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FRANK MCKENNA: If you watch what's going on in Israel now, you can see how quickly functioning democracies disintegrate.
PETER HAYNES: Welcome to Episode 42 of our monthly TD Securities podcast on Geopolitics with our guest, the honorable Frank McKenna. My name is Peter Haynes, and I'll be your host for today's episode entitled "The Not So Summer Doldrums." Clearly there's lots of geopolitical activity remaining on the plate. It's full. And as we roll through the dog days of summer in the northern hemisphere, I'm really excited to hear Frank's perspective on several of the issues, both in Canada, the US, Israel, and other parts of the world.
Before we get started, I want to remind listeners that this TD Securities podcast is for informational purposes. The views described in today's podcast are of the individuals and may or may not represent the view of TD Bank or its subsidiaries. And these views should not be relied upon as investment, tax, or other advice.
So Frank, I hope you are enjoying your summer on the East Coast. I hope you didn't stay up too late to watch the Blue Jays blow a four-run lead on Tuesday. Admittedly, they came back yesterday and won the series against the Dodgers. But that Tuesday night game was pretty painful.
FRANK MCKENNA: Yeah, my wife tells me it's affecting my entire behavior, those West Coast games, because I stay up late and I come to bed angry.
PETER HAYNES: Well, yeah, they make you angry. But we'll get to what the Blue Jays need to do to solve their bullpen woes at the end of this podcast, so stay tuned for a little baseball discussion. So let's start, though, right in your backyard.
Every year when you return to the East Coast in the summer, you host a charity event which I'm told is a proverbial who's-who of the East Coast business world. As part of this event, you attract some very senior world leaders as keynotes. And this year, former Secretary of State Hillary Clinton was your guest of honor. What were the three main takeaways from her address?
FRANK MCKENNA: Yeah, Secretary Clinton was the speaker, and I think it was the most popular event we've had in 23 years. We had people lining up to try and get in here, I think just because of what you've talked about-- so many really important things happening in the world.
So takeaways-- number one, I would say that buckle up. Whether we like it or not, we are probably going to end up having a presidential race in the United States featuring Donald Trump against Joe Biden. And there are a lot of people who don't like Biden. His age is referenced specifically.
And she said, get over it. He will be the candidate. And a lot of people may not like Trump, but right now, doesn't look like there's anybody that's able to beat him. So that looks like the lineup that we're going to be facing.
Secondly, we talked about Biden's track record. And she thinks that history is going to record his presidency as being an extremely consequential presidency, even though he doesn't seem to get credit for it in the polls.
But if you look at the accomplishments and infrastructure act, which has eluded the United States I think going back over 50 years; the CHIPS Act, which is designed to make the United States competitive in the semiconductor business; a modicum of gun control, which even though we would say it's very modest, it did end up moving the dial a little bit; and then the Inflation Reduction Act, the most inaptly named piece of legislation which has put the United States and its industries at the forefront of climate change technology-- an extraordinary win for the president.
And then I think most people would say that he's prosecuted the war in Ukraine in a commendable fashion, keeping together the NATO coalition and domestic public support. So when you add it all up, she would say it's a pretty good track record.
And then third, we did talk about the Ukraine at length, and she's got a long history with Putin and she's got a long history with the Ukraine and believes just very simply, we either fight Russia in the Ukraine or we'll be fighting them somewhere in Eastern Europe. And she believes the United States has to continue to provide arms and technology and military intelligence to Ukraine.
She did agree with me to some extent that we always seem to be a day short and a pound light. It just took us longer than we would like to get long-range artillery and to get tanks and now F-16s. It just seems like we're always slower than Ukraine's needs dictate. But arms and support are getting to the Ukraine, and they're fighting an heroic battle on behalf of a lot of the rest of the world.
So those would be three of the major takeaways.
