There are two scenarios. Scenario one,

Ukraine loses. Finally, they just can't

sustain defense anymore. Or there's a

compromised piece that stops the war and

gives Ukraine some breathing space.

There is no third possibility.

>> Press pause. A third possibility. We

armed them with tomahawk missiles and

the requisite infrastructure and

technology to start taking out more of

Russia's oil infrastructure which

results in a compromised peace which

isn't as ownorous or as one-sided as the

current envision compromise piece that

greatly understates how strong the

Russian war economy remains because

because just let me finish Scott

we're here with uh three or fourtime

guest, one of my favorite guests, and

also I would I'm going to go on a limb

here and call you a friend.

>> Yeah.

>> Um a historian, public intellectual, and

also people don't know this about you.

You're actually a pretty savvy

entrepreneur. Anyways, Neil Ferguson.

Always good to see you.

>> Great to be with you, Scott.

>> So, we're here at Davos at the annual

meeting. By the way, how many do I bet

you've been to like 40 Davoses. Do you

come here every year?

>> Not every year. I've rather lost count,

but it feels like 20 years.

>> Yeah. Yeah, on and off. I would think

you're very much an intellectual support

animal for the Davos crowd.

>> So,

I'll just simply put you obviously just

saw President Trump's talk. Attack that

from any angle you want or compliment it

from any angle. What are your

observations around what he said here

and how you think the mostly European

audience is reacting to it and kind of

set the table for us around this new

world order or this new world vision if

you will? Well, President Trump, as you

know, uh is extremely good at leading

the news, setting the agenda, and being

the number one topic of conversation.

and he's done that extremely well this

year uh by raising the issue of his

claim on Greenland uh which is carefully

calculated as an issue to cause the

heads of European leaders to explode not

to mention Canadian leaders. So if the

object of the exercise was to dominate

the conversation at the World Economic

Forum, mission accomplished. Uh so

that's I think the obvious uh thing to

say first. Why? So why would he do that?

I mean there are a couple of reasons

most of which I think uh are missed in

the conversation here. One is to

distract us from something else.

>> This is something that President Trump

has a record of doing. We weren't

talking about Iran immediately before

the bombing of Fordo last June. And I

think most people here have completely

forgotten that the Iranian regime has

just killed between 10 and 15,000 of its

own people. that President Trump

threatened to to take action if they did

that and that the uh USS Lincoln

aircraft carrier group is not far away

from the Persian Gulf. So I one

distinctly obvious point in my view is

that this is Maserovka as the Russians

say is a huge distraction operation

which has ensured that the Europeans

don't spend the week saying please

deescalate in the Middle East which is

what they would be saying if we were

still talking about Iran. So that's

point number two. And the third point I

would make is that as usual, President

Trump delivers the key message very very

carefully wrapped in so much riffing and

joshing and trolling that you almost

miss it. But the message was, "Oh, I'm

not going to take military action over

Greenland. Don't be silly." That was the

message. The markets picked it up

because the markets were a little bit

unhappy yesterday about this escalation

in US Europe tensions. And I think we

now see as usual, President Trump loves

the brink. He likes to go up to the

brink and he saw how the markets reacted

which was pretty negatively. And as

usual, back we go away from the brink.

>> So I think a lot of people would say

would agree with your distraction

thesis, but would say it's a distraction

from the Epstein files, not from an

impending attack on uh Iran. Do you

believe that in fact it's a bit of a

head fake and that US and there's some

evidence to support this that US

military forces are coordinating and

choreographing around a potential

military strike? You you understand

geopolitics as well as anyone. Do where

would you put the odds that there is

something resembling some sort of a

military strike impending on uh Iran?

>> Uh certainly north of 40%.

>> Yeah. Uh I mean I think uh that the

president made a very clear uh threat to

the Iranian regime. I think the Iranian

regime has by the standards of

totalitarian regimes uh been

astonishingly brutal towards its own

people. It's hard to think of a single

day of repression in any uh context in

which more than 10,000 people have been

murdered. But I also think that uh

President Trump has a strategic concept

to an extent that people underestimate

here. We've already seen that in

Venezuela. Venezuela was part of the

Axis sphere of influence. By the axis I

mean uh China, uh Russia, Iran, North

Korea, the bad guys, the authoritarians

who've been working together very

overtly not only in Ukraine but

elsewhere. And by decapitating the

Venezuelan regime, which is only a

couple of weeks ago, uh President Trump

sends a very clear signal uh that he is

capable of deploying lethal force in a

way that nobody else is. The Chinese

couldn't do this. The Russians certainly

couldn't do this.

>> Well, Putin tried for 35 minutes and and

Trump did it in 35 or 35 months and

Trump did it in 35 minutes.

>> So Putin is approaching year five of a

war against uh Ukraine that he thought

would be over in a matter of days. Yeah,

>> the Chinese love to do demonstrations of

their sea and air power in and around

Taiwan, but could they actually fight,

you know, a war? Well, none of their

commanding officers has ever seen

combat. Uh whereas the United States has

a great deal of combat experience. So, I

think part of what's going on here is a

global reassertion of American power.

>> Uh that is ultimately directed at Russia

and China. the unfinished business is

still the negotiation of an end to the

war on Ukraine. That that as President

Trump said today has proved much harder

than he expected. He acknowledges that.

