"Oh So Social" Conversation: Dmitri Alperovitch + Dr Michael Vickers

Thank you so much, Dr. Vickers. It's a great honor to speak with you today. I really appreciate the kind words. So let's begin.

Those are great questions. This is not the first time that we end up realizing too late that we're in a conflict with an adversary. I argue, and there's quite a bit of history in the book—both China's history, Taiwan's history, but also Russia's history—that Cold War I did not begin in 1946 with a Churchill speech in Fulton, Missouri, declaring that the Iron Curtain has descended across Eastern Europe, or 1947 or '45, but it actually began in 1920 with the end of our first war with Russia, a hot war with Russia that many Americans may not recall anymore. We actually intervened in the Russian Civil War on the side of the Whites in 1918. That lasted two years, was a disastrous intervention where several hundred Americans lost their lives, mostly due to frostbite and the like, not actual combat activities. But in the end, of course, the Bolsheviks ultimately won and secured their position in power. As soon as they did so, the lesson they drew from this conflict is that the capitalist West—not just America, Great Britain, and the rest of Western Europe—was determined to snuff out communism. They sent troops into Siberia in the Far East to side with the monarchists and the Whites because they were so opposed to Lenin and the communists, and that they were in a fight for their life. I quote the Russian army doctrine from that period, which was written to basically say that this is a fight to the death, that we need to fight on every front—economic, military, and so forth. And they immediately stood up the intelligence agency that became the GRU, which exists today, Russian military intelligence, as well as the SVR and the FSB, which were the Cheka initially that emerged into the KGB later on. The goal of those agencies was to conduct espionage against the West. They set up six different bureaus: one focused on North America, one on the United Kingdom, one on Germany, and one on Poland, which they viewed as a major threat, having just recently fought a war with Poland. They believed that the capitalist West was in a confrontation with them that would be to the death, and they had to react to that. And we, in response, did what? We decided that it was in our best interest to trade with the Soviet Union. We allowed our industrialists, Armand Hammer most famously, but many others, including Henry Ford, by the way, to go over to the Soviet Union and set up factories. Your listeners and viewers may remember during the conflict in Ukraine, at the beginning stages, there was this huge fight for the city of Mariupol on the Azov Sea. As the Russians were taking that city, the Ukrainian defenders, the brave defenders, holed up in this huge steel factory, Azovstal, one of the largest in the world. Well, that steel facility is an exact copy of another in Gary, Indiana, that at the time was the largest in the world. And American industrialists were happy to come over to Stalin's Soviet Union and set up a steel factory, because why shouldn't Stalin produce steel to help build tanks and planes and all sorts of things, right? We did that in the Cold War, and we continued to do so, by the way, after we realized that we were in a Cold War—yet another mistake of our foreign policy. There's this incredible story of 1947 when the Soviet Union is trying to build their first jet fighter, the MiG-15, and they're having problems with the availability of their indigenous engines. The trade minister in the Soviet Union, Mikoyan, who happens to be the brother of the Mikoyan whose name is in the MiG construction plant, was a head constructor of it. He says, 'Dear leader, we would like your permission to approach the British to see if they would sell us their Rolls-Royce engines, because we think they would be perfect for the MiG-15 fighter.' And Stalin is incredulous. He says, 'What fool is going to sell you their secrets?' Well, it turns out the Labour Party, which had just defeated Churchill in the election in 1945, was more than happy to trade with the Soviet Union and sell him the jet engines, which just a few years later shot down 139 Americans over the skies of Korea. So we tend to do this quite a bit: not realize that we're in a conflict with someone, keep arming them, keep trading with them. And we're doing the exact same thing with China. As you say, I do make the point that this is a Cold War. And actually, doing the research for the book, particularly the research on the first Cold War, it is striking to me how similar the two conflicts are. You ask how they're different; it's easier to describe how they're similar because the similarities are just so vast. First of all, we are in a global competition for supremacy with China that plays out in every corner of the world, in every sphere: diplomatic, economic, trade, technology, as well as military. We are in an arms race, both a conventional arms race and a nuclear one. They're building up their nuclear stockpiles as we speak. We have a scramble for bases in the region, just like we did during the first Cold War. We're once again, for the first time in 32 years, as you know, going back into the Philippines, getting access to their military bases, building up our own facilities on Guam and Japan, and so forth. The Chinese are doing the same thing in Pakistan and Cambodia, as far away as Djibouti. And we have a spy war that eclipses anything we had seen during the first Cold War, in part enabled through cyber espionage, but also because they just have so many more people in their intelligence agencies to be able to send here. And we have an ideological struggle, which is slightly different from the first one because it's not necessarily communism versus capitalism, although Xi Jinping is certainly Marxist-Leninist in the traditional sense of the word, but they're not necessarily exporting that ideology globally. What they are exporting and supporting is authoritarianism. President Biden talks about the struggle between democracy and authoritarianism, and certainly Xi is supporting Putin, Orbán in Hungary, and many other authoritarians around the world. So on almost every level, this is actually exactly the same as the first Cold War. The one difference, and the one pushback I get when I talk to people, is, 'Well, what about this economic interdependence?' I have two reactions to that. The first one is, well, I've just listed a dozen reasons for why they're the same, and you have one to put on the other side of the ledger to claim that it's not a Cold War—that doesn't make a strong argument. But two, even on economic interdependence, as I've said, we've had these deep ties to the Soviet Union, and not just in the '20s and '30s before we realized we were in a Cold War, but even in the '60s, '70s, and '80s. The entire Soviet Union economy was, of course, supported by fossil fuel extraction, as it is today with Russia, and much of that industry was running on Western technology that was sold to them, that they didn't even steal. And on top of that, President Reagan in the 1980s was desperately trying to get Wall Street, trying to get the European financial firms, to stop providing credit to Warsaw Pact countries that was financing their regimes and preventing their collapse. So we were literally giving money to them. So the scale is different, no question about it. The dependency is much more two-way than it was back then, but the similarities are just striking.

