Latest / FDD Morning Brief / Hezbollah's West Africa money trail | feat. Daniel Swift

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Hezbollah's West Africa money trail | feat. Daniel Swift · FDD Morning Brief

0:12
[SPEAKER_00]: Good morning.
0:13
[SPEAKER_00]: Hope everybody had a relaxing weekend.
0:15
[SPEAKER_00]: It's Monday, May 18th, the multi-front war in the Middle East is now 954 days old.
0:21
[SPEAKER_00]: I'm your host, Jonathan Chanzer.
0:22
[SPEAKER_00]: Welcome back to the FDD Morning Brief.
0:25
[SPEAKER_00]: Well, it looks like we might be back to war.
0:28
[SPEAKER_00]: Though latest response from the Islamic Republic to President Donald Trump was apparently not to the president's liking, diplomacy seems to have run its course.
0:36
[SPEAKER_00]: Trump spoke to Israeli Prime Minister BB Netsen.
0:41
[SPEAKER_00]: patiently or maybe impatiently for this diplomacy thing to either happen or not happen, baby wants to bomb more, not for the sake of it, but in pursuit of bringing down the Islamic Republic, because that's Israel's strategic goal here.
0:56
[SPEAKER_00]: It's not America's stated goal, at least not officially, but who knows?
1:01
[SPEAKER_00]: The president is grumpy and for good reason.
1:04
[SPEAKER_00]: Now for some ridiculous news out of the West Bank, Yasser Abbas, the 64-year-old multi-million-air son of Mahmoud Abbas, has been named to the Fata Central Committee.
1:15
[SPEAKER_00]: This is the highest decision-making body of the Fata Party, which is basically the only political party in the Palestinian Authority, because
1:22
[SPEAKER_00]: The corrupt government there doesn't really allow for any meaningful opposition.
1:26
[SPEAKER_00]: PA president Mahmoud Abbas is 90 years old.
1:29
[SPEAKER_00]: He's now serving his 21st year of a four-year term.
1:33
[SPEAKER_00]: So the Alta Cocker's political corruption here is undeniable.
1:38
[SPEAKER_00]: But installing is million
1:39
[SPEAKER_00]: his millionaire son to the committee of figures that could replace him.
1:43
[SPEAKER_00]: Well, that's brazen.
1:44
[SPEAKER_00]: Back in 2012, I testified before Congress about Yasser and his brother Tarak detailing their immense financial holdings.
1:52
[SPEAKER_00]: I wrote about it for foreign policy too.
1:54
[SPEAKER_00]: And Yasser didn't like it.
1:55
[SPEAKER_00]: So the guy sued me for 20 million bucks in the complaint, he said I was asking libel as questions.
2:02
[SPEAKER_00]: Somebody needs to get that guy a copy of the Constitution.
2:05
[SPEAKER_00]: But now that Yasser is a political big way, it's time to ask more questions.
2:09
[SPEAKER_00]: Namely, how did he get so wealthy while the average Palestinian struggles?
2:13
[SPEAKER_00]: This is not about Israel folks.
2:15
[SPEAKER_00]: If the Palestinians are ever to achieve independence, the government needs to take care of its people and the leaders need to lead.
2:22
[SPEAKER_00]: Instead, we're watching blatant nepotism and the distribution of wealth in ways that only foment more anger.
2:28
[SPEAKER_00]: The Palestinians always blame Israel for their troubles, but it's time to take a closer look at their leaders something's got to give.
2:36
[SPEAKER_00]: Now for your headlines, headline one, Iranian drone attacks launched by Iraqi proxies continue to plague the United Arab Emirates and the Kingdom of Saudi Arabia, one hit a generator on the campus of an Emirati nuclear facility on Saturday.
2:51
[SPEAKER_00]: The Saudis apparently offended off three drones yesterday.
2:55
[SPEAKER_00]: I've said it before and I'll say it again, neither countries particularly known for fighting wars, but they are getting in their reps, both defense and offense according to recent reports.
3:04
[SPEAKER_00]: The attacks on these countries are just as outrageous as the attacks on Israel.
3:09
[SPEAKER_00]: They're on the same side of this war, these countries, the same side as the United States.
