George Friedman: "Flashpoints: The Emerging Crisis in Europe" | Talks at Google

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MALE SPEAKER: Today with us is George Friedman, an American political scientist, author, and entrepreneur. His newest book is "Flash Points-- The Emerging Crisis in Europe." Mr. Friedman was born in 1949 in Budapest, Hungary. He has authored several books, including "The Next 100 Years," "The Next Decade," "America's Secret War," "The Intelligence Edge," "The Coming War with Japan," and "The Future of War." His newest, about which we'll talk today, "Flash Points," talks about the emerging crisis in Europe, and was published by Doubleday. Mr. Freedman's childhood was shaped directly by international conflict. He was born in Hungary to Jewish parents who survived the Holocaust. His family fled Hungary when he was a child to escape the communist regime, settling first in a camp for displaced persons in Austria, and then emigrating to the United States. Mr. Friedman received a BA at the City College of New York, where he majored in political science, and a Ph.D. In government at Cornell University. Prior to joining the private sector, Mr. Friedman spent almost 20 years in academia, teaching political science at Dickinson College. Mr. Friedman is the founder and CEO of the Private Geopolitical Forecasting and Intelligence Corporation, Stratfor. Please welcome Mr. Friedman to Google. Thank you. [APPLAUSE] GEORGE FRIEDMAN: Well, I am pleased to be here at the one company that Siemens is worried about. Google. And actually that plays a role in the story that I'll tell here. And you play a part. So all talks on books should begin with a justification for writing yet another book, where there's millions already written. I had two reasons for wanting to write this book directly. The first, I've written a book called "The Next 100 Years," which had forecast the failure of the European Union. The events that we see in Ukraine now, things of that sort. These things are of fundamental importance, because Europe remains one of the centers of world culture, and it remains the single largest economic region of the world, larger than the United States. What happens in Europe does not stay in Europe. And if the European Union is failing-- as I'm arguing it does-- this has consequences that will resonate for decades. The second reason I wrote this book is quite personal, as was just pointed out. My life, and the life of my family, was bound up with the geopolitics of Europe. I have a chapter in there-- the second chapter-- that's called "A European Life." and it was meant to say it was life of my father, and to a lesser extent, my mother. And what I was saying was that there was nothing unique in this life. It was just a European life. Those Europeans who lived through the 20th century, particularly the first half, were either uniquely fortunate to live through it, or uniquely cunning, or both. But a European life collided with European geopolitics over and over again to create catastrophe. My parents were born just before World War I. And in that war, their fathers, brothers fought on the Turkish front, mostly, because they were Hungarians. And after the war, the borders shifted, and the places they were born became part of other countries. And they moved to Budapest where they met, and they fell in love, and they married, and had a daughter-- my older sister-- and made a living. They tried to live an ordinary life. And then European geopolitics shifted again in the '30s. And Germany became the rising power again. And suddenly my parents became national security threats to the German state. They were Jews. My father was forced into the Hungarian army, into a Jewish labor battalion. And he went to just north of Stalingrad in 1942, to a city called Voronezh. And that was exactly the point where the Soviets staged their counterattack against the German Sixth Army. My father then walked back in the winter of '42, '43, to Budapest. A distance of a thousand miles through a bitter cold winter, poorly clothed. He survived where almost everybody else in his unit died, partly by the fact that he was a tough man, and partly by the fact that he was a smart man, but overwhelmingly because he was a lucky man. Because that's all that really mattered. He went back to Budapest. And then for a year or so, he was able to live. The Germans had not yet occupied Hungary. And then the Germans decided they had to occupy Hungary because Horthy, the leader of Hungary, was making a deal with the Russians. And they sent my father and my mother to concentration camps. My sister at the age of five was left alone in a Swiss shelter to survive how she could. There was nothing unique about this life. Everybody, Christian, Jew, whatever, suffered through this. It should not be taken as a unique story of my family. It was a unique story of Europe. And then the communists came. They survived, they came back. And the Soviet army occupied Hungary. And my uncle, who was a member of the Communist Party, and part of the Secret Police, let my father know shortly in 1948, that he was on a list. He had been a member of the Social Democratic Party. The Communists hated the Social Democrats. And he was on a list. And this was a time and a place where you should not be on any list. And so my parents face an existential choice-- stay and perhaps die at the hands of the Secret Police, or try to escape. And so in one night in August, the family went to a point on the Czechoslovakian border, on the Danube, and we got into a rubber raft and went across the river. I'm told that searchlights were playing on the river, and machine guns were in search towers. And it was just luck that the searchlights didn't find us. And I was, of course, asleep, drugged, because I was a danger to the entire operation. Why did we go to Czechoslovakia? Because, again of geopolitics. The British had lost