WEBVTT - Israel, Iran and a Radical Increase in Risk

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

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<v Speaker 2>I think you do need some foreign policy nerds like

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<v Speaker 2>me to come in and explain where the rules of

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<v Speaker 2>engagement are being changed before our eyes. And that's why

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<v Speaker 2>someone like me can say this is the most significant

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<v Speaker 2>uptick in Middle East risk for at least twenty years.

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<v Speaker 3>Welcome to the City of London, the City of the City,

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<v Speaker 3>the City of London.

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<v Speaker 1>We need mind the gap between the tree and the platform,

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<v Speaker 1>the financial hearts of the country.

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<v Speaker 3>The city, the city.

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<v Speaker 2>Welcome to in the city.

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<v Speaker 3>Band, clear of the door.

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<v Speaker 1>Pease from Bloomberg Studios in the heart of the Square mile.

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<v Speaker 1>This is our weekly look and the conversations motivating powerbrokers,

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<v Speaker 1>policy makers and financiers the world over. I'm Francine Laqua

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<v Speaker 1>and Dave. You're back in New York this week.

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<v Speaker 3>I am indeed h fancy, Hi David.

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<v Speaker 1>It's been quite a start to the week. It was

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<v Speaker 1>quite a weekend actually, you know, we were texting about

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<v Speaker 1>what we were going to discuss this week, and there

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<v Speaker 1>was no question we need to discuss the escalating tensions

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<v Speaker 1>in the Middle East.

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<v Speaker 3>That's right. The weekend really was momentous. The images of

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<v Speaker 3>the attack that Iran launched at Israel drones and missiles

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<v Speaker 3>flying over the dome of the Rock in the center

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<v Speaker 3>of Jerusalem really struck home what a historic moment it was.

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<v Speaker 1>Yeah, I mean a lot of people are actually really

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<v Speaker 1>scared that this would turn into a world war. And

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<v Speaker 1>do you remember when Ian Bremmer in our first episode

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<v Speaker 1>of the year came on with his top ten risks.

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<v Speaker 1>He was saying, look, it's really the Middle East that

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<v Speaker 1>we need to watch out for on the brink, and

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<v Speaker 1>he said that we're probably not smart enough for lucky

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<v Speaker 1>enough to avoid an escalation over the coming month.

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<v Speaker 3>That's right, talking about the sort of you the more

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<v Speaker 3>pessimistic outlook for this, and it has come to pass,

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<v Speaker 3>of course. However, we are still waiting. We're taping this

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<v Speaker 3>on Tuesday. We are still awaiting Israel's response to that

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<v Speaker 3>barrage of missiles and drones ninety nine percent of which

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<v Speaker 3>also the vast majority of which it managed to intercept

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<v Speaker 3>and shoot down. But there is this feeling that the

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<v Speaker 3>world is on a brink of something potentially much worse,

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<v Speaker 3>even than we've seen in the past few months.

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<v Speaker 1>Yeah, the group of seven members, including the Prime Minister

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<v Speaker 1>of the UK spoke with one another on Sunday and

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<v Speaker 1>said they would try to stop an uncontrollable regional escalation.

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<v Speaker 3>And of course, all of this is against the backdrop

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<v Speaker 3>of Israel's war in Gaza, which has now passed the

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<v Speaker 3>six month mark. It has left Garza's population of more

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<v Speaker 3>than two million people without access proper access to water, food, power, medicine.

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<v Speaker 3>It's displaced one and a half million people into the

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<v Speaker 3>southern part of the Gaza strip, and according to the

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<v Speaker 3>Hamas run local health authorities, it is killed more than

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<v Speaker 3>thirty three thousand people. Of course, after the horrific attacks

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<v Speaker 3>that her Master launched on Israel on October the seventh,

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<v Speaker 3>which killed more than twelve hundred is raised.

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<v Speaker 1>So let's have a conversation about how long standing tensions

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<v Speaker 1>between Israel and Iran came to a head, where those

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<v Speaker 1>tensions could go next, and what it means for the

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<v Speaker 1>overall stability of the region. Joining us in the London

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<v Speaker 1>studio geopolitical strategist Tina Fordham. Tina is the founder of

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<v Speaker 1>Fordum Global Foresight, an independent consultancy dedicated to advising boards

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<v Speaker 1>and the c suite about geopolitical, socioeconomic and financial Risks.

