“Flash Points: The Emerging Crisis in Europe” with George Friedman, Founder and Chairman of Stratfor

my name is LJ Steinbach I'm the president and CEO of the World Affairs Council what a treat we have today we had the privilege of having a dinner with Meredith and George Friedman last night and we learned so much it truly is an honor and a privilege to introduce to you today dr. George Friedman a prodigious intellect and a renowned strategic thinker actually you know dr. Friedman's visit represents the epitome of what the world affairs council has set out to do in our community which is to be a catalyst for global thinking and frankly there is no better accelerant than George Friedman dr. Friedman comes to us not only with great portfolio but with deep and thoughtful perspective with respect to portfolio many of you are familiar with George and his credentials which are long and impressive he's the founder and driving force behind Stratfor leading consulting firm in the field of global intelligence which Meredith is also a partner in and he's an accomplished teacher and prolific author and speaker with books like the next hundred years America's secret war the future of war and he's also a person on whose opinion rides some very important global decisions being made by many household name companies so but you know lots of people come here with portfolio you know it's the dr. Friedman's unique perspective that really makes him special he's a complex thinker who drives toward reason and rationale by challenging not only the assumptions of the people around him but his own on a regular basis in his new book flash points which will be by the way available afterwards he'll be staying after in signing books and talking with you about it if you'd like George shares with us in that book the genesis of that perspective that he has some of which I'm sure he'll share with us today I must say and I don't say this about all of our speakers and a few of them actually I mean this is a remarkable book that he's written it weaves together parts of George's personal history along with insightful analysis of the European experience in the 31 year period between 1914 and 1945 which as we all know was a truly horrendous and tragic period for Europe and it still shapes influences and touches us even today so a final couple of observations about perspective before we get George up here George grew up in a tough neighborhood in the Bronx which should provide all of the perspective one might need in life it's a pretty good up ring but there's much much more to George some of which he relates in his book which is why I think this book is extraordinary the perspective doesn't come easy you know as I was reading George's book I realized that he and I were born in the same year 1949 George was born in the dead of winter of 1949 I was born in the fall I was happily playing in my bassinet in Cleveland Ohio with my adoring parents hoping that I might amount to something in life sometime and have a comfortable life all of which I'm still working on George worlds George's world was very different George was born in Hungary to a very tough complicated and resilient Jewish parents who somehow managed to survive World War two while living with the indelible pain and sorrow of having lost other family members in places like Auschwitz as noted in his book flashpoints hungry as occupied by the Soviets after the war was just as treacherous and dangerous a place for families like George George's as it was during the war as George relates in his book you know his parents were faced with an impossible choice either number one they stayed in Hungary and faced what appeared to be never-ending never-ending catastrophic situation or two they could try to escape and perhaps die with their children in the attempt you know for George's parents there really was no choice so in that year of 1949 while I was safely ensconced in my bassinet in Cleveland George at six months of age was in a rubber raft with his parents with his 11 year old sister at night on the Hungarian shore of the Danube River ready to paddle to freedom an enormous risk George was only six months old of course and when he was sitting in the raft and he couldn't admit it at the time but he does in his book that actually he was the main threat to the whole escape operation as he describes it a crying baby and the Silence of the night would mean certain death that my friends brings perspective you know since I've since I've dated George and me by discussing our birth dates I reference kind of in closing the contemporary philosopher of that error the great contemporary philosopher of the era Paul Harvey in commending to you I hope people there's some people that remember Paul Harvey income in commending to you George's book for as Paul would say the rest of the story I'm not going to tell it all to you tonight so believe me it's a spellbinding tale you're unlikely to get a lot of details about it from George here at the podium but there's plenty for you to read in his book so with that if you would please join me in welcoming to Charlotte and to the podium a man of great perspective George Friedman thank you for that straw R Denari introduction and stealing the first ten minutes my talk I'm delighted to be in Charlotte again I've spent a great deal of time in Charlotte never left the airport but I'm sure the rest of the town is very nice I wrote the book flash points for two reasons the first I wanted to come to grips with an extraordinary reality of Europe Europe invented the world and when I say that I mean this before the European Age of Exploration the Mongols had no idea about the Zulus the Zulus didn't know the Aztecs existed the Aztecs had no idea about the Brits we lived on a single planet but our definition of the world was infinitely smaller and this was the case from the beginning of humanity when you take a look at ptolemies maps of the world