Palestine. The Israeli State had been established. And the Russians wanted to do anything to undermine the British. And they were hoping they could form an alliance with Israel, and make Israel a kind of toehold for the Communists on the Mediterranean. The Israelis needed two things. One was weapons. The other were Jews. The Soviets had both. And they routed these weapons through Czechoslovakia. And they routed these Jews through Czechoslovakia. And from there they were taken to a port, Trieste, where they were shipped to Israel. And my parents sought to hookup with these Israeli smugglers, which they did in the town of [INAUDIBLE]. Now my father had no desire to go to the United States. He was a deeply committed Zionist, but he wanted nothing to do with Israel. The paradox was that he had spent his life trying to stay alive in the face of people who believe deeply in things. And he did not want to go to another place where people believe deeply in things, and might take his life on either side. Or as he said, I wasn't going to go to the Negev Desert with two hand grenades and start again. I had had enough of this. And so my father sought to go to a place that-- he had two requirements. First, it should be stronger than all its neighbors. And secondly, no one should believe in anything nearly strongly enough to kill him. He had very low standards. He didn't want to go to Canada because Canada was a weak country, and America was a strong country, and who knows what would happen. Reasoning like that. He wanted to go to the United States. To go to the United States was complex. But somewhere in this my father made a deal where my mother, my sister, and I were allowed to go to the United States and become citizens very quickly. My father stayed behind. This was a time when the Cold War was beginning-- or had actually gotten fairly intense. And the Americans who had no idea what was going on the other side of the Iron Curtain were recruiting anyone who even spoke the language. My father did speak Hungarian, and that was enough to be recruited. They also recruited many Soviet agents, so it was a complete disaster. The CIA at its best. And then eventually my father came to the United States. In United States we grew up in the Bronx, which was a tough neighborhood, but not as bad as it became. And then we moved to Queens to a little house. And he loved this house. And my mother loved the house. And it had a little garden. And one day my father heard me playing somebody called Pete Seeger on the record player. And Pete Seeger was a folk singer who spoke about little houses made of ticky tacky and the corruption of suburban life. My father asked me what he was saying. And I said, well he was saying that people who live in suburban houses that look alike are losing their identities. The house is their identity. They are the house. And when everything looks alike, you have become ants. There's no difference. And my father said to me-- I'll never forget-- this is what Americans worry about? And what he meant by that was, look, I'm not worried about losing my identity. I'm worried about losing my life. If I don't have to worry about my dying, my wife dying, my children dying-- I'm happy. My identity doesn't depend on the house. And frankly, I'm not worried about my identity. I know who I am. I explained, look, when you live in the United States-- a very rich country, a very powerful country, a country that's almost invulnerable-- you worry about these things. When you come from Hungary in the middle of the 20th century, you don't have to. My father said something else to me. Every American student wants to go to Europe. And I went to Europe. And I said to my father, why don't you come visit Europe with me? And his answer was, there's nothing in Europe for me. I said, don't you want to see where you were born? No. I hate them. And I said, look. They've changed. And he said to me, the Europeans will never change. They only will pretend it didn't happen. That's what the root cause for me to write this book. The European Union was an attempt to transform Europe from a slaughterhouse into a place that had banished conflict, that had banished poverty, that had banished all of the bad impulses that were there before. It was a noble intention. But I had come to the conclusion that the European Union was failing. And therefore the question was, what comes next? If the European Union doesn't work, are all of the monsters and fears that existed before-- are they gone? And that really is what the book is about. And it begins with a paradox in Europe. Europe invented humanity. And by that I mean this-- before the European Age of Exploration, the Mongolians had no idea there were Congolese. The Congolese had never heard of the Aztecs. The Aztecs had never heard of the Japanese. The Japanese have never heard of the English. The world consisted of separate little plants. There was no sense of a common humanity. The idea that there is one species throughout the world, and however different they were, it wasn't that they knew they were there and rejected their humanity. They hadn't a clue. For all its brutality, its bloodshed, European imperialism achieved at least one thing. It discovered humanity. Humanity in the sense that there is a single species, that we share things in common. And however much we may hate each other, we hate each other as humans. This was an advance. But the Europeans did more. They transformed humanity's relationship to nature. To me, the vision that I have is the movies where in pre-World War I days, a concert is held. It's a wintry night. And it's dark. And inside that room, might has been banished, and the winter it shut out. And elegant men and women come together to listen to Mozart. Now from my point of view, any culture that can create Mozart is forgiven many things. You have to accept that. But it was this huge transformation of man's