00:00What is the status of things in your mind and where do you think this is heading?
00:04Well, there are two options.
00:06One is to de-escalate and walk away from this war and get to a ceasefire.
00:12But they're going to get a ceasefire without a deal with Iran.
00:15And Iran's going to control the Strait of Hormuz.
00:18It's going to threaten the Gulf and the supply of oil.
00:21You have a regime that's actually much more radical today than it was before
00:25because Mubtaja, Khomeini's son, is more radical than his father.
00:28They're going to rebuild ballistic missiles.
00:32They're going to build even more drones.
00:34They're going to even try to enrich the uranium they have to weapon grade and have a bomb.
00:39So it's a disaster.
00:40You know, Trump is already behind in the polls.
00:43This war has been a bit of a failure.
00:45But now going away from it implies it's going to for sure lose the midterms,
00:49not just the House, but probably the Senate.
00:51So I think that in spite of all the rhetoric about negotiations and getting a ceasefire,
00:56my more likely scenario, I give you the two-thirds probability,
01:00is one in which the U.S. has to escalate and finish the job.
01:03And escalate means take over Karg Island, trying to take over even the Strait of Hormuz,
01:09try to reopen it, try to have regime collapse and win this war
01:12and finally have a more stable Middle East.
01:14It's a very risky one because if you take that chance, you might win.
01:19But there's also a chance that you lose.
01:21And then they beat the bloc even more Hormuz.
01:24They destroy even more energy supplies of the Gulfies.
01:27And then you end up in 1970s stagflation.
01:30But in my view, escalating and winning is more likely than escalating and losing.
01:35And given the politics and the electoral dynamics, you'll have to escalate.
01:39So if you escalate and you end up losing, you said it's 1970s stagflation all over again.
01:45If you win, what does that look like based on the risk premia that are likely to go on a
01:50lot of physical goods
01:51and a question about stockpiling in different regions as a result of multiple different supply chain shocks?
01:57Well, if you escalate and win means that you take over Karg Island,
02:00you cut off by 90 percent the revenues of the government,
02:04you continue the bombing campaign, you destroy the military assets,
02:07you take over even the nuclear kind of weapon-grade uranium,
02:13you try to destroy the leadership, you try to have regime collapse,
02:17and you try to keep open as much as you can street of Hormuz
02:20while defending the oil-energy facility of the Gulfies.
02:23If all this thing happens and you win, then actually you got rid of the regime.
02:28And for a short term, maybe two, three months, you have oil prices above 120,
02:32but then you're going to go to a stable world.
02:35And by the way, Iran controlling the state of Hormuz is a threat to the Gulfies,
02:40it's a threat to Israel, it's a threat to Europe, it's a threat to Asia, it's a threat to the
02:43United States.
02:44So as the Emirates have been saying clearly, this is not acceptable,
02:48and this is the same view that people all over the Gulf have.
02:51It's not an acceptable solution.
02:53So given what has happened, you have to try to finish the job.
02:56And finishing the job means having de facto regime collapse,
03:00either formally regime collapse or informally a situation in which this regime is not anymore a threat
03:06to the region and to the world.
03:08Well, the regime has been weakened, though.
03:09You give that point to the president.
03:11But absolute collapse, there's been no evidence that we've seen defections,
03:15and they're still in control.
03:17Well, de facto collapse, in my view, means that you take over Karg Island,
03:23you try to reopen the state of Hormuz,
03:25you try to make sure that they cannot destroy more energy facilities in the Gulf.
03:29You keep on bombing the hell out of them for weeks.
03:32They've already been eroded a lot,
03:34and every day there's thousands of new targets within Israel and the United States.
03:37You may even be able to kill some of the remaining leadership.
03:41And de facto, effectively, a regime collapse.
03:44It's not a regime collapse, it's a regime that doesn't have nuclear weapons,
03:47doesn't have weapons, cannot threaten the state of Hormuz.
03:50And whether it's former regime collapse or not, at that point, it doesn't matter.
03:53But that means finishing the job.
03:55Nouriel, we've got about 60 seconds left.
03:57You lived in Tehran as a child.
04:00Yeah.
04:01How personal is this for you?
04:03You know, I'm a Persian Jew, so I was in Iran last when I was three years old.
04:07I lived in Israel, grew up in Italy in the US.
04:09So I don't take it personally, but I would say that while this is an appalling regime
04:15and the current one is worse than the previous one, the threat is not just to Israel.
04:19The threat is not just to the GCC country.
04:21The threat right now is not just to Europe.
04:24Europe is threatened from an economic point of view, from a military point of view.
04:28The missiles, the long-range ballistic missiles of Iran, can reach anywhere of the European Union.
04:33It's a threat to the world.
04:34It's not acceptable.
04:35You can discuss whether it was the right thing or not to start this war.
04:38Once you start it, if you don't finish it, it's going to be much worse than the situation previously.
04:44So given the risk, you have to try to finish the job and having effective regime collapse
04:49or the regime boxed in any way that's not anymore a threat.
04:52Nouriel, we appreciate your time and your experience, sir.
04:54Thanks for sharing it with us.
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