Latest / Trumponomics / Live from Qatar: What Does Trump Mean for the Middle East?

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Live from Qatar: What Does Trump Mean for the Middle East? · Trumponomics

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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Speaker 2: I'm Stephanie Flanders. I'm head of Government Economics at Bloomberg,
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Speaker 2: and welcome to trump Andomics, the podcast that looks at
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Speaker 2: the economic world of Donald Trump, how he's already shaped
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Speaker 2: the global economy, and what on earth is going to
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Speaker 2: happen next. This week, we're recording Trumponomics in front of
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Speaker 2: an audience from the Katar Economic Forum in Doha, and
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Speaker 2: we're asking the simple question, what does Trumpanomics mean for
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Speaker 2: the Middle East. It's the fifth Katar Economic Forum, and
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Speaker 2: the sessions theoretically have covered a very wide range of topics,
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Speaker 2: not just economics and finance, but the business of sport,
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Speaker 2: culture and the arts. But you couldn't help feeling, with
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Speaker 2: the event happening just a few days after President Donald
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Speaker 2: Trump's tour of this region, nearly all of the sessions,
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Speaker 2: and certainly many of the conversations here have also been
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Speaker 2: about Donald Trump what his policies mean for the region
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Speaker 2: and the world. We're recording this a few days into
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Speaker 2: the forum on Wednesday, May twenty first, and I'm keen
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Speaker 2: to take stock of some of those discussions we've been
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Speaker 2: having in the corridors and on the main stage, we
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Speaker 2: also think more broadly about not just Donald Trump's visit,
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Speaker 2: but longer term what the shift in the global landscape
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Speaker 2: he's engineering is going to mean for this part of
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Speaker 2: the world. My guests have been part of the conversations
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Speaker 2: here at the forum, and they've also, I think, been
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Speaker 2: doing some reflecting on their own. John Micklethwaite, Bloomberg's editor
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Speaker 2: in chief, and from our Bloomberg Economics team, Siad Dold,
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Speaker 2: chief Emerging Mark's economist, and Dinas Fandry, who's joined us
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Speaker 2: quite recently as the Middle East lead geoeconomics analyst. And
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Speaker 2: you were previously, Dina with the International Crisis Group. So
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Speaker 2: thanks very much all of you for joining me. See
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Speaker 2: that I'm going to start with you. We will get
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Speaker 2: into the visit in a minute, but I just wanted
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Speaker 2: to take a snapshot from you of how the global
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Speaker 2: economy looks today. If you're sitting here in Kata or
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Speaker 2: for that matter of Dubai, where you're based.
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Speaker 3: I think you can summarize what's happened to the global
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Speaker 3: economy in two numbers four and two. The region gives
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Speaker 3: the world four things for inputs, and it gets from
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Speaker 3: the world. Two things. The region exports to the world.
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Speaker 3: Energy is a major energy producer. The region exports capital
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Speaker 3: to the world. The region is a major trade route
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Speaker 3: for the world. You talk about the Strait of Homers,
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Speaker 3: talk about the Strait of Babil Mandeb, we talk about
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Speaker 3: the Sewiz Canal.
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Speaker 4: And the region provides also labor to the world.
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Speaker 3: Currently provides about seven percent of the working age population
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Speaker 3: to the world. Because the region is young, because it's growing,
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Speaker 3: and because other parts of the world are aging, that
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Speaker 3: ratio is going to go up all the way to
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Speaker 3: eleven percent by the end of the century. So that's
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Speaker 3: what it gives to the world. What it gets from
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Speaker 3: the world as input to the economies. Here two things.
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Speaker 3: One the most important thing is all prices higher. All
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Speaker 3: prices are good for the region, and all prices have
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Speaker 3: gone down. And the second thing that the region gets
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Speaker 3: from the world is interest rates determines monetary policy here.
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Speaker 3: It determines borrowing costs, and it determines capital flows. And
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Speaker 3: this year, interest rates at least if you look at
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Speaker 3: the Fed funds rate or under way down, maybe slower
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Speaker 3: rate than the previously thought, but that's good for the region.
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Speaker 3: That's different from twenty twenty two when the US was
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Speaker 3: raising interest rates rapidly and some countries in the region
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Speaker 3: were exposed by that term, by that rapid increase in
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Speaker 3: monetary policy in the US.
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Speaker 2: It's good to have that sort of the basic and
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Speaker 2: I like the idea of the inputs and outputs, Dina,
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Speaker 2: You're thinking more about the geopolitical inputs and outputs we've had.
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Speaker 2: Donald Trump's visit. We saw from a distance some of
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Speaker 2: the headlines, some of the enthusiasm around his trip, also
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Speaker 2: some of the stories that he will have been less
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Speaker 2: happy with. How important was it for the region.
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Speaker 5: I think this trip was absolutely key for the region.
