Jiang Xueqin: U.S. Trapped In Iran, Europe’s War Against Russia & a Grand Bargain With China (Transcript)

The reason why is that Trump does not want to be seen as a loser. He needs something to distract people’s attention, and it’s very possible that they come to a tentative agreement that is not at all sustainable, and then Trump switches his attention to Cuba.

Right now, the Americans have imposed an embargo on Cuba. The Cubans cannot access fuel and food and water. And the Americans have also indicted Raul Castro, who is 92 years old. He’s no longer in the government, but they want to try him. And this could be a replay of Maduro, where they indicted Maduro for weapons trafficking, and then they sent in special forces to kidnap him, basically.

So it’s very possible that we will see Cuba as the next global flashpoint. And as you know, Russia is heavily invested in Cuba, and both the Chinese and the Russians are trying to support Cuba in this very difficult circumstance.

What I see happening is a greater conflict arising in the Middle East, and then other flashpoints arising as well throughout the world. Cuba will be the next flashpoint. But it’s entirely possible that North Korea and South Korea could also become another flashpoint.

This war in Europe is only going to escalate. As you know, there was an attack on a student dormitory in Luhansk, Russia, which killed at least 6 students. And Putin was very upset. He was visibly upset when he talked about the incident and he promised swift and decisive retaliation. So it seems like all gloves are off. Putin did promise a very important announcement in the St. Petersburg conference, and it’s possible that he might declare war against Ukraine. Right now it’s a special military operation, but if Putin declares war, then Russia would switch to total war.

So I see this conflict in the Middle East basically dragging the entire world into World War III, and right now we’re just waiting for the storm to break.

Russia and China’s Diverging Responses to the Iran War

GLENN DIESEN: Yeah, I think the successes of the United States in Venezuela helped to create some overconfidence, and belief, at least with Trump, that they could reproduce the success in Iran. I never really understood why, because it’s a very different theater of war. But I agree with you, I think Cuba will probably have to pay the price for the US failures in Iran in order to — well, they desperately need a win, at least Trump does now.

But do you think the Chinese and the Russians would interfere or intervene to a significant extent? I get the impression that when they’re in the Western Hemisphere, they want to be too close to American borders. They will essentially do what great powers usually do, which is not to interfere excessively, as opposed to how they would react if something happened in Korea or in Iran or Japan, anywhere close by. But do you think they could play a larger role in the Middle East? Because as you said, the world is different. They do have interest in that part of the world.

JIANG XUEQIN: Well, last month, Iranian Foreign Minister Arachi visited both Russia and China. And when he went to Russia, he was received by Putin, and Putin was very clear in that Russia is very supportive of the Iranian people and that Russia will stand behind the Iranian people and that the Russians see the Americans and Israelis as the aggressors here.

So I think that from Putin’s perspective, Iran is crucial to Russia’s strategic interests. And what we’ll see is that if Iran were to come into difficulties, then Russia would reinforce Iran through the Caspian Sea. So I think that the lines between Russia and Iran are solid.

The GCC nations have said to Putin and to Lavrov and complained about how Iran has closed off the Strait of Hormuz, and how it’s really damaging their economies. And Putin and Lavrov’s response has been emphatic. What they said is, “Why don’t you guys ever talk about the fact that Americans have killed 200 schoolgirls in Iran, innocent schoolgirls that have nothing to do with the war, and which you could say was even deliberate?”

So I think the attitude of the Russians is very, very clear. The Chinese are different. So when Foreign Minister Arachi visited Beijing at the invitation of the Chinese, he was not met by a senior vice premier. He was met by the foreign minister, who was his counterpart, Wang Yi. And Wang Yi’s attitude was that China seeks peace and ceasefire in the Middle East so that the world can return to global trade.

So the attitude of the Chinese is neutral. It is not taking sides. It’s trying to be a mediator in the affair. China is trying to seek a peaceful conclusion to the war as soon as possible. But the reality is that the Americans and the Israelis are the aggressors. They are the ones who broke international law. They are the ones who have committed these war crimes in Iran by targeting innocent civilians and critical civilian infrastructure. They are the ones who are blockading trade right now in the Middle East.

So unfortunately, China refuses to take a clear stance on this matter. And so the attitudes of these two different nations are different. And what I think is going to happen is that China may even sign an agreement with the United States to buy more LNG from America in order to compensate for the loss of Middle East LNG, especially Qatar. So these two nations see the world differently.

China’s Strategic Patience vs. Russia’s Urgency

GLENN DIESEN: Yeah, well, I can understand that though. I mean, if you would be sitting in China, you would — well, actually, this has been a common theme, I think, since the end of the Cold War. That is, for the Chinese, they see rapid economic rise, and also they have a more or less stable status quo which they can operate within. So essentially, if they don’t rock the boat too much, keep a low profile, they will be much stronger tomorrow than they are today. So it’s good to — if there will be any conflict, it would be better to delay it.

