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Bonita Mersiades

Bonita Mersiades is one of the most famous whistleblowers in world sport.

She is the author of ’Whatever It Takes: The Inside Story of the FIFA Way’ – a book that details the massive corruption inside the bids for the 2018 and 2022 FIFA World Cup including Australia’s role in the shady process. 

Bonita joined Misha Zelinsky to talk about the intersection of sport and politics, why when it comes to cheating its easier to punish individuals than nation states, the role that money plays in the corruption of sport and why it’s just so scary being a whistleblower. 

EPISODE TRANSCRIPT

Misha Zelinsky:                  Bonita Mersiades Mersiades, welcome to the show.

Bonita Mersiades:           Thanks, Misha.

Misha Zelinsky:                  Slightly different change of pace for what we typically have on Diplomates. You’ve got a very heavy sports background, but sports and politics are never too far apart. I thought, with your experience, let’s start right at the beginning. Why do people care so much about sport? Why do people care so much about men and women running around on a field kicking a ball or throwing a ball?

Bonita Mersiades:           There’s many reasons. I guess one of them would be that we’ve all done it, or most of us have don’t it, at some stage in our lives. The other thing is I think almost more than anything, perhaps music is the only other thing, is that it’s something which is part of a culture that goes through generations. Particularly in something like football, regardless of which code of football it is, the love of that and a love of the team for example can pass down from generation to generation. I think from an individual perspective, that’s why we love sport.

Bonita Mersiades:           From a bigger picture perspective, of society, it absolutely does reflect society and the values that we find important and the values that we like to instill for example in our children, of fair play and team work and perseverance and determination and integrity. For all of those reasons, it’s important.

Misha Zelinsky:                  Now, people often say, sports, it’s not a matter of life and death, it’s much more important than that. It’s also seen as an extension of the nation state. Do you see, in your experience, how much is sport an extension of not just communities but of the country itself? Do you think that that is an important part of sport, as well, the national identity?

Bonita Mersiades:           Yeah, especially for a country like our own. We’re very much tied up, our national identity is very much tied up with sport, even if not so much with ourselves. It is for other people. Having traveled a lot for work not just in sport, but in previous work in government, one of the things that people will often throw at you as a curtain raiser conversation is about the cricket team or the football team or whatever. It is pretty much part of our identity.

Bonita Mersiades:           I think, though, increasingly, too, is that a lot of nations are getting into sport and investing so much in sport because it is obviously a way of exercising soft diplomatic power. Along with arts and culture and fashion and food and all sorts of other ways in which soft power is exercised, sport is also very important to that.

Misha Zelinsky:                  It’s interesting you touch on that soft power, because it’s that murky bit between politics, business, passionate community interest. It strikes me sometimes what makes sport so special is what makes it inherently corruptible. What is it that we see with this questionable behavior from players, obviously, but administrators, high level bureaucrats? How is it that it gets so easily corrupted, something that is so pure when you start as a kid?

Bonita Mersiades:           I think a lot of the administrators in sport, particularly at high level, they forget what sport was about in the first place. My experience, for example, of FIFA is such that, whereas most of the people involved at a high level would have started off in the game as a kid once upon a time and came through the ranks as a volunteer and all of those sorts of things, they lost sight of that when they could see just how powerful that particular sport is, football … I’m talking soccer when I talk football … and the doors it opens for them. For example, if the FIFA president came to visit a country such as Australia, he would get a green light corridor which is reserved for heads of state. He would get to meet anyone that he wants to meet. The president of FIFA has, it doesn’t matter who it is, the president of the United States or the prime minister of the UK. They juggle about who they’re going to sit next to at state dinners. They are treated like a head of state and they see themselves as a head of state. In fact, they even refer to the FIFA congress, which has 212 member nations, more than the United Nations, as their parliament.

Misha Zelinsky:                  That’s really interesting. We’ll come back to that a little bit later on, about the way that sports globally govern themselves. You of course, you touched on FIFA. You’re the author of a book called Whatever it Takes, which is The Inside Story of the FIFA Way, but also particularly Australia’s failed bid for the World Cup in 2022.

Misha Zelinsky:                  Firstly, I suppose, why did Australia bid for this event? Why is it important to put taxpayer money … We put in $50 million, I think it was. Why do countries put money behind these kind of events?

Bonita Mersiades:           I think the number one reason is the one that we touched on earlier about soft power. If you look at Australia’s history with major world events, whether it be the ’56 Olympics, the 2000 Olympics, the Commonwealth Games, although that’s not as large, and things like that, Australia has leveraged those events to give it more power and more of a, I guess, credibility and notoriety, and I say that in a positive way, every time there’s been one of those major world events. That’s why nations use them. If you look at who won out of that 2018, 2022 process, and we’ve already experienced the 2018 World Cup, there is absolutely no doubt that Vladimir Putin and Russia used that to try and soften their image when everything else that was going on in their country would probably be a negative for most.

Bonita Mersiades:           Why did we bid? One, there was that. Two, I think from a football perspective, at the time and probably still, we have always seen it necessary to turbo charge our sport to realize its potential. This is what I’m really passionate about, is that football is a way in Australia for Australia to be closer to the world and the world to be closer to Australia. Yet, we’ve never really taken great advantage of that. Hosting a World Cup would have been a way to do that, as well as putting our sport onto another level financially. That was one of the reasons from a football perspective, as well as whatever legacy it may have left for the sport within our country. They were the three major reasons. There was a national reason, there was a football legacy perspective, and there was a football financial perspective.

Misha Zelinsky:                  Yeah. In your book, you talk about the fact that … Famously, for those who … I’ll just quickly recap. There was two bids for the 2018, 2022. Australia was reasonably confident they were going to do well with that process. We then finished last. We got one vote. $50 million dollars for one vote. That vote was from the now disgraced Sepp Blatter who basically told us he voted us, I mean, effectively out of sympathy. Otherwise, we would have got zero votes.

Misha Zelinsky:                  The thing that you talk about in your book, and I’d like for you to unpack this, at the time of the vote we knew we were going to lose, and yet nobody told the government. Can you expand on that a little bit, about that process of the vote itself?

Bonita Mersiades:           Yeah. I think that was … People have also asked me what really got me to the point where I was so unhappy with working through this. There was a lot of things, but that was one of them. We were standing in the lobby of the FIFA headquarters in Zurich after Kevin Rudd had been to visit. Kevin Rudd was a master politician and master showman. Put him up with Sepp Blatter and it was really a contest to see who was going to be smiling the most and being in front of the camera the most. Kevin Rudd was great on that visit, but after he left we were told point blank we wouldn’t win it because we would never be commercially competitive.

Bonita Mersiades:           From my perspective then, we should have at least as a minimum told the government that that was the case. The government may well have said, “That’s fine. There are other objectives we’re pursuing with this,” because after all, just by being a bidder we’re out there in the global community getting noticed. That’s not a bad objective as long as the government is able to make that decision, in my view. They were also bidding at the time for a security council seat at the United Nations, so there was that double act going on as well. But we didn’t. We didn’t do any of that.

Bonita Mersiades:           I think, when you come back to what happened at the very end of the whole bidding process and the fact that I revealed in my book, that Qatar, through what was then Al Jazeera, paid a $100 million what they call production contribution if the World Cup was held in Qatar, I think it’s fairly clear that Qatar were also given the same information, i.e. you won’t be competitive commercially. In other words, their meaning against the United States, who was one of the other bidders for 2022. Qatar dealt with that because they had the state owned resources to be able to deal with it. They came up with some might say it was a clever way of doing it, and some might say it was sneaky. Nonetheless, it worked for them, from an organizational perspective. We didn’t do any of that. Instead, what we did was, oh, we’ll get a consulting company to do a report on why Asia is the next big growth area in football. My question to that was, there’s three other Asian nations bidding so why us rather than the other three.

Bonita Mersiades:           There was always this view that no one would want those other three, they’ll want us in Asia, not the other three. I think there was this sense that while we would host a great World Cup … We do all of that stuff really well … and it’d have been fantastic to have, there was never any sense, realistic view of what else was going on. At least publicly there wasn’t a realistic view of what was going on.

Misha Zelinsky:                  You’ve sort of touched on this process. A lot of people wouldn’t know that when they’re deciding a World Cup, there’s only 22 votes, as I understood it.

Bonita Mersiades:           At that time, yes.

Misha Zelinsky:                  Yeah. Can you give a sense of some of the dirty trick … You touched on the Qataris have put up $100 million. You talk in your book and at other speeches around some of the examples from the then French president Sarkozy or Vladimir Putin in Cyprus. Can you give some examples of some of the stuff that other countries were doing in other to secure it? Given that the Russians won 2018 and Qatar won 2022, I think it’s important to think about exactly what went on.

Bonita Mersiades:           Yeah. Not just during the bidding process, but afterwards as well if you track some of these things. I think it’s important, too, because so many people have talked about Qatar and put it down to the traditional brown paper bag stuff. There may well have been some of that that went on, but there are also this other much more sophisticated and strategic interventions.

Bonita Mersiades:           I mentioned the $100 million production contribution. Not long before the vote, the person who is now the emir of Qatar went to France, had dinner with Nicholas Sarkozy, and Michel Platini who was then the FIFA vice president and one of the most powerful people in football, was invited along. Basically, it was put upon him that he and the people, his votes that he could manage, should vote for Qatar and in return for which Qatar would look after a number of things.

Bonita Mersiades:           The following year at the Dubai Air Show, Qatar Airways bought … I haven’t got the numbers absolutely correct, but certainly a proportion … bought approximately 80 Airbus aircraft and two Boeing aircraft. The following year, Michel Platini’s son ended up with a job with Qatar. The following year, Qatar, and they still owned, Paris Saint Germain, the most successful and the biggest football club in Paris. All of these things sort of went on both at the time and subsequent to secure those votes. That’s one example.

Bonita Mersiades:           In terms of Russia, I tracked this through a Greek newspaper, or through a relative who sent it to me actually. Vladimir Putin visited Cyprus in September 2010. This was about two months before the vote or six weeks before the vote. In a speech about anti ballistic missile technology, he said, “We Russia are going to share our technology with you,” which in itself is a huge issue and quite big, “But by the way we’re also bidding for the 2018 World Cup and we’d really love to have your vote.” Sitting in the audience is the man who’s going to vote. Now, was that you must vote for us or else or just the type of typical government to government deal or negotiating or trading that goes on during these things? That’s why I say there’s a lot of sophisticated and strategic interventions from countries and nation states around that whole bidding process and the voting process.

Misha Zelinsky:                  It was quite successful when you look at it, right? You look at the fact that there was a lot of concern at the time, certainly for the last decade, around Russia’s behavior globally, when you look at invasion of Georgia and so on and so forth, the annexation of Crimea. They bid quite high as you describe and then there was a tremendous soft power success for the Putin regime in Russia last year in the 2018 World Cup. Qatar, which is a tiny country, I think everyone was shocked that they won it. They’ve come under enormous pressure for some of the abuses of human rights and labor rights subsequently. They’re two really concerning examples.

Misha Zelinsky:                  Australia’s bid. I’m kind of curious. What about us? We spent $50 million of taxpayers’ money. Was our bid clean or not?

Bonita Mersiades:           It depends what you mean by clean. Is it clean in that anyone is being indicted or arrested yet? It was clean in that respect because no one has been. Was it clean in terms of using, as I’ve termed it, or in fact as the former attorney general of the United States termed it, the FIFA way? Yeah, we absolutely did. For example, we gave four million dollars to the Oceania Football Confederation, that’s based in the Pacific, for a really good project, that is to help kids in the Pacific play sport with better facilities. No one can doubt that that’s a good cause, but it was only given because we were bidding. I sat in the meeting. It’s not a question of I’ve read this somewhere and i think this is what happened. I sat in the meeting with the director general of [inaudible 00:14:59] on more than one occasion, what was then [inaudible 00:15:02], more than one occasion in which he talked about how he would require additionality from the federal budget in order to fund this. There is no doubt about that.

Bonita Mersiades:           We, when I say we, Australia, the Football Federation of Australia, got an award from the Asian Football Confederation for a five million dollar donation, five million dollar donation that wasn’t particularly allocated to anything but we donated it. We gave half a million US dollars to Jack Warner, probably the most notorious of all of the characters, if I can call them that, around FIFA and world football. He wanted that to upgrade a stadium in his home country of Trinidad and Tobago. What they didn’t bother to do in terms of due diligence was to find out that the land on which the stadium was … Sorry, the stadium was built by FIFA money. The club concerned was owned by the Warner family. The land on which the stadium and the facilities were built was owned by the Warner family. Where did that US half a million dollars end up? In Jack Warner’s personal back account.

Bonita Mersiades:           Now, what Football Federation Australia officials or former officials have said in relation to that, “Well, we didn’t know that was happening.” Even if they didn’t know that was happening, they should have been able to figure out what was going on and they should have done better due diligence. Not only that, they shouldn’t have made a payment of US half a million dollars to one of the most powerful people in world football and a voter some six weeks before that vote, because it smells. There is no other word for it. It smells.

Misha Zelinsky:                  In any other context, if these people were elected, it’d be a corruption. Because again this murkiness of sport, it becomes less … There’s no proper oversight, no proper democratic oversight. Just going back slightly from the bid, we lose the bid quite badly, but ten months before that event you lost your job. Your book is largely about being a whistleblower. I was kind of curious. You called out some of the problems. Next thing you find yourself on the out. Can you maybe explain what caused you firstly to blow the whistle on this, so to speak, internally? Then why did you find yourself shown the door do you think?

Bonita Mersiades:           I kept raising questions while I was in the job. It’s worth bearing in mind that I was a very senior executive. I reported to the CEO, I had close contact with the chairman amongst the bid group. I was also doing my other work at FFA as well, which was the ordinary communications and PR and corporate affairs type stuff. I would ask questions about why were we doing this, why were we spending money here. I would call out … We employed three notorious, two of them especially, notorious international consultants. In my eyes, [crosstalk 00:18:05]-

Misha Zelinsky:                  Who specialize in the area of thief of bidding?

Bonita Mersiades:           Yes. That’s all they do basically.

Misha Zelinsky:                  Right.

Bonita Mersiades:           Having worked with consultants for years and years and years, having been in government and elsewhere, I knew that they were not ordinary consultants. They were getting paid $15 million between them. They weren’t like ordinary consultants who would provide reports or provide you feedback or have any … Except for one of them, they had no deliverables in particular. I kept asking questions about this. As I mentioned, we were told that we wouldn’t win and we didn’t tell the government. As far as I’m aware, we didn’t tell the government. Certainly from a management perspective, we didn’t. I just got more and more uncomfortable. After a while, I guess, I think it was just simpler for my CEO at the time because he had the consultants in one ear sort of complaining about me and me in the other ear complaining about them. I think he thought what price piece will get rid of her?

Misha Zelinsky:                  Like a lot of whistleblowers, you came under an enormous amount of personal pressure. Can you explain that the attempts to discredit you? There was a report done that deliberately targeted you and one other person. Can you sort of take us through that process? You’ve made the complaint and then you’ve then largely been left as the problem.

Bonita Mersiades:           Yeah. To this day, I’m still seen as a problem, even though there’s been a change of executive management [inaudible 00:19:35] at FFA. I think someone said I was an agitator and therefore I shouldn’t really be someone they talk to.

Bonita Mersiades:           The first thing they did was try to make out that the reason I was sacked was for reasons that were just not accurate. A little bit like what’s happened to the Matilda’s coach more recently. They would say, for instance, it was because I was responsible for relationships with the state governments and they weren’t going well. Actually, it wasn’t my responsibility. That was all about stadiums and that wasn’t my responsibility. There were those sorts of things. That was just the immediate aftermath.

Bonita Mersiades:           It became much bigger than that. There was sort of a fatwa put out against me by Football Federation Australia in terms of warning people not to have any contact with me, not to talk to me, not to take any notice, saying that I was bitter and twisted, saying the usual stuff when there’s a whistleblower. They do everything to discredit you and say that you’re only saying things because you’ve lost your job. Some people didn’t believe that because they had known me. I didn’t just go and work in football because I wanted a job. I worked in football because I love football and have done all my life. I grew up with it.

Bonita Mersiades:           Then it sort of elevated. When I started talking about governance, when I put it all together, I wrote it all down. I wrote everything down. I started putting together and I realized that what this really was was a governance issue at a much bigger level, at a FIFA level. I started talking about that, both here in Australia and also internationally. I actually coined the phrase the FIFA way back in 2011 and in fact I’m delighted to say that Loretta Lynch, the US attorney general, picked up on it.

Bonita Mersiades:           They then started a review of the 2018, 2022 bidding process by a person who is now a judge in the New York Court of Appeals. He was a paid consultant to FIFA. He interviewed approximately 75 people for his report, which took approximately two years to do. He got paid about ten million US dollars for it. In his report, he singled out two people to criticize. First of all, he said the decision was fine, there was nothing wrong with Qatar and Russia being selected. He did say that there was some dodgy things about the Australian bid and some dodgy things about the UK bid, but he singled out two people and identified them. That was me and another whistleblower, a woman. Of all people in the entire world of football that were seen as being a problem for football, it was the two whistleblowers and two women, and two quite vulnerable people.