But I don't think we should lose sight

of that. And I'd far rather be talking

about Ukraine than Greenland. Uh and I

did manage to at least spend some of the

time at the Ukraine House today talking

about what's happening there, which we

should come back to. But then ultimately

the big problem is is China and and

China is the real adversary in today's

geopolitical moment. You used the phrase

new world order. It's not a phrase I've

ever much liked since I think George HW

Bush gave it currency. What we're seeing

is actually a familiar old world order

of cold war. Uh we are in cold war.

China has taken the place that the

Soviet Union used to occupy and that's

the dominant strategic reality. Uh and I

don't think everybody here at Davos

fully understands that even yet. Mhm.

>> Uh and so there's a tendency here to

misread Trump. They they've been doing

that for a decade, but I think also to

misread the world and to think it's all

about them.

>> Mhm.

>> But it really isn't all about them. It's

not about Europe. Uh except in so far as

Europe can't seem to help Ukraine

effectively without the United States.

And it's certainly not all about Denmark

and and Greenland. I think that is a

very conscious distraction that

President Trump has chosen. And there's

an air, I think, of of almost uh

lightheartedness. Uh when you talk to

members of the US delegation here, they

know that they're driving the Europeans

nuts.

>> And they're quite enjoying it because

they're the first American

administration in my lifetime that has

said out loud what many others have felt

and said privately about the Europeans,

that they're impossible. They're

entitled. They're always uh striking

moral attitudes. this international law,

that international law, they don't pay

their share of the costs of European

security. And I think what's fascinating

is to hear an American administration

saying out loud what their predecessors

used to say privately back in Washington

about dealing with the Europeans. So

there's some overlap here and then some

things we we would disagree on. So I I

think it's hard to argue that what the I

would argue the greatest performing

organization in history is the US

military and that what happened in

Venezuela is a flex. I can't imagine it

hasn't sent chills down the spine of

every world leader when Maline

Albbright, Secretary Albright said, "Our

reach is far in our memory as long has

never been more apparent." Right? The

issue is in kind of a double-barreled

question here. It our adventures or

misadventures overseas are like a Bond

film. They always start great. Bond

films always nail the opening and then

they go on to be bad, mediocre, amazing

films. And often times we start off, we

nail the opening and then things come

off the rails. And already in Venezuela,

we're talking about taking the oil. It

hasn't been regime change. Same regime

is there. And it doesn't appear there'd

be a quote unquote plan. First barrel of

the question. Second, you my sense is

that you see this as sort of like

bumping up against the EU. It's all not

I want to call it good fun but shouldn't

be taken seriously but not literally or

literally not seriously. Whereas I see

that our power has come from not being

25% of the world's GDP but effectively

being the leaders of an alliance that

was 60 or 70%. And then we're rupturing

that alliance and ultimately we're going

to be much weaker and unable to promote

western values around the world. Whereas

my sense is you don't see the same level

of rupture that I see. So let's start

with Venezuela. I'm more worried about

the rest of the bond film. Tell me what

you think the prospects are of a

Venezuela post this unbelievable

military operation. And two, I would

argue that this rupture or the spring of

alliances is long-term very unhealthy

for America and the West. Neil,

>> well, I think this was never intended in

Venezuela to be regime

change in the sense that uh there was

regime change in Iraq. Y

>> uh in 2003 and President Trump very uh

deliberately said the other day, we

aren't going to make the mistake they

made then of entirely dismantling the

regime and then seeing the country

descend into chaos, a chaos that the US

owned. This is regime alteration. So

it's an alteration. Uh obviously it's

meet the new boss more or less the same

as the old boss cuz it's in effect uh

Maduro's deputy. But the alteration is

she doesn't report to Xinping and

Vladimir Putin and the Cubans anymore.

She reports to President Trump and she

better report the right things or she

too uh could have a one-way ticket to a

New York courthouse. So I think that's

an important change, but it's not to be

confused with regime change where the

Americans say and now you're going to

hold elections and people we really like

are going to win them and then we have a

stock market we'd like to liberalize

etc. I mean, those days are long gone,

and I think the Trump administration

rather prides itself on not having an

idealistic vision, uh, but being

entirely realistic. Steven Miller was

boasting about this the other day. We're

the ultimate realists. And in so far as

it takes Venezuela out of the Chinese

camp and makes it essentially part of

the Western sphere of American

influence, that is an important

alteration. What happens next? Well, I

think the issue of the oil is mainly

about denying it to China because part

of the way that the world has worked

lately is that the sanctions get imposed

on bad actors and the Chinese

essentially evade the sanctions and then

get the oil at a discount. They're doing

this with the Russians. They've done it

with the Iranians for years. And I think

part of the game here is to end that. Uh

so it's not a meaningless change that's

happened. It's disappointing uh if like

my friend Ricardo Hostman like all my

Venezuelan friends pretty much you you

really wanted to see the Chavistas gone

and the opposition the democratic

opposition in power. We may get there

but I think it was never going to happen

in a hurry after the bad experiences of

Iraq. Could Iraq be the wrong analogy?

Yeah, not perfect. So what else could be

said?

