Ukraine at the Crossroads: From Donetsk to the Garrison State

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1:08To understand the economy, you have to understand human nature. This podcast is powered by Acast.

1:20David McWilliams: How are you doing there? It is time for the podcast. hope everything is well you're not feeling a little bit too angsty people going back to work summer's kind of over back to school September John always hated this time of the year he was depressed I as swatty pants was always like oh here we go back to school great fun let's learn lots and I go nah let's learn lots my head is full exactly anyway my head is empty it needs to be filled out I hope you are well and I hope the summer has been kind to you and it hasn't been a bad one weather wise so fingers crossed, we won't get completely lashed out of it in the coming months.

1:57Now, also in the coming weeks

1:59David McWilliams: because John and I are going to Electric Picnic next Friday. Yeah, absolutely. Looking forward to that. It's very funny when you do things like this at Electric Picnic in the tent, right? You have a kind of ambiguous relationship with the weather because on the one hand you don't want to be too hot because then nobody will go into the tent because everyone's sitting outside. Yeah, okay, yeah. Makes sense. You don't want to be too lashing because the tent gets too hot. It gets steamy, right? Because I've done this for the last 20 years. So you want slightly overcasty weather, right? Not too hot, kind of Goldilocks.

2:25David McWilliams: We need a Goldilocks economy. Not too hot, not too cold. Anyway, we will see you in Minefield five o 'clock next Friday, the 29th. But John, I want to talk about the deal, Putin, Trump, the EU, Ukraine, et cetera. But what I want to say to you is that there is a positive long-term option for Ukraine, which I think is being disguised here. We're going to talk about, I remember about six months ago, I suggested to you that Ukraine would be turned into a garrison state. It was going to be the garrison state on the eastern fringes of Europe up against Russia. And I said this would be probably a good thing for Ukraine.

3:11David McWilliams: I still think now this could be a good thing for Ukraine. Because at the moment, everyone's talking about what did Trump do and what did Putin do. So the podcast is going to be in three bits, John. First one is, what has the last few days revealed to us about the state of mind of Putin and the state of mind of Trump and the position of Zelensky, number one? Number two, what is the historical reference point for the type of deal that is on the table for Ukraine? And then the second part of the podcast is to look at the notion of the garrison state, which is a notion in political economy. It was coined in 1941 by a guy called Harold Laswell, an American political economist, about a type of state where the military becomes the most powerful agent in the whole background.

4:04Right, okay. Now, Laswell was warning at the time that America could become a garrison state

4:09David McWilliams: because they were spending so much on military during the Second World War. Yeah. And the interest of the military. And of course, interestingly, Eisenhower in the 1950s, who don't forget was the lead general in the American army, Eisenhower warned of the military-industrial complex. And by that, he was warning about the garrison state. So we're going to talk about that too. But also with the deployment of the National Guard on the streets of DC, it looks more and more like a garrison state. Well, that's very, very true. But I mean, it's the idea of like, so I'm going to explain what a Garrison State is.

4:41David McWilliams: We're going to even touch on Sparta and Athens, the Polyponesian War. Right, okay. All over the place. So that's where we're going with this podcast today. Now, but you last night were at a gig. I was, yeah, yeah. I went in to see a band called the Maccabees. They're fantastic. I love the band. It's one of these kind of quirky bands from the early 2000s. And they had three albums out. And then they broke up for 10 years. and then they've just gone back on the road and they had no idea what kind of reception they were going to get. They got a fantastic reception. It's kind of weird. We'll probably talk about this in an EP, how some bands just really click with people and they have a really kind of, you know, strong engagement and relationship with them.

5:28And this is one of the bands. Their first breakthrough song was a song called Latchmere and it's about a swimming pool in Latchmere in Battersea because it has a wave machine. And it's just...

5:39David McWilliams: Look, I love that. I love that. I'm going to actually listen to it. Listen to it. And I didn't realise this because when we lived in London, that's the swimming pool that I used to bring the girls to every single week because they had a wave machine. And the songs about it. That's brilliant. Brilliant. Brilliant. Wave machines, Lashmere, Maccabees. Excellent. Excellent. Well, listen, we're going to park that musical piece of trivia and come back to the musical piece of trivia maybe next week in the big tent at the gig. But let's talk about the last couple of days. What struck me, John, was that so much of the analysis that has gone on has been looking at, oh, you know, Trump is outfoxed by Putin, Putin's in the lead, etc.

