THE WEST BLOCK
Episode 6, Season 12
Sunday, October 23, 2022
Host: Mercedes Stephenson
Ian Bremmer, Eurasia Group
Retired Gen. Rick Hillier, Former Chief of Defence Staff
Location: Ottawa, ON
Mercedes Stephenson: A dire warning of rough economic waters ahead, and the crisis in the Canadian forces.
I’m Mercedes Stephenson. Welcome to The West Block.
It’s been a hard few years and times about to get even tougher. That’s the bleak outlook we’ve been hearing from Finance Minister Chrystia Freeland.
Eurasia Group’s Ian Bremmer is here on the forces battering the global economy and Canada.
In an increasingly dangerous world, the ranks of Canada’s military are emptying out. Just how bad is this latest crisis facing the Canadian forces and what does it mean for national security? I’ll ask former Defence Chief Retired Gen. Rick Hillier.
From we’ve got your back to turning off the taps, the federal government sent cheques to millions of Canadians in the early days of COVID-19. But with more rough economic waters ahead, Chrystia Freeland is now warning that the government won’t be able to keep everyone afloat.
Chrystia Freeland, Finance Minister: “There will be people whose mortgage payments will rise. Business will no longer be booming in the same way it has been. We cannot support every single Canadian in the way we did with the emergency measures that kept people safe and solvent at the height of the pandemic.”
Mercedes Stephenson: Governments are facing tough economic choices and Canadians are feeling the pinch. So, what is driving all of this economic turmoil and what should Canadians expect in the months to come?
Ian Bremmer is the president and founder of the Eurasia Group, a leading global research and consulting firm. His latest book is titled The Power of Crisis: How Three Threats—and Our Response—Will Change the World.
Thank you so much for joining us today, Ian. Nice to see you.
So many people feel this at the gas pump. They feel it at the till. They feel this kind of global anxiety and unrest that you can’t quite put your finger on, whether it’s war and peace or the economy, but inflation is just at the centre of so much of this. What do you believe are the biggest driving factors behind that situation?
Ian Bremmer, Eurasia Group: Well, it’s two major global crises and the political responses to them hitting almost at the same time. So first, it’s the pandemic and remember, the level of contraction of the global economy when the pandemic first hit, was unprecedented in our lifetimes. This wasn’t a recession. This was very briefly, a depression. We shut down big pieces of the global economy. And the response to that was unprecedented amounts of fiscal stimulus, which was great to ensure that the middle and working classes didn’t lose their capability to continue to support themselves and their families, but of course, created huge problems in terms of ongoing inflation, an incredibly tight labour market, deep challenges in supply chain, when you whipsaw, shutting down production and then expanding it with all sorts of consumer demand. So that’s the first piece, and we’d be talking about major inflation right now even if that was the only thing we were facing. But on top of that, the Russians invaded Ukraine, a land war in Europe that ends 30 years of peace dividend in Europe. The Russians are one of the largest energy producers in the world. The Russians and Ukrainians are two of the largest agricultural and fertilizer producers in the world. You’ve stopped a lot of that production and export and the impact of that is much higher prices, and much less availability. So, I mean you put both of them together and it should be no surprise that we’re facing inflation levels that we haven’t seen in generations and that you have leaders not just in Canada, but in the United States and the U.K., and on the continent of Europe, saying we’re not going to be able to respond in the next couple of years with the kind of fiscal packages that you had grown accustom to in the teeth of the pandemic.
Mercedes Stephenson: How bad should people be prepared for this to get?
Ian Bremmer, Eurasia Group: I think that 2023 is probably going to be the worst of it, but very easily more challenging than what we’ve seen over the past month. In particular, the energy crisis that you have, especially in Europe—and energy crises are far higher in Europe than they are in the United States and Canada—they at least have the storage this year. It’s going to be very expensive. The governments can make people whole. They can provide subsidies for people that don’t have the means. But you’re not going to run out of energy this year and in part, that’s because the Russians were pumping gas through most of 2022.