I actually think that this Cold War is much easier to win than the last one because China is much weaker than the Soviet Union is on almost every level except economics. First of all, let me walk you through some of the reasons why we're stronger. We have the world's greatest economy, the world's biggest economy, that remains the innovation engine for the world, as we're seeing right now with the developments in AI and so many other technologies. It is now very clear that unless something truly dramatic changes either in China or here in the United States, that will remain the case for many decades to come. China's economy—the big question for decades was when would their double-digit growth end. Well, it has ended, and now their growth is estimated to be about two and a half, three percent annually, about the same as ours. And we're 25% bigger. So unless that trajectory somehow changes, we're going to remain the biggest. And by the way, not only is it unlikely to change in their favor, it's likely to get worse because Xi Jinping has completely mismanaged that economy. It's driving away foreign direct investment, closing borders, ejecting Western businessmen and arresting them. And on top of everything, they've got this huge property bubble. Just to give you a sense of how big it is, at the height of the 2008 global financial crisis, real estate was roughly 10% of our economy. It is 30% of China's GDP—just unbelievable scale. And of course, on top of everything, you've got the demographic trends that are going absolutely the wrong way. Over the course of the century, they'll experience a demographic collapse unlike anything the world has ever seen, going from about 1.4 billion people to 550 million or so by the end of the century—hugely deflationary, hugely anti-growth. So they've got all these headwinds, and they're already at the same rate roughly as us in terms of economic growth. Secondly, we've got the greatest military in the world. Yes, the balance of power is starting to shift in the Taiwan Strait, and that's really why I wrote this book, because I believe the threat to Taiwan is potentially at its greatest in the next four to eight years. But China's military on every other level doesn't even come close to us. If there was any concern, for example, of fighting China in a land war in Africa or in a naval battle in the Atlantic Ocean, it wouldn't be even close; it would be a cakewalk for us because they don't have any global capabilities like we do. They've built a military for one purpose, which is to retake Taiwan, and that's where they've been able to match or come close to some of our capabilities, but on every other level, they don't even come close. We have the world's greatest alliance network, both NATO but even in the region—Japan, Philippines, Australia—mutual defense treaty allies of the United States. China has none of that. Even Russia is not really an ally of China; at best, it's a very transactional relationship. And it's not the beacon of freedom and attractiveness in the world. Look, I think we have a big problem on our borders. I'm not for open borders, although I do think immigration is really important to this country, but orderly immigration. But every single day, we have 4,000 Chinese nationals crossing that border. Most of them, I think, are probably looking for a better life, like my parents did. Some of them could be intelligence agents as well, but certainly not 4,000 a day. And no American, or anyone else for that matter, is crossing the border into China to try to immigrate there. So just on every level, we're much stronger. Now, we do have dysfunction, political dysfunction, and it's hard for us to get our act together and use these incredible strengths to our advantage. But that's also not unique in our history. We've always been divided—from the Revolutionary War, where Benjamin Franklin's son was on the side of the Loyalists and so many families were divided, to the Civil War, to the Vietnam War, to the civil rights movements. But yet every time that we face an external threat that is a major threat to our nation, we come together. We did that after 9/11, we did it after Pearl Harbor. Hopefully, we won't experience another attack like that, but I am confident that we'll eventually find our way and harness our strengths to win this new Cold War. The question is, will we do it in time? I open the book with a quote from Tolstoy from 'War and Peace,' where he says that the two most powerful warriors are patience and time. And I worry, to be honest with you, that we don't have much patience and we're running out of time.

