WEBVTT - Pressure Is Mounting on Iran's Regime

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Protests over economic conditions in Iran have roiled the country

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<v Speaker 2>for weeks. Anti government protests in Iran have entered a

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<v Speaker 2>thirteen day as the country faces economic.

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<v Speaker 1>Terms nationwide movement that has now swept through all thirty

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<v Speaker 1>one provinces.

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<v Speaker 2>The death toll in Iran may be in the thousands,

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<v Speaker 2>higher than previously feared. And while it's not the first

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<v Speaker 2>time Iran's regime has faced massive demonstrations, this time feels different.

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<v Speaker 1>What was unique about it, I think, is that the

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<v Speaker 1>sheer desperation of the population brought all segments of the

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<v Speaker 1>society together.

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<v Speaker 2>Olivyas is the Iran Project director for the International Crisis Group,

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<v Speaker 2>an independent policy research organization that tracks conflicts around the world,

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<v Speaker 2>and he says, these protests in Iran are widespread.

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<v Speaker 1>Rich and poor, old and young, secular and pious, and

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<v Speaker 1>also it's spread geographically in places that we had not

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<v Speaker 1>seen protests before, some of the regime's strongholds, including rural areas,

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<v Speaker 1>and then again it's quickly spread to bigger cities.

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<v Speaker 2>What also sets these demonstrations apart is the kind of

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<v Speaker 2>support they're getting from a sitting US president. In a

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<v Speaker 2>social media post, the Commander in chief said, quote, we

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<v Speaker 2>are locked and loaded and ready to go if Iran

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<v Speaker 2>shoots and violently kills peaceful protesters. The Iran regime was

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<v Speaker 2>in a precarious position before this. Israel and the US

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<v Speaker 2>attacked Iran in June. The country's currency, the Iranian reale,

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<v Speaker 2>has weakened dramatically in recent months.

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<v Speaker 1>And so you put all of those things together, it's

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<v Speaker 1>created not just a national sense of desperation, but also

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<v Speaker 1>a sense of finality that we're getting close to a

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<v Speaker 1>moment of absolute deadlock across the board. The regime was

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<v Speaker 1>and is failing, and the people, I think were just

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<v Speaker 1>fed up with it.

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<v Speaker 2>I'm David Gura, and this is the big take from

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<v Speaker 2>Bloomberg News today on the show, weeks of protests in

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<v Speaker 2>Iran and the possibility of international support threatened the Iranian regime,

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<v Speaker 2>How we got here and what could happen next. Iran

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<v Speaker 2>has been led by a religious authoritarian regime since nineteen

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<v Speaker 2>seventy nine, and it has faced protests since then, but

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<v Speaker 2>they've always been quashed by Iran's military and security forces,

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<v Speaker 2>which are aligned with the regime. Olivayaz, the Iran Project

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<v Speaker 2>director for the International Crisis Group, says, there is something

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<v Speaker 2>unique about the demonstrations that are currently taking place across Iran.

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<v Speaker 1>Iran is not unfamiliar with protests. This time, the trigger

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<v Speaker 1>was economic. The Iranian currency has lost about fifty percent

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<v Speaker 1>of its value in the course of the past few months,

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<v Speaker 1>ninety nine percent of his value in fact, since the

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<v Speaker 1>beginning of the revolution. And the economic downturn in the

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<v Speaker 1>past few weeks created a real crisis, and the merchants

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<v Speaker 1>in bazaar came to the streets protesting the market volatility.

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<v Speaker 1>I think they never imagined that they would unleash an

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<v Speaker 1>avalanche that basically covered the entire country very quickly and

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<v Speaker 1>fantastasized into an immediate demand for regime change. Now, of course,

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<v Speaker 1>we have seen this before. It usually takes maybe a

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<v Speaker 1>day or two for these protests to start spreading, but

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<v Speaker 1>this was almost immediate.

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<v Speaker 2>As you mentioned, in twenty twenty five, the Iranian real

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<v Speaker 2>slumped by about forty five percent against the US dollar.

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<v Speaker 2>We've seen this dramatic weakening. What accounts for that? Why

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<v Speaker 2>have we seen the currency depreciate so much?

