Steve Hsu: China leapfrogged western expectations so fast. It went from, you know, the west thinking it was still a backwards low labor cost, low end manufacturer with shitty technology. It went from that to the west, suddenly perceiving that, oh my God, they're, they're just slightly behind in AI and they're caught up in lots of areas and actually surpassed us in a bunch of areas that, that sort of more or less short circuited the the Thucydides trap. The Thucydides trap is if you have a rising number two, there's often a war because the number one power sees that number two has more momentum and realizes it better fight early because if it waits, number two's growth curve will allow it to surpass number one, and then number one won't be able to prevail in a competition.

So that's the dynamics of the acidity trap. Han Feizi points out that like what might have happened is that they zoomed up this catch curve so fast that now there isn't actually a Thucydides trap dynamic that when the planners in Washington actually look at what a hot confrontation will look like, they think they're gonna lose.

So actually, instead of a Thucydides trap dynamic in the Western Pacific, what's actually happening is intense planning for Fortress Americas

Alf: Hello and welcome to a brand new episode of Seeking Truth from Facts. Today I'm joined by regular and friend of the show, Steve Hsu, to do a roundup of 2025 from a geostrategic point of view. How are you doing, Steve?

Steve Hsu: Great. It's great to be with you again, Alf. Perfect.

Alf: So we're sitting down just five days into the new year on the back of a 2025, that was very eventful from a geostrategic standpoint. I think it would be good to start off by asking what the major trends of the year were and focusing in to the more regional levels? What do you think of that?

Steve Hsu: Got it. So obviously the big thing was the economic, Shall we say friction between Trump and China. And I think the main thing that was learned, at least I think a reasonable interpretation, is that Trump's team were overconfident in the degree to which they could leverage tariffs against China.
So there's sort of a, maybe you could call it a boomer take that, you know, might have been true 10 or 15 years ago, but isn't true anymore, which is that China's economy is. Dominated by exports and most of those exports go to the US. The US consumer is the consumer of last resort, and the Chinese economy's heavily dependent on the US consumer.

And you know, each of those statements is wrong. So exports is a relatively small chunk of the total Chinese economy. The US portion of total Chinese exports is relatively small, and I think basically exports of the US is something like 2% to 3% of the Chinese economy. So even if that went to zero, that would, you know, not be the end of the world. They wouldn't like it. It would also hurt a lot of Americans ability to get products. it would hurt the ability of a lot of US manufacturers even to, you know access the supply chain items that they need. But. If you think about it, the Chinese economy is growing, you know, even in the current situation where they're kind of recovering from a property bust. It's still growing sort of 4% to 5% a year.

So losing 3% of GDP ie, if the US completely cut off trade, it isn't something that would cripple them. It would just mean they have a bad couple of years and then maybe they recover from it after that. So for people who followed this, you know, the Trump team I think thought they were gonna be able to use this as leverage against China.

And every time the Trump team did something to China, there was an immediate Chinese response. And ultimately it culminated in the Chinese actually rolling out rare earth materials, controls of their own which I think the US realized that this is a huge problem for, you know defense. The defense industry, which I, I think actually is still currently restricted from getting rare earths from China, but also things like car manufacturing and other key aspects of the US economy.

So, so I think it's fair to say, although this last part I think is, you know, you could argue about it, but it does seem like the Chinese got the best of a tariff war that Donald Trump started.

Alf: I guess the, like two, two points I picked up on there. I mean, one you mentioned China's still going around four to 5% a year. I think most independent stats I've seen on that do fall within that range. But I know some have, some have disputed that, I dunno what you think of that dispute. And then at the same time, I think you picked up on something very important that I've also noticed, which is that a lot of the kind of as you said, like boomer attitudes towards China are based on these assumptions that may have been true 20 years ago. That China's only competitive because of its lower labor costs that it artificially keeps wages low for that purpose and that that's basically the core of its economic model when in reality real wages in China have been. Rising quite steeply for the past 20 or so years, and that's not really where their comparative advantages these days.

Steve Hsu: Yeah, I think we could go on for the whole hour on, you know, what's happening with the Chinese economy, Chinese manufacturing competitiveness, et cetera. The view or what the reality was 20 years ago is just very different from today.

