Better call Kissinger: an interview with the renowned diplomat

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Hello and welcome to the Intelligence from the Economist. I'm Jason Palmer.

And I'm Ora Ogumbi. Every weekday we provide a fresh perspective on the events shaping your world.

For nearly a decade now, our Crony Capitalism index has charted just how much wealth plutocrats can attribute to chummy relations with governments. The latest index lays out how fast crony capital is rising and where.

And like many Western brands, Lego is having to step carefully in the Chinese market. The firm's offerings fit well with officials wishes for nods to traditional culture and it's holding off its many homegrown Chinese rivals. Well, so far. First up though, Henry Kissinger is about to turn a hundred. He has been celebrated by many as America's definitive 20th century diplomat. As National Security Advisor and later secretary of state, Mr. Kissinger oversaw the re establishment of a relationship with China and eased tensions with the Soviet Union, securing an arms control treaty. His work negotiating America's withdrawal from Vietnam controversially earned him a Nobel Peace Prize.

We believe that peace is at hand. We believe that an agreement is within sight.

He remains a polarising man. Mr. Kissinger has been associated with human rights abuses in Cambodia, Chile, Bangladesh and beyond. After leaving office in 1977, he became a successful consultant and continued to influence global politics. Presidents, prime ministers and diplomats the world over still value his philosophy, his ideas and his advice. He remains a remarkable and much remarked upon geopolitical leader. With no sign of an end to the war in Ukraine and China posing an ever growing threat, his thinking is as valuable as ever.

There are so many photographs in here.

Dr. Kissinger, this is President Presidential pictures.

Here in this corner, Bill Clinton, Ronald Reagan, Zanny.

Minton Beddoes, the Economist's Editor in chief, met with Mr. Kissinger at his office in New York.

For the best part of a century, Henry Kissinger's been thinking about how great powers interact and how to avoid war between them.

Well, I started thinking about this very early on in my life, probably when I was in military service during the war. How to prevent such catastrophes from happening again.

So, as a scholar and as National Security Advisor and Secretary of state to two presidents, Henry Kissinger in the 60s and 70s oversaw some of the most consequential and frankly controversial US foreign policy decisions.

He.

He hasn't held Office since the mid-1970s, but he has as a consultant and quiet emissary, had incredible influence and contact with global leaders and has met pretty much every world leader since Nixon.

And if he hasn't held office since the 70s, why are you so keen to speak with him now?

I think two reasons. Firstly, because notwithstanding the fact that he is about to turn 100, Henry Kissinger still remains remarkably plugged in. But secondly, because I think his ideas themselves are circling back into relevancy for perhaps the last quarter century as America focused on the war on terror. The notion of realpolitik, which Henry Kissinger is so closely associated with, and the theory of great power conflict wasn't really the focus of international affairs. But now with the rise of China, we're returning to that kind of a world.

We are on a path to great power confrontation. Both sides have convinced themselves that the other represents a strategic danger.

If you look at Ukraine, there's also relevance. Ukraine is at an absolutely crucial point. The priority, of course, is the success of the counteroffensive, Ukraine's ability to regain its territory. But at some point soon there will also be a focus on negotiations. And that's where Kissingerian insights are useful.

In what sense? So for those who aren't familiar with Kissingerian thought, how can it help us understand what's going on in Ukraine today?

Kissinger's thinking is all about understanding countries interests and using diplomacy as a means to avoid conflict. Having understood their interests, it's a very kind of great power view of the world. And if you look at what's going on now, on the one hand you've got Volodymyr Zelenskyy this week touring European capitals, talking to leaders, securing more arms for the counteroffensive. On the other hand, this week you had the first Chinese envoy arriving in Ukraine. The Chinese having very, very clearly and closely allied with their eternal friendship with Russia, now trying or appearing to make some move to get involved in Ukraine. And actually it was interesting when we spoke to Henry K. And we had some eight hours with him over two days. Between the first and the second day the news broke that Xi Jinping had at last called Volodymyr Zelenskyy and they'd had that first conversation.

