WEBVTT - Surveillance: The U.S. Is Abusing Its Privileges, Rose Says 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.360 Bloomberg dot Com, and of course on the Bloomberg. This 0:00:27.440 --> 0:00:30.400 is a true joy. Gideon Rose has been wonderful to 0:00:30.480 --> 0:00:33.440 stop buying a monthly basis to flog his issue of 0:00:33.479 --> 0:00:36.159 Foreign Affairs at magazine. It's a jewel, this one. I 0:00:36.200 --> 0:00:39.159 hate him because the books in the back, like including 0:00:39.159 --> 0:00:42.320 a one volume on chopin what is the music book? 0:00:42.600 --> 0:00:46.160 Foreign Affairs again does it well with thoughtful reading, including 0:00:46.320 --> 0:00:49.720 essays by Secretary Pom Pale and also by the former 0:00:49.760 --> 0:00:52.880 Treasury Secretary of the United States, Jacob Blue. We're thrilled 0:00:52.880 --> 0:00:55.000 to Jack, Lou and Gideon Rose could be with us 0:00:55.040 --> 0:00:57.680 together this morning. Gentlemen, this is just a joy to 0:00:57.720 --> 0:01:00.160 have you here, particularly with the news flow. I've to 0:01:00.200 --> 0:01:02.639 ask you an ugly question. I don't want to ask you, 0:01:02.800 --> 0:01:05.160 but I want to go first to you. Gideon. You've 0:01:05.200 --> 0:01:10.240 got a beautiful essay in this new issue on authoritarianism 0:01:10.280 --> 0:01:13.840 in the Middle East. Give us your thoughts on the 0:01:13.880 --> 0:01:19.360 new Saudi Arabia. Well, so uh, in many respects, this 0:01:19.440 --> 0:01:23.959 is not exactly shocking. Um. The Saudi regime does not 0:01:24.080 --> 0:01:29.200 take distance lightly and they have gone after their internal 0:01:29.240 --> 0:01:32.880 critics in many respects in the past when and in fact, 0:01:32.959 --> 0:01:35.320 many regimes have done this in an unsavory way over 0:01:35.319 --> 0:01:39.080 the years. When Napoleon did something similar and got criticized 0:01:39.080 --> 0:01:42.920 for it, his foreign minister Talleyrand famously said it was 0:01:43.000 --> 0:01:45.200 worse than a crime, it was a blunder because it 0:01:45.280 --> 0:01:47.720 made everybody upset. And so what the Saudis have done 0:01:47.760 --> 0:01:50.040 with Kashogi was not just a crime but also a 0:01:50.080 --> 0:01:53.720 blunder because by doing so so gratuitously and obviously they've 0:01:53.760 --> 0:01:57.240 made everybody upset. And the reality is this crisis will 0:01:57.240 --> 0:01:59.440 blow over. No one's going to actually break relations with 0:01:59.440 --> 0:02:01.520 Saudi Arabi be over this. And so the question now 0:02:01.680 --> 0:02:03.240 is not really getting to the bottom of it, but 0:02:03.520 --> 0:02:06.200 getting past it for the diplomats and how that happens 0:02:06.240 --> 0:02:08.800 will be an interesting story about diploma for the diplomats. 0:02:08.919 --> 0:02:15.040 Mr Secretaries, Secretary minution attend this conference in Saudi Arabia. Look, 0:02:15.120 --> 0:02:18.680 the story is coming out of Istanbul or nothing short 0:02:18.680 --> 0:02:24.079 of horrific and Um, the idea that journalist could be 0:02:24.200 --> 0:02:29.320 murdered for reporting offends our most basic values. I've made 0:02:29.320 --> 0:02:32.600 it my business to refrain from publicly advising my successor. 0:02:32.600 --> 0:02:36.480 I appreciated it when my predecessors offered me private advice. 0:02:36.960 --> 0:02:39.840 But I can say that when I was Secretary and 0:02:39.960 --> 0:02:42.639 we had to make a decision about whether American business 0:02:42.680 --> 0:02:46.000 people should attend a conference in Russia, business conference in 0:02:46.080 --> 0:02:50.880 Russia while Russia was occupying Crimea and moving in in 0:02:50.960 --> 0:02:55.440 the eastern Ukraine, I advised them not to go. All right, 0:02:55.480 --> 0:02:59.600 But um, you know, Mr jacklu, how does it affect 0:02:59.680 --> 0:03:03.360 for relations between the US and Saudi Arabia? So away 0:03:03.360 --> 0:03:05.440 from the from the conference which is immediate, which is 0:03:05.480 --> 0:03:08.240 next week, Um, what kind of advice would you have 0:03:08.360 --> 0:03:12.520 taken on