Bill on Secure Freedom Radio 3/1/22

Boy, a lot to talk about in the economic warfare space, that’s for sure. Bill, give us a 30,000 foot level assessment of how we are watching economic warfare be waged, it seems with considerable effect at the moment, by European nations both in NATO and some not. As well as, to some extent, the United States under the administration of Joe Biden.



Transcript 3/1/22

Frank Gaffney (00:00):

Welcome to Secure Freedom Radio, this is Frank Gaffney, your host and guide for what I think of as an intelligence briefing on the war for the free world. Men whose intelligence we both admire and are privileged to be able to tap with regularity is that of Bill Walton. He is, of course, best known these days, perhaps, for his outstanding television podcast program The Bill Walton Show. He has a couple of other attributes that we find very, very valuable in our conversations with him, particularly about matters economic and financial, and that is his experience on Wall Street as the President and CEO of Allied Capital Corporation. And subsequently, his leadership of the Council for National Policy which I’m proud to be a member. Bill, it’s great to have you back.

Bill Walton (00:45):

Frank, thank you.

Frank Gaffney (00:46):

Boy, a lot to talk about in the economic warfare space, that’s for sure. Bill, give us a 30,000 foot level assessment of how we are watching economic warfare be waged, it seems with considerable effect at the moment, by European nations both in NATO and some not. As well as, to some extent, the United States under the administration of Joe Biden.

Bill Walton (01:13):

Well, the west has launched aggressive, unprecedented economic sanctions against Russia and Putin. And the thing that stands out-

Frank Gaffney (01:23):

Over the matter of, its invasion of Ukraine.

Bill Walton (01:26):

Well, yes. I think that was a game changer and I think it was a wake up call for the EU and no more so than in Germany. Under 16 years of Angela Merkel, they’ve been totally in Russia’s pocket and growing more and more dependent upon Russian gas and shutting down its nuclear program and trying to go green with wind and solar. And putting the German economy and the German people in incredibly precarious position. Well, this weekend, the German Chancellor, Olaf Schultz, announced a complete reversal of virtually everything that she’d been putting in place, including the Nord Stream 2 pipeline, which was all set to go and was being studied and expected to go out and online this summer. They’ve shut the, quote, “study” down and the expectation is they’re not going to open it up.

Bill Walton (02:29):

The other thing that’s fascinating is that the chancellor was a member of the Green Party, and of course they’ve been against all of these fossil fuels, and now, in addition to trying to drive Germans production of fossil fuels up, he’s now urging re reactivating a lot of the old nuclear power plants and is advocating building more. And that’s also a complete reversal from where the Green Party’s been. And what they’re seeing is that Putin wants to reestablish the Russian empire and the Germans have woken up from this dream they’ve been in the last 20, 25 years and are now prepared to step up. And including Germany’s contribution to NATO. He pledged a hundred billion Euro or 110, 105 billion Euro, 110 billion dollars to its defense effort to get it up to 2%. And of course, this is what Donald Trump was lecturing about for year after year after year and everybody thought Trump was way out of line. Well, it turns out Trump was exactly right and the Germans now agree, they need to be able to prepare to defend themselves.

Frank Gaffney (03:45):

There is, of course, a certain fluidity to all of this. And I personally would be a little dubious that we won’t see that Nord Stream pipeline, the second one, brought online in due course. Having invested as much as they have. And frankly, having become as dependent upon Russian energy as the Germans have. And the same might be said of their commitment to finally step up on some of their obligations to enhance their military preparedness. But it’s a positive development, that’s for sure. And I guess it calls to mind that old line about conservatives being liberals mugged by reality. Maybe greens and socialists and Germany are being now [inaudible 00:04:35] by reality and braced up in a way that, let’s hope, is enduring.

Frank Gaffney (04:39):

Because it’s absolutely vital to having the kind of deterrent effect that one has hoped for long before now. Bill, as we’re speaking, of course the war is still going on in Ukraine. There’s a large convoy of military vehicles headed towards Kyiv, as it’s called these days. That suggests that it’s going to become much uglier and particularly more deadly for the people of the capital of Ukraine. And perhaps the people of Ukraine more broadly. Which makes all the more interesting, what kind of toll is all of this taking on this economic warfare that is on the Russian economy, the currency of Russia, the capital markets of Russia?

Bill Walton (05:32):

Well, the other thing of note was that the European ministers got together this weekend and virtually unanimously voted to impose the toughest economic sanctions ever. And the pivot point in this, I guess, was the call that the Prime Minister of Ukraine came on, dialed into the meeting, pleading for help. And he said, “This is probably the last time you’ll see me alive.” And he gave a very emotional 10 minute speech, and after that speech, it really turned the room around and the Germans, who had been skeptics, really turned on a dime during that meeting. And the sanctions, the big one is the limiting Russian banks access to the SWIFT system, which is … that’s short term for Society for Worldwide Interbank Financial Telecommunications. It’s essential. It’s the Gmail for banks.

