Dollar Diplomacy

Roger Robinson is the President and CEO of RWR Advisory Group, a Washington, D.C.-based consulting firm that specializes in the risks present at the intersection of global business activity and national security concerns. Robinson is a former Vice President in the International Department of the Chase Manhattan Bank, and was the Senior Director of International Economic Affairs at the National Security Council.

FRANK GAFFNEY:

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. It has been my great privilege and distinct pleasure to have worked for many years with a man I’ve considered to be a hero in that war, both in the past and at the present. And certainly, I fully expect going into the future. He is Roger W. Robinson, Jr. A man who I first met shortly after we both served in the Reagan Administration and had the privilege of working closely with during the early years of the Center for Security Policy and in his present capacity as the founder and president of RWR Advisory. And we’ll talk more about what that group is doing in a moment, but I thought we might start with what Roger has done for our country to his great distinction and to the country’s great benefit in the past. But let me begin by welcoming you back to our microphones. Roger Robinson, thank you for giving us a full hour of your time for an important deep dive on the work you’ve been doing. Welcome back.

ROGER ROBINSON:

Thank you, Frank.

FRANK GAFFNEY:

Let’s start with a bit of background, Roger. Your first stint of public service came on the Reagan national security council staff. Talk a little bit about what you did there and the moment in which you found yourself contributing.

ROGER ROBINSON:

Well, Frank, if we can roll the date back to around December of 1981, Soviet troops were massing on the Polish border for an imminent invasion of the country. Unless General Jaruzelski had a state there where we’re having to declare martial law in the country and basically shut down Solidarity, which was the free labor union, or the closest thing to a free labor union the East Bloc had ever seen at the time. Pope John Paul was to be silenced. And it was an either/or choice. And so it was a very dramatic time. President Reagan made, I think, the wise decision to understand that this was a Soviet-sponsored repression. As opposed to penalizing the Poles, he went after their largest project in the East-West economic history, the Siberian gas pipeline, which was a twin pipeline that traveled thirty-six hundred miles from the Siberian gas fields to Western Europe and it would have taken, had it been fully subscribed and successful, Western Europe to a level of dependency on Soviet natural gas deliveries, over seventy percent. And you can see the way they’re held hostage at thirty percent today. More than double that and you’d have a sense of where we’d be had there been no Ronald Reagan. And at the same token, we were watching our Western European friends subsidize, with taxpayer money, interest rates on massive loans to Moscow, not just for the project, but for general purposes, if you can believe it, not tied to any specific purpose. So you saw this major financial underwriting going on at the very time when those troops were massing. And I had the opportunity as having been vice president and division executive for the USSR/East European division of Chase for some five years, knew where the money was. I knew they had very little hard currency cash flow. Soviets only made thirty-two billion a year or so at that time in total hard currency income, which is equivalent to about one-third of the annual revenues of General Motors or Exxon at the time. So, and we’re still about a hundred percent of the money that they needed in financing each year, because they were spending about sixteen billion dollars more than they made, was being picked up by Western governments and banks. So it’s not that we were underwriting ten percent, we were underwriting a hundred. And I’m just trying to – I can’t get into too much detail and I apologize for being a little more granular on this.

FRANK GAFFNEY:

Just to drill down on what you’ve just been describing, Roger, the excess expenditures of the then Soviet Union were predominately going into military investments and activities and subversive behaviour around the world, all of which threatened their creditors. This was, after all, really the height of the Cold War, wasn’t it?

ROGER ROBINSON:

That’s correct. I mean, these were global expansions. This was Angola and Vietnam and Havana.

FRANK GAFFNEY:

So what was your role in trying to stave that off in addition to pointing out the, well, insanity of this Siberian gas pipeline back in the day, Roger Robinson, when you worked as the senior director for international economic affairs at the NSC?