The Chinese have called the Ukrainians and have begun to be mediators.

Exactly. I was going to ask you about it. I thought this was exactly the kind of thing that you would be recommending.

Well, when you read our statement on that subject, we say, when will the Chinese wake up and call the Russians aggressors? But that's not how the Chinese think. The Chinese don't enter this as moral judges. They ended it as an expression of their national interest.

So it was striking that Kissinger immediately saw this as a very important intervention and he thought that it would potentially reshape the nature of the aftermath of the war.

If I were a Ukrainian, I would think about the nature of the military offensive I want to conduct. Now, it is one thing if they conduct it to inflict maximum damage on Russia. It's another to stay within principles that China has laid down.

I think what struck me hearing him discuss this was that he has a somewhat more subtle assessment of what China might be trying to do than many that you talk to in the west and how.

So what does he think that China's plan is?

Here Kissinger was at pains to explain why it might be in China's national interest.

I think China does this in part because it doesn't want a clash with the United States. Because if Russia is totally defeated, the Chinese Russian evolution cannot end with a total Russian defeat and Chinese acquiescence in this new reality. China wants an independent Ukraine.

The way Kissinger sees it, it's not in their interest for Russia to be humiliated after the end of the war, to be completely, catastrophically collapsed. On the other hand, they have recognized that Ukraine should remain an independent country. They've cautioned against the use of nuclear weapons. And I think, in Kissinger's view, they now see that by playing a role in Ukraine they might be able to use this as a way to further Chinese national interests but also potentially to have an issue on which there can be some form of dialogue with the United States.

And Zanny, do you agree with his take on China's stance in the war and what that signals about China's geopolitical aims more broadly?

I don't think any of us knows what China wants and I think it's always important to be skeptical. I don't think China really gives two hoots about Ukraine per se. China thinks about Ukraine in the context of its broader relationship with the United States. And thus far it's been immensely useful to have Russia effectively becoming a sort of vassal state to China. That said, Where I think Kissingerian thinking, if you will, is very helpful is thinking about what national interest implies. And in that sense, I think Kissinger's right that she wants to avoid Russia having a humiliating defeat because that would be bad for China. It would perhaps lead to, who knows, his replacement by some pro Western government or a very weak Russia, which would be bad for China. Also, I think his thinking is helpful in understanding whether China sees Ukraine potentially as an area where it can play a bigger diplomatic role. And that's what we just don't know yet. We don't know whether this is a genuinely constructive effort, whether it is window dressing, whether it is designed to burnish China's credentials in the global South. There's lots of different interpretations. But where I think Kissingerian thought is helpful is. Is in thinking about what the motivation is on both sides. And then he would go on to say the purpose of diplomacy is to try and find a way, knowing those interests, to come to some kind of negotiated agreement.

Okay, so we've talked about China's role in the conflict, but does Kissinger see any other ways of achieving peace in Ukraine?

Well, I think the other really interesting takeaway from our conversation was Kissinger's assessment of Ukraine's membership of NATO. I mean, for a long time, Kissinger controversially was one of those people who thought it was a mistake to dangle NATO membership in front of Ukraine.

I thought that the decision to leave open the membership of Ukraine and NATO was very wrong and, and whites. Because if you looked at it from the Russian point of view, in 89, they controlled Europe up to the Elbe river, and every square inch of what they withdrew from became part of NATO. The only thing that was left was a country they always considered as the little brother closest to them organically or historically. And now that is going into NATO. So I think for Putin, it was a final turning point.

But more recently, after the invasion, he changed his mind on this. Came out recently arguing that Ukraine should indeed be a member of NATO. But interestingly, in the conversation with us was the argument he gave for that it was not so much about Ukraine's security, which is the reason that most people think that Ukraine should be a member of NATO. But actually for the sake of NATO.

We'Ve proved now we're going to defend Ukraine. In my view, it's madly dangerous because the Europeans are saying we don't want them in NATO because they're too risky and therefore we'll arm the hell out of them and give them the most advanced weapons and how can that possibly work?

