Canada’s Independence Is at Risk (Uncut) 03-29-2025

Canada’s Independence Is at Risk— And Its Best Option isn’t the USA

Canada has found itself at multiple tipping points all at once. Now, in response to recent trade aggression from the South, two schools of thought have emerged. Number one, that despite this aggression, the United States is still the world’s largest economy, strongest military, and best trading partner.

And Canada should kiss and make up and mend that relationship because that’s the partner they need. The opposing school of thought says, despite recent optimism in the United States, it’s still an empire in decay and that long trend hasn’t changed. So therefore, if Canada is to think long term, they should seek other trading partners, utilize their longest coastline in the world, and seek to deepen relationships across Asia.

Today, I am joined by Parag Khanna, a seven times bestselling author focused on geopolitics. He’s been named one of the 75 most influential people of the 21st century, and he’s the founder of Alpha Geo, a geospatial analytics platform. It was a thrill having him on the platform today to discuss all of this and much more.

Welcome to the J. Martin Show, where we dissect the greatest minds in geopolitics and finance. Here is Parag Khanna. Enjoy.

This is J. Martin. Okay. Here I am with Parag Khanna.

Parag, it’s great to have you on the show, man. I am looking forward to jamming with you. Thank you for making the time.

Likewise. Great to see you, Jay. Okay.

So here’s where I want to start. Canada, in my opinion, is at a tipping point. And clearly, I think multiple tipping points right now.

The one that I want to start with with you is the tipping point in response to call it US trade aggression. And I see two primary schools of thought that emerged from the country in response to this. One is that the US is the world’s strongest economy, largest military, our best trading partner, and we share the largest land border in the world with them.

We need to find a way to kiss and make up and maintain this relationship because it’s the best one going. The counterpoint to that would say protectionist policies, trade aggression like this. This is more symptoms that are so classic of an empire in decay.

It’s just added to the pile, right? The US is on their way out. Therefore, Canada will be far more strategic to play the long game and look for new partners, stronger partners. Yeah, we got the land border, but we also have the longest coastline in the world.

And so access to markets at our disposal should we choose to move that direction. So that’s where I want to start today. What’s your take on those two schools of thought? Well, first of all, it’s more than trade aggression, isn’t it? So let’s just park that to the side because clearly it’s what the designs that Trump is articulating are more than just trade.

The trade aggression he’s applying to everyone in the whole world. The territorial ambition, aggrandizement, expansion, conquest, that applies uniquely, I would say uniquely to Canada, but Canada plus Greenland plus Panama plus God knows where else. So to put it on the side, short answer, both, both.

Now, the theoretical underpinning of this is what I call multi-alignment, right? Be friends with your neighbors, but also reach out globally. In trade economics, it’s actually formally known as open regionalism. So have good relations, kiss and make up as you put it with your biggest regional trading partners and allies, but also not to the detriment of your global relationships, taking advantage of Asia, of Europe, of the Arctic.

So the answer is literally both and with very good reason and with strategies to underpin each of these different vectors, whether it is how to repair U.S. relations and how to be more global. The answer is do all of the above at the same time. And that’s why strategy, diplomatic strategy, economic strategy requires a professional team, a global team, an experienced team, a confident team, all hands on deck all the time so that you never fall into the complacent crap of relying on only one partner for anything.

Okay, let me ask you then, you mentioned the competent team and right away I was like, does Canada have that right now? And in another tipping point that I think Canada might be at, I’d love to know your thoughts on this. You know, we have all the right ingredients. I’m Canadian, clearly, as I keep saying we.

We have all the right ingredients to be a great country, right? We’re resource rich, we’re population sparse. On a per capita basis, we should be very wealthy. However, we’re not today.

We’re the slowest growing G7 economy since 2020. We’re like the bottom of all 38 OECD countries right now from an economic standpoint. But we came through 2008 with a healthier balance sheet than any other G7 nation.

So we’ve got the stuff if we choose to leverage it. We’re not doing that right now. A country can have all the right ingredients though.

Like think about Argentina, you know, 100 years ago, the wealthy Argentinian was a phrase that everybody knew because of how bountiful that country was from leveraging their resource and export economy and smart immigration policies. Yet, poor elections lost them 75 years of productivity. So you can have all the right ingredients, make a poor choice of the polls and lose nearly a century.

What’s your take? Does Canada have the team right now? And do you see that as another tipping point to vulnerability? So I wouldn’t blame just politics, it’s complacency. You’ve had different sides of the aisle governing in Canada over the past decade and a half since the financial crisis. So it isn’t just a question of one election or the other.

It’s fundamentally about the ambition, about the governance, about the strategy versus complacency. So Canada got complacent and that complacency held up across multiple different administrations. So rather than me, it certainly is a non-Canadian becoming overly partisan.

