Episode 284 – How the West was Lost with Thomas Fazi

[00:00:00] Steven Grumbine: All right, my friends, this is Steve with Macro N Cheese. Today’s guest is Thomas Fazi. And, you know, one of the things that I’ve been trying to do, is pull together an understanding of class and MMT, and the geopolitical angles. I’ve been extremely put off by a embrace of neoliberals and elites.

People like Joe Biden and the establishment of the European Union, and the elites at the G7 and so forth. I’ve been particularly dismayed by watching the normalization of genocide and the normalization of war, and cold war and ramping up attacks against Russia, using NATO, and attacks against China across the board.

I’ve spoken about Biden and his state of the union address, where he came out and basically said, ‘Hey, we’re going to create a jobs program and it’s all going to be about ramping up the military industrial complex to combat China.’ And, as they say the quiet part out loud, I keep looking for people that are not hiding from these truths, that I can talk to. Because MMT without the values, the lens without the values, is just navel gazing.

We have real situations going on in the world, that I feel Thomas Fazi has really taken some tough stands on, that not everybody is going to agree with. And some stances that take a little bit of effort, especially as you consider what has happened to the working class. Thomas Fazi is a journalist, a writer, a socialist who spends most of his time in Rome. Co-director of Standing Army in 2010, an award winning feature length documentary on US military bases featuring Gore Vidal and the still alive Noam Chomsky.

The author of Battle for Europe: How the Elite Hijacked the Continent and How We Can Take It Back. Also, one of my favorite books of all time that he co-authored with Bill Mitchell, Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World. I had the privilege of meeting Thomas at the first MMT conference in UMKC, and it’s been a pleasure to talk to him several times over the years.

And I’m really grateful to have him join me again today. With that introduction, Thomas, welcome to the show, sir.

[00:03:09] Thomas Fazi: Hey, Steve. It’s a real pleasure to be back.

[00:03:13] Steven Grumbine: Absolutely. I’m watching Europe, and Europe is your specialty. Let’s just be fair, you have been battle for Europe as long as I’ve known you. And this European project, this European Union and this Euro zone, and the, quite frankly, the European Central Bank and the Euro, have been kind of the bane of your existence for many, many years, even before it was instituted.

And once it became instituted, you saw many of the problems that came with it. And here we are, 2024, watching Europe basically become a vassal state of the United States as they put their own wellbeing completely at risk in support of very, very insane geopolitical strategies, supported by the DC consensus and the warmongers that inhabit our government here in the United States. I would like to hear, just to get us started, what is the state of the European project today?

[00:04:12] Thomas Fazi: Well, it depends, I would say that from the perspective of European working classes, European citizens, it’s as disastrous as it’s ever been.

All the problems relating to the EU, and especially to the Euro- that we’ve been discussing, criticizing for years, i.e., the globalist, oligarchic, hyper-capitalist nature of the European Union; the incredibly nefarious role it has played in eroding democracy and popular sovereignty in Europe, in transferring sovereignty away from the people, away from national democracies, to these unelected, unaccountable institutions; the way the European Union over the years has actively suppressed democracy throughout Europe has forced the imposition of a hyper-neoliberal, anti-social, anti-working class, anti-labor social and economic model on the European Union.

That still exists, all those problems are still there in many ways. We see those same dynamics play out. Today, I’m sure listeners will know that we’ve just had elections. And European elections are kind of faux elections to a large degree, to the extent that the EU is not a democracy. And so, elections play a fairly marginal role in actually determining the outcome of policy, because you only get to vote for the European Parliament, which has very limited powers.

The actual power is in the hands of the European Commission, the European Central Bank and other institutions, which are not democratically elected. But nonetheless, of course, those elections have had a political fallout, especially at the domestic level, especially in France.

Listeners will probably know that right after the results came in showing that Marie Le Pen’s “far right party” got virtually double the votes of Macron’s party, [Macron, being the current president of France] Macron immediately called a snap legislative parliamentary elections. And what we saw right after that was a script that, as an Italian, I’ve seen play out over and over again throughout the years.

And that is one where as soon as a, again, “populist” or ” anti-establishment” government comes into power, or has a good chance of coming to power, as Le Pen does now, given what the polls are telling us and given what the recent results of the European parliament have told us, then the kind of democracy-proofing mechanisms of the European Union, and of the Euro, kick into action.

And so, what usually happens in these cases, what you see is markets selling off the bonds of the country in question, supposedly because they’re spooked by the new government power, or the government that has a good chance of coming to power. And this is usually framed in the mainstream media as a natural reaction of markets to “irresponsible people” coming into government, or risking to come into government. But in fact, this is a very simplistic narrative, because, as MMT teaches us, it’s the central bank that ultimately controls the interest rates on the government bonds.

And this is the same for a country that issues debt in its own currency. But of course, the same goes for Euro countries, even though they don’t issue the debt, it’s this supra-national institution, i. e. the European Central Bank that issues the debt, but still the European Central Bank has the power to control interest rates.

Of course, to bring down the spread, one of these notions that regularly pops up in European politics, and that the spread is the differential between the interest rates paid by X country and German interest rates, which are usually the lowest interest rates in the Eurozone. So, whenever the spread between German interest rates and another country’s interest rates start to widen, that’s seen as a sign of the fact that X country is “spooking markets.”