I think the Russians have been the exact opposite. They never had a new stable status quo after the Cold War. That is, NATO continues to push upon their borders, and for this reason, I think they always, well, to the opposite of China, instead of keeping a low profile, they punch above their own weight.

So I guess that could make sense in this regard as well. If China thinks it’s better to delay any confrontations, even if it’s over Taiwan, whatever it would be, while Russia probably sees the Iran war similar to the war against Russia — that is, it’s a regime change war. I think the British and Americans made that very clear already in 2022 that having Putin out of the Kremlin was the principal objective.

Also, of course, the dormitory you mentioned in Luhansk, it has some parallels to the killing of all those schoolgirls in Iran. I’ve seen the only coverage in the Western media appears to be “Putin accuses Ukraine of hitting the dormitory,” sowing all doubts, which they could.

The Greater Israel Project and Its Limits

GLENN DIESEN: But I wanted to touch upon something you mentioned before. You said that Israel, under the Greater Israel Project, could go after countries like Turkey or even Saudi Arabia. Again, that’s where the territorial claims at least are. So how do you think the Greater Israel Project would be affected by this, by a defeat in Iran? Again, we don’t know it’s a defeat yet, but if the US would have to go home without the Strait of Hormuz and Iran comes out on top — because the Israelis seem like they’re already overstretched — do you think this could be essentially the collapse of the Greater Israel Project, or would they just escalate?

The Iran Negotiations: Three Sticking Points

JIANG XUEQIN: The reality is that it’s impossible for Americans to walk away because right now the Americans and the Iranians are negotiating. They’ve been negotiating for the past 2 months and there are 3 sticking points.

The first sticking point is the uranium issue. And here I think the Americans can compromise where the Iranians agree to keep the uranium but allow international inspectors to come in and ensure they’re using it for civilian purposes. So the first sticking issue is the uranium.

The second sticking issue is the Strait of Hormuz. So the Iranians obviously want control of the Strait of Hormuz in order to extract reparations for this war that has devastated their nation. And the Americans here would be willing to make a compromise.

But the third sticking issue is Lebanon. And here the Iranians are emphatic and say that whatever peace treaty that we sign with Americans also applies to Lebanon, meaning that the Israelis have to withdraw from Lebanon. And here, even if Americans were to agree to such a deal, there’s no way they can enforce it because Israel will just expand this war. In fact, what’s been happening these past few days is that Israel has gone on the offensive in Lebanon.

Israel is this pit bull that the Americans cannot put back on a leash. And there’s absolutely no way for peace to be negotiated now without settling this Lebanon issue. And the Israelis have shown that they are completely committed to conquering all of Lebanon. Right now, I think they have like 20% of the territory, but Lebanon is a very important part of the Greater Israel project. They have to conquer all of Lebanon, as well as Jordan and Syria in order to achieve the Greater Israel Project.

So there’s really no way for a permanent peace to arrive in Iran. Whatever peace that they negotiate on will just be tentative. It might be at most 6 months before the war resumes. And again, the sticking issue is Lebanon and Hezbollah.

There are so many ways for Israel to continually force America into conflict in the Middle East. Unfortunately, as we saw from the Thomas Massie election in Kentucky, the Zionist lobby has tremendous political sway in America. They invested $30 million just to defeat one Republican congressman who didn’t have much of an impact in Congress anyway. He was just one person. But they made a point of defeating him to send a strong message to all other politicians that if you defy the Israel lobby, then they’ll come after you.

And so given the tremendous political sway of the Zionist lobby over American politics, given the fact that Israel is intent on starting as many wars as possible in order to achieve the Greater Israel Project, I think that this war in the Middle East can only escalate. And when I mean escalate, I mean that eventually America will have to send in ground troops. And the reason why is that America has just run out of weapon systems. It’s just much too expensive to keep on bombarding Iran with bombs. If you want to fight this war and you want to fight effectively, you have to send in ground troops. And so I see this happening within a year.

GLENN DIESEN: Well, it does seem like at each of these issues, each side have some room to manoeuvre, I think, on the nuclear issue. As I said, I think the Iranians would be willing to give something if they had sanction relief in return. The Strait of Hormuz, I think this is not that the Iranians— this is core to their security, so they’re not going to give this up, I think.

But the real breaking point, yeah, it could be ending the war against Iran’s allies as well. So Lebanon, Palestine. But if the US is not able to come to any agreement, which will be too humiliating, is it possible that the war just never stops, but the shooting comes to an end? That is because whenever the US now attacks something in Iran, Iran strikes back immediately, which would be an incentive for the US to not do this.

And again, is it possible that both sides stop firing upon each other, the US blockade comes to a quiet cancellation and they start pulling a bit back and they’re just technically at war, but no one’s firing at each other. Could that be a possible solution?