ROGER ROBINSON:

Well, I came to NSC, Frank, in early March of 1982 with a plan. And very fortunately, Judge William P. Clark, the national security advisor to the president and, frankly, I think the president’s best friend, was at the helm at the time and, you know, I remember his first day or my first morning, going in at seven a.m., I didn’t know anyone in the Reagan Administration, really, at that time, just a few folks, and he said, if you worked here, what would you – what would you do? And I said, well, I’m glad you asked that question. I have a plan. And the – and the plan, frankly, was that we should use the threat to Poland and the global threat represented by the Soviets, as you say, at the height of the Cold War, put this into an economic and financial context and go after that hard currency cash flow, which was sixty-six percent generated by oil and gas then and now. With gas being the centrepiece of at least their planned future earning structure. And to really insure that this two-strand line that I described of huge gas pipelines did not materialize, that we had to kill the second strand of the pipeline, we had to delay as much as possible the first, which had, regrettably, already been contracted with Western Europeans. And we needed to end those subsidized terms and conditions on credits to the USSR and we needed to inhibit Western banks and governments from underwriting the very threat that we were paying in lives and in treasure to counter. And the list went on, but we needed to tighten technology controls, we wanted to encourage the Saudis to pump more oil, we wanted to de-control prices at the wellhead here in the United States to affect a precipitous drop in oil and gas prices, which happened. And were able to put enormous stresses on a rigid, anemic Soviet economy. And it was lots of fits and starts and blood on the floor with the allies that staunchly resisted us. There was an entirely different philosophy. Aus Politik was about a payola scheme to racketeers. Whereas we were in the – we were for peace, but through strength, as you know, and we were not going to have anything to do with seeing the Soviets continue to be subsidized and underwritten in this reckless fashion, so –

FRANK GAFFNEY:

In this – in this very important portfolio, Roger Robinson, you were able to bring the economic, financial, technology, security emphasis into a larger strategy that President Reagan adopted in 1983, as I recall, the so-called national security decision directive seventy-five. Comprehensive plan for taking these guys down, the old Soviet Union. And the rest, as they say, is history. It worked and, I think, in no small measure that was a tribute to the important and highly consequential impact of the recommendations that you made in the space of those several years, trying to ensure that we didn’t continue to prop up this mortal enemy of the United States. Roger, we’re going to pause in a moment, but I just wanted to say this is important background to the challenges of our time. Now a different set of enemies to some extent, but some have simply reorganised, doing business under other names, but what you have remained steadfast in doing now at RWR Advisory Group is helping those in government and the rest of us to understand the vulnerabilities of these enemies and the use they’re making of our vulnerabilities to their economic, financial, technology operations. Roger, we’ll be right back with more for a full hour with the president and founder of RWR Advisory Group, Roger Robinson, right after this.

 

FRANK GAFFNEY:

Welcome back. We’re talking with Roger W. Robinson, a former senior official in the Reagan Administration, who, as we’ve been discussing, played an incredibly important role in helping to bring down the last totalitarian ideology that sought the destruction of the United States, Soviet communism. But who is still very much engaged in trying to help the rest of us understand the challenges that we’re facing from successors to the Soviet Union and their Chinese allies at the moment. We’ll talk more about both of those in a moment, but Roger, I did want to give you an opportunity to talk a little bit about your new project, IntelTrak.com, a product of RWR Advisory Group. Give us a sense of what IntelTrak.com is and what it does.

ROGER ROBINSON:

Well, Frank, about three or four years ago, we were seized with the idea of trying to build a common operating fixture with, say, the military, a video representation of the transactions of initially the state-owned enterprises of our two principle adversaries, China and Russia. Both of whom have impressive global footprints, so to speak, with their many enterprises. China far more than Russia, as you can imagine. But nevertheless – and we thought that if we could build a database just through old-fashioned research that we did through subscription and other databases, foreign languages, trade publications, press releases – in other words, we scoured the world for any information on these sometimes rather hidden transactions, particularly of subsidiaries of the Chinese and Russian state-owned enterprises. So it was a deeper drill effort and we were able to build, over time, five years of past data on every transaction of not just state-owned enterprises now, but those that are state-controlled. Namely, those private sector firms that are fraudulently represented as being private sector when in fact they’re state-controlled.