But in fact, markets can only spook governments and countries, and can only, financially, put pressure on countries, so long as a central bank allows markets to do it. And so, to the extent that what we’re seeing in France today is the spread between French and German bonds widening. Countless articles about how markets are spooked by the prospect of a Le Pen government. How markets are selling off French bonds.

And what everyone admits, is that this can only happen because it’s the European Central Bank that’s allowing this to happen. Because it has every interest in using financial markets to discipline governments. To make sure governments don’t stray off the neoliberal path that they’re expected to stay on. And, the same thing is happening now.

So, we’re seeing that same logic applied now to put pressure on French voters, Macron and his guys, Italian and French, this is what happens if you vote for Le Pen. You know, we’re going to have a financial crisis. We’re going to have a fiscal crisis. And of course we’re seeing the same narrative now being peddled by the bureaucrats themselves.

But what we’re witnessing, in fact, is the European Central Bank refusing to do what it should do, i. e. keep interest rates low, uh, guarantee financial stability, especially in view of an election. It’s doing the opposite. It’s actively engineering a financial crisis, a fiscal crisis in order to put pressure on voters.

And if, God forbid, Le Pen should get into government, in order to put pressure on the next government. And, this is something that we’ve seen over and over again in Italy, it’s often being used in Italy, as a way to put pressure on governments and that this is. You know, this reminds us of what Wynne Godley, the great, late, British economist said back in ’92 when Britain was considering whether to join the Euro or not. And he said, that would be a very bad idea because if a country gives up its monetary sovereignty, it becomes, effectively a colony, of whoever issues the currency, in this case, the European Union and the European Central Bank.

And so this, I think, really drives home what the Euro system is. It’s a system that is fundamentally aimed at subverting democracy, and essentially nullifying whatever result comes out of the ballot box. Because ultimately, it’s this European union that controls all the economic levers. And so, you know, Le Pen, has, I would say, a fairly decent manifesto when it comes to social and economic policies.

She would like to lower the pension age, raise the minimum wage, put a tax on wealth. In fact, her manifesto, her electoral program is almost identical, except on the issue of immigration, on all the the other issues is basically identical to the “far left” bloc that is running in the election. Seriously. I mean, it’s almost like an identical manifesto.

And in fact, what the message we’re hearing from the EU is that, you know, no matter who, so again, it’s important to understand that, people might think, oh, but because since now this is directed at Le Pen, then it’s okay.

But if, a real left coalition where to get into government, with that same program, it would get the same treatment. This is not about left or right. This is about ensuring that countries stick to the neoliberal playbook. They cannot stray from that path. So this, I think really, um, you know, drives home the profoundly anti-democratic, oligarchic nature of the euro.

At the same time, we have also seen the European Commission, open up a so called excessive deficit procedure against France, literally today. Listeners might know that France, historically, has always had a very high deficit. A much higher than average deficit. It’s one of the countries that has historically run the highest deficit in the European Union.

One of the few countries that for many years actually ran a primary deficit. So, it had a deficit, even net of the interest payments. Despite this, the European Union has always been willing to cut France a lot of slack. So long as pro EU governments were in power in France, the deficit was apparently not a big deal for the European Union.

Now that there’s a good chance of Le Pen getting elected, suddenly everyone’s, gone into deficit hysteria mode. Everyone’s freaking out about it France’s, “excessive deficit”. So you can clearly see that this is purely political. All these rules, are simply used as a baton simply to be wielded against governments that stray away from the establishment’s path. So all these problems that we’ve had for many years are still playing out.

Interestingly enough, there are some people in the European MMT movement that think, and have been saying, I won’t quote names but, who claim that since, during the pandemic, governments were allowed to run very big deficits supported by the European Central Bank which was buying up most of the bonds, then that means that the problems that we’ve known, you know, the kind of fiscal constraints that we’ve known before the pandemic, no longer exist.

I’ve always pointed out this was a very naive, uh, stance because, obviously, the European Central Bank had every interest in allowing interest rates to rise at that moment in time. That didn’t mean that the Euro had suddenly got more democratic. Or, had suddenly given up on fiscally repressing governments.

I wrote way back in 2020 when Bondolier and the European Commission President said, we’re suspending the growth and stability pact. We’re suspending the EU’s fiscal rules. Governments can spend whatever they want to pay for. Lockdowns, or whatever. Buy vaccines and that kind of stuff.

Um, but I..

[00:13:49] Steven Grumbine: Let me jump in there real quick, because I will say names. We’re talking about Dirk Ehnts here, and I like Dirk Ehnts very much. In fact, I’m going to be talking to Dirk very, very soon. Maybe even as soon as tomorrow for folks that are hearing this out of order here. And I just want to say for the record, back during the pandemic, they kind of lifted the deficit rules.

And, it didn’t change you and Bill Mitchell’s perspective. It didn’t change the work that you had put in Reclaiming The State. It didn’t change any of the facts. But there was an easing. And it’s easy to see how somebody could say, hey, you saw how good it could be. Why would you go back? But lo and behold.

As of our recording five hours ago, Dirk tweeted out, and rightfully; he’s seeing this. He says the European fiscal framework is still dysfunctional, and cutting government spending in those countries would surely put the Eurozone in a recession. Why do we have to go through this again?