They've succeeded in climbing the value chain to the point where one could almost argue in the majority of advanced manufacturing sectors, they now either dominate or are at parody with you know, the, the best competitors from anywhere in the world. So that's an amazing story because not only did they have very strong economic growth for 20 years, but they actually caught up technologically. There are only a few areas where they really significantly lag behind the best of the rest of the world. So for example, EUV lithography, advanced semiconductors, they're still a little bit behind, but in all kinds of other areas, they might actually be way ahead, like battery technology, electric vehicles, alternative energy, solar panels. So in some of those areas, they're actually way ahead.

So it's just a very, very different. Situation. Then I think, you know, honestly, Trump is pretty old, so you know, I think he could be forgiven for being pretty out of date in his views on what the strategic balance is in terms of trade between the US and China.

So one reading of 2025 is that people learned the hard way. Because I, I think just like when the Ukraine invasion happened, people assumed, a lot of people were confident that our economic sanctions would bring Russia to its knees. And that turned out not to be the case. And a lot of people, when Trump started his tariff stuff thought that would cause the Chinese to basically make a lot of concessions to the us.
But it didn't happen that way at all. In fact, they didn't make any concessions. Now looking into the future, there's some issue of whether they sort of pulled the rare earth trigger. Too early. Is that something that now that they've made the West aware that there's this vulnerability around rare earth metals, materials is that something the West is gonna be able to react to and build their own supply chains to make themselves independent of China on rare Earth?

That's a sort of forward-looking strategic conversation that we can have. I think generally it's harder than people think. I think that it's not the mining of these materials, that it's hard, it's actually the processing of these materials. Although you wouldn't necessarily compare that in terms of like technical difficulty to extreme ultraviolet light sources made by ASML, it, it's still something that isn't something that your companies figure out how to do overnight.

It could take many, many years of trial and error and experimentation to figure out how to do this refining of rare earth's in an economically viable way. And it did take China a long time. They've been emphasizing this particular area for a long time. And, you know, a lot of value add is incorporated in their current production methods, which are not known to the rest of the world.

Alf: Another one of the key developments of the year has been Donald Trump's return to the White House, as well as his announcing and implementation of a new national security strategy. Just shy of a year in, what do you make of the Trump administration's geopolitical performance so far, and how radical a shift do you think that there has been from the liberal orthodoxy that prevailed under the previous administration?

Steve Hsu: Right. So if you step away from economic competition to more broadly geostrategic competition, which could include military competition there, I think there's been a very strong break from the attitudes or the analysis that prevailed under the Biden team. So people like Hegseth our current Secretary of War, you know, he's the first really senior person to just say out loud that if we got into a shooting war in the Pacific, that potentially the Chinese could sink all of our aircraft carriers. And that's something that people who are technically inclined and think about missiles and missile defense, long range sensors hypersonic weapons, all this whole like sort of panoply of technologies that I think are gonna be very crucial for a war in the Pacific. People like me have been warning about this for many years now that it appears that Chinese are, have properly developed a suite of technologies that hold at risk the US fleet.

Anywhere within one to 2000 kilometers of the Chinese mainland. And so the Western Pacific would be a very, very difficult place for the US to operate without losing huge amounts of material. And what's interesting is the Trump people openly acknowledged this, so Hegseth openly acknowledges this and, and their, you know, their new official defense strategy.

Policy papers acknowledge this. And so what you're really seeing is, a move toward Fortress Americas, not, not America singular, but Americas to include Venezuela, for example. So I've sort of said this like in conversations about the geostrategic and military balance of power, I've always said.
The US may no longer be able to dominate the Western Pacific, but it can dominate the Americas North and South America, and is protected by two oceans from the Russians and the Chinese. And if the US were to withdraw from a more sort of forward posture in the Western Pacific, they could still easily defend themselves you know, on their side of the Pacific.

It isn't yet an existential threat from the buildup of the Chinese military, even if, if we lose our dominance of the Western Pacific. What's interesting about the Trump people is they seem to more or less acknowledge this, and they're building their strategic position around these assumptions.

Whereas during the Biden administration you could not find any senior Biden people who would, who would acknowledge that this is the case. So I think this is a very fundamental question like if you and I are playing a strategy game, like a board game, like risk or something, or maybe something more advanced like civilization or something. You know, our evaluation of the competitor's strengths and our own strengths that's sort of the fundamental baseline that you have to have before you then plan your strategy. And I think there's been a shift between the last administration and this administration in their evaluation of the strengths and weaknesses of the US versus China.

