Interview
“The British may not like the Americans, but they have no choice but to stand behind them”
On July 4, the United Kingdom will hold snap elections to elect a new parliament and a new government. Decades of economic stagnation in the United Kingdom have been accompanied by a political and social crisis exacerbated by the Brexit process and the rise of geopolitical tensions that began with its inclusion in the holy alliance against Russia.
On the other hand, there is something “unique” about British imperialism. London has long been the nerve center of global financial flows. In the aftermath of the 2008-9 financial crisis, the Gulf countries’ ties with British finance capital came to the fore, while in the 2010s a similar issue arose with China, with London becoming the most important focal point of the global renminbi trade in the West.
At the center of all these financial flows is the famous City of London, or simply The City, also known as the “Square Mile” in reference to its small size. The City, which has its own separate administrative and legal structure, is somehow involved in all the conspiracy theories about finance in the world, as it has always had a dark side.
Tony Norfield, author of The City: London and the Global Power of Finance (Verso, 2017), which focuses on the role of finance in the functioning of the City of London and British imperialism, strongly emphasizes that finance is an integral part of the capitalist world system and that it would be absurd to attempt to separate the two.
However, the City of London and finance also point to the specific nature of British imperialism, with the financial sector in particular playing a critical role in both British GDP and investment structure.
Norfield does not think it is possible for London to pursue a policy independent of Washington. In his view, even if the British wanted to do so, they are too weak to act separately from the US. The rise of China and the pivot of Asia and Latin America towards China, as well as Russia’s victory in Ukraine, are inevitable, Norfield believes, despite all British efforts to the contrary. Norfield writes about his thoughts on current affairs on his personal blog “Economics of Imperialism.”
Let me start with Britain’s role in global finance. The City of London is not well known in Turkey. But especially in the 2010s, City officials have developed deep ties with the AKP government. For example, Public-Private Partnership projects, which are often criticized in Turkey, were approved through Britain and the City of London in the same decade; even the legislation was taken from Britain. Can you tell us a little bit about what distinguishes the City of London from other financial centers and the importance of the City for British imperialism?
Yes, it’s a big topic, of course, but one thing you might remember is that in the middle of the financial crisis in 2008, there was a lot of discussion about interest rate swaps and the sheer volume of them. You know, if you look at how much they are technically involved in terms of hundreds or even thousands of billions of dollars worth of swaps.
What many people overlook is that the legal basis for these interest rate swaps is actually in English law. This may seem strange because not many swaps are done with people in Britain, but it reflects the fact that the British influence on finance is quite large. And this is really based on historical factors because the growth of the British empire, especially in the 19th century, even before that, meant that all kinds of commercial, maritime, transportation, insurance and trade relations, most of these were dominated by the British.
The British, for example, in an earlier period, were the biggest slave traders. So basically they played a very big role in international trade, partly because of their imperial ambitions. In the case of India, for example, they more or less closed down the Indian shipbuilding industry and the Indian shipping industry. Indians were able to build ships, sail ships and go from port to port. But what the British did was that they prevented ships from docking in colonial India unless it was a British port. So a large part of the shipping and shipbuilding industry in India closed down and was instead dominated by the British.
In insurance, marine insurance, Lloyd’s of London I think is the biggest marine insurance company in the world. And of course Lloyds is made up of wealthy individuals who are members. But it still reflects this historical factor, it’s a historical factor that continues today.
The multiple connections that the British have actually go back much further than the Americans. Even though the US is the largest economic power, obviously much larger than Britain, it is quite clear that the connections on which financial and business transactions can be built are very strong in the case of Britain and are actually more widespread than they are for the US.
So what happened? There are actually two phases. First, in the 19th century the City of London was a major financial center for the world economy, as I said, finance, shipping, insurance, insurance in general and trade, basically trade. One historian put it quite nicely and said that England was not the workshop of the world, it was the warehouse of the world. In other words, a lot of goods came in and were sent out again.
So Britain has a long history of being a kind of trading center and financial relationships were built on that basis. So, again, maritime insurance, trade, finance and things like that, and this was very important for the British.
So, even though the British economy in the 19th century had a deficit in commodities, the money that it made from insurance and the investment income from all its investments overseas meant that its current account was actually about 5% of GDP. So it had a huge deficit in trade but a huge surplus in investment income and various financial incomes, including insurance.
This was hit by the First World War of 1914-1918. As you know, this damaged world trade and meant that Britain was in a weaker economic position. In the inter-war period they tried to remedy this. Although they used the empire as a basis for doing that, it didn’t go very well.
Then, in the post-war period, the British were in a much weaker economic position, but they used their relationship with the US to continue to strengthen their financial dimension. So in the period immediately after the war, for example in the 1950s, you saw that trade financing was predominantly in British Pounds, not in US Dollars. Again, this seems a bit unusual because of the dominant economic position of the US, but that’s what happened. There was also, especially during the 1960s, the growth of the euro markets. The center of the euro markets was largely in London. The City of London was attracting foreign banks to come to London where they could do these transactions. This was because of the low regulations that existed in the City of London to circumvent local laws in the US that restricted the amount of interest that could be paid on a bank deposit.
European markets, for example, have very different regulations and the Bank of England and the City of London have much less regulation. So most of the big boom in international finance through the euro markets took place in London.
And despite the relative weakness of the UK economy, which was never in very good shape during this whole period, British finance used the US dollar, but it acted as a kind of financial trading instrument. So even today you see that the City of London, or the UK more generally, is not like that.
The City itself is a relatively small area. There’s also Canary Wharf and some other places within London. So geographically it’s not exactly a city, but the City of London, even after Brexit and despite the weakness of the British economy, is still the largest foreign exchange trading center in the world. It’s also one of the biggest financial derivatives trading venues between banks and their clients, like interest rate swaps and things like that.
The banks in the UK, not all of them are British banks of course, but the banks in the UK had the largest international links compared to other countries. And this again was creating stress. I emphasize how big the City is despite the relative weakness of the UK economy, certainly compared to the US, but also compared to a number of European countries.
And you know, they had a big role in setting regulations for the bank, for international agreements, for all sorts of things, because of this accumulation of expertise and because of this role that they played as an allied partner and accomplice with the US. That gave them a lot more freedom and influence than they would have had on their own as the British economy.
The City has a separate administrative structure alongside the British state apparatus. We hear some people in Turkey, some people close to the government, talk about London barons, London bankers trying to interfere in our domestic politics. Because the City of London is a kind of, you know, dark place, an ominous place for foreigners.
I think a lot of the discussion about this on the internet is completely wrong. The City of London has been given all sorts of privileges in terms of financial regulation, but it’s not as if it’s a separate power in its own right. This has been the policy of every government. It has been a deliberate policy of Conservative governments and Labour governments, particularly since the 1970s. To stimulate the financial sector, loosen regulations and allow the city to expand massively.
In 1979, exchange controls were relaxed. From 1986 or 87, I can’t remember, the so-called big boom happened. Then governments did not say, no, this is a bad idea, let’s change it. No, they continued it and they did more and more.
And under the Labor government in 1997, one of the biggest supporters of City was Gordon Brown, the Labour Chancellor of the Exchequer. He even ridiculously praised Lehman Brothers, as I mentioned in my book on the City. This was just a year or so before everything went to hell. This was a consistent British government policy.
So, okay, even though the Bank of England is a different institution, different governments, different policies, etc., it is completely wrong to portray the City as some kind of demon that sits indoors. This is a deliberate, precise and consistent part of British policy. And that’s because they make a lot of money out of it, or the British economy does.
And again, this was looking at the period when a former Labour government was in power. And they were actually praising all these jobs, big bonuses and a lot of tax revenues from tax revenues.
This is something that ironically the Brexit policy has messed up because it has been a factor in reducing the economic benefits for the City.
We’ll come to that. Okay, but I read an article in Politico yesterday and it said that the City has already won the elections because both Labour and the Conservatives have guaranteed how the City will function. But again, in your book you emphasize that all capitalist corporations carry out important financial operations. Where do you think the particular anger towards financial activities comes from? Could it be that the masses, especially the non-proletarian masses, are confronted with the capitalist structure, with the financial sector as one of its 1001 faces?
