2025 National Conference On-the-Record Livestreams

RUBENSTEIN: Wow, we have a great group here. OK. I’m David Rubenstein. And I have the honor and privilege of serving as chairman of the Council on Foreign Relations. And to all of our members, thank you very much for coming. We have—this is our thirtieth National Conference. And that means it was started in 1995. Now, who can remember the most important thing that happened in 1995? The O.J. Simpson trial. (Laughter.) So we’re expecting 460 participants over the course of this—of this conference, from about thirty-six different states and from ten different countries. So to all of you who’ve taken the time to come here, I appreciate your doing it. We think you’re going to learn a lot. We have an incredible group of panelists who’ve agreed to participate. And I think you’ll learn a lot.  

And as I was thinking about it just a few moments ago, you know, I lived through, many of you did, the Vietnam War, and lived through the Iraq and the Afghanistan War, when American soldiers were being killed. And it was very nerve wracking to be an American, to be watching this happening. And now we don’t have any soldiers that are really in combat, yet we have conflicts around the world that are extremely dangerous to our country and dangerous to the future of the world. So Russia-Ukraine, Israel-Gaza, what’s going on in Iran, and potentially China and Taiwan. 

And so a lot of people ask me all the time: What is going on in your country now? What is your policy going to be? In fact, as I travel around the world I get more questions now of what our foreign policy is than any time in my—ever since I’ve been traveling around the world, for the last thirty-some years, even though we’re not in combat ourselves. And it just, you know, illustrated to me how important it is that we have an informed citizenry that can really know what’s going on. And by participating in this event, I think you’re going to be part of our informed citizenry. 

As I think you probably heard me say before, Jefferson used to say—Thomas Jefferson—that a democracy really only works if you have an informed citizenry. Our citizenry is not as informed as it should be, and we’ve spent a lot of time in recent years trying to make sure that the Council on Foreign Relations is educating people who are not only members but people who are interested in learning about foreign policy and national security policy. 

When the Council was first set up, it was set up for basically White men from New York City. (Laughter.) Then we dramatically expanded it to White men from Washington, D.C. (Laughter.) And then later we decided we’d have some White men from around the rest of the country. But over the recent years we’ve dramatically changed that, to the good fortune of the Council on Foreign Relations. We have a—I hate to say that I don’t want to use the word; I will use the word—we have a diverse membership, and we’re very proud of having a diverse membership. We now have members from—about one-third of our members from the New York area, one-third from Washington area, and one-third from the rest of the country. And our membership is I think now about 30, 35 percent female, which I think is much better than it used to be. And gender—and ethnic diversity is much, much better than it ever was. And therefore, I want to thank the members of the Council who are here and thank all the people that have been willing to apply to be members of the Council. 

As you probably know—you may have heard me say this before—being a member of the Council is, you know, a testament to your achievements, your ability to be a productive citizen. As I said the other night—and I hope you all see this later—two nights ago we unveiled the portrait of Richard Haass—Richard Haass, president for twenty years. We have a tradition here of having portraits of our presidents unveiled, and you’ll see it tonight, I think. It’s an unusual picture, and I won’t comment further on it, but it’s—(laughter)—it’s a great picture and I’m very happy we have it. 

But what we really have here now is an opportunity for all of you to learn more about national security, foreign policy. The team has put together an incredible program. Our National Committee, headed by our vice chair, has done a really incredible job, a great work. And I want to thank Blair Effron and all the others who were involved in making this possible. 

So, just to conclude, I want to thank Mimi Haas. Is Mimi—is she here? No. Mimi Haas has been a supporter of the National Conference, and she’s supported it significantly in memory of her late husband, Peter. And I want to thank Mimi publicly for making it possible for the National Conference to occur. 

So over the course of the next couple days you’re going to learn a lot more about foreign policy, national security policy, and I think you’re going to come away feeling, you know, you’re fairly educated. You may be a little depressed when you hear some of the things that are going on. (Laughter.) We had a board meeting today, and we heard briefings on Russia and Ukraine, no easy answer there; briefings on the Middle East, no easy answer there; tariffs and trade, no easy answer there. And so you’ll hear about all this, but hopefully you’ll come away after these two days are over feeling you are better informed, you feel you’ve gotten your money’s worth out of the Council. And I just want to thank all of you for not only being members of the Council, but for your generous support. 

The Council does not get any government money—not that we would probably get any anyway. (Laughter.) But we take no government money. And so now, you know, we depend on the generosity of our members and other people like Mimi who have been supportive. So thank you all for coming. Thank you for being here this evening. 

And let me just introduce what we’re going to have now, which is tonight we’re going to have a panel discussion between Ajay Banga, who is a(n) incredible individual who’s now the president of the World Bank. Previously, he was the head of Mastercard, among other major positions he’s had in the financial service world. An immigrant to the United States and an example of the kind of strength we get from the United States—in the United States when we have immigrants, and many of the people who are here probably are immigrants or know of immigrants who’ve helped our country a great deal. Ajay is an incredible success story, has risen up to be the head of the World Bank, one of the most important jobs in the world, really. And he’s going to have a conversation with Mike Froman. Mike, as you know, has done an incredible job in just the relatively short period of time, a little more than a year or so, as the president of the Council on Foreign Relations. And so you’re in for a treat. And I want to ask them both if they would come out now, Mike Froman and Ajay Banga. (Applause.) 

FROMAN: Terrific. Thank you, David. Welcome, Ajay. It’s great to have you. 

BANGA: Thank you. 

FROMAN: Ajay was here in September 2023, about six months—four months since you’re— 

BANGA: When you were twenty-seven years old.  

FROMAN: Yes, exactly. Exactly. (Laughter.) So it’s great to—it’s great to have you back. You know, you’ve said the World Bank was not born of altruism but of strategic design. You know, many think of the World Bank as a humanitarian organization. It’s not. But poverty alleviation has really been at the core of what it’s done for so many years. Over the years, there’s been a focus on education, on health, on infrastructure, on climate. You’ve put jobs as the North Star, the creation of jobs at the North Star, not as a byproduct of other investments but as a goal in itself. Why jobs? Why do you think the World Bank can create jobs around the world? And why the shift in emphasis? 

BANGA: So I think the reality is that the best way to alleviate poverty or eliminate it is to create jobs. The best way to put a nail in the coffin of poverty is to give a person a job. Because poverty is both a state of mind and a state of being. And a job alleviates both. You earn, but you also have hope and optimism. And if you don’t have those two things, you remain in one form of poverty or the other. And if you look at the history of the last forty years of poverty alleviation in the world, most of it has happened in countries where jobs were created in the tens of millions—China, India, Mexico, Bangladesh, Vietnam. All mostly by outsourcing jobs and production from the developed world to these countries, principally for labor cost arbitrage reasons, to start with, but then followed up by logistics cost arbitrage because they were building infrastructure from scratch and did a much better job of people building that than we would have had to do if we had to rebuild it. And they made good quality products as well.  

When you put those three things together, you ended up with this model of growth, job centered. There’s 1.2 billion young people coming through the pipe in the emerging markets who will be ready for a job between now and the next twelve to fifteen years. Current forecasts for those countries, same countries, is to create somewhere around 400 million jobs. Now, forecasts are made by guys like us, and so don’t take it too seriously. And forecasts are not destiny. But we can’t be wrong by 800 million. Something is missing in that space. And if we are wrong by 800 million, then what you have is not a demographic dividend. You have a timebomb ticking in the next twelve to fifteen years. Because then—if you’re worried about illegal migration right now, just wait. If you’re worried about military coups right now, just wait. If you’re worried about drugs and people not being able to get access to being productively involved in society, just wait. You’re saying you can’t hear me, ma’am? All right. 

FROMAN: Yeah, can we turn up the volume, please? Thank you. 

BANGA: So, I mean, at the end of the day the point is you got all these people looking for a job. You’ve got not enough jobs. You’ve got challenges on that front. I think building a school and building a bridge and building a skilling center is lovely. But if all—if it isn’t all focused towards job creation, then it isn’t going to do what it needs to do. And that’s why the focus on poverty, and jobs, and connecting the dots. And that’s what I’m up to. 

FROMAN: And, ultimately, what’s—is that better? I can hear myself better now. What is the role of the private sector in that job creation? This is all going to come from government jobs and assistance? 

BANGA: I hope not. I hope not. That’s how our tax dollar goes to die. But if you—if you were to—(laughter)—if you were to think about how jobs get created, you need an enabling infrastructure environment. Meaning—by infrastructure, I don’t mean only hard infrastructure. I mean soft as well—so bridges, roads, airports, all that stuff. But then you need skilling, education, health care, that, if you get that right, and you get the right business-friendly regulatory environment—by business friendly, again, I don’t mean only business friendly as in roll out the carpet each time, but labor law, land law, mobile collateral guarantee law, utilities that are properly funded, things of that nature—if you do those two things, you can then allow a private sector, small, medium, large, global, local, to flourish and create the virtuous cycle you need to create jobs.  

So that’s the role of the private sector. Ninety percent of jobs in most countries are created in small and medium enterprises in the private sector. But the government has the role to play of creating the enabling infrastructure and the environment to enable that private sector to win. And that’s the—that’s what we’re trying to do. The World Bank has in its units the ability, through the parts that work at the public sector, to help with the infrastructure. The part that is focused on knowledge and the knowledge bank to help with the regulatory environment and the business-friendly part of it. And the part of us that works with the private sector—IFC, MIGA, ICSID, to help with the private sector.  

The question is, can we connect the dots and do it properly? Which is what I said the first time I met you, that I wanted to fix the plumbing of the World Bank. And the plumbing is if you build a house on top of bad plumbing, you end up in trouble. And I’m trying to make sure that the place works as it should, so that this idea of a change then is something we can translate into action.  

FROMAN: Where are you in that journey towards fixing the plumbing? 

BANGA: (Laughs.) I’d say reasonably well along. Depends how you measure it. But in—the G-20 sort of expert group had twenty-something things to be done. We’ve done sixteen of them. I don’t count that because I’m not sure all the twenty are the only things we have to do. So the way I look at it is, what are we trying to do differently? Become faster. We used to take nineteen months, on the average, for a project to go from conversation to approval at the board. We’re down to twelve now. So what I said I would do by June. Some projects are getting approved in thirty days, a health-care clinic in Kenya. Some projects are taking three years, a hydroelectric dam in Central Asia. That’s appropriate because the risks are different, the challenges are different. And so I think you put it together, you get the twelve months. But you’re getting it done the right way.  

The second is that we said we’d work better with the other multilateral development banks, because we all need to work better otherwise we’re fragmenting our efforts. So to give you an example, we’ve got a digital platform we launched in which now every MDB that gets a project in a country puts it in there, and everyone can co-finance and co-bid together. And we’ve now got 174 projects going through it. Fifteen billion (dollars) of financing has already happened in the past six months. We’ve signed a full mutual reliance framework with the Asian Development Bank so if you’re co-financing a project in Fiji, the government of Fiji doesn’t have to go through two due diligences, two procurement systems, two project approvals. One gets done. I do it, they’ll accept it. They do it, I’ll accept it. That’s kind of trying to find a way to make us work better together.  

Working with the private sector—you know, you started talking with the private sector, but there’s a whole series of things we’re doing across five dimensions from regulatory certainty, to insurance guarantees, to foreign exchange and local currency, to us taking the first loss, to creating a originate-to-distribute platform that’s run by Doug Peterson, actually, and out of that— 

FROMAN: Hmm, CFR member. 

BANGA: Yes. Is that so?  

FROMAN: Yes. 

BANGA: You do manage to rope them all in, don’t you? 

FROMAN: We try. (Laughter.) 

BANGA: People like me, too, but what the hell. 

FROMAN: Mmm hmm, CFR member. 

BANGA: I’m giving more than pennies, I’ll remind you, Mr. Rubenstein. (Laughter.)  

And so there’s work with the private sector. There’s work on all of these dimensions. There’s a corporate scorecard that had 153 items on it. We’re down to twenty-two. So you could actually be counted for what you’re supposed to be, you know, standing up for. It’s just a whole series of things, Mike, on that front that are happening. Forty countries, combined country management across the bank, the rest underway. We’re trying to get ourselves to be capable of being called good plumbers.  

FROMAN: Good plumbers, excellent. 

One of the areas you’ve put a major focus on is expanding access to electricity, the M300—to have 300 million more people in Africa or across developing countries getting access to electricity?  

BANGA: Africa.  

FROMAN: Africa. And this has been a big week for you and energy policy and electricity policy. The board of the World Bank approved for the first time allowing the bank to get involved in nuclear power. Tell us about that and why it’s significant.  

BANGA: So the board—not approved for the first time. We had not been financing nuclear for the past forty years. What we got to was a good understanding and agreement that we would get back into that space and do it sensibly. So the first thing I see ourselves doing is signing a partnership with the IAEA so that their capabilities and our current and new—when we build them up—capabilities, will get married together so we can work together.  

So Rafael Grossi and I are in the process of working out a way to work together so that we can bring his knowledge and safety and regulatory policy and safeguards to what we think we can build up as well. 

The second is to start working on looking at extending the fleet life of current fleet, so that about eighteen, twenty countries around the world that do have current nuclear power—and a number of them will be in the emerging markets as well, which is where our effort is. We won’t be doing work in France or the U.S., but Brazil, and Romania, and India, and anybody else who could need it. And clearly, the economics of extending the life of these nuclear power projects is now far more preferential to building a new one.  

Then there’s work we could do on getting new countries who want to go into it to understand the regulatory policy, the safety, the disposal of waste management, the various things you will need in addition to the nonproliferation aspects of it with the IAEA—work on that. 

And the last one is small modular reactors who—there’s a lot been talked about it for a long time, and it’s one of those technologies that everybody is trying to find a way to get it to scale. The problem is there’s not standardization yet across the different variants, and therefore, if we can help to help bring about standardization and scale in SMRs, could SMRs be the way of the future for a number of countries—or, for that matter, for high-intensity consumption data centers for AI and the like? So all this has to do with nuclear.  

We also got clear sort of insight for our clients and our employees of the World Bank’s intention to continue being active in midstream and downstream natural gas—gas being a good transition fuel with the challenge that you’ve got to make sure you manage the flaring and the methane leaks in gas, which we are working very hard on as well. But the idea is to get natural gas to be used in a number of countries where it makes sense as part of your energy mix, where it’s cheaper. It’s important to have it—particularly if you have it in your soil and you’re not relying on building imported systems for gas, but it’s there, so can I help you develop and do things with it.  

The whole idea of M300, which is connecting 300 million people in Africa to electricity, is based on the following fact: 600 million people in Africa have zero power today, zero electricity. These are not brownouts or blackouts. This is nothing, no connection. And I think that electricity is a basic human right. I really think you should call it that, because without electricity you cannot begin to think in terms of health care, education, jobs. You know, I’ve heard people say, let’s use the power of digitization to change the future of Africa. I’m like, guys, what digitization are you talking about, when half of Africa doesn’t have power?  

FROMAN: Doesn’t have electricity. 

BANGA: What are you going to do—your finger, you going to charge your phone? You know, that big Michelangelo kind of thing. (Laughter.) It doesn’t work like that. Life doesn’t—so you’ve got to get the basics right to get it to work well. And I think that getting power, getting electricity to people is just a starting point. And I don’t mean two lights and a fan. That to me is inadequate. I’m talking about enough power so a household and a business can do what is needed to be done to be a productive participant in society.  

And that’s where we came up with the idea of along with the African Development Bank—I have no idea if we’ll get there, Mike. We—in the last ten years we’ve reached 100 million people to connect them to electricity. This is five years, 300 million. It’s hard. But we’re applying all the learnings we have around getting regulatory policy clarity. We have twenty-odd countries that have committed. Presidents, prime ministers, energy ministers have stood up in big halls and committed to the regulatory policy they will change in return for attracting us and the private sector to come there. We have told them we will give them budgetary support when they change the policy, what we call pay for results. 

In the last two years, pay for results has become 50-odd percent of our financing. So I pay when you change; I don’t give you the money in advance. And we’re trying to use every tool in the toolkit, every arrow in the quiver to drive this change in policy. You know, you’ve got to get utilities that are adequately financed that they will be able to pay the generator; otherwise, that’s where the breakdown happens. So things of that nature. 

We’ve got—we’ve had events in Tanzania, events in London last week attracting a whole lot of private-sector investors, other MDBs as well. The amount of money required for this is quite large. The World Bank could put almost 40 billion (dollars) to work over the coming five years on this topic. The IMF is collaborating with us for another 15 billion (dollars) or so from their—one of their trusts to be able to create the fiscal headroom for countries to make those utilities liquid and capable of paying and so on. And then from the private sector we’ll probably need somewhere between 20 (billion dollars) and 40 billion (dollars) more. And so this is—this is a real opportunity for a real task. But I just believe it’s the kind of thing we have to do. 

FROMAN: A couple months ago the secretary of the treasury came to the Bank, I guess, around the spring meetings and said that America first is not America alone, and that the Trump administration wanted to expand U.S. leadership at the international financial institutions like the World Bank and the IMF. You know, that’s a distinct difference from, for example, the WHO or the WTO or other organizations that the administration has not been terribly warm to. Why is that? What do you think that—how can you think that the Trump—the World Bank can align itself with Trump administration priorities? And how do you manage the fact that you’re, obviously, the World Bank—you’re not the U.S. bank—but the U.S. is your largest shareholder? How do you manage changing priorities in the U.S. vis-à-vis your other—your other shareholders? 

BANGA: Mike, the—first of all, that’s—we just discussed nuclear, for example. And Scott and French Hill were extremely helpful in our work of trying to get this to be at a point where people on the board and our shareholders would support it. So would other countries, like the French themselves. You know, that’s two Frenches I just used, but you don’t talk about two other Frenches, right? (Laughter.) So the French government is helpful, too. And as you know, France gets about 70 percent of its power from nuclear, so they kind of get the idea of this topic. So, you know, Germany is going through a change in its approach to nuclear power, and so they were constructively helpful too. Even Japan, which as you know has been through a very difficult time after Fukushima, is keen to get back into looking at the opportunity of what safe nuclear power could mean. And I think the reality is that AI has suddenly made everybody realize that whatever projections we were working with for power consumption will not work in this new environment, and therefore the alternative, you got to—if you’re going to have power that’s clean, and baseload, and reliable, you’re going to have to have things like gas and nuclear to be a critical part of your energy mix going forward. So there’s good, practical reasons behind all this. 

Now, why and how does the United States look at the World Bank in these different contexts? I think the reality of why the U.S. understands the value of the World Bank through administrations is we have a power of leverage. So you can—you can put money to work bilaterally, and that’s a dollar for a dollar; or you can give me the money, and if it goes through IBRD or IFC it’s $10 for a dollar because we have a triple-A rating which allows us to leverage up handsomely at a good price with good—(inaudible)—so we can in turn be useful to our client countries. 

In IDA, which goes to the poorest countries, we can only leverage up four times. And the reason for that is we give away roughly one-third of what we get from our shareholders to poorer countries every year because they need the money to be in the form of grants—no repayment, no interest. But the two-thirds is at highly concessional terms, and so when that gets paid back you get a corpus so you can keep leveraging. So the math of the leverage in IDA is four times when the rest are ten times. 

So the total paid in capital of IBRD, one part of the Bank, is $24 billion over eighty years. 

FROMAN: Over eighty years. 

BANGA: Eighty years. 

FROMAN: And what percentage of that came from the U.S.? 

BANGA: Seventeen percent, 3.6 billion (dollars). 

FROMAN: The U.S. over forty years has put $3.6 billion in. 

BANGA: A large sum of money. 

FROMAN: (Laughs.) 

BANGA: And the IBRD over the same eighty years has lent out $1.4 trillion. And—and—wait for this; for you bankers, listen to this—what is the—what is the non-repayment on those loans? Essentially nothing. 

FROMAN: Zero, right. 

BANGA: Two billion dollars are currently in delayed accruals: 1 billion (dollars) from Belarus, which as you’ve noticed is, frankly, with a country that is currently at war with another country, and consequently is not keen to pay us cash back; and the other 1 billion (dollars) is with Zimbabwe, and that’s another case altogether. But on one-point-something—1.5 trillion (dollars), if you have a $2 billion nonaccrual, that’s a nice place to be. 

And I think that’s because of the fact that not only do we have on the one hand leverage, but on the other hand we enjoy effectively preferred creditor treatment, because if you don’t pay me back nobody will give you money. 

FROMAN: Right. 

BANGA: And therefore, the power of those two items together—or, honestly, if the World Bank did not exist today, we would have had to create something like this, and it would be really hard. So using what you’ve got and making it work better, work efficiently, work with the private sector—because there isn’t enough money in government coffers or philanthropies to do what we are trying to do; you have to get the private sector to be a consistent player in the game, and that’s where the jobs are anyway. So getting a focus on the private sector and jobs; making the place work better, more efficiently, a better partner; and at the same time doing so exploiting the leverage and the preferred creditor treatment of the system; and then realizing that we have the ingredients of working with sovereigns but also driving regulatory policy change and combining it with our ability to help the private sector catalyze financing; I mean, that’s a pretty good formula. 

FROMAN: Pretty good formula. I mean, it sounds like it should be very attractive to President Trump because it’s mostly using other people’s money and then it’s using a lot of leverage. (Laughter.) He’s familiar with this. Well, no comment. All right. 

BANGA: I mean—(laughter)— 

FROMAN: Early on in your—in your first year or so as president, the question constantly came up: Are you going to go for a capital increase? Are you going to go to Congress for a capital increase? And I remember you saying: We don’t need a bigger Bank right now; we need a better Bank. We need to demonstrate we can do more with what we have. First of all, do you feel you’ve demonstrated that? And, two, in an atmosphere where USAID has been eliminated, what do you think the appetite is in Congress for a capital increase? 

BANGA: I think we will progress back to the earlier part of we’re fixing the plumbing. I think we’re making progress and making the Bank a better bank. 

Mike, you’ve worked with me for years. I would never be content with this. So if I think I’m at five out of ten now, if I get to seven I’ll raise the bar and go back to four, because that’s the only way for this institution to truly be a partner of the private sector. 

To me, twelve months from conversation to approval is still too long. Nineteen was awful; twelve is still too long. The thirty days for a health-care clinic makes sense, but there’s other projects in there—I don’t mean the hydroelectric dam—there’s other stuff that should also be in forty-five days and two months rather than six months and nine months. Raising the bar to what you take for natural in your private-sector lives is what we’ve got to do if we are going to be seen as the best place to put government money to work for that leverage. I think you don’t earn it otherwise. There’s no entitlement to that money. And so I am very focused on continuing that journey of improving the Bank’s productivity and capability. 

Do we need more money? IDA needs money every three years because of that model of giving away one-third of the money. We just finished an IDA round, IDA21 which ended last year, into which—with just 24 billion (dollars) of total financing, which with the leverage gives us about a hundred billion dollars to work with over the coming three years, which is a record amount of money. When the United States administration recently announced $163 billion of cuts in their budgets, they did allow $3.2 billion for IDA. 

FROMAN: They continued to support it.  

BANGA: Yeah. It’s a lower amount than what was committed by the Biden administration, but only by some little bit. And I think we can find a way to getting back to the 100 billion (dollars). So I’m actually quite constructively delighted that that came through. But I don’t take it for granted, because three years from now I’ve got to do it again. And just so you understand how tough this IDA round was, your questions are all about the U.S. But let me step back a little. In the past nine months during the IDA replenishment, let’s discuss my largest shareholders. Japan, second largest shareholder. The government fell. A new one came in. Declared elections. Came back in a minority, in the middle of this. The Korean government, which was hosting our IDA replenishment event, declared martial law on the morning of the event. Just so you can feel the joy of that day. 

FROMAN: Feel your pain, yes. (Laughter.) Yes. 

BANGA: And then the German government fell and had a reelection, just came through it. The Canadian government fell, which you’re aware of. The British government changed. The Dutch government fell twice, including recently. The Austrian government changed. Yeah? Shall I keep going? (Laughter.) In fact, the only government that didn’t change of all my shareholders was the Chinese. And that’s another topic all together. (Laughter.) So if you see it from my eyes, I had to go through an IDA replenishment and get to a record. But the only question people ask me is about the U.S. And I will tell you, you’re focusing on only one aspect of it. For people like us, back to your point about 17 percent shareholding, I have to work with the other 83 (percent) too. And that’s my job. And if I didn’t like it, I shouldn’t have taken it. And that’s how I think about it.  

FROMAN: There are a lot of developing countries that are having an unsustainable debt profile at the moment.  

BANGA: I would argue we’re getting there too, so. 

FROMAN: Well, there’s a—we’ll leave that to another bank. We’ll leave that to another bank. But with the cutback of aid and increased needs—fiscal needs on their part, how do you see the debt issue being worked out over the next few years? And particularly, since you mentioned China, China’s become a major creditor. Not always in the same format as other creditors for restructuring. What role do you see China playing in helping to solve some of the unsustainable debt issues? 

BANGA: So, Mike, first of all, big picture, funnily enough, given that the U.S. dollar has weakened over the last few months, and I don’t know where interest rates will go yet but you got to put those two things together, in an odd way, unintended way, a lot of the countries who were having real debt distress was because they borrowed money but interest rates were very low, and they borrowed in dollars and euros. So they got a double whammy over the last five, seven years. This is actually turning towards being helpful, in a really odd, unintended way. And I think just keep that somewhere at the back of your mind as you think this through. 

The G-20 has a common framework for working out some of this debt. It goes past the old Paris Club because, as you just pointed out, the creditors have changed. You mentioned China, but there’s a bunch of bilateral creditors in there who were not there in the prior debt crises. In addition, commercial financing, cross border, is up a great deal. None of this, by the way, is discussing the domestic debt. We’re still only discussing international debt. And so the mix of creditors into these countries has completely changed. And so what we’re—what the IMF and us are on together is something called the Global Sovereign Debt Roundtable, which has the Paris Club, bilaterals, and commercial players all in the room at the same time.  

And four countries are going through the G-20 common framework in Africa—Ghana, Chad, Ethiopia, and—who else? Four of them are going through it.  

FROMAN: Zambia has already gone through.  

BANGA: Zambia. Four. Some of them have got—took a long time to get through. Others have gone through faster. The recent ones are quicker because we’ve learned a few lessons along the way. You know, you settle a level of agreement of how many cents to the dollar with the official creditors, then you go back to the private sector and they don’t agree, they strike a different deal, at which point these guys don’t agree. So you’ve got to kind of do it simultaneously. The second thing was you needed transparency of what the actual debt was. A number of the deals that were signed by bilaterals, including China, had confidentiality clauses in there which prevented the countries from declaring what exactly were the terms of their loans, and therefore you couldn’t figure out what dollar haircut you had to take.  

And so all that’s become much clearer. We’ve set up a much level—a much more transparent playing field on some of the debt data. I’m actually encouraging the G-20 to now do this for all the G-20 countries, not just the G-7 which is what was done till now, so we can get even better data going forward. I suspect you will see this cycle come through the same way other countries, when they see this can work faster, will line up and come through the pipe. But this is tough. You know, and that’s why I think you’ve got to worry not only about those who are currently in distress, but think in terms of those who have liquidity issues as well. And because a lot of them have got refinancing of debt coming up. And to me, that will become a solvency issue if we don’t solve the liquidity issue.  

And so with that we’re working on two or three pillars of work. One is to increase net positive financing to all the international financial institutions into them. Two is to work hard on domestic resource mobilization with those countries, so they also have to do some work on it. And so—and the third part of it is what else can we do to help them with this transparency? And that’s what’s going on. 

FROMAN: Before we open it up to the audience, I will just give you a lightning round of questions.  

BANGA: Yeah? (Laughter.) 

FROMAN: What are you most proud of accomplishing in your two years there? What’s your highest priority unfinished business? And, knowing how much you love KPIs and metrics, how do you measure what success looks like five, ten years from now?  

BANGA: Well, I don’t plan to be around ten years from now, so that’s an easy one. The first one, I think what I’m most proud of is the alignment that I now see among lots of people in the Bank about the idea of fix the plumbing, you’ve got bigger work to do, let’s align around jobs, that’s what we got to do. You can see that filtering through. I have no doubt that there’s still people at the Bank, Mike, who wish I would die tomorrow morning. I have no doubt. (Laughter.) I have no doubt there are plenty of people, however, who understand the idea. And there are those who are still not sure and waiting to see which way this goes. That’s normal in change. When you’ve got an eighty-year history, you will get these three sorts of people. That doesn’t worry me. I’m beginning to see the momentum behind alignment. And to me, that’s what I went there to do. I think that’d be good. That connects that idea of the scorecard as well. That’s why I felt a five out of ten on getting to where I need to.  

KPIs when I’m done? I don’t know. I’ve got a five-year term. I’ve got three years to go. So let’s talk about five years rather than ten. My view is that if in these five years I am able to get the institution to get the speed of projects to come down even further, that would be, from a client’s point of view, the most important difference they will see in us. Because you’ve got to remember, at the other end, if it’s a democratically elected government, it’s probably got a four- to five-year term. If you spent two years discussing a project for approval before it even starts getting implemented, how much interest will that government have after the first two years of their term to keep speaking to you? And that means you are—you’re not getting a smooth pathway to development. You’re getting a jerky pathway to a dialogue. Changing that to where things go through the pipe at a pace that they should will change completely the interaction between development banks and countries. And to me, that is the most important thing we can change. 

FROMAN: Terrific. All right, let’s open it up to questions here in the room. I see one way in the back. Just to remind people this is on the record, or not for attribution? On the record? On the record. So identify yourself and make a short question. 

Q: Thank you. Fascinating discussion. Bhakti Mirchandani, Trinity Church New York.  

You mentioned power as a solution to the—to the jobs deficit in developing countries. Can you kind of share more about AI, white collar jobs in developing countries, AI, you know, white collar jobs here? What models have you seen that work?  

BANGA: Sure. Sure. So the AI topic is an interesting one. I want to break AI into—whenever we go through this—into big AI and small AI, when we come back to the discussion. What I mean by “big AI” is what most people discuss, which is these large data-driven models. 

Now, to do AI well you need four things to happen. You need computing power, lots of it. You need electricity, a heck of a lot of it. You need data, lots of it, kept in its simplest form so it can be manipulated to the maximum extent possible and then kept safe and secure with the right rules around privacy. And the fourth thing you need is you need people who understand how to make that work and create the first algorithms and the work of working with such stuff.  

There are very few developing countries, aside from an India or a few others like that, that actually have those four things. And even India will be stressed on the power.  

Which surely means that for AI to work in the developing world, there’s a very big gap between what they’re being told—that AI will be like, you know, the cellphone—you will go from rotary dial to cellphone capability and skip through everything. I don’t think this is the same thing.  

And if you believe that the way is then for large Western or Chinese or Indian companies to go operate the AI for you in your country, think through the implications of how countries will think about the national security aspect of their citizens’ data being used elsewhere, and you will very quickly realize the balkanization that will come into these models is more than people are willing to discuss right now.  

So I’m actually quite concerned that Big AI will in the beginning create a bigger disparity between the developed world and the developing world than we currently understand.  

The other side of that is, I think the job impact is a more serious topic in the developed world in the early years than it is in the developing world.  

Small AI, on the other hand—local models, delivering locally derived data, delivered on a dumb phone.  

So let me translate that. Think of a farmer attached to a farmer-producer organization or cooperative in Uttar Pradesh, in India, and if I could use my phone to look at my crop and say, that disease—I don’t know what it is, but this spray from my cooperative which costs 500 rupees will help me kill it. That’s small AI at work. That’s amazingly productive.  

And so I think if you segregate big and small AI, there are two different roles in the developing world. But you need to think about it that way rather than the impact of jobs in the developing world, of big AI in the initial years. Down five or ten years, it’s a whole other topic, but I don’t think that’s the case today.  

The second thing is that when we’re talking about jobs in the developing world—I should have said that when Mike asked me that question—we’re talking about focusing in areas that are locally relevant and don’t rely on outsourcing jobs from the developed world. So let me give you what those sectors are. This came up through a jobs council that we’ve set up with President Tharman of Singapore and former President Michelle Bachelet of Chile and a number of CEOs and civil society people. And here are the five sectors. The first is infrastructure; it’s construction, but then it’s enablement in what it does.  

Second is agriculture as a business, particularly trying to make small farmers productive so they don’t get incented to sell their land and finally end up as urban poor. And that’s the example of that small AI app and many such things.  

Third is primary health care—not just because you get a healthier population, but if you do it well, you’ll employ nurses and medical diagnostic technicians and midwives and the like. And there are examples like this in Indonesia where we’re working with the Indonesian government. Their president is about to announce that on a citizen’s birthday, every one of those citizens will get access to a free annual health checkup at a distributed system of health-care clinics. We’ve been working on them for a few years now.  

And a fourth such item is obviously tourism. We’re not tourism experts, but we can help with the skilling institutes that go into providing the right kind of skills for that tourism. 

And the last one is value-added manufacturing for domestic consumption and regional trade and the like, including minerals and metals that the developing world is blessed with that we all need. 

So in these five, there are lines from AI and there are lines from outsourcing is relatively low compared to other categories. And so there is a way to think about this in a more constructive way than just what AI would do to it.  

FROMAN: Yes, right here, third row? The microphone is making its way to you. 

Q: Monique Mansoura, independent strategic advisor on health security and biotechnology. So inspired by your work and this discussion.  

A question I have is, you talked about the soft enablers of health and education, and can you say more about that? I come from the work of health and biotechnology, and we really struggle with sort of the linkage to what a driver of economic development is—driver of jobs, how much harder it is if you don’t have health to be a worker, to contribute to the economy. 

FROMAN: Yeah.  

Q: So I’d love your thoughts on that. And also sort of the insults that are things like the COVID war, right, one of the words we didn’t talk about—we lost 7 million lives—and the risks that persist in those types of threats. So I’d love your insights. 

BANGA: Yeah.  

FROMAN: Thank you. 

BANGA: You know, one aspect of this health is—you just heard me talk about this primary health care. So we’ve made a commitment that we’ll reach 1.5 billion people with better access to primary health care by 2030. Indonesia alone, as it turns out, will deliver 290 million out of the 1.5 billion with this one—because this work has been going on for a while with them.  

And so this December we are launching an effort with the government of Japan and the WHO, and Japan built some of the best universal health-care thinking after the Second World War and has built on it. Japan’s not a poor country, and it can afford something. But the ideas and learning from it are what we’re trying to bring into our primary health-care rollout across the system. 

