Edward Fishman

Thank you, Tim. And thank you all for being here. Uh, this is my first time at this forum, and I will say, as someone who goes to, you know, different industry conferences, this is definitely the best setting, uh, of, of any that I've been to. So I'm grateful for the organizers for having me here at Broadmoor.

So what I wanna talk to you about for the next half hour s- or so is what I call the age of economic warfare, in which sanctions, tariffs, industrial policy have become the primary way that great powers compete with one another. And this process has been going on now for a couple decades, but it's now gotten to a point where it's happening at such a large rate that it's reshaping the global economy itself.

But before that, it's important to note that sanctions have always been part of the way that countries compete with one another. If you go back to the 1990s, there were sanctions on Saddam Hussein's Iraq. Does anyone here know how those sanctions actually worked? They were through a multinational naval blockade. So ships from over twenty countries, commanded by an American admiral, patrolled the Per- Persian Gulf twenty four/seven. And any time they saw a tanker that they thought might be carrying Iraqi oil, they would actually try to intercept it.

Well, today, sanctions look quite a bit different. All it takes is a signature from President Trump in the Oval Office to impose devastating economic harm on any other country in the world. And that's because something else happened in the 1990s that made economic warfare more potent, and that was the creation of choke points. Hyperglobalization created these parts of the global economy where one country has a dominant position, and there are few, if any, substitutes. So obviously, the US dollar, which you see on the screen, it's used in ninety percent of all foreign exchange transactions. Nvidia's chips, eighty-five percent market share in AI chips. And then, of course, as we all seen, and this is a mining conference, rare earth minerals, China refines ninety percent of the global supply.

And so the critical difference is, when in the '90s we needed to actually do a multinational naval blockade to stop Iran from selling oil on the global marketplace, today, the US can just threaten refineries from being cut off from the dollar to try to get them to stop buying oil from Iran or Venezuela. And China can just threaten to cut us off from rare earth minerals to coerce us. And so what's happened is that the threshold, the political threshold for deploying hard-hitting economic warfare has gone significantly down because no longer do you actually need to use naval blockades and military force, whereas the impact has simultaneously gone up.

And so I wanna walk you through a little bit of the history because I think it's important context for what's happening today. The origin of this age of economic warfare is really in the mid-aughts. So I'll take you back to the year two thousand and four, maybe some of you remember it, when George W. Bush was ru- running against re-election-- running for re-election against John Kerry. The US was fighting two wars at the time, one in Iraq, the other in Afghanistan, neither of which was going particularly well. And the war in Iraq ostensibly was launched to get rid of Iraq's nuclear weapons program. And yet, right when Bush was re-elected in two thousand and four, the Iraq Survey Group came out and said that Iraq actually was not developing nuclear weapons.

And that put Bush in a very awkward position because at the same time, the country right next to Iraq that was bigger, more powerful than Iraq, namely Iran, was actually building an industrial-scale nuclear program. And so it put Bush in a terribly awkward position. He had just invaded Iraq to try to get rid of a nuclear program that didn't exist, whereas the country right next door actually was building an industrial-scale nuclear program.

And so there's this press conference a couple months after Bush is re-elected in December, I guess one month after he's re-elected, where he's asked, "Well, why don't you at least try to sanction Iran?" And he says, "We've sanctioned ourselves out of influence with Iran. We don't have much leverage with the Iranians right now." And basically, what he was saying was, we had a trade embargo on Iran dating back to the '90s. The United States didn't buy anything from Iran. We didn't sell anything to Iran. And so the only sort of vision for how you can increase pressure was to do what we did against Iraq in the '90s, a, a naval blockade. But there was no political will for doing this. And so it kinda felt like the United States was out of options.

But when Bush said this, a member of his team, the gentleman on the screen, Stuart Levey, was watching. And Stuart was the first Treasury Department Under Secretary for Terrorism and Financial Intelligence. His job was to do sanctions. And he heard Bush say that sanctions basically had no role against Iran, and he took it out as a personal challenge. He said, "Is there some way that I could potentially gain leverage over the Iranians?"

