FidelityConnects: Canada's moment part 1: Navigating a rewired global order
In a world marked by geopolitical disruption, shifting alliances and evolving energy dynamics, understanding the broader forces at play has never been more critical. In this conversation, former CIA senior officer and geopolitical expert David Bridges sets the stage with a sweeping view of today’s global landscape. From Arctic security and emerging shipping routes to the long-term implications of conflict in Ukraine and the Middle East, the discussion explores the intersection of energy, defence and trade. With North America’s resource strength and quality of governance in focus, Bridges highlights why Canada and the U.S. may hold a durable strategic advantage, even in an increasingly complex world.
Transcript
00:07.540 --> 00:09.442
Hello, and welcome to Fidelity Connects.
00:09.442 --> 00:13.380
I'm Pamela Ritchie. The paint roller, the garbage bag, the
00:13.380 --> 00:17.550
pacemaker, everyday tools used by millions, each invented by
00:17.550 --> 00:21.821
Canadians. Insulin, the telephone, the first mutual fund,
00:21.821 --> 00:23.990
the first ETF, in fact.
00:23.990 --> 00:27.927
Breakthroughs that didn't just solve problems, they reshaped industries,
00:27.927 --> 00:29.729
economies and lives.
00:29.729 --> 00:34.000
For decades Canada has punched above its weight but today
00:34.000 --> 00:36.002
something bigger may be at play.
00:36.002 --> 00:40.073
Supply chains are shifting, alliances are evolving, trade
00:40.073 --> 00:44.110
is being rewritten, and for the first time in a very long time
00:44.110 --> 00:47.380
those forces may be aligning in Canada's favour.
00:47.380 --> 00:51.451
Is this Canada's moment, and more importantly, what does that mean
00:51.451 --> 00:53.686
for investors, for you?
00:53.686 --> 00:57.757
During today's extended Fidelity Connects webcast we'll bring you insights from
00:57.757 --> 01:01.795
leading industry experts on what's driving this shift and where the
01:01.795 --> 01:03.696
opportunities may lie.
01:03.696 --> 01:07.000
To kick off today's conversation is geopolitical expert
01:07.000 --> 01:09.936
and principal at Morlupo Group David Bridges.
01:09.936 --> 01:11.971
Nice to see you again, David.
01:11.971 --> 01:13.973
How are you?
01:13.973 --> 01:16.609
Hey, Pamela, it's nice to see you again. It's nice to be back.
01:16.609 --> 01:18.445
Delighted to have you back.
01:18.445 --> 01:22.348
Just remind for those joining you here today, you were with the CIA for many
01:22.348 --> 01:26.119
years in many different ways leading all kinds of groups.
01:26.119 --> 01:31.424
Can you just remind us of your bio a little bit first?
01:31.424 --> 01:33.793
As you said, I was at CIA for 25 years.
01:33.793 --> 01:36.463
I was in the clandestine service so the espionage cadre.
01:36.463 --> 01:40.433
I was, at the time of my retirement, a member of
01:40.433 --> 01:44.003
the senior intelligence service so that's the senior leadership team.
01:44.003 --> 01:46.005
I spent the bulk of my career overseas.
01:46.005 --> 01:47.941
I was actually born in France.
01:47.941 --> 01:52.879
My father was in the US Diplomatic Service so I grew up
01:52.879 --> 01:55.915
mostly outside the US on both sides of the iron curtain.
01:55.915 --> 01:59.385
I'll date myself, I was in Moscow for the Cuban Missile Crisis.
01:59.385 --> 02:03.356
I was a teenager in Czechoslovakia, then Czechoslovakia,
02:03.356 --> 02:07.861
under Soviet occupation. I went to the University of Bucharest when
02:07.861 --> 02:11.831
Ceaușescu was still around. Came back to the US for college and grad
02:11.831 --> 02:16.102
school, then went off to work in the Middle East for five years
02:16.102 --> 02:20.273
for peacekeeping force. Then joined CIA, retired
02:20.273 --> 02:24.344
from CIA and went to work for Fidelity and spent 12
02:24.344 --> 02:28.715
years working in asset management in Fidelity US,
02:28.715 --> 02:32.886
working with fund managers and analysts, talking to them about the real
02:32.886 --> 02:37.357
world and the real world's impact on their investment strategies
02:37.357 --> 02:39.526
and hypotheses and suites.
02:39.526 --> 02:41.394
It was pretty gratifying.
02:41.394 --> 02:45.965
Then a couple years ago I decided having spent so
02:45.965 --> 02:50.603
many years on the road I wanted to dial it back a little bit.
02:50.603 --> 02:54.774
I've maintained my exclusive relationship with Fidelity
02:54.774 --> 02:58.478
but I have a little more control over my travel these days.
02:58.478 --> 03:02.048
So well deserved. I mean, what an incredible career.
