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Trump Is Beginning To Cave On North Korea: Eli Lake (Podcast) · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul Sweene. You,
0:05
Speaker 1: along with my co host Lisa Brahmawitz. Each day we
0:07
Speaker 1: bring you the most noteworthy and useful interviews for you
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Speaker 1: and your money. Whether at the grocery store or the
0:12
Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast
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Speaker 1: or wherever you listen to podcasts, as well as at
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Speaker 1: Bloomberg dot com. Well. Last night, President Donald Trump, in
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Speaker 1: a State of the Union address, said that he will
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Speaker 1: meet with North Korean leader Kim John Un on February
0:29
Speaker 1: in Vietnam. Help us preview what might come out of
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Speaker 1: that summit is Eli Lake. He is a Bloomberg opinion columnists.
0:37
Speaker 1: He joins us in Washington, d C. Eli, thank you
0:39
Speaker 1: for joining us. What do you expect will come out
0:43
Speaker 1: of this summit between the US and North Korean February.
0:46
Speaker 1: I think there's a very good chance you will see
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Speaker 1: um a statement, a kind of declaration of peace, which
0:52
Speaker 1: is similar to statements that have been made before, but
0:56
Speaker 1: would pave the way to a formal peace treaty that
0:58
Speaker 1: ends the Korean conflict. Today there's only an armistice, and
1:02
Speaker 1: I think you may see a new policy where you
1:06
Speaker 1: would see the relaxation of sanctions on North Korea in
1:08
Speaker 1: exchange for some progress on what's called de nuclearization or disarmament,
1:14
Speaker 1: but not the old policy, which is that no sanctions
1:17
Speaker 1: would be lifted until they were there was verifiable disarmament
1:21
Speaker 1: from North Korea. So eli, are we any closer to
1:24
Speaker 1: de nuclearizing North Korea? Well, especially I I don't think
1:29
Speaker 1: we are. Especially a recent report from the U N
1:31
Speaker 1: Security Council is correct that says that, you know, there's
1:34
Speaker 1: a there's not that the North queens have not only
1:36
Speaker 1: continued their development of weapons programs, but are are continuing
1:40
Speaker 1: to sell it to other rogue actors um. And you know,
1:44
Speaker 1: the leaders of the U S Intelligence community also said
1:46
Speaker 1: that they do not expect that Kim Jong un would
1:49
Speaker 1: ever verifiably give up his nuclear arsenal um completely. And
1:55
Speaker 1: this follows a pattern we know that dictators all, you know,
1:59
Speaker 1: develop nuclear weapons in a way as a kind of
2:01
Speaker 1: insurance policy, because if you have a credible threat to
2:05
Speaker 1: and senerate a city like Seoul or other neighboring cities,
2:09
Speaker 1: then there you will not be invaded like someone like
2:12
Speaker 1: Saddam Hussein or well market Offie, So you like, who
2:16
Speaker 1: has the leverage here, the US versus North China, North
2:19
Speaker 1: North Korea just doesn't seem like anything has materially changed
2:22
Speaker 1: over the years. And I'm just trying wondering, other than
2:25
Speaker 1: the fact that we are the President is meeting with
2:28
Speaker 1: Kim Jong un, which is historic in and of itself,
2:30
Speaker 1: what's changed, well, the Trump administration, the President himself would
2:35
Speaker 1: say that the young leader of North Korea wants to
2:38
Speaker 1: bring economic prosperity to his country, and that this is
2:42
Speaker 1: a source of leverage because the United States is a
2:45
Speaker 1: wealthy country and it can help with that. But that
2:48
Speaker 1: defies in a lot of ways everything we know about
2:51
Speaker 1: Kim Jong Remember, you know, Kim Jong un murdered his
2:55
Speaker 1: uncle and had I think his half brother murdered and
2:58
Speaker 1: and has done terrible things in terms of his climb
3:01
Speaker 1: to power, and has acted in a in a ruthless
3:05
Speaker 1: manner that suggests that if he really is interested in
3:09
Speaker 1: the kinds of things he needs to do for prosperity,
3:12
Speaker 1: um that would mean opening up his society and opening
3:15
Speaker 1: up his economy in a way that would be ultimately
3:17
Speaker 1: a threat to him. So I don't think that I
3:20
Speaker 1: don't I don't believe the happy talk that he's interested
3:23
Speaker 1: in this sort of economic development. But the answer that
3:25
Speaker 1: I think that the White House would give you is that,
3:27
Speaker 1: you know, the US can provide North Korea with the
3:30
Speaker 1: means to get their country out of, you know, extreme poverty.
