‘We need the United States and NATO to say to Russia, “Okay, we get it. NATO will not enlarge to Ukraine and to Georgia”’—according to Jeffrey D. Sachs, only this could lead to the end of the Russo-Ukrainian war. Mandiner asked one of the world’s most famous economists, who influenced the development of events from the regime-changing Eastern European countries to the Third World, about the issues of war and peace, sanctions, America’s strategy and his opinion on Orbán’s policy. You can read the interview below.

Jeffrey David Sachs is an American economist, professor at Columbia University, whom the New York Times called ‘probably the world’s most important economist’ in the 1990s. Sachs was previously a consultant to the WHO, the World Bank, the Organization for Economic Co-operation and Development, and the International Monetary Fund. After 1989, he was a consultant for rapid regime changes and economic transitions in several Eastern European countries. Between 2001 and 2018, he was Special Advisor to the UN Secretary-General. In 2004 and 2005, Time named him one of the 100 most influential people in the world. He is the author or editor of nearly twenty books, and frequently pens articles in major publications such as the Financial Times, Scientific American, Time, and the Huffington Post. In 2020, Sachs supported Bernie Sanders in the US presidential election and was one of the advisers of the left-wing politician.

Sachs visited Hungary at the invitation of the Hungarian National Bank (MNB). Among other engagements, he met with Viktor Orbán, then gave a lecture at an MNB’s event and at the Mathias Corvinus Collegium (MCC).

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Do you still hold your opinion that there is a need for ceasefire talks between the Ukrainian and Russian sides in the Russo-Ukrainian war?

I think the war is based on politics. And we need to resolve the underlying politics that caused the war, and that make the war continue. There are three major issues that led to this war.

What are those issues?

The first is the US push for NATO enlargement to Ukraine and Georgia,

which was a commitment pushed by George Bush Jr in 2008 at the Bucharest NATO Summit,

and which all US administrations since then have continued to push. The second issue is Crimea, which has been the home to the Russian Black Sea Fleet since 1783, and Russia is determined, understandably in my view, to continue to be the base for the Russian fleet. The third issue is the Donbass, which is the predominantly ethnic Russian region of Eastern Ukraine.

The Donbass was the centre of controversy from the time of Ukrainian independence, and then of this war really since 2014. The question was, what is the role of the Russian language, Russian culture, and Russian Orthodoxy in Ukrainian society—while one side said that a more pluralistic society is needed in which ethnic Russians have their role and the Russian language is used in these oblasts, the Ukrainian nationalists from Western Ukraine mainly said ‘no’ to the language compromise. After 2014, the country was dominated by Ukrainian nationalists, and even though there was an agreement—the Minsk II agreement—to give autonomy to Luhansk and Donetsk, the Ukrainian leaders in Kyiv rejected it out of hand and said they would not implement it. And that was the third cause of this war.

How do you see the responsibility of the United States in the war?

At the end of 2021, President Putin said to the United States, ‘We need a diplomatic way out of this crisis. Most importantly, NATO cannot expand to Ukraine’, and other issues were on the table as well. Biden refused any negotiation over these issues, and Putin invaded Ukraine on 24 February of this year.

My view is had Biden negotiated and agreed that NATO would not enlarge, this war would not have happened.

In March, there was almost a quick agreement to end the war, because the Zelensky government said to the Russians, ‘Okay, we accept neutrality, non-NATO, and we can solve the Donbass and Crimea issues down the road, but we should stop the fighting’. And on that basis, there were negotiations in Istanbul and Ankara that were overseen by Turkey, and they were making progress. Then those negotiations broke down—I am guessing because the US told the Ukrainians, ‘Don’t compromise. When you can be part of NATO, you can defeat Russia in the battlefield.’ So the war has been raging since then.

What about the ceasefire?