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Speaker 5: The Golfared States went through a period of difficulty politically
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Speaker 5: with Visa VI the US, and so Trump's trip last
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Speaker 5: week was kind of a re emergence of the golf
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Speaker 5: aub States, as it were for the countries here. Everybody
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Speaker 5: walked away from the trip a winner. Trump got what
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Speaker 5: he wanted, which was some of the economic deals that
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Speaker 5: he was gunning for, and the golfab States in return,
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Speaker 5: were able to showcase that they were open for business,
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Speaker 5: that they were here, that they were active, that their
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Speaker 5: economies were growing, that politically they were havens of stiff
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Speaker 5: ability in a region of instability, and all of that
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Speaker 5: was very important. And I think they also used this
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Speaker 5: as an opportunity to set perhaps some red lines or
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Speaker 5: at least some asks on the political side, things like,
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Speaker 5: you know, asking for the sanction lifting of sanctions on Syria,
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Speaker 5: setting some red lines in terms of what they would
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Speaker 5: be willing to accept in a US run potential nuclear deal.
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Speaker 5: So really just using it as an opportunity to outline
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Speaker 5: to the Trump administration what was important for them politically
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Speaker 5: and showcase this reinvigorated relationship with the US.
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Speaker 2: And we did have some very big numbers coming out.
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Speaker 2: Every day was a new country and a new very
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Speaker 2: large number of billions, occasionally the odd trillion thrown in.
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Speaker 2: We know Donald Trump has a quite relaxed attitude to
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Speaker 2: these things. Do these governments take seriously those commitments?
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Speaker 5: They take them seriously, yes, But I think what they
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Speaker 5: take more seriously is the ability to capture those headlines
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Speaker 5: with these huge figures, which is exactly what they did.
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Speaker 5: Some of these pledges aren't immediate, they're over the course
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Speaker 5: of ten years. Who knows what will happen between now
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Speaker 5: and ten years time, and.
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Speaker 2: Who knows what you could include. I mean, Ziah, do
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Speaker 2: you have been just a bit of a reality check
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Speaker 2: on some of the past even Trump's first administration, some
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Speaker 2: of the promises that were made then.
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Speaker 3: Yeah, So there's a qualitative element to it, but there's
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Speaker 3: a quantitative side to it. So the reason why I'm
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Speaker 3: skeptical whether these investments will be delivered this is multifold.
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Speaker 3: I think one is the fact that if you look
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Speaker 3: at the track record of what happened during Trump's first term,
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Speaker 3: he claimed that there was, for example, from Saudi Arabia,
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Speaker 3: four hundred and fifty billion dollars or purchases and investments.
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Speaker 3: I didn't do the numbers, but the former IMF mission
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Speaker 3: chief to Saudi did, and his conclusion was, if you
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Speaker 3: look at trade and if you look at investments, if
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Speaker 3: you add them all up, it's less than three hundred
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Speaker 3: billion dollars in the first time. Now, since then, the
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Speaker 3: region has been spending more domestically, and if you're spending
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Speaker 3: more domestically, there is less.
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Speaker 4: To go abroad.
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Speaker 3: So but luckily that they will be able to deliver
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Speaker 3: even a larger number is smaller. And the third thing
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Speaker 3: is the biggest economy in the region, Saudi Arabia has turned.
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Speaker 3: It's no longer an exporter of capital, is an importer
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Speaker 3: of capital. Saudi Arabia last year, when all was at
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Speaker 3: eighty dollars per barrel, was a net borrow from the world. Today,
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Speaker 3: when all was at sixty five, it's more likely to
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Speaker 3: be a borrow from the world. So if it wants
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Speaker 3: to invest six hundred billion dollars to the US, as
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Speaker 3: the White House says, there were commitments of that size
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Speaker 3: or even one trillion dollars that Donald Trump is chasing,
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Speaker 3: Saudi Araby needs to borrow first. That makes it unlucky
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Speaker 3: that they would actually deliver on these pig numbers.
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Speaker 2: All right, Well, that is a kind of a bombshell
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Speaker 2: that I guess we'll also maybe come back to in
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Speaker 2: terms of the Saudi Arabia's changing standing. But John Michael Fay,
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Speaker 2: you know, like me, you're visiting the region for the forum.
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Speaker 2: We saw the coverage of the Trump visit. Probably you
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Speaker 2: had your own thoughts on how it had gone its importance,
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Speaker 2: But you know what surprised you actually being here the
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Speaker 2: last few days and how the Donald Trump Show is
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Speaker 2: playing in this region.
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Speaker 6: I think a couple of very obvious things. The first
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Speaker 6: is if you come here again, if you come back here,
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Speaker 6: or we come back every year for the conference, you
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Speaker 6: see the way in which this region continues to add power,
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Speaker 6: both in the kind of long term way old enough
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Speaker 6: to remember when you thought about the Middle East and power,
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Speaker 6: you thought about countries like Egypt.
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Speaker 4: Yes, in places like.
