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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: We hope you had a great weekend and welcome, indeed

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Speaker 2: to the Monday edition and more specifically, the early edition

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Speaker 2: of Balance of Power here on Bloomberg Radio, Satellite radio

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Speaker 2: Channel one twenty one, Bloomberg Originals, and YouTube. Search Bloomberg

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Speaker 2: Business News Live to find us on YouTube. We keep

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Speaker 2: the stream up all day for our programming from Washington

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Speaker 2: to New York and back again with the President not

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Speaker 2: wasting time in making some news today, and I'll let

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Speaker 2: you know lawmakers are coming back to town. There's going to

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Speaker 2: be a lot of talk about sanctions on Capitol Hill

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Speaker 2: as well as recisions, and we'll get to all of

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Speaker 2: that in a moment with Laura Davison. Today it's about Ukraine,

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Speaker 2: and the President told you this was coming right. We

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Speaker 2: sat here Friday knowing that the President was planning a

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Speaker 2: major announcement, as it was termed on Monday. There were

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Speaker 2: great questions about what this might include and whether it

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Speaker 2: would be offensive weapons. The answer is kind of yes.

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Speaker 2: The news here really is more not just American weapons

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Speaker 2: reaching Ukraine, but the fact that NATO is going to

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Speaker 2: pay for them. This answers the question we were asking

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Speaker 2: about whether it be a major emergency supplement or request

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Speaker 2: coming from this administration, something we couldn't imagine right The

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Speaker 2: idea of spending more money on Ukraine would go against

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Speaker 2: the grain for this president, but he's clearly upset with

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Speaker 2: Vladimir Putin and he's found a new way to get

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Speaker 2: American weapons in the hands of Vladimir Zelenski. Here's Donald

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Speaker 2: Trump from the Oval Office a short time ago, sitting

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Speaker 2: next to the NATO Secretary General Mark Ruder.

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Speaker 3: We're very very unhappy with him, and we're going to

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Speaker 3: be doing very severe tariffs if we don't have a

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Speaker 3: deal in fifty days.

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Speaker 4: Tariff said about one hundred percent.

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Speaker 3: And I'm disappointed in President Putin because I thought we

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Speaker 3: would have had a deal two months ago, but it

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Speaker 3: doesn't seem to get there. So based on that, we're

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Speaker 3: going to be doing secondary teriffs if we don't have

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Speaker 3: a deal in fifty days.

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Speaker 4: It's very simple, and they'll be at one hundred percent.

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Speaker 3: And that's the way it is.

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Speaker 2: Is there more gold in there than there was on Friday?

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Speaker 2: Are you seeing this on YouTube? The guilding never stops

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Speaker 2: in the Trump White House. It was that big gold

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Speaker 2: eagle there on Friday. Laura Davison is our deputy bureau

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Speaker 2: chief here at Bloomberg in Washington, d C. And is

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Speaker 2: of course helping demand all of our coverage here from

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Speaker 2: the White House to the Capitol. In backage, she's with

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Speaker 2: us right now. Great to see you. They're adding to

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Speaker 2: the gold as we go here, are they not.

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Speaker 5: There was a certain glow in that clip in particular.

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Speaker 6: My god, that was like Liberaci's office.

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Speaker 2: He did, by the way, mention the resolute desk, which

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Speaker 2: I guess has been cleaned up and returned. I've been

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Speaker 2: waiting for the update on this. Remember when Elon Musk's

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Speaker 2: son X he drooled or something on that they brought

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Speaker 2: the desk out of the oval, were going to have

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Speaker 2: it refinished, And I never heard that it came back.

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Speaker 5: And this is clear.

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Speaker 7: You know.

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Speaker 5: Even at the cabinet meeting on Friday, Trump was talking

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Speaker 5: about the decor he's been spending a certain amount of

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Speaker 5: time picking different frames, picking different clocks, including stealing some

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Speaker 5: apparently from the State Department from Marco Rubio.

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Speaker 6: This is, of course, not why you're here.

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Speaker 2: We're talking about Ukraine, and this is really interesting watching

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Speaker 2: the evolution here when it comes to Donald Trump, Vladimir

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Speaker 2: Putin and this war. Because it was just weeks ago

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Speaker 2: he was talking about his great relationship with Putin. It

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Speaker 2: was weeks before that he was yelling at Vladimir's Zelenski

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Speaker 2: and the Oval, and it was weeks before that he

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Speaker 2: predicted that he could finish this war on day one.

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Speaker 6: What does he think at this point?

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Speaker 5: This is a total reversal. And even go back, you know,

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Speaker 5: even further a year ago he was talking about abandoning

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Speaker 5: NATO partners. That really causes her on the campaign trail.

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Speaker 5: Now you have a meeting in the Oval, a very

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Speaker 5: cordial meeting with the Secretary General of NATO. You know,

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Speaker 5: you even mentioned that he's really become very friendly with

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Speaker 5: his organization, especially at the NATO meeting a couple of

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Speaker 5: weeks ago. You know, part of this is that Mark

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Speaker 5: Rod has been very strategic in how he's courted this

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Speaker 5: relationship with Donald Trump, and he's arranged this deal that

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Speaker 5: Trump very much likes of that the US won't be

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Speaker 5: giving weapons that they're going to be purchased through NATO

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Speaker 5: and then given to Ukraine. This is very much the

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Speaker 5: way he has always wanted to structure these deals, going

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Speaker 5: back to day one of his term. Ifs he didn't

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Speaker 5: want some sort of aid, he wanted some sort of

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Speaker 5: financial deal. Remember there was the rare Earth's Deal that

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Speaker 5: he was trying to cut. And this is, you know,

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Speaker 5: very much kind of where he sees kind of the

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Speaker 5: role he wants to play of making these financial deals,

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Speaker 5: these business deals, versus sort of a diploma diplomatic solution.

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Speaker 2: It's like the military version of We're going to build

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Speaker 2: a wall and have Mexico pay for it. Right, he

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Speaker 2: gets to do something that is maybe controversial, giving weapons

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Speaker 2: to Ukraine, at least with his own base. But as

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Speaker 2: long as we're not paying for it, we somehow don't

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Speaker 2: have our fingerprints on it.