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<v Speaker 3>Tina, thanks so much for joining us on in the city.

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<v Speaker 3>Thank you for having me so As Francin and I

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<v Speaker 3>were just saying, it really was a momentous weekend. I'm

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<v Speaker 3>sitting in the US on Saturday, there was this sense

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<v Speaker 3>of real foreboding about how events might unfold. Did you

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<v Speaker 3>feel that this was as historic and as momentous an

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<v Speaker 3>act by Iran when you saw this unfold over the weekend?

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<v Speaker 2>Yes, in many ways, because Iran has broken the taboo

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<v Speaker 2>first of all, of launching an attack from its own territory.

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<v Speaker 2>And let's remember that this so called shadow war that

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<v Speaker 2>has been in existence for some years between Israel and

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<v Speaker 2>Iran has been fought through proxies. That's what his Polah

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<v Speaker 2>do in Hamast to a certain extent, and the Huthi rebels,

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<v Speaker 2>they are helping Iran achieve its aims without triggering a

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<v Speaker 2>conventional military response. And so the decision in Tehran to

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<v Speaker 2>launch these hundreds of ballistic and cruise missiles and drones

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<v Speaker 2>from its own territory into Israel was a major uptick

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<v Speaker 2>in the risk level. And I think market participants have

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<v Speaker 2>completely got it wrong with the idea that it was

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<v Speaker 2>somehow meant to be symbolic, But so why did it happen?

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<v Speaker 1>So this is in retaliation okay, an Israeli strike on Damascus.

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<v Speaker 2>Yes, and that also broke the rules and.

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<v Speaker 1>Which killed Iranian general.

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<v Speaker 2>In Iranian generals, but in the Iranian consulate in Damascus.

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<v Speaker 2>And remember that in international law that is sovereign territory.

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<v Speaker 1>If we take a step back, there's three hundred explosive

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<v Speaker 1>drones and ballistic missiles. What was the endgame of Iran?

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<v Speaker 1>Was it showing a force and telling Israel don't mess

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<v Speaker 1>with us? Or was it actually trying to hit targets.

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<v Speaker 2>It was upping the ante. They couldn't have known the

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<v Speaker 2>kind of performance of the Israeli air defenses, nor the

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<v Speaker 2>cooperation or the extent of the cooperation between the UK,

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<v Speaker 2>the US, France and Jordan and possibly others, so it

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<v Speaker 2>was taking a big risk. They didn't appear to have

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<v Speaker 2>targeted population centers or things that would have really increased

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<v Speaker 2>the risk level dramatically. But this was intended to send

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<v Speaker 2>a message that there would be punishment for Israel for

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<v Speaker 2>attacking the generals on the sovereign territory of their consulate.

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<v Speaker 2>And now Israel is in this rather terrible position of

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<v Speaker 2>trying to calibrate its response.

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<v Speaker 3>But do you think, Tina, that it was a miscalculation

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<v Speaker 3>then from the Iranians, that the Israeli air defenses would

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<v Speaker 3>be so effective at shooting them down, and that there

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<v Speaker 3>would be a coalition that would emerge, including Arab states

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<v Speaker 3>to intercept the missiles, sort of rallying to Israel's defense.

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<v Speaker 3>And doesn't that make Iran actually look rather weak?

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<v Speaker 2>Absolutely? I mean the end result, without being able to

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<v Speaker 2>read the minds of the mullahs that run Iran, the

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<v Speaker 2>end result has been that Iran's formidable military is not

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<v Speaker 2>looking so so formidable. So Iran is looking weaker. Remember

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<v Speaker 2>that it also sells those drones to Russia to use

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<v Speaker 2>in the case of Ukraine. So Iran ends up looking exposed.

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<v Speaker 2>And the other way that this attack backfired is that

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<v Speaker 2>it has been a gift to Israeli PM Netanyahu, who's

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<v Speaker 2>you know, time on the political clock in Israel was

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<v Speaker 2>really running short. Remember just the day before huge protests

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<v Speaker 2>not against his prosecution of the war in Gaza, but

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<v Speaker 2>for not bringing the Israeli hostages held by Hama's home.

