WEBVTT - Surveillance: Afghanistan with NATO's Stoltenberg 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferroll and Lisa Bronwitz Jaily. We bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:29.680 and of course on the Bloomberg terminal. Right now we 0:00:29.880 --> 0:00:33.200 change gears. We've been speaking with Ambassador Bolton and Congressman 0:00:33.280 --> 0:00:37.159 Davidson from Ohio and now and Lisa Bramwits has been 0:00:37.240 --> 0:00:41.040 so good about this. We speak of an allied response. 0:00:41.240 --> 0:00:44.920 We've heard many defenses of the permanence in need for NATO. 0:00:45.280 --> 0:00:48.200 We are now joined by the Secretary General, of course, 0:00:48.240 --> 0:00:52.680 his affiliation with his Norway against Stoltenberg, joins us this morning. 0:00:52.960 --> 0:00:58.640 Yen's what should be NATO policy after America exits from Afghanistan. 0:01:01.720 --> 0:01:06.360 First of all, to stay committed to uh to ensure 0:01:06.480 --> 0:01:10.120 that Afghanistan doesn't once again the concepts safe avan for 0:01:10.400 --> 0:01:13.039 national terrorists, because we have to remember that the reason 0:01:13.080 --> 0:01:18.039 why NATO allaizes joined the United States going into Afghanistan 0:01:18.480 --> 0:01:22.120 in two thousand and one was a direct response to 0:01:22.319 --> 0:01:26.000 terrorist attack attack on the United States and the hundreds 0:01:26.040 --> 0:01:29.760 of thousands of Canadian European NATUS soldiers and partners have 0:01:29.880 --> 0:01:33.400 served alongside US soldiers there for twenty years, and and 0:01:33.480 --> 0:01:36.959 for those twenties we have prevented Afghanistan from being a 0:01:36.959 --> 0:01:40.480 safe havan for international terrorists. We need to ensure that 0:01:40.480 --> 0:01:44.560 that also the case in the future, so so we 0:01:44.600 --> 0:01:48.360 will we will follow monitor the new rulers and Cobbled 0:01:48.440 --> 0:01:50.440 very closely, and we will also make it clear that 0:01:51.360 --> 0:01:54.320 NATO allies have the capabilities to strike from long distance 0:01:54.840 --> 0:01:58.760 terrorist groups if they try to re establish themselves in Afghanistan. 0:01:58.840 --> 0:02:01.520 Because at the time constrained this morning, Secretary General, I 0:02:01.520 --> 0:02:05.800 really want to focus on the important Resolute support mission, 0:02:05.880 --> 0:02:09.040 the idea of the Italians in the west of Afghanistan, 0:02:09.480 --> 0:02:13.000 the Germans up north where the Northern alliances, and then 0:02:13.040 --> 0:02:16.840 there's a Turkish flag in the middle providing support NATO's 0:02:16.880 --> 0:02:21.600 support to Afghanistan. Now Turkey is in a unique position. 0:02:22.120 --> 0:02:26.880 Explain NATO's relationship with Mr Rajuan and the New Afghanistan. 0:02:28.919 --> 0:02:32.760 The NATO has ended its military presence in Afghanistan, as 0:02:32.960 --> 0:02:35.440 NATI states as huh and I would like to thank 0:02:35.480 --> 0:02:38.680 and praise and and and command all those men and 0:02:38.720 --> 0:02:41.640 women who have served there for so many years, and 0:02:41.680 --> 0:02:45.239 their efforts and their service was not in vain. Turkey 0:02:45.680 --> 0:02:48.920 Is has spread the key role in in operating the 0:02:48.919 --> 0:02:53.280 airport and and Turke has offered to continue to support 0:02:53.760 --> 0:02:57.800 the airport. And the airport is in cobble Is vitallys 0:02:57.800 --> 0:03:01.440 a vital link to the world to get a humanitarian 0:03:01.560 --> 0:03:06.480 aid in but also to enable safe passage for those 0:03:06.520 --> 0:03:11.000 who want to leave. And NATO allies have strongly stated 0:03:11.040 --> 0:03:13.600 that we will not forget all those who are still 0:03:13.600 --> 0:03:16.840 in Afghanistan who supported those who are at risk, and 0:03:16.880 --> 0:03:19.600 we will continue to work to ensure that they can 0:03:19.760 --> 0:03:24.520 leave Afghanistan. Will that be in NATO support directly and 0:03:24.600 --> 0:03:29.200 the many adjacent borders of Afghanistan to continue to get 0:03:29.360 --> 0:03:34.160 people out. So NATAL allies are first of all working 0:03:34.200 --> 0:03:39.440 on how to make sure that airport can continue to operate. 