1 00:00:02,520 --> 00:00:10,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple, Cocklay and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:24,160 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,160 --> 00:00:29,760 Speaker 2: I'm Tyler Kendall here alongside Bloomberg's Michael Shepherd in Washington, DC, 7 00:00:29,880 --> 00:00:32,160 Speaker 2: where it is already shaping up to be a busy 8 00:00:32,320 --> 00:00:34,760 Speaker 2: news day. We had new reporting this morning from Bloomberg 9 00:00:34,800 --> 00:00:39,479 Speaker 2: News people familiar telling us that US and European officials 10 00:00:39,479 --> 00:00:43,760 Speaker 2: have already started working on plans to bolster Ukraine's military 11 00:00:43,920 --> 00:00:47,159 Speaker 2: capabilities as part of any sort of security guarantees. This 12 00:00:47,240 --> 00:00:51,440 Speaker 2: is going to be absolutely crucial in these negotiations going forward, 13 00:00:51,479 --> 00:00:54,520 Speaker 2: since we know that an initial demand from the Grelin 14 00:00:54,960 --> 00:00:59,600 Speaker 2: was for Ukraine to abandon its defense industry, abandon Western 15 00:00:59,680 --> 00:01:02,840 Speaker 2: military terry flows. And we heard from President Trump earlier 16 00:01:02,880 --> 00:01:06,039 Speaker 2: today speaking in an interview with Fox News, laying out 17 00:01:06,440 --> 00:01:08,759 Speaker 2: the stakes of what's happening here. 18 00:01:09,680 --> 00:01:12,479 Speaker 3: I hope President Putin is going to be good, and 19 00:01:12,560 --> 00:01:15,000 Speaker 3: if he's not, it's going to be a rough situation. 20 00:01:15,240 --> 00:01:20,959 Speaker 3: And I hope that Lensky President Zelynsky will do what 21 00:01:21,000 --> 00:01:23,600 Speaker 3: he has to do. He has to show some flexibility. 22 00:01:23,640 --> 00:01:25,280 Speaker 4: Also, they're not going to be a part of NATO, 23 00:01:25,360 --> 00:01:28,319 Speaker 4: but we've got the European nations and they'll frontload it. 24 00:01:28,319 --> 00:01:31,319 Speaker 4: And they'll have some of them France, in Germany, a 25 00:01:31,360 --> 00:01:36,120 Speaker 4: couple of them UK. They want to have boots on 26 00:01:36,160 --> 00:01:38,280 Speaker 4: the ground, not in. I don't think it's going to 27 00:01:38,319 --> 00:01:39,920 Speaker 4: be a problem, to be honest with you. I think 28 00:01:40,280 --> 00:01:42,960 Speaker 4: I think Putin is tired of it. 29 00:01:45,120 --> 00:01:48,800 Speaker 2: Joining US now for more is Bloomberg's national security reporter 30 00:01:48,920 --> 00:01:51,960 Speaker 2: Natalia Joe Jiak, who has been following this story helps 31 00:01:52,080 --> 00:01:55,080 Speaker 2: lead our coverage when it comes to foreign policy here 32 00:01:55,280 --> 00:01:57,520 Speaker 2: at Bloomberg and Natalia. It felt like one of the 33 00:01:57,560 --> 00:02:01,080 Speaker 2: big takeaways yesterday was that we did see these firmer 34 00:02:01,920 --> 00:02:04,840 Speaker 2: commitments from the White House from President Trump when it 35 00:02:04,880 --> 00:02:08,240 Speaker 2: comes to a US backed security guarantee. But do we 36 00:02:08,280 --> 00:02:10,640 Speaker 2: have any details on what this is actually going to 37 00:02:10,680 --> 00:02:11,679 Speaker 2: look like in principle. 38 00:02:12,240 --> 00:02:15,359 Speaker 5: Well, we did hear a bit more from President Trump today. 39 00:02:15,480 --> 00:02:18,200 Speaker 5: I mean he basically ruled out US troops on the 40 00:02:18,240 --> 00:02:23,320 Speaker 5: ground and described a bit about potentially having air support 41 00:02:23,400 --> 00:02:26,880 Speaker 5: to provide a sort of backstop to Western forces that 42 00:02:26,919 --> 00:02:30,840 Speaker 5: would monitor some sort of peace in Ukraine once they 43 00:02:30,919 --> 00:02:33,639 Speaker 5: reached that deal. But as you mentioned at the top 44 00:02:33,680 --> 00:02:36,440 Speaker 5: of this, they're still trying to hash out the details 45 00:02:36,480 --> 00:02:39,080 Speaker 5: right now. So we know that the national security advisors 46 00:02:39,080 --> 00:02:42,480 Speaker 5: from Ukraine, the US, and the European nations are all 47 00:02:42,480 --> 00:02:44,880 Speaker 5: trying to figure that out right now, especially ahead of 48 00:02:45,160 --> 00:02:46,079 Speaker 5: the next meetings. 