3:34
Speaker 1: I want to shift gears a little bit beyond North
3:37
Speaker 1: Korea because when we talk about national security, I have
3:40
Speaker 1: to wonder what's going on with Venezuela and how much
3:44
Speaker 1: is this becoming a sort of solidification of an alliance
3:48
Speaker 1: between China and Russia versus United States and other developed markets. Well,
3:56
Speaker 1: that's a very good question, and certainly Venezuela is a
3:58
Speaker 1: country where you've seen both Russia and China play the
4:02
Speaker 1: role of sort of the big power UH and development.
4:06
Speaker 1: But you know, China last year began to call back
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Speaker 1: its loans from Venezuela at a moment when you know,
4:13
Speaker 1: its economy was cratering as it is now um and
4:17
Speaker 1: its oil sector has been so depleted because of its
4:20
Speaker 1: mismanagement and the corruption of the Chavez and Madura regime.
4:24
Speaker 1: UM And in many ways, the Chinese might be looking
4:27
Speaker 1: at their in initial investments in the earlier part of
4:30
Speaker 1: this decade into Venezuela as a pretty bad bet. Um.
4:34
Speaker 1: I think that the Russians have a different kind of
4:36
Speaker 1: interest because they see that Venezuela could potentially play the
4:40
Speaker 1: role at At Cuba played in the Cold War, which
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Speaker 1: is a source for power projection in the hemisphere. Um So,
4:47
Speaker 1: you know, I think their interests a line here. I
4:50
Speaker 1: know that the U. S. Intelligence community leaders last week
4:53
Speaker 1: said that they feared a kind of research sign no
4:56
Speaker 1: alliance against you know, the rest of the sort of
4:59
Speaker 1: more western democracies. But I still think that there are
5:02
Speaker 1: a lot of sort of sources of tension there, and
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Speaker 1: they could very well be a classic mistake that the U. S.
5:08
Speaker 1: Intelligence community, many in the US intelligence community made in
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Speaker 1: the Cold War, where they believe that, you know, two
5:12
Speaker 1: countries that followed the same communist ideology would be natural allies,
5:17
Speaker 1: when in fact, you know, their their rivalries between them.
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Speaker 1: That border uh Is has never really been quite so quiet.
5:25
Speaker 1: So in a lot of ways, I would say that,
5:27
Speaker 1: you know, we still have to sort of wait and see.
5:29
Speaker 1: But there is a different point which is also worth making,
5:33
Speaker 1: which is that we see it all the time that
5:35
Speaker 1: autocrats and autocratic regimes will band together when there is
5:40
Speaker 1: a democratic threat to to to those regimes. So it's
5:45
Speaker 1: in the interest that of China and Russia to see
5:49
Speaker 1: that the democratic tumult that we're seeing now in Venezuela fails,
5:54
Speaker 1: because that is that kind of same thing can be
5:57
Speaker 1: a threat to them at some point. Are you saying
6:00
Speaker 1: that right now China is very much an autocratic company
6:04
Speaker 1: country and that its alliances are going to be with
6:06
Speaker 1: other autocrats period the end, Well, China is an autocratic
6:09
Speaker 1: country and its alliances are you know, largely with other
6:13
Speaker 1: autocratic countries. And we see the China I mean we
6:16
Speaker 1: see with Russia for example, protecting Bashar al Assad and
6:19
Speaker 1: the UN Security Council um and I think you'll see
6:23
Speaker 1: more and more with China the same kind of behavior.
6:26
Speaker 1: I mean, I think that. So, like, what do you
6:27
Speaker 1: what do you think of the next steps in Venezuela.
6:30
Speaker 1: It's been kind of comps since Guido assumed his position
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Speaker 1: as I guess president number two or President number one.
6:35
Speaker 1: What do you think our next steps? Well, we're seeing
6:37
Speaker 1: more and more pressure. I mean, most of Europe has
6:40
Speaker 1: now come out and recognized Guido as the interim president.
6:43
Speaker 1: I think that there will be more and more pressure
6:46
Speaker 1: now through humanitarian aid that you know will be delivered,
6:49
Speaker 1: and we'll see will the real question here is if
6:53
Speaker 1: Muduro gives an order not to accept or to block
6:56
Speaker 1: humanitarian aid to his starving population, will the mill of
7:00
Speaker 1: terry follow that order? If if Maduro gives an order,
7:03
Speaker 1: which by the way, apparently he didn't over the weekend
7:05
Speaker 1: in the face of mass demonstrations for his military to
7:08
Speaker 1: fire into the crowds, will the military follow that order.
