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NIMA ALKHORSHID: Hi, everybody. Today is Thursday, November 21st, and we have Michael Hudson and Richard Wolff with us here. Welcome back.

RICHARD WOLFF: Thank you, Nima. Glad to be here.

MICHAEL HUDSON: Yep!

NIMA ALKHORSHID: And let’s get started with the breaking news about Netanyahu and Gallant. We’ve learned that ICC, we’ve learned about the ICC arrest warrant on Netanyahu and Gallant, the former defense minister of Israel. And here is what we heard from CNN.

CNN NEWS CLIP: “The criminal court has just issued arrest warrants for Israeli prime minister Benjamin Netanyahu and former Israeli defense minister Yoav Gallant, accusing them of war crimes in Gaza, and also for a top Hamas commander, also known as Mohammed Deef, who is believed to be dead.

The court says it found reasonable grounds to believe the prime minister bears criminal responsibility for war crimes, including starvation as a method of warfare, and it rejected Israel’s challenge of the court’s jurisdiction over the matter. CNN’s Nick Robertson joins us now from Jerusalem. Nick, what more can you tell us?

Well, this is a very, very significant escalation. It was first announced by Kareem Khan, the ICC chief prosecutor, back in May, that he was going to seek to request arrest warrants for Benjamin Netanyahu and Yoav Gallant, who was the defense minister at the time, as well as three other senior Hamas officials, including Mohammed Deef, Ismail Hania, Yaya Sinwa, the other.

Those three are all dead. Deef believed to have been killed in July. So unclear why they’ve issued an arrest warrant now for him. But by overturning Israel’s rejection of the jurisdiction and the allegations by the court, this clears the way for something very, very significant, which Prime Minister Benjamin Netanyahu and Israel have never, ever faced before.

These are very, very serious charges and allegations, as you read them out there, that the court believes he has, they have grounds to believe that he bears criminal responsibility for war crimes, as you said, including starvation as a method of warfare and of crimes against humanity, of murder, persecution and of other crimes.

These are very, very serious allegations. These are not the sorts of allegations that the Prime Minister has faced before. When they, when the ICC first made these statements back in May, the Prime Minister, the Prime Minister’s office said that they were absurd, that they were false and that they were a distortion of reality.

It is something that back then the Prime Minister took very, very seriously, has been in meetings today with the U.S. mediator Amos Hochstein talking about the possibility of a ceasefire with Hezbollah in Lebanon to the north. But this is absolutely now going to come front and center of the Prime Minister’s attention here.â€�

NIMA ALKHORSHID: Yeah, here is the reactions from the European Union. The EU considers, Joseph Burrell said that the EU considers the ICC warrants against Netanyahu and Gallant binding to be implemented.

And on the part of Israelis, we are hearing that Israeli Minister of National Security proposed extending the country’s sovereignty over the West Bank in response to international criminal code arrest warrant for Netanyahu and Gallant. And your take, Michael, let’s get started.

MICHAEL HUDSON: Well, when I grew up, people were still discussing the Nuremberg trials, and I can just imagine what Netanyahu’s defense, if he were there, would be. He’d say that these bombs that were dropped on Gaza were not my bombs. They were America’s bombs. We didn’t target where to bomb. The Americans targeted it. I was only following orders.

Of course, that’s not what he said. What he said was, how can you accuse me of genocide when we’ve said that the Palestinians are not human beings? How can there be genocide against people who are not human? That is what he said. He said it’s anti-Semitic to claim that Palestinians are human and that we killed other human beings.

I think he’s just driven 99% of the world to say, if that…. is anti-Semitism, well, you can draw your conclusions.

NIMA ALKHORSHID: Richard.

NIMA ALKHORSHID: Yeah, well, it seems to me that the slogan often attributed to the victims and opponents of Naziist Holocaust was the phrase, never again. But what this shows us is that the phrase should be amended.

Never again, unless we do it, then apparently the never again doesn’t apply. I want to stress one particular thing. The Israelis will mock and dismiss what just happened, as you can see. That is what they basically have been doing all along. But they are now, yet again, in one additional way, isolated in the world.

I want to hammer at the isolation. An isolation of Israel, now having its leader-in-chief be, you know, put under an arrest warrant for genocide. It’s extraordinary. Happens very rarely in the world. He’s getting that, and the only significant support that Israel has is the United States.

That’s why it’s important for you to have read Joseph Borrell’s statement from the EU, which at least verbally, I doubt they’ll do much, but verbally says we are not being taken down the road to isolation.

By contrast, the United States is being taken down the road to further and further isolation as the financial and military enabler of what has now been called genocide-warranting arrest. Under the normal notions of the law that I’m familiar with, the accomplice to the crime, is likewise subject.

What will prevent now, a prosecutor, especially when they get the response from Israel, and what I will expect to be the response from the United States? The demand will be made. We may not hear about it, but in the court, the demand will be made if Netanyahu behavior warrants an arrest.

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Why would Biden be exempt? Biden has authorized the money and the weapons without which this genocide could not have been prosecuted. And the many opportunities the United States had to stop it were not utilized. Thereby, they have convicted themselves to be an accomplice, and therefore the question will arise.

But even if it doesn’t, even if they avoid the embarrassment, there it is. And I want to stress, not out of a defense – I’m no supporter or enthusiast for Vladimir Putin, Lord knows – but that war has been going on considerably longer, and no comparable bombing of hospitals and schools and children has been committed.