Bonita Mersiades:           One of the impacts of having been a whistleblower, especially in a relatively small community in Australia, is it’s very hard to get a job when you’re up against one of the most powerful men in the country, i.e. Frank Lowy. For the other whistleblower, she was an American born Arab woman who … She has found it difficult to I guess really gain the employment that she would like to, just as I have. You continue and get on with life and do other things, but life changes a lot when that happens to you.

Bonita Mersiades:           I guess one of the telling things about all of that was that you do learn who your friends are and you do learn about people who say they stand for something and that they don’t actually stand for anything when it comes to it. Because they’ve never bothered to pick up the phone and ask you how you are or any of those sorts of things. I guess I’m glossing over it to some extent, because it doesn’t sound that bad, that it was just written in a report, but it was much worse than that in that this was global news. This wasn’t just something that happened in little old Australia. It was global news.

Bonita Mersiades:           When this report came out, I was in Perth doing some work. A friend of mine, a journalist in England, contacted me and he said, “You really need to look at the Garcia report straight away.” By the time I’d got back to the hotel to log onto the computer and have a look at it, I was inundated with calls. It changes your life. It’s one thing to have been sacked from my job and had to sort of reinvent myself after that. It was quite another to have this man who should know better, a lawyer, who had been the US attorney general for the Southern District of New York, so a prosecutor, he should have known better than to break the confidence of two women whistleblowers. It was just outrageous treatment and says more about him than it does about us.

Misha Zelinsky:                  You sort of detailed I suppose there the enormous pressure you came under. It’s quite a curious … A lot of people might have just gone underground. You’ve probably taken even more prominence since then. How did you go about fighting back against a very, very, very powerful not just in Australia, but global outfit?

Bonita Mersiades:           There were two options, and one was to sort of, and what they wanted us to do, was to get into a corner and curl up and die. Neither of us did that, I’m pleased to say. Certainly for the other whistleblower, her preference was not to bring any more attention to herself because she had some other issues that she needed to deal with. From my perspective, I thought I’m just not going to take this. I’m not the person who did anything wrong. I’m the person who’s brought attention to all of this. I’m just not going to take it.

Bonita Mersiades:           Fortunately, someone put me in touch with an MP in the House of Commons, Damien Collins, who is now the chairman of the Culture, Media, Digital, and Sport Committee at the House of Commons, and also an Australian businessman who is living overseas who is very interested in sports governance issues. We formed, in conjunction with a couple of members of the European Parliament, a group called New FIFA Now, campaign group. Soon after that, we turned up in the Brussels parliament and European Parliament and had I think about 250-300 people at a gathering in which we called for reform of FIFA. We called for basically an overthrow of FIFA as we knew it then and said that there was something terribly wrong going on, when that report had come out, when the two whistleblowers were shamed and disparaged the way they were, yet their whole decision making regime and rationale was not questioned whatsoever.

Bonita Mersiades:           Now that was before the May 2015 arrests.

Misha Zelinsky:                  Yeah, I’d like to … Let’s go to that now. This dodgy process happens. You lose your job. You come under a lot of pressure, start fighting back. FIFA are kind of largely sweeping things under the rug as perhaps they’ve done in the past. Then, of course, there are an enormous amount of arrests, huge worldwide press, that of Jack Warner, the soccer club that you just described, the $500,000 from Australia for the stadium upgrade that never happened, and then Sepp Blatter who was the head of FIFA and the person that voted for us but did so in a manner that was relatively back handed. Tell us a little bit about that and also how validating it might have been. Was it validating after everything?

Bonita Mersiades:           It was quite incredible. As part of our New FIFA Now campaign activity, there was actually a FIFA presidential election coming up in 2015. Sepp Blatter was standing yet again and he was up against at the time Prince Ali of Jordan. We had, as part of a campaign activity, we had organized something with Amnesty International and with [inaudible 00:27:55] to happen in Zurich. We also have put together this sort of fake newspaper, which we were handing out in the streets of Zurich.

Misha Zelinsky:                  Not fakes news, though.

Bonita Mersiades:           No, no, not fake news. Fake newspaper.

Misha Zelinsky:                  Okay.

Bonita Mersiades:           With stories about FIFA corruption basically. Sharon Burrow and Jamie Fuller and others were …

Misha Zelinsky:                  Sharon Barrow is of course the global head of the union movement. An Australian, former head of the ACTU.

Bonita Mersiades:           Yeah. Former head of the ACTU. They were in the streets of Zurich handing out this fake newspaper with the real news when all of the sudden the news came through that there’d been these arrests at the Baur au Lauc Hotel. That was yet another media onslaught. It was quite incredible. In a sense, Jamie and Sharon were sort of Johnny and Jenny on the spot in Zurich. Even again here, there was a lot of media interest in what went on.

Bonita Mersiades:           Did I feel vindicated? Not straightaway. It took a while for that to happen. It was certainly the case though that it was pleasing to see and to have confirmed that the FBI and the IRS were looking into these issues. I had known about it for some time that they were. It was pleasing to see that they’d got to the point where they’d made these arrests. After that, to learn that other things subsequently happened, such as the Swiss government started looking at it, the French government and the UK. I guess over time that has become vindicating. Even more so, I guess when the full Garcia report was released some three years after that summary report, which-

Misha Zelinsky:                  This is the report that named you as the …

Bonita Mersiades:           Which named me and the other woman. Almost three years after it was first released as a summary report, when that came out, everything that was in it in relation to Australia in which he had pointed the finger and said there’s something that needs to be looked into in relation to Australia, everything had come from me, which made it even more absurd what he had said. Because on the one hand, he’s saying this happened, that happened, this happened in relation to Australia. The person who had told him all that, he then said, “You can’t really take any notice of her because she’s a whistleblower.” I think that probably for me was really the point of vindication.

Misha Zelinsky:                  That’s a big decision to make, whistle blowing. Do you think it was worth it knowing that journey you’ve been on? Maybe you can’t answer that, I’m not sure. At huge personal cost, obviously, but seeing that whole house of cards come tumbling down, does it feel worth it in the end?

Bonita Mersiades:           Yes, it does fundamentally. Does it change your life? Yes, it does. Is it worth it? Yes.

Misha Zelinsky:                  It’s a very brave thing to do, to stand up to power.

Bonita Mersiades:           Thanks.

Misha Zelinsky:                  Turning to money in sport, we’ve talked a little bit about much money there is in sport. You talked about FIFA more generally in the sense that they’re an international body, they’re not government run, but they’re these quasi international bodies with sort of no democratic oversight, at least from people, democratically elected people. Given how much money they’re in control of, and these are multi, multi, multi billion dollar enterprises, but also receive billions and billions of dollars from governments, from taxpayers, what do we do about overseeing these entities? What’s the role of culture and governance and how do you actually bring these institutions to their heel? The FBI raiding them and investigating and arresting people is one thing, but you want to see good governance more fundamentally like you would in an ordinary government. What’s the role of governance and culture?

Bonita Mersiades:           It’s a really interesting question, and especially at the moment when you can see what’s happened since 2016 in particular. What happened then is we got a new FIFA president. He brought in a CEO who was a senior bureaucrat in the United Nations. Now, United Nations has had its own governance and financial management problems, but what she has done is introduce a lot of good process and good reporting. I would say that where there’s an issue of process versus culture, culture wins every time. What they haven’t addressed, and I don’t think anyone who’s in the game could address it, they haven’t addressed the culture of FIFA and they haven’t addressed the culture of world football.

Bonita Mersiades:           You’ve got to go back to what the FBI said, I think it was James Comey at that very first media release, sorry, media conference, after the arrests, where James Comey and Loretta Lynch was there. James Comey was still the director of the FBI and he said, “This is a mafia style organization.” I was at a conference not long after that where one of the FBI investigators was speaking. He actually explained what a mafia organization looks like. You take one person out, e.g. Jack Warner, and you put another person in.

Misha Zelinsky:                  The show rolls on.

Bonita Mersiades:           Yeah, the show rolls on. In fact, that’s exactly what happened in the Caribbean. Jack Warner came out, the next person came in, and he’s since been arrested as well.

Bonita Mersiades:           What do you do in terms of governance and culture? One of the things that we called for at New FIFA Now is that there needed to be … It was like being a company. You needed to treat it like a company, an administration, that you would bring in an outsider who had an absolute [inaudible 00:33:47] to make the necessary policy and operational and cultural change and force that through. That takes a generational thing. That isn’t what’s happened. What is clear, though, is that the whole circus keeps rolling on.

Bonita Mersiades:           FIFA’s financial statements came out I think yesterday or the day before, and they showed that their cash reserves have increased to $2.6 billion, their revenues over four years have increased to around about, I’m talking US dollars here too, seven billion dollars. Despite, when you consider that those four years to 2018 includes 2015, despite all of that and despite a 100 million US dollar legal bill, sponsors are still putting money into the game. The question is, where is that sponsorship coming from nowadays. This is the big issue for sport, I reckon. It’s coming from Russia. It’s coming from China. It’s coming from the Middle East. There’s still some money coming from the US, but it is less so as a proportion of all the money. There’s a real pivot happening in world sport. That could just reflect society in general, where the world is going in geopolitical terms. Going back to the very first question is how the sport reflects society, I think it’s worthwhile looking at where the big money in sport is coming from.

Misha Zelinsky:                  That’s interesting. I didn’t really link the concept of sponsorship, soft power, and the control of those institutions, but there’s actually … My next question just goes to this point. There’s this issue of national systematic cheating going on in sport. You’ve seen the Russians with Sochi, then the question of the nation states interfering in the bidding process. We’ve seen some pretty severe penalties for Sepp Blatter, for Jack Warner, but the penalties seem to be on the individuals and on the nations less so. Why? Is that about power? Is it about money? It seems to be the World Cup, the 2018, the 2022 fiasco, Putin would be the center of it and he’s gotten away with it scot free and put on a triumph of soft power in the 2018 FIFA World Cup in his home country. What is it that you can actually … How are we going to stop countries getting away with this rather than the individuals?

Bonita Mersiades:           That’s a really good question. As to why, it’s much more difficult to I guess get at a world leader in that respect than it is to get at a recipient or someone who may be a recipient of a corrupt payment for example. That’s what’s interesting about what’s happening with FIFA so far, too. Most of the people they’ve arrested, indicted, charged, or have been sentenced have been those who have been in receipt of the payments, not those who have made the payments. I think that’s a really interesting issue because it’s not always that companies have made the payments, it’s been individuals as well. Yet, every single indictment so far has been around an individual. It hasn’t gone beyond that. How you stop that, I don’t know. I think it’s a big issue for the world. It goes beyond sport, but of course it gets back to the fact that sport reflects that very much so.

Misha Zelinsky:                  It’s definitely a challenge, though. These countries and these individuals, sorry, companies and countries, when you look at countries like Russia, countries like China, the distinction between a company, an individual, and the nation state is incredible blurred.

Bonita Mersiades:           Very.

Misha Zelinsky:                  That-

Bonita Mersiades:           [crosstalk 00:37:24]

Misha Zelinsky:                  That’s right. Exactly. The top down pressure and the top down influence is enormous. To say these are just rogue actors is to a fair minded person, I think, relatively heroic kind of way of framing it. What’s the answer? Is there cause for hope in this? Ultimately, sport … Sport is a funny thing because it relies on you and I putting importance on 11 women or men running around on a field kicking a piece of leather around wearing different color shirts and giving import to that so people can make billions of dollars out of it. It matters. Once you puncture that myth, sport kind of dies. These things chip away at it. Is there hope for sport in the longterm, do you think?

Bonita Mersiades:           I think there’s hope for sport in the longterm. I would have perhaps three and a half years ago we were at a tipping point where things may change more quickly than they have. I think what an organization like FIFA in particular has done very well is manage the crisis they’re in quite well. I would argue, as I said earlier, that the culture hasn’t changed though. One of the things we have to bear in mind is that the FBI and the IRS and the Swiss and all of them keep saying this is an ongoing investigation. They haven’t gone beyond North and South America yet. They haven’t looked at Asia. They haven’t looked at Oceania. They haven’t looked at Africa or Europe. That’s, I would think, is still to come.

Bonita Mersiades:           What can sport do? I think the other potential is in the general changes we see in society where younger people in particular are not taking crap like this. My generation, obviously there are exceptions, but my generation has tended to sort of play within the system a bit more. Whereas I think younger people, don’t classify it necessarily as an age thing, but they are calling out this sort of behavior and they don’t want it. I am hopeful that that will have an impact over time.

Misha Zelinsky:                  You’ve talked about the age of idea. Another important [inaudible 00:39:41], it’s something that has been a certain movement in this area as well, gender, the Me Too movement and calling out bad behavior and power. Role of gender in sport, you took on basically the ultimate boy’s club arguably in FIFA. What was the role of gender in this?

Bonita Mersiades:           For the two of us, the two women involved, it was huge, but I’m going to say there’s not one woman in power in football, including in this country, who ever bothered to pick up the phone and say, “Are you okay?” Not one. I find that unforgivable because in fact the other woman whistleblower, she actually sort of came to my attention as being in a spot of bother quite a while before that. My first reaction, having met her once, was I must reach out to her and see that she’s okay because there’s obviously something going on there. I did that. That’s what I think I would do for almost anyone in that situation.

Bonita Mersiades:           There’s no doubt that because we were women, they saw us easy targets. She was even a more junior woman than I was in the whole setup. They saw us easy targets, thought we’d be people who would probably keep quiet. They certainly looked for areas, things where we were both vulnerable and found them, and that’s one of the reasons in fact why she has chosen not to be public about these things. Yet, there was no support from a gender perspective. That’s despite the fact on the FIFA executive committee at the time, sitting in the room, discussing these issues, was an Austrian woman, who’s gone on to get awards for being so wonderful on gender diversity in football, yet she didn’t once reach out to either of the two women who were absolutely treated appallingly by the male machine that was FIFA.

Misha Zelinsky:                  What do you think the reason for that was? Is that something that’s systemic as a problem in the sport itself, that it’s hard for women to support other women, the interests of the individuals involved? Is there anything in particular you could put it down to?

Bonita Mersiades:           I don’t think it’s the sport itself. It’s the sport itself in that I think one of the things I always characterize those who have got to the top of FIFA and in fact in football in Australia as well, they get to the point where they’ve forgotten why they are there. They’re more concerned about what football can do for them than rather what they can do for football. Therefore, if there is a line between right and wrong and good and bad and all of those things, they are quite happy to sort of dip their big toe over to the other side and dismiss anyone … This is true of any sort of whistleblower type situation … dismiss anyone who’s making a noise, a bit of an agitator as I said earlier, or a bit of an activist and say, “I’m not having to do with them because that won’t help me.”

Misha Zelinsky:                  Now, we’ve talked a lot about all the negatives of sport. We kind of touched on the positives at the beginning. One of the things, you can sometimes get depressed about the state of the world. This podcast often deals with a lot of the bad things that are happening in the world. Sport can be harnessed for good. We saw recently the issue in relation to Hakeem Al-Araibi, the entire soccer football community coming together, although the union movement globally coming together, and the players union movement supporting him and the incredible work of Craig Foster. Do you see that there are other avenues for sport to be that lightning rod for good? We’ve talked about the problems, but can it still be a force for good?

Bonita Mersiades:           Absolutely. That’s what it should be for. The Hakeem Al-Araibi situation is a good one. I first met Hakeem back in 2016 because the FIFA presidential election was on. One of the front runners for that was Sheik Salman of Bahrain and Hakeem was then living in Australia. He didn’t have refugee status, but he was brave enough to speak out against Sheik Salman. Hardly anyone in Australia took any notice of it, including Craig Foster and the UPFA, but nonetheless internationally it was a big story because the FIFA presidency was a big story. Hakeem did the right thing then and he’s continued to do so. It was a great example of the positive power of sport and the potential of sport. What we recently saw with Craig is the public face of that Save Hakeem campaign.

Misha Zelinsky:                  It was a great story and it’s very good to see him back safely at home here in Australia. The last question I like to ask all my guests … We could talk all day about sport, frankly. I could talk about sport nonstop. We need to put some kind of limit on it. .

Misha Zelinsky:                   Of course, the last hokey question that I have at the end of a very serious discussion about sport is about … It’s called Diplomates. Who are the three foreign mates you would invite to a barbecue at Bonita Mersiades’s? Who would they be?

Bonita Mersiades:           Three foreign mates or three foreign people who have-

Misha Zelinsky:                  Or three foreign people that you’d like to be their mates. I’d like to pretend that all these people that I talk to are my mates. You can have anyone you want.

