#UkraineRussiaWar (+5 Days) - Tim Harcourt | Russia's Commodity Heavy Economy, Sanctions & How It All Affects Australia

🎙️: https://atlasgeographica.com/tim-harcourt/

This was recorded at 11:00 on the 2nd of March.

Tim Harcourt is the new Industry Professor and Chief Economist at the Institute for Public Policy and Governance (IPPG) at the University of Technology Sydney (UTS).

He published the Airpot Economist in 2008 and followed up with The Airport Economist Flies Again in 2021. 

Since Thursday the 24/02, Tim has written much about the war from the angle of Russia's economy, economic sanctions and how Australia's economy might be affected.

In This Podcast With Tim Harcourt, We Speak About...

• Why The Russian Economy Matters.
• Unintended Consequences Of Sanctions.
• Where Australia Fits Into This.

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• 00:00 – Introduction
• 01:40 – Why The Russian Economy Actually Matters.
• 13:22 – Why Did The Swiss Break Neutrality?
• 18:10 – Are The Sanctions More Severe Than Putin Thought? + 2nd Order Consequences.
• 25:27 – How Is Australia Affected By All Of This?
• 30:12 – How Does China Fit Into All Of This?
• 32:42 – Where Do Nukes Fit Into All Of This?

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Episodes Of The Curious Worldview Podcast Similar To This!

• Jim Henry Ukrinae/Russia War #1
• Jim Henry Ukraine/Russia War #2
• Vijay Vaitheeswaran On Gas
• Michael Hilliard Geopolitical Analysis

Links To Tim Harcourt

• Tim Harcourt Twitter

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Transcript

SPEAKER_00 0:00

Tim Harkwood is one of Australia's most celebrated economic voices and business and economics writer. Among the many positions he's held, he was uh formerly an international economist with the Reserve Bank of Australia. He was the first chief economist of the Australian Trade and Investment Commission, otherwise known as Ostrade. He was the professor of practice in economics at the UNSW Business School, and he's currently the chief economist at the Institute for Public Policy and Governance at the University of Technology UTS. He also uh authored the extremely popular book, The Airport Economist, and has since followed up with another book called The Airport Economist Flies Again. This content also doubles as a podcast, and largely everything he does that informs his writing and his uh public speaking and his podcasting is about making economics and international trade accessible to the whole community. Tim has been writing a lot since last Thursday on the Russian invasion on Ukraine and has specifically been focusing on the Russian economy and the efficacy of sanctions, but then also particularly what the sort of unintended or otherwise intended consequences are going to be for the Australian economy. So, as you will have seen, the last few episodes I've done on the podcast have been trying to look at this current European war from as many different uh areas of expertise as possible. And so I reached out to Tim in the hope to speak with him about exactly those topics the Russian economy, the efficacy of sanctions, and then also where Australia fits into this whole picture. So share it wide, share it around, and most of all, just keep Ukraine in this moment at the top of your mind. Without any further ado, here is Tim Harcourt. Tim Harcourt. Good evening, mate. Thank you for joining me. Be good to be good to be with you. So you've been writing quite a lot about uh this current moment, specifically from an economic point of view, how it might affect Australia, commentary on Russian's economy, and then also the efficacy of sanctions. I just want to open up with you explaining to me and the audience why the Russian economy actually matters. This is from your piece in the UTS. You say, like Australia, it's a major major global supplier of commodities in terms of oil and gas, but also nickel, palladium, coal, copper, and wheat.

SPEAKER_01 2:16

No, that's right. I mean, um, I mean, although Russia's this huge land mass, uh, it's got a huge population and its economy is about the size of Australia. But if you consider uh commodity economies around the world, if you consider oil and natural gas palladium, uh Russia is a superpower. And um after the fall of the Berlin Wall, um actually after pretty much after Putin took over from Boris Yeltsin, Russia did what economists said you should do. You know, they had they invested in their comparative advantage, exporting gas and uh and oil and uh palladium around the world, and not um manufacturing much at home and importing a lot of well now luxury goods from from Europe. So uh Russia you know is a significant economy in energy, and uh you know a lot of a lot of countries, particularly in uh Western Europe, are net uh importers of energy, and that's sort of why Russia matters.

SPEAKER_00 3:16

Okay, so much has been making, much has been made of the sort of heavy over reliance of Europe on Russian gas. Are there other uh specific fragilities in different commodity supply chains for other countries with copper, wheat, or one of the special metals, or is it really the big geopolitical focus here is the gas?

