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00:00Welcome to Balance of Power on this day that I believe brings us to 172 days since the war with
00:06Iran began. We now have experts telling us here, press openly describing this as a quagmire. If
00:14you were still advising the president as to options to end this quagmire, which ones are
00:20realistically left? Well, the best option is obviously not realistically available, which
00:26would be to go back in time and not start this war in the first place, because President Trump really
00:31has put the United
00:31States in a strategic cul-de-sac with no clear way out. And really, when it comes down to it,
00:37if you stare at it squarely, there
00:39are two bad options. One is to keep this war going with all of the costs to the global economy
00:44and all of the risks of
00:45escalation and further casualties. And the other is to cut a very, very bad deal. And really, Iran is just
00:53simply upping the
00:54price for that deal with each week that goes by, adding new demands to what it would require to open
01:01the Strait of Hormuz.
01:03And I think this is the horns of the dilemma that President Trump is locked on, is that to get
01:07Iran to actually step away from
01:11keeping the strait closed, which it largely is right now, despite what he says, the United States will have to
01:16pay a very steep price, I
01:18think, in terms of frozen assets, in terms of sanctions relief, and potentially in terms of something the president previously
01:23agreed
01:23to, a very large fund for the reconstruction of Iran. And at some point, the president, I think, is going
01:29to end up having to bite
01:31the bullet and do a bad deal.
01:33Jake, it's great to have you with us on Bloomberg. I'm sure that you gamed out a lot of scenarios
01:38involving Iran in your time at the White
01:41House. Did the United States, did this administration, underestimate this enemy?
01:47There's no doubt about it. The notion that you would conduct a regime change war, you would kill the top
01:55leader in Iran, and
01:56Iran wouldn't react by throwing everything it had back at the United States, would have been debunked immediately by any
02:04serious
02:05person in the intelligence community. So the president should have known, and I think did know, from his intelligence community,
02:11that
02:11Iran would look at closing the Strait of Hormuz, would look at hitting U.S.
02:16infrastructure across the Middle East, would look at attacking neighbors in the Persian Gulf, and Iran has done all of
02:22those
02:22things. And the minute the president decided that he was going to launch a war, the end goal of which
02:29was the removal of
02:30Iran's regime, which is existential for those leaders, they were going to respond in an existential way. And so I
02:37think it was not just
02:38predictable we would end up where we would end up where we are, but it was predicted by a lot
02:41of people going back to the
02:43the beginning of this conflict.
02:45Well, of course, the president says it wasn't just about decapitation at the top of Iran's leadership. He says repeatedly,
02:52and
02:52still does to this day, that the goal is to have a denuclearized, non-nuclear Iran. And when you couple
02:58that with the
02:59president's statement on True Social today, that no talks with Iran are ongoing or scheduled, can you reach that end
03:06game on the
03:06nuclear program without negotiations on it?
03:10There's no way. At the end of the day, the only path to verifiably blocking Iran from acquiring a nuclear
03:17weapon is a deal that
03:19includes intrusive inspections in Iran. That is something Iran would have to agree to. That requires diplomacy. It requires
03:27negotiations. I do find it interesting that you had Jared Kushner out saying there are talks ongoing and then you
03:33have the
03:33president 24 hours later saying there are no talks ongoing. These two things can be squared by the definition of
03:39what talks are.
03:40Informal contacts outside of the administration, ways of passing messages back and forth. Maybe that's what's unfolding and that's what
03:47Jared Kushner is referring to. But at the end of the day, there is simply no substitute for the United
03:52States sitting down with Iran,
03:55whether it's with mediators or just simply directly as we did back in the Obama administration, and coming out with
04:01the terms of a deal that does, in
04:03fact, put a lid on Iran's nuclear program for the long term. But we've gotten so far off course of
04:08that because right now the main point of
04:12friction is not actually the nuclear program, whatever President Trump says. It's getting the straight open. And that's trying to
04:17restore a status quo ante that
04:19existed before this war kicked off in February, before we even get to questions about a long-term deal on
04:25the nuclear file.
04:27Well, as someone who has been negotiating with leaders of the Middle East for years, I wonder your thought on
04:34exactly how talks are
04:35being conducted, including people who don't even work for the administration or the government. Axios today invoking the name Tulsi
04:43Gabbard,
04:44speaking with an Iraqi Kurdish leader with close ties to the IRGC. The administration wanted to reach out directly to
04:50the Islamic Revolutionary
04:51Guard Corps. Through this intermediary, the U.S. was delivering messages to an IRGC commander. You've got Jared Kushner at
05:00the
05:00table, who does not have a clearly defined role. Is this the beginning of our problem right now, or is
05:07this somehow part of a strategy?
