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Bessent Warns Iran's Trade Partners to Cut Ties Ahead of New Sanctions · Balance of Power

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Speaker 2: And let me be clear, any entity that facilitates money
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Speaker 2: laundering on behalf of Iran will be removed from the
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Speaker 2: US dollar system.
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Speaker 3: The clock just started ticking.
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Speaker 2: The new sectoral sanctions determinations issue today target five of
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Speaker 2: Iran's most vital lifelines that it exploits in other countries
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Speaker 2: digital assets, technology, gold, aviation, and shipping. These measures broadened
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Speaker 2: secondary sanctions for anyone foolish enough to continue conducting business
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Speaker 2: with this regime, and will accelerate the speed with we
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Speaker 2: pursue them as I speak. Treasury's Office of Foreign Assets
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Speaker 2: Control is also sanctioning over sixty entities, individuals, and vessels around.
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Speaker 3: The world that enable the Iranian.
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Speaker 2: Regime to procure illicit nuclear and missile technology, conduct cyber operations,
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Speaker 2: and generate oil revenue. This is a sustained campaign to
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Speaker 2: collapse every last option for run.
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Speaker 4: There you have it with the Treasury Secretary Scott Besstt,
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Speaker 4: speaking live in Washington and taking a couple of questions
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Speaker 4: from reporters. Now making his way off the stage that
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Speaker 4: was live at the Treasury Department, I'm Joe Matthew alongside
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Speaker 4: Kaylee lines here in Washington with a realm of headlines
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Speaker 4: on the terminal. This was of course forecast to be
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Speaker 4: about what he calls Economic d Day for era on
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Speaker 4: and Kaylee, the Treasury Secretary is saying that the US
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Speaker 4: will block every potential revenue.
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Speaker 5: Source for the IRGC, and that could be many.
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Speaker 4: Here we got a couple of red headlines as well,
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Speaker 4: saying that the US will end dollar access to those
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Speaker 4: laundering Iranian money and just toward the end there a
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Speaker 4: major financial institution to be sanctioned this week. So in
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Speaker 4: the next couple of days, we're going to have a
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Speaker 4: lot more headlines on this, with of course China and focus.
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Speaker 4: He did take questions suggesting that China would not be spared.
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Speaker 6: No, even though China isn't initially targeted at least in
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Speaker 6: this round. He did speak to this notion that none
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Speaker 6: of this is intended to be immediate, that he wants
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Speaker 6: to level set and give entities and countries that are
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Speaker 6: engaged in this facilitation of economic lifeline providing to Iran
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Speaker 6: frankly laundering money, et cetera, some time to correct their behavior.
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Speaker 6: He said specifically that he wouldn't say the timelines, but
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Speaker 6: that Treasury does not have infinite patience here, so obviously
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Speaker 6: meant to be a warning shot, as the Treasury Secretary
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Speaker 6: described to all of these countries. Let's get more on
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Speaker 6: this now as we turn to Bloomberg walk Shington correspondent
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Speaker 6: Tyler Kendril.
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Speaker 7: Who is live at the White House for US.
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Speaker 6: So, Tyler, I guess this is what the economic D
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Speaker 6: day plan is, though we still are awaiting exact details
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Speaker 6: and battle plans, if you.
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Speaker 8: Will exactly, Kyley. At this point, it is very clear
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Speaker 8: that the White House is trying to ramp up the
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Speaker 8: economic pressure in a bid to get Iran to the
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Speaker 8: negotiating table, perhaps using this as leverage in order to
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Speaker 8: try to get some sort of movement amid what really
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Speaker 8: has been stalled talks. As you and Joe just hit
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Speaker 8: those red headlines there, the Treasury Secretary saying that the
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Speaker 8: US will end dollar access to those laundering Iranian money.
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Speaker 8: He said that this is going to equate to broadening
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Speaker 8: out the secondary sanctions risk for those countries that continue
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Speaker 8: to do business with Iran.
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Speaker 7: He also mentioned that the Treasury.
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Speaker 8: Department is sanctioning sixty different entities and individuals as we speak.
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Speaker 8: In response to the question on China, though the Secretary
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Speaker 8: did not rule that out, he said that, quote, no
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Speaker 8: one is above the reach of this.
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Speaker 7: But also added that quiet.
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Speaker 8: Diplomacy is taking place, which was really interesting to hear
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Speaker 8: him talk about the idea that President Trump is currently
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Speaker 8: placing calls as well as calls being placed to counterparts
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Speaker 8: from the Treasury Department, this State Department, in the US
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Speaker 8: military reaching out, as he said, across the globe to
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Speaker 8: try to get these countries to limit these financial lifelines,
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Speaker 8: but importantly, no defined timeline to quote shut down these
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Speaker 8: activities that we've identified. Going on to say that it's
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Speaker 8: related to digital assets, technology, gold, aviation, and shipping, the
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Speaker 8: Secretary ended by saying, quote, it is no longer acceptable
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Speaker 8: to operate in the gray areas of this conflict. But Kayley,
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Speaker 8: as you just outlined, there still big questions on exactly
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Speaker 8: the timeline that these different countries have. We know the
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Speaker 8: UAEF for example, already moved to cut financial ties with Ron,
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Speaker 8: but we're still waiting for updates from some of those
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Speaker 8: other countries. Beyond China, we're thinking about Turkey and India
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Speaker 8: as just two other examples.
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Speaker 4: Well, Tyler, before we go to Jill Livornia, we're thinking
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Speaker 4: about Canada as well, and the Treasury Secretary was asked
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Speaker 4: about the economic statecraft that we're witnessing between the two
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Speaker 4: and some are even calling it a trade war right now.