03:02.048 --> 03:03.850
You're here with us to share some of your insights.
03:03.850 --> 03:07.620
Based on everything you've just said and where you've been and what you've
03:07.620 --> 03:11.824
seen, in terms of the world shifting, I mean, meaningful shifts, put
03:11.824 --> 03:16.162
today in perspective for us. What kind of shift, as we've mentioned here,
03:16.162 --> 03:18.698
are we in?
03:18.698 --> 03:23.836
That's a great question. We are living with a
03:23.836 --> 03:27.907
US president who by US political tradition
03:27.907 --> 03:31.878
standards is an outlier, a
03:31.878 --> 03:36.583
man who feels unconstrained by precedent,
03:36.583 --> 03:38.685
by history.
03:38.685 --> 03:42.589
A man who appears to take great delight in smashing
03:42.589 --> 03:49.262
long held assumptions and understandings.
03:49.262 --> 03:53.700
We're 18 months into his second term in office, we got
03:53.700 --> 03:56.269
another 30 months to go.
03:56.269 --> 04:00.607
The disruption that Donald Trump has brought, not just to the
04:00.607 --> 04:04.944
US but internationally, I think we can reasonably
04:04.944 --> 04:09.549
foresee lasting at least another, we'll say 26
04:09.549 --> 04:13.286
months, 28 months.
04:13.286 --> 04:17.056
We need to start thinking about what that means for all of us.
04:17.056 --> 04:21.494
I mean, as this is going on it has forced many reactions
04:21.494 --> 04:25.865
and trade changes,
04:25.865 --> 04:29.135
sentiment changes, lots of things, and now we have an energy change afoot which
04:29.135 --> 04:33.172
is very much happening due to recent events in the Middle
04:33.172 --> 04:36.209
East. The world order is shifting.
04:36.209 --> 04:40.446
It's been shifting for a while. There's been a rising in China, it's not
04:40.446 --> 04:44.450
a secret, certainly. Would you say that the world order is ordering
04:44.450 --> 04:49.255
itself around energy in a new way?
04:49.255 --> 04:53.559
I think, absolutely, we're seeing some profound changes
04:53.559 --> 04:57.730
to global energy architecture that are being driven both by
04:57.730 --> 05:01.734
geopolitical changes, geopolitical events like what's
05:01.734 --> 05:05.772
happening with Iran, for example, and the US, but I think more importantly
05:05.772 --> 05:09.909
by global demographic change.
05:09.909 --> 05:14.113
We're living through a period of unprecedented, historically unprecedented
05:14.113 --> 05:18.851
demographic growth. We're seeing the rise of
05:18.851 --> 05:22.789
a region that we still don't have a good name for.
05:22.789 --> 05:26.793
I mean, in the old days they called it the Third World and now it's sort of
05:26.793 --> 05:30.763
the Global South, it's that part of the world that the West,
05:30.763 --> 05:34.767
the developed West, hasn't spent a lot of time thinking of, except as
05:34.767 --> 05:39.005
a resource base, which is now assuming
05:39.005 --> 05:43.309
an unprecedented importance because of, as I say, demographic
05:43.309 --> 05:47.680
growth. By 2040 Nigeria will be the world's third most populous
05:47.680 --> 05:51.984
nation. We haven't really kind of adjusted our thinking to
05:51.984 --> 05:55.922
a world where the Global South moves
05:55.922 --> 06:00.093
into a position of enormous prominence.
06:00.093 --> 06:04.430
In thinking about that and other places around the world who
06:04.430 --> 06:09.469
want either buy energy from or to have energy exported to,
06:09.469 --> 06:13.172
again, put North America, we'll come back to some of these things, but put
06:13.172 --> 06:17.477
North American in context within a world that is ordering itself
06:17.477 --> 06:21.848
around energy self-sufficiency, the ability to be energy independent
06:21.848 --> 06:25.785
and the ability then to export to new places and
06:25.785 --> 06:31.858
from new places. Where does North America sit?
06:31.858 --> 06:35.962
It's producing states. I mean, Canada, the US and Mexico are important
06:35.962 --> 06:38.598
energy producers and will continue to be so.
06:38.598 --> 06:42.635
It gives them energy independence as well so there's
06:42.635 --> 06:46.739
that buffering from the sharper shocks of geopolitical
06:46.739 --> 06:51.244
effects that countries with less energy independence are subject to.
06:51.244 --> 06:55.548
I think that the longer term future for North America
06:55.548 --> 06:59.786
and for the northern part of the Western Hemisphere
06:59.786 --> 07:03.523
is very favourable and will continue to be favourable for years and years to
07:03.523 --> 07:08.161
come. We have a long history of cooperative
07:08.161 --> 07:13.099
engagement. I will confess my own bias, I'm a committed
07:13.099 --> 07:17.036
Atlantacist, I'm a strong believer in Canada not as a 51st
07:17.036 --> 07:20.506
state but as a strong sovereign partner country.