And I think that's not been really, the media has focused on individual actions of the Trump administration or the documents that they publish. But no one's really come and said like well actually, the Trump people have this view of the weapon systems and the balance of power and the ability to manufacture these weapons systems at scale. You know all of these things put together, which determine the balance of power or say, in the Western Pacific. The Trump people really have a fundamentally different view which I think is actually more realistic than what prevailed under Biden. Biden was really just, if you like, the boomer thing.

Like basically what, what prevailed in U.S. thinking for the last 20, 30 years, right? So the Trump's Trump people have actually broken pretty strongly from that. I think in quote, serious defense analysis circles or the media, has been under analyzed or under discussed.

Alf: Would you say there's a quite key difference between the strategy being pursued by the current Trump administration and the strategy that was pursued during his first term?
Steve Hsu: Yeah, I think in the first term they had not come to this kind of radical change in perspective on the balance of power. Remember we had COVID and stuff like this, so, so they were not really even focused on it. so I think Trump 2.0 is quite different from Trump 1.0 regarding this and quite different from Biden.

Alf: And to kind of zoom in on the more regional level one area where there has been a real shift in in policy it seems is. Ukraine, of course Trump came into office with his promise to end the Ukraine war. And whilst the proxy war does remain ongoing it seems that thanks the work of Steve Woff among others, progress has been made towards a deal to end the war. To what extent do you think progress has been made and what do you make of the fact that any deal reach will most likely be worse for Ukraine than what was on the table in Istanbul in 2022?

Steve Hsu: Yeah, so I, I feel that Ukraine will end off, end up worse off than if we had settled things in Istanbul or even earlier before the Russian invasion.

So in the end it'll be a, a big loss for the Ukrainian people and the Ukrainian nation. So the infrastructure, their productive capabilities, their economy I think are just pretty much destroyed. And, and, you know, they've had we don't know the exact number, but it could be of order a million casualties or maybe both sides combined, or a million at a million casualties.

So it's, it's really a tragic outcome, and I actually am not sure whether Trump and Witkoff are gonna be able to settle this. I, I think it may be as, as Mearsheimer says, settled on the battlefield. So that Russians will just keep advancing, maybe even, get sort of to Odessa and, you know, break through this network of defenses that has been built up over many years in the western part of the Donbas.

If they break through there, then you know, the, there may be a collapse on the Ukrainian side and the whole thing has to be settled in a very sort of dramatically bad way for the Ukrainians. It might happen that way, and I think that's what Putin's sticking to because it seems like Trump and Whitcock, although they do, they do wanna settle this war.

They don't want to be enemies of the Russians. They want to, if possible, pry the Russians away from the Chinese, or at least settle out this theater so that they're not forced to allocate a lot of US resources or even mind share to this theater. They, I think that's their goal, but I think they're not realistic in, in understanding what Putin's break points are in the negotiation. I think Putin has been consistent the whole time the things he's been asking for. And I think if we don't give him those things like guarantees regarding NATO membership and the size of the military that Ukraine is allowed to have after the conflict ends. You know, unless we give on those particular negotiation points to Putin the war won't end except with them winning in a military fashion and then us just being forced, or Ukraine just being forced to accept terms from them.

And I still think that's quite a likely outcome. Are we in the fourth year of this war now or something? So it's amazing how slowly Russia has proceeded. I think this mainly has to do with some new aspects of warfare, like drones that have enabled the Ukrainians really to hold off the Russians for a long time.
So even that part of it's still a little bit unpredictable but my impression is that, you know, before the news cycle a few months ago or a month ago, sort of turned away from Russia-Ukraine, it did seem like the Russians were really winning. And potentially coming close to sort of winning an outright military victory.
But that could be wrong. I don't have super high confidence in that and it, it still remains to be seen. But in any case, I think the Trump people wanted to end this conflict and still want to end this conflict, but can't quite get it done.

Alf: Okay. And I mean, to move to another zone of tension tremendous events have continued to take place in the Middle East with the fallout from events in 2024, such as Israel's page operation against Hezbollah and the fall of Assad. As well as the fail seemingly failed to US mission to counter the Houthis and the Red Sea. What do you think are the main developments outta the Middle East in 2025? And bringing the conversation into 2026, how much, if at all, potential do you think the current situation in Iran has to reshape the region?

