World Update: A Town Hall Meeting

Tuesday, September 6, 2022
A civilian trains to throw Molotov cocktails, as Russia's invasion of Ukraine continues Viacheslav Ratynskyi / Reuters

David M. Rubenstein Senior Fellow for Energy and the Environment, Council on Foreign Relations; @Alice_C_Hill (speaking virtually)

Vice President, Deputy Director of Studies, and Nelson and David Rockefeller Senior Fellow for Latin America Studies, Council on Foreign Relations; @shannonkoneil (speaking in New York)

Research Fellow, Council on Foreign Relations; @DavidMSacks1 (speaking virtually)

George F. Kennan Senior Fellow for Russian and Eurasian Studies, Council on Foreign Relations; @SSestanovich (speaking in Washington)


President, Council on Foreign Relations; Author, The Bill of Obligations: The Ten Habits of Good Citizens (forthcoming January 2023)@RichardHaass (speaking in New York)

CFR fellows discuss recent developments around the world, including the ongoing war in Ukraine, tensions with China over Taiwan, the future of U.S. relations with the Middle East and Latin America, and issues concerning climate change, global supply chains, and polarization in the United States. 

The town hall meeting format gives members a unique opportunity to engage with CFR experts on a wide range of topics in a setting designed to promote candor.

HAASS: Good afternoon. Now I have to introduce myself. I’m Richard Haass, for those of you who don’t recognize me. (Laughter.) Welcome to today’s “World Update: A Town Hall Meeting” with CFR fellows.

Before we start, though, I got a couple of things I want to talk about. One is, today is an important day in the history of this institution. Today we published the centennial issue, the 100th anniversary issue, of the flagship publication of this, or any other institution involved in foreign policy or international relations. Obviously, I speak of Foreign Affairs. The issue—the September/October issue, literally a century after the first issue of the magazine, which has really been not a but I would argue the authoritative voice in this country and around the world for a century. The new issue is titled, The Age of Uncertainty. Go read it and indeed if you don’t, make a habit of reading the magazine as well as the website, where there’s even more fresh material day-in, day-out. But I think it’s a really important milestone.

Secondly, last I checked, it’s September. I hope you all had a good summer. It’s over. (Laughter.) Now you go to work. September means U.N. General Assembly. It means gridlock. It means traffic jams. But this is a place, if you play your cards right, you can have two or even three meals a day. (Laughter.) So we’re not sure what the lineup will be. I see Nancy Bodurtha in the back. Nancy likes to keep us off balance. And what happens is, you know, you’ve got literally dozens if not hundreds of prime ministers, presidents, foreign ministers, other potentates coming to town. We just don’t know exactly who we’re going to get when we’re going to get it. So just stay tuned to your website. To your—you know, we’ll get information out to you, but it tends to be busy and, shall we say, fast changing. Nothing we can do about it other than we’re going to try to get you as interesting a lineup as we can. And at the moment it’s still very fluid.

Third, far from least, we are—good news is we are largely, but not completely, out of the age of COVID. So we’ve got COVID protocols in mind. We still require those who come into the building to be vaccinated. Masks are a matter of choice. If at some point, I hope not, it ever becomes necessary to revisit that, we’ll do it. Your safety and the safety of the people who work here is paramount. But for the moment, here we are. Which is, shall we say, a sign of more than a little progress.

This town hall, like all town halls, is meant to showcase several of our fellows. Today we’re even more geographically dispersed than usual. Here with me in New York is Shannon O’Neil, who is vice president here at the Council and, with Jim Lindsay, heads up the Council’s think tank, the Studies Program. Shannon is also one of this country’s leading experts on Latin America. She sits in the chair here and she’s got a book coming out in about, what, five weeks, four weeks?

O’NEIL: Yeah, about six weeks.

HAASS: Six weeks. The Globalization Myth: Why Regions Matter. Good title, Shannon.

O’NEIL: Thank you.


O’NEIL: You might—you might have helped me with that. (Laughter.)

HAASS: And what it will do is change your preconceptions of how to look at the world. And so much of the conversation is about globalization. What Shannon drives home is that we often overlook regionalization and how much of what is significant in the world happens at that level. That is coming out and we’ll do an event dedicated to that book, October 20th?

O’NEIL: October 20th, yes.

HAASS: Be there or be square. I also see on the screen Alice Hill. David—Alice is a David Rubenstein senior fellow for energy and the environment. That means she is responsible for climate change—responsible in the intellectual sense, I should make sense, not in the physical or climatic sense. Her latest book is The Fight for Climate After COVID-19, which was published last year. And she really is, I believe, I would say the leading the expert in the country about adaptation, about not just how do we fight climate change, but now do we intelligently build resilience and learn to live with it. Because, to some extent, it is inescapable.

Third, we have David Sacks. David’s a research fellow here at the Council. He is somewhere in Europe. But normally he is in Asia. David is one of the country’s leading authorities on Taiwan and China. I’ll ask him questions about that. And if I’m allowed to say, he’s also writing what I believe will be an important book about Hans Morgenthau, in many ways the father of American—or, realism more broadly.

Last, but not least, Steve Sestanovich. Steve is the George Kennan senior fellow for Russian and European studies here. Steve has also a distinguished background working in the government. Very much involved with things dealing with the Soviet Union, the former Soviet Union. And he joins us from our nation’s capital. So I want to thank all of them.

We’re going to have a conversation for the next thirty-five-forty minutes, give or take. And then I will open it up to you all, and by “you all” I mean those in this room, those in the room in Washington, I think Steve’s going to field the questions there, and those in the virtual room.

I’m going to start with Professor Sestanovich, Ambassador Sestanovich. And I want to start with Mikhail Gorbachev. Before w stalk about the present and future just, what, several days ago now you had the funeral for Mr. Gorbachev. I noticed that Mr. Putin was otherwise engaged and couldn’t attend the proceedings. Steve, say something about how you think history judges, or will come to judge Mr. Gorbachev, including historians in Russia. I mean, and will there be a big gap between how he’s seen internally and how he’s seen here and in the rest of the world?

SESTANOVICH: Well, you’ve already got a big gap in the way Gorbachev is seen in Russia and in the rest of the world. The theme of Russian commentary over the past couple of days has been, OK, he was an idealist, and we have to admire that. And he did bring about some necessary reforms. But really, the—you know, the repetitive indictment against him is he let the Soviet Union dissolve. And that is probably for some time going to be an important theme in Russian commentary and the way in which Gorbachev is remembered.

What’s not so much remembered is how it was that Gorbachev came to preside over the end of the Soviet Union, because what he faced was a series of kind of challenges from across the USSR to the status quo. Something like the Yugoslav succession. And he really faced the question of whether or not he was going to fight the kinds of wars that Milosevic fought in Yugoslavia in order to keep the Soviet Union together. And he made a choice that actually that was not going to preserve the Soviet Union as a great power. I mean, that’s what people like Putin say about him, is that he caused Russia to become weak, no longer a great power.