7:11
Speaker 1: That's really where the rubber hits the road. And I
7:14
Speaker 1: think that there is an understanding that, you know, he
7:17
Speaker 1: can have his generals, as he did last week, show
7:19
Speaker 1: up in a press conference saying that they're still loyal
7:22
Speaker 1: to him. But if the order is given, how many
7:26
Speaker 1: of the middle and lower ranking members of the Venezuelan
7:29
Speaker 1: military will follow it. They are suffering the same kind
7:33
Speaker 1: of privations as the rest of ordinary Venezuelans. And so
7:37
Speaker 1: in that respect, I do think that Medora's days are numbered,
7:41
Speaker 1: just real quick. In one word, which is a bigger
7:44
Speaker 1: threat North Korea or Venezuela. Well, North Korea is a
7:48
Speaker 1: bigger threat because they have nuclear weapons. Sorry, North Korea,
7:52
Speaker 1: ELI like, thank you so much for being with us,
7:54
Speaker 1: Eli Lake. We always love reading your columns for Bloomberg
7:57
Speaker 1: Opinion coming to us from Washington. D see read his columns.
8:01
Speaker 1: They are fabulous. He covers national security. But we were
8:20
Speaker 1: right in the middle of media industry earning season right now.
8:23
Speaker 1: We had twenty one century Fox report pretty decent numbers
8:26
Speaker 1: this morning, and of course the Walt Disney Company last
8:29
Speaker 1: night out with their numbers which are also slightly better
8:31
Speaker 1: than expected. The stocks are both kind of unchanged here
8:34
Speaker 1: this morning, so it help us dive into kind of
8:36
Speaker 1: what we're seeing in the media landscape. Let's bring in
8:39
Speaker 1: Porter bib Porter Bibs and managing director of Media Tech
8:42
Speaker 1: Capital Partners. He joins us in our Bloomberg Interactive Broker
8:45
Speaker 1: studio here in New York. And Porter has been covering
8:48
Speaker 1: the media business close to forever. I'll put it that way.
8:51
Speaker 1: So Porter, as you kind of look at the landscape
8:53
Speaker 1: today and again we had those results just recently from
8:56
Speaker 1: Fox and um And and Disney. We have some more
8:58
Speaker 1: to go. You know. It looks like investors are stepping
9:02
Speaker 1: back and saying, gee, I have to make a bet
9:03
Speaker 1: here whether some of these big media companies can really
9:06
Speaker 1: survive in a world where there's Netflix and Facebook and Amazon,
9:10
Speaker 1: let's just take a look at Disney, you know, probably
9:12
Speaker 1: the biggest and best position arguably. What's your view on
9:15
Speaker 1: Disney and how they play out over the next several years. Well,
9:18
Speaker 1: Bob Iger in his conference call UH yesterday said direct
9:23
Speaker 1: to consumer is his highest priority. He's putting Disney Plus,
9:27
Speaker 1: his main streaming service, on on fast forward. They're gonna
9:33
Speaker 1: show in April a demo to the world to see
9:37
Speaker 1: how it flies, and hope to launch by the end
9:40
Speaker 1: of this calendar year. Um. But the real bombshell that
9:45
Speaker 1: Disney has is not just Disney Plus, and not their
9:49
Speaker 1: sixty ownership of Hulu, which they probably will um end
9:53
Speaker 1: up owning a pent of buying out Comcast and a
9:56
Speaker 1: T and T the minority shareholders so they can control
9:59
Speaker 1: the whole thing. The bombshell is ESPN Plus, which is
10:05
Speaker 1: going gangbusters, has two million paid subscribers. But where the
10:09
Speaker 1: real money tree is going to start shaking down on
10:13
Speaker 1: Disney is when online betting goes across the country, which
10:17
Speaker 1: is going to do There are three states now where
10:19
Speaker 1: it's legal, and all of a sudden, you're going to
10:22
Speaker 1: find in the next couple of years fifty states legalizing
10:26
Speaker 1: online betting, and who has the most live sports and
10:31
Speaker 1: just a gigantic archive of debtor sports information. It's it's
10:36
Speaker 1: interesting that you bring it up because it's one way
10:39
Speaker 1: that Disney diversifies away from what Netflix has in addition there,
10:44
Speaker 1: in addition to their other original content. My question is
10:47
Speaker 1: we talk a lot about Netflix being sort of the
10:49
Speaker 1: big elephant in the room. Is Netflix going to remain
10:52
Speaker 1: an independent company? Well? It um, I may be in
10:57
Speaker 1: the minority, but since the day that Netflix launched, I
11:00
Speaker 1: said it was an unsustainable business model. Um. They don't
11:03
Speaker 1: make profit, they absolutely and they have gigantic, almost eighteen
11:09
Speaker 1: billion dollars of off balance sheet obligations. And the reason
11:13
Speaker 1: that they don't have to show those is because they don't.