49 00:02:46,840 --> 00:02:49,440 Speaker 6: Natalia I wanted to bring up the next meeting, and 50 00:02:49,800 --> 00:02:53,639 Speaker 6: the idea from President Donald Trump and one share by 51 00:02:53,760 --> 00:02:56,960 Speaker 6: the European counterparts who were there yesterday, would be a 52 00:02:57,000 --> 00:03:01,480 Speaker 6: bilateral sit down between Vladimir Putin and Oldimir Zelenski. But 53 00:03:01,919 --> 00:03:05,720 Speaker 6: how would that work without perhaps a chaperone for lack 54 00:03:05,760 --> 00:03:08,840 Speaker 6: of a better word, And what sort of neutral location 55 00:03:09,040 --> 00:03:13,200 Speaker 6: would even be feasible given perhaps some of the US 56 00:03:13,440 --> 00:03:19,799 Speaker 6: presidents estrangement of other neutral locations, potentially through tariffs yeh, 57 00:03:19,880 --> 00:03:21,280 Speaker 6: Switzerland and Brazil. 58 00:03:21,520 --> 00:03:23,600 Speaker 5: Yeah, I think that's a great question. I mean, first off, 59 00:03:23,639 --> 00:03:25,720 Speaker 5: we need to get Putin to actually commit to this, 60 00:03:25,880 --> 00:03:29,480 Speaker 5: because we haven't actually seen that yet. The Russians put 61 00:03:29,480 --> 00:03:32,840 Speaker 5: out a statement yesterday saying they were exploring the idea 62 00:03:32,880 --> 00:03:37,600 Speaker 5: of looking at more senior Russian and Ukrainian officials talking, 63 00:03:37,640 --> 00:03:40,760 Speaker 5: but they didn't say anything specifically about Putin actually doing this, 64 00:03:40,840 --> 00:03:43,920 Speaker 5: so we have to see first. But then in terms 65 00:03:43,960 --> 00:03:46,760 Speaker 5: of where this actually takes place, I think it's a 66 00:03:46,760 --> 00:03:49,240 Speaker 5: really great question. You know, Switzerland was an idea that 67 00:03:49,320 --> 00:03:51,760 Speaker 5: was thrown out there, but that's a country that has 68 00:03:51,880 --> 00:03:55,560 Speaker 5: really clashed with Trump over trade, so that's pretty much 69 00:03:55,640 --> 00:03:59,119 Speaker 5: ruled out. Hungary is another option, but you know they 70 00:03:59,160 --> 00:04:02,760 Speaker 5: have been a thorn in the Ukrainian side for many years, 71 00:04:03,240 --> 00:04:07,280 Speaker 5: especially over the prospects of EU accession, so that seems unlikely. 72 00:04:07,760 --> 00:04:11,160 Speaker 5: I think one area or one place that where it 73 00:04:11,280 --> 00:04:15,040 Speaker 5: might be possible would be in Turkey, because we've seen 74 00:04:15,720 --> 00:04:18,560 Speaker 5: the last round of talks between the Ukrainians and the 75 00:04:18,640 --> 00:04:22,240 Speaker 5: Russians at the lower level in May were held in Turkey, 76 00:04:22,279 --> 00:04:23,360 Speaker 5: So that might be an option. 77 00:04:23,920 --> 00:04:26,520 Speaker 2: Just in our final minute that we have with you, Natalia, 78 00:04:26,560 --> 00:04:29,400 Speaker 2: what sort of reaction did we see from our European allies? 79 00:04:29,400 --> 00:04:32,599 Speaker 2: Have a dozen of them descended here in Washington yesterday. 80 00:04:32,600 --> 00:04:35,320 Speaker 2: I believe it was the German Chancellor who said that 81 00:04:35,400 --> 00:04:37,840 Speaker 2: this meeting actually exceeded his expectations. 82 00:04:38,200 --> 00:04:42,120 Speaker 5: Yeah, I think we can't explain enough, like how much 83 00:04:42,200 --> 00:04:45,279 Speaker 5: anxiety there was going into this meeting from the Ukrainian 84 00:04:46,080 --> 00:04:49,239 Speaker 5: and the European leaders, just given what they had seen 85 00:04:49,279 --> 00:04:53,200 Speaker 5: on Friday when Putin and Trump had their big summit 86 00:04:53,240 --> 00:04:56,120 Speaker 5: in Alaska. There was a lot of concern that Trump 87 00:04:56,120 --> 00:05:00,880 Speaker 5: had essentially swung behind and Putin and was disregarding concerns 88 00:05:00,920 --> 00:05:04,320 Speaker 5: from the Ukrainian side. And you know, as they after 89 00:05:04,360 --> 00:05:06,880 Speaker 5: they met, there was a huge sense of relief also 90 00:05:06,960 --> 00:05:10,520 Speaker 5: because there wasn't another blow up in the Oval Office 91 00:05:10,560 --> 00:05:14,800 Speaker 5: between Zelenski and Trump as we had seen in February. 92 00:05:14,920 --> 00:05:17,640 Speaker 5: But then not only that, they also managed to pin 93 00:05:17,720 --> 00:05:21,839 Speaker 5: Trump down on the security guarantee part. 94 00:05:22,400 --> 00:05:25,839 Speaker 2: All right, Natalia Drosdiak, we thank you always for your coverage. 