PETER HAYNES: So Frank, when you think about historians looking back on the Biden administration with some positive feedback a hundred years from now, do you not think that a lot of the things they'll talk about that occurred during this administration occurred away from the government and, more specifically, in the Supreme Court?
And I'm curious if some of the decisions made by the Supreme Court, because we know it's right-leaning right now, such as striking down Roe v. Wade and other matters, are in fact going to overshadow some of the accomplishments you just discussed.
FRANK MCKENNA: I think that you could look at it a slightly different way. You could probably put it on the Trump list of accomplishments. If you were a supporter of Trump, you would say, look, whatever shambles he might have created and whatever controversy he might have incurred, I like him because he appointed three Supreme Court judges who have tilted the Court semi-permanently to the right.
If I were on his side, I would say, leave everything else aside. He did that for me. And the result was a series of decisions which have really been extraordinarily ideological in their basis, all the way from Roe v. Wade overturning 70 years of jurisprudence to climate change issues to gun control, really loosening every effort to try and introduce more rigorous gun control, and so on and so on and so on.
So I don't-- it's hard to take away from a president like Biden the fact that a Supreme Court acted in such an ideological way because he didn't have anything to do with appointing the judges. But Trump will get credit, and he will get blame, depending on which side of the ledger you happen to be on for what I think is essentially opening up the Supreme Court of the United States to becoming a third political player.
And I don't think it's healthy. I don't think it would be healthy if the Democrats were doing the same thing. Right now, you can look at every judge and you know their political pedigree and how they're going to be deciding cases in large measure, with few exceptions.
By converse, in Canada, I doubt if anybody listening to us could even name most of the judges. But even if they could, I doubt if they would know what political persuasion they are. So it just shows by contrast how strikingly political the Supreme Court of the United States has become.
PETER HAYNES: The whole court matter-- we're going to talk about Netanyahu in a couple of seconds, and courts just seem to be just overlapping with governments everywhere in the world. Let me just-- in fact, obviously with respect to the future of Donald Trump, the courts are going to decide whether or not he goes to jail.
And on that particular topic, I want to go back to 2016 when Secretary Clinton was, in fact, running for president against Trump, and you had had a lunch at that time with Bill Clinton. And I remember you were speaking about how President Clinton was bemoaning then the fact that to win a party nomination, a candidate needs to cater to the extremes. And I think we would all agree that seven years later, things are worse, not better, in that regard.
With President Trump certain to win the Republican nomination, President Biden's popularity is also waning. And this has led to some talk, and I would say credible talk, of a third-party centrist candidate-- I think No Labels is the term that you hear-- or a ticket that has emerged. And the names being bandied about for that third-party centrist candidate would be led by Democratic Senator from West Virginia, Joe Manchin, and a partner that he would bring along from the Republican side.
If there is a third-party candidate in the presidential election, at the very least, we know it would be disruptive, and it would likely benefit former President Trump. Do you think the topic of a third party joining the US presidential election has any legs?
FRANK MCKENNA: I do. And I think that it would be potentially catastrophic for the Democrats. That's not a universal view. Karl Rove has an op-ed piece in The Wall Street Journal today saying that it could harm Republicans, depending on who the candidate is. I think it's a much better chance that it will harm Democrats.
And Hillary Clinton spoke about this at length, by the way, at our event a couple of weeks ago. To start with, the Green Party candidate, who ran against Al Gore in the famous pregnant chad election, clearly deprived Al Gore of victory over George Bush and ended up handing the Green Party four years of what I think they would say is very progressive climate change government. But they're the ones who did it. They were uniquely responsible for that.
They did the same thing to Hillary Clinton. The Green Party took several million votes away from Hillary Clinton in her election and gave that election to Donald Trump. So I do not understand the rationale for anybody who's got an environmental bent almost deliberately going out to sabotage pro-environment party, the Democratic Party. But it's happened in those two elections.