To me, there are certain strategic interests, strategic policies that one should be pursuing no matter who is in power. So Canada lost a little bit of sight of that. Obvious examples include not building enough infrastructure, not building enough housing, not diversifying the economy enough, all of those kinds of things that should be obvious.

And I would imagine no matter who wins the next election, those stand front and center and they do. So the more you can have a bipartisan consensus about what is in the obvious best interest of the country and its people, the better. And I don’t think that Canada lacks that consensus today, irrespective of whether the reason is the wake-up call from the Trump administration or simply because of the heated political debate and election campaign that you’re now in.

It doesn’t really matter, all of the above. So again, don’t blame it on the elections. The other thing is I wouldn’t really denounce Canada’s performance that much.

You haven’t had a major recession. You don’t have the wildly fluctuating cycles. You may have been slower growth, but we know what the causes of that are.

We’ve just identified them. So maybe Canada hasn’t been as dynamic, but if dynamic is a euphemism for volatile, debt-driven, low savings, high inequality, and all of those other maladies that plague some countries that have grown faster, well then maybe that’s a small price to pay for having been stable. So Canada is nothing if not stable.

Stability happens to be the kind of target variable in our periodic table of states, which I know you’ve seen, and actually you may remember Canada ranks ahead of the United States in that. When you look at kind of 26, 27 key indicators of stability, what are the real components of the stability of a state, I think that you’d be pretty happy with where Canada stands relative to other countries in the world. You’re up there with Germany and Japan and so forth and ahead of the United States.

So let’s not pretend that growth is everything. Let’s focus on the assets that Canada has. Canada is an unbelievably asset-rich country.

It still has a coherent, cohesive society and polity, even if you have a relatively divided election right now. So again, enormous potential. Let’s hope that the new consensus that is clearly there about what needs to be done is thoroughly implemented by whoever leads the next administration.

I have to get you to expand a little bit on your periodic table of states because it’s a very unique concept. I’ve never seen states catalogued this way before and I just know that when you said Canada’s up there with Germany and Japan, some people are going to cock an eyebrow and say Germany? Actually, they’re now growing slower than Canada. What’s so good about that? But as you said, there’s more to a country than growth, right? Yeah.

So when you say you’re growing slower than Germany, it’s like, okay, so what? The periodic table of states and the stability of a state is only partially related to growth. Growth is one element and it’s not unimportant. But when you’re talking about the fundamental pillars of the stability of a state, you want to look at everything from its landmass and natural resources and population size and industrial capability, size of its military.

You want to look at its economic, fundamental economic health in terms of its asset liability, mismatch its debt to GDP ratio, which is very much under control in Canada. Then you want to look at things like the quality of the government, the governance, the efficiency of public services, the quality of delivery of public institutions, the median income, the inequality, the quality of infrastructure. All of those things paint a well-rounded picture of a society.

So again, ask yourself, is the most important thing in the world to grow? Because I can point you to a couple of really fast-growing resource-rich countries in Africa if all you want to do is chase growth. Or do you want to be a stable state and a stable society? You can have growth and not have stability. Ask any one of the 8 billion people in the world, though, whether they want to be more or less stable as a state tomorrow and the next day.

And I think you’ll have a pretty universal answer. So in my academic work, I’m chasing stability and I want to know what the ingredients are, what the inputs are, what the components are, and improve on all of those things. And that makes you a good state, whether or not you happen to be growing fast this year or next year.

Any country, and you mentioned Argentina earlier, you can take Brazil next door, allow me to hand everyone a credit card and allow consumer debt driven growth. And I’ll engineer growth for you in that country. I’ll deregulate the financial system and I’ll do three or four quick tricks.

And wow, you’ll be a fast-growing country. But are you a stable country? That is the hardest thing to achieve in politics or in policy. And that’s where Canada actually ranks really high.

And there’s no denying that Canada is stable. I mean, I hope you’re not making the counter-argument that Canada is unstable, which, of course, as a Canadian, you have no desire or incentive to do. So again, looking holistically, which is what I do, but not without looking rigorously at dozens of variables, Canada ranks extremely well.

And that’s, again, just a really good foundation on which to build. And sure, engineer that growth, but have it be the right kind of growth. And that’s also part of the conversation that you’re having in Canada today, which is a really healthy conversation.

Yeah, man, I really appreciate that. It’s so counter to every headline that you’ll read today. And that’s normal.

Journalists love to sensationalize and hyperbolize these events and whatnot. But quite frankly, Prague, I’ve found myself in the last couple of years just seeking a bit of optionality. I mean, here I am in Indonesia, and my kids go to school here now, and I’m still Canadian.

My wife is American, and my kids have dual. So we also look at the U.S. a lot as another location to put down roots, but we’ll be here for a couple of years. And it’s a refreshing take that you just offered that is very counter to a lot of the thinking I’ve gone through over the last couple of years.