95 00:05:25,839 --> 00:05:29,599 Speaker 2: A reporter here at Bloomberg News covering national security for US. 96 00:05:29,760 --> 00:05:32,120 Speaker 2: As we were just talking about the German Chancellor, Mrsey 97 00:05:32,200 --> 00:05:35,680 Speaker 2: came out yesterday. He spoke to reporters at the White 98 00:05:35,720 --> 00:05:38,479 Speaker 2: House and one of the topics of discussion, of course, 99 00:05:38,520 --> 00:05:40,560 Speaker 2: we're talking a lot about security guarantees, but there are 100 00:05:40,600 --> 00:05:44,720 Speaker 2: big questions to here about what the future of territory 101 00:05:45,279 --> 00:05:48,080 Speaker 2: is going to look like in any sort of potential deal. 102 00:05:48,200 --> 00:05:51,760 Speaker 2: Here's what he told reporters yesterday about the potential for 103 00:05:51,920 --> 00:05:57,839 Speaker 2: territory concessions. 104 00:05:55,480 --> 00:06:00,160 Speaker 7: Merced One aspect which has not been discussed today is 105 00:06:00,200 --> 00:06:03,080 Speaker 7: that Ukraine should not be forced to see any territories. 106 00:06:04,320 --> 00:06:06,760 Speaker 7: Russia's demand that you give up don Bash region is 107 00:06:06,760 --> 00:06:09,760 Speaker 7: comparable to put in perspective to a proposal that the 108 00:06:09,880 --> 00:06:12,160 Speaker 7: US give up Florida. He was Florida. 109 00:06:15,120 --> 00:06:19,400 Speaker 6: We're joined now by Sir Peter Westmacott, former UK ambassador 110 00:06:19,480 --> 00:06:23,080 Speaker 6: to Turkey, France and the United States and now a 111 00:06:23,160 --> 00:06:27,239 Speaker 6: senior advisor at the Royal Institute of International Affairs in London. 112 00:06:27,480 --> 00:06:30,719 Speaker 6: Sir Peter, thank you for being with us today. You 113 00:06:30,880 --> 00:06:34,360 Speaker 6: have worked with and no carestarmer Well, yes we can 114 00:06:34,400 --> 00:06:36,440 Speaker 6: hear you, lad and clear, Sir Peter, thank you so 115 00:06:36,520 --> 00:06:40,480 Speaker 6: much for joining us, Sir Peter. President Trump is presenting 116 00:06:40,520 --> 00:06:43,680 Speaker 6: a number of ideas around this peace plan in Ukraine, 117 00:06:43,839 --> 00:06:48,279 Speaker 6: and that includes Europe buying, the EU buying American made arms, 118 00:06:49,120 --> 00:06:54,040 Speaker 6: no US troops on the ground, no call for a ceasefire. Yet, 119 00:06:54,120 --> 00:06:57,040 Speaker 6: what is your read on the state of the American 120 00:06:57,080 --> 00:07:04,039 Speaker 6: President's commitment to actually securing Ukraine for the long term. 121 00:07:04,320 --> 00:07:05,919 Speaker 8: Well, I think what he's trying to do at the 122 00:07:05,920 --> 00:07:09,440 Speaker 8: moment is to head off the demands that they have 123 00:07:09,480 --> 00:07:11,920 Speaker 8: been from President Zelenski in from a number of European 124 00:07:11,960 --> 00:07:16,080 Speaker 8: governments for Ukraine to be considered as a credible member 125 00:07:16,080 --> 00:07:19,600 Speaker 8: of NATO. That is anathema, of course, to Putin, who 126 00:07:19,680 --> 00:07:23,440 Speaker 8: doesn't want to have NATO on his doorstep. He doesn't grasp, 127 00:07:23,520 --> 00:07:26,400 Speaker 8: of course, that NATO is a voluntary alliance that is 128 00:07:26,520 --> 00:07:29,800 Speaker 8: defensive of countries, many of which were once under the 129 00:07:29,880 --> 00:07:33,600 Speaker 8: Russian jackboot. He wants to rebuild a Russian empire, regardless 130 00:07:33,600 --> 00:07:36,520 Speaker 8: of the wishes of the countries and the government's concerned. 131 00:07:36,560 --> 00:07:40,280 Speaker 8: But leave that to one side. He has a real 132 00:07:40,320 --> 00:07:44,080 Speaker 8: problem about Ukraine becoming eventually member of NATO. Now, if 133 00:07:44,120 --> 00:07:45,800 Speaker 8: that's not going to be part of the deal, and 134 00:07:45,880 --> 00:07:49,920 Speaker 8: it perhaps can't be, then some sort of really strong 135 00:07:50,120 --> 00:07:52,920 Speaker 8: military guarantees are going to be important. And that brings 136 00:07:52,960 --> 00:07:55,280 Speaker 8: us to your point about how is that going to work. 137 00:07:55,320 --> 00:07:57,760 Speaker 8: President Trump says, no American boots on the ground. I 138 00:07:57,800 --> 00:07:59,440 Speaker 8: don't know whether the French and the Germans and the 139 00:07:59,440 --> 00:08:01,760 Speaker 8: British were on have troops on the ground, but they 140 00:08:01,760 --> 00:08:04,160 Speaker 8: will want to have them not very far away in 141 00:08:04,240 --> 00:08:07,440 Speaker 8: the event that things do go wrong. Of course, although 142 00:08:07,480 --> 00:08:09,640 Speaker 8: President Trump says that hundreds of billions of dollars of 143 00:08:09,640 --> 00:08:12,960 Speaker 8: American taxpayers money have been spent on Ukraine, so thus 144 00:08:13,000 --> 