In this election, a Green Party candidate, and it looks as if Cornel West could be that candidate, would suck up a couple of million votes. They would almost all come from the Democratic Party and potentially swing a number of Electoral College states that are really important for victory.
In addition to that, you've got a No Labels party, which would be a second third party, so to speak. And in this case, people that I'm close to have told me there's a very good chance that Joe Manchin could end up launching there because he's probably going to lose for the Democratic Party in his state.
Jon Huntsman is involved in that. Senator Sinema's involved in that. A number of kind of moderate people are involved in that. And again, that could very well be a way for a lot of Republicans who are anti-Trump to bleed their vote off without having to vote for Democrats.
So you can see the potential for real damage that a third party would do in an election that's likely to be highly polarized to begin with. So I would say right now that this represents the biggest danger to Democrats from Trump becoming the president of the United States again.
PETER HAYNES: My first recollection in my life of a third-party candidate was in 1992, I think, when I was at a conference in San Antonio, and the keynote speaker was Ross Perot. And he had to get up on his little stool there, to get up above the podium. And they were selling the "Ross for boss" shirts. I'll never forget that. And obviously, he disrupted that election.
But the one third-party candidate--
FRANK MCKENNA: He did more than disrupt it. He denied the Republicans a win. His influence was that. So it doesn't always cut one way. It's just in this particular election, I would say the Green Party and probably the No Labels party would both disproportionately hurt the Democrats than the Republicans.
PETER HAYNES: And what you didn't mention, though, amongst third-party candidates would be another potential third-party candidate, if he doesn't win the nomination, which would be President Trump. And I know there's sore loser rules in terms of being on ballots. I don't fully understand how all that works. But I guess you could argue that ultimately, if he doesn't win the nomination, he could run as a third party.
FRANK MCKENNA: He could. If he did, that would be disastrous, absolutely disastrous for Republicans. I'm not sure that he would do that. And right now, it's kind of hard to see where he's going to lose. Logic might tell you that he would lose. But if you look at the polling numbers, he is miles ahead.
And the horse that people have been betting on who's in second place, Ron DeSantis, as I mentioned last week or last month, he's a bit like a snowman who's melted away in the summer and all you see are buttons and carrots on the ground. He's really falling off the charts very quickly, so.
There's a very interesting article that was written by Mitt Romney, Senator Mitt Romney, beseeching Republicans at some point to rationalize the field before it's too late because it is a winner-take-all system in the Republican Party. And if it's Trump against eight candidates, it's Trump winning every time. So he's strongly urging people to start becoming rational as we get to a critical stage, so that you get down to one or two choices and make it more of a binary choice than it would be.
PETER HAYNES: Mitt Romney, who vacations-- I believe he has a place in Grand Bend, Ontario. I was told that recently. And it comes up every summer, if I have that correctly. Hopefully, I've got my facts right.
So let's work off of the notion that President Trump will win the nomination and then eventually gets a second term as president. I think most observers would say that this outcome would be the start of a revenge tour, and that tour would only end once Trump had further entrenched his power by ignoring the rule of law.
This scenario is playing out this week in another country, which we have discussed in the past, and that's Israel. So can you explain to our listeners this month how the new laws that were approved by the Netanyahu government this week will further entrench extremist views and his particular power in Israel?
FRANK MCKENNA: Yeah. To start with, we have to understand that Netanyahu ended up winning the last election as a result of the proportional representation system. And I just plead with anybody listening, no matter how virtuous your motives, never let our country go down the road of proportional representation because it results in this kind of extreme result.
In order to win the election, Netanyahu had to cobble together a coalition of traditional supporters, but together with some other parties that were at the ultra, ultra fringe, and in this case, the group that hold the balance of power, an ultra right-wing group of Orthodox Jews.
And there are many mainstream Jewish people in Israel and a lot in the United States who just think this is-- it's just wrong that this group, who will not join the military and aren't forced to do what other Jewish people are required to do and aren't required to work, should end up having such an extraordinarily strong grip on power. And yet they do, and they're pushing Netanyahu.