And one day, in early 2006, he was at a hotel in Bahrain flipping through a copy of the Financial Times when he came across an article about a Swiss bank that had cut ties with Iran of its own volition. And a light bulb went off for Stuart Levey when he realizes, "Maybe it's okay if I can't get the British government or the German government or the Chinese government to sanction Iran. Maybe all I need to do is go meet with bankers in London and Singapore, Frankfurt, Dubai, bring with me dossiers of declassified intelligence showing how their banks, oftentimes unwittingly, were being used to funnel money into Iran's nuclear program and persuade nine out of ten of them to cut ties with Iran of their own volition." And for the one out of ten bankers who were like, you know, "Thanks, Mr. Levey, you can be on your way," he could threaten to cut them off from the US dollar. He could say, "Either you continue doing business with Iran or you continue using the dollar, but you can't do both."

And I was, uh, part of the team that implemented those sanctions. It wasn't always the most pleasant, uh, conversations, but it generally worked extremely well. And it, it, the, the sort of proof is in the pudding here. Uh, when the United States starts doing those, uh, types of secondary sanctions against Iranian oil sales, so going and actually threatening refineries with being cut off from the dollar unless they reduce their purchases of Iranian oil, their oil exports cratered. They fell from about two and a half million barrels a day at the beginning of the campaign, down to about one million barrels a day in twenty thirteen. And in lockstep, Iran's economy falls into a substantial recession, the biggest recession that they had had in several decades.

And sometimes in foreign policy, you need to have a good policy, but you also need to get lucky. And this recession in Iran just so happens to coincide with a presidential election in June of twenty thirteen, when Iranian President Mahmoud Ahmadinejad, who had been a big advocate of the nuclear program, was term-limited, and so there was an open presidential contest. And two weeks before that election, the gentleman on the screen, Hassan Rouhani, who was not really on anyone's radar, he was a total dark horse candidate in an eight-candidate field, in the one publicly televised debate of the campaign says, "The big mistake we did was not to negotiate with the West on our nuclear program and to have all these sanctions be imposed on us." And within two weeks, this guy goes from polling in the low single digits to winning fifty-two percent of the vote in an eight-candidate race. And so even though Iran is a dictatorship and the supreme leader ultimately controls decisions on the nuclear program, he saw over half of his voting age population vote for nuclear diplomacy, and we wind up getting the, a n- a nuclear deal with Iran.

So that first nuclear deal is signed on November twenty-fourth, twenty thirteen. I remember it viscerally because, again, I was working on the sanctions against Iran. And I'll admit that while the hope of the policy was to use economic pressure to get Iran to g- to, uh, concede to a nuclear deal, we weren't always sure it was gonna work. So this was an extreme, you know, high point in confidence that sanctions actually might have efficacy.

On that very same day, November twenty-fourth, twenty thirteen, when we signed the JPOA with Iran, it was the first time that you had tens of thousands of Ukrainians flood the Maidan in Kiev for the first time. And of course, these protests start the process that a couple months later led to Russia invading Ukraine and annexing Crimea in February and March of twenty fourteen. The reason I juxtaposed those two events is that as US officials scrambled to the White House Situation Room to try to figure out what to do about Russia's invasion of Ukraine, they were fresh off this success of sanctions against Iran. And so it kind of logically made sense. Well, maybe we should try economic pressure against Russia.

The issue, of course, though, was that Russia was a much larger economy than Iran. In twenty fourteen, they were the eighth-largest economy in the world. They were the world's biggest producer of fossil fuels, um, substantially larger than the United States at the time, although of course, the shale revolution has since, uh, reversed that. And so there were real concerns that if we just kind of used the Iran playbook against Russia, we might cause so much collateral damage that it would hurt us just as much as Russia.

And so the solution that US officials came up with was what was called scalpel-like sanctions. It was not to send the Russian economy into an immediate crisis, but to try to make it impossible for them to grow over time. We did that by cutting off their access to capital markets, making it impossible for them to borrow money in, uh, in the Western markets, and also cutting them off from key technologies that they needed to exploit their next generation of hydrocarbon resources. The idea was, well, if they can't raise debt, and they can't refinance their existing debt, and they had about seven hundred billion dollars worth of dollar and euro-denominated debt at the time, that they would be forced, Russian companies, to take cash from their balance sheet, pay down that debt, they couldn't invest in the future.