So this is really worth dwelling on because it's not an argument you hear very often. His argument is that the Europeans are making a terrible mistake by arming Ukraine but then saying it's too risky to have them in NATO. He thinks a Ukraine that is heavily armed but potentially unhappy with the outcome of any negotiated settlement to the war, where perhaps it doesn't have all of its territory back, is a sort of potentially volatile and dangerous Ukraine. And so his argument, which is a counterintuitive and I think really quite controversial one, is that it is the rationale for NATO membership of Ukraine is not so much Ukraine security, but security and stability more broadly in Europe.

Well, it sounds like it really is that great power view of the world again.

It really is. Ori. And the problem with that view of the world is that it gives virtually no agency or importance to what the Ukrainians themselves might want, or indeed other countries. If you have a great power view of the world, you focus on what the great powers want and you pay much less attention to what other players might want. And that, frankly, is what makes this view so controversial.

Zanny, you said you spent about eight hours with him across two days. I'm hoping you can tell us a bit more about your discussion.

How long have you got? No, seriously, we did spend an enormous amount of time with him, but whatever you think of Henry Kissinger's views, he's a pretty remarkable man. And you know, it's that length of experience and insight. I mean, I can't think like that now, nevermind when I'm nearly 100. But it yielded as a long briefing in this week's issue. We have a special podcast coming out on Saturday and for people who really want to get to the details of what we discussed, there is, I think it's a 44 page, lightly edited transcript on our website.

Wow. Well, you can listen to the podcast special wherever you're getting this podcast. Zanny, thank you so much for your time.

Yes, welcome, Uri.

Over the past couple of decades, Britain's capital had become so welcoming to Russia's oligarchs that it had become known as Londongrad. These moneyed men, and they were really almost all men, showed up with unthinkable piles of cash, lots of it made from businesses the state handed out. As the Soviet Union collapsed, oligarchs bought London's big mansions and in a couple of cases, its big football clubs. After Russia invaded Ukraine last year, 48 of its oligarchs were placed under Western Sanctions. The immense wealth of many pals of Russia's President Vladimir Putin highlights a wider problem that the Economist has long been keeping an eye on in the form of our crony capitalism index.

Our latest index shows that although billionaires have had a pretty bumpy ride over recent years, over the long run, their share of wealth has increased.

James Frensham is a data journalist at the Economist.

And so our index highlights a growing problem of businesses with questionable links, some of them to states, and how those countries need to go about reducing the level of corruption within countries.

Okay, so before we dig into the numbers, what's your definition then of crony capitalism?

We define crony capitalism as rent seeking sectors that tend to get pretty chummy with the state. So rent seekers can inflate their earnings by gaining favorable access to land, to licenses and resources. And some may form cartels to limit competition, or they lobby the government, say, for beneficial regulation. And we find that often they bend rules, but businesses typically don't break them. They stay the right side of the law. And so we classify sectors as rent seeking on this basis. So those include kind of banking, construction, property, and those dealing in natural resources. So sectors where the proximity to government really say, helps grease the wheels of those businesses.

And so thinking about the latest dive into the numbers, what are the trends? What did you learn?

Yeah, so there are a good handful of those billionaires that we classify as corona catalysts, about 800 or so, and their total wealth amounts to $3 trillion. So about 1 quarter of all billionaire wealth in the world, and that's 10 times more than 25 years ago. So it's now risen from 1% of global GDP to 3% now. And about 2/3 of that increase, quite interestingly, has come from just four countries, America, China, India, and Russia. It's perhaps no surprise to you that Russia, with its kind of mafia like kleptocracy, is top of our index. So crony wealth in Russia is equivalent to about 20% of GDP.

But you mentioned four sort of big countries in this. What does crony capitalism in America look like?

Yeah, America doesn't look too bad. So a vast majority of billionaire wealth in America is not crony capitalist by our measure. So crony sector wealth amounts to about 2% of GDP in the states, and that places it 26th on our index. However, what I would say is that tech wealth exhibits some of the characteristics of cronyism. Tech companies have massive market shares in the States and they spend tons of money on lobbying in Congress, which is kind of one of our key themes of crony sectors. So if we were to reclassify tech wealth as a crony industry in our index, then crony wealth in America increases threefold to 6% of GDP.