Yes, it’s for getting better workers and healthier workers, but actually to be completely honest, it has two other benefits—the one about jobs, the nurses, the medical diagnostic technicians, the midwives—not just doctors but all these. And in fact, it’s—the Indonesian government computed that it’s the single largest possible generator of jobs other than tourism for the Indonesian government in the coming years. And then it will drive health-care costs down, which otherwise are climbing in Indonesia and reaching levels that they are much lower than, say, Malaysia or Singapore, where that would be a crippling number if they got to that. So this is a way of bending the curve by early diagnostics.  

But the other aspect of it is catching the next pandemic early. If you do have distributed health-care clinics, which are doing regular testing and diagnostics, the probability of catching the next pandemic earlier is much higher than it was during COVID.  

So there’s a whole series of benefits inside the idea of rolling our primary health care which are important.  
The Indonesian one started with an effort that had begun in China, went to Peru and Indonesia and other countries, on stunting. So children in Indonesia a little while ago—30-odd percent of the kids in Indonesia were stunted because of malnutrition in the womb, and then for the first 1,000 days, including the time in the mother’s womb. And there are statistics available that tell you that a stunted child earns 17 percent less per year throughout their life than somebody without stunting. So think of the dramatic progression impact of that number—17 percent less per year throughout their life, throughout their working life, than somebody who wasn’t stunted.  

So there is numerical information as well available to justify a lot of what should go into health care for the right reasons.  

FROMAN: Yes, Fred Hochberg?  

Q: Fred Hochberg. 

I’ll tell you, years ago I remember when I chaired the Ex-Im Bank, multilateral banks like Ex-Im around the world could not be subordinate to World Bank desks, so we sort of were boxed out of financing those projects. Is there any way around that, or has that changed at all, that you could then utilize all those export-import banks around the world?  

BANGA: Hi, Fred. Nice to see you, buddy. 

It’s not so much IBRD and IDA that is where that comes up. What I’m trying to do with IFC for the private sector, which is where ex-im also plays, is to allow IFC to play a role where needed of being junior equity, of first-loss taker. Because clearly, when you—this private-sector lab that we had set up which had—which Mark Carney and Shriti Vadera were chairing at one time before Mark went off to do a slightly less important job—(laughter)—thank God he’s there.  

And so if—that group of CEOs came back—including Larry Fink and a bunch of others as well—came back with five things to work on. One of those was if a project in the emerging markets has all these other risks attached to it of foreign exchange and political risk, which we can help with but it still has it, and therefore for David Rubenstein as an investor the water is still here, how do we bring the water down here? It could be if IFC said I’ll take junior equity or a capped return of 6 percent or whatever and allow it to come down here. That hasn’t been our role, because if we actually booked the loss I’m going to have to go back to my shareholders over time to get a capital increase, and that’s an ugly discussion. So how do you manage that dynamic is the issue. 

What we’ve done is we have created a new fund called the Frontier Opportunities Fund. I didn’t want to call it a First Loss Fund for obvious reasons, right? (Laughter.) As a banker, it kind of makes me uncomfortable. But Frontier Opportunities Fund sounds pretty cool. And we have funded it from our own regained earnings to start with, but now I’m going to philanthropists like David Rubenstein and saying, how about putting your money where your mouth is and—(laughter)—you know, and giving some money for the right reason. If I’m taking a risk to help private-sector capital go into these emerging markets for development and you believe in that cause, then help me out with this. I’m just kidding. That’s the kind of thing I’m trying to do. And I think that’s very different from what it was, like, Fred, when you were discussing that topic, so. 

If you go back to the Ex-Im Bank, come talk to me. (Laughter.) 

FROMAN: This gentleman here in the front row. 

Q: Glenn Creamer, World Affairs Councils of America. 

I’m curious—I know it’s not your mandate to deal with humanitarian assistance the way USAID did, but since the U.S. was the largest donor country and you talk about 300 million people getting electricity in Africa of the 600 million that need it, I’m curious the impact of the, basically, closure of USAID, the termination of almost 10,000 people, and the retreat of the U.S. from the humanitarian assistance realm, what—how does that impact your work, or does it? I mean, you have your own mandate and you’ve got to push ahead, but I’m just curious, people need electricity but they also need food, they’re also—you know, they need medicine, they need a lot of things which the U.S. was providing and no longer is. Thank you. 

BANGA: Yeah. Yeah. Well, so, the first thing is it does impact us in one way somewhat directly, which is trust funds that we hosted which may or may not be contributing to our work but we host them because we provide hosting services for a lot of these. A number of them had some funding from USAID, and that obviously has gone. And so those people are stressed about how to manage their numbers. That’s not direct impact, but it’s there. I see them. I meet them. I hear them. 

The indirect impact is if you are funding in some countries a large part of their health costs through this, then, you know, they will come back to us looking to put IBRD and IDA money to work towards supplementing their health budgets. And to me, that’s an indirect impact. It’s, obviously, taking away from something else we could have funded. But it’s a question of prioritizing the right thing at the country level. 

One of the challenges we had as a Bank which is part of the making us work better is that we have this thing called a country partnership framework, which is the equivalent of a strategic plan for the country. And if you write it too broadly, you can end up justifying any project for its financing. What I’m forcing our teams to do across all the parts of the Bank is, first, write one for the whole country because most countries view public-private partnerships as an integral part of their life, and therefore giving them a public-sector CPF separate from a private-sector one isn’t very useful. And so getting one done together is kind of practical. 

Secondly, write it in five pages, as compared to a hundred and fifty, because your client will not read a hundred and fifty pages. They’ll give it to somebody seven levels down to translate into an executive summary. You may as well do it yourself, because then your words will be seen and you’ll be forced to prioritize. Prioritizing forces your client in the government to also indulge in that degree of thinking through what will make the most difference for my country in the coming three, five years. 

And so, in a funny way, this is helping us get CPFs to get prioritized because the sense of urgency has gone up. This is a complicated time in the entire aid firmament. It’s not an easy time. But, you know, we aren’t directly, as you said, in the humanitarian business. So I’m using it to make my work better and more efficient and more useful to a country. But it’s a bad time, in that sense. 

FROMAN: Yes. Woman, right about midway. Yes, further, sorry. We’ll try and get to you if we can.  

Q: Hi. I’m Margaret Williams, a fellow at the Belfer Center at the Harvard Kennedy School.  

I was wondering if you could speak about the Bank’s role in climate change, particularly in context of massive growth of AI, considering that the U.S. leadership on climate change is just dropping to zero and we apparently don’t have climate change, and we’re cutting science for climate change. But just maybe the Bank’s role in leadership on climate matters, considering your other priorities. Thank you.  

BANGA: So, you know, this is an interesting discussion. Our clients are demanding help on certain things. And this is coming from them. So if you’re a client who’s at the receiving end of big challenges of weather pattern changes, or forest fires, or things that impact you, what we will call “adaptation” in that part of the world, they’re really keen that we work projects with them that help them. Or they’re looking for ways to mitigate the future growth of emissions by looking at stuff like a rail corridor instead of truck transport in Lobito, in Africa, for example.  

When I talk about the World Bank wanting to put 45 percent of its financing into climate-related financing, one of the biggest discussions with governments around the world right now is, what does that mean? The U.S. is saying, I don’t like that because you’re diverting away from what is the purpose of your mandate, which is education, health care, and so on. And when I explain that you may think that, but actually the 45 (percent) is not going into solar and wind. It’s actually going half into adaptation, which is a school that is hurricane-resistant, a road that doesn’t get washed away in the monsoons, seeds that are heat—you know, capable of surviving hotter temperatures, drip irrigation instead of flooding irrigation. Most of them will say, we should do that in Miami too. 

And then, if you—if you talk about mitigation, and you say it’s about the Lobito train corridor instead of trucks, and it’s about, you know, growing rice with the kind of methane emissions that are much lower because you manage it better than flooded fields, or it’s about fighting methane emissions from flaring and the leak of gas, or it’s about electric buses instead of diesel buses in a bus rapid transit system, then most people agree with that too. The problem is that the words “climate finance” are getting weaponized in this situation, on both sides. You will find the Europeans are ready to commit hara-kiri if you change the word.  

And so we need to find a way, with those shareholders that I have who represent the whole world, to find a sensible answer where we do what we need to do. Because we’re not targeting 45 percent of our money going there. As we build schools, we’re building them hurricane-resistant. Why would you not? As you build a road, you’re building it monsoon-proof. As you put seeds to work, you’re building heat-resistant varieties of seeds and putting them in. So automatically more and more of my financing is going into what our shareholders and the MDB world count as climate financing. It’s not the target. It’s a derived number. 

And so I still think our role is to do things in a smart development way, and to meet what our clients need. And our clients are asking for this too. But I’m not taking money away from schools or health care or skilling or bridges or roads or airports. I’m actually making that integral to what we’re doing and connecting it to jobs. But doing it in a way that we call “smart development.” And so use whatever words you want, but don’t make this a fight that throws the baby out with the bathwater. That’s what I’m trying to explain everywhere that I go in public. And that’s all I can do. 

FROMAN: Third row there. 

Q: Thank you so much. I’m Caren Merrick. I’m a tech entrepreneur, and recently served for three-and-a-half years as the secretary of commerce and trade in the commonwealth of Virginia.  

And so, Virginia—my perspective is, Virginia is the datacenter capital of the world. And all of the global hyperscalers who are building out across the world, employing folks, and they’re a magnet for economic development wherever they go in the world. But these hyperscalers are also becoming nuclear companies. They want to generate their own power. And they are also placing bets on, as you mentioned, the World Bank is looking at who is standardizing. And so there are countries—France, Canada, the UK, and the United States—that are all building out technologies. How does the World Bank—I’m just interested in your perspective. How do you think about who to place your bets on in this frontier, where nuclear is going to be critical? It’s clean, it’s affordable, it’s abundant, and it’s innovative. And how do you think about that? Thank you. 

BANGA: Yeah. I don’t know the answer to that yet, because this approval happened day before yesterday. (Laughter.) And after forty years— 

FROMAN: What have you been doing since? I mean—(laughter)— 

BANGA: Exactly. And after forty years of not doing it, you know, if you were a highly qualified nuclear scientist, you wouldn’t want to keep working at the World Bank for the last forty years, because we weren’t doing anything. So we’ve got people who understand nuclear science because they’re still working with us in different aspects of our work, but the first thing I have to do is rebuild a pool of talent, and do so with the IAEA. That’s why I’m so keen for Rafael and I to have this partnership, because I think together we can make one plus one equal to three. 

I do believe, however, that my job is not to place early bets, like a venture capitalist, on new technology. My job is to come and help to standardize and build quality standards in the system. And then when somebody is coming through as a racehorse to win, put enough money on it to get it to scale. And maybe the scale will bring the costs down. And that will be a good place to be. That’s kind of how I think our future could go. We’re not there yet as an institution. It’s very early. So ask me this next year. And we’ll see. 

FROMAN: I think that’s a commitment for him to come back next year, so. (Laughter.) This gentleman’s been very patient here, second row. Here comes a microphone. And if you could all speak up, make sure people can hear. 

Q: Hi. John Tyson. I’m an executive investor in the food sector here in the U.S. 

My question is about global poverty alleviation, you were talking about earlier, in agriculture. In the World Bank’s toolkit and set of priorities, where does agricultural productivity and supporting agricultural livelihoods fit in the total puzzle? 

BANGA: Yeah. Huge. It was the number two in the list of the five job generation systems I talked about. We’ve committed—like we did the 1.5 billion people for health care, you’ll see a method in the madness of our commitments now. We had committed $9 billion a year, which is double what we’re doing today, in this agriculture as a business, oriented towards small farmers. So not oriented towards mechanized farming and large agriculture, which we are not needed for. There’s enough commercial money there. This is, as you find in the emerging markets, a number of people here originated from there, you will see that the single biggest crisis in the farming communities is that the children of small farmers don’t want to be farmers. And they tend to sell off the land. And at that time, they think they’re rich. And they buy a Toyota, and a TV, and smoke and drink. And then four years later they’re in a shantytown on the outskirts of an urban city looking for gig driving jobs.  

That is a tragedy. And it’s going to get worse. It’s true of where I grew up, in India. It’s true of my home state of Punjab, where this is a real crisis. But it’s true of other places too. So fixing this is quite important. It ranks up there in terms of keeping people wanting to pursue their parents’ profession as a respectable, with productivity, with a decent life profession. To do that, you’ve got to start thinking in terms of building out how do these farmers get access to better markets for their produce, better pricing for fertilizer, better tools for figuring out which pest is on their plants, better—and so on and so forth. So we’ve built an open architecture platform with Google where you can feed in the farmer-producer organization, cooperatives in the old days, on the one hand, and then feed in a buyer, a fertilizer, a seed producer, a crop insurance provider at the other end, to create the marketplace. And every click creates a certain amount of cents going to the people, and creates a business model.  

That’s what we’re working on. And I just came out of Uttar Pradesh recently, and that’s why I mentioned that earlier. I went and visited six such FPOs that we saw working there. And that’s the kind of model I want to lift, along with the Google product formula. Take it to a bunch of places. 

FROMAN: Great. Last question here. 

Q: Thank you. Thank you so much, Ajay. My name is Joyce Zhang Gray. I’m with Visa, but more importantly I was— 

BANGA: Oh, God. 

FROMAN: Visa. 

Q: I know. (Laughter.) 

FROMAN: I’m sorry; we’ll take another question from that—yeah. (Laughter.) 

Q: I was going to say, but more importantly— 

BANGA: Although I can see others who are ex-Visa sitting right here. (Laughter.) 

Q: I was classmates with Aditi in both college and business school, so I’m friendly. (Laughs.) 

BANGA: Oh, you’re fast. That’s my daughter. You’re good. 

Q: I’d love to learn more about your thoughts on promoting local business creators, those who are job creators, entrepreneurs. 

BANGA: Yeah. 

Q: And also, in this age of the freedom of movement of knowledge and labor, but the restrictions because of immigration, there’s less brain circulation of those who might study abroad and come back to their communities to build jobs. What do you think the implications will be? And how can we— 

BANGA: So the thing is that talent is everywhere but opportunities are not, right? So the trick is to allow—of course, by jobs I don’t mean only companies; I mean entrepreneurs as well. 

To give you an example, having studied this issue for a long time, the reason that women don’t open—Silicon Valley’s funding for female-owned businesses is a tiny percentage of the total money going in, even today. There are reasons why this is even worse in the emerging markets. One of the challenges is women don’t own the assets in many emerging markets. The legal and cultural system fights against it. So if you give a woman a loan, she will be able to leverage that by going to a bank and saying, hey, the IFC gave me a loan, and she might get another two bucks from some bank. But if you give her a grant of equity or if you give her access to equity, she’ll probably raise ten from banks. And so the multiplier effect of equity is what we are talking about here. So one of the commitments we’ve made is to reach 80 million women with access to financing, about half of that with equity and half with debt, in these coming years in a chance to give them the ability to create entrepreneurial energy. 

I was in—I was in Nairobi and visited an innovation center we had set up along with the government of Denmark and the UK, and 3,000 businesses have been through it in the last few years. And 60 percent of them are women-owned. And what—it was supposed to be towards climate benefits. So these two girls I met there—literally girls; they were—I mean, by now they’re about thirty, but they were—when this started they were in their twenties. And you know, mangoes that get a blemish on the outside, nobody buys them but they’re perfectly fine. So they would buy these mangoes at a discount, and air dry them, and then package them and sell them as dried mangoes, which I thought was something only Indians ate. Turns out the entire equatorial belt loves their Jais. (Laughter.) And so it became a decent business. And then they met a guy at that innovation center who was processing biomass for pellets, and they started buying his biomass and a furnace. And then they found somebody else who was selling a secondhand Tetra Pak machine in that center. Now they’ve got a $23 million revenue. 

FROMAN: Wow. 

BANGA: And I—you know, I think the biggest thing this Bank can do after bringing down the time taken for projects is to learn how to steal shamelessly and duplicate, duplicate, duplicate as many times as you can. Because an idea like that, this innovation center, why shouldn’t we have a hundred of these in Africa? We don’t. We’ve got a few. And so the power of an institution like ours is create/prioritize things in countries—few priorities, get things through the pipe fast, and then help to duplicate and transfer success, because then we make a difference in a finite period of time, including for entrepreneurs. And that’s the kind of thing that I’m trying to change. 

We have a knowledge bank. It is full of experts. You can—you want to learn about drinking water? Tomorrow morning you’ll have three people with PhDs and Nobel Prizes sitting with a chart paper telling you all about drinking water. That’s lovely. My problem is I want those projects replicated in a hundred places. We’re taking our knowledge bank, which is across the IBRD and the world—the public-sector side and the private side, putting it together, and in every practice we’re going to have one group of people who focus on regulatory policy change and policy—back to my earlier discussion, one group of people whose only job is to steal shamelessly and copy. And stealing shamelessly is a really good thing—(laughter)—when it’s for the right reasons, and that’s what I’m trying to get done. Productizing—what people in the consumer world would say, you productize what you produce. You test it out and you roll it out. That’s what we need to do more of. 

FROMAN: I’ve known Ajay for twenty-five years. I worked directly for him for about four years, Mastercard. 

BANGA: Tough times. 

FROMAN: Inspired by him every day. I think you can see why. Please welcome—please thank—join me in thanking him for being here. (Applause.) 

(END) 

This is an uncorrected transcript. 

ALDEN: Good morning, everyone. Welcome to day two of the National Conference. As seems to be the case more mornings than not, there’s obviously a lot of news today—(laughter)—and I imagine we will get to it in the course of other discussions. For the panel this morning, however, we are going to focus on what is actually my favorite topic and I think in its own right an extremely important topic, which is the future of relations here in North America.

My name’s Ted Alden for those I don’t know. I’m a senior fellow here at CFR. I’ve been here almost two decades now. This one is actually a very personal topic for me. I’ve lived my life back and forth across the border between Canada and the United States, have family and friends in both countries. My professional work on immigration and trade has taken me to Mexico a lot. I confessed in our prep call that I find what’s going on these days rather heart-wrenching. It really, really hurts me in some deep ways.

I think many of us who witnessed the courageous decisions made by all three countries during the 1980s and 1990s expected that North American integration would be lasting. Canada and Mexico each shook off histories of anxiety about U.S. domination to enter into a continental free trade agreement. And the United States, despite its economic might, chose to tie itself to a set of binding trade rules with its neighbors. Still closer integration seemed likely over time. But instead, here we are today for this discussion.

We could not have three better guests to help make sense of the current situation.

To my immediate left, Steve Verheul is a former chief negotiator for the Canada-U.S.-Mexico Trade Agreement, or CUSMA. Whoops, sorry; wrong country. (Laughter.) The U.S.-Mexico-Canada Agreement, or USMCA. Excuse me, Alonso. Apologies. (Laughter.) The Mexico-U.S.-Canada Agreement—(laughter)—in the Spanish acronym known as T-MEC.

BROWN: T-MEC. (Laughs.)

ALDEN: Phew! Anyway, OK.

Steve retired from a career in federal government service in Canada in 2022 and is now a principal with GT and Company Executive Advisors.

On my far left here, Alonso Cervera is deputy director general of economic studies, public affairs, and communications at Banco Santander, the Spanish bank, which I was just reading is now the largest bank in continental Europe and the second-largest in Mexico. He’s based in Mexico City.

And in the middle, my good friend Theresa Cardinal Brown, senior advisor for immigration and border policy at the Bipartisan Policy Center in Washington, D.C. And among other government roles she has had in her career, she was the first attaché in Ottawa for the Department of Homeland Security.

Their full bios are in your material.

OK. Let’s go to it. I want to start by asking about the G7 summit which is commencing Sunday in beautiful Kananaskis, Alberta. President Trump and other G7 leaders will be attending. Canada’s new prime minister, Mark Carney, has invited a number of other foreign leaders, including Claudia Sheinbaum, the president of Mexico, to attend. Some of you may recall the last time the G7 was held in Canada during the first Trump administration in 2018 it did not go well. There was a falling out between Trump and the other leaders. Some of Trump’s people accused Justin Trudeau of having, you know, personally betrayed President Trump. It poisoned their relationship in a way that never really recovered.

So I want to start by talking about what would be a more positive outcome this time. (Laughter.) What’s at stake in that meeting? And what would—what would be—it’s a low bar, to be clear. (Laughter.) But what would be—what would be a positive outcome from this meeting? Steve, I’ll start with you, from the Canadian perspective. What would be a win for Canada coming out of the G7 summit?

VERHEUL: OK. Well, I think, to start with, a win will be to do better than we did last time. (Laughter.) But as you say, I think that hopefully that’s a low bar. But I think the agenda that our prime minister has set for the meeting lends itself to a lot of themes that we think are the most important ones we should be addressing at this point in time. So protecting our communities and the world, a lot of emphasis on security-related issues; that’s a big issue in many contexts. We’ve got the whole issue of building energy security, also a security issue but in a different sense, making sure that we have what we need going forward, whether it’s critical minerals or other forms of energy—oil, gas, electricity, all of that. And then, thirdly, securing partnerships for the future, which I think gets us back to another theme that I think we’ll touch on later, which is about what kind of partnerships do we need to try to achieve our objectives economically, from a security objective as well.

So the theme running through all that is really security. So we’re looking at national security, economic security, supply chain security, energy security. These are the issues that are going to be a big focus. And these are the same issues that I think we should be focusing on in the North American context.

ALDEN: Is there going to be a communique, you think, or?

VERHEUL: Yes.

ALDEN: There will? So there will be an effort to get some kind of consensus on a communique coming out?

VERHEUL: Yes.

ALDEN: OK. That will be interesting. I will read it carefully.

Alonso, from the Mexican perspective, what would be a good outcome from the president’s meeting with the other leaders in Kananaskis?

CERVERA: Well, I think it’s already a good outcome that we have been invited. It’s better to be—(laughter)—it’s better to be at the table than to be on the menu. (Laughter.) And I think it’s been a while since a Mexican president was present at these type of meetings. I think it’s been more than a decade. And I think it’s very good to see President Claudia Sheinbaum attending. In the previous administration, our president only traveled abroad, I think, once. And I’m hoping for a good outcome from the bilateral meetings Mexico-U.S., Mexico-Canada. Hopefully, we’ll have some constructive headlines and she relays on a bilateral basis all the work that Mexico has been doing, particularly on the immigration and the security fronts. But we are very happy in Mexico to see our president travel in a couple of days and attending this meeting.

ALDEN: Theresa, I may ask you to do two things. One is to channel the Trump administration a little bit.

BROWN: Oh boy. (Laughter.)

ALDEN: What would be a good outcome for President Trump? And if you want to have a slightly more standoffish view as well, I’d appreciate that. But what do you—what do you think the United States is hoping to get out of—out of this summit?

BROWN: Well, I mean, I think President Trump is going with a couple of aims.

One is his trade agenda, and tariffs, and helping the rest of the world understand in his mind that, you know, we really do mean it when we say we want even trade, we want fair trade; that I’m not joking, we need to renegotiate these things, let’s figure out how we get it right to better, in his mind, you know, the U.S. positioning.

He’s going to lean on them to meet security commitments. The U.S. is not going to be the world’s policeman anymore. You got to stand up on your own. I know Canada just recently announced that it was going to speed up its commitments to defense and NATO. So I think that’s another thing that he’s going to try to do.

And of course, at least with our bilateral neighbors but probably with some of the other countries as well, immigration issues. And so that will probably be a key part of the trilateral discussions.

I think it’s very important, just to add to what Steve and Alonso have said—that Canada invited the Mexican president to the G7 to me is a very strong signal that Canada wants to have a stronger relationship with Mexico in this moment, when the relationships of both with the United States are on a little bit shakier ground. And as somebody who’s been watching sort of the North American situation as long as you have, Ted, that’s not always been the case. For a very long time it was sort of this dual bilateral, and there were occasions when either Canada or Mexico would be happy to throw the other under the bus to improve their relationship with the United States. To now see Canada and Mexico drawing closer to each other and trying to find those places where they do have common cause—now, certainly there are some in Canada who are still happy to throw Mexico under the bus. We know that. But at the government level, I think there is an understanding that we can be stronger dealing with this kind of uncertainty in the United States if we can operate together.

ALDEN: Actually, I mean, could I get Steve and Alonso to comment on that quickly? Because my perception is the same. I mean, you’ve seen, you know, when Trump was talking about illegal immigration and fentanyl, the Canadian response was, that’s a Mexican problem; that’s not our problem. And we’ve seen it the other—we’ve seen it the other direction, too, I mean, during the USMCA negotiations. At one point it looked like Canada might get left out. So there has been that. Has something changed here, you think, Steve? Is there a pivot here in which the Canada-Mexico relationship is going to become more important going forward? And maybe Alonso as well.

VERHEUL: Well, I think it is.

But first, to go back to previous negotiations in Trump-point-one, all the talk about the divisions between Canada and Mexico was a bit overexaggerated. Even when the U.S. and Mexico were negotiating on their own, I was being kept fully informed on what was happening. And when Canada was talking to the U.S., I fully informed Mexico on what was happening. So we were certainly still working together. But I think before starting this round the relationship was not as constructive or positive, and we, unfortunately, had some provincial premiers that made some comments that were unhelpful about perhaps pursuing a Canada-U.S. agreement. The government and many of us do strongly believe that we’re far better off in North America with both Canada and Mexico as a part of the agreement.

ALDEN: Alonso?

CERVERA: What I would say from Mexico’s standpoint, I think the relationship with Canada has always been positive. I think our president, President Sheinbaum, has stated that the strategic partners to Mexico are the U.S. and Canada. I think it’s in the interests of both Mexico and Canada to have a strong relationship and to, like, join forces and present a unified front when it comes to dealing with the U.S. in upcoming trade revisions of the USMCA. So I’m optimistic that there will be a good working dialogue between Mexico and Canada, and that we will present a unified force vis-à-vis the U.S.

ALDEN: Yeah. That would—that would be very encouraging.

Let’s talk about the current state of trade relations, because a lot of the tensions in North America are around the trade issue. We’ll talk about immigration as well. But, Theresa, maybe you could start with the IEEPA tariffs that the president announced in February and March. I do trade and immigration in my career, and the president managed to link the two perfectly—(laughter)—saying we’re putting tariffs in place because we have problems with unauthorized migration and fentanyl smuggling from Canada and Mexico. Why did the president link these issues? And what does success, again, look for the—look like for the administration in drawing that linkage? Let’s set aside the court decisions. Those may come up in the questions. But what’s the strategy here, you think.

BROWN: So I think you have to understand that for President Trump I believe that tariffs are a trade issue, yes—he’s looking at rectifying what he see as trade imbalances—but they’re also leverage, and they are a lever that he believes that he can unilaterally impose to gain leverage in future negotiations. And he has always seen—and he ran on this, you know, the migration issues, security measures, fentanyl, drugs; like, those were campaign issues. So in his mind, the imposition of tariffs to gain leverage to force, in some ways, the other countries to do more on those two issues was a no-brainer.

But what it did was sort of—you know, sort of change what had for decades been sort of the traditional, you know, we will stay in one lane. We’ll negotiate migration issues only around migration. We’ll negotiate security issues, you know, criminal enterprises, drug smuggling, on the—he combined them. And that’s to the United States’ benefit when they’re the one imposing the tariffs.

The question, you know, as you said, the Canadians were, like, what, us, with drugs and fentanyl and migration? The answer is yes, not to the same extent that we had been seeing with Mexico but there has always been a flow of irregular migration at the U.S.-Canada border, and it had been exacerbated in recent years via the arrival of people going north, for example, through Vermont into Quebec seeking asylum, and recently—more recently Mexicans going into Canada to come into the United States. Fentanyl not as much, but I think the answer to that is that the fentanyl smuggling routes were just finding any way they could, and so there was more fentanyl coming into Canada than probably previously.

So it’s not—it wasn’t zero, but you know, everyone said looking at comparative to Mexico it wasn’t as big a deal. But it is something that the United States periodically has to remind Canada that there are issues that we do deal with—(laughs)—on the U.S.-Canada border related to crime and migration that we need to take seriously. We had to do that in the—in the Obama administration and in the Bush administration. It’s kind of time to come back to that a little bit.

Now, was this the right way to go about it? We’ll see. But I think that was the thinking.

ALDEN: Yeah. OK. I just—to be clear, I’m still suspicious, actually, that there’s almost any fentanyl coming across the border with Canada, because the way they count this stuff it’s seizures in the region of the border and we’re not actually sure where that stuff’has come from. But let’s—but let’s lay that aside.

Alonso—I want to ask both Alonso and Steve about the governments’ response to these moves by the United States, to the linking of these issues and the imposition of tariffs, and their different ways to approach it. But, Alonso, why don’t—why don’t we start with you? How has the Mexican government responded to, first, the threat and later the imposition of tariffs under—and the linkage to migration and drug smuggling?

CERVERA: Well, I think it has been clear that President Sheinbaum has taken a tough stance against organized crime in Mexico. This is a significant difference relative to the previous administration. I think we have seen significant arrests made of different cartel members. We saw the extradition of twenty-nine prominent members of drug cartels recently, extradited from Mexico to the U.S. There are reports of the elimination of hundreds of fentanyl labs throughout Mexico and the confiscation of weapons, et cetera.

We didn’t hear this type of news in Mexico in previous years. We had this type of reports in previous administrations, Peña Nieto and previous ones, but there was a vacuum of this type of information in the last six years. So I think this is part of the—this has to be part of a negotiation. I think we have the best cop in Mexico, Omar García Harfuch, leading the effort to fight the cartels. And again, we’re seeing results.

At the same time, when we look at border crossings from Mexico to the U.S., they have plummeted. We’re down sharply, maybe 80 percent, relative to the same period a year ago in the first—we have data for the first quarter. So it looks like, well, people are dissuaded to try to come into the U.S. through the Mexican border because of all these reasons, but I also think that it has to do with more surveillance on the part of the Mexican government to prevent people from going into the U.S.

ALDEN: OK. And then on the trade piece specifically, I should know this but I’m afraid I don’t actually know, has Mexico retaliated? Where has Mexico retaliated? There really has not been any direct retaliation by Mexico in terms of counter-tariffs.

CERVERA: There has been no retaliation on the trade front. And I think that all the negotiating takes place behind the scenes on both fronts, security and immigration. That’s behind closed doors. They don’t talk about it in the mañaneras in Mexico, in the president’s daily briefings. She talks about tariffs, but when it comes to the retaliatory topics, their mouths are shut. As it should be.

ALDEN: So no direct retaliation.

CERVERA: Correct.

ALDEN: Different in Canada, of course. So, Steve, talk to us a little bit about the Canadian response to the tariffs.

VERHEUL: Yes. I think I have to start by saying that on the fentanyl issue there is less than 1 percent of the fentanyl coming into the U.S. coming from Canada. Similarly, on illegal migration, less than 1 percent is coming from Canada. So we don’t see ourselves as a big part of the problem. And in fact, we get far more illegal drugs coming up north from the U.S. into Canada than is going the other way. So I think it kind of bring homes—brings home the notion to me that the long tradition has been countries are responsible for managing their own borders, they don’t really usually try to get other countries to manage their borders for them. So that’s been an ongoing frustration for us.

But on your question, Canada has retaliated. We retaliated from the beginning, particularly against the initial fentanyl tariffs. We imposed retaliation against the tariffs on steel and aluminum, the initial ones. We imposed retaliation. And we imposed retaliation against the tariffs on autos. We felt we had no choice. We felt that this was an attack on our economy, and we needed to respond. Some exemptions have been granted to ease the burden on Canadians, but most of that retaliation remains in place.

We’ve also responded to the U.S. security concerns. We had a $1.3 billion program put in place early on which included everything from helicopters and drones and more people at the border to enforce the border, and try to stop anything from going south. There was a bill introduced in the Canadian House of Commons last week to further strengthen the border. (Coughs.) Excuse me. So we’ve been doing quite a bit of work on that front. And then we have also been pursuing the negotiation angle at the same time.

More recently, particularly as we had the lead-up to the G7, there’s been an effort to try to reach some kind of an accommodation on largely security-related issues—Arctic security in Canada, defense commitments in Canada, but the border issue is tied into that, and an effort to try to get some movement on the aluminum and steel tariffs in particular. So we’ve taken a kind of an across-the-board approach to respond to the U.S. tariffs.

ALDEN: Excellent. The other piece of this I just wanted to ask about briefly, you know, President Trump has said we don’t need anything from Canada. And he’s been dismissive of Mexico and other nations as well. I mean, I think we all know in this room how integrated the supply chains are in North America. Have there been efforts in either country to demonstrate to the United States, A, that this is not true, and, B, where necessary to try to reduce some of the dependence on the—on the U.S. market. Maybe, Steve, I’ll start with you, because I’ve certainly heard both conversations coming out of Canada, about ways to reduce the vulnerability but I also, I think, ways to point out to the Americans that, no, you actually do need us. But what have the discussions been in Canada on that?

VERHEUL: Yeah, well, fairly intensive one.

ALDEN: Yeah. (Laughter.)

VERHEUL: And we are trying to change this into a bit more of a fact-based dialogue, because the U.S. does require a lot of the products that we produce. We provide oil, gas, electricity that the U.S. can’t meet on their own. The same with critical minerals. We provide most of the critical minerals the U.S. is looking at, or needing. We provide potash for fertilizer for the agriculture sector. We provide more than 50 percent of the aluminum that the U.S. needs to meet its domestic demands. So I think the U.S. does need us in those respects. I think the U.S. does have options on heavy crude oil, which is needed by refiners in Texas. If they didn’t want to get it from Canada they could get it from three countries, Venezuela, Iraq, and Iran. (Laughter.) If they want—if they wanted to get critical minerals from other sources in the same kind of range that we have, they can go to China to get those critical minerals. If they want to get potash and they don’t want to get it from Canada, then they would have to go to countries like Russia.

So our argument in all of this is, we’re—at least we hope, we think we, are a more reliable, more secure, more dependable partner than those other countries. And we should continue to have that kind of relationship. So that’s definitely where we want to go. We are the largest customer of the U.S. by far, more than China, Japan, the UK, France combined. So it’s a two-way relationship. I think we both benefit from it. And those are the messages we’re passing on. But on diversification of exports, before I negotiated the agreement with the U.S. and Mexico I negotiated an agreement with the European Union. Our trade to the European Union is expanding. We’re looking to see how much more we can expand that. And if the U.S. doesn’t want our energy resources and critical minerals, we will certainly sell them to other markets.