you wouldn't recognize them but they were his maps of his world and there were fragments what Europe did starting in the middle of the 15th century was ripped the veil off the world and doing so they invented humanity her definition of humanity was me my brother and I'm not sure about his friend it was the village to town the clan the place you lived the discovery of a universal humanity throughout the world they may not like each other or understand each other nevertheless share a common humanity of sorts was a European achievement it's a story in itself not to be told here of why Europe did this why not the Romans why not the Chinese why then we could go through that and we should but for now let's leave it at the simple fact they did in creating humanity they didn't simply create a map of the world but they had an evolution of thought that spoke about a concept called the rights of man it was called the French enlightenment and just as the Explorers revolutionized their understanding of the world the Enlightenment transform the meaning of living in that world and in the writings of Rousseau in the writings of Montesquieu whoever it was a necessary next step to exploring the world he was exploring its meaning and they delivered us an idea of humanity that hadn't existed before and they went further and they invented the idea of the nation-state the idea that not only is the individual part of humanity and that he has certain rights but he's part of a community that speaks a language has a shared history and has what I call a loved one's own the most natural form of love is love of one's own a baby the age of 2 does not wonder about the meaning of love or whether there are better mothers in the world probably he accepts that love and that's his obligations and the 10 commandments which speaks about honor thy father and thy mother that is not about sending Christmas cards it is rather their beliefs are my beliefs their enemies are my enemies their friends are my friends that's what honour thy father and thy mother mean and here we begin coming into the problem if we believe in the right of national self-determination we must also believe that there are differences between people that is Hungarian is not an Austrian an Austrian is not a Italian that there are differences so we come back struggling to define humanity drawing the great differences between people at the same time Europe conquered the world it also transformed nature it was possible in 1900 to travel 30 miles in an evening on a train to attend the concert in which the winter was banished so was night and Mozart was playing being played Europe can be figured forgiven much for Mozart it was a magnificent culture like all cultures a contradictory culture but then something happened something of enormous importance from 1914 to 1945 and 31 years Europe engaged in the most savage bloodbath in human history 100 million Europeans died of political causes between 1914 and 1945 in the first world war in the second world war in the planned starvation's by Stalin in the Ukraine in the Spanish Civil War and on and on in a continent that never had more than 500 million inhabitants 100 million died not only 100 million died but Europe lost its sovereignty it went from dominating the world British Empire French Empire a Belgian Empire for godsakes from each European state having a Empire and ruling virtually or influencing or being involved deeply in every part of the world at some point it went to occupy territory the Soviets occupied it the Americans occupied it and they lost their empire the story of Europe is extraordinary firstly and what they built and secondly what they lost and how quickly they lost it the question is how could this happen in 1913 in the 1910 a man called Norman and Joe Nobel prize-winner later and a very brilliant man wrote a book demonstrating mathematically that it was impossible for there to be another war in Europe his argument was very simple Europe is too interdependent and because of the financial independence the trained independence a war would be so devastating it couldn't be held and he was right assuming the assumption that the primary purpose of people is to make money he nailed it but clearly that was not the primary purpose or not the purpose by itself because the assumption that you cannot have conflict if you have interdependence proved not to be the case which makes a great deal of sense if you think about it Brazil and Madagascar are not going to have a war they don't touch each other they don't affect each other wars break out between countries that are interdependent because if you are interdependent that means you're dependent and you're gonna try to manage that dependence making sure that the other guy doesn't do something to hurt you and he's going to do the to do that as well and so when you have interdependence this is the foundation of conflict Norman Angela's theory was interesting because it's a very common one now it is the belief that all human beings pursue economic ends and that those economic ends control what we do if there was ever anything to prove that wrong it was World War one it made no economic sense and neither was it irrational the dilemma of Europe was always the same Mo's dilemma it is the second smallest continent in the world not only smaller continent is Australia my wife's Australian so I will say what I always say Australia is not a continent it's a very big island with very little inside the country is a desert so let's not confuse this Europe is a smallest real continent it has 52 sovereign states national self-determination they speak different languages they have different histories and most of their histories designate others as their enemies my mother could not say the word Romanian without spitting I had years after she'd left the country I mean that was just if you're a Romanian you're an enemy she was Hungarian so the third question