00:00The U.S. military carried out massive precision strikes on the three key nuclear facilities.
00:09Your bold decision to target Iran's nuclear facilities with the awesome and righteous might of the United States will change history.
00:18The world must not forget that it was the United States which, in the midst of a process to forge a diplomatic outcome, betrayed diplomacy.
00:27Just in the last few seconds or so, we're getting President Trump announcing a 12-hour ceasefire between Iran and Israel.
00:33We basically have two countries that have been fighting so long and so hard that they don't know what the f**k they're doing.
00:40Are you interested in restarting negotiations with Iran? And if so, have they...
00:45So, our people, Marco could answer this, but our people are not... I'm not.
00:52The way I look at it, they fought, the war's done, and, you know, I could get a statement that they're not going to go nuclear.
00:59We're probably going to ask for that, but they're not going to be doing it.
01:03But they're not going to be doing it anyway. They've had it. They've had it.
01:08Whether or not Iran has had it, the question remains how the conflict reshaped the landscape of politics and markets in the Middle East.
01:16To help us find an answer, we spoke with Karen Young, senior fellow at the Middle East Institute in Washington.
01:23I think we are in the midst of some major transition in the region.
01:27We don't know in which directions, at what speed it will go.
01:31But I think mainly this is a transition that will have to happen inside of Iran.
01:36The government and the security apparatus is extremely weakened.
01:40They've been delegitimized in the eyes of their own people in terms of their ability to defend them.
01:45The president of Iran had to ask for Israel's permission to fly out of the country.
01:50That just gives you a little bit of a picture of the control that the IDF had over Iran's airspace.
01:58And we don't know right now the extent of, you know, where the highly enriched uranium that Iran has stockpiled, where it is.
02:07One of the big stories has been the Gulf states, Saudi Arabia and the Gulf states and the investment into their and their economic development.
02:15What possible ramifications could what we've seen in Israel, Iran and with the United States have on Saudi Arabia and the Gulf states?
02:23So the economic transformation that's happening in Saudi Arabia really since Mohammed bin Salman and his father King Salman came to power in 2015 has been this idea of, you know, Vision 2030, of opening up the economy, trying to increase foreign direct investment, encouraging women's participation in the economy and opening up new sectors, particularly tourism, as well as, you know, new energy, renewables, perhaps green hydrogen.
02:48A whole lot of transportation, a whole lot of transportation, a whole lot of sports investment, entertainment.
02:52None of those things work if we see a region where there are ballistic missiles falling from the sky.
02:59So the missiles that Iran sent into Doha to hit the Al-Udeid base as a retaliation against the United States, I think for the entire Gulf Cooperation Council was a moment of real terror and fear,
03:15even though it was pre-communicated and was not targeting the Qataris, you know, themselves, it's just not something that goes along with having the World Cup or having major tourist destinations.
03:28That will sit in people's memories for a long time.
03:32Investors like stability, predictability.
03:34There has been a lot of instability because of the relationship between Israel and Iran, fear of Iran developing nuclear weapons.
03:44What are the prospects that actually over the longer term, this will bring stability to the region rather than instability to the region if, in fact, Iran is substantially weakened?
03:54Iran is weakened, but Iran can still lash out.
03:57And that's why, you know, the location and the state of their stockpile, almost 900 pounds of highly enriched uranium, we need to know where it is and we need to know it's in safe hands.
04:10More and more, Iran now has a motive to weaponize, which maybe they truly did not have before.
04:16And finally, we don't know, as you said, exactly how this will play out in Iran, but it seems like one possibility is some turmoil within Iran about leadership.
04:27There's a lot of speculation about that.
04:29If, in fact, there is that turmoil and it's not clear who's in charge for some protracted period of time, what does that mean for the region?
04:37I think that's the worst case scenario for the region, particularly if we get rival military factions or breakoffs from the IRGC, competing commanders, so to speak.
04:47We're definitely not there yet.
04:49There is still very much a command and control system still in place in Iran.
04:55We have the supreme leader, we have the clerical leadership, we have the elected leadership, and we have the military leadership.
05:01And those are still intact, though, particularly within the IRGC commanders and the military structure.
05:08They have been decimated.
05:09There have been a lot of people killed.
05:10But they're still very much in control of their armed forces.
05:16So do we see factions breaking off?
05:18Do we see some sort of exiting the country and taking riches with them or taking materials with them and living to fight another day, forming up with militias in Iraq, trying to enter into Syria and destabilize Syria further?
05:33I think those are all possibilities that we have to consider.
05:37Unless you're a defense contractor, war is never good for business.
05:42But what President Trump calls his 12-day war involving Israel, Iran, and ultimately the United States, had remarkable little effect on markets, apart from a short-term spike in oil prices.
05:54We asked our special contributor, Larry Summers of Harvard, why?
05:57David, it's something I've noticed over long periods of time.
06:02Geopolitics are much less significant for markets than geopolitical people think that they should be, whether it's events in the Taiwan Straits or events with respect to North Korea and what happens in South Korea.
06:20Markets kind of have a life of their own driven by longer-term assessments and less responsive to even very dramatic short-term events.
06:35So I think this is just something we should all be used to.
06:40It's a version of my observation about events ultimately being less important than trends.
06:47I think on top of that, you have the reality that it sure doesn't look like oil is as important to the global economy as it used to be,
07:01that imported oil is much less important to the U.S. economy than it used to be.
07:09And there's a sense that there's some excess capacity around, particularly in Saudi Arabia, that might cover any sets of gaps.
07:22So I think it's all of that.
07:25It's also the fact that a larger fraction of the market is tech stocks than once used to be the case.
07:31And they are relatively impervious to these developments.
07:37One of the long-term trends that may happen, we have one data point or two at this point,
07:42but one trend is a somewhat more assertive United States, more than we thought originally with President Trump,
07:49with his getting involved in Iran, even the visit to NATO, and his apparent shift in his position.
07:56If, in fact, the United States is relatively more assertive on the international stage or less,
08:00does that have potential ramifications for economics as well as for markets?
08:04I mean, it depends on what the form that U.S. assertiveness takes.
08:09I had been concerned about a growing U.S. isolationism,
08:14that an outward-looking United States could be a very important stabilizing force in the world,
08:21and I continue to believe that.
08:23So I think a sense of the U.S. as being willing to be a security guarantor
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