3:13
[SPEAKER_00]: We should all remember that.
3:15
[SPEAKER_00]: Incidentally, social day.
3:17
[SPEAKER_00]: The UA seems to understand the Saudis.
3:20
[SPEAKER_00]: I still think they're on the fence and I don't like it.
3:22
[SPEAKER_00]: headline two, remember the yellow zone in Gaza, you know, the territory that Israel controls and that surrounds the area that is still manned by Hamas.
3:31
[SPEAKER_00]: Looks like Israel is slowly gaining ground on the terror group.
3:35
[SPEAKER_00]: Last we checked in, Israel controlled 53% of the coastal armclaves and Hamas controlled 47 over the weekend.
3:43
[SPEAKER_00]: Prime Minister BB Netanyahu provided a territorial update
3:51
[SPEAKER_00]: That's an increase of 7% for those who may be mass challenged like your humble host.
3:56
[SPEAKER_00]: We can expect these rallies to continue to take more ground, so long as Hamas refuses to surrender.
4:02
[SPEAKER_00]: For those with purple hair, decrying the purported injustice of this oncology campuses, well, you might just advise Hamas to wave the white flag, as long as Hamas continues to fight, Israel has every right to fight back and to deprive the group of its safe haven in Gaza.
4:19
[SPEAKER_00]: headline three, the outrage continues over Nicholas Kristoff's column in the New York Times, accusing Israel of training dogs to rape Palestinians in jail.
4:29
[SPEAKER_00]: The peace drop last week and I decided not to weigh in because I didn't think it deserved a response, but the story continues to swirl in the headlines, mostly because of the acidity of it all.
4:40
[SPEAKER_00]: new information is coming out about Christophe family history, which doesn't seem to be particularly flattering to him.
4:46
[SPEAKER_00]: Bottom line, the guy is a Pulitzer Prize-winning journalist, but I'd like to formally nominate him for a Durante Prize.
4:53
[SPEAKER_00]: That's the one recognizing dishonest reporting named after Walter Durante in the New York Times Moscow correspondent who in the 1930s famously and shamelessly white-wash
5:10
[SPEAKER_00]: headline four, get ready for more anti-Israel, in fact, if worldwide the Israeli government just passed a death penalty law for West Bank Palestinians convicted of murder.
5:20
[SPEAKER_00]: Opponents will point out that Israeli convicted of murder have no such law to contend with.
5:25
[SPEAKER_00]: But here's the part where I remind you that the Israelis have hundreds of murderers in their jails and they if yet to figure out a way to deter these murderers attacks, perhaps the threat of
5:37
[SPEAKER_00]: But then again, folks, just brace yourself for another political firestorm as if Israel needs one.
5:44
[SPEAKER_00]: And headline five, some late breaking news.
5:46
[SPEAKER_00]: The Israeli Navy has once again intercepted a flotilla.
5:50
[SPEAKER_00]: This time, the interception is off the coast of Cyprus and the Turks who've been sponsoring these things for more than 15 years now are once again crying foul.
5:58
[SPEAKER_00]: In fact, the government is accusing the Israelis of piracy.
6:02
[SPEAKER_00]: Our committee, keep your papers peeled for more acrimony between Ankara and Jerusalem.
6:08
[SPEAKER_00]: The war of words continues and I'm worried that this could lead to unwanted conflict between Turkey and Israel.
6:15
[SPEAKER_00]: That's a serious concern, folks, as things continue to heat up across the Middle East.
6:20
[SPEAKER_00]: All right, it's time for the interview.
6:22
[SPEAKER_00]: Today's guest is Dan Swift, a senior research analyst at our Center on Economic and Financial Power here at FDD.
6:29
[SPEAKER_00]: He served as a U.S. diplomat in Washington, Jordan, Burma, Ethiopia, South Africa, and the list goes on.
6:35
[SPEAKER_00]: In these roles, he worked closely with USAID's office of the chief economist because, well, Dan is a talented economist.
6:42
[SPEAKER_00]: before joining FDD Dan Led Prosper Africa, 17 agency, presidential level, national security initiative to increase two-way trade investment between the US and Africa.
6:53
[SPEAKER_00]: I could go on, but I won't.