11:15
Speaker 1: They don't come do and payable until they air the
11:20
Speaker 1: content that they've paid over overpaid for. So they're gonna
11:24
Speaker 1: face serious competition already from Amazon, from Disney, from uh,
11:30
Speaker 1: everybody else who wants to get into the streaming business.
11:33
Speaker 1: And somebody is going to have to pick up Netflix
11:37
Speaker 1: and take them over. And who will that person be? Well,
11:41
Speaker 1: a lot a lot of analysts are positing Apple. I'm
11:45
Speaker 1: not sure Apple is the only buyer. I think that
11:48
Speaker 1: Verizon may have to do something because they're they're looking
11:52
Speaker 1: at uh, being dumb pipes for the for the future
11:55
Speaker 1: if they don't have some content to create multiple revenue streams, stories,
12:00
Speaker 1: subscription revenue, and advertising. Uh. It could be Microsoft, which
12:04
Speaker 1: has Xbox distribution network, tens of millions of Xboxes all
12:09
Speaker 1: over the country, all over the world actually, and no
12:12
Speaker 1: content except games. So Microsoft, well, let's take a lot.
12:15
Speaker 1: I mean, Netflix has a hundred and fifty billion dollar
12:17
Speaker 1: market cabin so obviously, Uh, only a handful of companies
12:21
Speaker 1: out there could possibly do that. Are you one of
12:23
Speaker 1: those folks that says that, g as we the landscape
12:26
Speaker 1: today in the in the media consumption world, it's Time Warner,
12:29
Speaker 1: you know, Comcast, Disney, Viacom, and so on and so forth.
12:32
Speaker 1: Are you one of those folks that says, boy, if
12:34
Speaker 1: I look five years into my crystal ball, five years
12:37
Speaker 1: down the road, it's not those companies. It is Amazon,
12:39
Speaker 1: it is Microsoft, it is Netflix. Are you one of
12:43
Speaker 1: those people? And if so, sorry for the two point question.
12:46
Speaker 1: What happens in the traditional media landscape? Do we have
12:48
Speaker 1: to have another massive wave of M and A it vaporizes. Uh,
12:52
Speaker 1: we're the whole media industry right now. Um, every ten
12:57
Speaker 1: years or so, Uh, everybody start screaming content is king.
13:01
Speaker 1: Well that's the scream today. Content is king. And the
13:06
Speaker 1: distribution means that you reach out to the consumer through
13:10
Speaker 1: uh is really irrelevant. It's all going digital. It's and
13:14
Speaker 1: five years and now it'll be virtually all mobile. So uh,
13:18
Speaker 1: the legacy media linear television, cable is not going to
13:23
Speaker 1: exist in any great shape or form alright, So in
13:26
Speaker 1: that vein what major media company that currently exists will
13:31
Speaker 1: be no longer in five years. Well, one of the
13:34
Speaker 1: most vulnerable right now is Comcast because there such a
13:39
Speaker 1: big cable, linear television, Universal Pictures and NBC, um, the
13:48
Speaker 1: major networks. They're trying to go digital right now and
13:52
Speaker 1: trying to walk away from their core businesses on on
13:57
Speaker 1: network television as we know it today. But it's not
14:00
Speaker 1: gonna work. You don't think their broadband business is what's
14:03
Speaker 1: going to be the future of Comcast. And I think
14:05
Speaker 1: the thing that we'll save Comcast as as a business
14:08
Speaker 1: is their ability to deliver five G content and it's
14:13
Speaker 1: probably going to be mostly somebody else's content porter bib
14:17
Speaker 1: it is wonderful having you here. Thank you so much
14:19
Speaker 1: for being with us. Porter bib is managing partner at
14:22
Speaker 1: Media Tech Capital Partners. Has been in the media space
14:26
Speaker 1: for decades. Was the first publisher of Rolling Stone magazine.