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Speaker 5: Is that the idea, Yes, And it's also makes it

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Speaker 5: an easier self for Trump because he doesn't have to

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Speaker 5: go to Congress and get them to approve additional money.

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Speaker 5: You know, it's not clear if Congress is going to

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Speaker 5: approve this Russia sanctions package that has been debated for

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Speaker 5: several weeks. You know, these at various versions of this

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Speaker 5: bill have you know, sanctions of five hundred percent. Those

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Speaker 5: are massive. You know, Lindsay Graham has been talking about

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Speaker 5: scaling that back. But the bill right now has pretty

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Speaker 5: significant support, and it's possible, as Trump mentioned in the

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Speaker 5: Oval Office earlier, that it could pass, you know, in the.

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Speaker 6: Coming weeks, even with the help of Democrats.

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Speaker 2: It's interesting. I'm glad you mentioned that. In that soundcut

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Speaker 2: we just heard of the president. He's talking about tariffs.

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Speaker 2: He's one hundred percent tariffs, he means sanctions.

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Speaker 6: That's what this bill is.

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Speaker 5: Yes, this is and Trump it seems to really be

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Speaker 5: talking about two things. One, perhaps some sanctions that he

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Speaker 5: would impose unilaterally in addition to whatever Congress decides to do.

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Speaker 5: So he's talking about these one hundred percent secondary tariffs,

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Speaker 5: which we understand to be sanctions. These would be essentially

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Speaker 5: levies on trading partners that buy Russian goods, especially Russian oil.

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Speaker 5: So this would be hitting other countries essentially trying to

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Speaker 5: further isolate Russia and further dampen any demand for their goods.

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Speaker 2: We've got a great conversation coming up a little bit

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Speaker 2: later in the hour with Max Bergman at the Center

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Speaker 2: for Strategic and International Studies, who's looking at what the

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Speaker 2: effect would be here, and if you're a country like India,

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Speaker 2: that could be a real problem if that's past.

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Speaker 5: Right, Yes, there's especially if it's you know, one hundred

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Speaker 5: percent or even you know, forget five hundred percent, right,

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Speaker 5: Those are you know, tariff levels that just completely cut

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Speaker 5: off or sanction levels that cut off trade entirely.

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Speaker 2: So we're speaking about tariffs, and the President actually made

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Speaker 2: news about tariffs over the weekend. He was asked about this,

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Speaker 2: and I'm not sure it's even top of mind with

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Speaker 2: the Ukraine stuff here, but he threatened another thirty percent

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Speaker 2: on Mexico USMCA excluded. We spoke to Peter Navarro here

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Speaker 2: on Friday talking about Canada thirty five percent. That also

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Speaker 2: is us MCA goods excluded. So these aren't terribly meaningful

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Speaker 2: at the moment, are they Doesn't that cover the vast

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Speaker 2: amount of imports from both countries, that.

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Speaker 5: Really does, so that really lessens the scope there. And

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Speaker 5: of course, you know the Canada and Mexico are the

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Speaker 5: US's largest trading partners. Though not far down the line

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Speaker 5: is the EU, which has a thirty percent teriff rate,

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Speaker 5: much to the surprise.

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Speaker 6: So that's the real news this weekend, right, keep going through.

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Speaker 5: Yes, Yeah, and that really came as a surprise because

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Speaker 5: the US has been in talks with the EE for weeks,

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Speaker 5: if not months, about cutting a deal. The EU leaders

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Speaker 5: at one point thought they were going to be able

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Speaker 5: to keep that tariff level at ten percent, which, while

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Speaker 5: you know, wasn't their preferred outcome would be, you know,

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Speaker 5: a level that could support much of the trade that

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Speaker 5: is ongoing. But at thirty percent, you have a lot

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Speaker 5: of companies in the EU saying, look, this just doesn't

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Speaker 5: that the math of these trade deals don't make sense anymore,

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Speaker 5: and we're going to have to suddenly find other countries

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Speaker 5: to export our goods.

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Speaker 6: Wow.

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Speaker 2: The idea not to retaliate is pretty interesting here as well,

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Speaker 2: is this don't poke the bear or just give us

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Speaker 2: time to cut deals with other countries.

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Speaker 5: I think the next three weeks will really be a

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Speaker 5: key sign here. You know, do they get to August

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Speaker 5: one and are they able to either you know, stave

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Speaker 5: off that implementation, push it back a couple of weeks,

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Speaker 5: get a lower deal, or you know, is it August

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Speaker 5: one and suddenly thirty percent. That's when you could really

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Speaker 5: see countries start banding together putting on some of these

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Speaker 5: retaliatory tariffs as sort of daring Trump to you know,

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Speaker 5: back down.

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Speaker 2: Your calendar must look like a riot. So we've got

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Speaker 2: what is it now? August one is the next deadline

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Speaker 2: for reciprocal tariff. We just dropped a fifty day waiting

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Speaker 2: period on Russia sanctions. He said, I don't know why

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Speaker 2: fifty We seem to be in two week increments, and

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Speaker 2: didn't we already have something else we were waiting two

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Speaker 2: weeks on here?

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Speaker 6: What else?

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Speaker 3: Is?

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Speaker 6: What's the other deadline on your calendar? Right now?

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Speaker 5: We've got a lot of different things percolating between all

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Speaker 5: the copper tariffs and all these sector coppers all do

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Speaker 5: at various points in the fall. One nice thing about

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Speaker 5: that fifty day deadline for the U creatres that gets

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Speaker 5: us past Labor Day so people can enjoy their Labor

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Speaker 5: Day vacations and then come back to Washington and deal

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Speaker 5: with the next turn of the screw.

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Speaker 6: So all right, I waited until the end to ask

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Speaker 6: you this.

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Speaker 2: I don't want to put you in an awkward situation,

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Speaker 2: but I have to ask you about this Jeffrey Epstein story.

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Speaker 2: The President talked about it last week, called out the

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Speaker 2: reporter for asking about it. You've got the deputy director

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Speaker 2: of the FBI not showing up for work now calling

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Speaker 2: out the attorney general. Is this real, this MAGA split.