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Speaker 4: He said Canada was offered a very good deal. Trump
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Speaker 4: wants Canada to come to the table to negotiate. Of course,
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Speaker 4: we're seeing headlines from JD. Vance as well in Brewer,
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Speaker 4: Maine who said negotiations are still underway. Tyler, do we
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Speaker 4: know anything about the current state of affairs here? Josh
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Speaker 4: Wingrove's reporting would suggest that this was completely falling.
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Speaker 8: Apart right, sort of two sides to this. Both sides
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Speaker 8: had been projecting optimism, then both sides were blaming each
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Speaker 8: other for these talks ultimately falling apart our own reporting
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Speaker 8: as you're mentioning saying that Canada does not feel that
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Speaker 8: these talks are going to resume until after the midterms,
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Speaker 8: but did also leave some room there, cautioning that this
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Speaker 8: all remains very fluid, and as we continue to see
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Speaker 8: the escalation of tit for tat retaliation, perhaps that is
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Speaker 8: also adding to the pressure here because the fifty percent
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Speaker 8: tariffs that have gone into effect on twenty billion dollars
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Speaker 8: worth of goods is rather a significant move, especially considering
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Speaker 8: that we had heard that we were on the brink
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Speaker 8: of a trade deal happening. Joe, as you know, one
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Speaker 8: of those key items really did come down to the
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Speaker 8: auto tariffs. President Trump ramping up that threat for autos
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Speaker 8: fifty percent by January first if something isn't raached. But
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Speaker 8: I will point out we heard from the Canadian side
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Speaker 8: of things that it was the US, according to them,
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Speaker 8: that didn't want to extend those lower rates down to
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Speaker 8: all vehicles such as trucks, and that's one of the
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Speaker 8: reasons we ultimately saw this up ended.
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Speaker 4: Well, Tyler, a lot to go through here. We appreciate
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Speaker 4: all of your reporting today. Tyler Kendall, Washington Correspondent, live
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Speaker 4: at the White House. I mentioned Joe Lavornia was coming up,
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Speaker 4: and what a day to have him with us. The
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Speaker 4: chief economist SMBC America's former counselor to Treasury Scott Bessen,
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Speaker 4: who we just heard from and an important economic advisor
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Speaker 4: to President Trump in the first term. He's with us
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Speaker 4: live from World Headquarters in New York. Joe, good to
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Speaker 4: see you.
6:58
Speaker 3: Welcome.
6:58
Speaker 4: You've been very generous with your time, and everyone should
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Speaker 4: know you were listening along with all of us. As
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Speaker 4: the Treasury Secretary spoke, will D Day work this time?
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Speaker 9: The sanctions, though, as Kelly said, we need more details,
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Speaker 9: but it seems very strict and potentially very groundbreaking and
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Speaker 9: broad in a way that sanctions have not been used before.
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Speaker 9: The fact that the US is trying to pressure I
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Speaker 9: ran to the negotiating table to me is a positive.
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Speaker 9: We're not involved in military kinetics at the moment. Hopefully
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Speaker 9: that will remain the case and that somehow there is
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Speaker 9: a negotiation that takes place. But of course, if the
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Speaker 9: sanctions work the way the administration would like them and
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Speaker 9: the regime crumbles internally because of it, well that will
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Speaker 9: also be effective. So it's a strong negotiating tactic. We'll
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Speaker 9: see what happens. I don't know exactly how they're going
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Speaker 9: to be implemented, but right now, from what I heard,
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Speaker 9: it sounds like the rhetoric is pretty harsh, and my
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Speaker 9: guess is JOE will be matched with action.
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Speaker 6: Do you expect that it will be matched with action
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Speaker 6: equally for all of these different countries to which it
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Speaker 6: could apply. He obviously indicated that China wouldn't be exempt
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Speaker 6: from this, Joe, But I do wonder if you believe
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Speaker 6: that the US would really be willing to do its
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Speaker 6: worst ahead of Hijin Ping's visit here just weeks from now.
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Speaker 9: Right. Well, that's a fair point, And there was one
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Speaker 9: of the questions that asked about the comparison to D Day,
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Speaker 9: and the Secretary is allowing there to be some runway
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Speaker 9: before these are fully implemented, so that these backdoor whatever
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Speaker 9: it was the negotiations so to speak, back door I
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Speaker 9: think was the word used, or back channel negotiations proceed
8:31
Speaker 9: so that there could be some success. So the Secretary
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Speaker 9: is pretty persuasive. He knows how this negotiation process works,
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Speaker 9: which is why I believe intentionally he didn't want to
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Speaker 9: give that much information. The fact that he did allude
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Speaker 9: to the fact that major financial institution could be sanctioned
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Speaker 9: this week, I think is important and probably is raising
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Speaker 9: some eyebrows. So we'll just have to wait and see,
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Speaker 9: but I think he was, as I said, very firm,
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Speaker 9: very credible.
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Speaker 10: We'll just have to see what actually happens.
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Speaker 4: It was mentioned earlier Joe that as of right now,
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Speaker 4: Scott Bessant is running the war with Iran much more
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Speaker 4: than Pete Hegseth is, and as the administration turns from
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Speaker 4: military warcraft to economic state craft. I'm just wondering your
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Speaker 4: thoughts on this. You worked very closely with him. Is
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Speaker 4: this something that he envisioned? Did you game this out
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Speaker 4: when you were at the Treasury, And is the country
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Speaker 4: in better hands now that he's in charge of this?