ALDEN: Yeah. I mean, just one other point maybe. I live up in a border community very close to Canada. And the other thing Canada does, it sends a lot of people down to the United States—for jobs, as tourists, to buy real estate. Yeah, I mean our community up in the northwest corner of Washington, we’ve seen Canadian visits down 50 percent. We had brand-new Trader Joe’s open entirely to serve the Canadians coming down. And not clear what the market’s going to be for that. (Laughter.)

Alonso, when we were talking in advance it was interesting to me, you said Mexico is not—despite its web of free trade agreements—not looking tremendously actively at diversification. It’s still focused on the U.S. market, despite the turmoil. Explain that a little bit, yeah.

CERVERA: Yes. I think the focus in Mexico right now is on the trade war, the trade tariffs, and how Mexico will prepare itself for the upcoming revision of the USMCA in July of next year. Mexico is one of the most open economies in the world. Mexico is the country probably with the largest number of trade agreements signed. Still, 83 percent of our exports go to the U.S. So if you want to diversify, you can diversify over the long run. And we have not diversified enough. So we’re not going to solve our problems right now by diversifying suddenly and sending more goods to Europe, or Asia, or South America. I think we need to protect our relationship with the U.S. And we need to show in the U.S.—I was saying earlier to your question, we have not retaliated.

What Mexico is trying to do is make it very evident how important Mexico is to the U.S. We are the top exporter to ten U.S. states, including Texas, Arizona, Michigan. We’re the second most important exporter to fifteen states, including California, Florida. And we are among the top three exporters in nineteen of twenty-two industry groups. So we have to show the data to the U.S. government, to U.S. companies, to U.S. congresspeople, to show that the links between the two countries are immense. The U.S. needs Mexico. Mexico needs the U.S. Our dependence on the U.S. is primarily on energy, when it comes to gas and gasoline. So we have to come to terms and look for the strengthening of this region, not for a weakening of it.

ALDEN: Very good. Theresa, I want to turn more directly to the immigration question. We’ve all been watching the actions in Los Angeles and other cities. And we are witnessing what, I think is fair to say, is an unprecedented campaign of mass deportation, at least in this century. We haven’t seen anything like this for a long time, maybe ever. How is this likely to reverberate, do you think, in North America? Maybe even more broadly in the hemisphere? What are the broader regional implications of what this administration is doing with respect to deportation in particular?

BROWN: Well, it’s interesting because you said earlier that, you know, historically, countries rely on their own—defense of their own borders, rather than other countries to do it. But what we have seen over the last decade, given the massive amounts of migration throughout the hemisphere—and this is happening in Europe too, with the migration from Africa and the Middle East—is a more externalization of the borders. And it’s newish when it comes to migration, but it’s not new generally. Because after 9/11 we talked about pushing our security outward. The deal we negotiated with Canada was called Beyond the Border. We didn’t want to have our security just at the border, because that would impede the trade and travel that happened regularly. We wanted to move it out. So now we’re seeing that effort in the migration area as well.

And it started with working with Mexico to say, we can’t deal with everybody who arrives at our border. We need your help to manage the flow to the border. And so—and, you know, Canada and U.S. have had a, say, third agreement to manage asylum seeking between the countries for a while, that was extended and broadened in the previous Trump administration. So I think that trend is now there. It is not—it is not going back. Because of the amount of migration that’s just happening worldwide, that countries are not able to, when people just sort of show up at their border, manage it then. It has to—there has to be a broader [conversation]. And as sort of a global phenomenon, the instruments that we have relied on in the past, for example, the refugee compacts and those kind of things, were meant for another era of migration.

So this is a new realm. And in the absence of a more sort of multilateral framework in which to manage this migration, it’s happening on sort of a lot of bilateral ways. So I think for the Trump administration, and, frankly, the Biden administration did this too, is trying to work with our partners in the hemisphere to say, how can we address migrants before they arrive at the border? Whether it is finding other places—well, for Trump, it’s just can we send them someplace else? If we can’t send them home, can we send them someplace else? Can we send them back to Mexico? Can we send them to Panama? Can we send them to Costa Rica, or, I don’t know, Kosovo, I guess? (Laughter.)

ALDEN: Let me push a little bit on this, and get Alonso into the conversation as well, because I agree with you. I think there has been this effort at broader regional management. But I’m wondering if the deportation campaign, the removal campaign, is going to upset that. I mean, Alonso, I imagine in Mexico this is not being looked at kindly. I mean, you’ve talked about the efforts that Mexico is making to help the United States control that border. But at the same time, suddenly the United States is talking about sending back Mexicans who’ve maybe lived here ten, twenty, thirty years. I’ll come back to you, Theresa, but—

CERVERA: Absolutely. That’s a source of concern. That’s the headline in Mexico over the past few days. When we look at the hard data, and we have data for the first quarter of the year, deportations to Mexico average 330 people a day. That’s maybe two airplanes, or one and a half airplanes. Deportations are down—or, were down in the first quarter of this year, vis-à-vis the first quarter of last year. So there’s a lot of—there has been a lot of noise. The noise is certainly intensifying. But what I would say is the U.S. also has to look at itself in the mirror and say: What is the damage that we could inflict to the U.S. economy if we keep on going and increasing the efforts to deport people?

There are industries in the U.S. where undocumented workers from Mexico and from other places account for 25 percent of the jobs, like agriculture, or 13 percent in construction, or 12 percent in, you know, food preparation. So I think there’s a lot of noise. Hopefully the noise will subside. But certainly, this is a source of concern. I think it would place an additional burden on the Mexican government if we suddenly we need to house Mexicans who were living in the U.S., or from other nationalities. This could put social pressures on Mexico and fiscal pressures. And I’m sure this is going to be something that will be discussed at the table in the upcoming days.

ALDEN: Theresa, please. Yeah.

BROWN: So I jumped to the border case, but one of the reasons I did so is because the border isn’t the focus right now, right? In the first Trump administration and the Biden administration, it was all about what was happening at the border. Given that border arrivals are so far down now, Trump is redirecting those resources toward interior enforcement. And you’re right. He has not just redirected resources of the immigration agencies. He has redirected the entire federal government toward immigration enforcement. FBI agents, DEA agents, ATF agents, U.S. Postal Service criminal inspectors, IRS criminal inspectors are doing immigration enforcement right now. Not to mention all the DOD resources that are being redirected, and I’m not just talking about in LA recently but using DOD to build detention centers. So this is, I would say, frankly, the largest restructuring of federal government toward an enforcement effort since 9/11.

And it will have consequences. The difference that I think you’re seeing—to your point, a lot of noise but you haven’t seen, in Mexico, as many deportations. It is very easy—I won’t say very easy—it is easier, much easier, to increase arrests of people than it is to actually deport them. Because if you are amassing all of that federal efforts, law enforcement efforts, military efforts, you can go out into communities and find people to arrest. We have thirteen to fourteen million undocumented people. And the Trump administration, by taking away some of the temporary protections and work authorizations the Biden administration gave, is making more undocumented people every day, that they can then go arrest.

But arresting people doesn’t mean you can immediately send them out of the country, because we do still have some processes to do that. And even if you decide you’re going to ignore the legal processes to deport somebody, you still have logistical processes. You have to have transportation. You have to have facilities to house people if you’re going to detain them until they’re deported. And you have to have countries willing to accept them. And right now, some of the largest issues we have are the places that people came from in the last seven, eight years are not places we can deport people to. We can’t deport people to Venezuela. We can’t easily deport people to China, although they’re trying, and other places in the world. So that’s why you’re seeing the deportations of people to other third countries. That’s the only way that this administration could do it.

So what you’re seeing is a ramp-up of arrests, and that is having immediate impacts in communities because they’re not just going after the criminals, right? They’re now going into workplaces. They’re going to the restaurants. They’re going on the farms. They’re going at the day laborers outside the Home Depots. These are very visible. And they want it to be visible because they want there to be fear in the community, because they’re also pushing this self-deportation agenda, which is not something—it’s been—it’s been sort of an understood corollary that if you increase enforcement some people will choose to leave on their own. Well, now the government is actively encouraging that, including with money. We’ll give you $1,000 if you go home on your own and we don’t have to pay for it. This is all a really kind of big increase in how it’s done. And one of the reasons they want people to deport on their own is because it’s so hard to deport people, right?

The impact to the industries, though, of the arrests, and the corollary fear, is what’s creating the challenges for business, because people aren’t showing up to work.

ALDEN: Let me ask one big final question about the impacts, and then we’ll pivot back to trade, before we open up to questions. Some of you here in this room have probably made some money off the TACO trade. (Laughs.) That was a term coined by my former employer, the Financial Times, a columnist there, the “Trump Always Chickens Out” trade. And we’ve seen this, I think, in the trade space, and who knows where it will go. But there is a phenomenon there that when the economic damage seems high enough, Trump will back down on the tariffs. Do you see the same thing happening on immigration? Do you think there’s a potential when he hears enough from the companies that are being hurt that he may change direction on this?

BROWN: I’m not so sure. So, in the first administration his effort at the border to deter people from coming included separating families from children, right? And that created such a domestic blowback that he very quickly reversed that policy. However, you know, he ran a campaign on mass deportations. He has taken every step he can very quickly on mass deportations. Now, recently he has said, oh, we’re going to get the criminals out, but we’re going to do something for the farms. Just wait. We have some change coming.

The issue that I see is, one, this massive redirection of the federal government. Once you’ve done that, it’s hard to yank it back, right? Like they’re out there going. And I think that where Trump personally is on immigration is he does recognize there’s a business interest in having workers, right? He gets that. I mean his properties hire foreign workers on H-2B visas. We know this. But people in his orbit have a much more strict view of immigration, people like Stephen Miller, who would be happy to see no immigrants coming into the United States anymore, I think. (Laughs.)

You saw this in the dustup when Elon Musk started talking about H-1Bs, and the Trump base sort of went after him. There is this dichotomy. And so I’m not entirely sure. I think he may try to mitigate some of the worst of it, but I think what he was talking about is we’re going to kick him out and then find a way to have them come back in, not we’re not going to stop kicking them out. So I think, unlike the tariffs, this one I think he’s going to—he’s going to struggle with a little bit, to nuance it.

ALDEN: OK. I want to ask a last question about trade then, before opening it up to all of you. Alonso, you mentioned a couple of times the USMCA renegotiations. Given the egregious violations here in the United States of the congressionally approved trade agreement with Canada and Mexico, why would either country be willing to renegotiate the USMCA with this administration? Steve, maybe I’m going to start with you on that. We’re all anticipating USMCA renegotiation. Is that—is that a realistic expectation? And if so, why? Why would the Canadian government do this again, given that they threw out all your hard work the last time? (Laughter.)

VERHEUL: Well, I think we are in a situation now where the biggest challenge I think we’re all facing is the degree of uncertainty, almost toxic uncertainty, which is affecting investment, it’s affecting longer-term planning, all of that. And I think that at the same time Canada has found that the U.S. is no longer a reliable ally, no longer a reliable partner. So that does cause us considerable concern, obviously. And that’s why we’re looking at differentiate—or going to other markets as well to sell our products. But I think at the end of the day, Canada, the U.S., and Mexico, we live next to each other. It’s impossible for us to not have a relationship. I think it has to be both a security relationship and maybe, even more importantly, an economic relationship.

And if we start to take apart the integrated North American economy, we’re all going to pay a very heavy cost. We will not be nearly as competitive in the world as we were before if we’re split into three separate silos. So the cost just for the transition will be huge. It’s going to take five to ten years to try to get to what Trump is envisioning as his objective, if that’s even possible. It’s going to cost the U.S. economy hundreds and hundreds and hundreds of billions of dollars to do that. And then we’re all less competitive at the end of all that. So we hope that after we get through this initial stage.

And similar to what we did in the first term—President Trump started the first term by saying he’s going to rip up NAFTA. They came to the table initially with very extreme proposals. All of those were dropped. And at the end of the day, we ended up with a decent agreement. We’re hoping that part of history repeats itself, that these extreme positions will start to moderate, and we can come to some kind of terms that make sense at the end of this process. But a long ways to get from here to there.

ALDEN: OK. Alonso, last word, and then we’ll open it up to the group. Do you—is Mexico, sounds like from your comments so far, is anticipating a USMCA renegotiation, that will be the framework for these discussions, yeah?

CERVERA: That’s correct. And I think that—correct me if I’m wrong, Steve—but I think it’s set in the USMCA that we, the three countries, have a date in July 2026 to sit down and review. It’s not a renegotiation. It’s a revision of where things have gone right, where things have gone wrong. And it will be an exercise, I think, of pointing fingers of what you did wrong, where you misbehaved, and where I misbehaved, and try to come to terms and try to fix those issues that haven’t gone according to plan. But it’s in the schedule. It’s for July 2026. In Mexico there’s some talk that this could be brought forward. I doubt it. But I think Mexico is getting ready for that exercise to happen within the next thirteen months.

ALDEN: Sir, please, go ahead. Yeah.

VERHEUL: I think the U.S. has talked to Canada at least about beginning that discussion in October of this year. They want it accelerated. So I think we’ll have it sooner. But I think it will be very difficult for Canada, and I would assume Mexico as well, to enter that kind of negotiation of the agreement we have now facing all of these high tariffs that are causing such economic damage in our economy.

ALDEN: Yeah. And just to be clear, there are more coming down potentially.

VERHEUL: Absolutely.

ALDEN: I mean, maybe just give us a quick list of these 232 investigations.

VERHEUL: Well, we’ve got pharmaceuticals, we’ve got lumber, we’ve got copper, we’ve got planes, we’ve got trucks, we’ve got semiconductors. I’m probably missing a few. But there’s a number.

ALDEN: Yeah. Maybe foreign-made films. The president has said he wants that, no more films made in Vancouver trying to make it look like it’s the United States, right? (Laughter.)

BROWN: Toronto can’t substitute for New York anymore. (Laughter.)

ALDEN: OK. I’d like to open it now for questions from the members. Just a reminder, wait for me to call on you, and then wait for the microphone, and state your name, affiliation, and state. I’ll have to go to our former Canada fellow, Diane, to start off here. So if we could—sorry, that’s a complicated place to get a microphone for the first question. But, Diane, please.

Q: Thank you, Ted, for your terrific work, actually, researching and publishing on these issues related to North America.

ALDEN: Thank you.

Q: I also want to thank the panel for your various expert responses to these questions.

I have a question for—

ALDEN: Diane, you have to—you have to identify yourself, even though I know you. (Laughter.)

Q: Oh, OK. Sure. I’m Diane Alleva Caceres. I teach at the Georgia Institute of Technology.

And I also run Market Access International. We focus on working with jurisdictions, Canada, U.S. elsewhere, sub-nationally, on the trade development and FDI development of strategies and implementation. Most recently, the Southeastern U.S.-Canadian Province Alliance, which was just held in Saint John, New Brunswick. So a fascinating experience that I would be happy to talk about later.

But my question to all of you is, so all three countries are federalist countries. To what extent do these subnational jurisdictions—states, provinces, cities, maybe even other entities like the Georgia Chamber of Commerce, I’m going to reference, other chambers—is there a pathway in your country for those entities to influence federal policy, trade policy, specifically? What are those mechanisms, if they exist at all? If they don’t, should they? Thank you.

ALDEN: Great question. Steve, do you want to—you want to start? I know these are fairly extensive in Canada.

VERHEUL: Yes, they are. And particularly with our provinces and territories. We actually, in many ways, operate jointly with them in developing Canadian positions, getting their input, and trying to ensure that we have a common position across the board. There’s also something called the Council of the Federation, which is the provinces and territories meeting on their own. And they will often make demands to the federal government about what they think should happen in these negotiations. And we also have individual provinces we work with quite frequently because they may have specific issues that they want to push and want to have a direct line of access to the federal government on those issues.

Also, with municipalities, there is a Federation of Canadian Municipalities that we also meet with regularly. They don’t have the same kind of policy influence that the provinces have, for probably obvious reasons. But work with them very well as well. So those are probably the biggest ones on the government side. A lot of nongovernmental organizations that we work with as well—think tanks, in many cases, sometimes regional organizations. But, yeah, no, it’s—

ALDEN: Alonso, on Mexico, or?

CERVERA: I think in the case of Mexico it comes down to the federal government working with chambers of commerce from the different—various countries—the U.S., Chamber of Commerce, Canada Chamber of Commerce, la Cámara de Comercio, the Spanish. And we have many of—I could list a lot of them. And then the Mexican business groups. President Sheinbaum has apparently a very close relationship with the business elite in Mexico, the Business Mexican Council, Consejo Mexicano de Negocios. They meet. They get together. They publish about it. And I think it’s the top companies in Mexico who are advising the government, who are actively advising the minister of the economy on these trade issues. And I think it’s a joint effort, federal government with the business elite, with the top companies, Mexican or foreign, and then with the chambers.

BROWN: Just, I mean, to point to the U.S. situation and how it differs a little bit, particularly with Canada, we know that the governors do engage in trade missions, for example. But the authority for trade is a federal authority. So they don’t have a formalized role. But groups like the National Governors Association will engage, and individual governors will engage with the administration. Certainly, members of Congress, who have to approve trade agreements at the end of the day, are representing domestic interests in their localities.

But what I have found very interesting is to watch the development of some more subregional or subnational groups who are more engaged in these relationships. So like the Council of the Great Lakes or PNWER, which are binational subnational groups that engage in policy direction and policy making with the federal governments. And in Mexico we have some of that along the border regions. I’m thinking the San Diego-Tijuana, as well, is probably the most developed, although the dos Laredos and others. So they do play an important role, but do they play a formal role? Not necessarily. But their influence is there.

Where I’ve seen less engagement is—you know, and this is particularly true, I think, on the migration issue, we’re starting to see more of it—is, like, counties and localities that have an interest in business development as well. And they have national organizations, National League of Cities, National Association of Counties. The National Conference of State Legislatures, right, that engage in these issues. So it’s more of an advocacy, lobbying role, if you will, than formal. But we’ve had, particularly with the large business associations—U.S. Chamber of Commerce, BRT, more formalized consultations around these kind of big negotiations. So that does happen too.

ALDEN: Yeah. I’m enthusiastic about these regional groups. Out in Washington State, where I live, the Pacific NorthWest Economic Region—

BROWN: PNWER, yeah.

ALDEN: Is the western states and the Canadian western provinces, northwest territories. And they’ve been—they have very strong relationships there, which I think are a bit of a counterweight to the divisive stuff coming out at the federal. I promise we won’t all answer every question coming out. We’ll go to the back of the room here, sir.

Q: Thank you. My name is Leland Lazarus. I run a consulting firm focused on national security issues, focused on China’s engagement in the Western Hemisphere.

And I wanted to ask whether there’s a united front/diverging interests between the U.S., Mexico, and Canada regarding China. I know there’s potential outcomes in the USMCA review on a common tariff vis-à-vis China. I was just in Mexico last week and, of course, there’s BYD and Geely products everywhere. There’s also the rise of Chinese money laundering organizations operating in those three countries. So can you give us a sense of where the three countries converging and where they’re diverging with regards to their policy towards China?

ALDEN: That’s a great question. Alonso, you want to start us off there?

CERVERA: Sure. Well, as I said earlier, President Sheinbaum is on the record saying the U.S. and Canada are our strategic partners. And I think she’s then said, China is not. So I think she—part of the negotiation will be we want to make sure that the U.S. and Canada know that Mexico is their ally and not China’s. And, frankly, there’s open talk in Mexico about import substitution from China. We import a lot of intermediate goods and final goods from China. We have a very large trade deficit with China.

And government officials, the minister of the economy and his people, I have been in meetings in which they say to businesspeople from, you know, other places, we have a long list of products that we buy from China. We want to stop buying it from them. So if you produce them, you’re Mexican or from other nationality, we will buy them from you, not from them. So I think this is an open statement. And I think it’s part of the strategy, not to retaliate to the U.S. but to try to, you know, come to good terms before we review the USMCA next July.

ALDEN: Is it similarly clear cut for Canada, Steve?

VERHEUL: Well, I think we go a bit further. When President Biden introduced tariffs against China on electric vehicles and steel and aluminum, Canada matched those as a sign of good faith. And I think we’ve certainly been actively calling for a more coordinated approach between the three North American partners on issues related to China so that we don’t have the possibility of Chinese imports coming through the backdoor into the U.S., and challenges like that. And when it comes to the USMCA review, I’ve heard this from representatives of the U.S. trade representative’s office, it also reflects our view, but we should be looking at introducing. economic security obligations into the agreement as a way of finding some common ground. So measures at the border, approaches to inbound investment, approaches to outbound investment for security reasons. And I really think that at the end of the day, as all of this tariff discussion continues, I think that’s the exit ramp for North America. To get the U.S. off the tariffs and move more towards common approaches on security so we can remove the security issue as the main point of tension between us.

BROWN: I would just say, like, in the last, I’d say, five, six years there has been talk about how—you know, ally-shoring, near-shoring—we would much rather have some of these, particularly critical minerals and other key industries and supply chains, closer to home in Canada and Mexico, than necessarily from China. You know, this administration is more like we want them in the U.S. So that has to be balanced. But the reality is that we’re better, from a security standpoint, if Canada and Mexico are our partners here.

In terms of—you know, you mentioned, sort of, the money laundering and other things. I think that Canada—or, that Mexico’s efforts to go against the cartels and to have a more honest conversation around fentanyl in Mexico, is one way to say it, is helpful. Because without that under the last Mexican administration the United States was trying to negotiate with China about the precursors, but Mexico wasn’t a real partner in having that conversation. And so that’s changing. And I think that will help as well, from a—from that—from that side of things.

ALDEN: OK. Yeah, right here. Is that Nelson? Nelson, how you doing? (Laughter.) I didn’t know you were national member. I thought you were a D.C. guy. (Laughs.)

Q: Don’t tell Irina.

ALDEN: I won’t. (Laughter.)

Q: All right. Nelson Cunningham, formerly with the State Department, before that, McLarty Associates, and before that the Clinton White House, where I worked on NAFTA integration and on expanding NAFTA throughout the region.

Ted, my question for you is—

ALDEN: Me? (Laughter.)

Q: Yeah, but for the—all of you—is, is North America dead? What is the long-term impact of the Trump policies? You know, it took decades for far-sighted leaders in all three countries to craft the notion of North America as an entity. I remember when Jorge Castañeda and Vicente Fox talked about the whole enchilada. Not just trade, but migration accords.

BROWN: Yeah, yeah, yeah. Everything, yeah.

Q: Is the damage from the Trump administration going to fundamentally change the notion of North America, so that both countries will go back to the Porfirio Díaz view: Poor Mexico, so far from God, so close to the United States?

BROWN: So close to the United States. The elephant that rolls over.

ALDEN: You know, a couple of years ago in Foreign Policy, Nelson, I wrote a piece called “Who Lost North America,” which is exactly about that question. Who wants to offer some forward-looking thoughts on that?

BROWN: I remember Jorge Castañeda saying that, particularly when we were talking about comprehensive immigration reform during the Clinton-Bush era. You know, I think North America, as an idea, never achieved the kind of heights that somebody like Bob Pastor was, like, hoping it would.

ALDEN: Former Council member, American University professor. Really a big loss for all us when he passed away.

BROWN: Right. I mean, there were—there were a lot of people that had a lot of really high hopes for more integration than we’ve seen, and more alignment of interests than we’ve seen. But it hasn’t been a failure, either. I mean, in my mind the damage Trump can do is not inconsequential, but in the years that we have had NAFTA, and USMCA, or whatever the national name for it is, the integration of the country’s economies, the relationships at a subnational level—to your—and just sort of the better understanding we all have of each other, the growth in the relationship between Mexico and Canada, those, I think, are going to persist. Those will be very, very hard to unlock at this point, you know, thirty, forty years in, because they have developed, sometimes in spite of whatever’s happening at the national level.

So, you know, could—you know, a lot will depend on what happens after this Trump era in the United States. Does he launch what some in his administration are talking about, a complete restructuring of the international global trading order, that will have corollary impacts to our neighbors? Maybe. Or is it a blip? I think that’s the—that’s really the question, is how much of what he does will we institutionalize? The way he’s going about it is not conducive to institutionalization, at least in the United States, because it’s all executive orders. And we’re already seeing some of that. The courts are coming in saying, you actually can’t use IEEPA that way. Now it’s going to be appealed, and we’ll see what the Supreme Court has to say, but it’s not legislative. Congress hasn’t yet gone there. And there’s some concern about whether or not they’ll be able to.

So those would be the kinds of things that would mean that this period would have a long tail, versus being a blip. And what happens to the Republican Party when Trump is no longer running for president? Like, who’s the next—and will they continue on this? I think there’s so much uncertainty that I’m not willing to say it’s dead, in any way.

ALDEN: Steve.

VERHEUL: Yeah. I think that—a couple of things. I don’t think North America is dead, or it may be weakened at the moment. It may be on—even on life support, but I don’t think it’ll be dead, at the end of the day. I think there are two reasons for that. One is, the whole Trump plan—and I mentioned some of this earlier—is far too expensive. It’s going to take five to ten years in most sectors to get to this reshoring point. That’s past any expectation of Trump’s term continuing. So, getting to your point, I think we could easily see that he will go down this track. It won’t be all that successful. And then we’ll see a future administration start to return to a more normal trade policy. And so I think at the end the effects of becoming less and less competitive will be more and more evident over that period of time too, so the failures of that policy will become increasingly evident.

I also think that if the U.S. continues to try to operate as isolationist, without Canada and Mexico, the rest of the world is going to leave them behind. Virtually every other country in the world still holds a lot of value in rules-based trade. The EU, the Trans-Pacific Partnership countries, even China, professes to have a commitment to rules-based trade—but that just tells us that the rules need to be changed. (Laughter.) But overall, all of those other countries are much more attached to rules-based trade, see the value, know that for long-term planning and investment you need to have a secure environment, not this constant chaos and ups and downs. And I think we’re already seeing signs of maybe the EU, maybe Trans-Pacific Partnership countries getting together.

Their share of global trade is roughly three times the size of the U.S. share of global trade. So a certain amount of weight can be brought to that. I think if the U.S. does dig in on this isolationist approach, causing harm to countries around the world and to the U.S., others are going to react more strongly.

ALDEN: I would love to stop right now because I’m feeling slightly optimistic, which won’t last if we go onto more questions. (Laughter.) I think I’ll go in the back here, sir, and then I’ll swing back around the other side of the room.

Q: Hi. Yong Lee from Google.

Just building on the question before about is North America dead, is there a new—do you see a new nexus emerging, such as the EU or the Pacific, where it will attract those talented migrants and H-1B visa immigration, that may come—that would have come to the U.S., but feels no longer welcome? Is there kind of a new nexus of migration building? I understand, you know, obviously Europe is having its challenges with migration. But are there benefits for Europe and trans-Pacific partners to kind of pick off great global talent that otherwise would have come to the U.S. to work or study in American universities?

ALDEN: Theresa, do you want to take that one? Let me just—let me just say, to add to that, you know, I’ve been writing about this for twenty years now, predicting that, you know, this was likely going to—like, after 9/11 look at the impacts, global financial crisis, the first Trump term, and the restrictions. And it really hasn’t. You know, you’ve seen the foreign students keep coming back. Hasn’t seemed to have any lasting impacts. Is this time different, maybe?

BROWN: Well, right now, at least, the U.S.’ loss is everyone else’s gain. And Canada has been trying to pick off our H-1B people for a while. And now China is, like, I will—they’re giving PhD researchers in the United States $200,000 to show up tomorrow. China is happy to take our folks. And U.S. citizens, H-1B holders who are waiting decades and lifetimes in line, our immigration system is hurting us right now, big time, even before Trump came. Let’s be clear. Even before Trump came, our immigration system—we succeed in spite of our immigration system at attracting people to the United States.

Right now, the efforts to claw back money for research at colleges and universities in the United States is going to have long-term impacts to our innovation in this country. Forget about the people, the money—people go where the money is. And if the money’s not there, the people aren’t going to come. We are taking away visas in seemingly random ways. Right now, visa appointments for students are completely halted around the world. As students are trying to get visas to come in for the fall semester, the State Department has issued a complete halt on all visa interviews so that they can examine the social media of every potential student coming into the United States. If that’s not causing everybody to have second guesses about whether to come to the U.S. right now, I don’t know what they’re thinking.

Like Ted, I have family in Canada. I was there a couple weeks ago. And they said, glad to see you here. We’re not coming to visit you anytime soon. We’re just not. Sorry. My daughter’s getting married in November. We’re not coming. So we are in a moment that we are shooting ourselves in the foot. Whether or not—again, just like the NAFTA question, or the North America question—this will persist after this moment is unclear. (Laughter.) It’s unclear. Will this be a permanent shift of people away from wanting to come to the United States, or if we rectify this will people come back? The history, to Ted’s point, is that people still really want to come to the U.S., but maybe not now.

And so we—again, it’s too soon to see. I agree, it’s not ideal. And I think particularly if we lose this period of investment, and innovation, and, you know, putting our best and brightest, and everybody else’s best and brightest, to work, we may not gain that back in real dividends in terms of competitiveness for a while. But in terms of the people, will the people come back? I think yes, if we kind of reset our expectations again later.

ALDEN: OK. Great question. Another one? Let’s go up here to the front. Yes, please.

Q: I’m going to turn a little bit to the audience because we couldn’t hear back there earlier.

ALDEN: Oh, sorry.

Q: My name is Diana Lady Dougan. And I’m probably the longest-serving senior advisor at CSIS, but I also paid my dues in government and have been honored by appointments by both Republican and Democratic presidents.

But I commute between Washington and San Diego. So I would like to address my question to Señor Cervera. In Coronado we now get our strawberries from Imperial Valley, fifty miles away, instead of Mexico, fifty miles away. They are a little bit cheaper. But my question is, in all these things that we’re looking at that are imponderable and heartbreaking immigration and other things, I’d like to know your thoughts, not just thoughts, but current experience or evolving experience in U.S.-Mexico, investment in one another. And are companies pulling back from investing or housing in Mexico? And our Mexican companies—explain or just elaborate a little bit on that, please. Thank you very much.

CERVERA: Sure. Well, we have not seen a—I think that the investment in general has come to a standstill, given all the uncertainty, no? I think investment is allergic to uncertainty. So if there’s uncertainty, people stop. We have data for 2024 in Mexico, foreign direct investment data. And it was OK. It was just, like, in line with the previous three-year average. And we’re still getting about 50 percent of foreign direct investment coming from the U.S. So U.S. firms are still investing in Mexico. We do not see in the data new companies arriving. I think it’s reinvestment of existing companies in the—U.S. companies in Mexico. And I think that Mexican companies—there’s a lot happening in Mexico as well. And that has prompted many Mexican companies to look for opportunities abroad.

So you have large, successful conglomerates, Mexican conglomerates, looking to diversify away from Mexico. They have good, profitable businesses. Some of them cannot grow larger because they have a dominant market share. And they’re looking for opportunities in the U.S. And I think that that trade and those trends will persist. I also don’t think that North America is dead. I think globalization has peaked. I think regionalization is going to become increasingly important. And I just don’t see how North America gets weaker. And my bet would be ten years from now if we have this same room, I think we’ll see higher—larger trade flows between the three countries, larger investments, and less anxiety.

ALDEN: Excellent.

CERVERA: Hopefully.

ALDEN: Here, the woman here.

Q: Thank you so much. Luisa with the SMU Tower Center at SMU.

Actually, you touched on the question I wanted to talk about. This has been a very U.S.-centric discussion about the domestic challenges here, but what about the Mexican domestic challenges and that impact to North America? I mean, Mexico is more militarized today than it’s ever been, declining rule of law due to the judicial reform. So we’ve seen some glimmers of light on President Sheinbaum’s moments. We were a little concerned, some of us Mexicans. But now, what are we—how is that going to impact? I mean, if we continue in this decline in the rule of law in Mexico because of the politicization of the judicial system, what does that mean for North America and the conversation, and in a Trump, you know, administration who is worried about Mexico? So talk a little bit about that. Talk about what’s happening with the business community. And what is that—what is that going to say for the future?

CERVERA: I think that’s a very timely question for a USMCA panel. I think Mexico has just gone through an experiment that no other country has attempted, which is to select all members of the judiciary by popular vote. And we had that happen on June 1. Half of the members of the judiciary, all the Supreme Court judges, were chosen by 10 percent of the electorate, because the other 90 percent didn’t want to vote. And I think it’s an open experiment. This was the last constitutional reform of President Lopez Obrador. It went through Congress mid-September last year. And I think it’s an open question. I’m not a fan of what they did. But I think we will see over time how the system works. I think that the previous system had flaws, but I’m not sure that the new one will reverse them at all. And I think that that’s—these two questions are intertwined.

I think part of the reason why Mexican companies are looking for opportunities abroad has to do, in part, because of the rule of law and of the uncertainty around it. So I think these are—this is a challenging time for Mexico because of our own issues, and also because of what’s happening in the U.S. And unfortunately, this is a huge missed opportunity. The Mexican economy has grown by less than the U.S. for the last two decades. Even though we’re younger, emerging economy, we have little to show for it when it comes to growth. And on the judiciary, I think time will tell whether the rulings are based on the letter of the law or on the sentiment of the judges. What is fair? What is just? Is it what is written in the law or what I feel is fair for the two parts in a trial? So I think it’s a huge question. And I could go on, but we don’t have time.

ALDEN: Thank you. Let’s try to get a few more. We’ll go to the back here, the woman right on the aisle there.

Q: Thank you. Reva Goujon from Rhodium Group.

So the automotive tariffs have probably been the most instructive on why constraints matter, right? In USMCA level, where we have tariffs stack up and then get de-stacked in an EO, there’s no methodology on assessing U.S. content for autos yet. And so at the same time we see President Trump describe USMCA as transitional. And when you talk to certain companies abroad, you hear them deliberating over whether, OK, if there’s an investment I was going to make in Canada, for example, for final assembly, maybe now I actually need to make that investment in the U.S. at higher cost. Which is precisely what presumably the administration wants to see happen, right, that calculation. So in the negotiation where you’re weighing the constraints to those moderate outcomes that you describe, as well as that uncertainty overhang, that has a purpose, right, to the onshoring pull, how then, as negotiators, do you manage that on a timeline and a negotiating strategy?

ALDEN: Steve, you want to take that? A really interesting, and getting into the weeds—because, I mean, in a lot of ways the U.S.-Canada stuff is an auto negotiation in so many different ways. So central to the cross-border economy.