6:24David McWilliams: He is basically sucking the Europeans and the Americans into a trap, and he has it all figured out. But what actually was revealed to me was just how pathetically small-minded Putin is. Because if you drill down to the details, do you remember Putin was talking about denazifying Ukraine, demilitarizing Ukraine, etc.? That's all gone. All he wants now, if you look at the map, is a sliver of land in Donetsk. That's what it was all about. And he has been fighting not for three years for this, but for 11 years. and after all the bluster and all the stuff. But that's all he's kind of left with. This is my point.

7:05This is my point.

7:06David McWilliams: Look, 11 years, the amazingly dominant, allegedly Russian army can't even beat the Ukrainians who are massively depleted and massively stretched across a front line of hundreds of kilometers, right? And all he now wants, actually at the very end, is this tiny sliver of land and donuts that he can go back to the Russians and declare, I have a victory. Yeah. How pathetic is that? After all the millions of lives lost, after all the money spent, after all the families destroyed, after all the deaths of young men, at the end of the day, Putin is going to settle for a little sliver of land. And of course, that is what Zelensky is being forced to make his mind up on.

8:01David McWilliams: Now, lots and lots of commentators are going on about, look back at history, and this is Yalta, which is when Stalin, Roosevelt, and Churchill basically divvied up the world. or this is Munich 1938. Munich 1938 when Hitler outsmarted and outfoxed and outgunned and outthought Chamberlain and Chamberlain came back with his, oh, this is my little piece of paper, this white piece of paper. And of course, Czechoslovakia was dismembered by the West and Hitler. And within a few months, the sedating Germans were embracing the Nazi armies, et cetera, et cetera. They're all the parallels. but I think a better parallel John isn't 1938 it is 1940.

8:49But Mike just before you go there you know you're saying that Putin is settling as it were for the sliver of land when he's getting Crimea and a little part of Donetsk or whatever if if that's the way it goes but is that just for now though i mean because put good you know let everyone settle down regroup and go back at it

9:13David McWilliams: isn't that the big fear well i think that that's the big fear and that's why for example the americans have come in and said they're going to give some sort of vague security guarantees i can go back to this yes sure right that is the big fear you don't you don't trust the person the other side why would you trust him he's invaded countries before etc etc but i go back to the 12th of March 1940. Okay. There is an agreement signed by Finland and by Stalin. Now, whatever you think of Putin as not being able to be trusted, Stalin, I think, in general, was a fellow you couldn't trust when it came to land grabs.

9:53But that particular treaty, Treaty of Moscow, ended the first Finnish-Russian war, okay? And it was called the Hundred Day War, the Winter War.

10:06David McWilliams: The Finns and the Russians went head to head. Now, the reason I know this is that many years ago, when I was trying to learn Russian in a place called Novi Ruza, middle of nowhere, on the road to Smolensk, kind of middle of nowhere Russia, my teacher was half Finnish. And I was very intrigued about this, and I didn't understand where she'd come from. What were Finns doing in Russia? And she was part of what they were called the Karelian Finns, K-A-R-E-L-I-A-N. And Karelia was a part of Finland, which was basically bordered upon and went up to villages just outside St. Petersburg, then Leningrad.

10:43Free marshy area, that part of the world. Marshy area. They were Finns. They were Lutherans. They spoke Finnish. They were Finnish nationals. And they were traded by the Finnish government in Helsinki as the piece of land. they had to give Stalin and the Russians for peace. There was a continuation war after this. The Finnish went back to war with the Russians very, very soon after this as part of a Finnish-stroke Nazi army that went in, Finnish-German alliance. But the borders that were settled by the Treaty of Moscow on the 12th of April in 1940 are still the borders of Finland and Russia today.

11:28Oh, okay. They haven't moved, even after the Second World War. How did the Karelians feel about that being sold out? So about 400 ,000 Finns moved from Karelia to Finland proper. So they were the refugees. And then lots of them stayed in Russia, hoping, for example, that maybe Russia wouldn't be too bad. But what eventually happened, there was another budget called the Irgurian Finns, and they were ethnically cleansed. There was a genocide against them by the Russians. But let's say hundreds of thousands of Finns remained in Russia on the wrong side of the border, you know. Like hundreds of thousands of people in Ireland remained on the wrong side of the border, you know.