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Speaker 2: Does it spill over into anything policy related that a

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Speaker 2: Bloomberg audience should care about, or is this a tabloid story.

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Speaker 5: This certainly could mean, you know, shakeups at the FBI

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Speaker 5: and the Justice Department at the highest levels. If you know,

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Speaker 5: some of what we're seeing comes to fruition. And this

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Speaker 5: is really sort of a cautionary tale of when you

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Speaker 5: make promises when you are not in government to then

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Speaker 5: you are suddenly in control of things. You control all

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Speaker 5: the levers of power. If you get your side really

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Speaker 5: amped up that something's happening, you have to be able

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Speaker 5: to then you know, show something on the back end.

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Speaker 5: So this is really sort of the insider outsider dichotomy

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Speaker 5: of you know, all these people from the outside a

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Speaker 5: railing against government are now in key positions and you

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Speaker 5: have to deliver.

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Speaker 6: There's a lot of tape on cash Betel Bongino, jd

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Speaker 6: Vance talking about this list and how they're going to

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Speaker 6: expose it, and those things don't go away automatically. I'll

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Speaker 6: be very curious to see how they managed to do this. CC.

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Speaker 6: I think you might be onto something there, Laura. It's

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Speaker 6: great to have you back.

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Speaker 2: Laura Davison helps to run our coverage here in Washington,

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Speaker 2: our deputy bureau chief at Bloomberg, and always great to

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Speaker 2: spend some time. Well, we can pull her away from

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Speaker 2: the desk. Producer James is back today. Did I tell

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Speaker 2: you that America's producer is back with us? We'll have

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Speaker 2: much more straight ahead as we consider the impact of

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Speaker 2: these Russia sanctions if they were in fact implemented, not

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Speaker 2: just sanctions, but secondary sanctions that could ricochet around the world.

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Speaker 2: Our conversation ahead with Max Berg at csis coming up

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Speaker 2: on Bloomberg.

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Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

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Speaker 1: us live weekdays at noon and five pm Eastern on

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Speaker 1: Apple Cocklay and Android Auto with the Bloomberg Business app.

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Speaker 1: You can also listen live on Amazon Alexa from our

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Speaker 1: flagship New York station. Just say Alexa played Bloomberg eleven

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Speaker 1: thirty with.

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Speaker 2: Big thanks to c c cherandoff Justin Milner and Elizabeth

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Speaker 2: Severn for helping us out last week while producer James

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Speaker 2: was off golfing. He's back with us today here the

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Speaker 2: nation's capital, and we were raring to go with.

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Speaker 6: News coming from the White House.

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Speaker 2: We started early today Secretary General at NATO in the

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Speaker 2: Oval Office, President Trump talking about Ukraine as promised, this

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Speaker 2: is going to Cary. Is largely through the day here

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Speaker 2: in the newsflow. As lawmakers in the Senate Lindsay Graham

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Speaker 2: and John Thune for that matter, craft a sanctions package

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Speaker 2: against Russia. The President's tapping the brakes on this. He says,

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Speaker 2: fifty days. Give Vladimir Putin fifty days to cut a deal,

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Speaker 2: and then we'll talk about sanctions. That, of course has

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Speaker 2: been on the table for weeks now, the President even

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Speaker 2: altering the language in that sanctions legislation before it ever sees.

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Speaker 6: The light of day.

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Speaker 2: But it looks like the news today is about weapons specifically.

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Speaker 2: That's why the NATO boss was in the Oval Office,

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Speaker 2: Mark Rude, sitting next to Donald Trump as he announced

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Speaker 2: this plan. Something we touched on last week. If you

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Speaker 2: listen to this program, you might have seen this coming.

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Speaker 2: A deal in which American weapons get to Ukraine. But

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Speaker 2: we don't go to Capitol Hill and spend a bunch

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Speaker 2: of money to do it. They'll be bought by NATO,

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Speaker 2: from the US, from US contractors. In some cases European

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Speaker 2: countries will send their own weapons and will backfill them.

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Speaker 2: But in the end, our NATO allies will pay for this.

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Speaker 2: Here's Donald Trump speaking earlier about the Patriot missile batteries

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Speaker 2: that are on the way to Ukraine.

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Speaker 4: Thank you everything.

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Speaker 3: It's patriots, it's all of them. It's a full compliment

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Speaker 3: with the battery issue.

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Speaker 6: And when do you expect it to write any Ukraincer.

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Speaker 3: Well, we're going to have some come very soon, within

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Speaker 3: days actually. So a couple of the countries that have

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Speaker 3: Patriots are going to swap over and we'll replace the

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Speaker 3: Patriots where the ones they have, and Matt will coordinate

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Speaker 3: with NATO.

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Speaker 4: But so it's going to be they're going to start

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Speaker 4: a arriving version.

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Speaker 2: This was just last hour at the White House. As

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Speaker 2: we bring the voice of Max Bergman to this story,

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Speaker 2: who is director of the Europe, Russia and Eurasia program

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Speaker 2: at CSIS, the Center for Strategic and International Studies.

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Speaker 6: Max.

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Speaker 2: It's great to have you, and I'm curious to hear

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Speaker 2: more about your research into the impact of sanctions and

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Speaker 2: secondary sanctions on Russia and other countries around the world.

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Speaker 2: I wonder your thoughts initially though, on this deal to

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Speaker 2: continue providing weapons without going back to cong risk with

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Speaker 2: an ask, is this a smart angle for the White

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Speaker 2: House to get NATO involved financially as we heard today.

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Speaker 8: Well, I think it's good news, especially for Ukraine. I

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Speaker 8: think we should be clear about what the baseline here was.

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Speaker 8: You know, the administration a week or so ago announced

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Speaker 8: that it was going to suspend deliveries of Patriot missile

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Speaker 8: systems to Ukraine. These are vital to protecting Ukrainian civilians,

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Speaker 8: and right now it just looks like the White House

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Speaker 8: is sort of turning that back on and that future

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Speaker 8: deliveries then are going to be paid for by the Europeans.

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Speaker 8: But really a lot of this money had already been

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Speaker 8: paid for by the Biden administration, and what we're looking

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Speaker 8: at are just sort of the deliveries of future systems.