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<v Speaker 3>And so Natsigna, who seems to have been given a

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<v Speaker 3>bit of a break by this attack, and so what

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<v Speaker 3>does he do with it? And what does he do

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<v Speaker 3>with it exactly? Does he keep the conflict with Iran going?

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<v Speaker 2>Well, this is the conundrum, right, So you know, I

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<v Speaker 2>get a lot of emails and have conversations with investors

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<v Speaker 2>and other you know, sort of business leaders, and every

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<v Speaker 2>one of them said, but surely BB won't bite the

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<v Speaker 2>hand that feeds him and go against the US, And

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<v Speaker 2>to which I said, have you not been paying attention

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<v Speaker 2>the kind of incredible diplomatic pressure that the White House

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<v Speaker 2>has put the Natanyahu government under to deliver humanitarian aid

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<v Speaker 2>and everything else. This is a consequence of the end

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<v Speaker 2>of the Pax Americana, right that Washington can't just call

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<v Speaker 2>the shots.

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<v Speaker 1>But I guess the question is, Tina, does this play

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<v Speaker 1>to Nathanael's hand because he got so much support to

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<v Speaker 1>dealing with Iran, So he was in tricky hot water

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<v Speaker 1>because of what he's doing in Gaza. But then as

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<v Speaker 1>soon as you get intact from Iran, then the Allies

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<v Speaker 1>show up.

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<v Speaker 2>Yes, And so how does he interpret that extra space

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<v Speaker 2>that he's been given and what does he do with it?

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<v Speaker 2>Because he's hanging on by a thread politically, remember, and

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<v Speaker 2>his coalition is all hardliners who are saying, go big,

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<v Speaker 2>let's end this problem once and for all. We've heard

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<v Speaker 2>the Israeli cabinet using the Hiroshima metaphor saying that's what

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<v Speaker 2>ended the World War two was the America's use of

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<v Speaker 2>the atomic weapon, and that's all terrifying stuff. And yet

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<v Speaker 2>the market consensus is that Israel will send a response

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<v Speaker 2>that's within the gray zone right, sends a message but

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<v Speaker 2>won't inflict damage. That is a hard line to tread.

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<v Speaker 3>Do you think the markets are miscut plating as well

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<v Speaker 3>here that I think you said this at the beginning, Tina,

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<v Speaker 3>that markets were not sensitive enough to these risks. But

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<v Speaker 3>should they pay more attention to what people sitting around

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<v Speaker 3>Nettigna who's cabinet table are actually saying?

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<v Speaker 2>I think that there's an overly simplistic interpretation. I mean,

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<v Speaker 2>let's be clear, the capacity for conflict and dislocation in

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<v Speaker 2>the Middle East to inflict price action on markets is

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<v Speaker 2>much reduced thanks to the onset of US energy independence

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<v Speaker 2>and shale gas. So it is certainly true that even

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<v Speaker 2>in the worst case scenario, we're not probably looking at

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<v Speaker 2>a thirty dollars a barrel increase, maybe five or six.

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<v Speaker 2>I'd argue that still matters in an environment when markets

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<v Speaker 2>are very focused on what the Fed does next and

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<v Speaker 2>have downgraded their expectations for rate cuts. War is inflationary.

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<v Speaker 3>You mentioned the Pax Americana and the end of Obviously,

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<v Speaker 3>we're in a big election year here in the United

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<v Speaker 3>States as well, and we've seen Donald Trump come out

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<v Speaker 3>and grandstanding about this if you want to call it that,

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<v Speaker 3>about how iron never dared to attack Israel if the president.

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<v Speaker 2>Well, that's funny because Iran did attack when he was

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<v Speaker 2>president and the US didn't respond.

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<v Speaker 3>But sorry, okay, yeah, memory there for you. But so,

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<v Speaker 3>how much is the domestic American political situation I think

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<v Speaker 3>here influencing what is going on in the Middle East.

