The Doorstep: La crise cachée de la croissance mondiale, avec Rachel Ziemba

NIKOLAS GVOSDEV: Welcome, everyone, to this edition of The Doorstep podcast. I am your co-host, senior fellow at Carnegie Council Nick Gvosdev.

TATIANA SERAFIN: And I'm Tatiana Serafin, also a senior fellow here at Carnegie Council, welcoming today back to The Doorstep Rachel Ziemba, who is an adjunct senior fellow at the Center for a New American Security. Last year she spoke to us about sanctions. This year she is back talking about sanctions, and we will hear from her in a minute because that is on everybody's minds—what are they, will they work, will Putin respond, and what is going on with Putin, the North Atlantic Treaty Organization, the United States, and Ukraine? Rachel has some great comments, and we will hear from her in a minute. We are so glad she was able to come back.

Before our talk today, Nick, I want to bring to you a part of the world that again we have had guests come speak to us about, Africa. It doesn't get a lot of coverage. It really bothers me.

It is something that I am looking at, and one of the reasons why is because we have as a media business decreased our coverage and our people on the ground in places like Africa. In fact, by one study there are virtually no American reporters stationed in Africa anymore. It might as well not exist. One study found over all the references to Africa that people actually thought Wakanda was the fourth most commonly referenced African country.

I am really upset about this, and I have to bring it up because we talk a lot about what happens when a hurricane hits here. I don't know if you know that there is a tropical cyclone, Ana, now in Madagascar that has killed dozens of people and left 65,000 people without homes. It just happened yesterday. Zippo, zero, not in the news.

There is a direct correlation between the number of people we have on the ground and the news that we are getting. I was speaking with someone the other day who said, "We're not making money if we have people in Africa." But it's not always about money. It's about information, it's about trying to create a global community. I hope you agree with me on this.

There is so much going on in Africa that I think that we need to elevate it, so I am really grateful for this podcast for being able to share Africa stories.

NIKOLAS GVOSDEV: I think it was important when we had Ambassador Charles Ray a year and a half ago and then really just a little bit more than a month ago, a month and a half, we had Howard French really laying out why Africa matters to doorstep concerns in the United States—a lot of things we don't think about, but also because things can happen in Africa that are test cases for things that then show up in other parts of the world.

There are two news stories in Africa that have real applicability. One is that Uganda is turning to Russian political and election "experts" in how to manage the election system, which has implications obviously for the strength of democracy. The other is we had Sean McFate on a few weeks ago talking about new rules of war and private military outfits and what they're doing, allegations that the coup in Burkina Faso was undertaken by military officers that wanted to bring the Wagner Group to work with them, and they were overridden by the president, and then suddenly the president finds himself out of his job.

So things that may happen in Africa don't necessarily stay in Africa and coverage of what happens there is important for us because trends that start there will begin showing up in other parts of the world and then perhaps even on our own doorsteps.

TATIANA SERAFIN: Amen to that.

And crypto—everybody is talking about the decline. I have to admit I thought, It's a bubble. But why do you think it happened? Do you have some thoughts?

NIKOLAS GVOSDEV: Just very quickly two things.

One is that we now understand that some of the energy policies that were undertaken in places like Kazakhstan were driven by the interest of groups there to harness energy for cryptomining. One of the things we've seen is that since the somewhat change of government in Kazakhstan, Kazakhstan has cut back on cryptomining.

The other thing of course—and this ties back not only to our podcast with David Yermack last year but our book talk with Casey Michel earlier this week—is that in Russia the government is very anxious to prohibit Russians from holding or transferring assets in cryptocurrencies for the reason that they fear that Russia's wealthy will try to use crypto as a way to get their assets out of Russia, away not only from Western sanctions but also from the ability of the Russian government to tap into those sources of wealth.

So there are some really interesting developments there that again highlight points that previous guests on The Doorstep have been making.