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Speaker 8: But I think what it does represent is kind of

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Speaker 8: a real shift in the burden of supporting Ukraine from

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Speaker 8: the United States to Europe, where the Europeans effectively pay

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Speaker 8: us to provide weapons that we were previously providing. At

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Speaker 8: the very least, it is a good thing for Ukraine.

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Speaker 8: Someone is going to pay for this. It looks like

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Speaker 8: you're up and that the supply of very precious Patriot

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Speaker 8: missile systems will continue to flow to Ukraine, which is

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Speaker 8: really vital for their security.

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Speaker 2: I'm glad you mentioned these patriot missile systems use the

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Speaker 2: word precious. How many of these do we have? Because

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Speaker 2: when weapons to Ukraine were halted by the Defense Secretary

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Speaker 2: and another official in the Pentagon a couple of weeks ago,

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Speaker 2: that was the justification that we've run out of stuff

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Speaker 2: like this.

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Speaker 8: Yeah, and part of it is connected to events in

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Speaker 8: the Middle East, where the US has used a lot

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Speaker 8: of Patriot missile missiles interceptors to shoot down Iranian drones

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Speaker 8: and other missiles. And every winter it has been a

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Speaker 8: big test for the United States about whether it could

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Speaker 8: supply Ukraine with enough air defense to get through because

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Speaker 8: Russia started targeting Ukrainian power plants and other facilities. And

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Speaker 8: there are some reports that the US is really low

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Speaker 8: in stockpiles, perhaps down LEWBO of fifty percent. And this

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Speaker 8: is a big problem, and it's a big problem for

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Speaker 8: our defense industrial sector that really can't produce enough. And

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Speaker 8: there's just been big orders by the US Army to

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Speaker 8: try to ramp up production of these missile interceptors used

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Speaker 8: by the Patriot system. So this is a problem. It

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Speaker 8: has been a problem throughout this war that not only

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Speaker 8: does Ukraine need a lot, but that aren't defense industrial

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Speaker 8: base in Europe's defense industrial base can't really meet the

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Speaker 8: mark in terms of production.

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Speaker 2: Really makes you wonder Max how many years we are

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Speaker 2: going to have this conversation for it's just endless and

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Speaker 2: everyone seems to know that it's something that's badly needed,

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Speaker 2: yet we never get down to actually increasing the capacity

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Speaker 2: of the DIB as they call it. I know that

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Speaker 2: your expertise, though, is in the sanctions package that we're

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Speaker 2: talking about. Your economic acumen here in the research that

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Speaker 2: you've done is something that I'd like to ask you about,

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Speaker 2: because sanctions are one thing, and that's another bit secondary

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Speaker 2: sanction something else. We talk about a lot, but we

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Speaker 2: never quite get to. This was on the tape for

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Speaker 2: the Balance of the Biden administration. But we're looking at

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Speaker 2: some pretty hefty numbers here, whether it's one hundred percent

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Speaker 2: or five hundred percent max. What would this mean for

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Speaker 2: the likes of India or other countries doing business with Russia.

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Speaker 8: Well, it could be really significant. And you know, the

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Speaker 8: President is going about secondary sanctions in sort of a

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Speaker 8: different way by using terraffs as opposed to sanctioning the

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Speaker 8: companies or countries that are then acting as workarounds for

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Speaker 8: the main sanctions target. What's happened for Russia is that

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Speaker 8: the Russian oil market oil sector has been diverted to

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Speaker 8: India and China in particular, and the United States has

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Speaker 8: been very reticent in particular to sanctioned India. We are

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Speaker 8: trying to develop close ties with India, we see India

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Speaker 8: as a strong potential partner visa v. China, and we've

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Speaker 8: also been reticent in some ways to go after a

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Speaker 8: number of Chinese banks and other Chinese entities. So I think,

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Speaker 8: you know, with this tariff play, we'll see it could

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Speaker 8: have real ramifications, I think for Russia's oil sector, but

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Speaker 8: it would also have real implications for the United States

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Speaker 8: bilateral relations and the thing we have to remember, is

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Speaker 8: part of what the Biden administration was trying to do

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Speaker 8: was to keep Russian oil on the global market. We

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Speaker 8: wanted Russia to take a haircut in terms of how

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Speaker 8: much profit it was getting in terms of sales. But

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Speaker 8: we didn't really have a problem with Russia selling oil.

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Speaker 8: We just wanted to sell it at a haircut. Means,

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Speaker 8: we wanted Russian oil on the market to keep global

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Speaker 8: prices low. The Trump administration, i think, is taking a

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Speaker 8: bit more of a blunt approach, and so we'll see

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Speaker 8: if this begins to really lead to a spike in

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Speaker 8: oil prices.

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Speaker 6: What would this mean for China as well?

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Speaker 8: Max Well, I think what we've seen is that China

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Speaker 8: has means of retaliating, so it could lead to an

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Speaker 8: escalation of the US China trade war, which has sort

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Speaker 8: of already been rekindled. China has demonstrated its willingness to

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Speaker 8: use rare earths and other things to hit back at

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Speaker 8: the United States. So, you know, China does recognize that

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Speaker 8: it's oil dependence, its dependence on Russia as well as

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Speaker 8: the Middle East, represents a real strategic vulnerability. It's part

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Speaker 8: of the reason why they are going a whole hog

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Speaker 8: into renewables and clean technology. But for China, I think

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Speaker 8: this could be really significant if the US does impose this,

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Speaker 8: and I think we would see China try to retaliate

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Speaker 8: against US. So I don't think it would just be

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Speaker 8: we set these China stops buying Russian oil and moves on.

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Speaker 8: I think it would try to find other ways of responding.

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Speaker 4: Well.

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Speaker 2: So I guess what comes out the other end of

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Speaker 2: the pipe here if this is in place for some time, Max.

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Speaker 2: Are we on the phone with Opek about how this

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Speaker 2: is going to work and what would it mean for

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Speaker 2: crude oil prices?