In general, there is a public opinion that looks at banks, the city, finance and things like that as a negative for the economy of the country. And this was a little bit less. During the boom years, so to speak, when everything looked ridiculously great, stock prices were soaring, all sorts of financial indicators looked good, there was a more popular view against the greed of bankers, that sort of thing. And of course, even young people earning millions of pounds, let alone big executives, were dealing with this sort of thing. It was an easy focus of resentment.
Then the financial crisis of 2008 and the bailout of the banks and things like that became a big thing and there was widespread dislike and hatred of bankers, that sort of thing. But what none of them could deny was that finance was an important factor for the British economy in terms of tax revenue, news and that sort of thing.
So there is a popular view against banking and finance, and it is very common among left radical people. But it’s a very simplistic view. Maybe I should not say that, but I think it’s a stupid view because it ignores the fact that the financial sector is a necessary element added to the functioning of capitalism.
As you mentioned, I talk about this in my book and I even give an example, let’s take Apple. Apple is a huge technical marvel of a company in the US. It also owns one of the biggest bond trading companies, right? It’s funny, I always thought Apple was all about consumer technology and stuff like that. No, they have a huge amount of financial derivatives deals.
It’s involved in a lot of bonds and it’s got a company called Braeburn. Right? Braeburn is a kind of Apple and it’s based in Nevada and a lot of people don’t know about it. They know about iPods and iPhones and Macs and things like that, but they do not really know about Braeburn.
Every big company, not just Apple, every big company has to have a finance arm in terms of dealing with currency risk, interest rate risk transactions and everything else. So you can not escape that. Every single company does it, technically an industrial company, a commercial company or whatever, has to do it. And this is a necessary, inevitable factor of capitalist markets.
So if you don’t like finance but you want capitalist markets, then there is a contradiction. In your view, these things inevitably arise from capitalist markets. So you can’t get around that. You have to do something about capitalist markets, if you don’t like capitalist finance. Otherwise you are on the losing side.
Yes, but related to the previous question, in the aftermath of the 2008 crisis and during the Brexit debate, attention was simultaneously drawn to the City of London’s evasion of EU regulations and to the hyperinflation of the financial sector in the UK and the relative decline in the competitiveness of the so-called productive sectors. Was this debate purely populist or was it an extension of real material class interests for Britain? I mean, there is some debate about industrial capital versus finance capital and so on.
I think this is again a misguided, ill-informed debate. Let me put it this way, there is no great distinction between an honest and wonderful industrial capitalist and an evil finance capitalist, because all these necessary links are there where you find, for example, an oil company like British Petroleum, BP, right? Yes, they do.
They will have a big treasury trading department because they deal with the ups and downs of oil prices, cash flows and all kinds of things. So every big industrial company necessarily has a financial aspect. True, technically they produce things or they are engaged in other things, but they have to do them.
But at the moment most of the world’s production takes place in a number of countries, particularly in Asia, where wages are relatively low and production costs are lower. And that means that the richer countries are focusing on having a monopoly position in the narrower industrial areas – specialized engineering and so on. Or they get involved in commercial power.
Let’s go back to Apple. They get everybody else to produce for them. And they rely on licensing and commercial monopolization to make their big profits. So they do not produce a lot. They outsource all the production elsewhere, but they still make a big profit because they can make big mark-ups.
So everybody else produces for them and they raise prices. It’s an extreme case, but it’s similar to what most of the rich capitalist countries do. So you see that in all these countries in general the share of manufacturing and industry is declining and instead the services sector is growing.
I mean, of course you need a service sector, don’t you? You cannot live in an economy with only manufacturing, mining or industry. But what happens is that the trading power of the rich countries is an important way for them to siphon value from the rest of the world. This is part of their parasitism on the world economy.
The financial dimension is also an important part of it. So this commercial parasitism and financial parasitism is an important part of the infrastructure of the rich powers that run the world economy. You know, they have a problem when the financial sector goes crazy and explodes, but when the post-crisis period comes and they want to do something else, they try to re-impose it in a different way.
Right now they are having even bigger problems with Russia, China and a number of countries trying to build something different. On top of all this, there is the parasitic system of domination over the world economy that the US, the British and other western powers have been in charge of for decades.
So you disagree with the claim that there is no capitalism anymore and that we are living in a new feudal world order?
No, that’s absurd. It is basically, if you want to call it that, imperialist capitalism, and in many ways a much more parasitic and corrupt capitalism.
You know, rather than having the good old 19th century concept of, you know, I’m a greedy capitalist, but at least I’m investing and producing and things like that. Right? No, what they are doing is they’re setting up a commercial monopolized system to control things and, you know, in the financial commercial sense, it means benefiting their producers as long as they still own them. But even if they don’t own the producers and they outsource the production to you, they want to make sure that the financial links and the commercial links are run by them and that all the big price increases happen for their benefit. That’s what happens, isn’t it?
Yes, I see. Now let’s talk a little bit about the Brexit discussions and this is also relevant. With Brexit, some of the Thatcherite Tory economists said that they wanted to make the UK a new Singapore, and you criticized that very harshly in one of your articles. But don’t you think that complaints about bureaucracy in the EU, Brussels’ attempts to regulate financial institutions, and Tory criticism of a move away from the free market, all of these things represent a bifurcation with capitalist institutions and ideas on the continent?
It’s always been a problem for the British because for a long time Europe seemed to be the main growth area of the world economy, not anymore but for a while it was. With the growth of the European economy and the growth of the EU, there was a big debate in Britain about whether to join the EU or not. Throughout the 1960s there was a lot of internal British debate: Should we join? Should we not join?
And they found that their previous imperial connections were not doing them much good economically. Most of Australia and New Zealand, for example, was one long railroad. The Canadian connections were not as strong. So basically it looked like Germany, France, Italy, Spain. These European countries were growing. Maybe we should have joined them.
The problem was, if the British did that, then would they still have a dominant position? That was always the problem and that was always the calculation they had to make.
In the early 1970s they finally decided: Yes, we have to do this. So they joined the European Economic Community. It made a lot of economic sense for them, but they were using their ties with other Europeans to put economic pressure on their own industries, which were in decline, and to have a competitive whip to improve them and put them in better shape, whereas before they had strong ties with the old empire, the Commonwealth, which gave them a privileged position, but it meant that they were no longer competitive in the rest of the world.
So the Conservative government in the early 1970s and the Labour governments afterwards tried to make the British economy more competitive so that it could compete a little bit more with the Europeans. But they had a big problem, even in the European context, of how to maintain your dominant position when you are no longer so dominant economically.
And they were very concerned about losing their political power. So that was why they didn’t want to join the European Union; or they joined the EU, but they didn’t want to join the new order of creating a single currency and having the euro, because that would be a step too far and it would mean that they would lose their influence. So they didn’t like to do that.
They were also afraid that it would weaken the City’s position and instead give more direct power to, for example, Germany, to the European Central Bank and things like that. So they didn’t like that and they wanted to step back from doing it.
There was always this tension, they wanted to have the connections. In fact, the City of London was doing most of the euro-related business in Europe, and the Europeans didn’t like that very much because the size of Frankfurt or Paris as an alternative financial center was relatively weak to do that compared to the size and power of the British financial system dealing with European finance.
You also mentioned in your Singapore article that during the Brexit debate some Londoners, particularly hedge funds and venture capital, were trying to separate the UK from the EU. But other institutions, some banks and pension funds, and asset managers were in favor of staying. How do you explain this phenomenon?
Brexit was a very stupid economic idea, completely stupid except in a few narrow dimensions. And that’s why you saw that the big companies didn’t make a big deal out of Brexit, because just over half of the population was in favor of Brexit. So they didn’t want to make a big deal out of it and piss off half of their customers. They didn’t want to talk too much about it.
But in the financial sector, for example, or in the business world, the people who were really in favor of Brexit were either hedge funds or venture capitalists, people like that who thought they could benefit from less regulation, lower wages and that sort of thing. So they had a more Brexit-oriented perspective. They also appealed to a more nationalist version which, frankly, most of the British working class supported. So it was British nationalism against a so-called European power that they didn’t like. We were going to be free, we were going to be able to do separate things and that sort of thing. It was a rather silly nationalist view and it actually undermined the social welfare aspects of the British working class. But the British working class generally supported this nationalist, anti-European view.
