July 19, 2016 "Information Clearing House" - "TRNN" -  JESSICA DESVARIEUX, TRNN: Welcome to the Real News Network. I'm Jessica Desvarieux in Washington.

President Obama met with NATO leaders in Warsaw last weekend to what seemed like a restatement of vows to protect Europe. Let's take a listen to what the president had to say.

BARACK OBAMA: In this challenging moment, I want to take this opportunity to state clearly what will never change. And that is the unwavering commitment of the United States to the security and defense of Europe, to our transatlantic relationship, to our commitment to our common defense. Throughout my time in office, one of my top foreign policy priorities has been to strengthen our alliances, especially with NATO. And as I reflect on the past eight years, both the progress and the challenges, I can say with confidence that we've delivered on that promise. The United States has increased our presence here in Europe. NATO is as strong, as nimble, and as ready as ever.

DESVARIEUX: So ready that the president will be sending 1,000 troops to Poland as one of four battalions that are being sent to countries bordering Russia. But what is really at the heart of this matter? Are these just tactics by the U.S. leading to an escalation of tensions between the U.S. and Russia? And what role should NATO be playing in maintaining a balanced Europe?

Now joining us to help us answer these questions is our guest, Michael Hudson. Michael is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He's also the author of many books, including his latest, Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. Thank you so much for joining us, Michael.

MICHAEL HUDSON: It's good to be here.

DESVARIEUX: So, Michael, we just heard President Obama pledging his allegiance to protecting Europe. Does Europe really need protecting, though?

HUDSON: Well, as soon as Obama made those words, there was a fury of European statements saying that Obama and NATO was making Europe less secure. The French prime minister, Francois Hollande, says that we don't need NATO. NATO has no role to play in our Russian relations. That leaders of the two major German parties, both the Social Democrats and the Christian Democrats, said that NATO was warmongering. Gorbachev came out and said the world has never been closer to nuclear war than it is at present. William Perry, the former head of the Pentagon in the mid-90s, said that NATO was threatening and trying to provoke atomic war in Europe.

And one of Russia's leading military strategists said here's what the problem is: NATO wants to move bombers and atomic weapons right up to the border of Russia. That means that if they launch over us, we have only a few seconds to retaliate. President Putin a little while ago had given a speech saying that Russia doesn't really have a land army. In fact, today, no country in the world, in the Northern Hemisphere, at least, has a land army that can invade anywhere. Try to imagine America being invaded by Canada, or by Mexico on its borders. You can't imagine it. Impossible. No democracy can afford a land army anymore because the costs are so high that the costs of mounting a land war will just impoverish the economy.

As a matter of fact, what NATO is trying to do is to goad Russia into building up an army so it can undercut its economy by diverting more and more resources away from the economy towards the military. Russia's not falling for it. Putin said that Russia has no intention of mounting a land army. It is unthinkable that it could even want to invade the Baltics or Poland. But Putin did say we have one means of retaliation, and that's atomic bombs. Atomic weapons are basically defensive. They're saying, we don't need an army anymore. Nor does any country need an army if they have an atomic weapon, because if you attack us we'll wipe you out. And we'll be wiped out, too, but you're never going to be able to conquer us. And no country, really, can conquer any other country. Russia can't conquer Europe.

So the effect, Putin and the Russian leaders have said, look, if they suppose that an American plane goes a little bit off, like, you know, the ships try to provoke things, we don't know whether it's an atomic attack at all. We can't take a risk. If there's a little bit of a movement against us, we're going to launch the hydrogen bombs, and there goes Berlin, Frankfurt, London, Manchester, Brussels. That's why you're having all of these warnings. And Europe is absolutely terrified that Obama is going to destabilize. And even more terrified of Hillary getting in, who's indicated she's going to appoint a superhawk, the Cheney protege Flournoy, as Secretary of Defense, and appoint Nuland, Victoria Nuland, as Secretary of State.

And all throughout Europe--I've been in Germany twice in the last two months, and they're really worried that somehow America is telling Europe, let's you and Russia fight. And basically it's a crisis.