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Speaker 8: Yeah, I think there's some real potential that we get

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Speaker 8: on the phone with the Saudis and others in the

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Speaker 8: Gulf States and say, hey, we want you to offset

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Speaker 8: some of the shock that this could cause. We want

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Speaker 8: you to open up the taps put more oil on

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Speaker 8: the market. We shall see if.

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Speaker 4: They do that.

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Speaker 8: The Biden administration, I think, didn't feel that it had

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Speaker 8: the political relationship to actually do that. In the Saudis,

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Speaker 8: I don't think we're willing to. But with Trump maybe

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Speaker 8: it's different. I think the bigger broader question here, though,

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Speaker 8: is that Trump has not shown a lot of interest

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Speaker 8: in trying to really stick it to the Russians economically

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Speaker 8: or militarily. He has not demonstrated in the past a

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Speaker 8: lot of support for Ukraine. If that is shifting, the

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Speaker 8: question is how far does that shift. I think what

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Speaker 8: we've seen is a partial shift. US is now looks

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Speaker 8: like it's going to continue military supplies, but there's no

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Speaker 8: indication Trump is going to go to Congress try to

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Speaker 8: ramp up our production for Ukraine. And then the economic

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Speaker 8: question is how much of an economic hit is the

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Speaker 8: president willing to absorb to stick it to the Russians

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Speaker 8: in support of Ukraine. There's limits to what the Biden

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Speaker 8: administration would do, so I do have some doubts about

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Speaker 8: how far we are willing to go, and I think

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Speaker 8: Russia may just try to call our bluff here, and

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Speaker 8: then it'll be really interesting when the fifty or sixty

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Speaker 8: days expire whether that prompts sort of a strong US reaction.

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Speaker 8: But there could be a good outcome if we just

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Speaker 8: simply get India to lower what lower them out it's buying,

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Speaker 8: and maybe there's some way to negotiate something with the

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Speaker 8: Indians to reduce the amount of Russian oil and other

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Speaker 8: Russian military goods and things that it's purchasing.

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Speaker 2: That'd be very trumpy, wouldn't it. You put five hundred

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Speaker 2: percent tariffs on the line or sanctions on the line,

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Speaker 2: and in the meantime you just crank back India a

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Speaker 2: little bit to try to increase the pain, knowing that

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Speaker 2: those sanctions were never going to take effect.

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Speaker 6: Max. What happens over the next fifty days.

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Speaker 8: Well, I think what happens over the next fifty days

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Speaker 8: is Russia keeps pummeling Ukraine. What I think we're seeing

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Speaker 8: with the statement on especially the arms deliveries, is simply

441
00:20:49,920 --> 00:20:53,000
Speaker 8: the preservation of the status quo in terms of the

442
00:20:53,040 --> 00:20:55,720
Speaker 8: West is going to keep supporting Ukraine and supplying Ukraine

443
00:20:55,800 --> 00:20:59,480
Speaker 8: with supplies. Now that's not quite enough. And Russia thinks

444
00:20:59,480 --> 00:21:01,560
Speaker 8: it can win this war now and is going on

445
00:21:01,720 --> 00:21:04,320
Speaker 8: another military offensive and has been going on a military

446
00:21:04,359 --> 00:21:06,520
Speaker 8: offensive because it sees a light at the end of

447
00:21:06,560 --> 00:21:09,600
Speaker 8: the tunnel of the US sort of drawing back support. Now,

448
00:21:09,800 --> 00:21:12,119
Speaker 8: what I hope happens over the next fifty days is

449
00:21:12,160 --> 00:21:15,720
Speaker 8: that there's a ramp up on European efforts to support

450
00:21:15,800 --> 00:21:18,919
Speaker 8: Ukraine militarily. I think that's happening, But then also that

451
00:21:18,960 --> 00:21:22,320
Speaker 8: the US begins to negotiate with India and perhaps even

452
00:21:22,359 --> 00:21:26,320
Speaker 8: with China to reduce oil or oil flows from Russia

453
00:21:26,359 --> 00:21:29,560
Speaker 8: in India, and that maybe there's talks with the Saudi's

454
00:21:29,560 --> 00:21:33,600
Speaker 8: about offsetting any cuts to Russian Russian supplies on the

455
00:21:33,600 --> 00:21:35,960
Speaker 8: global market. I would hope to see that. I'm not

456
00:21:35,960 --> 00:21:38,080
Speaker 8: sure we're going to see all of that, but I

457
00:21:38,119 --> 00:21:41,720
Speaker 8: think we may see some progress perhaps with India. That's

458
00:21:41,720 --> 00:21:42,560
Speaker 8: at least my hope.

459
00:21:43,520 --> 00:21:46,400
Speaker 6: There you have it. Remember this conversation in fifty days

460
00:21:46,400 --> 00:21:47,400
Speaker 6: when this comes around. Max.

461
00:21:47,440 --> 00:21:49,520
Speaker 2: It's great to see you. Thank you for the insights today.

462
00:21:49,560 --> 00:21:53,720
Speaker 2: Max Bergman CSIS. He's director of the Europe, Russia and

463
00:21:53,760 --> 00:21:57,520
Speaker 2: Eurasia Program at the Center for Strategic and International Studies.

464
00:21:58,160 --> 00:22:01,280
Speaker 2: Just a stable of smart people ATIS who we tap

465
00:22:01,320 --> 00:22:05,000
Speaker 2: on a regular basis. Here clarifying the remarks on tariffs

466
00:22:05,080 --> 00:22:09,080
Speaker 2: versus sanctions, here Howard Lutten at the Commerce Secretary saying

467
00:22:09,280 --> 00:22:13,560
Speaker 2: that it's economic sanctions. You can also make an economic

468
00:22:13,600 --> 00:22:16,119
Speaker 2: penalty if I catch you doing it, then you have

469
00:22:16,160 --> 00:22:18,080
Speaker 2: to pay. You can do tariffs, you can do sanctions.

470
00:22:18,119 --> 00:22:20,280
Speaker 2: Those are both tools in the toolbox. So I guess

471
00:22:20,880 --> 00:22:24,199
Speaker 2: those are interchangeable. Now you learn something every day on

472
00:22:24,240 --> 00:22:27,840
Speaker 2: this program.