Steve Hsu: Yeah, so if I were to tally up the wins and losses on different sides from 2025, well for sure the collapse of Syria and the neutralization of Hezbollah by Israel. I think surprise a lot of people. I think Israel surprised on the upside in those two goals, you know which are really for them, like pretty important strategic goals like neutralizing Hezbollah and, and, and removing Assad. That's really, you know, in, in ordinary, like in sort of ordinary terms that would be, you know, if you were talking about this a few years ago, that those would be considered just major, major positive strategic developments for Israel.

On the L side, I think the, the, probably the most obvious L and the one that I have the highest conviction in is the inability of the US Navy to reopen shipping through the Red Sea and to subdue the Houthis. And this is very important. If you actually analyze what happened to the US carrier groups that were operating in the Red Sea, the missile systems and drone systems used by the Houthis, the bombing campaigns against the Houthis, et cetera. What happened there Has actual implications for something more serious, like an actual world war that might happen in the Western Pacific. I think it shows, you know, similar related to what I said earlier that missile systems really hold at risk surface ships. And the Navy really can't defend those ships even against pretty crappy missile systems that the Houthis got from the Iranians. And definitely not the best systems that the Iranians have.

They can't defend their ships and they can't defend Israel itself from these missile systems. And again, someone like me who's been studying missile defense since the Cold War, since Ronald Reagan Star Wars, which happened when I was in college studying physics, you know, and I actually almost went to work for the Institute for Defense Analysis on X-ray lasers, which were part of the Star Wars program.
So I've been following this suite of technologies ie the technical problem of whether a country can defend itself or a ship can defend itself against modern maneuvering, ballistic missiles, or even hypersonic missiles. And I've always been a skeptic. I've always thought that the claims of US defense contractors and Israeli defense contractors that they can actually defend against that kind of attack has been strongly overstated.

I think what happened in the Red Sea vis-a-vis the Houthis is pretty strong evidence that that's the case. In a moment I'll go on to the Iranis-Israel conflict. Although I have less conviction in this 'cause a lot of the details still are classified and we don't know exactly what happened in the missile syndrome exchanges between Iran and Israel? My moderate conviction conclusion is that the combination of the best Israeli defense systems like David Sling, plus US Arley, Burke Destroyers plus, you know, US Patriot systems, basically everything that you could throw at the Iranian missile attacks actually didn't work that well, and also expended billions and billions of dollars of anti-missile missiles I think we've used up a significant chunk of the entire supply that were, have ever been made in that short conflict. And, and I, I actually interpret that conflict as having ended because it was starting to look bad for Israel if, Iran were able to keep up its regular salvos of their missiles, that gradually it would, you know, we don't, we didn't have enough systems to defend and Israel would start taking really significant damage from these attacks. Now, I don't have as high conviction as I said on that conclusion is I do. So it's a, it's a distinct question of whether. Israel can defend itself against Iranian missiles and what the magazine depth of Iran is and how many of their most advanced missiles they actually have. That's a separate question of whether the US would risk operating a carrier group in the Red Sea against the Houthis.

I think for that, I think it's pretty clear we don't want to do it. It was touch and go. There have been interviews with the captain, I think of the Eisenhower. There were a bunch of mishaps or they loss, some F-18 into the ocean 'cause the, carrier was maneuvering to try to avoid the missiles.
I think the commander said at one point there was a Houthis missile that passed within a few hundred meters of a ship. So I think it's pretty clear that one theory of the case is that, oh, we have these Arley Burkes and we have SM-3 and SM-6, and we can, a carrier group can defend itself against modern ballistic and hypersonic missile attack.

I think there, there are actually some people who claim that. I think he, Hegseth not one of those people, but there are people out there, boomer type military analysts who claim that. I think that's totally untrue. And I think what happened in the Red Sea with the Houthis is pretty strong evidence is that that's not true.
Lower conviction is this narrower question of whether Iran has a formable formadible enough conventional ballistic missile arsenal to threaten Israel, even with the US expending massive resources to help protect Israel against that missile attack. And we may see this, this hypothesis tested again because, uh, we may have another war between Israel and Iran coming up soon.

Alf: I guess to bring events into 2026. I mean, I don't know how much you've looked into the situation, but I, I dunno what, if you have any idea the likelihood given the current unrest in Iran, of any kind of regime change?