SPEAKER_01 3:38

I think gas is the one that gets the most uh attention, you know, 20% of German reliance on natural gas and and high data elsewhere, uh including uh to other parts of the EU. Um you're quite right. Um uh there are other metals uh to do with uh the automotive sector that depend on Russia and their supply chains, and in the agricultural space, um, you know, wheat exports out of Russia are a big deal, particularly uh to China and East Asia, as they are to Ukraine uh for that matter. So, you know, you know, sitting in Australia, when we think of oil, natural gas, and wheat, we think of ourselves and we think of Russia, and we think of um, you know, we think of wheat, uh we think of Ukraine. Um you know, uh it has uh you know the world's best, you know, 70% of the world's best soil. Uh so agriculturally, yeah, you could say you the Ukraine is a superpower. As they were, you know, the breadbasket of the old Soviet Union.

SPEAKER_00 4:38

How are all of the what are the big implications then of all of these economic sanctions in Russia if their entire lifeblood relies on a globalized economy that can buy their things?

SPEAKER_01 4:47

Well, you know, you're quite right. Uh and uh if you think the economy is tough for the average Russian now, just imagine what it's going to be like as the sanctions bite, you know, you've already seen the huge drop in the the ruble, which basically means you're reducing everyone's uh income within within Russia. And um uh as you mentioned, with such a large population and such uh terrible income inequality, uh, given that the oligarchs and a lot of them the the former Communist Party members picked up a lot of the key assets of the state, um, the distribution of income in Russia is a real issue that we don't have, say, in Australia or you wouldn't have to the same extent in Sweden, uh, for instance. So that has real implications. Uh, not only not only in terms of uh the the export reliance, but also um when all these um oligarchs and the you know the upper class of Russia have been importing luxury goods from uh Italy and uh diamonds from from Belgium and they're buying football teams in the UK. And at first, when the European Union announced the sanctions, some of the countries were pretty pretty slow. Uh Belgium asked for a carve-out for diamonds, and Italy asked for a carve out for luxury goods. So really, really, when you when you think of it, um if you start turning the tap off not just to the ordinary Russian person, but to some of the wealthier Russians, uh they're gonna get a bit cranky. And um uh also, you know, uh not issuing them visas and uh changing the the flight patterns of the world, that's gonna make them cranky too, and that's uh I think where the sanctions are heading to uh not just hurt Russia but to hurt the people that may uh be influential in public policy in Russia.

SPEAKER_00 6:37

Yeah, that's been a really interesting revelation out of all of this, sort of a very um transparent pulling back of the curtain onto Russia that the majority domestic populace very little influence over the uh domestic pop policy or over sort of Putin's agenda. But as soon as you start restricting an oligarch's extraordinary lifestyle, that could actually be the thing that creates the domestic pressure. Um, and that is just uh you know such a disgusting example of how corrupt and sort of rotten uh the political system is in Russia.

SPEAKER_01 7:13

Yeah, well that's right. I mean, because I mean really Putin made this pact with the oligarchs. Um I'll let you have the assets and I'll let you do whatever you want around the world, but you've got to keep out of politics. And that's sort of been the uh the extraordinary um you know pact, you know, Faustian pact he had with the oligarchs. Now, once that starts to unravel and they can't do what they want, uh then it could be quite then it could be quite uh different. And I think that's why you've seen um uh this huge pro-Ukraine sentiment in social media, and now it's trying to reach out to Russian people. Um I heard that um on Google you can um leave uh restaurant reviews of Russian restaurants and people are uh uh uh from all over the world are getting on there and calling for Russian people to you know rise up against their government. So it's gonna be a very interesting time. I mean, uh when the Tsar, you know, conquered uh the Ukraine and other countries, you know, in the great Russian Empire in the 19th century, there's no social media to fight back with, so it's gonna be quite different now.

SPEAKER_00 8:14

Yeah, it's it's it's amazing, isn't it, how unprecedented the amount of attention given to this conflict is. And I suppose Putin, who reportedly doesn't even use the internet and sort of just exists in his own little bubble reading about Russian history, I think he's completely miscalculated the effect that social media would have on uh his opinion.

