The Delusion of Crushing Russia and China: A Timely Warning from Henry Kissinger

Former US Secretary of State Henry Kissinger, at 99 years old, has lived through many crises. But of the current strategic tensions, he had the following to say: “We are at the edge of war with Russia and China on issues which we partly created, without any concept of how this is going to end or what it’s supposed to lead to.” His warning was issued in an interview with the Wall Street Journal published on Aug. 12.

The WSJ notes: “Mr. Kissinger has understood diplomacy as a balancing act among great powers shadowed by the potential for nuclear catastrophe. The apocalyptic potential of modern weapons technology, in his view, makes sustaining an equilibrium of hostile powers, however uneasy it might be, an overriding imperative of international relations.” When Kissinger warns we are on the brink of nuclear Armageddon, we must take it seriously. But it should also be emphasized that it is his view of a “balance of power” — otherwise known as British Imperial geopolitics — which has brought the world to this crisis point.

The former Secretary of State went on to say that the West is unlikely to turn Russia and China against each other, so in his view, all it can do “is not to accelerate the tensions and to create options, and for that you have to have some purpose.” (In other words, the West has none.)

Nonetheless, Washington and most European capitals continue to escalate the tensions with both these powers, in particular over Ukraine and Taiwan. They are de facto a party to the war against Moscow and have engaged an economic warfare that is hurting their own economies much more than Russia’s. Now, there are increasing calls from the United States and Europe to decouple economically from China, which would have much more devastating effects.

Just to take one example: Five huge Chinese state companies have already decided to de-list their stocks on the New York Stock Exchange, due to the stringent conditions imposed by Washington. If all other Chinese firms do the same, it will result in a loss of equity of more than $1 trillion. And one more example, this time from Germany: a team of economists from the Economic Research Institute (IfO) based in Munich calculated what consequences would be of different forms of decoupling of the EU and Germany from China. They found that if the production that now takes place in China were brought back home (reshoring), Germany would lose about 10% of its economic power. If that production were brought back to other EU countries, Turkey and North Africa (nearshoring), the loss would be about 4.2%. Not surprisingly, the hardest hit would be the automotive sector followed by other heavy industries.

Keep in mind that these figures are underestimated, and do not take into account the ripple effects of such drastic changes. Nonetheless, the authors of the study plead for a reduction of the dependency on China (and also on Russia). It is certainly illusory to think that the United States, whose economy is in a worse shambles than those in Europe, could replace what is now being supplied by China, although the authors suggest it might work…