TATIANA SERAFIN: I think it also highlights the global wealth accumulation among the select few, which happens to be our next book talk—because Davos just happened, but it was virtual—so it's not the same as we are going to read about in Davos Man: How the Billionaires Devoured the World with Peter S. Goodman, February 8 at 6:00pm—watch out for some signups—and I think this will really tie together things we have spoken about today and what we just spoke about this week with Casey, so we are greatly looking forward to our Book Talk.

And now to Rachel Ziemba. Good morning, Rachel. Thank you so much for coming back to The Doorstep. We are so excited to have you at, I think, an important point in the world today. You spoke with us last year about what sanctions were, were they effective—and let me tell you, that's all we hear about these days: sanctions, sanctions, sanctions.

Let's start with the elephant in the room. Yesterday President Biden said he is going to do a "personal" sanction on Putin, and I thought, What is that and why is it scary? I thought, Thank god I'm speaking with Rachel. What is a personal sanction? Is it scary? Are sanctions even in play here?

RACHEL ZIEMBA: Tatiana, first, thanks to you both. It is a delight to be back and chat with you guys with so much going on, so many moving pieces.

Personal sanctions would be targeting the personal assets of Vladimir Putin, as with any official. The challenge with Putin is that it's hard to know exactly what he owns. Some of it is the same issues with any powerful leader in an autocratic or semi-autocratic state—they can have their hands in a variety of pies—but it is particularly so with Putin because there are question marks about which of the energy companies he might have stakes in or other things, and so there are lots of different views out there.

I have definitely not followed all the money where Putin personally is concerned—I tend to track more the Russian state apparatus—but I think President Biden's comments are part of the whole debate in Washington and in European capitals about what are the measures that would influence Russia.

There is a whole school of people who have been saying for many years: "Target the oligarchs. Hit them where it hurts." You could say Putin is part of that group.

There was a view some years ago, "Hit the oligarchs and they will influence Putin and change the story." I have always been a little bit skeptical of that because I think we tend to see sanctions often concentrate power structures in societies like Russia that are set up to be defensive and where they think the goals are on their side.

To your bigger question, are sanctions at play and should they be at play, I think it is very difficult to craft a sanctions package that we know would lead to policy change. It is much easier—and I say this as an economist—to sit here and say how you craft a package that would hurt Russia economically, that would hurt certain interests. It is much harder to say that that leads to the kind of policy change we want, which is not only pulling back the troops from near Ukraine, it's a whole set of activities.

One of the things that has concerned me for some time where Russia is concerned has been that we have increasingly grouped sanctions for a whole set of what we call "malign activity," so it would be hard to imagine—even if policy started to change around disinformation, cyberhacking, and the whole long list you guys talk about all the time—how would we lift this sanction but not that sanction.

I don't mean to say that we should be doing nothing because there is a lot here at stake, there are a lot of slippery slopes that are going on, but just to say that imposing a lot of economic cost doesn't necessarily lead to policy change.

I tend to think sanctions are most effective when there is a really clear goal and a clear strategy, that it is not just about sanctions and coercive economic tools, but also in this case military deterrence and a variety of other things. In an ideal world we wouldn't have been at this point, we would have maybe had a set of policies that might give Russian elites and might give even Putin an interest in a different policy path. Sometimes I feel a little Pollyannaish when I talk about that, but I do think it is a conversation worth having.

Long way around, I think also what President Biden is trying to say is a lot of different sanctions, a lot of things are on the table, and the like. This is unique. This is one of the first times I have ever seen a U.S. administration lay out, "Here's all the things we're thinking about." They are almost negotiating in public.

Part of that I think is because they want to show they are as united as they can be with Europe—which is hard to do—but also because they are hoping that laying those things out has a deterrence element to it. We'll see what happens. I don't think anyone wants to see a circumstance where some of these strong economic measures have to be used, because they would be painful for the global economy, but so too would invasion and disrespect of national sovereignty.