on the next step for the US and 0:03:12.560 --> 0:03:16.680 Saudi Arabia. Look, I think that the issue is a 0:03:16.760 --> 0:03:20.120 very serious one. It has to be engaged directly. There's 0:03:20.160 --> 0:03:23.720 a need to understand, in a kind of murky situation, 0:03:23.880 --> 0:03:26.639 what the facts on the ground are. Um. I think 0:03:26.639 --> 0:03:29.640 it's taken too long to get to a clear explanation 0:03:29.760 --> 0:03:32.760 of what happened, and the swirling stories that we hear 0:03:33.080 --> 0:03:37.000 only make it worse. Um, the conversations that have been 0:03:37.000 --> 0:03:42.640 going on between Secretary Pompeo and the leaders in Saudi 0:03:42.680 --> 0:03:47.440 Arabia hopefully will provide some more clear understanding. UM, I'm 0:03:47.480 --> 0:03:51.240 not sure that we'll ever understand exactly what happened, and 0:03:51.280 --> 0:03:53.480 they're just going to need to be a recognition that 0:03:53.520 --> 0:03:56.720 this kind of behavior is unacceptable. You know, the United 0:03:56.760 --> 0:04:01.400 States has complicated relationships all for the world, but it 0:04:01.520 --> 0:04:04.360 also has align that it draws in terms of what 0:04:04.440 --> 0:04:07.000 core values are and I think that that's this is 0:04:07.000 --> 0:04:12.520 a situation that requires an articulation of those issues. Well, 0:04:12.560 --> 0:04:15.120 should it actually hurt business? Again, this is the very 0:04:15.160 --> 0:04:18.279 complicated question, Mr Leeu, of how to deal with allies 0:04:18.720 --> 0:04:22.720 that could have, you know, questionable morals. So look, you know, 0:04:22.760 --> 0:04:25.320 the the idea of using economic sanctions is actually what 0:04:25.360 --> 0:04:28.480 I wrote in the current Issue of Foreign Affairs about 0:04:28.920 --> 0:04:34.280 I believe that using economic power economic leadership is an 0:04:34.279 --> 0:04:37.960 appropriate use of power and a powerful tool. The question 0:04:38.000 --> 0:04:41.800 is how you do it. Um, you have the opportunity 0:04:41.880 --> 0:04:45.600 to inflict pain, but the goal of using economic pressure 0:04:45.680 --> 0:04:48.120 is not just to cause pain. It's a change of policies. 0:04:48.160 --> 0:04:51.080 You have to articulate what the new policy is how 0:04:51.240 --> 0:04:54.719 economic pressure would be used to accomplish that, and you 0:04:54.760 --> 0:04:56.520 have to do it in a way where the United 0:04:56.560 --> 0:04:59.480 States hopefully is working as part of the world community. 0:04:59.680 --> 0:05:02.400 I'm not addressing the facts right here, but as a 0:05:02.440 --> 0:05:06.680 general model, saying you can power requires some care and 0:05:06.760 --> 0:05:09.800 skill give you. And I notice how the Secretary diplomatically 0:05:09.880 --> 0:05:12.480 began his essay with the walk through of our history 0:05:12.800 --> 0:05:16.240 of American sanctions and waited for the crushing criticisms of 0:05:16.240 --> 0:05:18.800 the Trump administration until the end. Let's bring up the 0:05:18.880 --> 0:05:22.640 quote right now here from Secretary lou in Gideon Rose's 0:05:22.640 --> 0:05:26.440 new Foreign Affairs and magazine, the president's administration is behavior, 0:05:26.640 --> 0:05:30.039 behaving as if the United States is immune to consequences. 0:05:30.320 --> 0:05:34.600 He goes on to say bellicost unilateral actions, and then 0:05:34.760 --> 0:05:38.320 he shifts it will fall to Congress and honest reckoning 0:05:38.360 --> 0:05:41.640 on the part of US polly policy makers with the 0:05:41.680 --> 0:05:44.919 limits of American power, Gideon Rose, can Congress come to 0:05:45.040 --> 0:05:48.400 a diplomatic rescue or is that's so nineteenth century? I mean, 0:05:48.600 --> 0:05:51.480 Congress has lots of power and at some points in 0:05:51.520 --> 0:05:54.159 the past has played an important role in American foreign policy. 