The ICC saw fit to issue an arrest warrant against Putin. That was for invading another country, and that’s an issue. But the difference is that no one is asserting, not even the Ukrainians are asserting genocide. Whereas here we have this situation that is so extraordinarily significant.

And I think the history, history will shake its head in wonderment for decades to come, how the Israelis and the Americans worked themselves into this horrific dead end.

MICHAEL HUDSON: Well, Richard said that he doubts that anything is really going to come of this. So what could come of this? What should be? Number one, should Israel be excluded from the United Nations?

This is an Israeli policy. Netanyahu and the others who are charged are acting on behalf of Israel, which is a part of Israel’s population. Number two, should there be trade sanctions against Israel to prevent Turkey from supplying it with the oil that it’s supplied,

against the United States for supplying it with the bombs and armaments that Richard’s just mentioned? And in fact, should the United States be sanctioned against this, against its ability to vote in the Security Council to prevent any United Nations sanctions from being done?

What Israel has done is an attack against the entire principles of the United Nations, which Netanyahu claims are barbarism and anti-Semitic. How can it continue to be a part of the United Nations, protected by the United States… the Security Council, without these actual actions being taken?

NIMA ALKHORSHID: And just moving to the conflict in Ukraine, we had a new escalation. The Biden administration has decided to let Ukraine use ATACMS and, again, U.S. missiles against Russia. This was the first time. I talked with Ray McGowan the other day. He said that even, it seems, that the Pentagon didn’t know about this decision.

It’s unbelievable what’s going on right now in Washington. Do you understand, Richard, what’s going on and why they have decided to do that right now?

RICHARD WOLFF: Well, again, I obviously have no inside information, whatever. I’m dependent on what I can get from the mass media and trying to figure it out. So this is just my response to your question.

Let me dispense with one argument that is being put forward by the United States. And it is so preposterous and so lame that it kind of makes the opposite case from what it intends. This has to do with the mysterious collection of North Korean soldiers.

Now, this is a classic case of putting out an idea in order to cover something you’re doing with some kind of plausibility that might make naive, uninformed people think that there’s something equivalent going on. And the argument has been put forward, the escalation is really the decision by Russia to bring in North Korean troops.

And so, therefore, another escalation from the other side is warranted. Okay. I don’t know the exact number of Russian troops involved in Ukraine. I don’t believe anybody else does either. But let’s take a widely used number, and that number is 700,000 Russian personnel somehow involved.

The initial story, and it has never been changed by the Pentagon, the initial story about North Korean troops was 10,000 North Korean troops.

Okay, you do not have to be a military strategist to understand that if you’re a country committed to a war with 700,000 people, it is not a significant escalation, if it’s even true, that there are 10,000 North Korean troops. Unless you know that it’s actually a much, much larger number, and if you knew that, why wouldn’t you have said it?

Why wouldn’t you have made a point of it? Even now, when some people, having realized how bizarre it looks to claim that it’s an escalation to add 10,000 troops to 700,000 troops, which is trivial as a military move, okay, there you are.

You revealed, you made it up, you started it a week or two before this decision was made, and the planning for this decision was made long ago, because you had to have those missiles in place, and that’s a whole long operation that they must have undertaken. All right, given that, now what do I have left?

Here we have a president deemed so incompetent that he had to abort his race for president. He had to drop out because he wasn’t fit to run, let alone serve. And now he is, on top of that, a lame duck. He’s out, he’s done. How in the world do you take a world-class risk like this?

Everybody’s now waiting for what the Russian response will be to this. Okay, why would you do that? That is grotesque. And from everything we can see, Mr. Trump either wasn’t informed or is complicit. And I don’t know which it is, and we’ll see.

And I probably wouldn’t believe him, no matter what he said anyway, nor will at least half the world. So, and each day that goes by, it’s obvious he doesn’t know what to do, because he’s not doing it. It’s a risk. It’s a risk of nuclear war. It’s a risk of heightened conventional war.

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I noted that yesterday, in Kiev, the American, British, and I believe French embassies were closed. And the explanation was given, they’re fearing a missile attack from Russia on those headquarters. Since Putin did say, if you do that, we will consider it an act of war toward us by the United States and Europe.

Why would you, in your lame duck last two months, having the whole world see that the people of America judged you incompetent to finish running for president, and then voted against your vice president in the election? You have no right to behave like this. This is an amazing arrogation to the United States of the right to do this.

And in my judgment, this is a lame duck. Let me underscore: Lame. Forget the duck. This is a lame act of the neocons around Mr. Biden having lost the war there, to inflict more damage on Russia because that was the fantasy in their minds from the beginning.

As the statements early on by Lloyd Austin and by the President Biden revealed, weakening, dismembering, deconstructing Russia was the fantasy of what they had in mind. The fulfillment of the legacy of the Cold War that isn’t even there anymore. These are signs of people behaving bizarrely.

And if you put them together with the circus clown collection of new cabinet members announced by Mr. Trump, then the notion of the United States as a rogue state in the world, spinning out of control, has just been given enormous greater legitimacy around the world. And that ought to worry.

Because you put that together with an arrest warrant for Mr. Netanyahu and the symbolic direction of how things are going ought to worry anybody who isn’t lost in a bubble of self-delusion.

MICHAEL HUDSON: When Richard uses the word lame duck, what is a lame duck? It means he only has two months to go in office.

That means whatever you’re going to do, do it now before Mr. Trump comes in. The fact that the embassies of the U.S. and other countries were closed meant that the United States expected and wanted Russia to respond in a similarly proportional way that would justify the United States escalating and dragging all of NATO into the war.