I appreciate that. Well, optionality is also good at the individual level. A country can physically relocate, but people can, right? And so you and I have the luxury of living outside of our country, your countries of origin, and get to be wherever we want.

And more and more people, by the way, are like that. You’re a digital nomad. I’m an expat.

There is hundreds of millions of us, quite literally. And I think that that is all the more reason why a country needs to step up, because if they’re not going to be attractive, if they’re not going to offer the right conditions, whether it’s the tax regime or the public safety or the quality of schools or the airports and the visa regime and all of that stuff, well, then guess what? Those hundreds of millions of people can just go somewhere else, right? And what’s different between the pre-COVID world and the post-COVID world is that in the post-COVID world, you’ve got 100 countries that are offering themselves up and saying, come here, we’ll give you a good deal, right? We’ll make it attractive for you to come and live here. Canada, by the way, is a major destination for high net worth migrants and for just, you know, blue collar workers and for talented students.

So at every segment of the value chain of workers that can be in the services economy, meaning they don’t have to be physically driving a school bus in Brazil or picking cotton, you know, somewhere in Asia, for services workers, Canada is very attractive for talent. And I think that’s something to play on as well. Now, of course, that’s already been done.

Canada has grown staggeringly demographically. And again, one of the issues in your politics is that you’ve been a victim of your own success. It’s like if you have a concerted strategy towards Canada, 100 million, right? And I’ve, as a non-Canadian, I’ve probably done more than my fair share to promote that strategy and I’ve been very pro-Canadian.

But that said, if you know that’s going to happen, how about you build some housing? How about you build, you know, more schools? Because what Canada is doing this year to voluntarily reduce migration because you didn’t prepare for the migration is, again, to shoot yourself in the foot. Yeah. Yeah.

Okay. So I want to dig into where we started a little bit deeper. I opened up by saying, should Canada repair relations and, you know, stick with our partner being the U.S. or should we look for optionality? You said both.

So I want to talk about the optionality a little bit. I want to talk about the rest of the world, trade partners that strike you as the most ideal for Canada right now from a shipping route and just economic health standpoint. What are the ideal partners outside of the U.S. for Canada? So I think you’re asking the right question and it has to be taken kind of one sector at a time.

On the one hand, in terms of broader trade agreements, remember in 2017, Canada went forward and joined the Trans-Pacific Partnership, which is now called the CPTPP, even though the U.S. pulled out of it and Trump won. And the same, you know, Mexico, Colombia, Chile, New Zealand, Australia, Japan, a lot of smart countries along the Pacific Rim went ahead and joined that agreement, even though the U.S. did not. So smart move that that paves the way or that sets the stage for you to, you know, expand trade and exports in particular to China, Japan, Southeast Asia and other countries in China.

And Canada clearly is looking at that. You’ve been thinking about expanding pipeline capacity, especially LNG, to promote exports to Asia, whatever Canada does in terms of minerals as well. And ideally doing some value added work around that, potentially being a hub for producing more batteries, for example, of electric vehicle industry and nuclear power and so forth.

Those kinds of industries that are strong in Canada can orient towards Asia. Then you obviously have a free trade agreement with the EU. There’s been a lot of sort of bonhomie in Europe.

I believe it was Mark Carney who pointed this out in either a state visit or a one on one with maybe it was President Macron. I can’t remember. He said, look, Canada is the most European country outside of Europe.

And he was stating something that’s obvious, but something that fundamentally is true, something I’ve certainly been writing and saying for a very long time. Canada’s political system obviously represents continental Europe or resembles continental Europe much more so than the United States. And so that’s important that you have that relationship.

And of course, Europe is in dire need of a very stable natural gas supplier in light of the ruptured relationship with Russia, oil and gas, for that matter, and much else. So I think that that’s the other major direction to look in. And then, of course, there’s the Arctic, which is a bit more kind of emergent and nation, but is obviously a good set of relationships to pursue in terms of trade routes and to offer a very important shortened corridor for trade.

Partly that’s going to hinge on what happens in terms of moving goods and at what price across the US border. But we can come to that momentarily. But I do think that eventually that irons itself out.

The final direction would be kind of uber south, meaning not just the US, but obviously Mexico, Latin America and so forth. And I think there, too, there have been opportunities that just haven’t been fully exploited. But that all of that is part and parcel of thinking multi-directionally.

And that’s what Canada is now doing. And that means really ramping up the professional diplomatic core, the trade delegations, all of that stuff. As you know, Canadians have a very, very good image and reputation abroad, whether it is individuals like yourself or whether it’s your businesses, whether it’s your universities, which I’ve personally seen expand their footprint and partnerships all the way here in Southeast Asia.

So now is the time to really be waving that flag. Let me ask you. Thank you for that, Parag.