VERHEUL: Indeed. It certainly is. And it sounds like you’re well-versed in this. But we initially had an autos agreement, an autos pact, with the U.S. back in 1965. And we’ve had a long tradition of integrating our auto sector ever since. And, yes, with the U.S. effort now to try to reshore a lot of that production, this is going to get very difficult. Because at this point in time the way it works out is that the number of autos produced in Canada is roughly equivalent to the number of autos purchased in Canada. It’s the same thing for Mexico. It’s the same thing for the U.S. So the notion that Canada and Mexico are supplying so many autos to the U.S. is a false narrative.

But when it comes to how we address this issue, if the U.S. is going to want to reshore a lot of that production, clearly, it would be devastating to the Canadian auto sector. Similar to the Mexican auto sector. That would have consequences. In the last round of negotiations that we had with the U.S. in the first term, the U.S. put on the table in the negotiations a requirement that 50 percent of the content of every auto would have to be U.S. We rejected that. Mexico rejected that, because it would have meant the eventual demise of our auto sectors, because companies would have gone after that 50 percent content first and foremost, to ensure that they got that.

But instead, we went down the direction of the kind of labor value adjustment that was put into force, that meant that autos produced in Mexico would be produced under a defined amount of wage, dollar per hour. And that was factored into it as well. This time around the U.S. is likely to try something like that again. They may want to leave some tariffs in place to inhibit Canada and Mexico from participating to the same extent in the U.S. market. But the biggest challenge is really going to be the extent of the integration in the auto sector now. And tearing that apart is going to be so, so expensive that we’re—that we’re all going to lose.

So Canada will be fighting very hard to ensure that this is not unraveled. It’s of existential interest for us to have an auto sector. So, big fight, long fight. One of the most difficult issues. And we’ll have to see how it goes. But there’s a fairness issue here that I think we could see attacked by the U.S.

ALDEN: I’m afraid we’re going to have to make that the last question. We could go on for a long time. I think our speakers will be around, I hope, for the break. So if you have questions you want to address to them, feel free. Let’s give them a big hand. Thank you very much. (Applause.)

(END)

This is an uncorrected transcript.

O’SULLIVAN: Thank you, Irina. Just wait a moment. Excellent.

Good morning, everyone. It’s still morning, although you’ve been up and at it for a while. It’s my pleasure to be here today and to be with a fantastic panel talking about a subject which may sound theoretical but has a lot of practical implications and that, of course, is the changing global order.

And, certainly, if we think about where we are in 2025 we unquestionably are in a very different global landscape where the global order that many of us became comfortable with over the last thirty years has changed in some fundamental ways.

If we look back at the last thirty years—the period since the collapse of the Soviet Union—think about the main qualities of that global order and they were very distinct and, unfortunately, as we look at them today we can think that maybe they were historically atypical.

This was a world where there was the real absence of great power conflict. This was a world where we were rapidly integrating the global economy, more integrated every single year, and this was a world of relative peace and prosperity, kind of looking at the historical arc.

And now we can say over the last five years since COVID we’re in a world where the global order is still very uncertain but there are some characteristics of this order that have emerged that are very distinct.

We think first and foremost about the great power competition that is really the hallmark of the era that we’re in but also the fragmentation of the global economy. So not that we’re moving into a period necessarily of deglobalization but definitely that, like, rush to further integration of the global economy has stalled out a little bit and we see a regionalization of the global economy.

So we have three fantastic people here to talk about this. First, Emma Ashford—she’s a senior fellow with the Stimson Center on reimagining U.S. grand strategy. Really happy to have Emma immediately to my left here today.

And then next we have Oriana Skyler Mastro, who has very graciously stepped in in short order. Oriana is a fellow at the Freeman Spogli Institute for International Studies at Stanford and a courtesy assistant professor of political science at Stanford University.

And then far down to my left is Alina Polyakova, who is the president and CEO of the Center for European Policy Analysis as well as a senior fellow at the Henry Kissinger Center at the Johns Hopkins University.

So we have three fantastic people, all with slightly different areas of expertise, to discuss this question of the shifting global order. But I thought I would not ignore that since I was here last night the world seems a little bit different than it was.

I don’t know how many of you, like me, thought you were going to go to bed early but ended up staying up into the wee hours watching some very dramatic events unfold in the Middle East.

So I’m going to start with that. I imagine that nobody in this room is unfamiliar what happened but we witnessed last night a very ambitious operation on the part of Israel and it’s an ongoing operation. Prime Minister Netanyahu has made clear that this is a multi-day operation to go after Iran’s nuclear facilities as well as its senior military leadership.

This is—Israel has once again really—although this is a topic that people have been debating and talking about for more than a decade, Israel really did seize the moment of surprise.

Yesterday in the hallways here we were talking about how the negotiations that were due to recommence on Sunday between the Trump administration and the Iranians had the very real and credible threat of military force as being a useful element to Steve Witkoff, the negotiator on the U.S. side.

So Israel I think really did take everyone by surprise except the Trump administration this morning is saying that they were fully briefed and that in some ways they were supportive in intelligence and in other matters in this operation.

There’s still very, very much that is unknown and it is not going to be our objective to try to give a briefing on this. I hope we’ll be able to touch on it over the course of the day.

I’ll just tell you as someone who lived in the Middle East and worked on the Middle East for George W. Bush for some time the three big things that are on my mind, the big questions that I’m asking myself, the first is what is the status of Fordow.

So Fordow is the facility at which Iran has the most advanced centrifuges so the centrifuges that can most quickly take the enriched uranium that we know Iran has already enriched up to 60 percent and spin that up to weapons grade in relatively short order.

From what we could see last night, again, just looking at public sources, it did not appear that Fordow has been explicitly targeted by the Israelis yet. It’s the most obvious place. It’s where the most Iranian capacity is.

One explanation is that, again, we just saw the first night of the operation. Maybe it goes to take out what remaining air defenses Iran has and, perhaps, tonight we’ll see the Israelis go hard after Fordow.

There’s also the reality that these centrifuges are deeply buried in the mountainside and it’s always been assumed that this would take a different kind of military capacity to go after. However, we saw Israel with Nasrallah and the assassination of Nasrallah that involved multiple bombings in the same location to get deeper and deeper underground.

So I think it’s very much an open question. If Fordow is still able to function as it appears right now the next and very big question is Iran’s reaction. There’s multiple reactions that we all need to think about and policymakers are going to be thinking hard about and looking for evidence of, one, does Israel—does Iran decide now is the time to go for a nuclear weapon, and if so Fordow is the most likely place where this enrichment would occur—again, 60 (percent) to 90 percent. The estimate is that this takes weeks to do to have a fully functioning bomb. I don’t think people know exactly but we’re talking months, not years.

So does Israel decide—I mean, does Iran—sorry—decide to move forward and take the sprint in Fordow? That is, obviously, going to be something that people are going to be watching for, and if so does the U.S. military get involved. That’s the big question.

The other big question about Iran’s reaction is, you know, how, much is Iran going to react—what is the retaliation here. The assumption is it’s going to be widespread—I think there’s some debate about that—and will Iran see the U.S. as complicit in this and so will Iran’s retaliation be not just vis-à-vis Israel but will it be against U.S.-related targets.

The last question that I would ask—I said three questions in my mind—Fordow, Iran’s reaction, and third, what is the state of affairs of American preparation to defend Israel at this moment. I’m assuming it is very high.

If you think about when Iran counter—or attacked Israel in the Biden administration this was a very extensive attack that was, largely, thwarted due to extensive collaboration with regional actors and the United States to protect Israel from the more than 200 missiles and drones that came from Iran.

So these are the three things that I’m watching over the course of the day. Obviously, there’s a lot of things we don’t know but I think it is plausible to say that what is happening in the Middle East right now could in fact have a big influence on the global order we’re about to talk about.

So I am going to use this moment to actually pivot now to my extraordinary panel here to ask, just starting with this news, looking at what’s happening in the Middle East, how does this affect the shifts in the global order that we’re thinking about, this shift towards China?

You know, repeatedly I think policymakers have lamented the effort to focus on China has been repeatedly pulled back by a focus on the Middle East. Are we seeing this again or do you think the trends that we’re going to be discussing in greater detail are going to be resilient to that?

Who would like to start here? (Laughter.)

POLYAKOVA: Emma, why don’t you go ahead there?

O’SULLIVAN: This is called—

ASHFORD: Let me—I guess I’m—

O’SULLIVAN: All right. We can start with Emma.

ASHFORD: I’m not sure if I can answer the world order question. I think what I can say is that it’s the way the U.S. reacts and gets drawn in or doesn’t is going to have significant implications for world order, going forward.

And I think you touched on a few of these issues but there are a few big things that we just do not know at this point, and I don’t mean about, you know, what Israel hit or any of these things. I mean on the U.S. policy side.

You know, we do not know whether this is a case where Donald Trump has lost control of Israel or been unable to persuade Israel not to go ahead with strikes he didn’t want. Maybe that’s the case.

Alternately, despite the fact the administration has been messaging publicly that they said no, maybe privately they gave a green light. That’s what the Israelis are saying.

So did the administration want this or not? We don’t know yet. And can the U.S. then stay out if so and does the U.S.—does President Trump want to stay out, right?

All of that sort of flows from the fact that we don’t know whether this was done with a wink and a nod from the U.S. or whether this was something that Israel has done in—effectively, in defiance of what the administration has told them.

And, you know, whether the U.S. can stay in or out, whether Trump wants to stay in or out, really, I think will shape U.S. foreign policy on a much bigger scale, right? Not just the Middle East, not just Iran. You know, every administration since 2008 has tried to pivot towards Asia and focus more on China.

But I don’t think it’s an exaggeration to say that Trump’s foreign policy legacy is going to be shaped by whether the U.S. is pulled into a war with Iran in the next couple of weeks. The Republican base is deeply opposed to the U.S. getting involved in a war with Iran as are Democrats and independents, to be clear.

The Republican Party at the elite level is split and has been for some time. I think Trump himself genuinely wants a deal to resolve this issue but I worry that he may think that Israeli strikes will actually help to get him to that deal.

And so, you know, I think, again, until we can figure out what it is the administration is trying to achieve we’re not going to be able to tell what the implications will be.

Do you want to jump in?

MASTRO: Sure. So let me just say when I think about the biggest influence of these events on the global order I think about how we are all in this room talking about this, and there’s one place where they are not spending their time, energy, and resources dealing with this and that is in Beijing.

Because while we have talked about for years how difficult it is to pivot to Asia, I will tell you, you know, I’ve worked now, I don’t know, fourteen years at the Pentagon and, obviously, my views here are my own and do not represent those of the United States Department of Defense, the U.S. government, or the United States Air Force. (Laughter.)

But my first job my boss said to me, just go into rooms and say, what about China? (Laughter.) And that’s all I did for years, and here we are in 2025 and I have to tell you, as someone who has worked on strategy and plans—and if I can toot my own horn, I’ve won two Officer of the Year awards for my ability to do strategy and plans—it’s not that hard. Just do it. Just stop doing this other stuff and pivot towards Asia and focus on Asia, right? (Laughter.)

So while we are sitting over here I can tell you I would love it if the United States could do everything, like, let’s go build that Golden Dome that’s going to be useless and let’s go march in the streets of DC. Let’s do it all. But we do not have the resources, right? The United States spent more on its nuclear weapons than China spent on its whole military since 2006.

And so while we sit in these defense circles and we pat ourselves on the back about how we won the Cold War because we convinced the Soviets to spend money and do stupid things, how can we then say in the same breath maybe we should deploy troops again to the Middle East to fight this war, you know.

And so for me we just—we’ve run out of time. I’ve had policymakers say to me, Oriana, we’re just going to do this—we’re just going to do this first and then we’re going to do this. Meanwhile, you know, China has been very strategically disciplined.

They do not believe in foreign military intervention as a tool of power. They want to dominate Asia militarily and we’re going to talk about that on this panel and, you know, a lot of people would consider me a China hawk because of my writings on that issue. But when it comes to the rest of the world they’re focused on using political and economic tools.

Now, we might sit here and look at them and say, oh, you know, that’s not possible. Sure, wouldn’t it be nice if you could protect your interests without sort of gumbo diplomacy? But the truth is they’ve done it successfully for thirty years. And, you know, leaving judgment aside, the war in Afghanistan cost the equivalent of ten Belt and Road initiatives. So which one is more impactful on the world?

And so it’s very difficult. The Chinese, they sit over there and they’re just, like, we want to stay out of it. Even with Iran, when you see people are talking about the autocratic quad of Iran and North Korea and Russia, and when I talk to the Chinese about it, you know, they do not want that bloc because they understand they want to have their cake and eat it, too.

They have close relationships with those countries that give them strategic leverage, but their most important economic relationship is with Europe, right? The strategic relationship is with the United States.

And so I have often tried to articulate recommendations to drag them into these things and in a recent Foreign Affairs piece I said when it came to Iran and others we should start punishing China for the misbehavior of some of their friends.

And when I talked to party officials about it they read that article because everyone reads Foreign Affairs—(laughter)—and they said to me, you know, Oriana, we hate this thing you wrote. And I said, but why? I said, you didn’t want this autocratic bloc. Isn’t that nice? And they said, yeah, but you said we should suffer for how the Iranians and the North Koreans and the Russians behave. We don’t like that, right?

So the global order is going to be shaped by the fact that they’re going to continue to compete efficiently and effectively, moving forward, while we continue to do a hundred things at the same time and that’s how great powers decline.

O’SULLIVAN: So I’ve made a mental note. I want to debate Oriana on this point at some point but not when I’m a moderator. (Laughter.)

But I would say that what’s interesting is that China’s been able to do that in part because the United States has been managing some of these issues in a way that, you know, they can feel pretty confident that if Iran closes the Strait of Hormuz that the U.S. military will take care of it, even though that oil is primarily flowing to China.

So it is, as you say, very complicated. Before we move on, Alina, do you want to comment on this particular question?

POLYAKOVA: No, I’m happy to chime in. I mean, that was a lot to follow here. And I’m certainly no China hand, but I take everything you say, Oriana, with, you know, a lot of, you know, thought in mind as to what I’m about to say which is that, you know, I think, obviously, the events of last night, you said, Meghan, were really dramatic and kept a lot of people up at night.

But I think, to my mind, I see this as part of a much longer trend that we’ve been in for quite some time and it has less to do with our policy decisions in Washington or even the decisions being made in Beijing and Moscow. But I think it’s part of a much longer-term restructuring that we have been in for, I don’t know, at least the last twenty years probably.

And when I look at even the first election of Donald Trump, I remember at the time that was, obviously, a quite shocking election. It was unpredicted. But what I thought at the time was, well, this is a symptom of the restructuring, right, that there are—as a backlash against globalization.

There’s this enchantment with mainstream politics, and I think we are still in that trend and we don’t really know where things are going to end up or what the global order if there is one is actually going to look like.

I think that trend has been much more accelerated over the last five years. I say five years mainly because I think we really saw the fragility of the global system with COVID particularly in the supply chain sector, and it seems like since basically 2020 there has been a lot of kindling around the world, right, that at any moment can really blow up and ignite.

And I think as much as we like to think that there’s such a thing as self-contained conflicts I think increasingly there aren’t any and that has, I think, less to do with economic globalization and much more to do with the fact that the global security order is deeply interconnected.

So, for example, maybe Beijing does not care what’s happening in the Middle East and they want to stay out of it but Russia is a Middle East player, too. They have a deep relationship with Iran. I wouldn’t call it an alliance, but certainly it’s a collaboration and a cooperation that’s been accelerating, and Russia was certainly present in the Middle East in various ways for decades.

Obviously, the U.S. has interests in the Middle East while at the same time the entire region has been undergoing a major power shift and a major power rebalancing, if you will, the last several years. There was a great Foreign Affairs article about this a few days ago I think by Vali Nasr that talked about their rebalancing in the region.

And so to my mind what happened, unfortunately, I think, was obviously predictable, not because of the news reports about it but also because we’ve kind of seen this movie before.

I think I’m a little more skeptical about the desire from this administration to use military force in the region despite our longstanding alliance with Israel, and I think one thing that we’ve seen consistently and when, Oriana, you said, you know, the Chinese don’t believe in the use of military force like we do, I don’t think this White House, really, at least the president, believes in the use of military force to achieve his objectives either.

I think that’s been quite consistent in some of the things that the president has said for many, many years now. And so I wonder if we would send in any military capabilities into—to support Israel at this point.

O’SULLIVAN: I think there are all different kinds of ways that the U.S. could be dragged in. It wouldn’t necessarily involve us sending troops. But I really appreciate all three of you kind of touching on this, going forward.

Let me come back to you, Emma. On the question of global order, so there are many different alternative global orders. We’ve all talked about the uncertainty, about the trajectory and the evolution of the global order right now.

But one model that we’ve heard people talk about and that some of the actions of the Trump administration has suggested this might be appealing to the president and others is this spheres of influence idea—the idea that the United States would be most concerned with the Western Hemisphere and then others can look after other parts of the world.

Do you think this is a feasible model? How would it work if it were? Would this be in the U.S’ interest or the interest of others?

ASHFORD: Yeah. I mean, look, it’s a really good question. I think we’ve seen this term spheres of influence sort of pop back into the discussion a lot, particularly, I think since the invasion of Ukraine. I think, you know, Trump himself, clearly, likes this model and if you—you know, for a slight description here, right, again, so spheres of influence sometimes gets a bad rap as a concept, right?

We tend to think of it as something—you know, the Stalin and Churchill dividing up parts of Eastern Europe at Yalta and condemning some people to living under Soviet rule.

But actually throughout history what we see is that spheres of influence are basically a way in which great powers sort of make unpleasant choices in order not to be fighting one another all the time, right?

So basically they agree that there will be certain areas that are sort of buffer zones. There are areas where, you know, the U.S. would accept, for example, that Russia has more of a say in parts of Eastern Europe or China has more of a say over—for Taiwan.

And so, yeah, I think Trump himself and some of those around him in the administration do actually find this idea fairly appealing. Trump himself has suggested that he might enjoy sort of a concert of the great powers approach. You can see in his dealings with Russia that’s, clearly, what he’s trying to do is, you know, two equals above the fray talking to each other.

I am skeptical that this will work in practice and the reasons are not anything to do with the politics or even with the sort of image of it, not the morality of it. The reasons are practical. It’s that during the unipolar moment, right, since 1991 the U.S. sphere of influence grew to encompass pretty much the whole world, right?

The boundaries of where we see U.S. influence expanded as we expanded NATO—we expanded our interests in the Middle East, right? You know, Kyiv, right, we’re now helping the Ukrainians to fight a war against Russian invasion but, you know, during the Cold War we were a thousand miles further west in Berlin.

So I am not sure that you could at this point find any feasible spheres of influence deal that the Russians or the Chinese would accept without U.S. policymakers accepting that they’re going to have to dial their own sphere back, and I don’t see the willingness to do that.

So to me this just doesn’t pass the sort of practicality test so there’s really not a lot of point in even debating the sort of ethical merits of it.

O’SULLIVAN: Great.

So let me stay with this idea of this sphere of influence for a minute and come to you, Oriana, and I know this probably goes against, certainly, what you would prescribe to policymakers personally.

But if we were to see something like a sphere of influence kind of global order arise it would necessarily entail some kind of grand bargain between the U.S. and China, between President Trump and President Xi, about how they were—just as Emma said, how they were going to, you know, delegate or what kinds of things the U.S. was going to back away from and China was going to be able to be unilaterally decisive on.

Do you see a potential for a grand bargain, not the current tensions withstanding, and if so what would be the elements of such a U.S.-China grand bargain?

MASTRO: So I don’t see that as a possibility for a number of reasons. To piggyback off of what Emma said, first and foremost, I mean, maybe it’s wishful thinking that it’s not a possibility because, really, we’re going to give up Asia for, like, Latin America? Like, that’s the trade we’re making?

Like, Asia is the most important economic center of the world. I think the Chinese—because the part of the sphere of influence logic and the Chinese have always wanted the U.S. military out of Asia, right, and that is less controversial, I think, to say now than it was fifteen years ago.

But when you’re in Beijing and you say that—when I gave talks fifteen years ago and I said, you know, China, you don’t like being surrounded by the U.S. military, they were, like, so you’re the foremost expert in the United States on China? Like, that is the most obvious thing that anyone could know about us, right?

So for us to pull out of Asia so that we have a sphere of influence in the Western Hemisphere, they have one in Asia, I don’t think that is in the U.S. interest.

Now, let’s just say Trump was stupid enough to be, like, that’s what I want. OK. So we’ll go to the—(laughter)—that’s the grand bargain. He goes to the Chinese and he says, I want to do this grand bargain. You know, you get Taiwan and, you know, 70 percent of the global economy as long as, you know, we can deal with the border with Mexico. (Laughter.) And why is the Chinese—like, why are they not going to do it?

And honestly, there’s two reasons. The first is they don’t trust him. So even grand bargains on Taiwan, like, they’re hopeful. They’re, like, I don’t know—he doesn’t care about Taiwan. But the problem is the way they saw the first Trump administration is that they rolled out the red carpet for Trump and not even they. Let me be clear. Xi Jinping rolled out the red carpet for Trump, and then he went home and put those sanctions on China and Xi Jinping was personally embarrassed about what happened.

And so when I was in Beijing I think two or three weeks ago talking about the prospect of a grand bargain, no matter how good that deal sounds they just can’t risk looking so bad if they’re, like, excited about it and then it falls through.

The other aspect that’s really concerning is that historically the United States has often done them. We have said we don’t—you know, here’s our defense perimeter and Korea is not a part of it, right, and then North Korea invades South Korea and we’re, like, I guess Korea is important and then we’re going to create a war.

Same thing happened with the Gulf War, right? We’re like, oh, Kuwait, I don’t know. So there is a concern that I have that Trump communicates to the Chinese, like, oh, this Taiwan thing, you know, I’m not really into it and then a conflict starts that makes him look weak.

And so they’re constantly trying to figure out what that bargain would look like, and so they ask me, on one hand, President Trump, when he first came into office, he took down from all U.S. State Department websites the statement we had had for a long time that said we do not support Taiwan independence.

So the Chinese are, like, what does that mean? You no longer say you don’t support Taiwan independence. But then in the tariff negotiations he said, this is great for peaceful reunification, which is the Chinese term for, you know, the complete encompassing and enveloping of Taiwan under the CCP.

So they ask me—they’re, like, what does this mean? What would the bargain look like? And I’m like, well, I’m a China specialist, not an American specialist. (Laughter.) We’ll figure it out.

POLYAKOVA: It’s a good excuse.

O’SULLIVAN: OK. So we’re kind of collectively establishing this spheres of influence idea, alternative global order, not so practical.

So, Alina, let me come to you with a different proposal, one that we could look at what’s happened in the recent months and say maybe this is where we’re going, and this would be a world in which, perhaps, the United States would say to Russia and Europe, you guys are on your own. You have issues and problems but work them out among yourselves. The U.S. is going to focus on China, and that’s the competition, going back to what we were talking about earlier. That’s the competition that really matters. Let Russia and Europe figure things out on their own.

And, you know, is this feasible? Could Europe protect its interest vis-à-vis the Russia we see today without the United States and how central is a resolution of the war in Ukraine to this vision of a global order? Does it matter how that’s resolved and is it feasible that this kind of world order could emerge without that war being resolved?

POLYAKOVA: Well, before we go there just a final, you know, nail in the coffin of spheres of influence.

I do think that one place where we did have—U.S. accepted de facto sphere of influence for decades was, of course, in Europe, right, after the Second World War and that’s where the term originated from and all of that.

But what we saw very, very clearly is that spheres of influence are deeply and inherently unstable models for the global order and there’s one very basic reason for that is because the people living in that sphere of influence don’t really want to be in it, right, and that’s why we saw all the revolutions that took place in Central and Eastern Europe and the move towards a more Western model.

And I think if we are naive enough to think that millions and millions of people will voluntarily for the rest of their lives and their children’s and grandchildren’s lives will go back to that I think it’s very naive to think that.

It may be stable for a short time but it’s not sustainable, and I would personally much rather live in a U.S.-led global order than a sphere of influence global order or a Chinese-led global order, right?

But to your question about the importance of Europe and can Europe really go at it alone, well, you know, we’ve told the Europeans exactly that for actually a long time. You know, we’re going to pivot to China, as I think Emma opened the conversation saying, and you guys are on your own.

I think the problem has been that Europe has said over and over again we’re going to do more defense spending; we’re going to meet that 2 percent of GDP spending that’s part of NATO. We’re going to do all of these things. And then almost nobody did them for a long time, and I think now you have a moment where you have an administration that is actually—out of many things that the president may have said in the past and the inconsistency that you point to, they seem to be pretty consistent about putting an end to the level of support that we have seen for our European allies, whether that be through NATO or through our support for Ukraine more broadly.

You know, I was in Brussels, Warsaw over the last couple of weeks and I think what you hear there is that that has finally—that realization has finally been taken in in a real way, and even though we still don’t know what potentially U.S. disengagement or U.S. drawdown in Europe will look like there’s a deep understanding that it is going to happen and the European allies are actually stepping in.

Too slowly, right? Not enough is being committed in terms of funding. But it was really interesting to see Secretary Hegseth at the Shangri-La Dialogue say, you know, Indo-Pacific allies should take lessons from Europe. I never thought I would hear that come out of any U.S. secretary’s mouth when it comes to defense spending in Europe.

But, look, they’re about to commit to 5 percent in the next NATO summit and that’s huge. We don’t spend 5 percent in defense. Our defense spending has been going down proportionally.

And so I think Europe can go at it, quote/unquote, “alone” but not now, right? There needs to be much more of a thought through timeline for the, I think, rebalancing of the relationship between Europe and the United States, and I think this goes back to this broader rebalancing of the global order, right, and Ukraine does have a really important role in that.

You know, again, there’s no such thing as a self-contained conflict anymore and it’s very, very clear that what’s happening in Ukraine is providing a lot of interesting lessons for the Chinese. It’s providing really interesting lessons for Europeans and I hope being taken seriously in terms of military lessons and capabilities by our own military.

But the resolution of—quote/unquote, the “resolution” of the war in Ukraine, unfortunately, I don’t think is within the grasp of the president right now regardless of  how much time we’ve already spent on the ceasefire negotiations.

But there’s no doubt in my mind that if we look to be giving the Russians a win and if we pursue an appeasement strategy and de facto accept some limited sphere of influence for Russia in the so-called buffer states like Ukraine, Moldova, Belarus, that that will give basically free reign to China to pursue its ambitions in Taiwan with or without knowing what the U.S. administration might do because they’re going to calculate, well, they said that Ukraine was important but look at what they did there. It wasn’t so much.

So I think there are going to be reverberating global effects that will undermine the stability of the global order, undermine U.S. standing in the world order, and that all starts, I think, with the outcome of the war in Ukraine.

O’SULLIVAN: Great.

Actually, Emma, I’d like to see if you have a comment on that. I’ve heard you articulate elsewhere a view that suggests that maybe what happens in Ukraine isn’t so central. So I don’t want to put words in your mouth but give you an opportunity to express that.

ASHFORD: Yeah. I mean, look, I think—you know, I appreciate everything Alina says here but I would, I guess, take issue with a few of these points. I mean, so, you know, one is that I think the conflict in Ukraine is contained to a certain extent, right?

You’re absolutely right that other states are drawing lessons from it. You are right that other states are sort of involved in some ways.

But if we actually look at what the Russians have done, what NATO has done, there’s been this very bright red line of the war stays in Ukraine. The war does not enter NATO territory. NATO, the U.S., are not getting directly involved and we have actually seen that hold for three years.

And if you’d asked me three years ago I would have said I don’t know if this can hold without escalating. It actually has. And so I think to some extent what we have seen is a practical acceptance on the part of the U.S. but even on the part of some European states of a—you know, if not a sphere of influence then at least saying, well, Ukraine is not a big enough interest for us to actively fight Russia and risk the escalation, the potential nuclear fallout that we could actually see from that.

And so, you know, again, I am very skeptical that the notion of spheres of influence writ large is going to work because you need, you know, the U.S., the Russians, the Chinese on board. I don’t think that’s going to happen.

But I think the alternative strategy of saying, well, you know, the U.S. needs to support countries everywhere no matter what the risks to the U.S. and its people are in, you know, doing what they want to do and that includes sort of unlimited support for the war in Ukraine, I think that’s also a very slippery slope that potentially pulls you into conflicts.

And so, again, I don’t think the balancing act we’ve seen in Ukraine over the last few years has been ideal, right? There’s been many, many problems with it. But we can at least say this, right? We helped Ukraine. We stayed out of conflict with Russia. To me, those are two good things.

MASTRO: Can I just jump in on the China-Ukraine thing for a second? Because people are always being, like, China is learning all these lessons for Taiwan about Ukraine. And the Chinese military have always watched other conflicts to learn about the nature of war.

So I’m not saying that they’re not watching this. But when people are, like, oh, if we—you know, if Russia wins in Ukraine or if Russia is losing in Ukraine then the Chinese think they’re going to lose the war over Taiwan, I would just say that operationally these are two completely different theaters.

I mean, a ground war in Europe doesn’t have anything to do with the air and naval battle you’ll have to fight over Taiwan. For example, the United States cannot get arms to Taiwan once the war starts so there is no option of just arming them and not being directly involved.

And even when you see one side or the other of the struggle, I like to point out to my American colleagues who say maybe the Chinese learned that war is not so quick and war is not so easy, I ask my military colleagues, are you thinking that maybe the United States can’t win wars anymore because Russia is failing? If not, then why do you think that’s how the Chinese think about it?

If anything, all the Chinese writings I’ve seen on Ukraine are just, like, we would have done this so much better than the Russians. (Laughter.) So, like, I think, like, they’re learning from it but they’re not learning these lessons—it’s not so direct and linear that now the war over Taiwan is more likely or less likely based on what happens—

POLYAKOVA: But I think there’s lessons being learned about U.S. resolve, not just with a Republican or a Democratic administration. I would say the policy in Ukraine has been largely consistent between this administration and the last one, frankly. I think those are the kinds of lessons I was referring to, not necessarily military lessons, right, because those are completely different theaters. So I agree with you there.

But just because Emma came back to me, and I don’t want to start a debate about the importance or lack of importance of Ukraine, but I do think it is, you know, maybe a bit of an illusion to think that the conflict has been contained for the foreseeable future.

It’s been managed through the loss of many, many Ukrainian lives and through huge sacrifices by Ukrainians holding the line and that has—I think receded a sense of urgency here in the United States and to a certain extent in Europe about needing to ensure that there is some sort of stability reached there whatever that looks like for Ukraine now, whatever that looks like for the Russians now.

But trust me, if you look at Russia’s military spending, the militarization of the Russian economy, they are preparing for a confrontation with NATO. There is no question about that anymore. It is—they’ve clearly stated it. They have taken the strategic steps and they have learned a huge amount from having battle-tested troops.

Who else has learned a huge amount? The North Korean troops are also doing rotations now in Ukraine and, potentially, Chinese soldiers, although those reports are a bit mixed right now whether the Chinese soldiers are actually serving in Ukraine.

But we’re now seeing rotational forces de facto between multiple countries for getting battle tested and battle ready in the front line in Ukraine and that will have consequences for, potentially, how the Chinese or North Koreans get involved in any confrontation in the Indo-Pacific.

O’SULLIVAN: You have set up a perfect segue to the next thing I wanted to ask about and, Oriana, I’ll turn to you.

You referenced earlier about—I forget what you call it but this notion of the axis of upheaval, and Alina just suggested as well—the idea of Russia, China, Iran, North Korea coming together as some kind of quad.

How realistic do you see this? Alina just sort of referenced that there is this military coordination. Is this an operational alliance or is this, you know, factors of convenience? And specifically to what extent does China really have a different set of objectives than these other three actors?

Like, the other three, to me, seem like disruptors. China really still has an interest in the global order to some extent. So would love your thoughts on that.

MASTRO: So I sort of alluded to this before that, you know, the Chinese with a lot of their policies in the military, economic, and political spheres they really like to have their cake and eat it, too. Like, there’s—for them there’s no reason you have to choose, and during their rise over the past thirty years a number-one priority has been to have positive relationships with the United States and its allies and partners, right?

These are not only their greatest trading partners but they looked at history and they came to the conclusion that the number-one threat to a rising power is, of course, the established hegemon who wakes up one day and decides it doesn’t want to be in competition anymore and launches a preemptive war against the rising power.

So in their decisions that they make of what strategies to pursue they have always considered how is the United States going to understand a certain policy or strategy and that’s why—and I’ve argued recently in a book I had this year that they try to do things differently than the United States because it’s harder for us to recognize that as a direct challenge.

And one thing that they have not done is alliances, and then there’s a number of reasons they don’t do them, one of them being that they recognize the United States would see that as a challenge immediately.

I mean, if China had acted like John Mearsheimer had argued they would and had formed a military alliance with Mexico and put PLA troops on the border in the ’90s, you know, maybe my job at the Pentagon talking about how important China was wouldn’t have been so difficult, right, fifteen years ago.

But instead of training militaries overseas they’ve trained the police forces of over a hundred countries overseas, right, and we missed this stuff because we’re looking for the wrong thing. They also recognize the United States has all the best allies. They write about this extensively and they’re, like, what are we going to do, give up good relations with Europe to be friends with Iran? Like, that doesn’t—that’s not a good deal.

So what they’ve been doing is they have some benefits in particular with their relationship with Russia. On the military side, their military has been built on the backbone of technical assistance and know-how from Russia over the years and the Russians’ support of their territorial claims in Asia has been very useful.

But they get to have that with Russia and not really have their relationship with the Europeans suffer, right? And so they don’t want it to be so clear that this bloc is forming. When the Russians went to the North Koreans, the Chinese, like, their statements about it were, like, we’re not a part of this—we don’t know what’s happening—we don’t have control over anything, because they recognize if all of a sudden Europe cares about what’s happening in Asia, right, because North Korea is fighting in Ukraine, if South Korea is, like, you know what, U.S.? Actually, I will let you use South Korean bases in Taiwan because I’m concerned about what happens with North Korea.

If the Japanese are, like, I’m all in because the Russians are putting pressure on me, China can’t win. China can’t win economically, politically, or militarily if U.S. allies and partners across the globe come together.

So they’re trying to keep those things separate. So I am confident—you know, I would bet my life if there were a conflict over Taiwan, China would like those countries to do nothing. And the same token, I think and the Chinese think that that doesn’t mean those countries are going to listen to them, right?