14:31
Speaker 1: Talking about that's my favorite part of them. I love it.
14:33
Speaker 1: There's so many favorite parts, talking about shifting industries and
14:37
Speaker 1: UH and just Amazon. This year has seen a significant
14:57
Speaker 1: rally and the price of crude, but there are still
14:59
Speaker 1: some archer existential questions hanging over at the oil market.
15:03
Speaker 1: Joining us now is Jim Crane, Energy Studies Fellow at
15:06
Speaker 1: Rice University's Baker Institute for Public Policy, joining us from Houston.
15:10
Speaker 1: He's also the author of a new book, Energy Kingdoms,
15:13
Speaker 1: Oil and Political Survival in the Persian Gulf. Jim, I
15:18
Speaker 1: think one really pressing question for oil markets recently has
15:21
Speaker 1: been is Opeque on its deathbed? No pick is is
15:27
Speaker 1: alive and kicking UH and getting bigger by the signs
15:31
Speaker 1: of UH. You know the talks that have been revealed
15:35
Speaker 1: recently with Russia and the you know, the OPEC plus
15:39
Speaker 1: countries that that are now caucusing UH frequently with with
15:44
Speaker 1: Saudi Arabia and the other OPEC. In the real OPEC members. UM.
15:49
Speaker 1: A lot of that is because of the U s shale.
15:51
Speaker 1: So you know, this rise in in US oil production
15:54
Speaker 1: has really undercut OPEX market power. So to get it back, uh,
15:59
Speaker 1: it brought in Russia and now we've got the you know,
16:02
Speaker 1: two of the three largest global oil producers, Saudi Arabian
16:06
Speaker 1: Russia working together. Uh. So I think, uh yeah, OPEC
16:11
Speaker 1: is still a going concern for sure. So, professoral Crane,
16:15
Speaker 1: when we think of OPEC in the Middle East, I
16:17
Speaker 1: mean it's obviously oil has transformed that region of the
16:20
Speaker 1: world so dramatically over the last seventy five years. Um.
16:24
Speaker 1: You know, obviously tremendous oil reserves there. Despite the fact
16:28
Speaker 1: that the US is now coming online with a shale.
16:30
Speaker 1: What are some of the downsides that you're concerned about
16:33
Speaker 1: in that region? Um, as they continued to progress. Well.
16:38
Speaker 1: So this basically that's you know, the whole crux in
16:40
Speaker 1: my book. So it's basically a history of energy consumption.
16:43
Speaker 1: You know, these countries were extremely poor. Uh when oil
16:48
Speaker 1: was discovered, they didn't use any oil at all, which
16:50
Speaker 1: was great for the companies that that we're producing that oil.
16:53
Speaker 1: They could export every bit of it. Uh, and over
16:56
Speaker 1: the past oh four or fifty years, they've gone from
17:00
Speaker 1: zero to leading the world in oil consumption, uh, you know,
17:04
Speaker 1: which also happens to be their main export commodity. So
17:07
Speaker 1: that that trend, that continued growth and energy demand was
17:12
Speaker 1: threatening their economies because you know, they were diverting evermore
17:16
Speaker 1: exportable crude oil into their economies, and it was also
17:20
Speaker 1: threatening their political systems. You know. They these are autocratic
17:23
Speaker 1: political systems that are based on patronage by basically giving
17:27
Speaker 1: away stuff. So they were giving away too much, uh
17:31
Speaker 1: in terms of energy domestically, and they needed to get
17:36
Speaker 1: rid of these subsidies that they that they put in
17:39
Speaker 1: place in the nineteen seventies. And they're they're starting it's
17:42
Speaker 1: starting to happen. They're starting to to to raise energy prices.
17:46
Speaker 1: Saudi Arabia is leading the way. But now, you know,
17:50
Speaker 1: sort of the latter stage of my book, I look
17:52
Speaker 1: at how climate change is likely to affect these countries. Uh,
17:57
Speaker 1: and that's a whole new existential issue, sort of a
18:01
Speaker 1: lose lose situation if you will, for them. Uh. You know,
18:05
Speaker 1: if climate action succeeds in reducing carbon emissions, that will
18:10
Speaker 1: probably affect oil demand in their economies. If climate change,
18:14
Speaker 1: if the world does not succeed in reducing oil demand, uh,
18:19
Speaker 1: you know, the raising rising temperatures, you know, Saudi Arabian
18:23
Speaker 1: the Gulf are going to be you know, on the
18:25
Speaker 1: front lines of climate victimhood, with some of those cities
18:29
Speaker 1: along the Gulf coast possibly getting to be too hot
18:33
Speaker 1: and humid for you know, the human for humans to withstand, uh,
18:38
Speaker 1: so by you know, sort of the end of this century.