Bill Walton (06:31):

I mean, if you want to send money around, this is what you use. And they’ve cut off all the banks in Russia, interestingly except the ones that handle the gas sales, because they don’t want to cut off the energy supplies to the EU. But except for that, it is having a very crippling effect in the Russian economy. Oil and gas is only about 20%. Only. That’s a lot, about 20% of the Russian economy, and they’ve had a fairly vibrant tech sector. And that piece of the world, that piece of the Russian economy, has been incredibly crippled by these sanctions. And they really can’t do business because they can’t get access to their capital. There’s a case of one small tech company that had 2 billion, or $2 million dollars, set aside for just this coming of eventuality.

Bill Walton (07:19):

And now, because of the SWIFT system being shut down, they can’t reach it. We’re seeing a run on ATMs in Russia, we’re seeing … The economic shock here is tremendous there. They could see their GDP fall by 10, 15%. And Frank, your word dubious, that’s a good word when it comes to the tough intentions of the EU. But what’s not in question is that the Russian economy is really quite small. It’s 11th in the world, smaller than South Korea, highly dependent on oil and gas. These sanctions are cutting off the vibrant part of the Russian economy. Russian GDP has been flatlined for the last 10 years, and most importantly, the GDP per person has dropped from about $16,000 to $10,000 since 2012. And when you look at that amazing photo-

Frank Gaffney (08:22):

Which is all more remarkable given that the size of the population has dropped. So you’d think that it would be staying more or less static, even if GDP is declining.

Bill Walton (08:33):

Which makes matters even worse. But for me, the image that stands out is that astonishing photo of Vladimir Putin meeting this weekend with his top advisors on the economy and he is sitting at the head of a-

Frank Gaffney (08:45):

Meeting remotely.

Bill Walton (08:48):

He’s sitting at the head of a 50 foot long table and his advisors are all the way down at the other end of the table. They’re about five or six of them clustered around. Evidently Putin has been absolutely in a state of paranoia about the virus and has been social distancing and this is the most extreme example. And we’ve got photos to prove it. But the other thing is, he doesn’t use a cell phone. He doesn’t use the internet. He thinks that it has all been engineered by the CIA so he won’t touch the electronic world. And he’s very out of touch. And it just makes you wonder whether Putin really has all the power that we think he has, because if the economy’s going to go further south from the direction it’s going, the billionaires are already complaining that we shouldn’t … The Russian plutocrat billionaires. Oligarchs, that’s their word. They’re all complaining about this.

Bill Walton (09:50):

You have to wonder how long Putin is going to be able to hold the whip hand. And I see that as an extremely … I mean, you could say, well, if they get rid of him, that could be a very positive thing and Europe would, or Russia would stand down, and bring Europe back to some sense of stability. But my biggest fear is that Putin is a man who’s in his desperate last hours and that old play, movie in the 50s called The Mouse that Roared, about a little country that declared war in the United States to be recognized and get foreign aid. Well, I think economically, Russia is the mouse that roared, but it’s a mouse that has 5,000 nuclear weapons aimed at Europe and the United States.

Bill Walton (10:42):

The unknown here is China. They had a nice meeting during the winter Olympics, Putin and Xi, and Xi promised support for Putin. But Xi also wants to do business with Europe. And he has to worry about all the business and all the economic relationships that China wants to have with Europe. And with the EU, at least for the time being, turning very tough on Russia, where’s Xi going to come out here in terms of supporting Putin? I don’t think we know, but it’s something to watch.

Frank Gaffney (11:20):

It is indeed. It’s made more interesting by something our colleague, Bill Gertz, pointed out in the Washington times a day or two ago. Namely that China actually signed a treaty with Ukraine to guarantee their security in the event there was a nuclear threat emanating against it, and tied into an invasion, specifically. And this would seem to make even more problematic Xi’s alliance with-

Bill Walton (11:51):

Well, I want to use a stronger word than dubious because Russia is, or China’s, likely to agree to a treaty based on international law as much as they’re bound to agree not to steal tech [crosstalk 00:12:04].

Frank Gaffney (12:03):

Oh yeah. No, no, no. Look, I’m not under any illusion-

Bill Walton (12:06):

But we have a piece of paper signed by China, yeah, that’s worth a lot.

Frank Gaffney (12:10):

Right. Push comes to shove, he’s going to align, I’m sure, with Vladimir Putin. But the point is that, as you were suggesting, it’s gotten more complicated for China, I think, than they had probably bargained on. And it may, especially if this is sustained in terms of the Wests’ cohesive response to it all, provide a bit of a discouragement. Which is much needed to their own [crosstalk 00:12:40].

Bill Walton (12:40):

And I underestimated the toughness of the Ukrainians. In particular, the toughness [crosstalk 00:12:46] of its president. So did Putin. But now we’re left with this situation where, there was some people we know that are very smart about this, who said that Russia could go in and take Ukraine in three days. Well, that has not proved to be the case. And it now looks like Russia’s going to escalate, but it’s an enormous country. And you send people in, it didn’t seem like they’re going to be to occupy Ukraine with any real secure grip on the country. And so this is not something that’s going to get resolved in the next week or two. This is something that’s going to be an ongoing … he’s going to have millions of dissidents in Ukraine that he’s got to deal with, even if he does succeed militarily.