NIKOLAS GVOSDEV: That's a great point that I want to continue to ask you to expand on. What is critical about this next round of sanctions discussions, as opposed to what we saw particularly in the second term of the Obama administration and even during the Trump administration, was that sanctions tend to be imposed that don't really have so much of a doorstep impact on the sanctioning countries.

The sanctions that are being laid out—and then of course, yesterday Russia's own threats about its counter-sanctions—we are talking about things like energy disruption, we are talking about companies with contracts not being able to be paid for their goods and services, we're talking about goods that would be sanctioned where an American or European firm is doing a project in Russia and that would hit their bottom line and then have ripple effects outward.

What is your sense as to the willingness, from what you have seen, from what you have observed—you are very active obviously in these discussions, particularly on Twitter, engaging so many people and trying to get to the bottom of this—as to the resolve to really drop the hammer if it is going to mean real domestic costs in Germany, France, Italy, Britain—perhaps even in the United States, maybe not so much, but given that Russia is one of the largest oil suppliers to the United States right now, and we saw how the Biden administration, for all of its talk about "green transition," once prices at the pump hit a certain level, they were back to not quite "drill, baby, drill" but "pump, Organization of the Petroleum Exporting Countries (OPEC), pump?"

Do you see that there is a political will to impose these kinds of costs if there is going to be real domestic disruption?

RACHEL ZIEMBA: You raise a really important point. In a sense, I think the mixed messaging we have seen—particularly out of Germany, though more recently out of France in a different way—has been highlighting particularly these energy risks.

I think there is a willingness and maybe a sliding scale, depending on which ally one talks to, that in the case of a major incursion, an invasion, that does need to be met with things that might have meaningful impacts on the population.

I think what we have seen over this week, towards the end of January, is the Biden administration sort of saying: "Okay, well, you're worried about energy implications. Let's try to deal with this energy crisis. Let's try to replace some of this."

I know, Nick, you have written about this issue, of the way that Russia was adding to as well as taking advantage of the energy situation and imbalances in Europe last year, in 2021, going into 2022, and I think that in some ways complicates it.

The events of last year in my mind were partly triggered by a fundamental imbalance as the global economy reopened and Asia demanded more natural gas. We were sitting here in the summer of last year saying: "Well, there are no stockpiles. Nobody is filling up the natural gas storage. Why are they not doing that?"

Putin is saying, "I'll approve Nord Stream 2 and suddenly you'll have a lot of gas."

I'm like, "Okay, maybe, but if prices are high, why aren't you sending my gas anyway?" That maybe goes back to the conversation earlier about which economic interests, short or long term, are most vital to Russia.

I think to some extent this risk of going into military and economic conflict on all fronts, which is the risk scenario we're looking at—we often think about sanctions as the alternative to using military tools, in this case I think you could see them hand in hand—is: What happens to those critical supply chains? That has maybe focused the mind of saying, "Well, how do we deal with this short-term issue?"

But I think you rightly highlight this question mark of: "Well, where do short-term measures this year fit in with these longer-term goals around the energy transition?"

We know that among the things Russia is unhappy about—and there is a long list—is the fact that European banks won't green-light financing of energy projects on environmental grounds, not just anything relating to the system. It is much harder to get funding for projects in Russia's Northeast. Europe wants to stop drilling in the Arctic. Even countries like Norway are not quite so onboard with that with the European Union. Russia is worried about CBAM, the Carbon Border Adjustment Mechanism. So there is a number of issues and different economic models that I think are at stake here.

I sidestepped your question of how much willingness. I think that part of this trying to focus and crystallize attention on where additional supplies might be is part of this effort the United States is doing to try to keep the alliance together, to try to make sure that there are not fissures that Putin can take advantage of—he, along with Xi Jinping and Chinese leaders, is very good at playing those fissures and widening them—but I think ultimately what we will see in any sanctions package will not be anything that directly targets energy supplies, it is probably more a risk from the counter-sanction side.