0:03:40.200 --> 0:03:42.920 A second, we expect the Taliban to live up to 0:03:42.960 --> 0:03:47.200 their commitments both on safe passage but also on open 0:03:47.440 --> 0:03:50.880 land borders UH and of course also what they are 0:03:50.920 --> 0:03:55.480 promised when it comes to preventing Harris organizations being able 0:03:55.520 --> 0:03:58.920 to reconstitute themselves in Afghanistan. If you're just joining us 0:03:58.920 --> 0:04:01.560 on radio and television in Stoltenberg, where there's a former 0:04:01.560 --> 0:04:05.160 Prime Minister of Norway, Secretary General of NATO or honored 0:04:05.160 --> 0:04:08.000 that he could join us on this historic morning, Mr. 0:04:08.080 --> 0:04:11.720 Secretary General NATO. It's not so much in search of 0:04:11.720 --> 0:04:14.000 a mission, but it is a morph It is a 0:04:14.080 --> 0:04:20.360 changeable Europe, a changeable NATO North Atlantic Treaty organization. As 0:04:20.440 --> 0:04:24.120 we move into two thousand twenty two, all of that 0:04:24.600 --> 0:04:28.800 butcher stuff against a question of migration, a question of 0:04:28.920 --> 0:04:33.400 refugees across Europe, I would suggest this is the third rail. 0:04:33.760 --> 0:04:38.440 How can NATO support its nations and continental Europe confronting 0:04:38.600 --> 0:04:45.280 a new round of mass refugees and migration. Our main 0:04:45.360 --> 0:04:50.080 talk is to help to stabilize our neighborhood and that's 0:04:50.080 --> 0:04:53.120 the reason why we are working with partners in North 0:04:53.160 --> 0:04:58.920 Africa Enemy least to help to stabilize countries in our neighborhoo. 0:04:58.960 --> 0:05:02.520 Because we're our neighbors on most table, we are more secure. 0:05:03.040 --> 0:05:05.719 We also have some presents, for instance in the Agen 0:05:05.920 --> 0:05:08.880 where we help to implement agreement within Turkey and the 0:05:08.920 --> 0:05:13.520 European Union on illegal migration over the Agine see from 0:05:13.520 --> 0:05:18.560 from Turkey into the rest of Europe. But the NATO's 0:05:18.640 --> 0:05:21.159 main purpose is to make sure that we stand together 0:05:21.640 --> 0:05:25.600 thirty allies, one for all, and all for one. This 0:05:25.720 --> 0:05:28.000 is important for Europe, but it's also important for the 0:05:28.080 --> 0:05:33.200 United States. In a world with a shifting global balance 0:05:33.200 --> 0:05:35.560 of power with the rights of China, it is a 0:05:35.640 --> 0:05:39.480 huge advantage for the United States to have twenty nine 0:05:39.680 --> 0:05:43.520 friends and allies in NATO. No other major power has 0:05:43.600 --> 0:05:46.920 anything like that, and therefore a strong NATO, Europe and 0:05:46.920 --> 0:05:50.640 North American standing together is important both for North America 0:05:50.760 --> 0:05:54.720 and for Europe. How can NATO assist your members in 0:05:54.839 --> 0:05:58.159 what we're hearing interview the interview general commit of the 0:05:58.240 --> 0:06:03.120 United States Ambassadorable Alton, Congressman Davidson, and others. They all 0:06:03.160 --> 0:06:07.440 circle back to a relationship of a new Afghanistan with 0:06:07.560 --> 0:06:11.520 China and with Russia. How can NATO respond to that 0:06:11.720 --> 0:06:18.960 perceived new alliance? So for US, it's obvious that all 0:06:19.000 --> 0:06:22.200 the countries in the region, and that of course also 0:06:22.240 --> 0:06:25.400 includes China and neighbor Afghanistan and the Russia not so 0:06:25.440 --> 0:06:28.680 far away, it is in their interests to have a 0:06:28.760 --> 0:06:34.520 stable Afghanistan and Afghanistan where terrorist groups like isis K 0:06:35.520 --> 0:06:41.520 cannot work. Established themselves operate plan Taririst attacks against any 0:06:41.520 --> 0:06:46.520 other country. So there are many differences between Russia, China, 0:06:46.720 --> 0:06:49.839 NATO allies and all the countries in the region, but 0:06:49.960 --> 0:06:54.760 we all have a common interest in preventing Afghanistan from 0:06:54.800 --> 0:06:57.760 once again as it was before we went in in 0:06:57.800 --> 0:07:01.680 