Why would they do this? Well, it’s because Mr. Trump has promised to end the war. And they want to prevent that. They want to make it impossible for Trump in January to stop a war that they want to go on a year, two year, ten year, to constantly be a drain on the Russian empire, Russian, on Russia, in the illusion that this war is actually draining Russia’s resources and that Russia can’t afford it. So I can just imagine what is going to happen when President Trump takes power if Russia is doing what it appears to be doing, saying, well, it’s true that you’re attacking us with missiles.

We know that they’re not really atomic missiles. We know that you’re trying to goad us into something and play upon our fears. But unlike you, we’re not projecting our fears. We’re going to do, we’re going to use conventional weapons to continue to knock out your electricity grid and to make it as difficult as possible for you to actually wage a war.

We think that by the time that Trump takes office in January, the Ukrainian army will be decimated in the literal sense of decimated. It won’t have a fighting force anymore. So you can imagine what Mr. Trump is going to do. He said on his first day he’s going to try to end the war.

We don’t know what his plan is, but I think he’s already said what it is, have a ceasefire, make some agreement as to who gets what land, but not to go forward with what President Putin and Foreign Minister Lavrov have said they really wanted. They must denazify Ukraine. They must reintroduce democracy with real elections, not under the Nazi control, but under actual democratic control. And all of the opinion statements in Ukraine say the people want peace, because if their sons are drafted, their brothers or friends are drafted, they’re just going to be sent to the front to be killed.

So I can imagine what President Putin’s response is going to be to Mr. Trump. He has to worry about the fact that when somebody tells Mr. Trump, well, you know, we can’t do your plan, we’re rejecting it, that makes him lose face. So I can imagine how they will handle it diplomatically. They’ll say, oh, thank you, President Trump.

You may be glad to hear that you’ve made precisely the same terms as we’ve made in our proposal two years ago in 2022. It would have worked then. But Ukraine and Russia even signed it. We signed off on what basically is your plan. But Boris Johnson went to Kiev and told Zelensky that NATO opposed it.

So the past two and a half years have completely changed the situation and made your proposal, you know, pretty much obsolete. For one thing, you can make an agreement, but we no longer can trust the West. We agreed to a ceasefire that you suggest.

NATO broke it and used the interim to make, prepare a great offensive that it had prepared for February 2022 that began by shelling civilian areas in Donetsk and Luhansk. And that forced us to protect our Russian-speaking population that was being treated as non-citizens. Even so, we made an agreement to try to settle things.

But as much as we like your proposal, how could you even get it through Congress? And if you did, how could you get the CIA and the military to obey you?

You’ve already appointed a new Secretary of Defense that is going to fire the generals and the colonels in Afghanistan who refused to follow your directions that they should withdraw from Afghanistan.

So we Russians are looking forward to your cleaning out the CIA, the Department of Defense, the FBI, and the deep state that did so much to undermine you in your first year term of office.

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So we’ll be glad to help you to explain to your electorate that the, and the NATO countries about how Biden, Sullivan, and Blinken made obsolete the quite reasonable proposals that you’re making in principle. I think that’s what’s going to happen on day one.

RICHARD WOLFF: I wanted to add a piece of information that may not have caught your attention, but it caught mine.

This last week, literally a few days ago, the latest Gallup poll, and remember Gallup is an American company closely connected to American institutions. It has been regularly polling the Ukrainian population on its attitude towards peace and war.

And it announced this last week that for the first time, a majority, over 50 percent, I believe it was 53 or 54, a number like that, are in favor of peace and negotiations with Russia.

So let’s really be clear: the same time that the Gallup poll indicates that a majority of the people of Ukraine, whom everybody knows are the major victims of all that has gone on here, not the Americans, not even the Russians, the Ukrainians, now a majority wants peace.

And at the same time, the United States escalates the war, increases the risk of the opposite of what the majority of the people in Ukraine want.

You know, when this story is written, these details will be put together, and everything Michael just said about get in what you want to do before you lose office, shows that their connection to the notion of doing what democracy would suggest, serving the people, the majority of the people, the majority of Americans never supported the Ukrainian war, and they certainly don’t now. That’s one of the reasons that Mr. Trump got elected. Now the Ukrainians don’t want the war. You know who wants the war?

Jake Sullivan and Joseph Biden, and that alone ought to make the internal, you know, the International Criminal Court think again about, hmm, why pick Mr. Netanyahu without the support of Mr. Biden? Mr. Netanyahu couldn’t have done genocide on anybody but his household pets.

NIMA ALKHORSHID: And just moving to the G20 summit here in Brazil, when we look at G20, a lot of countries are participating in this summit, and it’s so, in terms of the countries participating in the summit, it’s so important, and there is a lot of potential in this institution.

But at the end of the day, we see nothing coming out of this. They were talking about the conflict in Ukraine and in the Middle East, but at the end of the day, nothing substantial coming out of G20 summit.

What is the problem, Michael? Let’s get started with you. What is the problem with G20 that is not able to do anything important in terms of the complex that we’re witnessing right now?

MICHAEL HUDSON: Wait, what’s the problem with Ukraine or with the summit?

NIMA ALKHORSHID: With G20, with the countries.

MICHAEL HUDSON: Okay. I think that Secretary Lavrov made it very clear. The problem for him, he raised the scope of what the discussion was all about. Instead, we’re really talking about a split of the world into two different, almost two different civilizations.

