Jeffrey Sachs Interview - War is The Continuation of Politics.
Jeffrey Sachs Of Fans October 17, 2023
https://www.youtube.com/watch?v=dLc4Rxp56Ks&ab_channel=
Jeffrey Sachs：you know the Secretary General of the UN Antonio gues said it right that uh
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at the core of this uh further disaster in the world and this uh profound uh
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catastrophe and and destabilization is a 56 years of uh Israeli occupation uh
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after The Six Day War uh of uh Palestine the failure to get a two state olution
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for decades despite uh many un Security Council resolutions and of course uh uh
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a complete breakdown of that process uh in the most recent government of
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Netanyahu I don't think anyone could have predicted exactly these events
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though as you pointed out uh very rightly your recent the discussion of
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this um the UN special Envoy for the region said this is a boiling cauldron
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there's growing violence there is unrest there is seething discontent that was a
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year ago uh and the past year has been a year of turmoil inside Israel because
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Israel is profoundly divided as a society and as a poity um so it's it's
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not as if Jake Sullivan was even remotely reflecting reality when he said
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a couple of weeks ago that the Middle East is the quietest in two decades that
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shows the unreality of American policy thinking uh and it seems likely though
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everything as you very well know is unconfirmed right now that uh it wasn't
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and you again pointed this out very right ly most likely a failure of
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intelligence as it was a failure of processing information by the political
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leaders uh Egypt has said uh Egyptian
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government spokesman have said that they warned Israel uh 10 days ago we don't
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know whether this is actually exactly right but that they warn that something big is uh about to happen and what I
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think we can see is pretty clearly a failure of the political class for sure
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we don't know whether it was a failure of intelligence gathering a failure of
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information but it was a catastrophic failure of the political class both in
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the short term to understand current realities and in the longer term because
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the whole approach of Israel is to believe that the Palestinian issue can
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be ignored forever basically that's the real uh uh uh tactic of Israel which is
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this will go away we will make peace with the the rest of the region for
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whatever pragmatic reasons the Palestinian issue is is gone we control
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uh the territory of Israel and the West Bank and Gaza and we don't have to deal
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with this underlying uh 56e issue since uh the 1967 war
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so I keep coming back to Von kltz on all
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of the issues that you are dealing with and that we're discussing these wars are
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the continuation of politics with other means we're talking about politics here
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and we're seeing in Ukraine or in uh This Disaster in Israel and the
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unfolding humanitarian catastrophe as Gaza is now bombed with
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vengeance and besieged we're seeing a complete failure of politics to address
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underlying issues and uh war never solves the political issues by
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themselves and Von kwiz by saying this I think as all Scholars
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know and should understand he wasn't saying that war is a substitute for politics he says war is a continuation
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with other means but diplomacy is supposed to go along with this and if
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you take the view that you don't really ever need to solve the politics because
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military power will do it for you that's never true and uh unfortunately we're
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seeing yet another catastrophic Dem demonstration of this in in Israel I
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think that is absolutely correct and can I just say it is not just the Israeli government of Mr Netanyahu that has
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basically turned its back on diplomacy it seems to me in attempting to find a
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solution to this issue of the Palestinian territories and the Palestinians and their position in uh
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the Middle East and in the world but also that of Western governments I mean
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for as long as I can remember for decade after decade there were attempts by us
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officials us diplomats us secretaries of State Henry kinger whoever all trying to
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find some kind of negotiated solution that would address this problem and one
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of the things that has really changed and is very alarming is that at some
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point over the last eight 10 years people seem to give up nobody
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nobody's been trying to do anything like this I don't know for example whether
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the current Administration even has a Middle East Envoy just just just saying
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I mean there always used to be one there always used to be someone that both
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sides would talk to and try and exchange ideas and of course one can argue that
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that diplomacy wasn't getting as very far it wasn't solving the problems in any meaningful way but at least it did
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provide an opportunity for people to talk and discuss and meet and speak and
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uh uh come to some kind of even minor agreements which sort of diffuse the
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situation and that's as far as I can see that's all been abandoned entirely the
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Biden Administration didn't do it the Trump Administration didn't do it Obama did to some extent but not very