two thousand and one, becoming a place where TIS organizations 0:07:01.680 --> 0:07:06.719 can plan, organize, conductors attacks against other countries. Mr. Secretary 0:07:06.800 --> 0:07:11.200 General Angelo Merkell of Germany speaks of an existential need 0:07:11.440 --> 0:07:14.480 to have a Kabbal airport open. You mentioned it earlier, 0:07:14.680 --> 0:07:17.280 like in our final moments here to speak about the 0:07:17.400 --> 0:07:20.640 new Kabal airport. How do you perceive and you mentioned 0:07:20.680 --> 0:07:24.600 Turkey and their affiliation of protecting and sustaining it over 0:07:24.640 --> 0:07:27.440 the years of this war, how do you perceive a 0:07:27.520 --> 0:07:36.000 new Kabbal airport with NATO support. NATO Allies are strongly 0:07:36.040 --> 0:07:38.960 supporting the efforts to make sure that we have a 0:07:39.040 --> 0:07:44.840 functional operational airport in a cobbal U. Turkey is playing 0:07:44.880 --> 0:07:48.840 a key role. I discussed this uh just yesterday with 0:07:49.000 --> 0:07:51.840 the with the Turkish Foreign Minister, and I would like 0:07:51.920 --> 0:07:55.600 to praise Turkey for the key role both in supporting, 0:07:55.680 --> 0:08:01.640 helping facilitating the evacuation, getting people out from Cobble, out 0:08:01.640 --> 0:08:04.320 from Afghanistan into the airport over the last days, but 0:08:04.400 --> 0:08:07.440 also now the offer they have made to help to 0:08:07.440 --> 0:08:11.080 operate the airport, because the airport is are so essential 0:08:11.840 --> 0:08:14.720 both for aid coming in but also for people to 0:08:14.800 --> 0:08:17.960 be able to leave. But how will we affect that, 0:08:18.160 --> 0:08:22.160 I mean America's it's done over what occurred yesterday. We 0:08:22.200 --> 0:08:24.920 all knew it was coming, and yet particularly those of 0:08:25.000 --> 0:08:29.400 us with an understanding of nineteen five, are stunned. How 0:08:29.440 --> 0:08:35.680 do we actually affect a reopening with the Tailiban? As 0:08:35.720 --> 0:08:40.080 we work, NATO is not planning to deploy any forces 0:08:40.160 --> 0:08:43.200 or personnel at the Cobble Airport. We have ended our 0:08:43.240 --> 0:08:47.280 military presence there as as as as an alliance and 0:08:47.320 --> 0:08:50.880 as for instance allies like the ninety States have done. 0:08:51.320 --> 0:08:55.199 But we are working with other countries, including a need 0:08:55.240 --> 0:08:58.680 to ally cad UH and they have what I will 0:08:58.720 --> 0:09:03.040 call operational contact with Taliban to see if we can 0:09:03.080 --> 0:09:08.400 help ensuring that the continue, that the airport continues to function. 0:09:08.600 --> 0:09:11.520 Mr Secretary General, thank you so much for joining Bloomberg 0:09:11.559 --> 0:09:16.480 this morning. Yen Stoltenberg, NATO Secretary General, and this historic morning, 0:09:20.960 --> 0:09:25.320 we now finished whatever year Politics is with John Bolton. 0:09:25.400 --> 0:09:28.600 He is a former national security advisor. The book A 0:09:28.640 --> 0:09:31.920 Sensation a year ago, the room where it happened, and 0:09:31.960 --> 0:09:36.040 we're thrilled that Ambassador Bolton could join us this morning. 0:09:36.280 --> 0:09:39.040 I'm not going to mince words, Ambassador Bolton. You are 0:09:39.160 --> 0:09:45.320 scathing about the urgency and the magnitude of the Pakistan problem. 0:09:45.360 --> 0:09:48.720 How should the Secretary of State advise a president on 0:09:48.760 --> 0:09:54.200 our new relationship with Pakistan? Well, I think for many 0:09:54.280 --> 0:09:59.119 years we've been constrained by our concern for Pakistani logistical 0:09:59.200 --> 0:10:03.840 support to our forces in Afghanistan, and our concern about 0:10:04.320 --> 0:10:07.800 Pakistan's nuclear weapons, which if they fell into the hands 0:10:07.800 --> 0:10:11.360 of terrorists one by one, or worst case, the terrorist 0:10:11.440 --> 0:10:15.040 regime took over Pakistan, would be a global threat immediately. 