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Speaker 6: Saudi Arabia were important for oil, but geopolitically Egypt seemed
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Speaker 6: more important. Now it's very much the Gulf. And you
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Speaker 6: can feel that both in terms of the people coming
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Speaker 6: here for money, basically because I think that is a
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Speaker 6: big element. People are coming here, many of the people
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Speaker 6: in this room, perhaps in order to get capital. That
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Speaker 6: is incredibly important and that's having a real impact. And
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Speaker 6: there is a slight difference I think between the UAE
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Speaker 6: and Cutter and Saudi Arabia because as you say, Saudi
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Speaker 6: Arabia no longer has as much to push out. So
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Speaker 6: there's an interesting dynamic in the people coming looking for money.
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Speaker 6: The second thing is just you know, the extraordinary personal
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Speaker 6: thing of Donald Trump, the fact that people queue up
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Speaker 6: to say they met him or that they talked to
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Speaker 6: him for one second, and where his car was parked
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Speaker 6: and all this stuff, and it is much more in
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Speaker 6: a weird way, like going back to a previous era
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Speaker 6: of royalty visiting a place. It's much more along that
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Speaker 6: line and a variety of somewhat spectacular promises. I think
9:27
Speaker 6: probably people from countries that were colonized might remember this
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Speaker 6: in a different era about places like Britain, but where
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Speaker 6: promises are made but you're very unsure what they mean.
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Speaker 6: It's just much more exciting that the king Emperor has arrived,
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Speaker 6: and that's very much the sort of spirit of it
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Speaker 6: at the moment. But he has obviously had a very
9:45
Speaker 6: big effect. As you said, everyone one that the interesting
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Speaker 6: question somehere at the back of that is Israel Gaza,
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Speaker 6: where it's harder to see where the red line is there.
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Speaker 2: I want to get into some of those the deal
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Speaker 2: making on the geopolitical side that he I guess has
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Speaker 2: been somewhat less successful so far, at least in some areas,
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Speaker 2: but just on the sort of broader point, John, it
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Speaker 2: was quite fashionable before the election the US election last
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Speaker 2: year to say that this region would be relatively relaxed,
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Speaker 2: even non balance happier with a Trump victory because of
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Speaker 2: his quote unquote transactional approach to foreign policy, which we've
10:22
Speaker 2: obviously seen play out. But I get the sense, and
10:25
Speaker 2: certainly talking privately to some of the policymakers here at
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Speaker 2: this event and elsewhere, there was a nervousness actually about
10:34
Speaker 2: the instability, and also people hankering a bit realizing the
10:38
Speaker 2: value of a rule based system, even if they complained
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Speaker 2: about it. They didn't like American politicians American presidents lecturing
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Speaker 2: them about human rights and other things. The idea that
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Speaker 2: everything is now thrown up into the air is making
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Speaker 2: the leaders here nervous.
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Speaker 4: I think that's very true.
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Speaker 6: I think if you've talked to people behind the scenes, yes,
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Speaker 6: there is an enormous amount of what Trump did this,
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Speaker 6: Trump did that. There is also a worry, I think,
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Speaker 6: which is along the lines of the people in this
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Speaker 6: region have moved from a relationship based thing with America
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Speaker 6: to slightly more transaction based, and I think that is
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Speaker 6: very scary because and I've just come back from Asia
11:19
Speaker 6: where you see exactly the same thing with places like
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Speaker 6: Japan and South Korea. If you look at Liberation Day,
11:25
Speaker 6: what happened with tariffs, what happened with Zelenski in the
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Speaker 6: White House. If you are one of the people who
11:32
Speaker 6: rely on America to support you. And I think in
11:35
Speaker 6: this place, this region, you can talk about that, not
11:38
Speaker 6: just in terms of countries, but in terms of families.
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Speaker 6: If you rely on America to be your ally, you
11:46
Speaker 6: can't have an ally who's there eighty percent of the time.
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Speaker 6: You're either one hundred percent or it doesn't really count.
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Speaker 6: And I think what scared people about what happened in
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Speaker 6: the first bit of the Trump presidency was the idea
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Speaker 6: that that was all that negotiation, and I do think
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Speaker 6: there is that. So it's a mixture between this all
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Speaker 6: welcome the King stuff on the one hand, but then
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Speaker 6: this slight nervousness that he could change his mind dramatically
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Speaker 6: about things, and that I think here particularly from the
12:14
Speaker 6: point of view the families who control a lot of
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Speaker 6: the power in this region, they really do rely on that,
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Speaker 6: and so that's where the nervousness comes from.
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Speaker 2: So it's a reality check, because of course, is something
12:26
Speaker 2: we've also heard from countries more broadly, what you might
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Speaker 2: call from a global south. You know, there have been
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Speaker 2: people privately saying, oh, it's it's a relief to have
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Speaker 2: the US be just as transactional, you know, and not
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Speaker 2: pretending to be anything that it isn't just a self
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Speaker 2: interested country like the rest of US, and we can
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Speaker 2: all sort of we can be we haven't rest from
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Speaker 2: the lectures, but there is a sting in the tale.
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Speaker 2: I mean, Tina, do you do you agree with Jonason?
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Speaker 5: Yeah, broadly, yes, absolutely think. I think from the perspective
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Speaker 5: of the countries here, though this trend began even before
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Speaker 5: Trump Arguabie, right after the Arab Spring, it already appeared
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Speaker 5: as though the US wasn't as committed to the region,
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Speaker 5: So they've had a long time to adjust to what
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Speaker 5: they perceived to be a US pivoting.