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successfully and since he left well I haven't seen anything I think the uh the the uh fact
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of the Biden Administration certainly very explicitly was uh the Palestinian
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issue is not an issue uh what we are working on is a is a end run around that
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a uh their Hope was for an Israel Saudi
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uh agreement on pragmatic grounds by both sides that completely ignored uh
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the Palestinian issue it always seemed extraordinarily doubtful to me that that
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was real it just seemed like another figment in the imagination of this Administration which has many of them
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but that was explicitly the idea which is we don't have to take uh the issue of
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Palestine the truth is you know we're in almost a hundred years now not just the
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the 56 years since the sixth day war almost a hundred years discussing the
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issue of how uh uh Jews and Arabs are Muslim Arabs in particular are to live
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together in this place and it Remains Not only unresolved I would say for
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decades uh the Israeli approach was we don't really need a solution to this we
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need to make facts on the ground uh and uh as far back as I know from Direct
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observation Israel was putting what has now become hundreds of thousands of
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settlers into what would be uh the Palestine uh independent state if there
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were a two-state solution and the idea was to frustrate uh the two-state
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solution that there could not really be a two-state solution despite the words
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that were constantly used to that effect so I don't think that the American
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Presidents ever seriously took that on
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and I don't think any Israel government except for one except for yitzak Rabin
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took that on and he was assassinated uh in trying to make peace and that's
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another major lesson in the world it's much easier to derange peace than to
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make it because those who oppose peace kill those who want peace this is a uh
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actually uh unfortunately throughout history a pretty widely observed
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phenomenon so most of the Israeli governments didn't really try or they
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put on the table an offer that they knew would be refused because it basically
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was not really a two-state solution uh Gaza
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is a tragedy that is now you know reached both uh this uh
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horrific uh U horrific destruction of U of innocent
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people uh in Israel and now it's going to suffer Vengeance from the air with
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probably thousands and thousands of innocent uh Gaza residents being killed
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in the next few days would be my guess because I'm not sure that this Netanyahu
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government has any resp restra at all right now any self-restraint uh so we
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may see a absolute uh horrific humanitarian I mean deliberate
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catastrophe in response as Vengeance uh that would not surprise me and it would
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be just a another round of uh destruction and another poisoning for
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years to come and we watch in the US politics you know the American
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politicians are also almost none has really been able
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even if they wanted to to approach this issue it's uh America's not an honest
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broker in this and never has been uh American politics is so geared to
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backing Israel rhetorically symbolically unconditionally that there is no uh with
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the r of exceptions an honest proposal put on the
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table and so we're trapped in this spiral of tragedy and uh I don't see
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anything in the in in the outcome of this that's going to relieve that or make people wake up to reality or you
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know these events are not conducive to rational responses uh they are conducive
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to disastrous responses just like 911 led to 20 years of US foreign policy
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disaster in everything misconceived in response Israel is likely to create
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grave disastrous responses to these events that is exactly my thought and I
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have to say prime minister Netanyahu talking about 911 this being Israel's
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911 I mean is a I would have thought that given how unsuccessful ultimately
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the US response was to that that would have been a parallel which an Israeli
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Prime Minister would want to avoid it's it is so right by the way you know the
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the response was precisely precisely to say there's no
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such thing as politics there's only War so the response to 911 was to launch the
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uh gwatt the global war on terror which logically made not an iota of sense from
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the beginning how do you launch a war on terror that's to deny politics that's
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precisely what it was it's to deny any underlying conditions that give rise to
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Terror for example uh and so it was a denial of politics of course it led to
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Afghanistan it led to Iraq it led to Syria it led to Libya and in its way it
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led to Ukraine because everything was we don't need any
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diplomacy we need power and for Netanyahu to repeat it in those terms
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and to then hear what we've heard which is we're going to
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besiege Gaza with no food no water no power
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uh it it's uh if it's meant and it may
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well be meant it is uh exactly the post 911 disaster that the US face continued