But a key point about economic warfare is that government policy is always just one part of the equation, and market conditions sometimes can have just as much of an impact. And what happened in the second half of twenty fourteen is that global oil prices collapsed. They fell from over a hundred dollars a barrel down to about fifty dollars a barrel in the matter of a few months. And so all of a sudden, these Russian companies who thought that they were gonna pay down their debt with oil proceeds didn't have the money to do so. The Russian government actually had to bail out Rosneft, the biggest, uh, state-owned oil company in Russia. And Russia was thrust into an immense economic crisis. Uh, this is actually almost forgotten by history, but in the winter of twenty fourteen, twenty fifteen, Russia's economy is contracting at an annualized rate of about ten percent. So really in free fall, um, worse even than Iran was suffering in the lead-up to the nuclear deal.

But instead of pressing our advantage, Western leaders panicked, and they said, "Hold on a second. We didn't want Russia to have an economic crisis." Actually, Pr- uh, French President François Hollande publicly said, "If Russia is in a crisis, that's not necessarily good for Europe. I think the sanctions must now stop." So basically, European leaders looked at this situation and said, "Whoa, we have bitten off more than we can chew. We need to find a way to freeze the sanctions."

And so in February, Hollande, the French president, and Angela Merkel, the German chancellor, hop on a flight to Minsk, the capital of Belarus, and sit in a hotel room with Petro Poroshenko, the Ukrainian president, and Vladimir Putin for eighteen hours negotiating a ceasefire called Minsk II. It was not worth the paper it was written on. It was actually being violated by Russia as it was being signed. The Russians took another big city, uh, like a, a strategic city in Ukraine called Debaltseve a week after it was signed. But I think ultimately the Europeans just wanted to find a way to freeze the conflict. And, uh, even a couple of months later, after this ceasefire, Germany signs the Nord Stream II pipeline deal with Russia.

And so I think Putin comes out of this episode in twenty fourteen, twenty fifteen with two lessons, both of which wind up being very important. The first lesson was, goodness, the West has tremendous power over my economy, and that makes me feel vulnerable. But lesson two, which I think was just as consequential, is that these decadent democracies in the West, they lack the stomach to prosecute a long-term economic war against me.

And that second lesson, sort of doubting the political will of the West, would have really important consequences six years later when Russia masses over a hundred thousand troops around Ukraine's border. The US has a chance at this point to potentially deter a Russian invasion of Ukraine, and in fact, President Biden threatens Putin with the most severe sanctions that have ever been imposed if he invades Ukraine, thinking that that might change his mind. But of course, Putin does not believe Biden's threat. You know, people often say, "Well, we can't get in Vladimir Putin's head. We don't know whether it was even possible to deter him. Maybe he was just determined to invade Ukraine, come what may." And to a certain extent, that's true. But there is one thing we know for certain. Putin did not believe Biden's threat.

And the way we know that is that the key move that Russia took between twenty fifteen and twenty twenty two to try to sanctions-proof their economy was to amass large amounts of central bank reserves. Six hundred and thirty billion worth of central bank reserves on the eve of the twenty twenty two invasion. And when that invasion happened, fully half of those reserves were sitting in Western bank accounts just waiting for the US and the European Union to, to freeze them. They're sitting in Belgium and France and the United States, and that's what happened. Forty-eight hours after the war starts, the US and the EU sanction Russia's central bank and actually wind up repurposing a lot of those central bank reserves to fund the Ukrainian war effort.

And so you have to ask yourself, if Putin actually believed Biden's threat that invading Ukraine was gonna lead to the most severe sanctions that have ever been imposed, would he have left half of his war chest exposed to sanctions? Probably not. And of course, since then, and you would know this extremely well, central banks have learned their lesson. And we've seen a doubling on annual gold buying by central banks since twenty twenty-two, which is a big reason that prices have driven up so much since then.

But of course, probably the most important economic war being fought today is between the US and China. This starts during Trump's first term, where the gentleman on the screen, Bob Lighthizer, basically thinks that China had been fighting an economic war against the United States for decades, and that the United States just hadn't done anything about it. They'd been stealing American intellectual property. They'd been, um, uh, you know, having unequal market access, but there hadn't been a significant way to respond. You know, Lighthizer, his tool of choice was tariffs, but for a lot of these problems with China, particularly around their technology sector, tariffs really wouldn't do very much. You know, companies like Huawei and ZTE at the time were wiring the entire globe with their telecommunications infrastructure, and they were... The United States government was kind of scrambling around to think about a way to potentially stop it.