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Speaker 4: Away from the America never famously saved m. Barrack day exactly.
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Speaker 5: That's exactly right, And so I think on the one hand,
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Speaker 5: they're used to it and they almost appreciate, like you said,
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Speaker 5: this transactional approach that the Trump administration now has. But
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Speaker 5: on the other hand, they're afraid because he's unpredictable, he's unreliable.
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Speaker 5: On the one hand, he might listen to them and
13:34
Speaker 5: they might have his ear immediately after a visit where
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Speaker 5: everything goes well and ten minutes later things will change.
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Speaker 2: Just as we should also sort of take off some
13:42
Speaker 2: of the big things that happened, and I think you politically,
13:46
Speaker 2: a very significant thing that happened during the visit was
13:49
Speaker 2: the normalization of relations with Syria, I mean, Dina. What's
13:52
Speaker 2: the impact of that and the importance of that for
13:55
Speaker 2: the region.
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Speaker 5: It's absolutely huge. The new Syrian government would have had
14:00
Speaker 5: no hope of any gross, any development, any stability had
14:05
Speaker 5: it not been for the sanctions relief. But the announcement
14:10
Speaker 5: of sanctions relief is not quite the same thing as
14:11
Speaker 5: the implementation of sanctions relief, and sanctions on Syria are
14:16
Speaker 5: multi layered, incredibly complicated, and their removal requires many different
14:21
Speaker 5: people in the US to be on board with it,
14:23
Speaker 5: many different institutions in the US to okay it, and
14:26
Speaker 5: it will require real commitment on the part of a
14:29
Speaker 5: Trump administration. So it remains to be seen just how
14:33
Speaker 5: committed this administration will be to actually lifting all the
14:37
Speaker 5: sanctions in the next few months.
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Speaker 2: See what's the economic impact of normalizations Syria and who
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Speaker 2: are the sort of winners economically in the region from it?
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Speaker 3: In terms of general economic impact is probably limited. Serious
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Speaker 3: economy is not very large, and it doesn't have much
14:53
Speaker 3: spillover to the rest of the region, but there are winners.
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Speaker 3: So if you think about, for example, Turkey, Turkey has
14:59
Speaker 3: political and cents in Syria. Under the new government, you'd
15:02
Speaker 3: think that Turkish construction companies will be involved in the
15:05
Speaker 3: reconstruction of Syria, which is probably gonn if the bill
15:08
Speaker 3: could be in millions of dollars and it may benefit
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Speaker 3: from this. I think with respect to Syria, when it
15:14
Speaker 3: comes to Syria and what happened in Syria, it just
15:17
Speaker 3: tells you something also about what's happening in the broader region,
15:20
Speaker 3: because I think when people look at the region today
15:22
Speaker 3: and they read the history of the region today or
15:24
Speaker 3: write the history of the region today, they're not going
15:27
Speaker 3: to say, look, there were a bunch of protests in
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Speaker 3: the Arab world in two thousand and eleven, and there's
15:33
Speaker 3: another waive of protests in twenty nineteen in Abanon, in
15:36
Speaker 3: Iraq and Algeria and Sudan, and that every Arab republic
15:40
Speaker 3: had popular protests since twenty and eleven, leading to toppling
15:44
Speaker 3: of governments in some places, and then we had COVID
15:47
Speaker 3: and then we had the war in twenty three and
15:49
Speaker 3: twenty four, and up to today, they'll think there's a
15:52
Speaker 3: whole period of instability. There's something in the region that
15:56
Speaker 3: is politically probably is just simmering. You had the popular protest,
16:01
Speaker 3: which signals dissatisfaction. Economically, if you look at many countries
16:05
Speaker 3: in the region, their gdpeople CAPTA today is lower than
16:08
Speaker 3: twenty thirteen, so it's almost the last decade of economic growth.
16:13
Speaker 3: And you see that in Egypt, you see that in Iraq,
16:15
Speaker 3: you see that place of Jordan, Tunisia, Iran, and then
16:18
Speaker 3: you see what happened in Syria. But there's a sudden
16:20
Speaker 3: change out of nowhere and then obviously the war, and
16:24
Speaker 3: there is the whole level of anger in the region
16:27
Speaker 3: that's not expressing yourself. So you have this political instability
16:31
Speaker 3: risks in the region which hasn't quite manifested it self.
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Speaker 3: We saw an element of that in Syria, of with
16:36
Speaker 3: what happened in Syria in December, but we haven't seen
16:39
Speaker 3: it in the rest of the region.
16:41
Speaker 2: Dina, I mean, I feel like it's sort of crazy
16:42
Speaker 2: to be going through these things so rapidly, but we
16:45
Speaker 2: don't have a huge amount of time. And something that
16:47
Speaker 2: the president has talked up a lot is a nuclear
16:50
Speaker 2: deal with Iran, but not much sign of progress and actually,
16:55
Speaker 2: as we're recording this, there is also the sort of
16:57
Speaker 2: leaks out of the US about potential shill create a
17:00
Speaker 2: tension and potential attacks between Israel and Iran. So how
17:04
Speaker 2: do you see that?