0:05:54.200 --> 0:05:56.240 They're not really doing so now. I think many of 0:05:56.320 --> 0:06:00.320 us would like them to do so now, but end well, 0:06:00.360 --> 0:06:02.680 it's a quite The people in Washington can do anything 0:06:02.680 --> 0:06:04.760 if they actually choose to. Right now, we seem to 0:06:04.760 --> 0:06:08.160 be in a sort of partisan spitfighting spending contest that 0:06:08.400 --> 0:06:10.680 prevents Congress from playing any kind of significant role in 0:06:10.720 --> 0:06:13.440 foreign policy or domestic Well, I'm gonna use the word pragmatic. 0:06:13.520 --> 0:06:15.359 This is what you do when Jack lou works with 0:06:15.440 --> 0:06:18.640 Joe Mowkley and Tip O'Neil up in Massachusetts from another 0:06:18.680 --> 0:06:21.520 time ago. There's got to be a pragmatic view coming 0:06:21.560 --> 0:06:24.599 out of these mid term elections towards if we're not 0:06:24.600 --> 0:06:26.560 going to go to multilateral, we're going to go to 0:06:26.680 --> 0:06:29.680 some new lateral What would you like to see? Whatever 0:06:29.760 --> 0:06:32.520 the form of Congress in senateive is. To be clear, 0:06:32.600 --> 0:06:36.400 I think the United States should work multilaterally whenever we can, 0:06:36.560 --> 0:06:39.640 reserving the right to act unilaterally when we need to. 0:06:39.720 --> 0:06:42.760 The question is, um, do we go around the world 0:06:42.960 --> 0:06:45.719 as we are right now with our tariffs, acting in 0:06:45.760 --> 0:06:48.760 a way that violates norms that we helped to define? 0:06:49.360 --> 0:06:52.719 Do we do things like withdrawing from the Iran Deal, 0:06:53.160 --> 0:06:56.920 leaving all of our allies in Europe and Japan with 0:06:56.920 --> 0:06:59.560 with countries like China and Russia. They cooperated with US 0:07:00.000 --> 0:07:02.359 rejecting to what we're doing. And that's going to happen 0:07:02.360 --> 0:07:05.000 in a few days when the new secondary sanctions kick 0:07:05.040 --> 0:07:07.480 in because the United States withdrew and does that increase 0:07:07.560 --> 0:07:10.160 or decrease American influence. The argument that I make in 0:07:10.200 --> 0:07:12.840 the article is that this is a powerful tool that 0:07:12.880 --> 0:07:15.680 you need to treat as a tool of some limitation. 0:07:15.960 --> 0:07:18.200 Where does it come from. It comes from the centrality 0:07:18.200 --> 0:07:21.080 of the dollars, the world's reserve currency, and the primacy 0:07:21.120 --> 0:07:23.280 of the United States. It's not a good thing when 0:07:23.280 --> 0:07:26.080 you see countries in Europe working with China to develop 0:07:26.120 --> 0:07:29.000 alternative payment systems in order to get around the dollar. 0:07:29.440 --> 0:07:31.520 This won't happen overnight. This is not a question of 0:07:31.560 --> 0:07:34.240 the ATTORNI switch and does the world move away from 0:07:34.240 --> 0:07:37.480 the dollar. It's a decades long process. I think it's 0:07:37.520 --> 0:07:41.560 profoundly against US national security interest to accelerate that process. 0:07:41.560 --> 0:07:44.240 And I think the unilateralism, the the you know, the 0:07:45.840 --> 0:07:49.960 I think not careful unilateralism is driving that process to 0:07:50.040 --> 0:07:53.559 speed up. Reserving the right tower is different than using 0:07:53.600 --> 0:07:58.680 it on every issue. Aren't these just acting on campaign promises. 0:07:58.680 --> 0:08:00.840 A lot of people won't expect the president and his 0:08:00.840 --> 0:08:03.440 administration to follow through, but this is what they promised 0:08:03.440 --> 0:08:06.600 when the people voted for them. Well, I think that, 0:08:07.160 --> 0:08:10.320 you know, we all have to live and should live 0:08:10.360 --> 0:08:12.800 with campaign promises because when you're elected, it is a 0:08:12.840 --> 0:08:16.200 contract with the people. UM. I think how you exercise 0:08:16.280 --> 0:08:19.200 that power has to reflect the facts on the ground 0:08:19.240 --> 0:08:23.400 and strategic questions about how do you preserve us influence. 