that really has to be answered here is it ended in 1945 is it over the Europeans have been patting themselves on the back ever since 1992 for what a tremendous job they've done you talk about American exceptionalism the European position is we went through World War two and it's really hit us genocide as a bad idea don't do it if history were only that simple if life were only that simple so the question here is is it over is the 31 years merely the first chapter in a much longer story or the last chapter in a very long story that continues or is it really a breakpoint in European history and this matters tremendously because Europe is the richest economic zone in the world the collective GDP of Europe is larger than the collective GDP of the United States it may have no global powers but it has certainly significance what happens in Europe matters to the world and that was one of the reasons I wrote the book the second reason was alluded to unlike any of my other books that were kind of impersonal this was about my life or if not my life my parents life we speak of geopolitics and it's a very impersonal thing okay this country making one of that country for me my entire life was shaped by geopolitical realities my parents were born in the old hops for Empire my mother in the city of Bratislava my father east in the Carpathian Mountains in a town called wish good odds don't worry about where it is their fathers fought in the world first world war against the Turks so their brothers they died they come home broken they came home to whatever was left the borders of Europe changed my mother moved to Bratislava from Bratislava to Budapest my father moved from what was Ukraine to Budapest now you cane because after all if one is Hungarian one lives with Hungarians not with Slovaks and that was understood in Europe they met and they fell in love and they married and he started a printing business and it looked like they were gonna have a life and he had a little girl everything was well but the German question was not settled Versailles guaranteed that the Germans would repose the issue of German requirements and in 1932 the Germans were both liberal and pathetically weak in 1938 six years later they were the greatest military force on the continent which reminds me always that don't write anybody off this began changing their lives because Germany started redefining Europe and a redefining Europe it redefined Hungarian strategy with the Germans there the Hungarians had to make their peace with the Germans and making the peace with the Germans meant joining them in their military adventures joining them the military adventures meant joining them invading the Soviet Union invading the Soviet Union meant my father was in a uniform in a Hungarian battalion and sent to the front and he marched with the Hungarian army to the city of Voronezh north of Stalingrad this is where the Russians staged their great counter attack right on Voronezh why as Voronezh were the Hungarians Romanians and the Italians in Stalingrad were the Germans where do you go and attack you have the Romanians the Italians and the Hungarians and who was the most exposed the Jews they were most exposed because they were labor battalions and unlike all soldiers who were expected to be willing to die the Jews were expected to die that was what they were there for and they attacked over the Hungarian army they broke the Hungarian army the Hungarian army had no great desire to build the Third Reich so it fell apart and my father walked home from Voronezh to Budapest about a thousand miles in the winter of 42 43 of his battalion of about 500 men five survived I asked my father you know what he did his first answer was I he had a daughter and my sister and he would imagine my sister was sitting there and he had to go pick her up and he would spend days going to get support where my sister was sitting his second answer was I'm a country boy and the city boys just didn't have it they couldn't survive then he would say I was lucky sheer dumb luck I'm the one hand I deal with geopolitics is something you can predict and yet at the slowest level smallest level the where we actually live our individual lives it is frequently a question of pure and dumb luck but he survived and it came back and the Germans were not occupying Hungary so he went back to make a living and then the Germans came in and he was taken to Mauthausen the concentration camp in my mother one to one my sister the age of five was hidden the basement of a Swiss guaranty building and she had to survive my mother my father my sister survived the war that's extraordinary in the family that all three would survive many others died they survived and like the spider in the drain spout my father started rebuilding his printing plants and this time the Soviets who had beaten the vert marked now occupied Hungary and it was discovered that my father had been in the labor battalion it had been a Social Democrat before the war the Communists hated the Social Democrats because they challenged them for the working class and they didn't want that my father personally had no politics at this point his view was geopolitics basically was deadly and politics simply tied my hands he had very few beliefs at anything transcendental nevertheless he was on a list and to be analyst in Hungary in 1949 meant death he found out he was on a list because my uncle was a lifelong communist and a member of the secret police my father and my uncle hadn't spoken for thirty years partly over deep disagreements of the meaning of Hegel in the early Marx and partly over somebody doing something to someone at a Bar Mitzvah it's a family so the complexities are there but the wood he got the word to my father you're on the list and as he said we then faced a choice to be on a list meant prison death the children being given up for adoption or killed or what have you or you stay so in the night