And his statement is so strong and so extreme that the final paragraph of his speech, I’d like to read it and walk you through it and talk about it. He said, “Clearly, the West is too smart for its own good. It appears we need to create a new category to describe a nation’s economic condition – once developed, now declining nation.”

That description defines most of the neoliberal West that are infected with the neoliberal pathogen. In the declaration, the point 80.5 opens with the following, quote, “We note good prospects for a soft landing of the global economy, although numerous problems remain, blah, blah, blah, and a number of downside risks are there.”

But Lavrov said that outcome is based on the fact that the global majority is growing at about 4%, while the remainder is at 2%, a number, in my opinion, quite lower. And what he adds now is very, very important.

It can generally be stated that economic rents are a very tiny proportion of the global majority’s economies, while it constitutes 10% to 25% elsewhere, which represent costs to these economies, not productive income, the neoliberal disease.”

Now, that’s just what we’ve spoken about on earlier broadcasts, Nima, when we’ve said that most of the American economy isn’t production. Since 2008, 90% of the American economy, wage earners, their standard of living has gone down. We talked about this last week.

The 10% of the population, the creditors, the bankers, the real estate people, the rentier interests, all of the wealth that’s gone up has accrued to just the 10%, and their wealth is counted as an increase in GDP.

So, if you look at the GDP, without fictitious capital, payment to the banks is not a product, payment of rent to the landlord is not a product. When hedge funds gamble with computerized trading to make money, that is not really a product.

When you take out the fact that almost all of the growth in the U.S. economy and the European economies have been not a product, but payments to the financial, real estate, and monopoly sectors, then they’re not growing at all. So, that means that the only growth that’s occurring in the world is to the global majority.

And what is the United States going to do when it loses power? That was a topic of our very last show. And the fact is that now you have Lavrov and the global 20 people realizing, wait a minute, we don’t want to be like the United States, like we used to want 50 years ago, when the U.S. seemed to be successful. We want to be not like the United States. We want to create entirely different institutions.

Well, that’s what sort of disturbed me at the beginning of the show when you quoted what China is using, the money that it’s borrowing from Saudi Arabia for.

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China wants to help bail out the third world countries from the bad debts that they were taken on as a result of direction by the International Monetary Fund and the World Bank that didn’t help them grow, that helped them shrink, that helped them financialize their economies in the same distorted way that the United States was doing.

That I think China and the G20 should have said, we’re not only rejecting the U.S.-European model, we’re rejecting the residual, the results of this financial neocolonialism and just wiping out the debt. And from here on, we’re only going to take on productive debt for things like the Belt and Road Initiative.

I think you had some statements on that that you wanted to segue into.

RICHARD WOLFF: Yeah, what I’m about to say is consistent with what Michael says. It just comes at it from a different angle. You know, in mathematics, there’s something called, if you have a functional relationship, an inflection point.

When the direction of change changes itself and something that’s rising begins to start to fall. I think that the lameness, the inconclusiveness of the G20, in its official statement, not so much in Lavrov’s comments, but in its official communique at the end, is a reflection of an inflection point. That organization is riven.

It is the place where the decliners and the risers are mixed in together, and they can’t agree on what it is that they are doing. And we see that everywhere. And for me, the key statistic is, if you add up the GDPs, I understand GDP is a very crude number. It misses a lot, but it’s one of the few measures of a footprint that we have.

If you add up the GDP of the G7, the United States and its major allies, and you add up the GDP of the BRICS, and by that I mean you have your choice. The first five who started it, the 11 that they grew to a year or two ago, and now the additional 13 that came on at Kazan.

But even if you only go with the first five, they now have a larger aggregate GDP than the G7. I mean, that hasn’t, that’s never been true before. And the gap, by the way, they crossed, the lines literally crossed in the year 2020. So we are already now four years beyond, and the gap is getting worse.

That is, the GDP, aggregate GDP of the BRICS is rising. If you add the newcomers to it, rising even faster. And that of the G7 is falling. It’s falling. And they’re more and more behind.

And without all the adjustments, Michael’s right, you know, GDP, you know, as we teach our students in the university, misses a lot, never counted, you know, the difference between the woman who works at home in a conventional household, where she’s not counted as the GDP, but if she gets divorced and has to take a job doing the same work in a restaurant or somewhere else, she is in the GDP. All of the adjustments will not erase the fact that the global world economy is now split. The dominant role played after World War II until the early years of this century is over.

They had a good run, 70 years, 75 years. As empires go, not at all unusual. There have been some that have lasted longer and some that lasted less. So here we are, and it’s over. And what you’re watching, whether it’s in Israel and its isolation or in Ukraine as the desperate escalation in the remaining weeks of a lame duck, etc., etc.

I think these are all symptoms, signs, measures of this shifting world economy. And I want to stress it in another way. Virtually every sizable corporation in the world, American, European, Chinese, Japanese, is now recalculating their strategy. And you know what they’re recalculating? The changed world economy.

What currencies they’re going to deal with. Where they’re going to source their inputs that they need. Where they’re going to look for the growth of their markets. How they’re going to manage all of that. What arrangements for credit they’re going to undertake.

Everything is changing. When you had a certain kind of national need, you went to London or Washington or New York. Now you still consider going to those places. But you’re going to play them off against the deal you can get in Beijing or New Delhi or Sao Paulo or wherever else you end up going. These are different. Everybody is shifting and changing.

And in that process, you’re watching the American government, which is also adjusting. But it’s adjusting by trying to hold on. And that’s a contradiction. You can’t hold on if the whole world is changing. Yet it wants to hold on.