12:10David McWilliams: Lots and lots of Protestants in the south found themselves on the wrong side of the border in 1921 and lots and lots of Catholics in the north. So, I mean, this is what happens when you start to redraw boundaries. Yeah, yeah, yeah, yeah. But what I'm saying is I think our framework for Ukraine might be better served looking at the Finnish framework than either the Yalta framework and or the Munich framework. Right. Because what happened was that the small country that had been attacked by the big country remained intact in the Finnish case. And I think that's interesting. Yeah. So what happened is there was a thing called the Continuation War, which was there was the Winter War, then there was this peace treaty, and there was a Continuation War, which was the Germans and the Finns against the Russians or the Soviets.

12:54And then at the end of the day, the Finns signed another treaty with the Russians and they flipped side and there was a war, the Lapland War, which the Finns against the Nazis

13:03David McWilliams: at the very end of the Second World War. Yeah, yeah, yeah. So there was all sorts of carry on. And Santa, exactly. And the elves in Lapland, right? So what I'm saying is now that I've actually looked at the last five days and all the shapes and whatever, what has emerged to me is not the hand-wringing of Western commentators about how awful Trump is and he's going to let the Ukrainians down. I think that's noise. I don't think it's analysis. I think basically what you want is what's the signal in the noise? The signal is that the Russian demands have been, they're called maximalist demands. You always hear that the Russians are maximalist thing.

13:43They're kind of minimalist. They're tiny, right? They are going to get a small bit of land, which will be kind of useless to them. they're going to declare that a victory in Moscow and have a victory parade. So that's the win. So the question is, what's the win for the Ukrainians? What's the long-term play for the Ukrainians? And it strikes me that the long-term play for the Ukrainians is a much, much better one. Go on, explain that. It is that Ukraine is turned into or becomes a garrison state, right? And what's the advantage of that? A garrison state is that they will get huge amounts of American military hardware, huge amounts of European aid and trade, huge amounts of capital transfer from Europe to Ukraine.

14:37and their military will become the engine of their innovation. And what they will become is an integral part of Europe on the border of Russia with some sort of American, as Trump said last night, vague security guarantee. Yeah, yeah, yeah, yeah. We'll be involved, he said. We'll be involved. Everyone is saying, oh, this is awful for the Ukrainians because it's not a NATO membership. Well, this is, sorry, Mac, this is what I was going to ask you about is, if Ukraine are going to be all tooled up with American arms. And Europe's going to pay for it. Yeah, and Europe's going to pay for it. What's the difference then between being part of NATO or not?

15:22There's still going to be this garrison state, as you say. You've put your finger on something very interesting. The two countries in the world that get most American military aid,

15:34David McWilliams: that get most access to American military hardware, that get first dibs on new American military technology, are two garrison states. First one is Israel. Right, okay. And the second is Taiwan. Interestingly, two places that are absolutely in the news at the moment. So neither of them are members of NATO. This is the key thing. So interestingly, what is on the table for the Ukrainians is a type of state which is what emerged in Taiwan and what emerged in Israel. Now, both Taiwan and Israel would claim themselves that they are surrounded by enemies. The Taiwanese case, it's mainland China. In the Israeli case, it's the Arab states around them.

16:23David McWilliams: Now, if we can, I don't want to say that Israel is a model for Ukraine, but I think it is the way it's going to go, a garrison state. And the interesting thing about what Israel is doing now, a way to look at this, is the complete and total victory of the garrison state in Israel over the democratic state. because it's all been driven by military hawks, IDF, securitat sort of obsessives, fanatics, military fanatics, religious fanatics, etc., etc. Can I just ask you, in a garrison state, can democracy operate on a proper level, if you know what I mean? So listen, that's a very, very good question.

17:05David McWilliams: So I'm going to explain to you what the garrison state is, John, first, and then we're going to talk. So a garrison state was a concept coined by a fellow called Harold Laswell, right? In 1941 in America, as I said before. Laswell's fear was that America would turn into a garrison state. And the question is, what is a garrison state? A lot of our listeners will not have heard about this, right? It's a term broadly used to describe highly militarized societies, deeply engaged in an ongoing conflict, and focused intensely on security issues. Okay. Now, over time, this term has been applied to various countries.