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Speaker 9: Well, obviously I'm very happy having worked for the Secretary,
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Speaker 9: I'm very happy he's in that position. And I can
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Speaker 9: tell you many clients. You know, it's like the Bloomberg
9:36
Speaker 9: story that was run a number of months ago in
9:38
Speaker 9: Best and We Trust. I wouldn't say that the Treasury
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Speaker 9: Secretary is taking over from the Secretary of War. The
9:46
Speaker 9: fact is, and when you were in Treasury you realize it.
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Speaker 9: But the tentacles, the reach of Treasury is just so
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Speaker 9: broad and deep. Under Secretary for Terrorism and Financial Intelligence
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Speaker 9: Acting Secretary Gen Lang, the sanction are.
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Speaker 10: A big part of the Treasury's portfolio.
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Speaker 9: So the fact that the administration is using economic leverage
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Speaker 9: in addition to prior military kinetics, are all part of
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Speaker 9: a larger platform. But I wouldn't say, you know, one
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Speaker 9: department is overtaking another. This is just part of the
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Speaker 9: Treasury's portfolio, which has certainly grown in scope relative.
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Speaker 10: To past Treasury secretaries.
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Speaker 9: And I think it reflects the fact that President and
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Speaker 9: many an administration have a lot of faith and confidence in
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Speaker 9: the Treasury Secretary, so hopefully he'll be successful.
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Speaker 6: Well when we consider the various challenges the Treasury Secretary
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Speaker 6: now has before him, Certainly this is one, but he
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Speaker 6: was asked there repeatedly during that press conference about another,
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Speaker 6: which is climbing long end rates in the United States.
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Speaker 6: Hence the bigger buyback announcement of last week, the promise
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Speaker 6: of some coming fiscal consolidation, which, let me know if
10:52
Speaker 6: you buy into that notion, Joe, But could some of
10:56
Speaker 6: the things that the Treasury is trying to pursue, choking
10:59
Speaker 6: of off aroun at economically and therefore taking even more
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Speaker 6: energy out of global markets actually fuel the inflationary forces
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Speaker 6: that are creating in part, his other headache right now
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Speaker 6: in terms of higher borrowing costs.
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Speaker 9: If things don't work out, yes, that would be a risk.
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Speaker 9: But I was looking at the oil markets this morning,
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Speaker 9: of course, and as the Secretary was speaking, and we're
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Speaker 9: down almost three percent West Texas. So it does seem
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Speaker 9: to be a view that the market is taking these
11:24
Speaker 9: new actions quite seriously and that they may have some success.
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Speaker 10: On the inflation side.
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Speaker 9: I'm a bit more negative on inflation, just in part
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Speaker 9: because the US economy is booming, it is very strong,
11:36
Speaker 9: and the high productivity and the rising living standards through
11:39
Speaker 9: faster wages which I see coming through the higher productivity,
11:43
Speaker 9: that will just take some time to play out. So
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Speaker 9: I may have a little bit different view on the
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Speaker 9: inflation scenario. But I understand what the Treasury Secretary is
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Speaker 9: trying to do. I understand what they're talking about from
11:52
Speaker 9: a national security and global security perspective, and in that regard,
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Speaker 9: I might separate the economics in the short term from
11:58
Speaker 9: longer term security and safety issues.
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Speaker 4: So you layter on this breakdown with Canada and you
12:04
Speaker 4: start to wonder Joe Crown, Royal whiskey, goose down, jackets,
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Speaker 4: ice hockey equipment, confusion over cars, does affordability just get worse.
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Speaker 10: I don't think it gets worse.
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Speaker 9: I mean, the inflation data JOE have have trended a
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Speaker 9: bit lower. The core CPI is around two and a
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Speaker 9: half percent. That's not terrible.
12:26
Speaker 10: I think.
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Speaker 9: Unfortunately, you know, perhaps the President may have been too
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Speaker 9: aggressive and getting you know, saying was going to get
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Speaker 9: inflation down as fast as he'd like. But the trends
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Speaker 9: aren't terrible. So I don't think it's going to worsen
12:40
Speaker 9: the affordability issue. But we'll see what happens. I mean,
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Speaker 9: understand people's concerns. There's issues in terms of affordability on
12:49
Speaker 9: the mortgage side, lending side. But the reality about rates, though,
12:53
Speaker 9: is that this rise and race has been global and
12:56
Speaker 9: the US rise and rates Joe has to be put
12:58
Speaker 9: in the proper perspective. It's a strong economy among industrialized countries.
13:02
Speaker 9: The demand for capital is high. You see it with
13:04
Speaker 9: this hundreds of billions of dollars coming to mark from
13:09
Speaker 9: the hyperscalers like this is raising demand for capital because
13:12
Speaker 9: US investment opportunities are so strong, and a part that
13:15
Speaker 9: is because of the President's policies of prudent, business friendly deregulation.
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Speaker 10: Low tax rates, low.
13:22
Speaker 9: Taxes on working class Americans, with the no tax on tips,
13:25
Speaker 9: and over time, those are all positives that will help
13:28
Speaker 9: on the affordability side. Maybe the criticism and I level
13:30
Speaker 9: against the administration is they need to maybe message that
13:34
Speaker 9: better because these things pull very well with everyday Americans
13:37
Speaker 9: and maybe that's what we'll hear more of going into
13:39
Speaker 9: the midterms.