0:08:23.760 --> 0:08:26.640 I think that diminishing US power over the long term 0:08:26.680 --> 0:08:29.560 is a very serious consequence, and I think it's something 0:08:29.600 --> 0:08:32.600 that the Embarkan people don't want us to do. UM. 0:08:32.720 --> 0:08:37.440 These are questions that require careful thought, careful analysis. You know, 0:08:37.800 --> 0:08:41.400 Tom asked, can Congress come to the rescue? Congress is 0:08:41.800 --> 0:08:47.600 traditionally pushed administrations, where administrations have restrained Congress. The idea 0:08:47.679 --> 0:08:50.560 that that kind of leadership comes from Congress is a 0:08:50.559 --> 0:08:54.160 bit backwards. We're not seeing the kind of careful leadership 0:08:54.440 --> 0:08:57.400 that we've seen frankly in Republican and democratic administrations in 0:08:57.440 --> 0:09:00.200 the past, Which does not mean you don't use the levels, 0:09:00.320 --> 0:09:03.240 but you have to use them carefully. But but if 0:09:03.280 --> 0:09:05.560 you if what you say is true, Secretary Lucian, the 0:09:05.600 --> 0:09:08.920 Republican Party not hold the Trump administration into account if 0:09:08.920 --> 0:09:11.920 they're actually diminishing over the longer term the power of 0:09:11.960 --> 0:09:16.200 the US. Look I I can't speak for the Republican Party, UM, 0:09:16.280 --> 0:09:20.280 but I know that over my decades in public life, UM, 0:09:20.320 --> 0:09:22.400 there used to be a core and the Republican Party 0:09:22.440 --> 0:09:25.320 that believed deeply in free trade, that thought that it 0:09:25.600 --> 0:09:29.640 enhanced American influence and grew the economy. We now see 0:09:30.559 --> 0:09:34.280 a Congress that's willing to step back when an administration 0:09:34.400 --> 0:09:37.240 puts in place things like steel and aluminum tariffs on 0:09:37.240 --> 0:09:40.680 our closest allies, which is an attack in some ways 0:09:40.800 --> 0:09:44.400 on the core principles of the Atlantic Alliance. It doesn't 0:09:44.440 --> 0:09:46.920 make sense in terms of our long term national security. 0:09:46.960 --> 0:09:49.320 We could keep this discussion going all day. We'll try 0:09:49.360 --> 0:09:51.719 to do that with Secretary Louis welcome all of you 0:09:51.760 --> 0:09:55.520 on Bloomberg Television and radio worldwide with Jeck Lou and 0:09:55.600 --> 0:09:59.160 Gideon Rose and celebration of a new Foreign affairs magazine. 0:09:59.160 --> 0:10:02.040 You have the Secretary State occupied in Riod with your 0:10:02.160 --> 0:10:06.040 lead article on Iran, and I love his subhead Iran Exposed. 0:10:06.200 --> 0:10:09.640 But as you listen to Secretary lou Gideon Rose. Is 0:10:09.679 --> 0:10:13.360 it America exposed? Is that the real distinction here? I 0:10:13.360 --> 0:10:15.839 think the challenge is exactly the Secretary he was saying 0:10:16.280 --> 0:10:18.520 that you have to pick your fights. You can't fight 0:10:18.640 --> 0:10:21.480 with everybody on everything. The United States is far and 0:10:21.520 --> 0:10:23.920 away the most powerful player in the world, not just 0:10:24.000 --> 0:10:26.320 in the security but also in the economics fear. We 0:10:26.360 --> 0:10:29.400 can deploy that leverage for our interests and our values, 0:10:29.640 --> 0:10:31.920 but we can't do everything, and so you have to 0:10:32.000 --> 0:10:34.120 pick and choose which fights you on. And the problem 0:10:34.160 --> 0:10:35.640 with this administration, or one of the problems with the 0:10:35.640 --> 0:10:38.360 tradition for me, is that they keep fighting with everybody, 0:10:38.400 --> 0:10:42.320 allies and enemies, Iran and China and Russia, and were 0:10:42.360 --> 0:10:44.240 not Russia, Russia the only person they don't fight with, 0:10:44.480 --> 0:10:47.360 but essentially everybody else. And that diminishes your leverage. And 0:10:47.400 --> 0:10:50.320 at some point people wonder, is this guy really somebody 0:10:50.360 --> 0:10:51.760 we want to play with? Or should we just go 0:10:51.800 --> 0:10:54.880 and organize a game by ourselves without the United States. 0:10:54.920 --> 0:10:58.559 That's the danger down the road within our economics statecraft, 0:10:58.880 --> 0:11:01.600 Mr Secretary, is the idea of our new debt, in 0:11:01.640 --> 0:11:06.640 our new deficit. Congressional budget Office driving for this convert sation. 