Well, they get a clue in twenty eighteen when the gentleman on the screen, Wilbur Ross, is frustrated with ZTE because they'd violated a settlement that they had with the US government. He asks his team, "What is the harshest thing that we could potentially do to this company, ZTE?" And this team at the Commerce Department comes to him, and they says, "We can do a denial order. That will basically mean that they're fully cut off from all technology purchases in the West." They impose that denial order on April sixteenth, twenty eighteen, and within a couple weeks, ZTE comes out and says that the operating activities of the company have ceased. So within just a few weeks, by virtue of being cut off from Qualcomm chips and Intel processors and the Google Android operating system, one of the largest technology companies in China with over a hundred thousand employees cannot produce any of their products. They're totally paralyzed by these, these export controls.

It's such a crisis that Xi Jinping picks up the phone, calls Donald Trump, and begs him for a reprieve. Trump ultimately agrees, but this winds up being another kind of light bulb moment for the United States, that it can use technology and semiconductors as a choke point in much the same way that we use finance and the dollar as a choke point. The US eventually uses this same type of export control strategy on Huawei, putting export controls in place against the largest technology company in China.

And of course, while China's biggest tech companies are being cut off from Silicon Valley, China doesn't just se-- stand pat. They start saying, "Well, what can we do to defend ourselves?" And in twenty eighteen, shortly after that ZTE crisis, China's Ministry of Science and Technology publishes a series of thirty-five essays titled What Are Our Choke Points? It's actually where I got the title, uh, for my book, Choke Points. The idea was to try to say, "What are the choke points that make us vulnerable to foreign economic warfare? What are the choke points we can use to potentially, uh, fight back when we're victimized by countries like the United States?" Over the next several years, they also build the legal machinery they need to do sanctions and export controls and tariffs of their own.

And then, of course, we see them put this to the test, uh, in April of last year when President Trump on Liberation Day imposes massive tariffs on the whole world, eventually tariffs of over a hundred percent on China. China retaliates not just with matching tariffs, but with export controls on rare earth metals. And those export controls have a similar immediate impact on the US economy to the export controls on ZTE. Uh, within a few weeks, you have companies like Ford say that they have to idle factories that produce the Explorer SUV in Chicago. You have Raytheon scouring the globe looking for alternative supplies of rare earth metals for their Tomahawk cruise missiles. This is a crisis and wake-up call for the US government on par with the crisis and wake-up call that China experienced in twenty eighteen.

And so where does that all leave us today? We really have these two major forces that are reshaping the global economy, and both of them, the mining industry is at the center of them. The first is an economic arms race in which countries all over the world are looking for ways that they can exploit choke points under their control to coerce other countries. The second is what I call the scramble for economic security, which is basically the inverse, where countries say, "Well, what are the, the choke points that make us vulnerable, and how do we defend ourselves often with state support and industrial policy?"

So in the economic arms race, um, you, you see it all around us. You have China's export controls on rare earth metals. They've also done export controls on, you know, minerals like gallium and germanium, um, and antimony. Of course, Iran's closure of the Strait of Hormuz is the most important act of economic warfare we've seen this year, closing off the world's most important energy choke point and choke points for other commodities like sulfur, which is critical, uh, to produce copper. And even the EU and Canada, you know, America's traditional allies, have been searching around for ways that they can potentially use choke points at their disposal.

But I think even more important probably for the mining industry is this scramble for economic security because this is really where geopolitics starts deeply affecting business and investment decisions. Um, in China, they've obviously had major efforts to get off the US dollar. A big way they've done that is through creating alternative payment systems. They have the cross-border interbank payment system or CIPS that they've been trying to scale up so that they aren't dependent on cross-border dollar settlement. One of the most remarkable statistics is that China is the world's biggest trading power by far, and yet only thirty percent of its own trade is settled in RMB. And so they still are very vulnerable to dollar sanctions. You could also classify, um, central bank gold buying as part of the scramble for economic security.