I’m not saying that Europeans are great progressives and that’s a negative thing from that perspective, but it was certainly a bit stupid from an economic point of view, and it opened the way for a more reactionary perspective that could be implemented by whatever government, in this case a Conservative government rather than a Labour government, because the trade unions, for example, were generally a bit more pro-European because they saw more positive social welfare events in Europe than were likely to happen outside Europe, outside the EU. So this was a reality.
And it was also an anti-immigration against EU migrants, undermining our living conditions and, you know, trying to get British welfare benefits and that kind of thing. That was the anti-immigration aspect of populism, it was anti-European stuff, which led to the British working class, not everybody but most of them, having an anti-EU view, which was the fuel for the Brexit view, which was linked to the anti-EU Nigel Farage type, UKIP type view.
But economically it’s a stupid thing, economically Brexit was a bad mistake. You know, you see the way the European Union is going, it’s not very progressive, it’s also dominated by the US and it’s doing stupid things.
So my position, to be honest, was to abstain. I thought that the European Union was bad and I thought that the great British alternative was bad. I mean, you know, I wouldn’t say that one was better than the other, but, you know, it was clearly absurd to have the view that there was a great British alternative.
Throughout 2010, the UK and the City of London became a hub for Chinese financial flows and in particular the renminbi. In turn, the UK joined the Belt and Road Initiative and the Asian Infrastructure Investment Bank, attracting Chinese investment to Britain despite the crisis. Did Brexit have anything to do with these developments, or was it just a coincidence? Does China still see Britain as a gateway to the western hemisphere?
The British expected more positive economic growth from Asia, whereas the European dimension of growth looked rather weak by comparison. But at the same time they were afraid of Asia’s growing economic power. So it was a bit of a mixed view. So, yes, for a while they wanted more Asian engagement in the economy, but at the same time they were afraid of a larger Chinese dimension and then they easily bought into the American paranoia about China. And that always undermined how much the British could embrace the Asian perspective. So, you know, they. Basically they wanted to be involved in Asia but as long as it could keep Western power in place, which they had a big role in. So that was the angle they were trying to push. And that led to this absurd “Singapore on the Thames” alternative, which went nowhere and looked silly.
But the British are in the middle of nowhere in this respect, frankly, they are not strong enough to implement some kind of independent view. As far as the Americans are concerned, they are number two or three on the list. The Europeans don’t like them very much, but they are stuck. They look a bit stupid, frankly.
But they will always, you know, try to strengthen their great international position. We are not Americans. We are not as aggressive and imperialistic as the Americans… But they are doing a lot of what the Americans are doing.
Today the European Union also announced new tariffs on Chinese electric vehicles. According to news reports, Germany, Sweden and Hungary opposed the new tariffs, while France and Spain in particular pushed for new tariffs. So how realistic do you think Europe’s decoupling from China, or “de-risking” as it is officially called, is?
First, it cannot be done. Secondly, whether from a British perspective or a European perspective, it is an attempt to prop up a very weak European economy.
But we can say that many German companies are completely against this idea of decoupling. And decoupling from China cannot be done. Basically, it cannot be done. And it’s stupid to try to do it.
And it’s not only China. They are worried about Korea, they are worried about India, they are worried about basically all kinds of things where they cannot compete with Asia. That’s the bottom line. You know, they cannot compete with the growing power of the Asian economy. So they want to do these kinds of things but basically they cannot compete. That’s the whole thing.
And they’re going to pick China in particular, because China is a big economy that continues to grow, a stronger, competitive economy. So they will claim that Huawei is doing all this bad spying, whereas the great Google, the great Amazon and all these kinds of things don’t spy as much as the Chinese do. It’s just ridiculous.
And they just want more western, American based power rather than Chinese risk, which they don’t like, which is not an independent power.
Lately we have been hearing a lot of talk in the western media about China’s overcapacity. Before it was about China dragging emerging economies into debt. Do you think there is any truth in all this? Does China’s great economic power aim to make countries, especially in Asia and Latin America, dependent? Or accusations of dumping from the EU?
This is absurd. You know, many African countries, for example, are choosing China as a more progressive alternative, a productive alternative to western domination. That’s it and it works for them, doesn’t it?
Who is going to build these things? I mean bridges, roads, railroads, power stations, etc. It’s not going to be the fucking Brits, Europeans and Americans. It’s going to be the Chinese. So it’s not a debt trap. And frankly this whole debt trap hoax is nonsense and has been proven not to be true. But basically they want to argue that.
Of course, I’m not claiming that every Chinese investment is great and every European investment is completely terrible, that’s not true. But to say that China is a debt trap and everything else is good is nonsense. There is all sorts of evidence that this is nonsense and that they cannot compete. But they don’t have as much control as they did when the Anglo-American view of the wonders of Western power was dominant. And that’s the point. And they are worried about losing that. That’s basically the issue.
You said this in one of your articles. In the past years, the BRICS countries have done some things outside the western financial system. It is also argued that the sanctions policy of western imperialism, led by the US, has failed and accelerated this process. But unlike Russia, China is still cautious about relations with the US, given the tensions between the other members of the bloc. What are the prospects for BRICS as an alternative?
Basically very good. And this is the way to go. It’s a good idea to build something more productive and different than the Western-US-Anglo type of domination that many Asian countries, Latin American countries and African countries have suffered and know they have suffered in previous decades.
There will be all kinds of conflicts and grievances and all the rest, but this is a more productive alternative than what was offered to them by the British, Americans and Europeans.
So this is the way to go and they are doing it in all kinds of ways. This will continue. The Americans will complain, the British will complain, the Europeans will complain, but it is a good thing that they are trying to build an alternative productive economy that is not dominated by parasitism, by the parasites of the western world. Basically, they are trying to get out of this trap and it is working. It’s better for them. And they see it every time. One of them now sees that there is an alternative to this nonsense and they don’t want it anymore, so they are trying to build an alternative. And that’s it.
There might be a mess here and there, whatever. It may not always work exactly. Yes, but to build an alternative to these things; that’s what they have to do and they are doing it.
Turkey, Asia and other countries should join in. Not the western nonsense that is trying to dominate them instead.
Finally, let’s talk about the ongoing occupation of Gaza, the war in Ukraine and Britain’s role in all this. Britain has been actively supporting Israel since October 7th. In addition, London has established a very close financial and political relationship with reactionary Arab regimes that have overt or covert relations with Israel. Given the financial infrastructure of British imperialism, what can you say about the role of the British government in the Middle East at the moment? As far as Ukraine is concerned, Britain seems to be pursuing a tougher anti-Russian policy than the US in Eastern Europe and the Black Sea region, as well as in the South Caucasus. It has established deep relations with Poland, the Baltic states, Turkey and Azerbaijan. Is Britain trying to create a cordon sanitaire against Russia?
The British, of course, are strong allies with the Americans and they see any real challenge to American power as a problem for them. It’s kind of like, you know, being the great helper who wants to be a great alternative or not an alternative but has their own thing. It doesn’t exactly suit them but they can’t do anything else. They want to be bullies but they are dependent on the Americans. That’s the real issue. They want to pretend that they have alternatives, but they don’t. They need to depend on the Americans to increase their power.
So they are more anti-Russian when it comes to Ukraine than the Americans are when it comes to Ukraine. They are more against what the Russians are doing than the Americans are. But this policy will lose because Russia will win.
But instead they want to strengthen something else because they are worried about losing their power, the power of the Americans and the West in general. And something else is being built that is not the power of the Americans and the West. That’s why they don’t like it.
That’s how all these things should be looked at. That is the key point. Anything that happens today is about whether there will be western power, mainly American power, and the British have their own point of view or European power or whatever, and instead there will be an alternative built by other countries.
The British don’t like it, the Americans don’t like it and they try to argue how terrible it is. But these other countries are obviously trying to build a better alternative. That’s what we are trying to build.
What about the Middle East connections and the Gaza war going on in the Middle East in Palestine?