FRANK GAFFNEY:

Roger Robinson is our guest. And Roger, you were making the point that state-owned enterprises in some of these dangerous places like the Russian and Chinese economies are of particular concern in terms of what they’re up to in foreign investment and other activities that you’re tracking with IntelTrack.com. Please carry on.

ROGER ROBINSON:

Well, we do this on a daily basis, Frank. So this is as close to real-time information as possible. And you’re quite right. If you look at the Russian economy today, they themselves admit to seventy percent of the economy controlled by state-owned enterprises. China is somewhat lower, but when you really see the full scope of how they manage these matters, I think that percentage is even higher, so you’re out there in our marketplace, in the international trading and financial system that we built from Bren Woods [PH] onward after the war, this is our, in effect, domain. And has been adjudicated by Western rules. Russia and China have been able to enter that space, indeed be welcome in that space. But here’s the kicker. You know, some of those enterprises, many of them, are state-controlled or state-owned. They have strategic agendas. They have security-related agendas. They’re into buying the strategic assets of small neighbouring states, for example, some of the smaller NATO nations. Not just other nations. And the entire desire, in this case, Russia, is to compromise those economies and the political leaders of those countries so that they take over the nuclear sector, they take over the natural gas sector, they take over mining and metals. In other words, it’s a creeping, insidious kind of warfare. Part of their hybrid warfare, I would say, as much as forty percent of Chinese and Russian hybrid warfare is based in what we call the economic and financial threat domain.

FRANK GAFFNEY:

Yeah. Hold, for a moment, on getting into some of the particulars here. And we will in the course of this full hour with Roger W. Robinson. But just develop a little bit more, if you would, that term hybrid warfare, what they mean by it and what should give us such concern.

ROGER ROBINSON:

Well, as we know now from the invasion of Ukraine and the way the Chinese are playing their hand in the illegal island building in the South China Sea, it’s all now, Frank, about incremental steps. Those encroachments, those strategic gains that are just below the radar screen of catalyzing a military response from the West, they’re not keen on starting a shooting incident or some kind of limited war, but they’re very keen on – not yet, but coming to the very threshold of how far can they push the envelope and what means can they use, like disinformation and these massive media campaigns to take over the airwaves in countries, the economic and financial, as I said, building strangleholds, creating dependencies, China’s dollar diplomacy, where they buy whole African countries that are awash in precious resources and so it’s framed as being commercial and legitimate economic activity, but it’s not – they’re not interested in the profit margin or profit motive, they don’t have shareholders, per se. This is not about corporate governance or anything that we might consider in that category. This is about paying what’s required, paying the bribes that are required, doing whatever, selling arms on the side, any sweetener to get that project, that nuclear deal, that pipeline, that high speed rail system. So they’re looking at trying to grab those strategic hubs and nodes of economies. So that’s why the economic and financial is so prevalent in hybrid warfare. You don’t necessarily have to get to the little green men phase of things if you can – if you can feign commercial activity but really the – executing a complicated, insidious hybrid warfare strategy. And that’s what’s afoot here.

FRANK GAFFNEY:

Let’s talk then, Roger, a little bit about China’s strategy. I mean, you’ve, again, outlined it in broad detail, but how would you characterise its strategic objectives?