07:20.506 --> 07:24.577
The same with Mexico. I think that will continue
07:24.577 --> 07:28.181
you to be the case, Donald Trump's fulminations notwithstanding.
07:28.181 --> 07:30.983
There's just too much at stake.
07:30.983 --> 07:35.455
Let me say the ties that bind us are far stronger than
07:35.455 --> 07:39.492
the ability of any one man to sort of definitively
07:39.492 --> 07:40.359
render.
07:40.359 --> 07:43.896
Now, having said that, we live in a world where ...
07:43.896 --> 07:48.334
if you look at the combined population of the US and Canada, 370 million people
07:48.334 --> 07:50.970
against a global backdrop of ...
07:50.970 --> 07:55.208
we're now in excess of 8 billion on our way to a population max of probably 11
07:55.208 --> 07:56.976
billion people at the turn of the century.
07:56.976 --> 08:02.081
We are definitely a small player in a very big world
08:02.081 --> 08:06.219
but we do have these abundant natural resources that
08:06.219 --> 08:09.021
buffer us and will continue to buffer us.
08:09.021 --> 08:12.792
You and I were speaking just before we came on air, you mentioned that there's
08:12.792 --> 08:16.796
some new research that you had looked at putting the natural resources of
08:16.796 --> 08:18.798
the world, basically, into context.
08:18.798 --> 08:22.668
Can you run through those for us?
08:22.668 --> 08:26.873
An old colleague of mine at the Agency sent me this thing, it's a different
08:26.873 --> 08:28.908
way, a different lens to look at the world.
08:28.908 --> 08:33.112
What it is is a ranking of states around the world
08:33.112 --> 08:37.250
on the basis of natural resource wealth, underlying natural
08:37.250 --> 08:39.252
resource wealth.
08:39.252 --> 08:43.623
The country that emerges as the wealthiest is Russia by far
08:43.623 --> 08:47.894
with a natural resource base, estimate
08:47.894 --> 08:50.263
$75 trillion. The US comes in second place, 45 trillion.
08:50.263 --> 08:54.300
After that Saudi Arabia, 34
08:54.300 --> 08:56.369
trillion.
08:56.369 --> 09:02.008
Fourth place is Canada, 33 trillion. Then Iran,
09:02.008 --> 09:05.011
China, Brazil and Australia.
09:05.011 --> 09:08.247
It gives us a a different way of looking at the world and interpreting the
09:08.247 --> 09:12.251
world. When you have two of
09:12.251 --> 09:17.723
the top four countries partners, neighbours,
09:17.723 --> 09:22.194
linked by culture, friendship,
09:22.194 --> 09:26.299
commerce, trade, it's a very powerful [crosstalk].
09:26.299 --> 09:30.536
The hockey Buffalo Sabres game, there you go.
09:30.536 --> 09:34.607
I will say to my Canadian friends and colleagues, I think
09:34.607 --> 09:38.711
that the sight of thousands of Americans singing Oh Canada says a lot more
09:38.711 --> 09:42.748
about the true nature of the bilateral relationship than anything Donald
09:42.748 --> 09:46.218
Trump might have to say about wanting to make Canada the 51st state.
09:46.218 --> 09:50.389
It was a tear jerker and even those who pretend it wasn't, it was, it was
09:50.389 --> 09:54.860
fantastic. Based on that ranking that you just had there
09:54.860 --> 09:58.698
I suppose you could say some of those countries have always competed with the
09:58.698 --> 10:02.935
other countries to export and to get their oil to different places as
10:02.935 --> 10:06.906
their main industry, energy, other types of energy as well,
10:06.906 --> 10:11.110
but it's changing a bit. You listed there Russia, the US, Saudi Arabia, Iran,
10:11.110 --> 10:15.247
Canada is in there at number four, they've always been competing, how
10:15.247 --> 10:19.285
can that shift or change? How do you see those competitors to feed
10:19.285 --> 10:23.556
the rest of the world with various types of energy changing,
10:23.556 --> 10:27.660
teaming up? I don't know, how does that work?
10:27.660 --> 10:32.531
I think that the success, or relative
10:32.531 --> 10:36.969
lack of success, is really driven by the quality of governance.
10:36.969 --> 10:39.205
In Canada you have high standards of governance.
10:39.205 --> 10:43.676
We, I wince a little bit,
10:43.676 --> 10:46.912
but I think the US has pretty high standards for governance.
10:46.912 --> 10:49.115
Recently there's been a little testing of that.
10:49.115 --> 10:53.285
The other countries on that list, let me say their standards of
10:53.285 --> 10:57.923
governance don't quite meet our standards, Russia, for example, or
10:57.923 --> 11:01.861
Iran. That has this long term dampening effect on their ability
11:01.861 --> 11:05.731
to effectively exploit that natural resource base they enjoy.