Yes, the British have a reactionary role in this. They have a terrible role in this. But you know, there is no way they can be a progressive force in Palestine, in Gaza, in the Middle East, in West Asia. It will always play a reactionary role. They realize that now with their policy of supporting Israel in every way, it depends on supporting the Americans.
But it has to fail. I hope so, but it’s not something that they are really going to back down or try to do something different. All their policies are reactionary and stupid and they will fail.
So you still think that the UK will act as a kind of lapdog of American imperialism around the world?
Yes, because that’s basically their only option. They want to be independent, they want to be a great alternative. They don’t like the Yanks. They want to be something different but they can’t be because they are too weak. So they want British stuff. But the British don’t do anything for anybody, they don’t build anything and they are not an alternative for any other country. So basically they support the reaction, not the alternative. That’s how it works.
So they have to support the reaction in the Middle East and in the rest of the world and that’s what they are doing.
I think the basic idea is that the Europeans are losing. They may not like the Americans very much and they want to be different from the Americans, but it turns out that they are not that different. The Americans, one of them, is trying to ruin you too. Okay, I’m British, but that’s basically what they’re doing. So if you want to build something different you have to look elsewhere.
Foreign affairs writer Lily Lynch discusses the shifting political landscape of Central Europe and the Balkans in this interview with Harici. Lynch, whose work frequently appears in the New Statesman, New Left Review, and The Baffler, addresses a range of topics from Hungary’s recent elections to Serbia’s complex foreign policy maneuvers. A recipient of a 2025 LA Press Club award, she examines the “clarifying effect” of the Ukraine war on regional leadership and the evolving nature of right-wing populism across the continent. The conversation offers a detailed analysis of the challenges facing the European right and the persistent geopolitical tensions in the region.
I would like to begin with Hungary, specifically with the recent electoral victory of the right-wing populist Tisza Party, much like Viktor Orbán and Fidesz, and of its leader, Péter Magyar. What does this victory signify for Hungary’s future? The deep corruption and abuses of power involving Orbán’s circle had also received coverage in the international press. The fact that the country’s three major parties at the top of the electoral list are all right-wing paints a rather bleak picture.
I think that Magyar’s victory demonstrates several things. One is that right-wing ideas are still broadly popular in Hungary. The fact that Magyar is not so different from Orban on issues like immigration demonstrates that. So right-wing politics were not defeated in this election; instead, it is clear now that they are very much entrenched in Hungary and do reflect the sentiments of the public.
At the same time, I think there’s a particular brand of right-wing populism that is starting to cause some fatigue. This is a sort of clownish, personality-driven Trumpian populism that is wedded to Zionism, and which Orban embodied as well. I think Magyar’s success hints at a desire for a more sober and serious right-wing politics, decoupled from MAGA populism, and perhaps somewhat less revisionist: a politics that are anti-immigration and conservative but also more content with the status quo.
The electoral result also suggests that Trump’s brand has grown increasingly toxic, and that Orban’s choice to embrace Trump–going so far as having JD Vance campaign for him ahead of the election–hurt more than it helped. Trump is becoming a burden for the right, particularly in Europe. After Trump’s threats towards Greenland, no one in Europe can say they support Trump and also support respect for sovereignty. Of course, this is exactly what Orban once preached, as he fashioned himself a sovereigntist. In the end, it appeared that he only opposed encroachments from Brussels, but gave Trump’s America a pass.
At the same time, Orban’s deliberate stoking of the culture war ended up producing diminishing returns for him. Without decent economic performance, and with so much perceived corruption, his culture war crusades on issues such as gender simply were not enough to keep him afloat. In addition, Orban’s re-traditionalization efforts failed. The pro-natality policies he put in place were expensive but did little to boost the birth rate. Church attendance under Orban was even lower than it was during the socialist period, when religion was frowned upon by the authorities.
It may also be useful to touch on Serbia. The government led by Aleksandar Vučić appears to be pursuing what is often described as a “multi-vector foreign policy.” On the one hand, there is the prospect of EU membership; on the other, there are Serbia’s historically rooted ties with Russia. Yet in the course of the war in Ukraine, how should we interpret the statements coming from Moscow, particularly the strong reaction led by the Foreign Intelligence Service (SVR) to alleged arms deliveries to Kyiv via third parties? How sustainable is this condition of being a “swing state”?
There was a time when Vučić managed Serbia’s complex geopolitical position relatively well. At the height of the Vučić era, which was already a decade ago now, Serbia had relations with Russia, China, Turkey, the US, and many countries of the Global South that are members of the Non-aligned Movement–all while remaining a candidate for EU membership. But February 2022 changed everything for him. A major war in Europe–no longer confined to Donbass–meant that he was suddenly under much more pressure to harmonize Serbia’s policy with that of other European countries. In practice this meant things like imposing sanctions on Russia, and by voting in lockstep with EU and NATO member countries on resolutions on Ukraine in UN General Assembly votes.
It is true of course that Vucic was permitting indirect Serbian arms sales to Ukraine, which bought him a lot of credibility in Western capitals. With the Russians, meanwhile, he made excuses: He claimed that he was under a tremendous amount of pressure, and basically could not tell the West “no”. For a while I think the Russians accepted this, if grudgingly. But then as the arms sales to Ukraine didn’t stop after Vucic said they would, there were strong reactions in Russia.
I don’t think any of these actors, with the possible exception of China, trust Vucic anymore. For a long time, Vucic was all things to all people. A great example was in a UNGA vote Serbia voted in favor of a resolution on Ukraine, then Vucic immediately issued a statement saying that it had been “a mistake” and that they’d meant to vote against it. This was a deliberate strategy of ambiguity: which message to believe? The actual vote or Vucic’s statement to the press. He was masterful at this, for years: give one message to Washington, one to Moscow, and one to Brussels. I think you can sustain that kind of ambiguity for a time, and perhaps even a long time, but war has a clarifying effect. At a certain point, you just have to choose.
Vucic has also been one of the losers of the second Trump administration. This is the exact opposite of what he had hoped: he expected Serbia to be a natural ally to Trump. Instead, Vucic has been rebuffed by the administration, and repeatedly. Vucic stayed faithful to his mutli-vector foreign policy with the expectation that Trump would come to power and immediately end the war in Ukraine. I think he really believed that would happen–that Trump would end the war in Ukraine immediately. If that happened, Vucic’s job would have been a lot easier: there would be far less pressure on him from the EU, for one. So long story short, two recent developments have imperiled his multi-vector approach. First, the full-scale war in Ukraine in February 2022, and second, Trump winning a second term, and subsequent ambivalent relations with the White House.
It may also be worthwhile here to address the issue of Kosovo, which, as is well known, has in recent years become a fault line that periodically simmers and boils over. In the December elections in Kosovo, Albin Kurti once again returned to the office of prime minister. Would it be possible for you to share some information on this, or perhaps your observations and/or firsthand impressions? It seems likely that this is a place we will be discussing in the years ahead.
Albin Kurti has staked his career in part on his opposition to the creation of something called “the Association of Serbian Municipalities” of “Community of Serbian Municipalities” in northern Kosovo. Northern Kosovo is home to a Serbian-majority population who absolutely do not recognize Kurti’s government as legitimate and largely answer to Belgrade, though they often feel left on their own by the Serbian government as well. According to the 2013 Brussels Agreement between Kosovo and Serbia, the government of Kosovo has to create something called the Association/Community of Serbian Municipalities, a sort of thin layer of sovereignty or self-government that is nonetheless subordinate to Prishtina. Meanwhile, Serbia would extract itself from the north, ceding control of it to the government of Kosovo.
This has always been hugely controversial in Kosovo, as some believe it will create the conditions for eventual Serbian secession. Kurti remaining in office effectively means that there will be little progress made on this front. This is something that has made Western capitals very frustrated with Kurti, and he was under EU sanctions until last year.
However tense the current status quo is, I disagree with those who say a return to full-scale war is imminent or inevitable. There are something like 4,500 peacekeeping troops in Kosovo as a part of KFOR, NATO’s Kosovo peacekeeping force. That said, I am sure there will be the occasional flare up of localized violence. This currently happens every 1-2 years. But I highly doubt that these spasms of violence will lead to a full-scale war. Despite all the acrimonious feelings and distrust, there is little appetite for another big war in the Balkans by any side.