I believe that Taiwan is really existential to our interest in a way that few places are. I compare it to West Berlin and the role that it played in the first Cold War. Of course, that was the flashpoint that could have taken the United States and the Soviet Union into a conflict. Nothing else really came close, except the Cuban Missile Crisis for 13 days in October. But as you all know, Afghanistan was a conflict where we were aiding the mujahideen, but we weren't going to go to war over Afghanistan with the Soviet Union. We weren't going to go to war with them over Vietnam. Stalin had no interest in intervening in Korea; he was supporting Kim Il-sung but didn't want to send significant troops beyond pilots that were pretending to be Koreans flying in that MiG Alley. But West Berlin was that moment. Just for your listeners, to give a quick overview, a lot of people sort of think that the Cuban Missile Crisis was the most dangerous point in the Cold War where we risked nuclear war, and certainly it was, but it was a 13-day event. In fact, most of those 13 days, Americans didn't even know that we were under this threat because Kennedy didn't reveal it right away. But they had forgotten that entire summer that predated the Cuban Missile Crisis in 1961, which was just as dangerous, if not more so. During that summer, first of all, Kennedy had an interest to establish a better relationship with Khrushchev. They were going to meet for the first time in Vienna in June of 1961, and he had written him letters coming into office saying that there's no reason our two countries should be confrontational; we should strive for a better relationship, let's figure this out. And Khrushchev would have none of it. He walks into the Vienna Summit and basically tells Kennedy, 'Get the heck out of West Berlin, get your allies out of there, or I'm invading.' Kennedy is completely shaken up; he did not appreciate that Khrushchev was so strong on this. And Kennedy finds his backbone. He has the Bay of Pigs, but he realizes, 'I can't have another disaster like this on my hands.' West Berlin is critical to US interests, to preventing Soviet expansionism, and he decides that he's going to fight to the death over West Berlin, which is this strategically isolated enclave surrounded by East Germany, far away from any resupply lines for the Allies. He goes on television and tells the American public that summer, 'Prepare for war, that war is coming, including potentially nuclear war.' He goes to Congress and demands money for fallout shelters to sustain a nuclear confrontation. And that was not 13 days; that was the entire summer where we were preparing for nuclear war. In August of that summer, Kennedy is woken up one day and he's told that the East Germans are building the wall. And you know what he does? He celebrates. Remarkably, 25 years later, Mr. Gorbachev teared down this wall, as President Reagan said. But Kennedy says, 'Thank God, if he's building the wall, he's not invading. The risk of nuclear conflict has just diminished dramatically.' It's not a great solution, he says, but we can live with it. And the reality is that the wall stabilized the Cold War. Yes, you had the Cuban Missile Crisis, which was actually an outgrowth, we now know, of the West Berlin crisis. But after 1962, the threat of conflict diminished dramatically, and it allowed us to get to détente in the 1970s with the Soviet Union and arms control agreements and the like. But without the Berlin Wall, you would not have had it, without the Soviets blinking and indicating that they're going to end their expansionism in Europe. And I believe that Taiwan plays that role today for the United States. Now, why do I think that? First of all, Taiwan really is the cork that keeps China bottled up. China's geography is not great. They're surrounded by countries with all of whom they have, or recently have had, border conflicts. Every single one of them. Now with Russia, they've just managed to get a peace agreement in the last 20 years or so and finally stabilize those borders. But with everyone else, this is still very much an issue. Obviously, you've seen the confrontation with the Philippines in the South China Sea. Just this weekend, you had the Chinese soldiers on India's northern border grab an Indian soldier and pummel him to the ground and beat him up. So this is a real problem for them; they're in the neighborhood, no one really likes them, and in part because, frankly, their aggressive actions. But the other problem they face is that their shoreline is not conducive to deep-water naval operations because the waters are very shallow, both in the South China Sea and East China Sea. And the third problem they face is that they're completely contained. So when they look out at the world—and I have this map in the book where you rotate the map and China's at the top, looking out at the vastness of the Pacific Ocean—it becomes very, very clear their strategic disadvantage. From the east, they have the Korean Peninsula, half of which is South Korea, 28,000 American troops, airbases, radar installations. Further down, the Japanese islands, with the headquarters of the Seventh Fleet, Marines in Okinawa, and incredible capabilities of the Japanese themselves with the Japanese Self-Defense Forces, which are getting better and better by the day. At the very center, facing the Taiwan Strait, facing most of the key ports of the Chinese Navy and the Chinese Merchant Fleet, is Taiwan, viewed as an outpost of American power. And then closing down that arc is the Philippines, where we're once again getting access to military bases. Just for the first time in April, we deployed the new intermediate-range ballistic missiles, which can range both ships in the Taiwan Strait as well as Chinese ports. We were able to do that because we pulled out of the other Cold War I relic, the INF Treaty, that prevented us from having land-based intermediate-range ballistic missiles. We withdrew in 2019 and just developed those missiles that we, for the first time, deployed in the Philippines as part of a training exercise. So China is completely contained. And you can't really be the world's greatest superpower if you're contained by another power, particularly in the naval realm. So as their submarines are leaving the ports of Hainan down in the South China Sea or other bases, or their surface fleets, they have to go through these choke points in the first island chain, which are completely controlled today by the US Navy and US allies. And that's problematic, because the US Navy today, at our whim, can shut off all imports and exports out of China and completely ruin their economy if we wanted to. If you want to be the world's greatest power, you can't allow