ROGER ROBINSON:

Well, I think it’s clear that China is about regional hegemony. And pushing the United States out of the Asia-Pacific region, undermining our alliances, isolating us from Japan and South Korea, leaving Australia out there dangling, in other words, whatever it takes. You’ve seen the way that they’ve long ago cowed Southeast Asia and how they used their proxies in Cambodia and other countries that they’ve already purchased in effect as veto power to make sure that there’s no consensus, you know, in such gatherings on something like their incursions into the South China Sea. So we’re already seeing plenty of evidence of the way they’re compromising the region and trying to break the will – look at the Philippine president who no longer wants to enforce tribunal results that he worked so – the country worked so hard to get. All for fear of offending China. So again, they want this intimidating presence so that they can make these gains to get us out and take control of that vital region of more than half of the world’s trade under a Chinese wing, so it’s a serious –

FRANK GAFFNEY:

And a tremendous amount of its resources as well. Roger, we’re going to pause for just a moment. When we come back, I want to ask whether it’s more than regional hegemony that the Chinese aspire to and what that might mean in addition to what you’ve already described for us. That and more with Roger Robinson of RWR Advisory and IntelTrak.com. Right after this.

FRANK GAFFNEY:

Welcome back. We are having a very intense, very important conversation with Roger W. Robertson, Jr, one of the country’s preeminent experts and practitioners of the art of economic and financial security. He is, these days, engaged in helping the rest of us understand what’s afoot at the hands, notably, of the Chinese and Russians in this portfolio at RWR Advisory Group. You can find it at rwradvisorygroup.com and also check out its major project at the moment, IntelTrak, I-N-T-E-L-T-R-A-K.com. Roger, we were talking about the Chinese. You mentioned in the previous segment that they clearly have a strategic objective driving the United States out of their region and dominating it to the extent they can. As you know and IntelTrack documents, they are involved far more broadly than just in their own region, though. Would you talk a little bit about what else the Chinese are up to and, again, what that suggests is their larger objective, perhaps over time, but nonetheless what they’re striving for?

ROGER ROBINSON:

We all know and now understand, you know, one belt, one road, the old silk road with both maritime and land-based dimensions that are sweeping across, in their vision, in the case of the land, right up into Western Europe in terms of scope. So they are trying to create a huge swath, an economic sound that they basically dominate in the Asian – the Asian infrastructure investment bank that they set up as a competitor to the World Bank is designed, again, to bring some fifty-seven plus countries in to actually assist this kind of Chinese-led expansion that is ostensibly commercial and development-oriented, almost as though it’s all for the benefit of those countries along the path of the silk road, so to speak, but of course, those benefits are annoying strategically to Beijing and that’s clearly what it’s all about. You have Western Africa and Eastern Africa, when you – when you visualise our tools and you push in a company like Huawei or the other big telecom companies or oil and gas companies, you’ll see the coasts of Africa are black with dots of transactions of their efforts to basically steal out from under the Africans their greatest sources of wealth, tie them up and make sure that they have that – that in their portfolio. Much like Venezuela on the oil side. They’ve given Venezuela sixty billion dollars at a time when they didn’t have a farthing of credit worthiness. And the list goes on. Even in the G7 countries, look at the way they scooped up Nexen, a huge Canadian oil and gas company some years, just a few years ago for fifteen billion. Now they’re over at Hinkley Point in the UK, contributing to a twenty-four billion dollar, three power station deal in the UK. Nuclear power. All with the notion of being able to design and construct their own in Branwell, Essex, England. These are going to be showcases. The Brits could end up unwittingly or wittingly legitimating a company, a particular company called China General Nuclear Power Corporation that’s involved in Hinkley Point. They – one of their employees has just been arrested for espionage by the US Department of Justice and the FBI for two decades of theft of Westinghouse nuclear reactor technology. So, you know, these are stolen plans from the United States that are now heading toward the UK.

FRANK GAFFNEY:

And Roger, really, basically, it seems to me that if you look at all these and perhaps the Azores, too, if we’re foolish enough to give up an air base there, the Chinese are taking up strategic positions, as you mentioned earlier, chokepoints around the world and their ability to interfere with our operations, with our trade activities, with our security, for that matter, would be far greater than just in the Western Pacific, at least as I see it. How about you?