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Speaker 6: Well, the midterms are one thing I'm curious what you'll
13:45
Speaker 6: hear will hear more of this week, specifically from the
13:48
Speaker 6: Chair of the Federal Reserve, Kevin worsh when he speaks
13:50
Speaker 6: at Jackson Hole, as he's going to have some of
13:52
Speaker 6: these very same issues in mind. Joe, as you talked
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Speaker 6: about your view on inflation and some of the forces
14:00
Speaker 6: that are out there, the demand boom for AI infrastructure,
14:03
Speaker 6: which yes, is obviously creating more demand for capital, but
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Speaker 6: also could be inflationary in its own right. Do you
14:09
Speaker 6: think he could realistically set the stage for a hike
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Speaker 6: coming soon?
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Speaker 9: Well, the Bloomberg, as you know, if you look at
14:15
Speaker 9: your Bloomberg terminal probability of a September hike is forty percent.
14:19
Speaker 9: We've got inflation data on Wednesday. I'm upbeat on the economy.
14:23
Speaker 9: And last year, if you look at what the Fed did,
14:25
Speaker 9: they cut rates three times a total of seventy five
14:27
Speaker 9: basis points to guard against unwanted weakness in the labor market.
14:31
Speaker 9: Last year, private jobs or headline jobs are only up
14:34
Speaker 9: something like ten thousand a month, and that was perhaps
14:36
Speaker 9: the time. The right thing to do. The economy, in
14:39
Speaker 9: my view, is very strong. Job growth is improving. You'd
14:42
Speaker 9: want to take back some of that emergency easing. So
14:44
Speaker 9: I could see the Fed raising rates in September on
14:47
Speaker 9: Jackson Hole, Kevin worsh is probably going to say things
14:51
Speaker 9: need to get we need to get inflation back to
14:52
Speaker 9: two percent. What I love for him to say if
14:54
Speaker 9: I don't think he will, but if he's listening maybe
14:56
Speaker 9: he'll put it in his speech is he should say
14:58
Speaker 9: that the FED funds rate is the primary instrumant of
15:01
Speaker 9: monetary policy, not the balance shee. Because one of the
15:04
Speaker 9: questions I get from a lot of clients is what
15:06
Speaker 9: are they going to do with the balance sheet? And
15:07
Speaker 9: that is I think partly why longer rates may be
15:10
Speaker 9: rising to reflect that extra term premium, giving you all
15:13
Speaker 9: the uncertainty. I don't think he'll say that, but I
15:15
Speaker 9: wish you would.
15:17
Speaker 5: The President's watching. He'll tell Worship about that.
15:19
Speaker 3: Right.
15:19
Speaker 5: Yeah, they're talking a lot.
15:21
Speaker 6: All of Washington's important decision makers watch and listen to
15:23
Speaker 6: this program.
15:24
Speaker 7: Joe Lavornia, thank you for being on it.
15:26
Speaker 6: He of course, is a former counselor to the Treasury
15:28
Speaker 6: Secretary of Scott Bessett, now Chief Economists of SMBC Americas.
15:33
Speaker 4: Stay with us on Balance of Power. We'll have much
15:35
Speaker 4: more coming up after this.
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16:00
Speaker 3: Let me be clear, any entity that facilitates money.
16:04
Speaker 2: Laundering on behalf of Iran will be removed from the
16:09
Speaker 2: US dollar system. The clock just started ticking.
16:15
Speaker 6: So as our clock keeps ticking, let's turn now to
16:18
Speaker 6: our political panel. Rick Davis and Jeanie Shanzano are with us. Rick,
16:21
Speaker 6: of course, partner at Stone Court Capital, and Republican strategist.
16:23
Speaker 6: Genie a democratic analyst in Democracy, A visiting fellow at
16:26
Speaker 6: Harvard Kennedy School's Ash Center.
16:29
Speaker 7: Welcome to you both.
16:30
Speaker 2: Rick.
16:30
Speaker 6: We've talked repeatedly since this conflict between the US and
16:34
Speaker 6: Iran began about whether or not the US and the
16:37
Speaker 6: President specifically is credible when making threats, because he so
16:40
Speaker 6: frequently pulls back from them, threatening to attack infrastructure, then
16:44
Speaker 6: backing off for the.
16:45
Speaker 7: Sake of negotiations.
16:46
Speaker 6: Should other countries who listened to the Treasury Secretary today
16:50
Speaker 6: take him more seriously in this instance or could it
16:53
Speaker 6: also just be another bluff being called out?
16:57
Speaker 11: Yeah, this was a.
16:58
Speaker 12: Little bit confusing this statement today by Secretary Vestant. D
17:02
Speaker 12: Day he's been calling a D Day for quite some time,
17:05
Speaker 12: was on June sixth.
17:06
Speaker 11: That was a day that the world remembers.
17:09
Speaker 12: I'm not sure anybody's going to remember today's press conference
17:12
Speaker 12: because it was basically a warning, not a D day.
17:16
Speaker 12: And so I don't know how seriously our enemies are
17:21
Speaker 12: going to take this threat, because that's who we're talking about.
17:24
Speaker 12: We're talking about people who are aligned against the interests
17:28
Speaker 12: both economically and security wise, against the United States, and
17:33
Speaker 12: so sure great to have the secretary threaten these entities
17:39
Speaker 12: and countries. Great to have the toolkit that we have
17:42
Speaker 12: as a country to be able to make an impact.
17:46
Speaker 12: But this has been going on now for over six months.
17:49
Speaker 12: The sanctions themselves have been going on for over fifty years.
17:53
Speaker 12: At what point are we actually going to see a
17:55
Speaker 12: result something like a D Day. We didn't get that today.