Bonita Mersiades:           Okay, all right. The first I would suggest would be Vitaly Mutko. He is the deputy prime minister in Russia. He was the Russian sports minister. He was president of Russian Football Federation. He was the president of [inaudible 00:48:35] St. Petersburg. He is part of the St. Petersburg clique of Russia. He, of course, was the sports minister who was in charge when all of the doping issues were going on. He sanctioned it. He has lost all of his positions in world football and in the Olympics. I think he would be worthwhile having a chat to. Just to see if he’s ready to be a whistleblower.

Bonita Mersiades:           The other one would be, and this is terrible, I’m going to sit on the fence, either of the Obama’s would be fine with me. I’m a great admirer of Barack Obama and a great admirer of Michelle Obama-

Misha Zelinsky:                  I’ll let you have both. It’s your barbecue, so you can have them both. Is there a last one?

Bonita Mersiades:           Last, and I would like to say but not least, but this is a really different reason, I think it’d be fascinating to meet one of the people who controls a lot of the world, especially a lot of the world in our language, and that’s Rupert Murdoch.

Misha Zelinsky:                  Certainly does.

Bonita Mersiades:           Yeah.

Misha Zelinsky:                  Rupert Murdoch, a Russian politician, and the Obama’s. That’d be quite an interesting affair. Look, thanks so much for joining us. Thanks so much for being so open and honest and brave. Congratulations on your fight so far and appreciate it.

Bonita Mersiades:           Thank you.

 

Gordon Bajnai

Gordon Bajnai was the prime minister of Hungary from 2009 to 2010.

Banjai took charge of Hungary in the aftermath of the Global Financial Crisis and lead the country through an incredibly difficult period in its history.

As prime minister, Gordon was the last socially democratic leader of Hungary before the country took a turn towards a more right-wing, populist and now largely autocratic regime. Gordon is now the chair of global investment firm Campbell Lutyens.

Gordon joined Misha Zelinsky for a fascinating discussion about, Brexit and the rise of populism, the role economics plays in politics, the march of nationalism in Europe and just how fragile democracy really is.

To my fellow Diplomates out there – if you’re enjoying the show, please be sure to subscribe, rate and review. It really helps! 

 

Misha Zelinsky:                  Welcome, Gordon Bajnai to Diplomates. Thank you for joining us.

Gordon Banjai:                   Thank you for your time.

Misha Zelinsky:                  No, thank you, but I was just seeking before as I was walking here there were just a couple Eastern Europeans in London, so you’re we’re really living the European-London cliché right now, but given that we are in London, and I’ll say it for the recording. We’re in London right now that obviously Brexit is top of the mind here. Where to from here? From Australia, it all seems quite mad. The clock’s ticking. Where do you think this is actually heading now as we head towards the cliff with the potential hard Brexit?

Gordon Banjai:                   Well, every country have their own special kind of populism. I think the special tailor-made populism of the United Kingdom is the hatred towards Europe, and that’s probably a result and it’s a lesson for other countries that if for 40 years politicians try to blame everything on Europe and take all the credit to themselves, that’s then sometimes people start to believe them. Brexit, but it’s been a very clumsy two years since the vote.

Misha Zelinsky:                  Yeah, and it has been two. It’s gone quick.

Gordon Banjai:                   Quick, but two years after it’s still unclear what’s going to happen as we speak. We are just a couple of days from the first vote in the House of Commons about the deal that was negotiated by the British government, and they are not very likely to win that vote. The uncertainty will remain and be honest, in 80 days to go out to Brexit.

For people in business, or people with investments, or people with jobs in the UK, it’s a huge uncertainty with a very short time to react. It is clearly hurting the economy longterm. Whatever happens, it’s going to be negative for the economy, and then even in the best scenario, but there are further down downside scenarios that can hurt the UK better. But instead of, just let me give you two very interesting polls that I’ve read recently.

Within the voters, the committed voters of the Conservative Party, 54% would support no-deal Brexit, hard Brexit, and only 18% of last week, 18% was supporting the deal proposed by the Prime Minister. On the other hand, if you look at the whole country, the latest poll I have seen was 54% against Brexit, only 46% for Brexit. At the national level, it’s a turnaround-

Misha Zelinsky:                  From 52-48.

Gordon Banjai:                   52-48 yeah, the other way.

Misha Zelinsky:                  In 2016, yeah.

Gordon Banjai:                   Just still not the huge shift even [crosstalk 00:03:01], but it is a shift. It shows how far committed hardcore politics can go from the national mood if we believe both [parties 00:03:14].

Misha Zelinsky:                  Just going back to the original value, sort of touch on populars and then anti-European sentiment in the UK, but was that what drove the Brexit vote? Were there other factors? It’s been sort of debated to death, but what’s in your mind drove that vote, the leave vote?

Gordon Banjai:                   Every such political upsets or surprise votes combine many factors, but I think that the specific nature of these referendums, direct democracy, is that they give a chance for many different groups in society to express their protest by a single vote against something.

Misha Zelinsky:                  So something’s annoying you and you just vote, leave.

Gordon Banjai:                   So many people, I think, have felt disenfranchised, sort of inequality in the UK has grown significantly. It has always been one of the most unequal countries within the European Union. Inequality has grown significantly after the global crisis. That’s one factor. But that seems like a social problem, and still it transferred somehow into an identity crisis. That’s very similar to the US, where many of the disenfranchised Midwest voters who lost their jobs have turned into a kind of identity politics, who are supporting ‘America first.’

Misha Zelinsky:                  That’s right. Similarly, we see the Northern England vote to leave, which is where you’ve seen a lot of deindustrializations. It’s similar to Trump, the industrialization in the Midwest.

Gordon Banjai:                   That’s a global phenomenon, that populism, which is collecting the vote of those who are losing on the social economic agenda. Populism is often able, at least right wing populism, because this is just one form of populism. But right wing populism is able to collect that vote with an identity message. That’s very varying, and that’s very similar to what happened in the 1930s.

Misha Zelinsky:                  It’s interesting on the 1930s. Sometimes it’s seen as a very basic analysis, but do you think it’s similar? Is it 1929-1939 all over again, where you have a major economic event? The Depression is somewhere, the global financial crisis. Then the rise of communism and fascism, et cetera, across Europe. Is this the same thing again, or is it something different?

Gordon Banjai:                   Well, I think there are similarities. We are living in a different age and with different history experiences. But, yes. There are similar trends and rules applied here. First, there is a time lag between the economic crisis and the rise of populism. Second is the interesting switch from the social problem to the identity politics. Then the problem with identity politics is that it’s often cynical politicians use identity, be it the national or religious identity, or regional identity against a national identity. They use this to get into power, and to stay in power, they need to continuously escalate the feelings. They need to pump more steam into the steam room until it blows up.

The permanent escalation is an inherent feature of this kind of politics, and it usually doesn’t end well. That’s probably a commonality.

Misha Zelinsky:                  To put it mildly, yeah.

Gordon Banjai:                   If you look at the whole global politics today, the system is breaking down. One consequence of the global financial crisis, technological change, the inequality in the developed societies all ending up is that the status quo, as we have known, as you and I have grown up, you probably less than I, but we have both grown up in the Pax Americana, the system which was guaranteed or supplied by the United States. This system is breaking apart because the US is pulling up, creating a vacuum. Then some actors, often maligned actors, are occupying that vacuum, taking it over.

That’s also a result of this kind of populism. Also of the fact, if you take one step back and look deeper into what’s behind populism, is that following the great financial crisis, the legitimacy of the status quo in most developed countries and the global status quo has disappeared, that the political reserve that was keeping the system together was used as a result of not just the crisis, but the way the crisis was managed in that. The real issue is, if there is a next crisis, which is going to come soon, that political reserve will not be there to back up the system.

So, we are going into the next crisis with much less political reserves, much less legitimacy behind the status quo, and less tools in the policy makers, especially economic tools. [crosstalk 00:08:52]-

Misha Zelinsky:                  Yeah, [military 00:08:52] policy being so exhausted and fiscal policy being restricted.

Gordon Banjai:                   And in that context, Australia is doing quite well actually, compared to other countries.

Misha Zelinsky:                  Well, yeah. You wouldn’t know it though, looking at our politics, which is a little bit just as crazy as well. We’ve had multiples prime ministers in recent years.

Gordon Banjai:                   One experience that I can share, speaking from Hungary, from Europe, from this part of the world, is that there is a process of deterioration, gradual moral deterioration, but seems to be radically different today, will become the new norm tomorrow. Other things will appear radical, which the day after tomorrow will become the new normal. It’s a kind of amortization of centrist politics, ethics, and morale, play by the rules, checks and balances. Those countries which can stop this amortization early on are more fortunate than the ones who go through this long process, because it can always get worse.

Misha Zelinsky:                  Indeed. But before we get to the democratic question, I was to unpack a little bit about the drivers of populism. You talked about populism and inequality, the GFC as a trigger point, though inequality was probably on the rise before that, but middle class people really got wiped out during the global financial crisis. You became prime minister in Hungary during the GFC, so you understood this crisis very well. In retrospect, did governments do enough to protect ordinary people during the global financial crisis? Is economic equality the antidote to this sort of ethno right wing nationalism? Is more equality the answer to this? How do you see that?

Gordon Banjai:                   Fortunate countries who have enough room to maneuver, i.e., take on more, to survive the crisis, the deepest point of the crisis could, or are able to protect their middle class. But unfortunate countries like my own country, Hungary, was very indebted and not trusted by the markets with new credit. So we have to take a much bigger change and shift, more radical reform that my government was running. We just have to make sure that we survive, but there was not much room to maneuver in the social arena at the time.

But you know, crisis doesn’t have an ideology. There is no left wing crisis and right wing crisis. Crisis wants solutions quickly. Like military surgeon versus the plastic surgeon, you can’t measure by the millimeter. You have to cut 10 centimeters away from the wound to make sure that it doesn’t kill the patient. You have to act quickly and decisively and focus on the core areas to stop bleeding, so that’s what you do in crisis management, because that doesn’t have a philosophy.

To put it differently, in life you can’t choose what situations you get into. What you can choose is how you behave. If you are coming from a progressive center-left approach, you can try to manage the crisis, to stave it off, and still try to keep the texture of society together. One thing that we could learn, for example, from the Thatcher era in the United Kingdom is: if you let, in certain regions or geographies, the system of labor collapse, the social inept to collapse, then it can decades to recover. If you can hold together the middle classes, the systems of employment lower in the classes. If you kept people in jobs, or if you can keep them able to get back to jobs as soon as there is some rebounds, then after the crisis, there’s a chance to recover quickly. However, if you let it collapse under the weight of the crisis, then it maybe decays.

Misha Zelinsky:                  What is it then, do you think? We’ve had this crisis. and inequality is rising. Why do you think that the ring wing populism has taken hold much stronger, seemingly, than left wing populism of, say, redistribution, high taxes, more social safety? You’ve seen a lot more similarly nationalism style populism rise up, be it the UK, the United States, other countries in Europe. Why do you think social democrats are struggling to articulate a populism message on economics?

Gordon Banjai:                   I wish I had known the perfect answer.

Misha Zelinsky:                  Probably a lot of money to be made if you knew the answer!

Gordon Banjai:                   Interestingly in some countries, the progressive forces have done pretty well. If you think about, President Obama managed the economy pretty well in the crisis, and the US bounced back very, very quickly and very decisively. It’s one of the longest period of recovery, post-crisis recovery in economic history. There are some other good examples. Portugal has a progressive left government, and they are doing reasonably well, very well.

Misha Zelinsky:                  But Obama, of course, led to Trump, which is the question.

Gordon Banjai:                   But there are some other factors in that, because if you look at when Obama left, he was very popular. Maybe it’s also the campaign and the candidate explains part of that.

Misha Zelinsky:                  Absolutely, yeah.

Gordon Banjai:                   But clearly there is a phenomenon of identity politics, and typically progressive and left parties are much weaker identity politics than right wing parties.

Misha Zelinsky:                  Which is ironic, because it’s the ring wing that often accuses progressives of wanting to play identity politics, because they’re-

Gordon Banjai:                   [crosstalk 00:15:29].

Misha Zelinsky:                  Yes, but also through the promotion of women’s rights, or the promotion of minorities groups, is that somehow that is identity politics, whereas nationalist politics is identity politics as well. It’s quite ironic in that sense. We’ve talked a little bit about economics. One issue we haven’t really talked about here, and it’s probably that when you look at the Brexit vote as well, is this question of immigration. Because when you look at some of the countries that have become more populism right wing … Poland, it’s done quite well economically, really.

Gordon Banjai:                   That’s a perfect example of how contrary to what Bill Clinton said in 1991 or 1992 in the campaign, you remember is

Misha Zelinsky:                  “It’s the economy, stupid.”

Gordon Banjai:                   “It’s the economy, stupid.”

Misha Zelinsky:                  Yeah.

Gordon Banjai:                   And everybody thought he had found the stone of wisdom. There are times when it’s the economy, stupid, and 25 years later, his wife long the election despite the fact that the US was booming economically. In Poland, there was a regime change despite the fact that Poland was the only country in Central Europe, or probably the only country in Europe, which was growing in the middle of the crisis as well.

Misha Zelinsky:                  Correct.

Gordon Banjai:                   It’s not just the economy, stupid. Sometimes it’s identity. If I need to find an explanation, the one that is closest to my heart and brain probably is that every democracy is built on middle classes, broad and stable middle classes. If the middle classes start to fear of losing their status, their stability, if they lose their perspective, their horizon looking into the future … If you think about, this is the first time in 70 years in the western part of the world, developed world, is that the middle classes fear that their kids will do worse off than themselves.

Misha Zelinsky:                  Interesting. There’s an interesting statistic on this where in the United States in the 40s, 90% of Americans believed their kids would do better than them, where today, it’s more like 40%. That’s kind of indicative.

Gordon Banjai:                   In some countries, it’s even less. If you think about youth unemployment in Italy [crosstalk 00:17:47]-

Misha Zelinsky:                  50% in some places, yeah.

Gordon Banjai:                   France as well. Youth unemployment and the general perspective is the horizon is looking down, not up. That’s a factor that explains the volatility, the anxiety of the middle classes. If the middle classes are trembling, then populism is on the growth. Just to quote you one famous English historian, “Revolutions are not made by the poor.”

Misha Zelinsky:                  [crosstalk 00:18:18].

Gordon Banjai:                   “It’s made by those who get disappointed.”

Misha Zelinsky:                  Hm, interesting. This anxiety around immigration, you’re seeing it Trump, you’re seeing it in Brexit, you’re seeing it in Europe. Merkel’s intake of Syrian refugees … Does immigration come up as an issue when the economy is doing badly? Or is it more of a cultural problem? Some people say, “It’s inequality and that’s what’s driving everything.” Others say, “Well, it’s the cultural changes that make people anxious.” Do you have a take on that?

Gordon Banjai:                   What right wing populists do is they transform the economic problem into an identity problem. They say, “Immigrants take your jobs,” although in fact, very often it’s automation or other forms of technology that take your jobs. Protectionism is the economic policy of nationalism. If you think about the trade wars that are revived in the world, and they are threatening, probably the single biggest geopolitical threat at the moment, is the US-China conflict, which goes well beyond a trade war. If you think about that, there is direct translation of identity politics into economic policy.

It’s interesting. I’m spending a lot of time in the UK. Since Brexit, there is a sharp downturn in immigration here. There is a shortage of labor in certain segments of the economy. But still, many people are opposed to immigration because they don’t see the cause of the problem and the problem together. Coming from the progressive side, we have this tendency of trying to explain all these technocratic policy different questions. In the era of populism, policy is not really a question. Policy is not the main topic of politics, it’s identity. It’s security. If you want to win elections from the progressive side, you need to develop your vocabulary, your politics, and catch up on those arguments.

Misha Zelinsky:                  And make people feel, rather than explain to them how something is going to work. Right?

Gordon Banjai:                   You have to find an answer to the issue of identity emotions, as well. Technocratic explanations make people feel … Let me take a step back to explain what I want to say. I think there was a consensus for a long time that these egg-headed technocrats are running these countries based on policies and complication explanations, which nobody understands, but they make the world run smooth, so it’s okay. The GFC just blew that up. Many people say, “Look, you egg-headed technocrats! You are corrupt. You played only for yourself. You messed up, so you were not that smart as you pretended to be. So why should we listen to you? Why shouldn’t we listen to ourselves or our own instincts? Or people who deliver, who cater for those instincts?”

That’s what populism is. You have to regain that trust, and it’s very, very, difficult. You have to find the language, and you have to find the right messages and as well as underlying policies.

Misha Zelinsky:                  Coming back to this question of democracy in Europe, after the fall of the Berlin wall, there was a kind of a democratic bloom. Everyone thought, “Well, these democracies are going to just be on the march inevitably.” Now we’re starting to see, you’ve got Poland, and Hungary, and Turkey, and Russia that are more or less autocratic. Then you’ve got Italy now that’s elected a pro-Russian government. How concerning do you think it is for the future of democracy in Europe right now? Is there any positives there to draw on?