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now abely Professor Sachs uh we could discuss this for many hours but I I
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think I would like to move on to this other topic which is the one that you've written a brilliant article about about
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the changes in the world financial system about the position of the dollar it's a topic that has been much talked
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about many people um would like to know more about this I would certainly like
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to know a bit more and you written a wonderful article about this issue perhaps you can tell us some of the
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Salient points in that article the kind of things that you want to um you know people you they feel that people should
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be aware of well I I think the the main starting point uh about any discussion
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about the dollar is should be the pound and just to put it this way uh a hundred
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years ago anything we say about the dollar today we said about the pound at
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the time that the British pound was the center of the world financial system the
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center of the world currency uh the way you made payments and so forth now of
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course there still is a uh a city of London a financial center and a very
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talented one in in fact but the pound plays no role at all in international Affairs to speak
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of other than as a historic Relic um and the the the reason
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is of course the fundamental change of power there's no British Empire anymore
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and there's Britain and there's still the pound but uh Britain's role in the
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world is fundamentally different from what it was a hundred years ago
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and it reminds us of of a basic Point uh one can money is a way to make the
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real economy the economy of goods and services operate it's a way to make
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exchange uh to make trade but whether you trade in dollars or Pounds or renman
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B or Euros or rupes or rubles is not the most significant thing
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in the world indeed when you study monetary economics as I did and as I
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taught for a couple of decades at Harvard you actually use an expression
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money is a veil a veil to the real economy uh the real economy is the
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action who produces the chips who produces the the microchips the potato chips how do you trade and so forth and
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how you settle that in monetary terms that's not so complicated not such
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a big deal and I was involved a couple of times in helping countries adopt a
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new currency from one day to the next uh I in Estonia and in Slovenia in the
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early 1990s I helped them make a new currency instead of Ruble to use the crw
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in Estonia invented from one weekend to the next and similarly in in Slovenia
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the toar basically invented from the Yugoslav currency and the point is yeah
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it's not so hard to uh change the currency of denomination and the
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mechanisms now having said that the dollar has been the currency of choice
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for denominating international transactions and for settling
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International transactions basically since the end of World War II with many evolutionary
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Chang ches along the way but it's been convenient to have a unit of account
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that is shared as long as the dollar is managed as a money in a responsible way
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by the United States now that has been sometimes true sometimes not true
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but the dollar has uh held up as a
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predominant but not the sole currency of choice for uh
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decades the big changes that are going to end that within 10 years in my
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opinion much faster than my colleagues think by the way because they say oh the dollar will remain predominant for
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decades to come and I think this is not true is two things one one of the
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reasons for the dollar predominance has been the convenience of the dollar B
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based banking system so it's been a fairly efficient lowcost way to make
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transactions uh in international life whether it's offshore dollars or onshore
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dollars the US banking system has been a a mechanism for settlements uh and uh
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the big number one change in the world is we've got new technologies for
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settlements especially digital Technologies and we're going to have digital Central Bank currencies so we
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won't even use banks for a lot of our payments in the future and without the
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banks the advantage of the dollar as a payments mechanism purely
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mechanistically will diminish considerably second Factor actually three I should say second factor of
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course is the decline of the relative share of the US in the world economy uh
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which is ultimately what undermined the role of the pound sterling uh it's been
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more gradual but it's absolutely sure that the US diminishes as a share of the
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world economy depending on how you measure it you get different metrics but arguably China is a larger economy than
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the US now with measured at what we call purchasing power adjusted prices and in
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any event the role of the dollar no matter how you measure it or the share of the US I should say in the world
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economy no matter how you measure it in the various ways is diminishing and will continue to diminish then the third
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factor is the big mistake of us policym
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other in addition to various disastrous blunders of monetary policy the worst of
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which was September 14 2008 when uh the worst policy decision in modern times