And, my posit back to Dirk- which I’ll bring up in our conversation when I do talk to him- would be, I believe, and again, this is where friends can disagree, right? I believe that Dirk and others place way too much faith in the goodness of these institutions and the goodness of the people.

And therefore, when Lucy pulls the ball away from Charlie Brown, again, it’s a big shock. But it’s not a shock if you have that skeptical eye that says, this is an elitist project. This is not a project about serving the people. This is a project about serving capital. It’s a project about serving the oligarchy and the global oligarchy, the U S oligarchy, the elites.

And we’re experiencing this through the G7. We’re experiencing this through, I mean, Joe Biden is doing the exact same things. We got a couple of people to see that during this, uh, during the pandemic recovery that Biden deficit spent, somebody’s right back to celebrating 2 trillion in deficit reduction. He’s back to calling people illegals for votes.

He’s back to, literally, funding a genocide. This is, let me just drop this. To me, the most obscurely weird, I can’t put my finger on why. If there’s ever been an MMT story to blow the lid off . . . To make people say, Oh My God! I get MMT! Why are they not focusing on Joe Biden’s full-throated, open wallet funding of genocide in Gaza? Why are they not preaching it from the hilltops?

And it confuses me as to what their ends and their means are by staying silent, largely, on Biden’s genocidal tendencies. The fact that so much of the world is literally standing by, at least in terms of the vassal states that are tied to the U.S., are staying idly by as Israel literally tries to erase the Palestinians. But they’re not just doing it there, are they? They’re trying to do it through Ukraine and Russia.

Yeah.

And, they’re trying to do it with Taiwan and China and, really, we just saw that the US military even tried to run a psyop in the Philippines to make them have a lack of faith in Chinese pharmaceuticals. And could have killed millions of people. I mean, obviously that’s a lot to swallow there. But, my God, this is the MMT geopolitical game. Why are we not capturing this? What is to not gain by bringing this stuff to the forefront?

[00:17:22] Thomas Fazi: Well, first of all, let me say, obviously I completely agree, on your reading of what is happening in Gaza, maybe we’ll get into it in greater detail. Uh, What is happening is just absolutely revolting. There is no doubt in my mind that what Israel is committing in Gaza is a genocide with clear genocidal intent. And there’s at the very least a clear attempt to ethnically cleanse Gaza and the Palestinians, more in general.

There really aren’t words for what is happening, from my perspective. And how much more proof do people need to realize that, you know, what is happening in Gaza is not a normal war? This is not a normal war between two armies, as you might frame what is happening in Ukraine. A conventional war between two more or less equivalent armies. I mean, this is one of the most powerful armies in the world just recklessly assaulting and wiping out civilians, decimating children, decimating women.

Let me just quote from what the UN Human Rights Council just put out today. They’ve done a lengthy study on the conflict and they concluded that the Israeli authority is responsible for war crimes; for crimes against humanity, including extermination. Intentionally attacking civilians, using starvation as a method of war, sexual, and gender based violence.

Things that, you know, supposedly people in the progressive MMT community should care about. And this comes after the International Court of Justice has said that what Israel is committing, and has committed, over the past, what is it now, 8 months, is plausibly a genocide. Meaning that, based on the evidence they have, there’s very good reason to believe that Israel is committing genocide.

The International Criminal Court is seeking arrest warrants for Netanyahu for war crimes. The U. N. has added Israel to its blacklist of countries that commit abuses against children in armed conflict. And no wonder, considering that more than 13,000 children have been killed so far in this war. Many of them not less than a year of age.

And let me just say, on the issue of genocide, there’s a lot of controversy , you know, what, is it a genocide? Is it not a genocide? Well, these are legal terms. So, you know, this is used to frame things in moral terms, of course. But they’re first and foremost legal terms. Genocide is a legal concept that was formalized after the Holocaust. You know, one may have an opinion, but ultimately when we’re talking of legal issues, it’s up to courts.

It’s up to the official authorities to establish whether what is happening is a crime and whether that crime is genocide. And we have all the foremost international authorities that are qualified with establishing whether what is happening in Gaza is a genocide or not that have come out and said either yes, it is a genocide or yes, it’s a very plausible chance of it being a genocide.

So there’s really no doubt in my mind, but, then again, I mean, even if we forget the legal terms, I don’t see how anyone that has witnessed the just eight months long, brutal assault on Gaza; the bombing of schools, the bombing of hospitals, the bombing of refugee camps. How anyone can support this is really almost beyond my comprehension.

That said, I’ve been a very big critic of the mainstream neoliberal left. And I’m happy to see that at least on this issue, most of the left has taken the right stance. But you mentioned the MMT community specifically. And, um, they’ve been slightly less, sanguine about coming out and criticizing.

Especially, I’m talking about representatives of the American MMT community have been quite coy about coming out and criticizing the Biden administration. You know, crazy geopolitical posture at the global level, which isn’t just Gaza, but Gaza is, of course, what many are focusing on for obvious reasons.

And I think that has to do with a number of reasons. The MMT community, in general in terms of geopolitical analysis, have always been quite poor in my opinion. In general, I think there’s always been an under-appreciation of the power relations between countries. And so, in general we were talking about this right before we started recording.