Gordon Banjai:                   Don’t forget that democracy is a tool, not a means. It’s a means, not an end, to put it in proper image. It’s a means, not an end. I’m convinced that that’s the best means to the right end.

Misha Zelinsky:                  Sure.

Gordon Banjai:                   But for most people, they want a solution.

Misha Zelinsky:                  Yeah, they want the outcome.

Gordon Banjai:                   The outcome, and democracy doesn’t deliver. Compared to that, they believe rightly or wrongly, I think wrongly, that other types of systems deliver better results. Then democracy can go out of fashion.

Misha Zelinsky:                  Yeah. I think that’s a really good point. I say this to the people. In ’89, people didn’t sit there and read Jefferson, and then read Marx, and then say, “Well, what Jefferson’s argument is a lot more compelling, because I believe in liberal democracy.” They looked at the results, right? Middle class growth in wester countries was much better than the equality of everyone being poor in the Eastern Bloc.

Then how do democracies deliver for people? What should the focus be? Should the focus then be on economic inequality?

Gordon Banjai:                   I think it should be. Irrespective of whether it’s a democracy or autocracy or dictatorship, the leading elite tend to get corrupted unless they are very well checked and controlled. Democracy is the best way to control that, but even then, there can be a kind of self interest of people being … If the elite in any society don’t realize that they need to [keep 00:24:48] integrating people at the bottom of society, and keep broadening, stabilizing the middle class, and keep letting people into the middle class from the up, then they can destabilize themselves. It’s not a new idea. There was this Italian sociologist and philosophist, Pareto, who developed his ideas in the 1920s, 1930s. He said, “Societies, where the elite stops integrating, the best people from the bottom are breaking down sooner or later, and the elite will lose power because people are rebel against them.”

Misha Zelinsky:                  Now, that’s interesting. We’ve talked a little bit about countries, maybe, that people say, “Okay, Hungary and Poland. Then there’s autocracy in these countries, and Russians have always been a bit different.” You bring it a little bit closer to the main game, and England’s, the UK’s going through its things. But France, we’ve seen these really quite scary demonstrations in Paris with these yellow vest demonstrations against what Macron’s doing there. Democracy … He’s attempting a reform agenda, but it doesn’t seem that people are going along with him, and there’s been a violent backlash to that.

Gordon Banjai:                   First of all, France has great traditions in going out to the street, and sometimes being very violent.

Misha Zelinsky:                  That’s true.

Gordon Banjai:                   It’s not long ago. I remember in 2005 or 2006 in the outskirts of Paris. People were burning shops and cars similarly, so it’s not new. That’s part of the French political culture, which would not be part of other country’s culture. On the other hand, clearly Macron has a very difficult job to do, because he needs to reform a country which hasn’t really decided whether it belongs to the south or the north of Europe. France has this identity issue. It loves its southern identity, but it’s hard, but its brain knows that it’s better to be in the north.

So France, which is one of the biggest economies in the world, and is quite a good economy, I have to say, but it is need of some of these reforms. The problem is because of they’re relatively high in debt, it means there is little room to manoeuvre. If you want to introduce reforms, if you want to be more labour-friendly, if you want to reduce taxes to mobilize entrepreneurship, then you have to take away from somewhere else. While Macron was delivering much more than any of his recent predecessors on economic reforms, he hasn’t or couldn’t deliver on the social part to keep people happy, because he didn’t have the room to manoeuvre. So, I’m kind of understanding of his problems, but I think he realized he needs to change also style. The art of politics, it’s not just policies and facts and figures, but it’s style and explanation, and explaining people why you do things.

Misha Zelinsky:                  But the French are very important to the European project, because for a long time, Merkel was really the central figure in Europe maybe holding the show together through the crisis, but she’s now exiting and has gone out, taken a lot of damage on the immigration issue with the million refugees. But Macron was meant to be the man to lead a European renaissance. But with him under pressure, you can start to see the beginnings of what holds Europe together, what are the things that hold Europe together. Because you’ve got … We haven’t really talked about it yet, but I think we probably need to, which is the interest of Putin to very much break up Europe. There’s very much those links between Le Pen and the other nationalists in the European countries, linked to the Russian destabilization of those countries. What is the future of Europe in terms of holding itself together where Macron’s under pressure, Merkel’s gone, and the Russians are meddling?

Gordon Banjai:                   Well, there are two ways to assess this context: one is the internal, then the other is the external, naturally. The external dimension that Europe is under multiple pressure, at least three different directions: Russia, which is interested in weakening and sort of breaking up and negotiating directly in each country. And also the US recently, under the Trump administration, is interested to have a bilateral relationships. Then China, thirdly, which is interesting in maintaining the rules-based global trading system and access to the European market, but it is also trying to access countries one by one, because with many of the countries individually, each of these countries can have a much bigger, much weightier, much more sizeable player than as if Europe kept itself together.

Europe together is a 500 million market. Even after Brexit, it’s 460 million [crosstalk 00:30:34].

Misha Zelinsky:                  It’s a big-

Gordon Banjai:                   Still very big.

Misha Zelinsky:                  Yeah.

Gordon Banjai:                   And it’s one of the first world’s, probably the world’s most valuable market if you look at number of people times GDP per capita. It’s the most exciting marketplace in the world. It has actually delivered on much of the promises of a single market. It is quite a single market in many aspect. But on the other hand, if Europe starts to utilize its weight of 500 million market, and starts to negotiate in a more assertive way with other powers … Says, “All right. You want access to my market? I want access to your market as well. You have to play by the rules.”

If Europe starts to develop as a military union … If Europe starts to behave as a financial union, which it hasn’t delivered greatly on … And if Europe starts to deploy united policy on migration, and starts to protect its external border, then Europe could be a much more heavyweight player in the global order.

Europe’s natural self interest is to organize itself as Europe and not as individual states. If you think about Germany, the largest country is Europe is 82 million people. What is it compared to China, US, or Russia? But if you look at Europe with 450 or 500 million people, that’s a size in which you can remain a player at the table. Because Europe’s real question, looking ahead 20-30 years, whether it remains part of the rule setting table or will become the rule taker. It will be quite a shift compared to its last 500 years.

You could look at Europe as a kind of Noah’s ark in the flood of globalization for the nations of Europe to survive. It’s quite [balancing 00:32:54] to jump off Noah’s ark. It’s reasonable to discuss about the direction, but to quarrel at the wheel is not very good, because the ark can capsize. [crosstalk 00:33:14]. You want to keep it together. You want to discuss what is the right direction to go, but you also want to act in an orderly and coordinated way on the ark, so as that you can land in the good course.

Misha Zelinsky:                  How concerned should European countries then be, as they go through their election seasons, about Russian interference? There’s suggestions there was interference in Brexit. There’s suggestions you’ve seen it with Le Pen and the yellow shirts. How concerned should European countries be about that?

Gordon Banjai:                   I think Europeans should be concerned about external influence. There’s a asymmetric situation, because maligned powers are looking at democracies and saying, “Where is the [oculus 00:34:11] here of democracies?” And that’s elections and the daily operation of democracy. Through social media and other means, and corrupting occasionally certain parties in these countries, promoting radical parties, they can destabilize democracy.

Those countries which don’t have this nitty gritty problem of democracy and free voting, they can exploit other’s weakness this way. That’s an asymmetric war. Europe and even the United States, in that sense, should react to this by protecting themselves, protecting their democracy, but not allowing any interference.

Misha Zelinsky:                  It’s a challenge, isn’t it, though? The thing that won the Cold War was the openness of the west versus the closed systems of the Communist Bloc, and the other countries. It seems almost that openness is being used against the west in a way that we’ve never seen before. With social media, through economic means, and others. And as a result, democracy lost a bit of the swagger, so to speak. So how do you make openness a virtue again, is the question. I’m not sure about-

Gordon Banjai:                   First of all, openness is inside a country or a region, externally, you have to assert your powers much more strongly. First of all, you have to create the community of democracies and coordinate against those who don’t follow those principles. Second, you have to punish bad behavior. Thirdly, people will tend to exploit the rules-based system unless you very stiff, very firm in protecting that system. What I see today, because many of these [maligned 00:36:28] actors are exploiting these internal divisions, and that can be lethally dangerous unless re-protected. The Australian election system so far has proved to one of the most successful in the world. I don’t know if you feel that way in [crosstalk 00:36:46], but look from the outside … For example, the mandatory voting system cuts out certain things like the fight for mobilizing. Because you don’t need to fight to mobilize voters, there’s a natural gravity to work for the can tre.

Misha Zelinsky:                  That’s right.

Gordon Banjai:                   That’s a big benefit of the Australian electoral system, which others could learn from. Because in many countries, think of the US. Many politicians are working on trying to keep voters from voting.

Misha Zelinsky:                  Yeah, that’s right. Yep.

Gordon Banjai:                   Or asymmetrically, trying to mobilize their voters and keep others away. If you think about Cambridge Analytica and what they have done in the US elections, that was tactics about that. How do you keep the voters of Hillary Clinton away from voting while mobilizing the Trump voters? Those are nasty games. If you don’t have that problem, that’s already a better place.

Misha Zelinsky:                  The last thing I want to ask you about is: I’ve been thinking a lot about democracy recently. Over the summer I was doing some reading. It’s relatively new thing in human history, democracy. I take it for granted as something that’s always been in my life, but it’s really a blip in human history. What are the warning signs, do you think, that a democracy is headed down to the wrong path into an anocracy  or an autocracy? What are the things that we should be watchful for?

Gordon Banjai:                   Right. Great question. I love it. First, endangered middle classes, the destabilization of middle classes. Second, polarization of politics, political language, which you mentioned. Behavior. Third and most important probably is media. If the mass media, and that includes social media, is losing its standards, ethical standards, or it gets under the influence of malign actors … If mass media cannot be held to ethics, or it loses its balance, the balance coverage, then if private or public forces get control of a significant part of the media, then media turns into propaganda.

Misha Zelinsky:                  Yeah.

Gordon Banjai:                   And the propaganda, you can brainwash people into very stupid things. Think about the 1930s Germany. Adolf Hitler couldn’t have done in 1934 what he was doing in 1939, simply because of the Goebbelsian propaganda and brainwash. Then after media come the other institutions, independent institutions. The independence of courts, prosecutors, police, the control over political parties, checks and balances. These are very important things. Democracy is not simply the will of the majority. It’s also the ability for power to change hands if the majority changes its mind. It’s the right to change your mind and change your leaders.

It’s not only about the will of the majority. It’s also the protection of minority. Even when there is a strong majority, democracy’s about probably three years from now, the other side will have a majority. You have to maintain the probability. That’s what will keep power in control, in check.

Misha Zelinsky:                  Yeah, J. S. Mill talked about the tyranny of the majority, right? So you need to make sure that the majority is not necessarily-

Gordon Banjai:                   [crosstalk 00:40:36] countries, in many countries in central eastern Europe, in other countries, developed countries. That’s a phenomenon that’s only possible if there is a strong control of media and propaganda, because that facilitates, that’s the anteroom for dictatorship.

Misha Zelinsky:                  Well, thank you so much. One final question that I ask all my guests is if they’re in Australia, I ask them about international people. I know you’re a huge fan of Australia, regularly attend, but if you’re having a barbecue at your place, what three Australians, alive or dead, would you invite along?

Gordon Banjai:                   My childhood hero, Angus Young from AC/DC.

Misha Zelinsky:                  Very good!

Gordon Banjai:                   In his shorts.

Misha Zelinsky:                  Playing the music, yeah?

Gordon Banjai:                   Yes. Prime Minister Keating. I’ve heard a lot of good things. I’ve never met him, but he seems to be a very smart and-

Misha Zelinsky:                  He’s more of an opera man than an AC/DC man, but he’ll-

Gordon Banjai:                   It will be an interesting group around the barbecue. Thirdly, I have a good friend who I think very highly of as an investor from my close profession. Mark Delaney from Australia, super.

Misha Zelinsky:                  Very good.

Gordon Banjai:                   He is a guru of investing, and I look up to him for his investments.

Misha Zelinsky:                  Well, you’ve got investing, politics, and AC/DC. It’d be a good combination at your barbecue. I’d like to be a fly on the wall at that. But anyway, look. Thank you for joining Diplomates. It’s a punny name, and it also implies that you’re my mate. I don’t often get to claim former prime ministers as a mate, but just so you know I am.

Gordon Banjai:                   [You’re welcome 00:42:19].

Misha Zelinsky:                  But also, Hungary’s not a country that gets a lot of discussion in Australia, but my assistant Google, I did some research. There are 100,000 Hungarians in Australia, so I’m hoping that at least some of them listen and I can build an audience off the back of you as well. Thank you so much for your time. Look forward to having you back someday in the future.

Gordon Banjai:                   Thank you very much, and greetings to all of those Hungarians in Australia.

Misha Zelinsky:                  Thank you. Including our current treasurer, who is a Hungarian and a Jew. His family fled after the … Josh Frydenberg is, but shout out to Josh from Diplomates. I doubt he is someone who listens to my podcast, but hopefully he listens sometime. Thanks, Gordon.

Gordon Banjai:                   Thank you very much.

 

Professor Simon Hix

Professor Simon Hix is the pro-Director for research at the London School of Economics and is the chair of Vote Watch Europe. 

Professor Hix is a globally renowned expert on EU politics, democratic institutions, parliamentary voting behaviour, political parties and elections – and to prove it he is the author of over 100 books and papers on these topics. 

We had a fascinating discussion about Brexit, where to for Britain as the deadline for a deal approaches, what drove the Leave vote itself as well as the worrying rise of right wing nationalism in Europe.

 

EPISODE TRANSCRIPT

Misha Zelinsky:                  So, Simon Hix, welcome to Diplomates, thank you for joining me.

Simon Hix:                              You’re welcome.

Misha Zelinsky:                  And I should say, for the recording, that we’re in your rather salubrious offices here in the London School of Economics. So thank you for having me along.

But given that we are in London and this is a political podcast, what better place to start than Brexit. So, as an Australian to a Brit, what the hell is going on? Because back home it looks kind of crazy. Is it as crazy as it seems?

Simon Hix:                              It is crazy. You know, I was away for a period over Christmas and came back and it’s the same old, same old, in the sense that we still don’t know where we’re heading. So, we’ve got a vote next week in the House of Commons on Tuesday.

Misha Zelinsky:                  And that vote is for … ?

Simon Hix:                              This vote is for Theresa May’s deal. So she’s done a deal with the EU which is called a withdrawal agreement. It’s an agreement that sets the terms of the UK leaving the EU and the terms are, essentially, how much money do we still owe as part of the divorce deal? What are the rights of the citizens in the UK and UK citizens on the continent? What happens to the Irish border, between Northern Ireland and the Republic? Republic, of course, is going to stay in the EU, Northern Ireland in the UK, of course is going to leave the EU. And then a transition arrangement for two years while we negotiate the long term deal.

So she signed the deal which is more or less the deal that we knew was going to be signed. It has to be ratified by the House of Commons for us to be able to leave on the 29th of March. So the 29th of March is the deadline bias.

So if they don’t pass it through the House of Commons, we leave on the 29th of March without a deal.

Misha Zelinsky:                  A hard Brexit, so to speak. Yeah.

Simon Hix:                              A hardest of hard Brexit. So, leaving without a deal has potentially enormous consequences. We’ve got one wing of the conservative party saying, No, leaving without a deal is fine. We’ll be fine. A lot of them are very Libertarian. They have a view that this is about creative destruction. Bring it on. And we’ve gotten to the point where you’ve got this left wing of the Labour party saying, Actually a no deal would be a good thing because it would be a crisis of capitalism and then they’ll be a collapse of the government. And then Labour will get elected and we’ll be able to implement socialism. And then we’ve got the right wing and the Tory party saying, No deal will be a good thing because there will be a crisis of socialism and then we’ll be able to slash and burn the British state and they’ll be this new Singapore-on-Thames Nirvana that we’ve wanted.

Misha Zelinsky:                  It’s almost horseshoe politics with the extreme left and the extreme right, both agreeing on the outcome.

Simon Hix:                              They can’t both be right, obviously, right?

But either way, they think there’s potential disaster. Most people accept that without a deal, it will be end of Just-In-Time production supply chains which could be the collapse of manufacturing. Tariffs and quotas on agriculture, most of our agriculture produce is exported to the European market.

So I think the planes will not be able to take off and land. You know, they’ll be a tail backs at Dover. They estimate a 10 minute delay on every truck going through Dover within an hour, leaves to a 30 mile tail back. So you can imagine what that cumulatively…

That super market shelves will start to empty out. The NHS is worrying about running out of drugs because their main supplier is in Holland. A no deal scenario is a disaster. Most people accept that. Most economists, most people who work in the supply chains will tell you that. All the business interests will tell you that.