Steve Hsu: So I haven't been following that closely. You know, here's the thing.
The people that are sort of, we're using this sort of like a caricature of like a boomer, very pro-western or overconfident, person who's very overconfident in the strategic situation of the west, vis-a-vis everybody else. One of the assumptions that such people make is that, oh, these are, these authoritarian regimes tend to be very brittle.

And actually sometimes they just collapse and you can remove the, you know, the hated leader, the dictator autocrat of that system more easily than you thought. And certainly like Syria is, is, you know, a case where that turned out to be true. Russia is a case where it turned out not to be very easy to bring down the Putin regime, which, which I think was one of the, for the really most extreme warhawk neocons. That was one of the main reasons they wanted to not compromise and cause this Ukraine-Russia conflict because they thought it would ultimately bring down Putin. But that turned out not to be true. I don't think the regime in PRC is brittle and you know, would be easily toppled, by, you know, some setback, military setback or by us covert operation.

Iran is kind of in the middle. I don't know enough about Iran. I wouldn't be that surprised if know the, the theocracy that runs Iran is in danger, you know, from these current riots. I mean, the economic situation there is very bad. And, you know, they've been under sanctions forever from the west and I'm sure people are very, very unhappy with the current economic situation. And I also think, you know, the Israelis and the Americans have probably massive intelligence operations there to gin up these kinds of protests. So I don't really know what's gonna happen in Iran, I guess I at low conviction I sort of think they aren't gonna be able to topple the regime through these actions, although I think they're trying quite hard.
Alf: And what's what's interesting on, on the point of the kind of boomer analysts often overestimating the extent to which these regimes will just fall.With Syria as an interesting case, because I mean, yeah, while in 2024, the final push to remove Assad was very quick. I mean, it did take a 13, I think, yearlong war to lodge him from power. Even Iran, iran seen very serious protests before in 2009, in 2022. It is proven more resilient than many have expected.

Steve Hsu: You make a very good point, which is that the final downfall, which is this non-line, if, if it happens is some nonlinear event, which might happen, seem to happen really quickly, but it's a result of decades of sanctions.

Yeah. And also covert actions against the regime. You know, arming rebels, arming splintered factions within the country. Exactly. You know? Yeah. So, yes. That's fair. Assuming, you know that the CIA is not totally incompetent and that they're actually using the money that they're allocated in a reasonable way.
You know, they have been applying pressure to all of these regimes for a long time, so sometimes it's not the right characterization to say that the regime was brittle and it fell, but rather that, you know, they were under pressure for a long time and finally fell.

Alf: Another, example is Gaddafi, right? Where they, so they go in to back the rebels there and the assumption is that it'll be like an Iraq job where the regime falls within, within days. But the 2011 Libyan intervention, I mean, it, it took months for, Gaddafi's troops to give up and for, for Tripoli to fall. Unlike in Syria, Libya had basically no international support.

yeah.

Steve Hsu: And, and, and, and usually, and usually in these cases the West has complete, you know, air superiority and they're just bombing, you know, the country, like in the case of Libya, like the, where the French were actually bombing him, right. So, yeah, so it, it's, it's a complicated story. Not to jump ahead, but like I think the case that we're gonna examine very closely soon is Venezuela. They got Maduro, but his regime is still in power and are they gonna be able to quickly topple and or co-op that regime now and get what they want?

So that's, that's like the open question that we're all gonna be focused on for the next. A few months probably.

Alf: Absolutely. I think, we'll,come onto to Venezuela later, but I think to shift focus on I think what we both agree is the most crucial geopolitical contest of the century, namely the back between the United States and China 2025, sort of similarly saw major developments on that front.

The myth of China's inability to innovate was busted by deep sea causing a shock to the foreign policy establishment in the west. The final year of made in China 2025 saw many independent studies seeming to confirm its general success. All the while questions over Taiwan and the Trump administration's approach to China geo strategically remain to some degree unanswered.

What are your major impressions of how 2025, and I know we've covered this partially, but I guess to go in more in depth, how 2025 saw the US China competition evolve?