SPEAKER_01 8:33

They said that towards the end of his regime, Stalin uh you know stayed in his uh you know in his country house and had very little very little contact with his Politburo. And it sounds like uh under COVID uh Putin has had the same. He has those big long tables because he doesn't want to go near anyone, and uh it sounds like you know, in Australia they talk about the Canberra bubble in terms of politics. Well, imagine the Moscow bubble within the the very top elites, you know, it'd be very hard to get outside opinion, particularly when they're all scared of him, too.

SPEAKER_00 9:07

Yeah, people for the last two years have had to quarantine extensive periods of time just to be in a room with him, and supposedly he's had almost no human contact. Um, it you know, it it there is a lot of sort of playing the psychologist through the internet, right? Yes, you don't really know, but it it is a is a pretty grim picture, um, the one that's been painted of him. Um I want to follow up on the sanctions question and ask you how effective you think they are at deterring behaviour. Um so they clearly work as a weapon, but their effects can be relatively simply priced in as a part of the calculus to make the decision in the first place. So, generally, how how effective do you think sanctions are and then in this specific instance?

SPEAKER_01 9:51

That's a great insight. People do factor them in, don't they? Um, sanctions haven't proved to be all that successful. You know, they've tried them in Myanmar, uh, they tried them uh before with with with Russia. Uh they tried them with South Africa for years, and the trade sanctions worked. It was only the investment strike that really affected uh South Africa and the and the fall of communism that that that affected that. But um it's interesting with these ones because they're a lot tougher and there's more people involved. I mean the Swiss got involved. I mean that's I mean the Swiss who we know did business with Nazi Germany during the Second World War. The Swiss have joined in the EU sanctions, so that's quite something. Uh and um it could be um you know in the short run that this the sanctions will have uh funny effects on on prices and uh you know amazingly probably commodity prices will will shoot up in a way and that will probably benefit some commodity exporters like Russia and and Australia and Ukraine. But uh over over time the sanctions could really bide. I mean we're already seen uh the drop in the ruble. Um, you know, once the announcement was made, I mean, once Vladivostok opened, uh people try to get rubles out, and the central bank was actually making companies give rubles back to them because they're worried about their reserves. So that's back to sort of you know, back to the USSR, so to speak. Uh, and um, you know, we've had a huge uh hike in interest rates. So it's gonna be pretty miserable on the ground, I think, in in in Russia, and of course, now you know, once the oligarchs have their private planes seized all over the place, their private yachts, they'll start to get pretty snaky too.

SPEAKER_00 11:42

I also just want to re-emphasise how big Russia's population is. I was shocked when I learned it was 145 million, which I looked up the other day. I was under the impression it was 30, 40 million, right? Just very, very sparse over this giant country, which is the largest landmass in the world. But to have 145 million people.

SPEAKER_01 12:00

Uh and also, I mean, Ukraine's 44 million. I mean, Ukraine's not a small province, you know, like that's a that's a significant country. That's double the population of Australia.

SPEAKER_00 12:10

And a huge landmass, too? Yeah, it is. It is so Ukraine's a significant country. But just like double down to double down on the idea that that 145 million people have barely a say in the public policy of um their country. Uh I I don't know. I think it's just something that's been really hammered home over the last week, which personally and I think broadly people sort of didn't even think about or discount it or didn't realise.

SPEAKER_01 12:39

Yeah, we hear a lot about China being uh over a billion in India. We don't hear a lot about how huge Russia and Brazil is. You know, there was all this talk about the BRICS some years ago, you know, Brazil, Russia, India, China, South Africa added for a while, but um we don't actually think of Russia as a huge population, you're quite right, as well as a landmass. And a very diverse population, uh as we know uh ethnically, uh, and that's even you know uh even before you include those those former Soviet republics. You know, I spent a lot of time in in Kazakhstan, you know, the the East Asian in origin, uh Muslim speaking Russian, you know, very, very different, very, you know, very different ethnically to what you'd see in Moscow or or Ukraine.

SPEAKER_00 13:24

Can you explain why uh the Swiss ended up sort of joining in in this uh fight aga f why they ended up joining in?

SPEAKER_01 13:33

I was I was amazed by that, because they're not an EU member. They rarely get involved in anything, the the Swiss. It it could have been that um they knew that um once the EU sanctions were put in and uh the UK had already done it uh with Biden and the US that um the Russians had all fly to Swiss banks and they probably felt they didn't want to have um Ukrainian blood on their hands, you know, they wanted for once to sort of be an international team player. Oh, you think so, yeah. Yeah, I I think yeah, I mean it's because or they all they're worried about the you know the stability of their own financial system if they had a huge flood of Russian money.