What does it mean for the citizens rights? Nobody really knows.

So, it’s potentially disastrous if we leave without any kind of deal. But the right wing or the Tory party are using this as a threat because they don’t like the deal that she’s done. They feel the EU has got a better arrangements out of this. So we still don’t know where we’re headed. If they kick out the deal next Tuesday, which they probably will, all bets are off. We have no idea what’s going to happen after that. And the EU is willing to say, Bring it on. If there’s a no deal, you guys are going to suffer more than us.

Misha Zelinsky:                  That’s interesting because this sort of concept that Europe would get a better deal, why would they? I mean, there’s no incentive for Europe to encourage other countries to leave, I should think, right? So if you’re the European Union, you want to make it as hard as possible I would have thought.

Simon Hix:                              Yeah. So there’s kind of two sides of it. So one side, I don’t think it’s the EU wants to be seen to be punishing Britain, although there are definitely voices that say that. Particularly you hear that on the left in France or the left in Germany, where they blame the Anglo-Saxon bankers for the financial crisis. And so they say, It’s about time the Brits got their comeuppance. Sort of thing.

But the general view on the continent is they don’t want Britain to leave. We’re a major economy. We’re important for exports and imports.

Misha Zelinsky:                  Defense.

Simon Hix:                              Defense. For the whole credibility of the European project globally. The EU project in general is weakened if Britain leaves. So there’s a general sense of it’s a shame that the UK is leaving. So they don’t want to punish Britain, but equally, they’re saying, why should we give Britain a particularly good deal? You chose to leave. We have to protect our interests and our interests are the continuity of the single market that we’ve worked our butt off to create a continental scale single market with free movers and good services and capital within it. Why would we undermine that? Just because you guys want to cherry pick the good bits of this and not be responsible for some of the obligations that come with being part of this single market? Why should we give that to you? We don’t give that to anybody else?

So it’s not about punishing Britain, it’s about maintaining the credibility of the EU and holding the EU together. And of course, for the economic relationship between Britain and the EU 27 is pretty asymmetric. In London, these politicians here are very arrogant about Britain. We’re the fifth largest economy in the world. We’re this great global trading power. English language is the lingua-Franco globally. London is the world capital of the world services sector. Yada, yada, yada.

50% of our trade is with the EU 27. 15% of their trade is with us. That British trade with the EU 27 is worth about 20% of our GDP. Their trade with us is worth about 2% of their GDP.

Misha Zelinsky:                  Right. That’s interesting.

Simon Hix:                              And if you talk to trade economists here at LSC, they’ll tell you that those kind of asymmetries ultimately will predict what kind of bargain you get in a trade deal. The EU’s got far less to lose from failing to agree to a deal than the UK has.

Misha Zelinsky:                  That’s interesting.

Simon Hix:                              So the UK, the deal that gets done is bound to favor the EU. So, I remember a former student of mine is in South Korea, she’s in the Korean diplomatic academy and she’s one of their experts on Europe. And I said to her, hey, Wun, how’s Brexit look from east asia? She says, well, Simon -”

Misha Zelinsky:                  About as good as it looks from Australia, I’d assume.

Simon Hix:                              Right. Exactly. So it’s kind of interesting for an Australian audience to hear her say, she said, look, it doesn’t matter if you’re the fifth largest economy or the 10th largest economy, like Korea, or the 15th or the 20th, if you’re not the US, the EU or China, you’re a regulation taker. Those three markets make up 50% of the global GDP. 50% of global trade and goods and services. And they’re bargaining deal with any… It’s a reason why none of the three of them have got deals with each other in trade. They’ve all got bilateral deals with everyone else in the world. Because they say, ‘You want access to our market? Here’s the set of rules. Take it or leave it. You don’t want to accept these rules? You don’t have access.

And so that’s the way the US negotiates trade deals. That’s the way the EU negotiates trade deals. Why would it be any different if you’re the fifth?

So, Japan is the largest economy that’s accepted that kind of an arrangement. Canada, South Korea, those three countries. So Canada and South Korea both have trade deals with the EU and with the US. And the deals they have are essentially agreeing to apply European or American rules.

So for example, Canadian beef farmers have two fields. One field with cows destined for the US market and one field with cows destined to the European market.

Misha Zelinsky:                  Interesting.

Simon Hix:                              And the cows destined to the American market are pumped full of hormones, so you get these big fat cows destined to the American market. And the kind of skinny, vegan cows destined for the European market. You know, have to follow European Phytosanitary standards. So they’re regulation takers.

Misha Zelinsky:                  Yeah. So, the Brexiteers are probably going to get mugged by reality then in the end.

Simon Hix:                              Of course they are.

Misha Zelinsky:                  But so, leaving aside whether or not you get a better deal, there’s a deal on the table. They’re talking through the politics of it with it going to a vote, it’s interesting to me a lot of the discussion is around May versus the Brexiteers within her own party. And the Parliament is bigger than one party or bigger than one faction.

Simon Hix:                              Well yeah. And she doesn’t have a majority.

Misha Zelinsky:                  No.

Simon Hix:                              Because [crosstalk 00:08:48]have majority.

Misha Zelinsky:                  But there’s not a lot of discussion about Labour in all of this and Corbyn. So I’m curious to get your take in all of that.

Simon Hix:                              Yeah so Labour, like the conservatives, Labour is also split on this. It’s split into three groups. One group are the very pro-European group that would like to cause as much problems with this ratification as possible. With the hope that there’s a second referendum and they overturn and stop Brexit altogether.

Misha Zelinsky:                  And these are the sort of Blair-ite types.

Simon Hix:                              They’re the kind of Blair-right wing of the party.

Then there’s another group, which is a more radical left group. They call them the Lexiteers. The left wing Brexiteers.

Misha Zelinsky:                  Right.

Simon Hix:                              Who have never liked the EU. They saw it as a kind of capitalist project. They want us to get out of the EU so they can have a sort of socialism in one country. Pull up the drawbridge. British jobs for British workers. Subsidized British industry. You know, they’re living in some kind of…

Misha Zelinsky:                  The old socialized, left, yeah.

Simon Hix:                              So, in a sense, I like to describe the two radical versions of Brexit are the Tory radical version of the Brexit as the Singapore-Thames. And the Labour radical version of Brexit is Venezuela on trend.

Misha Zelinsky:                  That’s good.

Simon Hix:                              That kind of epitomizes where they think they’d like to take us. Most sensible people don’t want either of those outcomes.

Misha Zelinsky:                  Yeah.

Simon Hix:                              And Corbyn comes intellectually from that wing of the party. He’s never liked the EU. He thinks that we want to leave. To give these guys a bit of credit, though, a lot of people who did vote for Brexit in the North of England, you know, a lot of these cities in industrial decline are former Labour voters. So a lot of Labour seats have big let it, leave majorities in them. And the Brexit voting coalition in the referendum were two groups. It was kind of wealthy rural southerners who were just centerphobes who never liked Europe because they want Britain to go back to Empire.

Misha Zelinsky:                  Yeah.

Simon Hix:                              Empire 2.0 is what they want. And cities in industrial decline. Post industrial cities, very angry voters who are really angry at the ruling elites in the south, in the establishment. And they’ve never liked… In a sense, voting’s really the EU’s symbolic vote against what has happened in those communities.

So I’ll give you an example. So in Sutherland in the Northeast of England, the major employer in Sutherland is the Nissan car factory. Employs about 300,000 people. It’s the largest car employer in the UK. 70 something percent of their production goes to the EU single market. Just-In-Time supply chains, meaning that any delay in their supply chains will massively increase costs. So Brexit will increase those costs because they’ll be customs checks and stuff. Sutherland voted to leave the EU and the majority of those car workers in Sutherland voted to leave the EU.

So Lisa Nandy is a Labour politician and she tells a story about being asked during the Brexit campaign, being asked by the management of the car factory to come and talk to the shop floor workers because the management was saying, we’re totally opposed to Brexit because of the risks to the factory. Can you come and explain to them that if they vote for Brexit, they could all lose their jobs.

So she stands up and she tells the story to a packed room full of production line workers, saying, you do realize that Just-In-Time production will end. They’ll be tariffs and quotas on your cars. So, Nissan, which is a global company, will probably decide to end production here and move the factory to France or Slovakia or somewhere else. And you guys could all be out a job. And she says, one guy put up his hand and he said, we’re not stupid. I’ve been working here for 20 years. Don’t you think I know how Just-In-Time production lines work? Don’t you think I know where our cars are going? He said, you know, with new technology coming along we’re not expecting to have this factory here in 20 years anyway. It’ll be robots doing this stuff. We’re not voting for Brexit for our jobs. We’re voting for Brexit for our kids and our grandkids. And to send you guys a signal that you’re not listening to what has been happening around here in the Northeast of England.

Misha Zelinsky:                  That’s interesting.

Simon Hix:                              And that’s a real challenge for the center left. And so there’s an element wing of the Labour party which is very sensitive to the fact that although the kind of cosmopolitan youth, younger voters, the Londoners, are opposed to Brexit, a lot of their core voters are saying, you’ve got to deliver this.

Misha Zelinsky:                  Yeah. So we’ll get to the vote itself because I want to pick up on some of the things you’re talking about but just to stay with the Labour party, just very quickly, so Corbyn, one of the things that I find interesting is that there’s a real enthusiasm for Corbyn amongst young people. The so called Corbynistas.

Simon Hix:                              Yeah.

Misha Zelinsky:                  They would be remain people.

Simon Hix:                              They’re all remainers. In fact-

Misha Zelinsky:                  How is he getting away with being probably a Brexiteer in disguise whilst-

Simon Hix:                              It’s really difficult. And I think he can get away with it because they’re in opposition.

Misha Zelinsky:                  Yeah.

Simon Hix:                              And so he’s able to oppose anything the government proposes. So in a sense, what he’s asking for, if you actually look at what he’s asked for from Brexit, what he wants is the UK to carry on applying EU social regulation standards, EU environment standards, frictionless trade, to try employment first Brexit, he calls it. So you want to keep as much manufacturing as you can in the country. But that’s exactly what May’s deal is. You can’t put a piece of paper between the deal that she’s negotiated and what actually Labour are asking for.

So they’re really only voting against this symbolically, to try and create a crisis. To try and bring down the government in the hope that there could be a general election.

Misha Zelinsky:                  Right. But is there any way, I mean, if you’re May, just to put on your sort of… Is there a way for her to turn the focus onto Labour in the vote and I mean, far be it from me to give advice to the Tory party, but it just seems interesting to me that rather taking all these seating internally, if there’s a way to force the opposition-

Simon Hix:                              But with the government’s opposition dynamics of British politics…

Misha Zelinsky:                  Government always owns the result, right?

Simon Hix:                              Yeah. And the opposition, nobody’s going to blame the opposition if this fails. They will blame the government, blame Theresa May. So they can get away with playing these kind of games. And if we end up with a no deal Brexit and that is a disaster for Britain, and it could be absolutely disastrous. There’s kind of a typical British sense of, oh, it will be alright on the night. People will figure it out. People come to their senses. There’ll be a managed no deal. People will just figure it out. The French aren’t going to be crazy enough to stop lories going through the tunnel. And the Dutch are still going to be sending us medicines for the NHS. Come on, people will still allow British airlines to land in Paris and Berlin or whatever. It’ll be all right on the night. That’s the sort of general attitude of the British public.

Misha Zelinsky:                  Big gamble.

Simon Hix:                              I think it’s a very big gamble.

Misha Zelinsky:                  While I speak of gambling, let’s talk about the vote. And correct me if I’m wrong, you were given the rather difficult task of being an advocate for the remain voters. You went around the country. There were a bunch of experts who went around as the go would say, so called experts. Maybe you’re one of the so called experts people speak of.

Simon Hix:                              I was, yeah.

Misha Zelinsky:                  Tell us about that.

Simon Hix:                              So no, I was part of a group of about 14 academics, political scientists, economists, lawyers, historians, who were funded by the British Economic and Social Research Counsel, so the main funding of the social science body in the UK, to be experts. We were meant to be neutral. We weren’t advocates on one side or the other. We were meant to be able to, you know, media could call on us and we’d go on TV or the radio or go on public platforms in local communities to referee debates or to be someone there who could correct facts, this kind of stuff.

And it was modeled on what had happened during the Scottish referendum campaign. They had this program for the Scottish referendum campaign and the perception was that it worked really well. They’d had a bunch of academics who could come on and sort of neutralize the craziness of some of the claims people were making.

Misha Zelinsky:                  And the remain sort of came from behind in that situation to remind of that.

Simon Hix:                              Yeah, exactly. So, we’d go to different parts of the country and it was a real eye opener going to places. I remember going to Spalding in Lincolnshire. Lincolnshire, east coast of England, very agricultural community. Lots of new Polish and Lithuanian fruit pickers and agricultural labor going into that town.

We were called by the local newspaper, can we come for a town hall meeting on Brexit. Can they send some experts? So three or four of us went out there. Difficult place to get to in the middle of nowhere on the east coast of England. We went London to Peterborough, a bus and a train and anyway. It was hours together. Just a sense of how isolated this place is. You know Britain’s a small country, it’s a really isolated place out there.

And the local town is sort of boarded up and the only places open are these Polish shops and very flat agricultural land. And, you know, about 150 people show up at this town hall meeting and it’s about 80% pro-Brexit. And we’re standing on the platform and whatever we say, they ask questions, and whatever we say goes down like a lead balloon.

So, you know, one guy said, well why do you guys think Brexit will be bad for the British economy? And my economist friend says, well, you know, 50% of trades for the year, about 20% of our GDP, 20% of the whole size of our economy. If there’s a reduction in trade that’s a reduction in the size of our economy. And no matter how different people mold it in different ways, the estimate is it will be between 2 and 8% of our GDP. A reduction of between 2 and 8% of the size of our economy. And the guy said, that’s your fucking GDP not mine. What should I care?

My initial thought was well that’s a stupid thing to say but then I thought actually, no, that’s actually a really clever-

Misha Zelinsky:                  Wouldn’t change the economy of that town for brief-

Simon Hix:                              Really! And what he’s saying is, it’s been shit here for a long time, you guys are gonna take the hit for this.

And someone else said, I’m a farm laborer and since all these polls have been coming over, my wages have gone down every year for the past three years and I bet you lot have had rise haven’t you? And it went round like that.

And then someone else said, I’ve been waiting for a counsel house and it used to be a four month waiting list and now it’s a two year waiting list.

Misha Zelinsky:                  Because the immigrants.

Simon Hix:                              Yeah. And someone else said, you know, my daughter’s at one primary school and my younger son was gonna go to the same primary school but now there’s no places left in the school so I’ve got to drop my daughter off in this school drive ten minutes to drop my son off at this other school and then I’m late for work and that’s cause all this, and all the places are full of the bloody Lithuanian Polish kids!

And we’re on the platform going, this isn’t EU’s fault. This isn’t, you know, these are choices the British government has made about not investing in public services in areas where there’s been large immigrant populations and they’d say yeah but no one’s gonna listen to us. Doesn’t matter whether we vote Labour or whether we vote conservative, you guys are not gonna listen to us, but you’re bloody gonna listen to us if we vote for Brexit.

Misha Zelinsky:                  Interesting. So out of this experience did you think the Leave vote would succeed? We’re asking ourselves after the fact now obvious, but on the night did you, after that experience did you think it was gonna go that way?

Simon Hix:                              Yeah I did. So the opinion polls are really tight actually and most people weren’t trusting the polls. The opinion polls have been so wrong in the 2015 general election-

Misha Zelinsky:                  Yeah that’s right.

Simon Hix:                              Nobody-

Misha Zelinsky:                  They predicted Labour was gonna win.

Simon Hix:                              Yeah, exactly and so nobody was trusting them in 2016 and so everyone was saying the opinion polls are obviously wrong and so then they were making up their own version of what they thought was gonna happen. So most people thought the remain was gonna win easily, the betting markets, the currency markets, the prediction models, everyone-

Misha Zelinsky:                  For the record I also said it wouldn’t happen so…

Simon Hix:                              Yeah so I was doing some consulting in various different places and I was showing opinion poll data to say this is too close to call. It really could go either way. And my experience of going ’round to different parts of the country suggested that was the case. So it didn’t surprise me on the night.

Misha Zelinsky:                  Yeah, okay. That vote itself had kind of, Brexit kind of reset the map for politics and we’ve seen a lot of things happen since like Trump. What does it tell us more generally, you’re a political scientist, what does it tell us more generally about politics?

Simon Hix:                              Yeah, I think we are seeing a lot of advanced democracies, a realignment with politics. A realignment away from… for a long time politics in the post-war period was pretty simple straightforward. Lower income people voted for the left. Left wing parties wanted redistribution of wealth, higher taxes, creation of public services. Higher income people voted for people on the right. Right wing parties wanted to cut taxes, cut public spending, liberalize markets, and so on. And that was the sort of standard politics for most of democracies for much of the post second world war period.