In the United States, the big story of the last year has been investments in critical minerals. The US government has made commitments of about ten billion dollars between loans and equity in critical minerals projects with the goal of breaking China's, uh, choke hold over this sector. Uh, the US government also has Project Volt trying to stockpile, uh, critical minerals. So this is clearly a major, uh, frontier of scram-- of economic security. And then Canada, um, where I just was last week, the big story there is how do we find ways to export our commodities to markets outside of the United States? This is why there's such an emphasis right now on building the West Coast oil pipeline so that Canada can go from selling ninety-five or ninety percent of its oil to the US to a substantially lower amount.

So one final sort of point I wanna make before kinda getting zooming out and providing a framework for the future. I'm often asked, you know, how much of this is just a Trump story? And obviously, if you're a business and you're making a... you know, you're not just making investments over a two or four-year horizon. And it is true that in some ways, Trump is different. You know, he favors tariffs over sanctions. He targets, uh, adversaries and allies, and he acts unilaterally, and those all have really important consequences and make him different from, uh, from previous presidents. But by the si-same token, and I think this is really important, Trump is also part of a broader trend. Every single US president in the twenty-first century, from George W.

Bush to Barack Obama to Trump's first term to Biden, has imposed sanctions at roughly twice the rate of their predecessor. And since twenty nineteen, this trend has gone global. According to the IMF, global trade restrictions have actually tripled since twenty nineteen. So you just see more and more and more, exponentially more economic warfare everywhere around the globe.

And look, I think that individuals do matter. The people around the situation room, uh, the table in the situation room do matter. But at the same time, when you see a trend like this, you have to start looking for a structural cause. It can't just be that Barack Obama and Donald Trump disagree on everything except for the fact that sanctions are great. There has to be some underlying reason why economic warfare is proliferating.

And so what explains this trend? The way that I sort of at least attempt to try to encapsulate what's happening, which I think hopefully will provide a window into where things are headed, is what I call the geoeconomic impossible trinity, in which you have these three factors: economic interdependence, economic security, and geopolitical competition, in which amongst any group of states, you can only have two coexist at the same time, but not all three. So I'll quickly explain.

So in the Cold War era, of course, you have intense geopolitical competition between the West and the Soviet Union. But there's virtually no economic interdependence. We didn't rely on the Soviet Union, uh, for our economy. They didn't rely on the dollar for theirs. And so what does that mean? Even though we are at intense geopolitical competition because there's no economic interdependence, we still feel a sense of economic security. We're not worried about the Soviet Union imposing sanctions on us, and they're not worried a-of us imposing sanctions on them.

Fast-forward to the hyperglobalization era, the nineteen-nineties. By then, geopolitical competition no longer exists, right? At the end of the Cold War in the US, we start viewing Russia and China more as our potential friends than our adversaries. We actually expend huge amounts of time, resources, political capital into bringing Russia and China into the international economic system. And so because there's no geopolitical competition, we feel free to embrace economic interdependence without losing our sense of economic security, right?

When US businesses became incredibly dependent on China for inputs, they did so because it made economic sense, and they weren't worried about China cutting off their access, right? When China took their export revenues and plowed them into US treasuries and other US equities and bonds, they were not worried about being sanctioned by the United States. These were economically rational decisions to make in a circumstance where there was very little geopolitical competition.

But where are we today? Economic interdependence still persists. You know, China is still top three US trading partner. We're still deeply interdependent at a global level, and yet geopolitical competition has come back with a vengeance. Right? We are at, us-- the United States and China, despite the current détente, which we can talk about, are still deeply at each other's throats. The U- uh, Europe and Russia, at each other's throats, right? You have drones, uh, Russian drones that are threatening commercial airports in Europe on a regular basis.

And so what does that mean? It means that we've lost our sense of economic security. And when I say we, it's definitely true of the United States, where, you know, the whole reason that we are pouring all this money into critical minerals projects is because we don't feel comfortable relying on China for critical minerals, right? Um, but it's also true in every other country, right? Canada, I mentioned, uh, very focused on economic security. Japan now has a cabinet minister for economic security. The EU has its own economic security strategy, and China, you can view basically all of their efforts to indigenize their technology sector, um, uh, you know, to get off the dollar. This is all sort of a quest to provide China with economic security.