00:08:15,600 Speaker 8: not entirely true. And of all the money that's gone 145 00:08:15,600 --> 00:08:18,000 Speaker 8: on military equipment, eighty three percent of it has gone 146 00:08:18,000 --> 00:08:21,080 Speaker 8: to American defense companies, so you know it's not being 147 00:08:21,200 --> 00:08:24,600 Speaker 8: just handouts. And so it's not surprising that he says 148 00:08:24,640 --> 00:08:27,600 Speaker 8: that if there's to be more money, more arms, that 149 00:08:27,600 --> 00:08:30,320 Speaker 8: they should be paid for by the Europeans. But it's 150 00:08:30,360 --> 00:08:33,079 Speaker 8: already largely being paid for, shall we say, and it's 151 00:08:33,080 --> 00:08:36,080 Speaker 8: already been good business for the American companies. But by 152 00:08:36,480 --> 00:08:42,360 Speaker 8: saying we will strengthen Ukraine's defensive capabilities with this military equipment, 153 00:08:42,440 --> 00:08:44,520 Speaker 8: then I think you're putting in place, He's putting in 154 00:08:44,559 --> 00:08:48,760 Speaker 8: place a credible alternative, I hope, to the possibility of 155 00:08:48,800 --> 00:08:50,120 Speaker 8: eventual nature enlargement. 156 00:08:50,160 --> 00:08:51,080 Speaker 9: That's what that's all about. 157 00:08:51,160 --> 00:08:54,319 Speaker 8: It's about giving Zelenski and the others in Ukraine an 158 00:08:54,360 --> 00:08:57,320 Speaker 8: assurance that if there is a deal, and we haven't 159 00:08:57,320 --> 00:09:00,439 Speaker 8: talked about territorial swaps and so on yet, I wanted 160 00:09:00,440 --> 00:09:02,320 Speaker 8: that if there is a deal that is one that 161 00:09:02,679 --> 00:09:06,920 Speaker 8: can be relied upon to be fair and lasting, can. 162 00:09:06,760 --> 00:09:09,199 Speaker 2: We just dig down a little bit more on what 163 00:09:09,280 --> 00:09:12,880 Speaker 2: this credible deterrence framework would look like. And as we're 164 00:09:12,880 --> 00:09:15,800 Speaker 2: talking about the different sort of aspects that we could see, 165 00:09:15,840 --> 00:09:18,439 Speaker 2: we keep hearing this idea about air cover and perhaps 166 00:09:18,520 --> 00:09:21,040 Speaker 2: this is an area where the US would be pushing 167 00:09:21,240 --> 00:09:24,319 Speaker 2: forward the most. Here, can you give us some insight 168 00:09:24,400 --> 00:09:28,360 Speaker 2: into how these negotiations are happening behind closed doors when 169 00:09:28,400 --> 00:09:31,520 Speaker 2: it comes to what the US would actually supply to 170 00:09:31,960 --> 00:09:35,720 Speaker 2: a security guarantee to make sure that a potential deal 171 00:09:35,800 --> 00:09:37,079 Speaker 2: would actually get through. 172 00:09:38,640 --> 00:09:40,880 Speaker 8: Well, there's a lot of discussions still going on. There's 173 00:09:40,880 --> 00:09:43,800 Speaker 8: a coalition of the willing meeting that was co chaired 174 00:09:43,840 --> 00:09:46,280 Speaker 8: by the French President of the British Prime Minister. I 175 00:09:46,280 --> 00:09:50,200 Speaker 8: think today there are military chiefs getting together in Washington. 176 00:09:50,480 --> 00:09:52,040 Speaker 8: I think there's a lot of the detail of what 177 00:09:52,080 --> 00:09:54,240 Speaker 8: it really means that has got to be worked out. 178 00:09:54,720 --> 00:09:57,240 Speaker 8: But we do know from President Zelenski that he would 179 00:09:57,280 --> 00:10:00,000 Speaker 8: like to have I think you said ten different patriots 180 00:10:00,040 --> 00:10:03,920 Speaker 8: our systems on Ukrainian territory. These are very expensive, but 181 00:10:03,960 --> 00:10:06,960 Speaker 8: they are super effective and they are a very important 182 00:10:06,960 --> 00:10:09,720 Speaker 8: part of the defense of Ukraine against ballistic missiles and 183 00:10:09,760 --> 00:10:13,760 Speaker 8: other Russian hardware which might be fired there. Then I 184 00:10:13,800 --> 00:10:18,280 Speaker 8: think other parts of it would be territorial guarantees. The 185 00:10:18,280 --> 00:10:22,200 Speaker 8: President's talked about something that is Article five light, in 186 00:10:22,240 --> 00:10:24,640 Speaker 8: other words, an attack on one country as an attack 187 00:10:24,679 --> 00:10:27,440 Speaker 8: on us. All that is to say that if Ukraine 188 00:10:27,480 --> 00:10:31,080 Speaker 8: was attacked, then the Coalition of the Willing, if not 189 00:10:31,200 --> 00:10:34,920 Speaker 8: NATO members themselves, would regard it themselves as duty bound 190 00:10:35,000 --> 00:10:37,480 Speaker 8: to come to help Ukraine. But there's an