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<v Speaker 2>So the Biden administration is in the midst of a

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<v Speaker 2>fight for reelection, right, and the election is just months away.

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<v Speaker 2>The last thing it wants to be doing is trying

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<v Speaker 2>to intervene diplomatically to prevent World War III from happening

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<v Speaker 2>in the Middle East and to prevent Russia from achieving

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<v Speaker 2>a victory in Ukraine. The combination of these two conflicts

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<v Speaker 2>both of which have the potential to become systemic. Moving

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<v Speaker 2>beyond regional is the worst constellation of geopolitical risks that

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<v Speaker 2>we have faced for some thirty years. The period between

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<v Speaker 2>now and US elections, everybody's going to try on what

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<v Speaker 2>they can get away.

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<v Speaker 3>With, including the Chinese.

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<v Speaker 2>Yes, well they're doing it in the Philippines. Yes, everyone's busy.

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<v Speaker 2>This is the perfect time to try to take a

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<v Speaker 2>bite out of territory that you would like back, change

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<v Speaker 2>the facts on the ground. And this is the other

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<v Speaker 2>fundamental point that market participants miss. No one is business

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<v Speaker 2>might be waiting until US elections to do deals or whatever.

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<v Speaker 2>For challenger actors, which is the term I use. Now's

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<v Speaker 2>the time to increase your negotiating position so that you

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<v Speaker 2>can keep what you've got. That's what you hope. So

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<v Speaker 2>that's why Pucin is going for Harkyve, third largest city

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<v Speaker 2>that extends his territory, because he knows that when there

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<v Speaker 2>is a peace discussion, they're going to say, okay, we

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<v Speaker 2>want all the things that we've already got. So he's

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<v Speaker 2>going to try to get as much as possible. And

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<v Speaker 2>Chinese actions in the Philippines are significant. They're blockading the

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<v Speaker 2>delivery of food aid to Filipino sailors.

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<v Speaker 3>And Congress does nothing or is frozen.

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<v Speaker 2>Congress is frozen because it can't. Governments can only do

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<v Speaker 2>one thing at a time, and the Middle East is

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<v Speaker 2>now it.

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<v Speaker 3>Bloomberg Economics have done some projections and they're saying a

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<v Speaker 3>direct war between his run and Iran could push oil

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<v Speaker 3>up by more than sixty dollars about and tip the

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<v Speaker 3>world economy into recession. That is the sort of the

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<v Speaker 3>worst case scenario. But even a confined war hits global

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<v Speaker 3>GDP and sends oil up. So again, it feels like

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<v Speaker 3>markets and you've said this now a couple of times

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<v Speaker 3>seemed to be baring their head in the sand on this.

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<v Speaker 3>And because so many people, as you said, growing up

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<v Speaker 3>through these decades of the US dominated global order just

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<v Speaker 3>can't imagine a scenario when that really breaks down.

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<v Speaker 2>I think that's what explains it, you know, I call

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<v Speaker 2>it kind of behave ye. Finance meets geopolitics. Remember it

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<v Speaker 2>wasn't that long ago we were having these conversations about

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<v Speaker 2>whether Putin would invade Ukraine. Would he really do that?

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<v Speaker 2>He's just playing three dimensional chess. This is just saber

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<v Speaker 2>rattling to increase oil prices putin, by the way, is

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<v Speaker 2>a major beneficiary of this kind of geopolitical foment. How

0:13:19.240 --> 0:13:23.120
<v Speaker 2>do you kind of price this, how do you rebalance

0:13:23.160 --> 0:13:26.760
<v Speaker 2>your portfolio? I'm not sure I have the advice about that,

0:13:26.800 --> 0:13:28.880
<v Speaker 2>but what I do know is that when there is

0:13:28.920 --> 0:13:32.400
<v Speaker 2>a step change in trend, when you have a disconnect

0:13:32.480 --> 0:13:35.760
<v Speaker 2>between this incredibly sang Win market sentiment and what pretty

0:13:35.800 --> 0:13:39.760
<v Speaker 2>much every geopolitical analyst is saying, this is serious, that

0:13:39.880 --> 0:13:42.400
<v Speaker 2>is at least a reason to pay more attention instead

0:13:42.440 --> 0:13:44.760
<v Speaker 2>of being as dismissive as we're hearing.