In 2023, that won’t be the case, so you won’t be able to rebuild the storage that you have presently. Next winter is going to be harder. Also, there’s likely to be a bunch of disruption over the coming months. I’m sure you saw the news that Nord Stream 1 and 2 were sabotaged. We don’t know by whom, but irrespective of who did it, it clearly shows that the gloves are off for that kind of behaviour going forward. In fact, the Russians just had a couple of people arrested in Norway with drones engaging in surveillance of energy infrastructure there. So the likelihood that pipelines, fibre, other cyber-attacks going to hit the Europeans over the coming months and expand the war beyond Ukraine, is very real. The likelihood that you can maintain the existing food and fertilizer deal when it comes up for renewal in November, that’s also going down. So then look ahead to 2023, both for the inability to get stockpiles prepared and also in the challenges in not having enough food distributed to the right places in the world. I think we’re heading for a very difficult 6-12 months.
Mercedes Stephenson: You talked a lot about energy there and that’s something that is on Canadians’ minds. We are an energy superpower. We have all of this oil and gas and there’s been a big debate for years about whether it should keep going because it’s still needed or whether it’s too detrimental to the environment. As you can imagine, that’s been a debate on steroids with what’s happening with Russia and Ukraine. You know, you forecast global risk and predictability and energy supplies, what would your advice to the Canadian Government be about that?
Ian Bremmer, Eurasia Group: Well you’re watching what’s happening in the United States right now: President Biden who got the Americans back in the Paris Climate Accord, who said that I want to be ending fossil fuels. Remember, he said that to the young woman on the campaign trail. I promise you, I’m going to end fossil fuels. And now he has to go to Saudi Arabia. He has to play nice with the energy CEO’s because energy prices are high and he needs to see more production. The Canadians are facing the same reality. I mean you have the Green Party in Germany that is promoting import of fracked natural gas from the United States. I promise you, I did not have that on my bingo card nine months ago, right? So the reality is that your Canada today and you’re trying to balance between Alberta and Ontario, you have to recognize a future that allows for both. And that means yes, we’re going to have a post-carbon future in a generation. But to get there, it’s getting rid of coal and it’s accepting an awful lot of natural gas and oil to continue to provide power for people around the world, especially poor people around the world that have no other way to continue to provide for themselves. That’s a reality and Canada is a part of that reality.
Mercedes Stephenson: So do you think that means that Justin Trudeau is going to have to walk some of his previous statements back?
Ian Bremmer, Eurasia Group: Whether Trudeau has to do that or not is an open question. But certainly if he doesn’t, there’s going to be a price to be paid, politically. Biden has had to walk back. You’ve seen the so-called Inflation Reduction Act, which does not reduce inflation. But the only way you got it done was by making sure that West Virginia was made whole, and that meant some subsidies not just for electric vehicles and for solar cells, but also for fossil fuels. Canada’s going to have that same conversation. Canada’s a very diverse country with very different provinces that have very different economies. And those people have to be taken care of. I think that Chrystia Freeland was in Alberta when she made those comments that you played in the introduction. I mean, I know she’s from there originally, but you can’t forget about that piece of your country, and I suspect Justin recognizes that.
Mercedes Stephenson: What does this all mean for political unrest as people feel this pressure on them that life is getting unaffordable and we see increasing polarization? What do you think the consequences of that will be?
Ian Bremmer, Eurasia Group: Well it’s clearly growing political dysfunction and we see right now these whipsaw elections across South America, where it’s not the left or the right. It’s just whoever isn’t in power, you embrace. Anyone that opposes the existing establishment, you embrace. That’s how Macron made it in France and now he’s the establishment. He’s part of the problem and he’s dealing with massive demonstrations and outrage because the cost of living is too damn high and he’s making people angry. We saw it with the convoys in Ottawa, the shutdown of the bridge. You see it in the United States post-January 6th. I mean these are unprecedented and deeply problematic things for democracies, for elected democracies. This level of inequality of opportunity and hardship is causing incredible polarization and that’s going to get worse, not better, as we go through these economic challenges in 2023.