18:40
Speaker 1: So you're talking about how sort of the the existence
18:45
Speaker 1: of oil and the production of oil in the Middle
18:47
Speaker 1: East really gave rise to the current political regimes and
18:51
Speaker 1: also to the capital there. At the same time, this
18:56
Speaker 1: is going to be a problem for them since this
18:58
Speaker 1: is how they've established, uh, the entire infrastructure of how
19:01
Speaker 1: they operate. I'm just wondering, you know. You we started
19:04
Speaker 1: with talking about OPEC and how it's broadening out and
19:08
Speaker 1: still alive and kicking, But is the center of focus
19:12
Speaker 1: moving away from the Middle East because of some of
19:15
Speaker 1: these challenges and because of uh, the fact that it
19:18
Speaker 1: needs to have a bigger critical mass to fight the
19:20
Speaker 1: U S shale presence. I think, you know, Saudi Arabia
19:24
Speaker 1: and Riad is still the you know where the critical
19:27
Speaker 1: mass of OPEC lies. I mean the Saudi Oil Ministry
19:30
Speaker 1: and the Saudi Minister himself. Um, you know, is still
19:33
Speaker 1: the key personage within OPEC who still calls the shots. Um.
19:39
Speaker 1: You know, the other countries in in the Gulf, you know,
19:44
Speaker 1: the the other monarchies tend to caucus with Saudi Arabia
19:47
Speaker 1: in within OPEX. So there you know, it's still um
19:50
Speaker 1: but yeah, I think you know, Saudi Arabia is still
19:53
Speaker 1: that the heavyweight within OPEC. We're talking to Jim Crane,
19:56
Speaker 1: energy Studies fellow at Rice University's Baker Institute for Public Policy. Jim,
20:01
Speaker 1: you know to the extent that these I mean, we
20:03
Speaker 1: know some of these Gulf area countries are trying to
20:06
Speaker 1: diversify their incomes, diversify their economies. How successful have they
20:10
Speaker 1: been at attracting foreign capital and actually achieving some of
20:13
Speaker 1: that diversification. Well, you've got the first successful post oil
20:18
Speaker 1: economy in the Middle East now in Dubai, right. So
20:21
Speaker 1: Dubai's GDP is you know, about three percent or less
20:25
Speaker 1: now from oil and gas. So so Dubai's done it.
20:28
Speaker 1: They've They've developed a you know economy based on financial services,
20:31
Speaker 1: on tourism and conventions and on shipping and logistics, uh,
20:35
Speaker 1: and on real estate, right those crazy real estate projects
20:38
Speaker 1: we've seen with their the you know the world's tallest
20:40
Speaker 1: building and the you know the islands in the uh
20:43
Speaker 1: you know shaped like palm trees in the Gulf. UM.
20:46
Speaker 1: You know, there's a lot of other real estate projects
20:48
Speaker 1: that are you know, maybe a bit a bit more
20:50
Speaker 1: sense that they've they've managed to convert into a non
20:53
Speaker 1: oil economy pretty successfully. Also airlines, um. But now you've
20:57
Speaker 1: got the you know, the other Gulf Cooperation Council countries,
21:01
Speaker 1: the other monarchies have not followed Dubai's example until recently
21:06
Speaker 1: they're starting to do the same thing. So a giving
21:10
Speaker 1: Dubai a bunch of competition in airlines and in real
21:13
Speaker 1: estate and tourism, um. But they need to go a
21:16
Speaker 1: lot further than this, I think for for oil derived economies,
21:20
Speaker 1: diversification is really something that they really have to be dragged,
21:25
Speaker 1: kicking and screaming into because you know, these these sectors
21:28
Speaker 1: are just not as profitable as oil. I mean, if
21:32
Speaker 1: you can produce oil for five or ten bucks and
21:35
Speaker 1: sell it for fifty or a hundred dollars, you know
21:37
Speaker 1: that's a you know that that level of profit is
21:40
Speaker 1: just not going to be available in pretty much anything else.