So before I open it up to, to questions, I just wanted to end with, um, sort of a, a reflection on what does this mean for business? Because obviously, many of you are either at mining companies or at financial firms that are providing services to the mining industry, and I wanna, uh, sort of maybe situate where business is in this whole story. One of the critical things is that economic warfare is very different from other types of statecraft, in that the government sets the policies, but companies actually carry them out, right? Even with finance, there's not a button in the US government that just freezes another company's assets, right? The US government puts someone on a sanctions list, and then it's up to banks to actually freeze the assets themselves.

And so what does this mean? It means that companies are instruments of policy. And in recent years, the finance sector, uh, and the tech sectors have been conscripted. They've really been brought under, um, sort of, uh, brought into the fray of economic warfare. Um, and I think that what's happening, and particularly a big story of the last year, has been that, that the mining sector right now is at the center of this. The mining sector is used as a weapon, uh, China uses it as, as a weapon, and it's also part of economic security. It's, uh, you know, a sector that the United States government is investing in.

I think an important point, though, is that companies are also agents, right? It's not just the US government telling companies what to do. There has to be a two-way conversation. And I can say when I was in the US government, I was always very happy when companies would come to my office and tell me about, you know, how a particular geopolitical conflict might affect their business. You can't expect the government to know exactly. And so I think that it's imperative, even more than ever, for businesses to actually educate public sector about how their business operates and how different policy tools might work.

Um, I think another important point, I mentioned economic security kinda being the watchword today. We don't have an agreed definition of economic security, right? You think about even with, with rare earths, right? China, we all know, refines ninety percent of the global supply. Well, does economic security in rare earths mean that China, we d- don't depend on China at all? Do we have to bring that down to zero? Or is fifty percent dependence acceptable, right? These are types of questions that policymakers are grappling with, where we actually need the mining sector to provide insight into what this economic security means, because then it gives government policy targets that are potentially realizable, right? I've been asked a lot, "How are we doing in terms of breaking China's choke point?" Well, if the goal is to depend zero percent on China, we're not doing very well. But if the goal is to get a, a head start, you know, uh, it looks, um, a lot better.

And then finally, all of this economic warfare is leading to a process of geoeconomic fragmentation, right? We're moving from a globalized world economy to one where it looks like at, you know, at the very least, there'll be two blocks. We may have more than two blocks, depending on where the United States plays in this equation. Most of the time, you talk to businesses, and they say, "Fragmentation is a huge risk to my business because there's so much uncertainty. Um, we don't know, um, what's gonna happen with different policies." Of course, fragmentation leads to higher inflation, higher energy costs, potentially tighter monetary policy. For a lot of reasons, this is a business risk that everyone has to confront.

But I think it's important to note that geoeconomic fragmentation is also a business opportunity for certain industries, right? If you look at the mining industry, if you're a gold miner, geoeconomic fragmentation has been a tailwind for your business, right? It's been a big reason why gold prices have been soaring, uh, in the last several years. If you are in the copper industry, geoeconomic fragmentation is also a, a tailwind as we are in this AI race with China, trying to build out data centers, trying to rapidly build out our electrified economy. And so I think that the key point here is to understand how this process of economic warfare and geoeconomic fragmentation affects your business and then to make decisions about where you think the puck is going. Because I think it doesn't just have to be a risk that you manage, it can also actually be an opportunity that you seize. So with that, I will open things up to questions.

Yeah, uh, two questions, please. Quick one and a other. Uh, how long have you been with CFR? And second of all, uh, some years ago, maybe fifteen, twenty, there were certain hotel interests in this country that had interests in Moscow, uh, with Putin. Would that event of fifteen years ago be the reason why the US has been so recalcitrant in helping Ukraine?

So I've been with CFR, uh, since the beginning of the year. Um, and look, I think the US-Russia antagonism has much deeper roots than that. I think, you know, the... it really stems from the fact that Putin was not happy with the post-Cold War settlement and that he did seek to try to expand Russian power and didn't like the fact that he had democracy encroaching on his borders. I think something that's often forgotten in the sort of saga of US-Russia relations is that Russia lashes out against Ukraine, not when it looks like Ukraine is gonna join NATO. Twenty thirteen, twenty fourteen, there was very little prospect of Ukraine joining NATO. It was when Ukraine was thinking about an association agreement with the EU. It was about Ukraine potentially moving in a more democratic, capitalist direction. I think Putin had always thought that if you had a, a, a country like Ukraine with so many similar cultural ties to Russia, similar language, you have many Russian speakers in Ukraine, that was democratic, free, open press, et cetera, that that would be a fundamental risk to his rule, and I think that's why he lashed out against Ukraine.