When Trump's national security strategy

was published in November was it? or was

it early December? Everybody was very uh

preoccupied with what it said about

Europe. I said that's not the

interesting thing. The interesting thing

is the Trump corollery because the Trump

corollery was this illusion to the

Roosevelt corollery of 1904 Theodore

Roosevelt I should say which said not

only is the Monroe doctrine true that

Europeans can't interfere in the Western

Hemisphere and Latin America and the

Caribbean but also we the United States

reserve the right to change governments

we don't like in this part of the world.

So, we're back to that world. And to go

to your movie uh analogy, the movies

back then never turned out that well.

The United States intervened and let's

see, Haiti, Nicaragua, Cuba, Mexico,

I'm sure I'm missing Dominican Republic.

And it, you know, often ended up with,

well, he may be a son of a but

he's our son of a Or it ended up

with h the revolution. Think Cuba. and

then you're really looking at a mess.

Can that be the story here? I think

that's the the downside risk for the

Trump administration that if they repeat

the history of American interventions

post 1904, then you either end up having

a nasty regime that you kind of own or

you end up with another revolution

against it. I think it'll be hard to

avoid that because Venezuela has been

very deeply and seriously damaged by the

Chvistas. It will take a while to repair

if indeed it can be repaired.

Part two. Look, the standard view in

this part of the world is alliances have

been absolutely crucial. Uh the reason

the United States won the cold war was

its alliances. And many American

secretaries of state have have said

this. It's almost a standard form for

administrations up until this one. And

what distinguished President Trump in

both his first and second term is his

disdain for allies and his view that

they're essentially on the take that

they take advantage of the United

States. And he set out to change that.

Now before you say this is terrible and

crazy and you know we all should uh

prepare for the end of civilization,

bear in mind that for 50 years American

presidents have said to the Europeans,

"Hey, you know what? You guys really

don't pay like enough considering that

you're as rich as we are pretty much.

Why is it that we bear 60 or more% of

the cost of NATO? The first president to

get the Europeans to act to commit to a

significant increase in their defense

spending is President Trump. And that

commitment that happened last year I

think was important but it hasn't really

translated into much meaningful

rearmament so far even in Germany which

has certainly voted the means they've

passed very significant fiscal measures

but rearmment is going at a snail's pace

and certainly not fast enough to

meaningfully alter the situation in

Ukraine. So, I think part of what we're

seeing here is more pressure on the

Europeans to make them think, gee, the

Americans might really check out a NATO.

They might really do that. We really

need to get serious. Now, I don't think

that President Trump will one day

announce, "I'm done with NATO or for

that matter go to war with Denmark."

This is all classic Trump bluff. The

goal is to force the Europeans to take

seriously their own rhetoric. Scott, for

the last 10 years, I've heard European

leaders here and elsewhere talk about

strategic autonomy and how important it

is that Europe should become a real

superpower. But it was all talk. Macron

was especially good at giving these

speeches. But did the French defense

spending meaningfully rise? No. So I

think part of what we're seeing here is

a deliberate and conscious effort to

provoke the Europeans into getting real

about defense spending and rearmament

and really taking ownership of the

crisis in in Eastern Europe that began

when Russia uh invaded or fully invaded

Ukraine. So, I'm not so sure that the

goal here is to dismantle the alliances

any more than it is to dismantle the

alliances that the US has in Asia with

Japan or with South Korea. Those

countries of course didn't like having

tariffs imposed on them and it made them

very nervous. But it's not like the US

US is about to tear up its defense uh

alliances in in Asia, especially when

China poses an obvious threat to those

countries. The truth is that America's

allies don't have a better option. Mark

Carney may think that he can go to China

and make nice with Suzan Ping and this

will somehow impress Donald Trump, but I

don't think it does because is Canada

really going to join the Chinese Greater

East Asian co-rossperity zone? What

would that actually imply? Would it

really be in Canada's interests to have

Chinese Communist Party surveillance of

their tech stack? I'm thinking no. So

the truth is the United States can can

really treat its allies in an almost

abusive way knowing that they don't have

anywhere else to go and that in the

final analysis if it makes them step up

and make a bigger effort particularly a

bigger military effort then it's

probably worth trolling them at Davos

for a week.

We'll be right back.

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I think people from both sides of the

aisle would acknowledge the point that

the EU and NATO or as it relates to NATO

have been unfairly free riding off the

large S of US military spending where I

think where we part company is I

actually thought Mark Carney's talk talk

yesterday was the most powerful and what

I see is Canada who is basically 75% of

their export exports are coming to the

US. And I feel like in so many words he

said from that great movie Animal House,

uh let's be honest, uh we up. We

trusted you. And I I'm not as

optimistic, Neil, that these other great

economies don't have options outside of

the US. And what I actively see is a lot

of big economies uh purposefully and

deliberately and maybe permanently or at

least for a while reconfiguring their

supply chain and their economic activity

around and away from the US. And while

China, who I think I agree with you is

uh could accurately be described as our

adversary, while their imports the

percentage of their exports has got

dropped from 17 to 10% in the US, their

exports into other countries in has

increased. China just registered its

largest export trading surplus. It

strikes me that the fring or rupture of

these alliances is benefiting China and

hurting us. I haven't seen the uplift or

the the benefit of us kind of flexing

our muscles other than what you talked

about in terms of Venezuela military

might and getting the EU off the couch

in terms of military support. What I see

or what I fear, and I'm not sure I sense

the same fear from you, is that we're

going to be less prosperous as nations

spend a ton of time and energy trying to

figure out a way to have the same type

of incredible economic alliances that

we've enjoyed for a long time. And and I

I would I would say taken for granted.