473
00:22:28,119 --> 00:22:31,600
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch

474
00:22:31,680 --> 00:22:35,080
Speaker 1: us live weekdays at noon and five pm Eastern on Apple,

475
00:22:35,160 --> 00:22:38,520
Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. Listen

476
00:22:38,600 --> 00:22:41,720
Speaker 1: on demand wherever you get your podcasts, or watch us

477
00:22:41,720 --> 00:22:44,000
Speaker 1: live on YouTube.

478
00:22:44,359 --> 00:22:46,439
Speaker 9: And we want to get more on these weapons systems

479
00:22:46,480 --> 00:22:49,520
Speaker 9: that are going to be heading Ukraine's way, whatever the

480
00:22:49,600 --> 00:22:52,080
Speaker 9: route is, of course, this route through NATO. And turn

481
00:22:52,160 --> 00:22:54,639
Speaker 9: to retired Rear Admiral Mark Montgomery, who's joining us now

482
00:22:54,640 --> 00:22:57,160
Speaker 9: here on Bloomberg TV and radio. He's a former Destroyer

483
00:22:57,200 --> 00:23:00,480
Speaker 9: squadron commander and now senior fellow at the Foundation for

484
00:23:00,640 --> 00:23:04,239
Speaker 9: Defense of Democracies. Admiral, thank you for being here on

485
00:23:04,320 --> 00:23:08,160
Speaker 9: Balance of Power. When we consider these patriot missile systems themselves,

486
00:23:08,160 --> 00:23:10,560
Speaker 9: the idea that the US will be backfilling countries that

487
00:23:10,640 --> 00:23:13,880
Speaker 9: send these systems to Ukraine, how quickly can we actually

488
00:23:13,920 --> 00:23:17,359
Speaker 9: do so? What kind of capacity exists in this regard

489
00:23:17,400 --> 00:23:19,000
Speaker 9: right now?

490
00:23:19,440 --> 00:23:21,359
Speaker 4: Well, thanks for having me. You know, this is the

491
00:23:21,400 --> 00:23:22,000
Speaker 4: real challenge.

492
00:23:22,040 --> 00:23:26,480
Speaker 7: That the president's language was a little nonspecific, as was

493
00:23:27,320 --> 00:23:30,199
Speaker 7: Rutza's and conflicting, but I will tell you we can

494
00:23:30,280 --> 00:23:31,480
Speaker 7: get them there quickly.

495
00:23:31,520 --> 00:23:33,320
Speaker 4: Through either the two routes that we're mentioned.

496
00:23:33,320 --> 00:23:36,880
Speaker 7: The one route of the Europeans transfer their pack two

497
00:23:36,960 --> 00:23:41,280
Speaker 7: that's a lower level type of patriot missile to the Ukrainians.

498
00:23:41,280 --> 00:23:43,480
Speaker 4: What the Ukrainians could use very easily.

499
00:23:43,320 --> 00:23:45,880
Speaker 7: And then order backfill and order them from the United

500
00:23:45,920 --> 00:23:51,040
Speaker 7: States to refill the European armory, or the United States

501
00:23:51,080 --> 00:23:52,160
Speaker 7: could transfer.

502
00:23:51,720 --> 00:23:54,760
Speaker 4: Them and then NATO pays European.

503
00:23:54,359 --> 00:23:56,960
Speaker 7: Countries pay the United States for the United States to

504
00:23:57,000 --> 00:23:57,960
Speaker 7: replenish itself.

505
00:23:58,240 --> 00:23:59,760
Speaker 4: Either of those methods gets.

506
00:23:59,560 --> 00:24:02,399
Speaker 7: Them their much quicker than a Ukrainian order from the

507
00:24:02,520 --> 00:24:04,720
Speaker 7: United you know, from a defense industrial based country, which

508
00:24:04,720 --> 00:24:07,200
Speaker 7: would be years. Either of these cases, he says, could

509
00:24:07,200 --> 00:24:11,520
Speaker 7: be weeks to months to have missiles and batteries transferring

510
00:24:11,600 --> 00:24:12,520
Speaker 7: to Ukraine.

511
00:24:13,760 --> 00:24:15,840
Speaker 2: Admiral, We're really glad to have you with us today

512
00:24:15,840 --> 00:24:20,280
Speaker 2: because before you were on the USS Nimics, the USS mccampbell,

513
00:24:20,400 --> 00:24:24,040
Speaker 2: the USS Elliott, the USS Bainbridge, and I can keep

514
00:24:24,080 --> 00:24:27,080
Speaker 2: going the Teddy Roosevelt. You were on the National Security

515
00:24:27,119 --> 00:24:30,040
Speaker 2: Council at the White House late nineties, and when we

516
00:24:30,080 --> 00:24:32,440
Speaker 2: look back a couple of years here, how do we

517
00:24:32,800 --> 00:24:35,760
Speaker 2: rationalize the fact that we've been having this conversation about

518
00:24:35,760 --> 00:24:39,880
Speaker 2: our defense industrial base for decades, and we really don't

519
00:24:39,920 --> 00:24:42,080
Speaker 2: have a greater capacity to show for it. Was this

520
00:24:42,200 --> 00:24:44,960
Speaker 2: not something but you were talking about that many years

521
00:24:45,000 --> 00:24:46,200
Speaker 2: ago inside the White House.

522
00:24:48,000 --> 00:24:48,560
Speaker 4: Exactly right.

523
00:24:48,680 --> 00:24:51,879
Speaker 7: I think we've got about a twenty year deficit, particularly

524
00:24:51,960 --> 00:24:53,719
Speaker 7: in our munitions, and that's what we're talking about here.