18:00
Speaker 12: You can get a timeline to get it in the future.
18:02
Speaker 12: So I'm still scratching my head, going, what in the
18:05
Speaker 12: world did we just see happen at the Treasuric Department today?
18:09
Speaker 11: Certainly not a dbay wow.
18:11
Speaker 5: Well, do you feel the same way, Genie?
18:13
Speaker 4: The sectories asked about China. No one is above the
18:16
Speaker 4: reach of US sanctions, he said, If China facilitates transactions,
18:22
Speaker 4: it will be targeted.
18:24
Speaker 5: What's to be confused about?
18:28
Speaker 13: I think the real question here is what is the
18:31
Speaker 13: administration trying to achieve. One thing they seem to be
18:35
Speaker 13: trying to achieve is regime change.
18:38
Speaker 5: And unfortunately for the all of us and.
18:41
Speaker 13: The administration, economic sanctions against autocracies like Iran are very
18:48
Speaker 13: infrequently effective at regime change because economic sanctions like this
18:55
Speaker 13: harm populations, and the thinking is the population will rise
19:00
Speaker 13: up against this regime and will overthrow it, or change
19:05
Speaker 13: its ways. There has been no sort of history. Whethern
19:10
Speaker 13: and Rick mentioned the last fifty years of economic sanctions,
19:14
Speaker 13: they have weathered all of it. And now, thanks to
19:17
Speaker 13: what the administration did with starting this war in February,
19:21
Speaker 13: we have a more hardened regime in place. I don't
19:25
Speaker 13: think there's anybody who studies iron who thinks that this
19:28
Speaker 13: regime will do anything except kill protesters without even batting
19:34
Speaker 13: an eyelash if they try to rise up now. So,
19:37
Speaker 13: if it's not regime change thereafter, and there's again very
19:41
Speaker 13: little research evidence that that's effective, the only other alternative
19:45
Speaker 13: is we are going to badger them back to the
19:48
Speaker 13: negotiating table. That's probably our best bet. But economic sanctions
19:54
Speaker 13: of this magnitude, if they go into place, are probably
19:58
Speaker 13: just going to do what this regime wants to do,
20:04
Speaker 13: which has become more hardline, not likely to get back
20:08
Speaker 13: to the negotiating table where you have more moderates. And
20:10
Speaker 13: of course we were at the negotiating table before the
20:13
Speaker 13: war started twice now and we bombed them, and now
20:17
Speaker 13: we're asking them to go back to it, and when
20:19
Speaker 13: they say no, we're saying we're going to sanction them
20:21
Speaker 13: so I'm not really feeling like this is going to
20:24
Speaker 13: be effective. The only way out of this is going
20:27
Speaker 13: to be diplomacy. And all of this is a self
20:31
Speaker 13: inflicted wound, wound by a president who got rid of
20:35
Speaker 13: the only negotiated settlement we had, which is the JCPOA,
20:39
Speaker 13: and then bomb them twice and has now woken up
20:41
Speaker 13: to the fact neither of those things is effective.
20:46
Speaker 6: Well, on the subject of self inflicted wounds, Rick, as
20:50
Speaker 6: we consider what actually might come about economically if we
20:54
Speaker 6: do see these secondary sanctions implemented, if iron actually is
20:57
Speaker 6: choked off, if it's oil is never making it on
21:00
Speaker 6: to global markets, and if this happens and Iran chooses
21:02
Speaker 6: instead of going to the negotiating table to retaliate against
21:05
Speaker 6: other Gulf States energy interests throughout the region, could this
21:10
Speaker 6: actually exacerbate some of the political problems that the president
21:13
Speaker 6: is facing at home if it leads to higher energy prices.
21:16
Speaker 6: Not even to say what could happen as a result
21:18
Speaker 6: of the tariffs against Canada that are now being implemented
21:20
Speaker 6: and implemented back in return.
21:23
Speaker 11: Yeah, just focus on the Iran question.
21:25
Speaker 12: And look, I certainly am for D Day, and I
21:28
Speaker 12: do believe that crippling sanctions will exacerbate the domestic problems
21:34
Speaker 12: that exist in Iran. And I do believe that the
21:37
Speaker 12: only ultimate solution is not negotiation, but regime change.
21:42
Speaker 11: In Iran from Iranians.
21:44
Speaker 12: So the fact that Sexuary Vessett made a point of
21:47
Speaker 12: saying this is how they change governments in the Soviet Union,
21:54
Speaker 12: I think it's a good indication that they're not going
21:56
Speaker 12: to the negotiating table. The question really is what you said, Gaily,
22:00
Speaker 12: is like, how tough can the administration be if it
22:04
Speaker 12: has to weather economic punishment at home because of the
22:08
Speaker 12: policies that they're now going to pursue abroad. And we
22:13
Speaker 12: haven't seen a willingness by this administration to buck the markets,
22:17
Speaker 12: to buck the bond market, to buck the increase in
22:21
Speaker 12: consumer spending. If we do see it, it's going to
22:25
Speaker 12: have a cost. I mean, the political guys in the
22:28
Speaker 12: White House, I am sure sitting around the same table
22:30
Speaker 12: vest In saying like this policy could be a disaster.
22:34
Speaker 11: If it's actually implemented by the midterms.
22:37
Speaker 12: And maybe that's why we didn't see a timetable because
22:41
Speaker 12: the reality is if they come out today with crippling
22:43
Speaker 12: secondary sanctions on India, on China, on places who are
22:49
Speaker 12: doing business with Iran, you would probably see a negative
22:53
Speaker 12: impact on consumers, negative impact on the economy, and that's
22:57
Speaker 12: not exactly what they're looking for politically, Genie.