Your thoughts?

>> Well, the difference is that the United

States is in a sense a kind of empire of

consumption and the United States has

run uh for many decades a current

account deficit. Uh the United States is

a fantastic market to sell to uh for

foreign companies. Uh even after the

imposition of tariffs, it's still a

fantastic market to sell to. The problem

about China is it's not really a

fantastic market to sell to because what

the Chinese are all about is selling you

stuff. That's why they have a colossal

>> their imports have been flat. Their

exports are up 40% since co

>> and we're not too far from the most

important European economy, Germany. As

we sit here in Devos and the Germans are

having their lunch eaten, their

manufacturing sector is being hit

extraordinarily hard by Chinese

competition. And Chinese competition is

now in multiple domains. You know this,

Scott. The Chinese have not only made

electric vehicles uh the market that

they dominate, not only batteries, uh

not only solar cells, but they're now

doing stuff in chemicals in pharma that

we never thought was possible. And so a

huge swaith of uh the German economy is

is suddenly feeling a competitive blast

from China that poses a really profound

threat to the German economy's future

prosperity. So, it's not a good swap. Uh

cuz Xinping really isn't offering you

great market access in China except if

you want to come and have your

technology stolen because market access

in China is remember you come, you set

it up, we clone it, and then we say bye.

>> I that's why I don't think there is a

really great choice on the table here.

No matter how disgruntled uh Europeans,

Canadians and Asians may feel with

President Trump, remember President

Trump is president for three more years.

Uh probability is uh that his power

waines uh as that tends to happen in in

a second term, particularly if the

Republicans lose the midterms and you

know time passes and uh the

gravitational forces of American

politics do what they do. It's still the

United States uh and the next president

will doubtless be quite a different

person uh from this president. So would

it really make sense to reorientate your

entire strategy towards a one party

state run by an avowed Marxist Leninist

Mauist? Uh a regime that doesn't have

the rule of law uh that routinely uh

incarcerates and disappears uh people

that uh fall foul of it. a regime that

has labor camps, indeed concentration

camps in Zing Jang, etc. I mean, we can

all say that the United States has its

faults, but you take it from me. You

would not want to live in a world in

which China was the dominant power and

in which you had to have a subservient

relationship to Beijing. That would be a

much inferior world even to the world of

Donald Trump's uh uh uh Donald Trump's

extraordinary uh an egotistical style of

American leadership.

>> When I look at

this, I don't even call it new

framework. I don't want to use the term

new world order. It feels to me more

less Monroe doctrine and more well maybe

it is part of the Monroe Doctrine, but

spheres of influence. And I worry that

our we're withdrawing from I think the

most valuable companies in the world uh

Apple and Alphabet are basically

operating systems upon which everything

else is built and they get attacks for

everything and they set the tone. I

believe as of American economics,

policy, rule of law, mostly democracy

has kind of been the operating system

for the majority of the of the west and

now people are deciding maybe they'll

try and find their own operating system

or shifting off of it and we're moving

to these spheres of influence where we

have these regional superpowers. China

and the Asia, the US and the Americas. I

don't know. They fight it out in Europe.

You're not worried or you don't see it

as kind of a a withdrawal. You see it as

flexing which will ultimately

potentially increase US dominance and

kind of get the Europeans in line and to

stop quite frankly bitching and moaning

and live up to their their rhetoric. The

music has to match the words. I see it

as a withdrawal to a smaller America

around spheres of influence that will

embolden Russia and China in their

spheres. You don't see that?

>> Well, it's conceivable. I guess this is

sort of Gideon Rakman's view that in the

end Trump's just another strong man who

wants to carve up the world with uh

Vladimir Putin and Suzin Ping. But I'm

not sure that that's really what we're

seeing here. I mean, last I heard,

Indepacific Command is still by far the

most important of the military commands

of the United States. Uh, and it's uh

role in life is to deter China from uh

seeking to establish itself uh as uh uh

in control of Taiwan or uh extending its

power in the South China Sea. It's it's

a real and formidable force. And I don't

think if you spoke to Admiral Sam Po,

the commander of Indacific Command, he

would say, "Yeah, we're just winding

this up because we're all going to the

Western Hemisphere." I think we have to

distinguish here between rhetoric and

reality.

>> The rhetoric of the Trump

administration, particularly Trump 2.0,

is quite consciously borrowed from

McKinley and Roosevelt. It's a sort of

circa 1900 vibe. I don't know who gives

Trump this stuff because for sure he's

not sitting there reading biographies of

of Theodore Roosevelt. Somebody thinks

it's a good idea, maybe it's JD, I don't

know. Somebody thinks it's a good idea

to make these illusions to a an America

before the New Deal, an America uh which

was an America still on the rise as a as

a power, not even really regarded as a

great power by the rest of the world. So

this rhetoric has clearly some appeal uh

in uh to members of the administration,

maybe to voters. I don't know how many

voters have heard of the Roosevelt

corollery. Not many I suspect but the

reality remains that the United States

is a global power with military

capabilities throughout the world and

the international trading system doesn't

look remotely like spheres of influence.