11:05.731 --> 11:10.036
This, I think, at the end of the day is really the big story for investors
11:10.036 --> 11:12.838
anywhere, what's the quality of governance in the place you're looking at?
11:12.838 --> 11:16.776
Are the risk premia worth it?
11:16.776 --> 11:18.444
Exactly.
11:18.444 --> 11:22.415
The two most populous countries on the planet need more energy,
11:22.415 --> 11:25.017
India and China. They're actually right next to each other.
11:25.017 --> 11:27.853
They need more of it. They can get it from Russia, they do get it for Russia.
11:27.853 --> 11:31.057
They can get it from Iran, they can do.
11:31.057 --> 11:34.994
Is there a role for perhaps North America to get more and more, maybe on
11:34.994 --> 11:38.431
the LNG front? I mean, there are many deals being struck, being thought up,
11:38.431 --> 11:41.267
being written up on drafts and deals being stuck.
11:41.267 --> 11:45.404
Again, how do you see some of the most populous nations being fed
11:45.404 --> 11:49.175
by energy from other countries?
11:49.175 --> 11:53.245
This is where the US and Canada, we're coming kind of late to the game.
11:53.245 --> 11:56.282
Our thinking, I think, for a long time has been driven by domestic consumption.
11:56.282 --> 12:00.319
By domestic consumption I'm really talking
12:00.319 --> 12:05.024
about US, Canada joint domestic consumption.
12:05.024 --> 12:09.061
There's some existing issues to
12:09.061 --> 12:13.933
resolve, trans-border pipelines that pass through ecologically,
12:13.933 --> 12:16.335
culturally, environmentally sensitive areas.
12:16.335 --> 12:19.472
For years and years and years we kind of thought about meeting our own domestic
12:19.472 --> 12:23.442
needs before we thought about exporting what we had to the rest
12:23.442 --> 12:27.780
of the world. Well, let me say that as the rest the world develops more
12:27.780 --> 12:31.517
and more of an appetite for energy the US and Canada, as I say, are coming late
12:31.517 --> 12:35.221
to the game and looking at developing their own export capabilities.
12:35.221 --> 12:38.524
They are coming without doubt.
12:38.524 --> 12:42.728
Canada signed an LNG deal with Germany which I think is simply kind of
12:42.728 --> 12:46.165
a harbinger of what's to come.
12:46.165 --> 12:49.335
The other countries in the world that are out there, the Russias of the world,
12:49.335 --> 12:53.305
yeah, they export but a lot of that export capability
12:53.305 --> 12:57.042
is very subject to the vicissitudes of geopolitics.
12:57.042 --> 13:01.447
Lately it's been weighing against Russia, for example, because of wars,
13:01.447 --> 13:05.751
because of sanctions and let me say
13:05.751 --> 13:10.055
geographic realities. China's
13:10.055 --> 13:13.626
hungry, India's hungry for energy supplies.
13:13.626 --> 13:18.898
They want what everybody wants and that is reliable, dependable
13:18.898 --> 13:21.634
energy supplies with let me say contract transparency.
13:21.634 --> 13:29.375
I think they're a little bit challenged there.
13:29.375 --> 13:32.678
Do you think that the discussion of a ...
13:32.678 --> 13:36.649
because this speaks to almost a fracturing, new types of
13:36.649 --> 13:42.955
energy alliances and so on, there is a world oil price, will
13:42.955 --> 13:46.225
that be challenged, we just have more bilateral deals?
13:46.225 --> 13:50.396
I'm not saying it disappears but this has been a long term question,
13:50.396 --> 13:54.600
isn't it, the world oil price. Will it be challenged in new ways?
13:54.600 --> 13:57.670
I think so. We're seeing a little bit of a fracture in the OPEC, OPEC+
13:57.670 --> 14:01.740
construct as countries begin to seek to cut
14:01.740 --> 14:06.178
their own deals. They begin to think that perhaps
14:06.178 --> 14:10.182
participating in ... it's not a cartel anymore but a cartel-like structure
14:10.182 --> 14:14.153
perhaps doesn't meet their needs as
14:14.153 --> 14:18.424
effectively and as fully as operating on their own might.
14:18.424 --> 14:22.428
I think that our future lies in
14:22.428 --> 14:26.498
a realm of a more fractured consolation of energy
14:26.498 --> 14:31.237
suppliers. I think there's still going to be abundant supplies
14:31.237 --> 14:35.307
but how those supplies come to market, I think it'd be less harnessed
14:35.307 --> 14:39.645
by cartels and more driven by, say, individual
14:39.645 --> 14:41.280
bilateral initiatives.
14:41.280 --> 14:44.183
It's really interesting to see how that will transform probably over a long
14:44.183 --> 14:48.354
period of time. I'll ask a discussion about defence because
14:48.354 --> 14:52.391
the more we talk about natural resources inside countries the more you get to
14:52.391 --> 14:56.462
the question of protecting your country, perhaps, but protecting what's
14:56.462 --> 14:59.398
in the ground in a lot of cases as well.