6:55
[SPEAKER_00]: So let's get down to business.
6:56
[SPEAKER_00]: Let's welcome Dan Swift on to the show.
7:02
[SPEAKER_00]: Welcome to the FTD Morning Brief Dance Wifft.
7:05
[SPEAKER_00]: Morning John, thanks for hosting me today.
7:07
[SPEAKER_00]: Oh, it's a great pleasure.
7:08
[SPEAKER_00]: Glad to have you on.
7:10
[SPEAKER_00]: All right, I want to start with some questions relevant to the current multi-front war in the Middle East, no surprise there.
7:16
[SPEAKER_00]: You and some of our other colleagues at FTD have done some great work looking at the Iranian economy under the pressure of economic fury.
7:23
[SPEAKER_00]: You created an economic model, in fact.
7:25
[SPEAKER_00]: So tell us about it.
7:27
[SPEAKER_01]: Yeah, thanks, John.
7:28
[SPEAKER_01]: So what we did is to our knowledge, the first systematic model based estimate of economic damages in Iran.
7:35
[SPEAKER_01]: And why that's important, I think you spoke to it in your header is that we've transferred in phases of this conflict from a more kinetic conflict to now a really economic conflict where economics is used as leverage to try to get to a place at the bargaining table that protects US national security interests.
7:55
[SPEAKER_01]: Well, I don't pretend to know what the future holds.
7:59
[SPEAKER_01]: Understanding what the economic damages of Iran is certainly seems relevant in that context.
8:05
[SPEAKER_01]: So two big takeaways from this entire exercise.
8:09
[SPEAKER_01]: The first is, and I don't think either of these are going to be a surprise to you, John, but the first is that the US did a lot of damage to Iran.
8:18
[SPEAKER_01]: And I think that sometimes gets lost in the overall narrative about where we are in the negotiating posture
8:25
[SPEAKER_01]: But our midpoint estimate is that the U.S. did about $144 billion of damage, that's about 40% of Iran's pre-war economy, and at the higher end, our estimates are roughly double that.
8:39
[SPEAKER_01]: The other big lesson, and again, I don't think this will surprise you, John, is that estimating damages in Iran is really, really, really difficult.
8:47
[SPEAKER_01]: Even at the best of times, Iran is not an open economic book, it's got a large informal economy about 30% of its GDP is off-book, and you know it's set up to obscure financial flows moving in and out of the country because of the US sanctions regime.
9:03
[SPEAKER_01]: So a very difficult exercise, but to compensate for that, we try to be very conservative with our estimates.
9:10
[SPEAKER_01]: So I want to place that in context when you hear those top line numbers.
9:13
[SPEAKER_00]: So you're saying that it runs not transparent.
9:17
[SPEAKER_00]: I mean, I'm shocked for one.
9:18
[SPEAKER_00]: Hey, they're not like settling up with Ernstin Young and just putting it all out there.
9:24
[SPEAKER_00]: I mean, it's shocking to me.
9:26
[SPEAKER_01]: I know, I know.
9:28
[SPEAKER_01]: It's tough for me economics perspective, right?
9:31
[SPEAKER_01]: Just talking technically is that usually in most places, you'd have a pretty robust national economic system and model to start with and we didn't.
9:38
[SPEAKER_01]: So when we did this, we did have to exclude a lot.
9:41
[SPEAKER_01]: I want to make sure this is in context when we talk about these top line numbers.
9:45
[SPEAKER_01]: We just can't generate meaningful or credible estimates for things like human capital, losses.
9:51
[SPEAKER_01]: There's even like macroeconomic,
9:53
[SPEAKER_01]: changes that we can't really account for.
9:55
[SPEAKER_01]: Before the conflict started, Iran was running about 50% inflation.
10:00
[SPEAKER_01]: It's very likely that inflation is running hotter now, that it's difficult moving goods in and out of the country.
10:07
[SPEAKER_01]: The blockade isn't specifically blocking things like food, but it is another kind of node in a supply chain of food moving into the country.
10:16
[SPEAKER_01]: And the internet blockouts and things like that have really affected the informal kind of
10:23
[SPEAKER_01]: And that's going to create pressure on Iranian consumers, on their people that will manifest in second and third order kind of impacts that they were very difficult to quantify at this point, sitting in Washington DC.