ROGER ROBINSON:

Well, I couldn’t agree more. But Frank, here’s the problem. How are they able to seemingly stealthily prosecute such an ambitious global agenda and take control over the chokepoints, these strategic hubs, the core assets of countries and just proceed with impunity, how does that happen? And the answer is, they made a big discovery. As did Russia. Which is, we don’t police the international trading and financial system because of its seemingly legal and commercial – we’re basically fine. Once in a blue moon, we have the committee on foreign investment in the United States might object to a national security case, but it’s not a systematic, you know, full up secretariat that’s working these issues as steadily as it should. I mean, it’s – as I say, once in a blue moon. So basically, we don’t have any real inhibitors. And the Chinese and Russians have discovered, why do illicit financing, why do smuggling, why do illegal things when if you stay in the legal legitimate trading and financial systems, you can get everything you want and be a hero and get Western financing and partners in so doing.

FRANK GAFFNEY:

Well, this isn’t to suggest, and I’m sure you don’t mean to, that they’re not doing all of the illegal stuff, too. It’s just that they – they’ve figured out that, as you’ve very well indicated and demonstrated with IntelTrack.com, Roger Robinson, that this is something that is now being overshadowed, the illegal stuff, by what they’re getting away with, what they’re enable to do legitimately by Western governments and commercial enterprises. This is really shocking and there are many examples. You mentioned the nuclear plant in the United Kingdom, which was just approved. There are some where countries have actually said no. Australia, for example.

ROGER ROBINSON:

Said no to China’s state grid. China’s state grid is People’s Liberation Army. I mean, it’s – and they would have controlled fifty percent of the electric supplies of the southern portion of Australia. And that looked like it was a go as well until some inspired security experts were able to prevail on what should have been an obvious decision that this is exactly the kind of strategic infrastructure that China’s targeting. And they’re doing it with companies that have the most colourful histories, but who knows what those histories are? We’re trying to eliminate the rap sheet on these companies. We want to show, company by company, the risk profiles. What security-related abuses have they been involved in in the past? Have they been proliferators, sanctions busters, hackers? You know, what is in their history? Who are these folks?

FRANK GAFFNEY:

And in a lot of cases, they are all of the above. And you are making book on them, RWR Advisory Group and IntelTrack are indispensable resources for all of that. Roger, just very quickly, the question occurs, you mentioned earlier the role of state-owned enterprises in the economies of Russia and China. We’ll talk about Russia here more in the next segment. But staying with China for a moment, to the extent that this is a state-owned undertaking, a PLA, as you say, People’s Liberation Army-associated enterprise, obviously, that ought to send alarm bells off for security personnel across the world. How frequently is that the case?

ROGER ROBINSON:

Well, I’m afraid it’s not happening systematically at all, Frank. I mean, it’s almost episodic. A little bit like the way CFIUS discovers their cases.

FRANK GAFFNEY:

Yeah, this is the committee on foreign investment in the United States. Right, an entity as you know so well, Roger, run by the Treasury Department, whose job it is to bring foreign investment into the United States, that would seem to be a transparent conflict of interest and work contrary to the objective of having real security-mindedness applied as a screen to these kinds of transactions. Roger, we’re going to have to pause for another moment. I do want to come back and talk with you about what the Russians are doing, particularly in a part of the world that has not been getting the attention it requires, but is very much under threat by the Russian Federation at the moment, the Black Sea. That and more with the president and founder of RWR Advisory Group and the ingenious purveyor of IntelTrack.com, Roger Robinson, right after this.

FRANK GAFFNEY:

We’re back for our fourth installment of this important conversation with Roger W. Robinson, one of the country’s foremost experts on and, well, really, leading lights with regard to economic and financial security, now with RWR Advisory Group. Roger, we’ve talked a bit about China, we’re not doing justice to any of these topics, I’m afraid, but we’re giving people both a sense of what is going on and where they can find more information about it all at rwradvisorygroup.com and IntelTrack.com, but talk if you would about Russia. What are its strategic objectives as you see them at the moment?