0:11:06.760 --> 0:11:09.320 We have a Reinehart and Reinhardt not right off and 0:11:09.440 --> 0:11:12.800 rogue golf Carmen Reinhardt Vincent Reinhart writing on where we 0:11:12.880 --> 0:11:16.080 are ten years on in this new edition of Foreign Affairs. 0:11:16.200 --> 0:11:18.640 But it comes down to a debt. Your thoughts on 0:11:18.720 --> 0:11:21.920 a debt growing easily out over a trillion And we 0:11:22.000 --> 0:11:25.200 have one guest who is suggested, with economic slowdown, we 0:11:25.200 --> 0:11:28.040 could begin to look at a crisis near two trillion 0:11:28.080 --> 0:11:31.640 dollar deficit. You know, I I think the growth of 0:11:31.640 --> 0:11:35.240 the deficit over a period of strong economic growth is 0:11:35.320 --> 0:11:38.560 very troubling. Usually you deficits go up when you're in 0:11:38.600 --> 0:11:41.440 a recession or when you're in a war. We don't 0:11:41.520 --> 0:11:43.960 usually drive the deficit out of control when we're in 0:11:43.960 --> 0:11:47.040 a period of sustained high growth. I have a number 0:11:47.040 --> 0:11:50.640 of concerns. First of all, our borrowing requirements will keep growing. 0:11:50.720 --> 0:11:53.040 That means that, you know, for all the focus on 0:11:53.040 --> 0:11:56.079 the trade deficit, when you have a fiscal deficit, you're 0:11:56.080 --> 0:11:59.120 borrowing money from overseas, You're driving up the trade deficit. 0:11:59.440 --> 0:12:02.160 That's going to have a powerful negative impact on our 0:12:02.160 --> 0:12:05.840 trade balances. Secondly, it has an effect on interest rates. 0:12:05.880 --> 0:12:08.400 It drives up, not just treasury rates, but all rates 0:12:08.480 --> 0:12:11.920 in the economy. You know. Third, we need to have 0:12:12.000 --> 0:12:14.560 fiscal capacity when the economy needs it. We're in the 0:12:14.600 --> 0:12:17.800 tenth year of a recovery. We're not going to grow forever. 0:12:17.920 --> 0:12:20.280 Whether it's six months, a year or two MutS from now, 0:12:20.280 --> 0:12:22.760 we're going to wish we had more fiscal s Your charm, 0:12:22.880 --> 0:12:24.680 he has a limited charm. As you worked in the 0:12:24.760 --> 0:12:27.920 legislative branch for years and then in the executive branch, 0:12:28.080 --> 0:12:30.199 many of you won't know that secretary who will also 0:12:30.240 --> 0:12:33.440 served in state for a while. Your charm, as you 0:12:33.559 --> 0:12:38.480 understand the addictions of Washington is debt is a growing deficit. 0:12:38.760 --> 0:12:43.120 Does it become an addictive process for the Beltway? I 0:12:43.160 --> 0:12:46.440 think right now you have an unusual situation. There is 0:12:46.480 --> 0:12:50.720 no loud chorus for fiscal responsibility. Fiscal conservatives voted for 0:12:50.760 --> 0:12:53.960 a tax cut that costs two trillion dollars over ten 0:12:54.040 --> 0:12:57.920 years and blew a hole in any plan for fiscal balance. 0:12:58.480 --> 0:13:01.920 Progressives are saying, you know, to democratic administrations in a 0:13:02.000 --> 0:13:04.560 row were fiscally responsible and what did they do? They 0:13:04.600 --> 0:13:08.080 were followed by Republican administrations that spent more than we 0:13:08.120 --> 0:13:12.080 had on tax cuts. I'm worried that putting together any 0:13:12.320 --> 0:13:15.760 coalition to care about fiscal responsibility is much harder. And 0:13:15.920 --> 0:13:18.800 I would point out fancy that the chairman's Gideon Rose 0:13:18.920 --> 0:13:23.160 is the Peterson, the Pete Peterson chair at the Council unformulations, 0:13:23.200 --> 0:13:28.760 with his deficit UH knowledge over the years. Francy. Yeah, 0:13:28.840 --> 0:13:30.839 I like them to talk about charm Tom, but I 0:13:30.880 --> 0:13:32.680 really want to talk about is actually dullar as a 0:13:32.679 --> 0:13:35.400 reserve of currency? Secretary leew And. This is something that 0:13:35.440 --> 0:13:38.640 you alluded when we started off the conversation. Why why 0:13:38.760 --> 0:13:42.240 does it not actually really lose its appeal in less 0:13:42.240 --> 0:13:45.680 than ten years if the US continues going the way 0:13:45.679 --> 0:13:48.600 it is. Look at the moment, I don't see an 0:13:48.600 --> 0:13:52.320 alternative out