525
00:24:53,720 --> 00:24:57,280
Speaker 7: Whether it's Patriot missiles here, the standard missiles the Navy

526
00:24:57,359 --> 00:25:01,560
Speaker 7: was using to shoot down Huti rebel cruise missiles, or

527
00:25:01,600 --> 00:25:06,000
Speaker 7: the offensive weapons that we were using against the Huti's

528
00:25:06,119 --> 00:25:09,480
Speaker 7: or have used in other locales, we were running at

529
00:25:09,480 --> 00:25:12,439
Speaker 7: about twenty five percent of the proper level of munition

530
00:25:12,520 --> 00:25:14,600
Speaker 7: to order. In other words, when we needed four, we

531
00:25:14,720 --> 00:25:17,159
Speaker 7: ordered one. When you do that over twenty years, you

532
00:25:17,240 --> 00:25:20,280
Speaker 7: really create a deficit, and worse, you tell the defense

533
00:25:20,280 --> 00:25:22,919
Speaker 7: industrial based companies I'm not going to do major orders

534
00:25:23,160 --> 00:25:26,360
Speaker 7: and they reduce their ability to produce. So what you've

535
00:25:26,359 --> 00:25:29,440
Speaker 7: seen over the last three years are pretty consistent. From

536
00:25:29,480 --> 00:25:33,160
Speaker 7: the supplemental, the Ukraine supplemental, Taiwan supplemental a couple years ago,

537
00:25:33,160 --> 00:25:36,480
Speaker 7: this year's budget, and next year's budget. Actual investments in

538
00:25:36,480 --> 00:25:39,320
Speaker 7: the defensive dustrial base where the United States is contributing

539
00:25:39,400 --> 00:25:42,960
Speaker 7: to defensive dougtrial based companies like Lockheed and Raytheon and

540
00:25:43,000 --> 00:25:46,719
Speaker 7: Northrill Grunman to expand their ability their capacity to produce

541
00:25:46,960 --> 00:25:49,720
Speaker 7: they obviously contribute, and so we are beginning to grow

542
00:25:49,800 --> 00:25:53,800
Speaker 7: our capacity. But this is a twenty year deficit. The

543
00:25:53,840 --> 00:25:56,720
Speaker 7: only deficit that's worse is the European one, which almost.

544
00:25:56,480 --> 00:25:57,119
Speaker 4: Went to zero.

545
00:25:59,280 --> 00:26:01,800
Speaker 9: Well, and now where Europeans are trying to step up

546
00:26:02,080 --> 00:26:04,800
Speaker 9: in their own defense spending category, which is one of

547
00:26:04,800 --> 00:26:07,320
Speaker 9: the main aims of this administration. That was a point

548
00:26:07,320 --> 00:26:10,440
Speaker 9: emphasized by a Secretary General Ruta in the Oval Office

549
00:26:10,480 --> 00:26:13,119
Speaker 9: with the President earlier. As we consider the kind of

550
00:26:13,160 --> 00:26:15,320
Speaker 9: allied capacity, if you will, I also would like to

551
00:26:15,320 --> 00:26:18,639
Speaker 9: ask you, Admiral, about Russia's capacity and specifically the supply

552
00:26:18,680 --> 00:26:22,080
Speaker 9: of weapons that Russia is still getting from countries like

553
00:26:22,680 --> 00:26:26,560
Speaker 9: North Korea. How should we be considering Russia's ability to

554
00:26:26,600 --> 00:26:30,680
Speaker 9: continue to replenish its own stocks, continue striking Ukraine often

555
00:26:30,760 --> 00:26:34,200
Speaker 9: civilian targets, and how it's matched against the assistance Ukraine

556
00:26:34,280 --> 00:26:35,920
Speaker 9: is now getting in terms of air defenses.

557
00:26:37,160 --> 00:26:40,240
Speaker 7: That's a great question, Kelly, because you're exactly right, Ukraine

558
00:26:40,240 --> 00:26:44,359
Speaker 7: is fighting four countries Russia North Korea, Iran, and China,

559
00:26:44,400 --> 00:26:48,080
Speaker 7: and in fact, Russia today is firing more artillery from

560
00:26:48,160 --> 00:26:50,960
Speaker 7: North Korea than their own. In other words, the majority

561
00:26:51,000 --> 00:26:53,359
Speaker 7: of the artilleria being used by Russia as North Korean.

562
00:26:53,560 --> 00:26:55,399
Speaker 4: North Korea gave about six.

563
00:26:55,200 --> 00:26:59,720
Speaker 7: Million rounds, which is twenty years of US production to

564
00:26:59,840 --> 00:27:05,280
Speaker 7: the Russians. Iran has built a Shahed drone factory in

565
00:27:06,160 --> 00:27:09,000
Speaker 7: Russia after giving them thousands of their own Shaheed drones

566
00:27:09,000 --> 00:27:11,560
Speaker 7: are selling them. They now have a factory, they're producing it.

567
00:27:11,720 --> 00:27:14,600
Speaker 7: That's what's hammering the Ukrainian cities every night. And the

568
00:27:14,600 --> 00:27:18,320
Speaker 7: third thing is China has been backstopping the economy with increase,

569
00:27:18,400 --> 00:27:21,000
Speaker 7: you know, with increases in imports and exports, but equally

570
00:27:21,040 --> 00:27:26,000
Speaker 7: importantly providing the microelectronics that are used in Russian cruise

571
00:27:26,040 --> 00:27:29,400
Speaker 7: and ballistic missiles. So all three of these countries, as

572
00:27:29,440 --> 00:27:32,960
Speaker 7: access of authoritarians, are supporting the fourth Russia in this fight,

573
00:27:33,359 --> 00:27:35,560
Speaker 7: and that's who Ukraine's been going against. So that's probably

574
00:27:35,560 --> 00:27:37,960
Speaker 7: why it's appropriate for the United States and Europe to

575
00:27:38,080 --> 00:27:41,800
Speaker 7: assist with at least with equipment but not forces.

576
00:27:42,760 --> 00:27:45,119
Speaker 6: It's incredible to consider four countries, you know.

577
00:27:45,119 --> 00:27:49,520
Speaker 2: Bloomberg interviewed the head of Ukrainian Military intelligence, Admiral who

578
00:27:49,560 --> 00:27:52,320
Speaker 2: said North Korea is now supplying as much as forty

579
00:27:52,400 --> 00:27:57,360
Speaker 2: percent of Russia's ammunition in this war. You mentioned the

580
00:27:57,400 --> 00:28:02,720
Speaker 2: shells that we're having trouble manufacturing is quickly, but they're

581
00:28:03,240 --> 00:28:05,600
Speaker 2: prepared at least to send a lot of other stuff,

582
00:28:05,760 --> 00:28:10,840
Speaker 2: ballistic missiles, artillery systems. Russia of course providing money and

583
00:28:10,920 --> 00:28:14,320
Speaker 2: technology to North Korea in return. What's the weapon system

584
00:28:14,320 --> 00:28:16,959
Speaker 2: you're most worried about? And could we see them include

585
00:28:17,040 --> 00:28:18,760
Speaker 2: nukes coming from Pyongyang?