I think the record will be much more sympathetic, and ultimately even in Russia, to the thought that actually this was an unsustainable status quo, and that for Putin—for Gorbachev to do anything different to try to hold the Soviet Union together would have led to the kinds of wars that—let me take you quickly up to date here—would be necessary—the sort of genocidal wars that would be necessary in order to subdue national identity in other parts of the—of the country.

There’s one little other irony in the way people are talking about Gorbachev in Russia today. And I can’t quite tell how anti-Putin it’s meant to be. People say, you know, Gorbachev just had this unchallenged authority. He was able to make decisions, and nobody could stand up to him. And he could end up doing kind of crazy things. (Laughter.) And I still haven’t figured out whether people are hearing what that sounds like as a criticism of Putin. They’re cagey enough that nobody’s gone to jail for saying this, yet.

 HAASS: Yeah. Well, thank you. Well, Alex, it was a long, hot summer. Really hot. So what have we learned about climate change? We’ve been talking about it for years. We keep amassing evidence of it in all sorts of forms, literally everywhere. You’re the expert. I’m not. But what I’ve come to conclude is even though it’s a future problem, it has arrived. And it’s arrived bigger and faster, with greater consequence than many of us thought was going to be the case. Is that basically in the zip code of accuracy?

HILL: Absolutely. And I think it’s particularly true with heat, as you’ve mentioned. Certainly this year has been the year of climate, but it will be forevermore the year of climate as we continue to add to our missions and we continue to heat up. What has been surprising about the heat is the geographical dispersion from the Middle East to China—having a meteorological heat event that is unprecedented in meteorological history, according to a weather historian. And then, of course, we have this crushing heat wave occurring in California just now.

HAASS: Can I interrupt? The one in China, we’re seeing the drought, is that—are you referring to that—

HILL: Yes, but they also have extreme heat as well. So we’re just seeing unprecedented events across the globe in a way that we haven’t seen in the past, or at least we haven’t paid as much attention. And with heat, the scientists tell us that the modeling didn’t keep up with the heat that we’re experiencing. And then in—I didn’t even mention Europe, with the Rhine becoming so low—fifteen inches of clearance—that barges can’t get across, a major supply chain for Europe. And that’s shut down.

So what we’re learning is that our infrastructure systems, virtually none of them were built for the types of events we’re seeing. So we see in California calls for people to turn their thermostats down, to make sure that they’re not powering their heavy appliances. We see in China shutdowns of power to factories. We are just seeing demands on our system that can’t be answered. We’ve also seen these natural systems fail in the face of climate, because they’re dependent on assumptions that the climate would continue to perform as it had in the past. But with all the emissions and the pollution we’ve put in the atmosphere—and this is human caused—we are heating up quickly. So in the next few decades, we will be much hotter.

HAASS: Well, while you’ve got the floor, can you say something about Pakistan? Because that seems to me to a country that is literally drowning as a consequence.

HILL: Pakistan, unbelievable. Really, incomprehensible damage. A third of the nation underwater. We’ve seen thirty-three million people affected, at least a half a million homes destroyed. Much of their agricultural sector of one of their most productive provinces, half of the agriculture for Pakistan, 90 percent of that crop is destroyed. And Pakistan twelve years ago, in 2010, had very serious flooding. And at that time, they attributed that to climate change. This, I believe, the attribution studies will come in and this event will have been made worse by climate change, I believe.

But what we’re seeing is that the government can’t keep up. And what happened in 2010, the government couldn’t keep up. The leaders were not attentive enough. And it opens the window for extremists. In 2010, it was the Taliban. But we’re hearing from Pakistan and the media reports desperate pleas for help. And we can be confident that there’ll be children, young girls, married off. There’ll be greater human trafficking. And I believe that criminal activity will increase. We saw this during the pandemic. When governments couldn’t respond, criminal actors move in. And extremists will use this opportunity to recruit by providing water, tents, shelter to very, very desperate people.

And then, of course, many people are on the move, which is highly destabilizing for those people, but also for the communities that need to receive them. And this just points to the global destabilizing effect of climate change. You’ll have a country like Pakistan, which had virtually nothing to do with creating climate change, and it’s devastated. And I think this will be a major theme going forward in the November U.N. Conference of the Parties, the twenty-seventh in Egypt. Pakistan happens to head up the coalition of seventy-seven nations in the developing world who are all complaining about the developed world’s role in creating climate change, and its inability to provide adequate support to the developing world for clean energy or adaptation, that building resilience.

HAASS: We’ll come back to that in a few minutes.

David, you’re looking lonely out there, wherever you are. So let me bring you into the conversation. A lot of the attention on your part of the world this summer happened to revolve around a certain trip by a certain speaker of the House of Representatives to a certain island, and then a certain reaction to it. So where are we in the aftermath? A lot of conversation about whether the speaker ought to have gone, about—let’s not revisit or rehearse all that.

The question is, how did that change things? What is the—how would I put it—the new normal post hoc, if I’ve got that right, in the aftermath of her trip? To what extent did we go back to the status quo ante—I’ve now, by the way, used the totality of my Latin other than e pluribus unum. (Laughter.) And to what extent do we now—have the Chinese essentially created a new normal, new baselines? And then the question is, how—with the announcement of new arms deals and the rest, we’re, in turn, doing the same? What is your sense of the post-trip Taiwan situation?

SACKS: Yeah. So I think that you’re correct that the status quo has shifted. And China used Speaker Pelosi’s visit as an opportunity to change the status quo. And the number-one thing I would point to is the median line in the Taiwan Strait, which runs down the center of the Taiwan Strait and was respected by both sides for decades as a way to prevent miscalculation and incidents in the air or at sea. And now on a nearly daily basis, China is flying and sailing across the median line. So that has been erased. And no matter what Taiwan or the United States does now, that won’t be restored. So I think that’s gone for good.

We also see a lot of Chinese drone activity over Taiwan’s offshore islands. And now Taiwan has developed more robust procedures to try to force those drones to leave, or to shoot them down if necessary. And in fact, Taiwan’s military shot down an ostensibly civilian Chinese drone just a few days ago. So the status quo has shifted in that sense. And so when you look at it narrowly, I think you could argue that China has moved it in its favor. But if you were to kind of zoom out and look at the big picture, I would argue that, you know, reunification, to use the term China uses, is as far away now as it’s ever been.

So clearly China’s response to Pelosi’s visit moved the Taiwanese further away. Public polling shows that a vast majority of Taiwanese believe that China is hostile towards Taiwan. They reject the premise that Taiwan is a part of China. And the, you know, one country two systems formulation for unification, which China continues to put forward, has almost no audience in Taiwan. Interestingly, one of the leaders of the opposite KMT party, which advocates closer relations with the mainland, he decided to visit China after Speaker Pelosi’s visit to Taiwan. He wasn’t criticized just by the opposition, but actually even within the KMT there was pretty vocal opposition to that trip.