Steve Hsu: Yeah, so as I was saying earlier, I think the Trump people came in and thought they could. Win based on economic coercion, based on tariffs. I think that has turned out not to be the case. Interestingly, at the same time that that set of economic well you could call it economic warfare, was underway, I think the US military didn't think, like, was sort of moving the other direction, thinking that, oh, these guys are not gonna be a pushover. In fact, when we do the calculations of how many ships and hypersonic missiles and, you know, stealth jets they're producing that we don't think we can take them in the Western Pacific. And most of our efforts are now trying to arm the Philippines and Taiwan and trying to get them to, you know, at leastevolve into sort of porcupine.

You know, are not as easily coerced or, taken over by the Chinese, but, but we don't seem to have any stomach for direct military comp confrontation with the Chinese. I think as you said, this general recognition like in early 2025, I think it was quite common for me to encounter people who had a much more negative view of the Chinese capacity for innovation across all areas. Not just AI, but across all areas. A lot of statistics came out last year, like the rate at which they're installing robots, the rate at which they're increasing their electrical power, uh, generation.

The fact that they're threatening all the major Western automakers now, including they've already sort of eclipsed the Japanese automakers in Asian markets. So all these things that I think gradually people are becoming aware that, oh my God, these guys in fact may have even like, actually leapfrog us. There's a, a writer for Asia Times whose pseudonym is Han Feizi. I've had him on my show. I interviewed him when we were both in Beijing. So there's an episode of Manifold called Letter from Beijing where I interview this guy Han Feizi, who actually has a background in, he was educated in the US in engineering and then became an investment banker, and now he lives in Beijing.

He's quite aggressive on X and one of the things he quipped was like China leapfrogged western expectations so fast. It went from, you know, the west thinking it was still a backwards low labor cost, low end manufacturer with shitty technology. It went from that to the west, suddenly perceiving that, oh my God, they're, they're just slightly behind in AI and they're caught up in lots of areas and actually surpassed us in a bunch of areas that, that sort of more or less short circuited the the Thucydides trap. The Thucydides trap is if you have a rising number two, there's often a war because the number one power sees that number two has more momentum and realizes it better fight early because if it waits, number two's growth curve will allow it to surpass number one, and then number one won't be able to prevail in a competition.

So that's the dynamics of the acidity trap. Han Feizi points out that like what might have happened is that they zoomed up this catch curve so fast that now there isn't actually a Thucydides trap dynamic that when the planners in Washington actually look at what a hot confrontation will look like, they think they're gonna lose.

So actually, instead of a Thucydides trap dynamic in the Western Pacific, what's actually happening is intense planning for Fortress Americas the US, you know, gonna take over the oil in Venezuela, solidify itself in North and South America, including Greenland. And hopefully, you know, thanks to Yankee ingenuity and, you know, our indomitable free market system or something, you know, maybe in 10 or 20 years we'll reshore all our manufacturing and, you know, at some point it'll be competitive again, but it's not really competitive now and we need to pull our resources back in and rebuild ourselves.
I think that thinking actually is quite, I mean, again, not, it's not explicitly stated by, you know, the media or the more mainstream think tanks. 'cause it's just too discouraging. But the, the Trump people are actually acting as if that's the case.

Alf: Now to move on to the elephant that's been in the room for our entire discussion that I'm sure everyone wants to hear about. I think any geo strategic discussion right now would be incomplete without a discussion of the situation in Venezuela. Where Nicholas Maduro was two days ago, captured by US Special Forces at time of recording, representing a reassertion of the Monroe Doctrine or the Don Road doctrine, as it has been unofficially renamed.

Do you think there are ramifications of the, of this or serious, especially for China as summer asserting, and do you think that this indicates the reaching of the grand bargain of Latin America in exchange for most of Asia between the US and China, the possibility of which we have discussed previously?
Steve Hsu: I have more questions than answers when it comes to Venezuela. One because I'm not an expert on Venezuela. And then two, because events are moving so fast. So everything I'm gonna say you should take with a grain of salt and as low conviction. So number one, what are the strategic implications for the US China competition of the US taking control of Venezuela? You know, the Chinese have been active, I think, in developing the oil infrastructure, in Venezuela, and they buy a fair amount of oil from Venezuela. But I don't view this as a. Really critical strategic matter for them. In other words, it's possible that they cut a deal with Trump and said, you know, we're not gonna react super strongly if you take over Venezuela.

Like maybe they made a deal like that. It is very hard to know. Of course, the public stance is very negative, right? They called a special session of the security council and they publicly denounced the kidnapping of Maduro. Well, as anyone who believes in quote. International law, we, we can talk about this in a second, but anybody who believes in the facade of quote international law would, would not be very happy about this set of events.