586
00:28:20,440 --> 00:28:24,080
Speaker 7: So well, certainly not nukes because you know not that

587
00:28:24,119 --> 00:28:25,840
Speaker 7: Russia would use them, but they have their own.

588
00:28:25,760 --> 00:28:26,920
Speaker 4: Tactical nukes already.

589
00:28:26,960 --> 00:28:28,800
Speaker 7: But I'm glad you mentioned that because that's something we

590
00:28:28,840 --> 00:28:32,800
Speaker 7: should always be sensitive too. But the North Korean thing

591
00:28:32,880 --> 00:28:35,600
Speaker 7: that the North Korean weapons that bother me the most are,

592
00:28:35,600 --> 00:28:38,160
Speaker 7: in fact, the artillery arounds are exactly right. But what

593
00:28:38,240 --> 00:28:40,480
Speaker 7: bothers me even more than those are those Shahed drones.

594
00:28:40,840 --> 00:28:43,800
Speaker 7: Shah edrones from Iran and the factory that was built

595
00:28:43,800 --> 00:28:46,560
Speaker 7: in Russia are really putting pressure on the on the

596
00:28:46,680 --> 00:28:50,440
Speaker 7: Ukrainian air defense system and they're causing civilian casuties and

597
00:28:50,720 --> 00:28:54,040
Speaker 7: damage to critical instructure. You know energy, water, you know

598
00:28:54,080 --> 00:28:57,600
Speaker 7: the financial systems of Ukraine or hit every night, and

599
00:28:57,680 --> 00:29:01,160
Speaker 7: so to me, that Iranian drone and that North Korean

600
00:29:02,240 --> 00:29:07,480
Speaker 7: artillery are really making a difference and hurting the Ukrainians well.

601
00:29:07,480 --> 00:29:10,280
Speaker 9: And as you point to the targets that Russia is

602
00:29:10,360 --> 00:29:14,480
Speaker 9: taking amat in Ukraine, obviously part of the objective here, Admiral,

603
00:29:14,600 --> 00:29:18,680
Speaker 9: is to where on Ukrainian morale do you sense that

604
00:29:18,720 --> 00:29:22,080
Speaker 9: we reach a point where that is effective, where Ukraine's

605
00:29:22,160 --> 00:29:25,640
Speaker 9: kind of desire to keep prosecuting or defending itself in

606
00:29:25,680 --> 00:29:28,360
Speaker 9: this war is going to diminish as Russia being effective

607
00:29:28,400 --> 00:29:29,000
Speaker 9: in that regard.

608
00:29:30,240 --> 00:29:31,640
Speaker 4: So I don't think so.

609
00:29:31,680 --> 00:29:33,880
Speaker 7: And here's why I say that I go to Ukraine

610
00:29:33,960 --> 00:29:35,800
Speaker 7: every quarter for a couple of weeks to do training

611
00:29:35,840 --> 00:29:38,320
Speaker 7: with their military and their general staff, and I am

612
00:29:38,360 --> 00:29:41,840
Speaker 7: convinced the Ukrainians won't lose.

613
00:29:42,440 --> 00:29:43,160
Speaker 4: That doesn't mean.

614
00:29:43,040 --> 00:29:44,920
Speaker 7: They can push Russia out, it doesn't mean they can

615
00:29:44,920 --> 00:29:48,480
Speaker 7: recapture Crimea, but they won't lose. They're losing incrementally a

616
00:29:48,560 --> 00:29:52,600
Speaker 7: kilometer here, a kilometer there of land, but they will.

617
00:29:52,720 --> 00:29:56,360
Speaker 7: They have the societal resilience to stay in this fight

618
00:29:56,440 --> 00:29:59,400
Speaker 7: and win. They just need access to weapons and that's

619
00:29:59,400 --> 00:30:02,760
Speaker 7: what President Trump gave them today. He gave them access

620
00:30:02,800 --> 00:30:05,120
Speaker 7: to weapons systems that they need. The one thing I

621
00:30:05,160 --> 00:30:07,240
Speaker 7: wish he had gone one step further and give them

622
00:30:07,280 --> 00:30:10,320
Speaker 7: access to some of our offensive weapons again the attack

623
00:30:10,400 --> 00:30:14,400
Speaker 7: them's long range artillery. That would have been great because

624
00:30:14,440 --> 00:30:17,320
Speaker 7: then they could they could break up Russian formations when

625
00:30:17,320 --> 00:30:21,040
Speaker 7: they're coming together in Russia vice waiting till they're very

626
00:30:21,080 --> 00:30:22,520
Speaker 7: close to the Ukrainian lines.

627
00:30:22,720 --> 00:30:25,719
Speaker 2: Yeah, we want to stay in touch with you, Admiral.

628
00:30:25,760 --> 00:30:28,120
Speaker 2: Let us know when you're going back to Ukraine. Retired

629
00:30:28,160 --> 00:30:33,000
Speaker 2: Rear Admiral Mark Montgomery, Senior Fellow the Foundation for Defense

630
00:30:33,080 --> 00:30:35,800
Speaker 2: of Democracies. We thank you for the insights only here

631
00:30:35,920 --> 00:30:43,320
Speaker 2: on Bloomberg. Thanks for listening to the Balance of Power podcast.

632
00:30:43,920 --> 00:30:47,040
Speaker 2: Make sure to subscribe if you haven't already, at Apple, Spotify,

633
00:30:47,160 --> 00:30:49,720
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634
00:30:49,800 --> 00:30:53,040
Speaker 2: us live every weekday from Washington, DC at noontime Eastern

635
00:30:53,320 --> 00:30:54,719
Speaker 2: at Bloomberg dot com