SPEAKER_00 14:12

But they've already got the blood of all the other kleptocrats around the world's uh blood on their hands, you know. Like they are not impartial to an African despot, uh a Saudi despot. I mean, do you think it's it's just the overwhelming public opinion was enough that this was bad PR for them to not get involved? Or or or is there something more happening?

SPEAKER_01 14:35

It's got to be bad PR, I think. I mean, even FIFA, see, FIFA said you can play as the Russian football union, which is like the Olympic compromise you play as the Russian Union. Russian Olympic Committee. Your Russian Olympic Committee, but you're not Russia. They've even they've backed down. I mean, I mean FIFA are you know the most you know corrupt autocracy lover of dictators of all time. Even they've backed down. So I think uh yeah, I I think there's something in the momentum um that President you know Zelensky's gathered support for Ukraine is quite extraordinary. We we we don't have a I mean we have a sizeable Ukrainian population in Australia, not not huge, but they've all been out on the streets and people with them in uh streets of Sydney and Melbourne and and all around the country. So something about Ukraine, I guess it's a real David and Goliath struggle, huge, you know, small country being picked on by a large empire. People have come out for it.

SPEAKER_00 15:30

And it feels so unprovoked as well, which maybe is is is uh calling people to action more, more so. Yeah, you're right.

SPEAKER_01 15:38

It wasn't a tit for tat uh back and forth, was it? It was sort of a a huge, a huge strike. Uh and I think I think just seeing all the Oh, well the just the sight of all those Ukrainians walking through the snow with their little children across the border to Poland, I think you know has struck home somehow.

SPEAKER_00 15:57

Yeah. I I was reading on Tweet yesterday an anecdote from uh a guy fellow who lives in Amsterdam who had a couple of uh Ukrainians doing renovations on his property, and once the invasion um had happened last Thursday, they sort of just said, Hey, sorry, we've got to go home. And they left all their tools there and you know drove into the Ukraine, but supposedly. Yeah, and it's like there's also the um the current heavyweight boxer of the world, not Klitschko, I forget his name, he's still fighting. Yeah, yeah, he's gonna fight. He's gonna fight. He's a millionaire, lives in America and flies home. Uh, you know, obviously Zelensky's saying and saying, I don't need a ride, I just need ammunition. Uh yeah, it's it's created this overwhelming uh support on one side. You know, it's so asymmetric the support for the Ukraine.

SPEAKER_01 16:49

Yeah, it's incredible, isn't it? Even the Russian community in the United States and UK, Australia, Canada, they'd be coming out saying they want peace with Ukraine. Stop, stop this Putin. You know, it's a big, say big anti-war movement in Russia, you know, the Russian community.

SPEAKER_00 17:03

But all of what we're sort of saying right now, I think, couples into what we started off with that he uh has just completely underestimated the social media side of this. He sort of didn't realise that the rest of the world wouldn't buy his denazifying propaganda as well as uh outside of his own population, and that the rest of the world would actually get involved. Do you think that maybe he just thought people wouldn't care that much because historically they maybe didn't make so much noise with Crimea in 2014 and stuff like that?

SPEAKER_01 17:31

Yeah, they didn't understand Crimea, this seemed a bit more direct. Uh and um oh, the power of um I mean Zelensky, the president of Ukraine, is a very effective performer. Um my ancestry, I've got the name Harkourt, but originally it was Harkovitz from Harkov, the Jews of Harkov, Harkovitz. And uh my grandfather used to always say to me, if only the world was, you know, run by a Jewish comedian, uh it would be a lot safer place. Funnily enough, you know, Zelensky's sort of at least in this beginning phase, he's he's he's performing pretty well.

SPEAKER_00 18:07

Yeah, absolutely. Um to return to the economy and sanctions, so I think sort of paradoxically of Russia being such a huge commodity exporter also kind of makes them self-reliant to a degree, loads of wheat, energy, etc. I think that Putin would have um taken into account huge sanctions and sort of just said, fuck it, we can rely on uh our own produce, our own gas, energy, etc. But do you think the sanctions have been more severe than he would have envisioned? Yes, I think I think they have.