We’re now facing the situation where it’s largely an education divide and an urban rural divide. It’s much more geography driving it than anything else. So you’ve got cities that are globalizing cities. They’re creating growth in financial services and creative industries, film, fashion, art, design, media, tourism, higher education, and so on.

The returns you get on education are massive so the economic divide is really driven by whether or not you’ve got a degree or not so getting university education massively increases your economic opportunities. And the economic opportunities gap between those who have university certification verse those who’ve not has grown massively and the economic opportunity gap has grown between cities that are growing, that is fast growing cities, and other cities in industrial decline and then aging rural populations.

So you’re getting a kind of anti-establishment feeling which is a coalition of these aging rural populations feeling like what is happening to my country? It’s not the country I remember or the country I grew up in.

Misha Zelinsky:                  Yeah. Sort of pathos nostalgia.

Simon Hix:                              Yeah, exactly, and often that’s around race and ethnicity and immigration and a backlash against gender equality. For example, interestingly, after the Gilets Jaunes demonstrations in France-

Misha Zelinsky:                  We’ll get to those.

Simon Hix:                              They set up a bunch of citizens assemblists out of the Gilets Jaunes and you know what the very first demand that came from those citizens assemblies was? Abolish gay marriage.

Misha Zelinsky:                  So that was them… interesting.

Simon Hix:                              Which is more kind of symbolic politics about the kind of rolling back, nostalgia, world’s moving too fast and so there’s that aging rural population.

And then you’ve got cities in industrial decline and there’s very angry, and sometimes this is young people, sometimes it’s older people, particularly men who used to be in industry, collapse in industry, decline in industry, and that coaliltion, that antiestablishment coaliltion is a new force that’s very much drawing support for populous parties and as far as they’re concerned mainstream centre parties are basically the same. They represent different postcodes of the capital city. So the Tory party, pre Theresa May, represented Notting Hill and Notting Hill set and the Labour party represent isn’t. And if in France the French socialists represent the Left bank and the French conservatives represent the Right bank of Paris. That’s what it felt like to the rest of the country.

Misha Zelinsky:                  And it’s just consensus around free trade, open markets, free movement of capital.

Simon Hix:                              Yeah, open liberal immigration policies-

Misha Zelinsky:                  And there’s some differences on the margin around how you sort of dice up the pie and that type of stuff?

Simon Hix:                              Yeah, exactly and whereas mainstream center right leans a bit more towards financial service interest and big business interest and the mainstream center left leans a bit more towards creatives industries and the new economy and higher education interest and this kind of stuff but neither of them really care about rural populations. Neither of them really care about cities in industrial decline.

Misha Zelinsky:                  It’s interesting that this sort of rural urban divide and the question of people being told what’s in their best interest and I think that’s interesting about the way that economists and people that are in the political game for the last 30 years are probably looked at the macro stories and look how good it is, right? But the thing about trade is it destroys and distributes unevenly.

Simon Hix:                              Trade and immigration. Both have distributional consequences. So in aggregate we know that trade is good for the economy in terms of increasing GDP, increasing opportunities, and so on. But you don’t look at what the local consequences of that are. So there’s loads of research now that looks at the China shock where you can locally, what has been the effect of globalization.

Misha Zelinsky:                  China between the WO in 2001.

Simon Hix:                              Yeah, exactly. David Autor is an american economist and a bunch of European political scientists, what they’ve done is for every region, for every local region, they’ve worked out what is the employment in each sector, what percentage employment is there in each sector in that region, and what is the exposure to global trade of that sector. And so you can work out what has been the globalization effect regionally. And what we know is that the bigger the globalization, the bigger the negative globalization effect regionally, the bigger the vote for populous parties.

Misha Zelinsky:                  Interesting, isn’t it.

Simon Hix:                              And the bigger the vote for Trump. The bigger the vote for Brexit in the UK and the bigger the vote for Le Pen in France, for the populous in Italy and so on and so on.

So that’s one. The other one is this distributional consequences of immigration. Again we know that immigration is great for the economy. It makes… new skills, new ideas, new resources, cheaper public goods, cheaper public services. On average immigrants our net contributors to the economy, they’re not recipients of money. The usual story.

Misha Zelinsky:                  All the facts.

Simon Hix:                              All the aggregate level facts. But increasingly what we know is that there’s local distributional consequences in two senses. One is an economic one, one’s a cultural.

The economic one is in certain sectors of the economy, wages have fallen dramatically as a result of immigration. In the UK for example, it’s agricultural labor and the building trades. Why? Because they’re cash.

Misha Zelinsky:                  Yep, hard to regulate.

Simon Hix:                              They’re cash-based economies. All the sectors where there’s a minimum wage and the minimum wage is enforced, immigration has had no effect on wages. But it’s had a huge effect on agricultural labor in the building trade.

Misha Zelinsky:                  Interesting.

Simon Hix:                              Everyone’s got a Polish plumber and everyone’s got a Lithuanian fruit picker.

Misha Zelinsky:                  And they’re rural areas as well.

Simon Hix:                              And they’re rural areas. That’s where there’s been real wage competition.

And the other one, then, is competition for public services and that’s usually disproportionate. Cities of where there’s immigration being sucked into cities, public services are being cranked out and a lot of these rural areas nobody’s thinking about increasing school capacity. Nobody’s thinking about building another classroom in a primary school or you’ve got to provide more surgery spaces in the local doctor surgery. Nobody’s thinking like that. So the local population feels the squeeze in public services.

And then, of course, there’s the cultural aspect. A lot of these places have never seen immigrants before and that takes time. That’s a legacy. We forget too quickly… So my grandmother grew up in Northwest London and where she grew up in Northwest London it was very white at that time and then it became very big Indian population immigration in the 1950s and 60s.

Misha Zelinsky:                  How quickly did it happen?

Simon Hix:                              It happened in the space of about a decade.

Misha Zelinsky:                  They say the speeds often effective, right?

Simon Hix:                              Yeah, the speed. But at that time there was really vehement… I remember my grandmother being very racist, you know. Ugh they’re all moving into, why are they moving into my neighborhood type thing. And now of course we’re in London and nobody thinks twice about it, right? So we forget very quickly our own recent experience of what it was like with being whites with new immigrants.

Misha Zelinsky:                  Oh it’s a similar story in Australia as well. So before we get off Brexit because I want to step into Europe but there’s a lot of talk about second vote. I’m quite nervous about the consequence of second vote because after everything that we’ve just covered about the anger and telling people what’s what, there’s a sense to me that you didn’t quite get it right and we’re gonna give you another shot at it and I would be very concerned, and I’m curious to get your take of it, seems to be very concerning to suddenly flip and be 52/48 remain. It’s almost like it’s been stolen from people.

Simon Hix:                              I absolutely agree with you. I mean I agree with you for two main reasons. One, the call for second referendum ignores, actually, the history of Britain’s relationship with the EU which is that we’ve always had a semi-detached relationship. We’ve always been reluctant members. We weren’t members of the single currency, we weren’t members of the Schengen border-free zone, we were always semi-detached.

Misha Zelinsky:                  We had a deal.

Simon Hix:                              You know, and sooner or later we were gonna have to make a choice as the process of European integration is moving forward. Sooner or later we’re going to have to make a choice. Are we inside it or are we outside. So it made sense to have a referendum on this and the referendum was going to make the decision so you can’t pretend that history is now fundamentally changed so now we really want to stay and we want to sign up to the whole thing. Of course we don’t. So that’s the first thing we’ve noticed.

The second thing is, you’re right, it’s incredibly condescending so I get annoyed with someone of my arch remainer friends who seem to think that going around and telling people you’re stupid and you’re a racist and you’ve made the wrong decision and you’re a xenophobe and you were bought by Russians. You think that’s gonna persuade people to change their mind?

Misha Zelinsky:                  Hasn’t really worked in human history so far.

Simon Hix:                              The third thing is it would get really, really nasty and I do really worry about what the consequence is. I’m genuinely worried about violence, political assassination even. I mean we had a murder in British politics, Jo Cox was murdered in the 2015 general election campaign by a radical right extremist. The Labour MP in the north of England. I wouldn’t be surprised if we have that kind of thing again. It’s not to say that we should be scared about, it’s more the, there’s a legitimate angle which is that this was an antiestablishment anti-elite vote. It’s very dangerous in democracies to fuel an antiestablishment anti-elite movement. That’s when you really can get very dangerous types of things happening and I don’t want to fuel that and I do think there was legitimate reasons for people to vote for this.

I think my experience of traveling around the country, people were not thinking about this lightly, people were massively mobilized. They thought about this very carefully. And a lot of people say, well they weren’t considering the economic interest. Well whenever people have elections and make choices in elections, there’s lots of things that go into their mind when they walk into the ballot box. For some people it’s symbolic, for some people it’s careful economical interest of their family or their personally, for some people it’s national identity. There’s lots of things that go into what influences why people put the x where they do on a ballot paper and so that’s no different in a referendum. Why would we think it should be any different in a referendum? And it’s completely legitimate.

Misha Zelinsky:                  Now, talking about that nationalism, and you’ve got another hat, you’re the chair, I believe, of Vote Watch. It’s a European project so you’re very, obviously, across European politics. Kind of want to get your take about how loudly are you about what we’re seeing other countries across, you know, Poland, Hungary, Turkey, not in Europe but peripheral to Europe, obviously, and now Italy. More and more, sort of right wing-

Simon Hix:                              France.

Misha Zelinsky:                  Well, yeah. Like you said, more of these National upsurge but not only in opposition. They’ve taken control of governments and dismantling democracies.

Simon Hix:                              That’s right. What we’re seeing it-

Misha Zelinsky:                  Is this 1929 to 39 all over again or is a bit more complex?

Simon Hix:                              Too early to tell in that sense. So it’s true that what we’ve seen is part of this realignment of politics, it’s the rise in support for these populous parties and the populous coalition is the same coalition we’ve been talking about behind Brexit.

And almost every country in Europe now has a populous movement of some kind. Some of them a bit more radical than others but no matter what country you talk about there’s a party where it’s… I don’t throw around populism lightly so what I mean by populism is a party that says that we represent the voice of the people against the establishment. And it’s very antiestablishment type view, very simplistic policy responses. A classic mainstream party moderate their promises because they know that there’s certain things that it’s difficult to deliver on and you can’t promise this and promise that. Where as populous have no constraints so the populous will say we’ll shut down immigration. Populous will say we’ll stop globalization.

Misha Zelinsky:                  Simple responses to complex problems.

Simon Hix:                              In Italy, the populous parties say we’re gonna have a flat tax and introduce universal basic income.

Misha Zelinsky:                  Yeah, increasing spending and lower taxes.

Simon Hix:                              Right.

Misha Zelinsky:                  Great plan if you can pull it off.

Simon Hix:                              It’s that kind of pub politics, I think of it, and it’s very attractive at the moment, particularly post economic crisis and we’re growing in equality, people saying, well what the hell. Let’s just try this. Let’s just go for these guys. And it’s a wakeup call for the establishment.

Misha Zelinsky:                  But once they get control of the-

Simon Hix:                              So here’s the real test. The real test is in ten years time when we look back, there’s two possible outcomes. One outcome is you get, you know, democracy is a safety valve. If there are deep divisions in society surely Democratic institutions and elections are vehicles through which these things get thrown up and then we as mainstream establishment, we have to address this stuff.

One version is mainstream parties respond, we come up with new policy responses, there’s big infrastructure investment, we try to address some of these regional and individual inequalities that’s developed, we try and think about how to create new sectors of the economy, try to think about what do we do to address these inequalities that have come out of globalization. How do we address issues of social integration of immigration. If those things get addressed then they’ll be a restabalization of politics.

Another alternative world is these populous come to power and instead of just addressing these things they start to dismantle democratic institutions.

Misha Zelinsky:                  And you’re seeing that in Poland.

Simon Hix:                              And they say we represent the will of the people and you get a narrative which is popular in Hungary which is I’m not a liberal democrat I’m a iliberal democrat because I represent the will of the people. The will of the people is the majority, why should you guys constrain what the people want? Why should you judges and you media and you other political parties, why should you constrain the will of the people?

Once you gauge that narrative that starts to get dangerously close to the types of politics we saw in the 1930s and so we don’t know yet how robust our institutions are to that because you’ve not seen it. These post-war institutions we’ve built, they’re pretty robust so far and they’re relatively new in centuries in Europe in Parliament in Hungary and that’s why I think the judiciary and the media are quite easy to be attacked. Italy is the test case. You’ve got the populists now in Italy. How robust are the Italian institutions to what will be? And Le Pen could win in France or Le Pen’s niece, she is the rising star.

Misha Zelinsky:                  Let’s talk about the French because I think, maybe it’s an arrogance of major Western countries that some of the Eastern European countries have been on the periphery and maybe they’ll never really develop democracies anyway and maybe they’re experiments, France is a serious economy, it’s a serious country, it’s a serious democratic history.

Simon Hix:                              Nuclear power, the rest of it.

Misha Zelinsky:                  Right. How worried are you about France? If France were to become a notably autocratic nationalist sort of nation, I mean that’s the European project almost over, right?

Simon Hix:                              It is over. Yeah. They were saying you can’t have France without Europe, you can’t have Europe without France.

Misha Zelinsky:                  Right.

Simon Hix:                              So Le Pen almost won. The Nationalists in France have been growing in support.

Misha Zelinsky:                  But doesn’t feel like they’re losing momentum.

Simon Hix:                              They’re not losing momentum, they’re gaining momentum. France is the epitome of the rotation of this politics. Macron represents the global elite, Le Pen represents the will of the people against the global elite. That’s the narrative.

Misha Zelinsky:                  And the concern I had when he came to power was that, didn’t strike me as the man for the times because the inequality story, the cultural disconnect story, he’s just want to double down on all the things that people are pissed off about.

Simon Hix:                              To be fair to him, France is a bit particular because France…

Misha Zelinsky:                  They always have this history of-

Simon Hix:                              Yeah, but not just that. The structure of the labor market in France is quite particular because they’ve got highly regulated markets and you have a whole insider outsider problem meaning that a lot of young people are priced out of jobs because highly regulated labor markets make it very difficult for companies to take on new people knowing they may not be able to keep them in place in 6 months or 12 months or 18 months. So you get very, very high youth unemployment in France and so that’s very different to… So a lot of young people actually were supporting Le Pen in this election.

So Macron in that sense was saying I want to liberalize the French economy in return for big infrastructure spending. In return for big spending on new technologies like digital environment, trying to shift the economy away to new technology so in a sense it wasn’t your classic doubling down of globalization it was more of a, we’re not gonna stop the world, we’re not gonna stop globalization, we’re not gonna save manufacturing in Europe. We need to think about a new economy. How are we gonna build this new economy. So in a sense, I saw his agenda of coming to power, his policy agenda and some of the people around him were really thinking creatively about how to think about what is going to be a new economy or a new society in a globalized world in an advanced democracy. That’s a step ahead and that’s exactly what I want mainstream politics to be thinking about doing.

Misha Zelinsky:                  Yeah, absolutely. He had a lot of hope-

Simon Hix:                              The problem then is he only managed to get the liberalization stuff passed without the other stuff so then it just looks like he becomes a baby Thatcher. It looks like he’s doing what Thatcher did in Britain in the 1980s. And it looks like, well, we’re going even more down that path and so then you get the Gilets Jaunes movement, you know, the yellow vest-

Misha Zelinsky:                  The yellow vest.

Simon Hix:                              And so these guys, again it’s an odd coaliltion, the bulk of the movement are rural small town suburban and rural areas, older voters, and small towns in decline, farmers, farm related producers, social conservatives, quite Catholic, and then a small wing are kind of angry, urban, militant, radical, left anarchists. They’re the guys smashing up the Arc de Triomphe and the shops in Paris but the bulk of the movement is this quite conservative movement so it’s a kind of…

Misha Zelinsky:                  People often get hijacked with movements.

Simon Hix:                              They do. And so the radical left has hijacked the movement but the movement itself is quite a socially conservative movement.

Misha Zelinsky:                  Interesting. And one thing we haven’t talked about, we’ve touched around it, but Russia. Every nationalist movement you look at is Putin’s not too far away from it. What’s his game here?

Simon Hix:                              Yeah so Putin is trying to metal. I don’t buy the Putin is driving this but I do buy that Putin is benefiting from all this and so if there’s anything that he can do that makes life difficult for the mainstream establishments so for example Brexit. The allegation is that there’s Russian money that got into the leave campaign and there’s Russian data hackers that were used to try and identify who to target with the leave campaign and so on and so on and so on. With Brexit-

Misha Zelinsky:                  When these votes are so tight though, it’s interesting.

Simon Hix:                              It could make a difference but lots of things could make a different.

