U.S. has to raise the costs for China's destabilizing behavior: Council of Foreign Relations Pres.

Council on Foreign Relations President and "The World: A Brief Introduction" author Richard Haass joins Yahoo Finance’s Zack Guzman to discuss the global economic impact of the coronavirus.

Video Transcript

- Well, obviously, we are highly focused on the way that the US continues to respond to the global pandemic. But an increasingly globalized take is pointing out some serious problems abroad when you look into how other governments around the world are adapting to crisis as well. It's presenting a troubling trend for democracies around the globe. According to the NGO Freedom House, a new study reveals a, quote, "stunning democratic breakdown with a report showing a rise in China's and Russia's influence in Europe growing, with fewer democracies in the region than at any point since the mid-'90s."

For more on how that could lead to destabilization around the globe in increasingly trying times, we're joined by Richard Haass, the President of the Council on Foreign Relations since 2003 as well as a former advisor to President George H.W. Bush as a member of his National Security Council and the author of the new book "The World: A Brief Introduction" And Mr. Haass, it's a privilege to have you with us this afternoon.

I want to jump right into your take on COVID-19. We'll get to the book in a second, because I think it's a great take on a pretty simple-to-understand description of world affairs here. But obviously, before that book came to print-- before you finished that, COVID-19 is now the main story here. I want to get your take on how that might accelerate destabilization in Europe, around the globe as democracies struggle to basically monitor a problem on the coronavirus front.

RICHARD HAASS: Well, thank you. No, you're right. There's not just an economic recession in the world. There's also a democratic recession. We're seeing a real rollback over the last couple of decades of both the number of countries that are democratic, but perhaps even more important, the depth the strength of democracies where it already existed. And I think this crisis is actually going to place pressure on existing leadership, whether they're democratic or authoritarian.

But people are going to demand of their government that it delivers, that it protects them physically, that it provides for them economically. And any government, be it democratic or non-democratic, that meets those tests will probably do just fine. And anyone that fails those tests will obviously-- there will be tremendous opposition.

But you see democratic governments in places like South Korea, Germany, Japan. They are distinguishing themselves. And those leaders are enjoying tremendous popular support. But at the same time, you're seeing authoritarian governments in Russia and Iran doing terribly. So it seems to me the lesson to draw from this is less the nature of the system and more the quality of the leadership.

- Well, the other question here too is how much you have in terms of power to respond to all this as you do see economies around the globe start to suffer the consequences of either shutdown orders or just basic recession, basically, spilling over across the globe and hitting them there. We've seen economic problems lead to some pretty severe-- I guess you could say power struggles. You can look back to Germany, World War II, and what happened there. How big of a concern is it for you that some of these economic problems actually will lead to a worsening position for some of these democracies on the brink?

RICHARD HAASS: I worry about it around the world. A lot of countries simply don't have much cushion. But I'll be honest. I worry about it here too. I worry. Some of the numbers you were talking [AUDIO OUT] $40,000 a year, virtually no savings-- how are they going to manage to navigate this particularly?

And I think it seems likely this is going to go on and stretch on for months. And even if there is a bit of a return to the workplace, my guess is a lot of those are going to have to be reversed, because there will be spikes or outbreaks of new infections. And at the moment, we don't have a society that is set up to provide a floor for that many people for that long. And something has to give. So either we will provide that floor or we will have serious unrest, even in this country.

- Well, I mean, we talked about how you served under the first President Bush. You also served under the second President Bush, so you have a pretty strong understanding here of Republican leadership. I'm curious to get your take on the way that President Donald Trump continues to grapple with assigning a sense of responsibility on China here as he continues to point the finger in how that country responded to the crisis at the beginning of the pandemic. What's your take on maybe how he's trying to apply the pressure on President Xi Jinping?

RICHARD HAASS: Look, I think it's perfectly fair and reasonable to be critical of China for how it handled the outbreak. It obviously silenced public health experts. it didn't report things. It didn't cooperate with international authorities. It allowed people to leave Wuhan, which led to the spread of the virus. And even now, four months later, they're still not doing everything they should.