America’s Ticking Time Bomb: The National Debt

JIANG XUEQIN: Yeah, I mean, that’s what a lot of people assume will happen. But we have to remember that America is running against a clock. America has a bomb on its hands called a nuclear national debt. Right now America has $39 trillion in debt. And so America spends about $2 trillion annually on interest payments alone.

And so the only way to maintain, to sustain its debt is for America to force people to continue to buy US Treasuries. And right now what we’re seeing is a sharp increase in US Treasury yields. So right now I think it’s about 5 to 6%. So it’s going up. And so America can’t afford to wait because if you just wait, everyone’s going to dump their US Treasuries.

Right now, Japan and China are dumping their US Treasuries. The GCCs are also dumping their US Treasuries in order to buy gold in order to finance their economies now that they can’t sell oil. So America has a very short timeframe to conclude this war in the Middle East. It cannot afford to wait. Because if it waits too long, then its entire economy could collapse. It could blow up. We don’t know the specifics, but we do know that it’s a ticking time bomb.

GLENN DIESEN: How about, well, as you said, if there would be a possibility for a peace, I assume that the Palestinian issue would have to be resolved because, I mean, this applies for the Israelis as well. If they would want to find some kind of a way of coexisting with the Iranians, I don’t see this as possible without resolving the Palestinian issues. That is, if this was solved, it would be much easier for Israel to make its peace with— they won’t care for it, but to have, say, to share the region with Iran.

But do you think there’s any appetite in Israel to find a grand compromise, a grand bargain, or is this pie in the sky wishful thinking?

Palestine, the Greater Israel Project, and Messianic Fever

JIANG XUEQIN: So from Trump’s perspective, he’s already solved the Palestine issue, right? So from his perspective, what’s going to happen is that Jared Kushner and Steve Wolkoff are going to go into Gaza and redevelop it as this Mediterranean resort, and it’s going to give jobs to Palestinians and it’s going to make everyone wealthy. So from Trump’s perspective, Palestine is no longer an issue.

But we know that’s not true because we know that there’s continual flare-ups in Gaza. We know that the Israelis are not respecting the ceasefire. We know that there’s been a lot of war crimes committed by the Israelis in Gaza.

The other issue is that you have elements within the Israeli state who are Messianic, who are eschatological. And so they want to achieve the Greater Israel project, and they want to cleanse Greater Israel of all Amalek. And so that includes the Palestinians. And so there’s a religious fever for genocide right now. And I don’t see these two sides being able to find a compromise. You know, you have one side that is geopolitical, that wants to make money, and you have another side that is eschatological, that wants to see the world rise up against Israel.

GLENN DIESEN: But again, if we take a step back, how do you see the— if there is no possibility for the US to make peace with Iran, does it have the capabilities though to defeat the Iranians? Because what you suggest is they would need ground troops to go into Iran. But even this would be very challenging. I mean, even if it was limited to control the coast along the Strait of Hormuz, this is a very long coastline. And with the new weapons technologies, that is, they could push them back with drones. The way this country is structured with, after coastline, you have mountainous regions, the ability to supply and support any US occupation force? I mean, it would be very different than what they did in Iraq. They wouldn’t have clear entry points either. I guess they would come in from the sea.

How do you see this war ending though? Because I think initially the US, they still think they might be able to strangle the Iranian economy, disrupt energy exports to China. So again, it’s a win. But for the US, the Iranians can now essentially not just destroy their bases. They can incentivise the Gulf states not to rebuild and re-host them by controlling the Strait of Hormuz. They can dismantle the petrodollar. They can essentially put sanctions on anyone who sanctions Iran in terms of having access through the Strait of Hormuz. So they have a lot of tools here. So would you say Iran is winning or is it difficult to put that label on?

Ground Invasion, National Draft, and the Road Ahead

JIANG XUEQIN: Yeah, so it’s impossible for America to retreat from this war, and the reason why is the national debt— $39 trillion. America needs the world to continue to buy US Treasuries to finance this debt. And if America were to retreat from Iran, it would signal to the world that America is a paper tiger. It can no longer enforce the dollar as a global reserve currency. Everyone would dump US Treasuries and they’ll be forced to dump US Treasuries in order to finance their economies, especially the GCC. So retreat is just not an option.

It’s also not an option to continue the war as it is, where America bombards Iran continuously. And the reason why is that over those 6 weeks when America was bombarding Iran continuously, they spent about 4 years of munitions. So their stockpile is depleted. So they cannot continue this air war. It doesn’t get you anywhere.

And so the only option that they have is to eventually insert ground troops, to use a ground invasion. But for that to happen, you would need a national draft. You’d call up about, I would say, at least half a million soldiers and send them off to Iran. And in that instance, you might have a possibility of winning.

And in order for America to justify a national draft, you need a series of events to happen. You need a false flag incident, you need a justification to rally the American people, but you also need to create enough economic chaos within America and outside the world so that people will accept a ground invasion of Iran.