The other thing is that if there is a risk of military conflict, there are a lot of different scenarios that could impact energy supplies and pipelines but also grain supplies. Ukraine and Russia are big suppliers of grain. Russia already stopped exporting as much because they had a poor harvest, so actually Ukraine has been benefiting in the short term, but there are important supplies here that could exacerbate some of the doorstep issues you guys are looking at.

This has already been a year where food prices are rising. There are fertilizer challenges that come from there having big sanctions on Belarus. There are other issues where high energy prices in Europe mean that fertilizer plants aren't operating because they are really energy-intensive. There are a lot of different pieces.

And let's not forget that some of the biggest buyers of Eurasian grain are in the Middle East—Turkey and Egypt—and I don't want to overstate the risks, but let's also not forget that the Arab Spring came after a year where food prices rose rapidly in part because of poor harvests and export controls of grain from Russia.

So there are a lot of potentially challenging issues. This agriculture issue is one of the reasons why agriculture is not one of the sectors that is on this target list.

If anything, I think the worries about the impact on the doorstep for Europeans, for Americans, for global consumers, has been why the U.S. government has pivoted more towards trying to use export controls and not just what we think of as financial sanctions. Those are likely to target banks, but this thinking about cutting off the supply of electronics and of software—Russian companies have been under orders to use more domestically made software. State-owned enterprises have not done a great job applying that.

Import substitution is hard and it is costly, but in a sense I see that in part as the U.S. effort to look around and ask: "Well, what's the asymmetric power we have now?" We have used some of the asymmetric power since 2014 and 2015 and Russia has adjusted to some of those measures. We might look and say, "Okay, they're choosing not to grow, that's a cost," but that is a choice that they're making.

So I do see this push towards export controls as being that attempt to try to ask, "Well, what are the things that might hit Russian doorstep issues?" But, as I think a number of people have rightly highlighted, things like export controls are longer-term structural issues.

We have seen Chinese companies adjust to some of those sorts of controls. I might say Russia wouldn't have a harder time doing that than a Huawei or a Chinese industrial complex, but there are limitations and there are costs to all these tools, including to global trade and the like.

TATIANA SERAFIN: I think your point at the doorstep—I heard it loud and clear—is that really our doorstep doesn't matter to us, but it does matter to Germany, and it maybe matters to Germany because they don't have Merkel to pull it all together, and they are a little bit of a mess, and it matters to the United Kingdom because they are also in a mess because Boris Johnson is a disaster.

You could say the same here, that especially the right in the United States is playing up this Ukraine issue, it is amazing here on right-wing channels, and I think it is because they want to paint Biden as weak.

But really, truly, our doorstep issue, our doorstep stake in this, is—I don't know—do we even have one that is going to really hurt us?

When I have talked about this with my students, the Gen Zs, it doesn't even register because they are more worried about the fact that Biden is not relieving their loans. They are more worried about inflation—"I can't afford to live in New York City," for example.

So I think this whole push—even the military push, if you want to push people who love the military, even that doesn't resonate with the younger generation.

I feel like you talk about us leading a coalition and making sure there are no fissures, but I think it's difficult when we're coming from a position where our doorstep says, "Who cares?"

RACHEL ZIEMBA: I think that is a really good point, and the other thing that I imagine your students are also bringing up, [which I'm hearing]: "Where is all this urgency when we are thinking about climate issues, the climate crisis and certain subsets?"—but maybe that is because I have spoken to too many people who have watched Don't Look Up.

NIKOLAS GVOSDEV: Great film.

RACHEL ZIEMBA: Yes, great a movie, scary the more one elapses from it, and I think really I'm sure your journalism and other students might have a heyday with that.

But I guess the challenge is also that where the doorstep issues for us are on the risk side—and we talked about energy—but I do think the fact that this is coming at a time when we haven't figured out what the narrative is around how we talk about inflation—and some of it is always asymmetric, like when prices go down and suddenly it doesn't cost much to fill up a tank of gas or other things, we are not quite as happy—the asymmetry of how upset we are.