17:06
Speaker 1: So, I think it's already good news that they've had
17:08
Speaker 1: several rounds of negotiations, some almost direct, kind of direct,
17:13
Speaker 1: and some involving Omani mediators and now increasing li Katari mediators.
17:18
Speaker 5: I think the momentum is there also good news. But
17:22
Speaker 5: there does seem to be a lot of public positioning
17:25
Speaker 5: on both sides in the media, and all of that
17:28
Speaker 5: is pretty standard for this type of negotiation. I do
17:31
Speaker 5: think this is a unique opportunity where both the Trump
17:33
Speaker 5: administration and the administration in Iran want a deal, and
17:37
Speaker 5: that hasn't always matched in the past. And we are
17:40
Speaker 5: faced with the US president who is capable of bulldozing
17:45
Speaker 5: through and getting a deal, which perhaps in the past
17:48
Speaker 5: we had, but the implementation of the deal was somewhat shaky,
17:51
Speaker 5: and of course the same president left the previous nuclear
17:54
Speaker 5: deal as well.
17:55
Speaker 4: There's also a lot.
17:56
Speaker 5: Of effort on the part of the Iranians and the
17:57
Speaker 5: Americans to brief regional players, players like Russia, and China
18:02
Speaker 5: to get them on board, to make sure everybody is
18:05
Speaker 5: on the same page. And again that really does count
18:07
Speaker 5: for something, so everybody feels involved in these talks. The
18:11
Speaker 5: real question, though, is what is the US ask and
18:16
Speaker 5: what does the US ask on enrichment? And this is
18:18
Speaker 5: where we've seen a little bit of flip flopping on
18:20
Speaker 5: the American side between asking for complete dismantlement of the Iran's
18:24
Speaker 5: program or accepting a certain amount of enrichment. But obviously
18:28
Speaker 5: in a limited capacity, complete dismantlement is just off the
18:33
Speaker 5: table for Iran. They won't agree to it. If the
18:36
Speaker 5: Americans are able to accept some kind of enrichment, then
18:40
Speaker 5: I do think the likelihood of a deal is actually
18:42
Speaker 5: quite high because both sides want it, and both sides
18:46
Speaker 5: need the win.
18:47
Speaker 2: Just to follow up on that. I mean, one of
18:48
Speaker 2: the things, one of the reasons it matters, if you're
18:51
Speaker 2: just thinking in kind of optical terms for the administration,
18:55
Speaker 2: is it's the difference between having a deal that's quite
18:57
Speaker 2: different from the Obama deal and have a deal that's
19:00
Speaker 2: actually very similar. Do you think that's going to be fundamental?
19:06
Speaker 5: I do think that President Trump just wants the win
19:10
Speaker 5: and coming back with a deal is a win no
19:13
Speaker 5: matter what's in it. So I don't think despite the
19:16
Speaker 5: fact that they did make a big deal out of
19:18
Speaker 5: the previous deal and not wanting this one to be
19:20
Speaker 5: the same. I don't think that this administration is dead
19:23
Speaker 5: set on making sure this is very different. They are
19:26
Speaker 5: just dead set on achieving this agreement with Iran. There
19:29
Speaker 5: are two things, though, in the deal that sound like
19:32
Speaker 5: they are going to be somewhat different to the previous one.
19:35
Speaker 5: The first is this idea that there may not be
19:37
Speaker 5: any sunset closes, so an end date to the agreement.
19:41
Speaker 5: It appears that there's been discussion about this, and it
19:43
Speaker 5: appears that there's been at least some agreement on it,
19:45
Speaker 5: and that's very different to the Obama administration's nuclear deal.
19:49
Speaker 5: The second thing is there appears to be an Iranian
19:52
Speaker 5: willingness to talk about its regional presence. I myself was
19:56
Speaker 5: taken aback when I heard the Supreme Leader say this,
19:59
Speaker 5: because it seems like Iran was only going to focus
20:02
Speaker 5: on a nuclear deal. But if there is willingness on
20:04
Speaker 5: the Iranian part to talk about its regional presence, then
20:07
Speaker 5: that fundamentally changes this agreement.
20:10
Speaker 6: Did you think that makes a difference to instability because
20:13
Speaker 6: I thought, well, theod was talking. If you were looking
20:16
Speaker 6: at the outputs for this region in a slightly more
20:19
Speaker 6: geopolitical way, you would say, one of the great outputs
20:22
Speaker 6: over the past however long you want to take, has
20:25
Speaker 6: been instability, which has ricocheted around the world in various
20:30
Speaker 6: ways of extremism and protests and also just difficulties and
20:35
Speaker 6: the moment that you could argue massively generalizing, but there
20:39
Speaker 6: are kind of two things slightly at the middle of it.
20:42
Speaker 6: There's Israel and Gaza, and there's Iran. Is there a
20:45
Speaker 6: chance because of all these machinations, however you put them,
20:49
Speaker 6: that actually you end up with a more stable regime
20:53
Speaker 6: and that element of the Middle East is changed.