relationship to time. A train could travel at 40 miles an hour, 50 miles an hour. A boat could go from London to New York in a week. This was even before the age of aircraft. The entire shape of the planet, our understanding of what was possible, had been changed by the Europeans. Europe had conquered the world, and also it, in a very real sense, conquered nature. Perfectly, no. But overwhelmingly redefined how we experience life. The paradox is that Europe never conquered itself. Throughout the 500 years from 1492 to 1992 of European power, no one was able to convince the Europeans to unite in a single entity. And no one could conquer them all. The Spanish tried. The French tried. The Germans tried. The English tried half-heartedly. Even the Dutch took a shot. But the point is that Europe was unconquerable. Europe is peninsulas jutting out from peninsulas, mountains like the Alps, or the Pyrenees, that can't be passed, the Baltic Sea separating part of it, and the vast steppes of Russia. Napoleon came the closest. Hitler then came close. Both of them died in the wastelands of Russia. Europe could not be united. So you had this paradox. This entity that conquered the world could not conquer itself. It conquered the world, yet there was an ongoing civil war in Europe. But the feeling was, it'll be alright. There was a man called Norman Angell, who wrote a book called "The Great illusion." He won the Nobel Prize later. He was a brilliant man. And he demonstrated in 1910 that it was impossible for there to be a war in Europe. There could not be a war in Europe because the financial system was so leveraged that it would cause financial disaster. International trade was critical. Interdependence reigned. So there could be no war. What Angell didn't understand is interdependence leads to war. Madagascar and Brazil are not going to fight a war. They have no issues between them. But France and Germany are interlocked geographically, industrially, commercially, financially. And the advantage of one is the disadvantage of the other. And each lives in dread of the other, not just of its armies. But that fact that interdependence means that if he does this, this will mean this to me, makes each one want to control the other, each one want to dread the other. Wars do not happen between nations that are not interconnected. They happen when there's interdependence. And the interdependence of Europe by 1914 had become profound. And all European nations lived in terror of all other European nations. This is an important story, because when we talk about the European vision, that they will create an entity so interdependent on each other it will make war impossible, we really have to read Norman Angell-- a brilliant man who proved with mathematical precision that World War I couldn't happen. He missed. He got the math right. What he missed was human nature, that you fear the thing that you depend on the most. Europe was a glittering place in 1913. It stood astride the entire world. There was no part of the world that had not been either occupied at one time by them, still occupied by Europeans, or under such heavy influence that may as well have been occupied. And there was no reasonable person who could imagine what was about to happen, because what began in 1941 was 100 years-- I'm sorry. 31 years of hell, of unbelievable slaughter between 1914-- MALE SPEAKER: You went from 1913 and then you said, 1941. Did you mean to say 1913? GEORGE FRIEDMAN: I meant to say from 1914 to 1945. Thank you. As I make these mistakes, let me know. In those years from 1914 to 1945, about 100 million Europeans died of political causes. First World War, Second World War, the starvations in Ukraine-- the planned political starvations, the Russian Civil War, the Spanish Civil War, the Holocaust, and on and on and on. This was just in Europe. Europe was a continent there was never more than about 500 million people during this time. The population grew back to cover it. But 100 million people died. That was far more than were killed by Genghis Khan. But you expected Genghis Khan to do that. That was what Genghis Khan did for a living. He slaughtered people. But the idea that the continent that had given you Mozart, and concert halls, and Kant, and Rousseau-- this gem of civilization, that it could turn on itself and create the hell that I described my father and mother living through, and the rest of Europe lived through, this was unprecedented. I know of no example of any empire that so rapidly destroyed itself, not because there were external forces, but because internally it was so unstable and so disorderly. At the end of these 31 years, in 1945, Europe was occupied territory. It had gone from ruling the world to being occupied by the Americans and the Soviets. From 1945 until 1992 and the fall of the Soviet Union, it remained occupied. Then different things to be in the East and occupied by the Soviets, than to be in the West. But the essence of sovereignty is decisions of war and peace. And from 1945 to 1992, the decision of war and peace was not made in Berlin, or Rome, or Paris, or London. It Was made in Moscow and Washington. If there was going to be a war, it would happen because they wanted it to. I should point out at this point how incredibly, meticulously responsible the Soviets and the Americans were during this period. In spite of many issues, in spite of massive armies facing each other, and nuclear weapons, these two countries went out of their way to make certain that war would not break out. Imagine nuclear weapons in the hands of the European diplomats of 1914, or 1939. It's interesting, because when I go to Europe, I'm called a cowboy, which really I'm not, because I'm European. But I've never met a cowboy, either. They think of Americans as cowboys-- wild, woolly, and violent. But compared to what the Europeans were, the Americans are pacifists. They just talk