But any case, it is not implausible to me, it is plausible to me that the Chinese are willing to cut some deal with Trump saying that we're, we're not gonna, we're not gonna take active measures against you over Venezuela. And who knows what the quid pro quo was. Maybe there isn't any deal. I mean, I don't think the Chinese are really in a great position to contest US action in Venezuela.

Maybe in some extreme scenario they could supply the Venezuelan military with some weapons systems. Although even that, like getting weapons systems to them against us interdiction, I think wouldn't be that easy. So, yeah, I very hard to know exactly what's going on. One could ask like if there were some qui kind of quid pro quo, what did they get out of Trump in order to not contest this very much?
I guess the same thing would go for the Russians. But you can, you could imagine lots of things that Trump could give them.

Alf: I mean, to join on there, to your point about international law, I mean, the idea of international law has always seemed to me to be one of those notions that if you think about it for more than five seconds, it just becomes transparently laughable.

The idea that you can have law, a law that is, is impossible to enforce. That you can have a legal regime above the state level A is kind of one of one of those ideas that's just ridiculous on the face of it.
Steve Hsu: Yeah, so I, I never believed in it. I always thought at the end, when push comes to shove it, it becomes a matter of pure power. Pure coercive, violent military power.

Now I, I guess to state more fully my view on international law and the quote, so-called rules-based order. So typical boomer NeoCon or boomer Western analyst will always couch things in the following way like, oh, we have this really great rules based order. It's good for everyone.

And these revisionist powers like Putin's Russia and Xi Jinping's China, these are revisionist powers who wanna overthrow our really nice rules-based order and. You know, without saying that I am an endorser of Putin's regime or Xi Jinping's regime, I would just say that, that, way of phrasing things is just, I think, kind of very stupid because it, it's pretty clear that when it wants to, the US doesn't give a shit about any rules and just enforces its own dict.

Trump is an extreme case of this like, like a Trump is maybe the poster child, like you might argue that, oh, all the non-Trump presidencies or non-Trump administrations have a reasonably strong commitment to the rule of law. And it's only Trump that's the outlier. But you know, you go back to the Iraq war, that was probably illegal.

Right?

Alf: And that caused like a million, well, some of, some of the stuff that I guess Reagan was doing in Central America or whatever.

Steve Hsu: Yeah or even Bush like grabbing Noriega, which is probably the most closest analog to which has happened to Maduro. So I think the right way to say this is that of course there are two phases. One is the Cold War phase, and then one is the post Cold War phase where the US is the sole hyper power, which, which, you know, maybe that phase now has ended with the rise of China. It persisted for a good 20 plus years. In all of those phases, it was definitely useful for the US to con you know, weak-minded jurist of international law or just random people writing editorials and newspapers or people in the street.
You know, you always want people to think that there is a just and fair system in place. Of course, secretly, you know, it's run by the powers that be, but it's better if people think of it as mostly fair operates pretty well. It's in all our best interest because then they're not fighting the system. They're accepting the system, and you don't have to expend your scarce resources suppressing these people or controlling them in some violent way. So it's better just to con them into thinking that this rules-based order is good and it's pretty fair and all the nations are gonna prosper if they just play by the rules. So clearly I think that was what we were trying to do, what the US Empire was trying to do and was largely successful, I think just because most people are not ever reasoning from first principles and don't have, you know, deep command of the facts, you know, and how the world works. So, so you can pull stuff over on most of the world, including, you know, professors at law schools whose specialty is quote, international law and even foreign policy experts, you know, et cetera.

You can definitely pull the wool over those people's eyes. And every now and then when the US is thinking of doing something like we're gonna go get Noriega. We're gonna go invade Panama, get Noriega, or Oh, we're gonna pretend that there's weapons of mass destruction in Iraq, and then we're gonna invade Iraq, right?

Without UN Security Council approval or what, you know, whatever thing it is that the US strategists feel we really want to do, we really need to do it. There will always be at minimum a kind of you know, cost benefit analysis where someone within the administration will say, oh, but you know, this will undermine the perception of the rest of the world, that there's something called rule of law, or that the United Nations means something.