17:43David McWilliams: The United States at certain stages in the 1940s, 1950s. Israel, as I said before, South Korea and North Korea are two garrison states. Massive military. Iran is a garrison state. The Russian Federation is a garrison state. Pakistan is a garrison state. And so too is Saudi Arabia, right? Yeah. So if you read Laswell's stuff, what he talks about is a garrison state depicts an extreme domestic political environment where and I give you the quote John, specialists in violence, people who are specialised in violence attain the vast majority of access to power and to decision making within the state and therefore the states experience what he called a process of militarisation and that results in national policies that will inevitably become the subject of are subject to the security establishments, real or perceived fears and threats, right?

18:43Right. In reality, I mean, just think about this, right? In reality, what this means is that security is the first and foremost concern of the state. And that means that the authority and the kind of special status of the security establishment is almost like a domestic veto power within the democracy. Right. And under these sort of circumstances, military apparatus, they gain effective control and dominance over the core facets of society. Yeah. And of course, all domestic decision making is dominated by the military. It's seen through this lens of security and violence.

19:24David McWilliams: Of security and violence and this idea that you have this constant ongoing threat everywhere. Yeah. It would be really stressful to live in a society where you feel constantly under threat and watching your back. You're constantly watching your back. You have, on a practical level, you have ongoing mass military conscription. Yeah. Now, a country like Switzerland has this too. Right. The army in Switzerland is very important. When I joined UBS, the Swiss bank, it was like joining the Swiss army back in the 90s. Did you get a little pocket knife? With the different grades. You know there's more guns in Switzerland per head than any country in the world.

20:07Yes, yes I did hear that.

20:08David McWilliams: They're an entirely tooled up society, right? They know how to use them. They know how to use them, but they don't use them. But they don't use them, right? Well, exactly. But it was interesting, I remember going to UBS and then somebody said, look, this is like joining the military. And I said, how do you mean? He says, look at all these people and the various different ranks in the bank. You know, from the chief executive down. He said, they all accord to the rank in the military. and they're a highly, highly subservient militarized management structure. Now, I thought this was all nonsense.

20:36Yeah.

20:37David McWilliams: Because I joined a bank and I joined the British part. It was kind of chaotic and full of traders and wide boys and barrel boys. But actually, the people who bought it looked at the world through a military lens. So if you think of the options now for Ukraine, and Zalensky has said this himself, the future of Ukraine is going to be a highly militarized, deeply, deeply insecure, secure state. Yeah. The insecurity is based on the idea that Russia is always there. Yeah. And again, if you think about it, the Ukrainians are saying, oh, we can't give up this sliver of land because that will be a bridgehead for the Russians to invade again.

21:19Yeah, yeah, yeah. Tin-ended wedge and all the rest. But that's nonsense because Ukraine is surrounded by Russia.

21:24David McWilliams: The Russians can come anywhere if they want again. And Belarus. And Belarus, exactly. So if you look at the geostrategic options, I think that what is happening now is the best deal the Ukrainians could possibly get to stop the war. Number two, taking the Finnish example as a potential blueprint, this could well be borders that remain patrolled, patrolled, policed, and defended for many, many years to come. But the third is it gives the Ukrainians a framework, a political, military, democratic framework of which to recover, to relaunch, and to in some way heal themselves, if they can heal themselves.

22:14David McWilliams: Now, does it say that all these soldiers were killed for nothing? Absolutely, but all wars are ludicrous. Yes. This is kind of first world war shit. You know, it's all wars are ludicrous. That the front line moves a few kilometers here and there. Thousands of young men are killed. Millions, we think, possibly. Killed or maimed or wounded here. But from a geostrategic and geopolitical perspective, what you can see is an end game for Ukraine. Now, the end game for Ukraine is to become part of this, what we call this garrison state. For example, Ataturk's Turkey was a garrison state too. A garrison state is one, as I said, where the concerns of the military are central and are biased and are basically supreme in many ways.

23:01David McWilliams: And then the question is, can you have democracies and all that sort of stuff? Well, exactly. But also, actually, I don't think it's been mentioned in this round of meetings, but it's something that was a big deal earlier in the year, which is America taking control of Ukraine's natural resources. The Americans have abandoned that now. They haven't heard that. That was the first Trump play. Yeah, I know. That was the first Trump play. Well, I mean, again, I think that this is the price you pay. If you decide, so what are the options for a country like Ukraine? They become a peaceful, non-militarized democracy.