So I think what’s happening is that the Trump administration is intent on continuing this war, but they’re just waiting for the economic pain to spread across the world so that the entire world begs America to end the Iran issue once and for all. And the world knows that there’s no way that America surrenders, so your only option is to support America in its invasion. And already we’re seeing NATO considering sending forces to the Straits of Hormuz.

Europe’s Delusion Over Ukraine

GLENN DIESEN: Yeah, well, I think that’s always been the assumption, that is, especially in Europe, that the only constraints of America would be its intent and willingness to do something, because there’s always this assumption in Europe that Americans have infinite capabilities. So the only thing restraining a victory is whether or not they will commit to it. That’s kind of the logic, not just against Iran, but also of course against Russia. They think that if only the US commits to defeating the Russians, then we’ll get it, even though Biden tried to do this for several years.

But on that topic though, what do you see— because I can see why the Iranian war can’t be put to an end, why this again is becoming another forever war. They can’t be won, there’s no pulling back. But what is it that keeps the Ukraine war going? And also, how do you see the US position changing? Because now I see Hegseth making the point that we have to continue to help Ukraine. I’m not sure if this is just rhetoric or that the US doesn’t necessarily want to put an end to the war, they rather just transfer responsibility to the Europeans. Well, again, short question then would be, what is it that keeps the war going?

JIANG XUEQIN: I mean, I think it’s just self-delusion. I think from the perspective of the European elite, they’re winning the war in Ukraine. So there’s talk, there’s reporting, that the Ukrainians have pushed back the Russian offensive and now the Ukrainians are gaining more territory.

And quite honestly, right now the Europeans live in their own elitist bubble and you’re only allowed into this bubble if you support the war completely. So if you’re a dissenter, if you’re trying to point out facts on the ground— for example, Ukraine has lost over a million men and Ukraine doesn’t have the resources to sustain this war— you’re pushed out, you’re considered a traitor, you’re considered a pessimist, and then you’re pushed out.

So the people in Brussels just live in their own little fantasy world, and they’re absolutely convinced that, first of all, Ukraine is winning this war. Second of all, Russia is on the brink of economic collapse. Any day now, Russia will collapse economically. And third of all, Putin is on life support. The elite, the Russian elite, are so angry about this war that they’re ready to rise up against him.

So if we just wait one more day, either the elite, the Russian elite, will overthrow Putin, or the Ukrainians will break into Crimea, or the Russian economy will collapse. If you just wait one more day. And quite honestly, once the European elite fall into this delusion, it’s impossible to convince them otherwise. And that’s why this war continues to this day.

Europe’s War Fantasy and America’s Grand Strategy

GLENN DIESEN: Yeah, I noticed as well that after having to listen to the European elites and their stenographers in the media saying Ukraine’s winning, winning for all these years when it was obvious that they were being destroyed, it seemed like they were finally shifting towards reality catching up. They were saying, “Well, they’re in a difficult spot, we might have to help them more.” But now they seem to have returned back into, “Yes, Ukraine is winning.”

I consider the European elites to be essentially social constructivists. They view it as, if you say that Ukraine is winning, then the public will throw their full support behind it because they want to bet on the winning horse. And if they support it, then we can send the weapons and then somehow we can win after all. If you accept reality as it is, that we’re losing, then the public will withdraw its support, will try to mitigate the catastrophe of this loss, and then the money dries up, and then we lose. So I think ideologically, they like to construct their own reality.

The problem is you can only do that for so long before you run into a wall. I just had a funny comment in this country — a newspaper wrote about me that when Diesen says the world is multipolar, it gives Putin legitimacy because it suggests that Russia is a pole of power in a multipolar world, as opposed to just being China and the US. And so we should not call it multipolar because this gives legitimacy to Russia. So we are essentially forced to live in a fake world, a world of delusion. Otherwise, if you recognize the world as it is, you can legitimize our enemies and, as you said, you’re kicked out of polite society.

JIANG XUEQIN: Sorry, but another point that’s very important is that in order to maintain their fantasy, they will sacrifice everything. So basically the Europeans are gearing up for total war. The Germans are planning a conscription. They will fight this war to the last Ukrainian and to the last European. They will not give up their fantasy.

GLENN DIESEN: Well, this is where I was wondering where you see this going, because my concern — what I’ve been saying for at least the past 12, 13 years — is we should not go down this path towards a war with Russia. It’s very basic. If you try to push NATO into Ukraine, my argument was always it would be like the Russians establishing themselves in Mexico. The only outcome possible here is war, and eventually Ukraine will be destroyed, and escalation would compel Russia to retaliate.