Now, let me ask you about the Arctic a little bit. I think you said the future of that is somewhat dependent on the cost of shipping across the US border. So, you know, the Arctic’s opening up.

It’s melting faster than the rest of the world. And so, you know, not just the Northwest Passage, but I think it’s called the Northern Sea Route now, which is closer to Russia. Right now, I believe Russia’s got the largest Arctic coastline.

Canada has the second and Greenland has the third. But in terms of infrastructure, it seems like Russia is way ahead of everybody, not just in the way they’ve been resurrecting their Soviet era bases. But I think they have something like forty six icebreakers up there, you know, relative to Canada’s two, I think the United States might have one.

You could correct me on that. But what’s going on in the Arctic and what should people maybe be aware of? It’s shifting there because it seems to be a geography that’s shifting quickly. And because of the way we look at maps, I think it’s lost on a lot of people that that’s the direct route to Asia.

That’s a direct route from Russia to continental U.S. and and lost on a lot of folks. So, yeah, love your take. Well, quite literally a shifting geography, especially with the melting sea ice and the accessibility of coastal areas.

But I think we have to break down the conversation into the military and strategic dimensions versus the economic and trade dimensions, because we can to some degree decouple them from each other. I mean, sure, Russia has gone and planted a flag literally down on the seabed at the North Pole and so forth. There’s actually some maneuverings going on right now around Svalbard Island, which is an island that was granted to Norway to fully administer under its sovereignty after World War One.

But with the caveat that it would allow nonmilitary activity by other countries such as mining and Russia has been involved in that. Now there’s some jockeying going on there. So there’s a lot that might change and be up for grabs, which is why the military dimension matters.

But remember that Russia’s military naval activity up there on the one hand, yes, stealth submarines, other kinds of intimidation that’s actually happening in the Baltic Sea as well. But because of the inaccessibility of the northern Russian cities along their coastline, and they do have several of them, they have to have more icebreakers because they have to deliver supplies to the population that lives up there, whereas Canada doesn’t have a lot of people living up there and it has sufficient infrastructure to reach those locations over land and Russia hasn’t invested in that capacity. So there’s specific reasons for those things.

But yes, so I mean, you know, muscling up in the Arctic for the sake of defending one’s sovereignty, asserting one’s sovereignty interests, preparing for any potential altercation, but ideally not stoking what’s known as sort of an escalation spiral, right, a security dilemma, where your maneuvers inspire them to do more security-related interventions and mobilization up there, which then, of course, fuels an arms race, that kind of thing. So trying to manage that. And I think there is scope maybe in the post-Ukraine war kind of landscape that may hopefully emerge in the coming six months to a year, maybe to de-escalate militarily in the Arctic.

Then there’s the economic piece, which is, OK, who’s going to take advantage of these trade routes? Some of them are more economic than others. Depends on what goods one is shipping, in which directions, who’s the largest market, who’s the largest customer for what, what’s the fastest way to get there, are there tariffs or not tariffs on those goods in that destination now or later? That’s very dynamic, which is why it’s effectively part of the global optionality strategy, right? We’ve talked about optionality for people, there’s optionality in trade, right? So again, think about when the Houthis are attacking, you know, shipping vessels in the Straits of Hormuz and in the Red Sea, you want to have Belt and Road and you want to have Arctic sea routes and you want to have other ways to have supply physically meet demand in the event of bottlenecks and choke points, you know, being vulnerable or shut down. And so the Arctic at the moment is more around that, about that optionality.

But when it comes to Russia, Russia’s North Sea energy resources, there is no question that getting them to coastal China and Japan via the Barents Sea, the Arctic route is very, very efficient for them. So it makes a lot of sense for Russia right this minute to be the key commercial power exploiting those opportunities. And for others, it’s slightly less economical and less urgent.

But eventually it becomes part of that broader optionality that all northern hemispheric powers will take advantage of. When I heard President Trump discussing the 51st state concept, you know, I laughed it off because he’s very bombastic in his messaging and I thought that’s right on brand, right? Same with the purchase of Greenland and all of this, you know, it’s sort of negotiation style is walk into the room, say something crazy, throw everybody off balance, then slide in your real demand and it’s so moderate from where you started that you might get everything you wanted. That’s how I interpreted that.

But as I started looking into the Arctic a bit more, I started to wonder, like, is it a coincidence that he’s expressing interest in the other two countries who share collectively the largest stretch of Arctic coastline? My question for you Prage is, what do you think is the motivation behind the 51st state conversation? Is it just to rattle Canada a little bit and get a better trade deal? Is there something grander, like maybe he’s looking at the lack of military development along Canada’s Arctic coastline relative to Russia’s and what’s your take on that and the sort of core motivations? Well, it’s kind of funny people in all of these conversations in the last month or two in which Greenland has been at the center or Canada in the 51st state with reference to the Arctic, no one has mentioned Alaska. The United States is an Arctic power and has major military assets in an Arctic zone, Alaska. So fourth, I guess, to Greenland and to Canada and Russia is the United States with an active Arctic coastline.