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was made by one of our worst treasury secretaries Hank Paulson when he
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deliberately bankrupted Leman brothers and put the whole world into a catastrophic Financial panic but I'll
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put aside that the the deliberate Choice was to weaponize the dollar repeatedly
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in the last 20 years the US said oh everybody uses the dollar well we can
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then intervene to stop Iran or to stop Venezuela or to stop Russia or to stop
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other countries we don't like from doing whatever it is we don't want them to do
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so the weaponization of the dollar has meant uh the US confiscating the foreign
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reserves of many countries now Russia being the the biggest of all of course
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with an estimated $300 billion dollars of Russian money Frozen because the US
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signed a a a pen the president signed a pen saying that US Banks could not
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transact with Russia and uh well why the heck would Russia continue to use
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dollars afterwards the US idea was uh completely wrong which is well this
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is the as was said the nuclear weapon of financial policy it proved to be nothing
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because it's not so hard to transact in other ways the idea that the the pay
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currency is somehow the definitive power over the real economy is a deep
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conceptual mistake so Russia started settling in renman b or in Rubles or in
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rupes and um it's now going to accelerate that process because at the
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core of the bricks 11 now is the original brics five
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countries Brazil Russia India China and South Africa conveniently they all have
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currencies that start with the letter R this is very nice it's not fundamentally
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important but it's not bad that you have uh the real the rubble uh the rupe the
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renman B and the Rand because now they call it the R5 uh and they're working
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this year in advance of next year's bricks Summit in Kazan Russia uh which
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will include 11 countries the original five plus uh Argentina uh uh Egypt
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Ethiopia Saudi Arabia the Emirates and Iran they're going to come up with new
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payments systems and new units of account maybe an R5 like a special
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drawing rights which is technically a way for bank for central banks to borrow
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and lend from each other it's nothing more than that it's not no magic it's just a right to borrow from a
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counterpart Central Bank uh and the bricks can make their own SDR uh if you
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will they can make their own unit of account by a basket of currencies they
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can decide to settle and have uh credit card systems clear uh within uh the the
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bricks region and they're going to succeed in this because it's not magic
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uh and it's not uh some uh unimaginably complex
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maneuver it's pretty standard Financial
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engineering and they will succeed in uh in doing that I think this is the point
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about it not that not being any magic behind it is is the key thing because in
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the West in London I SP spoken to many many people who assume that we have
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knowledge and expertise and Tech skills which simply cannot be found in other
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places I mean I I I've had some dealings in Maritime Insurance in the past and I remember people telling me when the old
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cat idea came up you know they can't copy this if they can't get insurance in
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London the ships will have to stop I said they will sort out their insurance systems be under no doubt about it maybe
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in the 60s it was different but today it's not difficult they can do this in
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India they can do this in Shanghai they can do this in Dubai they can do it in Russia they can do it and I think that
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the point you make about the ability to set up currencies I think if I'm not
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mistaken I think KES actually did this during the Russian Civil War in Northern
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Russia as well and he was actually very successful and he already showed as far
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back as then how it could be done am I and again just quickly very quickly
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because we're coming up to time but am I right in thinking that what the bricks
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are talking about also resembles closely some of the ideas that KES had in
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advance of Breet and woods yeah KES by the way you know was a a genius in
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monetary economics and uh at least as interesting if not more interesting than
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the general theory is his writings about monetary policy in the 1920s and I was a
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student of uh all of that myself uh and uh KES has been a big inspiration for me
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in a number of ways of his political economy but I can tell you in in my
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experience in Estonia in 1991 it was literally one evening
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conversation uh with the governor of the what would be the new Central Bank of
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Estonia what to do and they implemented it within basically a few weeks and they
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went on to have a a currency that was stable against the mark and then stable
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against the Euro and it took about a month uh to put together and that was in
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the midst of the turmoil of the breakup of the Soviet Union so this is not magic
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uh and uh of course it's nice to have Financial expertise but there's a lot of financial expertise all over the world
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right now and the financial expertise in London can help with settlements in