Again, if Russia sees this as an existential threat, there’s no way it’s going to back down. So either we go to nuclear war or we’re defeated. But how do you see this war going? Because I think the Russians now — their calculations, at least what I hear from Moscow — is that the mood has shifted dramatically. After the Europeans especially expressed the intent, and now also the ambition to develop the capabilities to fight Russia, they couldn’t be more clear in this language. There’s no more point to pretend as if — to be afraid of having a direct war — because at the moment the Europeans are striking Russia and Russia’s not striking back. So the war is already here. So what is there to be deterred about? The Russians should restore their deterrence. At least that’s what I’m hearing. How do you see it? Where is this going to go?

America’s Grand Strategy: Fortress America and Continuous Global Conflict

JIANG XUEQIN: Yeah, so I see that there’s a larger American grand strategy behind all this. For the longest time in a unipolar world, America guaranteed peace and safety for everyone. And that’s what allowed for global trade. And that’s what allowed for a period of tremendous peace and prosperity. And now that America has $4.39 trillion in debt, and now that the American economy has basically been hollowed out because they’ve financialized their economy and they shifted their manufacturing to China, America cannot afford to guarantee peace and safety for the world.

And so what America wants to do is shift the world into one of continuous conflict. The grand vision is that America retreats back into the Western Hemisphere. It’s something called the Monroe Doctrine, where it’s complete control over all the nations of the Western Hemisphere, including Venezuela and Cuba. But after Cuba, then you can imagine the Americans will target Canada, Greenland, Mexico, Colombia. It’s all part of this Greater North America project. So you create a Fortress America, and then you plunge the world into war by causing conflicts throughout the world.

So in Europe, there’ll be a war between the Russians versus Ukrainians backed by the Germans, the French, and the British. And that’ll be continuous war that could go on for decades. And while this war is raging, America will provide financing, armaments, and resources to Europeans to ensure that they will fight this war to the last European. And by doing this, the Americans can sustain their national debt and grow their economy.

In the Asia-Pacific, we’re seeing the same thing played out. The Shangri-La Forum just concluded in Singapore, and China didn’t really go. I mean, China did send a representative, but China was not really there. Pete Hegseth was there. The Japanese were there. The Filipinos were there. And I think what’s going to happen is that the Americans retreat from the Asia-Pacific and let Japan and South Korea do more of the heavy lifting. And they’ll be backed up by American allies in the first island chain, specifically the Philippines. And the goal is to force these nations to come into conflict with each other so that they are now again forced to buy American armaments and resources.

And so that’s the world that America wants to create — a world of continuous conflict, which is very similar to World War II. Remember, World War II was the greatest thing for America. Trump talks about how to make America great again. Well, World War II is what made America great, because the Europeans exhausted themselves on the battlefield. And then the Japanese exhausted themselves on the battlefield in China. And then towards the end, Americans came up and cleaned house and conquered the world and established Pax Americana.

So I would not be surprised if American strategists were planning the same thing — where they want to plunge the world back into World War III, and then America will be left alone, and America can rebuild its manufacturing base. And eventually, when the time is right, America will then conquer the world again and establish Pax Americana again. That, I think, is the larger grand strategy here.

Europe as America’s Proxy

GLENN DIESEN: Well, yeah, I got the same impression. I think the European leaders saw the Ukraine war as essentially the European leaders sitting at the table moving the Ukrainian pieces around against the Russians. I don’t think they realized yet that the political West doesn’t exist in its former form. The Europeans have become pieces on the table now. The fight to the last Ukrainian will essentially soon be the fight to the last European. So I think they also don’t realize that they’re proxies of America. They think they’re allies with completely overlapping interests.

But the problem is that they have very wrong expectations, because they look at the last 4 years and think they have proper escalation control, they’re able to manage the battlefield well. And the assumption, I think, is that it will essentially just be a continuation of this slow war in the trenches of Donbas, where they essentially tilted in the favour of the Europeans and the Ukrainians. I don’t think the Russians would fight a war with the Europeans in any way similar to what we’ve seen in the past 4 years. I think the brutality would be much, much more vicious, and it would be fought more on European territory.

JIANG XUEQIN: Sorry, I have one more point to make about Europe, which is that right now Europe is controlled by bureaucrats. These are not leaders, these are not visionaries, these are not people who are responsible to the people. They’re just bureaucrats, meaning that they live in their own fantasy world, meaning they refuse to take responsibility for their actions, and meaning that they turn a blind eye to reality.

So what they’re really trying to do is not take blame for the defeat of Project Ukraine. They’re just trying to pass the buck. They’re trying to prolong this war as long as possible so that they can retire into their nice pensions and then leave the problems to their successors. These are not competent leaders. These are just lazy bureaucrats.

The Iran War and the Fracturing Alliance System

GLENN DIESEN: Well, you may have used the word “leader” a bit generously there — I don’t disagree with that label, calling them bureaucrats. But what I wanted to ask was, the war with Iran appears to have changed some things. When the Americans were going to fight and knock out the Iranians, they realized that they had already sent too many weapons to Ukraine, so they had to pull weapons out of East Asia. And the insufficient weapons they had in the Middle East, they prioritized for Israel. So they essentially ended up in a situation where many of the Gulf states are discussing to what extent it’s a good idea to be frontline states for the US Empire.