It’s called Alaska, right? So there obviously isn’t a geographical logic to this, given that the US has multiple military bases in Greenland itself, has Canada as a very strong ally and has Alaska. So it’s obviously something that’s much more psychological, let’s say, in nature. Because, of course, if you wanted to achieve your interests, which are to have very positive relations with countries that have similar or greater Arctic coastlines, you would simply collaborate more with Canada and with Greenland, where you already have bases.

You wouldn’t really need to take them over per se, right? Because they have been fully cooperative with the United States and anything related to Arctic interests. If anything, obviously, they’ve been leaders in the sense that you know the Arctic terrain better. So I would say collaboration would be smarter than conquest.

And the gap between those two is better explained by Trump’s idiosyncrasy than by strategic genius. Okay. Okay.

I appreciate that. I’m glad you mentioned Alaska because you’re right, it’s completely absent from this conversation, which is kind of hilarious. It’s only hilarious until you remember how poor geographic education is in the US.

Yeah, I guess so. And I was recently reading about the history of the Russian America company and how they came into possession of Alaska. Gosh, what was the name of the operator, the general who was leading the charge in the Bering Sea and building the colonies in Alaska and moving down the entire west coast of America, establishing relationships through California, negotiating with the kings in Hawaii.

The Russian territory was almost a lot larger than Alaska. It was almost a big chunk of the west coast and Hawaii. But things didn’t quite pan out.

But yeah, it’s a quick jump across the ocean to Alaska. The Russian American company, as it was known, was superseded by the Alaska company. And then of course, by the mid 19th century, the deal that was done, and Alaska came into US possession.

But in any case, again, throughout that time, the trade relations, political relations between Canada and the United States, we obviously have a very long history of stable, amicable, cooperative ties. There’s no reason to upend all of that. And I think what I hear from Canadians is that their direct outreach to the states of the US 50 states that are principal trading partners of each province, they’ve been making that direct outreach.

And or, of course, as Europeans and Canadians are both doing, targeting their messaging at the very districts that are most dependent on Canada, as a reminder to them that this is a self-inflicted wound by their president. It’s not Canada’s fault. It’s not the European country’s fault.

And that, you know, obviously sending a message to Trump before the midterm elections or whatever the case may be. And here again, I’m having deja vu, because we were actually having this conversation in 2017. Canada did this in 2017.

It’s not that long ago. Please tell me you remember that I’m not losing my mind. Because literally, literally, when Trump was talking about tariffs being his favorite word in the English language, it was also then, and Canada responded this way.

So it gets to one of your other questions earlier, which was, you know, what’s the ultimate motivation here. So the common principle is what a lot of people in international relations called the madman theory, right? You know, go for broke, ask for or demand something absolutely ludicrous, and then settle for something that’s, you know, a working compromise where you still came out ahead. So the best example of that right now is the Panama Canal.

So you know, they were saying, we’re going to take over the Panama Canal, it’s a bad deal. We’re paying all these fees, China controls it very dangerous. And they went down and said, Okay, you know, Panama, you’re ours.

And the Panamanian president was like, No, not really, you know. And so they said, Okay, well, will you at least quit the Chinese Belt and Road Initiative? And Panama was like, Yeah, you know what, we’ll do that. And so Panama announced it’s going to pull out of China’s Belt and Road, smart, like a victory, an absolute legit victory for the US.

Then even more importantly than diplomatic style and optics, was the control over the two terminals on either end of the Panama Canal in the Atlantic and the Pacific. And, and there again, Li Ka-shing, who’s not from mainland China, but his company is a Hong Kong company, sold both of those terminals to BlackRock. And so now the US takes over, US company, asset manager takes over a very strategic infrastructure, and a company that actually was never Chinese, it was Hong Kong, you know, is out.

So actually, they came out. So this may be bad news to some of you. But like the madman theory works in the case of Panama, right.

And so I’m not sure what the outcome will be. I think Greenland is obviously different than much rather be, you know, sort of, let’s say we’re a coin toss between those who feel that staying part of Denmark is good enough. And those that believe that independence would be preferable.

Given all the revenue they can generate on their own being an independent country with only 60,000 people. The third and by far the least popular option would be joining the United States. Joining Canada would probably rank ahead of joining the United States, if that were an option on the table.

So I you got to imagine that Canada that Greenland being annexed by the United States is the least popular of the options on the table for the for the for the population, the indigenous population of Greenland. I, you know, the idea of a, I don’t know what you’d call that not an annexation, but Canada and Greenland joining ties in some way is really interesting. Your comments on the Panama Canal.