there. There were times when people thought that 0:13:52.440 --> 0:13:56.080 either the euro or the yen or the R and 0:13:56.120 --> 0:14:00.640 B would emerge as a near term alternative. UM. I 0:14:00.679 --> 0:14:02.880 think if you look over the next five or ten years, 0:14:03.040 --> 0:14:05.440 it is hard to imagine that it's going to be 0:14:05.480 --> 0:14:09.480 a process that's that quick. I'm being very careful when 0:14:09.520 --> 0:14:12.920 I say this is a multi decade process. Um. The 0:14:13.320 --> 0:14:17.000 special position the United States has in the world, because 0:14:17.080 --> 0:14:19.600 the dollar is the world reserve currency, is one of 0:14:19.600 --> 0:14:21.720 the reasons we have the ability to have the deepest 0:14:21.720 --> 0:14:24.240 and most liquid bond markets in the world. It's it's 0:14:24.280 --> 0:14:28.360 the reason we can exercise the sanctions authority that we exercise. 0:14:28.760 --> 0:14:31.960 It's an enormous consequence to the United States to maintain that. 0:14:32.520 --> 0:14:34.640 I think if you just turn the speed up on 0:14:34.720 --> 0:14:38.200 a movement away, it is against the national interest. So 0:14:38.320 --> 0:14:40.120 I'm not sitting here predicting it's going to be in 0:14:40.120 --> 0:14:43.080 the next five or ten years. And and I I 0:14:43.120 --> 0:14:46.080 think if there were an alternative, I might be in 0:14:46.120 --> 0:14:49.120 a position where I would be more concerned about it 0:14:49.120 --> 0:14:51.640 being quicker. I think it's pretty scary if you take 0:14:51.680 --> 0:14:54.320 what could be a fifty year process and you accelerated 0:14:54.360 --> 0:14:57.800 by ten or fifteen or twenty years. But does China 0:14:57.880 --> 0:15:01.680 want to be that China fill that vacuum. I think 0:15:01.720 --> 0:15:05.160 at the moment, you know, China wants to have it 0:15:05.200 --> 0:15:09.680 both ways. They want to be taken very seriously as 0:15:09.800 --> 0:15:11.840 one of the two major economies of the world. They 0:15:11.880 --> 0:15:14.520 wanted their currency, the R and B, to be accepted 0:15:14.720 --> 0:15:18.160 by the I m F into the Special Drawing Rights basket. Uh. 0:15:18.320 --> 0:15:21.880 They don't really want their currency to be fully convertible 0:15:22.000 --> 0:15:25.200 and subject to all market pressures the way a world 0:15:25.240 --> 0:15:28.000 reserve currency would have to be. Um. Do they want 0:15:28.040 --> 0:15:30.920 that in the long term? Possibly? What I do think 0:15:31.080 --> 0:15:35.120 is that there are conversations between Chinese and Europeans looking 0:15:35.160 --> 0:15:38.720 at ways to develop alternatives to you know, settling in 0:15:38.800 --> 0:15:41.240 dollars and going through things like swift. What we're gonna 0:15:41.240 --> 0:15:43.520 do is one final question with Secretary Low and then 0:15:43.560 --> 0:15:47.600 we'll move forward with Gideon Rows on Foreign Affairs Magazine. 0:15:47.680 --> 0:15:52.520 Some interesting themes they are, particularly on nuclear warfare. Mr Secretary, 0:15:52.720 --> 0:15:57.160 your Democratic Party was distracted over the last twenty four 0:15:57.200 --> 0:16:00.120 hours of the DNA out to one one thousand and 0:16:00.160 --> 0:16:04.360 twenty four of whatever this silly DNA debate is. How 0:16:04.400 --> 0:16:08.920 does your party get back to Mokeley and Tip O'Neill. 0:16:09.320 --> 0:16:12.120 It's that simple. How do we get back to what 0:16:12.200 --> 0:16:15.040 you lived a number of decades ago? You know, Tom, 0:16:15.200 --> 0:16:18.040 I hear a lot of discussion about where where is 0:16:18.080 --> 0:16:20.760 the Democratic Party going? Um. I think in a few 0:16:20.840 --> 0:16:23.280 weeks on election day, we're going to see whether or 0:16:23.320 --> 0:16:26.480 not Democrats win a majority in the House. The arithmetic 0:16:26.520 --> 0:16:29.480 to me is pretty straightforward. If we went back a 0:16:29.560 --> 0:16:32.840 majority will be because we picked up some centrist seats, 0:16:33.040 --> 0:16:36.600 some switchovers from Republican to Democratic seats, and you're going 0:16:36.640 --> 0:16:40.040 