21:42
Speaker 1: So uh, it's a tough cell diversification, but unfortunately for them,
21:47
Speaker 1: it is vital. Uh, and that is what they've got
21:50
Speaker 1: to do. Jim Crane, thank you so much for being
21:52
Speaker 1: with us. Jim Crane is Energy Studies Fellow at Rice
21:55
Speaker 1: University's Baker Institute for Public Policy based in Houston. Is
21:59
Speaker 1: a book is Energy Kingdoms, Oil and Political Survival in
22:03
Speaker 1: the Persian Gulf. A very interesting kind of reflection at
22:07
Speaker 1: a time when there is this pressure about global warming
22:11
Speaker 1: and about the use of fossil fuels, and as a
22:14
Speaker 1: lot of these Middle Eastern kingdoms do try to diversify
22:17
Speaker 1: their investments and the resources away from oil. Well. Of course,
22:36
Speaker 1: President Trump delivered his State of the Union address last night,
22:39
Speaker 1: touching on a number of topics. To help us parts
22:42
Speaker 1: through what the President said and the democratic response, we
22:46
Speaker 1: bring in Lonnie Chen. Lonnie is the David and Diane
22:49
Speaker 1: Stuffy Research Fellow at the Hoover Institution, also a director
22:53
Speaker 1: of Domestic Policy Studies and Lecture in the Public Policy
22:56
Speaker 1: Program at Stanford University. Calling on the phone from of
23:00
Speaker 1: Lee Stanford. So, Lonnie, a lot of topics covered in
23:03
Speaker 1: a State of the Union address last night, maybe light
23:06
Speaker 1: on a detail, but certainly a message that was consistent
23:09
Speaker 1: with his past messaging. What did you take away from
23:13
Speaker 1: the State of the Union address last night? Well, I
23:16
Speaker 1: thought the President actually sounded a number of unifying themes
23:20
Speaker 1: during his speech. Obviously there were elements of it that
23:23
Speaker 1: were classic Trump claiming credit for avoiding nuclear armageddon with
23:28
Speaker 1: North Korea was chief among them, But fundamentally, as a
23:32
Speaker 1: as a speech, I think the President from a policy perspective,
23:36
Speaker 1: focused on a few items that ought to get support
23:39
Speaker 1: from Republicans and Democrats. Prescription drug pricing, infrastructure reform, UH,
23:45
Speaker 1: boosting economic growth. Those are all themes that Republicans and Democrats,
23:49
Speaker 1: at least in theories, should agree on. So as a
23:51
Speaker 1: general matter, I would say the President's speech sounded many
23:54
Speaker 1: more unifying tones that might have been president his recent rhetoric. Okay, so,
24:00
Speaker 1: Lunny Chain, this actually does not necessarily jibe with what
24:04
Speaker 1: a lot of other people are saying about the speech
24:06
Speaker 1: in that uh, President Trump did not seem to throw
24:10
Speaker 1: Democrats a bone when it came to the wall and
24:13
Speaker 1: negotiating about avoiding another government shutdown. Why do you disagree well?
24:19
Speaker 1: On immigration? That's an area where obviously the president feels
24:22
Speaker 1: very strongly that he needs to continue to play kate
24:25
Speaker 1: and and uh promote policy that's popular with his base.
24:29
Speaker 1: But bear in mind the current process is largely in
24:32
Speaker 1: the Congress's hands. There's a negotiation going on. We'll see
24:36
Speaker 1: where the President comes out on it. But as a
24:38
Speaker 1: general matter, if you look throughout the speech, I think
24:41
Speaker 1: there were many more times when he tried to bring
24:44
Speaker 1: people together then he tried to drive them apart. Now,
24:47
Speaker 1: with respect immigration, that's obviously a very controversial issue, one
24:50
Speaker 1: where I think there was more divisiveness, but we've come
24:54
Speaker 1: to expect that from the president. Immigration is a hallmark
24:57
Speaker 1: issue for him, and obviously it's kind of central to
25:00
Speaker 1: his political coalition. So it's understandable, not excusable, but understandable
25:05
Speaker 1: the degree to which he uses immigration as an issue
25:08
Speaker 1: to divide Republicans and Democrats. So, Lonnie, I guess the
25:12
Speaker 1: rubber will meet the road, if you will, really, over
25:14
Speaker 1: the next week or so, as we approached the deadline
25:18
Speaker 1: for a potential second shutdown, was there anything you heard
25:21
Speaker 1: in the address last night? Or even in the Democratic
25:24
Speaker 1: response that would lead you to believe that there is
25:26
Speaker 1: a path forward to avoid a second shutdown. Well, the
25:31
Speaker 1: the only question I think will be whether the negotiators
25:34
Speaker 1: who are talking about this issue in Congress now, the
25:37
Speaker 1: Conference Committee that was convened to end the last shutdown,
25:41
Speaker 1: the question is whether they can achieve resolution that's going
25:44
Speaker 1: to be satisfactory to the far left to the far right.