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other currencies or make insurance policies in other currencies and they're going to have to do that actually so
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this is going to change in my view much faster and it's because if you push hard
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on what deal called America's exorbitant privilege that privilege is real to have
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other countries use your currency but if you lean to hard on it the privilege
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goes away because no one wants to pay an exorbitant price
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for America to be able to use its use the dollar to determine geopolitics no
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one's going to allow that to happen Professor Z I just wanted to
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quickly make one final point which you may or may not agree with me about which is that of course for us in Britain you
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mentioned the P Sterling when our Empire went we found the fact that our currency
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had become a reserve currency it it ceased to be an asset it became a burden
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in many ways absolutely were trying to cash in on it you had to freeze their accounts exactly I mean it was anyway
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reeta sax uh this is where I we we're up to 30 minutes which is what we said again an enormously stimulating program
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we could discuss these things for hours we probably will in the fut great but um
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I I I will STI let's do one question which is directed towards you Professor sack specifically and then Alexander
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we'll answer the rest of uh of the questions from yeah from Tommy Gun
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Professor saaks how will sustainable development goals fair in light of the Russian Black Sea blade will the Russian
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concessional prices and exports make up for the disruption look the the basic point is
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sustainable development cannot work in the context of War period so it's not
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specifically about the Black Sea or whether there's a grain deal or not to
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achieve anything that we want to achieve on the planet the United States and Russia and China need to cooperate with
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each other uh we are not going to succeed in any of our objectives in a
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deeply divided World much less a world in open War so it's not technical issues
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that block us it is it is uh the cooperation of major powers in the world
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to create a framework in which people can live their lives and have normal
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progress and their kids can be in school and uh not in the disasters of War
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that's what good politics is about geopolitics needs to be not about who's
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number one which is a crazy idea in this world uh it needs to be about how are we
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going to get along peacefully that's diplomacy the generals need
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to sit down get back and we actually need diplomats unfortunately our
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diplomats became the greatest cheerleaders of war in the last couple of years we don't even have diplomats
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that I see right now because all they talk about is weapons and War we need real diplomats in the sense of making
30:54
cooperation work and because it's it goes much Beyond a grain deal or the
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specifics of what's going to happen in the next six months the sustainable
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development goals are about long-term investments in education in skills in
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physical infrastructure uh in the way we live our lives and that requires a vision of
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peace and it requires actual Financial cooperation joint projects uh just to
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give another example in a in a few days China will have the 10th anniversary of the belan road initiative uh the Bel and
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Road initiative was China's offer of uh giving long-term lending to help
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countries build infrastructure it's actually a terrific program it should be
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praised widely and those of us outside should be saying we want to partner with
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you you want to build High-Speed Rail up to SAR will help build it from Saran to
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to Paris and it in other words this is an offer for
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cooperation instead of course the United States badmouths it every single moment
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it possibly can you know horrible uh we want uh we don't want to connect with
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you we want to build our alternative not that necessarily they ever will so the
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issue is really a a deeper and and in a way a more abstract one if we are
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getting along not literally at war with each other or
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threatening even more disastrous Wars we can achieve everything we want and if
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we're at War believe me no one spends a minute thinking about sustainable
32:46
development in the middle of a war and uh if your main goal is to boost the
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ammunition or to bomb someone or to create a new alliance you're not
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thinking about sustainable development so it's not about the specific deal uh
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in uh in in uh uh the Black Sea it is about peace in Ukraine and that requires
33:13
us Russia negotiations directly because this is a war between the United States
33:20
and Russia over NATO over the security Arrangements of Europe and if we are
33:25
civilized and smart this war can end basically immediately by having a
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security Arrangement that makes sense in Europe for everybody including for
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Russia uh for Ukraine for others and that's what we have refused to talk about for three decades now and that's
33:46
our biggest so it's just like when we started talking about Israel and Palestine that's been almost a hundred
33:54
years without a serious discussion and in terms of European security
33:59
Arrangements it's been 30 years without a serious discussion because the United
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States said well our answer is NATO and that's not an answer that works for European security because doesn't work
34:11
for Russia and for many other countries and so this is the core of the issue of peace and peace is the core of the issue
34:18
for sustainable development
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you know the Secretary General of the UN Antonio gues said said it right that uh