of August and then August 1949 we paddled across the Danube to Slovakia there Czechoslovakia at that point now the reason we did that was geopolitical the Cold War was raging already and the Hungarian Austrian border was completely sealed there was no way to break through on the other hand you could get across the Austrian Czech border how well the Germans tribunal you should say the Soviets looked at Israel as anti British and they figured that there was an outside chance they could bring them into a Soviet bloc what did the Israelis need they needed Jews and weapons what did the Soviets have more Jews than they knew what to do with and lots of weapons and so a rap line as we used to call it ran from Bratislava to the Italian ports of the Adriatic where ships are waiting to take the Jews in the weapons to Israel my father was a dedicated Zionist absolutely believed in the state so long as he didn't have to go there because in this state as he said two-handed you two hand grenades and sent you two did negative he was tired of being in a place that had to fight for his life he was wanted to be in a strong country you know Camus said you know neither a victim nor a victimizer be my father's position is this was a deranged concept there's only victims and victimizers and is much better to be a victimizer he wanted to go to a big country he liked the United States because he was bigger than his all its neighbors so if it went berserk we're on the circuit another country he was invited to go to Canada to Canadians wattens well the owners they yet there were only 15 million people in Canada there were 200 million the United States that's not good odds he wanted the goads at a big country to be safe it became very simple and he got to the big country but in a very complicated way that also has to do with the Cold War getting into the United States wasn't easy we my mother my sister and I came to the United States on a destroyer in the captain's cabin my mother never understood the story captain's do not give up their cabins dorothy's refugees travel often we never were able to put it together but we found the paper that showed that my mother was applying for citizenship two weeks after she'd arrived in the country which actually takes a little longer to get at her citizenship and my father is reporting in to a place called ha line just out of Salzburg where the u.s. counterintelligence I found out later operated the Cold War was boiling the Americans did not know what was going on on the other side of the hill people like my father were being recruited to be on the other side of the hill we don't know what he did we have a picture of him on a boat surrounded by thugs wearing an armband when I asked about the armband he explained to me well I was the translator weakness of this theory was that he couldn't speak English worth a damn 10 years later I don't know what he was translating my parents lied to me with a efficiency board of history much of what happened I did not need to know and to the extent that I found it they would lie about it but here he was caught up in the geopolitics of the Cold War in order to get his family into the United States and this is the personal dimension of geopolitics that I wanted to talk about when I said to my father and I spent a great time of Europe studying its universities like fiber Agora in Paris University you know why don't you come back to Europe he said I have no interest in any of them they shall all rot in hell where's little work so I said don't you understand that they've changed I was twenty years old hit he says the Europeans they've never changed they just forget and so the question of this book was a very personal one have the Europeans changed now we have to remember that Europe was not sovereign until 1992 sovereignty is about war and peace and the decision of war and peace did not rest in Rome in Paris in London it was resting in Moscow and Washington in the fundamental sense of what sovereignty means they were in sovereignty and for that period of time because the Americans the Russians were extremely careful them how they managed the situation there was no war during this time the European Union was invented and the inventor of the concept of the European Union was not Europeans it was Americans particularly George Marshall it was in the Marshall Plan was an argument for European integration and the Europeans opposed it intensely the French did not want to be integrated with the Germans the British did not want to be integrated with the French as I'd like to say nobody want to be integrated with the Italians it was something opposed why did the Europeans adopt it it was Charles de Gaulle Charles de Gaulle's realized that if he accepted this idea of integration he could create an integrated Europe of which France would be the dominant country Britain excluded and he could recreate French power had nothing to do with peace and prosperity yet at everything to do with French power in due course it morphed in 1992 finally the mature European Union emerged and the European Union that emerged in 1992 based on the Mauser ik treaty okay emerged at a very special time because it was the same year in which the Soviet Union collapsed for 500 years there was always a European global power Soviets being the last one after 1992 for the first time there was no European global power first time in 500 years there was only one global power the United States for the first from 1992 to 2008 it went beautifully but it was also the most prosperous period of history hiding the basic contradictions that were underneath the surface which were revealed in 2008 in seven weeks in 2008 the underlying contradiction of Europe was revealed first on August 8th 2008 the Russians invaded Georgia visited two things it announced with authority that Russia was back in the game and also said to all the other countries particularly Ukraine Georgia is friends