The Next American Century with Dmitri Alperovitch

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1:32Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk with some of the brightest minds out there about everything surrounding the written word, from authors and historians to figures in entertainment, neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe wherever you get your podcasts and leave us a review. We all love a review, even the bad ones. I want to hear the parts you're enjoying or how we can do better. You know, I can roll with the punches, so let me know.

2:06Anyways, let's get to it.

2:14My guest today, Dmitry Purovich, is one of the few people who accurately predicted when, why, and how Russia would invade Ukraine. He got it right, and he got it right early. He's now out with a new book that explains how America can beat China in the race for the 21st century. Dimitri is someone we should be listening to, so let's see what he has to say.

2:43I'd like to take a second to recommend my friend Andy Ostroy's great podcast, The Back Room. Every episode is a fun, incredibly honest take on our society and the political situation, along with some brilliant guests. I've been honored to join Andy on the show, and you know anywhere that accepts me with no filter deserves a shout out.

3:10Joining us now on Open Book, Dmitry Alperovitch, co-founder and chairman of Silverado Policy Accelerator. But he's a brilliant guy. He has been at the SALT conference many times. He is the author of World on the Brick, How America Can Beat China in the Race for the 21st Century. Demetri, it's great to have you on. The book is phenomenal. Thank you. I have been passing out your book to people who think they know something about our national security just because they have money. Sometimes people have high net worth, so therefore, they know everything about everything, which of course they don't.

3:46But you do know a lot, if not everything about this. So tell us first a little bit about your background on becoming a national security expert, and then we'll get into the book. Absolutely. So I'm an immigrant to this country, a proud American by choice. I was born in Moscow in the 1980s and immigrated when I was a child. Grew up in Chattanooga, Tennessee, went to Georgia Tech, focused on both cybersecurity attack as well as international relations, and then went into the cyber field, had a good career, founded a company you may have heard of called CrowdStrike, now one of the largest cybersecurity companies in the world, took it public, and in 2020, decided to focus my energy on philanthropy and giving back and founded this think tank called Silverado Policy Accelerator that really focuses on how do we make sure that this century, just like the last one, remains an American century and confronting the threat of great powers, particularly China, that present, I think, a fairly existential threat to our well-being and our dominance in this world.

4:51Okay. So what year did you grow up in Moscow? What year were you born in Moscow? 1980. Okay. So in 1985, I was in the U.S. Embassy in Moscow, and I was upstairs drinking Budweiser beer with the U.S. Marines. And one of those embassy Marines got honey trapped. You don't remember this because you were only five years old, but he got in a lot of trouble. And it was a tough place, Moscow, in the 1980s. When was the last time you were in Moscow? So I left in 94. I have not been back. I've not been sanctioned by Putin, so I can't go back. You've been sanctioned. So this is like a badge of honor you're wearing.

5:29You've been sanctioned by Putin. I'm trying to get sanctioned by China, having written this book. So we'll see if that it works out. Okay. They're not going to spray any nerve gas on you or anything like that, or you're not that important, right? I don't want to get sanctioned by Iran. They don't mess around. Okay. So let's talk about that. We have 5.7 million people that live in some form of autocracy, which means that their freedom has been taken away. Your book writes about the differences between freedoms, democracies, countries that believe in liberalism. And I mean liberalism, the Western liberal idea of expressing your personal freedom, not conservative or liberal.

6:05You write that these autocracies are very dangerous because they have centralized power, a result of which they can make these decisions and they can move the masses through fear to project their will around the world. And they're all a little crazy. They all have these weird ambitions. So let's start with China. The podcast listeners on Open Book are the American president and you're walking into the White House situation room and you're going to brief them on China and assume that this is a domestic governor that just became president. He doesn't have your national security experience. So tell us what he needs or she needs to know about China.

6:43Well, the first thing and the reason I wrote this book is that I believe we're on a path to conflict. I was one of the first ones geopolitical analysts that have predicted that Putin was going to invade Ukraine months before it happened back in December of 2021. And what got me so convinced were basically five reasons. I believe he was driven by history, his own distorted view of history, not believing that Ukraine was a country, his view of destiny, Russia's destiny, his personal destiny to take Ukraine, to control it, and then security, geography, and most importantly, ego. He wanted to be the one to do it, not just leave it off to the future generations.

7:17And I believe those same five reasons are playing out in the Indo-Pacific with China wanting to take Taiwan, and particularly Xi Jinping wanting to take Taiwan and do it on his own watch. It's not an accident that both men are in their 70s and Putin started this war when he's in the 70s and Xi is now also looking at sort of the twilight of his power. He's gonna be in office probably until 2032. He's gonna be 79 and 32 when his last term, likely last term runs out. Unlike our system, perhaps, they don't tend to elect their leaders into the 80s and beyond that, of course, you've got health concerns and the like.