If you look at Hunong Shin's work on the

networks of of trade of supply chains

and interlocking balance sheets, it's

still a very very extraordinary complex

global trading system. And when

President Trump uses a 19th century tool

like tariffs, all that happens is that

the supply chains get reconfigured and

the Chinese goods get to America with

two stops along the way. The rather than

just the one of 2018. So I I think we

need to just take Trump seriously, but

not literally. This was the key insight

that Selena Zto had way back in the 2016

campaign when she pointed out that, you

know, journalists took him literally,

but not seriously. voters the other way.

So we don't I think need to take the

national security strategy literally as

a document. We just need to look at what

the US does and what it does is to

maintain military superiority in all of

the major zones of the world including

Europe. So here's the thing that the

Europeans never want to face that

throughout the period since 1945

certainly from 474849

they have relied on the US for their

nuclear security. Nuclear deterrence is

not really provided by the French foster

certainly not by British Trident. It's

an American uh public good that is made

available to Europeans. Uh it's not

included in the NATO budget. It's

America's strategic force that says the

Russians can't have central or western

Europe and if they try to have it, they

risk obliteration. That's been the

position really since the late 40s and

and that has been the position despite

the end of the Cold War. Now, nobody

likes talking about this in Europe

because strategic autonomy, if it were

to be meaningful, would mean that the

Europeans would need a proper nuclear

arsenal, which they can't remotely

afford, and I don't think they would

have the political will to build. So,

what is the alternative? Really, there

isn't one. The United States is the

thing that deters Russia and as China is

now in the midst of building a huge

nuclear arsenal that will at some point

be as big as the Russians, you really

need the United States. Otherwise,

you're completely at the mercy of the

great Eurasian autocracies, which I

don't think even the most Trump phobic

uh European liberal could could regard

as a good outcome. Another thing that's

important when we get to reality is that

geopolitics doesn't change that much cuz

the world's geography is pretty constant

over time. And whether you're looking at

now uh or if or or if you want to uh

look at the 1940s or if you want to go

back to the early 1900s, there are

really two great geopolitical

formations. This goes back to the uh the

early theorists of geopolitics, Mckender

and Spikeman. There's the great Eurasian

land mass which has historically been

dominated by large authoritarian

empires. And then there are the uh the

the rimlands uh which are kind of

western Europe, the British Isles, the

Americas and then Japan and uh the the

Asian equivalents. That that's

geopolitics

nightmare scenario. The great Eurasian

authoritarian regimes dominate the whole

Eurasian land mass and you're just left

in the United States with air the

Western Hemisphere. That would not be a

good outcome. It wouldn't have been a

good good outcome if Hitler had won

World War II, which is why of course the

United States ended up fighting Germany.

So I think you can't change that. You

can act in a way that makes the

probability of China plus Russia plus

Iran plus North Korea winning.

>> Mhm.

>> Or you can work to stop them winning.

And I think the Trump administration is

doing a better job of stopping them

winning than its predecessor did. The

Biden administration was really quite

unsuccessful in checking the formation

of this axis. Indeed, I would say that

the axis didn't really exist in 2020,

but it was fully in existence by the end

of Joe Biden's term. So, whatever we

hear when President Trump is riffing as

he was earlier today

or whatever we read in his truth social

account, which shouldn't really be

called that, it should be called truthy

social cuz it's kind of truthy in the

way Steven Cober used to talk about

truthiness is truthy social. About half

of what he says he kind of means and

about half he's just he's just shooting

the We shouldn't get too fixated

on what Trump says. We should be much

much more focused on what the United

States does. And what it does seems to

me a pretty strong advertisement for

American allies staying with America and

not contemplating the possibility of

joining those lovable guys, Xihinping,

Vladimir Putin, Supreme Leader Kami, Kim

Jong-un. I mean, is that the club we

want to be associated with? Not me.

We'll be right back.

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So, let's talk about what America

actually does and let's use that as a

bridge to talking about Ukraine. My

sense is when I read the proposed peace

plan that the US outlined to me it

sounded like just scheduling the next

war it sounded to me or what the

president actually has done is given

comfort to our enemy Russia while

withdrawing I would argue that NATO

right now is the Ukrainian army. If

NATO's mission is to repel an invasion

of Europe by Russia, it is effectively

the Ukrainian people are and the

Ukrainian army is is in fact NATO and it

feels as if America has withdrawn a lot

of at least vibe support from Ukraine

and that I would argue the EU has

stepped up. You don't agree with that?

Well, let's be clear. uh the European

Union cannot without American support

provide the assistance that Ukraine

needs to survive.

>> Y the war is uh dragging on towards its

fifth year. This is going to be harder

and harder for Ukraine to sustain. Um

there is a manpower problem at the

front. Uh there's an air defense problem

in the cities. Uh although the

Ukrainians have been heroic uh and also

tremendously innovative Yeah. in uh the

drone uh warfare and technology, the

Russians have more or less managed to

keep pace with that so that the

Ukrainians have an edge on quality, but

the Russians have an edge on quantity.