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<v Speaker 1>Well, first of all, David, I think that it's the

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<v Speaker 1>accumulated impact of sanctions. Iran has been in a state

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<v Speaker 1>of stagflation for about fifteen years. Second is that the markets,

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<v Speaker 1>especially since last fall when the UN sanctions on Iran

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<v Speaker 1>were restored and it became clear that there's basically no

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<v Speaker 1>light at the end of the tunnel for getting any

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<v Speaker 1>sanctions relieved anytime soon, and so there's no economic reprieve

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<v Speaker 1>around the corner. There was some significant capital flight and

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<v Speaker 1>dimming of hopes and expectations in the market in Iran,

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<v Speaker 1>and I think all of these factors came together and

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<v Speaker 1>created a perfect economic storm that the government simply did

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<v Speaker 1>not have any answers to. The middle class was already

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<v Speaker 1>hollowed out after years of sanctions, corruption and mismanagement. But

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<v Speaker 1>the government was better at trying to look after his

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<v Speaker 1>own core constituents, the lower strata of the Iranian society.

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<v Speaker 1>But again, there was no cushion left now to try

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<v Speaker 1>to bail them out anymore.

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<v Speaker 2>How has their government responded to these protests, Well.

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<v Speaker 1>Look, these protests I think have had three phases. The

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<v Speaker 1>first phase was the Pesition administration trying to see if

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<v Speaker 1>there was a way to placate these protests by offering dialogue,

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<v Speaker 1>offering subsidies seven dollars to every Iranian and hoping that

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<v Speaker 1>it would go away. It did not work because the

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<v Speaker 1>problems are so much deeper and widespread to be alleviated

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<v Speaker 1>just with marginal reforms like this. And then the second

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<v Speaker 1>week we started to see the clampdown the usual mo

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<v Speaker 1>of the Islamic Republic, which is repress and carry on

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<v Speaker 1>refused reforms. It was really back to that playbook. And

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<v Speaker 1>then President Trump threatened to intervene, and I think that

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<v Speaker 1>served as a perverse incentive for the regime to try

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<v Speaker 1>to wrap up these protests before the US could move

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<v Speaker 1>military assets to the region. And this is when we saw,

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<v Speaker 1>coinciding with last weekend and run, a very brutal crackdown.

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<v Speaker 1>The regime brought down the iron fist with speed and

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<v Speaker 1>ferocity that we've never seen before. The number of fatalities

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<v Speaker 1>now ranges in a few thousands, tens of thousands of

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<v Speaker 1>people have been arrested.

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<v Speaker 2>We are just a few months from the war back

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<v Speaker 2>in June, and you had US and Israel attacking a

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<v Speaker 2>lot of a run in infrastructure, targeting scientists, military officials.

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<v Speaker 2>How is that shaping the way the regime is responding

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<v Speaker 2>to these protests well.

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<v Speaker 1>As I said, Iran has had experience with protests before,

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<v Speaker 1>but this is really once in a generation phenomenon that

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<v Speaker 1>the regime was dealing with, and I think that made

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<v Speaker 1>it feel that it is facing an existential angst for

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<v Speaker 1>its survival, and it resulted in its resort to brutality

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<v Speaker 1>the kind of which we have not seen in decades.

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<v Speaker 1>I think the fact that the regime believed that Israel

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<v Speaker 1>would not just try to undermin it through military and

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<v Speaker 1>kinetic actions or sabotage of its nuclear or military facilities,

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<v Speaker 1>but also through subversion, also through infiltration. And of course

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<v Speaker 1>we saw in the Dream Conflict an extraordinary degree of

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<v Speaker 1>intelligence penetration by Israel into the Iranian system and society,

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<v Speaker 1>and Israel was openly talking about trying to topple the regime.

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<v Speaker 1>So some of that fear was not paranoia, some of

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<v Speaker 1>it was justified based on past experience. So all of

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<v Speaker 1>this provided more ammunition for those within the system. We're

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<v Speaker 1>arguing that this should be nipped in the butt as

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<v Speaker 1>quickly as possible.