The widespread notion in the MMT community that imports are always a benefit. Well, this isn’t necessarily, uh, always the case, especially if you’re a nation developing, that’s trying to build its economic sovereignty. In that case, clearly, depending on imports, especially for basic food stuff, for stuff that’s necessary for your basic survival, is not a good thing at all.

You want to be self sufficient, regardless of whether, in strictly financial terms, you might be able to sustain a trade deficit for, you know, a certain length of time. That’s not the only thing to take into consideration. So I think there’s sometimes a very kind of reductionist approach to that, especially to the question of trade and trade relations between countries.

And you know, it probably has to do with this underappreciation of the importance of being self-sufficient in real terms. I think it probably has to do with the fact that a lot of the most prominent representatives of MMT come from the United States. A country that has had the benefit as, you know, a global hegemon to run a very large trade deficit for a very long time.

And it has been able to rely on imports. And that has been true. It hasn’t caused any real financial issues. And so I think, they’ve taken that template and applied it to the entire world. But in fact, we’re seeing that that model is now also coming back to bite even America, itself, in the ass. Because what this has created is a situation where the US has decimated working communities.

It’s been totally disastrous, in industrial terms for America. Even though it might have been sustainable in fiscal terms and in strictly kind of financial terms. And so I think there’s a belated realization of this, even at the policymaking level, of course, given the heightened geopolitical tensions. Now, there’s all this talk of reshoring and reindustrialization and industrial policy. So I think there’s that issue.

[00:23:26] Steven Grumbine: Let me jump in there real quickly. Fadhel Kaboub, [who is one of my favorite MMTers in the world, I love Fadhel beyond words] he talks about how, not only monetary sovereignty has to be earned, but he talks about food sovereignty, energy sovereignty, he talks about all the basic staples. You’ve got to have value added production sovereignty, otherwise you end up like many of the global South countries, that can produce crude, but can’t produce [actually] manufactured and refined petroleum products. So, they’re always at the mercy of external players and external actors that, basically can destroy their entire economy by a simple price change in crude, by a price change in some commodity that they no longer have any power over, and then they’re stuck trying to get those foreign reserves.

I guess my question to you is this, because this is a very important thing, because there are people that are talking about this. Like I said, Fadhel is one. We had Hamza Hamouchene come on here many times, talking about the insanity of the EU’s clean energy rules, which have Tunisia, TUNISIA!- a country that produces next to nothing, in terms of carbon output- creating the green hydrogen for Germany to meet their European goals.

While simultaneously, Tunisia has to import energy, while they’re exporting energy to Germany. This colonial approach, this import/export strategy based on empire, isn’t the jam we think it is, and it’s killing people around the world. And I don’t want to go too far down the Muammar Gaddafi road, but let’s be fair, we offed him by him trying to unite Africa.

Whatever will we do with a united Africa? Oh my goodness, we couldn’t poach from them anymore. And now you’re seeing insanity in Milei, the output of that is going to be insane austerity and so forth, and just was able to talk to Daniel Kostzer about that.

Germany, the superstar of the EU, right? Germany, literally had their energy cut off from Russia through the Nord Stream 2 pipeline sabotage. Help me understand this role of the US, in terms of their relationship with these groups, as they, [let’s be fair] prostitute themselves to the United States at their own expense.

Well yeah, that’s a very good question. It’s a question that I’ve been wondering for the past, well, many, many years, but especially over the past two years. What we’ve seen in Europe has been astonishing. Really the complete vassalization of Europe to its subordination to America’s geopolitical strategy and interests, is nothing short of suicidal.

You know, when it comes to Ukraine, there’s a case to be made for the fact that in the short term, at least, America is benefiting, in many ways, from this conflict. A conflict that, in my opinion, the US deliberately stoked. That’s my reading of the entire history leading up to Russia’s invasion.

It is that America deliberately wanted a war in Ukraine, it wanted to destabilize Ukraine, hoping to get Russia to invade, in order to create the situation that we have seen unfolding over the past two years. Because it knew that it had a lot to benefit from that, at least in the short term. Geopolitical implications will be a disaster for America too.

But this has to do with the short sightedness of the US imperial machinery and its various appendages.

In the short term, there’s no doubt that America has benefited from this conflict, in economic terms, by selling its own liquefied natural gas to Europe in place of Russian gas, at much higher prices than what Europe was paying for Russian gas. It’s benefited, in military terms, in a sense of boosting its own military-industrial complex, you know, one of the main aims of any war fought by America.

But it’s also succeeded in essentially revamping NATO. People were starting to question reasons for its existence. It revived NATO up from the ashes, allowing the US to reestablish this military hegemony over Europe, to the extent that NATO is not an alliance among equals, it’s a tool that the US has always used to control Europe.

And of course, this has geopolitical ramifications, and that is that America, thanks to this conflict, has unquestionably reasserted its dominance over Europe. I think this was at the cost of weakening Europe economically, politically, geopolitically — this was an explicit aim of this war, in my opinion.

It’s been “mission accomplished” in that respect. It’s been an incredibly successful plan in, that respect. And I think this has to do with the fact that US geostrategists and military planners, they understand that America’s hegemony is weakening at the global level. This is why they’re stoking all these conflicts, pretty much, on every continent on the planet.