big. And this is an important thing to remember, that the Europeans, when left to their own devices, have historically for millennia, been extraordinarily violent. In 1992, two things happened. The collapse of the Soviet Union exactly 500 years after Columbus meant that for the first time, no European power was a global power. That was an extraordinary change in human history. For the first time in 500 years, Europeans were not a global power. There was only one global power. It was the United States, and it had no idea what it was doing. It didn't want to be a global power. It didn't know it was the only global power. And it had the maturity of a 15-year-old. If you've ever seen a 15-year-old in the morning, they are totally self-confident that they can do anything. They could fly a plane if they have to. In the evening, their girlfriend breaks up with them, and they're suicidal. They're bipolar by nature. As is the United States, lost in this. But still the Europeans had emerged with this vision that they had entered a new truth. And that truth was the European Union. And the European Union was based on the idea that the Europeans had learned their lesson. They understood that war was bad. And they constructed something that would be better. It's vital to understand that the European Union was created by the United States, not the Europeans. Back in the 1940s and early '50s, it was the United States that wanted an integrated Europe. The Europeans resisted. The United States wanted an integrated Europe not because they like the Europeans, but they wanted a strong economic bulwark against the Soviet Union, and they wanted lines who could afford armies, and so they wanted integration. And when the idea of integration was put forward, the French didn't want to work with the Germans, the English didn't want to work with the French, and nobody wanted to work with the Italians. So you had this fundamental problem. The first European leader that accepted the idea of a European entity, whatever it was called, was Charles de Gaulle. And he accepted it not for the reason you might think. He accepted it because if there was an integrated Europe, France would be a leading power, in his mind. France could steer this entity into being a counterweight to the United States. And Europe could return to history. That was the theory. Over time, the Europeans adopted this idea. They first struggled against it. Then they adopted it. And there was two European Unions. One was the outer seven. The other was the inner six. And it developed onward until it became, in 1992-- the same year the Soviet Union fell, the Maastricht Treaty came into force. And the Maastricht Treaty created the modern European Union. A free trade zone with some countries sharing in a common currency and a regulatory apparatus in Brussels. It was, according to it's official doctrine, based on peace and prosperity, not the pursuit of happiness, which is to say, not the American principle that you're promised nothing except the right to try to be happy. The Europeans promised happiness. They had to, because they were terrified of what would happen otherwise. So the question then became, what happens if you can't get prosperity? What happens to peace? But from 1992 to 2008, it was a period of extraordinary economic prosperity in the world. And all of the flaws, all the problems, embedded in Europe were hidden. You couldn't see them. Then in 2008, in seven weeks, the world transformed itself. Between August 8, 2008, and September 15, 2008. On August 8, 2008, the Russians invaded Georgia. This did several things. One, it re-announced, history may not be over. The Russians have returned to history. Why did the Russians invade Georgia? The United States was busy staging, the Russians felt, orange revolutions everywhere. One of them was in the Ukraine. And this bears what is happening today. And the Russians felt there's only one reason to stage a pro-Western uprising in the Ukraine-- you plan to seize the Ukraine and attack Russia. At this time, the United States was bogged down in Iraq and Afghanistan. And that really wasn't on their minds. But it was on the Russian minds. And the invasion of Georgia was designed to deliver this message-- Georgia was aligned with the United States. This is what an American guarantee is worth. And that message was not for the Georgians alone, but was especially to the Ukrainians, to the Kazaks, to the Azerbaijanis, we're back and we reframed history. And suddenly the idea of perpetual peace-- which had never existed in Europe because at the same time that Maastricht was going on, 100,000 people died in Yugoslavia-- which the Europeans explained as they always explain the Balkans, it's not really Europe. But of course it is. And 40,000 people died in the Caucasus during the war between Azerbaijan and Armenia. War was nibbling at the edges of Europe. And that war that we talk about now starts. There. But the more critical thing that happened, happened seven weeks later. Lehman Brothers collapsed. And with the collapse of Lehman Brothers, a series of events unfolds that brings us to today's crisis-- this week's crisis, Greeks I should say. For the United States, this was the fourth crisis-- a financial crisis-- since World War II. There was a municipal bond crisis. There was the third world debt crisis. There was the savings and loan crisis. And now the subprime crisis. And the United States knew how to handle this. The head of the Federal Reserve Bank, the secretary of treasury, and eight bankers got into a room-- broke every law on the books, there was no justification for these people to be in a room together-- and made a deal. And there's a way that Americans handle this. First, the financial community behaves with absolute irresponsibility. The federal government bails them out. And then the financial community condemns the federal government for irresponsibility. This