10:37
[SPEAKER_00]: I got to say, the fact that the internet's been downed out for like 80 days, you tell me that the economy's functioning when the internet doesn't, I mean, come on, this is just not.
10:48
[SPEAKER_00]: It's not.
10:48
[SPEAKER_01]: I still can't drive to my daughter's school without Google Maps.
10:53
[SPEAKER_01]: Right.
10:53
[SPEAKER_00]: Yeah, me too.
10:54
[SPEAKER_01]: Just to say that the impact are pretty different in hard to wrap your head around.
10:59
[SPEAKER_00]: Yeah.
10:59
[SPEAKER_00]: Yeah.
11:00
[SPEAKER_00]: All right.
11:00
[SPEAKER_00]: Moving on to another topic.
11:02
[SPEAKER_00]: You recently wrote about the way to choke off his ball of finance and specifically you're talking about assets in West Africa.
11:09
[SPEAKER_00]: That's not something we talk about much on this program.
11:12
[SPEAKER_00]: But it's actually kind of a tried-and-true method for his follow-up and seeing this actually for decades that they've used West Africa as a node for moving money.
11:22
[SPEAKER_00]: So tell us a little bit about that and maybe the ways that you see us having an impact.
11:28
[SPEAKER_01]: Yeah, I think this relates well to the conversation we just had, right?
11:31
[SPEAKER_01]: So you have a Hezbollah, which it's patron is Iran, which is under financial pressure.
11:37
[SPEAKER_01]: So that in turn puts pressure on Hezbollah to figure out new ways to raise revenue to kind of continue the conflict that's already engaged in, even though I know there's a tentative ceasefire.
11:48
[SPEAKER_01]: Um, so where do they look?
11:50
[SPEAKER_01]: Well, one place they're going to look is West Africa, which has long been a hub for Hezbollah financing, in particular the Lebanese diaspora.
11:58
[SPEAKER_01]: And in a recent piece I did for the National Interest, I really highlighted a few areas.
12:03
[SPEAKER_01]: So a quick of war is a place that I've been to recently.
12:06
[SPEAKER_01]: It's fascinating.
12:08
[SPEAKER_01]: It's a booming economy right now.
12:10
[SPEAKER_01]: They've done very well.
12:11
[SPEAKER_01]: While a lot of African countries have struggled because of currency devaluation associated with that, Collective War has a peg, and it's tracking massive amounts of investment.
12:22
[SPEAKER_01]: And so you're seeing a big kind of boom of economic activity, which filters through everything.
12:27
[SPEAKER_01]: And now there's a few issues there.
12:30
[SPEAKER_01]: So the first is that when the economy does well, you know, has below associated entities also do well.
12:40
[SPEAKER_01]: to mitigate those flows.
12:43
[SPEAKER_01]: And I would just add that having spent about half of my diplomatic career in Africa can tell you bandwidth constraints associated with the continent are always a concern.
12:53
[SPEAKER_01]: And many times we get ourselves in the trouble because we're just not simply paying attention to the continent because there's, let's face it, other more pressing or complicated issues emerging elsewhere.
13:03
[SPEAKER_00]: Yeah.
13:04
[SPEAKER_00]: All right.
13:04
[SPEAKER_00]: I want to probably steer back to Africa in a minute, but I also want to ask you about the delivery of US dollars to rock.
13:13
[SPEAKER_00]: This is also pretty relevant to all the conversations that we're having this morning right about Iran and his follow up.
13:20
[SPEAKER_00]: We've been delivering dollars to Iraq as part of our kind of post war arrangement.
13:26
[SPEAKER_00]: We've helped kind of keep their economy afloat with cash.
13:30
[SPEAKER_00]: But the Iran-back militias there are posing a serious challenge to this policy.
13:36
[SPEAKER_00]: So what's going on on that front?
13:39
[SPEAKER_01]: Yeah, I mean, this is a bizarre story in many ways.
13:42
[SPEAKER_01]: So this is an artifact of a US effort to protect the Iranian government, I'm sorry, the Iraqi government from lawsuits in the United States.
13:52
[SPEAKER_01]: So they established the count and the count at the Federal Reserve.
