00:00The Wall Street Journal reported President Trump has rejected the latest proposal aimed at resolving the Iran war and reopening
00:06the Strait of Hormuz.
00:07U.S. officials telling the Journal that Trump has said it's planned to resume bombing in Iran after the midterm
00:13elections in November.
00:14We spoke with Dina Svendieri, Bloomberg's Mideast geoeconomics lead, about the next phase of the conflict, what it could look
00:20like, and why a solution won't be easy to find.
00:23Internally inside Iran, there's a real debate going on about whether they're making too many concessions, whether they're giving up
00:30too much, because from their perspective, the Strait of Hormuz is a strategic gain.
00:35So there really has to be a recognition of Iran's control over the strait, which, of course, is exactly what's
00:41making the U.S. bulk.
00:42So it really remains to be seen if we even get there.
00:45You've also said that you think a lot of the leadership in Iran right now believes that the Trump administration
00:50is only going to respond to threats and escalations.
00:54And they've said pretty openly that they are more sensitive, that they believe Trump is more sensitive to this war
00:59leading up to the midterms.
01:01And are they trying to use that as leverage?
01:05Absolutely. I think most importantly, they believe that if they are to escalate, they have to do it before the
01:11midterms,
01:12because of the reason that you outlined, that Trump is more sensitive to that pressure.
01:15I think that's a little bit of misreading on Iran's part, though.
01:19President Trump has indicated that he doesn't really care about the midterm elections.
01:25And there's a lot of rumors floating around also that post the midterms, he'll feel even more unconstrained.
01:31And so maybe he'll escalate then.
01:33And so I think on the Iranian side, what they're trying to do is really figure out if they need
01:38to preempt that American escalation
01:40or if they need to double down and really try to extract as much as possible from the United States
01:45in the lead up to the elections.
01:47And I think right now the jury's out.
01:49That debate is really active.
01:51It's really vocal.
01:52But they don't seem to have made a decision, really.
01:55We just finished the U.N. General Assembly.
01:57Netanyahu made an incredibly fiery speech at UNGA.
02:01It was basically an enemies list, naming everyone from the United Kingdom to the mayor of New York
02:07as people who kind of had it out for Israel.
02:09Is there any indication, any willingness on behalf of Israel to play ball here or abide by any kind of
02:15agreement?
02:16Honestly, the short answer to that is absolutely not.
02:20Every indication coming out of Israel shows that actually they want to double down.
02:24They want to continue the wars in their backyard because from their perspective,
02:29those are now important Israeli foreign policy issues.
02:35They don't see the war in Lebanon or the war in Gaza as a part of the Iran conflict.
02:40They see it as separate, actually, much like the Houthis in Yemen see their war as separate from the Iran
02:45war.
02:46We tend to group them into one and see them as different fronts of the Iran war, but they certainly
02:51don't.
02:51That means that this is going to be a huge sticking point.
02:54It was a sticking point in the first MOU.
02:56It's definitely going to be a sticking point in this MOU, this deal, because President Trump has pressure.
03:04He can exert pressure on Israel.
03:06But at the end of the day, it really is going to be down to the Israelis whether they want
03:10to listen to it or not.
03:11And what's more, the Israelis are preparing for their own elections.
03:14I was just going to say all politics are local.
03:16And Netanyahu, that seemed like a domestic speech, more so than an international speech almost.
03:22Absolutely.
03:23Absolutely.
03:23They're preparing for their own elections.
03:25They're worried about their own domestic issues.
03:29They're playing the political game internally.
03:32And I don't think it would look good for any candidate domestically if they suddenly turned around and walked away
03:39from Lebanon and Gaza.
03:40I just don't think that this is something that Israel wants.
03:44All right.
03:44Speaking of domestic politics, you've written recently about what the potential endgame could be for Iran.
03:51And you see, you kind of lay out three scenarios as to where this could go based on who's in
03:55leadership right now and kind of the different political factors.