is an American sport. And we go through it over and over again. The problem with Europe was that they had never gone through a financial crisis. They'd never done it before. They had no model. They had no kind of expectations. No one was cutting them slack to get out of it. But more than that, the Americans had had one Fed chairman, one secretary of the treasury, and eight banks. Well, the Europeans had eight banks. The Europeans had one ECB. But they had over 20 finance ministers. And try to get them together into a room to settle anything. The subprime crisis shook the European banking system. They bought lousy paper. And the Europeans always accuse-- saying, the Americans started this. My point is, hey, idiot. Why'd you buy it? The point is that the Europeans will point to everyone else. But they bought it. And it shook the financial system. And that revealed the fundamental fault line of European reality. Germany is the world's fourth largest economy. It exports almost 50% of its GDP. That is, 50% of its GDP, half of its GDP, comes from exports. Half of those exports go to the European Free Trade Zone. A little over half. With that sort of constant surge of exports, it is almost impossible for European countries om the periphery to develop. Imagine if the United States exported 50% of its GDP, and depended on that. And half of it would go to Canada and Mexico. What would the condition of Canada and Mexico be? This is what the Germans do. Their industrial plan, their economic plan, is far greater than it can consume domestically. If they don't export, they're going to have massive unemployment and economic instability. They must export. And for them, The European Union was a system for maintaining their exports. First, they had access to all these markets as if it were their own. Second, they had the political power the price the Euro at exactly the point they wanted to prevent inflation but facilitate exports. Whereas the southern Europeans had to have some much lower price. They couldn't get it. Finally, they created a reality through Brussels. Just as Washington creates regulations, Brussels creates regulations. And the Brussels regulations, plus the tax structure of Europe, made entrepreneurial activity impossible. Entrepreneurial activity in the United States is possible first, because the tax structure is such that if you happen to hit a home run, you're gonna enjoy it. The tax structure in Europe is confiscatory at a certain level, so the risk/reward ratio isn't there. Secondly, they developed rules and regulations on everything from human resources to health care. In the United States, if you try to be entrepreneur, it doesn't work, you go bankrupt, you walk away. When I started Strafor, I didn't know what I was doing. But if I had failed, I could put it behind me. In Europe, you don't hire people. You adopt them. They live with you forever. It takes you a long time to unwind entrepreneurial activity. And so one of the things that happened here was that the European 1950s corporation was never challenged like the American was. It never was challenged because there was no Google coming up at them. Siemens was impervious. And that was no accident. It was built that way. And the reason that Europeans came after both Microsoft and Google on antitrust and regulatory issues was to make it more and more difficult for them to operate in Europe. Because for Germany, Siemens and the large corporations were social-- their system of social nets under them. You got a job at Siemens. You got promoted. You rose in the systems. You did in 1950s. It was social stability. It was inefficient, but it soaked up excess labor. What happened in the other countries? What happened in countries like Romania or Italy? Because it was impossible to be legally entrepreneurial, you became illegally entrepreneurial. You lived on the margins. And in living on the margins in these countries, the government knew you were doing it. They knew you weren't paying taxes-- not the Romanians, or the Greeks, or the Italians who wanted to pay taxes anyway. But you're certainly not going to pay taxes if you're illegal. But the government wanted you to do it to maintain employment. Because the German pressure was so heavy, and the Germans are coming in and buying all assets that are worth anything, that you have to be off the books. As a result you wound up with a sovereign debt crisis. That is to say, because the tax base couldn't support repayment after the subprime crisis, the banking system now faced a second major crisis, a bigger one. The bonds that governments had sold couldn't be redeemed. And then a question came up, how do we solve this problem? And there were two solutions to this. One solution was that Germany, leading northern European countries, would underwrite the bad debts. And the other was that we would impose austerity on the southern European countries. And the Germans thought about this for three minutes. And they said, I think we should impose austerity. And the Eurocrats-- that thin layer of financial people, journalists, and so on-- accepted this idea that we'll force them to pay it back. They'll have a bad time. And then it'll all straighten out. What they didn't realize was the massive consequences that they would set off. And the IIMF has now admitted that they didn't get it. In Greece, unemployment is now 26%. In Spain it is 23%. In Southern Italy it is 22%. In central France it is 20%. In other words-- and I should add-- unemployment for those 25 years or less is 50% to 60%. These are the same numbers that existed in the United States during the Great Depression. This is a depression in southern Europe. Where Germany has 5% unemployment, southern Europe is in depression. And this is a depression that it can't easily recover from. What this has now become is not a financial problem, it's a political issue. When the very poor become poor, it