Now, he in his own right is very susceptible, one, because he wants to stay in power, and two, because he's got a number of criminal charges against him. And the only hope he probably has of staying out of jail is to be president. So it does remind you of a parallel situation here in the United States. But so he's really beholden to this small group, even though I think personally his inclinations are not as extreme.
And the fight is really over whether there'll be any shackles on government at all. And people can take both sides of this debate, but I think the general view is the motives of the government in Israel now are really not pure motives. What they want to do is to take-- limit the powers of the Supreme Court of Israel, which has always been seen as a friend to both Arabs and to Jewish people in terms of seeking relief and often embarrassing the government.
And the government wants to take away their power and-- number one. And secondly, a lot of people feel that this ultra-Orthodox group that seem to be wagging the tail right now also want to get rid of any suggestion of a two-nation solution. So the rest of the world is looking on this with horror because it really makes anything by way of rapprochement in the Holy Land difficult.
I mean, the people in the streets, it's beyond anything I've ever seen, hundreds of thousands every day. And these are not Arabs in the streets. In fact, they're looking on with considerable bemusement. These are really highly educated and respected people in Israel.
When I was there a couple of weeks ago, our supper was interrupted. We had the assistant, former assistant deputy of the Bank of Israel at supper, and she jumped up at, I think it was 8 o'clock, and said, look, I've got to run. My protest starts right now. And people of all persuasions, a lot of military people, in fact a huge number of military people are involved, all protesting against what the government is doing because they see it really as an existential threat to Israel.
So it's very, very unpleasant. And I don't know where it's all going to end. The protests seem to be accelerating, if anything, blocking airports, blocking highways, marching from Tel Aviv to Jerusalem and so on. Canada is extraordinarily preoccupied with this. I've talked to our foreign minister about it, and she said, we're looking at it extremely carefully.
And the United States is looking at this with almost horror, I think it's fair to say. Tom Friedman had a recent excellent article in The New York Times about it, saying that the United States is the only thing that can save Israel from itself. And he talks about the power and the respect that the United States have in Israel. And at some point, Biden is going to have to do something that he really won't want to do, and that's to weigh in heavily with Netanyahu, who he's known forever, and try to see if they can slow down this walk off the cliff.
For the United States, their whole Mideast policy depends on it. They're working on rapprochement that would involve Saudi Arabia, the Palestinians, and Israel, and they're making good progress. But they need a partner they can trust in Israel. They also provide a significant amount of aid. A lot of people in the United States are saying, why would we provide aid to a country like Israel that is far disproportionate to the aid we would provide some of the poorest countries in Africa?
And they also have defense agreements with Israel. So the United States has leverage, but they've always been reluctant to use it because of the close relationship between the two countries. But right now, the situation in Israel, I'd say, is getting more acute with every passing day. And it's increasingly less likely that the government can back off the ledge that it's out on.
PETER HAYNES: So two follow-up questions. First of all, are you surprised by the tempered language from the Biden administration? Do you expect that to change? And then secondly, Netanyahu, I think today, had said that he wants to negotiate. And the deal, it's not effective until I think November, so there's a window of time for negotiation. Is there any realistic negotiation on these extreme views?
FRANK MCKENNA: Well, the trouble is, before he would say that he'd negotiate, he passed the legislation. So effectively he's negotiating with the gun to the head of the other side. The other side, which probably includes a majority of Israelis, I would say are not much in a mood for compromise on this either.
They know that no matter what they do, as long as the fringe parties control the political narrative in Israel, we're going to see more and more incursions in the West Bank. We're going to see more and more violence in return. We're going to see a destruction of any effort at all, successful or unsuccessful, to try to find a two-state solution.
So I think people are dug in pretty deeply. So I wouldn't discount statesmanship, but in this case, Netanyahu comes to it without very clean hands. He wants to--