Finally, I am curious about your assessment, in broader terms, of what has given rise to the right-wing populist wave across Europe and/or how it is likely to shape Europe’s future overall. The supposedly “anti-establishment” profile, as in the case of Giorgia Meloni, either ends up directly submitting to the establishment, that is, to the Brussels bureaucracy, or produces state structures of astonishing corruption. This is a genuinely compelling issue, and I would be very interested in your views.
My answer about what has given rise to the right-wing populist wave is not at all original. I don’t think it’s a coincidence that this wave was preceded by the 2007-2008 financial crisis, which led to an overall crisis in faith in institutions, experts, and in liberalism. This was fertile ground for a populist backlash against “elites”. Of course, these anti-establishment politicians ride to power on promises to “drain the swamp” or fight the powers that be, and then turn around and adopt very conventional policies once in office. Or, in Orban’s case, they may actually break with established consensus, but turn out even more corrupt than the liberal “elites” they rail against. There is always a rhetoric-policy gap in politics, but it’s especially pronounced on the populist right.
Interview
‘The so-called international order is crumbling; national interest is the only remaining truth’
In this extensive interview with Harici Medya at the Antalya Diplomacy Forum, Swiss journalist, Editor-in-chief of Die Weltwoche Roger Köppel provides a piercing diagnostic of the fracturing global order. Analyzing the downfall of the so-called “rule-based international system” through the cold lens of realism, Köppel articulates the inherent fragility of modern alliances when confronted by the supremacy of national interests. From the volatile Iran-Israel axis to the internal schisms within NATO, and from China’s emergence as a strategic alternative to the complex interplay between theology and power, each pivotal issue is reshaped by Köppel’s distinct and uncompromising perspective.
The dialogue further explores the friction between the Vatican and the American populist right, interrogating the resurgence of religion as a potent geopolitical instrument. Placing significant emphasis on Türkiye’s central role as a mediator within this “biblical” theater of conflict, Köppel champions the necessity of authentic diplomacy over moralizing rhetoric. Ultimately, this conversation offers a profound intellectual roadmap for navigating the sanctuary of pragmatism in an era redefined by the maneuvers of “great predator countries.”
I’d like to start with the ongoing talks about Iran. There is this current discussions between United States and Iran that they had an agreement about the Strait of Hormuz, but then things soured quite a bit and now Iran claims that they’re going to close the strait again because the American side also is not opening the blockade. So in a more general sense, what do you think about this ceasefire? How do you think it’s going to evolve in the upcoming days?
If I knew, I would have great qualified knowledge. Probably I could be a very rich man because I could foresee the stock market development. Unfortunately, we are in a very difficult situation where national interest, security concerns and even religious convictions are in the field of battle. And I can just hope that at the end of the day, goodwill prevails and that all sides find a way to settle this terrible situation. But how it can be achieved… I’m a Swiss. It’s very, very difficult to give here any kind of advice. I think I can understand all sides. I can understand the security concerns of Israel. I have a lot of sympathy with that. I can understand the American position, which was, since President Reagan, rather clear concerning Iran. And then you have Iran, this amazing civilization, which at least in European eyes, is also on a way, which can be—let’s be very cautious here—which can be considered a threat for other countries, building up ballistic arsenals, experimenting with nuclear explosives. It’s a very, very demanding issue. But somehow I’m still optimistic. I believe that they find a solution. But at the moment, it’s very hard to see how.
The United States and Europe had some sort of conflict between each other when it came to the Iran war. Donald Trump had certain expectations from its European allies, which already had a strained relationship after the Greenland debacle. When it comes to why Europe did not send any help, how do you describe that? Do you think Trump was right? Do you think Europe was right? What is the situation between the two parts of NATO?
I think what we see in the relationship between the EU and the United States is a symptom of the topic that has been discussed at this conference here in Antalya, which is the crumbling, which is the downfall of the so-called international order. And you can see it even on the level of military alliances such as NATO, that these alliances, they mean nothing in today’s world. We are in a world where national interest rules. And I believe that always national interest has ruled. But sometimes there was a lot of hypocrisy and the big talk about international order, rule-based order. But at the end of the day, it was only and always national interest. And we see it now with NATO: when it’s in the national interest that the Europeans can talk and use NATO, they say, “We are NATO members.” If the biggest NATO power, United States, says “Now you have to help us,” the Europeans say “No.” So I don’t want to judge this. I don’t want to say who is right and who is wrong. But I would like to say that this just indicates to us that these international rule-based systems, alliances such as NATO, they give no security today, they give no order today. The only thing that matters are national interest and the capacity of national leaders to sit together and find solutions for conflicts. And this is why this forum here in Antalya is very important. Because in such a world of national interest, where conflicts can pop up any second, any minute, it’s very important to bring back diplomacy, to talk, to create platforms such as these in order to interact. I think this is great that we have on one day the Ukrainian Foreign Minister and on the other day the Russian Foreign Minister. I wish we had more such forums also in Europe. And this is my critique of the European Union. We are too much… The European Union is too much moralizing, telling everybody who is the bad guy, who is the good guy, and is not engaging enough in finding common ground, common solutions via diplomacy.
When you look into the relationship between Europe and Russia or Europe and China, especially with the NATO meetings previously, before the second Trump administration, it was always claimed that these countries are adversaries to the Western order in general. But now, especially strained relations between Europe and the United States, we are seeing many members of the European Union trying to find alternatives to their security arrangements with the United States, which can be considered with China. Especially now we are seeing the Spanish Prime Minister going to China. Emmanuel Macron said something similar. And there were Keir Starmer’s meeting with Xi Jinping in China. So in general, do you see China being an alternative to United States? Do you think that Europe will change its course towards East?
Well, I’m from Switzerland, from a neutral country. And we try not to make enemies. We are too small; we have to be able to defend ourselves. And Switzerland is very much open to the world. We work with everybody. And even our neutrality has a bit suffered in the last years because the European Union has pushed Switzerland a lot in order to participate in the sanctions against Russia, even delivering weapons to Ukraine. Fortunately, we did never that. We were strictly neutral in the juristic sense. But with the sanctions, we have lost a bit our absolute impartiality. So Switzerland is totally open to the world. And I think many European countries should follow this path and should not talk themselves into these kind of confrontational views of the world. Of course, I mean, there might be other interests. If you look at the Baltic states, with their history with the Soviet Union, with Russia, it’s complicated. Poland has another tradition; they have to find out for themselves. But generally speaking, I would say in today’s world, we have to invest in great bilateral relationships. The European countries should cooperate with the United States, of course, with China, with Russia. I mean, Russia is a neighbor of Europe, but Europe, what is Europe? Europe is a group of small and middle countries with different histories and also different national interests. And somehow the EU is a structure which is too heavy-handed for this multiplicity of interests. So I would strongly argue from a Swiss perspective: make peace with Russia as soon as you can. Make no war, no conflict with China. Stop this moralizing attitude and patronizing of others. Just try to be a small bunch of countries who is not in big power politics anymore. Let the others be big powers. We can be big economic powers, big scientific powers, big powers of diplomacy and understanding and leave the rest to the big predator countries that are also on this planet. Of course, the big powers have big problems. We are smaller countries with smaller problems.
There’s a sentiment, there was a sentiment in the first Trump administration that if the European countries hang on tight for as long as possible, there will be eventually a leader that is willing to work together with Europe once again, which was Joe Biden in that. And when Joe Biden was elected, the Ukraine war started. And then we saw a reconsolidation of European countries under NATO umbrella in general. But now we are seeing the strain in the relationship is so hard that things may not go back as much as it can. But still, in the many international meetings, we are seeing figures like Gavin Newsom from California, which could be potentially the next president of the United States. And he was saying, “You need to once again hang on tight until 2028.” Do you think that if a Democrat president or a president that is someone that’s more close to American establishment… Do you think if someone like that gets into the presidency in United States, the concept of “collective West” will come back and Europe and United States will go back to their relationship like it was before?