It’s a way of slowing down this geopolitical transition that they understand is inevitable, to some extent. They’re trying to slow it down, they may hope of stopping it, but they realize that it’s happening. And in this context, reestablishing your control over the vassals is absolutely fundamental. America’s control over much of the world, it’s not just soft power, but even it’s hard economic, financial, and military ability to impose its will upon most of humanity.

Which has been the case throughout most of the post war era, is a thing of the past. America essentially exerts that kind of hard influence, only over its client states. So essentially, Europe, the European Union more specifically, and a few countries in Asia, New Zealand, Australia, South Korea, Japan. That’s pretty much it.

This is what the American empire has reduced to. And in this context, reestablishing your utmost control and dominance over the subordinate states is absolutely fundamental. And that has been achieved when it comes to Europe. So, a success for America.

Why did European countries go along with a plan, that clearly goes against Europe’s interests in every respect? Again, it’s been disastrous in strictly economic terms, decoupling Europe from Russian gas to some extent. Not entirely, because we can’t afford to do that. So that’s one of the paradoxes of this war — while we’re, essentially, pushing toward or inching towards nuclear war with Russia, we’re continuing to buy gas from Russia, because we know that we can’t entirely decouple from Russian gas for now.

But nonetheless, the beginning of this decoupling has had disastrous effects on Europe. It’s sent energy prices through the roof, resulting in millions of people falling into poverty. The continent’s manufacturing and industry base, being very severely affected. In strictly economic terms, this war has been an absolute disaster. And again, not just for ordinary working class people, although they were obviously the most affected, as is always the case in every war.

But also industry, look at Germany. You mentioned Germany, the country that’s been probably most affected by this war is also one of the countries that’s most gung ho about, now, waging all out war on Russia. How do you explain that? But Italy, my country, has been also very negatively affected.

All countries have been terribly affected by this conflict, in economic terms, and in geopolitical terms. I mean, Europe was already a geopolitical midget before this conflict. It was already living in the shadow of the United States and very much, kind of, shadowing America’s policies and America’s strategy. But over the years, as we saw during the Iraq war, there were attempts by European countries to develop a more, slightly autonomous position.

So, it’s like a different position from America’s. When it comes to Ukraine, we’ve seen a complete subordination of Europe to the US, pursued strategy through NATO. Again, a US controlled organization. So, even in geopolitical terms, it’s been a disaster. You could say the same about Gaza. Europe’s [the EU’s] stance on Gaza has been just as disgusting as America’s position on Gaza.

So, almost unconditional, diplomatic, political, military support, economic support for Israel and its genocide, including by providing weapons to Israel. Germany is the second provider of weapons, after the US, to Israel. And of course, this has had tremendous impact in the global South, which already didn’t have a very good opinion of Europe, [for obvious historical reasons] but now, is really shunning Europe in a very deep, profound way, which will have massive implications for the future.

And so why? And, that’s the million dollar question… ‘Why did European elites, go along with this?’ And we could spend hours talking about that. I think very briefly, there are historical reasons. European elites have always been very tightly controlled by America. America has been very effective at building its cultural, its economic, its political influence, over Europe since the post war period, including through outright military control. Let’s not forget.

Again, we speak of America as an ally, but America is also a country that’s been occupying a number of countries in Europe since the second World War, primarily Germany and Italy, the losers of that war. Which, right after the war, signed secret bilateral agreements with America, which is still classified to this day. But we can imagine what’s written in there. So, this has never been a relation between equals.

And so, America has been very good at creating a European elite that automatically thinks in transatlantic terms. And so, you’ve got soft power, the way that America influences Europe through its English language media, which most people- especially in Brussels- rely on, rather than on their national media, rather than French, German or Dutch media or whatever. Through very influential, very well endowed transatlantic think tanks, that have a very big influence on European policymakers.

They’ve developed, of course, very, very deep ties with the European deep states, through building linkages between the American kind of national security establishment, and the various European national security and intelligence establishments. American business, of course, is very, very, powerful in Europe. We completely depend on your big tech.

So, there are a number of reasons why the European elites have developed this vassalized mindset over the years. Of course, over the past two years, we’ve seen that on steroids. Partly that has to do with, I think, a very clear message that the US sent to its “allies” at the start of the war, with the bombing of the Nord Stream gas pipeline.

It’s a very important pipeline that Germany spent years developing, bringing gas from Russia to Germany. We know that that pipeline was bombed in September of 2022, so a few months after the beginning of the Russian invasion. All the evidence points to the US having had an indirect, or a direct, role in the bombing of that pipeline. Even though initially, everyone pointed the finger at Russia.

Russia had absolutely no reason to do it, and now that’s been acknowledged, even by the investigators that have been looking into this. But the truth is that everyone knows [in Europe] that America had something to do with it. Which is why the whole thing has been put to silence. it’s as if it’s never happened. There’s been a conspiracy of science in the media. The rule is you don’t talk about Nord Stream.

The official investigations, there were three of them- a Swedish, a Danish and a German investigation- the Swedish and Danish investigation have already been wound up, without them revealing anything about what they found. So again, you wonder why, you wonder what they found during this investigation. So, I think it’s quite clear that the US played a role in this. And I think that was a message to its European allies: Look, we’re not, fucking around anymore. we’re not messing around anymore. You got to get on board with us. Otherwise, you’re going to see the wrong end of US imperial power.