0:10:16.040 --> 0:10:18.400 But the fact is we've been played by the government 0:10:18.400 --> 0:10:22.880 of Pakistan for a long time. Terrorist elements within that 0:10:22.920 --> 0:10:28.240 government already, particularly Inner Services intelligence, have played a double game, 0:10:28.360 --> 0:10:30.720 and we've put up with it. I just think with 0:10:30.840 --> 0:10:35.880 the end of American involvement in Afghanistan, with a terrorist 0:10:35.920 --> 0:10:40.320 government in place there now, which gives potential support for 0:10:40.520 --> 0:10:43.719 terrorist activity and take over Pakistan, we've just got to 0:10:43.760 --> 0:10:47.160 get tough on the government either to crack down on 0:10:47.360 --> 0:10:50.199 terrorism or to face the consequences. To me, the critical 0:10:50.280 --> 0:10:53.680 sentence and you're wonderful essay and the Washington Post, John Bolton, 0:10:54.160 --> 0:10:57.640 was you say, now we tilt to India. Let's take 0:10:57.679 --> 0:11:01.319 it back to John Galbraith's ambassador to India, long ago 0:11:01.440 --> 0:11:05.040 and far away. We've always been struggling with this tilt 0:11:05.080 --> 0:11:08.680 to India. How do we tilt to India now to 0:11:08.840 --> 0:11:13.240 assist the memory of our soldiers in Afghanistan. Well, the 0:11:13.600 --> 0:11:16.679 principal threat that we face globally in the twenty one 0:11:16.800 --> 0:11:20.720 century is China, and India has moved away a long 0:11:20.800 --> 0:11:23.400 way from the so called neutrality of the Cold War, 0:11:23.480 --> 0:11:27.280 where it actually tilted towards the Soviet Union, which was 0:11:27.320 --> 0:11:30.079 one reason we tilted towards Pakistan. I mean, it kind 0:11:30.120 --> 0:11:32.640 of goes back and forth, but but India now sees 0:11:32.760 --> 0:11:35.360 China as the threat, and it sees the same thing 0:11:35.400 --> 0:11:39.880 we see in Pakistan, a large and growing Chinese presence 0:11:39.920 --> 0:11:42.959 of Chinese assistance to Pakistan over the years for its 0:11:43.040 --> 0:11:46.679 nuclear and ballistic missile programs. Uh and I think the 0:11:46.720 --> 0:11:49.480 time is is here for the US to tighten up 0:11:49.520 --> 0:11:52.840 with with India. With Australia, with Japan, which we already 0:11:52.840 --> 0:11:55.840 formed what we call the Quad with UH and and 0:11:56.160 --> 0:11:58.679 really to put to Pakistan as clearly as we can 0:11:58.840 --> 0:12:03.560 give up this flotation with terrorism and UH. If you do, 0:12:03.679 --> 0:12:06.439 there's a there's a real prospect for cooperation. But we're 0:12:06.480 --> 0:12:09.000 not going to go on any longer pretending you're not 0:12:09.080 --> 0:12:12.240 doing it. There's always been a struggle. You're institutionally within 0:12:12.280 --> 0:12:16.760 our international relations with India. What form of relationship would 0:12:16.800 --> 0:12:20.840 you advocate after your travels to Central Asia? Does Biden 0:12:20.880 --> 0:12:24.520 need to go to Delhi now? Well, I think he 0:12:24.559 --> 0:12:27.360 needs to go soon. And I think we've got some 0:12:27.400 --> 0:12:29.760 real issues with India too. This is not this is 0:12:29.760 --> 0:12:31.840 not going to be easy. They've got to break their 0:12:31.880 --> 0:12:35.760 dependence on Russian weapons systems, which they've relied on and 0:12:35.800 --> 0:12:40.040 purchased for decades, going back to the Cold War. Uh And. 0:12:40.080 --> 0:12:43.840 I think a lot of the the political class in 0:12:43.840 --> 0:12:45.600 India is going to have to wake up to the 0:12:45.640 --> 0:12:48.920 fact that the neutrality, which was never really neutral during 0:12:48.920 --> 0:12:51.240 the Cold War, is no longer an option. I think 0:12:51.240 --> 0:12:54.079 they're beginning to move in that direction. I think, uh 0:12:54.120 --> 0:12:56.920 there's a lot of opportunity there, but I don't underestimate 0:12:56.960 --> 0:12:59.240 the amount of work that's going to be involved, impassatable 0:12:59.360 --> 0:13:01.280 and how can so? And are you about some sort 0:13:01.280 --> 0:13:05.360 of alliance between the Taliban and Islamic State or other 0:13:05.400 --> 0:13:08.560 groups that could become something reminiscent of the al Kada 0:13:08.679 --> 0:13:12.800 of your Well, I think I think it's an important question. 