at the core of this uh further disaster in the world and this uh profound uh
catastrophe and and destabilization is a 56 years of uh Israeli occupation uh
after The Six Day War uh of uh Palestine the failure to get a two state olution
for decades despite uh many un Security Council resolutions and of course uh uh
a complete breakdown of that process uh in the most recent government of
Netanyahu I don't think anyone could have predicted exactly these events
though as you pointed out uh very rightly your recent the discussion of
this um the UN special Envoy for the region said this is a boiling cauldron
there's growing violence there is unrest there is seething discontent that was a
year ago uh and the past year has been a year of turmoil inside Israel because
Israel is profoundly divided as a society and as a poity um so it's it's
not as if Jake Sullivan was even remotely reflecting reality when he said
a couple of weeks ago that the Middle East is the quietest in two decades that
shows the unreality of American policy thinking uh and it seems likely though
everything as you very well know is unconfirmed right now that uh it wasn't
and you again pointed this out very right ly most likely a failure of
intelligence as it was a failure of processing information by the political
leaders uh Egypt has said uh Egyptian
government spokesman have said that they warned Israel uh 10 days ago we don't
know whether this is actually exactly right but that they warn that something big is uh about to happen and what I
think we can see is pretty clearly a failure of the political class for sure
we don't know whether it was a failure of intelligence gathering a failure of
information but it was a catastrophic failure of the political class both in
the short term to understand current realities and in the longer term because
the whole approach of Israel is to believe that the Palestinian issue can
be ignored forever basically that's the real uh uh uh tactic of Israel which is
this will go away we will make peace with the the rest of the region for
whatever pragmatic reasons the Palestinian issue is is gone we control
uh the territory of Israel and the West Bank and Gaza and we don't have to deal
with this underlying uh 56e issue since uh the 1967 war
so I keep coming back to Von kltz on all
of the issues that you are dealing with and that we're discussing these wars are
the continuation of politics with other means we're talking about politics here
and we're seeing in Ukraine or in uh This Disaster in Israel and the
unfolding humanitarian catastrophe as Gaza is now bombed with
vengeance and besieged we're seeing a complete failure of politics to address
underlying issues and uh war never solves the political issues by
themselves and Von kwiz by saying this I think as all Scholars
know and should understand he wasn't saying that war is a substitute for politics he says war is a continuation
with other means but diplomacy is supposed to go along with this and if
you take the view that you don't really ever need to solve the politics because
military power will do it for you that's never true and uh unfortunately we're
seeing yet another catastrophic Dem demonstration of this in in Israel I
think that is absolutely correct and can I just say it is not just the Israeli government of Mr Netanyahu that has
basically turned its back on diplomacy it seems to me in attempting to find a
solution to this issue of the Palestinian territories and the Palestinians and their position in uh
the Middle East and in the world but also that of Western governments I mean
for as long as I can remember for decade after decade there were attempts by us
officials us diplomats us secretaries of State Henry kinger whoever all trying to
find some kind of negotiated solution that would address this problem and one
of the things that has really changed and is very alarming is that at some
point over the last eight 10 years people seem to give up nobody
nobody's been trying to do anything like this I don't know for example whether
the current Administration even has a Middle East Envoy just just just saying
I mean there always used to be one there always used to be someone that both
sides would talk to and try and exchange ideas and of course one can argue that
that diplomacy wasn't getting as very far it wasn't solving the problems in any meaningful way but at least it did
provide an opportunity for people to talk and discuss and meet and speak and
uh uh come to some kind of even minor agreements which sort of diffuse the
situation and that's as far as I can see that's all been abandoned entirely the
Biden Administration didn't do it the Trump Administration didn't do it Obama did to some extent but not very
successfully and since he left well I haven't seen anything I think the uh the the uh fact
of the Biden Administration certainly very explicitly was uh the Palestinian
issue is not an issue uh what we are working on is a is a end run around that
a uh their Hope was for an Israel Saudi
uh agreement on pragmatic grounds by both sides that completely ignored uh
the Palestinian issue it always seemed extraordinarily doubtful to me that that
was real it just seemed like another figment in the imagination of this Administration which has many of them
but that was explicitly the idea which is we don't have to take uh the issue of
Palestine the truth is you know we're in almost a hundred years now not just the
the 56 years since the sixth day war almost a hundred years discussing the
issue of how uh uh Jews and Arabs are Muslim Arabs in particular are to live
together in this place and it Remains Not only unresolved I would say for
decades uh the Israeli approach was we don't really need a solution to this we
need to make facts on the ground uh and uh as far back as I know from Direct
observation Israel was putting what has now become hundreds of thousands of
settlers into what would be uh the Palestine uh independent state if there
were a two-state solution and the idea was to frustrate uh the two-state
solution that there could not really be a two-state solution despite the words
that were constantly used to that effect so I don't think that the American
Presidents ever seriously took that on
and I don't think any Israel government except for one except for yitzak Rabin
took that on and he was assassinated uh in trying to make peace and that's
another major lesson in the world it's much easier to derange peace than to
make it because those who oppose peace kill those who want peace this is a uh
actually uh unfortunately throughout history a pretty widely observed
phenomenon so most of the Israeli governments didn't really try or they
put on the table an offer that they knew would be refused because it basically
was not really a two-state solution uh Gaza
is a tragedy that is now you know reached both uh this uh
horrific uh U horrific destruction of U of innocent
people uh in Israel and now it's going to suffer Vengeance from the air with
probably thousands and thousands of innocent uh Gaza residents being killed
in the next few days would be my guess because I'm not sure that this Netanyahu
government has any resp restra at all right now any self-restraint uh so we
may see a absolute uh horrific humanitarian I mean deliberate
catastrophe in response as Vengeance uh that would not surprise me and it would
be just a another round of uh destruction and another poisoning for
years to come and we watch in the US politics you know the American
politicians are also almost none has really been able
even if they wanted to to approach this issue it's uh America's not an honest
broker in this and never has been uh American politics is so geared to
backing Israel rhetorically symbolically unconditionally that there is no uh with
the r of exceptions an honest proposal put on the
table and so we're trapped in this spiral of tragedy and uh I don't see
anything in the in in the outcome of this that's going to relieve that or make people wake up to reality or you
know these events are not conducive to rational responses uh they are conducive
to disastrous responses just like 911 led to 20 years of US foreign policy