And you also mentioned China. What's the story there?

Yeah, well, China's a bit of a mixed bag. So it's 21st in our index. So crony sector wealth there is equivalent to about 2.5% of GDP. But since Xi Jinping, China's president, launched a corruption drive, crony wealth has fallen pretty substantially, from about 50% of all billionaire wealth in 2012 to about 1 quarter today. But the problem in China, of course, is Xi Jinping's relationship with its tycoons. Whatever industry they operate in, they're doing so with the consent of its president. So good examples of that. Jack Ma, the co founder of the tech giant Alibaba, he disappeared in late 2020 after criticizing the authorities. And he was worth nearly 50 billion at the time. And he's recently reemerged and his worth is about half that figure.

But clearly that kind of occasionally disappearing people with crony wealth is not how every country deals with this stuff. What are the other way?

Yeah, not all countries are in favor of purges, but in the past year or so, America's really been trying to gather support for a crackdown on corruption in the wake of the Russian invasion of Ukraine in order really to prevent other countries from descending into the kleptocracy that so afflicts Russia. And in March, America hosted its second summit for democracy. And there there were 74 countries, they represented about 2/3 of global GDP. And they declared that, among other things, they would work to prevent and combat corruption. And probably thinking, well, what the hell does that mean in practice? One good example is property. So America and other countries, particularly Britain, France, they found it's really, really easy for funky money, let's say, to be squirreled into both kind of residential and commercial real estate in those countries. And those transactions are often done by shell companies, the true owner of which is rarely disclosed. So starting next year, America is going to require that businesses that are formed or operating in the country, they reveal their true kind of beneficial owners. And so the hope is that that forms one prong of an attack to kind of reduce the kind of ill gotten gains that wash overseas into what are ordinarily clean countries, let's say sunshine.

Being the best disinfectant, as always. But do you think that would really clear things up, as it were?

Yes and no. Transparency is definitely Not a silver bullet. I've seen evidence of this myself. I went to Highgate in North London. There's this big mansion on a hill called Wittenhurst. And there's been much speculation in recent years about who owns the mansion. And in theory, the answer is just a click away, because for three pounds in Britain, you can download the title deeds of any property in the country. So if you do that for Wittenhurst, the owner since 2017 is listed as a company which is listed in the British Virgin Islands. And there are no further records of this company. There's been much speculation over the years about who owns it, so I decided to knock on the door and simply ask. Unfortunately, the person that came to the gate was a Eastern European man, pretty stocky, dressed, head to toe in black tactical gear, and he basically said, I'm not telling you anything. Get off the property, you're trespassing. So, as I said earlier, there's a new law in Britain that came into force that requires that foreign businesses that own property in Britain register in the country and disclose who their true beneficial owners are. So Wythenhurst would fall into that category. However, Wythenhurst has not disclosed that information. And a recent report by Transparency International, who are anti corruption watchdog, they found that basically over half of the 100,000 or so properties subject to this new reporting requirement still remain hidden. So owners that want to stay in the shade, as it were, can too often just skirt the rules, Ignore the rules and registries just don't really have sufficient resources to police them properly.

Thanks very much for your time, James.

My pleasure.

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For companies outside of China, access to the world's second largest economy comes with a few caveats. And that's true even for those selling what many consider the most wholesome of products.

The Chinese name for Lego, Le Gao. It includes the character of happiness. But what is great for Chinese parents is that here is clearly an educational toy.

Rosie Bloh writes about China for the Economist.

And Chinese parents love to give their kids things that will also make them brilliant future masters. And then there's a sense of. Of creativity and play as well. And again, this has become something that Chinese parents are increasingly worried about. Yes, their kids must get top marks, but they must also be brilliantly creative. So LEGO is doing fantastically well in China. Yes, it's expensive, but there are more and more people who can afford it. And last year, over 60% of new shops opened by LEGO were in China. It's one of their biggest growth markets. But with that expansion, of course, comes growing pains.