23:41David McWilliams: and then they are constantly subject to the fear of Russian invasion. Yeah. Right? So there is no peace for them. Yeah. There's no security. There's no lack of anxiety. If they decide that they want to become like a big version of Ireland, right? Yeah. With no army, demilitarized, that would be a disaster for them. That's off the table now. Putin was talking about denazifying them, demilitarizing. That's all off the table, right? But what they're going to do, the NATO is a red rag to Putin just because of the name. But if they get the sort of military support that Taiwan, for example, gets from America against China, this could be more than sufficient, a deterrent for China in this case or Russia in the future to have any particular excuse for having to go again.

24:35Yeah, yeah.

24:36David McWilliams: So I think we're all fixated on NATO. I think we're all fixated on the name and the Article 5 and the this, that and the other. It might well suit the Ukrainians not to be members of NATO because it's the only way in which they can actually get the military prowess to defend themselves, while at the same time having a form of words that doesn't anger the Russians and allows Putin to go back with his win, even though his win is entirely, entirely pyrrhic and kind of pathetic in the overall scheme of things. Yeah. And that's, I think, something that maybe people are missing in the whole discussion about what's going on because we are so head up on, you know, Donald Trump was unpleasant to, I don't know, Macron or Keir Starmer or one of those things that we're not actually seeing that the way in which Ukraine can prosper is actually through the lens of this garrison state.

25:37It's not perfect. Yeah. But for example, every single European country after the Second World War was a garrison state. Yeah.

25:44David McWilliams: Every single country. Yeah, yeah, yeah. All of conscription, all of massive military spending, or massive American military spending in those countries, they all had military men at the top, like generals in, for example, the generals in governments. They all had MI5, MI6. These were essential parts. I mean, the problem in Ireland is, you know, they had specialists in violence at the top. We just had specialists in, I don't know, bureaucracy or administration. Yeah, yeah, yeah. But of course, the Cold War, you know, that was the lens that the world was viewed through. So it required that. Can I ask you a question, though?

26:22It might be slightly aside, but I thought it was interesting looking at all the European leaders sitting around the table. And they seem to be speaking in one voice. Who do you think was kind of leading that? I know they'd all claim it was Macron or it was Mertz or it was Maloney. But where did that kind of consensus come from?

26:43David McWilliams: I think it's fear of Russia. I think that, for example, and we're going to talk about the Polynesian War in a minute, John. Yeah. Because that's the way the podcast goes. I think it's basically, it's a fear of Trump and a fear of Russia, right? So the one thing that the Europeans realized is we are now facing a war on two fronts. An actual war with Russia, number one. And a sort of a proxy war with America, which is going on really in Donald Trump's head more than anywhere else. Yes. But Donald Trump's head is the most important place to be in the world, right? So I think the one voice is always...

27:21David McWilliams: The interesting thing, the one voice is probably, with the exception of Maloney, every single one of those European leaders comes from the establishment background. Every single one. So Merz, Macron, Keir Starmer, they're all basically vanilla centrists. Maloney is the only one who could have come from a very nationalist, very, maybe even pro-Russian worldview. But she has played the game very, very well, as we said before. So I think what they are is the gene pool, of the political DNA of most European leaders, at least the ones on display the other day, is more or less the same, right? Yeah.

28:02David McWilliams: They are NATOists, they're Atlanticists. So that's what I think. It wasn't so difficult for them to have one voice. Why? Because they have one common enemy. Yeah. And is Mertz leading that, do you think? Well, no, because the Germans have always been a little bit wishy-washy on Russia, right? The reason the Germans have been very wishy-washy on Russia is that the Germans have always been much more dependent on Russia than anybody else. because as I've said in the podcast before, Russia is a massive economy which has got no industry and loads of resources. And Germany is a massive economy which has got loads of industry and no resources.

28:34David McWilliams: So the match made in heaven actually is an alliance between Russia and Germany, which has never really come to pass because the other countries, i.e. the Atlanticists, have always been trying to drive a wedge between Germany and Russia and have been successful in doing so. And the latest wedge, of course, now is Ukraine. So the question we have is, what is the future of Ukraine or for Ukraine in a world where Trump blesses a less than satisfactory peace deal between Ukraine and Russia? If Zelensky can get this through, and if Putin can be relied upon to stick to the deal. Okay, that's the two things.

29:17Okay, so let's explore that after a bit of this.

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31:09Actually, just before we get back into this, Mac, there was one thing that I noticed was for the first time, I actually saw Trump laugh, genuinely laugh, was when that gobshite journalist tried to embarrass Zelensky about his attire back in February. This time he said to him, oh, you look fabulous. You know, I see you have a new suit or something like that. And Zelensky says, yeah, thanks. And I see that you're wearing the same suit that you did back in February to your man. and Trump genuinely asked.