SPEAKER_01 18:43

Um and I think the uh vast um scope of uh the countries involved, he wouldn't have expected that. And the breadth and width of the sanctions, uh he might have thought uh people would throw out a bit of vodka, and he might have thought that um uh there would have been a sort of you know, don't buy Russian. But uh, you know, the gas that that was that was extraordinary. Uh the very um direct freezing of assets, even of the Russian Central Bank, that was pretty big. Uh and uh the SWIFT, you know, these are the the it's uncharted territory for uh for sanctions in the global economy, they're not they're not conventional. And uh you haven't had so many countries do it all at once against one country. And I think your point is right. He probably thought, I've got the reserves, I can, you know, I've I had enough money to put on the Olympics and the World Cup. Um I've got I can get through sanctions like I did with Crimea. But these are much bigger, and uh and I don't think anyone expected that. I don't think any I mean I obviously the West didn't expect him to invade either, and I don't think he expected the response. And I don't think you I think you're right, your point you made before. I don't think you thought Ukraine would have that much global sympathy. But it does. And um ironically, I reckon Zelensky, in a way, he's probably gonna save Ukraine. He'll probably save Trump from running again, in a way, because Trump was very close to Putin. A lot of his supporters were very pro-Russian, and he may have saved Taiwan, because China's been sitting back uh watching to see what Putin would do and how people would respond, and they've seen stuff they don't like, particularly if they decide to have a crack at Taiwan. Uh so you know it could be that you know the the president of Taiwan could send a slab of beer over to Ukraine, I think, and say thanks very much, because uh they've done anything forever.

SPEAKER_00 20:47

Spe speaking of Zelensky, I haven't um heard from him since the weekend, maybe Saturday or something. Do you uh have you seen any any news of you know him?

SPEAKER_01 20:57

I only saw him working walking through Kiev on uh on Sunday, and then I think he sent his defence minister to Belarus for the negotiations. So I imagine he'll make a statement after that. But uh pretty pretty brave, not running.

SPEAKER_00 21:15

Oh, absolutely. No, it's complete skin of the game, and the whole world's responded to him, like as you as you've said. So you've spoken a lot about the sort of immediate and direct consequences from all the sanctions, um, the rubles at the floor. Uh the domestic economy is going to just the average Russian is going to really suffer. But could you speculate into some of the sort of unintended second, third, and fourth order consequences from this wave of sanctions?

SPEAKER_01 21:46

Yeah, well that's interesting, isn't it? Because I mean, maybe you know, some people being fearful that then Russia will get more closer economically to China. China's sort of been a bit frosty since it started going wrong in the Ukraine. So it might be at the moment probably Russian isolationism rather than alternative superpower arrangements. There may be a real rethink of energy sources in Europe. I know that the Germans weren't keen on nuclear power whilst you know France was. There might be a bit of a rethink, I think, of nuclear power, you know, despite what happened in Japan and so on. I think that people will think really carefully about um uh energy uh the energy mix between nuclear, uh fossil fuels, gas and uh renewables. Um they're probably gonna be a little bit more more more cautious now, uh I think, because they know that having lots of gas and having uh lots of oil is a pretty big trump card for for those nations, so you wouldn't give that up easily. And um I think in in in some ways you might see um you might see uh uh a strengthening of the European Union now. I mean they're pretty um they're pretty ordinary under uh COVID, you know, they were you know nicking vaccines off each other and all sorts of things, whilst Europe seemed a bit like it's finally got its act together. I mean it was really the polls that led it, and um the even though the UK is not a member anymore, the UK was very strong in Ukraine early, uh, and they sort of led Germany and the rest kicking and screaming into doing something, but now they've done something. So that might, you know, Putin's managed to unify Europe, something that no one else has managed to do.

SPEAKER_00 23:41

So it might drive um a shift in the way that Europe thinks about energy independence. So what does that mean? More maybe tax maybe some of the uh massive ESG uh financing and funding and tax breaks could be sort of moved towards nuclear, or is it looking at other trade partners for their energy?

SPEAKER_01 24:04

Uh and maybe I mean maybe uh countries like Qatar that are big on LNG and Australia are gonna play a bigger role now. Uh and uh it could be too. I think um Japan and South Korea, very energy-dependent nations, have looked really closely at Russia and possibly what China could be doing in the South China Sea, and they're probably thinking we've got to have a bit more multilateral action now, uh, just like the Europeans did. So I think you may see um you know some quite positive action, like we've had with the quads in Australia with uh India and Japan and Australia and the US. So some of the some of the natural alliances going towards a multilateral uh position might actually help rather than being at the mercy of um Russia and potentially China in the future. I think Ukraine will get EU membership tomorrow. Yeah, really. Well soon.