And what the United States is doing globally should give all of us a big clue as to what is happening inside every country. Particularly those countries that are declining. The G7. The West. The collective West. Including Japan. Including Australia, New Zealand, and all of them.

In those countries, the corporate elite, the rich, the 10% at the top, who own the stocks and who run the companies, they’re trying to hold on in a decline. And what that means, to the degree that they have the wealth and power to do it, it means even greater suffering coming sooner for the middle and the bottom.

Because the decline isn’t shared equally. Of course it isn’t. And they have more power inside their countries to hold on than the United States has internationally to hold on.

So we are watching a growing desperation, both in the ranks of American leadership and in the elites in every country, because their, the ground is underneath them.

Last week, in the parliament of New Zealand, the 20% of the people in that country, New Zealand, who are Maori, who are the indigenous people of that country, disrupted the parliament.

Would not let business go forward because they’re trying to change internally the deal between the settler colonial community and the Maori community, which was established by deals they both signed years ago.

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And the whites now want to change the rules, and the Maori are saying, no, no, no, no, no, no, no, you don’t do that, and we won’t let it happen. You’re what, that’s not so different. It’s not yet at that stage, but it’s not so different from what the Palestinians have been trying to say to the Israelis.

I mean, and you can stop one or another of these processes. You can slow them down. You can deflect them. But the larger picture, both internationally and inside each of the countries, and for that matter, inside each of the corporations, is a process of adjustment that is going to show up in all of these conferences going nowhere.

And when you look for some meaning, where does he find it? He finds it in Russia, for whom all of this is a step up, given where they’ve been since 1989.

NIMA ALKHORSHID: Michael, do you want to add something?

MICHAEL HUDSON: Well, I think that you mentioned before the show about Saudi, what’s happening in Saudi Arabia’s borrowing.

Can you describe that, and then I’ll comment on it.

RICHARD WOLFF: Sure. Normally, for many, many years, there’s been an arrangement in the world economy, very important, for how to handle transactions in oil. Oil being the major energy source that replaced coal and wood in the history of Western, well, the history of the globe, to be blunt. Okay.

So for much of the last century, oil has been the key energy source. Once oil was discovered to be located disproportionately in the Middle East, and within the Middle East, disproportionately under the sand, in a country called Saudi Arabia, a country created to get it to manage the oil in that country. They’ve had an arrangement.

Oil is bought and sold around the world, and paid for, invoiced in U.S. dollars. So if you’re in Nigeria, well, I shouldn’t pick that. If you’re Kenya and you buy oil, you pay in dollars. If you’re Luxembourg and you buy oil to heat your homes in the winter, you’re paying dollars. Okay.

Much of that money ends up in Saudi Arabia because they’re the overwhelmingly dominant source of oil. Not the only source, but a dominant source.

And so the question was, Saudi Arabia, in working out this architecture of international trade, what is Saudi Arabia, which is, you know, a place in the desert, what is it going to do with this global avalanche of dollars that is coming to this place?

And because of the dominance of the United States coming out of World War II, the solution found was known as the petrodollar system. And what it meant was, the world would pay in dollars. A huge portion of those dollars would end up in Saudi Arabia and other countries, Kuwait, Iran, and so on.

And Saudi Arabia, at least, made a commitment to recycle, to take those dollars and lend them to the United States government, to purchase U.S. treasuries with that, to lend the money to the United States. So literally, think of it this way.

The United States, as a major purchaser of oil, would send its dollars out, they would buy oil, and the Saudis would then send the dollars, deposit them in bank accounts in New York City, they’d come home. And you would have less of a disruption of the world economy and the central role of the United States.

It also meant that the United States could send all over the world green pieces of paper called a dollar, which cost absolutely nothing to make. And the rest of the world wouldn’t use the dollars to buy American goods, because they needed it for something else, to buy oil, to conduct their trade. So it was a subsidy to the United States.

The world sent its produce here for us to consume, and we sent them little worthless green pieces of paper, which cost nothing to produce. It’s a subsidy to the standard of living of this country.

Okay, what happened this last week was that somebody arrived in Saudi Arabia who wanted to borrow dollars, and it wasn’t the United States government, which always does that. That’s what petrodollar means. It was the People’s Republic of China. They had a bond issue, $2 billion worth, a new thing.

They hadn’t done this before, to borrow dollars in Saudi Arabia. Saudi Arabia is not a major place where bonds are bought and sold. That’s usually done in London or other world capitals. Why in Riyadh? Because the Chinese have brought Saudi Arabia into the BRICS.

They are now a partner, and this is a plan whereby a number of things are accomplished. Saudi Arabia has a new customer for its dollars. It doesn’t have to send them all to the United States. It can diversify its trade deals in just the way its participation in BRICS was intended to achieve. So it’s another BRIC of the BRICS structure.

Number two, the Chinese, being a very wealthy borrower, don’t have to pay the premium that any other third world country would have to pay. They would have to pay a much higher interest rate to borrow compared to the U.S. Treasury.

Because in the world capitalist market for the last 75 years, the safest way to hold money or wealth is in U.S. Treasuries. They’re considered the obligation of the biggest, most powerful, most secure place. The Chinese were able to borrow at one or two points. That’s a tiny difference from lending to the United States.

And so what the Chinese are doing, they’re playing the role of intermediary. They’re borrowing dollars at a rate very close to the United States Treasury, the lowest in the world.

And turning around, if I understand the intention here, and at this point, I’m guessing, I don’t know what the Chinese are going to do with the money, the dollars they get.

