← What Really Matters with Walter Russell Mead
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Foreign.
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Welcome back, everybody, to what really Matters. I'm Jeremy Stern with you in Los Angeles. I'm here as always with Walter Russell Mead of tablet, the Wall Street Journal, Hudson Institute, and the Hamilton center at the University of Florida. Let's start with this week's news. First story of the week. U.S. forces intercepted and seized a sanctioned oil tanker off the coast of Venezuela this week, marking a serious escalation of tensions between the two countries. A senior Trump administration official referred to the ship as, quote, a stateless vessel that was last docked in Venezuela. The very large crude carrier, which is 20 years old, was sanctioned by the US in 2022 for supporting Iranian oil exports. The US action may make it much harder for Venezuela to export its crude, as other shippers are now likely to be more reluctant to load its cargoes. Most of the nation's oil goes to China, usually through intermediaries at steep discounts owing to sanctions risk. Brent futures edged higher after the news, and a few hours later, US Attorney General Pam Bondi posted a video on X showing heavily armed forces descending to the ship's deck from a Black Hawk helicopter. US Officials have long suspected Venezuelan President Nicolas Maduro's regime of selling sanctioned crude via Cuba illegally in order to benefit from the profits while making the sales harder to trace. Walter, is this tanker seizure news or FO news?
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I think it's actually news in that it is a significant escalation of the Trump campaign against Maduro's government in Venezuela. And it's not merely a sort of symbolic escalation. It's actually hitting them where they hurt. You know, there are a couple hundred, I think, of these container ships that are, you know, not under a flag or willing to operate in the, in the shadowlands or whatever. They don't actually, the owners of these things don't actually want their ships to be seized by the United States and the oil, you know, know, confiscated or at least stored or whatever. They want to continue doing business. So this really does have the potential to inflict massive harm on the Venezuelan economy at a time when the country is already in poor shape. So, yeah, I think what we see is that the, the Trump administration is continuing to ratchet up pressure.
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I saw that shortly after the news of the tanker broke. Trump was answering questions and told a gaggle of reporters that Colombia, the country of Colombia, would be next on his list in his campaign against drug trafficking. He called the president out by name, seemed to threaten him. I know the two of them have gone at it before. We'll talk about the new national Security strategy document in a few minutes. But for now, kind of, how expansive do you expect this Western hemisphere military, anti drug, anti immigration campaign to be?
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Well, I think what he will hope is that, what is that saying you kill the chicken to scare the monkeys, that if you demonstrate your will and your capability in a couple of key cases, other people will quietly draw the necessary conclusions. You'll be able to get a lot of power for a small amount of exertion. It looks as if with Melaye's victory, Melaye's party doing so well in the latest elections in Argentina, there's the, you know, in Chile, it looks as if the, actually the communist candidate will lose the election In Chile, we've seen a shift to the right in some other countries. You may end up in a situation where most, if not all of Latin America is following the Trump lead. I notice that Mexico has imposed 50% tariffs on China, which is again, is very smart from the Mexicans because this will make it much easier for the United States to accept goods from Mexico rather than sort of Mexico being a place where Chinese goods are assembled for export to the United States. Smart move, but a sign that on the whole, Trump's influence is growing in the hemisphere.
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All right, our second story. Despite devastating out of pocket costs, Americans are generally insulated from the true cost of health care premiums. However, the expiring subsidies on the Affordable Care act marketplaces where more than 20 million Americans get their insurance show just how exorbitant premiums have become. Consider a 60 year old couple earning $85,000 a year without subsidies. Their health insurance premiums next year will approach $32,000. Americans who get health care insurance from their employers, some 160 million people, may be breathing a sigh of relief. But their health care premiums are also staggering. An average of $27,000 a year for a family of four. And the fact that their employers pay part of the tab isn't much of a reprieve. That's because decades worth of research shows that even though employers pay most of workers premiums, those costs are passed on to workers in the form of lower wages and fewer jobs. That's why, according to a new report from the center on Budget and policy priorities. The rise in health spending above the rate of inflation over the past decade has depressed wages by nearly 10%. Walter, is this news or fo news?