ROGER ROBINSON:

Well, clearly, they’re trying to get out from under sanctions as rapidly as possible. I don’t see how that particular endeavor is being assisted by basically scuttling the Minsk Accords, which, as you know, never had any great prospects at the get-go.

FRANK GAFFNEY:

The Minsk Accords being the effort to defuse the Ukraine crisis, right?

ROGER ROBINSON:

That’s correct. And of course the epis brutality and atrocities on women and children in Aleppo and other Syrian cities, towns, villages that has gone on to the point where we have hundreds of thousands, as you know, tragically killed, innocent people, Russia is obviously looking for hospitals, looking for aid infrastructure. These are war crimes. Even the United States, reluctant to brand Russia as a war criminal in Syria has been compelled to do so. So I’m not breaking new ground here. But it’s hard to imagine that Western Europe is actually going to weaken its resolve on sanctions, but, you know, stranger things have happened is, sadly, what I would report there.

FRANK GAFFNEY:

But the larger point is that there’s a workaround available to the Russians as you’ve been describing it by dressing things up as commercial transactions. So talk a bit about what they’re doing in furtherance of their efforts to both get out of the sanctions regime, effectively, and also exercise dominion over important parts of the world.

ROGER ROBINSON:

Well, for example, I mean, the – right in this same window of atrocities, we have the Germans signing on, with Angela Merkel’s support, on Nord Stream 2, a massive pipeline into, directly into Germany under the Baltic Sea that will further make Europe more dependent, not less, on Russian gas, totally contrary to the EU’s own Third Energy package, which is guidelines to basically escape such undue dependency. So that’s in reverse. You’ve got Rosatom, the huge nuclear reactor company giant of Russia that is having success in NATO countries like Hungary, doing sweetheart deals with no tenders, no revelations of the terms and conditions, and these are fifty year dependencies, so a small country like Hungary loses its entire sector of its economy for fifty years. This is the kind of thing that we’re talking about that Russia is quite happy with themselves, even chortling, over the fact that they’re able to do this seemingly legitimate business, unmonitored by the security services in the West to a frightening extent. No security-minded due diligence on the part of the private sector players who are seemingly happy to do business with KGB fronts and basically companies controlled by the security services of Russia. And right down to the annexation of Crimea, which, you know, is being depicted as just lots of Russian ethnic folks that are wanting to reunite with the homeland. What about – what about the annexation of Crimea? The standard lines are, and we’ve seen them all, that this is an effort by ethnic Russians to reunite with their homeland. You know, this was – this was in effect an artificial separation for some time and we have to push through all of that and get to where this thing, in my judgment, really got going. Which is a trillion dollars of oil and gas is situated off of the offshore Crimea, out two hundred and thirty miles or so of this exclusive economic zone, which has now been taken over. In the preliminary drilling by Shell and Exxon-Mobil and others, they found a find there that is comparable in some estimates to be that of the North Sea during its more, you know, pinnacle years. And so that’s where this trillion dollar figure comes in. It may or may not be the case, as things turns out and are proven in terms of reserves, but you can imagine that this is the single biggest revenue prize for the future of Ukraine that’s going to be now drained by the Russians using stolen drill rigs from the Ukrainians. So in other words, they’re not even bringing in their own, they’re just stealing the whole infrastructure wholesale.

FRANK GAFFNEY:

Adding insult to injury as they say.

ROGER ROBINSON:

They’re moving it into the water.

FRANK GAFFNEY:

Yeah. And Roger, talk quickly, if you would, about what they seem to have in mind for Romania’s resources under seas as well.