14:59.398 --> 15:03.669
That has been brought to much newer prominence, certainly in Canada,
15:03.669 --> 15:07.640
I think around the world. There is an arms race, probably for
15:07.640 --> 15:10.376
different reasons and maybe some of them for very old good reasons.
15:10.376 --> 15:14.046
Tell us a little bit about the protection of natural resources.
15:14.046 --> 15:18.083
We're talking about North America here but other places as well.
15:18.083 --> 15:22.221
I think certainly the notion
15:22.221 --> 15:26.258
of needing to develop a capability to defend yourselves is a
15:26.258 --> 15:28.060
very old one.
15:28.060 --> 15:31.196
It goes way, way back.
15:31.196 --> 15:35.567
The issue of who's spending what on what
15:35.567 --> 15:39.939
has achieved more salience in recent years as
15:39.939 --> 15:43.876
the US president begins to point fingers
15:43.876 --> 15:48.547
and call other countries out
15:48.547 --> 15:52.918
for spending less than perhaps they should, not just for
15:52.918 --> 15:56.722
sort of collective defence purposes but for individual defence purposes as
15:56.722 --> 16:00.726
well. Certainly, the case in Europe which for years and years
16:00.726 --> 16:05.197
and year relied on, let me say, the
16:05.197 --> 16:10.369
US military umbrella as justification to underspend on defence.
16:10.369 --> 16:14.473
That's now become a political issue, it's become a NATO
16:14.506 --> 16:18.110
alliance issue, it will continue to be an issue.
16:18.110 --> 16:22.147
Canadian defence spending has certainly come up for discussion, not
16:22.147 --> 16:24.550
just in Canada but internationally as well.
16:24.550 --> 16:28.654
I think that's one of those things that Canadian policy makers are taking on,
16:28.654 --> 16:32.758
are going to have to take on for years and years because Canada has the world's
16:32.758 --> 16:36.762
longest coastline. It's coastline that mostly
16:36.762 --> 16:40.799
faces the Arctic Ocean, an ocean that for years and
16:40.799 --> 16:44.903
years nobody thought about because it was dark and filled with ice and
16:44.903 --> 16:48.474
unnavigable, but that's changing with climate change.
16:48.474 --> 16:52.811
Arctic ice is thinning and transpolar, circumpolar commercial
16:52.811 --> 16:56.115
shipping is becoming viable.
16:56.115 --> 17:00.185
Canada and Canadian decision makers are gonna have to decide how
17:00.185 --> 17:05.057
Canada wants to protect its shores and
17:05.057 --> 17:09.161
protect the shipping that's coming, inevitably, in the years to
17:09.161 --> 17:09.895
come.
17:09.895 --> 17:14.800
The shipping is trade so I guess I would ask you to order for us,
17:14.800 --> 17:18.904
is Canada but other Arctic nations as well thinking about the Arctic
17:18.904 --> 17:23.208
first because of trade and then defence of that trade second,
17:23.208 --> 17:27.146
or is it defence first which will ultimately protect trade?
17:27.146 --> 17:31.150
How would you order that if you had to?
17:31.150 --> 17:35.721
That's a great question, Pamela. I think it is a challenging one because
17:35.721 --> 17:38.924
it isn't just what's happening on the surface, it's also what's happening
17:38.924 --> 17:43.529
underneath. Canada, the US and Russia have made
17:43.529 --> 17:45.931
big seabed claims.
17:45.931 --> 17:49.968
Norway has as well. The Arctic states are very interested in what lies
17:49.968 --> 17:54.139
under the Arctic Ocean as well so I think
17:54.139 --> 17:58.610
what we have is this conflation of commercial and defence
17:58.610 --> 18:01.413
issues that are kind of hard to unpack.
18:01.413 --> 18:05.551
One, because we haven't had a lot of commercial
18:05.551 --> 18:09.488
shipping in the Arctic and two, as far as defence
18:09.488 --> 18:13.492
is concerned we had NORAD, the
18:13.492 --> 18:17.863
distant early warning system, occasional deployments
18:17.863 --> 18:21.800
of special forces units into the Arctic to try out their gear in
18:21.800 --> 18:24.903
brutal conditions but that was about as far our thinking went.
18:24.903 --> 18:28.607
Now we're looking at the possibility of ...
18:28.607 --> 18:30.843
not the possibility, the probability ...
18:30.843 --> 18:35.414
of serious increases in France and circumpolar shipping
18:35.414 --> 18:39.351
carrying energy, goods, you name
18:39.351 --> 18:41.086
it.