SPEAKER_00 25:04

Soon, right, yeah, but you you think that they'll uh be fast-tracked into the EU because of all of this? I think so, yeah. It'd be hard to keep them out. Interesting, yeah. I guess that um is best to be addressed in the last question, that whole calculus of how much uh overt support and alliance with the West does do we want to give Ukraine. Um but you'll see why later. Um weird fact is that Russia is Australia's largest kangaroo importer. Um that's a direct line of revenue, which is clearly going to be affected uh elsewhere. You just sort of suggested that we could almost be an LNG supplier to Europe and and East Asian countries. Uh is that you know, how does Australia fit into this picture? I really wasn't aware of the potential of Australia uh exporting energy to Europe. It just seems like you know too far to go, but maybe not. Well, maybe not.

SPEAKER_01 25:56

I mean it's I mean a lot of it would have been locked into South Korea and and Japan and China, and we've got LNG links with the United States. But uh, you know, who knows with this massive shock uh what could be done. I'd imagine that the Europeans will go to Qatar first. But um, you know, with all these um hydrogen and uh lithium and all these new energy sources coming on board, that'll have to be a a change. I mean Europe and Australia's doing pretty well with renewables, they've got very strong links with Spain and Germany and the Scandinavians, so that will that will grow. But uh I think some of these superpower sources of energy might might might change. Uh and it could be um uh it could be that some of the sort of defence trade alliances might might change a bit as a result of um a result of this shock.

SPEAKER_00 26:50

How would the defence trade alliances change?

SPEAKER_01 26:54

Well, there's already movement um with respect to Japan and India and ASEAN, United States and Australia. Uh and there's you know there's the AUKUS uh agreement between Australia, UK and the US. So I think some of the more traditional defence alliances have started to come back a bit more. And the Europeans getting involved in defence is a new one. I mean they've started to actually arm Ukraine, and that's a that's a big change because it's pretty hard for those nations to get involved in military action or even hints of it. Uh so that might change, I think. I think defence budgets are going to increase. Like just across the board. Yeah, I think so. I think so.

unknown 27:38

Yeah.

SPEAKER_01 27:38

Because we haven't seen people use weapons on the on the massive scale that Putin has until until this week.

SPEAKER_00 27:47

Um specifically in Australia, if there was a very big boost in LNG exports, what where in Australia is that actually situated? I really know nothing about the liquid natural gas market in Australia. Oh, okay.

SPEAKER_01 28:03

So where would it be in uh West Western Australia, uh Northern Territory and Queensland, so the LNG uh terminals off you know off Darwin and off the northwest. And in Queensland, so the sort of uh the uh the resource rich in the right spot for transport. Oh yeah, well that's right, that's handy. Yeah, okay. That's handy. Yeah. I mean a Chinese um there were there was an issue with a Chinese couple Chinese naval vessels going through the Arafua Sea uh about a week ago. It'd sort of be blown off the front page with Ukraine and Russia, but uh there was a little bit of incident in the Arafur Sea, so that people are quite conscious of that.

SPEAKER_00 28:42

At the moment, how significant is that industry in Australia, liquid natural gas?

SPEAKER_01 28:48

Oh, we're um we'll probably be like Qatar by 2030, so it's uh a pretty pretty significant. So it's a huge uh line of income. Yeah, no, we haven't reached our potential there. And um we have hydrogen. I've just done a show on South Korea and we've got big hydrogen uh ties with South Korea and Japan. So yeah, there's a lot of um there's a lot of new um sort of resource action in in those areas that's quite interesting. And then um I mean I d I don't know much about it, but lithium, the stuff they make in batteries for electric cars, that's um very big in South America and in Australia, so that will be another another line of um of export income, I think. Uh so there's yeah, there's quite a lot quite a lot of new things that um are emerging now beyond the traditional wool on wheat and coal.