0:13:45.040 --> 0:13:47.520
<v Speaker 3>So is there a world in which the US sort

0:13:47.520 --> 0:13:51.120
<v Speaker 3>of reasserts itself and tries to kind of firm up

0:13:51.240 --> 0:13:53.720
<v Speaker 3>the packs American as I've been saying that, it seems

0:13:53.760 --> 0:13:56.920
<v Speaker 3>that we may get a vote in the US House

0:13:57.160 --> 0:14:00.599
<v Speaker 3>on funding for Israel and potentially look again at the

0:14:00.679 --> 0:14:03.280
<v Speaker 3>question of funding for the Ukrainians, which has been of

0:14:03.320 --> 0:14:07.000
<v Speaker 3>course held up now for so long. Could a shock

0:14:07.200 --> 0:14:10.600
<v Speaker 3>like this kind of wake America up a bit to

0:14:11.000 --> 0:14:14.160
<v Speaker 3>the need for it to continue to fund the resistance

0:14:14.200 --> 0:14:17.600
<v Speaker 3>against Russia and Ukraine, continue to fund its allies around

0:14:17.640 --> 0:14:19.800
<v Speaker 3>the world, and kind of reassert itself on the world stage,

0:14:19.840 --> 0:14:22.920
<v Speaker 3>or do you think that status is kind of forever gone.

0:14:23.240 --> 0:14:25.760
<v Speaker 2>It's a really important question, and I think it also

0:14:26.040 --> 0:14:28.600
<v Speaker 2>just exposes I mean, here you have me and Francine

0:14:28.600 --> 0:14:31.000
<v Speaker 2>in an American and Italian living in London, and you

0:14:31.120 --> 0:14:34.880
<v Speaker 2>and Britain in the US. I've never been more conscious

0:14:34.920 --> 0:14:38.920
<v Speaker 2>of the kind of geographic disconnect and risk perception. I mean,

0:14:38.960 --> 0:14:43.880
<v Speaker 2>Americans really do feel inviable. You know, in many ways,

0:14:44.000 --> 0:14:47.240
<v Speaker 2>US markets are performing, the US is growing. This is

0:14:47.280 --> 0:14:51.240
<v Speaker 2>Europe's problem. Investors have really taken on board the Trump

0:14:51.320 --> 0:14:53.760
<v Speaker 2>talking points Europe should be paying more for defense. I

0:14:53.800 --> 0:14:55.840
<v Speaker 2>come back to them and say, Europe is paying more.

0:14:56.240 --> 0:14:58.840
<v Speaker 2>There are very few countries not paying the two percent

0:14:58.880 --> 0:15:02.920
<v Speaker 2>at NATO. The US periodically goes through these waves of isolation,

0:15:03.520 --> 0:15:05.360
<v Speaker 2>and this is one of them. But I think it

0:15:05.440 --> 0:15:09.840
<v Speaker 2>is also due to the fact that Americans don't appreciate

0:15:10.200 --> 0:15:14.240
<v Speaker 2>how they benefit from the globalized economy and financial markets too.

0:15:14.480 --> 0:15:16.600
<v Speaker 1>But tin can the US afford it? So if Donald

0:15:16.640 --> 0:15:18.760
<v Speaker 1>Trump gets the richest white try in the world, it

0:15:18.760 --> 0:15:19.960
<v Speaker 1>doesn't mean they can afford it.

0:15:20.120 --> 0:15:21.560
<v Speaker 2>Right, It doesn't mean they're willing to pay.

0:15:21.800 --> 0:15:23.800
<v Speaker 1>Right, It doesn't mean they're willing to pay It doesn't

0:15:23.840 --> 0:15:26.040
<v Speaker 1>mean that, you know, they can continue going into debt.

0:15:26.080 --> 0:15:28.000
<v Speaker 1>It doesn't mean that the next president will support all

0:15:28.040 --> 0:15:31.680
<v Speaker 1>of this. Do they have the bandwidth of doing of

0:15:31.720 --> 0:15:34.600
<v Speaker 1>trying to get involved in so much foreign affairs?