My view is not that we need a ceasefire so much as that we need a negotiated end of the war,

which is different from the ceasefire. We need the United States and NATO to say to Russia, ‘Okay, we get it. NATO will not enlarge to Ukraine and to Georgia’. In my view, that is not a defeat of NATO. That is just common sense. And that is what I would like the United States to say. Unfortunately, the neoconservatives who are in charge of US foreign policy completely disagree with that, because it has been their project for the last quarter century that the US would continue to expand eastward, even though they promised Gorbachev in 1990 that NATO would not move one inch to the east. So all in all, my view is that this war could have been avoided in December 2021, it could have been ended in March 2022, and it can be ended now, by a pragmatic approach to three issues to NATO: not enlarging to Crimea, it remaining a de facto part of Russia, and by some kind of compromise governance and autonomy for the Donbass region. Of course, I cannot guarantee that Russia would accept terms in this way after almost a year of war, but I believe that there is a good chance for that. However, there is no way to find out unless we actually sit down to negotiate.

You did not mention Ukraine as a real factor.

I am not talking about negotiations between Zelensky and Putin so much as I am between Biden and Putin, because at the core,

this is a conflict between the US and Russia,

even more than between Ukraine and Russia. This is a war of influence between two superpowers. And if the US just says, ‘We don’t get involved, it’s Zelensky’s choice about negotiating or not’, which is their line, this is a totally artificial and a totally hopeless situation because this war cannot be ended until the United States says, ‘NATO will not enlarge to Ukraine’.

What do you think about the sanctions policy of the European Union?

I think that the European Union’s policy needs to be a policy to push for a peaceful settlement, as I just outlined. Anything that is based on the idea of supporting Ukraine, whatever it takes, until Ukraine achieves military victory, which is the European position, is wrongheaded in my view. First, I don’t believe that Ukraine is going to defeat Russia on the battlefield and push Russia out of Crimea, and out of its other positions in Ukraine—I just don’t believe it’s a factual matter. Second, if it were to come to pass, two things would happen beforehand: one, much of Ukraine would be destroyed, turned to rubble, and second,

if such an eventuality were really approaching, Russia would be much more likely to use tactical nuclear weapons.

And this would be, of course, profound, possibly complete disaster for everybody.

Do you believe that is a real danger?

Of course it’s a real danger. If Russia were losing on the battlefield, and if somehow Ukraine were to make a breakthrough and be retaking Crimea, I think Russia would definitely escalate militarily, in some devastating ways. Perhaps there are more steps in between this and nuclear weapons, but I think they would continue to escalate because they would see that as an absolute core national security concern for Russia, and one that they would use all means to defend, as they frequently say. So it is in this context that one should consider issues like a sanctions regime or any other policy. If the policy is put in place to underpin a military victory by Ukraine without these intermediate negotiating objectives, it will not work; it will be very destructive, and it will create massive harms everywhere.

In particular with the sanctions, they are incredibly costly for Europe.

And this is the main point. If they were aiming at something feasible, we could say, ‘Well, that is an investment in a new peace agreement’. But if they are aiming at something that is not feasible, like Ukraine’s military victory over Russia in Crimea, which Zelensky announces as his war aim almost every day now, then we have to consider these are costs without benefits, and the cost is enormous for Europe. Europe has basically put itself into an economic tailspin, and the biggest loser of all is Germany.

What do you think about the policy of the German government?

The German economy is so big that it is going to bring down Central and Eastern Europe along with it to an important extent, and the sanctions regime is a big part of that, because it is basically saying that we won’t take the energy that keeps our economy functioning. Europe scrambles for some other means, but the fact of the matter is that it is driving Europe into real severe economic decline, and even larger industrial decline. We don’t know the bottom of it right now, but I think it’s extremely serious. It’s not a tactic that aims at a realistic outcome—it’s a cost without return, and therefore, I would really rethink the whole strategy in a fundamental way. Of course, everything has been exacerbated by the destruction of the Nord Stream Pipeline.

Who do you think blew up the pipeline?

I think it’s likely that the US did it, or the US and its friends;

maybe it was UK divers, maybe Polish divers, or somebody else, but definitely it’s a US action, together with others. I should say,

nobody knows for sure, but I think that is the most likely scenario.

And I think the costs to Europe are very high from this. I would like to know who did it. I would like to know what Sweden found on the ocean floor. However, weirdly enough, Sweden said whatever they found was so sensitive in national security that they are not even going to tell Germany, which is pretty weird for Sweden to declare. I think Hungary should ask the Swedes, ‘Well, what did you find down there? Did you clean up all the evidence that it was a US action? Or you cleaned up the evidence of somebody else? What is really going on?’, because this is of big consequence for Europe.