Of course, usually when prices go down like that, it is because people around us are losing jobs or something else is going on, so it is often not unmitigated good news, but this element of how we deal with those pressures and some of the dislocations—we are headed into sort of a point of monetary normalization, there is a fiscal cliff, who knows what is happening with all of the other elements on the agenda?—but I think you are very right to highlight that there are many kinds of divides and fissures at home in thinking about what this really means.

It continues to be difficult. What's the narrative around selling the benefits of alliances and forward basing, whether that is traditional military or intelligence gathering?

Britain is maybe the most clear example, but this element that we have seen in a variety of places, even recently in Australia with Djokovic, of: Do rich people get their own say in the rules, and what are the interests? I think this does make it difficult to think about what's their role in the world and the goal, and how do you navigate towards these kinds of medium-term goals, whether it is around the energy transition and the like?

I think that lack of cohesion and common goals makes it a hard thing because you end up more likely with what measures are needed to do something to do it—or, as Nick said, a circumstance where the way you deal with energy shortages is saying, "OPEC and Russia, pump more oil."

It's not just about messaging. You need to have a good strategy and then you need to communicate it well. Both are necessary. I think that is a challenge now. Even though I think a lot of people are aware that that is an issue, that I think is going to become a challenge especially as we get closer to the midterms.

I think the narrative issues—you know, we see it as well with China, where there are maybe mixed views when it comes to the doorstep about what we should be doing.

TATIANA SERAFIN: Thank you for bringing up China—I know, Nick, you have a question. I was reading today—and we always talk about, "Let's put pressure on China either with sanctions" or "We're not sending our diplomats to the Olympics"—which are, by the way, starting soon—and all of a sudden, I am reading actually all investors are pouring money into China right now because there is inflation around the world so China is the best bet. I just thought, My God, it's just like Cabaret—"Money, money, money, money"—and the strategy and the messaging are completely lost because everybody is just worried about making money.

That is a doorstep issue that I think we can probably around the world get our hands around. That's what people are concerned about. I don't know when the Fed is coming out with its statement today, but I think that is what everybody is looking for.

RACHEL ZIEMBA: At 2 o'clock.

TATIANA SERAFIN: All right, at 2 o'clock we're going to be tuning in.

What are you expecting with that, and is the message coming from the Fed going to reverberate in Germany, Ukraine, and Russia? Does that matter? Does that money aspect matter more?

Going back to the first personal sanctions—we might not know because of what we talked about in our book talk this week—everything is put into offshore shell companies. But maybe that is the pressure point, if we could find that money pressure point, that would make a difference. I don't know. I am kind of spitballing here.

RACHEL ZIEMBA: I think it does matter, and to some extent with markets even just a change in tone and a change in alignment matter. We have seen a lot of money shift—not that it's been good for bonds for a while, but selling bonds, rising interest rates—the last two weeks have been a pretty rocky ride in the equity market, and we might well all see more of the same.

If we look at emerging markets, rate markets, there are countries like Brazil that are pricing in interest rates going to double digits. I don't think it is going to happen for a variety of reasons we can get into, but interest rates were in the low single digits in 2020 after they cut rates. In Russia also markets are pricing, they have to do very defensive policies, but obviously there are particular circumstances there.

What worries me about the Fed exit—which it had to do—the Fed as well as U.S. fiscal authorities came through with the stimulus. They did a lot. They helped us keep things moving.

The unfortunate thing is that big companies, entities that could already get product, they were the ones that got even more—big, AAA or high-rated companies, strong sovereigns including the United States or countries like Canada and European countries could borrow super-cheap, and even some emerging markets—now what has been happening is that emerging markets have already been facing this challenge of needing to withdraw stimulus, they can't do much on the fiscal side, and a number of them are really struggling to grow. The policy mix, both because of COVID-19 but also structural issues, domestic demand is a challenge.