0:15:35.520 --> 0:15:37.640
<v Speaker 2>You know, I had an interesting observation from one of

0:15:37.680 --> 0:15:40.360
<v Speaker 2>my clients in Washington, D C. Said, Trump is a

0:15:40.440 --> 0:15:43.320
<v Speaker 2>shadow president and as long as you know he is

0:15:43.360 --> 0:15:46.360
<v Speaker 2>in that position kind of pulling the strings in the House,

0:15:46.400 --> 0:15:49.480
<v Speaker 2>we won't get that aid bill, sixty million in aid

0:15:49.520 --> 0:15:53.240
<v Speaker 2>to Ukraine, which is something that the American public supports

0:15:53.280 --> 0:15:56.680
<v Speaker 2>and that the US Congress supports, now being held up

0:15:56.760 --> 0:16:00.560
<v Speaker 2>in the House. And it is existential, not only for Ukraine.

0:16:00.720 --> 0:16:03.480
<v Speaker 2>Let's maybe if you want to be brutal and take

0:16:03.480 --> 0:16:06.680
<v Speaker 2>the humanitarian consideration out of it, the fact that Ukraine

0:16:06.680 --> 0:16:09.760
<v Speaker 2>will cease to as an entity in many ways. Again,

0:16:09.840 --> 0:16:14.320
<v Speaker 2>it's about that perception of what constitutes US security and

0:16:14.440 --> 0:16:17.560
<v Speaker 2>is in the US national interest and self interest, and

0:16:17.600 --> 0:16:19.760
<v Speaker 2>I think that link has been broken in many ways.

0:16:20.000 --> 0:16:22.960
<v Speaker 1>Tina, Can I ask you about the alliances in the

0:16:22.960 --> 0:16:26.360
<v Speaker 1>Middle East that have been forged or reforged right because

0:16:26.360 --> 0:16:29.440
<v Speaker 1>of this threat coming from Iran. So suddenly Israel was

0:16:29.480 --> 0:16:32.600
<v Speaker 1>supported by Jordan, certain parts I think is also supported

0:16:32.600 --> 0:16:36.640
<v Speaker 1>by Saudi Arabia. Does this change anything in Nataniel's mind?

0:16:37.040 --> 0:16:40.760
<v Speaker 2>This is a very interesting kind of reshuffle of strange

0:16:40.920 --> 0:16:45.240
<v Speaker 2>bedfellows going on, because you will have seen the veement

0:16:45.400 --> 0:16:51.000
<v Speaker 2>denials of an Arab Israeli coalition of the willing emerging.

0:16:51.040 --> 0:16:56.000
<v Speaker 2>And I don't think that's really part of Natanyahu's story.

0:16:56.360 --> 0:16:59.200
<v Speaker 2>But Jordan says, for its part, it was defending its

0:16:59.200 --> 0:17:03.320
<v Speaker 2>own airspace. If a foreign object trespasses its airspace, it's

0:17:03.320 --> 0:17:05.840
<v Speaker 2>going to shoot it down. And I think that makes

0:17:05.880 --> 0:17:08.040
<v Speaker 2>a lot of sense. But what it really underscores is

0:17:08.080 --> 0:17:12.000
<v Speaker 2>the mutual self interest amongst these countries in the region.

0:17:12.040 --> 0:17:14.840
<v Speaker 2>And Jordan and Israel have had a peace treaty for decades.

0:17:14.960 --> 0:17:19.840
<v Speaker 2>Let's not forget the UAE and Saudi cooperating. Is that unusual?

0:17:19.920 --> 0:17:24.439
<v Speaker 2>Remember Iran and Saudi were at war until Saudi and

0:17:24.560 --> 0:17:29.080
<v Speaker 2>Tehran agree to a pause normalization of relations. And then

0:17:29.160 --> 0:17:32.920
<v Speaker 2>we have the fact that Saudi itself is saying that

0:17:33.720 --> 0:17:38.879
<v Speaker 2>the Hamas attack was meant to foil the normalization of

0:17:38.960 --> 0:17:42.680
<v Speaker 2>relations between Israel and near our world without something being

0:17:42.720 --> 0:17:44.040
<v Speaker 2>done about the Palestinians.