ROGER ROBINSON:

Well, Romania has been quite courageous as a NATO member. They have agreed to take interceptor missiles in our European-based missile defence system. They have been very robust, relatively speaking, on the Russian incursions, economic and financial and otherwise. And so the Russians have no love for the Romanians is a very generous way to put it. And the Romanians have some very interesting offshore finds in the Black Sea themselves. But my fear is that those fields are only a few kilometres from what are now the Russian fields. And they would not only set Romania free in terms of dependency on Soviet – on Russian gas, but maybe two or three other countries that are in a similar situation in the region. Because they would be a net exporter. Now my proposition to you and what we should be worried about, including our military, is that Russia is not going to let that happen, they’re going to harass them with their naval vessels, they’re going to find any means necessary to that because they are not going to want Romania to have that kind of windfall at their expense. Their expense being the loss of these strangleholds. They resist those vigorously as we’ve seen in the Baltic States and I can give you an example there as well.

FRANK GAFFNEY:

Roger, let me turn to one other piece of all of this, there is a very controversial commercial relationship between Russian rocket manufacturers and US companies that supply, including to our military, boosters for getting payloads into space. Talk about strategic vulnerabilities, what are the implications of this arrangement and do you think, from an economic and financial security expert’s perspective, this is an arrangement we should continue to rely upon?

ROGER ROBINSON:

Well, well, clearly not. I mean, someone wasn’t minding the store. Look at the RD-180 engines that we were relying on for United Launch and the consortium that basically has dominated launches in the United States. We were utterly dependent. And remain so on the Russian engines. Just like we can’t get into space today without some incredibly usurious fee paid to the Russians on a per astronaut basis. Last I heard, it was like fifty million dollars or some – some abuse of that scale. So the point is, that when we’re sitting by and having Russia provide twenty percent, I once heard, of our nuclear fuel, I have to check that number, but it’s an inordinately high percent, I won’t peg twenty, but up to twenty percent of the nuclear fuel is produced for the United States via Russia and Rosatom and its subsidiaries.

FRANK GAFFNEY:

We’ll be right back with a final segment with Roger Robinson about what we must do in light of all of these strategic plays and the economic and financial techniques being used to effect them if we are to preserve our security and that of the free world. Straight ahead.

FRANK GAFFNEY:

We’re back for our final instalment of this hour long conversation with Roger W. Robinson, an old friend and much-admired colleague, formerly with the Reagan national security council, now with RWR Advisory Group. You can find his work there at rwradvisory.com. Also, check out their important product IntelTrak, T-R-A-K.com. Roger, we’ve been talking about particularly the Chinese and Russian strategic objectives, the extent to which they are being pursued these days through, among other techniques, economic and financial plays that are not generally well understood and more often than not wildly approved of by the governments here and elsewhere in the free world. Even though there are obvious security implications to them. I’d like to ask you, if you would, to talk just a little bit more about how the deck is stacked in terms of giving favourable consideration to transactions as long as they seem to be just commercial in nature and how we ought to be organising ourselves to understand them rather better and deal with them rather more thoughtfully.

ROGER ROBINSON:

Well, very quickly, Frank, in the Reagan Administration, we did have an approach to this, it was an inter-agency one called the senior inter-departmental group, international economic policy, and though it was not only chaired by Treasury, it reported through the national security advisor to the president and ultimately was a body of the NSC. The NSC set the agenda. I was executive secretary of that body. And all of the options that emerged from those deliberations to the president were written by us and all of the decision directives down. So it was an NSC-dominated body, which is perfectly appropriate because it is, by definition, a coordinator of the inter-agency process. So that you get all the economic opinions, the pro-trade positions, the need to preserve our free flow of capital and other priorities of Treasury. But likewise, the intelligence community, the military, the Pentagon are all at the table to cite the kind of concerns we’re talking about today. That’s not present anymore. And now, it’s really – CFIUS is actually chartered by Treasury, but not really an NSC oversight per se and the threshold of meeting strategic concern has been raised somewhat. This is not to say that Treasury’s not doing its best, but it has a different mindset, it has a different set of mandates. It’s most concerned about keeping a lubricated international trading and financial system going. I mean, this is global growth. And I get that and I think all of us do. But at the same time, we can’t have leading adversaries that are taking advantage of a domain that we utterly dominate and built and turning it into their economic and financial warfare sandbox. That’s what’s afoot here.