So when you take kind of a longer view, I think China has set back its own interests in terms of trying to achieve unification with Taiwan. Like I said, I think it’s remote. And China continues to put forward its preference for peaceful reunification. And I frankly don’t see how it will achieve that objective anytime in the near future.

HAASS: Subsequent to the trip, you had the introduction of legislation. I’m not sure if it was in the House or in both chambers, House and Senate, the Taiwan Policy Act. What is that about? And what’s your take on both its substance and its prospects?

SACKS: Yeah. So this was bipartisan legislation sponsored by Senators Graham and Menendez in the Senate. And they bill it as the most comprehensive restructuring of U.S. relations towards Taiwan since passage of the Taiwan Relations Act in 1979. I think there is something to that. If it does pass in the form that it’s in now, it would be the most comprehensive restructuring of the bilateral U.S.-Taiwan relationship. There are reports that the White House is opposed to the Taiwan Policy Act, as it is currently drafted. Needless to say, the Chinese are vocally objecting to it.

And it combines, what I would say, are a lot of useful things, substantively, that we can do with Taiwan to bolster its defense and resilience, but also paired with a lot of symbolic gestures that I think are not worth the price and are not really timed well right now. So on the substantive front, you know, one of the headline-grabbling provisions is $4 ½ billion in foreign military financing for Taiwan. I think that’s a good idea. That’s something we should be pursuing. Establishing a much more robust program of exercises and training between the United States and Taiwan militaries, really helping Taiwan transform its defense into an asymmetric approach, as well as to focus on its reserves and civilian resilience.

But paired with that, you also have provisions allowing Taiwanese officials to display symbols of sovereignty in the United States, to rename its de facto embassy, also to make the director of the American Institute in Taiwan, which is our de facto embassy, a Senate-confirmed position. So all of these things are—I would argue, are purely symbolic in nature and don’t contribute to Taiwan’s defense, and contribute to increasing its resilience to withstand a Chinese invasion or blockade. So my preference would be to move forward with those elements that actually strengthen Taiwan. That is worth paying a price, in my view, even if China responds to those. But I don’t really see the argument for moving ahead with the symbolic portions that China will object to and there will be a price to be paid, but I don’t think there’s much to be gained.

HAASS: OK. Thank you, David.

Shannon, what’s going on with our neighbor to the south? AMLO’s been in office for several years. And what is he likely to leave to his successors, and both in terms of the state of democracy? To what extent will he be—you know, the economy, the energy sector—to what extent will he be able to pretty much determine who his successor is, and what his successor can do? After all those years of Mexico—you wrote about it and others—through rotations of power is becoming more of a democratic success story. There seems to be a little—I don’t know how to say “backsliding” in Spanish. I can barely say it in English. But once—that seems to be the take.

O’NEIL: Yeah. I won’t use the profane term for him, but he’s going to leave a mess for the next person who comes in, right? (Laughs.) And there’s a question about—he will try his best to put his own person in there. And there’s a lot of machinations happening already. But what we’ve seen over these last four years, and he’s got another two to go, is we have seen a real limiting of the economy. I mean, Mexico has not yet recovered to its pre-COVID size. It’s one of the only countries in the Western Hemisphere, and a handful around the world, that hasn’t bounced back. Part of this is that they had one of the smallest stimulus packages in the world. And so because of that, hundreds of thousands of small and medium enterprises just closed. And it’s hard to get those restarted—

HAASS: Just out of curiosity—10 percent detour, I apologize—is their level of inflation, as a result, less than other places because they had some more stimulus, or not?

O’NEIL: No, because the challenge there is so much of their industrial base, their business base closed that now demand is overheating because you just—you don’t have the capacity to eat it. So they actually have higher inflation than we do, even though they didn’t do the stimulus package. So, you know—

HAASS: Apologies.

O’NEIL: No, no worries. So you have a big challenge there in terms of just the private sector. You have a government that has pulled back on public investment. So it’s not investing in infrastructure. It’s not investing in the kinds of things that—public goods that allow business and the private sector to thrive, or just the economy in general. And a lot of economic policies, economic nationalism, energy nationalism and other things that have made it really difficult for the private sector, and particularly foreign direct investment, to come in. You see record low levels of public investment, record low levels of private investment. And over now three-plus years, that has really limited the recovery of the economy. So he leaves to his successor, whoever that will be, a smaller economy, one that has much less capacity because it hasn’t had this investment over what will be six years.

You also see a country where one of his big policies is to bring the energy sector back to public hands. His predecessor had opened up the energy sector to private investment, and really had seen the writing on the wall that the Mexican government didn’t have the skills or the money to exploit the resources there—whether they were traditional fossil fuels or whether they were bringing in renewables. And he is clawing back that whole process. And even when he can’t get a constitutional reform passed, he’s just doing it by fiat, by not giving licenses and permits and the like. And so U.S. energy companies, or those who invested, are now working with the U.S. government and USTR to bring a consultation process and then to use the USMCA, which is the successor to NAFTA, to try to get back their assets or allow—force these markets to be reopened. But there’s a lot of challenges there.

So you’re—he’s also not only kicking these companies out, he’s really questioning the future of sort of stable, affordable, and green energy in Mexico, which also makes it very hard for manufacturing and other companies to produce there. So economically, he leaves a pretty difficult tableau for the next president to take over. Socially, he leaves higher poverty rates. He leaves higher and continuously high rates of violence. You see, you know, double the homicide rates you saw under Calderon, which would have been two presidencies back. You see a huge expansion of extortion, and robbery, and other crimes. So really organized crime taking hold of many parts of the country and using—you know, population has become prey, rather than just drug trafficking through. They have much a larger criminal problem than they did in the past.

And you see very significant political polarization. Because he is personally popular. He, in Mexican parlance, would follow sort of the, you know, Trump rule that there’s—you know, a third of the people would vote for him even if they shot somebody on Reforma, you know, Mexico’s main avenue, not 5th Avenue. But he really has a die-hard base that, whatever he does, whatever the consequences, they will stick with him. And he uses that to really divide—sort of a classic populist, in that sense, and demagogue in the political sense.

HAASS: So let me take a step back. If we had had this meeting ten or fifteen years ago, we would have held up Latin America—it would have won the—almost, like, the—it’s like high school graduation—most likely to succeed or most improved part of the world. It looked increasingly democratic, increasingly market oriented. It looked increasingly successful. And unlike other parts of the world, certainly countries were not going to war with one another. They had internal security problems.