You look at a country like Mexico, which has been barely growing for a few years—Brazil, South Africa—and these are major emerging markets that might not have economic growth on a per capita basis over the next couple of years. Think about what that means from the impact on their doorsteps, which then impacts their willingness to grapple with the things that might be important to us.

Mexico is responding to some of those issues by saying, "Okay, we're no longer going to export energy." Maybe there are plenty of other sources, but that push towards nationalization, that push to deepen national supply chains, has impacts.

Now I'm not saying that there isn't a benefit to increasing competitiveness and increasing manufacturing value-added in a country like the United States, but if everyone is trying to do that at the same time and not in a coordinated way, we could end up with a lot of costs that businesses are having to face.

One of the big challenges and maybe black marks over the last year has been the fact that, if anything, as China sticks with zero COVID-19 and doesn't have much domestic demand themselves as a result, their exports have gone up and external imbalances have gone up. The United States is actually importing more from China than it used to a couple of years ago. China is still very involved in the supply chain, even as we diversify.

So I think you sort of end up with a circumstance of divergent growth in different areas, a turn inward, which doesn't always bode well for political stability, regional stability, willingness to deal with regional and global issues, willingness to deal with long-term issues, and an environment where the Fed and other policymakers are needing to move away from having a really big-time tool, but we don't necessarily have the vocabulary to think about some of the kind of growth challenges that are happening in some of the big emerging markets.

People ask me all the time: "Are we going to see a wave of debt, debt distress, debt crisis?" I say, "Well, some of the countries are really going to have to cut back on current spending to meet those debts, but what I really see is a growth crisis. I think we have seen some of these areas before, but this is not necessarily going to be a story where big countries default on their debts because of the costs of that, but just we don't know all the impacts of what that is going to mean socially and how it amplifies some of the challenges that come from extreme weather, some of the energy and other dynamics."

I know that's a long way away from some of these issues, but we are going to see also divergences in different countries about who can weather some of those challenges better, so I don't think it bodes incredibly well for global coordination—for example, even on things like canceling the debts of the world's poorest countries—and those are some of the things we need to do to continue to reach what our "new normality" might be as we move into a different phase of the pandemic.

NIKOLAS GVOSDEV: Rachel, as I was just listening to this answer, I was struck by how much this seems to fit into what the Biden administration announced last year, a "foreign policy that benefits the middle class." You're talking about conditions where we are importing more from China than we did in the past. You're talking about real economic stress in the rest of the hemisphere, which has implications—not only that Mexico is one of America's biggest trading partners, but then of course the related migration crisis into the United States—and yet the issue that dominates the national security community is a security crisis in Eastern Europe.

After you have seen the first year of the Biden administration, where do you think the "foreign policy for the middle class" narrative is going? Was this just a slogan to appeal to people who felt that Washington was out of touch, or do you think that we have now fallen back into reacting to crises as they happen rather than being proactive, as you said earlier about being able to respond to these middle-timeframe issues that aren't the crises of the day?

RACHEL ZIEMBA: I think you have to give a bit of a mixed grade there because I do think the Biden administration did come out trying to do a number of things. We can raise questions about things like how far COP26 went—it probably didn't go far enough—comparing it to what it would have been in a different administration, obviously a different sort of dynamic setting in motion via regulation, a number of changes. It is not the whole story, but some of the work that the administration has been doing around semiconductors and technology and other things like that have borne some fruits.

It is not just about foreign companies or U.S. companies are opening up foundries and factories and the like in the United States, but those are in some cases well-paying jobs—it is about innovation, training, and other things like that—but of course offset by things like the fact that in a number of science, technology, engineering, and mathematics areas if there is not the same ability for global citizens to come and study, what are the implications, what happens if we no longer trust other countries to share in research and development? There are mixed stories.

I do think we need some of the coordinated work—for example, with the Quad and other things like that—trying to think about co-investment on some projects, does directly or indirectly support some of these "foreign policy for the middle class" goals.