awful lot 191 00:10:37,520 --> 00:10:39,600 Speaker 8: of detail on this military side that's got to be 192 00:10:39,840 --> 00:10:42,040 Speaker 8: hammered out, and I'm not sure that President Trump is 193 00:10:42,160 --> 00:10:44,200 Speaker 8: very clear where he wants it to be. But he 194 00:10:44,240 --> 00:10:47,720 Speaker 8: has understood that there will not be a deal unless 195 00:10:47,760 --> 00:10:51,440 Speaker 8: there is something like that, and there is an arrangement 196 00:10:51,480 --> 00:10:57,640 Speaker 8: whereby Ukraine can have its own credible military deterrent and 197 00:10:58,120 --> 00:11:03,480 Speaker 8: equipment to wistan any further attacks. Because ultimately, nobody trusts 198 00:11:03,960 --> 00:11:06,439 Speaker 8: to keep his word. Perhaps President Trump does, but nobody 199 00:11:06,480 --> 00:11:09,439 Speaker 8: else does. Anyone who's dealt with him knows that, as 200 00:11:09,480 --> 00:11:12,040 Speaker 8: we saw on the eve of the invasion of Ukraine, 201 00:11:12,040 --> 00:11:13,840 Speaker 8: he lies through his teeth. So there's got to be 202 00:11:13,920 --> 00:11:17,600 Speaker 8: something which is pretty strong and pretty credible if the 203 00:11:17,679 --> 00:11:20,680 Speaker 8: Ukrainian people and the Ukrainian government are to go along. 204 00:11:20,480 --> 00:11:24,400 Speaker 6: With it, Sir Peter. One thing President Donald Trump has 205 00:11:24,440 --> 00:11:27,680 Speaker 6: made clear is his desire to move very quickly with this, 206 00:11:28,120 --> 00:11:31,800 Speaker 6: and outlined together with European leaders yesterday, a timetable of 207 00:11:31,880 --> 00:11:35,600 Speaker 6: perhaps a bilateral meeting between the Russian and Ukrainian leaders 208 00:11:35,640 --> 00:11:39,560 Speaker 6: within two weeks and perhaps a trilateral meeting including him 209 00:11:39,880 --> 00:11:43,160 Speaker 6: within three weeks. Is that overly optimistic and what are 210 00:11:43,160 --> 00:11:45,400 Speaker 6: the risks of moving at this pace? 211 00:11:47,120 --> 00:11:47,440 Speaker 3: Well? 212 00:11:47,960 --> 00:11:50,679 Speaker 8: One of the benefits of having somebody like President Trump 213 00:11:50,679 --> 00:11:53,240 Speaker 8: in the oval office is that he likes to move fast. 214 00:11:53,320 --> 00:11:54,760 Speaker 8: You know, look at all the different things that he's 215 00:11:54,800 --> 00:11:57,120 Speaker 8: done since he became president. Some of it we may like, 216 00:11:57,160 --> 00:11:59,520 Speaker 8: some of you may not. But he doesn't hang around, 217 00:12:00,040 --> 00:12:02,160 Speaker 8: and he's a deal maker, as he likes to remind 218 00:12:02,240 --> 00:12:05,520 Speaker 8: us regularly so, and he also would like to see 219 00:12:05,520 --> 00:12:08,480 Speaker 8: an end of the killing, as would we all. So 220 00:12:08,960 --> 00:12:11,720 Speaker 8: I think he wants to get on with this. He 221 00:12:11,760 --> 00:12:13,840 Speaker 8: doesn't think there's any need for a cease fire, which 222 00:12:13,880 --> 00:12:17,160 Speaker 8: is what Zelenski wants and what everybody else in the 223 00:12:17,160 --> 00:12:20,520 Speaker 8: European side would like, and what the Chancellor of Germany 224 00:12:20,559 --> 00:12:24,240 Speaker 8: and the French president reminded him was a requirement for 225 00:12:25,120 --> 00:12:28,040 Speaker 8: progress towards some sort of a settlement. He's now moved 226 00:12:28,040 --> 00:12:30,640 Speaker 8: off that because Putin didn't want to have a cease 227 00:12:30,679 --> 00:12:32,760 Speaker 8: far he wants to go straight to a settlement. But 228 00:12:32,840 --> 00:12:36,000 Speaker 8: to do a settlement in very short order, when you're 229 00:12:36,000 --> 00:12:42,280 Speaker 8: talking about territorial issues and guarantees and Putin's desire, frankly, 230 00:12:42,320 --> 00:12:46,360 Speaker 8: to dismantle the entire post code War European order, you 231 00:12:46,400 --> 00:12:50,400 Speaker 8: know that's going to be very difficult, and that's a 232 00:12:50,440 --> 00:12:54,200 Speaker 8: real problem. Let's hope that we can move past. I 233 00:12:54,200 --> 00:12:57,280 Speaker 8: think everybody would be delighted if there was rapid progress. 