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But since they already have seven or eight hundred billion dollars worth of dollars that they have lent to the U.S. Treasury, which I’m assuming everybody knows, they’re not going to do that. That wouldn’t make a whole hell of a lot of sense. So what are they going to do?

My guess, they’re going to go to the 50 to 100 countries that are part of the Belt and Road Initiative and that are suffering under the dollar debt that they have accumulated and say, if you went to borrow to pay off your old debt, you’d have to pay, you know, X percent. We’re going to give it to you for much less than that. We’ll pay off you.

We’ll enable you to pay off your debt by lower interest costs to us than you would have to pay to the West. Or they’ll forgive it altogether. My guess is it’ll be a mixture of both of those things. That’s part of what the, and the Chinese will get something important in return, access to a port, access to minerals, access to markets.

They’re building their apparatus, and I want people to know that it is happening more under the radar of what people see than it even is above. We can see a lot of it going on, and there’s twice as much going on in these little deals that are changing everything.

Last thing, this means that Saudi Arabia, which together with Japan, China, Britain, are among the greatest creditors of the United States, and have been for 50 years, aren’t going to be. That money is not going to be lent to Uncle Sam. And that’s kind of interesting, because we’re borrowing more money than we have ever as a nation.

Our deficits are enormous. Now, they may develop their platinum coin or whatever game they’re going to play, but they’re still borrowing money, and they’re still working a regime that depends on the government’s ability to borrow money. That, it’s going to have to pay more.

It’s going to cost the Treasury more, because money is going to China that used to come here. I don’t know how far that’ll go, neither does anybody else, but these are huge straws in the wind.

NIMA ALKHORSHID: Mike?

MICHAEL HUDSON: I’d like to get into some of the technicalities of how this is happening.

I sat in with the White House, with the State Department, when the petrodollar arrangements were being set up, and had long discussions with officials. Saudi Arabia never got any petrodollars. The petrodollars were never in Saudi Arabia.

The payment for Saudi Arabian oil was paid by the American oil companies into the U.S. bank accounts of Saudi Arabia. Saudi Arabia was told, you have to, you can charge as much as you want for the oil, but you have to keep your money in the U.S.

You can start with holding your U.S. dollars safely in U.S. Treasury securities, but you can also buy U.S. stocks and bonds. But you cannot buy any controlling share of U.S. companies. We Americans get to buy foreign commanding heights, and foreign companies, you can buy, like, minority shares.

So the head of Saudi Arabia bought a million shares of every stock listed in the Dow Industrial Average, for instance, spread it all about. Now, it’s been keeping all of these accumulations of a sovereign wealth fund, not simply in treasury bills, but spread out into all sorts of primarily U.S., but also other NATO securities.

Now we come up to the fact, the important points that you started with, that China offers to borrow dollars. What is the effect of this? Well, we know China doesn’t need dollars, but it can borrow at 1.2%, which is hardly anything, as you pointed out. How will Saudi Arabia raise these dollars?

It will draw down its accounts in the United States. It will sell treasury bonds. And why would it be doing this? In effect, the liability that the United States had to Saudi Arabia is now replaced by a Chinese liability to Saudi Arabia. Why did Saudi Arabia do this? Why did it move its dollar claims out of the United States to China?

And why did China borrow dollars instead of something else? Well, once Saudi Arabia decided to join BRICS, you can imagine all of the pressure that’s brought by American diplomats against Saudi Arabia. Saudi Arabia saw what the United States did to Russia’s holdings in Europe and the United States. It simply grabbed it.

Saudi Arabia was reminded that, remember the agreement that we made in 1974, that not keeping your petrodollars in dollar form in the United States would be considered as an act of war. That was told to me directly at the White House by the Secretary of the Treasury. And this is what Saudi Arabia is afraid of.

Well, if they’re talking tough like that, we don’t want what America did to Russia to be done to us. We do want to keep dollars because no matter how much trade by the BRICS is in their own currency, the dollar is still going to be strong because all of America’s satellites are using dollars. And other countries owe huge amounts of dollar debts.

So now the Saudi Arabians have begun to move their dollar holdings out of the United States into friendly governments that are not going to simply grab these dollars and confiscate them, as the United States wants to do. Now, the question is, what will China do with these dollars?

I hope that it does not say, we’re going to pay all of your bad debts. We’re going to create a bonanza for the U.S. financial sector, debts that they thought would not be repaid, debts that are selling for 20 cents, 30 cents on the dollar. They’re going to be able to pay them 100 cents on the dollar.

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We’ll make trillions of dollars or at least hundreds of billions of dollars for speculators and vulture funds in the United States. I don’t think China is going to do that. There’s no need to. It can make a deal with the vulture funds and the creditors of third world countries to say, okay, the global south countries cannot develop, cannot increase their investment and living standards if they have this financial colonialist burden. Now, what are we going to do? Either we can wipe out the burden and claim that they’re odious debts, and there are good legal reasons for saying this, undertaken by governments that do not benefit the domestic economy. That’s the definition of odious debts. Or they can say, well, we’ll give you something, and something’s better than nothing. Let’s say 10 cents on the dollar.

We’ll use these dollars to pay them off, and like the Brady arrangements of the late 1980s wrote down the bad third world debts to a fraction of their values. We’ve discussed on this show before. I think that they could do that, but basically, China is going to use these dollars, which are still the acceptable, safe currency of many countries, to actually spend the money on putting together the Belt and Road Initiative. It can’t all be done with Chinese manufactured goods. There are huge amounts of machinery that have to be bought, raw materials that have to be bought. These dollars are going to be spent on the Belt and Road Initiative, leaving aside something completely separate, our Global South debts to the vulture funds in America and Britain. Well, there’s actually a use for these dollars, and China will be able to maintain its current dollar holdings, which it needs in case there’s another George Soros currency raid, bear raid on the Chinese yen, RMB, to try to drive it down in price like Soros did against England.