Right? The way I view it is that when the Imperial Hegemon does something. It's doing a kind of cost benefit analysis where if it, sort of shows that it can do things that totally violate the rules, but only it can. And it's just because it's an exercise of raw power it has to think about what the downstream consequences of that action are and you can have a legitimate, sincere debate among people within the US system. You know, who might not believe at all in the rule of law except as you know, a useful tool for control, like a totally fake system that lets the US control the world without resorting to violence all the time.

Even if they do have that cynical view of the rule of law system, international law, they still don't wanna make it completely obvious to everyone that, that the whole thing is a sham because enough people believe in it, it becomes normative that it, it does a lot of work for the hegemon. Right? So some people, like on X, when I said I gave, I tweeted out about Maduro's kidnapping as being like, just yet the latest example of like rule of law and rules-based order, international rules-based order is a total sham and, and you're, it's just theatrics for the dimwitted.

You know, I say things like that and some people got upset. But you know, I think that most serious foreign policy strategists do understand this point. And they, they might argue that the US should conform to the rules-based order more rather than less. But they're doing that for selfish reasons 'cause they think that. It is better in the long run for the US to conform to the rural space order, not because they care necessarily about the utility of these other countries but just because, oh, it's a useful fiction for us to have around. So that, that's my view of all the rules based order in international law.

Alf: I guess one final kind of thing to add onto that, that just came to mind was all this talk at the moment over Greenland. How serious do you think the Trump administration's designs on Greenland are? And if they do make some kind of move, whatever that may be, what kind of consequences do you think that might have if it's possible to tell at this stage? Yeah.

Steve Hsu: I don't know how serious they are about Greenland. It, it does seem like they have a, a kind of 10 year, like I, I think, like even if you were a very strong American primacy and all you care about is America needs to strengthen itself for the, you know, continued long-term competition with China.
And you say, yes, it would be good if we controlled Greenland, right? You can argue whether that's really so important or not, but let's suppose you're convinced that it is. But surely there's a way to work this out with the Danes in such a way that it doesn't completely rupture NATO and, you know, create yet another example of the rules-based system being completely flouted by the United States.

You know, there seems to be a way to do this with finesse. That, but the Trump administration lacks, that's how I would say it. this is kind of related to the fact that, If you watch the recent press conferences that Trump has been giving both about Maduro, but just in general he clearly is undergoing some kind of cognitive decline.

I think he's clearly less sharp than Trump 1.0 you know, in his first term, and that Trump was much less sharp than Trump when he was a younger man, like 40 years old or something like that. So, I'm, I'm not an anti-Trump kind of mad King kind of person, but there is a little element of this going on. There is definitely some mad kings I think going on with Trump.

Now what's very amusing for people who have the sort of, what I call the Normy boomer view of how. government, and sovereignty work like say in the eu. You'll just notice like all the EU people are afraid to like criticize Trump over Maduro. Like all these British politicians when called on the carpet about rule of law, like they, they've been banging on about international rules-based system and international law. Like, 'cause they like it because like Russia, Russia violated that in invading Ukraine. So that's like a very important talking point for these British guys.

But now when Trump is doing it, they don't really know what to say. It's like they, their, their heads are exploding and they, and occasionally, like the interviewers are actually good enough to like actually forced the British politicians to confront this. And they, it's like their heads are exploding.
But like Merz Merz just said, oh, it's complicated. And like, and like Callis, Callis doesn't know what to say. Like, I think someone asked her point blank like, well, whoa, what happen if the US just took Greenland? She's like, oh, you know, we don't comment on diplomacy because, you know, 'cause diplomacy is complicated and it's happening in real time.

So I, I just don't think those guys know what to say or do. Some of them probably thought this wasn't an imperial system and everything was on the up and up. And they're, they're like suddenly like shocked to realize, no, it is an imperial system and you're the subjects. So some people are probably like that.
Some of them are just controlled, you know, probably CIA, you know, people, people that were allowed to rise to these high positions within the EU because US Intelligence Services had compromising information about them and they could be controlled. And so they're just controlled. As ridiculous as it makes them sound, they're gonna try to avoid saying anything that makes their American handlers angry.

Alf: I think to finish on that note, I think it's been a fantastic recap of 2025 and the first few days of 2026 as eventful as been. Thank you so much for coming on the show, Steve, and I'm sure we'll do something like this again and I'll be very glad to do it.

Steve Hsu: Yeah, great to be with you again, Alf. Have a great 2026.
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