234 00:12:57,600 --> 00:12:59,880 Speaker 8: But you know, there are questions to be answered, such 235 00:12:59,880 --> 00:13:03,120 Speaker 8: a what does the president mean by territorial exchanges or 236 00:13:03,200 --> 00:13:07,480 Speaker 8: territorial swaps? Has anyone seen any sign of the Russians 237 00:13:07,640 --> 00:13:10,080 Speaker 8: offering land of Theirs in exchange for the land of 238 00:13:10,160 --> 00:13:13,319 Speaker 8: Ukraine that they want to keep for themselves. I don't 239 00:13:13,360 --> 00:13:13,760 Speaker 8: think we have. 240 00:13:14,200 --> 00:13:16,000 Speaker 9: All we've seen is that. 241 00:13:15,960 --> 00:13:20,000 Speaker 8: There might just be the possibility of the Russians withdrawing 242 00:13:20,040 --> 00:13:22,640 Speaker 8: from some little corners of Ukraine that they were ready 243 00:13:22,679 --> 00:13:25,880 Speaker 8: occupied in exchange forgetting others. Well, that doesn't sound to 244 00:13:25,920 --> 00:13:27,680 Speaker 8: me like a very fair deal. I'm not sure that 245 00:13:27,720 --> 00:13:31,520 Speaker 8: it would. President Zelenski either. So these territorial issues as 246 00:13:31,520 --> 00:13:35,240 Speaker 8: well as the military guarantees and the broader political questions 247 00:13:35,240 --> 00:13:38,520 Speaker 8: that we've touched on. This does take time, but President 248 00:13:38,679 --> 00:13:40,840 Speaker 8: Trump is a man in a hurry. He went to 249 00:13:40,880 --> 00:13:43,520 Speaker 8: Alaska a couple of days later, there was everybody in 250 00:13:43,559 --> 00:13:45,839 Speaker 8: the Oval Office. We've now got the coalition of the 251 00:13:45,920 --> 00:13:48,559 Speaker 8: winning talking to each other. We've got military chiefs looking 252 00:13:48,559 --> 00:13:52,079 Speaker 8: at the military guarantees question. It would be wonderful if 253 00:13:52,080 --> 00:13:55,040 Speaker 8: we could make earlier progress because each day that we speak, 254 00:13:55,320 --> 00:13:58,440 Speaker 8: there are more people being murdered by Russian missile attacks 255 00:13:58,480 --> 00:13:59,280 Speaker 8: on Ukraine. 256 00:14:00,880 --> 00:14:03,360 Speaker 2: Sir Peter, in just the last thirty seconds that we 257 00:14:03,440 --> 00:14:06,600 Speaker 2: have with you, i'd loved to get your thoughts on 258 00:14:06,920 --> 00:14:10,480 Speaker 2: what has been a relatively warm relationship between the UK 259 00:14:10,559 --> 00:14:14,240 Speaker 2: Prime Minister Cure Starmer and President Trump throughout this process. 260 00:14:14,280 --> 00:14:16,600 Speaker 2: What do you make of the evolution of this relationship 261 00:14:16,679 --> 00:14:18,360 Speaker 2: considering that the UK was the first to ink a 262 00:14:18,440 --> 00:14:19,480 Speaker 2: trade deal for example. 263 00:14:21,320 --> 00:14:24,040 Speaker 8: Well, it was, and it started I think with a 264 00:14:24,200 --> 00:14:27,720 Speaker 8: very successful visits the over office by Kiir Starmer. Not 265 00:14:27,800 --> 00:14:30,360 Speaker 8: everybody was convinced that it would work. You'd got President 266 00:14:30,440 --> 00:14:34,920 Speaker 8: Trump who was full of maga approach and somewhat protectionist. 267 00:14:35,040 --> 00:14:38,400 Speaker 8: You've got Kiir Starmer, who was a labor politician, a 268 00:14:38,440 --> 00:14:40,680 Speaker 8: free trader. You know, how was that going to work out? 269 00:14:41,520 --> 00:14:44,400 Speaker 2: Peter, I'm so sorry we have to leave it there. 270 00:14:44,560 --> 00:14:47,520 Speaker 2: Peter Westmacott, former UK Ambassador to the United States. We 271 00:14:47,600 --> 00:14:50,160 Speaker 2: thank you so much for your time in joining Bloomberg. 272 00:14:50,320 --> 00:14:51,360 Speaker 2: We'll catch up with you soon. 273 00:14:51,600 --> 00:14:53,160 Speaker 9: Stay with us on Balance of Power. 274 00:14:53,240 --> 00:14:55,000 Speaker 10: We'll have much more coming up after this. 275 00:15:00,520 --> 00:15:04,000 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 276 00:15:04,080 --> 00:15:07,480 Speaker 1: us live weekdays at noon and five pm Eastern on Apple, 277 00:15:07,560 --> 00:15:10,920 Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. Listen 278 00:15:11,000 --> 00:15:14,080 Speaker 1: on demand wherever you get your podcasts, or watch us 279 00:15:14,120 --> 00:15:15,520 Speaker 1: live on YouTube. 