They want to make sure that they have enough dollars to protect themselves against any U.S. dollar raid. And the risk of holding these dollars has now shifted from Saudi Arabia to China itself. And China feels pretty confident that the United States is not going to grab its dollars because China can say, all right, then we’re taking, in exchange, all of the assets, the dollar assets you have here, it’ll be a wash. So I think that is the actual technicality, the nuts and bolts of what they’re doing.

It’s very important because it shows the desire for de-dollarization that has been so strong for the last few years, and especially since America’s confiscation of Russia’s money, England’s confiscation of Venezuela’s gold supply, and the United States’ confiscation of Iran’s foreign reserves way back when they drove out the dictatorship of the Shah. So these are all the background of what’s happening. And needless to say, this is not something that is discussed in the open media, not even in the financial pages of the Financial Times or the Wall Street Journal. It’s interesting that the place that you get these discussions is on the Internet shows like Nima’s show.

RICHARD WOLFF: Michael, let me ask a clarification.

What would prevent China, having borrowed this $2 billion, to go to a third world country, I’ll pick one, Malaysia, and say to them, you go to your bankers, you owe X billion dollar debt, and you say you’re going to declare bankruptcy.

MICHAEL HUDSON: No, no, debt repudiation, not bankruptcy.

RICHARD WOLFF: Here’s what they say. They want, of course, repudiation.

That would be better. But let’s start. They say, we’re going to declare bankruptcy, and therefore, you are not going to get anything. At which point, they say, but here’s a way for you to get 10%, 10 cents on the dollar. We won’t declare bankruptcy, but the debt will be sold by us for 10% to the Chinese.

We will take the 10%, pay you off, so we have no longer any relationship to you. And what we deal with, the Chinese, is our business, not yours. What’s to prevent that?

MICHAEL HUDSON: Wait, who’s going to buy these bonds?

RICHARD WOLFF: The Malaysian government says, we’re going to declare bankruptcy unless you agree to the following. We will sell these bonds.

MICHAEL HUDSON: We? Who’s the we?

RICHARD WOLFF: Malaysia, the Malaysian government.

MICHAEL HUDSON: Yeah.

RICHARD WOLFF: We will sell this debt to the People’s Republic of China.

MICHAEL HUDSON: Wait, but what debt? The debt’s held by the vulture funds. Malaysia doesn’t have any debt to sell. The debt is all owned by foreign investors, by the IMF, the World Bank, and all the vulture funds.

RICHARD WOLFF: Okay, let me phrase it differently. The debt is threatened by Malaysia. We will declare bankruptcy. We will not pay this debt, whatever it is.

MICHAEL HUDSON: Yeah.

RICHARD WOLFF: So now the holder, whether it’s a vulture fund or a bank in New York, is threatened with losing the entire deal.

MICHAEL HUDSON: Yeah.

RICHARD WOLFF: They’ve made a lot of money. They made a lot of points when they cut the deal. They’ve made a big interest for, you know, the usual. They’re willing to write this shit off because they assume they’ll be able to turn that money around and recoup it in the next deal that they cut with some poor African country. Okay, so they are willing to write it all off.

Then Malaysia says, but wait a minute, wait a minute, we will offer to retire. Rather than bankruptcy, you get nothing. We will retire the debt if you agree to do that, and we’ll give you 10 cents on the dollar. So you’re going to get 10 cents or zero cents. And the choice you make, we are assuming you’re going to prefer 10%.

Okay, where does Malaysia get the 10%? Answer, it borrows that money from China, which has the dollars because it borrowed in Saudi Arabia. So China becomes the hero for Malaysia by enabling them to unload their debt obligations for 10 cents on the dollar.

If they had declared bankruptcy, they’d be hung up in court by Elliot and his fund for the next 10 years, as you know very well. And that can cause them various kinds of grief. And they may lose the case, in which case they’d have to pay. That’s what happened with Argentina and some other examples that we know about.

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So the Chinese have a good chance of finding countries who will be able to cut such a deal, relieving them of their debt without a process from the hedge fund. And the Chinese are the heroes and will get God knows what in exchange from the Malaysian government for making this deal available to them. Am I making a mistake here?

MICHAEL HUDSON: No, but you’re focusing on a single narrow country. The only way this kind of arrangement can be made is by an international conference. Not only Malaysia, but all of the different countries. I had a long discussion with Prime Minister Mahathir of Malaysia some years ago.

And we both discussed how can Mahathir and Malaysia get a group of countries to go through this. So I can assure you that their attention all along is to say, our problem is that we have owing these bad debts that have been given to underdevelop our economies, not develop them, is a universal problem felt throughout the global South countries.

‘Let’s have an international conference’ is the only way to resolve the problem that you point out of the vulture funds that happened to Australia. And the international laws have been changed since the Argentinian fund against the corporate raiders that you’ve mentioned.

The new international law says that if a majority of third world or global South bondholders agree on the renegotiation, then the minority partners, the real vulture funds, Paul Singer and his gang, have to go along with it. They have no ability to hold up an agreement that the majority, I don’t remember if it’s 75% or 80%, agree with.