Why does he want Brexit? So there’s this sort of macro level thing, anything that destabilizes western Europe is good for Russia-

Simon Hix:                              Yeah. But there’s a micro level thing which is that Britain was the one country at the table in EU that was really pushing to maintain sanctions against Russia, right? With Britain off the table he reckons he’s got much more chance of getting the EU to back down on some of its sanctions. So there’s some really very concrete short term interests related to this. And so he’s playing both of those games. There’s often very concrete interests related to gas, relating to sanctions… The sanctions are hurting and with Europe staying together and the European Establishment have really held together with sanctions and those sanctions really are hurting Russia. So he really wants to try and loosen that so this is the game he’s playing which is not just the big geo-political one. It’s really concretial to economic interests.

Misha Zelinsky:                  Yeah, because he’s got the foot on the throat with these sanctions.

Simon Hix:                              Absolutely.

Misha Zelinsky:                  Interesting. One thing I want to get your take on, and we’re coming to the end now and you’ve been very generous with your time but right wing populous. I mean there’s this anger and very sort febrile political environment but why is it that the right wing populous are winning and you’re not seeing… in the 30s you had the communists popping up, the socialists, and all these social democrats, FDR, they’re nowhere and this ethnonationalism, this right wing populism is winning everywhere.

Simon Hix:                              And it’s interesting-

Misha Zelinsky:                  And inequalities there, I mean it’s there in the data.

Simon Hix:                              Similar circumstances in Latin America with the left wing populous so great, big impact of globalization, big economic inequalities between globalizing cities and rural populations. I think it’s largely to do with the fact that these are often middle-aged or older voters that are losing from these changes and so it’s not necessarily younger voters. So apart from what I’ve just said about France, younger voters tend to be the ones to be educated, younger voters and they seem to be the ones to support more radical left ideas. Whereas older, these are more socially conservative voters. They already got their protected interest. They’ve already got, you know, state pensions. Often they’ve got houses and they’ve paid off these debts and so this is largely driven by social values that they don’t share and so national identity.

In fact, 1930s when there was a major economic downturn and we saw votes shifting mainly to the radical right rather than to the radical left. In fact, throughout history of democracies, there’s a nice paper by simple economists looking back over from 1918 to the present looking at major economic downturns. Major economic downturns tend to lead to swing votes to the radical right or to the left and that’s what we’ve seen over the last ten years in Europe.

Misha Zelinsky:                  Interesting.

Alright well one last question I ask of all my guests and this might not wash so well with a Brit but with Australian audience-

Misha Zelinsky:                  After the last series, I’m not sure we’ve even won a game. We’ll need some sandpaper. Australian gets asked who they’d love to invite as internationals to their barbecue. So for international audience I’d say, which three Australians would you invite to a barbecue. Alive or dead, I’ll give you that.

Simon Hix:                              Oh boy, that’s a good question. Well Misha, he’d have to be one of them.

Misha Zelinsky:                  No, no, you can’t count me. Even thought the show’s called Diplomates and I know you as a mate now, obviously, so I couldn’t tap into the cult of Simon Hix online but…

Simon Hix:                              That’s a good- I’ve never thought about that.

Pauline Hanson.

Misha Zelinsky:                  As a political scientist, no doubt on that one.

Simon Hix:                              As a political scientist.

Misha Zelinsky:                  Well, okay, she can make the fish and chips.

Simon Hix:                              Yeah, I think it’d be interesting to know what makes her tick.

Misha Zelinsky:                  Yeah.

Simon Hix:                              Rudd, I think.

Misha Zelinsky:                  Kevin Rudd.

Simon Hix:                              This is getting interesting.

Misha Zelinsky:                  And the third one would probably… the swimmer with the huge feet. What was his name?

Simon Hix:                              Ian Thorpe.

Misha Zelinsky:                  Thorpe.

Simon Hix:                              So Simon Hix, Ian Thorpe, Kevin Rudd, and Pauline Hanson. Wow. I mean, people like trying to get Kevin to stop speaking but… that would be an interesting barbecue to say the very, very least.

Simon Hix, thank you so much for joining the podcast and it’s been fantastic and I look forward to chatting in the future.

Misha Zelinsky:                  Have a safe trip home, cheers. Bye.

 

 

Governor Kim Beazley

Kim Beazley is the Western Australian Governor.  Governor might be his current job, but he was also the Australian Ambassador to the United States, Parliamentary Leader of the Australian Labor Party, Deputy PM of Australia and also served as Defence Minister – quite a CV!

Governor Beazley joined Misha Zelinsky to talk about Trump, Putin, China and how Australia can navigate the global rivalries that are fast emerging between our strategic allies and our regional trading partners.

We apologise for the quality of this audio. It was done in Government House in Perth, which is currently under extensive renovation. 

 

 

EPISODE TRANSCRIPT

Misha Zelinsky:                  Governor Kim Beazley, thank you for joining me on Diplomates. Now, I should note that we’re doing this in the rather salubrious surrounds of the Government House in Western Australia so thank you for having me along. Very lovely digs you have here.

Misha Zelinsky:                  Now, Governor, I thought it would be useful to start off here. You’re former ambassador to the United States. The U.S. under Trump, it seems to be picking fights with its friends in the European Union, it’s broken deals with the Iran Deal. Of course Australia was not immune in respect to the discussions around migration. The United States has been a very long term friend with Australia. Can we still count on the United States as a friend?

Kim Beazley:                         I’m going to separate Australia out from the rest. We’re unique. I suppose you could also include Israel in that uniqueness. We are not criticized by the U.S. in any way shape or form. That all the old verities were there and the language between us and the United States, all the old undertakings, all the old promises, they all still feature in the rhetoric of, not only the officials of the United States, but also President Trump. So it’s as though, excuse me, we’ve been frozen in aspic. The Australian relationship is carved out from the roiling of the rest of the U.S. relationships in the Western alliance. Most notable with NATO, but also, really, too, with Japan and South Korea and experiences that they have had. So there is no reason to say, in anything that has happened to this point, that Australia has been … had its relationship changed.

Kim Beazley:                         But the circumstances in which we conduct our own diplomacy in the region and further afield, yeah, that has been impacted. But that’s in a sense for us to work out how to handle it.

Misha Zelinsky:                  So we’ve had, recently the foreign minister come out and say that the relationship perhaps is changing. We’ve had the Shadow Foreign Minister in Penny Wong also talk about perhaps a new paradigm emerging. The U.S. president seems to be very focused on deals. He says that NATO’s a bad deal. The Iran deal was a bad deal. Various trade relations are bad deals. Could ANZUS ever be a bad deal, do you think? In that context?

Kim Beazley:                         I think the problem that we have with the President and others, is related to how he sees the world. And basically, American statespersons have run the United States since World War II on the basis of the post World War II settlement. Liberal internationalism, multilateralism, rules of the road in so far as the global commons is concerned, open trading relationships as far as the WTO is concerned. It’s at the heart of the liberal internationalist project of the United States. Trump is the polar opposite. He is a nationalist. He is a unilateralist. He has no permanent friends and no permanent enemies. He is an admirer of authoritarian rule. He sees essentially the paradigms that I described earlier on as essentially excuses for looting the United States. And in that position for a lengthy period of time.

Kim Beazley:                         He takes umbrage, therefore, at anything he thinks in past relationships with allies, in particular, as indicating that they’re users as a reason for him to bring them under a scalpel. And then he looks to Russia, probably in a quite unique way and we don’t know fully the reasons for that, but irrespective of his attitude to Russia, he is essentially not about an international order of liberal principles. He is about an international order of survival of the fittest, competitive and that order is ruled, not by rules, but by force de rigueur and the creation of facts.

Kim Beazley:                         Now that’s him. But his officials don’t agree with that. So you have these absurdities. You have the visit this month in July to Europe, Brussels, one or two other European capitals and then Helsinki with Putin, in which he exhibits all the, with NATO, all the facets of their changed ideological direction. But then the communique comes out. And there’s not a dime of difference between the communique from this NATO and any of the communiques in the past. And American officials are writing that.

Kim Beazley:                         He comes out with the picture I presented of nationalist unilateralism and his Defense Secretary, Mattis, personally writes the national defense strategy which is an enormous re-endorsement of the saliency of the American alliances.

Kim Beazley:                         So you’ve got the President out there with new directions. You’ve got the rest of his administration talking up the old storm, and most of Congress as well, doing the same. So this is, to say the least, a confusing time for Australian ministers.

Misha Zelinsky:                  Given the depth of relationship, I think it’s interesting because as you say the relationship is deep at a political level, it’s also deep at an institutional level. It sent us, for want of a better word, seems to be holding for now but given the extraordinary powers the president has, over foreign affairs in particular, can the relationship survive four years, potentially eight years of Trump? Can they potentially, given the importance of the U.S. relationship to Australia and it is, how do we maintain that relationship in the context of unilateralism and nationalism from a Trump administration?

Kim Beazley:                         If this was being pursued in an intelligent systematic way, based on our, what you’d call full court press of officials, and U.S. policy was proceeding with structure down the line that we’ve been talking about, the answer would be no to that question. But the essence of Trump’s administrative style is beyond the expression of an attitude. It’s impossible to develop a body. And so no one can really predict what’s going to come out of all of this, beyond volatility. And certainly there will be volatility and that volatility may produce crisis, particularly when they interact with other changes in the system.

Kim Beazley:                         See, I would say that Australia has more to think about in the much more rapidly changing distribution of power in our region, than simply Mr. Trump. And we do have to look very seriously at recasting the defense policy that we have.

Kim Beazley:                         And one of the things that Trump is doing, I think, inadvertently helpfully, and I put the helpfully in quotation marks because it’s not his intention, is that he’s forcing us to rethink the way we do force structure. And we put up global rules out there and global order up there and the relationships in the region as an equal force structure determinant with the defense of our approaches. That was a mistake when we did it and it’s now completely unsustainable. So we have to-

Misha Zelinsky:                  You mean the reliance on the U.S. underpinning security in the region?

Kim Beazley:                         Not reliance on the U.S. so much as the character of the region.

Misha Zelinsky:                  Right.

Kim Beazley:                         And the character of the region did not really reflect what we assumed of it and the fact that Mr. Trump is not actually prepared to pursue his side of some of the underpinnings means that what we should have done anyway, we absolutely have to do. We have to go to Plan B.

Misha Zelinsky:                  And so let’s talk a little bit about Plan B. You mentioned the shifting of power and I think, effectively, that’s a shifting to a more multi-polar world with the rise of China and the reset of Russia. And you’ve got Putin and Xi actively challenging some of these structures that we have and the alliance system, it’s not being helped by perhaps uncertainty around the U.S.’s position on those alliances. But in the region, with Australia and our relationship with China, we’ve seen [inaudible 00:10:11] assertiveness in the region from China militarily. How concerned should we be about China under the Xi regime.

Kim Beazley:                         There’s no reason that we have to engage with China. We have to calculate what the Chinese are likely to do in the future. We have to see how they interact with other powers in the region, including the United States. But I’ll just say this about President Xi, he has shifted China a long way from the vision of Deng Xiaoping. And there’s a big area of risk here that people just simply don’t talk about and that is, how does he keep his legitimacy going now that they’ve essentially moved away from collective leadership? It moved away from the trend towards constitutionalism. It reinserted the Party processes.

Misha Zelinsky:                  That’s right he was saying he’s a big reformer.

Kim Beazley:                         Yeah and everything. And they’ve done that. So you now have a totally different picture emerging from China. How does he keep legitimacy for what is a lifetime of leadership instead of the 10 years normally accorded. Well, he’ll run into trouble. All governments do run into trouble. The Chinese are not exempt from that. And when he does, people are going to start looking at him from a nationalist point of view and say things like, you made a big deal of re-incorporation of Taiwan. You made a big deal of enforcing our position in the South China and East China Seas. Why is nothing changed? Are you really the defender of the nation?

Kim Beazley:                         Now that’s not a question that would normally have been asked of any of his predecessors as president. It will be asked of him some time in the next 10 years.

Misha Zelinsky:                  What sort of event would ask that question?

Kim Beazley:                         The Chinese people are engaged. Yes, there’s oppression. Yes, there’s a failure to recognize rights, but there’s two things. One, they’re very courageous. Two, they’re very opinionated. And generally they’ve found out this, which is not a good thing, necessarily for the rest of us. They’ve found that if you go after the Communist Party from the right, you frighten them. If you go after them from the left, the super libertarian and the rest of it, you’re easily oppressed. And so-

Misha Zelinsky:                  So nationalism is the big threat to the regime.

Kim Beazley:                         Nationalism, you can always get them

Misha Zelinsky:                  Interesting.

Kim Beazley:                         And nationalism gets bound up in what we’ve just been talking about. So there’s that. There’s not just Trump out there on the landscape. There’s also these other changes and where on earth are we going to end up with North Korea is a further factor in this.

Misha Zelinsky:                  That’s right.

Kim Beazley:                         So what do we need to do? Well, we don’t need to move away from the United States for the very simple reason. In this more volatile region, where we have effectively a total focus on technological skills as our defense, staying ahead of the game technologically, we now only have one alternative and that is relationship with the United States. They are the only people really in the game, in technological enhancements, in capacity in weapons systems, military tactics, all the things that are associated with the next generation of military technologies.

Kim Beazley:                         The only other people in the game are the Russians and the Chinese. The Europeans are on the outskirts. So for us, if we want to survive in this zone, in the long term, we have no choice but to associate with the United States if we want to be anything.

Misha Zelinsky:                  Let’s talk about the United States, China, and the South China Sea. You’ve got the Chinese being very provocative, building manmade islands, taking ownership of other islands and then now militarizing those islands despite promises not to do so. The Americans are very keen for us to engage in the Freedom of Navigation exercises which is to go within the 12 nautical mile range of those sites. Australia has yet to do that. Should we be doing that? Should we be participating in those types of Freedom of Navigation exercises?

Kim Beazley:                         Well that’s a matter for the government. The government is quite clear on what it believes the legalities of the situation are. Also quite clear on what they believe the Chinese are already doing or not doing. Also quite clear on what the rights are of the states that have got counterclaims and the rest of the world in terms of movement of shipping, both civil and military through those areas. So there’s nothing you can complain about, I think, sensibly about Australian government policy and it’s quite reasonable for them to be presenting those policies to the Chinese in argument and discussion.

Kim Beazley:                         Before I became governor and was then less reticent about putting my views across about what government should be doing, what I used to say-

PART 1 OF 3 ENDS [00:15:04]

Kim Beazley:                         My views across about what the government should be doing. What I used to say was by and large, I think we should do these things on our own. That we have our own view about the legalities here and how these legalities ought to be pursued and we were pursuing it. The marginal zone about where we ought to operate in this regard is about island like features that are being created but do not attract island like legal rights. So that is when you take a rock and turn it into a base, that sort of thing, even when you’ve done that, that attracts no automatic rights to a territorial sea around it.

Kim Beazley:                         Most of what has been done has been turning features which do count as islands into bases. And the position of the Australian government over the years has always been that they treat those entities as though there was an owner because there is than owner. The question about who the owner is is to our mind not settled. But then we would observe the limits that would have been observed if an owner was in place.

Misha Zelinsky:                  How do we grapple with, as a democracy in Australia that we favor these rule based order, where you have contested claims in the South China Sea, they go to court, they’re ruling in one particular which is against China in that particular instance, and that has not subsequently been observed. If it does start to unstitch the entire system when countries don’t observe the outcomes of the great system, or the referee so to speak.

Kim Beazley:                         Well our view of course is they should. And hardly anyone can ever enforce its views on the rest of the globe. You basically have to simply influence folk or try to influence folk. Whether you do actually anything practical about it or not, at least when there is a discussion of these issues, you don’t back away from the principles that you evolved. So any argument that takes place you take the view of the legalities which we have supported for a very long period of time.

Kim Beazley:                         It’s not an embarrassment, I don’t think, for a country like Australia if the views we express are not entertained by others with whom we’re talking. We can’t force them to do anything. And in those circumstances, the best we can do is to articulate those concerns, keep doing so, give support to other people who are doing it who may be more directly effected than we are, and learning the maturity and toughness that comes with somebody or some nation that is prepared to stand up for what it believes.

Misha Zelinsky:                  I’d just like to just quickly talk about China’s relationship with some of the other players in the region. Some of the smaller countries of the Asian nations and also the Pacific in terms of this One Belt, One Road initiative. And we’ve seen initially it’s talked about one of the largest investment in human history to reestablish that trade route through sea and land.

Misha Zelinsky:                  But we’re also now seeing the so called debt book diplomacy where countries have signed dup for projects they don’t necessarily need at terms that aren’t that particularly favorable. Then when they can’t make the payment, that asset’s taken back. Most troubling-ly the example of Vanuatu it looked like there may have been a military lock base or Naval base being built there potentially. How concerned should we be about that the way that China’s asserting itself through trade or through debt in a region?