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Geez, I thought Obamacare was going to fix all that. I'm shocked myself. I thought we'd had this fight. The real problem here is that news. Is that phone news? It's reality. But I think again, it's, as is so often the case, there's a kind of a flawed framing of it. I mean, the real problem is that health care is just too expensive. There, there are a lot of reasons for that. There's no single thing that is driving it. A lot of it has to do with, with the way it's, it's delivered in kind of what we used to call blue social model methods, a guild system, employees for life in large bureaucracies. But there's also the sense that the fact that for companies it's tax exempt and the company subsidy to you of your health insurance is actually not subject to tax. At the same time, it hardly takes decades of research to note that if companies pay for employee health care, this will reduce the amount of money available in wages and will also reduce the number of employees a company wants to hire. This is, you know, if it really took you decades of research to do that, I don't know what, what should you, you know, begin to look at now that, that rainy days often lead to slippery or sidewalks. Could we have, you know, a hundred years of research into a difficult situation like that? One difficult question. So we have to figure out a way that the productivity enhancements that are taking place in other parts of the economy can more and more take place in healthcare. That has to mean some forms of automation, some kind of use of Dr. Chatbot or something of that nature has to happen. And figuring out how to do that is both one of the most, maybe the most single most important domestic policy question that we have, maybe next to housing. And it's also, I think if I were talking to somebody who wanted to be the next generation of massive tech mogul, what I would say is, look at this field. You want to be the Uber of medicine or the Amazon of medicine or whatever it is now. A lot of people have tried. The regulatory environment makes this very difficult. You know, there are reasons why we don't have, you know, Mudoc yet. But as, as the software becomes more capable and as more people put some effort into thinking about what a different kind of healthcare system could look like, I think we're going to reach the point where you start being able to, to introduce reforms and build companies that together move us down this road. But what we want is for as much as possible, healthcare to start working more the way computers do, and that every year you can buy a better computer for less money. That's how progress is supposed to look.
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All right, final story of the week. China's recent breakthroughs in fracking technology have the potential to usher in a new shale revolution that could solidify the country's energy security and reshape the international oil order. On Tuesday, the Jimsar shale oil demonstration zone in Xinjiang, China's first such national level zone, reached its annual crude oil output goal of 1.7 million tons, 22 days ahead of schedule. Established in 2020, the shale oil demonstration zone in the Jungar Basin covers an area roughly 500 square miles and could potentially yield more than 1 billion tons of crude oil. China has the largest recoverable shale gas and third largest recoverable shale oil reserves in the world, according to the U.S. energy Information Administration. As the world's largest crude oil importer, China's commercial exploitation of its shale reserves could threaten OPEC and its allies. However, accessing these formations buried deeper than those found in the US has presented a significant challenge. Walter, is this news or faux news?
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It's not quite yet news. There will come a day when, if they manage this, it will be news. I think that as, as I've heard and, and you know, I'm, I'm hardly a petroleum expert and even less a Chinese fracking petroleum expert, although I'm willing to play one on tv. But I think a lot of the problem there has to do with water more than anything else. The, the shale resources in China are very far from large water sources and North China in general is very short of water anyway. And so it's not, you know, whether or not you can actually drill down that far. It's just all of the other stuff has been the limit. So I can't. From the news accounts that we're getting and the sort of limits of Chinese media anyway, it's hard to see what's under this. It could just be the Chinese kind of showing something. You know, we have this demonstration zone which is completely irrelevant to anything larger, but we're just going to kind of suggest that we could become independent. And frankly, I would say the biggest problem with that is not that it would be, oh no, a blow to opec. Oh, how horrible that would be. I would just weep and moan, oh my goodness, what a terrible thing. But it would be the consequences For Chinese autarky, that is their ability to laugh at the prospect of sanctions or worst case, some kind of naval blockade as a deterrent to an attack on Taiwan. So if we got to the point where China actually was self sufficient in energy and remember, in addition to the fracking, they're doing their solar stuff, they're doing nuclear. They are really do. They're exploiting hydropower in a way that we can't do because we have voters who live in the places that are going to, you know, we're going to fill up with water to make reservoirs and those voters have lawyers. China does not have any of those problems. So they are really moving forward on this. And people talk about this in terms of, oh, it's going to give them a great AI advantage. Well, you know what's really going to do, if they can have a self contained electronic power system, it makes them that much more able to contemplate aggressive action beyond their frontiers.
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All right, that does it for the news this week. Let's have the big conversation. So the Trump administration published the unclassified version of its national security strategy earlier this week, Walter. And as you noted, Trump's supporters have hailed it as a kind of holy founding document and his critics have criticized that as bringing an end to democracy. None of which tells us very much about what's actually in the strategy document and whether or how much of it matters. You're one of the few people, I think, who read it and has some sense of what these papers are and aren't actually for. So give us your thoughts on America's national security strategy circa 2025.