I think one of the things that is different across the legislative agenda and tools more generally in the economic statecraft area is it went from a period over a few administrations of focusing more on the restrictive set of tools, and we have talked about this a lot—the sanctions, the export controls, the investment restrictions, especially the sanctions—to things about how do we do things differently at home to either support a range of goals and become more resilient.

You both had a great but a scary discussion about American Kleptocracy: How the U.S. Created the World's Greatest Money Laundering Scheme in History earlier this week, and that is a prime example of where there needs to be more work to increase resiliency at home and address some of these issues, and it is hard once that has blown up in that way.

I think there are a number of areas both around domestic investment, but things that are in either approved legislation or not-yet-approved legislation, like the U.S. Innovation and Competition Act (USICA) and the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act. In the CHIPS Act there's a question of how much semi-conductors and other production we are going to have. USICA includes a lot of additional funding for the National Science Foundation and it includes funding for co-investment with Asian allies critical to our supply chain.

That focus of what one might call either "positive" or "constructive," as opposed to just the restrictive, I think is a shift. There was some of that under the Trump administration, but I think it was muddied by the fact that at the same time there was some co-investment there was a lot of "Well, let's target allies." There was a different form of "America First" in that way.

So I think there are mixed stories, there is probably a lot more rhetoric than there is action, and I think there are still a lot of challenges.

I think Tatiana alluded to how can we talk about democracy around the world if we have such challenges with our democracy at home—and the recent dynamics around voting rights and around the rules and regulations and arcanity of the dynamics in Congress only bear that out—but I do think that people in the administration believe that they are trying to do foreign policy for the middle class.

The challenge is two things. One is that crises come up. I think some of the dynamics we are facing with Russia right now are in part maybe a reaction to the fact that it seemed like yet again the administration was trying to pivot towards China, towards Asia, to change its policy towards Russia but hope that Russia would just stay there and be happy with what was going on. While I do believe you can do multiple things at once, I think the focus on climate, the focus on China, and the difficulties given Russia's own choices to integrate them into that sort of metric has been one of the many things that we have had to react to.

The unfortunate thing is that, even over the course of the summer and so on, there were certain things like energy vulnerabilities that are not easy to deal with, but I think that made it even more difficult to coordinate with Europe and to balance the short-term issues and the longer-term reorientation in those ways. The jury is still out on what it will look like.

Back to the messaging point and the strategy point, there has been so much focus on things like increasing manufacturing, focusing on supply chains, dealing with the ravages of the pandemic, that some of the dynamics of why there are as many or more costly imports from China than there ever about the fact that people don't want to see empty shelves. You can't necessarily shift production everywhere at once.

I am sitting here in Canada right now where there are people who are very upset about the fact that truckers now need to be vaccinated to cross the border and will that impact the supply chain further. The real issue is, whatever else is going on, that people don't want to be truckers and what wages we pay to them and the like. So some of it is there is not just one set of policies that is foreign policy for the middle class.

I mention the truckers' strike in part not to elevate it but to say that it is a nexus of illicit finance, disinformation, and a lot of things that the Canadian and American consumers should be concerned about.

This is just another way of bringing it back to some of the ways in which doorstep concerns and grievances can be amplified and can feed into different challenges and become a real challenge for law enforcement that was tracking illicit finance. We really say that our structures at home need to continue to be modernized, whether it is around dealing with digital security, whether it is dealing with financial transactions, all of these things. So foreign policy for the middle class is a whole diverse area.

TATIANA SERAFIN: Thank you so much for that analysis. Foreign Policy also asked experts, and I think they came down exactly where you are—it's incomplete, maybe a C+—so we will continue this conversation.

Thank you so much for joining us. Absolutely we have to watch this growth crisis and have you back, and also see what happens with the Fed in the short term and in the medium term what happens with Ukraine.

Thank you so much, Rachel, and we will see you again soon.

RACHEL ZIEMBA: Thank you. Great to chat with you.