Yves here. The US press tries to create the impression that our political and trade partners in Europe are all in for our increasingly aggressive confrontation with Russia. This Real News Network segment challenges that simplistic view.

One point that Hudson does not make clear is that it is actually a requirement of NATO that members spend 2% of GDP supporting the alliance. But it hasn’t been observed. The country that pretends to meet its 2% obligation is the UK, but it does that by classifying defense expenditures it would have made regardless as part of its NATO commitment. If I read Hudson correctly, the US is starting to ask NATO members to ante up. Ironically, that’s not that different than the position that Donald Trump is taking (as in his objection to NATO is not the organization per se but the degree to which the US is shouldering the costs).

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 flurry of European statements saying that Obama and NATO were 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.

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 a missile 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 the US 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 that Russia has one means of retaliation. That’s atomic bombs. Atomic weapons are basically defensive. They’re saying that they don’t need an army anymore. Nor does any country need an army if they have an atomic weapon, because if you attack them, then can wipe you out. And they’ll be wiped out, too, but no nation is going to be able to conquer them. No country, really, can conquer any other country in today’s world. That means that Russia can’t conquer Europe by invading and occupying it.

In e effect, Putin and the Russian leaders have said, look, if an American plane goes a little bit off into Russian territory, like ships often try to provoke things, they don’t know whether it’s an atomic attack at all. Russia can’t take a risk. If there’s a little bit of a movement against them, they’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.

Europe seems increasingly terrified that Obama is going to destabilize Eurasia. Even more terrified of Hillary getting in, who’s indicated she’s going to appoint a superhawk, the Cheney protege Michele Flournoy, as Secretary of Defense, and appoint Victoria Nuland as Secretary of State.

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 is a means of obliging the European countries to pay the United States arms manufacturers for goods, and to basically hold Europe up for ransom, saying if you don’t be a part of this, we’re not going to defend you.

Europe is saying, well we really don’t need defense. We’d rather have an economic relationship with Russia. Especially the Germans say they don’t want the sanctions. The Italians say they don’t want the sanctions. The Americans say, 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, or at least from countries in the dollar orbit, not from the Russian orbit.

That, essentially, is what Obama meant by the reset. It meant a new Cold War. But the essence of this new Cold War is to fight in the new way, which is a financial war. The military are now only a catalyst for the financial warfare by the United States.

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 counter-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 spending. Russia and almost every country would like to use more of its resources for the domestic economy, not for military overhead. America is trying to force Russia to spend more on overhead as part of its economic warfare with Russia.

This was Brzezinski’s plan in Afghanistan, you know, under the Carter administration. The idea was that if you could force Russia to pay more for its military to defend Afghanistan, then its economy would buckle and discontent would spread. This is the essence of American strategy: to spread chaos. 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. 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 an idea that 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 will go to war.

The second thing was, 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 neutral buffer pivot between Russia and Europe. The United States then put $5 billion into Ukraine, and spurred a nationalist-ethnic revolution. It took the United States 20 years to turn that around and break up this neutrality.

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.