18:41.086 --> 18:46.125
How are we going to order ourselves individually
18:46.125 --> 18:50.162
and collectively to protect that shipping and to protect the
18:50.162 --> 18:54.133
enormous financial gains that will flow to us
18:54.133 --> 18:58.904
if we have an effective system of governance and monitoring in
18:58.904 --> 19:00.839
the far North?
19:00.839 --> 19:04.943
It seems like a long way out because of events going on
19:04.943 --> 19:09.114
now between Ukraine and Russia
19:09.114 --> 19:13.152
and the way Canada has taken a stance on that, others have taken a stance
19:13.152 --> 19:17.222
on that. The fact is Russia is just across the Arctic Ocean and
19:17.222 --> 19:21.260
if we're talking about trade I'm curious,
19:21.260 --> 19:24.363
Russia has been an interesting place for investors over the years, not now,
19:24.363 --> 19:28.300
it's different now, but if you look way out what
19:28.300 --> 19:31.870
do you see there?
19:31.870 --> 19:35.274
There's been a lot of speculation in the press that Vladimir Putin is nearing
19:35.274 --> 19:39.278
the end of his grip on power,
19:39.278 --> 19:42.848
his time in office. I don't really share that view.
19:42.848 --> 19:47.152
I ran that part of CIA that focused on Russia so it's
19:47.152 --> 19:49.588
part of the world that I know pretty well.
19:49.588 --> 19:53.759
I'd say that Putin's grip on the levers of power is as firm as it's ever been
19:53.759 --> 19:57.796
but he has embarked in this disastrous war
19:57.796 --> 20:02.367
on Ukraine which is costing Russia an enormous amount
20:02.367 --> 20:04.069
of blood and national treasure.
20:04.069 --> 20:08.874
He's
20:08.874 --> 20:13.111
washed away a lot of Russia's international reputation
20:13.111 --> 20:18.984
and he's foreclosed Russia's ability to do deals
20:18.984 --> 20:23.188
that focus on its own abundant natural resources, timber,
20:23.188 --> 20:30.128
diamonds, oil, gas, hydro, rare
20:30.128 --> 20:34.299
earths. It's got a tremendous natural resource base.
20:34.299 --> 20:38.470
Vladimir Putin is a prisoner of his
20:38.470 --> 20:40.572
world view.
20:40.572 --> 20:44.876
His world view is that the West is inevitably encroaching on and
20:44.876 --> 20:49.114
planning to subjugate Russia and that he
20:49.114 --> 20:53.051
feels his job is to reassert Russia's role in the
20:53.051 --> 20:57.122
world by reestablishing Russian power across the entirety of the former Soviet
20:57.122 --> 21:01.126
space. The fact of the matter is a lot of those independent republics
21:01.126 --> 21:05.163
don't share that view, Ukraine, case in
21:05.163 --> 21:09.368
point. We have this horrible war going on, 500,000
21:09.368 --> 21:12.304
Russian dead.
21:12.304 --> 21:17.509
The Ukrainians now are killing more Russian troops than Russia can recruit.
21:17.509 --> 21:22.180
It's also driving a revolution in
21:22.180 --> 21:26.285
defence production, the role
21:26.285 --> 21:31.223
of the middle power states, like Ukraine, which have assumed this
21:31.223 --> 21:35.560
outsized importance on the basis of
21:35.560 --> 21:39.831
their direct sustained involvement in
21:39.831 --> 21:44.836
an existential combat or wartime threat to themselves.
21:44.836 --> 21:49.274
Middle powers, you mentioned Europe a few minutes ago underinvesting
21:49.274 --> 21:52.077
in defence knowing that the US would be at the ready.
21:52.077 --> 21:55.213
This is a prominent story we've been learning about for the last, over a year
21:55.213 --> 21:58.183
now. Canada in a similar situation.
21:58.183 --> 22:01.987
Then this discussion from the Prime Minister of Canada at Davos, the rise of
22:01.987 --> 22:05.957
the middle powers, it's certainly taken root, I think, in a lot
22:05.957 --> 22:09.995
of countries, it's taken root in Canada, how
22:09.995 --> 22:13.498
do you see that actually unfolding in the world to come?
22:13.498 --> 22:15.867
Is that something you agree with?
22:15.867 --> 22:19.905
Do you find it interesting? It's a little bit more futile if you
22:19.905 --> 22:26.345
look at structures. What do you think of the middle powers discussion?
22:26.345 --> 22:30.315
I'm convinced that we are entering, let me say, the age of the middle power
22:30.315 --> 22:34.319
where you have states across the world that are not the
22:34.319 --> 22:38.490
superpowers and they're not the
22:38.490 --> 22:43.528
geographically, politically, smaller, less consequential states, states
22:43.528 --> 22:47.666
that are robust populations, robust national economies,
22:47.666 --> 22:52.237
considerable autonomous capabilities, beginning
22:52.237 --> 22:56.174
to flex their muscles, beginning
22:56.174 --> 23:00.379
to assert more effectively, I
23:00.379 --> 23:04.616
think, national interests and configuring their own
23:04.616 --> 23:08.754
sets of policies to accommodate achievement of those national
23:08.754 --> 23:12.257
interests. The thing about middle powers, though, is there are a lot of them
23:12.257 --> 23:16.328
and the quality of governance in those middle powers ranges from
23:16.328 --> 23:22.734
the very high, Canada, case in point, to the very low, North
23:22.734 --> 23:27.672
Korea or Myanmar at the other end.