with the United States this is what friendship with the United States gets you nothing we were caught up in Iraq and Afghanistan we didn't have the forces to to mean this plays out in Iraq is playing out a dis moment in Ukraine it's playing out of this moment the other thing that happened seven weeks later was the bankruptcy of Lehman Brothers the United States managed it very well the way the United States always manages the federal government bails out the banks the banks condemned the federal government it's a standard thing we did it and third world debt crisis we did it and resident with Resolution Trust and the savings and loan crisis this is the way we did D Europeans had no such ability they weathered their financial crisis and then wound up in the sovereign debt crisis where they couldn't contribute that why the fundamental problem of Europe is that Germany exports an excess of 50 percent of its GDP imagine of the United States exported 50% of its GDP to Mexico and Canada what would their conditions be but it was the same situation we must begin by remembering that the most vulnerable country in Europe is Germany its entire prosperity depends on its customers and half of its customers are in the free trade zone a germ of Europe and if those can't buy then Germany social stability is at risk and therefore from 2009 to 2011 Deutsche Bank surged Slendy throughout the zone to maintain - which is why I couldn't pass a stress test it still hasn't recovered for the German government made it do now there are two narratives of what happened here one is that the Germans were fooled by the wily Greeks or the other story is that the Germans deliberately primed the pump I have known deutsche bank examiners all that simple and trusting so whatever this story is the story matters less than the fact the question became how do we pay back the sovereign debt why was this problem because Europe had been created in such a way as to make entrepreneurial activity impossible ok the tax structure meant that if you made a great deal of money they took it away from you that overstates it but not by too much the rules on human resources meant that you didn't hire people you adopted them you couldn't shake loose buy a beer near bankruptcy from the problem and so there is no Google there is no Facebook there is no Microsoft challenging Siemens and indeed when they do come in there antitrust regulations you know put them in their place very quickly Europe is filled not with entrepreneurial growth but with 1950s style corporations it also meant that in countries and the Southwest everything was in the black market so I have a friend who works in Romania whose creates bolts in Romanian and so I said to him how many employees do you have and he said what do you mean employees how many buildings do you own own is such a complex concept he was a criminal but he was sponsored by the Romanian government to be a criminal because with the Romanian government the Greek government the Italian govern all understood that except for the black market there could be no entrepreneurial activity there would not be any employment that the rules of Brussels the pricing of the euro and all these other things made it impossible them to be on the books as a result not that my friend would have paid taxes anyway that means that's not overstated but he certainly wasn't gonna pay taxes when he was a criminal as a result this created the sovereign debt crisis the tax base was irrational the tax base of eastern and southern Europe did not represent the realities so they couldn't pay back with it so the question became who should take the burden should the debtor or the creditor take the burden the Greek said I think should be the creditor the Chairman said yeah let it be the debtor the Germans won and this resulted in a social catastrophe in southern Europe twenty six percent unemployment in Greece 22% unemployment in southern Italy 24 percent unemployment in Spain and unemployment for those under the age of 25 is 50 to 65% and we are here not talking about poor people getting poorer the people who became unemployed where the professional classes of Europe because when you're a government employee and laid off it's not like here it's lady in the motor vehicle Bureau you hate that's good she got laid off you're talking about doctors you're talking about electrical engineers you are talking about a broad range of telecommunications people these were the people who not only got laid off but if they kept their jobs their salaries were cut as in this case of a friend of ours increased from 3,000 a month to $800 a month in southern Europe it is the middle class the professional class that has been devastated by the past five or six years when the poor get poorer well at least they understand the grammar of poverty it's not a new world but when we get unemployed and we lose our house the entire structure and expectations of our lives shift at first you believe this is only temporary but after seven years it's hard to believe that it's only temporary and it's not temporary it is structural in its long term but I also want to tell you these unemployment rates are the same rates that we had in the United States and the Great Depression okay so the unemployment rate is staggering Germany's unemployment rate Austria's unemployment rate is 5 percent their unemployment rate is Great Depression levels you now have multiple Europe so let's talk just three we have Germany a nation of enormous efficiency as it says totally desperate to maintain its exports and suffering from the disease of all efficient exporters their customers can't buy or all by we're very fortunate United States to be nine percent export in goods of that forty percent goes to Canada Mexico we're exposed to the world with only by about five percent of GDP so you take a twenty percent hit hey it's a pain Germany is totally exposed yes it is very efficient you