Why do you think it would have been in the US’s interest to blow up the pipeline?

The US was against the pipeline for years. The US said that Europe should not be dependent on Russian gas, which, to my mind, is a very strange idea, because an economist wouldn’t use the word ‘dependent’, an economist would use the word ‘trade’. Russia trades its gas and Europe trades its manufactured goods and other goods. And that’s what we call mutually beneficial exchange. We don’t call that dependence. However, military strategists in the US who aim to weaken Russia would not view that as mutually beneficial exchange, they would view that as dependence. Although I have a very different point of view, the US policymakers said for years, ‘Nord Stream is a trap. Nord Stream is dependency. Nord Stream should end. Germany should renounce Nord Stream.’ Then on 7 February of this year, Biden was asked in a notorious press conference when he was meeting with the German prime minister, ‘What about the Nord Stream, Mr President?’, and he said, ‘If Russia invades, the Nord Stream Pipeline is finished.’ And the reporter was very surprised and said, ‘Excuse me, Mr President, but that’s a Russian-German project, how can you say it would be finished?’ And he said, ‘Believe me, we have our ways,’ which, to my mind, to an American ear, is very familiar, because

this is the American way of taking actions, like, for example, blowing up infrastructure,

which we have done on many other occasions in the US. When the pipeline was blown up, everybody knows that the former Foreign Minister of Poland Radek Sikorski tweeted ‘Thank you, USA’. Now this is a man who, I would think, is in the loop of what happened—although he removed the tweet, but it was good enough as a thank you.

Can you give other examples?

US Secretary of State Antony Blinken said in a press conference together with the Canadian Foreign Minister, and I am more or less quoting, that this event [blowing up the Nord Stream pipeline] represents what he called ‘a tremendous opportunity to finally wean Europe away from Russian energy’. Well, the destruction of international infrastructure by sabotage of a multibillion-dollar project of tremendous economic significance to Europe is not under any circumstance a tremendous opportunity.

But if the US Secretary of State says it’s a tremendous opportunity, you should raise your eyebrows

and think, ‘What a strange statement. What does that indicate?’. To my view, it indicates that the US was a party to this, or a strong supporter of it. I would like to try to find out what the Swedes learned and know what others have learned. However, given the way the Western media works, we’re not finding out very much. Perhaps the most interesting thing is that this major event took place,

and in the mainstream Western media nobody talks about it at all anymore.

That, to my mind, is also evidence of US complicity.

Some are saying that what the United States is achieving right now is basically driving Russia into China’s arms. What do you think about the Chinese-Russian relations?

I think that, obviously, China and Russia are rapidly becoming more economically integrated. Russian energy that used to flow to Europe is now flowing to China. We should also understand the context, which is that in US foreign policy doctrine, China and Russia are the two enemies explicitly, not just on a list of many, many countries, but the two that are named as the two threats to the so-called rules-based international order, which in the US linguistics means the ‘US-based international order’. So the reason for Russia and China embracing each other is not only that Russia is turning east rather than west because of this war and its consequences, but also that

China is facing more and more US antagonism and anti-China actions.

What China is seeing also is a much more aggressive and a much more provocative United States. This basically started around 2015, when China announced the Made in China 2025 policy, which was a policy to take international leadership in ten important technologies by 2025. Then, the United States strategists opened their eyes and said, ‘We can no longer accept China’s continued economic rise. It’s a direct threat.’ Even President Obama tried to negotiate the Trans-Pacific Partnership, on the basis that there should be a Pacific trade agreement that explicitly would not include China, which is a very strange idea that we would have an Asian trade relationship with China not part of it. So already the United States was actively trying to cut China apart from its trade relations.

What happened then?