0:13:12.840 --> 0:13:15.120 I think we should first remember the al Qaida of 0:13:15.200 --> 0:13:17.560 your is the al Qaida of today as well, and 0:13:17.600 --> 0:13:20.920 they have remained in close touch with Taliban during twenty 0:13:21.000 --> 0:13:24.400 years of exile in Pakistan. They're back in force now. 0:13:24.480 --> 0:13:26.960 We see that even in U N reports before the 0:13:27.000 --> 0:13:30.880 fall of the Afghan government, isis K has been at 0:13:30.880 --> 0:13:35.000 odds with Taliban because they don't think they're tough enough, 0:13:35.120 --> 0:13:40.920 they think they're insufficiently strict in the implementation of Islamic law. 0:13:41.440 --> 0:13:44.920 So so there's there's tension there now. But but let's 0:13:44.960 --> 0:13:47.439 be clear, this could turn into cooperation in the blink 0:13:47.480 --> 0:13:51.880 of an eye. And isis K does have worldwide thread capabilities, 0:13:51.920 --> 0:13:55.120 as does al Qaeda, and I'm worried we have slipped 0:13:55.120 --> 0:13:59.240 back into a pre nine eleven situation. Meanwhile, we do 0:13:59.320 --> 0:14:01.560 have a poor that there are a number of American 0:14:01.600 --> 0:14:05.960 citizens still in Afghanistan UH, and the US has completely 0:14:06.040 --> 0:14:09.000 pulled out. What do you see as the best pathway 0:14:09.360 --> 0:14:12.440 to get some of these people who are remaining out 0:14:12.440 --> 0:14:16.040 of the nation safely? I mean, especially whose alliance are 0:14:16.040 --> 0:14:19.680 we going to rely upon. Well, I'm I'm very worried 0:14:19.680 --> 0:14:22.160 that that they're not coming out. Let's let's remember a 0:14:22.200 --> 0:14:25.440 lot of these US citizens may well be dual citizen 0:14:25.600 --> 0:14:29.000 US and Afghan or they may have been Afghan and 0:14:29.000 --> 0:14:34.080 and become US citizens. So from Taliban's perspective, there's still 0:14:34.120 --> 0:14:40.960 Afghans and UH. I would not UH rest any comfort 0:14:41.040 --> 0:14:43.800 in cooperating with Taliban that we may get a few 0:14:43.800 --> 0:14:47.080 more people out who are American citizens. I think the 0:14:47.160 --> 0:14:50.520 number of Afghans who worked with US and other coalition 0:14:50.600 --> 0:14:53.280 forces for the last twenty years are going to be 0:14:53.400 --> 0:14:56.200 few and far between getting out. I think I think 0:14:56.240 --> 0:15:00.600 we're real risk here of a long brutal hostage situation. 0:15:01.520 --> 0:15:03.680 Did we do the right thing? We left, and we 0:15:03.800 --> 0:15:07.640 left those people behind, and we knowingly did it. We 0:15:07.960 --> 0:15:10.480 never should have left. I think that's the fundamental mistake. 0:15:10.520 --> 0:15:14.840 I think the exit itself was badly bungled, no question 0:15:14.880 --> 0:15:17.720 about that. But the mistake here goes back to the 0:15:17.760 --> 0:15:23.000 Trump administration negotiating with the Taliban, not negotiating with a 0:15:23.080 --> 0:15:27.880 terrorist group, not negotiating with the government of Afghanistan that 0:15:27.960 --> 0:15:31.680 we helped create twenty years ago, and that whatever its deficiencies, 0:15:31.720 --> 0:15:35.680 and it had plenty, it had at least some democratic legitimacy, 0:15:35.800 --> 0:15:41.240 of which the Taliban has zero. Yeah, certainly complicated. Can 0:15:41.280 --> 0:15:43.360 you come back and just do big picture with us? 0:15:43.400 --> 0:15:45.440 A lot of the concerns about the way in which 0:15:45.480 --> 0:15:49.560 we withdrew has been China now stepping in the Belden 0:15:49.680 --> 0:15:53.040 Road initiative, as you know, through Pakistan. You wonder if 0:15:53.080 --> 0:15:58.240 it continues through Afghanistan. Is that a real threat? Yes? 0:15:58.440 --> 0:16:00.320 I think it is. In fact, I have up in 0:16:00.440 --> 0:16:03.520 the Well Street Journal today on the reaction both by 0:16:03.640 --> 0:16:06.480 China and Russia to what we've done in Afghanistan. And 0:16:06.520 --> 0:16:10.920 I think while we're all understandably concentrating on what's gone 0:16:10.920 --> 0:16:14.560 wrong in Afghanistan, what's the global terrorst threat? As a consequence, 0:16:14.680 --> 0:16:17.320 if you look at the big picture, our main adversaries 0:16:17.320 --> 0:16:20.760 read this as a sign of American retwreet, retreat and weakness. 