03:57Can you walk us through what you see as the most likely scenarios?
04:02Our base case scenario right now is that we find ourselves in a protracted war.
04:08Now, what does that look like?
04:09It looks like cycles of escalation punctuated by pauses in the fighting where each side regroups and rearms and really
04:17prepares for the next round, so like strategizes for the next round.
04:21That doesn't augure anything good for the region nor for the global economy, really.
04:26I think disruption in regional waterways is going to continue for the foreseeable future.
04:32It's likely to have more impact in the Strait of Hormuz than in the Red Sea because the Red Sea
04:35has already been affected by the Houthi maritime campaign last year.
04:40But freedom of navigation is a thing of the past in those waterways.
04:43I don't think we're going to come back to it.
04:44It's also intended to keep the U.S. kind of stuck in its campaign to get oil through the Strait,
04:55which is going to be a very costly endeavor for Washington.
04:57And finally, it deprives the Gulf Arab states of the most important thing, which is a return to a normal
05:05state of affairs that would allow them to kind of rebuild the infrastructure that was affected, that would allow their
05:11economies to get back on track, and really for them to get back on their feet.
05:15That's all of the things that are not going to happen in the next few months.
05:20That's why there was some reporting out in the Wall Street Journal this week saying, essentially, Gulf allies don't want
05:26the U.S. to give any inch on Iran.
05:29They would rather continue this conflict than not take a hard line against Iran.
05:33I wanted to ask you about that because that goes counter to my own reporting, what I heard with Gulf
05:39leaders as I was speaking to them at the U.N. this week.
05:42Does that track with what you're hearing?
05:45Actually, what I'm hearing tracks with what you're reporting.
05:49Okay. All right. We'll go there then.
05:51Yeah, absolutely.
05:52From my perspective, it looks like actually the Gulf Arab states are putting whatever pressure they have at their disposal,
05:58without actually escalating to using financial means to pressure the U.S., but everything else, diplomacy, really insisting,
06:08and ensuring that the U.S. kind of walks away, or at the very least doesn't escalate in this conflict.
06:15Now, they understand that that would leave them in a vulnerable position, but war for them is their worst-case
06:22scenario.
06:23I mean, Iran striking at their facilities is the worst thing that could happen to them.
06:27Now, that's not to say that there aren't elements within the Gulf Arab states who actually probably would want this
06:33war to continue
06:34and the U.S. to finish this war.
06:36But generally, based on my conversations, they're adamant that they want this to end,
06:42and they're adamant that they want to deal with the Iranians in such a way as to incentivize them not
06:47to target them in future rounds.
06:49Right. It's important to remember that it's not a monolith.
06:52There are different countries with different priorities.
06:53But, yes, most of the folks I've talked to recently this week seem to be working very hard behind the
06:57scenes to try to quell this,
07:00exactly what you were just saying.
07:00Before I let you go, I do also want to ask you about these airplane flight sanctions that the Treasury
07:06Department put into place.
07:08How big of a deal is this, and what is the goal here?
07:10Is it really impacting commerce for Iran, or is it antagonizing the population
07:16and fomenting disruption and malcontent within the state at the government?
07:21So I struggle to understand or to see what the goal is.
07:27What I do know is that the result is that it effectively cuts the Iranian population off from the rest
07:34of the world,
07:34from their families that are abroad.
07:36It prevents people-to-people exchanges, which is usually something that is good and that helps foster the desire to
07:45change a political system.
07:46And it just continues, alongside all the other sanctions, to squeeze the Iranian population without necessarily affecting the government.
07:54And that's just bad news for the average Iranian, really.
07:59During a war, it's highly unlikely that Iranians are going to go out and demonstrate and overturn their government,
08:05because that would be seen as betrayal.
08:08And so ultimately what it's achieving is just further squeezing average Iranians.
08:14So I really fail to see what the objective of those sanctions are
08:19and how it would lead to anything that would fulfill U.S. objectives in this war.