can cut your throat with efficiency so Germany is doing everything you can to maintain the free-trade zone so what it will do is declare we actually don't care of the Greeks leave but we'll give you four more months you will notice that the Germans always kick the can down the road and the reason is not because well we're just feeling good about ourselves here the reason is they can't afford the risk of the free trade zone collapsing of protectionism and things of that sort they can't they can't absorb that in the meantime you have southern Europe in depression depression at a level that even QE isn't going to solve Eastern Europe obsessed with the Ukrainians which the Spaniards really couldn't care less about it ain't a major issue for them and the Germans obsessed with maintaining exports and the French bitching and moaning kind of on the margins about something but in other words they haven't found their place yet in this universe this has nothing to do with the Erie European Union we saw from 1992 to 2008 this is a completely different world and what you see happening when the radical when the middle class becomes radicalized because of unemployment what you get are left-wing but particularly right-wing movements and we see the National Front in France we see podemos in Spain five star in Italy you're big and hungry Europe is filled with right wing and left wing movements and the main Europeana Sparty's are to a large degree being discredited the question is who takes them out not how far they we see nationalism rising if you go to Europe now you see something can hatred for Germany in bunch of southern Europe and Eastern Europe German contempt for everyone else you see fragmentation of European countries we saw 45% of Scots voting to leave the European the United Kingdom people say well they didn't get the other 5% I'm sitting here and say 45% we see Catalonia moving to trying to leave Spain we see the Belgians talking about dissolving Belgium we see northern Italy talking about leaving southern Italy this time I think they're serious but we see all of these movements the Hungarians in Romania wanted to leave Romania we see these micro geopolitical events and we already see war but we always saw war in Europe the Europeans fantasize that it was a peaceful continent 100 million people died 100,000 people died I should say in Yugoslavia last I'd looked at was Europe 40,000 people died in the war between Azerbaijan and Armenia in the Caucasus at the same time it has never been a peaceful place will it go to war again and that's not clear is it an unstable place with an unstable political system well how else could it be with this level of unemployment in this differentiation it seems to me that we're looking at flashpoints coming alive everywhere the flashpoint between Russia and the West is alive we see to me the immigration problem in Europe of Islamic is really the Turkish problem as many of them are Turkish coming back alive because turkey is now the most dynamic country in Europe and has been for quite a while it's good fortune was it was kept out of the EU it also has the largest army in Europe a million people so the Mediterranean is sparkling and even the Danes are asking to close their borders so that Bulgarians can't get jobs as an Islamist candidate when you paint the very short history of the EU which I've tried to do it begins to answer the question that I posed the beginning is it over and we talk about geopolitics you also have to talk about the people that we know in Romania or in Greece and what this means to them and who they are to understand the bitterness that's building and the anger that's building is it over well certainly in the sense that Europe has found peace and prosperity and European exceptionalism rules and soft power is all you need that has become more and more problematic every day the question is whether or not the Europeans are going to have another war and for this we have to look at the one that's happening and where is it happening where you would expect it to happen in the borderland between Russia and the European Peninsula Ukraine in Belarus in the Baltics and if you visit Poland the Baltics you visit Romania they are all working with the United States to create a containment policy and it is coming back doesn't mean it has to be the 31 years I don't think the Europeans have another 31 years in them I hope but it also doesn't mean we've reached the point where we have abolished geopolitics in favour of economic growth or to be more precise it would be fine if their economic growth but there isn't and there are structural reasons why there isn't is what I'm trying to point out and so for the United States now the only global power the question that has to ask is the same question is asked for the past hundred years the one thing the United States has always responded to was a European hegemon who could take control of Germany and Russia and combine their capital and technology with Russian manpower and resources we fought the first world war right after the Tsar fell we intervene we fought the Second World War about the relationship between Germany and Russia the Cold War was entirely about the relationship between Germany and Russia so this is what we always respond to we respond to many things including Haiti Somalia I mean you know what he got this week but this is the core American strategic issue since 1914 can we tolerate a hegemonic power is Russia hegemonic power how do we prevent it from becoming a hegemonic power and why can Russia play this game because Europe is so weak and fragmented so much at odds with each other both Russians and the Americans can pick off countries did they want one at a time and so the old game continues let me ask questions I'm sorry Thank You dr. Friedman we'll start with questions and answers immediately so please raise your hand introduce yourself and speak loudly go ahead I will honestly