The Europeans, when American aid was

first cut off back at the end of Biden's

presidency, could not fill the gap. That

was immediately obvious because the

minute the American aid stopped, you'll

remember that the House cut it off. Then

Ukraine started to lose. The United

States isn't supplying much aid since

President Trump was sworn in, but it's

still playing an important part

to air missiles. Yeah. It's it's

important to recognize that if that

went, then the Europeans would not be

able to make up the difference.

Europeans have handed a lot of weapons

as well as money to Ukraine. They have

not built an awful lot of weapons a new

the Danes are in especially weak

positions because they've given pretty

much all of their military hardware to

Ukraine. They don't have actually much

defense capability at all at this point.

So until the Europeans do serious

rearmament, and I especially mean until

the Germans do serious rearmament,

Ukraine needs the United States to

remain engaged or it risks losing the

war. I was down at the Ukrainian house

earlier today and uh there's a fantastic

video. You must go and see it. Uh an AI

generated video imagining Russian drone

strikes on uh uh Paris uh on Brussels

and brilliantly on Davos. And uh the

Ukrainian point which I wholly agree

with is that Europeans just find it

really hard to believe what you said

earlier that Ukraine is in fact fighting

for Europe. They just can't imagine that

the Russians would ever do to their

cities what the Russians are doing to

all the major Ukrainian cities every

night. Uh to the point that Kief at this

point has almost no uh heating and

electricity in really large parts of

town. I mean there are people I know

whose apartments have no heat uh in

mid-inter and it's bitterly cold there.

So I think we don't and the Europeans uh

as well don't fully understand how

fragile the situation is, how

overstretched Ukraine is, how hard it is

to sustain this war, and how desperately

we need the war to stop. Peace uh in the

sense of the Russians all leave and and

Ukraine gets uh the Donbass back, maybe

even the Crimea. This is a total

fantasy. That is not how wars like this

end. There are two scenarios. Scenario

one, Ukraine loses. Finally, they just

can't sustain defense anymore. The

morale crumbles. This is how these wars

typically end. The line is very long.

The Ukrainians don't have as many men.

There's a scenario in which they lose.

And the Russians, after all the

slaughter of the past uh four years, are

able to advance further into Ukraine.

That can't be ruled out as a scenario.

It's actually the most likely scenario

in a historical framework.

or there's a compromised piece that

stops the war and gives Ukraine some

breathing space. That is the better

outcome. Obviously, there is no third

possibility. There's no possibility

where Ukraine wins.

>> Oh, press pause. A third possibility. We

armed them with tomahawk missiles and

the requisite infrastructure and

technology to start taking out more of

Russia's oil infrastructure which

results in a compromised peace which

isn't as ownorous or as one-sided as the

current envisioned compromised peace. I

think that greatly understates how

strong the Russian war economy remains

because just let me finish Scott because

the Ukrainians already did take out most

of the Russians oil refining capacity

last year and the Russians just kept

shipping crude was 13%.

>> No, it got up to 40%. and higher that

that the the the Ukrainians actually

don't need the tomahawks that much

because their own deep strikes with

drones are highly successful and have

been incredibly effective. Except that

Russia's big and it has enormous

capacity particularly uh when it comes

to exporting hydrocarbons. You blow up

the refineries, they just then ship the

crude

>> and the sanctions regime has failed

doubly. It hasn't succeeded in stopping

the Russians shipping crude and the

so-called ghost fleet. And it also

hasn't stopped the Europeans and others

trading with Russia through third

countries. I mean European countries

export a suspiciously large amount of

stuff to Kazakhstan and Tatastan and

Kyrgystan. It all goes on to Russia. So

under these circumstances, there isn't

really a way in which the military

balance can decisively be shifted uh

against Russia. The Russians have been

held and it's been an incredibly

impressive success. They've been held.

They've barely advanced uh despite

casualties on a monthly level that the

US suffered in a year in Vietnam at the

height of the war. They haven't gained

much ground. In fact, somebody told me

the other day he calculated that a snail

would have got further in the direction

of Pagrosk than the Russians did last

year. So, that's pretty good. But I'm

not sure there's much more that can be

done with Ukraine's capability.

I think greater economic pressure on

Russia is still needed to get Putin to

the negotiating table, but you also need

a deal that he can take, that he can

accept. We're talking here, Scott, about

a compromised peace. That's the nature

of the beast. And for that to happen,

Putin is going to have to say, "I

achieved my victory." he's going to have

to be able to sell something to his

people to justify all the slaughter. I

think that probably involves uh him

abandoning his original goal, which was

to take the whole of Ukraine and turn it

into another Bellarus. I think we've

pretty much told him that's impossible.

And we've also, I think, pretty much

told him, you're not going to destroy

NATO either. But I think we have to give

him some territorial

uh win to end this war. And that is why

I think the the 28-point plan, the

original version, was not a bad starting

point for negotiation in that the

Russians were prepared to talk about it.

And the fact that the Russians were

prepared to talk about it so much so

that they even claimed off the ship of

it meant that you were getting

somewhere. This was why the involvement

of Jared Kushner was so important.

He is a highly skilled negotiator. Steve

Witoff on his own was not getting very

far. Bring Jared in and you start

getting results. We've s seen that in

the Middle East. I think we begin to see

it with Ukraine. It's tough. But I don't

think the Europeans have helped at all.