20:57
Speaker 5: The issue is that Iran's relationship with its proxies in
21:02
Speaker 5: the region and the network of partnerships that it's built
21:05
Speaker 5: in the region really is its crown rules. It's its
21:08
Speaker 5: single most successful foreign policy endeavor as the Islamic Republic.
21:13
Speaker 5: So it's very important to it. Now it has suffered
21:16
Speaker 5: a blow. For sure, it is weakened, although I would
21:18
Speaker 5: argue it's not weak because it's a temporary thing, not
21:21
Speaker 5: a permanent thing. But this is significant to Iran, and
21:26
Speaker 5: it would have to gain a lot of security in
21:28
Speaker 5: order to give that up. Would such a deal give
21:31
Speaker 5: it that security. I think a deal with Trump's America
21:35
Speaker 5: would give it legitimacy for sure. And what happens after
21:39
Speaker 5: the deal, I think is what's critical to determining how
21:41
Speaker 5: much Iran is willing to give up some of these partnerships.
21:44
Speaker 5: If Iran really does see the benefits of the deal,
21:47
Speaker 5: if for example, you could foresee a potential Islamic republic
21:51
Speaker 5: that is more integrated economically in the region, an ideal
21:55
Speaker 5: that a lot of the golf Arab states are trying
21:57
Speaker 5: to sell to Iran. If it can be reintegrated, if
22:00
Speaker 5: it's no longer isolated, then it means the regime has
22:04
Speaker 5: an interest in staying integrated and perhaps giving up some
22:09
Speaker 5: of those relationships. I don't think it'll be easy, and
22:11
Speaker 5: it certainly won't be the first thing that happens, but
22:14
Speaker 5: I do think it's it's a potential scenario.
22:18
Speaker 2: John, you mentioned at the start something that we should
22:20
Speaker 2: you know, people listening. Although it's called Trumpnomics, obviously we're
22:23
Speaker 2: listening to this show at the same in the same
22:24
Speaker 2: week that international pressure is mounting on Israel, and the
22:29
Speaker 2: UK government has taken some steps, and there's been an
22:32
Speaker 2: alliance of other countries who've also attempted to put more
22:37
Speaker 2: pressure on Israel regarding the situation in Gaza. That's the
22:40
Speaker 2: other wrinkle, surely in your story about having greater prospects
22:45
Speaker 2: for stability here.
22:47
Speaker 4: Yes, that was That's what I was asking about as well.
22:50
Speaker 6: Most people would say those two things, Israeli Palestinian dispute
22:54
Speaker 6: and the Iranian that those have been at the bottom
22:58
Speaker 6: of most of the elements about what has made this
23:01
Speaker 6: a difficult region.
23:02
Speaker 4: For outside powers to deal with.
23:05
Speaker 6: You might argue interfere with and cause things, but those
23:08
Speaker 6: those are the two things, and without a solution on those,
23:11
Speaker 6: and I think neither Iran. Weirdly seems a little bit
23:15
Speaker 6: closer to some kind of deal than what seems possible
23:19
Speaker 6: in Israel Palace.
23:20
Speaker 2: But with all this talk of deals again, it does
23:22
Speaker 2: seem like the sort of parallel tracks we've had a
23:25
Speaker 2: you know, several weeks of talking about big numbers and
23:28
Speaker 2: emerging great relationships between the US and the Middle East
23:31
Speaker 2: and in the Gulf nations at the same time as
23:34
Speaker 2: this continued drama is playing out and even deepening in
23:38
Speaker 2: some ways around the situation in Gaza. And the mistake,
23:42
Speaker 2: some would say, of the first Trump administration was this
23:45
Speaker 2: idea that you could have the Abraham Accords, that you
23:47
Speaker 2: could be moving towards a more peaceful place, just hoping
23:51
Speaker 2: that that dispute would go away. And on October seventh,
23:54
Speaker 2: everyone said, but we mustn't make that mistake again. The
23:56
Speaker 2: problem is now still front and center. But Dina Zi,
24:00
Speaker 2: but it doesn't. It feels like we're still talking around
24:02
Speaker 2: it in forums like this and in more geopolitical settings.
24:07
Speaker 5: Absolutely, the problem is the Israel Palestinian problem is such
24:10
Speaker 5: an endemic issue to the Middle East. It's so complicated,
24:13
Speaker 5: it's long standing, and it's just years and years and
24:17
Speaker 5: years of animosity and now several years of devastating conflict.
24:22
Speaker 5: It's difficult to pick that apart. But you're absolutely right
24:25
Speaker 5: to say that there will be no stability in the
24:28
Speaker 5: region long term if you don't resolve this conflict. This
24:31
Speaker 5: will always form the context in the backdrop to any
24:34
Speaker 5: attempt at stability. And the problem is in the last
24:38
Speaker 5: few years that this conflict has raged on, it has
24:41
Speaker 5: engulfed the entire region. So we're no longer talking about
24:44
Speaker 5: a limited conflict that covers just Israel and the Palestinian territories.