The Europeans are certainly having similar discussions now — the Americans won’t necessarily come to their aid. In 2022, they convinced Europeans to join in on this war, and now they’re outsourcing it to the Europeans and essentially pulling back from the whole NATO cooperation. So I think they also learned this lesson.

And in East Asia as well, especially the South Koreans are having these discussions — why would we make an enemy out of China, and then if something goes wrong, to what extent would Americans actually be able to protect us? It just seems like the alliance system of the United States could falter. The idea that you can replay World War II in this way of building a Fortress America and burning down the rest — I don’t see this as necessarily being feasible. So I guess that was my question. Do you see this as being feasible or just a recipe for a very messy suicide?

Japan’s Dilemma: Vassal State or Economic Collapse

JIANG XUEQIN: I think in the short term it’s very feasible. So let’s just focus on Japan. Japan receives most of its oil from the Strait of Hormuz, and Japan has very little resources, and Japan is losing a lot of its strategic reserve. And so if you run out of oil, you’re in a lot of trouble. So what are Japan’s options? Well, you can either buy LNG and fuel from Russia or from America.

In this instance, the fact of the matter is America has 50,000 forces in Japan, and America right now is helping Japan build its own CIA. It’s helping Japan remilitarize. And if you’re Japan, you have absolutely no option in this matter but to become a vassal, a proxy for America. Because if you don’t agree to this, then America will just blockade you. You’re already losing all that oil from the Strait of Hormuz. And if America refuses to finance you, refuses to provide you resources, then your economy is completely and utterly screwed. So unfortunately, Japan has absolutely no choice but to be a proxy for America and to do America’s bidding. That’s point one.

Point two is that China has always been hostile towards Japan. So if America were to retreat from the region, then it’s entirely possible that China starts to blockade Japan, because China has tremendous shipbuilding capacity. So there are all these historical, geopolitical, and economic factors within a region that America can exploit to its advantage. And so I don’t see how Japan and China can avoid a conflict.

I live in China. I can tell you that the rhetoric has ramped up tremendously these past 6 months, especially after Prime Minister Takeuchi said that Taiwan is core to Japan’s strategic interests. Last year there were millions of Chinese tourists going to Japan. Now there are very few, and China has even discussed the possibility of closing its airspace to Japanese airlines. This would mark a major escalation. So again, unfortunately, even though America is a bully, most of the world is too much mired in its own regional conflicts to really care that much.

The Grand Bargain: Taiwan, China, and U.S. Strategic Interests

GLENN DIESEN: Well, that was my initial comment about the rapid shifts in international distribution of power. If these shifts happened over a longer period of time, it would be more time for countries to adjust to new realities. But I think it’s very difficult for countries like Japan to reorient themselves away from the US, much like the Europeans after having essentially outsourced their foreign policy and had this excessive security dependence for 80-plus years.

But yeah, well, that’s a great point, renewed conflicts between China and Japan. But what do you see, given that the main, if not only, peer rival of the United States is China, and Americans keep referring to China also as a motivation in the Iran War, that is, if you can cut off oil exports to the Chinese, then that in itself is a win.

How do you see the sustainability of Taiwan, this Taiwan status in its current form? Because, as I said before, China, I think, has an interest — if it has to be a military conflict, it’s better to do tomorrow, given that China will be in a better position. The US has the opposite, that is, if it’s their $39 trillion in the hole and China strengthening day by day, it’s better to have that conflict today or at least start chipping away at the sovereignty of China and the whole One China policy.

In other words, the status quo doesn’t seem very sustainable anymore. And Taiwan had this key role both in the bipolar and unipolar era in terms of containing China, but how do you see it developing from here on? Will this be a flashpoint, you think, over the next few years?

JIANG XUEQIN: Yeah, so Trump visited China in mid-May for a couple days. I understand that Western reporting is that the visit was lackluster, that Trump just came and sucked up to President Xi. But in China, the attitude is very different. If you look at Chinese media reporting, if you talk to Chinese experts, they believe this was a breakthrough in US-China relations. This is a radical turning point, meaning that the trade war will eventually come to an end, possibly as soon as this year.

So I think that a grand bargain is afoot. They’re still discussing specifics, but let me go over what the grand bargain might look like. So what America is most interested in is access to the Chinese financial market. And the reason why is that Chinese save 40% of their income. So China has the highest savings rate in the world. And what American companies like Visa, BlackRock, Blackstone — what they want to do is financialize these household savings, basically force Chinese into American debt in order to sustain the American Ponzi scheme. And this was actually a precondition for China’s WTO entry 25 years ago.