FRANK GAFFNEY:

Now Roger, you mentioned the Treasury Department and it has done particularly good work, it seems to me, in the security space with respect to trying to cut off funding of non-state actors who are engaged in terrorism against us. And yet, that doesn’t seem to have translated into a similar kind of threat awareness and determination to counter it when we’re dealing with state-level actors. Notably, the Russians and Chinese.

ROGER ROBINSON:

Yes, I think you’ve put it very well. This is where we’re behind, Frank, and it’s been a – it’s been a debilitating gap, capability gap for the United States, without question, that has to be remedied urgently. And it is that one, that counter-threat finance, as it’s often called, it has been effective. It’s the non-state level, that’s the drug cartels, the organised crime, the terror financing, all of this is important and granular and classified, most of the time. But what about going up the threat finance food chain where the real money is, where the real decision – the strategic plays are made, where twenty billion a pop flows from China to Venezuela. In other words, not suitcases of cash, not with flashlights on beaches, as important as they are. So we have to understand the orders of magnitude here. We’re missing the big picture. And the adversary knows this and has moved in to this legitimate juggernaut that has seemingly a candy store open for it in terms of Western financing, Western partnerships, Western technology, equipment, all to prosecute strategic aims of a state. So we haven’t caught up, amazingly, with this mindset. And so this is where we have to go, we have to – we have to realise that economic and financial warfare is practiced against us every day and has been for decades by our principle adversaries. We are not only not on the field in a domain we utterly dominate, we’re not in the stands, we’re not in the stadium, we’re asleep at home.

FRANK GAFFNEY:

[LAUGHS] Let me ask you, one particularly ominous development, I guess you’d call it, certainly trend, on the part of the Chinese has been displacing the Bretton Woods post-World War Two, US-dominated, international economic arena and increasingly is putting into place institutions with hundreds of billions of dollars of Chinese underwriting. It really seems as though not only haven’t we figured out the security implications of all of this, we haven’t even got our head around what the financial implications might be of a Chinese reserve currency, for example, underpinned by these various other mechanisms. Would you just say a word about whether that should be somewhere something we’re concerned about as well?

ROGER ROBINSON:

Well, clearly these, too, are strategic designs. And getting reserve currency status is of a huge priority for the Chinese. Having RNB denominated sectors of international trade and ever-growing use of their currency, is – likewise, fits this gambit perfectly, is indeed required. They know that the dollar dominance is very troubling. Because if the day comes where the US does need to respond in its own economic and financial counter-punch, it could do so by denying dollar-denominated transactions and closing off the US financial system for a currency that’s double-stopping more than eighty percent of the world’s transactions. And that would be, basically, the economic equivalent of an at least tactical nuclear device kind of thing. It’s a serious blow. And it is a real sobering reality for our adversaries. So they’re trying to escape the remainder of our levers to really hurt them before we become cognisant of the nature of the game that we’re in. And I just think that we are not approaching this with a similar strategic mindset, we are not putting the pieces of the puzzle together adequately at this time. And even companies, the private sector of the US, are they really performing security-minded due diligence? Are they really looking at the subsidiaries and global footprints of who they’re doing business with, who they’re partnering with, who they’re taking to IPOs or initial public offerings on stock exchanges?

FRANK GAFFNEY:

It seems to me it’s not even clear that they’re taking adequate account of their own corporate interests let alone the strategic interests of the United States and this is why I think what you’re doing at RWR Advisory Group and with your IntelTrack.com services is really of such incalculable importance. I appreciate so much your taking a full hour to go through this in some detail and I look forward to further conversations with you about it. And about, in particular, the need for us to do better under a new president. Keep up the good work, my friend. Come back to us soon. I hope the rest of you will come back to us again tomorrow. Same time, same station. Until then, this is Frank Gaffney. Thanks for listening.