DESVARIEUX: Okay. Michael, I want to get back to your point about how we're seeing this narrative develop about a potential nuclear war on the horizon. And it seems like it's quite real. This is not just conjecture, here. We have U.S. and Russia's military forces warning that a nuclear war is nearer than ever before.

So let's talk about interests, here. On either side, let's be as specific as possible, and call a spade a spade. In whose interest is it to keep up this narrative? Because I'm sure there are people not just in the United States that profit from this, but also in Russia. Can you speak to that?

HUDSON: Well, one of the points made at the NATO meetings was NATO urged countries not to rely on Russian weaponry. There was an insistence by Obama that the NATO countries spend 2 percent of their GDP on NATO, on arms, mainly by buying arms from American military manufacturers, Raytheon, Boeing and the others.

Now, look at what's happening in Europe. It's not even growing 2 percent because of the austerity that's being imposed on it. So 2 percent is the entire annual economic growth in Europe. This large amount has to be spent on American arms. So it turns out that this sabre-rattling to Russia merely means, is a means of obliging the European countries to pay the United States arms manufacturers for goods, and to basically hold you up, Europe up for ransom, saying if you don't be a part of this, we're not going to defend you, and Europe is saying, well you know, we really don't need defense. We'd rather have an economic relationship with Russia. Especially the Germans say, we don't want the sanctions. The Italians say, we don't want the sanctions. We don't want you to make money off Russia. Buy from us, not from Russia. Buy your agricultural goods and your other goods from us, from countries in the dollar orbit, not from the Russian orbit.

And that, essentially, is what Obama meant by the reset. It meant a new Cold War, but the essence of the Cold War is to fight in the new way, which is a financial war, with the military only being a kind of catalyst for the financial warfare between the United States on the one hand. And it's now--the first effect of the reset--was to drive Russia into an alliance with China. And now, NATO may be overplaying this right-wing hand so much that it's driving Germany and Italy and France out of NATO. That is the effect this is--what it's doing is rather effective.

DESVARIEUX: Michael, what about on the Russian side? There are interests that are encouraging this reset?

HUDSON: They had hoped that the reset would mean a winding down of military. Russia would like to use, every country would like to use more of its resources for the domestic economy, not for the military overhead. And in a way, America is trying to force Russia to spend more on overhead as part of its economic warfare with Russia.

This is Brzezinski's plan in Afghanistan, you know, way under the Carter administration. If you can force Russia to pay more for its military to defend Afghanistan, then its economy would buckle and you'll have discontent there. And then the Americans can come in and promote nationalist and other localist breakups, and try to break up Russia just as America is trying to push a breakup of China as a long-term strategy. And this is going--there's no way that this cannot backfire on the United States.

DESVARIEUX: Okay. Let's talk about what everyday people could do to move away from accepting this narrative, or move away from this potential reset that President Obama is proposing? What policy decisions could be made to de-escalate this tension?

HUDSON: Essentially to dissolve NATO, which France has been pushing now for many years. There's no need for NATO now that there's no threat of any military invasion anymore. Remember after World War II, NATO was put up when there was a thought that, well, the first idea is European countries should never go to war with each other again. There will never be war between France, Germany, Italy. That's been solved. There's no way in which European countries would go to war.

The second thing was, well, what if Russia would re-invade like it did when it fought against Hitler? Well, there's no danger of Russia invading anymore. In fact, in 1990, when the Soviet Union broke up, the Ukraine passed a resolution that it wanted to remain neutral and benefit from its sort of neutral pivot between Russia and Europe. And the United States put $5 billion into Ukraine, and spurred a lot of nationalist revolution. And so it took the United States 20 years to turn that around and to somehow break up this neutrality.

So the U.S. strategy is to prevent neutrality. Europe's economic interest is to achieve neutrality with Russia, and have economic unity so that there's little chance of any confrontation with Russia as there is among the European countries themselves.

DESVARIEUX: All right. Michael Hudson, always a pleasure having you on the program. Thank you so much for being with us.

HUDSON: Good to be here.

DESVARIEUX: And thank you for joining us on the Real News Network.

Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He is the author of The Bubble and Beyond and Finance Capitalism and its Discontents. His most recent book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.