23:01
Speaker 5: Just lastly on this is the American mindset?
23:04
Speaker 4: Is the mindset of this administration one that is geared
23:07
Speaker 4: toward the long term enough to manage this? And I'll
23:10
Speaker 4: add Canada as well. One of the most red stories
23:14
Speaker 4: today in the terminal comes from Josh Wingrove, who spoke
23:17
Speaker 4: with Canadian officials all weekend to learn that they believe
23:21
Speaker 4: the trade war with the United States, which they do
23:23
Speaker 4: call it, may last well beyond the midterms, that this
23:27
Speaker 4: could in fact be a new long term reality. Does
23:30
Speaker 4: the US look at either of these instances of economic
23:34
Speaker 4: state craft in the same way.
23:37
Speaker 13: I'm not sure this administration does. I'm not sure the
23:40
Speaker 13: US government does, but we should be. The damage in
23:45
Speaker 13: both of these instances is so long term and so widespread.
23:50
Speaker 13: You look at what President Trump has done to our
23:52
Speaker 13: allies in just the last week, let alone in the
23:56
Speaker 13: last year, that a year and a half or two
23:59
Speaker 13: that he's been an author You have South Korea, you
24:02
Speaker 13: have Canada, You have Alman. The list goes on and on.
24:06
Speaker 13: Now we're going to be secondarily sanctioning potentially allies for
24:10
Speaker 13: their operations with Iran.
24:13
Speaker 5: We are getting.
24:14
Speaker 13: Ourselves into an almost impossible position here on the world stage.
24:20
Speaker 13: And what the Secretary did today was he issued an
24:23
Speaker 13: existential threat to the Iranian regime. And when you issue
24:28
Speaker 13: that kind of threat in foreign policy, that means they
24:32
Speaker 13: are going to fight to the death. And the question
24:34
Speaker 13: now for the US is are we prepared? And this
24:37
Speaker 13: gets to your long term question to fight to the death?
24:40
Speaker 13: Are we willing to put troops on the ground. And
24:42
Speaker 13: the answer is no, and they know it. And yes,
24:46
Speaker 13: everyone would like regime change in Iran, but we shot
24:49
Speaker 13: ourselves in the foot in February when we went in
24:53
Speaker 13: the time to do these harsh economic sanctions and to
24:56
Speaker 13: try to support regime change in other ways. Was before
25:00
Speaker 13: for the end of February when people were rising up,
25:04
Speaker 13: and why they didn't do that remains an open question.
25:07
Speaker 13: But it suggests that what they want to see and
25:10
Speaker 13: what they have in mind is not long term but
25:12
Speaker 13: short term wins. And that's not how Iran plays this game.
25:16
Speaker 13: And that's why we're here fifty years later.
25:21
Speaker 6: Well, Rick, I'd like for you to weigh in on
25:25
Speaker 6: the Canada portion of this, specifically to Joe's point about
25:28
Speaker 6: Canada's expectation that this is not going to get any
25:31
Speaker 6: closer to the resolution that may be desired prior to
25:34
Speaker 6: the mid terms, or maybe even not until President Trump
25:36
Speaker 6: is out of office, characterize the strength of the US
25:39
Speaker 6: and Canada's positioning in what could very much just be
25:43
Speaker 6: a tit for tat escalatory cycle, when the Canadian Prime
25:47
Speaker 6: Minister has soaring popularity because of this trade war with
25:50
Speaker 6: the US, and President Trump's own approval rating has been
25:53
Speaker 6: consistently following.
25:56
Speaker 12: Yeah, President Trump's rating on the economy now is sub third.
26:00
Speaker 12: I mean, that is a historic low for a president.
26:03
Speaker 12: And as you point out, Primister Carney has actually benefited
26:09
Speaker 12: both politically when he was running and since he's been
26:13
Speaker 12: in office from the challenge with Donald Trump. So when
26:16
Speaker 12: you're looking at who holds the political cards, absolutely it's
26:20
Speaker 12: it's the Canadians and their fact that they are willing
26:23
Speaker 12: to put out to folks like Josh Wingrove of Bloomberg
26:27
Speaker 12: that they're going to settle in for a long fight,
26:29
Speaker 12: that they don't care about the US political cycle.
26:32
Speaker 11: If anything, they're.
26:33
Speaker 12: Going to manipulate it to create havoc in states like
26:38
Speaker 12: Maine and Michigan and Wisconsin that have critical elections for
26:44
Speaker 12: Republicans that could determine the future of the United States
26:48
Speaker 12: Senate as far as political party control.
26:51
Speaker 11: They know what they're doing.
26:52
Speaker 12: Mark Carney is a savvy guy, and I think he's
26:55
Speaker 12: playing his set of cards that Donald Trump likes to
26:58
Speaker 12: use so much much better than the current White House.
27:02
Speaker 4: Boy, it's going to be a interesting conversation with the
27:04
Speaker 4: premiere Ford Tomorrow. Great panel, but this is going to
27:08
Speaker 4: be more drama than many may have bargained for. Rick
27:12
Speaker 4: Davis and Janie Schanzeo, Thank you both, Bloomberg Politics contributors.
27:15
Speaker 4: Fascinating view from our Republican strategist and Democratic analysts. We're
27:19
Speaker 4: going to dig more into what's happening in the geopolitics
27:22
Speaker 4: with Iran on this economic d Day, as Scott Besson
27:26
Speaker 4: calls it, with Volley Nosser, President Middle East Studies, JOHNS.