31:41David McWilliams: Did he say that to him? Yeah, it was great. It was a great little moment. But it's like, you know, I just thought, geez, Zelensky still has the comedy chops, you know? Oh, he definitely has the comedy chops. He definitely has. And so the interesting question now is what happens to Ukraine? What happens to Zelensky? What happens to this huge country? I mean, Ukraine is the biggest country in Europe, ex-Russia, right? You're talking 40 odd million people, massive land mass, has enormous natural resources, particularly agricultural resources, still has a heavy industry industrial base, all of which would be ideal for making tanks, John, all ideal for making aircraft, all of which would be ideal for this garrison state idea.

32:27David McWilliams: It's not the best. It would probably prefer to be a liberal democracy, which has got low expenditure on guns and more expenditure on other things. but it is captive to geography. And the geography is the following. There is no natural, for example, geological division between Russia and Ukraine. It's the flat plain. It's in that area. Its neighbor is run by a person who believes that Ukrainians don't exist as a distinct ethnic race and that they're basically proto-Russians. and it is in an area where their neighbors, both West and East, have had a go over the years. So what choice does it have?

33:15David McWilliams: And I think that a lot of this debate is, you know, if you go back to the ancient Greeks, John, let's go back to the ancient Greeks, right? Why not, Mac? Why not? The Polyponesian War, John. The Polyponesian War, right? The Polyponesian War between Athens and Sparta, right? So there was two basic ways of running ancient Greek societies. You have the Spartan society, which was top-down, which was heavily militaristic, which had a huge amount of slaves, and which basically was a military state, a military junta in the ancient world. And then you contrast that with Athens. And Athens had democracy, republicanism, philosophy, theatre, geometry, logic, rationality, Aristotle, Socrates, all those labs, right?

34:07And good wine. There has always been this conflict it had between states that are run as military juntas, which tend typically to be agricultural, and states that are run as republican democracies, which even back then tended typically to be run by money and trade. Back to the theme of the book, which is the story of humanity. So if you look at Athens, Athens was flourishing, was non-aggressive in the main, was democratic, was a loose coalition of interests. It had at the center of Athens, the city, remember we talked about this, it had the marketplace, the agora, right? Sparta, in contrast, was much more like a military dictatorship.

34:58and as a result of that, these two powers were destined to sort of clash. Now, once the Persians turned up,

35:08David McWilliams: the Greeks, both Athenians and Spartans, joined forces with a common enemy. The common enemy was Persia and they kicked the lumps out of the Persians. That was the theme of the movie, The 300. I am Sparta! I didn't see it, it was really good. It's a great movie. It's a really stylized movie, but it looks amazing, really vicious. but it's about the 300 Spartans that hold back the Persian army. Exactly, right? Exactly. So that's where we are, right? So you have these choices for government. Now, of course, what most garrison states want to be is half Sparta, half Athens. Yeah. So when you need to have a scrap, you are really tough and uncompromising.

35:50Yeah. But on your day-to-day basis, you are a flourishing, curious, intellectually free democracy. Now, it's very rare that these two can actually live side by side.

36:03David McWilliams: And the reason is power is always a grab between one power base against another power base. Yeah, yeah. But maybe the best example of a garrison state was Finland after the Second World War, where it had a heavy, heavy, heavy military presence across every facet of society. Conscription, guns under the bed, localized militias, all this sort of thing. But at the same time, it had a vibrant democracy. Now, the Finns omit to tell you that they were on the side of the Germans in the Second World War. They were collaborators with the Nazis. They weren't in alliance. They were co-belligerents. Co-belligerents.

36:43Yes, a co-belligerent against a common enemy that was Russia and the Soviet Union, right? Yeah, yeah. So a garrison state can exist and can be a democracy and can be intellectually curious and can be open at the same time as having this military. And you could maybe argue that certain Scandys

37:01David McWilliams: were a bit like this up until the late 1980s, early 1990s. Because as you said, it was always framed under the context of the Cold War. So you couldn't keep your card down. You had to be militarized. So I think that is the best possible outcome for the Ukrainians. Well, can I ask you then, what kind of effect, or do we know what kind of effect a garrison state would have on its neighbors, not its enemy neighbors, but its friendly neighbors such as Poland, etc.? I think what will happen is the Ukrainians are going to be relied upon to do the dirty work of the West up against the border of Russia.