Kim Beazley:                         I think China might be concerned out it, not just us. International politics is pretty fluid. Reputational issues are very important. You start developing our reputation for using debt to essentially take over parts of other countries, if you start building installations which are of very little value to the country in which they’re built but a substantial value to yourself, if you start projects which can’t be paid for by their own intrinsic merits, or you can’t complete to the satisfaction of the folk concerned, you’re going to suffer immense reputational damage. And people will deal with it.

Kim Beazley:                         This is particularly so in the experience of countries in Africa, but also in Southeast Asia and South Asia. A lot of these things are self correcting. And China’s going to have to learn from that. and will learn from that as people respond. When you actually look at the completion rights of these projects, and then look at some others who engage the infrastructure of the region like the Japanese, at a much lower level the Japanese have a much higher success rate. And what the Japanese actually produce is something usually useful to the countries concern.

Kim Beazley:                         They don’t talk about belts and roads and endless highway of Japanese economic activity, but to all intensive purposes, when you look at the infrastructure projects they’re engaged in, they’re similarly geographically aligned to those which the Chinese do but with smaller amounts invested and better outcomes for the people that are concerned. It’s not just there, it’s Americans, it’s a lot of other people engaged in this.

Kim Beazley:                         But it is an opportunity for many countries, and there will be from time to time an intersection between what is fiscally sustainable and what is actually locally necessary. And that’s certainly, China’s a powerful country, it helps advance their influence. At the moment you’d say that the most impactful in political terms of these Chinese strategies is not so much on the region we inhabit but in Central Asia. And who loses out? In Central Asia, to those Chinese infrastructure initiatives, what? Russia.

Kim Beazley:                         So Russia has this relationship with China which sees Russia’s interests and influence effectively being subsumed.

Misha Zelinsky:                  That’s interesting. So you think that … A lot of people are now seeing it perhaps it’s a Cold War sort of prison, but a lot of people are seeing it as an alignment of interests between Russia and China. But you’re suggesting perhaps there are tensions that will emerge at Eurasian crossover region as China seeks to build up it’s sphere influence. Because Putin’s very concerned about spheres of influence.

Kim Beazley:                         Look, there’s no conflict of interest between the two except perhaps in the challenge to what they think is objectionable features of the rules based order. But the truth is there’s no symmetry there either. Putin just totally rejects it, the Chinese don’t. The are may feature of rules based order which they absolutely agree with. There’s no symmetry between the two of them on that.

Kim Beazley:                         It’s convenient to have that relationship with China, but there are contradiction elements of it too. The Russians built up a lot of influence and Vietnam and a lot of influence in India and South Asia. And the performance of the Chinese is causing all of our lives to be quizzical about them. And there’s no activity which when analyzed in detail to engage in which Russia does not look to complete in theory.

Kim Beazley:                         Putin may have had a triumph with his conversations with Trump and made the American president look ridiculous or as a satrap. And all of the allies of the United Stares might have been embarrassed by it. But where does it get Putin? Has it got him a relief of sanctions? Has it got him a non-engagement with the NATO powers along his border? Has it got him an American recognition of where he stands in Ukraine? Has it got him anything that actually matters to him?

Kim Beazley:                         And when you look at Russia’s situation, an economy the size of Australia with about four or five times that number of people to look after as Australia with about two and a half times out spending on defense, there’s a few people in Russia who are beginning to start to say to Mr. Putin, “Enough already.”

Misha Zelinsky:                  With a very low life expectancy evidently as well.

Kim Beazley:                         Yeah. Except the Russians are pretty courageous people.

Misha Zelinsky:                  They’re stoic.

Kim Beazley:                         They’re stoic as you say, they’re cynical. They like the fact that they’ve seen him stand up proud, take over property and the rest of it. They also want to be fed. And at some point of time, where Putin stands at the moment means they’re not going to be. So he needs those changes. If I was a Russian I’d be saying of the old lad, I’d be saying, “Oh yeah, you did real well. You poisoned our relationship with the United States, you’ve interfered in their politics in a way beyond any interference they’ve done in ours, you’ve got yourself in your mind a president elected at your own behalf. What’s on my table as a result of that please?” And the answer of course is nothing.

Misha Zelinsky:                  Yes, well that’s interesting. So you talked about economics there, and I think in the old Cold War we had two separate systems that a lot of people now point to the economics being this, perhaps the destiny in terms of security. You have people that look at China’s projections in our region and then say well there’s no way the that US can compare against China’s GDP therefor game over. Some analysts will say that. Others will point to the quad. Now I’m curious to ask you about which is the alliance of Japan, India, the United States, Australia which is very nice and do you see that as a potential counterbalance in our region in terms of economic response and in security response?

Kim Beazley:                         No, I just see it as a useful engagement. We are moving. China’s not the only country rising economically. You’ll see the same set of statistics that you just quoted applied to India, show India in the second half of this century we’ll all be thoroughly dead, taking over that leadership position from China. And you’ll see a straight line projections are all terrific except there are human realities that intervene.

Misha Zelinsky:                  And India has a demographic advantage as well.

Kim Beazley:                         Yeah. That’s right. And at the moment there’s a writing America off which also doesn’t have population problems. It’s economy is going to expand. The relativities that work towards China are not based on collapsing the American position. It’s a the American position advances, US is now starting to compete in new technologies, having let it go to some degree. And they’ve just put humongous amounts of money into it. Another great triumph for Putin. Gets out the and boast about a bunch of hypersonic missiles and related technologies which he doesn’t possess. And threaten to incorporate nuclear weapons within technical strategies which he hasn’t arrived at. He may arrive at that.

Kim Beazley:                         But with his 78 billion a year that spends on defense, he just massively tweaked the tail of somebody spending 715 billion. Brilliant move. You really scored with that one. So what do the Americans say? Oh well, we better got on with the hypersonic, we better get on with a different technical nuclear weapon usable in the battlefields. We’d better get on with the lasers, we’d better get on with the Artificial Intelligence and the rest of it. He’s just invited competition for an outfit spending ten times what he’s spending on defense. Fled losers.

Misha Zelinsky:                  Which is exactly what happened in the 80s with Reagan handcrafting the Soviet Union.

Kim Beazley:                         Exactly. And we need to take a look at that. There’s an awful lot of what the Americans are doing with their massive new defense spending that I think is a bit unwise. They’re focused too much on platforms and personnel and not enough on the new technologies. Though they’re spending a lot on the new technologies. I think the objective of the 350 ship Navy works against the rapid incorporation within the platforms they do have which is about 280 of them, of some of the new technologies which they brought forward very substantially particularly in related to direct energy weapons like lasers.

Kim Beazley:                         Their demand to put another 100,000 men or whatever it is in the Army works against the Army’s clear preference for next generation technologies on the battlefield. So there’s that tension going on. But the amounts of money is so huge that they may well be able to sustain the apparently contradictory priorities.

Kim Beazley:                         So there’s all of that going on at the moment which gives absolutely no attention or focus here at all.

Misha Zelinsky:                  And Australia benefits from that because we use a lot of the same combat systems as the United States, is that right?

Kim Beazley:                         And also we are very adept in sitting down with the Americans and converting those technologies into things that are usable in our environment. And I notice for the recent meeting of OSMET that the American Defense Secretary was pointing out our membership of the industrial recognized, industrial and inventive capabilities that the US will want to partner with. So we have got the possibility of engaging a lot of these technologies given that we can’t any longer do that ourselves. Or count on getting it from anywhere else. At least we are now heavily engaged with the Americans on that front. And we have at our defense …

PART 2 OF 3 ENDS [00:30:04]

Kim Beazley:                         … the Americans on that front, and we have at our defense, science and technology organization exactly the sort of capabilities that we need to ensure that we prioritize those technologies rightly and incorporate them effectively. We’re on the verge of a [walk 00:30:18] in the next generation systems, but only on the verge of that because of the continuing relationship with the Americans and nothing Trump has done threatens that. Trump creates a difficult international environment for us. He has not created a difficult military development environment for us.

Misha Zelinsky:                  Well, that’s very assuring. Just to bring it, we’ve talked a lot about international defense policy. I’m curious to get your views on some of the things that are happening at home in a foreign policy context. We’ve had Chinese interference in our domestic affairs, and all the debates between the so-called China Hawks or the Panda Huggers, how seriously should we be concerned about Chinese interference in our democracy with various financial interference into major parties, and how hard should we be pushing back on that?

Kim Beazley:                         Most countries, and this country is now included, but wasn’t, most countries extract themselves from the contribution of other countries and involvement in domestic politics. It doesn’t necessarily work regarding the subject of illegal penetration on the scale that you saw from the United States and Russia, but there are some protections there and the protections have come in here. I think we have to be very careful here in how we handle this. We do not want to make the many Chinese Australians uncomfortable in their own country.

Misha Zelinsky:                  Absolutely.

Kim Beazley:                         It is important that they feel welcome, that they are Australians like the rest of us. We have a blessed tendency in this country not to refer to ourselves as Italian Australians or Irish Australians or Chinese Australians or Indian Australians. The Americans do that.

Misha Zelinsky:                  Yes.

Kim Beazley:                         We don’t.

Misha Zelinsky:                  Yep.

Kim Beazley:                         We just talk about Australians and then we may get in the conversation go down the line to look at ethnic origins, but we assume that in the end they get absorbed by the great Australian, lovely cultural system.

Misha Zelinsky:                  Absolutely.

Kim Beazley:                         We’ve got to think about that. That means that when we have a disagreement with the Chinese, and we will from time to time and we do look at the sorts of issues that come up here, we need to be polite. We need to be firm, but we also need to be polite, and we need to avoid humiliation wherever we can. The debate that we had on these various issues at the time of Sam Dastyyari put out of the show late last year. I’m not defending him. I’m suggesting that he shouldn’t have gone, but it spiraled out of that into mutual insults, and there certainly is enough to go around in the political process about engagements of the past, in a way which I could understand why Chinese government would start to look at you sideways.

Kim Beazley:                         See, you’ve got to be sensib;e about it. The Americans are the biggest investor in this. The Chinese are our biggest trading partner. Chinese Australians are critical contributors to the stability of this country and its success. We need to bear all those things in mind and grab some maturity in handling it.

Misha Zelinsky:                  No, that’s interesting because I think there’s some difficulty in how to handle the relationship. You mentioned earlier about reputational concerns that the Chinese have, but also there is a, there seems to be a tension between calling out behavior from the Chinese, be it in island building in the South China Sea, or perhaps in meddling in democracy, but it seems to be the tone that is a concern rather than the … How would we be better to manage that?

Kim Beazley:                         Adopt a reasonable tone. You can make these points without getting hysterical. The points need to be made and you want to be able to incorporate those issues in your conversations without necessarily creating massive damage to your country while you do it. One of the problems is this, and this just doesn’t apply and this issue applies in any issue, if you go out of the top and you create a situation where you were tricked and you left worse off than before when you went over the top in your response. The point is, the object of your attention is no longer the issue. You are the issue.

Kim Beazley:                         Now, how do you deal with that? Well it’s a maturity and it also means too that there are a lot of areas of politics when you’re a nation like us, which is not all powerful, you need to actually learn to manage your words and manage your approaches. We’ve done it in the past. We now have to do it full time.

Misha Zelinsky:                  I was just curious just to peek a little bit about the tension that exists, and it’s kind of the elephant in the room where we say we don’t have to choose between our secured relationship with the United States and our trade relationship with China. Can you see, what are the potential triggers where a choice may need to be made? There’s a whole, Hilary Clinton famously said you can’t argue with your banker. How do we argue with our best customer at the same time as wanting to perhaps stick with our best friend in the United States?

Kim Beazley:                         A good start is not to ask the question, and to actually look at how governments handle issues and not the commentary. Commentary has to ask the questions because there’s nothing else to say. The government doesn’t operate like that.. We decided that it was in our interest to proceed with membership of the Asian Infrastructure Investment Bank. This is a big deal, a far bigger deal than any of the things that we’ve been talking about so far.

Misha Zelinsky:                  The Americans didn’t want us to do it.

Kim Beazley:                         The Americans did not want us to do it, but we decided, particularly with the south east Asians who are very important to us, [inaudible 00:36:45] to us, wanted us to get involved. We decided to get involved, so what do we do then? We go around saying, “Well, we’ve chosen between the US and China and we’ve chosen China.” That would be the height of immaturity, stupidity, and factually wrong. We chose to be a member of the Asian Infrastructure Investment Bank. That’s what we chose. What we did with the Americans was to say to them, “Look, we think that we need to get into this.” I used to say to them, “You look at China through the prism of the geographic relationship, through Confucian societies, Indochina.” We look at China from a north south perspective. We go through a whole variety of other cultures before we arrive at the Confucian ones. They are important to us and we take some guidance from them. We take the view that we need to listen to what they want us to do and they said that they would feel much more comfortable in that bank if we are there, so we’re going to do it.

Kim Beazley:                         What we will do is we will firstly say that we’re going to try and make the government’s terms as close to the Asian Development Bank as we possibly can, and we are going to keep you advised on each step that we take. That’s how you handle those issues. We didn’t running around asking silly questions about whether or not we’re choosing between China and the US. You do what is in your national interest. That’s what you do.

Misha Zelinsky:                  That’s interesting, so I would like to actually ask you a questions following on from that because you’ve talked a lot about the economic rise of China and the choices there. Australia has been at every war with the United States, certainly the twentieth century and twenty first century. Is that relationship too strong? Should we be more independent given that what we know now with the Iraq war and the subsequent knock on effects of that? Is there a situation where we can perhaps not necessarily go all the way with LBJ so to speak?

Kim Beazley:                         You make your own decisions. Every one of the wars you referred to we made our own decisions. There was always a factor in those decisions about, at least since World War II, about the character of the relationship we have with the United States is one of the issues that we thought through, but it was not the only issue. We thought through those issues from the perspective of our own national interest, particularly recently, our involvements in Afghanistan and our involvement in Iraq, not the original one. I would say that these are issues which we’ll have to keep on thinking about all the time. You always need to think about it from the point of view of understanding that we’re already deeply embedded in the American system, through the job facilities of which we’ve added another couple over the course of the last decade, in relation to another area of contest that need space, and therefore we’ll always making a substantial contribution to them. We need to work out whether or not we want to make more.

Kim Beazley:                         Tony Abbot, as I recollect at the time of his last latest engagement in Iraq was hardly influenced by American concerns at all. He was influenced by and trying to influence the Americans toward committing themselves because he believed that it would be fatal for the rest of us if that caliphate got underway and successfully ensconced itself in Syria or Iraq. I would have said that our engagement, and I was looking at it from the point of view of the point made in Washington while it was being discussed, not at my level. It was being discussed at other levels, but I was at least in there. It was virtually nothing to do with the alliance and virtually everything to do with the situation on the ground and our concern that the Iraqi government should survive.

Misha Zelinsky:                  That was in response to the ISIS sort of take over over parts of Syria and of Iraq, but the original decision in 2003, I’d like to ask, would you have handled that differently?

Kim Beazley:                         Yes I would have.

Misha Zelinsky:                  Yep.

Kim Beazley:                         To be honest, I’m not quite sure where I would have ended up at the very, very last minute, but I can tell you what I would have been doing in the period of time when the British and the Americans and the rest of the world really was looking at what ought to be done about Saddam Hussein, and I’d be doing my damnedest to try to persuade the Americans not to do what they did because if you look at our speeches at the time, you will see that we knew exactly what was going to happen as a result of all of this. We understood of course that the Americans after 9/11, they’re pretty much a winded society, and there’s a lot of motivation around about punish one, educate a hundred.

Kim Beazley:                         We saw at the time that this was not a sensible way of doing that and that you were likely to get yourself into serious trouble if you persisted with it. I suspect that possibly at the end of the day, as the whites in their eyes time had been arrived at, probably would have redeployed the ships that were in the gulf anyway. That would have been a very last minute point, and that was after you’ve exhausted every capacity to persuade them not to. It would be a bit absurd had the ships sailing around there not engaged in what subsequently emerged.

Misha Zelinsky:                  Have been not perhaps as a starting player in the coalition of the willing, so to speak.

Kim Beazley:                         It would be a concluding point, not a starting point.

Misha Zelinsky:                  Well, that’s a good place for us to finish up. Just as a final question we ask all of our guests on Diplomates, which is, and you’re a former ambassador, so with international guests like to ask them which Australians they’d invite to lunch, but as a former ambassador I might ask you three Americans to lunch with the governor, who are they and why?

Kim Beazley:                         Well, I would love to have ex-President Obama as one of those to lunch. I’d love to have Hilary Clinton, and I would be fascinated to have added to them Jim Mattis.

Misha Zelinsky:                  Oh wow. That would be an interesting group.

Kim Beazley:                         To see what they’ve got to say about contemporary affairs. I’ve got a huge amount of time for all of them and I think that they would make, because all three of them make excellent dinner companions.

Misha Zelinsky:                  That would be a lovely, to be a fly on the wall that would be great, but look, Governor Beazley, thank you so much for your time. It’s been a fantastic conversation and all the best with the new year.

Kim Beazley:                         Thank you.