23:27.672 --> 23:31.410
You're talking about middle powers as a collective, it's really kind of
23:31.410 --> 23:33.845
difficult because you have to differentiate.
23:33.845 --> 23:37.849
I really see this as really entering the age of
23:37.849 --> 23:40.619
the high quality middle power states.
23:40.619 --> 23:45.357
That's absolutely fascinating and seeing some of those trade alliances because
23:45.357 --> 23:50.228
of that link up much more strongly.
23:50.228 --> 23:55.700
Does that change the North American thesis particularly one way or the other?
23:55.700 --> 23:59.638
No, I think Canada and
23:59.638 --> 24:04.743
the US will continue to be what they've always been, sort of close partners
24:04.743 --> 24:08.713
with all these abundant ties, personal,
24:08.713 --> 24:10.849
social, cultural, financial.
24:10.849 --> 24:15.020
That's not going to go away but I think in
24:15.020 --> 24:19.491
the case of Canada we're seeing now an expansion of
24:19.491 --> 24:24.029
ties to other middle power states
24:24.029 --> 24:28.333
in every realm to include defence, talking to
24:28.366 --> 24:33.138
Swedes about buying Gripens, doing
24:33.138 --> 24:37.542
missile deals with Australia, looking to
24:37.542 --> 24:42.247
the Japans, the South Koreas of the world as
24:42.247 --> 24:44.115
increasingly important trade partners.
24:44.115 --> 24:46.985
I think that's a very healthy development.
24:46.985 --> 24:51.189
It makes the world more stable.
24:51.189 --> 24:52.991
We have a few minutes left.
24:52.991 --> 24:56.962
I wanted to make sure that I asked you the impossible question which
24:56.962 --> 25:00.966
is to sort of leave us with some context of when the war in the
25:00.966 --> 25:04.302
Middle East will end.
25:04.302 --> 25:08.440
We've been on sort of the nice edge of, oh, it looks like the ceasefire's
25:08.440 --> 25:11.910
here, it looks like it will hold, it looks meaningful discussions.
25:11.910 --> 25:14.913
Is there a lot of noise right now because there actually are meaningful
25:14.913 --> 25:19.117
discussions going on?
25:19.117 --> 25:23.088
Both sides, the US and Iran, are struggling for
25:23.088 --> 25:26.625
incremental leverage to use on the other.
25:26.625 --> 25:30.061
The Iranians discovered years and years and years ago that there's a high
25:30.061 --> 25:34.299
degree of American neuralgia where incurring American losses is a
25:34.299 --> 25:38.069
concern. Iran, as a matter of state policy, began killing Americans in the
25:38.069 --> 25:42.274
early '80s and discovered that by killing a couple Americans, not a couple,
25:42.274 --> 25:46.578
I don't mean to dismiss them or flip, but by killing
25:46.578 --> 25:50.815
Americans they could wield or achieve outsized leverage
25:50.815 --> 25:52.651
with the US.
25:52.651 --> 25:56.855
The US for years and years viewed Iran as a
25:56.855 --> 26:01.226
problem that was just too tough to deal with so the
26:01.226 --> 26:05.297
Iranian can got kicked down the road over and over and over again until
26:05.297 --> 26:09.334
Donald Trump, probably by listening a little bit too much
26:09.334 --> 26:13.805
to the Israeli Prime Minister, decided that by waging a
26:13.805 --> 26:17.842
surprise attack what he could
26:17.842 --> 26:21.680
do was achieve a popular uprising that would get rid of this problem
26:21.680 --> 26:23.548
government. Well, it didn't work.
26:23.548 --> 26:28.987
Now we're in a position where Iran having
26:28.987 --> 26:37.195
had its A team eliminated, its B team eliminated,
26:37.195 --> 26:39.598
now in the hands of the C team, military hardliners who've grown up in a
26:39.598 --> 26:43.635
culture or an environment that is firmly convinced that the US is going to
26:43.635 --> 26:49.674
attack. It's been preparing since the early '80s for that attack.
26:49.674 --> 26:53.745
The US has configured a defence capability that's really designed to deal with
26:53.745 --> 26:58.516
near peers and isn't particularly well suited to dealing with a
26:58.516 --> 27:02.654
country that can field a $30,000 drone and
27:02.654 --> 27:06.725
is willing to use that drone against US
27:06.725 --> 27:10.195
friends and allies in the region to achieve leverage.