In fact, what happened was that after

that 28 point plan did the rise, the

Europeans said, "No, no, no. This is far

too good for Russia. we we insist on

changes and they insisted on changes

that for example left the Ukrainian army

even bigger and of course the Russians

said no I mean I can understand some of

the American

>> wasn't the original 28 point plan

doesn't it feel like it was written by

Lavaroth it felt like a Russian peace

plan

>> it wasn't written by Lavough it may have

been written uh by another uh Russian or

co-authored it certainly wasn't written

by American diplomats but I think it's

fair to say that it was agreed

between uh Russians, Ukrainians, Witoff,

Kushner. I think that's what happened.

The Ukrainians were actually ready

because they desperately need a break.

They need a ceasefire. And then the

Europeans were the ones who said, "No,

no, no. We need we need to make it much

much tougher." And that killed the

negotiation. That's an important point

that is not, I think, widely understood.

And I think I can speak with some

authority on this. So we have to

recognize that this piece won't be

pretty.

>> It will involve uh almost certainly

territorial sessions. The language of

that's important. In the original plan,

it wasn't that the Russians acquired

Deuri ownership of Donbass. It was de

facto. The language here matters a lot

because if you can put it that way, then

you haven't permanently seeded the land

to Russia. It's a temporary state of

affairs and it recognizes roughly where

the line of contact is. So I think this

is the only way the war can end well. It

it can end really badly if we hold out

for the perfect peace that will satisfy

the men in Brussels and the uh in

Berlin. If we hold out for a really good

peace, we could end up with a Ukrainian

defeat. And that that is a nightmare

scenario for Europe which is why I can't

really understand the lack of realism

here that this is a time when you have

to get

>> I just want to press you have six more

minutes and you've said a lot there just

under the oposis of realism you don't

worry that if Putin is allowed to quote

unquote claim a victory here and not end

this with something resembling a black

eye that all we're doing is scheduling

with this piece the next war that

eventually it's the rest of Ukraine

Poland

>> of course if we did nothing if we if we

did nothing after such a a ceasefire or

peace, then we'd only deserve another

war. But if you get the breathing space,

you can start the reconstruction of

Ukraine. The Ukrainians are a military.

>> Who's going to invest in a Ukraine where

we feel like Russia is just going to

rearm and then invade?

>> I'll invest in Ukraine. They have the

best best defense technology in the

world.

>> We'll take their drones, but will anyone

invest in the civilian infrastructure

thinking that Russia is just going to

rearm and take the rest in another war

in five or seven years?

>> Have ever been to South Korea? So, South

Korea is interesting because it's a

complete heap of rubble in 1953 and it

has a neighbor who is uh clearly as

dangerous as neighbors get and yet here

we are. Soul uh is one of the specific

>> the West and the US might be willing to

participate in that type of 55th

parallel or whatever it's called that

would guarantee some sort of security

such that people would be willing to

invest and Ukraine would have some sense

of autonomy and self-governance.

>> Yes. And I have said from the outset,

I've said it to President Zalinski, your

best outcome is to be South Korea. Your

worst outcome is to be South Vietnam.

That is the nature of the relationship

you have. The United States has

supported you, but you need to lock in

what you've got and then build it,

rebuild it, and then you'll be able to

show cuz on the other side of the line

there'll be continued uh Putinism,

kleptocracy, criminality, poverty. uh

and on the western side there'll be the

European South Korea which I think is

not an unrealistic vision given the

talent there is in Ukraine given what

they've shown themselves capable of

incredible courage incredible innovative

uh energy I'm I'm a passionate supporter

of Ukraine's bid for freedom passionate

supporter I do not want to see it fail

because uh Europeans set too high a bar

in these negotiations I believe if you

can get a breathing space. Two things

will happen. First, Ukraine can begin to

rebuild. It now has a formidable army,

the biggest in Europe, and it has shown

itself to have formidable military

technology. Now, take that and scale it

in Germany. If the Germans today,

Friedri Mertz, are you listening? Did

Operation Warp Speed for rearmament

instead of what they are doing, which is

going through the usual incredibly slow

bureaucracy of procurement. If they just

did, okay, gigafactory in Brandenburg,

we take Ukrainian drone designs and we

don't just do 3 million a year, we do 20

million a year. How about that, Putin?

Now, if the Germans did that, and they

could do it, they have the manufacturing

infrastructure. They have the workforce.

They have a crying need for instance,

the days of selling automobiles to the

Chinese are over. They did that. That

would be a gamecher unlike Tomahawk

missiles because if the Russians saw

German rearmment really happening, that

would be the clearest sign. A that Putin

had made a huge strategic blunder. B

that Ukraine had a future. So I think

there are ways to to solve this problem.

They just require far more energy on the

European side, far more commitment, and

above all something of what we still see

in the United States, an ability when

the chips are down to cut through the

bureaucracy and do things really fast.

So, I just wish we could have sort of

Elon Musk and rearmament, you know, the

SpaceX approach. You could scale what

the Ukrainians do. You know what's

really tragic is they have fantastic

technology. They cannot scale it. They

don't, of course, have the space or the

security. They're trying to build drones

in a war zone under daily bombardment.