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<v Speaker 2>One tool the regime has at its disposal is control

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<v Speaker 2>of the Internet, and we've seen that happen here over

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<v Speaker 2>the last few weeks. I'm curious how that shaped our

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<v Speaker 2>understanding of this protest movement, and beyond that, the effect

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<v Speaker 2>that that's had on protesters' ability to organize.

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<v Speaker 1>Look, the regime has no answer to the legitimate grievances

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<v Speaker 1>of its population other than repression and shutting down the internet,

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<v Speaker 1>as it has done repeatedly in the past. It serves

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<v Speaker 1>multiple purposes. First of all, when the regime turns off

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<v Speaker 1>the lights, the world doesn't understand the scale and scope

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<v Speaker 1>of the atrocities committed until the regime has managed to

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<v Speaker 1>re establish control. Partly, this time around, we know about

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<v Speaker 1>what has happened because the regime actually broadcasted it itself

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<v Speaker 1>broadcasted on state television, and the regime did that in

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<v Speaker 1>order to instill fear in the hearts of the protesters.

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<v Speaker 1>Is also to prevent communication and coordination between the protesters

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<v Speaker 1>and to make sure that the images of bravery in

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<v Speaker 1>one city do not spill over and encourage and incentivize

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<v Speaker 1>other cities to come join the protest. And finally, it

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<v Speaker 1>is to prevent cyber attacks or covert operations, as we know,

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<v Speaker 1>to prevent internal forces from being able to coaliesten to

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<v Speaker 1>bigger masses that would be hard for the regime to

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<v Speaker 1>contain and control.

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<v Speaker 2>Elon Musk says he's going to make his Starlink Internet

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<v Speaker 2>service available for free to Iranians. Is that likely to

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<v Speaker 2>make any kind of a difference here?

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<v Speaker 1>So, look, there are some images and some information trickling

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<v Speaker 1>out of Iran because the blackout is about ninety nine percent,

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<v Speaker 1>so it's about one percent of Internet connection that is

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<v Speaker 1>still established, and part of that I think is coming

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<v Speaker 1>through Starlink. So it's a positive thing that Elon Musk

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<v Speaker 1>is doing, but it's still awfully insufficient. It is very

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<v Speaker 1>difficult to get a comprehensive and accurate image of what's

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<v Speaker 1>happening on the ground. I have not been able to

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<v Speaker 1>reach my own family in the past six stays. I

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<v Speaker 1>don't know how they're doing. The landlines, mobile phones, Internet,

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<v Speaker 1>all of it is down, and so it's really possible

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<v Speaker 1>to get hold of them.

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<v Speaker 2>Coming up. What President Trump has said about the United

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<v Speaker 2>States is support of the protesters and what could happen

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<v Speaker 2>if the protest movement or intervention from overseas topples the

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<v Speaker 2>Iranian regime. The protest movement in Iran is facing a

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<v Speaker 2>violent crackdown, including threats to kill popular opposition leaders and activists,

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<v Speaker 2>that has drawn international condemnation, and President Trump has offered

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<v Speaker 2>protesters his support. At an event in the Oval Office

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<v Speaker 2>on Wednesday, Trump said he'd heard the executions were called off.

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<v Speaker 3>We have involved by very important sources on the other side,

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<v Speaker 3>and they've said the killing this up and the executions

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<v Speaker 3>won't take place. There was supposed to be a lot

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<v Speaker 3>of executions today and that the executions won't take place.

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<v Speaker 2>Also asked about the possibility of US military action in Iran,

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<v Speaker 2>which he still won't rule out.

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<v Speaker 1>Does mean a military action is now off the table

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<v Speaker 1>against Iran?

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<v Speaker 3>Or We're going to watch and see what the process is.

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<v Speaker 2>I asked Alivayas, the Iran Project director for the International

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<v Speaker 2>Crisis Group, to unpack Trump's comments. In recent days, President

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<v Speaker 2>Trump has been a very vocal supporter of the protesters.