hurts. But they understand the grammar of poverty, the structure of what it means to be poor. The people who were hit in the government cutbacks were doctors, engineers, they were the professional classes, who in Europe are heavily employed by the state, because the state has a much broader reach. So, and you have a national health system, and you cut everybody's salary by 50%, you're cutting doctors. When the middle class, which has a clear expectation of what Europe would mean for them, that they would have if you're Romanian and you're Italian, and you come into the EU, you will have a European life. And it's defined by Germany, maybe not as well as Germany, but still, you'll have a European life. And you'll realize over time that that life is gone. So if you were 40 years old in 2008, and you started to lose your job, and your salary was being cut from 3,000 Euros to 800 Euros-- as happened in some people's case-- if you go down this list, what happens to you? You suddenly realize at a certain point it's not going to get better. You suddenly realize that this is not ending. This is not a cyclical thing. That's not temporary. I've been doing this for seven years. And the problem is not that some Think Tank in Brussels didn't think up the solution, it is that the Germans cannot afford to change their behavior because of what they would suffer, and therefore we're locked into this position. And that leads to what happens whenever the middle classes are devastated. The rise of radical parties, particularly of the right wing, because you have to find an explanation for what's wrong. And what the answer you find is that someone caused it. And we must protect ourselves from that by nationalism, by closing our borders, and the Muslims are a particular problem. And by the way, the Jews are a problem too. And you come up with a solution that the middle class comes up with when they've lost everything. And one of things that the European elite never got was that as they were stabilizing their banks, they were creating a system of political backlash that would threaten the entire system they had created. They thought they could keep everybody in their place. And of course, when you're devastated like the Europeans were, you can't keep everybody in their place. And everybody came out of their place. And so what we see now in Europe is the rise of brand new parties. In Greece, it was a left wing party, which has the same position as a right wing party, but they don't dislike Muslims. That's the difference. But these are parties that are basically saying, we're not going to pay you back. The Hungarians pioneered this. They gave mortgages out-- Austrian banks, Italian banks-- gave mortgages denominated in Euro, in Swiss francs, in yen, anything you want. Low cost. But nobody counted on the forint collapsing. The Hungarian government went to the banks and said on behalf of their mortgage holders, we're gonna pay you back in forints. And we're gonna give you about $0.60 on the dollar. Or we'll give you nothing. Give me a call in the morning and tell me what you want. In other words, the debtor, when he owes enough money, controls the situation, not the lender. Old story. I I owe you $100, you've got me. If I owe you a billion dollars, I've got you. And what the Southern European countries are realizing is one, they cannot live with the situation that's been created. That default is better than not default. And secondly, Germany can't afford to let them default, for all the bluffing going on. Germany can't afford this. They need to keep the free trade zone. We saw this recently in quantitative easing, which is a very nice term for printing money. I like it. Printing money was printed by the ECB, but it was administered by national banks. Why? Because the national banks could only buy paper from their own country, which means default could not affect Germany or others. But also, none of the European countries trusted the European Central Bank to be impartial, to buy the papers they had to. We're now back at the Nation State. And in Europe, when you're back at the Nation State, you're at a dangerous point. The United States had a very similar problem. And the problem the United States had was in 1861, a vast dispute on all sorts of issues between the South in the North. And the South said, we could withdraw from the American Union. And the result was a Civil War in which hundreds of thousands of Americans on both sides gave their life, and the Battle of Gettysburg fought to save the Union. Antietam and other places. Who will die to save the European Union? How could Europe create a grand RB of the Republic? It has no moral promise except prosperity and peace. You can't die for prosperity and peace. For life, liberty, and the pursuit of happiness, we hold these truths to be self evident that all men are created equal. There is a moral component. And you've been demonstrated that moral component. We fought the Civil War and saved the Republic. The Europeans have no moral component. They only have a prudential component. And the fact that they fear each other, dislike each other, for a very good reasons going back many years. My mother never forgave the Romanians, and I have no idea what the Romanians ever did to her. But it doesn't matter. If they didn't do it to her, it was her great, great grandmother. These are countries that are different, do not share faiths, and have never held together. And we are now at the beginning where it's all coming apart. And already we hear the guns in Ukraine. So all of the promises that were made are in question. And when Europe goes into question, the world trembles. Let me stop there and ask for questions. Thank you. AUDIENCE: So are you kind of-- your theory is that if there would be a large hegemonic power in the room, similar to like, the United States, in Europe still, this issue wouldn't happen. So if the Cold War never