25:47
Speaker 1: I think that's the that's the bigger issue. As far
25:50
Speaker 1: as the path forward, I think that the path forward
25:52
Speaker 1: is actually relatively straightforward. From a policy perspective. We all
25:56
Speaker 1: know the sorts of things that Democrats and Republicans would want.
25:59
Speaker 1: The question is whether as a political will there to
26:01
Speaker 1: avoid a second shutdown. And I would argue that the
26:04
Speaker 1: first shutdown was was considered to be so distasteful by
26:08
Speaker 1: both sides that there will be a very strong push
26:11
Speaker 1: to to avoid a shutdown. And frankly, if it comes
26:15
Speaker 1: down to a question of whether there will be a
26:17
Speaker 1: shutdown or if the President is going to act in
26:20
Speaker 1: some way unilaterally, my senses that the President will act
26:23
Speaker 1: unilaterally and Congress will do what it can to avoid
26:25
Speaker 1: a shutdown. That's not the optimal solution from a policy outcome,
26:29
Speaker 1: but it's not an unlikely outcome given where things are.
26:32
Speaker 1: As we said right now. So your former advisor to
26:36
Speaker 1: the Marco Rubio and make Romney campaigns, and I'm wondering
26:40
Speaker 1: putting that hat on for a minute, how would you
26:43
Speaker 1: view Stacy Abraham's response to Democratic response to President Trump's
26:47
Speaker 1: State of the Union where she talked about voter fairness
26:51
Speaker 1: as she talked about the middle class and the plight there.
26:54
Speaker 1: How would you advise President Trump to respond? Well, the
27:00
Speaker 1: of the themes, You know, if Stacy abrams response echoed
27:03
Speaker 1: the themes that we've heard from Democrats consistently over these
27:07
Speaker 1: many years since the campaign, it was very much a
27:11
Speaker 1: preview of coming attractions in for the president, he has
27:15
Speaker 1: one of two courses pretty fundamentally. One is to to triangulate,
27:20
Speaker 1: and I think you started to see some of that
27:22
Speaker 1: last night, triangulation around issues relating to healthcare, for example,
27:26
Speaker 1: and infrastructure. As I mentioned earlier. The other pathway is
27:30
Speaker 1: for the president to hold firm to some of these
27:32
Speaker 1: more divisive issues like immigration and to really focus in
27:35
Speaker 1: on that. As we moved towards this election, Bill Clinton
27:39
Speaker 1: sort of showed the way he had. You know, Bill
27:41
Speaker 1: Clinton had very low approval ratings entering this year of
27:45
Speaker 1: his presidency in much the same way as President Trump does,
27:48
Speaker 1: and Bill Clinton elected to essentially co opt much or
27:52
Speaker 1: part of at least new Gingrich and Republicans agenda. So
27:56
Speaker 1: if President Trump tries to co opt some of the
27:58
Speaker 1: issues that Democrats care about, various historical evidence to suggestive
28:03
Speaker 1: could be successful in rather than sort of holding firm
28:06
Speaker 1: to what one might consider a based strategy. Lonnie Chen,
28:11
Speaker 1: thank you so much for being with us. Lonnie Chen
28:13
Speaker 1: is a research fellow at the Hoover Institute, also Director
28:16
Speaker 1: of Domestic Policy Studies and lecturer in the Public Policy
28:19
Speaker 1: Program at Stanford University. Joining us from California. We appreciate
28:24
Speaker 1: that look at the State of the Union address as
28:27
Speaker 1: well as a democratic response heading into the elections. Thanks
28:31
Speaker 1: for listening to the Bloomberg P and L podcast. You
28:33
Speaker 1: can subscribe and listen to interviews at Apple Podcasts or
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Speaker 1: whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter
28:39
Speaker 1: at pt Sweeney, I'm Lisa A. Bram Woyd's I'm on
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Speaker 1: Twitter at Lisa A. Bram Woyds. One. Before the podcast,
28:44
Speaker 1: you can always catch us worldwide on Bloomberg Radio.