So Li Keqing, who’s, who’s now like 96 years old, or something like he’s, he’s up there. You know, he’s been around a long time made a lot of money, very smart individual, sold the two terminals to BlackRock. Do you think that Larry Fink was coerced by the President of the United States to say, Look, I can’t, I can’t buy these terminals.

If the United States buys the terminals, that’s sort of an act of aggression, maybe, but BlackRock, just a, you know, corporation, you can buy them. So you’re going to buy them, you know, when a company gets so large, they almost like they’re operating on behalf of the country at some points. What’s your what’s your take on that? So actually, the timing could not have been better for this deal from BlackRock’s point of view, because they just recently acquired Global Infrastructure Partners, which is one of the two or three largest infrastructure asset operators in the entire world.

And with a balance sheet that strong, they’re actually looking to buy operational profitable assets around the world. So I would imagine that even if Trump had not seen this as being in the national interest, it would have been something that would have been in BlackRock’s commercial interest anyway. So I see these as being perfectly well aligned.

You’re referring to kind of state capitalism, where like Saudi Aramco is basically an arm of the Saudi government, right? It doesn’t make independent decisions that don’t benefit the state, the government of Saudi Arabia, right? It may have an independent governance and balance sheet and so forth, but not really, right? Or like Gazprom in Russia, or whatever the case may be. But BlackRock is very much BlackRock, right? And it is in no way, shape or form, an agent of the US government unless their interests actually align. And in this case, they did.

Got it. Okay. Yeah, I appreciate that take.

Let’s, let’s take a look at some other directions the US might be focused on right now. When I like, have a sort of geopolitical analyst on and I run through all of the simmering tensions that have not erupted into hot conflicts, yet the South China Sea always seems to stand out as the most tense and the most vulnerable to a mistake being made that becomes something greater. Do you see that as the case if you look at the globe right now, not where the hot, hot conflicts already are, but where the emerging tensions are? What strikes you as the flashpoints? You know, it’s one of the hot spots.

It’s right here on my handy dandy giant wall map. So you’ve got the South China Sea right here, multiple conflicts related to the South China Sea, you’ve got your scrappy islands, your parasol islands in Taiwan, often the Northeast, which is generally considered distinct, but you could imagine a kind of domino effect there. And that’s what countries in the littoral area are concerned about that if there is a Taiwan contingency or conflict, then, and if China prevails in that, then that’s going to give them an even more strategic perch to assert themselves even more aggressively than they already have in the South China Sea where they’ve demarcated this nine-dash line strategy.

It’s a sort of a tongue-shaped demarcation that hangs down and basically reaches the waters of Malaysia, Brunei, and Indonesia, which is like out of all proportion, obviously, to what is permitted under international law, the law of the sea, the law of coastal special economic zones, and so on and so on. But China has learned the hard way that even though it may make certain claims and assertions, ignoring them flagrantly is the best way to teach China that it can’t have what it wants just because it says so, right? That people are going to say, no, really, there’s absolutely no one who recognizes this but you. So, you know, you don’t have a leg to stand on legally, intellectually, or otherwise, and we’re going to act as if your claims don’t exist because they’re so ridiculous, right? And that’s really important.

And so that is one example of how, so, I mean, look, could there still be and might there be and maybe even will there be a hot war over the, you know, particularly the Spratly Islands, less so the Paracel Islands, which are disputed with Vietnam, but Vietnam is more likely to back off and cut a deal, whereas the Philippines is a strong U.S. ally and the U.S. has stationed very important defense systems, actually missile stations as well that can actively target the Chinese mainland in the northern Philippines. That’s not a conflict where the Philippines is just going to back off and back down, right? So could it come to a conflict? Yes, it could. Could Taiwan as well? Yes, it could.

Would that be regrettable? Yes, it would. But right now it hasn’t happened. Right now it is one of the epicenters of maritime trade and will continue to be.

If there is a war, that will be very regrettable. But there will also be an end to that war. And whenever there is an end to that war, the waters will again be the center, one of the centers of global trade.

So, you know, again, it’s the supply and demand dynamics. It’s the trade orientation of all the countries. It’s their need for these passageways to remain open that will ultimately ensure that they remain open, even if there is a war at some point or the other.

What do you make of President Xi’s statements that he wants his military to be prepared for a successful invasion of Taiwan in 2027? It’s not the same as saying we’re going to do it. It’s just he wants his military prepared for a successful invasion. What do you make of a statement like that? Well, pretty much with everything in China, you should take them very precisely and exactly at their word.

You know, a lot of the naval drills and exercises and show a force and intimidation that’s been going on around Taiwan and, quite frankly, around Okinawa Island as well, a Japanese island, and other Japanese islands even further north. All of those are intimidation tactics that are meant to put teeth to Xi Jinping’s words and doctrines and ambitions. Does it mean that China intends to actually take Taiwan by force versus continuing to shape its policies, its politics and its own self-perception in a direction that’s more favorable to China? Obviously, China would prefer the latter.