13:56
[SPEAKER_01]: And what happens is when Iraq sells oil money, that money sometimes goes into that count and it builds up and then they withdraw from it occasionally.
14:03
[SPEAKER_01]: And because of the sanctions regime, very few banks actually want to transfer that money back to Iraq.
14:10
[SPEAKER_01]: So what happens is, most of the time, it gets loaded once a quarter, physical pallets of cash are flown into Baghdad from New Jersey.
14:17
[SPEAKER_01]: It's about $400 to $500 million of cash at a time.
14:22
[SPEAKER_01]: The issue is not, I mean, I find it interesting, and Elaine Dizinski and Josh Burnbaum have done some really fascinating work on new economic
14:31
[SPEAKER_01]: state craft tools and I think this certainly fits in that category, but what's fascinating is when it gets to Iraq it enters the former banking system and it goes into the state bank Which processes payroll for things like until very recently?
14:45
[SPEAKER_01]: Iran-based militia.
14:47
[SPEAKER_01]: I ran back militia.
14:48
[SPEAKER_01]: It's like the PMF
14:50
[SPEAKER_01]: So you have basically money being sold at auction, US dollars, which then filters through the economy and ends up either through direct commercial relationships.
14:59
[SPEAKER_01]: So many of these are ran back to malicious own construction companies, they own commercial enterprises.
15:05
[SPEAKER_01]: but also frankly, just through the dollar auction system.
15:08
[SPEAKER_01]: So you have this kind of bizarre artifact ending in an outcome, which I don't think the planners of this system, anigilate initially envisioned where you have Iran back militians dealing in U.S. dollars that are flowing at U.S. government expense to Baghdad.
15:23
[SPEAKER_01]: So it's really just kind of a wild story.
15:25
[SPEAKER_00]: Yeah, I'm going to say, palliative cash to the Middle East,
15:30
[SPEAKER_01]: It's a bad track record on that one.
15:32
[SPEAKER_00]: Yeah, it does, you know, does not inspire confidence.
15:35
[SPEAKER_00]: We've seen this movie before and I don't like how it ends.
15:39
[SPEAKER_01]: So yeah, there's things that we can do when
15:44
[SPEAKER_01]: the kind of payroll for PMF has switched to another bank.
15:48
[SPEAKER_01]: And certainly this could be a potential application of three, 11 sanctions.
15:52
[SPEAKER_01]: This is under the Patriot Act, right?
15:54
[SPEAKER_01]: Designating a financial institution or jurisdiction as a primary money laundering concern.
16:00
[SPEAKER_01]: That has the advantage of starting an administrative process so that you can start negotiating, but let's face it.
16:06
[SPEAKER_01]: Iraq is a really tough place and there's always going to be this tension not wanting to push too hard on the Iraqi government because what comes next might be worse but at the same time you have just massive violence being perpetrated by these militias against I think you mentioned it at the top of the show.
16:25
[SPEAKER_01]: against allies in the Middle East.
16:28
[SPEAKER_01]: So I don't pretend to have the answer on this one, but it certainly seems like there's some mitigating steps we could take through economic statecraft and being a bit more aggressive on the application of perhaps, you know, three, 11.
16:41
[SPEAKER_01]: Yeah, measure.
16:43
[SPEAKER_00]: Something's got to give here.
16:44
[SPEAKER_00]: I mean, the idea that you got these Iraqi, you know, she eyed militias that are attacking UAE nuclear facilities and trying to attack the Saudis and their oil facilities.
16:57
[SPEAKER_00]: And we're delivering cash to Iraq that is trickling into the
17:08
[SPEAKER_00]: I think that explains the failure of an American policy or so we've got to get back to basics and figure out how to mitigate this.
17:14
[SPEAKER_00]: So I think you're absolutely right.
17:16
[SPEAKER_00]: All right, you have also been looking at the Chinese economy.
17:22
[SPEAKER_00]: And I think this is obviously relevant right now because we're seeing the sort of intertwining of the Chinese front and the questions about Taiwan and the war with
17:34
[SPEAKER_00]: Iran right now, and the way in which that war is hurting the Chinese from an energy perspective, from an economic perspective, but also it seems like the, I mean, the core numbers of the Chinese economy are not as strong as maybe we were led to believe.