SPEAKER_00 29:44

It's fascinating, isn't it, how unintended consequences might work. I mean, who would have thought that if you look at a European conflict between sort of two Eastern European states, Australia might all of a sudden have a big new line of income, you know, a country on the other side of the world. Uh, you know, if Asia, South Korea and Japan look at Russia and say we don't want to be reliant on their energy at all, Australia's a pretty good partner, uh, you would you would think. I mean, they're kind of reliable. Yes. Yeah. You sort of mentioned this a little bit earlier, but could you sort of uh speak more about how China might be either emboldened or unemboled over their Taiwanese ambitions uh from what they've seen over the last few days?

SPEAKER_01 30:27

Yeah, that's interesting, isn't it? Because the the big talk before the Beijing Olympics was that uh Putin and Xi Jinping had sort of you know thawed their frosty relationship, and uh they say Xi Jinping sort of gave them the green light to to you know they wouldn't stand in their way if they did something in Ukraine. Um, you know, who knows with Putin. Um uh and people thought, well, this is a dress rehearsal for Taiwan. Now um hasn't gone well for Russia so far. Uh Taiwan's an island, you don't just roll your tanks over the border. And um China would have now seen the uh reaction from the rest of the world. So I suspect uh they're gonna hold their hold their fire on this one. May not be worth it. I mean I mean Putin's this huge gambler. You know, he goes into Chechnya, he goes into Georgia, he do you know, takes on the Crimea. He's a huge gambler. Uh I don't think Xi Jinping is. Uh I think they've been aggressive in the South China Sea and brutal with Hong Kong, but I don't think they're gonna uh they know that they know that Taiwan would be quite different. In some ways with Hong Kong they were covered. Hong Kong they were covered because they sort of got it handed back, but Taiwan's not going anywhere. They're not gonna be handed back.

SPEAKER_00 31:52

Yeah. It's fascinating to think about how you know differently it may have gone. Like imagine if the Ukraine didn't uh put up this enormous defense, the rest of the world might think, oh, okay, well, I guess this makes sense, or this is this is terrible from Putin, but hey, what can we do about it? But since there is such this strong defense, the rest of the world's like, hey, this is so wrong. And it's just interesting how the paths can diverge like that based off, I don't know, a couple of extraordinarily patriotic speeches from Zelensky and huge amounts of attention on social media. It's just interesting to think about how how some things might hinge. Such drastic consequences.

SPEAKER_01 32:33

Yeah, no, that's right. That's right. EFC's in the moment. If he'd fled on the first day, would have been all over, I think.

SPEAKER_00 32:40

Yeah, yeah. Imagine crazy. Um finally, Tim, uh, from early January since the story of this Russian build-up on the Ukrainian border, every escalation has been a surely he can't do that moment. And given his recent precedence for doing those precise surely he cannot do this moments, how are you thinking of his nuclear threats?

SPEAKER_01 33:08

Yeah, unless uh I I think you've almost answered your own question. I mean that there was this uh great piece uh in Washington today about all the Russian experts, all the Putin experts in in in Washington were saying that surely he won't do this, he always does. Uh and so that's that's what they're thinking. Now the question is where would you attack? Because you're not gonna send a nuclear weapon to Ukraine, because that's apparently Russia, according to him. So would it be aimed at Western Europe? Uh, you know, and then you're gonna get huge retaliation. So um uh that's the big worry. Uh will the people around him stop him getting to that point is the other question. I don't know if you've ever seen Death in Stalin, that satirical uh show about the last dose of Stalin. I mean that that just shows you the tightness of that Politbureau, but it also means that um someone who's flying high one minute can uh can be replaced pretty quickly if uh if there's enormous pressure. But uh yeah, it's not something you want to contemplate, but we are not dealing with a rational um actor. You know, it's not a Oxford Debating Society, this is uh this is serious stuff.

SPEAKER_00 34:31

It may not be something you want to contemplate, but uh surely you sort of have and also maybe seen discussions of it or had discussions yourself. Like could you comment on the just the potentiality of it happening? Can we write it off as it's too absurd? Or is there I don't want to be like a fearmonger or anything, but or is there a reason for me sitting in Stockholm to think, could a Western Europe city, Western European city actually be blown up by someone who's just gone all in and says, fuck it, I'm gonna leave a legacy. I don't care if they remember me as a villain, I just want to be remembered. Is this, I mean, and is it too much of a caricature way that I'm thinking about it? Or um yeah, how do you think about that?