to see a group of new faces, new moderates come 0:16:40.080 --> 0:16:43.720 to Washington. This is not a moment where I expect 0:16:44.200 --> 0:16:47.040 broad bypartisan revival, but I think it's gonna be a 0:16:47.040 --> 0:16:49.240 breath of fresh air if we see some faces that 0:16:49.280 --> 0:16:51.080 are looking at how do we get things done, how 0:16:51.120 --> 0:16:54.040 do we solve problems? And that's going to start to 0:16:54.600 --> 0:16:57.120 become part of the debate about where is the Democratic 0:16:57.120 --> 0:17:01.640 Party going? Mr Secretary, congratulations on your article and Warn Affairs. 0:17:01.960 --> 0:17:08.520 Uh this morning Gideon Rose with us in celebration of 0:17:08.600 --> 0:17:11.720 a new issue of Foreign Affairs magazine. It's got a 0:17:12.280 --> 0:17:15.679 real focus on a new thinking about nuclear But the 0:17:15.760 --> 0:17:18.879 real headline, Gideon Rose, is you go all cabinet on 0:17:19.000 --> 0:17:22.960 us with an essay by Secretary of Pompeio distracted right 0:17:22.960 --> 0:17:25.440 now in read and the attendance this morning of the 0:17:25.480 --> 0:17:30.040 Secretary Treasury Jack Lou with you as well with Bloomberg Surveillance. 0:17:30.160 --> 0:17:31.959 Let's start with Jack Lou. What did he tell you 0:17:32.000 --> 0:17:38.160 in Foreign Affairs? The great ability to have wise men 0:17:38.240 --> 0:17:40.240 and women like that to come in and sort of 0:17:40.920 --> 0:17:43.440 help us get some perspective on events is really one 0:17:43.440 --> 0:17:46.520 of the pleasures of the job. Um. So one of 0:17:46.600 --> 0:17:49.240 the things that that Secretary lou is so concerned about 0:17:49.400 --> 0:17:53.480 is the way that we are abusing The United States 0:17:53.480 --> 0:17:57.560 is abusing its privileges as the most important dominant nation 0:17:57.600 --> 0:18:00.879 in the global economy. And the question of we have 0:18:01.040 --> 0:18:04.000 the leverage to use our financial power to extract things 0:18:04.000 --> 0:18:07.560 from others, to enforce norms, to uh get things we want, 0:18:07.720 --> 0:18:09.679 but we can't do it recklessly, and if we do 0:18:09.720 --> 0:18:13.440 it too much, then other countries basically start to question 0:18:13.520 --> 0:18:15.320 whether they want to be part of a system that 0:18:15.400 --> 0:18:18.640 we are helping to run. And the real question here 0:18:18.720 --> 0:18:21.920 is the United States has basically engaged in a bargain 0:18:21.960 --> 0:18:24.840 with the world in which we have our economic power 0:18:25.400 --> 0:18:29.240 and our security power, and we use it relatively restrained 0:18:29.359 --> 0:18:32.439 lee on behalf not just of our own national interests, 0:18:32.520 --> 0:18:34.840 but of the system stability as a whole. And the 0:18:34.920 --> 0:18:37.720 question now is are we actually going to continue that 0:18:37.800 --> 0:18:40.359 kind of policy or are we going to simply be 0:18:40.480 --> 0:18:42.199 using our power just for us? And if we do 0:18:42.240 --> 0:18:44.840 it just for us, at some point will others say 0:18:44.880 --> 0:18:46.760 this is not a game we want to keep playing. 0:18:46.800 --> 0:18:48.199 So let's not with the premise of the pace, and 0:18:48.200 --> 0:18:50.200 we should question it to begin with, Is the United 0:18:50.200 --> 0:18:53.040 States doing it too much? Well? I think so the 0:18:53.080 --> 0:18:56.240 answer is again yes, because we're picking fights with everybody. 0:18:56.240 --> 0:18:59.120 If not so much that you can't have trade disputes 0:18:59.200 --> 0:19:00.760 with your allies, not so much of you cannot trade 0:19:00.760 --> 0:19:02.640 disputes with China. It's not so much that you can't 0:19:02.720 --> 0:19:04.679 object to what Russia is doing in here, and you 0:19:04.720 --> 0:19:06.560 can't object to what ex is doing there, and you 0:19:06.560 --> 0:19:09.800 should say something about the Saudis. But basically, if every 0:19:09.840 --> 0:19:13.760 single mode is punitive and you're never cooperating, and you're 0:19:13.800 --> 0:19:17.240 basically trying to punish everybody, you you rack