24:48
Speaker 5: We're now talking about something that has drawn in Lebanon,
24:53
Speaker 5: it's drawn in Iran, it's drawn in the Gulf Arab states,
24:56
Speaker 5: because they're trying to mediate it. So there is no
24:59
Speaker 5: prospect stability without resolving the Gaza conflict, and right now
25:02
Speaker 5: there doesn't seem to be a lot of hope for
25:04
Speaker 5: resolving the conflict.
25:05
Speaker 2: At the broadest level that the conflict it's not just
25:08
Speaker 2: many years, it's now entering its second century, which is
25:12
Speaker 2: worth reflecting on. Because we're Trumpenomics, we're going to do
25:15
Speaker 2: a quick turn back into economics before we end, which
25:20
Speaker 2: means I'm looking at Uziad and can't help being struck.
25:24
Speaker 2: You mentioned it at the start. You know, there's one
25:28
Speaker 2: big change, which is that Saudi Arabia is now a
25:31
Speaker 2: capital importer, is now borrowing from the rest of the
25:34
Speaker 2: world to fund all its domestic investments. It's not necessarily
25:37
Speaker 2: and they be able to have this big checkbook, even
25:39
Speaker 2: though there was lots of talk of money last week.
25:42
Speaker 2: I would say for the outside observer, for many people
25:45
Speaker 2: in the world, Saudi Arabia's actually feels bigger. You know,
25:48
Speaker 2: it has the greater sort of geopolitical standing now and
25:51
Speaker 2: John mentioned it in passing as well. But you would
25:55
Speaker 2: say as an economist, that's happening, that great place on
25:58
Speaker 2: the world stage is happening as it's economics is actually
26:01
Speaker 2: becoming weaker and weaker. Is that is that fair?
26:04
Speaker 3: Weaker and weaker in the census, providing less capital to
26:07
Speaker 3: the world. But just just take a step back. This region,
26:09
Speaker 3: the Gulf countries are incredibly rich. Just perspective. If you
26:13
Speaker 3: look at Kata where we are today, Kata has about
26:16
Speaker 3: two eight hundred billion dollars of assets are broad of
26:19
Speaker 3: external asses. If it decides to liquidate then tomorrow and
26:23
Speaker 3: distribute to the citizens equally, there's fewer than four hundred
26:26
Speaker 3: thousand quatter is here. Each cuttery citizen could wake up
26:29
Speaker 3: next morning with two million dollars a millionaire. You do
26:32
Speaker 3: the same calculations for the EAE again, the same num
26:34
Speaker 3: almost the same number, two million dollars again for every
26:36
Speaker 3: citizen Saudi, because it's significant how the common wealth, but
26:40
Speaker 3: the population is much larger to twenty million in Saudi's.
26:43
Speaker 3: So we're talking about sixty thousand dollars per citizens, a
26:46
Speaker 3: significant amount of money, but the region is not into
26:49
Speaker 3: that business of liquidating and distributing. They use that wealth
26:53
Speaker 3: to try and generate economic reterm, They use that wealth
26:57
Speaker 3: for economic diplomacy, and they use that wealth to generates
27:00
Speaker 3: soft power. But in the context of a very rich region,
27:03
Speaker 3: something is changing, and that something is changing the amanda's
27:06
Speaker 3: topping up every year to that wealth continues to be
27:10
Speaker 3: positive in Kuwait in the UAE and on Cottact, but
27:13
Speaker 3: it's negative now in Saldi. That changed last year. As
27:16
Speaker 3: I said, when aill is are eighty, which is surprising,
27:19
Speaker 3: that is set to continue when all is lower and
27:22
Speaker 3: if you look at the arm of projection, as they
27:24
Speaker 3: expect that to continue all the way out to twenty thirty.
27:28
Speaker 3: And it just means Saldi has a choice. It has
27:30
Speaker 3: a choice to spend less at home and try and
27:32
Speaker 3: stay more abroad. That's one one choice. The other one
27:36
Speaker 3: is to borrow more from broad to fund all the spending.
27:39
Speaker 3: And the third thing is to draw on this wealth
27:42
Speaker 3: that it has accumulated, and that could give a citizen
27:44
Speaker 3: sixty thousand dollars. And I think this is a choice
27:48
Speaker 3: that Saldi policy makers need to face in the coming
27:51
Speaker 3: years and probably need to make a decision on that.
27:53
Speaker 2: And if you think about the world we have, you know,
27:56
Speaker 2: a world in which the dollars lower but the oil
27:58
Speaker 2: price is lower. But also people are potentially looking to
28:05
Speaker 2: move money out of the US or orient or sort
28:08
Speaker 2: of hedge their bets against either the US or China,
28:13
Speaker 2: you know, wanting to be in the sort of you know,
28:15
Speaker 2: play both sides. This region benefits from that. Are there
28:19
Speaker 2: particular countries that benefit from that?
