00:00It's unclear, and we heard this also with, you know, in Davos last week, it was definitely
00:04Mark Carney that kind of broke away a little bit, that alliance with the U.S. They're looking
00:09to China. But is China de facto the counterpart for allies that no longer want to be dependent
00:15on the U.S.? So you are seeing lots of countries now look to diversify their relationships away
00:22from the United States. I think we've seen that reflected with the EU attempting to get that
00:28Mercosur deal over the line last week. You're seeing Ursula von der Leyen. She's in India
00:33looking to conclude a free trade agreement. The problem with China is many countries have
00:38problems with the regime, the nature of the regime and things the regime has been doing
00:42in the European theater that run counter to European interests. That's aid and non-lethal
00:48aid into the Ukraine theater. It's overcapacity. It's the trade distorting subsidies. And so
00:53as they try to find a way through with the U.S. administration, I think there is a question
00:58now as to whether the de-risking approach that many countries have articulated now shifts. I think
01:05for Starmer in particular, it will reinforce this sense of never here, Keir. I think the Tories and
01:11reform will absolutely go after him for kowtowing to Beijing, but he'll try and make this trip about
01:15the domestic agenda, jobs, investment, etc. But I mean, if you get too close to China,
01:20does President Trump retaliate? I mean, is everything, you know, are we questioning everything
01:25that policymakers are doing in case Trump retaliates? I think that's one motivating
01:29factor. But as I say, I think there are other concerns many countries will have about getting
01:34off that de-risking agenda, certainly for the Europeans and indeed for the Brits. And so
01:39they're going to try to find a balance here, a way through where they both remain, you know,
01:46close and constructive with the Americans, while at the same time cognizant of the risks that come from
01:51getting closer with the Chinese. Also, what's happening in the UK Labour Party? So, you know,
01:57Keir Starmer allies barred the Greater Manchester Mayor from standing as Labour's candidate. I mean,
02:02this is a widely popular person. So does he feel threatened?
02:05I mean, Francine, you know my view. I don't think Starmer will see the year to conclusion. I think he
02:09is going to face a leadership contest, the midterm regional election, 7th of May. That's going to be a
02:14massive problem for Starmer and for Labour, given their likely performance in Scotland, in Wales, in
02:20the English councils. And so I think a leadership challenge is coming. Andy Burnham would have been
02:25a favourite and a darling of the soft left. The unions like him. He's very popular, obviously,
02:30with the base. And so that would have reflected, I think, a big threat for Starmer. And that's what
02:35they're trying to manage in the very short term. But that doesn't prevent these structural challenges
02:38that have prevented Labour from, you know, from performing well. They don't have a plan for power.
02:44Starmer hasn't managed the parliamentary party well. The polling is abysmal. They don't have a clear
02:48narrative or a message for the country. And so I think a leadership challenge will come. I think
02:53Angela Rayner is my base case to replace him. If not, then I think West Streeting is
02:57highly likely to succeed if Angela Rayner does not.
03:01What does it mean for the economy? Because, you know, what they offer at the moment, they say, is stability.
03:07I mean, I think if it's a leader to the left of Starmer, and it will be, they're going to want to
03:12pick apart the fundamental, let's say, governing philosophy of this government, which is going to
03:18be a change to the fiscal rules. I don't think they're going to throw the fiscal framework in the
03:22bin. Angela Rayner, you know, these guys on the soft left, that's not the same constituency as
03:29Corbyn and his allies. So whether it's a West Streeting, whether it's an Angela Rayner, I think
03:34we're looking at a tweak to the fiscal rule, but their instincts will be to borrow and spend more.
03:38I don't think they'll want to sign up to the fiscal straitjacket that Reeves and Starmer have
03:43alighted on that is dictating so much of what the government is and is not able to do on their
03:47domestic agenda. What happened over Greenland? So I love your piece, actually, that, you know,
03:51it says Trump's ruling out of military action does not defuse a crisis. That's what I felt.