ended, and the Berlin Wall didn't fall, this wouldn't be an issue. GEORGE FRIEDMAN: Yeah. I mean, the reason that Europe did not have a World War III among itself, is that it was occupied by the Americans and Soviets, and they didn't want to have one. But it's not simply a question of somebody having hegemonic power. There's a dynamic in Europe between Germany and the rest of Europe that's in play here. Ever since 1871, when Germany unified, Germany has been the most dynamic economic power in Europe, and scare the hell out of everybody. The German question has always been unlike the British, they have no empire to sell it to. They are incredibly creative, incredibly efficient, and very aggressive. This time they don't have an army yet, which is the good news. But they're still behaving in the same way. Ever since Germany united, Europe destabilized. And while the United States occupied the Western half, and the Soviets the Eastern half, it was a moot question. Now the Europeans have to work it out themselves. And they never have easily. AUDIENCE: What's so special about the Germans, then? Why have they succeeded after World War II, when the Southern European countries did not? GEORGE FRIEDMAN: That's an extremely good question to which I don't have a good answer. But it's one on which Max Weber and many people wrote, "Protestant Ethic and the Spirit of Capitalism." It has to do, I think, with the fact that when it's united, it unites well. In other words, unlike Italy where the northern Italians still don't get along with the southern Italians, the Bavarians and the rest of the Germans, you know, Munich and Frankfurt and Berlin all unite, they are also culturally vigorous. And they're also scared. One of things about the Germans is they remember the period for hundreds of years when they were fragmented into many small nations. And their terror is that it's going to happen again. And they keep losing war, so the terror is real. They therefore create states that are very effective in mobilizing economic activity to build economic activity. I think this is an insufficient answer, but it's the only answer I have. But empirically, we know that Germany does do this. And while I can't fully explain it, I can say it is a dynamic of Europe that's empirically clear. AUDIENCE: How do you feel a Marshall Plan might have played into this? Has the United States overdone the effort of rebuilding Germany at the expense of other countries in the region? GEORGE FRIEDMAN: The United States had to rebuild them, because the Cold War required first, that the West be self-sufficient-- Western Europe be self-sufficient, and secondly, that they have substantial arms. Once you begin the process of rebuilding, it take on a life of its own. It doesn't end, and shouldn't end. That was the entire idea. There is no way of limiting prosperity. Now the countries that the United States is most concerned with is Germany, because it's right on the front line in the Cold War. And of course, France. And to a lesser extent, Britain. Britain was very bitter that it wasn't the forerunner. And Italy, because both of them have strong Communist parties. Greece, Spain, it had much less to do with. But it was really the North European plain that the Americans were obsessed with, because if the Soviets attacked, that's where the attack would come. And that's where they had to have blockers. So certainly the Marshall Plan kicked off this process. But it wasn't that the United States could limit it. Once you put the Germans back to work, they're back to work. And they work well. And so Americans like to moralize whose fault it is. This is not anyone's fault. It's not the Germans' fault. They're not greedy or vicious. It's not the Southern Europeans' fault. It is the nature built into Europe. So I would argue-- and that's an important point I want to make-- is there's no blaming the Germans. They are in the position they're in. And they have to deal with it. There's no blaming, in my mind, the Greeks. There's no blaming the Russians. We are all playing out the hand that we have to play out. And unfortunately, in the case of Europe, this hand frequently winds up in a bad place. AUDIENCE: Could you comment on your thoughts of the influence of US foreign policy right now in Europe, because there are some lines of thoughts about US foreign policy being interested in taking Europe down a notch, Europe becoming too strong. And specifically, US influence in the Ukraine crisis. GEORGE FRIEDMAN: I don't see the US have the ability of taking down Europe a notch. Europeans are doing what they're doing. There's very little that the United States could do to take it down, if they want to. The problem of Europe is that having bought into peace and prosperity, they essentially-- many of them dismantle their militaries. So NATO no longer functions. It's a military alliance, but you can't have one if there's no military. So France has a military. Britain has a military. But the rest of the countries really don't. The United States looks at Europe and says, I think, reluctantly, there is no Europe here. There is Paris. There is Berlin. There's Spain. And they all have very different policies. So we have no one to talk to. We talk to the British. We talk to the French. But now we have a crisis in the Ukraine. From the Russian point of view, as I said before, they read this as a coup d'etat by the United States, taking the elected president of Ukraine, changing the Constitution on Sunday morning, and impeaching him, and imposing a pro-Western government. From the American point of view, he was corrupt and oppressive. And people rose against it. Philosophy aside, Ukraine is fundamental to the national interest of Russia. This is where the Wehrmacht was destroyed. This is where they perceive themselves. This is a place that is 70 miles from Stalingrad. And 300 miles from Moscow. It has no natural defenses. They