0:16:21.320 --> 0:16:24.040 John Bolton, you came out of Baltimore. Your father was 0:16:24.080 --> 0:16:27.760 a fireman, you did the military academy thing and wandered 0:16:27.840 --> 0:16:30.720 up to the liberal swamp known as New Have in Connecticut, 0:16:31.240 --> 0:16:33.040 and and it must have been a real shock your 0:16:33.040 --> 0:16:36.760 first day at Yale University. You did pretty good up 0:16:36.800 --> 0:16:41.720 there as well. You've got a great perspective on the 0:16:41.760 --> 0:16:46.960 international relations establishment of Washington. Are we in search of 0:16:47.000 --> 0:16:51.840 an operative theory? We went from the civilizations, the Washington consensus, 0:16:52.040 --> 0:16:56.320 maybe Zakaria's post American world. What does John Bolton's new 0:16:56.560 --> 0:17:00.880 foreign policy theory look like? Well, you know, I'm a 0:17:00.920 --> 0:17:07.040 Burkean conservative, so I'm not so interested in the broad 0:17:07.080 --> 0:17:10.240 scale theorizing. But I think American foreign policy has to 0:17:10.240 --> 0:17:14.040 be based on American national interest, which is why we 0:17:14.040 --> 0:17:16.479 were in Afghanistan, not not We weren't there to do 0:17:16.600 --> 0:17:19.320 charity work for the Afghans. We were there as a 0:17:19.400 --> 0:17:23.040 strategic defense against the recurrence of terrorism like we saw 0:17:23.080 --> 0:17:25.520 on nine eleven. And I think when we give up 0:17:25.600 --> 0:17:29.480 that very hard headed approach, we leave American danger, which 0:17:29.560 --> 0:17:32.200 is exactly where I think we are today. Meanwhile, we 0:17:32.240 --> 0:17:35.240 are hearing the administration is turning its focus much more 0:17:35.400 --> 0:17:38.800 to the Far East, into cyber security, to cyber warfare, 0:17:38.840 --> 0:17:42.439 to the protection uh, that could come from space and 0:17:42.520 --> 0:17:44.879 other types of fronts for the new war. What do 0:17:44.920 --> 0:17:48.080 you foresee in terms of the U s IS priorities 0:17:48.119 --> 0:17:52.320 and how it should chart a path in that direction. Well, 0:17:52.359 --> 0:17:55.760 I think cyberspace has been a kind of a garden 0:17:55.800 --> 0:17:58.040 of Eden for many people for twenty years or so. 0:17:58.200 --> 0:18:02.040 We now realize it's filled with dangers. As I said before, 0:18:02.080 --> 0:18:04.720 I do think China is the main threats, the existential 0:18:04.760 --> 0:18:07.400 threat of the twenty one century. But but I think 0:18:07.480 --> 0:18:10.360 what's most important to understand is with the with the 0:18:10.520 --> 0:18:13.280 end of the Cold War, the collapse of the Soviet Union. 0:18:13.680 --> 0:18:17.120 Although people had this dream of the peace dividend and whatnot, 0:18:17.200 --> 0:18:19.840 actually in the past thirty years the world is more 0:18:19.960 --> 0:18:23.040 dangerous from more diverse threats that we've got to be 0:18:23.080 --> 0:18:27.400 ready for. It's not with Afghanistan gone we're more secure. 0:18:27.200 --> 0:18:29.800 The clear point today is we are less secure and 0:18:29.840 --> 0:18:33.120 we need to be ready across a multiplicity of threats. 0:18:33.200 --> 0:18:35.240 Inbassador Bolton, thank you so much writing in the Wall 0:18:35.280 --> 0:18:38.000 Street Journalist morning, and we thank him for his conversation. 0:18:43.000 --> 0:18:46.120 He watches the euro on an hour by hour Basis. 0:18:46.160 --> 0:18:49.960 Ibrahim Urbari City Group Global had a foreign exchange analysis, 0:18:50.000 --> 0:18:53.040 but much more than foreign exchange folding in the sum 0:18:53.280 --> 0:18:58.600 of all its part. How correlated are the markets right now, Abraham, Well, 0:18:58.640 --> 0:19:01.440 they remained pretty correlated, and in fact, when we look 0:19:01.440 --> 0:19:03.840 at the FX market, one of the major ques we 0:19:04.160 --> 0:19:06.640 of course always take is what happens in in in 0:19:06.640 --> 0:19:09.120 interest rates and what happens in terms of global risk 0:19:09.160 --> 0:19:13.080 appetite and ex has been moving more or less in tandem. 