up a 0:19:17.240 --> 0:19:21.240 lot of grudging compliance. Even when you get anything at all, 0:19:21.400 --> 0:19:23.439 you piss people off. And that's what we're doing now. 0:19:23.480 --> 0:19:27.080 And the question is how long before people just start 0:19:27.119 --> 0:19:30.160 to lose faith in American economic leadership of the system 0:19:30.200 --> 0:19:32.720 as a whole. That's the real danger here down the road. 0:19:32.840 --> 0:19:35.919 And Secretary of Pompeo with an essay as well on Iran, 0:19:36.000 --> 0:19:37.840 and in course he is speaking the Trump Doctor and 0:19:37.880 --> 0:19:40.000 as he calls, well, but so this is a great question, right, 0:19:40.040 --> 0:19:42.479 So what what what Pompeo wants? And it's a legit 0:19:42.560 --> 0:19:46.680 goal is to use American economic leverage to get let's say, 0:19:46.680 --> 0:19:49.400 other countries like the Europeans, to put pressure on Iran 0:19:49.520 --> 0:19:52.440 and to further our goals. That's a legitimate policy. We've 0:19:52.440 --> 0:19:54.920 tried to do secondary sanctions before. I happened to think 0:19:54.920 --> 0:19:57.400 it's a dumb policy that doesn't work well because other 0:19:57.440 --> 0:20:00.479 countries resist. That has happened in the Nine Ease with 0:20:00.520 --> 0:20:04.919 Europe on Iran and Libya sanctions. But basically, if you 0:20:05.000 --> 0:20:06.879 want to do that, then you can't pick fights on 0:20:06.920 --> 0:20:08.479 something else, and if you want to pick fights on 0:20:08.480 --> 0:20:10.359 this other thing, you can do that. You can't fight 0:20:10.400 --> 0:20:13.280 with everybody all the time. If you do that, your 0:20:13.280 --> 0:20:16.000 positioner rose down the road. And what the administration is 0:20:16.600 --> 0:20:19.800 has it's demonstrated its ability to get into fights, and 0:20:19.840 --> 0:20:22.880 it's even demonstrated its ability to get out of them 0:20:23.520 --> 0:20:26.600 uh and settle them and move on. But it hasn't 0:20:26.680 --> 0:20:29.680 yet demonstrated any ability as far as I can see, 0:20:29.880 --> 0:20:33.439 to link its fights together to some broader strategy that 0:20:33.520 --> 0:20:36.960 moves things forward. Overall. Well, let's talk about the argument 0:20:37.000 --> 0:20:39.040 as to whether there is one rule for Iran and 0:20:39.080 --> 0:20:43.199 another facaity Arabia to sending Arabic at special treatment. And 0:20:43.200 --> 0:20:47.199 why because they are the dominant player in the global 0:20:47.280 --> 0:20:52.720 energy supply markets and that extracts their ability to uh, 0:20:53.200 --> 0:20:58.080 their their ability to manipulate oil prices, gives them leverage 0:20:58.200 --> 0:21:02.560 over other countries pulses? Does that enable them to commit 0:21:02.920 --> 0:21:06.600 humanitarian catastrophes, do things like the allegations that we're seeing 0:21:06.640 --> 0:21:10.920 in Turkey murdering journalists. I mean, uh, if you say, 0:21:10.960 --> 0:21:14.199 does it permit it in practice? Yes? In theory no, 0:21:15.400 --> 0:21:19.199 but I think you will. And my cynical guess is 0:21:19.240 --> 0:21:22.200 that you're going to see this uh again. People are shocked, 0:21:22.359 --> 0:21:26.040 shocked to find this happening. Nobody is surprised. Nobody has 0:21:26.080 --> 0:21:28.600 any illusions about what the Saudi regime is actually like, 0:21:28.680 --> 0:21:30.680 and if they did, they were uh, they were silly 0:21:30.720 --> 0:21:34.359 to have done so. Um. Yeah, I looked within the 0:21:34.400 --> 0:21:37.440 magazine and we don't really have time for it today. 0:21:37.480 --> 0:21:41.000 Why did you take the nuclear topic on? Because what 0:21:42.040 --> 0:21:45.359 annoyed me was the fact that the nuclear issues get 0:21:45.440 --> 0:21:49.840 brought in as unquestioned game changers. And when you say, okay, 0:21:49.920 --> 0:21:52.280 no matter what we're doing, we they've they've moved forward. 0:21:52.359 --> 0:21:55.320 So obviously this Trump's everything, and it's no longer clear 0:21:55.320 --> 0:21:57.479 to me that that necessarily should be the case. There 0:21:57.480 --> 0:21:59.600