00:00Tense understanding. Take us into that idea, Anna.
00:03Well, it's a great power competition, and the meeting doesn't change that.
00:06It means that they're competing, right?
00:08And I think that the optics are important, though.
00:12And I think when I'm reading the analysis out there,
00:14it underestimates a little bit the effort that the U.S. is making
00:18in trying to be on the good side of Xi.
00:21We have a huge dependence by the U.S. on China.
00:24The rare earths is critical, and it's going to take a long time to reduce that dependence.
00:28So what the U.S. is doing, what Trump is doing, is trying to buy time,
00:32trying to buy time to be able to build stockpiles, to diversify from that dependency.
00:36And therefore, I think this meeting is actually important for the pomp,
00:41for all the visuals that we've been given,
00:43even though the substance is pretty much in line with expectations.
00:46We even got a very tepid and timid extension to the trade truce.
00:51But it has built goodwill, and that buys time, and I think that's important right now.
00:56So you do actually think that that is quite material?
00:57Because a skeptic might say, this is only pomp and ceremony,
01:01and there isn't really any substance.
01:03But you think even the fact it hasn't fallen apart,
01:05there have been friendly exchanges, that is actually in itself some progress.
01:09I think so.
01:10Diplomacy is important, even though it's not material.
01:13Relationship between leaders.
01:14Look at this world today.
01:15So much depends on the decision of one individual, of one person.
01:20And therefore, being on the good side of that person is really important.
01:24And the level of geopolitical risk that we've had this year has increased substantially.
01:29The U.S., with the quagmire in the Middle East, is much weaker now,
01:32with the munitions being less than what they were before.
01:36There's a real question over the U.S. deterrence power.
01:40That increases the risk to the U.S. as well.
01:42Okay.
01:42So it reduces tensions with China.
01:44Yeah.
01:45And I'm wondering, actually, if you look back at the last visit that Xi Jinping made to the United States
01:49was some 10 years ago, I think, there or thereabouts.
01:52What does the distribution of power globally look like?
01:54How different is it now compared to the last time that the Chinese leadership was in America?
01:58I think this year we have seen the transition of a hegemonic world to a multipolar world.
02:03It's not a bipolar world, and that is important, too,
02:06because bipolar world would mean that China is strong enough to really force its wills on a host of other
02:12countries.
02:12But China isn't yet as strong enough.
02:14So we have two competing powers, and we have a lot of middle powers in the middle that are trying
02:18to hedge their bets.
02:19So it's a multipolar world.
02:21But in this year, China has grown a lot more important.
02:26We have seen this in the diplomatic outreach.
02:29We have seen this on the way Xi has been treated and behaved on the global stage, also by Trump.
02:35Actually, Trump has promoted Xi, if you will, to an equal.
02:38And Xi has embraced this to some degree.
02:40But still with limitations on China's power, you say, and that extends to what they can do in Iran, maybe.
02:46Do you think maybe is America overestimating how much influence China has in Iran?
02:51I think everyone is overestimating how much influence anyone has over Iran,
02:55because we're not talking about one Iran anymore.
02:57That is the key issue that keeps on being forgotten,
03:00that we have now a divided power structure with different elements,
03:04and some of these elements are in control of missile launches.
03:08So if they do not agree with anything that the president wants,
03:12they can just launch an attack on a ship.
03:15And this is how the MOU fell apart in the first place.
03:17So we have a divided power structure with elements in Iran now that are in charge of military equipment,
03:24that are ideological, that are religious, and they don't have the same goals.
03:29So you have the pragmatists and you have the more ideological elements.
03:33No one has leverage over them.
03:35And China can influence it, but they can't really sway the Iranian regime.
03:40Right. So this is where we are.
03:42So does that leave us skeptical of what difference another short-term phased agreement
03:47between the U.S. and Iran could make?
03:50What difference could it make?
03:50I mean, oil prices have reacted a little bit.
03:52We're down 104 is the handle.
03:54But actually, we haven't moved far this week on oil prices,
03:57despite all of the efforts at the U.N. General Assembly
04:00to bring these two sides to some kind of agreement.
04:05Yes, I am skeptical for the very reason that I just outlined, the divided power structure,
04:09which means there's not one Iran that we are negotiating with.
04:12However, the economic pressure on both sides favor eventually a mechanism
04:18that alleviates traffic through Hormuz somewhat.
04:21Because the Iranians need it, the global economy needs it.
04:25But it's not going to be a clean peace.
04:29There's still going to be disruption in the strait of Hormuz.
04:32That's going to be the new normal.
04:33And also, the situation in the Red Sea has been a game-changer over the last few weeks.
04:37Yes, and thinking about that, actually, it's interesting, Anna,
04:39that we have Europeans now offering, and this came first in the shape of the U.K.
04:43and now in the shape of France, both offering to send some kind of military support to Saudi Arabia,
04:49very small-scale, perhaps.
04:51But why are they doing that?
04:53What is the motivation there?
04:54Is that just to be able to show the Americans they're doing something?
04:57But they're very specific about Saudi and not other parts of the Gulf.
05:01It's a completely different conflict.
05:03The one between Saudi Arabia and Yemen and Saudi Arabia has a problem here because there are no good military
05:10solutions.
05:11And it is being left out there as well by the U.S.
05:14It's not getting the military support.
05:16So the challenge is that the Houthis have been getting stronger and stronger strategically with taking more territory in the
05:23Red Sea.
05:23The Saudis have two options.
05:25Military escalation, which would see the Houthis and the militias in Iraq attack Saudi infrastructure.
05:31Or they can try and buy the Houthis off, which is what the Houthis want.
05:35They want to govern Yemen, which would strengthen their hold over the Red Sea.
05:39So in any case, the Houthis will have more control over the Red Sea, which undermines freedom of navigation.
05:45Yes, and the Babel-Mendab Strait and the Europeans might be worried about that.
05:48Anna, thank you so much for joining us.
05:50Good to speak to you on the program.
05:51Anna Rosenberg of the Amundi Investment Institute.