The solution, you say, can only be done on an international scale, and that’s good. And there should be an international conference about this because look at the benefits that China will have for this.

An international conference will throw open the whole distinction between the global majority’s plans for growth that use debts to grow as opposed to the Western idea of growth. We’re going to lend you money that we know you can’t pay, and we’ll force you to sell off your raw materials, your minerals, your mineral rights, your oil reserves, your public utilities to us, for a song that we can then turn into monopolies and raise the prices and cripple your economy forever. That’s the issue that will be thrown up in an international conference. So China, I think, will politicize this idea, especially if it talks to Malaysia.

RICHARD WOLFF: And anyway, I find this fascinating, but Michael and I would because we’ve had to deal with these issues; he in practice and me in my analytical work. But the bottom line, I don’t want to lose the big picture. These are all symptoms and signs of a shift in the world economy. BRICS is a part of that. Every step that might take us closer to the international conference to relieve the debt. There are movements around the world to forgive the debt, to cancel the debt, to jubilee the debt. It’s in the air and it’s becoming, it’s coming closer. Not as fast as many would like, but it’s coming closer.

And I think you’re seeing that in all of these little adjustments and little moves. The United States ought to be worried. If Saudi Arabia is not lending to the US, but lending that dollars somewhere else, not only is the question, where is that money going to go and what is it going to do?

But it means the United States doesn’t have the borrow power that its deficits require it to have. And it’s not that this necessarily goes in a particular direction, but it suggests the kinds of renegotiation of world arrangements. And people should be under no illusion.

The power and the prestige of the United States that came out of the end of World War II, when every other potential competitor was wiped out.

Britain, France, Germany, Japan, Italy, you name it, destroyed, the United States absolutely on top, was able then in Bretton Woods, in the IMF, in the World Bank, to construct a global world economy that prioritized benefits flowing to US corporations and dribbling down or, if you like, trickling down to the American economy as a whole. All that is now over. Some parts of it more, some parts of it less. The dollar is still important, but nowhere near what it was. The petrodollar deal is still important, but nowhere near as much as it was. And I could keep doing that and repeating the phrase that ‘nowhere near as much as it was.’

That’s the measure of the decline, or if you like, of the reorganization of a world economy not built around the United States. And it means that for the United States, the central question is how are you, you, the American people and government, how are you going to relate to, to respond to the changing world economy?

Are you going to rattle your sword? Are you going to be militarily active? Now that your economic role in the world has shrunk, and your political role has shrunk, you’re isolated with Israel as your companion? You want to then rely on your military, because it hasn’t shrunk the way the other parts have.

Yeah, but that’s very dangerous, isn’t it, in a world of nuclear weapons? The portion of the world’s population represented by the people of the BRICS is now well over half the people on this planet. The percentage of this planet represented by the American people is four and a half percent. Over 50, four and a half.

Even at all the G7, you’re not close. These are realities you can’t dance around, pretend around, or bomb away. It won’t work.

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The real question, then, is not ‘whether,’ but really, ‘when’ are you going to sit down with the Russians and the Chinese and all the other players in this game, which includes the whole global South, especially now, and work out some live-and-let-live arrangement for the world, in which the United States and its allies will have to accept a lesser role than what they had after 1945.

MICHAEL HUDSON: Well, that’s the optimistic picture.

RICHARD WOLFF: Otherwise, it’s a fantasy. Otherwise, it’s the same fantasy as imagining that the Russians will sit down with the West and give back Crimea and those areas that they have now fought and died for.

It’s not going to happen, and it just stretches out horribly and at a big expense to Russia. But it’s a fantasy to think that in a world changing the way we’ve been discussing on this program for weeks now, you have other options, and relying on your military is self-defeating.

MICHAEL HUDSON: Well, that doesn’t mean it won’t be done. You pointed out that’s why empires fall, because it’s self-defeating.

NIMA ALKHORSHID: I think we can wrap it up for today, because we’re running out of time here. Okay. Thank you so much for being with us today, Michael and Richard. Great pleasure as always. Okay.

RICHARD WOLFF: Thank you as well, Nima.

You perform a very important function having and distributing these conversations. If I could add just a word, if we’re right, if the changing world economy is having all the ramifications and impacts that what we’ve been talking about today illustrate, then try to understand it by realizing that virtually none of this was a feature of the presidential election we just experienced. That neither candidate had the courage, the insight, the advisors to say, “Here’s what’s happening in the world, my fellow Americans, and here’s what I’m going to try to do to manage this situation, to cope with it, to make sure you understand where this is taking us.”

No, no, no, no, no. We are in there pretending that it’s 1966 and that we’re powerful and dominant and we don’t have anything to worry about. We can have a presidential race turning on matters about what toilets trans people can access. No disrespect to the importance of giving trans people their rights and privileges as well as everybody else, but it’s an amazing study in the self-blindness of a culture.

MICHAEL HUDSON: Well, it’s not only the presidential and politicians that haven’t discussed it, the mass media have not discussed it, and economists haven’t discussed it.

RICHARD WOLFF: Oh, the academic world is as deserving of the criticism as anybody, even worse.

MICHAEL HUDSON: Yes, there’s nowhere in the academic economics curriculum to work out international balance of payments or death at all. It’s a subject that is as unpleasant today for the population as sex was in Freud’s time.

RICHARD WOLFF: That’s right.

NIMA ALKHORSHID: Thank you so much, both of you.

RICHARD WOLFF: Thank you, Nima. Bye-bye.

NIMA ALKHORSHID: See you next week. Bye-bye. Thank you.