7:49He's not the healthiest guy in the world judging by his waistline. So he's going to be thinking about that period, likely from 2028 to 2032, as the window for him to launch this invasion of Taiwan to achieve what he calls the great rejuvenation of the Chinese nation that can't happen until Taiwan becomes a part of China, which, by the way, it has never been. This is one of the myths that they proliferate. In the book, we go through the history of Taiwan and how there's never been a moment in history when whoever fully controlled China also fully controlled Taiwan. But Taiwan is really important to China for strategic reasons beyond just historical.

8:27And it is really important to the United States. And I fear that the discussion in the United States about Taiwan has been reduced to chips. And look, chips are really important. They're the core of our digital economy. I mean, nothing can be produced without chips, as we've seen cars, microwaves, you know, computers, obviously, TVs and the like all need chips. And Taiwan produces about 90 percent of the world's most advanced chips, but about 40 percent of all chips. And it's really, really important. But it's always been important to the United States. You know, in 1950, General Douglas MacArthur called it the unsinkable aircraft carrier because of a strategic position, effectively being the anchor point of the so-called first island chain that spreads from Japan through Taiwan into the Philippines and onward.

9:11And it plays a critical role in containing China. When China looks out at the world, what does it see? It sees itself fully contained by U.S. military bases and U.S. allies, right? From South Korea, American army troops there, 28 ,000 Americans, air bases, radar installations and the like. The Japanese islands, the headquarters of the 7th Fleet, Marines in Okinawa, Taiwan at the center of that, viewed as an outpost of American power. And then completing that arc, the Philippines, where we were once again, for the first time in 30 years, reestablishing military presence in the bases there. So they feel themselves contained by us, which is why they want Taiwan.

9:47And of course, we want to keep them contained because if we uncork China, then we'll allow them to dominate Asia, one of the most important regions of the world economically, and use that as a power projection platform around the world. Okay. Okay. So I've done some homework. I'm this newly elected American president, and it looks like there's a hundred miles that separate the mainland between the island of Formosa. It also looks like it's a rough terrain on a lot of that island. There's a lot of jungles and mountainous terrain, four plus million people living in Taipei, but also there's hard beach access.

10:24I'm not going to really be able to have a Normandy beach landing. I got to go a hundred miles across. I've also got US air superiority in the area. And I'm going to suggest to the Chinese that they take it seriously because it would be so embarrassing to them if they go for the island of Formosa, they go for Taiwan, and they're blasted proverbially out of the water. So assess the risk over the next three to five years that the Chinese government, which you and I both know, want Taiwan. You write about this in your book. Xi wants to go down. His legacy is to unite the island. This is something Mao couldn't do.

10:58She wants to do it. And you and I know, Demetri, the one problem with these older politicians, they don't have to live in the world that they're making. OK. And so they're doing things now that could be on the fringe of irrational. So go ahead. He's invading in the next one to five years. I think four to eight years is the timeline. They're not yet ready. But of course, he's surrounded himself by yes men. So even if they're not ready in 2028, I'm not sure he's going to have anyone around him that will tell him that. Just like no one told Putin that invading a country of 40 million people, Ukraine, with 190 ,000 troops is lunacy, but he proceeded nevertheless.

11:33So you may have the same situation developing in China. And you're absolutely right, Anthony. The beach invasion that most people sort of imagine, this Normandy 2.0, you know, saving private Ryan Chinese edition, that's not reality. That's not the reality of this island. I know you've been there. The terrain is very rough, as you say, mountains, rivers, bridges, tunnels. You know, you can land on some of these beaches, even though they're very shallow. They've been preparing for it since 1946. That's right. And particularly since 1979, when we, of course, left our military troops left Taiwan. But the key to this, I think, is the infrastructure.

12:09And the book actually starts out with a fictional, hopefully fictional, scenario of invasion that might unfold in 2028 and how China might go about this. And the key to all of this is the port of Taipei. I believe they have to seize that port, which is facing the Taiwan Strait. That port, by the way, did not exist 12 years ago. It was only finished in 2012. And it provides easy access into the city of Taipei. And it's perfect infrastructure if you do an airborne assault to take that port to secure it. And then you can bring in these massive roll-on, roll-off ships that can unload huge amounts of logistics, armored vehicles, troops that you need to take over this island of 23 million people.