27:10.195 --> 27:14.466
We're in a position where the struggle for leverage is going to go on.
27:14.466 --> 27:18.737
Each side is going to use what it can to maximize
27:18.737 --> 27:23.975
its leverage and attempt to compel the outcome it seeks.
27:23.975 --> 27:28.813
I think what we're moving into is a period, I won't say of stasis
27:28.813 --> 27:33.184
but of this constant jockeying,
27:33.184 --> 27:37.722
using the tools at hand for advantage.
27:37.722 --> 27:41.693
I don't see any near term fundamental
27:41.693 --> 27:44.029
resolution of this situation.
27:44.029 --> 27:45.730
I think it's going to endure.
27:45.730 --> 27:50.068
I think what we're going to have are periods of lulls, of
27:50.068 --> 27:54.205
conflict and fighting interspersed with periods
27:54.205 --> 27:59.110
of heightened tension as one side or the other attacks,
27:59.110 --> 28:02.881
fires off a missile, fires off a drone, inevitably.
28:02.881 --> 28:07.085
So there is a way that the world will order itself around
28:07.085 --> 28:11.322
such a situation. A lot of that is making sure you're doing other things,
28:11.356 --> 28:14.392
essentially, and finding new trade routes, new energy corridors and so on.
28:14.392 --> 28:18.029
I think we have just a minute here but could you kind of wrap up those
28:18.029 --> 28:22.000
comments? We started with is world order becoming really an energy
28:22.000 --> 28:26.404
order, maybe this is a good place to just ask you that question again.
28:26.404 --> 28:29.841
The world has shown a remarkable ability to accommodate itself and adapt to
28:29.841 --> 28:34.179
changed circumstance. That continues to be a reality.
28:34.179 --> 28:36.181
We will adapt to this.
28:36.181 --> 28:40.385
We would adapt and accommodate to an outlier US President, to war in the Middle
28:40.385 --> 28:44.556
East, to a Russian president who's pursuing this quixotic
28:44.556 --> 28:48.326
imperialist dream they can't achieve, to a rising China.
28:48.326 --> 28:52.931
We will accommodate, we will adapt inevitably in
28:52.931 --> 28:56.134
ways that we can foresee, in ways we can't.
28:56.134 --> 28:59.771
Part of adapting is getting the absolute brilliance from your brain shared with
28:59.771 --> 29:03.475
us. We really appreciate David Bridges.
29:03.475 --> 29:06.444
If it was appropriate for applause I'd do it but it's not.
29:06.444 --> 29:10.115
Thank you. We hope to see you again very soon.
29:10.115 --> 29:14.152
Be very well and gosh, thanks for putting a lot of things into
29:14.152 --> 29:17.789
at least a broader context for us to think about and for investors to invest
29:17.789 --> 29:18.990
in.
29:18.990 --> 29:20.725
Thank you, Pamela. Thank you for the opportunity.
29:20.725 --> 29:21.960
I really appreciate it.
29:21.960 --> 29:25.897
Thanks for watching or listening to the Fidelity Connects
29:25.897 --> 29:30.034
podcast. Now if you haven't done so already, please subscribe to Fidelity
29:30.034 --> 29:32.837
Connects on your podcast platform of choice.
29:32.837 --> 29:35.673
And if you like what you're hearing, please leave a review or a five-star
29:35.673 --> 29:39.644
rating. Fidelity Mutual Funds and ETFs are available by working with
29:39.644 --> 29:43.014
a financial advisor or through an online brokerage account.
29:43.014 --> 29:46.718
Visit fidelity.ca/howtobuy for more information.
29:46.718 --> 29:50.555
While on Fidelity.ca, you can also find more information on future live
29:50.555 --> 29:54.692
webcasts. And don't forget to follow Fidelity Canada on YouTube, LinkedIn,
29:54.692 --> 29:56.694
and Instagram.
29:56.694 --> 29:59.564
We'll end today's show with a short disclaimer.
29:59.564 --> 30:03.401
The views and opinions expressed on this podcast are those of the participants,
30:03.401 --> 30:07.338
and do not necessarily reflect those of Fidelity Investments Canada ULC or
30:07.338 --> 30:11.342
its affiliates. This podcast is for informational purposes only, and should not
30:11.342 --> 30:13.878
be construed as investment, tax, or legal advice.
30:13.878 --> 30:16.181
It is not an offer to sell or buy.
30:16.181 --> 30:20.518
Or an endorsement, recommendation, or sponsorship of any entity or securities
30:20.518 --> 30:25.323
cited. Read a fund's prospectus before investing, funds are not guaranteed.
30:25.323 --> 30:28.893
Their values change frequently, and past performance may not be repeated.
30:28.893 --> 30:32.730
Fees, expenses, and commissions are all associated with fund investments.
30:32.730 --> 30:35.033
Thanks again. We'll see you next time.