I think that definitely played a role in getting the German elites in line. But in getting everyone else in line as well. So again, you know many, many reasons why Europe is doing this to itself. I would add just one last factor, which is the role of the European Union itself, and this relates to what I was saying, earlier. Among kind of Europhiles, especially progressive left wing Europhiles there’s always been this narrative of, yeah, the European Union might have some problems, but ultimately it’s what we need to develop a counterbalance to American power.

And so the European Union will help us become more independent from America. This has always been a big selling point of progressive Europhilia. But in fact, that was always an illusion. There’s a reason that the US actively supported the creation of these supranational structures, because it knew that it had an interest in creating a kind of central “government.” Because of course, we know the European union is not an actual state.

But let’s say creating a “unaccountable to the people, government“, at the European level, but accountable to the masters in Washington. And I think this has been particularly apparent over the past 5 years during the presidency of [Ursula] von der Leyen, who’s been dubbed the European American president, because of the extent to which she has gone to bring Europe in line with whatever happens to be America’s geopolitical strategy. You know, in Ukraine, vis a vis China, now in Gaza.

And so, what we see is that the European Union has played a pivotal role in aligning Europe. So, far from being this institution that was going to give us independence from America, it’s been, in fact, used as a way to keep Europe subordinated to America’s overarching strategy. And relating to what I was saying earlier, I was mentioning the way in which the EU supranational structures have always used their power to impose, a certain economic agenda on countries.

What we’re seeing now, because of this, essentially blending between the EU and NATO, or what we’re witnessing is effectively the NATO-ization of the European Union— what we have is a situation that’s even more dangerous because it’s one where now, the European Union can use its tools of financial monetary blackmail, not just to keep government in line when it comes to economic policy, but also to keep them in line when it comes to foreign policy.

We’ve seen this, again, I mentioned France earlier, one of the things that the Euro elites don’t like about Le Pen, isn’t just because she’s “far right”, it is because she has a much more cautious approach to the Ukraine issues. So, we can imagine that if she were ever to get into power, they would use those tools of financial monetary blackmail, not just to keep her in line when it comes to economic policy, but also to keep her in line when it comes to Ukraine.

Either you keep supporting the NATO strategy in Ukraine, or you are going to pay the consequences. And of course, they did the same with Giorgia Meloni’s government in Italy. This supposedly, far right fascist that was going to plunge Italy back into a fascist dystopia— in fact, what we’ve seen is Meloni, essentially, aligning herself on all the major economic and foreign policy issues with the EU and NATO.

And that’s because the European Union, ‘holds her by her hair’, put it that way. And so, we’re seeing the European Union evolving into an even more dangerous and frightening organization than it used to be, because now it can use those tools to essentially ensure the governments peddle America’s crazy geopolitical strategy, not just in Ukraine, but elsewhere as well.

So, let’s take a look. Let’s pivot slightly here back to US hegemony through the petrodollar. And obviously this is everybody that doesn’t follow MMT, and everybody that doesn’t really pay attention to the way that a currency issuing nation operates. They believe suddenly, somehow or another that this will represent the collapse of the US economy. That it will be no more. That the petrodollar is all that keeps the US dollar operational.

And quite frankly, Japan doesn’t have a petrodollar. Australia doesn’t have a petrodollar. The UK doesn’t have a petrodollar and they all operate in the way that they operate. The petrodollar is a numeraire, but it does give privilege. It does extend empire out, by folks having to get ahold of US dollar assets to make payments and so forth. So this is a privileged position for sure.

But it is oftentimes to the Left and other’s chagrin, it rarely ever transpires that these horrible boogeymen happen to the US. I think there’s a lot of hope in the BRICS. And I see the BRICS as a great alternative. Allowing other countries a way of slipping away from the SWIFT system. To allow them more autonomy and freedom. But I do believe the demise was greatly exaggerated, even though, it certainly changes the geopolitical framework.

There’re still nine hundred military bases around the world. There’s still incredible power, not necessarily for the good. I mean, the idea of the shining light on the hill needs to be disposed of quickly. I know that there was a bunch of jumping around. All the end of the petrodollar – they didn’t renew the blah, blah, blah. And people were running around like they had just won the Super Bowl or, you know, World Cup.

This is just bad economic takes from well meaning people, perhaps. What are your thoughts on the petrodollar? Where we stand today?

[00:42:09] Thomas Fazi: Yeah, so I had to play the role of the party pooper a couple of days ago. Essentially, debunking this story. So the story that was going around on social media was that Saudi Arabia had refused to extend this petrodollar agreement that was, effectively, you know, wasn’t whether it was a formal agreement or not. That, clearly, was some kind of agreement that was reached in 1974 between America and Saudi Arabia.

But the story was going around was that this was a formal agreement with the 50 year old duration, and that once that agreement expired on June 9th Saudi Arabia refused to extend that agreement. And that is simply not true. There’s no evidence that this agreement ever had a fifty year duration. And neither is any evidence that the Saudi Arabia has refused to extend this agreement that didn’t expire in the first place.

Probably because it wasn’t an actual formal kind of contract. It was likely more of an informal agreement where essentially, Saudi Arabia accepted to price its oil in dollars and then recycled the dollars that it received for its oil sales, i. e. the petrodollars, into the US in the form of purchases of US deposits and, especially, US treasuries. And the US in exchange would provide military support for Saudi Arabia.