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<v Speaker 2>He's threatened to twenty five percent tariff on goods from

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<v Speaker 2>any country that trades with Iran, and he's also encouraged

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<v Speaker 2>protesters to keep going, keep protesting. He wrote on social

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<v Speaker 2>media this week, take over your institutions. In another post,

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<v Speaker 2>he wrote help is on its way, with no specifics

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<v Speaker 2>about what that means, and when reporters asked him about that,

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<v Speaker 2>the President declined to elaborate. What is the potential for

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<v Speaker 2>US involvement here and what could it look like as

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<v Speaker 2>you see it?

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<v Speaker 1>To be honest, it's anybody's guests, But there is a

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<v Speaker 1>range of options available to the president in the category

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<v Speaker 1>of non kinetic I would say that overall, they're not

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<v Speaker 1>gonna move the needle of that month, because if you

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<v Speaker 1>engage in cyber attacks, for instance, to hamper the repressive

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<v Speaker 1>apparatus's ability to communicate, they can still you know, it's

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<v Speaker 1>a temporary measure. If you engage in sanctions or sanctions enforcement.

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<v Speaker 1>First of all, one has to remember that Iran is

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<v Speaker 1>already sanctioned to the hilt, and if the US is

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<v Speaker 1>to enforce, let's say, an oil embargo, it risks in

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<v Speaker 1>the process endangering one of the most critical choke points

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<v Speaker 1>in the world. And that would also have an inflationary

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<v Speaker 1>impact on the US as well, because gas prices will

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<v Speaker 1>go up in the same way that imposition of tariffs

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<v Speaker 1>on China, or on UAE or on Turkey, which are

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<v Speaker 1>trade partners of Iran, would also have an inflationary impact

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<v Speaker 1>on the United States, and in any case, it's unlikely

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<v Speaker 1>to have an immediate impact that would save the protesters.

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<v Speaker 1>So the non kinetic options I really don't think are

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<v Speaker 1>going to be effective in the short run. Kinetic options

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<v Speaker 1>come with huge risks and unforeseen consequences. The president can

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<v Speaker 1>decide to go for political decapitation of the running regime,

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<v Speaker 1>try to eliminate the Supreme leader or the government or

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<v Speaker 1>additional military leaders. But there are two facts about the

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<v Speaker 1>running regime that one should not underestimate. One is that

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<v Speaker 1>it's deeply entrenched, just like in Venezuela, where the president

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<v Speaker 1>decided that he's just going to remove the head and

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<v Speaker 1>leave the rest of the body of that regime in place.

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<v Speaker 1>And second is that it's also deeply benched regime. It

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<v Speaker 1>quickly replaced all the generals who were killed in June

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<v Speaker 1>and started fighting back against Israel. And even in a

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<v Speaker 1>scenario that one creates political vacuum at the top of

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<v Speaker 1>the system, it might be replaced by either a more

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<v Speaker 1>repressive set of leaders within the Revolutionary Guards, or it

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<v Speaker 1>might be replaced by violent chaos if we end up

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<v Speaker 1>in a free for all. In Iran, there is almost

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<v Speaker 1>half a ton of near weapons grade uranium that is

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<v Speaker 1>unaccounted for in Iran. That's sufficient for ten nuclear weapons

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<v Speaker 1>and maybe dozens of dirty bombs, and this would be

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<v Speaker 1>a major security breach for not just Iran and the region,

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<v Speaker 1>but the rest of the world.

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<v Speaker 2>This week, German Chancellor Friedrich Mertz predicted the Islamic Republic

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<v Speaker 2>is in its quote final days. He said, when a

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<v Speaker 2>regime can only hold on to power through violence, it's

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<v Speaker 2>effectively finished. Is this a regime on the brink of collapse?

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<v Speaker 1>Look, the Islamic Republic is in a debt spiral without

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<v Speaker 1>any doubt. But when it would collapse is anybody's guests.

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<v Speaker 1>I've been hearing these predictions literally for decades, and the

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<v Speaker 1>reality is that other regimes like the the Syrian regime

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<v Speaker 1>survived on use of lethal force and repression for many years,

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<v Speaker 1>so that Saddam Hussein and it eventually required foreign military intervention.