So there is this threat that those countries as disruptors, as you mentioned, continue to disrupt in ways that are not only not beneficial for the United States but are not beneficial for China and they’re trying to control them as much as possible.

But they also feel like, you know, especially as Russia gets closer to North Korea and North Korea gets closer to these countries, that they’re losing control over these possibly problematic entities.

O’SULLIVAN: Great. I have two more questions before we open it up to the audience.

So, Emma, let me come to you with a different element of the global order as it seems to be evolving and that is the rise of middle power. So some of us talk about middle powers as these are not great powers but they are countries that bring something to the table.

They may not have capabilities across military, economic, diplomatic spheres but in some area they are able to influence things in their region. I’m thinking about India, Brazil, Indonesia, Saudi Arabia—whatever the case may be.

These countries are becoming more active. They’re being more entrepreneurial in the relationships they build with one another. Is this the emergence of a real multipolar order and if so, you know, how does the United States pursue and protect its interests in an order in which these middle powers are actually, you know, consequential to the outcome of global affairs?

ASHFORD: So I think this actually fits in very neatly with what Oriana was just talking about with the—you know, the approach that the Biden administration tried to pursue which is, right, there is this axis of upheaval or authoritarians or whatever you want to call it. You know, we must respond to China, North Korea, Russia, Iran.

They’re all one thing, and we will do so by stitching together a bloc of our own, right? We will connect European allies to allies in the Indo-Pacific. We will bring together global democracies and we will have a united front.

Now, this might sound completely tangential but the point is that that strategy is in many ways trying to preempt the emergence of middle powers, of multipolarity, of a more, let’s say, flexible and open world order, right?

The U.S. is trying to lock in its alliances now, trying to pull Europeans away from China, right, and potentially, you know, as a result pushing together China and these other states more.

But there are many problems with that sort of two-bloc approach and so one of the alternatives is to focus in—for U.S. policy makers to focus in on some of these emerging powers and you named a couple. You know, there’s India, right, but there’s also Brazil. You know, there are Turkey, et cetera.

We tend to think of a lot of Global South countries when we think about this but middle powers also include a lot of U.S. allies—key U.S. allies—and one of the more interesting things, the more interesting side effects of U.S. alliance policy, U.S. hegemony for the last thirty years has been that it’s really suppressed the capabilities of those allies.

So Europe hasn’t spent a lot on defense for thirty years. They don’t have military capabilities. They can’t stand up to Russia. Now that we’re talking about U.S., you know, constraints and we don’t have enough resources to go around we’re saying to the Europeans, hey, you know, you guys need to do more for your own defense. You need to help and stand up to Russia. And in some ways that is a strategy of promoting military multipolarity, right?

We are saying to countries that—you know, our allies we may not agree on everything but, you know, we think they’re generally friendly. Hey, we need you to do more to stand up to Russia in the Indo-Pacific. We need you to help us stand up to China. And to my mind that seems like a very good strategy for not putting all of our eggs in one basket, which is the U.S. doing everything and trying to work with everyone all around the world.

I kind of like the multipolarity strategy because I think maybe it’s a way that we can basically steal some of this flexible strategy that the Chinese have been using to such a good effect. Maybe we can take it and use it for our own as well.

O’SULLIVAN: So, Alina, I’m going to come to you but do you want to comment on this before—

POLYAKOVA: Yeah, just on the Europe angle, really quickly, because I think the cost of that strategy—while I agree that we want, you know, our core allies especially in Europe to do everything they can do in defense and security and invest more, but the cost of that is that, you know, we’ve been pretty happy with basically telling Europe what to do and bullying them around and that’s been basically the nature of the transatlantic relationship for a long time.

But I think once you have a Europe that feels like it can be a hard power actor—and they’re very far from that right now but if that moment comes, which may be the natural outcome of what you’re talking about, Emma, we’re going to have to accept the reality that, you know, maybe they’re not going to align with us and our interests anymore and we’re going to have a lot less leverage over them.

So on China we don’t want them to pivot to China and they’re going to say, well, you know, you may want that but no, thank you. You know, we’re benefiting a huge amount from the economic relationship, right?

And so I think there is this cost benefit long-term analysis that we should also be thinking about because having allies who have been dependent on us for defense and security which is, of course, the Europeans, has benefited U.S. interests globally.

O’SULLIVAN: So I’m keeping an eye on the clock. I wanted to ask one quick thing to you, Alina, and then open it up, and then I’ll try to come back at the very end to see if people want to wrap up with particular comments, and that’s about technology. So we’re talking—

POLYAKOVA: When can we get there?

O’SULLIVAN: Yeah, no, no, I wanted to make sure we get there because we think about technology is a shaper of the global order. So we think about the previous global order and the emergence of nuclear weapons was so fundamental to the creation of that order. You think about the permanent members of the National Security Council all being powers that had nuclear weapons.

How is the emergence of AI and the technological trends that we’re seeing—how do you see that having an impact on the global order that’s emerging?

POLYAKOVA: This is a whole conference question, honestly, but—(laughter)—

O’SULLIVAN: No, I realize that. But this is—you know, this is a big conversation.

POLYAKOVA: It’s a big part—should be a big part of our discussions when it comes to defense, security, and international order more broadly because I don’t think there has been anything more transformative, maybe with the exception of electricity, that is going to completely restructure the power balance and the power dynamics at a global level than not just artificial intelligence but really the combination of all of the emerging technologies that are now coming to light because that affects energy issues.

We all know how much energy it takes to run data centers which, of course, there’s a few countries that provide at least in the nonrenewable space that kind of capacity and resources. And so it just becomes so deeply intertwined with economies, with defense, and security.

I think one of the lessons from Ukraine has also been when I look at the Spider Web operation that just took place, you know, two weeks ago or so the Ukrainians carried out in their intelligence operation combined with drone autonomy capability across Russia, which I think took everybody by surprise, when I look at that, you know, I heard from an administration official who kind of whispered to me and said, we couldn’t do that. And I was like, oh, really? You know, that’s uncomfortable.

But I think there’s also the transformation in the future of war that’s taking place and, again, there’s lessons to be learned in Ukraine there because now the autonomy revolution in the defense space is going to be defining of how we do war in the future, whether that’s in Taiwan or whether that’s anywhere in the world.

And so I think it’s not just about economic power imbalances, energy and resources competition. It’s also about hard power and how technology is actually transforming who has the control over hard power. It’s a hell of a lot cheaper, right, to build drones than, like, F-35s.

And so who’s going to have those capabilities, going forward? It’s going to be far, far more democratized, if you will, than I think we’re going to be very comfortable with.

O’SULLIVAN: Great.

OK. I think we’ve put enough on the table. Let me take some questions from the audience. I’m going to ask that you introduce yourself, please. I’ll begin right here.

Q: Thank you. Glenn Creamer, World Affairs Councils of America.

I’m curious if you could speak to something that wasn’t really addressed, which is the lack of fiscal capacity that pretty much all of these countries have right now. I mean, you’ve got demographic challenges. You’ve got social welfare states.

You know, we say, “Europe, spend more,” but they have their own challenges around so many other commitments that it’s hard to keep pumping your defense spending. China has huge problems and the U.S. has huge problems, as we see.

So the fiscal capacity to deal with some of these things I’m just curious how that overlay affects your analysis that you’ve spoken about.

O’SULLIVAN: Great. Thank you. Anyone want to jump in on this?

POLYAKOVA: I can take Europe, but—

MASTRO: Yeah, I’ll take China.

POLYAKOVA: Yeah, there we go. Natural division of labor.

I mean, that’s a very good question. I think that’s certainly top of mind among European policymakers. Every time that I’ve gone to Europe for the last couple of months the one thing that consistently comes up in any conversation is the Mario Draghi report, which I think maybe some of you are familiar with.

It was a report by the former Italian prime minister, that there was this huge, I think, mic drop in Europe that just outlined all of the challenges and obstacles that Europe has when it comes to economic competitiveness, and the many things that the EU would have to do to fix that are basically politically untenable at a certain level.

But I think there’s nothing like a crisis to make you prioritize, right, and I think that there’s a moment now in Europe where they understand that without U.S. military commitments they have no choice and that will mean some really, really hard political decisions and it’ll probably lead to more political polarization in Europe because a lot of European publics aren’t going to be happy about more defense spending at the expense of, you know, social welfare spending, for example, right?

But this is the new reality in Europe. And I would just say that the money is foundable. Like, Europe is very wealthy, right? Yes, they have a demography issue. A lot of countries are dealing with that.

But on the whole, we’ve seen over and over again they can find the money and be creative about it. It’s really about the decision making process.

MASTRO: I would say for China, you know, people bring this up a lot about the economic challenges, and as someone who is not an economist I cannot sort of independently assess what their future looks like.

But what I can say is they built—they started to build this military that now presents a serious challenge to the United States when their economy was smaller than France’s, right? And then they have been able this whole time—we kind of forget they don’t have the wealth we have. Their economy has been smaller than ours this whole time.

So when we ask ourselves how we got here at least in the military imbalance of power right now—which is just over Taiwan, let me be clear—you know, if we go just a little bit farther than Taiwan, like, the U.S. military, we got them.

You know, this is why it’s, like, I’m not worried about the South China Sea because the Chinese can’t project power that far. But over Taiwan they have the superiority and it really is about this balance of what you actually need because it is how much does an aircraft carrier cost versus how much does the missile cost that sinks the carrier and China is having to fight—they fight a different war than us.

We are trying to project power across vast distances and China, you know, can, like, see where they’re trying to go from across the Strait, and so it’s just we need different things to succeed. And so even if their economy slows down they have not had to make the choices between guns and butter yet.

And so even if their economy is stagnant for the next thirty years they will have more economic resources than they have the past thirty years and they were able to do so much with it. So I’d just articulate that I don’t think that means we can all sort of relax and not think that this is going to continue to be a military challenge even if the Chinese economy slows down.

O’SULLIVAN: Great. I’ll come right here.

Q: I’m Monique Mansoura. I’m an independent advisor in health security and biotechnology.

Really interested in this intersection, Oriana, what you talked about, some of the investments, the Tenex investment that we made in wars while China was making in Belt and Road initiatives. You know, in hindsight had we known that, sort of the ROI on those investments, and where strategically in our government do those choices about what are the levers of power that we want to take?

And related to that, the technology element. Are there technologies, arguably, that we’re not paying enough attention to on bias? But biotechnology is a key driver of where we get our medicines, of food, that isn’t on the priority table with critical minerals but, arguably, could be a key vulnerability in our weaponization of supply chains.

O’SULLIVAN: If you could just pass the microphone behind you for the next one.

Who would like to take this question here, what does the U.S. need to do to be more competitive when it comes to the competition with China?

MASTRO: You know, I’m not going to go through the very detailed list that I have on, like, all the things that we need to buy because I critique the military a lot and then they always come back to me, like, well, you know, what do you—you know, what would you do, and I’m, like, I’m so glad you asked. I have this, like, twenty—list thing to give you.

But on the technology let me just say that the hardest part and why I did some of the research and wrote the book I did is just convincing people to understand the issue in an accurate way. So my biggest pet peeve right now is this discussion about how China wants nuclear parity with the United States and so we need to build more nuclear weapons.

China does not want nuclear parity with the United States. There’s no evidence for it. Like, they don’t want 5,500 nuclear weapons. They have no nuclear weapons that are considered deployable by START Treaty standards.

You know, their doctrine, their force posture—everything is so different than ours. And so a lot of the cost calculation comes from things like that—like, is this going to make a strategic difference? If we have 5,500 or 7,000, you know, does Xi Jinping be like, oh, well, now—you know, now, you know, I’m not going to do anything? (Laughter.)

So, you know, I’m not—I’m embarrassed to say it. As someone out at Stanford. You know, I’m not a tech person and one of the reasons I like being out there is I get to, you know, play with the tech people. But when I think about the things that would make a big impact, even AI to a certain degree I’m, like, that just helps us lose wars more cheaply. (Laughter.)

Like, I still don’t know how we—how do we protect our assets from Chinese attack? I would like it for, like, airplanes to need less fuel to fly. Is anyone working on that? Like, that would be really useful. Like, intermediate range ballistic missiles—why do we still not have them? Anti-ship missiles that we can put in the Second Island Chain?

So some of those tech things I think are actually even a little bit more basic. And for bio, this is not so much on biotech but the number-one weakness the United States has in a war on China—we can think about all the fuel, all the prepositioning, even if we had enough munitions—we have no plans to get casualties out of Asia, and it’s my own view that the American people—we’re going to leave that war more quickly than we run out of fuel because of how many people are going to be dead.

So if we can think on, like, the more health, medical side of the strategy I think that is a really important area people aren’t doing a lot of work on.

ASHFORD: Can I just jump in briefly?

O’SULLIVAN: Sure.

ASHFORD: Because I actually think your point about return on investment actually I think dovetails quite nicely with the U.S. side of the fiscal constraints, you know, issue. We talked about Europe. We talked about China, right?

But the U.S. is also facing constraints. We can’t just dial up our military spending to do everything and this is one reason I think why we have seen so many people in the last few years switch from saying the U.S. must do everything to becoming much more comfortable with the idea of, you know, pushing allies in Europe or Asia to do more so that the U.S. can figure out how to focus rather than doing everything.

And I completely agree with the point that Alina made earlier that this is an autonomy versus capability tradeoff, right? If you ask allies to do more they’re going to want to be more independent.

But I see that tradeoff a little differently because I see these constraints—you know, fiscal, political, et cetera. The longer it takes us to figure out how to prioritize the actual threats to the U.S. the harder it’s going to be to make the investments that we need to make.

And, you know, we need to think about, you know, what is the risk that Europe is going to side with China against the U.S. Well, they were never really going to sanction China in the case of a conflict anyway. Probably they’re certainly not going to turn on the U.S., right?

So, to me, the risks are manageable. And then the alternative is this idea that the U.S. can continue its military spending as it has over the last twenty years without prioritizing on anything, probably dial it up; I don’t think that’s sustainable.

O’SULLIVAN: Yes?

Thank you very much, Emma.

Q: Peter Galbraith, Townshend, Vermont.

I wanted to ask you about what actually is the threat and concern about China. As somebody who was in government during the Cold War I got it. Berlin, missiles in Cuba, bases everyplace, occupying Eastern Europe, spreading communism, subverting, you know, allies, subverting, fighting in Angola, Somalia.

But China it’s not spreading communism because it’s not communist. It’s not trying to annex any territory. Oh, OK. Do we—is it really—do we really care about some reefs in the South China Sea or disputed territory along the India-China border where nobody can physically go?

So that really is my question. Even on Taiwan, which I get, but here we have the Trump administration trying to get Ukraine to surrender territory annexed by Russia and Ukraine is a member of the United Nations. We recognize Taiwan to be part of China.

O’SULLIVAN: Great.

Q: So what’s the threat?

O’SULLIVAN: Great. So I think, Oriana, this is a question made for you.

MASTRO: Yeah.

Listen, Peter. I mean, it depends on, like, you know, the night and how much I’ve been drinking of, like, how I feel about this question—(laughter)—you know, because, you know, I’m forty-eight hours deployable about any of these contingencies that we’re talking about and have, you know, conversations with my family about it.

The way I think about it, and maybe this is a bit anecdotal—it’s not as maybe rigorously associated with, like, social science research but this is the way that I think about it. How countries have controlled and threatened other countries have changed over time, right?

You referred to we had, you know, colonial empires and then during the Cold War you had the physical occupation of territories in which you would have, you know, the Soviet Union or other countries impose through the use of direct military force occupation on other countries.

And let me just say as a side note one of my favorite political science theories is that doesn’t happen anymore because intellectuals are really hard to repress, which only political scientists would come up with that. (Laughter.)

I mean, we are the easiest to repress. I mean, if I were a dictator I’d much rather try to occupy a territory filled with professors than, like, you know—(laughter)—filled with, like, people who can do things with their hands and bodies. (Laughter.)

So occupation apparently became very expensive and so China, you’re right, is not pursuing any of those things. They’re not doing their colonial empire. They’re not physically occupying, and part of that is they have come to the conclusion that through a different set of tools they can control what other countries can do without physically having to occupy them.

And so the question becomes maybe for every individual in this room, for every country, what is the degree of your sovereignty that you are willing to give up and at what level of that sovereignty is it worth fighting for.

And so I spend a lot of time in the region and I’ll say, like, Southeast Asian countries they understand this dynamic and they’re, like, yes, China will get to determine the rules of the game. They’ll get to determine who has jobs, who doesn’t have jobs. You know, we will be under the constant economic and military threat of China. But fighting a war with China is so brutal that we would rather accept that than contend with them.

My sense is that the American people, given that we have been a great power for most of all of our lifetimes here, we are not comfortable with another country dictating certain things. And let’s be clear, like, whenever China has the power to even say, like, what articles get to be published, what don’t get to be published, you know, whether or not someone like me would get tenure or not get tenure, like, they go to such a local level of that control.

And so I think the big thing is, like, once—if China—if you give China all that power to determine the rules of the road and every aspect of life how much sovereignty do we have left in the United States, and it is going to be—if there is a war it is so brutal, right?

So I respect those who say, I’m willing to give up that sovereignty to avoid that conflict. But we have to be clear that that’s what the tradeoff is about.

O’SULLIVAN: Before we go to more questions, Alina, can I ask you, because there’s so many different answers. There’s the military answer. There’s the tech answers. There’s an economic answer. Do you want to come in and—

POLYAKOVA: Yeah. I think this is really an interesting question about threat assessments, at the end of the day, right, and I think for a long period of time we got threat assessments really, really wrong, right?

And, again, just on China I think that’s a really interesting set of points in this conversation and I think on Russia too, right? We thought that Russia was a JV player because we looked at the Russian economy, to an earlier question. We looked at their demography problem. We said, you know, they’re not going to be a problem.

But I think what we have learned or should learn is that economic performance, demographic decline, don’t necessarily correlate with military capability or the desire and ability and the willingness to use military force in a decisive way.

And so I think that’s exactly what we’re seeing in Russia. Their economy is tanking and tanking. Their demography problems are getting worse and worse. Yet, they’re getting to be far more military capable and they’re becoming the threat that we thought they were at the beginning of the full-scale invasion and then we said, oh, their army is deeply unprepared and they really suck compared to the Ukrainians, who didn’t really have an army in 2022.

Well, now they do. And so I think there’s this tendency to both underestimate the threat—and I think this probably applies to the China question that you were discussing—and then to dismiss certain countries or certain political actors because we think we understand what is determining their interests, right?

And I think that is kind of where we are again today, unfortunately, whether that comes to China or whether that comes to Russia, and I don’t think we’re understanding the full threats and different threats presented by both.

O’SULLIVAN: Great. We’ve got a lot of questions in the room.

To Eileen over there in the mid to back.

Q: Thank you. Eileen O’Connor. I’m a former State Department and former journalist.

I wanted to ask you about debt and ownership of debt where the, you know, United States Senate has a bill in front of it that’s going to increase the debt significantly, and also China in the Belt and Road Initiative has deals on debt where they actually—if there’s a default they actually can own, you know, basically, shipyards, ports, et cetera.

How is debt to China an economic tool particularly against the United States as our debt increases, and then also around the world? I mean, Oriana, you talked about this with their economic and diplomatic. They use that rather than the military.

So I wanted to ask you that.

O’SULLIVAN: Would you like to comment on this, Emma?

ASHFORD: Sure. Yeah.

I mean, let me—I guess—there was a lot of discussion of this a number of years ago but I think the conclusion that most observers eventually came to was that the Chinese ownership of U.S. debt is in many ways mutually assured destruction, right?

For the Chinese to use it would mean that the value of the debt would go and then they would suffer as a result, and I kind of think a little bit analogously to, you know, some of what we’ve seen in recent years with sanctions on Russia or tariffs that this administration is trying to put on, right? In order to use the weapon you hurt yourself so much that you may not actually want to use it.

So I’m far less concerned about that when it comes to China. I’m probably more doveish on China than Oriana here. You know, for me what I’m concerned about is our ability to access Asian markets, right. I’m not concerned about Chinese-U.S. financial interactions, which seem to me to be a far less significant problem.

O’SULLIVAN: Let me just chime in. A tiny note on that is just I think one of the lessons that we’ve learned now twice in the last couple of years is that economic interdependence may be not as meaningful in staving off conflict than we thought.

Everybody thought, oh, Russia and Europe—you know, the relationship around gas means that we’re both equally invested. It’s not in Russia’s economic interest to jeopardize that. Well, there are things that are more important than economic interests it turns out to Russia. That may also be true in the U.S.-China relationship as well.

Eileen, if you could just pass the microphone next to—oh, you no longer have it. I’m going to try to get in a few so I’m going to—we’ve got lots of hands. I’ll do the best I can to keep people pithy.

Q: Thanks so much. I’ll try to be pithy also. I’m Amy Larsen, most recently at Microsoft and based in the Bay Area.

I was wondering if you could elaborate on some of the ways that you mentioned China has tried to kind of do things differently and under the radar so as not to kind of raise suspicions. How much of that is in the information space, cyberspace versus kinetic, and what do you feel like will be the most likely tool that they turn to in this administration?

Thank you.

O’SULLIVAN: OK. Oriana here—

MASTRO: Like, I can have a very quick answer to this because you should just buy my book, which gives you—(laughter)—the twenty-two cases of things that they do differently.

So the book looks at when they emulate the United States under select conditions—when they exploit, which means that they use a U.S. strategy but in areas where the United States is not competing, and then when they’re entrepreneurial.

So certain aspects of, like, the entrepreneurial status in the military realm are things like their leverage, interpretation of gray zone activities for territorial expansion, the anti-access area denial, use of strategic partnerships over alliances.

You know, when we talk—someone brought up the debt of Belt and Road. That’s not really foreign development assistance the way the United States does foreign development assistance. So there’s a lot of different areas, and you brought up the sort of kinetic/non-kinetic cyber.

So I will say one thing that they’re very good at—we have such a simplified understanding of a competition and what conflict is. It’s, like, conflict is military, competition is economic, political. Conflict is kinetic. Competition is non-kinetic.

But what the Chinese have done over the past fifteen years is they’ve asked themselves what types of activities do we want to be in the competitive space and for people not to consider conflict, and then they’ve moved them in there, right?

So, you know, fifteen years ago we might be, like, oh my gosh, you’re attacking one of our ships in the South China Sea. You know, in 2009 we were, like, this looks like it’s war. Now in 2025 you don’t even see reporting on it.

So when it comes to the cyber realm we always assume civilian is competition, military is conflict, but the Chinese really see it as the opposite. They’re much more likely to be engaged in attacks against the United States in space and cyber on the military side far before they do it on the civilian.

And one of the reasons—and I’ll just conclude with this—that the cyber so important is, you know, people sort of don’t realize China has no conventional capability against the United States, right. Their weapons do not have the range to reach us, you know, in the Bay Area where I live as well.

So they only have space, cyber, and nuclear, and so they’re a hundred percent going to be relying initially on those cyber and space elements.

But their targets are going to be military and that’s why the military—I don’t know where Microsoft is on this but that’s why the military would very much like to comingle our situation with the commercial because we think maybe then China is less likely to mess with the military because they don’t want to mess with the commercial.

O’SULLIVAN: Interesting. Right here, the—

Q: Thank you. Thanks very much. I’m Richard Downie from the Los Angeles World Affairs Council.

This has been a really thought-provoking panel. Thank you very much. You’ve all addressed the issues of alliances and, Oriana, you in particular talked about how important the alliances around China and how—with those alliances China doesn’t have a chance.

But what we’ve seen recently is that our alliance partners are getting stiffed and, in fact, we’re—the alliance partners are getting treated worse in many cases than our non-alliance people because we have leverage over them.

And I wonder if—and what we’re seeing now is indications towards the fact that some of these partners are starting to look at, particularly in the trade area, going to China or other places.

I wonder, could you—do you see this trend? Where do you see this trend going in terms of alliances because, you know, in terms of for us?

Thank you.

O’SULLIVAN: Thank you very much.

I think, Alina, I’ll turn to you with the European lens but it could be anywhere.

POLYAKOVA: Yeah. I think the biggest thing I hear, at least from our core allies in Europe, is this question of U.S. reliability and trust and how deeply, from their perspective, it’s been recently undermined, and they bring a lot of examples but I think the top examples were, one, the cutoff of intelligence sharing to Ukraine.

That was very temporary but still, and the potential cutoff of access to Starlink for Ukraine, which is the underpinning of a lot of their intelligence and missile guidance systems and all of that.

And so as a result it’s not just about the trust in the U.S. government, it’s also trust in U.S. companies, right, and that is a consistent conversation now that is having very specific outcomes and policy decisions that are taking place at the European level and at the national level in European countries.

But my message has always been to our European friends and colleagues when they raise this is, look, you know, we’ve had this partnership, this alliance, that’s benefited both sides significantly and, yes, we’re going through an upheaval.

But compared to the Iraq war, you know, compared to other points in which we disagreed so profoundly I don’t really see this as the worst possible scenario we could be in and I think we just—both sides have to kind of temper down the emotion and focus on the pragmatic outcomes that we can achieve together and that—you know, that may sound a little trite but there are opportunities to play for.

The European-U.S. economic partnership is the biggest, like, something like 1.4 trillion (dollars) in trade that we do with Europe. It’s huge, right, for us and for the Europeans.

And so when you think about competition with China or managing China or Russia, if we get our act together we’re completely capable of doing it. But I think this is the big question of, you know, is what’s happening now in this administration.

Well, obviously, the president thinks in much more transactional terms, doesn’t really like these multilateral agreements, and the Europeans are so invested in multilateralism in a profound way that I don’t see this as a blip. I see this as a continuation of a longer-term process and whoever comes next, whichever party it is, I don’t think there’s going to be any going back to this multilateral model.

And I think it really behooves our allies to take some accountability and responsibility and, like, show up at the table and deliver and stop talking about it.

O’SULLIVAN: So we’re, unfortunately, out of time and, obviously, we could keep this going. Lots of interest in the room. I like that we’ve ended on a somewhat positive note in the sense that—(laughter)—while our relationship with Europe is likely to be fundamentally different it is still going to be a very important relationship and it behooves us all to do the hard thinking about what these kinds of alliances and relationships mean in a world where the global order is changing in some fundamental ways.

This has been such fun, such a great panel. Really grateful to Emma, Oriana, and Alina. Please join me in thanking them. (Applause.)

(END)

This is an uncorrected transcript.

CARUSO-CABRERA: Good morning, everyone. Thanks, Irina. It’s a pleasure to see you all here on this rainy Saturday morning in New York City. Thanks for being here.

As a reminder, this is “Power, Politics, and the Tech Industry.” This is on the record and being livestreamed.

Our panelists today: Chinmayi Arun is with Yale Law School. Janet Haven is with Data & Society. Adam Segal is probably a familiar face; he is with CFR. And Renée DiResta is with Georgetown University. Pleasure to have to all here.

The title is probably purposely broad: “Power, Politics, and the Tech Industry.” I think if we surveyed everyone here about what they think this will be about or should be about, it would be real Rorschach about how you see the world at the moment.

And so—(laughs)—we’re going to start with a broad question: Why this panel right now? What does this tech moment mean to you?

Janet, let me start with you.

HAVEN: Sure. Good morning, everyone. It’s great to see you all. Thanks for your—thanks for joining us.

So I would come at this question from two entrance points because it’s a—it is a really, really broad question. So one way to get into this is to think about the outsized role of the tech industry, and specifically tech industry leaders from AI companies that are playing an outsized role in setting government agendas. And I think we, you know, are used to seeing tech lobbyists in DC or used to seeing a lot of influence from the tech companies in how legislation does or doesn’t play out. But I think what we’re seeing now is a situation where there is really a wielding of state power, in a different way, and I think we’re seeing that in all kinds of areas: in procurement, in setting geopolitical strategy, in setting national security strategy, industrial policy, in the production of scientific knowledge. We see the influence of the tech industry and Silicon Valley logic across the board. So that’s one way that I think we can get into this question.

A second way is really the drive with truly very little evidence of positive returns to adopt untested and ungoverned AI systems into government, deploy them across government services, and that’s really happening at the expense of the American people. It’s happening—both the American worker, government workers who are being laid off with the expectation that AI will be able to do their jobs, but also the American people who rely on the government to provide services. And we are talking about putting in place a set of AI systems that are being sold by these companies that we cannot really rely on to work in the ways that we expect them to.

CARUSO-CABRERA: Yes, I just want to—one thing. It’s not just that AI would replace them, but there is also belief that there were just too many of them, right, so that’s a totally different story, but that’s not the whole reason why there have been so many layoffs, right?

HAVEN: I think that the narrative that AI can bring efficiency to government—

CARUSO-CABRERA: Oh, there—yeah, sure.

HAVEN: —is very much informing this move; that it is OK to make these kind of deep cuts because we have this easy alternative in place.

CARUSO-CABRERA: Adam, how about you?

SEGAL: So from a foreign policy/national security perspective, I would focus on three points—the first, Janet referred to, which is the shift in innovation from government labs for national security to the private sector. So in 2022, the Defense Department published a list of fourteen critical emerging technologies. The private sector leads for eleven of those. So AI is the most clear case that we see now, but we see that around quantum, and supercomputing, and all these places.

So that is a massive shift, and you can see in former director—former NSA Jake Sullivan’s speech, when the Biden administration released its national security memo on the uses of AI, one of the defining characteristics, he said, is we have to rely on the private sector. So I think of that as an incredibly dramatic change.

The second is the role of the private sector in defending critical infrastructure, and in particular, digital infrastructure, and here Ukraine is the clearest example, right? We saw AWS, and Microsoft, and Google help move Ukrainian data outside of Ukraine to protect it from Russian attacks; Mandiant and CrowdStrike, and Google, and others doing cybersecurity; Starlink, you know, acting in some ways— in that same way, defending Ukraine, keeping internet up; and then Elon Musk—to go to Janet’s point—kind of inserting himself, making decisions about where the Ukrainian Army could or could not operate based on what his sense of escalation was.

But this was a very specific case. Of course we’re worried about what will happen in Taiwan—will the companies act the same way, are their economic incentives going to align?

And then, third, lots of talks about weaponized interdependence, right—how does the U.S. use its strength and specific technology sectors, in particular around semiconductors, to try to gain leverage over China? We are incredibly reliant on three companies: Nvidia, ASML, and TSMC, so I don’t think we’ve seen a concentration of power like that for a specific pool of economic statecraft before.

CARUSO-CABRERA: However, in the history of the United States when you think about, for example, the rule of the oil industry during war, et cetera?

SEGAL: I think when we saw the oil industry or, you know, the American car manufacturers play a role in World War II, there were a lot more of them, right, so we’re talking about manufacturing across the sector.

Also, with the oil industry—or, you know, you point to the fruit companies in Guatemala and Latin America in the ’50s and ’60s, that was a very narrow type of intervention, based on regime type, and the tech companies are holding the data of billions of people, and they are affecting, you know, every country except for the ones that, you know, are now shifting from U.S. platforms to Chinese platforms.

CARUSO-CABRERA: Renée, you look eager to answer. Go ahead. (Laughter.)

DIRESTA: I see it—so I study adversarial abuse online. I was the head of something called Stanford Internet Observatory for five years before going to Georgetown. One of the things that I see here is a replay of the dynamics in the social media regulatory conversation and the dynamics around that where we had platforms as unaccountable private power that sort of existed independently of regulations, and the challenges that we saw as different—you know, different regions took different governance approaches.

In the United States, for a very long time, we had largely a self-regulatory approach because of polarization in the United States. We did nothing. We assumed that self-regulation would be enough, and we allowed that to just kind of continue. We had what we call in the industry—and I came from tech; I went into academia in 2019, but I was in tech and that was how I was invited to join Stanford.

We saw what we called like working the reps where Democrats and Republicans used to just kind of try to prevail upon the platforms through public pressure—you should change your policies to be this way; no, no, you should change your policies to be that way. And this led to a lot of whipsawing back and forth into what those policies were, leading to impacts on the users, to us, even though we had no say in any way on what those policies were, even as we were the ones who were impacted.

This was handled very differently in Europe, right? You had the Digital Services Act, which is now in force, which, you know, certain aspects of it—for example, the disinformation code of practice converts from optional to pseudo-mandatory on July 1. That’s leading to very significant fights actually with the current administration because of the recognition that tech platforms have geopolitical outcomes; that the moderation policies of platforms lead to political outcomes for the policies, you know, for the parties that use them as propaganda mouthpieces, for example. So you are starting to see the ways in which the tools that platforms put in the hands of political parties lead to material outcomes in the real world, and so the governance structures of those platforms, of those, you know, social media platforms—and now with AI, as well—they have very material, real-world impacts. So we’re seeing power struggles to either regulate or not regulate them, and it is the users that continue to be impacted, even as we ourselves have almost no agency over them whatsoever.

So what I would like to see is much more in the way of giving users more control, and very few regulatory ecosystems do that in any way.

CARUSO-CABRERA: Not even Europe?

DIRESTA: Europe’s is—funny enough, gives users I would say the most in that the Digital Services Act provides a right to complain if your content is moderated. That is one of the things that it does. In the United States you really have no recourse whatsoever. So there are—

CARUSO-CABRERA: Right to complain if your content is moderated.

DIRESTA: Yes.

CARUSO-CABRERA: And do they also have a right to removal, right? Aren’t they—can’t you as a user say—

DIRESTA: Yes, that as well. You can have—

CARUSO-CABRERA: —remove me from your platform?

DIRESTA: That’s sort of—(inaudible). That’s not under the Digital Services Act, I don’t think.

CARUSO-CABRERA: Got it.

DIRESTA: It’s sort of a law that existed prior. But, yes, various pieces of European tech regulation provide more protection for users in ways that American law does not.

CARUSO-CABRERA: So what would you say to—and you hear this all the time—what would you say to members of the tech industry who say—and that’s precisely why companies like—I think of all the tech companies that have been created here, and yet we really can’t name one that was created in Europe.

DIRESTA: I mean, this is the counterpoint, right, like where are things built versus where they are regulated. There is—that is always—

CARUSO-CABRERA: But is it accurate?

DIRESTA: You know, I think this is the—this is the tension that we live with. That’s a no.

CARUSO-CABRERA: It’s the tradeoff, right?

DIRESTA: It’s a tradeoff, yeah.

CARUSO-CABRERA: Chinmayi, I think you’ve thought a lot about this tradeoff.