Now, a decade, two decades later, Latin America might win—well, it’s got a competition—but it would be up there for most disappointing part of the world. That even though you still don’t have wars, you don’t have the geopolitical challenges of other parts of the world, somehow it hasn’t taken advantage of it. And it seems, again, backsliding, or whatever word you want to use. But it’s hard to point to a lot of success stories. Indeed, populism—the word you just introduced—seems to be increasingly found in countries like even Chile, Colombia, that had made real progress. Suddenly, not so much.

O’NEIL: And it’s been—you know, you look at the 21st century, and Latin America started out very strong. The economies were growing. There was a commodity boom that helped push many of them. But many were diversifying their economies. On the social side, you saw poverty rates falling, you saw inequality—which had always been severe—lessening, to some extent. You saw governments able and willing to invest in education, so more kids were going to school. You saw health care programs reaching a broader part of the population. You saw other kinds of programs that were really making it from what had been unequal and sometimes excluded parts of society, bringing it together.

And you saw a real growth in a tenuous, but a real, middle class. So Brazil brought some forty million people into the middle class. Other countries, tens of millions of people. You saw a real change. And then, as you say, the last five to ten years, so much of that has backslided. In part, it’s the end of a commodity boom. So places that had had a lot of money no longer have a lot of money. In part, some of these countries—you know, there’s different stories in each place. Some have gone to the extreme of a resource curse. So, here, you know, Venezuela’s economy has just utterly imploded as you see the political grab for oil and other resources. So some are—some of these tragedies are policy made and political made.

But some of the other issues here—and one of them, I think, is Latin America’s place in the world. And Latin America for lots of reasons, and actually something I talk a lot in my book, is we’ve seen the rise of regions, three big regions, that have benefited from the, quote/unquote, “globalization” trend of the last forty years. And Latin America, most of these countries—with Mexico excepted—have been the losers of this trend. They did not regionalize. They did not connect to the rest of the world in a way that allowed them to benefit from the opening. Instead, they sent out raw materials and they brought back finished goods. And in fact, Latin America is the region of the world that has suffered most from what economists call premature deindustrialization. So losing your manufacturing sector before you reach the middle class or before you become rich. And that, I would say, is in part because they have not connected to each other.

HAASS: Somewhere in here we’re going to find some good news. (Laughter.) So just bear with us. Bear with us. (Laughter.)

I’m going to turn to Steve Sestanovich. Not that the—not that the war is good news. But what about trends? I mean, here we are, roughly, you know, half a year into the war—six months, plus or minus. And whatever Mr. Putin’s expectations or assumptions were, they have not been borne out. So what is your sense, Steve, of where we now find ourselves? And what optimism do you have that when we do this meeting a year from now, we will not be in a fairly similar, recognizable place? This is now—we all had better essentially buckle up and fasten in, if you will, for a long war.

SESTANOVICH: Wow. A year from now, when we do this, I don’t think we’re going to be necessarily in a good place, but we’ll probably be in a different place. Because there are a lot of unpredictabilities in the slow-moving, difficult confrontation between Russia and Ukraine, Russia and the West, within the Western alliance. And all of those, you can make a case, are going to be challenges difficult to handle for all of the governments involved. The military stalemate—you know, I’m not sure that’s exactly the right term right now, at a moment when the Ukrainians are launching a counteroffensive—is—the military situation is going to unfold slowly.

The economic cost for both the parties of the war but also for the Western—for Western European countries is going to be great. But nobody knows who’s going to be able to manage it better. The costs for the European Union some people have estimated are going to be in the neighborhood of, you know, half a trillion dollars this year, by Christmas. You are going to have cracks forming—nobody knows how big they will be—within Western unity. You’re going to have efforts by the Russians to try to exploit those cracks.

Some of you may have noticed a Gazprom video on Twitter today warning about the icy winter ahead in Europe. And it’s got all kinds of scary music and scenes of ice storms. (Laughs.) That’s lurid, but the truth is utility prices in Western Europe are going to be ten times what they were a year ago. Is this a scenario that is going to make it possible for the—for Western governments to hold together in their opposition to Putin? Where are going to be a year from now on that? You got me.

I think the thing that is striking about this situation right now is how successful most governments have been increasing a kind of bearable normalcy for this convulsion in European and global affairs. The Russians, it’s commonly said, you know, have not put the country on a war footing. Western Europe has not put their countries on a—on a war footing. The United States has been able to offer, you know, significant military assistance, but has not had to bear any significant costs. So far, within Ukraine, they—despite all of the damage and the immense economic costs, which may not be sustainable—you still have an identifiable national unity.

No government has really had to face a crisis, a political crisis, involving the question of whether it’s prepared to sustain the war effort. And that is going to be the big challenge of the next three, six, nine months. and when we have this CFR town hall a year from one, I would say the biggest question is going to turn out—is probably going to be not who gained military advantage on this or that front, but who was best able to cope with the political choices and challenges and stringencies that the war has imposed.

HAASS: We may have to bring back the concept of correlation of forces to describe things.

SESTANOVICH: Actually, I’m glad you mentioned that, because the Russians are so much in neo-Cold War rhetorical mode. You know, they just—in their official commentary, and I think privately, certainly Russians I’ve talked to, there’s this sense of a complete watershed being passed. This is—there’s no opportunity to go back to the pre-war situation. There’s a—you know, and they talk about their future in a way that really evokes the Soviet Union. The word autarky is being thrown around a lot to describe the kind of place in the world that Russia is going to have to fashion for itself.

HAASS: Alice, you let slip the idea that in November there’s going to be COP-27 meeting in Egypt. Why should any of us believe that COP-27 will make significantly more difference than COPs one through twenty-six? And the second half of my question, will the unfortunately named Inflation Reduction Act make any difference to the results of COP-27?

HILL: Well, I have to concede the point of your question that it’s a little difficult to see the progress after twenty-seven meetings of the Conference of the Parties. But coming out of Glasgow there was an agreement for countries to do more. And it will be interesting to see if that, indeed, plays out that countries will bring forth greater ambition. The United States, I think will be on a better—

HAASS: Can I just—can I just interrupt for a second? I’m going to be difficult. But since COP-26, we’ve had the war. And we’ve had the energy crisis. And suddenly we see China and others turning to coal. Desperate countries do desperate things. So aren’t we—rather than talking about progress, aren’t we actually falling further behind where we want to be? Or am I missing something here?

HILL: I think the war has come at a great cost to our efforts to cut emissions. Certainly, the International Energy Administration, as you’ll recall, said we needed to get off all fossil fuel investments by 2021. We’re not seeing that. We’re seeing long-term investments in LNG that will—the investors there will want to see profits for many years to come. So we’ve locked in fossil fuels. Just as you’ve said, China is turning to coal. They are very worried about their energy security. And we’ve just heard from Stephen, for the European nations, the U.K. is looking at 80 percent increase in gas prices this winter. And we’ve seen other countries struggling to have adequate energy supplies. So, yes, the war has upended what we had hoped were the conditions going forward.