And this, obviously, combined with the fact that, because oil was priced in dollars and that meant that everyone else had to purchase dollars beforehand in order to buy oil. That bestowed upon the United States what some have called this exorbitant privilege of essentially having the privilege not having to acquire foreign currency to buy oil, or any other kind of import, because it could simply print dollars and then buy oil or whatever it needed on the global level.

And, importantly, this is something that, technically, any country that issues its currency can do. But of course, you know if you do that in the long run there is, of course, a risk of, you know, your currency depreciates as you’re constantly creating new money and running these extended deficits. What this system allowed the US to do was to avoid seeing its currency depreciate precisely because the global demand for dollars, which effectively became the world’s reserve currency, kept the currency’s value up. So this is kind of the petrodollar story in a nutshell.

And it has played an important role, for sure, in supporting America’s post war global empire. And even, I would say, in supporting this regime of petrol war. We know that the US war machine requires ridiculous quantities of energy. Ridiculous quantities of oil, especially. The US Army, alone, consumes more oil than many countries around the world. And so, for the US being able to help itself to oil essentially “for free,” quote, unquote, was a huge benefit.

And so, yes, that system, even though this, story that was put out on social media is fake news, there’s no doubt that the petrodollar system has been unwinding for several years now. We are witnessing a slow but sure movement towards de-dollarization. That is, a shift away from the US dollar as the kind of, almost quasi-monopolistic currency used in international transactions towards other currencies. And it’s something that has to do with, of course, the rise of new centers of power, first and foremost, China.

But it also has to do with the way the US has been increasingly weaponizing, not just the dollar, but more in general, the Western US-led International financial system, to its own advantage. Essentially, imposing sanctions. And in the case of Russia, for example, even freezing Russia’s foreign exchange reserves. So what we’re witnessing is this weaponization of the financial system by the US and the West, more in general.

And this, of course, is giving a strong incentive to other countries to move towards these other currencies. Because they realized that now, what’s happened to Russia, it happened to other countries in the past. And it could, it could happen to them one day. And of course, the countries that are considered America’s enemies are the ones that are most interested in creating an alternative system. But any country could end up in the crosshairs of America simply because, whatever.

They don’t have to be outright enemies of the US. They simply have to be countries that happen to be pursuing policies that are not in the contingent interest of the US, at any point in time. The US, especially now, won’t think twice about slapping sanctions and weaponizing the financial system against those countries. And so what we are witnessing is effectively a slow movement towards de-dollarization. It won’t happen overnight, as some people were expecting.

Some people were hoping that this alleged non renewal by Saudi Arabia would have, you know, immediately crashed the dollar’s role as a reserve currency. That’s not going to happen. I mean, unless there is some massive geopolitical military earthquake which, of course, hasten things along. But, for the time being, it’s happening. The dollar’s role as a reserve currency is slowly weakening for not just economic reasons, but for geopolitical reasons, as well.

And I think this is one of the reasons why the US is so adamant. I think about stoking violence and chaos around the world, because it is a way to slow this process. Then again, the US is also better positioned to resist this process of de-dollarization at the moment. Because, for example, if we take oil and energy more in general, the US today is in a very different position than it was 20 years ago when it was heavily reliant on imports especially from the Persian Gulf, imports of oil.

Now, the US is close to being energy independent as a result of progress in fracking. And so it is less reliant on imports of oil than it used to be. But it does still run a and again, all these wars that it’s directly or indirectly active in or supporting still require a lot of energy. And so, into the long term this is just one of the epiphenomena of the global decline in the American post war imperial system that is declining, I think, at a much faster pace.

So, aside from de-dollarization itself, there’s no doubt that this global geopolitical shift in power away from the West towards, the rest, you could say. Towards the BRICS. But more in general towards what we used to call the global South, and what many people today call the global majority, is happening at a very fast pace. It’s been, turbo charged by Ukraine and now by Gaza. Most of the world is simply disgusted at what the West is doing around the world.

And so they’ve realized that the current institutions, not just the financial institutions, but more in general, the international governance system from the UN down, is probably non reformable because of the extent of Western control over these institutions, which the West, you know, happened to create. And so they’re moving as fast as they can towards the creation of alternative systems of international governance. Alternative systems of political but also financial governance.

I think Westerners often really overemphasize just how important they are. I mean, the West still holds a lot of power, especially in military terms, especially when it comes to the US. But in global terms there’s about a billion people that live in the so called West out of 8 billion people on the planet. And most of those 7 billion people live in countries not willing to submit to Western hegemony anymore, in quite an explicit way. And, of course, most of the people that live in those countries, themselves, are even more strongly opposed to Western hegemony.

So this is an inevitable process. And again, it needn’t have to be a violent process. What we’re talking about is essentially accepting that we’re not the sole rulers in the world and that we could simply accept being a normal country just trying to coexist on this very small planet that we live on.