0:17:44.359 --> 0:17:47.000
<v Speaker 1>Do you know, will we see a ceasefire in Gaza.

0:17:48.200 --> 0:17:51.119
<v Speaker 2>I don't think that the Israelis will agree to a

0:17:51.160 --> 0:17:53.440
<v Speaker 2>cease fire without the release of the hostages.

0:17:53.680 --> 0:17:56.040
<v Speaker 3>Put it that way, so that means an assault on

0:17:56.160 --> 0:17:58.119
<v Speaker 3>Raffa that has to happen, does it not?

0:17:58.640 --> 0:18:01.320
<v Speaker 2>I think that is right back on the table. I

0:18:01.440 --> 0:18:07.160
<v Speaker 2>don't think that this Iranian attack on Israel changes the

0:18:07.160 --> 0:18:11.639
<v Speaker 2>military calculus for Israel in Gaza, despite the international condemnation

0:18:12.480 --> 0:18:15.919
<v Speaker 2>and the fact that you know, just about every international

0:18:15.960 --> 0:18:19.120
<v Speaker 2>authority has said that famine is happening, a man made

0:18:19.160 --> 0:18:21.080
<v Speaker 2>famine happening in Gaza.

0:18:21.160 --> 0:18:24.879
<v Speaker 3>Now the stated goal of the Israeli government to wipe

0:18:24.880 --> 0:18:26.320
<v Speaker 3>her mass off the face of the earth, I think

0:18:26.480 --> 0:18:29.320
<v Speaker 3>is the phrase they've used. There are interesting parallels, aren't

0:18:29.320 --> 0:18:32.439
<v Speaker 3>there after the September the eleventh, two thousand and one

0:18:32.440 --> 0:18:36.000
<v Speaker 3>attacks in the United States, with President George W. Bush's

0:18:36.000 --> 0:18:39.840
<v Speaker 3>war on terror and how that lasted for so many

0:18:39.960 --> 0:18:44.160
<v Speaker 3>years and set up these goals that were really unachievable.

0:18:44.440 --> 0:18:49.600
<v Speaker 3>Surely is it not an impossible aim to completely eradicate

0:18:49.600 --> 0:18:51.520
<v Speaker 3>in Hamas, and well, Israel not have to get to

0:18:51.560 --> 0:18:55.200
<v Speaker 3>the point where they admit that and call ass Faracarpas.

0:18:56.000 --> 0:18:59.960
<v Speaker 2>I think we can agree that eradicating a non state

0:19:00.240 --> 0:19:06.280
<v Speaker 2>actor like Hamas or the Taliban is extremely difficult, if

0:19:06.320 --> 0:19:09.520
<v Speaker 2>not impossible, to do. I don't know that means Israel

0:19:09.560 --> 0:19:12.040
<v Speaker 2>will stop trying to do it.

0:19:12.080 --> 0:19:15.560
<v Speaker 1>Is there anything the US can do to make them stop?

0:19:16.280 --> 0:19:20.160
<v Speaker 2>Well, we saw the kind of veiled threats to reduce aid.

0:19:20.680 --> 0:19:24.960
<v Speaker 2>But remember that for Republicans in Congress, particularly the evangelical

0:19:25.040 --> 0:19:28.719
<v Speaker 2>Christians like Johnson, the Speaker of the House, the support

0:19:28.760 --> 0:19:31.119
<v Speaker 2>for the state of Israel is in a different bucket

0:19:31.680 --> 0:19:37.040
<v Speaker 2>than support for Ukraine and for even for Taiwan. Interestingly,

0:19:37.160 --> 0:19:40.639
<v Speaker 2>so Natina, who will really be testing the patients the

0:19:40.720 --> 0:19:45.480
<v Speaker 2>limits of the American political establishment because even its sort

0:19:45.480 --> 0:19:51.000
<v Speaker 2>of core support amongst American Jews is under threat. Israel's

0:19:51.040 --> 0:19:56.919
<v Speaker 2>international reputation has been damaged by the offense in Gaza.