Now, the Biden administration will take a different take on that. Secretary Kerry, the president’s climate envoy, has stated that he thinks this is a huge boost to clean energy, as has others on his team. We’re right to be a bit skeptical of that. The facts are on the ground that we’re going to probably have long-lasting ties to energy. But what this summer has also shown is that we have not adequately priced—as much as we focus on the cost of the transition to clean energy, we have not adequately focused on the cost of these impacts. The rough economic cost that the federal government has used since the Obama administration is the social cost of carbon. It’s in the $50 range right now, for every ton of carbon that is put in the atmosphere.

Under President Trump, that was dropped to $1. There’s been lots of litigation about whether this should be used, and questions about whether it’s reliable. The social cost of carbon is designed to measure the cost of the impacts of climate change. And so how we should account for investments in cleaner energy, as well as preparing. And what the summer’s shown is that we are utterly ill-prepared. Our infrastructure will continue to fail. Just think of Jackson, Mississippi. And then we will have water shortages across the world, as we’ve seen, famine, other things. So we need to pay greater attention.

And that will be a theme in November, certainly from the developing world. The developed world has not lived up to its promises of $100 billion a year for adaptation and mitigation. And in fact, the dollars for adaptation—that’s the preparation for these impacts—have fallen way short. But these countries don’t have our infrastructure to protect them. They don’t have the levees. They don’t have the kinds of long-term weather prediction that we have. So we’re going to see a lot of noise. I think it will be a contentious meeting. Will it produce results? I don’t know. But the stakes are only growing higher.

I work on adaptation, as you kindly stated. There is no way we can adapt our way out of the climate crisis. We have to cut our emissions, otherwise we reach these untenable states—rapid sea level rise, ocean acidification, and ecological collapse. And I’m a former judge. I’ve just been studying this. But it’s ahead. And this summer is showing us what it could be. And then when we get into the foreign affairs, that’s highly—a lot of uncertainty going forward for countries on how they’ll respond. A lot of threats to democracy. Lots of upheaval if we don’t contain our heating. So, yes, you’re right. The war has upended things. But I think there’s also, I hope, a greater understanding that we need to work through this to get to the goal of stabilizing our climate—restabilizing our climate.

HAASS: Yeah. I’m more skeptical than you are, because everyone may agree with that in principle, but everyone will be expecting everyone else to do the heavy lifting. And I think it’s a question of when and not if we have to have a serious conversation about the use of technology to reverse climate change, and who’s in charge of those decisions, and the rest. And I—yet again, there’s a gap between where we need to be and where we are. But that’s a conversation for another day.

David, I want to talk to you a little bit about China, not Taiwan. And in the last couple of months, there’s been a little bit of, I won’t call it revisionism, but almost a reassessment of China making the rounds. And the economy now, most experts think, is going to grow probably south of 3 percent. That China faces more bubbles than, I don’t know, a kid at a birthday party, in terms of what’s going on in particular with lending and real estate. Demography is now—which is, what, 1.3, 1.4 billion—is going to be under one billion probably, you know, long before the end of this century. Large—like, tens of millions of young, unemployed people, particularly men, environmental problems—a long list. Water shortages.

So basically, do we need to think of China differently, rather than thinking of China as this emerging great power? That while it’s getting militarily stronger, yes, it’s also, in many ways, the social and economic fabric of China is growing weaker?

 SACKS: Yeah. I mean, I think, you know, we’ve seen that debate largely play out in the pages of Foreign Affairs, actually, with people arguing that China has already peaked and its window is closing to kind of make the world as it would like to see, and then others saying that China actually has a long way to go in increasing its power. So but, you know, I think that what you raise is an interesting question, which is, you know, what does this mean for Chinese foreign policy if its power has already peaked, or if it still has a long way to go?

The Chinese talk about, you know, windows of strategic opportunity. They still define themselves as living in a period where that window is open. But presumably, if they believe that that window is closing, they would actually, you know, become more aggressive abroad, and try to lock in those gains that they want to see in terms of territory, vis-à-vis Taiwan and elsewhere, and really forming what they want regarding the Indo-Pacific. So I think those are all kind of very interesting questions. And how you view China’s power, whether it's going to be continuing to increase or whether it will stagnate and then decline, you know, I think that does shape what you believe China will seek, vis-à-vis foreign policy, and when it will seek that.

The question that you put forward in economics also, you know, goes to another critical question, which is: Will the Chinese Communist Party look for other bases of legitimacy as the economy, you know, struggles? And as you’ve noted, economists continue to cut their forecasts of China’s economic growth. Right now, sixty million Chinese people are in a full lockdown, including in, you know, major metropolitan areas like Shenzhen, where a lot of electronics are produced. So if China does not abandon its zero COVID policy in the near term, if it continues down that path, you know, if companies continue to move their supply chains out of China and economic growth declines, does it then seek, you know, to replace economic growth with nationalism and really lean into nationalism to shore up the CCP’s support?

HAASS: Shannon, while people are thinking of the questions they’re going to ask, I have a lightning round question for you. Who’s going to win the Brazil elections next month?

O’NEIL: Lula.

HAASS: OK. (Laughter.) It’s so rare that I get—

O’NEIL: In the sound round.

HAASS: It’s so rare I get clarity in an answer. I love it. Whether you’re wrong or right, I love it. (Laughter.) It’s great.

OK, let’s—I got a lot more questions, but enough of me. Let’s open it up to you, our members. We can start—Steve, why don’t we start with someone in the room in Washington. Then we’ll go to New York and then we can go virtual. Is there a hand up in Washington?

SESTANOVICH: OK. Any hands up in Washington? Over here.

Q: Sure. Hi.

SESTANOVICH: Why don’t you stand up and—

Q: Certainly. Kevin Sheehan from Multiplier Capital.

Got a question for David. There was a great article in the Times over the weekend about China’s substantial capacity to mount a blockade. And I’m wondering, in the face of that, how are the Taiwanese thinking about stockpiling? Not only in terms of key munitions and strategic material, but maybe even basic foodstuffs? Thanks.

SACKS: Yeah. So, you know, part of the Taiwan Policy Act that we discussed earlier actually includes war reserve munitions to be stationed on Taiwan. And I think that’s really a critical thing to think about, because one of the big differences between Taiwan and Ukraine, of course, is that resupplying Taiwan is going to be incredibly difficult during a conflict. Of course, it’s an island, whereas Ukraine shares a land border with multiple NATO members. So I think that one of our real focuses for the United States has to be ensuring that Taiwan has plenty of munitions on the island before a conflict begins. And actually, one of the second-order effects of the U.S. effort to arm Ukraine is that that’s now much more difficult.