To prevail without having to actually fight is also part of Chinese strategic culture. So I don’t think that we need to be watching the clock tick down through December 2026 or December 2027, depending on how you define the deadline that he set, and presume that shots are going to be fired. He’s just ratcheting up the tension and he’s trying to exhaust Taiwan as well.

And what we already know about Taiwan and have known for a long time is that this is not a population that really wants to fight, is really ready to fight, is even capable of fighting or defending itself for very long. And nor does the United States have an unlimited appetite to get involved in a war to preserve Taiwanese independence that can’t ultimately be won. So again, short answer would be this, that Taiwan, I foresee again, one way or the other, with or without conflict, we’re still heading in the same direction, which is what I would call one country, three systems.

And that’s a play, obviously, on the Hong Kong situation where we talk about Hong Kong versus the mainland as being one country, two systems. But of course, even that second system of Hong Kong is starting to resemble China more and more. So Taiwan, similarly, would be the third leg of that stool, where, yes, it’s nominally autonomous in some ways, but mostly not.

And yet, and is ever more, in a way, a protectorate of the mainland. So that’s why I would say it’s the third system. So one country, three systems is kind of where Taiwan is headed.

And China does have options that are not combative to, I mean, they could leverage their Coast Guard as opposed to their Navy and maybe send the Coast Guard out to surround the island and just monitor trade in a certain way that prevents a lot of key resources from accessing the island. And there’s no military involvement, there’s no weapons, there’s just trade restrictions on this part of the sea. And you kind of quarantine Taiwan to a degree, right? Those are some of the tactics that are already being rehearsed, that are already being used, sometimes cutting internet cables, certainly using non-militarized Coast Guard or fishing vessels or others to harass and intimidate and surround and to, again, rehearse, prepare for partial blockades.

Again, it depends on which side of the island you’re talking about in terms of what the specific tactics at play are. But yeah, China’s thought has been thinking through and practicing all of these things, which option one or all they may ultimately use or none remains to be seen. We’ll find out when everyone else in the world finds out.

Yeah. And I think during a lot of those military rehearsals, there’s also been an increased reports of cyber attacks on the island of Taiwan. So there’s a couple of levers being pulled at once, I guess.

What’s your take on the United States’ true appetite in this scenario? Wouldn’t it be in their best interest to look for an out and say, look, this is actually not something we want to get involved with and they just need a reason? And maybe in a similar way that China sort of took back Hong Kong from a legal standpoint, they didn’t need to involve the military. Is there a case that this is just an unfinished civil war and we’re reclaiming an island that’s already ours and there’s no reason for you to get involved because we have the legal grounds to do so? Giving the United States the out to say, we don’t have to get involved, not our fight, save our money, save our military. That’s already China’s view, but it’s not wise to accede to that view because Taiwan’s history and having been independent but also been under Japanese occupation and so forth prior to the Chinese Civil War makes its heritage much more complicated.

So it’s simply not true that it is merely a renegade Chinese province that’s unfinished business and a domestic civil war. And therefore the US has a legal excuse not to be involved because that would be to deny a much more complicated history that Taiwan has. So you can still get to a peaceful outcome without acceding to China’s very limited and partial reading of Taiwan’s history.

And so to get back to your key question about US appetite, I worked in the Pentagon myself, though not on this issue, but I can safely say, having spoken to a lot of colleagues and friends about this, no, Taiwan, again, the United States does not want to fight a war anywhere, at the risk of its own blood and treasure, especially at this point in time, fiscally and otherwise. And Taiwan is included in that list. But there is a special commitment, a special obligation that goes back decades.

And the US wants to extricate itself from a commitment like that in an honorable way without simply selling Taiwan out. And it’s that navigating that tension that is the key challenge of policy today. From a bigger trend standpoint, Prager, are we undeniably heading towards the new era of, call it multipolarity or call it the G-Zero globe? Is this a trend that is, without question, where we’re headed? Well, I mean, in my view, we’ve been there for a long time.

I wrote my entire first book about multipolarity in the US, China, Europe as the principal strategic imperial forces in the world and contrasting their grand strategies and their diplomatic styles in building influence around the And I wrote that book 20 years ago, 2-0. So I feel old. So I couldn’t have written a book about multipolarity that I was observing on the ground around the world if it wasn’t already true.

So to be honest, today is just more so. And a lot of people like to pick one moment. They’ll say, the 9-11 terrorist attacks, the US invasion of Iraq and Afghanistan, or the global financial crisis, or COVID, or Trump won.