17:52
[SPEAKER_00]: So tell us what's going on there.
17:54
[SPEAKER_01]: Yeah, no, great point.
17:55
[SPEAKER_01]: And I think this is important.
17:56
[SPEAKER_01]: There seems to be this narrative developing that somehow China's rise is inevitable in the U.S. isn't
18:02
[SPEAKER_01]: some type of terminal decline, and you even have, you know, President Xi referencing, you know, the Peloponnesian War and, you know, Greek philosophy during the,
18:14
[SPEAKER_01]: Uh, sorry, the 30 keys.
18:17
[SPEAKER_01]: Ah, I, the Eclipse trap, right, isn't that what he mentioned?
18:20
[SPEAKER_00]: Do you see it?
18:20
[SPEAKER_00]: He's trapped.
18:21
[SPEAKER_00]: That's right, that's what we all talk about.
18:24
[SPEAKER_00]: All the time.
18:25
[SPEAKER_00]: Yeah, yeah, I'm very strange.
18:26
[SPEAKER_00]: Pam Allison, who basically is trying to warn us away from great power competition.
18:32
[SPEAKER_00]: That's
18:32
[SPEAKER_00]: the Harvard professor who wrote this book, I don't know whatever it was 10 years ago, and he was warning that we're on this path to conflict with Beijing and that we need to get off that we need to find the off-ramp.
18:48
[SPEAKER_00]: That's basically what he's been saying.
18:50
[SPEAKER_01]: Yeah, I mean, and I think it's worth backing up for a minute, and in the long run, you know, Beijing's demography is just absolutely terrible.
18:58
[SPEAKER_01]: So their fertility rate is less than
19:02
[SPEAKER_01]: That's going to put a enormous pressure on their consumer base, on their workforce, on their social entitlements.
19:09
[SPEAKER_01]: And then you mix that in with declining capital efficiency.
19:12
[SPEAKER_01]: So what do I mean by that?
19:13
[SPEAKER_01]: So I have a recent piece in the Asia Times that talks a little bit about this incremental capital.
19:18
[SPEAKER_01]: I'll put ratio.
19:19
[SPEAKER_01]: I promise I won't repeat that again.
19:21
[SPEAKER_01]: But basically the point is, during the high growth periods in China in the early 2000s, it took about 41 or an envy their currency unit of investment to generate one.
19:31
[SPEAKER_01]: you want of economic growth.
19:33
[SPEAKER_01]: So that numbers closer to 9 or 10 today and you know, if you use numbers from other sources non official Chinese numbers, that could go up to like 17, right?
19:45
[SPEAKER_01]: So, so that means they're working harder, more and more investment, just the kind of run in place.
19:52
[SPEAKER_01]: To me, that's not the sign of an economy that is on some inevitable rise.
19:56
[SPEAKER_01]: Now, this not to say that China's economies can implode tomorrow.
19:59
[SPEAKER_01]: But it does mean that it's going to be very difficult for them to sustain their growth rates, which they've really been doing through what I call brute force state capital allocation or investment allocation.
20:11
[SPEAKER_01]: So basically they set a growth target that they magically hit every year.
20:16
[SPEAKER_01]: But, you know, they do that in part by fudging the numbers, but they also do that in part by directing their banks to send credit to certain parts of the economy that are under the strategic plan, even if they're not getting an economic return on that capital, and that's very difficult to sustain over time.
20:33
[SPEAKER_00]: All right, we're going to keep watching that because obviously tensions continue to rise.
20:38
[SPEAKER_00]: Questions continue to squirrel about the ways in which this board that some people are saying is undermining the effort to sideline the Chinese.
20:49
[SPEAKER_00]: Some are saying that it's actually having some sort of solubious effect on on China.
20:54
[SPEAKER_00]: It's a heavy way to relate to oil, right?
20:57
[SPEAKER_01]: Yeah, I mean, look, China, no question, has an interest in keeping the state of hormones open, right?
21:02
[SPEAKER_01]: They buy 90% of Iran's oil.
21:06
[SPEAKER_01]: And today, there's actually a good reporting.