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<v Speaker 1>So it's hard to predict when the Islamic Republic will collapse.

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<v Speaker 1>But there are certain things that are absolutely clear. This

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<v Speaker 1>is a regime that is at a dead end. It

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<v Speaker 1>has been ideologically bankrupt, economically bankrupt, politically at a dead end.

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<v Speaker 1>Even if it had a little bit of legitimacy left

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<v Speaker 1>because its social contract was defined by providing safety and

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<v Speaker 1>security instead of prosperity and pluralism. Even that fell apart

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<v Speaker 1>last year when it exposed the country to foreign aggression

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<v Speaker 1>as a result of its policies. So overall, I do

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<v Speaker 1>believe that the Islamic Republic is doomed to fail. But

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<v Speaker 1>when that happens, I think it's anybody's guest.

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<v Speaker 2>Let me ask you last that we've talked a bit

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<v Speaker 2>about the the transition would mean domestically, let me pull

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<v Speaker 2>back and ask about what it would mean for the

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<v Speaker 2>Middle East and for the world more broadly. I'm thinking

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<v Speaker 2>about the Sui's, the Qataris, the Israelis, also thinking about

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<v Speaker 2>Russians and the Chinese. What would that moment of transition

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<v Speaker 2>mean for the world as a whole, Well.

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<v Speaker 1>It depends, David. I think the status quo is attractive

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<v Speaker 1>for many because Iran is basically in a box. It's

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<v Speaker 1>dependent economically on China, militarily on Russia, and it is

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<v Speaker 1>not able to really pose an existential threat to most

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<v Speaker 1>of its neighbors and even to Israel in terms of

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<v Speaker 1>the threat it poses to Israel, as has been weekend,

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<v Speaker 1>So as long as it doesn't lash out, I think

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<v Speaker 1>a lot of Iran's neighbors would prefer Iran to remain

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<v Speaker 1>in the weak state that it is right now. Now,

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<v Speaker 1>a good scenario of Iran fulfilling its potential turning into

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<v Speaker 1>a G twenty economy, pluralistic democratic society is actually unattractive

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<v Speaker 1>to most of Iran's neighbors. To some of Iran's neighbors

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<v Speaker 1>who have monarchies and our authocracies, this basically sets a

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<v Speaker 1>precedent for their own populations that could be destabilizing to

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<v Speaker 1>some of Iran's neighbors who have been able to reap

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<v Speaker 1>the economic benefits of Iran's isolation, all of a sudden

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<v Speaker 1>there will be a major competitor, a major energy exporter,

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<v Speaker 1>a major attraction for foreign investment, and this could be

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<v Speaker 1>quite problematic. Also, Iran could be able to once again

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<v Speaker 1>influence US policy in the way that it was doing

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<v Speaker 1>prior to the nineteen seventy nine revolution. That would then

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<v Speaker 1>diminish the privileged position that some countries like Israel have now.

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<v Speaker 1>The worst case scenario, which is Iran becoming another failed state,

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<v Speaker 1>is also pretty unattractive for most of Iran's neighbors. With

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<v Speaker 1>the exception of Israel, which I think will be okay.

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<v Speaker 1>With Iran descending into chaos and it's fought away from Israel.

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<v Speaker 1>As long as it's internally focused, it's not a problem.

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<v Speaker 1>But for Turkey there will be probably millions of refugees

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<v Speaker 1>who would cross the border. For the Gulf States who

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<v Speaker 1>want to invest on their economic plans and future prosperity,

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<v Speaker 1>a country of ninety million being engaged in a civil

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<v Speaker 1>strife with a lot of lethal weapons and facile material

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<v Speaker 1>being unmonitored is quite problematic. So I think the worst

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<v Speaker 1>and the best case scenario are not attractive for Iran's neighbors.

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<v Speaker 1>The STATISCO is, but unfortunately the STATUSCO also doesn't appear

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<v Speaker 1>to be very sustainable.

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<v Speaker 2>This is the Big Take from Bloomberg New I'm David Gurat.

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<v Speaker 2>To get more from The Big Take and unlimited access

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<v Speaker 2>Thanks for listening. We'll be back tomorrow.