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Okay. Well, I think the first point is, you know, you read this and probably the Quincy Institute was hardest hit. That is to say, you know, Rand Paul, the more isolationist wing of the MAGA coalition, they are not only thrown under the bus, they're sort of being fed to the bus. This is a strategy document for an administration that thinks it is a global power with global interests. Now, it doesn't see those interests in the way that, say, John Kerry did or even Hillary Clinton did. There's actually more overlap, I think, with, with Secretary Clinton than with Secretary Kerry. But it is, you know, you look and you see, you know, what do you think about Taiwan? Well, we think Taiwan is a, is a core interest of the United States. They avoid saying it in so many words. But it's impossible to read that document without seeing it. The fact that US jets and Japanese jets have just exercised maneuvers together in the face of some Chinese pressure on Japan is sort of underlines that, I think, in the same way, again, they've offended just about everybody in Europe by what's in that statement. But it is not a statement that we don't care about Europe or that Europe doesn't matter to the United States. In the Trump vision, the European establishment is destroying Europe and therefore wrecking a vital ally of the United States, and they want that to stop. You can argue with them over this, but they actually believe that, that the European mindset is more dangerous to the United States and to Europe itself than Vladimir Putin. They really do believe this, that the mass migration into Europe, the economic stagnation, the sort of long history of pacifism, the sort of neurotic ideas about history and power and so on, that this is incapacitating Europe. So an administration that. That didn't really care about Europe and was genuinely isolationist would actually not spend any energy on, like, we don't care. Okay? You people are, you know, it's like, you know, you're wrecking your lives, but you're not related to me and I don't have to pay your bills. And then the Latin America strategy, which, again, they put the Western Hemisphere first, which is, I think, smart politics. And also, I would actually agree from a national security standpoint that we're at a moment when we need to. We do need to elevate the Western Hemisphere in our thinking, is, again, an incredibly ambitious agenda. Very focused talks. A lot of it is about power projection, and it sees key domestic interests, like our economic prosperity, like the security of our borders and so on, as being absolutely tied to what's going on in foreign countries. So I've been writing for the last year that anybody who thinks Donald Trump is an isolationist has just completely misread the man and the movement. That still seems to be true. There's a wing of the MAGA coalition that is isolationist, but Trump is not. And Trump makes concessions to them, and he wants to keep them in his coalition. He wants a big tent that includes him, but they're not getting a big piece of the action here.
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Just one final question. So insofar as there is kind of, you know, disagreement within the Cabinet about which direction we want to pull foreign policy and national security policy in, you see this document as reflecting kind of a compromise between, let's say, the kind of, you know, JD Vance Elbridge Colby wing on the one hand and the Marco Rubio Pete Hegseth wing on the other, or do you see this as being more of a victory for one side or the other. Is this more of a reflection of Trump himself? How do you read that, that dynamic?
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Well, I, I actually think that it suggests that, that there's less space between Rubio and Vance on some of these foreign policy issues than one might, than, than maybe a lot of the press speculation would give us. Trump himself has wanted to set this up. Here's Rubio, here's Vance. Let him fight it out in policy and for the succession. And, and I, Daddy will decide, you know, who's up and who's down. That's the, that's the framework. Trump wants the administration to work in and wants the press to work in. And the press, as usual, falls for it hook, line and sinker. Obviously, you know, I'm sure there are, I think, you know, when J.D. vance goes to bed at night, he doesn't think about how exciting it will be to attend Marco Rubio's inauguration January 29th. And I don't think Rubio has the same sense of, like, maybe I'll get to hand him the Bible. No, you know, that's not that. You know, there, there are, you know, there are, they're, they're both ambitious people who, who would like to move up in life. But, you know, you look at something like Venezuela, this, the, the Venezuela policy, or generally the Latin American strategy, okay? It is all about migration and drugs, which are two of the most MAGA issues of all MAGA issues that basically Joe Biden was out there trying to do, like democracy promotion in Equatorial guinea or something, while open borders at home and let the fentanyl do whatever it wants to do. Right? That's the kind of MAGA take on what's been going on. So this is MAGA policy, but it's interventionists. And in Asia, again, there's been a lot of criticism, and I cite in my column, David Sanger, excellent New York Times national security correspondent, White House correspondent. I cite his criticism that there's not a lot of talk about great power politics in this national security strategy, in contrast to the