What do you mean by that?

In China, even plastic bricks are political. So there have been some sets that have been popular in other markets that can't be sold in China, or aren't sold in China, I should say. And LEGO is starting off Pride Month with a colorful start. The toy maker is releasing its first ever LGBTQ themed set called Everyone is Awesome. It contains 346. So there's a fantastic set called Everyone is awesome. It's got 11 figures representing all the colors of the rainbow flag and skin tones. It's about diversity. Everyone is okay. This was sold in China and then it stopped being sold. That's as much as LEGO would tell me. The Chinese Communist Party has strict rules against promotion of any LGBT themes in media content. I guess that toy would have flown close to those regulations. We don't know quite what happened, but certainly it's. It's no longer sold. There have been other instances as well. AI Weiwei is a Chinese dissident, an artist who makes fantastic work out of Lego sometimes, amongst other things. And he wanted to do a big project in 2015, and Lego refused to sell a big order of bricks to him. He made a big fuss about it. The public completely went with this. He got showered with bricks, people sent him bricks. And after an outcry, LEGO did back down. But by then, the damage was done. Everyone knew that LEGO had toed the party line. But at the same time, Lego's also doing things that appeal very much to the Chinese Communist Party.

In what sense?

Well, so in the last four years, there have been an increasing number of sets very much aimed at the Chinese market, though they're sold outside too, which represent aspects of Chinese culture. Now, there's a big Chinese Communist Party policy of pushing traditional Chinese culture, because what the Communist Party wants you to think is, big ancient country, amazing history, amazing legacy. All of these things are so interesting and appealing about China as opposed to some of those other things you might have heard about China, like repressive government or censorship or whatever. And so it's a big part of the Chinese government's soft power push within China and abroad to think about Chinese culture. And what do you know then we get some LEGO sets. There's one which is for Lunar New Year and there was a Chinese money tree adorned with red envelopes. Duplo is a type of LEGO aimed at younger children. So bigger bricks. They did a learn about Chinese culture model that incorporated red lanterns, a mahjong set, temples and of course pandas everywhere and all of these things. There's even been a TV show, LEGO Masters. It's a format that you see in lots of countries and they had a China specific one where adults had to make elaborate sculptures that you can use only using LEGO bricks. So each episode of the Chinese version of this show is themed around the profound Chinese traditional culture. And the winners of the first season, they'd made this giant amazing diorama featuring a dragon curled around a Chinese palace. It was incredible, but it was, you know, very much here's Chinese culture in bricks.

But why LEGO specifically, right? Why does it have to be LEGO and not some, you know, knockoff brand of brick that has the same educational value and can be turned into, you know, traditional sculpture?

So there are actually lots of competitors to LEGO in China. You won't be surprised to hear that there are lots of competitors to many things. I've used some of these LEGO competitors, they are often not very good at fitting together. And the LEGO has actually fought several really successful copyright battles against many of these imitators. But it is hard to do and some of these competitors are fighting back by doing things that LEGO won't. So LEGO won't make true to life models of military equipment. That is very much not LEGO style. It's all about play. Chinese firms are filling that gap. So there's one local toy maker, for example, that takes inspiration from the People's Liberation Army. So the Chinese army's models and it's created J20 fighter jets, it's created intercontinental ballistic missiles, other Chinese weapons. Of course that's what you want your 5 year old playing with. If you want to, they can play in plastic bricks that are not Legos.

So to look at from the outside anyway, LEGO has a place in China and will continue to.

I think Lego's doing amazingly well in China. It's opened hundreds of stores already. Last year it opened 95 new ones. I will say one thing though. Of course there are these Chinese products or these products that are aimed particularly at the Chinese market. But the biggest selling brands, the biggest selling themes in LEGO in China are, are not these Chinese themes. They are LEGO technic, LEGO icons, Lego, Disney, the ones that you would find anywhere in the world.

Rosie, thanks for your time.

Thank you very much.

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