Well, I hope not that we will go back in the time before Trump in that sense, because Donald Trump made—the American President made—something which was to me overdue: he said we have to talk with Russia again. We have to engage in diplomacy. Under Biden, there was no diplomacy. And if Gavin Newsom wants to be the second Biden—no diplomacy with Russia, the collective West meaning “we, the West, the best against the rest”—then I don’t think that this is a philosophy with which you can win the future. Of course, the United States is a big country; you could say a Godzilla country. And a Godzilla country has a lot of problems. They have a lot of alliances in the region of China, with Taiwan, with Japan, entanglements. It’s not easy. Of course, you have global interests. You have to see what you can do. And I think the reality, the dominating trend in the reality is—and I think Trump has realized this—the time of unilateral dominance of the United States of America is over. That was the case after the downfall of the Soviet Union in 1990. Then the Russians were lying on the ground. China was still very weak after Mao Zedong. I mean, they were starting to recover. Now we have a different world. We have China, which is basically number one economically. We have India, which is growing very fast. Russia has recovered. Russia doesn’t swallow a NATO enlargement to the east, you know, neglecting all the security concerns of Russia. I have great understanding. The Russians say “No, we don’t want this.” The Americans would never tolerate Russians or Chinese with their military structures in Canada or in Mexico. I mean, they wouldn’t wait as President Putin for eight years; they would intervene in eight hours if something like that happens. So Trump has realized America is not strong enough to be the dominant hegemon of the world. So he starts to focus, to concentrate on his prime spheres of influence, which is South America, which is the Middle East with all the oil. He has a rivalry with China. But I think Trump is, ultimately, he’s a pragmatist. Probably he was being overconfident with Iran. I can understand that. He didn’t want… I mean, he doesn’t want… He’s not interested in the interests of the United States and of Israel if Iran gets nuclear weapons. So they had to do something. But you know, they probably overestimated themselves. We will see. I don’t know, but we’re seeing this kind of multipolar world is in the making, and therefore, we need a lot of diplomacy and pragmatism. I think Trump is a pragmatist. I didn’t think that Biden was a pragmatist. I don’t think that Gavin Newsom seems like a pragmatist. I don’t know. So I hope that we see leaders, whoever it might be, who will not go back to the old times with no diplomacy, no talking, with this kind of Western supremacy attitude. This is not good. It’s not good for the West. It’s not good for the rest of the world. It’s not good for everybody.
In the first question, you mentioned a little bit of the religious conflicts. From what I understand, at least, you were talking about the Trump and Pope little fight maybe. So this situation in the last week has really gone out of control. The statements coming from both sides were pretty harsh. Donald Trump and especially a Catholic, J.D. Vance, was telling the Pope that he should be careful when he’s talking about theological matters, which was pretty interesting on its own. But when you look into this, do you think it is happening because Donald Trump saw someone that is critical of himself and he just didn’t want to take that, or you see a more sectarian conflict on the background of the situation? Because we have many figures like Peter Thiel of Palantir having meetings in Rome, talking about the Pope, talking about the Antichrist. And there was Steve Bannon who was mentioning we should overthrow Pope Francis and overthrow Vatican. There are plenty of figures in the American populist right that have a problem with Vatican. So in general, what do you say? Do you think that this is a sectarian issue?
In my first answer, I actually alluded to another biblical conflict, which is the conflict between the Israelites and the Ishmaelites, you know, going back to the great prophet Abraham and those great peoples which emerged from that great father, grandfather of civilization: the Israelites and the Ishmaelites. And Iran, you know, being one of the great empires, of course, also during the Islamic rule of the world. And then, of course, then you got the Jews, God’s chosen people. And I would say that religion is also a big part of Middle Eastern politics. But it’s great, it’s good you mentioned this dimension also in Western politics. Well, I would suggest, I mean, not to take Trump literally, but to take Trump seriously. And not every utterance of people from his camp or from other camps has to be taken totally seriously. I’m a Protestant, but I’m theologically interested. I saw with certain bewilderment these, you could say this wrestling, this verbal wrestling between the Vatican and then we saw these absurd pictures of Donald Trump, the American president, like posing as some kind of Jesus. But we have seen some similar stuff. I mean, there are people who think that Trump is losing his mind. Well, I don’t hope that’s a sign of that. I don’t know. That’s what the Americans have to find out for themselves. But I would say this is, for me, just an absurd indicator of probable—and I hope I’m wrong—nervousness on the side of the American leadership which realizes that things in the Middle East are not going according to plan. And I think that the American President has put himself under no less stress because he said he wants to finish the war in Ukraine. It’s still going on. He has his vision for Israel, he has his vision for the Middle East, he has his Abraham Accords, which is a great achievement. But now they are somehow not, you know, really, really in the spotlight anymore. You see this war in Iran, he doesn’t seem to find an end, an emergency exit. So probably these verbal entanglements are a symptom of stress. But on the other side, we have seen so many things Trump has said and strange stuff, you know, and I wouldn’t take it too seriously. Of course, the Pope, it’s his duty to criticize, to criticize war-making powers. I mean, this is his duty. And he is also… he’s right when he says it’s a crime to use God for politics, which is not only true for Christians; it’s also true for other religions today. Some powers use God to make politics. That’s always dangerous. And I think this is the ultimate sacrilege. As a Protestant, the people who speak about God meaning themselves… that’s a very dangerous species. We should be careful of these guys. So the Pope is right in saying this. And Trump, of course, he wants to present his point. I wouldn’t give too much attention to that. Peter Thiel… I have been to these lectures in Rome. I have listened to them. Yes, of course. I was there and it was confidential, so I shouldn’t say anything. But I’m smiling when I’m reading the newspapers about these lectures, what he was supposed to have said. My father was a Catholic too. Peter Thiel’s notion of the Vatican is not that the Vatican is the Antichrist. That’s not his position. I made an interview with him in my newspaper and he was explaining what he meant with Antichrist. He said the Antichrist is a worldwide bureaucracy which is grabbing power and putting sand into the eyes of the people, saying, “We save you from the apocalypse, we save you from Armageddon, from the climate catastrophe. We will bring eternal peace.” So Peter Thiel is not against the Vatican. Peter Thiel is not against whatever. You know, he’s concerned about the global bureaucratic state, which he identifies from his studies with that what the Bible called the Antichrist. But there are a lot of theologians who would not accept this description. They have a more narrow definition of the Antichrist. But it was a very interesting lecture and it was on a very high intellectual level. And I think not many politicians who criticize Peter Thiel are capable of having such a lecture themselves. So it was very interesting for me to listen to that.
Okay, one last question. It’s going to be about Türkiye. More specifically, the latest affairs that we’re seeing all around the region is bringing out a new situation where Türkiye and Israel are the new rivals in the region itself. Iran seems to be taking a little bit of a backside. And now that this is recognized by both sides, by both Türkiye and Israel, the rhetoric is getting stronger. Yesterday Mr. Tom Barrack was here and he was asked this very question and he said that it’s only rhetoric, it’s nothing more. These countries do not have to fight, are not on a path to fight. But he’s of course a side note in this situation and he obviously doesn’t want to see these two countries to get into a quarrel like that. But what do you say about this? Do you think in the near future of Middle East you expect a conflict between Israel and Türkiye?