So Taiwan now has over $10 billion of a backlog in arms that we’ve notified to Congress that they’ve fully paid for that we have not delivered. And that includes a lot of the things that we believe will be critical for Taiwan’s defense—anti-ship missiles, anti-tank missiles, portable air defense. So that’s something that I think Congress, you know, and the administration needs to really focus on. How do we get those to Taiwan? How do we speed up deliveries? How do we prioritize Taiwan? Just to give one other, you know, data point there, we’re selling Taiwan a bunch of new F-16s. And Saudi Arabia is ahead of line than Taiwan to receive F-16s. You know, I would suggest that we should look at that and move Taiwan to the top of that list.

So, you know, in terms of war reserve munitions, that’s something that we have to look at, of course. But you also touched on another really interesting thing, which is civil resilience. Taiwan imports nearly 100 percent of its energy. Taiwan also doesn’t have the basic food supplies that they would need to hold out from a PRC attack. And so that’s also something that Taiwan has started to think about but, frankly, needs to do a lot more. You know, they’re decommissioning their final nuclear reactors right now. And so they will have no nuclear energy, because that’s a really difficult political issue on Taiwan. But I would argue that, you know, decommissioning your nuclear reactors, which are perfectly safe and are functioning, is probably not the best thing to do right now as you try to find ways to ensure energy security.

HAASS: David’s recommendation for improving U.S. relations with Saudi Arabia—(laughter)—reminds me that, you know, we chose these four fellows. And obviously, it leaves out certain issues, if you are—all things being equal, I’d say ask questions in these four areas. But if you want to raise issues, say, about the Middle East or whatever, I or we will do our best.

Here in New York, let’s get a hand. I saw Mark Angelson had his hand up here in the front row. And we do have people on virtually, right? OK. We’ll go there next. We’ll go to virtual land.

Q: Thank you, Richard. This is a question for Steve and Richard, I think. How much do we know about Putin’s health? And if there is no medical solution to this problem, is there a political solution to this problem? (Laughter.)

HAASS: I’m not that kind of a doctor, so I will—I will turn to Dr. Sestanovich.

SESTANOVICH: I have heard Russians express, with utter certainty, absolutely conflicting views about Putin’s health. (Laughter.) He is either, you know, as Bill Burns said, too healthy—(laughter)—or, you know, on death’s door. And I just—I got no information on you—for you on that one.

But you ask about a political solution. You know, Putin has really kind of whipped the country up into a kind of nationalist hysteria. Certainly, the Russian media have just gone kind of crazy. And in part, I think, to make it unpatriotic for anybody to challenge him. But the result is, of course, that it becomes harder to—for him, or anybody, to advocate some kind of compromise solution when you’re talking about a—some compromise end to the war—when you’re talking about what has been cast as a war of national survival.

HAASS: Shannon, I—before I go virtual, I want to follow up on something. You predicted Lula. Will Bolsonaro allow that? Will you have the Brazilian equivalent of January 6th and the big lie, or whatever you want to describe it as? And would he be able to bring into play significant resistance to an electoral outcome that goes against him?

O’NEIL: So he will do that. And in fact, tomorrow there looks to be a march or some sort of other event that Bolsonaro’s pushing this—his version of stop the steal for Brazil. I think it’s hard to imagine that he will accept the results, even if they are quite heavy leaning to Lula, which they look to be in the polls. But looking for some shred of good light or, you know, glass half-full here, I actually think Brazil’s democracy will hold. I think the military will stay in the barracks. They will not go with him.

We have seen over the course of Bolsonaro’s tenure in Brazil, over the last three-plus years, we have seen the Supreme Court stand up to him, investigate corruption into his family and to others, stand up and stop many of his, you know, wilder aspects here of his—of his tenure and rule and executive authority. We have seen the congress actually take over and really play a role in legislation and the like. And many of the reforms people attribute to this administration in Brazil have actually been the congress not the president doing it. So I do think—I think it will push Brazil’s democracy to a crisis. And I think Brazil’s democracy will hold and Lula will take office on January 1.

HAASS: Interesting. Let’s go to virtual land.

OPERATOR: We will take our next question from Monique Mansoura.

Q: Good afternoon. This is Monique with the MITRE Corporation.

A question primarily for Alice about COVID-19 and the challenges we faced in global health security and pandemic preparedness and positioning it as a national and economic security issue not just a health issue. And given, again, the immediate short- and long-term consequences, I think it’s clear that those multiple lenses are warranted. Particularly with regard to the interface between government and industry, and industrial policy, our relationships with the biotechnology industry have been challenged. And I would love your thoughts on how better to think about especially U.S. government, but global engagement with this industrial base.

HILL: Well, thank you for the question. There are so many lessons coming out of the pandemic. And one of them was this issue that you raised, essentially of long-term planning. And that would include how do we better interface with the private sector so that we have the goods, the ability to ramp up research, provide—and we did have good success with Operation Warp Speed, even if the American public was a little more skeptical of the value of vaccinations. But all of these catastrophic risks that are only uncertain as to timing. They’re not uncertain that they will occur.

And that is definitely true of pandemics. That’s been true throughout human history. We’ve suffered from pandemics. We knew after 1918 this was going to be a problem. And we saw different countries take advantage of their experience with pandemics and have better success with responding. So south Korea comes to mind. It had had SARS earlier, and they put in place robust planning and were able to act more quickly, put in testing and other things to save lives early.

The United States has had planning, unfortunately, under the Trump administration—there were struggles in all administrations for planning. So this isn’t just the Trump administration. But the Trump administration chose not to follow the plans, which for the career bureaucrats was difficult because that—all their relationships and their understanding of what would unfold depended on those plans. And so as we go forward, I think we are—many challenges that we face with climate change as well—we need much better planning, and national planning, and exercise planning. And those exercises should include bringing in our pharmaceutical companies to figure out how we will be able to ramp up.

We know that these threats will increase from, one example is climate change. Another example—climate change just changes the vectors of mosquitos, for example. So we’ve seen far more geographic spread of mosquitos carrying disease. We also need to understand that people are going to meet with—people move closer to animals, and then we have these zoonotic diseases entering the human population. So as the U.S. understands what its needs are, we need to build that foundation.

We cannot do this—we can’t count on the federal government to do it alone. It’s not going to happen. And we can’t expect industry to be ready unless it’s got those close relationships. And that’s what—in all my work on adaptation, that’s what it comes down to. We’ve got to have this in place beforehand so that we can have the discussions and the trust to move forward in a meaningful way.

So thank you for your question. It’s excellent. And far more we need to take advantage of this pandemic—you know, we always hear never let a good crisis go to waste—to make sure that we have robust planning going forward because it’s a certainty that we’ll have another pandemic in the future.


Steve, let’s get someone else from our nation’s capital.

SESTANOVICH: Yeah. We got a hand up in back.