These are episodes where the US either A, lost credibility, or B, began to turn inwards, or C, alienated the rest of the world. And everyone picks their favorite moment, as if it is like a war where on the day in which you have a surrender or you have a peace treaty, you can say a new era was born. That’s not the way things work with power transitions necessarily.

These things are incubated and they’re baking over long periods of time. So to me, China began to act in superpower-like ways almost a quarter century ago. And I went out and documented them as far as Peru, and Libya, and Iran, and you name it, all over the planet.

Chinese behavior, American behavior, European behavior. So are we now irrevocably in a multipolar world in which America is not actually going anywhere, China’s not going anywhere, Europe’s actually not going anywhere. And on top of that, you’ve got India and Russia and so on.

So we are absolutely in a multipolar world. It’s more GX than it is G0. GX meaning X number of great powers and superpowers that have greater or lesser influence depending on whether you’re talking about their regional influence versus their global influence.

But this is a GX world and it’s going to continue to be for as long as you and I are alive. Okay. Okay.

Thank you for that perspective. My last question for you is when you look at emerging markets right now, I’m just curious, what stands out to you as the most promising, most opportunistic? You’re in Singapore, we’re putting down roots in Indonesia. What strikes you from a global standpoint as the most promising emerging markets right now? Yeah.

So the term emerging markets encompasses such a wide set of countries across Latin America, Middle East, Africa, Asia, or the BRICS and whatnot. If you look fundamentally at their economic performance, at their stability, at the returns on investment in their markets and so on and so forth, you can actually kind of see that there is Asian emerging markets and then there’s everyone else. You don’t really put Thailand and Vietnam and Indonesia in the same category as Nigeria today.

No one’s going to buy a Nigerian local currency 30-year bond. Whereas in Indonesia, you can issue that bond and others can too. So there’s really Asia and there’s everyone else.

So I think much more geographically than I do in terms of these catch-all buckets, like emerging markets, it’s actually a term I’ve been denouncing for more than two decades because it really doesn’t tell you much about the common characteristics of these countries. And I think some emerging markets will wind up outperforming developed markets. In fact, they already do quite considerably.

The only thing is that they don’t get classified as developed because they’re not rich countries or they’re not democracies or their regulatory systems are still evolving unfamiliar things like property rights and rule of law and so forth. But fundamentally, if you’re an investor, what you’re seeking is returns, right? You’re seeking performance to the extent that if that doesn’t correlate to being a democracy in the sense of, however it’s understood by the ratings agencies, that’s quite simply less important than its performance. Okay.

Last question for you. This is a selfish one. New president in Indonesia, Prayobo, bit of a different take than Widodo, who was before him.

Markets don’t seem to love it. Currency’s hitting lows it hasn’t seen since the Asian financial crisis. Do you have any take or perspective? He’s expanding the role of military in the country.

What’s your take, Pra? Do you have one on Indonesia right now? I would have preferred that successive Indonesian governments are younger in terms of the personnel that are stacking them. I’d prefer that they be progressively more technocratic, meaning run by experts, by committees, not so much by parties and personalities. And I’d prefer that they be more consistent in their pledge, in their commitment to infrastructure investment, economic reforms, deregulation, strong social policy, trade enabling measures, all of those kinds of things that countries of Indonesia’s profile need to do.

So I don’t think it’s out of the question this government will do those things. Of course, the short term reaction of the markets is owing to the observations that I just made and that you made earlier. I’m not surprised, however, given the leadership’s profile, that I’ve often compared Indonesia to other countries like Egypt, Turkey, Pakistan and other places where the military does play an outsized role in key industries and land ownership, in commercial relations, supply chains, all that kind of stuff.

So it’s been one of those things that’s been fairly pervasive off and on in Indonesia. But I think they’ve reached a point as a country that they really need to take a very professional and again what I would proudly call a technocratic approach, I think technocratic leadership decision making by expertise in the interest of the public, of the nation, of the state, of the economy is how it should be run. So I think that the market warning, the market reaction, investor reaction is a strong corrective or motivator where this government may be saying, hey, just because we won and we have experience, it doesn’t mean that we are sufficiently professional and competent with a the world finds credible.

So I think it’s going to be a back and forth process. But overall, like you, I believe the country has enormous potential. I mean, there’s always been a saying that like Brazil, Indonesia is the land of tomorrow that always will be.

So Indonesia is the Brazil of our part of the world. But I think a few waves of the pen, let’s say, could get Indonesia on a track where it really has a very credible long-term story and gets closer to that escape velocity that we know that it’s capable of. Okay, look, for everybody watching, I encourage you to check out Parag Khanna dot com.

Check out the periodic table of states and all of Prague’s books, including his most recent move, where people are going for a better future. I just ordered my copy. I’ll review it here on the channel after I read it.

Parag, thanks so much for coming on the show today. I sincerely appreciate your time. Pleasure.

Really enjoyed it. Good to speak with you. All right.