Well, if I listen to certain statements of involved statesmen, there is not much diplomacy there. It’s very confrontational. We have listened yesterday to the Turkish President. Erdogan was very clear in his views. Also the Turkish Foreign Minister, Hakan Fidan, a very thoughtful person, but still with strong words. And I fear that now we are here in a still very serious conflict between Israel and probably Türkiye. I hope as a Swiss, that Türkiye—which under President Erdogan has in a… I’m not talking about interior politics; I don’t want to interfere, this Turks have to sort out themselves what they see appropriate. From outside, I see a very strong head of state, the President, in a smart way, who has positioned Türkiye as a key player of international diplomacy. And I hope that Türkiye can use this weight, this respect it has gained, in order to find a way also to accommodate the legitimate security concerns of Israel. Then I can understand Israel in this sense that Israel has had a lot of wars in the last eight years. It didn’t start these wars. Israel has been built out of a terrible catastrophe which is in the responsibility of the Europeans, especially the Germans, which is the Holocaust. They have created this state of Israel after the Second World War, which was not accepted by some of the nations in the Middle East. And so there were wars; Israel won these wars, they gained territory, they gave this territory back in the philosophy “land for peace.” So they gave the land, they didn’t get the peace. And there is now a new, you can say, more hardline political agenda which says, “Well, after the massacre of Hamas, we switch. We don’t believe in land for peace. Now land is peace.” It’s a bit, you could say, the Russian perspective. Russia was attacked many times. They said, “We need a cordon sanitaire in order to protect ourselves. We start to think in square kilometers.” Problem is, Israel, they start to think the same way. But at the core are legitimate security concerns. I don’t think that Israel is an imperialist power who wants to have an empire reaching from Pakistan to Portugal or, you know, a huge territorial player. But I think there are legitimate security concerns. And Türkiye, as this great moderator, has this great diplomatic force in the center of the world, of this world. I just hope that President Erdogan will find a way in order to bring Israel to the table. Now with Syria, which is very close to Türkiye, they have a great understanding, as far as I could see here, with other powers and the track record of President Erdogan, I think he’s in a unique position to bring here peace. But how this should be, I don’t know. In Switzerland, we say in the Middle East, “This is a biblical conflict.” It’s so hard to find a solution. We are glad that we are not living in this conflict field. We are living in the center of Europe. We had many wars there as well. But thanks God, they are behind us. Let’s hope they are not returning.
If it’s a biblical conflict, then we are all doomed. It’s not a thing.
No, then we are not doomed if it’s a biblical conflict, because then we can say we are all children of God and God didn’t create this world in order that human beings make war all the time. So we just have to find our… There must be a solution. We just haven’t found it yet.
Well, someone said we should be careful when talking about theology, so I should just stop here.
I agree.
Thank you.
Thank you.
In an exclusive exchange conducted by Harici Medya on the sidelines of the Antalya Diplomacy Forum, former Israeli peace negotiator Daniel Levy offers a clinical dissection of the shifting tectonic plates in Middle Eastern geopolitics. Amidst the fog of ongoing negotiations between Washington and Tehran, Levy delineates a region caught between the unpredictable whims of the Trump administration and Israel’s ambitious pursuit of regional hegemony.
Daniel Levy, a senior adviser to the government of former Israeli Prime Minister Ehud Barak, was part of the Israeli team that attended the Taba summit with the Palestinians in 2001. He also participated in the second Oslo negotiations in 1995 with then Prime Minister Yitzhak Rabin. Between 2012 and 2016, Mr Levy served as Director for the Middle East and North Africa at the European Council on Foreign Relations. He is currently president of the New York-based think tank US/Middle East Project.
The veteran diplomat provides a sobering analysis of the fragile ceasefires in Lebanon and the intrinsic link between Netanyahu’s political survival and the perpetuation of conflict. Crucially, Levy draws attention to a burgeoning sentiment within the Israeli establishment that increasingly frames Türkiye as a long-term strategic challenge, mirroring the rhetoric once reserved for Iran. This profound dialogue serves as a roadmap for understanding the complex interplay of personal egos, military-industrial interests, and the calculated destabilization of state structures across the Levant.
First of all, of course, the talks are going on right now with Iran and United States. There were certain news coming in the morning. First, Donald Trump claimed that everything is fine, the Strait of Hormuz is open. Then things didn’t go that way. It seems that the Americans didn’t open their own blockade and now the Iranians want to go back to closing the Strait themselves. So, so what do you expect from the ongoing talks right now? Which direction do you think that things will lead into?
I think there are three or four basic possibilities, scenarios. One is there is a deal of some kind. Second is there may be some quiet understandings or expectations, but there’s not something you could really announce as a deal. But the American President decides he’s had enough anyway. He declares victory and walks away. Of course, Iran, with equal, if not greater justification, will also declare victory and everyone will give their speeches. But essentially the ceasefire will hold, there’ll be an arrangement in Hormuz, etc. And that could transition later to negotiations. But, so that’s the second scenario. Third scenario is Trump decides that the way to get a deal is to do one big final strike just to show that he’s still the tough guy, he’s the warmongers. The Israelis and others, those inside his administration, convince him to strike again.
Like an amphibious assault. Like a what?
Well, it could be. What I’m saying is there’s another American-Israeli aggression, maybe from Trump. The goal is you escalate to de-escalate like he did in June of 2025. But once you do that, you’re no longer in control of events because Iran will respond. If that’s the third scenario, then either that segues towards a resumption of a prolonged conflict, or that segues towards walking away, declaring victory. Sorry, negotiation. We seem to be more in the non-escalation trajectory at the moment. Even though there are the things going on in Hormuz, which if the Americans are going to blockade, of course the Iranians are as well. So that’s where we are. The problem is in trying to decipher what will happen next. Of course, there are lots of moving parts, but the thing that makes this most difficult is you have an American president who is not only unpredictable, not only incompetent, but also incoherent. He has no strategy and therefore he doesn’t really know why he went to war, what he wants to get out of the war. I know there are people who think that’s naive to claim that; no, of course, there’s American geostrategy. You’re trying to take hold of an important choke point in world energy. It’s good for the American military-industrial complex. All those arguments are fine. There’s an element of that. But that’s not what’s defined this war. What’s defined this war is the fragile ego, the peculiar personality, easy to manipulate, as we saw with Netanyahu. The reports of how Netanyahu went to the White House, went to the Situation Room, told the American president a story which in any other American administration, the experts would say, “Mr. President, now that our guest, the Israeli Prime Minister, has left, here’s what’s really the story. We’re not doing this.” This president fell into the trap that no other president has before. The trap’s been laid before by the Israeli prime minister. So because of those things, it’s more hard to predict than it would otherwise be. And the president, President Trump, can lurch from, you know, one… he can wake up one morning, he’s spoken to someone, he’s heard an interview on Fox TV and make one decision, and then the next morning makes another one. So it seems that he is fed up with the war. He knows that the politics, the economics are difficult for him to manage. But maybe he thinks he’s Jesus again tomorrow and he carries on the war.
The Lebanon part of the war was really on the spotlight because Pakistan was saying one thing, Iran was saying one thing, then the United States and Israel were saying the complete opposite of what they were claiming. So what we have seen from the beginning of those talks with the ceasefire, it seems that the initial discussion was about actually involving Lebanon, too. And now we come to a point where Israel was reluctant to listen to what Donald Trump or the entirety of American systems tells them to do. But now, for some reason, Donald Trump managed to push Israel to hold a ceasefire on their own. So do you think that this is a failure by Israeli government to not be able to hit their war goals, which was reaching out to the Litani River? What do you think about it?
So, first of all, and this is playing out inside Israel, this doesn’t feel like a win on Lebanon. They’ve destroyed things. That’s their modus operandi. But being told, and especially the very particular language that President Trump uses in his Truth Social postings, “Enough.” This isn’t where Israel thought it would be. It also makes it quite clear that this was part of the deal, that it was the Iranians and the Pakistanis who were telling us the truth on Lebanon. It is also probably the clearest indication we have that Trump actually wants to close the escalatory logic of this war and to be in an ending this deal, de-escalation place because he’s imposed this ceasefire in Lebanon on Israel. It also shows us that if the Americans want to impose something on Israel, they can. Not that we needed any proof of that. Because it’s obvious America has the leverage. America gives them the weapons, America gives them the political support. If America says stop, Israel says yes; it tries everything to avoid that. It will continue to try to provoke. So inside Israel, there is a lot of criticism. First, as usual, Israel overestimated its own capacity and underestimated that of its adversary. You had the Northern Commander of the Israeli military saying, “We were surprised by Hezbollah still having this capacity to send rockets to fire on the ground.” But, and the “but” is important. As usual, it’s a ceasefire, Israel style. And it’s a ceasefire that the Americans have accepted, at least in this respect, Israeli stipulations on the ceasefire. Which means Israel is still physically inside Lebanon. So it doesn’t have the larger security buffer, but it has a significant security buffer. In fact, they took additional land inside Lebanon, bordering Syria, in the hours leading up to this declaration. And Israel, according to the document, the text, can act to prevent immediate operations from the other side. But who defines what that is? Who defines what the threat is? As long as Israel defines the threat, it will define it widely. Nonetheless, Israel has been significantly curtailed, which never happens on the Palestinian front, of course.