0:19:13.440 --> 0:19:16.240 That being said, for the dollars specifically, it means that 0:19:16.320 --> 0:19:19.280 it's been called in the cross currents to a degree. 0:19:19.400 --> 0:19:22.600 As you said, it's been a little range fund over 0:19:22.640 --> 0:19:24.680 the last few weeks because interest rates in the US 0:19:24.720 --> 0:19:26.919 have been low even as equity markets have been pushing 0:19:27.000 --> 0:19:30.399 up so raises. You were him the economic question, what 0:19:30.480 --> 0:19:33.679 could potentially push the Fed to act more quickly and 0:19:33.720 --> 0:19:36.240 thus to create some strength in the dollar that could 0:19:36.240 --> 0:19:38.760 disrupt the rest of the ffex world. What are you 0:19:38.800 --> 0:19:43.159 looking for in this Friday's jobs report on that front? Well, 0:19:43.200 --> 0:19:45.680 I think when it comes to the FED, they're actually 0:19:46.480 --> 0:19:49.040 drivers that matter a lot and drivers that matter much less. 0:19:49.119 --> 0:19:51.560 And I think the tapering question is much more in 0:19:51.600 --> 0:19:53.920 the latter category. And that was the main takeaway coming 0:19:53.920 --> 0:19:56.560 out of Jackson Hole. And therefore we don't think there's 0:19:56.640 --> 0:19:59.679 all that much that this paywall report can do for 0:19:59.720 --> 0:20:03.280 the actionality of the dollar beyond the day itself. What 0:20:03.400 --> 0:20:05.360 is much more important is what is the outbook for 0:20:05.680 --> 0:20:09.400 the fence price hiking intentions? And there I don't think 0:20:09.400 --> 0:20:13.040 this payroll report will do a great deal. So I 0:20:13.040 --> 0:20:15.640 think it will be a time until the FIT becomes 0:20:15.680 --> 0:20:19.640 the major market driver again in FX. If that's fascinating, Abrahim, 0:20:19.720 --> 0:20:21.640 especially when we take a look at what's happening over 0:20:21.680 --> 0:20:23.960 in Europe with the inflation print that we saw this morning, 0:20:24.000 --> 0:20:26.040 coming in at the hottest in two thousand and eleven, 0:20:26.280 --> 0:20:29.800 hotter than people previously expected. How much does this actually 0:20:30.119 --> 0:20:33.280 bleed into the potential for dollar strength? You're a weakness 0:20:33.520 --> 0:20:35.920 as you start to look at inflation really pick up, 0:20:35.960 --> 0:20:40.400 and perhaps people recognize that in the FX world. Yes, 0:20:40.520 --> 0:20:43.640 there I guess too too interesting observations here. One is, 0:20:43.680 --> 0:20:46.600 as you said, inflation in Europe has has crept high, 0:20:46.880 --> 0:20:49.880 much higher in a way that few of us have expected. 0:20:49.920 --> 0:20:52.159 And I think that puts the spotlight on to what 0:20:52.280 --> 0:20:54.879 the e CV may do at their next meeting just 0:20:55.000 --> 0:20:57.639 over a week from now, because they themselves have to 0:20:57.680 --> 0:21:01.560 consider whether to taper asset purchases, and our our expectation 0:21:01.600 --> 0:21:04.080 has been that they will be very slow in indicating that. 0:21:04.160 --> 0:21:07.760 But I think this inflation print could in fact increase 0:21:07.800 --> 0:21:10.440 the urgency for them to prepare to wind down there 0:21:10.480 --> 0:21:12.919 as a purchase program, and that in turn, it's not 0:21:13.000 --> 0:21:16.000 so much your negative factor, but it could actually suggest 0:21:16.080 --> 0:21:18.520 that there's a bit more upside linked to central like 0:21:18.640 --> 0:21:22.520 expectations from the s S outthom in the coming weeks, 0:21:22.840 --> 0:21:25.680 we also start China pm is weakening just a little 0:21:25.680 --> 0:21:29.280 bit overnight, and I'm curious how that impacts our inflation. 