280 00:15:16,640 --> 00:15:21,080 Speaker 2: Tyler Kendall here alongside Michael Sheppard in Washington, but we're 281 00:15:21,080 --> 00:15:23,040 Speaker 2: now going to go to a story that's going to 282 00:15:23,040 --> 00:15:26,520 Speaker 2: take us to Wyoming, because that's where Federal Reserve Chair 283 00:15:26,600 --> 00:15:30,240 Speaker 2: Jerome Powell will be in the spotlight later this week 284 00:15:30,280 --> 00:15:32,800 Speaker 2: when he gives remarks at the Kansas City Fed's Annual 285 00:15:32,920 --> 00:15:37,960 Speaker 2: Economic Policy Symposium. That's where we find Bloomberg's International Economics 286 00:15:37,960 --> 00:15:41,240 Speaker 2: and Policy correspondent Michael McKee, who's already there on the 287 00:15:41,240 --> 00:15:45,080 Speaker 2: ground for us in Titon Village, Wyoming and Mike. Earlier 288 00:15:45,120 --> 00:15:48,000 Speaker 2: today you sat down with the FED Vice Chair of Supervision, 289 00:15:48,080 --> 00:15:50,360 Speaker 2: Michelle Bowman, who told you that she has a lot 290 00:15:50,760 --> 00:15:53,080 Speaker 2: on her plate at the moment. What did we learn 291 00:15:53,360 --> 00:15:55,840 Speaker 2: about how she's balancing priorities. 292 00:15:58,120 --> 00:16:00,400 Speaker 11: Well, for right now, she says she's focused on the 293 00:16:00,480 --> 00:16:04,600 Speaker 11: regulatory issues instead of on whether or not the President 294 00:16:04,720 --> 00:16:07,680 Speaker 11: is interested in making her the chairman to replace J. 295 00:16:07,840 --> 00:16:11,400 Speaker 11: Paul when he leaves office in May or to focus 296 00:16:11,400 --> 00:16:14,640 Speaker 11: on monetary policy now. She did confirm that she hasn't 297 00:16:14,680 --> 00:16:17,000 Speaker 11: changed her mind on the idea of ray cuts, that 298 00:16:17,080 --> 00:16:20,760 Speaker 11: ray cuts should go ahead in September and all three 299 00:16:20,880 --> 00:16:23,840 Speaker 11: remaining meetings this year, but she said the most important 300 00:16:23,880 --> 00:16:26,920 Speaker 11: thing for her is getting some of these legislative proposals through. 301 00:16:27,160 --> 00:16:30,000 Speaker 11: One of the ones she's talking about now is the 302 00:16:30,040 --> 00:16:34,440 Speaker 11: supplementary leverage ratio. Another is the Basel three reforms. The 303 00:16:34,800 --> 00:16:37,840 Speaker 11: Biden administration had put out a thousand page document on 304 00:16:37,880 --> 00:16:40,840 Speaker 11: that that the FED is basically recalled and is rewriting 305 00:16:40,920 --> 00:16:44,320 Speaker 11: under her and then debanking an issue for the people 306 00:16:44,360 --> 00:16:49,040 Speaker 11: here where we are today, the Crypto Conference is basically 307 00:16:49,040 --> 00:16:53,000 Speaker 11: the Wyoming Blockchain Conference, and a lot of people here 308 00:16:53,000 --> 00:16:55,520 Speaker 11: concerned that banks don't want to take on their business 309 00:16:55,560 --> 00:16:58,040 Speaker 11: because of reputation and risk, and she says the FED 310 00:16:58,120 --> 00:16:59,640 Speaker 11: is going to be taking care of that. 311 00:17:01,520 --> 00:17:06,440 Speaker 6: Mike widening the angle from the conversation with Michelle Bowman, 312 00:17:07,160 --> 00:17:11,119 Speaker 6: what are you expecting to hear from FED policy makers 313 00:17:11,160 --> 00:17:13,720 Speaker 6: and other attendees They are in Jackson hole when it 314 00:17:13,720 --> 00:17:16,760 Speaker 6: comes to tariffs and the impact on the economy and 315 00:17:16,840 --> 00:17:20,760 Speaker 6: how that may be influencing the September rate decision, which 316 00:17:20,760 --> 00:17:23,040 Speaker 6: some are looking at as a possible cut. 317 00:17:25,880 --> 00:17:29,120 Speaker 11: Well, I think pretty much everybody agrees that tariffs are 318 00:17:29,240 --> 00:17:33,280 Speaker 11: inflationary and they are causing some inflation. It's been a 319 00:17:33,400 --> 00:17:36,000 Speaker 11: question of how fast we see it, and we're beginning 320 00:17:36,040 --> 00:17:38,280 Speaker 11: to see it more and more in the CPIPPI and 321 00:17:38,320 --> 00:17:42,520 Speaker 11: other indicators. Companies are coming out and talking about raising prices. 322 00:17:42,880 --> 00:17:46,280 Speaker 11: But then the converse is what's happening with the labor market. 323 00:17:46,320 --> 00:17:49,320 Speaker 11: We had a very low number of people hired in 324 00:17:49,359 --> 00:17:52,719 Speaker 11: the last month, and the unemployment rate went up a 325 00:17:52,760 --> 00:17:56,040 Speaker 11: little bit. Does that signal that we're seeing the economy 326 00:17:56,119 --> 00:17:59,040 Speaker 11: slow down enough to justify our rate increase or does 327 00:17:59,200 --> 00:18:02,560 Speaker 11: inflation mean that they don't want to cut rates? And 328 00:18:02,640 --> 00:18:04,520 Speaker 11: that's the debate they're going to have, and we'll hear 329 00:18:04,520 --> 00:18:07,400 Speaker 11: from different people on the FED about which way they 330 00:18:07,400 --> 00:18:10,040 Speaker 11: are leaning. At this point, we know Bowman and Chris 331 00:18:10,040 --> 00:18:12,760 