37:45And the quid pro quo for them is that they will have a development model which is based on being the garrison state. And the development model will be based on the military providing all sorts of innovation to the industrial base,

38:03David McWilliams: which is in effect what the United States has been for many, many years. The United States technology, a lot of the technology we talk about, the iPhone, the internet, this is all originally military technology, which the American military came up with and then seeded into the private sector. And that proximity between the military and the private sector was what, for example, Eisenhower was worrying about was the military industrial complex. So it's therefore a, it's a balancing act in the states between the military and the security forces and the private sector and maybe the democracy as to who gets most power.

38:43David McWilliams: And this is what Eisenhower was always talking about, that the president should always side with the constitution. with the democracy over and above the military. But again, I think this is the development model for Ukraine. So for example, there's no point saying to the Ukrainians now, oh, you can have a short, sharp shock. Your industry will have to have free trade. You will have to rationalize. We're going to be neoliberal. We're going to allow the capital markets dominate. That's not what's going to happen. They're going to have a much more, like the South Koreans, they're going to have an industrial strategy which is based on picking winners, on a partnership with the military, on large industrial conglomerates, and in effect on the state directing where the country goes.

39:31Now, the problem for Ukraine is in the past, the state has been very corrupt. So it'll need to clean up its act. But again, maybe the conditions on the military hardware and the military alliance and the military, for example, assistance to Ukraine, will be governmental, cleaning themselves up, being transparent. But again, for the long term, the question for the Ukrainians is, what is more likely to make Ukraine secure? Holding a little sliver of land in Donets and continuing to fight, or turning yourself into a garrison state, allowing yourself to become, In effect, a outpost of the West, heavily fortified, heavily militarized, a society that is militarized, but a society that is secure in that militarization.

40:20And I think that's on the table for them. Yeah. But I wonder, would Ukraine, because it needs to be rebuilt, become the magnet for immigration? All the immigrants coming to Europe are going to start heading to... I love that. Put them all into Ukraine.

40:38David McWilliams: Put them all into Ukraine. With the rebuilding. All those African lads. It will become a magnet for capital. On the issue of immigration, I will just say, as somebody who spends a lot of time in the Slavic world, there are very few immigrants in the Slavic countries. Yes. These people do not tolerate. These are very white countries. Yeah. Very, very white countries. But I think we will leave it here, John. I think the model for Ukraine will be heavily fortified, militarized, and industrialized country, having this relationship with the United States, which is not necessarily through NATO, but is much more akin to, for example, a Taiwan and our Israel relationship with the United States, that we can have an entire podcast, a series of podcasts on whether that's a good or a bad thing.

41:25David McWilliams: But it is what it is, right? There's no point to it. It is what it is. And they will build up their industrial base under that American military umbrella. And again, don't forget, you know, microchips, chip wars, all these wars are being fought through the military. Yeah. You know, this is why America wants to take a chunk in intel. So the very, very high-end technological advances are coming through the military. If you become almost a laboratory for the military, as Ukraine may well become, the upsides are actually quite significant. The upsides are very, very significant. And for Europe. And for Europe.

42:08But what would happen in this case is that a lot of Ukrainians who are in Europe will go home. A lot of Ukrainians who are in Ireland will go home because a lot of them want to go home. It will probably ease up a lot of budgetary pressure

42:21David McWilliams: in countries that have taken a lot of Ukrainian refugees because you don't have to provide the schools and the housing and the hotels and all that sort of stuff. and it gives the Ukrainians a framework of which to grow for a couple of generations and just we leave it in a couple of generations' time. If this were their framework, they would be in a far better position to fight the Russians in 20 years' time than they are now. Right. Because if Ukraine figures out a development model which is Western-adjacent and which is deriving a huge amount of its power and its prowess from trade transfer of technology, from startups which are being fed by the military industrial complex, and it manages to remain a democracy, it's going to be a much stronger country than the way Russia is going.

43:12Yeah. Because Russia is, in effect, a massive gas station that makes tanks. Yeah. And under a Putin regime or a proxy Putin regime or a son of Putin regime, I can't see anything changing there. So our take, John, on the last five days is that what's on offer for the Ukrainians, although unpalatable in the context of political economy in the short term, actually in the long term, is probably the best thing on offer. And they should probably take it if they can. Talk to you next week.

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