SPEAKER_01 35:12

Look, I w I wish you I wish I could say yeah, it's too far-fetched, but it's not. And and uh when you look at Putin's speeches, um, they're all about you know the emotional um hurt that Russia's gone through, not just in the Ukraine, but you know, every incident, you know, back to Tsara's times. I mean that that's how he operates. It's very emotional, very patriotic. Uh I think he said to um Australian Prime Minister in 2014, Tony Abbott, uh, you're not a native Australian, you're a convict from England. I am a native Russian. You know, he's very uh very very very clear about that. Um I mean the other story was that APEC, when I interviewed Putin, I said, uh, is Australia what you thought it would be like, you know, uh has it met your expectations? And he said, I never think about Australia. You know, that was his sort of his sort of response, you know. Uh so I I think his responses have been being very emotional, very patriotic, and uh that's why I don't think we can um you know think about a rational, a rational player. And that there's something about I I think Putin feels that when he took over from Yeltsin that he he tried to play nice with the West. He asked Bill Clinton, could I join Russia join NATO? Uh we're in APEC, uh, can we ultimately you know be part of all your alliances? And uh he got knocked back. And so he probably feels that he played Mr. Nice Guy and uh Mr. Diplomat for so long. The only way Russia ever gets any respect is with uh with aggression or the threat of aggression, or in this case actual aggression, and that's uh that's his mindset. And um, you know, we used to think nuclear weapons were great deterrents. With this guy, I'm not so sure, particularly when you know it's a very different scenario.

SPEAKER_00 36:58

It's a deterrent and a rational actor, but someone who has a failing economy is looking at all the signals that things are only going to get worse, is himself towards the end of his life, maybe thinks he could go out with some bang, literally. Yeah, um, it's it's not a deterrent. It's I mean, my my girlfriend's really like kind of like really worried about it, you know. I mean, rightly so, but also you but it's it's it's crazy stuff.

SPEAKER_01 37:26

Yeah, and um you know you can he he's probably fearful of you know Ukraine's a democracy. The people rose up and put in a charismatic young democratic leader, he's probably worried about what the Russian people might do if they follow the Ukraine's lead. So it's it's it's self-preservation as much as aggression towards Ukraine now. On that cheerful note. Exactly.

SPEAKER_00 37:50

Yeah, just to end with something nice for people to carry on through their day. Yeah. Um but is there anything that you want to say specifically about sanctions, Russian economy this moment that we didn't cover?

SPEAKER_01 38:04

Oh, I think I think the important thing to um remember in the you know in the integrated world that there's a lot of alternatives to Russia, and Russia is not as dominant as it once was uh economically when it was the Soviet Soviet Union. So um, you know, there are other other sources of energy around the world, there are strong alliances uh around the world, uh, and uh in in some ways the um uh you know the power of the Ukraine people has sort of taught us all a lesson about having moral clarity, having a backbone and having principles. And uh I think that's been the the best gift so far of something where we've seen utter tragedy in terms of loss of life and damage and fear. Uh the the upside is that we have seen uh what you Ukraine's been able to show the world.

SPEAKER_00 38:56

Yeah, in such a globalized economy, uh you don't necessarily have to rely on just one strategic ally, which is which is great. And it looks like there are less and less really despotic leaders in charge of very powerful countries, as opposed to just Russia and China's left. I mean, I don't know, is that too simplistic of a take as well?

SPEAKER_01 39:16

Well, a Jewish comedian can one run run the Ukraine and be a natural leader. Um they say that when they asked his mother, uh you're very proud of your your son for being so brave and courageous as president, she said, You know my other son is a doctor.

SPEAKER_00 39:31

What a legend. All right, Tim. Thanks very much, mate. And uh yeah, uh stay in touch. My pleasure. Thanks, Ryan. So you'll be able to find Tim on Twitter. I've linked what his Twitter is into the podcast description. There you will see everywhere that he's writing to, and you'll also have access to his books and his podcast through there as well. You will have noticed that I'm not making the typical appeal that I usually do in the more regular episodes on these specific ones about the Ukraine-Russian war. So instead, I would just ask that you share this with someone interested in the moment that's happening right now, because more episodes are going to be coming out in the following days and also following weeks who have a specific area of expertise relevant to this moment. Tomorrow Gaeda Hatu on the how this affects the MENA region. I'm going to speak with a Ukrainian who's currently in the Ukraine. He's a developer, but now he's turned into a soldier, and so forth. So share it with someone who's interested in this moment, keep it to yourself, review it, all the rest. Follow Tim, thank you very much.