ARUN: Well, I have because I’ve always looked at what I like to call the big tech companies as transnational actors, and the only person on this panel that isn’t American—I grew up in India, I worked in India for many years, and India is one of the biggest markets for these companies. And so although I’ve been here for several years now, I tend to study these companies in terms of the way in which they operate in the world and not just in the U.S. I’m also based at a law school, and so it’s interesting to me that different states feel like they’re engaging with the companies, almost like they are domestic actors, and like what the companies do elsewhere, like in Myanmar, isn’t really of concern to people in Europe or the United States.

And in my work I’ve found that that’s not true. What a company does elsewhere is usually related to what it’s doing in more powerful states, so you might think of it as kind of simultaneously trying to change the legal order and kind of regulatory language around the world. And so companies, for example, around the world are generally in favor of being allowed to collect as much data as possible and be allowed to do whatever—they like flexibility in what they are allowed to do with it.

You see the companies pushing for that at the WTO level. Sometimes you see the United States allying with U.S. companies about it, but the Biden administration, for example, was not necessarily pro-free data flows.

In Europe, you’ll see, you know, picking up from where Renée left off, Europe makes an effort to regulate these transnational companies because it’s more powerful than Myanmar, for example. But Europe is also finding itself a little bit in a Myanmar problem where, as the companies get more powerful, they are able to overwhelm European regulators, and so Europe can create a data protection regulator. But the companies still have the resources to continue to battle everyone that brings cases before the regulator to an extent where the regulator is not actually able to make a dent in their business. And that’s a powerful state. If you look—

CARUSO-CABRERA: And should that be a goal to make a dent in their business?

ARUN: Ideally, yes, because, like, if you think of the companies as transnational actors that are looking to profit as much as possible, the way they will do that is in two traditional ways, right—try to market products that will make them profits, and if, as Janet says, those products are not exactly—they don’t exactly do what they say they do, like if they’re promising a level of governance that they are not capable of, for example or, alternatively, the companies are using value chains like data annotators that are exploitative. Again, you profit if you’re not paying people as much as you should, and you are able to find sites in the world where you can do that. But as the companies get more profitable and more powerful, those practices shift to other parts of the world because they are able to engage with more powerful regulators and persuade them, also, that these practices are OK.

And so that’s why I say that, if you pay attention to a state like Myanmar, which is very weak and where the companies going in are like we will bring you telecom infrastructure, we will give you Facebook’s free basic—you know, free internet; why would you not want that, and then kind of look at what happens if that happens—if that sort of gift is like the Trojan Horse. I’m not sure the companies knew that when they offered it. But if it’s done without any view to what risks might come and without any accountability for what might happen, it gives you a sense of what the companies’ practices are. And that’s useful to know.

CARUSO-CABRERA: And your solution would be what?

ARUN: I think—so I’ve written a paper on this called “The Silicon Valley Effect”—

CARUSO-CABRERA: —That’s why I asked, yeah. (Laughter.)

ARUN: Thank you. I was—it’s very kind of you. I was trying to behave myself, but not—but if you want to read the sixty-page paper, you’re welcome to. (Laughter.)

So it suggested that what we need is a—is a transnational legal order, which is that movements and democratic regulators that are basically all allied to where it’s a democratic and public interest find ways to join hands because they need transnational power to push back the companies’ transnational power.

CARUSO-CABRERA: And what do we do about the actors that you don’t agree with—what their transnational view of the world would be or—I mean, would China be part of that? What if they—what if unnamed countries that don’t agree with you decide that they’re not going to go along with this?

ARUN: I’m not—so this is almost like a sociological solution, right? The reason I said transnational and not international is that transnational is a more flexible category. It allows people to join hands around shared norms, and I think that it’s possible, for example, that there are Chinese actors that think that data protection is more orderly and that it maybe protects their interests a little bit in view of the American companies that want to do business in China or it creates a global data regime that keeps companies like TikTok operational in parts of the world that have concerns about them.

So this is not—I’m not saying that there is a single set of principles that I have thought of that everyone will get behind; I’m just saying that it is possible. And saying transnational instead of international allows for people to join as they see these values as being in their interests.

CARUSO-CABRERA: Adam, you’ve written recently about what if the U.S. leads. What is the name of the piece in Foreign Affairs—what if the U.S. loses its dominance in AI to try and—

SEGAL: What if the U.S. comes second?

CARUSO-CABRERA: Yes. Yeah.

SEGAL: Well, but I think—so I—

CARUSO-CABRERA: I mean, that goes to what she’s talking about a little bit here, right—the tradeoffs we were discussing.

SEGAL: Well, a little bit of the back and forth between you and Chinmayi—so during the—I think it’s fair to say, during the Biden administration—the Biden administration basically said, look, we don’t like—we should try to convince the rest of the world that how China regulates digital spaces is bad. We know we have differences with Europe, right? We have differences over the DSM, DSA. We think that they are too reflexively regulatory, but we think that those gaps can be bridged, and those gaps are less important than the gaps with the Chinese.

And then we should go around the world, we should—basically the Europeans and the U.S. should talk through the TTC—the Technology Trade Council—and other types of forums, try to narrow that gap, and then go to India, and Brazil, and South Africa, and Indonesia—the pivot states—and say you want to adopt our forms of digital governance.

Now it had some successes and some not successes. I would say there was certainly some more convergence of thinking around anti-monopoly and regulation thinking in parts of that Biden administration—not all of the Biden administration; parts of it. But the Trump administration has basically said, actually, no. We have normative differences with the Chinese and with the Europeans, right? When Vice President Vance went to the AI Summit, you know, he essentially, not only called out the Europeans for regulation, which is, you know, the Biden administration did as well, but also for being anti-democratic, or essentially saying you are censoring these other voices, and then, you know, inserting themselves into elections in some way by supporting—saying, you know, you shouldn’t be taking down Nazi or other—the AfD in Germany kind of perspective.

So I think we’re in a very different world now about, you know, how can we have these kind of discussions and agreements about what norms we want to move to, and, you know, one of the big questions is going to be—is how do we move forward with these discussions on AI, right, because we had a kind of—we have a track at the UN, which, you know, goes slowly, and the Chinese have one view of it, and the U.S. and its partners have another.

We had these safety summits, which were very much focused on safety, but again, the Trump administration said, oh, no, this is too much talk about safety; let’s talk about innovation and growth—which the French also supported.

So we’re really at an inflection point, I think, where we talk about—internationally about how these norms are discussed.

CARUSO-CABRERA: Renée, I saw you nodding your head kind of vigorously earlier. Is there something that you want to—

DIRESTA: Listening—active listening. (Laughter.)

CARUSO-CABRERA: OK, Janet, to you want to weigh in on this?

DIRESTA: So I think that this is the—

CARUSO-CABRERA: Oh, no, Renée—

DIRESTA: No, it’s holding two things in our heads simultaneously, which is that European regulations are not necessarily what we would want to see here in the U.S. but there is something there, as opposed to this whipsawing back and forth where what you see in the U.S., unfortunately, is the job-owning style of pseudo-regulation where, you know, a new, powerful party comes into the White House and all of a sudden our entire moderation framework changes, and it happens entirely in response to implied political pressure. That’s what we have here. At least there something is written down and you have a general sense of what’s going to happen whether we like it or not.

CARUSO-CABRERA: What do you think of the notion of a transnational, you know, body or transnational notion?

DIRESTA: I feel—my personal sense is I don’t—you know, I tend to fall in the realm of the pragmatist where I just don’t believe that things are ever going to happen.

CARUSO-CABRERA: What if—OK, but let’s pretend.

DIRESTA: No, I’m sorry, that’s—(laughter)—I guess it is we can’t do anything here—

CARUSO-CABRERA: If it could?

DIRESTA: —in the United States, let alone globally, so I—

CARUSO-CABRERA: Right, yeah. (Laughs.)

DIRESTA: If it could, I mean, sure, that would be lovely. I just don’t believe that it ever will.

CARUSO-CABRERA: Would it be good? I mean, if we have all these different countries coming together, we don’t know that the ultimate policies would necessarily be the ones that we think are good, right?

DIRESTA: I would like to see a world in which we have created an environment where there are so many platforms that it actually doesn’t matter, and the reason for that is because I don’t believe that there should be or ever has been any such thing as a global public square, and so where I spend much more of my time as a person interested in, like, the underpinnings of the technology is in protocol-based platforms at this point. I think that that sort of technology is much more interesting than a continual, like, the attempted governance of centralized platforms. I just don’t believe that the attempted governance of centralized platforms works because the norms are too different, the values are too different.

The reason that Vice President Vance is over there screaming about the Europeans, about content moderation is because the Germans believe that Nazi-speak should be illegal and the Americans don’t, and that is a fundamentally, like, a normative cultural difference. And what we have done largely is say, OK, well, we’re going to geofence this, right? In Europe you’re going to see this content, and in America you’re going to see that content, and that’s been how it has been handled.

I just don’t think that one platform to rule them all is the way that we should be handling it. I think that we should have markets and technologies that facilitate a rise of as many platforms as possible, and I think that protocol-based technology gives us that. I think we should be really pursuing interoperability, ways that users can take their data and move it around to places, and a proliferation of platforms, which essentially is not anti-monopoly; it’s not saying we should break them up. It’s saying we should facilitate the rise of technologies that render them moot.

CARUSO-CABRERA: Janet, I’m going to get to you in a second, but I saw Chinmayi shaking her head. (Laughter.) Journalists love controversy—(laughter)—so if you seem to disagree—

ARUN: Look, I do. So this is actually—you know, I know where this comes from, but I think of it as a generation of thinking about social media platforms that’s outdated because it doesn’t engage with their business models. I would love a universe in which platforms decided they don’t care about profit enough to kind of allow this ecosystem.

CARUSO-CABRERA: I don’t understand that the focus on profit versus what she’s—

ARUN: So I will tell—I’ll tell you—so I think of it as kind of the surface versus what lies beneath, so the surface of platform questions, which I was super interested in and have written about also because I think that these are important questions, and Renée is correct—that there is geofencing because countries’ values don’t align and all of that. But underpinning all of this is the platforms’ business models, right? Why have they built these things? Is it because they want to allow people to communicate with each other? No. That’s a very happy side effect. But what they actually doing is collecting data, finding ways to market products to people using this data. And that’s the business model.

Now in this business model, the platforms that have access to the maximum data and to the technology with AI, which is expensive technology, expensive resources that allow them to do this targeting most effectively. Those are the companies that win. That’s the race to the top, and that means that anti-trust will help, to a degree, but the question is how do you—how do you break company dominance, and I’m not sure that protocols are the—they’ll be a part of it, but they’re not the only way.

CARUSO-CABRERA: Yeah. I guess I take slight issue in your sequencing. I think—I think people in technology build things because they want to build them, and then sometimes they look for the business model that ends up supporting it later, right? I mean, Mark Zuckerberg built Facebook to, you know, judge how people look at Harvard, right? I mean, that was the core thing, and you know, I believe that Sergey Brin and Larry Page were looking for a better way to do search, right? Ultimately it would lead to—but you’re a skeptic—no, I see that, but point of disagreement on my part. (Laughter.)

Janet, go ahead.

HAVEN: Yeah, I mean, I guess—I mean, the way that I would think about it is, you know, why do we regulate? Like, what is the problem that we’re trying to solve? And I think, you know—

CARUO-CABRERA: Yeah, because I’m not sure we quite know.

HAVEN: I have some ideas. (Laughter.) Happy to—happy to share.

And, I mean, I think that—I think that protocols, you know, are—they solve one layer of that problem, right?

DIRESTA: Sure.

HAVEN: They don’t solve all the problems.

DIRESTA: No.

HAVEN: And I—you know, I mean, I run an organization that cares about justice, essentially, that cares about how technologies impact people. And so we are much less likely to be thinking about the protocol level—and I’m glad Renée is—than thinking about the kinds of regulatory questions that are addressed by things like data privacy laws.

 So, you know, the way—there’s a—I think there’s a stack of things that we can think about in approaching regulation, and one of those—which Chinmayi and others have mentioned—is, you know, the idea of concentration of power. Right now, we have—we are seeing this unbelievable, extreme concentration of power in a few companies that, you know, as I started with, are not only setting the agenda for society, but they’re setting the agenda for the government, for our geopolitical strategy, for all kinds of ways that we are interacting with the world. And that kind of concentration of power is a problem, and it’s something that regulation could potentially address.

We also have a problem with just basic, fundamental rights protections, right? We do not have governed AI. The laws that we have on the books are civil rights laws. Our civil liberties laws in the United States are not applied in the digital space. And so, under the Biden administration, they put out a document that was—it was not policy but it was essentially a policy blueprint called the blueprint for AI.

CARUSO-CABRERA: You were involved in that, right?

HAVEN: I was not directly involved with it. I wasn’t in government.

CARUSO-CABRERA: But you were on an advisory panel under—

HAVEN: I sat on the National AI Advisory Committee to the White House, that’s right.

CARUSO-CABRERA—That’s different report.

HAVEN: But we didn’t do that. It was the Office of Science and Technology Policy that put out the blueprint for an AI bill of rights. And that laid out five basic protections that they posited all Americans should have when encountering AI systems. And these are really basic things like safe and effective systems—like, you should know the AI actually does the thing that it says it’s doing; you know, protection from algorithmic discrimination; data privacy; A human in the loop—if something goes wrong, do you have somebody to call, right? These are like super basic things. I cannot imagine that most people would have a problem with them. These are not guaranteed for you now, OK? You do not have these protections. And so that’s a real problem in the regulatory space.

I would say another reason that we regulate is because we may want to have public interest outcomes from the development of these technologies. Right now we really don’t. We have our entire, you know, concentrated tech industry is essentially focused on products that are pursuing goals set by private companies, and they are not being set by the public sector or by the public interest. And there are ways that we might want to invest in research, in different kinds of computing resources that would provide those spaces to have public interest outcomes and services for regular people.

And then I think the last thing—just to jump in because it is—I think this is particularly relevant and something that doesn’t get talked about a lot—the last reason I think it’s really important to regulate is business certainty; like we cannot really have—I mean, people talk about this sort of false choice between innovation and regulation, and—

CARUSO-CABRERA: Do you really think that’s a false choice?

HAVEN: Yes, I do because I think that if you don’t have business

CARUSO-CABRERA: You can’t regulate too much that you stifle innovation?

HAVEN: You can absolutely regulate too much.

CARUSO-CABRERA: OK.

HAVEN: That’s not what I said.

CARUSO-CABRERA: OK, so that choice. (Laughter.)

HAVEN: You need to have business certainty to be able to regulate, to roll out products. Any of you here who are running businesses and are trying to integrate AI into your companies, do you know what the product liability situation is? No—(laughs)—because it hasn’t really been worked out. We really don’t know. Do we know what the data issues are, the copyright issues, the intellectual property? No, we do not.

And so, you know, that level of business uncertainty I think is a real challenge for pushing for innovation that can really stick across the board, apart from innovation that accrues to a few large companies that are already in control.

CARUSO-CABRERA: OK, so two follow-on points that I want to ask, and I think is open to the panel—I think, Renée, you may be best on this—is when you talk about concentration of power, this morning Barron’s—they cover capitalism—(laughter)—they have a big story about how search is potentially being decimated by AI, right? And so now we’ve had this innovation that has taken what was previously perceived as something for the most powerful companies in the world, and now their business model is being disrupted. Of course they’re trying to co-opt that business model.

But is that, to some degree, what you are talking about in terms of fostering—is that an example of how—we sit here and think, oh, this company is so powerful. Microsoft, for example, gets sued for ten years, and then eventually it turns out that there is somebody else out there that’s disrupting. And we’ve spent a lot of time thinking about an issue that eventually becomes a moot point.

DIRESTA: This was the argument with the social platforms. I mean, there are these new emergent things that happen as a result of the new technologies obviating the issue.

So it has been interesting to see Google try to, you know, remain at the forefront of its own business model though, at the same time, the challenge that you have there is, even as that happens, the question is what are the incentives for the content creators that in a sense it winds up cannibalizing work to produce what we’re now calling answer engines as opposed to search engines, so you do wind up in a novel situation where I think we’re starting to see interesting questions around when Google is also no longer directing traffic to the websites because it’s simply answering the question, like that also has pretty significant downstream effects on the entirety of the ecosystem: the news producers that normally it would be directing some traffic to, the content creators that normally it would be routing traffic to, the accuracy of the information and what happens when Google is now the speaker, so to speak, in the equation.

So it’s a pretty significant change, and I think there is a lot of really both economic and legal questions as a result.

SEGAL: I mean, even from a policy perspective, we could still say that Google hung on too long, right; that the giants with their buying up of other small companies, other types of blocking things, that we would have had—you know, we would have had AI even earlier if—or AI text and search—if Google hadn’t dominated the space.

So I think there is probably some meaning there that we want to figure out—well, did it go on for too long, you know, is this environment producing enough startups, you know. I don’t—what’s the metric there that it is competitive enough as opposed to, well, eventually something came up, and that somehow was proof that the companies don’t have enough power.

CARUSO-CABRERA: Janet, the other point you brought up that I think was interesting was a lack of setting of sort of national policy goals and outcomes from the technology. Alex Karp, founder of Palantir, has actually written about this and suggested that a lot of the founders—and he was openly critical, as well, of workers, for example, in Google or Amazon who didn’t want to help the U.S. government and the Defense Department, but at the same time, were very, very happy to create algorithms and products that made us, you know, click on an ad, et cetera, as if that were better, right?

I mean, how do we—do we involve the tech companies in that? Do we want them to be part of a national policy setting goal? How do we bring that around?

I mean, he also argues that, you know, tech companies have tried to be sans-national, I guess, and they have to acknowledge that they are national products of a country, and to some degree, do they need to be—do U.S. companies need to be patriotic? I’m probably putting words in his mouth, but he certainly thought about these issues.

HAVEN: Uh-huh. (Pause.)

CARUSO-CABRERA: I didn’t ask you a question there. I just—(laughter)—

HAVEN: So I think there is obviously a role to play between—I mean, I would not argue that the federal government should replicate the technology industry and that all, you know, technology development should be, you know, nationalized, or something like that, right? So like, obviously, there needs to be an interplay, and to Adam’s point, you know, there is a role to play in, you know, sort of designating and protecting critical infrastructure.

But I think that what we should be concerned about is the idea that, A, it’s still a very speculative technological idea, right—the idea of artificial general intelligence, which is not actually a thing that exists right now, and it is highly contested whether it could exist, right, in scientific communities, and it is a kind of—the idea of it is a kind of everything machine, but it is not really very well specified.

So that is the goal of the big AI companies, and that is really the goal that has been put to the government as kind of the North Star. And what that means is that we have seen, for instance, this huge outlay of private capital, but also with government, you know, support to, for instance, build hundreds of data centers around the country, inserting data centers into communities where they have environmental impacts, where they displace people, where they are starting to displace jobs. And so, you know, we see that. We see a drive on a national security frame that we are engaged in an AI cold war with China that is, you know, driven very much by this idea that we need to win that war without really specifying in the realm of a technology that doesn’t yet exist, like, what does that—what does that really mean? What does that really look like?

CARUSO-CABRERA: Does anybody know what it means?

HAVEN: I feel like Adam—

SEGAL: No. (Laughter.) Now would be a good time to ask me about the Foreign Affairs article. (Laughter.)

CARUSO-CABRERA: Doesn’t anybody know what it means? Nothing anyone knows. (Laughter.)

Chinmayi—we’re going to go to audience questions in a second, but Chinmayi, I’ll give you the last word here before we take audience questions.

ARUN: Thank you. I mean, this is such an interesting discussion. I just—you know, in case I suggested inadvertently that I am anti-innovation, I’m really not. (Laughter.) I love technology, always have.

I just—you know, I think that this whole system—you said capitalism and you looked at me—(laughter)-

CARUSO-CABRERA: Well, so I read the first, you know, twenty pages of your article.

ARUN: Thank you.

CARUSO-CABRERA: And you refer to the capitalistic drive of the companies, so that’s why. Yeah.

ARUN: And so this is exactly—it is one model of innovation, and maybe you believe in it, maybe you don’t, but there are other things that the government, for example, in science funding has established, which is that we also need innovation that’s not profitable. It sends innovation down different paths.

I think other people on this panel have brought it up—that there needs to be space for that, and the companies are killing that with their dominance so, you know, I don’t see it as anti-innovation. I see it as giving space to innovation. So that’s one.

Two is that I’m not—you know, again, because I’m not American I’m not sure where this comes from, but I think that the world is interconnected in great ways. So I was looking this up and, for example, Black Lives Matter—apparently the—I don’t know if you know the Korean pop group—if you’ve got nieces or children—BTS. They’re all a little obsessed with it.

CARUSO-CABRERA: Yeah, K-Pop. They had a huge show in Jersey a couple of years ago. It sold out.

ARUN: So BTS ended up getting Americans to raise like—

CARUSO-CABRERA: B-T-S? BTS, yeah.

ARUN: —a quarter million—it was over a million dollars for Black Lives Matter because they said that this is a value. We care about people who are marginalized.

Now you could see that as foreign interference and terrible, or you could see it as reinforcement of something that young people care about over here.

CARUSO-CABRERA: OK, so it is 10:10, so this is where I’m supposed to remind everybody we’re going to take audience questions for the next thirty-five minutes. There are mics around the room. Please, when you get the mic, stand up, state your name, affiliation, and the state you’re from—we don’t often do that here at CFR, but this is a national conference. There’s going to be multiple staff members stationed around the room to provide you the mics. Please, no speeches, just questions—(laughter)—and we have a lady from Boston, right? Right here in the front. We met in the elevator last night.

Please stand, state your name, age, rank, you know—(laughter)—

Q: Alison Sander, Boston. So I want to follow up—and is this on the record or off the record?

CARUSO-CABRERA: This is on the record and livestreamed right now. (Laughter.)

Q: OK, all right.

CARUSO-CABRERA: There are millions of people listening. (Laughter.)

Q: So I want to get to a piece that Janet raised that sort of circled around the panel. Demis Hassabis, who as you know is a Nobel Prize winner, DeepMind, spoke in Davos in January and sent kind of chills through my veins because he said originally he felt secure about all this technology because he thought there would be time to develop it. But when this became a space race with China, then a lot of those protections, and time to develop it, and checking, and all of that sort of went aside. And as he explained it, there is just one winner. With something like AI you don’t want to come in second for lots of reasons he walked us through. And part of the implications of that is that there’s a push for humans out of the loop, so there’s a whole switch from the algorithm of HITL to HOTL, so humans in the loop to humans out, and you can see some of this in Ukraine in a missile—and in missiles and other things.

So I would love to get your advice. I don’t quite understand what options the panel has because I don’t see governance coming back anytime to international or national bodies, but if you have that concern, what do you think the Council should be doing about this.

CARUSO-CABRERA: Simple. (Laughter.)

SEGAL: So I—look, I think it’s totally right. There’s two dynamics, in fact. There’s the competition with China which people refer to, and as Janet said it’s the idea being that we’re somehow racing to AGI—the general intelligence—and the first one that gets there is going to somehow lock everyone else out.

I don’t know how that works, quite honestly. One, I don’t—

CARUSO-CABRERA: And do you think it’s true? I mean, is there only one winner? Is it—

SEGAL: I don’t think it’s true, so I, like—and the Chinese don’t think it’s true, right. When you see how the Chinese are talking about artificial intelligence, they are not as worried about existential risk in AGI. They are focused on how are we going to apply it in the economy, right? They are much more sector-based: defense work, surveillance, all those things. And they’re not involved in that same race.

And the Foreign Affairs piece that I did with Sebastiann Elbaum, who is in the room—he’s our visiting technologist in residence—essentially argues that there is going to be multiple competitions in different AI models. They’re going to be strong in some places and weak in others, and people are going to want to move back and forth, and we should be planning for that: how do we make sure that people can move back and forth between models safely, how can they adjudicate between different models, how do we want to share data if we’re going to share data and protect privacy, and things like that.

The other is, of course, just economics, right, and even though the companies at first said, well, we’re going to self-restrain, once ChatGPT came out then they all started racing towards the bottom, right? And so they are pushing things out and they are basically saying, oh, yeah, we’re going to do less security than we—inspections, and audits, and things that we did before.

I mean, the solutions to those are, you know, many of the things that Janet raised, like are we going to start applying—we have—I don’t think we need a national AI law right now. We have other types of law that can be applied around specific sectors that could start being clarified about the liabilities and other things in that space, and that’s what we need to happen. It’s going to happen domestically; I think internationally there’s very little chance of that happening, but we could start domestic.

CARUSO-CABRERA: Janet?

HAVEN: Yeah, I mean, I would say in terms of things—I agree with everything you said—and I would say in terms of, you know, your question of, like, what can we do, I mean, very practically speaking, there is—what is it called, the big, beautiful budget bill—(laughter)—

SEGAL: BBBB.

HAVEN: —thing that is sitting in front of our legislators right now at the national level. It includes a provision that would ban states from passing legislation on AI for the next ten years, which is, right, like kind of bizarre, and it could pass.

Now there are a whole set of like really odd bedfellows who are allied for and against this but, you know, it is—I guess what I would say is, like, that’s something that you can do—is push back on the ten-year moratorium because right now the federal government is very unlikely to pass real protections, real legislation, real regulation that is both about, you know, safety and innovation, and that balances those in a way that I think, you know, would work.

But states—in this case it turns out—really are the laboratories of democracy, and there are a lot of state-level AI bills. There is also the issue that, as Adam said—you know, there is a lot that can be done with existing law, so essentially being able to engage attorneys general at the state level to apply existing law to protect people against AI systems is something that is really just starting to happen, and the ten-year moratorium—like nobody really knows—but like might or might not, you know, kind of get in the way there.

SEGAL: I saw Mike wander in, and I really—you asked also what CFR should do, so I should hit that. (Laughter.)

So we have a lot of AI programming these days, and we are looking at a range of issues between global governance, how local laws affect foreign policy, how they get reflected out. We’ve brought on at least three new people that are working in emerging technology areas and AI, so you can expect to see a lot more programming, and a lot more writing and policy ideas coming from us over the next—

CARUSO-CABRERA: So, Janet, you argue actually in favor of federalism which is one of the cornerstones in the United States. Why are you smiling?

SEGAL: We’re for federalism, yeah, yeah. (Laughter.)

CARUSO-CABRERA: Chinmayi, did you want to weigh in on that at all?

ARUN: Well, federalism, no, but—(laughter)—but I do want to—I’ll leave that to you. (Laughs.)

I did, you know—my simple two points are just it helps to pay attention to what’s happening in the world, to listen to the canaries in the coal mine, and two is that I think it’s helpful, through federalism—I love the blueprint as a values document. I think it would have been helpful if the blueprint also acknowledged that these companies act elsewhere. It wouldn’t have—it would have taken two bullet points, and it would have been really powerful.

CARUSO-CABRERA: Wow, lots of—

HAVEN: Whoa, OK. (Laughter.)

CARUSO-CABRERA: OK, everybody here. The gentleman near—right there. Oh, your name, where you work, where you live—

Q: Yes, good morning. My name is J.D. Englehart. I work at In-Q-Tel. I live in London, England.

I’m very interested in how you assess the role of the Gulf states in the development and acceleration of AI. And what are the implications for U.S. national security and economic security? Thank you.

CARUSO-CABRERA: Can you remind people what In-Q-Tel is, for those who don’t know?

Q: Yes, we’re a private non-profit that was chartered by CIA to invest in venture-backed companies. We’ve been in business for twenty-six years and invested in over 800 companies globally.

CARUSO-CABRERA: Sounds so fun. (Laughter.) Go ahead.

SEGAL: Am I taking this?

CARUSO-CABRERA: Yeah, Gulf states. (Laughter.)

DIRESTA: Gulf states, go.

SEGAL: So the Gulf states fit in this one specific model of how we’re going to win the AI race, right, through massive data infrastructure and energy, and the Gulf states have both those things—or want to build those things. Also the argument being that we are trying to keep the Gulf states in the U.S. tech stack as opposed to the Chinese tech stack, right?

So the Biden administration, on their way out the door, introduced the AI diffusion guidelines, which essentially divided the world into three tiers. The first tier is, you know, everybody that we would definitely give things to, so our closest allies. The third tier was people we will never give anything to—so the Chinese, and the Russians, and others. And then the vast majority of the world was in the second tier, but a lot of those countries in the second tier were pretty unhappy to be in the second tier. The Israelis, the Poles, and some others were like, we should be in the first tier.

Essentially the Trump administration said we should actually try to diffuse as quickly as possible to as many countries to get them tied into our stacks. Now, again, is that how AI is going to work? I’m not sure.

I think the argument counter the close alliance with the Gulf has been how reliable allies are they? Are they going to continue to try and play us against the Chinese like they have in the past and will probably, in my mind, continue to try to do. I mean, if I was a developing country or a smaller country, that would be—my plan would be to try to move back and forth between the tech stacks.

You know, we certainly have had in the past concerns about Saudis and UAE human rights abuses and the use of tech on those frames there, and diversion, right? Is the technology going to leap from Saudi or UAE back to the Chinese—again, given the connections to China.

We don’t know the specifics yet, but those would all be things that I would highlight.

CARUSO-CABRERA: And when you use the word diffuse, you mean the tech—within the AI world, the word diffusion has particular meaning, right?

SEGAL: Yeah, it essentially means tying another country into the tech stack from the chips to the model, right, so that they would use U.S. models as opposed to Chinese.

CARUSO-CABRERA: Let’s go to the other side of the room here. The gentleman way in the back—yes.

Please stand, state your name, where you work, where you are from.

Q: Hello—oh, loud. My name is Noah Aptekar. I work with tech startups coming out of having worked at SpaceX, live in California. Is this thing cutting out?

CARUSO-CABRERA: You’re on. Yeah, we hear you. Yep.

Q: OK, cool.

My question, I was thinking about what are analogies or different ways we can think about regulation and innovation models from other industries. So, on the regulation side—for your response—thinking about protection of children and addiction, what can we learn from big tobacco, or not?

And then on the innovation side, thinking about driving innovation—I think there is—my personal opinion, to be provocative, is there is sort of a false choice between innovation and anti-trust, and thinking what are the pros and cons of how pharmaceuticals operate with, you know, the twenty-year protection which actually drives and accelerates the creation of new products.

So just curious—thoughts on—yeah, analogs that are helpful or not.

CARUSO-CABRERA: Anybody? Jump in.

SEGAL: It’s not me. This one is definitely not me.

CARUSO-CABRERA: Janet, I’m looking at you.

HAVEN: Yeah—

CARUSO-CABRERA: What about the big tobacco? I mean, you know, I think that it is settled science that smoking is bad for you, right, so I think ultimately they were trying to drive them out of business. Is that where you are going there or was that a—addiction and protecting children.

HAVEN: Yeah, on the big tobacco question I feel like I would turn to Renée on that.

DIRESTA: There’s like a few areas where you are seeing regulation coming for tech, you know, in the U.S., that’s the kind of few areas where we are starting some bipartisan agreement that something should be done, though that has also been the prevailing perception for the last eight years, and nothing has been done, so we still sort of find ourselves in the same place.

CARUSO-CABRERA: So what about here in New York state? You know, different states are banning it—banning social media platforms for children under a certain age. Many of the schools in New York City prohibit phones in school. I mean, are those good starts?

DIRESTA: A lot of that—and a lot of that is being kind of challenged in court. This is where we get to this interesting question, why sort of the preemption questions around AI—has actually been that the theory is that when you have those laws passed at the state level, it eventually leads to some kind of federal regulatory action that then harmonizes across and gets us to a law that then applies. Instead what we have is these various sort of piecemeal regulations where instead we’re winding up with a whole lot of different court challenges that then platforms are sort of—you know, we’re sort of fighting them state by state as opposed to actually achieving any of these—is sort of the envisionment of the laboratories of democracies leading to one sort of overarching framework that comes through because the overarching framework is not coming through. So instead we are winding up with these sort of ad-hoc battles. This is one of the reasons why that preemption debate—again, to happen around AI—the desire to not have that happen, the idea that there will be one thing that will move through.

I think the kid—you know, one of things that is happening with the child safety legislation, there are some concerns about freedom of expression. There are some concerns about the extent to which we can actually reasonably verify ages, while at the same time there is the recognition that the body of research that has continued to emerge is that it is, in fact, harmful to children, in some succinct and specific ways. And so there are people who are trying to come up with regulations that address those issues.

Again, you are seeing that move through in Europe and not in the U.S. I feel like I’m sitting up here sounding like I am defending European regulation—(laughs)—far more than I actually want to. But what you are seeing, what you are getting is the European model of pass the regulation and figure out the details later, and that is, you know—that is the way that that is often done, whereas in the U.S. we get nothing, and we have gridlock. And this is the dilemma that we find ourselves in.

CARUSO-CABRERA: And when you say you feel like you are defending them more than you want to, is it because you see some downside to it?

DIRESTA: Yes.

CARUSO-CABRERA: OK.

DIRESTA: Because there are, in fact, legitimate civil liberties issues to unpack there, so as we see the—what we might call the natural experiment of certain other countries banning social media for the under-sixteens, we are going to see what that does and how that plays out, even as we might not be comfortable doing it here in the United States.

HAVEN: Maybe just to add on to that, the—you know, I think the focus on harm to children is something that, you know, moves regulation, obviously, in all kinds of ways. I mean, I do think that the issue here is so multifaceted that it’s hard for me to think about like how it lines up with, you know, big tobacco because we have the—you know, the kinds of issues that Renée is talking about, but then we also have, for instance, the idea that all of these AI systems, all of these large language models are built on this, you know, sludge of data that has been pulled from whatever across the internet and includes all kinds of images of children that are being fed into these models. And so like then you get to like, well, this is, you know, about a data privacy issue, it's about copyright—you know, like all of—all of that layer of issues.

You know, you also get to the sort of other side of it where we’re seeing, you know, concerns about emotional reliance on chatbots by kids, right, of like companies that are building these like Replika or like other, you know, chatbot friends, companies that are building systems that seem to be like specifically designed to, you know, ensnare children or young people and develop a kind of like unhealthy emotional reliance.

So I think like the issues that we are seeing are expanding and are also—they really come in different regulatory buckets, which I think is challenging.

CARUSO-CABRERA: OK, next question. We’ll more here—lady here in the front.

Q: Thank you for a very interesting discussion. Bhakti Mirchandani, Trinity Church.