03:56Right. I mean, there was like a sigh of relief in Davos saying, oh, he's not sending the military
03:59crisis averted. Let's move on. Right. But it's deeply disturbing, actually, when that's even,
04:05you know, a base case. So I wrote that piece after Trump had
04:08excluded a military intervention, so military adventure. But then we had the further climb
04:14down later in the day where he talked about working through the NATO framework. So now I do
04:19think that the most extreme tail risks have been controlled for the tariff threat and any unilateral
04:25intervention, whether militarily or through economic coercion. So he's going to do a deal
04:29in the NATO framework and bilaterally with Copenhagen and Greenland. I think the remarkable thing is
04:34this is a deal that's been on the table for over a year. Right. The Danes, the Americans and the
04:39Greenlanders have been talking about reinforcing security on the island for the Arctic. But Trump was
04:46opposed to working with NATO and felt that he needed sovereign control over the island in order to
04:51deliver on these security goals. I think a combination of European resolve, congressional and public
04:58opinion in America. And of course, market pressure resulted in that big taco that we all saw in Davos
05:05last week. I mean, does the president go go back after Greenland because he doesn't I mean, a lot of
05:10the times what I'm told by people close to him is that he just doesn't let go. I mean, I think on
05:14Greenland, I think we're in a more boring negotiating corridor. Now, I think the risks have largely been
05:20controlled for. And I suspect there will now be an agreement that sees the Americans reinforce their
05:26security on the island. But they do it in a context through NATO with Rutter and bilaterally
05:31with the Danes, maybe the upgrade the 1951 treaty that will give the US more of what they're looking
05:37for. Sovereign bases on the island is something that's been talked about as long as that's done
05:40in conjunction with Denmark and Greenland. That may be a possibility. It doesn't mean other risks in
05:46the transatlantic alliance don't remain real. I mean, Europe has signed up to a 5% spending target
05:51by 2035 on security and defense. Many countries, Francine, just don't have the fiscal pathway
05:57to get there. The UK and France being two very obvious examples. And so at the moment of this
06:01midterm review, there may be a question when the Trump administration looks at the numbers and says
06:06allies aren't following through on their commitments. There remain very real risks in the Ukraine
06:11theater. The administration, which by and large is forgotten about, which has been completely forgotten
06:15about. But again, where the administration is really pressuring Zelensky to concede to territorial
06:21concessions in the Donbass, in particular in Donetsk, in areas of territory that the Russians have not
06:26been able to win on the battlefield. So that remains an existential and very real risk for Europe. And of
06:33course, implementation of the trade deal is now stuck because the European Parliament said they're not
06:37going to ratify it. So that creates the risk of more bilateral tensions. There's, of course, things around
06:42free speech and the Digital Services Act and the Digital Markets Act. And so there are many irritants
06:48and many potential sources of friction in the transatlantic relationship that may blow things up
06:52again. Do you have a better understanding now what this new world order could look like?
06:56I mean, I think the Europeans are getting to grips with the new world order that isn't governed on the
07:02basis of rules and norms and institutions that they're so comfortable with. And I think we are
07:07beginning to see the Europeans flex a little bit more. But again, Francine, you know, it's about
07:11that draggy agenda on economic competitiveness. It's about capital markets union, about the tech
07:17ecosystem, about doing more to ensure the Europeans, as Macron has always said, can be more strategically
07:22autonomous. And I think there, there are still some ways to go.
07:25Is there a timeline problem that you can be more autonomous, but it takes time to build up your
07:30supply chains, to have access to rare earth?
07:32I mean, I think it's a crisis and non-crisis context problem for the Europeans. I think there's
07:37this, there's always this question about will Europe perform well in the crisis? And my general
07:41expectation is, it tends to perform better than, tends to perform better than consensus
07:46suggests. The problem with Europe is it doesn't have a playbook for governing in normal times.
07:51So as soon as the existential threat has removed itself, as soon as the environment is a bit
07:56less menacing, everybody again begins to rest on their laurels and some of these important
08:01forms don't move forward.
08:03So as soon as I read, I say.
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