0:21:29.359 --> 0:21:32.160 If they are exporting it and we are importing it, 0:21:32.240 --> 0:21:37.760 is it indeed transitory? So I think China is in fact, 0:21:37.840 --> 0:21:40.400 or global growth more generally is in fact right now. 0:21:40.480 --> 0:21:43.879 The key question for for effects, it's to some degree 0:21:43.920 --> 0:21:47.919 the debate between reflation versus stackflation, and what we got 0:21:47.960 --> 0:21:51.360 out of the China PMS was that maybe the manufacturing 0:21:51.400 --> 0:21:54.040 part held up, and that tends to be the more 0:21:54.080 --> 0:21:56.760 important between the two, But what was striking was that 0:21:56.840 --> 0:22:00.760 non manufacturing was extremely weak relative to expectations and relative 0:22:00.800 --> 0:22:04.600 to the previous trend. So it does raise some warning signs, 0:22:04.640 --> 0:22:08.159 but they're actually not necessarily inflationary. To the degree that 0:22:08.240 --> 0:22:11.080 demand in China is folding back in line with some 0:22:11.160 --> 0:22:13.680 of the supply restrictions, we don't think that it fuels 0:22:13.720 --> 0:22:17.639 necessarily makingary impulses that we're seeing elsewhere. But it does 0:22:17.720 --> 0:22:20.919 leave that major question open, which is where does global 0:22:20.960 --> 0:22:23.240 growth go from here? And the one thing we know 0:22:23.400 --> 0:22:26.920 is that the dollar tends to strengthen when global growth weakens, 0:22:26.920 --> 0:22:29.920 So that I think is the key scenario under which 0:22:29.960 --> 0:22:32.479 the dollar strengthens in the coming ups. Everyhom and our 0:22:32.600 --> 0:22:37.679 collective memories, there are emerging market crises Ecuador, Mexico, on 0:22:37.800 --> 0:22:42.040 and on. Do you feel like we're near great instability 0:22:42.119 --> 0:22:45.520 within selected emerging markets or is its studies she goes 0:22:45.600 --> 0:22:49.680 given the information flow. So so for now we think 0:22:49.720 --> 0:22:53.800 that the risks and emerging markets are more ideosynchronic than systemic. 0:22:54.040 --> 0:22:56.560 And that's in the context of expecting that the global 0:22:56.600 --> 0:22:59.840 recovery will persist, that Chinese growth will bottom out and 0:23:00.119 --> 0:23:04.120 do okay. But this is one area where eventually fed 0:23:04.160 --> 0:23:07.160 policy and interest rates could matter a great deal. Via 0:23:07.280 --> 0:23:09.800 n S Chief Economists just highlighted that the other day 0:23:09.800 --> 0:23:12.359 that emerging markets are not in a position where they 0:23:12.400 --> 0:23:15.320 can weather a major increase in US interest rates. Well, 0:23:15.960 --> 0:23:18.760 for now, it's reassuring to see that US interest rates 0:23:18.760 --> 0:23:22.760 are really subdued, and under that scenario, we think that 0:23:22.960 --> 0:23:26.320 emerging markets will in fact be an interesting investing opportunity, 0:23:26.359 --> 0:23:30.000 including in effects. But again it is with with a 0:23:30.040 --> 0:23:32.960 bit of stomach ache, because we're all a little confounded 0:23:33.000 --> 0:23:34.840 by how low interest rates in the US are and 0:23:34.880 --> 0:23:37.160 if that changes, I think it could make the likelihood 0:23:37.160 --> 0:23:41.399 of more commonly emerging market crisis a lot more a 0:23:41.440 --> 0:23:45.160 lot more likely. REMBERI thank you so much for joining 0:23:45.240 --> 0:23:52.159 us today with City Group. Cathy Jones joins us right 0:23:52.200 --> 0:23:56.000 now Trumps Center for Financial Research here and the oardities 0:23:56.200 --> 0:23:59.000 of the bond market, Cathy, the wall of money out 0:23:59.000 --> 0:24:02.920 there is tang Will. What do you advise to savers 0:24:03.200 --> 0:24:10.280 exhausted from low nominal yields in non existent real yields? Yeah, Tom, 0:24:10.720 --> 0:24:12.959 you know, I think the key is that you need 0:24:13.000 --> 0:24:16.600 a pretty diversified portfolio. So you know clearly you're not 0:24:16.640 --> 0:24:20.520 going to get much return in traditional treasuries, and so 0:24:20.680 --> 0:24:23.840 you need a fairly diversified portfolio. But yields are low, 0:24:23.960 --> 0:24:28.000 and that that reflects as you mentioned with tremendous liquidity 0:24:28.000 --> 0:24:31.760 in the markets, sort of secular forces that continue to 0:24:31.760 --> 0:24:36.000 pour money into high quality bonds and um, that's probably 0:24:36.000 --> 0:24:37.760 not going to change, so you need to really have 0:24:37.840 --> 0:24:40.639 a lot of diversification to deal with it. Kathy, can 0:24:40.680 --> 0:24:44.000 you put into perspective the discussions of tapering bond stimulus 0:24:44.000 --> 0:24:45.840