0:19:57.080 --> 0:20:00.800
<v Speaker 2>Can that be rebuilt? It's going to be difficult, and

0:20:00.840 --> 0:20:05.240
<v Speaker 2>this Iranian attack is not enough, certainly to put Israel

0:20:05.280 --> 0:20:08.240
<v Speaker 2>back in the kind of victim place in the equation.

0:20:08.720 --> 0:20:12.280
<v Speaker 3>I mean, another scenario that seems quite likely as well,

0:20:12.800 --> 0:20:16.240
<v Speaker 3>assuming that Iran and Israel step back from direct confrontation,

0:20:16.480 --> 0:20:19.480
<v Speaker 3>is a flare up of facilities with Hezbollah in Lebanon,

0:20:19.600 --> 0:20:22.639
<v Speaker 3>and so that's going back to more of a proxy war,

0:20:23.160 --> 0:20:27.600
<v Speaker 3>but a full blown conflict between Hezbollah and Israel. How

0:20:27.600 --> 0:20:29.439
<v Speaker 3>do you see that playing out? Does Israel have the

0:20:29.480 --> 0:20:32.480
<v Speaker 3>capacity to fight war on multiple fronts at the moment?

0:20:33.080 --> 0:20:38.600
<v Speaker 2>I think we should underestimate the collective trauma that was

0:20:38.680 --> 0:20:43.400
<v Speaker 2>meted out on Israelis after the October seventh attack, and

0:20:44.040 --> 0:20:47.040
<v Speaker 2>the willingness to defend the state of Israel and the

0:20:47.119 --> 0:20:53.720
<v Speaker 2>sense that this is an existential crisis. And it seems hard,

0:20:54.720 --> 0:20:58.760
<v Speaker 2>you know, for people outside the region to appreciate that,

0:20:58.920 --> 0:21:02.159
<v Speaker 2>and if you read the Israeli pressed you can see it.

0:21:02.200 --> 0:21:06.600
<v Speaker 2>And the real challenge is the choreography, if you will,

0:21:07.000 --> 0:21:10.640
<v Speaker 2>And that's where these gray zone kinds of responses come

0:21:10.680 --> 0:21:14.520
<v Speaker 2>into play. And how do you calibrate a response that

0:21:14.680 --> 0:21:21.440
<v Speaker 2>inflicts damage on your enemy on the aggressor without provoking

0:21:21.840 --> 0:21:25.120
<v Speaker 2>a full scale military conflict which everyone says they don't want,

0:21:25.640 --> 0:21:30.560
<v Speaker 2>or alienating your number one supporter because Israel probably can't

0:21:30.760 --> 0:21:34.920
<v Speaker 2>do without US support. And that is why Biden has

0:21:34.960 --> 0:21:38.720
<v Speaker 2>taken this risk, really alienating the left wing of the

0:21:38.760 --> 0:21:42.600
<v Speaker 2>Democratic Party in support of Israel because of the fear

0:21:42.960 --> 0:21:44.600
<v Speaker 2>of an all out conflagration.

0:21:46.359 --> 0:21:47.400
<v Speaker 1>Tina, thank you so much.

0:21:47.760 --> 0:21:48.760
<v Speaker 2>Thank you for having me.

0:21:54.600 --> 0:21:57.080
<v Speaker 3>Thanks for listening to this week's In the City from Bloomberg.

0:21:57.320 --> 0:22:00.480
<v Speaker 1>This episode was hosted by me Francine lakwaw Merit.

0:22:01.040 --> 0:22:03.760
<v Speaker 3>It was produced by Summer Sadi, with additional editing by

0:22:03.800 --> 0:22:04.600
<v Speaker 3>Blake Maples.

0:22:04.800 --> 0:22:08.240
<v Speaker 1>Brendan Newman is our executive producer. Sage Bauman is head

0:22:08.240 --> 0:22:09.639
<v Speaker 1>of Podcasts.

0:22:09.280 --> 0:22:13.359
<v Speaker 3>Well special thanks to Tina Fordham. Please do you subscribe, rate,

0:22:13.400 --> 0:22:15.800
<v Speaker 3>and review wherever you listen to podcasts