statement that HR McMaster wrote when he was National Security advisor. But you see, he's not talking about China, but China's all over that document and this whole notion of kind of tariffs that favor Mexico putting up the 50% tariffs on China, the tariffs in Vietnam that, you know, higher tariffs on goods made with, you know, that with Chinese components, etc. Etc. There is clearly this steady thing going on, which is, again, both a MAGA thing, reshore manufacturing, rebuild the middle class and so on. And so forth, but is also a great power. China is getting rich and powerful off our stuff, and we're not going to let it do that anymore. But then at the same time, you don't want big fights with China about erupting every five minutes. You don't want disruption in rare earths. You don't want. There are all kinds of ways in which neither the US Nor China would benefit by some kind of economic clash. Overall, it seems to me that when we look at the trade figures, we're seeing a kind of an implicit national security strategy that is kind of working. That is, the tariffs have reduced China's penetration of American market, but the exports that, you know, from that would have gone to the US Are being diverted to other countries, which is poisoning China's relations with other countries. So the Europeans, as they read this statement and are like absolutely furious with rage against Trump. And I think a lot of people don't. They underestimate just how angry the Trump administration is making people over Europe. I think maybe angrier than you had to, even for the purposes of wake up call. I think maybe a little overdone here, but just the Europeans are thinking, ugh, you know, and, and Macron visited China and all of this. The Chinese are basically systematically ripping the guts out of European industry. And, you know, and so the Trump tariff by, you know, again, some people in the press say, hahaha, Trump's tariff, he's such an idiot. They're not working China's trade surpluses, you know, hit a new record. No, no. This is creating headaches everywhere, right? So China is the center, I think, of the national security strategy. It just. But part of the strategy is don't unnecessarily provoke them. He's not doing to them what he does to Europe, which is, you know, even when you've got nothing else to do, say something offensive to Brussels, why not have fun? You know, life is great. You don't treat China that way. You don't treat Putin that way. Not because Trump loves either Putin or Xi Jinping, but because he thinks they've got power because he respects them. Of course, that's the worst insult of all to the Europeans.
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All right, that does it for the big conversation. Let's end on the tip of the week. You were back in your old longtime hometown of New York recently. Walter, tell us how it's changed since you left and what your enduring favorite spots or things to do and CR In New York City.
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Well, my big takeaway from New York was that this congestion charge has not improved the traffic in Manhattan, you know, every time. I mean, I mean, it's always been true that between Thanksgiving and Christmas, Manhattan is just a nightmare to try to get from point A to point B, except in the blessed subway. And so whenever I found myself in a cab or an Uber or something, you have to add 20, 30 minutes, you know, if you, if you need to go from the Upper east side to, to Amtrak station, Madison Square Garden, you know, if you don't leave yourself 40 to 50 minutes for that trip, which you could almost do by walking and which, you know, the reason I didn't was I had a bunch of suitcases with me and I couldn't. So this congestion charge, which was either going to destroy the city's economy because, oh, just another charge and oh my goodness, no way, no, no one will afford it. Or on the other hand, oh, it's going to rationalize traffic and it's going to make everything better. No, no, none of the above. A huge multi year public policy debate was waged over this thing. Court cases, you know, people wrote books about it, dedicated decades of their lives to it. Nothing. Which I'm afraid is a pretty good characterization of a lot of the policy conversations and debates that we're having in the United States today. Favorite places in Manhattan. You know, as always, the Metropolitan Opera is, you know, fantastic. I even went to one of those modern operas this, this fall. The Cavalier and Clay, the sort of takeoff on the Golem of Prague and the rise of the American comic book industry. And in some ways it was, it was actually, it was actually kind of good. Dramatically. It was really effective. I'm still a sucker for Verdi though, you know, and Wagner, Puccini, Rossini. It's hard to, hard to beat those guys. And it continues to just put on the most amazing shows. It is the greatest repertory theater company in the galaxy as far as I can, as far as I can tell. And every year it gets more expensive. I'm afraid every year they get a little bit more woke and do a few more stupid things. But nevertheless, what remains is astounding. It's like, I'm afraid it'll soon be like the ruins of the Coliseum. But it's still imposing, even in, even in its. Even in decay.
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All right, there you have it. Thanks to our producer Josh Cross. Thanks to Alex Katana. But Hudson and my co host Walter Eslamead. I'm Jeremy Stern. We'll see you next week. And until then, please go rate and review us. This helps other people find the show.