12:46So that is key. And then the other thing that's really great about this port from the Chinese perspective, is right next to that port is the opening to the Tamsui River, which leads you right into Taipei. So if they can unload, as I write in this scenario, these so-called LCAC boats with the huge turban fans at the end of them and have the Chinese Marines use these boats that can go about 80 knots an hour down this river, they can be in the heart of Taipei in the government district right next to the presidential palace, right next to the Ministry of National Defense in about 15 minutes, right?

13:19So taking that port and then using it to also go down the river and try to do a decapitation strike against key government leaders and installations is going to be really, really critical. And then, of course, you unload huge forces to drive around the islands and then try to take over military bases and key population centers. So I've read the book and I said, I got to ask Demetri this question. I'm just going to ask the question. Okay. So you sort of feel like we're victims of some of our success over the 80 years. So hear me out. You know, you could be an American negativist and say, well, we lost and sort of pulled out of Vietnam.

13:57We sort of lost and pulled out of Iraq and Afghanistan, blah, blah. Or you can be an American positivist and say, wow, they projected a global footprint at the world's most powerful Navy, 11 aircraft carrier squadrons, and they've got this footprint that is suppressing. To use a quote from Thomas Hobbes in The Leviathan, we are at our best, we are at our most peace and prosperity when there's one hegemon that is suppressing the internecine conflicts. And America has done that. But what I'm wondering is we're a victim of this success because there seems to be some complacency in our leadership.

14:33You know, Ronald Reagan took Taiwan seriously. Kennedy and Nixon, in their first debate, they were talking about the islands of Kimoy and Matsu. We don't do that anymore. We call each other names like fat and stupid and lazy and dumb and crooked. But we used to have these very vigorous debates and people actually understood what was going on. Are you worried that we're not paying attention? Are you worried that our, you know, sometimes when you get your bell rung, you're ready for an avalanche, but if you haven't gotten your bell run, you're skiing at the top end of the slope. You're absolutely right.

15:06And this was the reason I wrote this book to raise the alarm bells, because I was trying to do that with Ukraine. For three months, I was telling people, he's invading this winter, it's happening. No one believed me, only towards the very end that people start taking it seriously in Europe. To the very end, I remember I was at Munich Security Conference the weekend before the war was launched, talking to senior German officials and others across Europe. And they were saying, this is all nonsense. There's not going to be any war. Of course, four days later, we had this massive invasion that took place.

15:34And I believe we're on another path to war where the stakes for the United States are much more dire than they are in Ukraine. As important as Ukraine is, Taiwan is a thousand times more important to our economy, again, chips, but more importantly to containing China to make sure that China does not become the world's greatest superpower and starts bossing around our friends and allies around the world and diminishing American power in the security realm and economics realm. This is really, really vital. And I am very concerned we're not paying enough attention to it. Okay. I mean, this is why you're writing the book, but what do we do here, Dimitri?

16:08I'm worried. Okay, I'm worried that we've got ideological leadership. We've got sclerotic leadership. I'm going to say something that as a Russian, you know, you're American, but you were raised in Russia and you know a lot about Russian culture, so you're going to not like. I feel like we're in an oligarchic duopoly now where the power structure is just circulating among Washington elite and they are spending money recklessly and they are carrying favor with lobbyists. And we've got big food convincing them to destroy our food. So we're a lot fatter. We've got big pharma convincing them to let us take and use experimental drugs and vaccines.

16:47We've got big military where the planes are falling out of the sky, but they just hand us the money. And there's a$2 trillion situation going on at the Pentagon. We don't even know where the money is. And there's nobody ever going to audit it. Any of this make you worried or you're not worried about any of this? And if you're not, tell us why. Well, there's no question that we have a lot of problems. We're very divided. We have all these issues you mentioned. But the book is actually very optimistic because it argues that we're much stronger than we think that we are and that China is much weaker.

17:18You know, we are in the new Cold War. And I make the case how this Cold War is actually very similar to the first Cold War. But China is actually much weaker than the Soviet Union ever was. It doesn't have the Warsaw Pact. It doesn't have the military strength and the global power projection that the Soviet Union has. It doesn't have the attractiveness of ideology that the Soviets had for the first, at least part of the Cold War with communism and on and on and on. It does have a bigger economy, but even that is diminishing, as you well know, with the Chinese growth stagnating, huge issues with their real estate market and the bubble that's there.

17:49By the way, in 2008, at the height of our crisis, real estate was 10 percent of our GDP. It is 30 percent in China, just enormous in terms of the impact that that's going to have to drag their economy down. They have the population collapse that's taking place. They're going to go from about 1.4 billion people they have today to 550 million or so by the end of the century. Just unimaginable and unprecedented in human history. So we have all these advantages. We have the greatest allies in the world, greatest military, despite all the issues. So this is doable. We can deter China. And this is what we ultimately need to do, right?