If I may ask a question as we move on. E-eighty percent of the attendees here are Canadian citizens or resident in Canada. The Trump administration seems to have been unnecessarily antagonistic and hostile to Canada with the tariffs, and we've seen Canada start to drift into a different orbit. How's that gonna play for us if Canada drifts further into a bloc that's more aligned with China and Europe than what we've traditionally considered the West and Europe?

It's a really important, uh, question, Tim. And I, and I should have mentioned, you know, if we talk about breaking our vulnerability to China on critical minerals, right? If you were thinking about what could the US do? Well, what, what are the, what are the assets the United States has, right? The US is the world's largest economy. We have the world's deepest capital markets. We have a government that right now has political will to invest in minerals, right? But guess what we don't have? We don't have the same mining expertise that our allies in Canada have. We don't have the same mining industry and expertise that our friends in Australia have, right? I think the strategy that might work is actually locking arms with our allies, building a bloc that then could potentially actually prov-- you know, provide us some economic security. I think if we are going to antagonize Canada, it's going to be virtually impossible for us to get out of this dependence from China. We can't do it. We, as in the United States, cannot do it without the Canadians.

So there's a question, well, what's gonna happen? I'm still, despite it all, optimistic on the future of US-Canada relations because a key point here is that despite Trump's rhetoric about we don't depend on Canada for anything, right? We don't need their timber, we don't need their fuel. It's actually not true, right? I mean, there's a reason why the US has exempted things like potash and oil and gas from tariffs, because we actually reques-- we need the, these, uh, these things from Canada. We don't get them, um, fr-from anywhere else. And so I'm still hopeful that despite the clear antagonizin-antagonism between Trump and Carney, that we will eventually get to a better place between the US and Canada.

At the same time, as an American, if Canada does wind up diversifying its economy a little bit, right? I think they've gone from seventy percent of their exports to the US to last year be sixty-seven percent. Carney wants to bring that down to sixty percent. I don't think that that's necessarily a bad thing for US-Canada relations. I think a Canada that has a little bit more independence may actually be a better ally for the United States.

Super. We've got time for another question. Willem? Yeah. Thank you. Um, y-y-you, you mentioned gold [laughs] , but that was only in two seconds. Could you elaborate on the role of gold in the de-dollarization?

Yeah, totally. So oftentimes we hear of the dollar as the global reserve currency, which is true. But I actually think that that's not... kind of understates what the dollar's role is in the global economy, right? It's the default currency across all use cases of money. It's the default medium of exchange. It's how countries pay for things across borders. It's the default unit of account. It's how prices are set, uh, for commodities, et cetera. And it's the default store of value, right? Generally speaking, if you have excess wealth, you put it in US equity markets, US bond markets, right?

My own view is that it's almost impossible for one commodity or one currency to displace the dollar across all three of those dimensions. I think what's more likely is that you have erosion of different sort of, uh, currencies and commodities in different aspects, right? So as a medium of exchange, maybe it becomes stable coins, maybe it becomes, uh, you know, China's, uh, RMB if they can scale up some of their, their RMB payments mechanisms that gradually chips away the dollar. Maybe it's the euro. Certainly, Christine Lagarde has aspirations to do that.

I think in store of value, the gold is right now the, the closest runner-up, right? I mean, gold has been where central banks have been putting their reserves. That's where they've been diversifying away from the dollar in the last few years. That's why, uh, if you count gold in sovereign reserves, the dollar share has actually dipped to a quite a low point, uh, because of, uh, the accumulation of gold. My own view is that's a structural, uh, fact, right? I, I would be very surprised if sometime in the next several years, central banks around the world say, "You know what? We're cool just accumulating Treasuries again." So I, I... y-you know, you all are, you know, living this on a daily basis. But my... at le-at least from my standpoint, I still see significant structural reasons for, for states, at least, for sovereigns to continue accumulating gold for at least the next decade.

Well, with that, we are out of time. Professor Fishman, thank you very much. That was a fantastic presentation, thoroughly enjoyable. Thank you for spending your time with us. My pleasure. [audience applauding]