Frank Gaffney (13:31):

Again, we’ll be watching it closely, Bill, as I know will you. Because one of the questions is, do they take out Zelensky? And that clearly seems to have been part of the plan. And if they do, do they impose some new puppet regime? And how do the Ukrainian people respond to that? It seems as though this is going to be a festering sore for Putin. I don’t know that I’d go so far as to say his days are numbered, as you’ve admitted, but it certainly isn’t working out as he had planned. And whether this nuclear threat is real or not …

Bill Walton (14:06):

Well, Frank, you could probably answer this. You could answer this question, does Putin really have a strong hand on the nuclear button? Isn’t he surrounded by lot of other people, lots of other men, whose interest may not be necessarily aligned with his?

Frank Gaffney (14:20):

Does it mean that he could pull the trigger unilaterally and they would all execute his orders? I tend to think that is the case. I just think that’s the nature of the system that he has presided over. And the other interesting thing on that point, Bill, which I think we’ve talked about in the past, but it bears remembering at a moment like this when he is engaged in these kinds of nuclear threats. That not only has Putin wholly modernized his nuclear arsenal, including introducing some exotic and terrifying new nuclear weapons in the mix. He’s not only adopted a doctrine that he calls Escalate to Deescalate, which clearly countenances the use of nuclear weapons in battlefield contingencies, among other things. But he also has personally presided over, not once, not twice, but repeatedly, strategic nuclear exercises in which the Russian military has simulated attacks against the United States with long-range ballistic missiles and other weapons.

Frank Gaffney (15:30):

And by the way, in some of those instances, has actually had Chinese participation in the exercises. So this is a guy who takes that particular point very serious, and I’ve been hearing news reports today that, just the past couple of days, that the Russians agreed with the United States that a nuclear war cannot be won and must not be fought. That’s not Vladimir Putin’s view at all. I think it’s deception, at the very least. Hey Bill, before we run out of time I did want to just ask you about one other thing, not unrelated to this point. You’ve done, on several occasions, I’ve participated on at least one of them that I can recall, on your wonderful television program The Bill Walton Show, programming about the vulnerabilities of our electric grid. Notably with our friend, Dr. Peter Vincent Pry. There has been, this weekend, as you may have seen, a really stunning piece by 60 Minutes.

Frank Gaffney (16:32):

And again, it wasn’t news, perhaps, to your audience or mine. But I think to a lot of Americans it probably was hugely shocking to discover that this large substation outside of San Jose, California, back in 2013, was very nearly destroyed by unknown persons. By the estimation of our colleague, Mike [Maybee 00:16:59], who featured prominently in the 60 Minutes piece, by the way, 700 terrorist attacks against the grid in the past decade. And it raises the question, doesn’t it, that if the grid is this vulnerable, whether it’s to physical sabotage or cyber attacks or electromagnetic pulses or solar weather or whatever, shouldn’t we be about fixing those vulnerabilities right quick? And would you agree with me that that ought to be so something that Joe Biden talks about tonight in his State of the Union Address, which will proceed in most markets our conversation. But I just want your thoughts on whether this rises to the level of importance that should feature prominently in such an address to the nation.

Bill Walton (17:53):

It should be front and center in importance. And to fix the electric grid is not trillions of dollars, it’s billions of dollars, and single digit billions of dollars. And we could do it. And we could do it fairly expeditiously as Peter Pry explains. But this calls to mind why this situation with Putin and Russia is so dangerous. Is that, our foreign policy and national defense leadership is so unserious, so unprepared to deal with real threats. They’re running after, still, global warming. John Carey said, this is the Russian invasion, gosh, he hopes it doesn’t interfere with our plans to move to green energy.

Bill Walton (18:41):

And then also, we’ve got Lloyd Austin concerned about, and Mark Millie, concerned about white rage in the US military and white supremacism. And they think those are the biggest threats facing in the United States. These are the men who would be recommending addressing the problems with the grid. And that they’re not doing it is, to me, a fireable offense. It’s almost treason, because they’re smart people who know that this is an issue. And coming back to Ukraine, one thing surprises me is that Putin has not done that to Ukraine. They have the capability to do it, and maybe they don’t want to tip their hand with regard to EMP. If they did it with Ukraine, it might stiffen our resolve to do something here.

Bill Walton (19:34):

So it may be just a strategic feint that’s being implemented. It’s a big concern, and oh, that Biden would talk about it tonight would just be fantastic. Because, for the first time in my life, I’m really worried about being incinerated. I mean these people, blunder after blunder after blunder. And Trump had the Nord Stream 2 pipeline shut down. Obama was not for it. And then the first thing Biden does, in January or July of last year, is they owe open the whole thing up. And that pipeline is 100% owned by Gazprom, the Russian oil and gas company. So the interrelationships here are fascinating and dangerous.

Frank Gaffney (20:26):

They are indeed. Bill, this is why we value so much your contributions to the program. Help leading us work through all of these and look forward to our conversation with you again next week. Thanks for your time today, my friend. Keep up the great work you do at The Bill Walton Show. Next up, we will speak with Colonel Chuck DeVore, United States Army, retired, about this Ukraine business on the tactical and strategic levels. Right after this.