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Mercedes Stephenson: Realistically, what can Western democratic governments do to deal with the inflation situation and with that kind of political unrest?
Ian Bremmer, Eurasia Group: It’s incremental. You see rates are rising in the United States and of course, the ECB is about to do 75 basis points as well. You’ll see that across the developed world and that’s happening because there is an effort to try to reduce inflation over time, without having major recessions. The problem is that when you have the level of geopolitical uncertainty we’re presently facing, and I’m not talking about nuclear war coming from the Kremlin, I’m just talking about a conflict that has now been expanding and escalating for eight months and it’s only going to continue. There’s no end in sight, that kind of disruption that matters for supply chains. It matters for goods. COVID still isn’t done in China. We have lockdowns, targeted lockdowns affecting about 20 per cent of Chinese GDP and that means that their factories aren’t working at full production. It means that you’re not getting the goods out of China the way you need to. Every one of those functions as a tax on global growth, it functions as a constraint on the ability of political leaders to respond effectively for their populations. So we can’t just look at the fiscal and monetary tools that central bank governors and ministers of finance would historically deploy to respond to a recession. We also have to consider that it’s much harder because of this geopolitical instability.
Mercedes Stephenson: Ian Bremmer, fascinating conversation. Thank you so much for joining us today.
Ian Bremmer, Eurasia Group: Good joining you.
Mercedes Stephenson: Up next, the global order feels more precarious than it has in decades and the military is struggling to find Canadians who want to serve. Are we headed for another decade of darkness? I’ll ask Canada’s former top soldier Retired Gen. Rick Hillier.
Mercedes Stephenson: Canada’s military is desperately looking for more troops. The forces are short more than 10 thousand members. That’s one in every ten positions unfilled.
The country’s top soldier Gen. Wayne Eyre was blunt, warning that the shortfall means Canada’s military isn’t prepared to fight the threats of tomorrow.
For more on what this means for the forces and for Canadian security, I’m joined by former Defence Chief Retired Gen. Rick Hillier. Nice to see you, Gen. Hillier. Always great to have a chance to speak with you.
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Mercedes, glad to be here. Thank you.
Mercedes Stephenson: I have to ask you what went through your head when Wayne Eyre came out, who’s not a drama, you know, kind of guy, and says something as drastic as we’re going to have to stop all non-essential operations and seems to be indicating that this is a really serious crisis?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Well, Wayne called it right and I’m glad he said that. I’m glad he came out publicly and made the case. And in reality, I believe the case is much more serious than what Wayne has articulated. And he’s done it in a very, very capable manner and I fully support him, but you know I hear numbers, for example, at the Canadian forces being down far greater than, you know, 10 per cent and instead of being at 70 thousand people, the Canadian forces are operating probably somewhere at about 45 thousand people.
Mercedes Stephenson: Wow.
Retired Gen. Rick Hillier, Former Chief of Defence Staff: And out of that, there are a significant percentage of them who are not operationally deployable or capable, so the capability of the Canadian forces, what we rely upon to look after us in Canada and then to represent us and protect our interests around the world and to take our values with them, that part that can do that is miniscule right now and we need to change it.
Mercedes Stephenson: So, how severe is this situation? How much trouble are we in?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Well I think the Canadian forces is a huge amount of trouble, but from the people side, from the equipment side, from the procurement side and all those things, but I think that puts Canada in a tough spot also. Again, our ability to respond in emergencies, whether it’s a hurricane as we just saw, whether it’s something else, or to respond around the world as part of NATO, as part of the United Nations, to help make the world a better and more secure place for Canadians to live within, our ability to do that goes down to almost zero and that’s not good for a nation that’s a G7 nation, that’s a founding member of NATO, a founding member of the UN. And we start to lose our impact and in fact, we already have around the world. So we need to change it if Canada is going to be strong and defined the world the way it should be Canadians.