18:23There are three possibilities here. First possibility is that the Goldilocks scenario that they never even try because they become convinced that it's impossible and the risks to them are too high. Or they go for it and they win or lose. And I argue that those two, regardless of what happens, I mean, obviously, it's better for them to lose, but it's a disaster, right? $10 trillion of market value wiped out, not to mention the risk of nuclear conflict. We've never fought, kinetically, a nuclear power before, and ideally, we won't. the loss of American lives is something we haven't seen probably since World War II, maybe even greater on a daily basis.

18:58So this has to be prevented. We have to deter them. And we have to do everything possible militarily, economically, diplomatically, because his strategy is going to be, how do I keep the U.S. out of it? Because he knows that if we won't intervene, Taiwan is screwed, right? They don't have the capabilities to defend themselves on their own. They need our help. And using economic leverage, trying to make sure that we're reliant on China for critical minerals like rare earths and lithium and cobalt and so forth, reliant on them on semiconductors, which they're trying to achieve right now, reliant on them for EVs, batteries, solar panels, wind turbines and the like as we're transitioning to green energy and reliant economically in every other respect.

19:40he's going to think that that may help deter us from engaging and just accepting that Taiwan is going to fall to China. That's what we've got to prevent. We've got to make sure that we achieve independence in all these areas and that we make China more aligned on us in a lot of these areas, particularly semiconductors, which are so essential, of course, to AI applications and the modern economy. And on top of that, we've got to make sure that we're investing in the right things in our military. I argue that we've been too enamored with these really exquisite, but incredibly expensive platforms.

20:12These aircraft carriers cost$14 billion now. The last generation, the Nimitz-class aircraft carrier was four. The four class is 14. I argue that we don't have three and a half times the value that we're getting for that$14 billion. We got to get back to the basics and start investing in mass, numerous numbers of missiles, air defense systems, mines, ships. We need quantity over quality at this point. If Donald Trump wins this election, is that good or bad for this problem that you're writing about in the book? Well, that's a hard question. I'm not sure even Donald Trump could answer it. He's made statements that Taiwan doesn't matter, that they're right off the coast of China, China should just have it.

20:53But he's also taking a very strong anti-China position during the course of his administration, as you know. So, you know, the benefit that Trump has is this sort of crazy man strategy that Nixon applied and Trump applied as well, where, you know, we saw this with Soleimani, right? The military presented him with three options. They thought that this crazy option of killing Soleimani was just thrown in, thinking that he would never take it. And he's like, oh, I like that one, right? So no one knows what he's going to do, which makes it very dangerous for them. So there's deterrent value there.

21:25But, you know, if he does say, well, you China, I'll make a deal for you for buying your soybeans. I'll just let you have Taiwan. That would be a problem. Unclear what he's going to do. I don't think he even knows. Okay. Make no mistake. This is a very, very tough call. Any president, I don't care who they are, when they're going to be looking at this, this idea that you're going to go to war with China, have enormous economic impact, loss of life that we haven't seen in so many decades, and the potential for nuclear escalation, this is a very, very tough call for anyone. And the problem that I have with the Biden administration is that they've done some good things.

22:05They've done just recently the tariff announcements on Chinese semiconductors and critical minerals that they're producing to try to even the playing field for our own companies. They've done some export controls to try to limit China's ability to project power in certain industries. They're building up forces in the Pacific. So directionally, it's all correct. I worry that it's moving way too slowly, that because we're not calling this a cold war, and I think labels matter, we're still in this mindset of, well, we're cooperating with China, we're competing with them in some areas. And that's just nonsense.

22:39We are absolutely in a cold war that is very similar to the first cold war. And the only thing that matters is winning. And you're not going to get anywhere with China on fentanyl. you're not going to get anywhere with China on climate change. We've been trying to do this with them for decades now. And of course, they haven't given an inch because they see that as a very transactional thing that if they're going to give us something, they want something back. And the biggest thing they want, of course, is Taiwan. So we got to get serious here and start moving fast, because if I'm right, I hope I'm not, that this can happen as soon as four years from now.

23:11There is no time to waste. Okay. I'm going to make you the global national security czar for the United States. So, I mean, anything you say goes. Forget about the Congress. Forget about everything. Everything you say goes. Okay, ready? Yeah. And we got to go around the world quickly because unfortunately, these are short, punchy podcasts. You ready? Yep, let's do it. Okay. Ukraine, what do we do? Look, I think Ukraine is a war of attrition now. It's really, really hard for them to win in the near term because Putin is in it for the long haul. And we got to make sure that Ukraine can survive for the next five, 10 years that it might take for the Russians to lose their will to keep fighting this and not achieving the end results.