28:21
Speaker 3: It could potentially benefit from this. Despite working as an
28:24
Speaker 3: economists have to make projections about the future. I look
28:28
Speaker 3: at the past and extrapolate. So far, foreign direct investment
28:31
Speaker 3: in the region has not been significant.
28:33
Speaker 4: Will things change. Possibly.
28:35
Speaker 3: I'm not smart enough to make that forecast two years out,
28:38
Speaker 3: but right now and if you look at Saudi for example,
28:41
Speaker 3: foreign direct investment into Saudi has been falling since twenty
28:45
Speaker 3: twenty one, so yes, this things could change. I was
28:48
Speaker 3: away on sabbatical last year because you approved there and
28:50
Speaker 3: John approved it. And the point I'm trying to make
28:53
Speaker 3: is twenty percent of my office hours were people coming
28:56
Speaker 3: to me asking how they could get jobs in the
28:58
Speaker 3: Gulf from.
29:00
Speaker 2: People and I should say your Harvard students were saying that.
29:03
Speaker 6: But the interesting thing about that, if you want a
29:05
Speaker 6: kind of dinner party version of having been to a
29:07
Speaker 6: variety of meals, here the number of people who were
29:11
Speaker 6: thinking of sending their children to US universities who are
29:14
Speaker 6: now reconsidering. You could argue that that is one of
29:19
Speaker 6: the biggest sort of changes in terms of what Liberation
29:23
Speaker 6: Day may have done to people's views of America.
29:26
Speaker 4: With a slightly ancillary.
29:27
Speaker 6: Thing about people being slightly more reluctant to go to
29:30
Speaker 6: London for tax reasons, that kind of thing actually does
29:34
Speaker 6: have a long term impact.
29:35
Speaker 2: I mean, Dina, I think certainly listened to some of
29:39
Speaker 2: the things that we've been saying, and particularly what John
29:42
Speaker 2: was saying about America's different stance with respect to the
29:46
Speaker 2: rest of the world and how people are reacting to it.
29:49
Speaker 2: Probably the world as a whole as a loser from
29:51
Speaker 2: having America sort of step back from its previous role
29:55
Speaker 2: and be much more transactional, but understanding that there still
30:00
Speaker 2: be relative winners and losers from this new global order
30:04
Speaker 2: or disorder. Do you feel that in your gut that
30:07
Speaker 2: sort of Middle East will be or the Gulf region
30:09
Speaker 2: at least will be a relative winner.
30:12
Speaker 5: I was just about to say, it depends what part
30:14
Speaker 5: of the Middle East you're talking about. I do think
30:17
Speaker 5: that the Gulf is well positioned to be a winner,
30:20
Speaker 5: certainly with this administration. They are and they represent and
30:24
Speaker 5: they present themselves to be everything that the Trump administration likes.
30:28
Speaker 5: The glitz, the glamor the money. All of these things
30:31
Speaker 5: are very attractive to this administration and it works, and
30:34
Speaker 5: so I do think that they're in a position to win.
30:37
Speaker 5: But they can only win, as we said earlier, if
30:40
Speaker 5: there is greater stability in the whole Middle East region,
30:43
Speaker 5: and it really can only go one of two ways.
30:45
Speaker 5: The Trump administration can either bulldoze through some of the
30:49
Speaker 5: things that we've seen in the last few years, get
30:52
Speaker 5: to agreements, fast agreements, but agreements that are implemented if
30:55
Speaker 5: they are committed to achieving some of their foreign policy objectives,
30:59
Speaker 5: in which case we may actually see greater stability in
31:02
Speaker 5: the Middle East. Or it will make these great statements
31:06
Speaker 5: and not implement them afterwards. And if that happens, then
31:09
Speaker 5: the region will just be as unstable as it is now.
31:11
Speaker 2: It's a very superficial response, but from what you were
31:15
Speaker 2: saying did make me think a little bit the surface
31:17
Speaker 2: glitz these amazing hotels, But every conversation I've had with
31:22
Speaker 2: people this week has been about different elements of their
31:24
Speaker 2: very swanky hotel room that didn't quite work. And I
31:28
Speaker 2: can't help thinking, you need the glitz, but you also
31:31
Speaker 2: need the showers that work, and I guess in your
31:33
Speaker 2: context you need the underlying social and human infrastructure to
31:37
Speaker 2: be in place as well.
31:38
Speaker 3: Well.
31:38
Speaker 2: I think that's an excellent place on which to end.
31:41
Speaker 2: But John Dino Ziah, thank you very much, So we're
31:50
Speaker 2: going to get to John, did you want to get
31:52
Speaker 2: a last word? You were looking at me meaningfully. Check
31:55
Speaker 2: if the boss wants to get the last words, I
31:57
Speaker 2: think now.
31:58
Speaker 4: When we ended on the showers.
32:00
Speaker 6: More to add.
32:18
Speaker 2: Thanks for listening to Trumponomics from Bloomberg. It was hosted
32:21
Speaker 2: by me Stephanie Flanders, and I was joined by John,
32:23
Speaker 2: Michelfwaite Z DoD and Dina Esfandre. With special thanks to
32:27
Speaker 2: the team at the Katan Economic Forum.