After that, President Trump introduced a very aggressive trade policy. When Biden came in, I was hoping he would say, ‘Trump’s policies were very destabilizing, we need to reduce the tensions,’ but quite the contrary: he escalated. The most dramatic of these is the attempt to shut China off from high-end semiconductors on the purported ground that they have military application and it’s a national security threat. But it’s much more than that—it’s basically an attempt to contain China’s development broadly, by limiting its access to advanced semiconductors. It’s a wrongheaded, dangerous, and provocative policy. It is seen for what it is in China, especially when it’s combined with US attempts to destroy Huawei and ZTE and other leading Chinese tech companies. This is another reason why China is not very interested in doing anything to abet the US position vis-a-vis Russia, because China is feeling the same pressures right now. And when you add in the irresponsibility vis-a-vis Taiwan, where the US has dropped a lot of its ‘One China’ Policy and to where the Speaker of the House of Representatives provocatively flies despite multiple Chinese appeals not to do so because of the provocations that it leads to, all of this means that Russia and China are feeling quite a common position right now that the US is pressing against both of them.

The United States is basically calling both of them adversaries or enemies.

Even when we have NATO meetings these days—and I really deplore it—, NATO is inviting Asian leaders, which to my mind is an absolute terrible misstep, because the word ‘NATO’, last time I checked, meant ‘North Atlantic Treaty Organization’, not ‘Anti-China Treaty Organization’. We shouldn’t have leaders from Japan, Korea, Australia or New Zealand coming to a NATO meeting that just proves to China and Russia that it’s against both of them. Therefore, to my mind, this closer relationship is one that is almost made by the United States. It also makes no sense. It’s dangerous, provocative, bad for Europe, bad for the United States, and dangerous for the whole world. However, it’s part of our neoconservative foreign policy in the United States.

You have just met Viktor Orbán. What is your opinion of Orbán and especially his policy regarding the Russo-Ukrainian war?

I really admire Prime Minister Orbán for being clear that the current path that we are on makes no sense. We talked a lot about the natural economic links between Hungary and countries to the East, whether it is the Western Balkans, the Black Sea region, Russia, or Central Asia. The idea that somehow we want to draw a new Cold War line or imagine that Russia is not on the map anymore, or sever all relations and punish Russia for generations to come, which is part of the heated rhetoric coming out of Brussels and some European capitals, makes no sense. I really appreciate Prime Minister Orbán saying these things because

he is one of the few European leaders to be very clear on this point

that we need a way out of this conflict, and that this is not helping anybody. This is not saving anybody. It’s not saving Ukraine. It’s definitely hurting the European economy, and it’s very dangerous for the world. We also talked about risks of escalation—and he is right.

You have also published on Africa and the future of Africa. You have written that the idea is that we should not give so much aid to Africa, but perhaps cheap, long-term loans might help the continent better. Why do you think this is important?

I am in favour of as much aid as we would give, the more the better. I’m not against it. I’m just seeing how limited it is. And if we are not going to give aid in the form of grants, we should be arranging much larger flows of finance. The reason is very simple. Africa is capital-scarce, meaning that even basic infrastructure like electrification, roads, water, sewerage, or digital access is not accessible to most of the population right now. And on the human investment side, what we call human capital in economics, which is investments in education and health, these are shockingly bereft of meeting the needs of the population. I will give an example because I looked at the data yesterday: in Chad and Niger, two very poor countries in Sub-Saharan Africa, there are two to three doctors per 100,000 population. Whereas in Europe, there are typically five to six per 1000. So the ratio is two or three hundred times more doctors per capita in our countries than in those countries where people are dying. Their life expectancy is 30 years lower in Sub-Saharan Africa than in the longest-lived countries in the world—that is a human disaster. However, I am a development economist. So I can say, and I would say with some authority and experience, unless there is investment in education of African kids, unless there is health care coverage, unless there is electricity access, and unless there is digital access, there will be no sound development in Africa.

And the risks will be in exploding population, mass migration and instability.

This is crazy; it’s in nobody’s interest. Therefore, people need to think a little bit ahead and say, ‘How can we help Africa break free of the poverty trap so that people can live good lives at home?’ And we can have the demographic transition to slower population growth, because if girls remain in school longer, they will marry later and will have fewer children, all to the benefit of Africa’s economic development, and its stability and sustainability in the future. I wish that some leaders would think ahead—but not enough do.