say I haven't heard of it which means it probably isn't working too well but I'll check I'll check it out no I well we have to first express the fact that the debt that the Greeks the Spaniards much of the Italian debt cannot be repaid it's not a question of wanting to and not want to do it it can't be the Hungarians pioneered a method for handling this Victor Horta bond is the prime minister of Hungary a lot of money was lent by Italian Austrian banks in the 1990s for mortgages that were denominated not in Hungarian currency footings but in Euros in Swiss francs in yen his lot to get anything you wanted the 14th collapsed after 2008 people couldn't repay it Warda bond went to the banks and they said basically here's what's going we're gonna do for you we're gonna repay you in footings whatever it's dollar for needs we're going to give you about 60 cents on a dollar it's more complicated but it comes out to about that you have an alternative in which we give you nothing sleep on it give me a call in the morning let me know what you want they bought it we have to remember one of the strange things about the euro it is subject to the debtor in other words if the debtor decides to default the most efficient default is to print your own currency and announce that you're paying back in that currency in a drachma and the Hungarians have done that one of the things we know about banks I'm thinking a clean way to say this you're silly people you'll take the money you'll take what you can get and then go into arbitration somewhere deep in the bowels of the world the point is the debtors have the euro in their pockets they will decide whether it is better to continue trying to repay this way or to follow the Hungarian model it's a complex issue but ultimately if American Airlines can decide to manage their debt structure so to speak so can countries and they will because many of these countries the government's can't survive if they try to pay it back just the revolt is too great so the answer under euro I don't see it surviving but it's not going to be up to the Germans who wanted to survive it's not gonna be up to the French is it going to be up to the debtors whether or not they're going to redefine their loans in terms of currency they can control and I think they will well it's interesting one of the problems with Spain has that all these countries have is the degree of destruction has been wreaked on the infrastructure of the businesses in Spain over 50% of construction firms have going bankrupt that means that if you try to stimulate the economy through construction you first have to reconstruct the firm's it's a very it's a serious problem the Greek the Spaniards have not been as why should I put it Vogl but the movements like podemos the Catalonian independence movement okay are actually more radical than the Greek so there's a paradox in the way the public addresses of the question which is much more sober and the political way which they express it which is really in many ways more extreme so yes they have the same problem each nation addresses us differently the one to watch next is not Spain its Ireland Ireland has announced that it wants to renegotiate its debt it's not in as bad condition as any of these countries but they're looking at the Greeks and they're saying this is pretty good deal for us and when the irish ambassador comes you can ask her as i'd like to you know exactly what is the status of the renegotiation process because the negotiation is Minsker a joke in other words it's not going to get anywhere the question on Minsk is whether or not the Russians have any benefit from this mints doesn't address the fundamental question Ukraine is of fundamental importance to Russia this is where they crush the Vermont you will say nobody wants to invade you but remember what I said in 1932 Germany didn't want to invade by 1938 they quit six years for then a neutral Ukraine is fundamental they view is that the United States has entered view has basically undermined a neutral Ukraine to create a pro-western one the only reason the United States would do this is to gain some sort of strategic advantage over the Russians despite that I think it's true for what we did and we had reasons for doing it we don't have to go in to know the Russians absolutely have no confidence in the United States the United States has no confidence in the Russians actually nobody has any confidence than anybody else but if you're going to have a minced talk and not have this fights leave the Russians and the Americans out because I'm sure the Germans and the French together couldn't solve anything sometimes in diplomacy you have negotiations that are created not because they're intended to solve the problem but to give the illusion that something is happening that's the minister and for the United States what they're doing is pre positioning tanks and artillery in the Baltics in Bulgaria and Romania and Poland the United States is busy constructing an alliance structure outside the framework of NATO on a bilateral basis with the countries in the region who are happy to join in and placing aircraft in position to attack an armored column you really need aircraft these days so the United States shifting is focused that you took remember about the pivot to Asia that never actually happened this is a pivot to Europe but a very peculiar Europe from American point of view where the Germans don't want us doing this and we really don't care what the Germans want or don't want but general Hodges who is the commander of US Army forces in Europe went to Ukraine announced that they were going to be sending trainers into Ukraine and pinned medals for heroism on Ukrainian troops but that's that that's a big move so the answer is that the min stalks are for the newspapers whereas they say in Brazil for the eyes of the English and the real question is can Putin survive we have time for two more