disaster in everything misconceived in response Israel is likely to create
grave disastrous responses to these events that is exactly my thought and I
have to say prime minister Netanyahu talking about 911 this being Israel's
911 I mean is a I would have thought that given how unsuccessful ultimately
the US response was to that that would have been a parallel which an Israeli
Prime Minister would want to avoid it's it is so right by the way you know the
the response was precisely precisely to say there's no
such thing as politics there's only War so the response to 911 was to launch the
uh gwatt the global war on terror which logically made not an iota of sense from
the beginning how do you launch a war on terror that's to deny politics that's
precisely what it was it's to deny any underlying conditions that give rise to
Terror for example uh and so it was a denial of politics of course it led to
Afghanistan it led to Iraq it led to Syria it led to Libya and in its way it
led to Ukraine because everything was we don't need any
diplomacy we need power and for Netanyahu to repeat it in those terms
and to then hear what we've heard which is we're going to
besiege Gaza with no food no water no power
uh it it's uh if it's meant and it may
well be meant it is uh exactly the post 911 disaster that the US face continued
now abely Professor Sachs uh we could discuss this for many hours but I I
think I would like to move on to this other topic which is the one that you've written a brilliant article about about
the changes in the world financial system about the position of the dollar it's a topic that has been much talked
about many people um would like to know more about this I would certainly like
to know a bit more and you written a wonderful article about this issue perhaps you can tell us some of the
Salient points in that article the kind of things that you want to um you know people you they feel that people should
be aware of well I I think the the main starting point uh about any discussion
about the dollar is should be the pound and just to put it this way uh a hundred
years ago anything we say about the dollar today we said about the pound at
the time that the British pound was the center of the world financial system the
center of the world currency uh the way you made payments and so forth now of
course there still is a uh a city of London a financial center and a very
talented one in in fact but the pound plays no role at all in international Affairs to speak
of other than as a historic Relic um and the the the reason
is of course the fundamental change of power there's no British Empire anymore
and there's Britain and there's still the pound but uh Britain's role in the
world is fundamentally different from what it was a hundred years ago
and it reminds us of of a basic Point uh one can money is a way to make the
real economy the economy of goods and services operate it's a way to make
exchange uh to make trade but whether you trade in dollars or Pounds or renman
B or Euros or rupes or rubles is not the most significant thing
in the world indeed when you study monetary economics as I did and as I
taught for a couple of decades at Harvard you actually use an expression
money is a veil a veil to the real economy uh the real economy is the
action who produces the chips who produces the the microchips the potato chips how do you trade and so forth and
how you settle that in monetary terms that's not so complicated not such
a big deal and I was involved a couple of times in helping countries adopt a
new currency from one day to the next uh I in Estonia and in Slovenia in the
early 1990s I helped them make a new currency instead of Ruble to use the crw
in Estonia invented from one weekend to the next and similarly in in Slovenia
the toar basically invented from the Yugoslav currency and the point is yeah
it's not so hard to uh change the currency of denomination and the
mechanisms now having said that the dollar has been the currency of choice
for denominating international transactions and for settling
International transactions basically since the end of World War II with many evolutionary
Chang ches along the way but it's been convenient to have a unit of account
that is shared as long as the dollar is managed as a money in a responsible way
by the United States now that has been sometimes true sometimes not true
but the dollar has uh held up as a
predominant but not the sole currency of choice for uh
decades the big changes that are going to end that within 10 years in my
opinion much faster than my colleagues think by the way because they say oh the dollar will remain predominant for
decades to come and I think this is not true is two things one one of the
reasons for the dollar predominance has been the convenience of the dollar B
based banking system so it's been a fairly efficient lowcost way to make
transactions uh in international life whether it's offshore dollars or onshore
dollars the US banking system has been a a mechanism for settlements uh and uh
the big number one change in the world is we've got new technologies for
settlements especially digital Technologies and we're going to have digital Central Bank currencies so we
won't even use banks for a lot of our payments in the future and without the
banks the advantage of the dollar as a payments mechanism purely
mechanistically will diminish considerably second Factor actually three I should say second factor of
course is the decline of the relative share of the US in the world economy uh
which is ultimately what undermined the role of the pound sterling uh it's been
more gradual but it's absolutely sure that the US diminishes as a share of the
world economy depending on how you measure it you get different metrics but arguably China is a larger economy than
the US now with measured at what we call purchasing power adjusted prices and in
any event the role of the dollar no matter how you measure it or the share of the US I should say in the world
economy no matter how you measure it in the various ways is diminishing and will continue to diminish then the third
factor is the big mistake of us policym
other in addition to various disastrous blunders of monetary policy the worst of
which was September 14 2008 when uh the worst policy decision in modern times
was made by one of our worst treasury secretaries Hank Paulson when he
deliberately bankrupted Leman brothers and put the whole world into a catastrophic Financial panic but I'll
put aside that the the deliberate Choice was to weaponize the dollar repeatedly
in the last 20 years the US said oh everybody uses the dollar well we can
then intervene to stop Iran or to stop Venezuela or to stop Russia or to stop
other countries we don't like from doing whatever it is we don't want them to do
so the weaponization of the dollar has meant uh the US confiscating the foreign
reserves of many countries now Russia being the the biggest of all of course
with an estimated $300 billion dollars of Russian money Frozen because the US
signed a a a pen the president signed a pen saying that US Banks could not
transact with Russia and uh well why the heck would Russia continue to use
dollars afterwards the US idea was uh completely wrong which is well this
is the as was said the nuclear weapon of financial policy it proved to be nothing
because it's not so hard to transact in other ways the idea that the the pay
currency is somehow the definitive power over the real economy is a deep
conceptual mistake so Russia started settling in renman b or in Rubles or in
rupes and um it's now going to accelerate that process because at the
core of the bricks 11 now is the original brics five
countries Brazil Russia India China and South Africa conveniently they all have
currencies that start with the letter R this is very nice it's not fundamentally
important but it's not bad that you have uh the real the rubble uh the rupe the
renman B and the Rand because now they call it the R5 uh and they're working
this year in advance of next year's bricks Summit in Kazan Russia uh which
will include 11 countries the original five plus uh Argentina uh uh Egypt
Ethiopia Saudi Arabia the Emirates and Iran they're going to come up with new