If you did all that stuff at scale in

Germany, a, you would create meaningful

deterrence. B, this is the beauty of the

thing, you'd actually see German

economic recovery, and that's like a

win-win if ever there was one.

>> So, I'm getting a bit of a a red light

here. So I just really crisply you said

something that really resonated and I um

my sense is there's this historic

opportunity to uh um defend a straight

replace whatever the term defeat the

Islamic Republic.

>> Yes.

>> And and I'm really hoping I've never

seen a greater case for greater ROI than

limited whatever you want to call it

strikes on civilian suppression centers

and kind of tip over the regime if you

will. regime alteration.

>> That's what that's what we have to hope

is coming. It will transform the

security of the Middle East. It will

transform life for Iranians. And I

believe it will be a huge contribution

towards a peaceful end to cold war

because it will signal that whatever

Chinese project produced the

relationships with Russia, Iran, and

North Korea was not a realistic

geopolitical project. That's my hope.

What do you what do you think the

chances are that the regime holds if

there is an intervention coordinated

intervention say US and Israel whatever

it might be intelligence limited strikes

what do you think is the likelihood that

the regime survives without western

military intervention

>> very high indeed like 90% because

they've crushed the the protests

brutally and the regime's repressive

apparatus showed no sign of cracking so

if there's no intervention that regime

lasts I mean it's like the Soviets had a

little bit of a revolt in 1962 they

uttered crushed it. 1962 was pretty

early in the Cold War. In fact, a

dangerous time in the Cold War. So, no,

we need to if we want to get rid of the

Islamic Republic, which has been a

source uh of mischief uh and mayhem and

murder since 1979,

President Trump has to do what I think

he is going to do.

>> Yeah, your lips to his ears. And the

most important thing we haven't covered,

but we'll have to cover it quickly.

Scotland's group draw in the World Cup.

nail.

>> We're in with Morocco and Brazil. Is

that right? I mean, come on.

>> Anyways, where are our chances?

>> Henry Kissinger was a great uh football

soccer fan. Uh, one of his great maxims

was every success is an admission ticket

to the next crisis. And after Scotland

heroically won their qualifying game in

one of the greatest football games I've

ever watched,

>> one of the best players in the world

right now.

>> It was a fantastic thing. I said to my

sons, "By the way, every success is an

admission ticket to the next crisis."

And then the draw came and they said,

"Dad,

>> we know what you mean." So, we got Haiti

to beat and otherwise I think we just

have to do damage limitation against

Brazil and Morocco.

>> Yeah, it's too bad. But, you know, I

think it was a glorious, glorious,

glorious game. We'll all remember Scott

McTominayy's goal as long as we live.

>> That that was one of the greatest

matches in football history. And are you

back in London?

>> I spend quite a bit of my time in Oxford

more than in London. And between Oxford

and Stanford, I'm always just

permanently jet-lagged, never bored.

>> Yeah, it's a rough commute.

>> It is.

>> And just give me 30 seconds, and I talk

about this a lot. I always say the

difference between Europe and the US is

US still the best place to make money.

Europe the best place to spend it. And

the difference between the UK and the US

is you're the ones that stayed. That the

risk gene has been starched out of uh

the UK gene pool. And it's it's it's

been very damaging. How would you as

someone who's who's by not by coastal

but by country uh how would you try to

summarize the big difference between the

UK and the US and what could the UK

learn from it?

>> I'm a dual citizen and I I I look at

both and think a lot about this. I I

think if you take AI or quantum

uh take the cutting edge of technology

the UK is is clearly a source of real

talent. What's the problem? It's not the

lack of uh talent or entrepreneurship.

It's the capital markets are utterly

unfriendly

to to scaling a really dynamic company

which is why demis and Mustafa Salman

and others have all ended up in the

United States because you have brilliant

company. I mean Deep Mind's the most

important AI company in the end. uh is a

much more important historically

innovative company, but it's a British

company that ended up being acquired by

Google because there was no other way to

scale it. So, I don't think these are

cultural problems. They're they're

institutional problems. And you can see

these as as in a sense Britain reverting

to its 1970s bad habits, which Margaret

Thatcher temporarily cured Britain of.

If you could bring Margaret Thatcher

back to life and redo Thatcherism, then

I think there would be a chance at least

of revitalizing Britain's capital

markets, which you know are potentially

extraordinarily broad and deep. I mean,

very liquid, but institutionally the

incentives are terrible. You know, the

way like pension funds deploy capital in

Britain would make you weep. So I think

there are fixes here that the next and I

hope it will be a conservative

government can address. I want Kem Bened

to be Black Thatcher and to do all the

things again that we learned the hard

way we had to do starting in 1979. Neil

Ferguson, historian public, I love

having you on. I disagree with most of

everything you say, Neil, and yet I

learned so much and you really do open

my mind and I'd like to think a lot of

our listeners minds to you just have

this unbelievable ability to thread

history with economics and logic even if

even if you get to a place that kind of

sends chills down my spine. I just love

love speaking to you. Really appreciate

appreciate your time and appreciate how

quite frankly like unfiltered you are.

It's really refreshing. So boring if we

agreed about everything, but we agree

about football.

>> There we go. That's dialogue. All right.

Thanks again, Neil. Good to see you.

>> My pleasure.