21:08
[SPEAKER_01]: I believe it was in the Wall Street Journal talking about some perceived economic short-term slow down in China, and the mechanisms pretty simple.
21:15
[SPEAKER_01]: I mean, Asia itself has felt some impacts in the energy disruptions coming out of the state of hormones.
21:21
[SPEAKER_01]: And China has done a very concentrated effort to diversify its export base.
21:26
[SPEAKER_01]: Its economy has really dependent on exporting surplus stuff, or they say dumping in the trade world.
21:34
[SPEAKER_01]: So things that are producing at a loss, they dump it a very low price in the third markets.
21:38
[SPEAKER_01]: The tariffs have made it very difficult for them to do that in the United States.
21:42
[SPEAKER_01]: So they've really directed that dumping on the places like Africa, Asia,
21:45
[SPEAKER_01]: Latin America, but these are precisely the markets that are also struggling now with some energy shots.
21:51
[SPEAKER_01]: So it is kind of rebounding back on Beijing a little bit through its...
21:55
[SPEAKER_01]: it's kind of dumping relationship to third countries, which is a fascinating dynamic and probably worth following.
22:02
[SPEAKER_00]: All right, well, I know you're following it.
22:04
[SPEAKER_00]: All right, I got a couple of just, I don't know, outlier questions for you as we can just sort of round third here and start to wrap things up.
22:11
[SPEAKER_00]: You do a lot of work on Burma.
22:15
[SPEAKER_00]: I know you've served there.
22:16
[SPEAKER_00]: But, you know, we've got sanctions on there and people talk about Burma as a kind of a threat to the US-backed economy or the banking system.
22:27
[SPEAKER_00]: Why do you watch Burma?
22:29
[SPEAKER_00]: Why should we care about Burma?
22:32
[SPEAKER_01]: No, good question.
22:34
[SPEAKER_01]: And a lot of times I wonder that myself looking at a 78-year civil war, the longest in modern history, it's tough to have hoax some time.
22:42
[SPEAKER_01]: But let's back up and look where Burma is on a map
22:46
[SPEAKER_01]: It borders countries that contain about 40% of the world's population.
22:51
[SPEAKER_01]: So you have India, Bangladesh, China, Thailand,
22:58
[SPEAKER_01]: And it is a real critical geopolitical or geographic choke point on the globe, you know, China, I feel like we've been talking about straight nonstop over the last month.
23:10
[SPEAKER_01]: But let's talk about the straight of Malaka.
23:12
[SPEAKER_01]: This is one of the choke points for Chinese oil.
23:15
[SPEAKER_01]: China has been trying like crazy to put in more and more infrastructure through Myanmar or
23:20
[SPEAKER_01]: as it's also known Burma, to be able to bypass that straight, and it's really struggled in many ways because it's deeply unpopular in that country.
23:29
[SPEAKER_01]: Overwhelmingly, the people of Burma want a democratically elected government.
23:34
[SPEAKER_01]: They want a government that isn't in bed with the Chinese, that isn't taking orders from Beijing.
23:39
[SPEAKER_01]: And you know, there's by last count 16 to 17 large ethnic armed organizations that are holding, you know, pretty much 40 to 50% of the country depending on
23:49
[SPEAKER_01]: And the politics of those interactions with both the Chinese and the Myanmar Huita are absolutely fascinating and I'm a little more sanguine today than I was in a long time you have some parts and this is again an article I wrote in the age of times some parts of the resistance movement are starting to come together they formed a new entity you have three very powerful ethnic arm groups in Burma that are starting to coordinate a bit better.
24:14
[SPEAKER_01]: And so, and even to the point where the one of them, the Arakhan Army, who is no group of boy scouts, but they managed to essentially surround the Chinese port infrastructure at Chalpue.
24:26
[SPEAKER_01]: So, to me, it's a good demonstration that these organizations, if they're grounded in local community support and they're fairly capable, they're even, they're even have the ability to overcome Chinese pressure.
24:38
[SPEAKER_00]: to protect key infrastructure because it's a possible tool to counter the Chinese essentially.
24:45
[SPEAKER_00]: That's right.
24:45
[SPEAKER_00]: That's right.
24:46
[SPEAKER_00]: I'm right there.