So I think the Chinese will agree eventually to open up its financial market, but maybe not liberalize its currency — maybe allow Chinese to buy stablecoins, which is basically a backdoor into U.S. Treasuries.

In return, what I think the United States will do is declare that they oppose Taiwan independence. And this is something that the Chinese want, have been asking for politically for the longest time. So Trump, after the visit, said that Taiwan is not really a big deal, he doesn’t really care. He’s also blocked or paused a $14 billion weapons shipment to Taiwan, which is a very big deal. There’s talk of Trump wanting the Taiwanese to onshore its semiconductor industry to America. TSMC, the largest Taiwanese semiconductor company, they’ve opened a factory in Arizona.

So America is perfectly willing to sacrifice Taiwan if it means that it’s able to access China’s financial market. President Xi has said that he will visit America in September, and there are rumors that at that time China will announce a trillion-dollar investment in American manufacturing, meaning some of China’s leading EV manufacturers will move to America and open factories.

So I think a grand bargain is afoot, and I think a condition of this grand bargain is to settle the Taiwan issue. Look, if you just talk to Taiwanese in Taiwan, they’re not interested in independence. Like most people in the world, they want to live a decent, good, safe life. If it means reunifying with China, they don’t care.

So I think that both the United States and China would want a peaceful resolution to this Taiwan issue, but there’s a problem. The problem is Japan. If Taiwan were to reunify with China, China would now have access to the Pacific Ocean. The first island chain will be destroyed, and China now can have a blue water navy. This is a direct threat to Japan’s interest because Japan is primarily a naval power. It is primarily dependent on the outside world for imports and resources. And if China were to establish a very strong blue water navy, it could blockade Japan. So there’s absolutely no way that Japan would countenance a reunified Taiwan-China. And so the possibility of this happening is almost zero.

So by opposing independence, what Trump is really doing is basically transferring the Taiwan issue from America to Japan. And I think from the American perspective, that’s a very good and very strategic thing to do.

The Real Flashpoint: North Korea

JIANG XUEQIN: So I think Taiwan is not a flashpoint. I think the real flashpoint is North Korea. Given the current geopolitical chaos, what North Korea could easily do is threaten Japan and South Korea. Most people don’t know this, but Seoul is within the range of North Korean artillery. So all North Korea has to do is set up its artillery on the border and threaten Seoul, and within about a day, it could flatten Seoul. And that’s where the majority of the Korean population live. So I think the next flashpoint will be North Korea and not Taiwan.

GLENN DIESEN: That’s interesting. Well, I was going to say, with a grand bargain, if it’s simply returning to the status quo, then I don’t think the Chinese would go with it because it simply looks as if the US would postpone the conflict until it can sort out other things. But of course, if it’s actually about the reunification — ending this former status quo — then it’s a very different thing. Then I think the Chinese will probably be willing to make quite a compromise in order to remove this possible, or most likely, source of war off the table. So that would be interesting if that could actually be achieved.

And I think many people in the US, while it might seem outrageous after living through 30-plus years of a hegemonic era, I think many people in the US begin to question to what extent they’re actually able to protect Taiwan if a conflict would break out.

The Legitimacy Crisis in the West

GLENN DIESEN: My last question though was just how do you assess the development of the possible legitimacy crisis in the West? You already mentioned that many of the European leaders act more like bureaucrats, but it seems this is again not only limited to Europe, but also the wider political West. That is, there’s a rise of these denationalised political elites acting like bureaucrats. They’re not really looking after national interests. Our key diplomats no longer believe in diplomacy, especially with Russia. We have, for example, the foreign policy chief of the EU arguing that she doesn’t think it’s necessary to talk to Russia. In the media, we have journalists who act more as information warriors. And as you said, they’re back at spinning narratives — Ukraine is winning, Iran is defeated — and anyone who challenges their narrative tends to be smeared, censored, cancelled.

This kind of failure of institutions can work for a while, but over time it destroys all trust and begins to degrade itself. How do you explain this, or how do you see where this is going? Because there would have to be a correction at some point, otherwise they could go off a cliff. And every year the trust in government — if you look at the polling in America, across Europe — and politicians, it’s at the bottom. The trust in media is all but gone. It can’t continue like this. We’re going to start to rot from within. How do you think it’s moving towards a correction, or just going off that cliff?

JIANG XUEQIN: I think it’s going off the cliff. I’m sorry to say this, but I think what we will witness in our lifetime is the fall of the West. And if you just read some history — Oswald Spengler — but if you even read the great religious traditions and their eschatologies, whether it’s Buddhist, Hindu, Jewish, Christian, Orthodox, doesn’t really matter, but they all talk about how when a society declines, there are certain signs that it’s in decline. And the West right now has all these signs.