But there's a limit to how much we can scapegoat them. This virus came to our shores four months ago. China can't be blamed for our lack of protective equipment. China can't be blamed for the debacle that continues to be testing. China can't be blamed for our inconsistent messaging or our undisciplined lack of social distancing.

So again, I think it's fine to be critical of China for all sorts of reasons. But at some point, as the saying we go, physician, heal thyself. We need to look at what we're doing. Look, we can't-- we can't stop globalization. That's not a choice. What is the choice is how we respond to it. And I would simply say in this case, our response has not been close to adequate.

- Yeah. And the response, really, is kind of-- I guess you could say, I guess, a reaction to an increasingly-- increasingly shifting position to just say that we're going to be isolationist in the way that we're handling some of these things. But when you look at the response to battling Russia's and China's reach in Europe and Asia, what's your take on the way that maybe the EU and the US could be working together to do more on that front to really battle the power rise in those regions?

RICHARD HAASS: Well, you raise a good point. Even though we're focused on this virus, the other set of problems hasn't gone away. Russia is still in Ukraine. They're still in Georgia. They're still in the Middle East. China is still trying to unilaterally change the status of the South China Sea. So the foreign policy challenge is we've got to deal with this new set of issues, like pandemics, like climate change, at the same time we deal with the old agenda.

And there again, we've got to figure out ways of deterring them, to raise the costs of destabilizing, aggressive behavior. So there's no solution to it. That's the stuff of history. But we've got to find ways to push back, either directly with military force, indirectly with sanctions. Maybe-- and obviously, one hopes that we'll create a context in which diplomacy can achieve something.

- You talk about the context here, and that's really the focus of your new book, "The World, A Brief Introduction." And it's kind of a take in that you don't really talk too much about theory, a simple way to understand the problems that have been there for a while. What prompted you to write this book, and what are you hoping to get out of it, maybe, explaining some of these complex problems to people that might not have nearly as much expertise as you do in the matters?

RICHARD HAASS: Well, thanks for asking. What prompted me to write this book is I thought we live in a moment where the world is obviously fundamentally important to the course of our lives. Anyone just need look out the window with the pandemic or with climate or other issues. Yet most Americans simply don't have an understanding about the world, so they're not informed citizens, which means, among other things, they're not in a good position to hold elected officials to account.

They may not know what questions to ask before they vote this November. They may not be in a position to make good investment decisions or business decisions or personal decisions or career decisions. So my goal was to essentially provide, in one book, in 300-plus pages, the background, the foundation that I thought somebody needed to help them navigate the news and to make more sense of the choices that are inevitably coming their way.

- And real quick, before we let you go, I mean, obviously, we highlighted your work under President George W. Bush there and obviously working under Secretary of State Colin Powell. We've been highlighting the way that President Trump is trying to position himself for reelection here in an election year as this crisis unfolds. Not necessarily seeing a rally around him the way that you would have thought if you are looking at this as kind of a wartime president here.

Before we let you go, your take on the way the president might not enjoy the same support out there as this is more of a health crisis than it may have been an anti-terrorism crisis that President Bush dealt with back in 2001?

RICHARD HAASS: Well, the reason that wartime presidents or prime ministers, if one looks at Churchill, do well is they level with their citizens. There don't over-promise. They try not to under-deliver. They're totally straight. They explain what's coming at them and what's likely to come at them the day after tomorrow, and they take responsibility.

To quote Harry Truman, the buck stops here. Harry Truman didn't say the buck stops with the governors. So I think the president has got to take ownership of the crisis. And I think also, he's got to be careful about his rush to go back to what he would consider to be economic normalcy. I get it. But the issue is not to rush to get back. It's to be able to stay back once we go back. We need to be able to sustain it. And at the moment, I'm not sure the conditions for that are even close to existing.

- All right. There you go. The president of the Council on Foreign Relations since 2003, Richard Haass. Appreciate you taking your time to chat with us today, sir.

RICHARD HAASS: Thank you.