24:48
[SPEAKER_00]: Yeah.
24:49
[SPEAKER_00]: And this one is an important part of Burma.
24:52
[SPEAKER_00]: You got these sold.
24:53
[SPEAKER_00]: I mean, this is not the sort of normal thing that I would track.
24:56
[SPEAKER_00]: But, you know, I think good for us to be aware.
25:00
[SPEAKER_00]: I got one last question for you.
25:02
[SPEAKER_00]: I know you've done a lot of work in Africa.
25:05
[SPEAKER_00]: And I know that's a big place.
25:07
[SPEAKER_00]: So I don't have to go sort of state by state.
25:10
[SPEAKER_00]: But I'm getting the sense right now that between kind of rare earths and, let's just say military outposts of certain regional players in the Middle East.
25:23
[SPEAKER_00]: There's a lot of happening.
25:25
[SPEAKER_00]: You mentioned West Africa is a hub for his ball of finance.
25:29
[SPEAKER_00]: South Africa's been in the news a lot.
25:31
[SPEAKER_00]: I mean, what's the overall takeaway of the trajectory of this kind of troubled continent?
25:38
[SPEAKER_00]: I mean, are we, is this a new battleground for the United States?
25:42
[SPEAKER_00]: Do we need to be surging there, given all the economic interests that play?
25:46
[SPEAKER_00]: Or is this going to stay a back war?
25:48
[SPEAKER_01]: Like, I don't think we need to search, but I do think we need to plan.
25:52
[SPEAKER_01]: And I know people in kind of the Africa universe around Washington are securing this, but it's true.
25:58
[SPEAKER_01]: And it will be true is that by 2050, one quarter of the world's workforce will be African.
26:04
[SPEAKER_01]: The demography is clear cut.
26:06
[SPEAKER_01]: This will be the second half of the century, our pattern and rates of growth will depend largely on the African continent.
26:14
[SPEAKER_01]: So it is important to make sure that A, we're competing there, but also B, that we're engaged enough that we're not just, you know, seeding it effectively to the Chinese and to a lesser extent, the Russians.
26:27
[SPEAKER_01]: So, you know, purely from an economic self-interest at standpoint, I think now is the time to start building the architecture for trade-in investment relationships on the continent.
26:36
[SPEAKER_01]: Look,
26:36
[SPEAKER_01]: And that's not to say the entire continent's going to rise.
26:38
[SPEAKER_01]: I don't necessarily buy the Africa rising argument either.
26:42
[SPEAKER_01]: The messy truth of it is that parts of the continent are going to rise.
26:45
[SPEAKER_01]: Places potentially quote to wa.
26:47
[SPEAKER_01]: And then other places are going to not rise.
26:49
[SPEAKER_01]: And they're going to be very problematic.
26:51
[SPEAKER_01]: And we're seeing that right now in Mali, where you have an al-Qaeda affiliate.
26:55
[SPEAKER_01]: That's effectively taken over the state.
26:58
[SPEAKER_01]: And this is a function of the West Africa
27:05
[SPEAKER_01]: and then inviting the Wagner group or now Africa core to come in and provide security and what happened.
27:12
[SPEAKER_01]: J.N.
27:12
[SPEAKER_01]: I.M.
27:13
[SPEAKER_01]: and I.M.
27:13
[SPEAKER_01]: and I.M.
27:14
[SPEAKER_01]: and I.M.
27:14
[SPEAKER_01]: basically ran rough shot over the Russians and now they're surrounded the capital city and look they're creating disruption in Nigeria which is a critically important country if more little less than 250 million people that has already struggling with
27:32
[SPEAKER_00]: uh... divisions among muslims and christians along their kind of an local producer to it that and of course we've seen some uh... assassinations of ISIS figures just in the last couple of days while going on all right we're going to leave it there i want to thank you dance swift for enlightening us this morning on the
27:56
[SPEAKER_00]: All right, folks, that's it for your Monday episode.
27:58
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28:02
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28:25
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28:27
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28:29
[SPEAKER_00]: And that is enough hot air for me for today.
28:31
[SPEAKER_00]: See you on Wednesday with more news, more analysis, more smart guests, until then, I'm Jonathan Shanzer signing off for ftd.