Q: Hi there. My name is Razi Hashmi. I’m with the U.S. Department of State. I’m also a term member here.

So my question is for Alice, and welcome others’ thoughts as well. How is the global response to Pakistan’s flood a sign for how we approach climate change that not only disproportionately affects the Global South, which was mentioned, but also Black and brown people, especially seeing the outpouring of support of Ukrainians in Russia’s invasion not so long ago? While it’s not apples to apples, we can also see the global response to the Afghanistan withdrawal as well. Thank you.

HILL: Well, you raise a very difficult question. I think that there is a feeling that that’s—that culturally we just don’t relate as Americans or American culture hasn’t related to the Pakistani as much as to the Ukrainian. But we know that it’s the most vulnerable that are going to suffer going forward, and that’s absolutely proven. You know, Pakistan is now suffering. It’s economy, it was already devastated. Inflation was at 25 percent, huge levels of poverty and inequality. All of these things, all of these risks that are mounting that we’ve been discussing here today, are highlighting that inequality will be a major challenge.

The inequality that we have across the globe has undermined trust in governments, undermined trust in institutions. And unless we start to address that—and so that would include COP-26. Unless the developed world comes forward with some more money—and you mentioned, Richard, the IRA, it does not have money for this. It has a lot of carrots for getting to clean energy, very important; not many sticks. But it won’t get to this issue. And it will—it will haunt us because what are those populations going to do that we are not doing as much as we need to do to help them thrive in a hotter world? They are at risk of powering up with dirty energy. They don’t have power, so they want power. They need power for air conditioning, so they’ll use dirty sources and that’ll create more heat. And also, just the death and destruction that they’re suffering, I think that fuels extremism.

So it’s a point that today—so far, the United States has been reluctant to address this issue of loss and damage. But I speak as a former judge: If this—if we did have a world court that addressed these issues, there would be some liability issues for the developed nations and particularly, you know, the very few nations who have caused 85 percent of the problem, essentially G-20. So I think it’s going to be tough times ahead and policy needs to address it.

HAASS: Shannon wanted to weigh in.

O’NEIL: You know, just on this issue of climate change like taking away from Pakistan, that’s far away or we feel it’s far away from the United States, but some of these climate disasters are happening much closer to the United States and one of the biggest effects is migration. And so one of the issues we’re talking about in—you know, in the midterms and the like is Central American, Mexican, and other migration. And right now in the Western Hemisphere, we see an unprecedented level of Latin Americans on the move. Some of it is because of authoritarian regimes and politics, but a huge number—and especially from Central America and parts of Mexico—is climate change and our climate disasters. And so this is something that is going to hit us very close to home—is hitting us on the southern border—that we haven’t been dealing with.

HAASS: David, before I take another question from New York, next month is the big congress in China. Is there anything—other than that Xi Jinping is going to get his unprecedented third term, is there anything to look for in—like, conditions or anything else that you and your China-expert buddies are watching?

SACKS: Well, like you said, I mean, everybody expects Xi Jinping to be anointed for a third term, so people are going beyond that to see to what extent he’s able to stack the Politburo’s Standing Committee with people who are known allies of his. So, you know, I think people are—people will be looking for that as an indicator of the consensus that’s around Xi Jinping within the upper echelon of the Communist Party. So people will be looking at the makeup of the Standing Committee.

And for us, as well, we want to see who the foreign minister and the state councilor will be. According to the retirement age that’s set in, Yang Jiechi and Wang Yi should both be heading into retirement, but now that is kind of a bit of an open question given potentially a lack of successors. From the Taiwan perspective, one of the potential successors of Wang Yi as foreign minister actually is running the Taiwan affairs office right now. So if he is elevated to become foreign minister, that could also signal that Xi Jinping is going to prioritize the Taiwan question during his third term and does want that to be part of his legacy. So there’s a lot of, you know, kind of internal politics that people are looking for.

I think the short answer is, regardless of the makeup of the Politburo’s Standing Committee, though, Xi Jinping by all accounts will be firmly in charge. And we haven’t seen any kind of dialing down of the emphasis on Xi Jinping in internal, you know, Chinese Communist Party publications or the media or things like that. So regardless of who he surrounds himself with, I think that, you know, this is Xi Jinping’s China and it will be for the foreseeable future.

HAASS: Yes, sir.

Q: Thank you.

This is primarily a question for Alice, but others may want to jump in as well.

HAASS: Why don’t you introduce yourself because not everybody knows who you are.

Q: Ramakrishna from the Woods Hole Oceanographic Institution.

The threat posed by climate brought the world together like no other issue has, but the recent geopolitical events have put quite a bit of tension in that. And we have believed for the longest period that China and United States can work together, but after the speaker’s visit to Taiwan China said it’s not going to do that anymore. And now we have seen joint military exercises between Russia, China, and India. And I’m wondering if you could comment on how that is going to reflect on Sharm el-Sheikh, the COP-27. Thank you.

HAASS: Alice, why don’t you give a short answer and then when I—if and when I disagree with you, I’ll chime in.

HILL: (Laughs.) All right. That’s a challenge here. Let’s see.

I think that all of this geopolitical warfare, the disputes or the growing escalation with China, has shown that even though we have this event—and climate change, it’s not like a nuclear threat. There’s nobody that needs to push a button. It’s just going to happen, and it will continue to happen unless we pull back. And it’s just shown that with this overlay of conflict it’s very difficult to achieve that because humans are involved. The are involved in causing the problem, but very much human relations—you’ve heard it described here today, you know, this intention of this country or that intention of that leader. All of those personalities and people interfere with our ability in those conflicts to achieve success.

And as Richard said, with COP-27 we’ve been trying a long time to get to agreement. We’ve gotten to agreements and then—but to actually implement them. As you’re well aware, though, we are in a very short amount of time about to pass some unforgiving deadlines that, basically, will cause unimaginable challenges for all of humanity and all of the ecosystems. And we also—if we don’t act, as I said, I don’t think human civilization will disappear, but it will be greatly changed. And as Shannon has said, we’re going to see so many people on the move searching for ground when it’s slipped away and otherwise. So the stakes are high at COP-27. And that, I hope, gives us all—all countries the incentive to try to address this in a meaningful way. But that may be too much to ask of human nature.

HAASS: It is too much to ask. And I actually don’t think the geopolitical rivalries which have grown worse don’t change the fundamentals of the lack of incentives to cooperate on things like climate change. It’s largely driven by domestic preoccupations and priorities.

Interestingly enough, China—and David can speak to this—has actually tried to introduce linkage. They said: If you want us to work with you on climate change, you better do more of what we want on Taiwan or other issues. And I just see that as using it because they think, you know, that we’re so interested in getting their help on climate change that we might be willing to pay a high price for it.