questions the young student there with the red thumb stand up introduce yourself no first anti-semitism is not the crucial thing although these rail easels grab any occasion to raise money the underlying thing is that has happened in the 1970s and 80s part of the Islamic movement in Europe is attacking Jewish facilities there are also anti-semites in Europe but they are not a significant thing the Islamic terrorism against all Europeans is more psychological than significant and it's scary to think you can go out to one day and get killed but then we saw they are lying today there are many things that like that's going to happen for the Europeans far more important than the Islamic movement is the Bulgarian movement that is if you have an economic problem you really don't want Bulgarians and poles and everybody else taking jobs and at the current four rules of Europe anybody can and so there is a movement in many countries to control their borders of who can come in and I think that is a much more significant problem the Islamist problem is a deep psychological problem that the Europeans have to cope with anti-semitism is primarily from effective after 7:00 from Muslims to Jews and this has been going on for a long time in Europe hitting Jewish targets now can anti-semitism rise yeah but that's not the real issue for Europe it is the outsider when I went to a museum in Trier the City Museum it was very interesting to see that the section on Jews and Muslims and Trier were in the same part of the museum so from the point of view of the city of Trier it was the same phenomenon the outsiders coming in and that feeling is there and is built-in to European culture but Holocaust no thank you it's the last question we well they never were countries they were invented by the French and the British and they were operated through dictators who hold it together Syria and Iraq there are 1.2 billion Muslims there is no military solution to this problem there are various movements that arise and they can only be contained by other movements the model that has to be followed as Lebanon has to be remember that in Lebanon from 1975 to 1990 there's a civil war there were multiple Shiite groups Hezbollah Nabih Berri in Imam Nisha there were multiple Sunni groups multiple Christian groups and they fought each other and eventually none could destroy the other and none could be destroyed so eventually after 15 years they reached some sort of understanding none could be imposed and Ronald Reagan sent troops to Lebanon after the explosion that killed I think two hundred and eighty Marines he pulled all the troops out because he understood something fundamental there are limits to military power and the number of Marines of a take soldiers would take to pacify Lebanon was one probably beyond what we could raise and two it doesn't much matter let them kill each other I don't know that he said that but I suspect he thought that there are problems that cannot be solved certainly not militarily but there are problems that we contained and you see that process underway yesterday in Yemen where the situation in Yemen had gotten completely out of control it was necessary to have air strikes and the Americans said hey we'll give you targeting information go do a guy and so they put together a coalition of ten countries you really only needed two UAE and Arabia and they carried out airstrikes one of the keys to power is to understand what you cannot do and understand what ultimately the outcome doesn't matter so the ISIS is than everything accounted your attention to itself as a monstrous thing it's a monstrous thing but it intends to be appearing as a monstrous thing to draw the United States in and other countries to give in to your enemy by allowing him to decide your strategy is a military militarily unacceptable thing so my view is we have a huge problem in the Middle East in the Islamic world we do not have the power to solve it they are not going to turn into Wisconsin Democrats you know at some point the near desire to do something is the dangerous thing most dangerous thing for a great power something must be done is the only statement you should ever hear before you run and I refer to mr. John McCain so my answer is I don't see a problem that rises to the level where the United States could effectively deploy military force it achieve an outcome in Russia that's a different story and that's more to the point dr. Friedman thank you so much for coming to Charlotte you just can't imagine how excited we were to hear the news that you were going to come to Charlotte but I have to tell a quick story first before I present you with this this morning I was on my way back home from a breakfast meeting and I stopped by the bank and I was in the teller line that outside teller line and it was a double line and I was waiting over on lane B while lane a got served and I had the WUF AE radio show on pretty loud so I could hear and I noticed that teller was taking a long time to get to me and finally after five minutes she said what are you listening to and I said well WFA is a Mike Collins show it's dr. George Friedman and he's in town speak to the World Affairs Council today at lunch she said this is fascinating she said I'm sorry it took so long to get to you but I just couldn't stop listening and well she was a she was about 20 years old so I thought well I told her all about the Magellan society in the world affairs council of Charlotte so I hope we got a new member out of that but I want to say thank you and this is just a little certificate of appreciation for coming to Charlotte and we hope that you will come next year again and and make Charlotte a more familiar place [Applause]

Channel: World Affairs Council of Charlotte

Views: 24,431

Rating: 4.7461929 out of 5

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Id: 4lECoNT8qq0

Length: 65min 15sec (3915 seconds)

Published: Mon Jul 13 2020