When you think about all the issues and power, one issue of power is with children. Another one is with, you know, the average American worker. So if there is going to be a huge displacement of workers, and we think about how that changes power. I mean, what would your ask of—I mean, have you seen companies solve—any company solve this in a good way? What would your ask of companies be, or what would your questions be with the idea of power in the United States in mind?

CARUSO-CABRERA: For all of you in from out of town, you should try to go see Trinity Church. It is so beautiful, and it’s so historic. You can see Alexander Hamilton’s grave, so it’s a very important—and one of the largest real estate holders?

Q: I think like at the bottom of the top ten. (Laughter.)

CARUSO-CABRERA: Anyhow, I didn’t mean to distract from the question. Who would like to take that? Power.

HAVEN: Yeah, I mean, I can talk a bit about that. So, you know, I think there’s a lot of focus on the idea of displacement of jobs and, you know, that there may be kind of massive job loss because of AI, and I think that’s absolutely a concern. I think it’s also—we still don’t know, and there’s—that’s a contested idea by economists and others.

I think what we do know, right, is that we’re already seeing harms to workers now, in terms of, you know, massive increased worker surveillance, loss of agency, deskilling, you know, very restrictive algorithmic management.

CARUSO-CABRERA: Where are we seeing that, and how? Do you have any specific examples?

HAVEN: Sure. Amazon warehouse workers. Uber drivers. There’s a—

CARUSO-CABRERA: So the model tells them you’re not fast enough, or you’re not—what?

HAVEN: Yeah, exactly. So, I mean, it cuts across all kinds of ways. So it can be, like, you know, algorithmic or AI-powered scheduling software, right, which takes into—does not take into account any sort of human factors of—people are simply—who are hourly workers are simply scheduled. And they have to show up or they lose their jobs. Which is—obviously, all of us have lives. We have children.

CARUSO-CABRERA: There’s no manager to talk to and say—yeah.

HAVEN: There’s no manager to talk to. There’s no way to manage that. And that’s, you know, why we saw—that’s why—like, that is the really core issue, one of the core issues, for why Starbucks has workers who are trying to unionize. Amazon warehouse workers, or warehouse workers in general, who are, you know, very tightly tracked, and then their sort of quotas and work expectations are set at essentially a maximum level that, you know, a human can sustain. So those are just a couple of examples. There are lots and lots of them, I will say, on our website, a small plug. My organization does research on this.

CARUSO-CABRERA: It sounds like—but it sounds like you’ve already referred to, like, a natural solution, right, which is—

HAVEN: Say again?

CARUSO-CABRERA: It sounds like you’ve referred to a natural solution that’s already occurring, which is that workers have the right to unionize and can—and, I can assure you, the one thing that, you know, corporations don’t like is when you, you know, people unionize, right? So—

HAVEN: Yeah, it’s actually—it’s very—so, I mean, one thing I would say is that it’s actually—it’s pretty challenging to unionize in the United States, Like, it isn’t actually like an easy thing that anybody can just unionize. And then unions are, of course, under a lot of pressure. And I do think that, you know, what we saw with SAG-AFTRA, with the Writers Guild and their strike, and then winning concessions on a number of issues but including on AI issues, really demonstrated that unions and organized labor are probably going to be a real force in in pushing back against the encroachment of unfair AI labor practices.

And so I think, you know, the idea that—if we care about this, that, you know, supporting workers and supporting the pathway to unionization in the United States is—would be something that we would want to see, if that’s—if that’s what we care about.

SEGAL: I mean, the other place that really seems to be having an impact is entry-level white collar, right? So I can’t remember which bank it was this week or last week had this story that said, you know, it used to take four analysts a week to do this Power—this slide deck. We can now do it in two hours with one—with one person. Same thing with entry-level lawyers, I suspect, and I don’t know how many RAs are in the room, but, like, RAs now, like, if I just put something in ChatGPT probably do it often as quickly as the RA would do it. So I—

CARUSO-CABRERA: Research assistants.

SEGAL: Research assistant. So I think that is going to be a big problem, right? So we’re graduating all these people from colleges that—and I think we’re starting to see some of those numbers—that they’re having difficulty finding that first job. Now, AI is not going to replace it when you’re at mid-career or further career, where you have, you know, experience and wisdom and everything else. But the training time might be replaced. And that, I think, is going to be a real issue.

CARUSO-CABRERA: Chinmayi, this is something you’ve thought a lot about, right, the issue of power and the displacement of power of people via the tech companies?

ARUN: I have. I hesitate because I’m not a labor expert. But the thing that I would add to what Janet and Adam said is, part of this ecosystem is displacing the idea of who is a worker through platformization. And so on one hand we hear this narrative of, well, AI is kind of taking over and we don’t need human beings to do this thing anymore—these things anymore. And on the other hand, that AI is made possible by armies of invisible workers who are labeling data, who are then correcting the output of the AI. And they’re all sort of an informal workforce. So I think part of the challenge for people who care about workers’ rights is to think about how to loop all of these people that are getting pushed out of the definition of worker back in,

CARUSO-CABRERA: Right here in front, Mr.—our marine fellow.

Q: Good morning. So Wilfred Rivera, the Marine Corps fellow this year.

So I’d be interested in your thoughts to see if we’re underestimating quantum computing timelines and risk, as it comes to the effects into AI. And should that conversation be part of this regulation and challenges that we have with AI, when it comes to quantum?

CARUSO-CABRERA: What does everybody think about that?

SEGAL: So quantum is either coming in three years, or thirty years, or never. (Laughter.) I don’t think we know yet, right? I mean, Jensen Huang said he didn’t think it was coming anytime soon. Stock market, you know, all the quantum companies went down. They all got very angry at him. He said, no, no, that’s not what I meant. It’s coming very soon. (Laughter.) We are definitely—you know, there have been some incredibly important breakthroughs on the types of chips that we’re using and—but, again, there still hasn’t been widespread use cases, right? Nobody still really knows what we’re going to use a quantum computer for, other than breaking quantum encryption, some types of nuclear weapons modeling, some types of weather modeling, and a couple of other—agricultural nitrogen fixation. So it’s like five or six use cases we’re pretty sure quantum is going to work for. But beyond that, no one’s really sure.

Because it’s not going to be a general-purpose supercomputer. And it’s not also sure about is it going to be better than supercomputing, right? Is it going to do things there? So I think there’s just a huge amount of uncertainty there. It also is often framed in the who gets there first kind of discussion, right? Are the Chinese going to get there first, and then be able to break all of our encryption without us knowing? But we have quantum-resistant encryption. We just need to get it out faster, and to put it into place. Again, it could be incredibly breakthrough. It could lead to incredible breakthroughs. I just don’t think we know yet. And it’s very hard to separate the hype from the actual science of it.

CARUSO-CABRERA: Renee, having come from tech, is this something that you’ve got thoughts on?

DIRESTA: It’s totally out of my wheelhouse.

CARUSO-CABRERA: Got it. No problem. I love it when people say that instead of pretending like they know everything. (Laughter.) Lady back here, with the glasses on.

Q: Thank you very much. I’m Diane Alleva Caceres with Georgia Institute of Technology and Market Access International in Atlanta, Georgia.

I have a question for you. In our national innovation ecosystem, how important today is DARPA, the Defense Advanced Research Projects Agency? Is it a driving force in advancing some of the technologies that you’re discussing still, in partnership with the private sector? And is it also addressing some of the regulatory concerns, but really from a—from a supply side, right, in terms of helping to create new technologies around also the protection of privacy, and data, and so forth?

CARUSO-CABRERA: You could ask the guy from In-Q-Tel after the panel. (Laughter.)

DIRESTA: I mean, I’m on DARPA ISAT, so I have maybe a particular perspective. ISAT is the sort of academic and industry advisor. You know, a small group of people who does, like, pre-studies. So that informs my perspective. So I’m possibly biased, because I believe it is. Not so much from a regulatory standpoint, but just from that model of, you know, pulling people together to think about where trends are going and to have that model of, you know, a highly creative, innovative think tank that is—that exists to think far into the future, and to do these thought experiments that dream big and get, you know, honestly, killed before they even become studies early on, right, which I think is actually quite valuable, when you say, like, we’re going to look at something for a year and decide to do absolutely nothing with it if the—if there’s no there, there. So that’s my personal perspective on it.

SEGAL: I would add—I mean, I think the point Renee made is that DARPA is still incredibly important for agenda setting. And Sebastian can correct me if I’m wrong, but I’m pretty sure it was DARPA that had the first competitions around self-driving cars that really drove a lot of the companies to enter into that space. And this was ten, fifteen years ago?

DIRESTA: Yeah, so I think the grand challenge model also provides a—

CARUSO-CABRERA: That’s the name of it, the grand challenge.

 SEGAL: Yeah.

DIRESTA: Yeah. The grand challenge model, where you say, like, we’re going to do these contests, in a way that invites private sector participation. So it’s essentially saying that the R&D is done in the private sector, but there is this agenda setting that says we are going to look at this particular big theme. And this is a matter of security and national interest.

SEGAL: Yeah. We’ve seen it in cybersecurity as well, this grand challenge around self-replicate—yes, software that improves itself and works on that space.

CARUSO-CABRERA: Yeah. Another question. I’ll go back, again, to the back of the room there. The gentleman there.

Q: Randy Stone, political science, University of Rochester, Rochester, New York.

I just got back this week from a conference on AI and the social sciences in Shanghai, which is fascinating in lots of ways. My sense is that the use of LLMs has already gone beyond this discussion, in some respects. And we’re already at the point where it doesn’t make sense for us, as social scientists, to use RAs to code data anymore, right? So ChatGPT can do that so much faster. We read 700,000 documents on the USITC website to turn them into a dataset. The other participants at the conference, who are deeper into AI than I am, use it routinely to write code. So we’re at the point where, you know, many computer scientists are going to be out of work because ChatGPT can write the code faster than they can.

But one of the issues that they raised was if we’re trying to train people to be methodologists, we traditionally did that by teaching them how to code first, and then they’d gradually get a sense of the conceptual issues. But it’s hard to get our students to actually do that work of coding, so they never get to the point of being able to think about the broader architectural issues involved in programming. And so we could have a generation that loses the ability to program because of the reliance on AI in the educational process. I also find this among my students. Now, if I give them anything to write at home, it’s written by ChatGPT. I have to give them take-home—

CARUSO-CABRERA: Is it any good?

Q: It’s beautifully written and often it’s pretty sophisticated. And so it’s a matter of how you write the problems, right? So if I give them an exam I have to give them paper and pencil now.

CARUSO-CABRERA: Yeah, we read about that. The blue books are back, yeah.

Q: Blue books are back, absolutely.

CARUSO-CABRERA: And what’s your question? (Laughter.) I mean, everything you said is very interesting. No, it actually is very interesting.

Q: Yeah. So I guess the question is, do you have any wisdom for us as educators and researchers about how we ought to engage with these issues?

CARUSO-CABRERA: It’s so interesting, right, because coding is a language. And it’s a language that evolves over time. You know, we all learned this when Newsweek did their deep dive into who was the founder of Bitcoin. And when they read the programming language, it reflected a certain era of time, and language that—correct me if I’m not, you know, remembering this correctly. So, is there a—is there a societal loss to a generation of coders who no longer—or, having lost a generation of people who no longer write code? Which is a language. I mean, is it as—I’m being a little weird here—is, it like, you know, gosh, we don’t have people who, you know, can read ancient Greek, and so therefore there are old documents that we can’t—you know, I mean, it’s very philosophical. I like the questions. It’s very theoretical. But, you know, any thoughts?

DIRESTA: I think most engineering—my husband’s an engineer. I think—and I was actually out with some people last night who were discussing this question. Most of them are still using—they’re using it as a tool alongside their own work. They don’t consider it to necessarily be at that point yet, where it is a full replacement. In part because the accuracy is not always there. And so you do need somebody with a degree of fluency to identify where things are not as if—you know, not correct. Much like—you know, I don’t know if you’ve—I use LLMs quite regularly myself. And there are times when you’ll ask—you know, you’ll ask it to write something for you, or to do a lit review, maybe, right? And it doesn’t identify something that you, yourself, know because of a deep familiarity with a field.

And this is, I think, the problem that you have to impress upon students, right? That it’s not going to get everything. And that there are certain aspects where it is going to have a—it’s going to return some of what you need, right? And it’s a great jumping-off point. But it’s not going to give you all of what you need. And so thinking about it as a tool, an enhancement, a way to get part of the way there more quickly, an accelerant but not necessarily the full deal, if you will. And that’s how I think about it, anyway.

And I think it is—it’s that—this is why I think it’s perhaps more effective for people who are either mid-career or senior, who recognize the gaps, and see it as an enhancement, who see it as an efficiency—you know, who see as improving their efficiency because they recognize what it isn’t doing, or what it’s doing wrong, as opposed to what you see from younger people who think of it as a replacement, or who don’t—who don’t—you know, the sort of unknown unknowns, or the known unknowns, even, where they don’t recognize what it’s not giving them. And that’s how I have chosen to, you know, even explain it to my children, right? To my eleven-year-old. Like, it’s not going to give you everything you need. This is still the process that you have to go through to do your research yourself.

CARUSO-CABRERA: So it’s 10:45. So this is over. (Laughter.) Because the Council ends things on time. So I hope you all enjoyed the discussion. And, you know, now—what are we doing? We’re taking a break? We’re done. (Laughter, applause.)

(END)

This is an uncorrected transcript.

BRIMMER: It’s good to see everyone here, bright and early on a Saturday morning.

We have been talking about many regions of the world, and now we’ll head to the top of the globe.

One of the areas—regions that has benefitted greatly from the end of the Cold War has been the Arctic. Indeed, that the Arctic created new institutions and new interactions that were extremely important, but we’re also finding that the Arctic is the center and the confluence of multiple trends facing the world today.

Now, the Arctic in, I’d say, the past thirty years was probably characterized by a phrase that’s been attributed to the Norwegians, but you can tell me who originally said it: “High north, low tension.” Now we might say, high north, returning tensions.

Now, I believe we have a map, so I’d like to—if we could go ahead and put the map up to help us orient us to where we are. This is a map courtesy of the United States State Department, and so that you can see the Arctic and you will be able to refer to the area that we are discussing for convenience for both people in the room and people viewing.

So, as I say, several trends converge in the Arctic, from climate concerns through the return of great-power competition. So I am honored to be able to welcome this panel of experts and to have the discussion this morning with the group here for the national conference.

Sitting on my immediate left is Mike Sfraga, former chair, U.S. Arctic Research Commission, former U.S. ambassador at large for the Arctic affairs at the Department of State, and he will bring four decades of experience and work in the Arctic, both at the diplomatic and at multiple levels. So, welcome.

SFRAGA: Thank you.

BRIMMER: Siting to his left is Marisol Maddox. Welcome. Senior Arctic fellow at the Institute of Arctic Studies at the John Sloan Dickey Center for International Understanding at Dartmouth—I’ve had the honor of actually being up at Dartmouth to see the Arctic center. You of course have many years at the Wilson Center Polar Institute, and are also a senior associate at our colleague, CSIS. Welcome.

And sitting to your left, of course, is Margaret Williams, senior fellow at the Arctic Institute, the Belfer Center for Science and International Affairs at the Kennedy School, and brings both with decades of expertise, particularly on environmental issues and with a particular focus on Russia and Alaska, as well.

And you remind us that of course the United States is an Arctic nation because of our state of Alaska. We have people and territory in the Arctic region as well, and an extensive coastline in the Arctic as well. So we’ll be talking about those issues.

So, welcome. I’m delighted to be chairing this session.

Let me start off with you, Mike. What trends do you see now? We talk about the confluence of trends. Which ones concern you most?

SFRAGA: Lots of trends, lots of concern, but also opportunity as well.

I think there’s a number of things. One is, the Arctic now is on this panel. We’re here at CFR. That’s different. Many years ago we would try to have a discussion about the Arctic and the same eight people would show up. Now you throw a dart and there’s probably an Arctic meeting somewhere. Great. And I think that’s a very, very positive trend is that understanding that the Arctic is not that—just that place up there that Margaret and I live in, that Mary Shelley based her Frankenstein monster on—and it’s not that place. It is a place that’s now integrated. It’s globalized. The ripple effect of what happens in the Arctic ripples through the rest of the world, and what happens in the rest of the world ripples through and to the Arctic.

So it’s not that far-removed place. When you have New York Times discussions about this and Washington Post articles, OK, it’s now part of the globalized effort, includes which issue you’re in, whether it’s energy, or fisheries, or great power competition, or thinking about the globe in a very different way, which we have to. I would argue that from Africa to the Arctic, we are connected.

But that’s a trend, right—understanding why the Arctic is important to many of us.

I think there are seven key drivers of change that are happening, and I’ll just rattle those off and maybe we can revisit them. We’ll probably want to talk about Greenland. We’ll probably want to talk about our allies and partners, and we’ll probably want to talk about why anybody should care about the Arctic.

But to Mike, my filter is not just as an Alaskan, but of course, but also here are the seven key drivers maybe my colleagues can—Esther, if that’s all right, maybe my colleagues can riff on that.

BRIMMER: Please.

SFRAGA: But to me, the seven key drivers, no matter what you’re interested in, would be climate—I mean, that is the major driver of change in the Arctic. Everything else kind of permeates from that—Mike’s thoughts. So climate is the first. And these are seven Cs of climate—of change in the Arctic.

The second is commodities—oil, gas, minerals, fish, timber, you name it. And we can debate and talk about that. So that is another key driver.

Another one is commerce. It’s trade; it’s shipping; it’s trying to draw venture capital north; it’s trying to make the Arctic, you know, more integrated into the globalized economic energy equations.

The fourth would be connectivity. Yes, we need reliable, affordable, redundant connectivity. It’s a given here. Trust me, it’s not a given in the Arctic. I live ten miles outside of Fairbanks. Ten miles away from me is a supercomputer. I can’t get Netflix; I just get flicks. (Laughter.) I’m on a satellite, it’s expensive—that’s a thing for our homeland security and national security. It’s a thing. So ports, bridges, those things.

The fifth would be our communities, and we’ll talk about that. They are under pressure. When we say that homes are literally falling into the ocean, they are literally falling into the ocean. We can talk about that.

Cooperation. Cooperation. We talked about Arctic exceptionalism, that no matter what happened outside of the Arctic until the full scale invasion of Ukraine, that the Arctic Eight could stay together and still concentrate on the issues of the Arctic. That is no longer a real thing, unfortunately. But there is a lot of cooperation. We doubled down on the cooperation in the north, including with our allies, our partners, strengthened the transatlantic alliance. You do that through the transarctic alliance, the seven nations of the Arctic.

And finally, competition, which was always there, but now it’s heightened. And we can talk about that from the Bering to the Baltic to the Black Sea, it’s all connected. And this idea of China in the Arctic, Russia in the Arctic, and China and Russia together in the Arctic—at least on the side of the Arctic that Margaret and I live on—that’s a real thing that we should be—we should talk about as well.

So those are the seven key drivers. The fact that we’re having discussions, but the fact that there are really these integrated issues driving change and change driving the ripple effect throughout the north—these are the things that I think about. It’s not just I worry about; there’s also some opportunity in there as well.

BRIMMER: Marisol. Climate is top of the list. As we know, the Arctic is warming much faster than the rest of the world. What do you see as the major impacts on both the maritime community and the Arctic as a whole, particularly of what you’re seeing?

MADDOX: Yes, so the Arctic has been warming about four times faster than the global average, and the Arctic Ocean is actually acidifying about four times faster than the global ocean average. And so what we’re seeing is kind of a tension between different types of trends, where the fisheries populations of the world are starting to move more away from the equatorial waters that are getting too warm, but as we’re seeing them move towards the polar regions, the stocks are not maintaining the same integrity, and so their populations are actually starting to fall a bit as they’re moving. So there’s, you know, some concerning challenges about, you know, that dynamic that we’ve seen replicated elsewhere—on mountains, for instance, where you have species that are moving further and further up a mountain and then—as there’s things like warming, right—and then you run out of space and they can’t go up anymore, and then that’s where you have some extinction events, right?

And so we’re seeing some challenges here in terms of what is the future of fisheries, which are, I mean, an incredibly important protein source for global food security, incredible source of jobs and—you know, for the people of the Arctic, fisheries are so important. We have new predator-prey dynamics that are emerging in the Arctic. We have the emergence of harmful algae blooms further and further north where the dormant cysts that come—like the dormant reproductive body of the harmful algae blooms—they wouldn’t be activated in cold water, but as the waters are warming we’re seeing them emerging, and they’re having ripple effects through the food chain, which has then effects on biodiversity as well as subsistence practices and, you know, potentially the economies.

And so there’s a real tension here in terms of, you know, the need to be, first, studying—we need to have persistent monitoring for multiple uses, right? And that’s something I do want to kind of foot-stomp here, is that a lot of the data collection to support an understanding of the fastest changing place on earth matters not just to support science and the understanding of economic development, but also can contribute to dual-use domain-awareness needs, which is one of the largest challenges in the Arctic from a security perspective. But we really need to be understanding the changes that we’re seeing. We need to be cooperating—because these are transboundary challenges to be able to then look ahead and to be able to advise industry on, you know, what should you be investing in; what are those emerging fisheries; how do you have proactive management; how do we use machine learning and artificial intelligence to understand the conditions that we need to be preparing for; and how does that proactive, sustainable management proceed?

So it’s a really kind of—as Mike alluded to, you get this real convergence of a lot of different challenges. And so I would say that the fisheries piece is really just one example of how many different topics you can hit upon as you think about how things are chaging.

BRIMMER: And is there an unexpected side effect of the impact on the issues with Russia and Ukraine, which we will get to in a moment, in that the data sharing amongst the Arctic countries has changed? How would you describe that?

MADDOX: Yeah, so, you know, data from—data-sharing with Russia was never, like, amazing—(laughter)—but it’s something that became more challenged after the full-scale invasion of Ukraine in 2022 because—so, the primary body for regional cooperation within the Arctic is the Arctic Council, and so in order to, you know, show Russia that when you violently invade a peaceful neighbor, you know, the Arctic is the number one region of strategic importance to Russia, and so they need to see that there’s going to be—that they will be, you know, incurring costs if they choose to violently, you know, break international law. And so as a part of needing to show Russia that there are going to be consequences, that cooperation was paused and then has been in a limited capacity resuming. But the Arctic Council—that construct is really important for dealing with transboundary issues of mutual interest, and so there has been a desire among all eight to be finding a way forward, but it’s been very important to do that in a way that does not in any way give, you know, any validation to Russia. So it’s really, you know, enabling that work at the local level, the scientific level, however appropriate, while we’re kind of trying to navigate this really complex time.

BRIMMER: Indeed, indeed. And we’ll talk further about the Arctic Council and other international organizations that have an interest in the Arctic.

But Margaret, I want to bring you into this conversation about what you’re also seeing in terms of the most critical issues in the Arctic and why it’s a confluence of so many different trends.

WILLIAMS: Yes. Well, thank you. And I’m so glad we have this map behind us because this is the perspective that we folks working in the Arctic have of the world. Usually when you see a world map the United States is in the middle or maybe Europe is in the middle, and if you see a map of the United States, often Alaska is just this tiny little picture off in the corner.

But this is—this is a reminder of why the Arctic is so unique. It shows us how connected we are to Europe and to Russia. It also shows us that the Arctic is an ocean surrounded by continents. And we have this trend right now where an entirely new ocean is opening up on the planet. It’s extraordinary. We have half of the sea ice coverage today than what we had about fifty years ago. It’s entirely possible then that within a decade we are going to have a summer of ice-free Arctic Ocean. And I know you’ve heard this over and over in the media, but this is extraordinary, to imagine a place that once was impassable is going to be completely open. And so there are so many things coming together. And Mike mentioned commerce and connectivity.

I also wanted to just mention—just draw on a few more things that Marisol said, that the Arctic is so special because—in a way because it has been inaccessible for—there have been people living—there are 4 million people living in the Arctic. People have been living there for thousands of years. But generally it has been very inaccessible, and this opening of the Arctic Ocean means so many new things. It means new shipping routes, and we can talk about that. It means a new potential roads, new—not the ocean, but access to the shoreline, access—it means opening up to new minerals, new road possibilities. So many new resources are being accessed now.

And then this relationship in the Arctic, this transboundary relationship has been also a wonderful, solid trend that has been unique about the Arctic, countries working together, and in fact that really started, I would say, with Mikhail Gorbachev. At the end of the Cold War Gorbachev made a famous speech called the Murmansk speech, and he talked about the need for peace in the Arctic. And he actually referred to the need to work together to protect tundra and our shared boreal forests, and that led to something called the Arctic Environmental Protection Strategy, which in turn morphed into the Arctic Council.

And so—and that makes sense. Russia occupies more than half of the Arctic, and if we think about climate trends, one of the key drivers of climate change is what’s happening with the permafrost, this solid layer of frozen soil across much of the Northern Hemisphere. Russia occupies over half of the world’s permafrost. The permafrost contains twice as much carbon than exists now in the atmosphere, and so if we think about climate solutions and climate challenges, working with Russia is pretty critical. And that has changed drastically, as Marisol mentioned, since the war.

So this is all—the ocean is opening up, and this is a time when we really need to be working across boundaries together. And it’s unfortunately the time when we’re suddenly not only having a conflict with Russia, but in our own policy we have become isolationist and are moving against this multilateral trend.

BRIMMER: Let’s take what we’ve discussed now in terms of the remarkable changes in the Arctic—the climate, and maritime, and a lot of changes in the Arctic—and look at the intersection with international geostrategic issues as well.

We have identified one major organization that is involved in the Arctic, the Arctic Council, and we’ve touched on how it has been affected by the Russian invasion of Ukraine and then the subsequent activities.
One of the others, of course, is NATO. There are now—the seven members other than the Russian Federation are all members of NATO, with the accession of Finland and Sweden. Will you comment a bit just on the expansion of interest within the North Atlantic Treaty Organization structures and the relationship among these allies?

SFRAGA: I think I alluded to this a little bit before, so thank you.

It was a tectonic shift for us who work in the Arctic, but also for NATO as well, even though NATO of course had their eyes and their efforts looking north, Norway always said that it was NATO’s eyes and ears in the north, and they were. It wasn’t as if Finland and Sweden weren’t paying attention and weren’t partners and allies; they were. But psychologically that’s a big shift for two countries that held out for a number of reasons. We doubled NATO’s border with Finland’s accession to NATO with the Russian Federation.

When I travel—when we all travel, but in particularly in my former position we traveled, just the mindset of my friends in Norway, Sweden, Finland, Denmark, Greenland, but—Latvia, Lithuania, Estonia, the Baltic—the connection between the Baltic and the Barents, that even though these are three, four Arctic nations—Denmark, Norway, Sweden, Finland—the idea of the Arctic of course was ever-present. They are members of the Arctic Council; they are Arctic nations. But they spent a lot of time thinking about the Baltic, as you might imagine, and have great expertise in that area, even though they are Arctic nations.

So the east-west perception of NATO, the Arctic perception of NATO, even the zone nation’s perception of NATO was in an Arctic context but really Baltic. And now when you talk to our friends there, they think about Baltic-Barents.

This is—it’s not just east-west; it’s north-south, and how it’s all connected. You cannot disconnect the NATO alliance, the Baltic, the Barents, I would argue the Beaufort. I mean, I could give you all the B’s of the sea—of the Arctic. (Laughter.) But they are all connected from the Barents to the Black Sea now. And so you have to stretch the geographic perspective, as Margaret talked about.

And for a geographer, having a map up there it’s really hard not to just stand up and start talking through it. (Laughter.)

But it’s a different kind of perception, but also the threat analysis is very different. It’s very different. And so when you think about ballistic missile threats coming from Russia, where do they come over? They’re going to come over the pole. This changes a lot of things and it changes nothing. We always knew this. But now having Sweden and Finland’s capacity, expertise, and full commitment to NATO—that’s a very different thing. And we talk to a Fin, we talk to a Swede who’s not in government, who doesn’t do NATO things; they’re just shopping and trying to take care of their family—NATO was right here because they never thought they would get there, but they see the threat, and that threat ripples from the north to the south into the Baltics—(off mic)—Europe.

So it’s a very different thing. It’s different for us in Alaska because we see this arc that—this North American-European arc of the Arctic, if you could look at the map, from Alaska through Canada, through Greenland, Iceland, Norway, Sweden, Finland, into Europe. We see that because the other side of the arc is the Russian Federation.

And I would argue there’s an Atlantic arc if you’re thinking about the GIUK gap. Where do the Russians send their northern fleet to access the rest of the world? It’s through the GIUK gap. That changes the dynamic for Europe; it changes the dynamic for NATO; it changes the dynamic for Norway; and I would argue every emerging very quickly—and we can talk about this later—is the Pacific arc. Do not disassociate the South Pacific, the Indo-Pacific, the Taiwan Strait, the North Pacific, the Bering Sea, Bering Strait—the Arctic. Do not do this. It is connected. It is absolutely connected. Russia, China, North Korea—China in the Arctic, Russia in the Arctic, China and Russia in the Arctic and continuing threats from the north.

Where do you monitor that? You monitor it from the state of Alaska with NORAD, with the North American Arctic, which is why Greenland, the connection to Alaska, the connection to NATO, the connection to Europe.

These are all streams and arcs that are absolutely connected, and NATO, to your point, gets that and is thinking about ways in which they structure everything from response to defense to force posture and how you stretch NATO and how far you can stretch NATO.

Long narrative—I apologize.

BRIMMER: No.

SFRAGA: But these things are absolutely all connected. And again, I’m sorry, but to a geographer, you put a map up, it changes the whole dynamic. I’m sorry. (Laughter.)

BRIMMER: You’re absolutely right. I’m actually a big fan of maps, and I’ll say that we—that both for this session on the Arctic, the session we did on Antarctic the other day where we also flipped the globe and had—we started with the Antarctic Ocean—that it changes your view. And on just a personal side, I want to say when I was at assistant secretary for IO, I had a massive photograph of the earth on my wall opposite where guests spoke, and we’d turn it around every few months so that you would—people would stop and it would be a different way of seeing the globe. And so I think it’s helpful to be stimulated by seeing different ways of representing the globe.

But let’s follow up on these issues, particularly looking at both allies and partners with whom we work. Other thoughts on the connections between whether different bodies of water, different societies—we are of course also responsible for the Bering Straits. We, the United States and the Russian Federation, have to deal with each other because we are responsible for this international waterway.

So let’s talk about the entrance to the Arctic, to the Arctic Ocean, and then we’ll talk about the exit on the other side and the latest issues.

Please.

WILLIAMS: Yeah, I could say a few words about the Bering Strait, which is that narrow waterway between Alaska and Russia. And it’s amazing. Very few Alaskans even know what is on the other side of Russia—I mean, what is on the other side of Alaska. They don’t think of Russia as being a neighbor. But when you unfortunately one of our previous political campaigns made famous the phrase, “I can see Russia from my house.” But you really can. It's incredible. You stand on the shore of St. Lawrence Island or even in Nome, Alaska on a clear day, I think you can see—you can see the Chukotka Peninsula. And this is an incredible place because of the currents that come through from the North Pacific into the Bering Sea. This is where massive—some of the largest marine mammal migrations on the planet occur. Birds from every continent come through this area to nest in the incredible, vast habitat that is present in the Arctic.

And now, because of this opening sea ice trend, we are seeing much more maritime traffic, and as a result of the Ukraine war and Russia’s leaning more in toward China, and of course China has plenty of investments in LNG and oil in Russia. This shipping route is becoming much more popular, and we have seen an increase in shipping traffic going through the Bering Strait since the Ukraine war. So that is a huge concern, and until the war in Ukraine, the U.S. and Russia were working very closely together, not only on a variety of science projects—not only on science but in preparing for potential accidents, such as oil spills, ship grounding, any kind of emergencies. And that was all coordinated through a joint contingency plan.

A few months before the invasion of Ukraine, a group of Russians came from the maritime—from the Marine Rescue Service to Anchorage. They hadn’t met in person for many years because of COVID and other reasons, and it was just this really exciting time because finally people were planning for this potential disaster in the Arctic which we cannot afford, and they were all set to do an in-person exercise—planning exercise in the ocean in 2022, and then with the invasion, all of that had to be cancelled.

But the main point is that so much has been shared between—in terms of cultural resources, natural resources, amazing wildlife resources, and science. Scientists have been going back and forth for thirty years, working together, monitoring permafrost, monitoring these wildlife migrations, and all of that has come to an extreme halt.

BRIMMER: Looking at, again, the dynamics in the Arctic, that the Russian Federation was one of the countries that was particularly insistent about who was an Arctic country and who was not. They were often some of the most, I thought, I would say influential in the view that China was not an Arctic country.

Now there are of course multiple countries that are observers at the Arctic Council, but again, the dynamic, when we start looking at the great-power competition in the Arctic, that dynamic between Russia and China has changed. Let’s explore that a bit. Can you go a little bit further on what you’re seeing, both whether it’s at the Coast Guard level or other levels with the presence of China and cooperation with Russia in the Arctic region?

MADDOX: Yeah. So especially following the 2022 full-scale invasion of Ukraine, Russia became very limited in the partners that would work with them in the Arctic. There were a lot of companies that left. You know, a lot of that cooperation was halted of course with sanctions. And so China has gained tremendous leverage over Russia. They have come in as a financier of a lot of projects.

We have seen definitely a recognition that the potential exposure to secondary sanctions is something that China is concerned about, and so there have been a couple projects where they have ultimately decided not to go forward because of those concerns. But still, largely China has been able to really create a very advantageous position for itself.

And we’ve seen a couple things that—a couple developments that are noteworthy. So one in particular which I was pretty surprised to see happen so quickly was an agreement after the Putin-Xi summit to create a joint working group for development of the northern sea route. The northern sea route and—so, let me back up.

Russia has a very strong Arctic identity. It’s been a significant portion of their economy. It’s the headquarters of the northern fleet, right? This is where they house their strategic submarines that are their second-strike capability. So it’s an incredibly sensitive region. It’s the number one region of strategic significance from their updated maritime doctrine, and they essentially—they view the northern sea route as internal waters that they can then regulate—which the U.S. and others do not agree with, by the way; we say it’s international waters. But they view this as something that is a huge commercial opportunity. And so—but because it’s also so sensitive, we’ve seen a lot of hesitancy in Russia letting anybody in. And the Chinese for some time have been trying to get Russia to agree with—to have some Chinese military—joint military exercises in the Arctic, which Russia has said no, no, no. But then they signed this joint working group for development of the northern sea route, and—you know, there’s a lot of question about well, what is that—exactly is that going to look like? But just from a kind of a matter of principle, that’s really letting the fox into the henhouse. And again, this is like a core interest of Russia’s, so seeing that from a psychological perspective really shows how much, you know, in terms of the terms of that engagement being favorable to China, they’re really able to make—to be benefitting from this.