So one major sign is demographic crisis, where the population is aging drastically and young people refuse to have children. So what do they do? They bring in immigrants. What do these immigrants do? They clash culturally with the local population. This is exactly what we’re seeing in the West right now, where you have these baby boomers who refuse to die, and they have absorbed all the resources, they have all the political power, and young people refuse to engage in the economy, they refuse to have children, and they bring in millions of immigrants, both legally through the H-1B system and illegally. But it’s causing tremendous social rift throughout society. And unfortunately, this is just a sign of a society in decline. That’s sign number one — demographic crisis.

Second is financialization, meaning that the society no longer produces anything. It just gambles, it speculates. And young people just fall into crushing debt. Think of all these young people in America right now that have student loans that they can never ever get rid of. You can’t declare bankruptcy on student loans. Think about credit card debt — 50% of Americans don’t have access to $500 for an emergency. So financialization, that’s sign number two.

Sign number three is moral decay, where there’s really no sense of right and wrong anymore in Western society. It’s all about profit. It’s all about following the rules. People aren’t allowed to exercise their common sense anymore. You have this massive dictatorship going on. I just read today that there were two Americans — Cenk Uygur, Hasan Piker — I’m sure you know who they are, but they were denied entry to Britain because they were “a threat to the public peace.” What does that mean really, a threat to the public peace? You’re not even allowed to speak your mind anymore. And it’s all part of this moral decay when people are not even allowed to have an honest conversation.

And then you have another sign, which is just evil triumphs in the world. The more evil you are, the more powerful you become. Just think about how these incompetent individuals — people like Peter Thiel, Jeff Bezos — just by co-opting the political system, they’re able to have billions and billions of dollars. I think just the idea of billionaires is outrageous. Never before in history have we had so many billionaires. In America, 10 billionaires have as much money as the bottom 50% of the population. That’s just astonishing to think about. One hedge fund manager in America makes more in a year than all kindergarten teachers combined in America.

So I think that the situation really is hopeless. Historically, if you just look at humanity, human history for thousands of years, this is a very, very typical cycle. Societies do decline over time, and we’re seeing these radical symptoms of that. And there’s really nothing people can do about it right now.

GLENN DIESEN: Yeah, what is strange is to see — as you said, with the concentration of wealth and the financialization of the economy — it should be common sense that you can’t structure human society like this when you have this amount of concentration of wealth. The irony is that often when people bring this up, the defense of the direction we’re heading now — and it’s not even stable, it just concentrates more and more wealth — is always referenced to liberal economists, be it Adam Smith, David Ricardo, Mills and others. And the problem is that they said the opposite.

If you go through the works of them, especially Ricardo, he recognized that with technological innovations, there would be more concentration of capital in the hands of capital owners. It would go away from labor over time. This could be disruptive. So this is not Karl Marx. This was common sense. People understood the problem of rent-seeking, which is why John Stuart Mill, Smith, or Ricardo — they didn’t celebrate rent-seeking by financial elites. But we see essentially their names now being used to legitimize what they essentially warned against. So there’s a lot of decadence all over the place.

JIANG XUEQIN: Right. But remember that for most of human history, most societies outlaw usury, right? There’s a reason why they did that.

Immigration, Culture, and the Limits of Public Debate

GLENN DIESEN: Yeah. Well, just the last point on that immigration issue. I think this is also something very immature, I think, in not just in Europe, but the US. Essentially, the debate is just between those who are for immigrants, more immigration, and those who are racist. Either you’re pro-racist or anti-racist. This is how the debate is framed.

They don’t look— it’s a bit like the shift in international distribution of power, that is rapid shifts in the population. If there’s no possibility to adjust, no one addresses what happens to the culture. And they use culture as this slang almost, which doesn’t have any meaning. But culture is what keeps society— is the glue that keeps society together. It’s like what we all have in common, what links us to the generation before us, what links us to those coming after us, essentially what’s worth passing down from generation to generation. It’s part of the collective consciousness.

And if you do have a massive shift in culture, you cause a disruption there. So it has a function in human society, but it is not discussed at all. It’s either you hate immigrants or you like them. This is essentially the extent of our debate.

JIANG XUEQIN: It’s quite stupid. And look, what people don’t discuss is that a lot of legal immigration is human trafficking. So if you look at America’s H-1B visa program, what they do is they bring in lots and lots of Indians, and these Indians often pay a huge bribe to enter the program. And then when they come in the program, they’re slaves to the system, right? Because if the company doesn’t like you, they can throw you back to India. So it’s human trafficking. That’s what it literally is.

GLENN DIESEN: Yeah. Well, anyways, we ran out of time already. So I just want to thank you as always for taking the time and for all the listeners as well. Where can people find you?

JIANG XUEQIN: Yeah, so I’m on YouTube. Predictive History is my channel. I also have a Substack where I go into detail about my geopolitical analysis. It’s predictivehistory.substack.com.

GLENN DIESEN: Excellent. Well, I’ll leave a link in the description, and thanks again.

JIANG XUEQIN: Thank you.

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