But I don’t think—the principal dynamic is greater geopolitical rivalry. It doesn’t help. But even if it abated, I don’t see countries for the most part prepared to do the kind of far-reaching things that the evidence would call for. But it probably at the edges makes a bad situation worse.

Let’s go to virtual land.

OPERATOR: We will take our next question from Valerie Grant.

Q: Hi. Valerie Grant with Nuveen in New York.

My question is directed to Alice as well. And a hopeful—

HAASS: Alice, you’re very popular today.

Q: (Laughs.)

HILL: It’s a big topic, climate change. And then throw in pandemics. (Laughs.)

Q: It is. It is.

So, on perhaps a hopeful note, what are the odds that emerging markets or the Global South, however you’d like to characterize it, would be able to leapfrog developed countries by investing more aggressively in renewable energy than in fossil fuels? The analogy or the precedent that I see for this would be the adoption of mobile telephony in emerging markets. And mobile telephony was adopted at a much more rapid pace than I think most investors expected and most policymakers expected as well. So I am just wondering if there isn’t an opportunity here for emerging markets to take a different path than the wealthier countries have already taken, to their demise.

HILL: Great question. And I think that thought underlies some of the Inflation Reduction Act. That act has a long, ten-year runway, huge amounts of investment in hydrogen, for example. And I think if the U.S. can play the role that it’s played—not on solar, but in many other areas—of being the leader on technology, there is an opportunity for—as countries power up, for the U.S. to help that transition and help them bypass some of this.

The challenge for us is the timing. There is going to be—with these heat events, there’s going to be more air conditioning. It’s just going to be more challenging circumstances, and that will put greater pressure on these countries to use dirty fuels. And we’ve seen that in some areas like South Africa. So, but then we’ve seen the U.S. come in and say we want to—and other countries—we want to help South Africa be—transition to green technology and green energy.

It's a great point. And that is one that I also anticipate would be raised at COP-27, again: How can the developing world be helped by the history and the lessons learned by the developed world? And the U.S. could do this in sharing more of its technology going forward as it develops more in response to this.

HAASS: OK. Three minutes left, so I’m just going to squeeze in a couple of quickie questions here.

Shannon, there was the Summit of the Americas several months ago, and I got into agua caliente for being quite critical of the administration and what it was accomplishing or not there. What is our Latin America policy? (Laughter.)

O’NEIL: It’s a good question. There’s thirty-plus countries there, so there’s not one policy that fits all. But I’ll say there’s two things that came out of the summit that are promising.

One is that a regional migration accord was reached. And here a large number of countries agreed to work together on migration. And as I said before, we’ve seen unprecedented move of Latin Americans around the country. There’s some 6, 7 million Venezuelans that are—just Venezuelans—that are out of their home, and most of them are in South America; they’re not here in the United States. And so lots of countries need help in creating legal systems, creating asylum systems, support for, you know integrating a lot of these refugees. And there are a lot of people, you know, that came together—countries that came together to work together on this. So I think that was a benefit.

The second thing that came out, which still needs to have some meat on the bones, is that the administration created Americas Partnership for Prosperity, which is basically an IPEF—an Indo-Pacific Economic Framework, which also needs some meat on its bones—but that idea for the Western Hemisphere. And just to circle back to our dispiriting conversation on what happened to Latin America, they lost in this round of globalization. But I would say right now, for demographic reasons, automation reasons, climate change reasons, geopolitical reasons, we’re seeing a once-in-a-generation fluidity to supply chains. Things that have been pretty solidified since the ’90s, there’s movement for lots of reasons and countries that didn’t fit in last time have an opportunity to fit in. And so this is a policy—if the Biden administration actually follows through and does something here, you could set up regional supply chains. The U.S. could be a leader in helping lots of these countries actually find a place in the global order that would bring more prosperity and diversification and the like. That would benefit them, but then would also benefit the United States, who right now has a policy of trying to build more resilient supply chains with friendshoring and allyshoring and all of that. You know, you have 450, 500 million people living under democracy in this hemisphere, and you know, you could find some economic partnership there.

So that’s what came out of it.


David, one country whose name hasn’t been mentioned today is the country with the world’s third-largest economy and one of its largest militaries. Just very quickly, give us a sense of, under the new government in Japan, what are we not talking about?

SACKS: Yeah. Well, you know, just to bring it back to, you know, Pelosi’s visit, I think that it was quite eye-opening for Japan because some of China’s ballistic missiles that flew over Taiwan landed in Japan’s exclusive economic zone. And so I think the conclusion there among many Japanese was that whether we—whether we decide to intervene or not, or whether we decide to support the United States if it chooses to intervene on Taiwan’s behalf, you know, basically, we are in the battlespace whether we like it or not. And so how do we reckon with that?

And you know—you know, former Prime Minister Abe, he was really the person leading the charge on this, and now his voice is, obviously, not there anymore to talk about this issue, which is—which is still very sensitive in Japan. But I do think that in the next, you know, couple of years we are going to see Japan move in the direction of being much more explicit about how it would view a Chinese blockade or invasion of Taiwan, how it would affect Japanese interests, and what it would be preparing—well, what it would be prepared to do, alongside the United States, to come to Taiwan’s defense.

I think that’s quite a big development for Japan. I think it’s, you know, part and parcel of a—of a much broader, you know, reorientation of Japan’s security policy and, as you’ve said before, kind of becoming a normal country, so to speak, in the postwar era. And so I think that this is kind of really the first test of that and we’re going to see that conversation continue in Tokyo.

HAASS: Steve, I’m going to give you the last word because Alice got so many questions.


HAASS: Quick answer: What odds would you say that—I know what I would answer, but I’ll ask—I don’t know what you would say. What odds are there that you could imagine diplomacy succeeding in the war, or do you just see it grinding on and possibly grinding down but not formally ending?

SESTANOVICH: I think there’s some real interest in the Biden administration and in European governments in finding some sort of diplomatic initiative that would at least position them better in trying to cope with the internal discontent that I talked about earlier as a possible complication for their other policy efforts. Is that kind of positioning going to produce some really increased chance of a settlement? I think right now there’s not much prospect of this, but I think you’re going to see almost all governments exploring the possibilities because they think it gives them a better chance at coping with the question of political support that they need to maintain their policies. Right now if you asked me, you know, the chances of getting a real—a meaningful political dialogue going on, a diplomatic forum, I’d say it’s probably 120 percent.

HAASS: And now, with that optimistic—

SESTANOVICH: Is that gloomy enough for you? Yeah. (Laughter.)

HAASS: Thanks, my friend.

Look, thank you all—Alice Hill, David Sacks, Steve Sestanovich, Shannon O’Neil. This is just an example, I think, of the breadth and depth of talent we are proud of and fortunate to have in the Studies Program, led by Shannon and Jim Lindsay. Look forward to seeing you all often here this month, given the influx of folks to New York. And it’s good to be back. So thank you all. (Applause.)



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