They also signed an agreement between the Russian border guard and the Chinese coast guard for cooperation on maritime policing in the Arctic. So that was signed in Murmansk. And we saw for the first time a joint Chinese-Russian coast guard operation above—in the Bering Sea. So that was—again, we’re seeing the deepening and expansion of Russian and Chinese cooperation in the Arctic.

And it’s noteworthy as well that Chinese coast guard vessels are so heavily armed that they’re not technically civilian vessels; they’re auxiliary. So again, this is—very much ties into concerns about dual use, and we know that China is interested in the Arctic because of the ways that it supports the larger vision that they have for themselves as a global power.

SFRAGA: So can I just follow up on that?

BRIMMER: Please.

SFRAGA: Marisol and Margaret lays a perfect foundation. Let me give you a snapshot of not just the differences of the Arctic but this activity that Marisol has underscored.

As Americans, as Alaskans, global citizens, we watched a movie play out last summer.

And if I get my facts wrong, Marisol and Margaret, bring me from fact to fiction here.

But if you were to reel back the time, in the course of last year it was FSB and Chinese coast guard working together off the state of Alaska in the Bering Sea. That’s one activity.

Second activity: Chinese and Russian naval armadas working together, same zone of area and influence off the coast of Alaska.

If you wanted to foot-stomp the concern, you also had in the same timeframe four bombers flying off the coast of Alaska—two Chinese, two Russian, together.

When you start to put the story together and the trendline over the last five to eight years, sort of—in that timeframe, you see the scale, sophistication, the willingness to work together in this part of the Arctic.

At the same time we had three Chinese—they would call them research vessels, icebreakers, doing all sorts of things in the same sort of area, north in the Arctic Ocean off the coast of Alaska. These are dual-use, multi-use vessels.

So when you start painting a picture, again, you can’t just look at the—like we all do, in our roles of foreign policy. When you start piecing it together, it starts telling you a story. And you add to that significant purchase of energy from Russia by China, and you look at the increase in vessels—IMO Polar Code certified and many that are not—and shadow fleets and movements of these resources along the Bering Sea, the Bering Strait, into ports in China. When you keep putting the pieces together, it tells you a story that draws you to the security, foreign policy discussions, along with the very real threats of environmental disaster.

We worry about this. This area knows no border, and if there is a spill, a catastrophe, a number of things will happen. We will decimate an environment that we all depend on. Our native peoples—that’s their grocery store. That’s not a pejorative statement. It is their grocery store. This is fundamental to their way of life. It’s fundamental to industry. It’s fundamental to a lot of countries.

So these stories about why does the Arctic matter—it fits into the broader geopolitics; it fits into energy; it fits into resources; it fits into food; it fits into the great-power competition; it fits into China’s wishes to be a global power, influencing the globe, changing the way in which the strategy board is played out. These are all—this is just one story.

It’s very different on the Barents side. There’s a different story going on there. So when I say there are five connected Bs—the Barents, the Beaufort, the Barents, the Baltic, the Black Sea—it’s a schtick, but there’s real substance behind that. They are all connected.

BRIMMER: So we understand that there’s major environmental change. There’s major strategic change. But the United States faces these changes with its allies, so let’s look at our allied relationships.

One of the other important changes is the president of the United States saying that he is interested in the—in Greenland. Now, just to recall that Denmark of course is a treaty ally of the United States—an actual treaty ally. We’ve been talking about that term over the past couple days—actual treaty allies where we have mutual defense arrangements. And remember that Denmark is also interesting because Denmark is actually composed of three components—that the Kingdom of Denmark includes Denmark, the Faroe Islands, and Greenland. And indeed, interestingly enough, we’ve just had the transition of the chair of the Arctic Council from Norway, which basically I would say helped save the Arctic Council, to the Kingdom of Denmark. And the handover that actually—Espen Barth Eide, the prime minister of Norway, handed the gavel in effect to the Kingdom of Denmark and it was received by of course a Greenlandic member.

So, what does it mean? What are the implications of the return or the debate about Greenland mean to the Arctic community?

Who would like to start?

MADDOX: Why don’t you start? (Laughter.)

SFRAGA: Why don’t I start? Thank you. (Laughter.)

So Esther’s laid out very well the nesting doll of issues here. There are many things going on. One is just the internal dynamics related to the Kingdom of Denmark. They are many and it goes back a long time. And these are friends and colleagues of all of ours for decades. I’ve known these folks for a very long time.

So within the kingdom there are tensions and things that they are dealing with with regard to the Faroe Islands and with regard to Greenland, and of course Denmark itself and its identity. So there’s internal issues going on. Of course you’ve heard about the wish to be independent. That is a real thing, and eventually it’s probably going to happen. But it’s not going to happen before Greenland could stand up an economy that could actually get them through. Right now they get about a half-a-billion (dollars) from the kingdom, along with free social medicine and all sorts of—you know, it’s probably—I don’t know what the number is, but it’s probably somewhere around a billion dollars a year in support. That would have to come from somewhere for Greenland to be totally independent, OK?

But—so there’s tensions in there. But they’re working them out, and I would think that—I know that the president’s statement and the foreign policy posture towards the Kingdom of Denmark, which I do not agree with—I do not agree with the process—the process and the narrative that is actually unfolding before us—that has done nothing but to bring the three legs of the kingdom together closer than they were before.

But this is internal. There’s this external issue that we just talked about. And the third part is, who gets to chair the Arctic Council? There’s a rotating every two years chairship, and since the kingdom has that, they now chair the Arctic Council. When internal, it was decided that there would be a Greenlander who would be the senior Arctic official chairing the senior Arctic officials.

It may sound like an interesting multilateral international organization to you, to us, but it is fundamentally different. These are eight—although Russia is participating at a lower level—eight nations working together on environmental issues, economic issues, sustainability issues. But when the Arctic Council was created. They also included six permanent participants—Native peoples of the north that get to sit at that table. That’s a fundamentally different dynamic when you have Indigenous people at the table. So there’s nuance within nuance here.

I think—and then I’m going to leave many things for my colleagues here. So there’s about three different dynamics happening all at once. Why would any of us care? We should care because it’s an interesting and fascinating part. It’s also real people trying to decide their future. But if the ultimate goal from a U.S. foreign policy perspective is that you think you must purchase, take over, invade another sovereign nation for your own security—well, that’s a red flag to me on every level. But if the ultimate goal is U.S. national security, I could get you there faster, cheaper, and not break a lot of glass, if that’s the ultimate goal. We already have agreements in place for the U.S. to build up national security for our own interests, the interests of the kingdom, of Greenland, and also our allies and partners. There's already agreements there. There are already agreements in place to help them increase their energy, their mineral capacity, their economic capacity, their cultural capacity, their civil society capacity. These things already exist.

So if the ultimate goal is to ensure that Greenland and the kingdom are part of the North American Arctic or part of the transatlantic alliance or part of us and not worry about China or Russia having more influence, I just gave you the toolkit that already exists to do that. You invest in our allies and partners. They will not look to China or Russia for investment. They will look to the United States, to Canada, and the European Union, like they want to, to help build their society and to help ensure our collective defense.

MADDOX: Yeah. So—OK. There are three main interests that the Trump administration has expressed in Greenland, and that is defense, economics—particularly around minerals—and shipping and seeing the emergence of the northwest passage as the sea ice is thinning and receding. And so I want to just briefly touch on those three.

I’ll start with defense. So we have a seventy-five-year-old agreement that has given us permanent basing privileges in Greenland, and that was Thule Air Base that’s now Pituffik Space Base. At any time if the United States wanted to—throughout time we’ve had actually very high levels of U.S. military presence. We have reduced it to that because our efforts were elsewhere, right? After the Cold War we were looking more into the Middle East. It just wasn’t a priority—not a great use of resources, right? And from the previous National Defense Strategy, we know that the U.S. is interested in understanding what are the calibrated investments we can make in the Arctic to secure those interests, while our major focus is over to the Indo-Pacific.

And so with this currently existing defense agreement, at any point if we wanted to be building another installation, adding additional, you know, troops or any kind of presence, we can do that. And we actually in 2004 had the Igaliku agreement, which created a permanent committee, which is a dedicated forum for DC, Copenhagen, and Nuuk to have specific conversations about defense and security. And so we have a venue where we have—and it’s not like a hostile place where you go and it’s like really tense. This is, like, very good-natured. We have a great relationship with both of our partners in both of these places, our allies in these places. And so we could go there and say, hey, we’re concerned about this; you know, we feel like, you know, things are obviously changing and we need to be making some more investments. And we have done that recently—in recent years, and Denmark has paid for it, right?

So if you actually look at—you really have to look at kind of the big Arctic picture here because from a continental security perspective, you know, we are now having to deal with hypersonic and ballistic missiles that are—that NORAD is not well—was not constructed to be able to detect and, you know, to be able to defend against those kinds of threats. And so one of the concerns that we had is that at Pituffik, our radar cuts out looking east because the Greenland ice sheet is so high. In some places it’s a mile high, and so there’s a place where the radar cuts out so the Danes paid for a radar installation on the Faroe Islands, because that helps us to look east.

And so even since—you know, when Trump was elected, he immediately kind of re-hit on this Greenland acquisition idea, and the Danes got the picture that he was serious that they needed to be investing more in defense, and they said OK, you know, we could have had this conversation in like a more respectful way, but we’re getting the message. They have already committed an additional over $2 billion in investments in long-range drones and supporting, you know, some of these targeted infrastructure and capability developments.

So there are ways to be going about this that help to strengthen the alliance, which, as we have talked about, you know, over the last couple days, is so important as we’re—you know, China is emerging as a nuclear peer; we have just, you know, the multipolarity is incredibly complicated; we need our allies.

So if you look at, you know, ways to be securing U.S. interests, when you have options for doing that cheaper, where you have more burden-sharing in one direction and then you have an alliance intact; and then the other option is you can—well, why do that when you can destroy the alliance, have to pay more money, and then have a huge headache because anything you want to do in Greenland is going to be really expensive, right? And so from a defense perspective, it just makes sense to stick with the current existing mechanisms and just use those, you know, more robustly.

From an economic perspective—I’ll just do it really quickly—

BRIMMER: Yeah, because I need to get time, then we’re—then we’re going to—

MADDOX: Yeah, sorry, I know. Once I start talking about this it’s—(laughs)—I’ll sum it up really quickly.

So just economically, again, from that 2004 agreement, we have the joint committee, which has four pillars of cooperation on economic development. You know, that’s again through DC and Nuuk, and then Copenhagen is involved—but we have a forum for, you know, the advancement of minerals partnership, right? Greenland joined the minerals security partnership. You know, they’ve expressed interest in U.S. companies investing. They just recently gave a thirty-year mining contract to a Danish-French company in Greenland, and they said the Americans didn’t even show up to give an offer. So there’s like this really loud noise here, like, well, the U.S. wants—we want access to these minerals, and Greenland’s like, great, why aren’t you, like, showing up and saying that you’re interested when we have the bids open?

BRIMMER: And we can explore that further.

MADDOX: So, yeah. (Laughs.)

BRIMMER: Because I’m sure we’ll get a question on that and you’ll get to address that.

I want to make sure I bring in Margaret, and then we’re going to be going to the group for questions because I’m sure there are a few questions. So, Margaret, thoughts on this point?

WILLIAMS: So just one thing that really didn’t come up in the administration’s discussion about wanting to buy Greenland is the fact that it’s covered in two miles of ice. And this is a major source of potential climate disaster, as Mike alluded to, as one of the seas. Greenland, with the warming air temperatures and with the warming sea temperatures, Greenland has the capacity to contribute to massive sea-level rise. And we’re already experiencing sea-level rise around the world, but in the Arctic, Greenland—the ice sheets are the primary source of potential sea level rise. And it’s just such an incongruous time to be talking about taking on this potentially new property while cutting science and denying climate change. It’s just part of the incongruity of this conversation.

BRIMMER: Thank you, thank you.

I’d like to turn to our questions now. We have our colleagues with microphones. And I will start with the gentleman there in the blue shirt, up first.

Please go ahead and identify yourself—again, what state you’re from. And remember, we are on the record and livestreamed.

Q: Hi, Rudy Novak from the Air Force Academy. I’m an Air Force officer. Colorado.

So Air Force officer is going to ask a question about boats—(laughter)—and it’s about capability in particular. So to operate in the Arctic, one of the primary capabilities you need is icebreakers. We have a lack of them, the United States. Our allies have more. So I just want to hear your thoughts on utilizing our allies and partners to get more icebreakers and presence and capability in the region, as well as from an American perspective, getting more boats in the region.

BRIMMER: Thank you for the question.

Who would like to—I’ll say that when we did the Arctic task force for CFR that was published in 2017, we have no more than we did then. Perhaps less. (Laughter.)

Please, will somebody comment on the icebreakers?

MADDOX: Well, just—I mean, so there’s the ICE Pact agreement, which is an effort between the U.S., Finland, and Canada specifically for that reason, right? How do we—and it aligns with the desire of NATO to be—you know, as an alliance, strengthening the industrial base, right? And this is a big part of that. So how do we work together to revive shipbuilding, to be able to do this in a more cost-effective way? And President Trump I think has an incredible opportunity here to really claim some wins, again, because that icebreaker gap has been a very significant one for a while, and I think the pieces are in place now for an exemption to be granted for, you know, Finland, for instance, to perhaps build an icebreaker for us on an expedited timeline. And that very much is something that President Trump could and I would say should do.

And Mike, do you want to add?

SFRAGA: I would just—let me channel my senior senator from the state of Alaska, Lisa Murkowski, and dear friend—also Senator Sullivan. You know, the metric is not Russia has fifty-something; these guys—to me that’s the wrong metric. The metric is what does the United States need to carry out its homeland security, its national security, and its research agenda. What do we need? That’s the metric. The Coast Guard says between eight and nine. These should be multi-use vessels, right? They should protect the homeland; they should be present so we’re influencing—I told you about the traffic in the Bering. There’s a lot—fisheries. We need to make sure our fishermen are secure. Presence is influence.

But the research capacity—now, this is the former chair of the United States Arctic Research Commission, former ambassador—but that’s a thing, is that we rely on these icebreakers—right now we have three. Two we have; the third is commercially available that was just converted. But the research community needs that data. And we rely on the Coast Guard to supply the research community vital data.

And so those are the metrics that I think. But it’s a real—it’s a power projection; it’s securing our fisheries. But it’s also demonstrating to the Russians and the Chinese and others that we are present.

And Marisol is right, through the ICE Pact and other capacity—but there’s a bigger picture—and I won’t go into it, Esther, I promise—but our own U.S. shipbuilding capacity is woefully—I would say disturbing. And so we need—there’s a bigger picture here, but we have to have—we have to revitalize the Coast Guard’s capacity to help defend. They can’t carry out a mission that we won’t give them the tools to carry out.

BRIMMER: Question here?

Q: Hi. Glenn Creamer, World Affairs Councils of America, based in Washington; I’m in Florida.

Can you just explain or help us understand the minerals that are in Greenland and what those actually are and how rare they are in relation to where else we might get them, and how important that is in the whole discussion? Thank you.

BRIMMER: Please continue. (Laughs.)

MADDOX: OK. So there are a lot of different types of minerals, like dozens of minerals in Greenland. The major issue here is that from a business standpoint it just doesn’t make sense when you look at the lack of infrastructure, you know, the very severe conditions, you know, the really remote environment—you know, just with how long it takes to get a mine online, and then how are you getting it to port? You know, these are the considerations when you’re actually looking at practically, you know, what does this look like?

There are some deposits that have been identified as having more commercial viability—so like the Tanbreez rare earth deposit in particular is one. We had been—the United States had been really starting to lay the groundwork to create the conditions for really robust American company opportunities in Greenland through things like USAID funding that was going to support the development of, you know, industry in Greenland, because it really has been—it’s largely underdeveloped, and so there really needs to be kind of those—the groundwork laid for the conditions to emerge so that there can be the opportunities for businesses to come in. But that funding has been cut, you know, so that’s one of those examples of where I think, you know, that should be reconsidered through another mechanism.

And then we’d—so, yes, there’s that side of it. But so really, yeah, again, it’s just also building U.S. business capacity to operate in areas like that because we also have limited expertise in regions like that. But also Alaska has a lot of expertise, so there have been efforts to be connecting Alaskans with Greenlanders, again, to be helping to relay best practices and really to support that.

So it’s really just that the groundwork needs to be laid for those conditions to be present. But then in the near term, because China is really distorting the market, there are things that the U.S. could do through like loan guarantees or tax incentives to try to help businesses to get over some of those initial financial hurdles and support them in the near term, you know, on the basis that in the longer term they would be able to be competitive on their own merit.

BRIMMER: Based on what’s there, can you give us a sense of so what industries might be interested in the resources available in Greenland. Are there particular ones for whom it will be more beneficial, or is that not clear yet?

MADDOX: Well, the minerals are used for so many different applications, so it’s—(laughs)—

BRIMMER: Right, right.

SFRAGA: Margaret? OK. Just checking.

BRIMMER: Yeah. (Laughs.)

SFRAGA: But really, Greenland, yeah. I mean, that’s going to be part of their equation, as is tourism, as is fisheries. I mean, they really have to build this diversified economy. We have to help—we have to help them. It’s in our best interest.

Let me show you something in the state of Alaska, OK? We too suffer from no roads. Even if you can get a road to a mine, you’ve got to power that mine. That’s probably going to be oil, because we—our gas is stranded. So Greenland has that hyper issue as well.

But there’s a way to think about creating perhaps alliances in industry and incentivizing industry to go after these critical minerals in an environmentally sound way. No one wants to ruin this environment, especially those of us who live there. But between Alaska, northern Canada, and Greenland, that’s a warehouse. The issue is no infrastructure. I mean, the old claim, you can’t get there from here? You literally can’t get there from here. (Laughter.)

So you have to fly in; you have to fly in your energy. You have to build the roads. This is complex, and when industry looks at this, they say it doesn’t pencil. Or it might pencil, but I need the federal government to give me tax incentives to clear some red tape. So it can be done if it’s a national imperative. I would argue for the United States, critical minerals and supply chains and all those—that is a national imperative for us. Our future depends on access.

Greenland is part I think of an alliance of like-minded nations who follow the rule of law to build out our capacity to get the critical minerals, produce them in an environmentally sound way—because right now I would argue they are not produced in an environmentally sound way—and get them in a supply chain that’s reliable for, yes, the United States, but also our partners around the world.

BRIMMER: Questions? Let’s see, I need to the microphone to this lady here.

Q: Hi. Laura Strickler from Virginia.

So, since its inception in ’96, the council has suffered critiques that it’s maybe not built well enough for purpose. It doesn’t have a legal mandate. A lot of people have never heard of it or don’t know what it does. And yet it is a place where the eight Arctic states enjoy primacy over the region, in particular on sustainable development and environmental protection. So my question is, if it’s no longer up to the tasks of today’s realities, what would we—what would be better and how would the Arctic eight maintain the primacy they all enjoy once you open the door to that conversation?

WILLIAMS: Maybe I would just start by talking about the current moment, and maybe—I think one of the things that you said, Esther, was that Norway perhaps saved the Arctic Council. And maybe just a quick note for folks—Norway was—when Russia invaded Ukraine, Russia was chairing the Arctic Council, and all of the other Arctic nations said we will not come to the meetings; we are not going to participate in this. But when the time came to have the transfer of the baton of the Arctic Council to Norway, it happened peacefully. It happened appropriately. It was all done in order. And Norway was determined to keep Russia in the mix and brought back Russia through meetings and virtual meetings and discussions and written procedures. And that was a huge, huge victory I think because the potential for that to have fallen apart was significant. And I know that Greenland and Denmark are determined to keep that going forward.

So to me that’s—with such instability and also with the U.S., I still don’t know what is the U.S. position on the Arctic. And how will the U.S. treat the Arctic Council and participate? And right now we have massive, massive funding cuts in all of the programs that allowed very productive U.S. participation in the Arctic Council. NSF—National Science Foundation—massive, massive cuts. All of the biological services that have been providing staff to support the Arctic Council—all of that is being cut. So at this point I’m just happy that the Arctic Council is still—it has integrity. And maybe I’ll just stop there, and you might have thoughts about the future of the Arctic Council.

I guess I could say that one criticism has been that there haven’t been enough binding agreements. There hasn’t been enough hardcore activity coming out of the Arctic Council. But maybe it’s OK for the moment. (Laughs.)

What about your views of future Arctic Council formations?

MADDOX: Yeah. So I’ll just add that—so in the 2021 Arctic Council ministerial there was that creation of that strategic plan for the Arctic Council. And so I believe next year is supposed to be the halfway point where they kind of assess. And obviously there’s going to be some challenges because of some of the limitations, but there are—because there’s a lack of dedicated and transparent funding for the Arctic Council, I think that’s something that could be looked at to try to—try to make progress on strengthening the Arctic Council during this really challenging time.

And, you know, as we’ve seen this kind of incremental, you know, efforts to be facilitating the work that happens through the working groups, that is of immense consequence to the people who live there, that feeds into really important policies, you know, maybe allowing the working groups to meet in person, you know, again, at a low level where it’s not giving any political validation to Russia. But just facilitating that really—kind of the boring work, so it’s not attracting a lot of attention, but you’re able to get done what we need. I think those are some ways that we could be strengthening it.

And I would just point to one of the major initiatives that came out of the Norwegian chairship that was a real success was the Wildland Fire initiative, which brought together—it was led by the Norwegians and Gwich’in Council International. So the Gwich’in are an indigenous peoples who span Alaska and—parts of Alaska and Canada. And what they were looking at is this emerging phenomenon of very extreme fire events in the boreal region, right? So, again, we’re very concerned about the amount of carbon that is coming from these extreme fires, where in Russia we’ve seen fifty-five million-plus acres burn in an extreme fire year. In 2023 in Canada, it was about forty million acres. And this year is already off to a really bad start.

And this is very serious for multiple reasons. One, these abrupt carbon emissions are not in our carbon budget. They’re not in our models. So this is, again, just setting us way behind in terms of being able to understand what is that carbon budget that we have to work with in order to stay within, you know, a climate that’s, you know, conducive to human prosperity. But there’s also a lot of uncertainty about how equipment and sensors are impacted by long-term smoke. And that’s a concern for multiple reasons. You know, economic, human health, and security. Plus, you know, just the people of the Arctic, our military installations, you know, Clear Space Base in Alaska was on high alert, would get ready to evacuate.

If we don’t have better cooperation between Canada and Alaska on managing the forest to prevent these massive fires as we’re having more extreme temperatures and prolonged droughts, we will have more and more intense fires. And then it actually degrades the native vegetation that helped to keep the permafrost intact. And then the invasive species that are opportunistically coming in first create the conditions that are more conducive to future burning. So it’s—again, it’s a huge feedback loop. And we’re in, really, a window of opportunity where we have a tremendous responsibility to be understanding, from a policy perspective, of what we can do to mitigate risk. Because once we kick some of these dynamics off it’s going to be so hard to reel it back in.

BRIMMER: And, indeed, we are, of course, meeting on the eastern seaboard of the United States in New York City. And, indeed, in the weather of the past week that there was haze in New York, Washington, and elsewhere from fires in Canada. Indeed. So we should also talk about Canada as well, but I’m going to look at questions. I’ll take—I haven’t called from this corner. And I want to make sure I’m getting all the way around the room. So, yeah, I’ll come.

Q: Hi. Tom Healy, the former chair of the Fulbright board.

Mike, first, I’d like to thank you for your extraordinary work as both a scientist and diplomat of rare skills brought together. We’ve just heard that there—we don’t know what the foreign policy for the Arctic is. Can you tell us, in small terms, what should it be? What should the U.S.’ foreign policy in the Arctic be right now?

BRIMMER: And, just to add to that, if you want to comment on the U.S. relationship with Canada as well, as the important ally that should be part of this conversation. Who’d like to go first?

SFRAGA: Maybe I’ll start. And, Tom, thank you. Tom and I have an arc of relationship, a substantive relationship, in that from Arctic Council discussions these people-to-people, the communication throughout the north, exchanging of faculty and students and experts has been going on. The University of the Arctic, which is a couple of hundred universities around the circumpolar north, and further south, cooperation exchanges. I get a phone call from a friend who says, Tom Healy wants to talk to you. I’m in Alaska. And I think the phone call, Tom, was, like, 4:00 in the morning Alaska time. So thanks for that. (Laughter.)

But Tom had an idea. And the idea was with Ambassador Brzezinski to create a Fulbright—brand new Fulbright Program, when the U.S. chaired the Arctic Council in 2015. Tom’s idea and Mark Brzezinski’s idea. Called a couple of us. We created the Fulbright Arctic Initiative to complement the U.S. chairship of the Arctic Council. It’s in its fourth iteration. All eight nations participate in that. Tom, your idea is institutionalized in the State Department, which is under pressure now so we’re trying to make sure that that Fulbright Program stays active. Because it may just be one to one, as you may know, but a program like Tom and others helped to create was wrapping the whole Arctic around a Fulbright concept. And it worked, Tom. So thank you for your leadership.

Here’s what—our national strategy for the Arctic region is in place. It’s a ten year strategy put into place a couple of years ago. And it lays out in detail what our strategy should be. The United States, right, it’s about our security in the north. We want a peaceful, stable, cooperative, economically sound Arctic. We want an Arctic that is cooperative. We want an Arctic that deals with governance and rule of law. And we want to ensure that native peoples are included in our discussions. And we want to have eyes on these very real, challenging environmental issues. Those are the pillars of the national strategy for the arctic region from the United States of America. Ten years. It’s got another seven or so to go. And it’s laid out with here’s what each agency should do all pointing towards substantive outcomes.

That was done over the course of many years. It’s a sound document. It’s one that I certainly followed, will continue to follow. It’s there, but it recognizes the new security dimensions. That’s a very different thing for our national security, the real—the real issues. It relies on allies and partners, not just in the security discussion but in the exchange, in the need for not cutting our institutional capacities for research, but investing in them, and making sure that our allies and partners in the north are part of that. But it recognizes that we have many allies and partners who have equities interests in the north that don’t live in the north—like the UK, like Japan, like South Korea, like Singapore, like India. I mean, I could keep going.

So it’s a recognition of this globalized Arctic, but to Mike—as the former chair and former ambassador—to me, it says: United States, lead. Please lead in the Arctic. And to Laura’s point and to Tom’s point, our northern neighbors want the United States to lead with them, not exclusively. To Canada, I mean, that’s a relationship that is so sound, so fundamental. No, they will not be a 51st state. They should be our number-one friend and ally. And they want to be. And that’s what a document like the national strategy says. It says, we all go together and we recognize it’s a globalized Arctic. So bring the whole team to Arctic issues and bring Arctic issues to the whole team.

Tom, I don’t know if I answered your question, but that’s the 50,000-foot level. And I’d look to my colleagues, please.

WILLIAMS: Only that we just don’t know how this will unfurl in the current administration.

SFRAGA: Correct.

WILLIAMS: But that is—that is the ideal strategy. And working at that multi-partner level is critical. And we have done that so well and successfully for decades. But from my point of view, it’s—so far we are crashing and burning on implementing those principles.

BRIMMER: We have about five minutes to go. So let me say—I’ll take a question here, I’ll take a question here, and then—yeah, those three. Please.

Q: Peter Galbraith from Vermont.

And my involvement in Arctic issues, one involvement, was working for the Senate Foreign Relations Committee and doing in the extension of the North Pacific Fur Seal Treaty, as a result of which, with the World Wildlife Fund, the killing of seals in the Pribilof Islands ended.

But my question goes to Greenland. You presented the case why we shouldn’t be taking over Greenland. That’s obviously very logical. But in my experience the best way to predict what a foreign leader is going to do is not the intelligence. It’s what he says he’s going to do. And there’s no doubt that Trump wants to take over and annex Greenland, not just have it for defense purposes. And so the question is, what would that do to Arctic cooperation, to the NATO alliance? And finally, wouldn’t it require an act of Congress to annex the territory? That’s been the case of every other annexation, including, of course, the purchase of Alaska. And do you think the votes are there in the Republican Party to annex Greenland?

BRIMMER: We have Greenland. There’s a question here. We’ll take all three and then I’ll ask each of the panelists to respond, since we have four minutes. Over here.

Q: Hi. Chris Bornay (ph), coming from London.

Just a quick question. Are there any areas where the U.S. and Russia may have such strategic alignment that we can use it to make the wheels fall off of the Russia-China relationship in the Arctic?

BRIMMER: Right. So we have Greenland. We have Russia. There was a third question? Yes.

Q: Hi. John Tyson. National term member from Arkansas.

I had another geography question. Which is I’m struck by the asymmetry on the map that’s on the screen. Russia is kind of further south in terms of degrees latitude from the Arctic Circle, as compared to the right-hand side of the page. And also, the coastline is kind of more flush, whereas Canada has all these little islands. So my question is, what are the practical considerations, compare and contrast, from a maybe defense or commercial perspective our side versus their side, if that’s the way to say it?

BRIMMER: Great. Thank you. So I’ll ask each of our panelists to comment, starting with you, Margaret. And we’ll go—whether it’s Greenland, Russia, or the differences between the geology on the Russian and the North American sides, because there are differences. And I’ll turn to the experts on that, so.

WILLIAMS: Yeah. Maybe I’ll take the question on areas where the U.S. and Russia have a strategic alignment. I think one of those is the Bering Strait. It is a common waterway. We both need it for commerce. It’s an important area of natural resources. Marisol mentioned the fisheries. Two of the biggest fisheries in the world occur in the Arctic. One fishery is shared between Norway and Russia. The other one is shared between Russia and the U.S. in Alaska. And that’s pollock. Our pollock stock is moving further and further into the northern Bering Strait—Bering Sea region. And so we have so much of our natural wealth that we share with Russia.

And in the Cold War, at the end of the Cold War, it was one area, beyond nuclear weapons, where we worked together was science. And science in the Arctic is such a way to bring our countries together. We have been working together for decades, monitoring permafrost, again, I mentioned wildlife, atmospheric science, marine biology, marine science of all kinds. And I think that could be an area. And I’ve—actually at the Belfer Center I’ve been facilitating some discussions between expatriate Russians and American scientists to see if we could pinpoint some projects that could happen at a low level, but to allow some dialogue to go forward considering how much—how much is at stake in this area.

MADDOX: On the Greenland, China and Russia would love for us to try to acquire Greenland physically, because that would mean that the U.S. has violated the sovereignty of a NATO ally. NATO would be in absolute disarray. I mean, and that just then gets into the argument of, like, you know, why does the alliance matter to the U.S.? Which obviously this audience is very well versed in the reasons for that. But, I mean, just a couple, again, this—especially with China emerging as a nuclear peer, you know, those dynamics, looking at, you know, asymmetric potential of disruptive tech, you know, there’s a lot of really cool innovation coming out of the alliance. Like, we want a part of that, right? There are ways that we can be securing our interests, and Europe has shown that they will step up with burden sharing. I mean, I think President Trump should just claim the wins he’s already had and just, like, leave this behind and move on to other things, because it’s not like the world is very boring right now. So that’s definitely my recommendation.

When it comes to the kind of geographical perspective, that question, so Russia has been, again, because they have such a strong Arctic identity, it’s a core—absolute core to their security interests, right? The whole Bastion defense concept emanates from the Kola Peninsula and beyond. So Russia has been making those investments in modernizing Cold War bases, you know, expanding runways to host more advanced aircraft, creating new installations. They are building up their ability to enforce the vision that they have for their rightful Arctic, right? And so that’s where, again, the U.S. needs to work with allies, because we are behind. And so we need to be working together to be able to rapidly kind of make up space to—you know, and to be able to deal with, you know, the potential expansion of Russian aggression. And that, you know, including seeing the way that Russian troops are now building up along the Finnish border, expecting that if there is, you know, some type of deal that comes about with Ukraine, if Russia perceives a win, we’re really expecting that to be increasing.

So even though they’re a little further—you know, that is—they are really capable. I would say, though, that this is, again, where climate change comes in as a major disrupter, because the rate of erosion—so you’re having the loss of landfast ice that had been buffering the coastline from storm surge. And then as the water’s warming, like, we had Ex-Typhoon Merbok come up, right? So come up from the Pacific and hit Alaska in October. Why is there the remnants of a typhoon—that’s, like, not a thing. So storms that used to die off in the cold Arctic waters are hitting warm water and getting reenergized. And so that is compounding the challenges with permafrost thaw. And so the Russian coastline is suffering tremendous losses. They have billions and billions of dollars of infrastructure damage. And we’re going to start seeing this because we’re at this kind of critical threshold where, you know, this is going to become a much more compelling dynamic going forward. And including in Alaska, where 80 percent of Alaska is underlaid by permafrost, all of our military bases. So I’ll just stop there.

SFRAGA: Esther, I’m looking at the clock. And so I’m going to go to game show and it’s, like, beat the clock. So I’m going to try—

BRIMMER: OK. One minute and they’ll be handing over to the captain. (Laughs.)

SFRAGA: Yeah. So I never ignore what presidents say, ever. I don’t—this issue is not going to go away, as much as we’d like it to. I think this is going to be with the administration for a while. I do think there are members of Congress who are going to be opposed to this. I think it’s it would be a battle. I do not think we would invade Greenland. However, you’ve got to bake it into—you’ve just got to, in this day. And so that’s why many of us have tried to make an alternative.

To the issue of cooperation, my colleagues have covered that. I think that those are the places where we might have some overlap and some productive work. And in terms of the landscape, this landscape is very different. The Russian-Alaska-Canadian Arctic is fundamentally different than the Norway-Sweden-Finland-Iceland Arctic. And for a lot of reasons it shapes policy and it shapes opportunity as well, In terms of capacity, this is why we all believe that there should be—I believe there should be a port in Nome, Alaska. We do not have an Arctic port. The United States does not have an Arctic port in the Bering Strait. We need one there. I would argue we need to revitalize our base out in Adak in the Aleutians as well. That’s for a number of different things. But geology and geography do influence policy and politics. They just do.

BRIMMER: I’d like to thank the panel for sharing their insights with us this morning. (Applause.)

(END)

This is an uncorrected transcript.