With Netanyahu government, there are a lot of, maybe conspiracy theories, maybe more normal comments. But people are claiming that Netanyahu is pursuing more and more war around their neighbors and with Iran because he wants to, you know, just keep going in the political scene. If they stop, maybe he’s going to get into a court case, he’s going to get arrested. Do you think that’s the case or do you think that the Israeli government and Israeli state itself wants to pursue these wars?
So I don’t think it has to be one or the other. It can be both. And I think in this case it is both. Netanyahu, who is alive, by the way, in terms of rumors of conspiracy theories… Well, it’s a weekly rumor. Exactly. It has served him politically since October 7th to be a permanent wartime leader, for Israel to be in perpetual war. Every week he’s still supposed to be in court. Every week he still sends his lawyers to the courthouse to say, “I can’t come this week, I’m busy with the war,” which is genuinely what’s happening. It seems like with the election getting closer, he wants these conditions and he has many options: Lebanon, Iran, Gaza, West Bank. So it’s not just a continuation of war, it’s a continuation of war on multiple fronts. There are other elements to this. Economically, part of how Israel has managed its economy is a version of military Keynesianism, which has been to pump money into the economy not only through the military-industrial complex, but also through the compensation that reservists receive. So part of the money in the Israeli economy at the moment is the very generous packages that those who sign up for more and more and more weeks of military service are getting. And Israel went into this war with a low debt-to-GDP ratio, so it has headspace to keep doing that. But then there is the part of this that’s not about Netanyahu, his personal court case and political management. This is about something that goes much deeper. He has support from the opposition. The opposition criticized: “Why didn’t you get the Americans to do more with us in Lebanon? Why didn’t you build more shelters?” They’re actually mad that they stopped. The opposition are just as belligerent in this respect as the Prime Minister. Back when there were discussions over the Israelis being held in Gaza, the opposition would say, “Get the hostages released and then resume the attack. Why don’t you at least get the hostages released?” So this goes much deeper into Israeli conceptual thinking and how the state has gone on a journey to promoting and then manufacturing societal consent for genocide against the Palestinians and war in the region. And so the way one has to understand this is Israel has a vision for regional domination that requires the weakening and collapsing of surrounding states, of any potential power balances or anything that could emerge as a peer competitor. Of course, Israel’s not the only one that has been involved in encouraging the collapse of states. Israel wasn’t the primary actor in Syria for sure. Israel did then go and smash up what was left of what the Syrian successor leadership could have done after Assad fell. And it even includes trying to… there are some states you’re not going to collapse, but you want to co-opt them. You want them to become dependent on Israel, more vulnerable, like the Gulf. Israel’s desired intentional outcome from this war with Iran was that the Gulf would be more weakened. And of course, the Israeli system is very clear in which country next needs to be weakened; it’s a country called Türkiye.
Yeah, I’ll get to that. But firstly, the cost of doing all of that, the road to regional hegemony, if you will. It’s always claimed that it’s Israel’s reputation and Israel’s friendships, all in the West, in Europe, in the United States and everything. But there’s this idea that if this war stops, somehow, not just Iran, all of that stops. Probably Israel has the idea that things will go back to how it was before. There won’t be any sanctions, there won’t be any, quote-unquote, “hard feelings” with the Western countries. Do you think that’s going to be the case? Because when Germany put sanctions on weapons sales to Israel, they waited for a ceasefire in Gaza, and the moment that it took place, there was just no more sanctions or no more ban for weapons sales. So do you think that’s going to happen with European states who right now are showing negative emotions towards Israel’s actions?
So I think this is a project of overreach, of exaggeration, which is typical of a state that goes to a very extreme place, which is the case in Israel today. But the Israeli, Netanyahu and others’ counter-narrative would be: so far it works. So one thing that’s going on here is while we’re in this moment of fluidity and while he still has Trump onside in the White House, and while everyone else is going, “Oh, my God, what do we do with Trump?”—Europeans, Arab allies, even Tier One Asian-American allies—Netanyahu is saying, “Let’s exploit this moment to strengthen our position to the maximum possible, and then things will settle down again, but we’ll be that much stronger.” So the bet he is placing is if Israel is successful enough, then the others won’t have a choice. They’ll be dealing with a much more powerful Israel. You know, as soon as Germany went one way, it went back the other way. And not only went back the other way, Germany has now signed one of its biggest drone manufacturing deals with an Israeli military arms company. So Netanyahu is saying, “Look, if I can pull this thing enough in my direction, if I get more of the Gulf with me, then India will be less reticent about taking sides. It will be more with me. I have the relations with Greece and Cyprus on energy. Maybe I force Lebanese gas to come this way, maybe I force the Syrians into a similar arrangement. Even if we’ve lost image, even if the reputation looks different, power talks and we can lose the campus and we can lose public opinion, but we can retain enough power that people won’t have a choice. And then they’ll basically accept in Europe as well.” Everyone will look at America as unreliable. This is even thinking for a post… kind of how do we function with an America that has reduced power? If we can assert this, others will fall in line. That’s the gamble. That’s the bet that Netanyahu is placing. There is, to my mind, sadly too much evidence that it’s not a crazy bet. Now, I don’t think it’s going to work. I think there will be blowback. I don’t think he can succeed. But that’s what he’s trying to do. And at the moment it’s not clear that he will fail.
Final question. You already mentioned about their will to, you know, have a quarrel with Türkiye. They’re making it evident in the media, they’re making it evident by their politicians and the claims they do. But at the same time yesterday Mr. Tom Barrack was here and he asked the same question if there will be a fight between Israel and Türkiye. And he said that it’s just rhetoric, there’s nothing serious behind it, that they are just being pushed by people around the leaders like Netanyahu and Erdogan. So I would like to ask you, is there a realistic scenario where Türkiye and Israel are going to face each other and what position the United States will take in such case?
So we’re not talking short term, but this is more than rhetoric. Israeli officials go around the world to their friends and they say, “We need to talk to you about Türkiye, why this country is dangerous.” They are beginning to talk about Türkiye in the way they used to talk about Iran. And Iran was not a short-term project. Iran was a decades-long project of creating the conditions for a confrontation. They warn about the Turkish missile program. That’s the language that they use. But it’s not just that. Türkiye would be not a serious actor in statecraft if it wasn’t now testing on the other side, which I’m sure it is, which is to look at… we’re not talking about war in the short term. What we’re looking at is what vulnerabilities can we begin to create or exploit. One should, for instance, see the energy relationship not only with Greece and Cyprus, but with Egypt. And if they can pull, as I said, Lebanon and maybe try and pull Syria just to test… maybe we can’t, but let’s try. Try the first time. If there is a Syria-Israel relationship, they will see where it can go. Now, I’m not saying that will happen; I don’t think it can. But on Lebanon they will try. They may get further. On Syria, they will try. The relationship on the Kurdish front, Israel got a defeat there when the Americans came in and said, “No, we’re not going to,” when the SDF was forced into the climb down that it was forced into with the Syrian state. So they get setbacks as well. Somaliland, the Israeli recognition of… So there are going to be things happening in places that you go, “What was that about?” and then you say, “Oh, okay.” One of the angles to this story, like the Somaliland story, is a Turkish angle. Israel putting a base somewhere next to where Türkiye has an influence. Sudan. Israel’s not a main actor in Sudan, but Israel’s closest friend in the Gulf is a very main actor in Sudan. So let’s see what we can do there. So you will see sometimes under the surface things going on if Israel is able to continue to pursue this. Now, the counterpoint to that is whether you begin to get an alliance in the region which includes containing and deterring Israel as part of its DNA, as part of its mission statement, if you like. And that’s the subtext to a lot of what is going on is whether Israel can pull more people in its direction or whether we get something that begins to look like containment. But if Israel could continue to pick off country after country, one at a time, then it will continue to escalate its future planning in a belligerent way vis-à-vis Türkiye. If it is forced to roll back some of its ambitious domination project, then the Türkiye thing is too much of a stretch.
Thank you so much, sir.
Pleasure.
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