27:28
Speaker 4: Hopkins University School of Advanced International Studies will be with
27:33
Speaker 4: us next here on balance of power. Stay with us
27:36
Speaker 4: on balance of power. We'll have much more coming up after.
27:38
Speaker 1: This you're listening to the Bloomberg Balance of Power podcast.
27:46
Speaker 1: Catch us live weekdays at noon and five pm Eastern
27:49
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27:53
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27:56
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27:59
Speaker 6: They start warning from the Treasury Secretary today as he
28:03
Speaker 6: said it would be economic D Day. In the wise
28:05
Speaker 6: words of Rick Davis, it's maybe less of a D day,
28:07
Speaker 6: more about a warning that it could be coming, as
28:10
Speaker 6: the timeline will vary for countries here, and the Treasury
28:12
Speaker 6: does seem to be leaving some wiggle room for countries
28:16
Speaker 6: and companies who provide financial lifeline to Iran via money
28:20
Speaker 6: laundering or oil smuggling or what have you, to adjust
28:22
Speaker 6: their behavior before they fully face the force of secondary
28:26
Speaker 6: sanctions that Secretary Bustin said the Treasury is serious about
28:29
Speaker 6: enforcing if necessary.
28:32
Speaker 2: President Trump has taken action that his predecessors have long deferred,
28:37
Speaker 2: and under his leadership, America is no.
28:40
Speaker 3: Longer managing the Iranian threat. We are ending it.
28:46
Speaker 5: At least that's the plan.
28:49
Speaker 4: We tap the expertise of an expert in Valley Nasser,
28:53
Speaker 4: Professor of International Affairs in Middle East Studies at Johns
28:56
Speaker 4: Hopkins University Valley. It's great to have you as part
28:59
Speaker 4: of our conversations today on Bloomberg TV and Radio. It
29:02
Speaker 4: remains unclear exactly how this is going to work. The
29:05
Speaker 4: administration is giving countries some time. But if we cut
29:09
Speaker 4: to the chase here, this seems to have everything to
29:11
Speaker 4: do with China. Is the United States willing to interrupt
29:14
Speaker 4: oil trade between Iran and China if it means some
29:17
Speaker 4: pain here at home.
29:19
Speaker 14: Well, it's not just China.
29:22
Speaker 15: The other big fish is Russia, and after that is India,
29:25
Speaker 15: It's United Arab Emirates, and it's Turkey, and it's a
29:28
Speaker 15: whole host of countries that the United States needs to
29:31
Speaker 15: get very tough with. And essentially, the entire Economic d
29:36
Speaker 15: Day is not really anything new that the United States
29:39
Speaker 15: is going to do to Iran. It's things that the
29:41
Speaker 15: United States is threatening to do to its allies.
29:44
Speaker 14: Around the world.
29:46
Speaker 15: And that's I think is a very tall order for
29:49
Speaker 15: the US to actually implement. And we'll see whether these
29:52
Speaker 15: countries voluntarily come along. China has already said that it
29:57
Speaker 15: will not play by the rules that the the United
30:00
Speaker 15: States wants to lay down, and to me, this looks
30:03
Speaker 15: like a grandiose statement, as sort of a theatrical declaration
30:09
Speaker 15: of a major step by the United States, which.
30:12
Speaker 14: May be no more.
30:15
Speaker 15: Effective than the presidents has many threats to be destroying Iran,
30:19
Speaker 15: sending it back to the Stone Age.
30:22
Speaker 6: Well, to that point, professor, our audience should know that
30:25
Speaker 6: you grew up in Tehran and you immigrated to the
30:27
Speaker 6: US after the revolution in nineteen seventy nine. Iran has
30:32
Speaker 6: basically been under sanction that entire time. Since then, it's
30:36
Speaker 6: been about half a century. So why realistically would the
30:40
Speaker 6: regime bow to a tougher sanctions regime like this, assuming
30:43
Speaker 6: the US does everything it says it will when it
30:46
Speaker 6: has not cowed to them in the past.
30:49
Speaker 15: Well, Iran has been under forty seven years of sanctions.
30:51
Speaker 15: I've written a book about that and the realities that.
30:54
Speaker 15: First of all, he has developed ways to survive on
30:56
Speaker 15: their sanctions. So it's not like a country that has
30:59
Speaker 15: not being outside of the global economy, that is all
31:03
Speaker 15: of a sudden subject to sanctions. They build their own missiles,
31:07
Speaker 15: their own drones, their own industrial products, and they can
31:10
Speaker 15: survive on a great deal of hardship. Secondly, sanctions work
31:14
Speaker 15: really when you actually offer something on the table. That's
31:17
Speaker 15: the way it worked with President Obama. He for the
31:20
Speaker 15: first time introduced secondary sanctions on Iran, squeeze them hard,
31:24
Speaker 15: and then he said, here's a table we can negotiate
31:26
Speaker 15: over the nuclear program, and this is going to be
31:29
Speaker 15: a realistic diplomatic negotiation. The reality is that President Trump
31:34
Speaker 15: is offering nothing. It is basically saying I'm going to
31:37
Speaker 15: squeeze you until you surrender, and the Iranians will not surrender.