Mercedes Stephenson: Why do you think this is happening? Is it neglect? Is it the culture issues in the Canadian forces? Is it simply that they’re spread too thin? What’s behind the shortage that we’re seeing?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Well I think you’ve taken the Canadian Armed Forces over the last four, five, six, seven years and you’ve just beaten it almost to death. And, you know, you’ve maligned the leadership. Some of the leaders have done, obviously, things that are absolutely inappropriate, unacceptable and being held to, you know, held to that. And so those things are all occurring at the same time, you know, had we not had missions across the world that are really a big magnet for kids to want to join. And when I say kids, you know, that 18-25 group who want to go out and change the world, well they want to go and do it on a mission. They don’t want to sit in, you know, Shilo, Manitoba or Petawawa, Ontario. And so there are a variety of things, but essentially it comes back to, is that we’ve removed the excitement and we’ve removed the mystique of being a soldier, an aviator or a sailor or a special forces trooper for Canada is a proud and good thing to do. And you actually have to rebuild that and that’s not a short-term process.
Mercedes Stephenson: So, who do you think is responsible for that? Is it the leadership who made the mistakes? Is it the way they’ve gone about trying to fix it? Is it the elected government? Is it the Canadian public?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Well I think it’s all of the above, but you have to have the leadership to move forward it. So if anybody thinks that Wayne Eyre, or all his ability is going to fix this problem, then they are mistaken. They are wrong. He cannot fix this alone. We need a prime minister who is going to show support for the Canadian forces visibly and to get out and show how proud he is and any other prime minister after his of those young men and women in uniform.
I was very fortunate, you know. I have prime minister Paul Martin, who loves soldiers and he was determined to rebuild the Canadian Armed Forces and then he was followed by Stephen Harper, who was determined to rebuild the Canadian Armed Forces. And the focus of those prime ministers meant their ministers were focused, their government was focused and indeed, the population of Canada was focused on how important these men and women are and how much they need our support, and as a result, we could do it. We need all of that to take place right now. So you need that kind of visible support. You need dollars into the Canadian forces and you need a full up, active, number one priority mission to recruit young Canadians to come and serve our nation in uniform.
Mercedes Stephenson: I noticed you didn’t list Justin Trudeau or Anita Anand.
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Well, you know, look, the prime minister’s got a huge role to play in this and I just encourage him to get out there and make sure that he’s in a spot where he can, you know, praise those men and women who serve us, who join, who leave their families and go around the world and sometimes do it at great risk to themselves. And they do it for Canada, they do it for service before self and they ask so little in return. And so it’s a great opportunity for leadership to stand up and be accountable for this and to be out there doing exactly what needs to be done.
Mercedes Stephenson: We are heading towards Remembrance Day, tough time for a lot of Canadian veterans. I’m aware of a number of soldiers and veterans who have died by suicide in recent weeks. This is always a concern. And there’s been a feeling among a lot of the veterans who I’ve spoken to of sort of rudderless-ness with what’s happening in the Canadian Armed Forces, with what happened in Afghanistan that gave them so much meaning. When you look at the treatment of Canadian veterans, what are your thoughts on that?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: I’d always like to see the treatment of Canadian veterans improve better than it is now. However, I wouldn’t underestimate all the incredible things that have occurred. And you can talk to a lot of veterans and they’ve been engaged in a lot of programs that have supported them well, and they also need some more support so we need to keep adding to that. But look, we are approaching Remembrance Day and it is an emotional time of year, particularly for those who served and their families who have served alongside of them, but is an opportunity to rebuild and again, a part of that mystique of the Canadian forces here. You know and here’s what I would say, the Canadian Forces can’t be changed and we can’t fix all the problems just with the chief of defence staff. But on 11 November, what I would love to see is the Canadian forces out there in force so to speak in every single Canadian community right across this great land, to show who they are, what incredibly young men and women they are, you know how great they look and what a good career there is to join and be out there and serve your nation. And whether it’s for three years or 35 years, it’s actually irrelevant. I think 11 November, we can remember the service and sacrifice of those who’ve gone before us in a variety of ways, and one of those is ensuring that Canadians understand it’s still good to serve the nation in the uniform of the Canadian Armed Forces.