05:10I think there are two things going on here. One, I would lay at the feet of Iran, which is
05:15that it has multiple competing power centers
05:18and a lot of people jockeying for a voice in their decision-making process. And that does make it difficult
05:24to know exactly who the right counterpart is.
05:27So I understand the administration's desire to try to get in through multiple channels. But the second thing that's going
05:33on here is you have an administration
05:35that is basically eviscerated official forms of diplomacy. You have a secretary of state who isn't really participating in any
05:42of the major files,
05:43whether it's Ukraine or Gaza or Iran. And you've left a lot to these informal mediators. Sometimes that can work.
05:51But I think more
05:52frequently it creates the kind of circumstance we have right now where we just simply haven't been able to get
05:58traction on a negotiation in
06:00several weeks. And it's left the United States in a very difficult position. It's also meant that regional countries are
06:06feeling they need to
06:07step up to try to broker something themselves because, of course, their interests are deeply implicated in this. And what
06:13I would expect will happen as
06:15we go on is that these regional countries will try to cut their own deals with Iran to make their
06:20lives a little easier, even if over time that
06:23comes at the expense of the United States.
06:25Well, it raises the question of Oman, which President Trump suggested yesterday the U.S. would be willing to bomb
06:31if it got in the United States's way. Do you see
06:35Oman's interest at this point, especially when it pertains to the Strait of Hormuz, is being misaligned with the United
06:41States's own?
06:43Look, I think Iran, excuse me, Oman and the United States both want to see the Strait open. And Oman
06:49has a deep and rich history of working as a really honest
06:53broker in trying to help bring about agreements between the U.S. and Iran. When I worked on the secret
06:58talks that first laid the groundwork for the
07:01Iran nuclear deal in the Obama administration, where did those talks take place? In Oman. Oman played a critical role
07:08in delivering the
07:09joint comprehensive plan of action. They've played an important role with the backing of the United States over the last
07:15few months, trying to work out
07:17some modus vivendi to reopen the Strait. So for President Trump to turn around and suggest he is going to
07:22militarily attack a country that
07:24fundamentally is just trying to bring about a deescalation in the situation. I think this is kind of par for
07:31the course in how the
07:32president operates. But it is not a constructive way to work with a partner that, yeah, it's not perfectly aligned
07:38with the U.S. because it has its own
07:39national interest, but fundamentally wants to see an outcome that is similar to the outcome we want to see, which
07:44is the Strait open and traffic flowing
07:46once again. And even more importantly, an end to the war, an end to the risk that this spills over
07:51in a more dramatic fashion going
07:52forward with more suffering and death.
07:55When we were preparing for our conversation, Jake, we saw some reports in the wake of October 7th that President
08:03Biden rejected calls from
08:04Prime Minister Benjamin Netanyahu to launch strikes against Iran. Is that the case? Did Benjamin Netanyahu try to start this
08:12war under the previous
08:14administration? Well, without getting into sensitive conversations between two leaders, what I have said and can continue to say is
08:22that
08:22Prime Minister Netanyahu has tried to get multiple American presidents, including President Joe Biden, to go to war with Iran
08:28directly, to have
08:29the United States directly engaged in a war with Iran. President Biden didn't do it. President Obama didn't do it.
08:36First President Trump,
08:37President Trump in his first term wouldn't do it. President Trump this time around did say, yes, I will go
08:43ahead and start that
08:44war. And we're all seeing the consequences of that. Well, so when we consider Netanyahu, then especially the ongoing questions
08:53of
08:54Lebanon and Israel's fight against Hezbollah of Gaza and the disarmament of Hamas, how much when it comes to the
09:00future trajectory of the
09:01Middle East is is going to depend on the outcome of Israel's elections in October? Is Netanyahu actually one of
09:07the larger impediments to
09:08peace? Look, there's no doubt that he has continued to stoke conflict and turbulence and wanted this war with Iran
09:16to
09:16continue, has continued to prosecute the campaign in Lebanon, is continuing to resist the pathway to a full settlement that
09:26is being
09:26pursued with respect to Gaza. The question, though, of whether a different Israeli government would take a fundamentally different
09:33approach to the region, whether to the Palestinian people or to Lebanon or to Iran, I think is still very
09:39much an open question. It
09:40would depend on the character of that government. One thing I think that would change is that if you had
09:45a government that did not have
09:46these really radical far right extremists like Ben Gavir and Smotrich, you could at least push out of power some
09:55of the most extreme
09:55elements in Israeli politics today. You know, the standoff in the strait is resonating in the Korean peninsula. Jake Sullivan,
10:03I'm sure you saw
10:03the president's announcement yesterday based on a his relationship with Kim Jong Un, but B, South Korea's decision to not
10:13assist the United States in reopening the strait to justify his decision to crank down United States involvement in military
10:21exercises off South Korea with the South Korean military. We know how important this relationship is in the Indo-Pacific.