31:41
Speaker 15: In fact, today the Iranian Speaker of the parliament told
31:45
Speaker 15: the visiting Pakistani military chief who went there to see
31:51
Speaker 15: if he can resolve the dilemma, that there is a
31:54
Speaker 15: pathway out of this, which means that the United States
31:56
Speaker 15: needs to go back to the MoU that it's signed
31:58
Speaker 15: in June and implement the MOE. So for the Iranians,
32:01
Speaker 15: there is already a diplomatic off ramp, and no, I
32:05
Speaker 15: think the Iranians will not give in, and they've already
32:08
Speaker 15: said that they will not tolerate any more economic pressure,
32:12
Speaker 15: that they will attack the infrastructure in the Golf, they
32:15
Speaker 15: will put pressure on the global economy. They may shut
32:18
Speaker 15: down a lot more of the trade in oil and
32:21
Speaker 15: gas that goes over the Red Sea, their proxies in
32:26
Speaker 15: Yemen in Iraq will begin to put more pressure on
32:29
Speaker 15: SAU the oil facilities, and Iran may get much more
32:33
Speaker 15: aggressive in the golf. The US has been escorting more
32:36
Speaker 15: and more tankers in the past two weeks, but those
32:39
Speaker 15: tankers may not come under a lot more fire than
32:42
Speaker 15: they had in the past two weeks. So yes, the
32:45
Speaker 15: United States can escalate, as the Secretary best Sense says,
32:49
Speaker 15: but the other side also gets a vote, and the
32:52
Speaker 15: Iranians are aiming at the US, but the real target
32:55
Speaker 15: for them is the global economy. Whatever they do will
32:59
Speaker 15: be designed to to get the attention of the energy markets,
33:02
Speaker 15: to get the attention of other dimensions of the global economy,
33:06
Speaker 15: and to make it much more difficult for the US
33:09
Speaker 15: to have its caken Either.
33:10
Speaker 4: To Treasury Best and Secretary best And said, a major
33:15
Speaker 4: financial institution will be sanctioned this week, Valley, Do you
33:19
Speaker 4: have any thoughts on who that might be?
33:23
Speaker 15: No, I mean we know that already all the major
33:26
Speaker 15: Western financial institutions have got out of any kind of
33:30
Speaker 15: a business with their own. Iran is not able to
33:32
Speaker 15: use the swift, a financial transaction mechanism which means that
33:37
Speaker 15: even if banks wanted to deal with their own, they
33:39
Speaker 15: don't have a regular way.
33:40
Speaker 14: To deal with their own.
33:41
Speaker 15: So that major financial institution is perhaps the Chinese institutions
33:45
Speaker 15: or Hong Kong institution connected to China, and my sense
33:49
Speaker 15: is that it potentially can invite a Chinese retaliation if
33:53
Speaker 15: the US did something like that. So the US is
33:56
Speaker 15: essentially expanding its war in the Gulf to a much
34:01
Speaker 15: greater war between itself and other global actors around the world,
34:06
Speaker 15: which seems to be shooting itself in the foot. It
34:10
Speaker 15: is basically expanding the geography of this war out of
34:15
Speaker 15: the Golf into the financial markets, and it's going to
34:17
Speaker 15: get entangled with some major global actors with whom it
34:21
Speaker 15: has other business and other sets of issues that it
34:24
Speaker 15: has to deal with.
34:27
Speaker 7: Well, the US, of course, says all of it.
34:29
Speaker 6: Whatever comes next is with the end goal of making
34:32
Speaker 6: sure Ron never has a nuclear weapon. Does what you're describing,
34:36
Speaker 6: Professor bring the US closer to achieving it?
34:40
Speaker 14: That was the goal.
34:43
Speaker 15: When the US bombed Iran's nuclear sites in June of
34:46
Speaker 15: twenty twenty five, and President Trump declared that Iran's nuclear
34:50
Speaker 15: program was obliterated. The Iranians were negotiating exactly what he wants,
34:55
Speaker 15: namely that they would not be any Iranian nuclear program
35:00
Speaker 15: or a new major threat to global security with Irani
35:05
Speaker 15: nuclear program, and he decided that he would settle the
35:09
Speaker 15: whole thing militarily.
35:10
Speaker 14: He'll just go to war with Iran. They will either.
35:12
Speaker 15: Completely cave in or that they would basically fall from power.
35:18
Speaker 15: None of that has happened. Irana's out of this war stronger.
35:22
Speaker 15: It's been now months that the US has got entangled
35:25
Speaker 15: in an endless war. President Trump has no way to
35:28
Speaker 15: finish this war diplomatically or militarily.
35:31
Speaker 14: He's stuck.
35:32
Speaker 15: And we're not even talking about Iran's nuclear program. He
35:35
Speaker 15: throws these words out there as a sort of a throwaway.
35:40
Speaker 15: In reality, the entire discussion is about the Strait of hormones,
35:43
Speaker 15: which was not even an issue before he went to war.
35:47
Speaker 15: We have to first resolve this issue of the Strait
35:49
Speaker 15: of hormones. We should have to first resolve the free
35:53
Speaker 15: flow of oil and gas out of the Persian Gulf
35:56
Speaker 15: through the Strait of hormones. We have to first get
35:59
Speaker 15: to a cisfy before we can even think about Iran's
36:02
Speaker 15: nuclear program.
36:04
Speaker 14: So in a way.
36:04
Speaker 15: He's actually pushed that issue much farther out, and he's
36:08
Speaker 15: not able to resolve the steps that the United States
36:11
Speaker 15: has to get through before it can arrive back at
36:15
Speaker 15: a conversation about Iran's nuclear program.
36:19
Speaker 6: All right, Professor, thanks for joining us. Valley NASA, Professor
36:22
Speaker 6: of International Affairs and Middle East Studies at Johns Hopkins
36:25
Speaker 6: University School of Advanced International Studies.
36:33
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36:36
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