Mercedes Stephenson: Ukraine is obviously on everyone’s minds and we’re heading into another winter war there. I know you’ve done a tremendous amount of work to try to support Ukraine. What’s your biggest concern right now about that conflict and about what Russia may do?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: The biggest concern about the conflict and for Ukraine to be at day 240 of the war on the 21st of October, is the fact that I worry about the ability of the West to remain together as one cohesive block going forward here. And as governments change, you know whether it’s the government in Italy, or the prime ministers doing a constant role in United Kingdom, or the midterm elections in the United States, these things take on partisanship politics roles and I’m worried that there’s going to be a lessening of support for Ukraine from a variety of countries and that the Russians will see that as hopeful for them and they will therefore persist in their attack and their invasion and therefore tens of thousands more people will die. That’s my biggest worry with Russia. You know there’s a great way out for Russia, and that’s to leave Ukraine and let the war end right there. And I think Putin is going to realize that one day and if he doesn’t, the people around him have to realize that and then make sure he knows it, otherwise he’s going to have to go. But, you know, Putin keeps using the nuclear threat and that’s the one thing I don’t think we in the West can allow ourselves to be sort of blackmailed by or coerced by, because if so, he’ll continue to use it forever and that will enable other countries to want to use it also here. I don’t think he’ll use it.
Gen. Dave Petraeus talked a while ago about the West response, the U.S. response, non-nuclear if Putin went nuclear with a tactical nuke. And that response is non-nuclear but it’s to take out every single Russian unit: land, sea and air that’s outside of Russia, in Ukraine, in the Black Sea, using conventional methods and send a very clear message that look, if you’re going to do this, it’s going to be incredibly painful for you and Russia. Putin will pay the price. So I don’t think he’ll do it. He’s a survivor.
Mercedes Stephenson: Russia versus China, which one’s the bigger threat to Canada’s national security?
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Both are threats and the fact that they want to dominate the spheres of the world that they can influence and they’ll do it for their own national interests. So we have to watch with both. And, you know, China is just sitting there watching what the West does in Russia, seeing how cohesive we are as a group of NATO, for example, and seeing just how much courage we have to keep supporting Ukraine, this democratic nation who is, you know, trying to survive, trying to defend its families and nation. And they’re watching what we do. And if we lag, or if we get cracks in our front in the West supporting Ukraine, China will see that as a significant sign as weakness and they’ll start looking at Taiwan in a much more aggressive light.
Mercedes Stephenson: A lot of things to think about.
Retired Gen. Rick Hillier, Former Chief of Defence Staff: There are.
Mercedes Stephenson: Gen. Rick Hillier, thank you so much for joining us today.
Retired Gen. Rick Hillier, Former Chief of Defence Staff: Mercedes, my pleasure. Thank you.
Mercedes Stephenson: Up next, a group of black civil servants will meet with a civil rights icon pushing to end discrimination in the federal public service.
Mercedes Stephenson: A group of Black civil servants are hoping to bring in a heavy hitter in their fight to end anti-Black racism in the federal public service.
Members of the Black Class Action Secretariat will be in New York on Tuesday, to meet with renowned U.S. civil rights leader, the Reverend Al Sharpton.
More than 15 hundred Black federal employees have joined a proposed class action lawsuit. They say the federal government has failed to hire and promote black employees, who instead found themselves the target of discrimination and harassment.
The group has also submitted a complaint with the UN Human Rights Council. They’re hoping to meet with them in the new few weeks.
That’s our show for this week. Thank you so much for watching. For The West Block, I’m Mercedes Stephenson, and I’ll see you here next Sunday.