need the Ukraine, because if Ukraine becomes part of a Western defense system, everything in Russian history tells them that whatever they think now, later they will do what they want. Remember, Russia had Germany-- a weak, shattered country in 1932. By 1938, it was the most powerful country in Europe. So the Russians have that view. The Americans also have a 100-year history of one overriding geopolitical interest-- not allowing a regional hegemon to control all of Europe. I went into the first World War to stop that. It went into the Second World War to stop that. It went into the Cold War to stop that. There are many crazy things we do. We invade Panama, for some reason, that I could never figure out. And things of that sort. But these are trivial things. The fundamental things that the Americans do is control the seas, and watch the European peninsula for hegemon. If Russia takes Ukraine, whatever the Russian intention is, the Americans think, what will they do next? And so you have two countries. Now, the American's General Hodges, a US Army Europe commander, visited Kiev, said there would be traders coming in officially. Only unofficial now. Pin medals on Ukrainian soldiers who fought well, which is symbolically stunning. And then announce that we would preposition armor, artillery, and other weapons in the Baltics, Poland, Romania, and Bulgaria. So I mean, that is quite an announcement for the United States to make in the past two weeks. Then Kerry is announcing a very aggressive policy. Biden is saying the same thing. So if you're the Russians, you're coming to the conclusion that the United States means to seize the Ukraine, and that means the end of the Russian Federation, from their point of view. They have a window of opportunity, because it will take the Americans six months to a year to have any meaningful force in the area. It is now the rainy season where the roads are mud. That will end in four to six weeks. And then we will see. In the meantime, Frau Merkel, who really doesn't need this aggravation right now. It has enough problems trying to hold the European Union together. It really doesn't need a war in the Ukraine to make its life miserable. Is in Moscow today with French President Hollande. And they're trying to get Putin to listen to reason. But the Western reason and the Russian reason are very different. The Russians, said to me-- I was in Moscow recently-- and the Russians said to me, look. We want this much. We'll give up Crimea, if that's what is really bothering you. But we want in Eastern Ukraine. It could be part of the Ukraine but it should be an autonomous zone. And they use this like Quebec in Canada. OK. It speaks a different language, so on. The United States is absolutely opposed to this. And the Russian view is, why would the United States be opposed to it? And therefore each side is reading the other. And this is how wars start. Except neither side wants a war, believe me. But the Europeans are irrelevant to this. Merkel could go to Moscow. She has no force. She has no army. The Europeans are playing a role that they played in the Cold War. They're inert. And that's what's so interesting. This is a war that the European Union should be busy not fighting about putting down or making whatever arrangement they want. But they're in no position to do what the Russians need, pulling them out of a recession, depression, whatever you want to call it. So what you see here is that unless the United States goes in, no one will go in. If the United States goes in, then the Russians freak. If the Russians go in, the Americans freak. And the Europeans are primarily worried about who pays what bond when. So you have a total asymmetry of interests and the kind of intellectual chaos. AUDIENCE: So are we playing to Putin's advantage? I mean, sort of pretending to be aggressive, or acting aggressive. I mean, isn't that helping Putin get stronger? GEORGE FRIEDMAN: Well, the alternative is not to be aggressive, let the Russians move forward, and occupy a position bordering Romania, Hungary, Poland, and so on. So think about the run up to World War II in Japan. The United States cut off the sale of oil to the Japanese. It also went about buying up oil in the Netherlands, East Indies-- Indonesia today-- to keep the Japanese from buying it. The United States was doing that because we wanted the Japanese to pull out of Indochina. The view was that if we do this, the Japanese will be under tremendous pressure. The Japanese view was, if we get into this pressure, there'll be more pressure. And we're accepting the fact that we exist at the sufferings of the United States. The result was Pearl Harbor. Wars don't originate with some crazed mastermind. Even Hitler was bluffing until his bluff was called. And once his bluff was called in Poland, he either went or he didn't go. If he didn't go, there would be consequences. So we went hoping that it wouldn't mean anything. Wars begin with bluffing. And just like in a poker game, at a certain point, you have to flip your cards. We're in the bluffing stage. And each side is hoping not have to flip their cards. Neither the Russians nor the Americans have any appetite for war in the Ukraine, believe me. But that's not how wars begin. I don't think there will be one. I think they'll find a way to back off. But actually, when you play it out, it's hard to find that place where they go. MALE SPEAKER: Please join me in thanking George Friedman for his [INAUDIBLE]. [APPLAUSE]
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Channel: Talks at Google
Views: 321,609
Rating: 4.5120506 out of 5
Keywords: Geopolitics, Boris Debic, Flashpoints, George Friedman (Author), European Union, History, TalksAtGoogle, Reading, Europe (Continent), Books
Id: r-8KV_GurLY
Channel Id: undefined
Length: 61min 25sec (3685 seconds)
Published: Thu Feb 12 2015
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