payments systems and new units of account maybe an R5 like a special
drawing rights which is technically a way for bank for central banks to borrow
and lend from each other it's nothing more than that it's not no magic it's just a right to borrow from a
counterpart Central Bank uh and the bricks can make their own SDR uh if you
will they can make their own unit of account by a basket of currencies they
can decide to settle and have uh credit card systems clear uh within uh the the
bricks region and they're going to succeed in this because it's not magic
uh and it's not uh some uh unimaginably complex
maneuver it's pretty standard Financial
engineering and they will succeed in uh in doing that I think this is the point
about it not that not being any magic behind it is is the key thing because in
the West in London I SP spoken to many many people who assume that we have
knowledge and expertise and Tech skills which simply cannot be found in other
places I mean I I I've had some dealings in Maritime Insurance in the past and I remember people telling me when the old
cat idea came up you know they can't copy this if they can't get insurance in
London the ships will have to stop I said they will sort out their insurance systems be under no doubt about it maybe
in the 60s it was different but today it's not difficult they can do this in
India they can do this in Shanghai they can do this in Dubai they can do it in Russia they can do it and I think that
the point you make about the ability to set up currencies I think if I'm not
mistaken I think KES actually did this during the Russian Civil War in Northern
Russia as well and he was actually very successful and he already showed as far
back as then how it could be done am I and again just quickly very quickly
because we're coming up to time but am I right in thinking that what the bricks
are talking about also resembles closely some of the ideas that KES had in
advance of Breet and woods yeah KES by the way you know was a a genius in
monetary economics and uh at least as interesting if not more interesting than
the general theory is his writings about monetary policy in the 1920s and I was a
student of uh all of that myself uh and uh KES has been a big inspiration for me
in a number of ways of his political economy but I can tell you in in my
experience in Estonia in 1991 it was literally one evening
conversation uh with the governor of the what would be the new Central Bank of
Estonia what to do and they implemented it within basically a few weeks and they
went on to have a a currency that was stable against the mark and then stable
against the Euro and it took about a month uh to put together and that was in
the midst of the turmoil of the breakup of the Soviet Union so this is not magic
uh and uh of course it's nice to have Financial expertise but there's a lot of financial expertise all over the world
right now and the financial expertise in London can help with settlements in
other currencies or make insurance policies in other currencies and they're going to have to do that actually so
this is going to change in my view much faster and it's because if you push hard
on what deal called America's exorbitant privilege that privilege is real to have
other countries use your currency but if you lean to hard on it the privilege
goes away because no one wants to pay an exorbitant price
for America to be able to use its use the dollar to determine geopolitics no
one's going to allow that to happen Professor Z I just wanted to
quickly make one final point which you may or may not agree with me about which is that of course for us in Britain you
mentioned the P Sterling when our Empire went we found the fact that our currency
had become a reserve currency it it ceased to be an asset it became a burden
in many ways absolutely were trying to cash in on it you had to freeze their accounts exactly I mean it was anyway
reeta sax uh this is where I we we're up to 30 minutes which is what we said again an enormously stimulating program
we could discuss these things for hours we probably will in the fut great but um
I I I will STI let's do one question which is directed towards you Professor sack specifically and then Alexander
we'll answer the rest of uh of the questions from yeah from Tommy Gun
Professor saaks how will sustainable development goals fair in light of the Russian Black Sea blade will the Russian
concessional prices and exports make up for the disruption look the the basic point is
sustainable development cannot work in the context of War period so it's not
specifically about the Black Sea or whether there's a grain deal or not to
achieve anything that we want to achieve on the planet the United States and Russia and China need to cooperate with
each other uh we are not going to succeed in any of our objectives in a
deeply divided World much less a world in open War so it's not technical issues
that block us it is it is uh the cooperation of major powers in the world
to create a framework in which people can live their lives and have normal
progress and their kids can be in school and uh not in the disasters of War
that's what good politics is about geopolitics needs to be not about who's
number one which is a crazy idea in this world uh it needs to be about how are we
going to get along peacefully that's diplomacy the generals need
to sit down get back and we actually need diplomats unfortunately our
diplomats became the greatest cheerleaders of war in the last couple of years we don't even have diplomats
that I see right now because all they talk about is weapons and War we need real diplomats in the sense of making
cooperation work and because it's it goes much Beyond a grain deal or the
specifics of what's going to happen in the next six months the sustainable
development goals are about long-term investments in education in skills in
physical infrastructure uh in the way we live our lives and that requires a vision of
peace and it requires actual Financial cooperation joint projects uh just to
give another example in a in a few days China will have the 10th anniversary of the belan road initiative uh the Bel and
Road initiative was China's offer of uh giving long-term lending to help
countries build infrastructure it's actually a terrific program it should be
praised widely and those of us outside should be saying we want to partner with
you you want to build High-Speed Rail up to SAR will help build it from Saran to
to Paris and it in other words this is an offer for
cooperation instead of course the United States badmouths it every single moment
it possibly can you know horrible uh we want uh we don't want to connect with
you we want to build our alternative not that necessarily they ever will so the
issue is really a a deeper and and in a way a more abstract one if we are
getting along not literally at war with each other or
threatening even more disastrous Wars we can achieve everything we want and if
we're at War believe me no one spends a minute thinking about sustainable
development in the middle of a war and uh if your main goal is to boost the
ammunition or to bomb someone or to create a new alliance you're not
thinking about sustainable development so it's not about the specific deal uh
in uh in in uh uh the Black Sea it is about peace in Ukraine and that requires
us Russia negotiations directly because this is a war between the United States
and Russia over NATO over the security Arrangements of Europe and if we are
civilized and smart this war can end basically immediately by having a
security Arrangement that makes sense in Europe for everybody including for
Russia uh for Ukraine for others and that's what we have refused to talk about for three decades now and that's
our biggest so it's just like when we started talking about Israel and Palestine that's been almost a hundred
years without a serious discussion and in terms of European security
Arrangements it's been 30 years without a serious discussion because the United
States said well our answer is NATO and that's not an answer that works for European security because doesn't work
for Russia and for many other countries and so this is the core of the issue of peace and peace is the core of the issue
for sustainable development