10:29And most recently
10:30here on Bloomberg, I think a lot of our viewers and listeners know how important South Korea is as a
10:34player in the memory chip space. Is President Trump making us more or less safe with this move?
10:41Look, at the end of the day, the strength and health of our alliances going forward is going to be
10:46measured as
10:47much by economics and technology as it is by military deterrence. And as you just noted, South Korea is a
10:53vital
10:53partner to us in the semiconductor manufacturing supply chain and high bandwidth memory, in the memory chip space, as you
11:00said, but in many other areas where South Korea makes massive investments in the United States and batteries and electric
11:06vehicles, helping to re-industrialize our country. We're in talks with them right now about building out a massive shipbuilding
11:13investment in which the United States could once again restore its capacity to build ships that we lost over several
11:19decades going back to the
11:201980s. So to turn around and hit South Korea this way about something so core and existential to their security
11:28and out
11:28and ours, basic exercises to make sure that we deter war on the Korean Peninsula, I think this is biting
11:34off our nose despite our
11:36face. And President Trump is going to learn over time that continuing to treat allies in this way will come
11:43at a cost to the United
11:44States in the larger relationship. And I worry that it will come at a cost on these issues of economics
11:50and technology at a moment
11:52when we are competing vigorously with China and where our work with South Korea is so vital.
11:58Well, so if the danger here potentially, Jake, is that other countries get drawn closer to China and China obviously
12:06is watching all of this
12:07unfold from the Middle East to the Indo-Pacific and beyond. Is it Xi Jinping that comes to Washington next
12:13month where he's intending to
12:15meet with President Trump at the White House on a stronger footing than the United States?
12:20Look, if you're sitting in Beijing right now and you're advising Xi Jinping and you're looking at a net assessment
12:25of America's capabilities and China's
12:27capabilities, you're saying to yourself, what does America have that we don't? Well, one of the biggest things America has
12:32historically brought to the table in the competition
12:34with China is a network of powerful, robust alliances in both the Atlantic and the Pacific. And China has had
12:41a long-term strategy of wanting
12:43to undermine those alliances, to weaken them, to divide the United States from its allies. And they're looking right now
12:49and saying, wait,
12:49President Trump is actually doing our work for us. And I think it does mean that President Xi will come
12:55with a certain swagger in his step
12:56because he believes that they are making progress economically and technologically. They're making inroads diplomatically. And the United States is
13:04losing
13:05or is degrading one of the most critical assets that it has. I think the other thing that President Xi
13:10has done over the course of the last year is shown that China has leverage.
13:14When President Trump slapped massive tariffs on China, they responded with the rare earth export controls. And President Trump felt
13:22he had to back down and essentially made a huge concession in the trade war.
13:26So President Xi will have that in mind, too, when he comes to Washington next month.
13:31So much of your time in the Biden White House was spent on the war in Ukraine, Russia's war with
13:38Ukraine that actually ties in to this larger conversation that we're having.
13:44Jake, we can't ask you about this. We can't not ask you about this before you leave.
13:49Because of the munitions that we have been spending on this war with Iran, we have left Ukraine now at
13:58this point with no Patriot missile interceptors, we understand.
14:02And the idea of providing a license for Ukraine to make its own seems to have been withdrawn by this
14:09administration.
14:09Have we abandoned Ukraine?
14:14Thankfully, we are still doing some of the critical things that are necessary to support Ukraine and its fight for
14:19freedom, independence, sovereignty, territorial integrity, namely continuing to provide intelligence.
14:24But in the opening days of the war, some of America's foremost bipartisan national security experts came out and said
14:30that starting this war with Iran is going to help Putin because it's going to mean we divert Patriot missiles
14:36away from Ukraine.
14:37And Putin sees that. And so what's he doing? He's launching larger and larger salvos of missiles at Ukraine, knowing
14:44that Ukraine doesn't have the interceptors to be able to defend itself.
14:47And his goal this winter will be to plunge Ukraine into cold and darkness by taking out its electricity grid,
14:54taking heating offline, taking lighting offline.
14:57And we are leaving Ukraine naked to those kinds of attacks.
15:00And this, too, was very much both predicted and identified at the beginning of the war as a huge cost.
15:06And I do believe that we have unnecessarily expended these massive numbers of Patriot interceptors to fight a war that
15:13made no sense from the start.
15:15And you can see the immediate direct knock-on effects for the people of Ukraine, who nonetheless are fighting incredibly
15:21bravely and effectively in stymieing Russia on the front line and, frankly, in taking the fight directly to Russia as
15:27well.
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