You would think that, that it’s not rocket science, you know, that that’s in everyone’s interest. It’s clean. obviously our elites, I think most people in the West would be happy to, you know, see this process unfold. And, there are studies and polls that show that, you know, most people in the West don’t support this strategy of permanent war; of ramping up conflicts around the world; of trying to keep everyone else down at at all costs. But, unfortunately, we are ruled by a rather, I would say, psychologically deranged elite that is not ready to accept that. Because they understand that their own power as Western oligarchies largely derives from this system. So, when you take the American global empire, millions of Americans that live in atrocious conditions. It’s not like everyone in the West is living in luxury. You could argue, for example, that, you know, take the petrodollar system, a system where the US has been able to, uh, rely on imports and destroy its own industry. That hasn’t benefitted ordinary Americans. It’s benefited Wall Street. It’s benefited the military industrial complex. It’s benefited the American oligarchs. And you could say the same about what’s happening in Europe. You know, Western hegemony for them is what they have used to acquire this immense wealth and power. And that’s what they’re afraid of losing. And it would appear that in order to, uh, stop this transition from happening, they would appear to be willing to, destroy the entire planet in the process, if that’s what it takes. And it’s a pretty terrifying prospect.

But this is where we’re at. And I think, on an even deeper psychological level, what we’re witnessing isn’t just the end of America’s post war hegemony. It’s the end of the West’s 500 year long hegemony. So you know, clearly, this has very deep psychological implications. So we just have to hope that we managed to survive this transitionary period without our deranged elites killing us all in the process.

[00:52:13] Steven Grumbine: I got two more topics I want to touch with you before we go. And I appreciate how much time you’ve given me so far. It’s just amazing.

So, Ukraine is having to do what every other country under the IMF has had to do. And that is starting to privatize. And sure enough, they’re selling off state assets to try to fund the war machine. They’re already deeply in bed with the IMF. Just quickly, your thoughts on the destruction of Ukraine and pursuit of US interests.

[00:52:44] Thomas Fazi: It’s really quite baffling for me to see the extent to which Ukrainians, themselves, Western Ukrainians, seem to struggle to understand the fact that the West is not Ukraine’s friend. I mean, to me, that is very clear. Ukraine, as a kind of, quote unquote, “neutral state” in between the West and the East could have thrived.

And the West has really gone out of its way to just tip that balance by essentially forcing Ukraine to choose between the West and Russia. Even going as far as provoking, I would say masterminding, a coup in 2014. That is what kicked off the civil war, and is ultimately what led to Russia’s 2022 invasion.

It has clearly used Ukraine for the pursuit of its own geopolitical, geostrategic, and economic interests. Going as far as even trying to prevent a peace deal between Russia and Ukraine being signed just weeks into the war. And so it seems to have no qualms whatsoever about really seeing Ukraine being destroyed. Seeing hundreds of thousands, likely of Ukrainians, already killed in this war. It seems to want this war to go on for as long as it can. Because, as I said, at least from America’s standpoint, it’s in their interest to do so.

But clearly, we are not helping Ukraine in any way. From my perspective, the West has essentially colonized Ukraine and is using Ukraine as a geopolitical pawn. As a military pawn in the pursuit of various geopolitical objectives. And that even goes as far as essentially taking over the Ukrainian economy, which is an economy that has a lot of potential.

Ukraine is one of the world’s agricultural powers. It’s one of the greatest producers of grain. It’s got huge tracks of agricultural land, which have massive value. A lot of this land is slowly being bought up by the usual suspects when it comes to the big players in the Western financial industry; BlackRock, Vanguard and so on. They’ve had conferences essentially dividing post war Ukraine among themselves and Ukraine’s economy apart among themselves.

And now they are also accelerating this process by essentially forcing Ukraine to sell off much of its assets, which Western financial interests can now scoop up at fire sale prices. Some of the prices that these assets we’re talking about, you know, land, we’re talking about real estate, talking about industry. Some of the prices that these assets have been sold off for are just ridiculous.

I mean, you can imagine how underpriced these assets are given the complete uncertainty that surrounds the future of Ukraine. I mean, they’re having to sell something that could be destroyed the next day. So, these assets have been sold off at ridiculous prices. All to the benefit of the Western financial oligarchy, which will end up essentially controlling all of Ukraine’s economy; even if this war ends tomorrow.

So what we’ve witnessed is essentially, yes, the Western colonization of Western Ukraine. Essentially, economic colonization of Western Ukraine. I think it’s utterly tragic. And that pretty much sums it up. I think that this latest wave of privatizations is just another step in that direction.

[00:56:14] Steven Grumbine: You’ve been wonderful. man. First of all, I enjoy your Substack very much. I enjoy your writings in UnHerd. Tell folks where they can find more of your work.

[00:56:24] Thomas Fazi: Yeah, they can follow me on Substack, at thomasfazi. com. And, I’m a regular contributor to UnHerd and to the American magazine Compact. So yeah, but if you follow my Substack, you’ll be up to date on the stuff I write, all over the place. So, uh, yeah, just, sign up.

[00:56:43] Steven Grumbine: Very good. All right, folks. Listen, thank you so much, Thomas, for joining me today. This is a tough one, folks. I mean, whenever you are taking on some of your heroes’ positions and maybe taking a different position, that takes some courage. So I just want to applaud Thomas.

And quite frankly, just want to say, hey, it’s okay to question and it’s important to question because things are happening in front of us that aren’t just about ledgers. There’s geopolitical things that are going on that impact your daily life. So for myself and my guest, Thomas Fazi, for the podcast, Macro N Cheese, we are out of here.