Speaker 11: Waller have said they would vote in favor of a 332 00:18:12,840 --> 00:18:15,760 Speaker 11: rate cut. The other members of the FED have been 333 00:18:15,960 --> 00:18:20,200 Speaker 11: somewhere along a spectrum from probably to no. Not yet. 334 00:18:20,320 --> 00:18:22,639 Speaker 11: We're going to wait for more data piles in that 335 00:18:22,760 --> 00:18:25,200 Speaker 11: data camp, and when he speaks on Friday, we expect 336 00:18:25,240 --> 00:18:27,240 Speaker 11: him to sort of dance around the issue and say 337 00:18:27,480 --> 00:18:29,600 Speaker 11: we'll wait and see what the data tell us between 338 00:18:29,600 --> 00:18:30,080 Speaker 11: now and then. 339 00:18:31,720 --> 00:18:34,800 Speaker 6: Okay, we'll look forward to hearing more from you, Mike, 340 00:18:34,880 --> 00:18:37,000 Speaker 6: Thank you so much. We're going to now turn to 341 00:18:37,119 --> 00:18:42,480 Speaker 6: our political panel, Genie Shanzano, Senior Democracy fellow with the 342 00:18:42,480 --> 00:18:45,680 Speaker 6: Center for Study the Presidency in Congress and a Bloomberg 343 00:18:45,720 --> 00:18:50,840 Speaker 6: Politics contributor, and Lester Munson, principle of the International Practice 344 00:18:50,920 --> 00:18:55,240 Speaker 6: at the BGR Group here in Washington. Genie, I wanted 345 00:18:55,280 --> 00:18:58,919 Speaker 6: to start with you again. We can turn to this 346 00:18:58,960 --> 00:19:02,000 Speaker 6: whole question of tariffs. We did see a little bit 347 00:19:02,000 --> 00:19:04,680 Speaker 6: of upside when it comes to the US credit rating 348 00:19:04,720 --> 00:19:08,000 Speaker 6: thanks to tariff revenue coming in. But let's talk maybe 349 00:19:08,000 --> 00:19:10,479 Speaker 6: about some of the downside that we could be seeing 350 00:19:10,840 --> 00:19:14,680 Speaker 6: for consumers down the road. The administration is now widening 351 00:19:14,880 --> 00:19:19,840 Speaker 6: the application of some of those metals tariffs that were 352 00:19:19,840 --> 00:19:21,480 Speaker 6: announced just weeks ago. 353 00:19:23,359 --> 00:19:24,680 Speaker 3: That's right, and that's. 354 00:19:24,520 --> 00:19:27,720 Speaker 12: What we've all expected by some estimates, and we've heard 355 00:19:27,720 --> 00:19:32,560 Speaker 12: this on Bloomberg repeatedly from some of the economic experts. 356 00:19:32,600 --> 00:19:35,840 Speaker 12: It's going to be two thousand dollars per household as 357 00:19:35,840 --> 00:19:38,840 Speaker 12: a result of these tariffs. And as we get into 358 00:19:38,960 --> 00:19:42,520 Speaker 12: school shopping season and then certainly for the holidays, consumers 359 00:19:42,560 --> 00:19:45,520 Speaker 12: will feel that. And we saw from the University of 360 00:19:45,560 --> 00:19:49,720 Speaker 12: Michigan Consumer Sentiments survey released just the other day that 361 00:19:49,800 --> 00:19:54,119 Speaker 12: consumers are concerned that they are not as confident in 362 00:19:54,160 --> 00:19:57,840 Speaker 12: the economy going forward. And there is an upside to 363 00:19:57,880 --> 00:20:00,480 Speaker 12: this revenue coming in, of course, as you do mentioned. 364 00:20:00,800 --> 00:20:04,440 Speaker 12: But the downside is is that tariffs are taxes, and 365 00:20:04,480 --> 00:20:07,920 Speaker 12: so that money is not coming from foreign countries. It's 366 00:20:07,960 --> 00:20:11,480 Speaker 12: coming from US companies who will, if they're not already, 367 00:20:11,800 --> 00:20:15,359 Speaker 12: pass the price of those tariffs onto consumers in the 368 00:20:15,480 --> 00:20:18,640 Speaker 12: United States. So there's a tendency to talk about these 369 00:20:18,680 --> 00:20:21,800 Speaker 12: as tariffs on other countries. Of course, they're tariffs we 370 00:20:21,880 --> 00:20:25,440 Speaker 12: pay as Americans to bring this material in and companies 371 00:20:25,480 --> 00:20:28,000 Speaker 12: pay for a certain amount of time until they pass 372 00:20:28,080 --> 00:20:29,200 Speaker 12: them off to consumers. 373 00:20:30,760 --> 00:20:32,520 Speaker 2: Well, I want to build on this headline that we 374 00:20:32,520 --> 00:20:35,520 Speaker 2: did get today that SMP Globe rating said that tariff 375 00:20:35,600 --> 00:20:39,479 Speaker 2: revenues will help soften the blow to the US fiscal health. 376 00:20:39,960 --> 00:20:43,320 Speaker 2: Our article on the Bloomberg says quote, while Trump's trade 377 00:20:43,359 --> 00:20:47,840 Speaker 2: war has roiled markets, unnerved foreign governments, and provoked criticism 378 00:20:48,320 --> 00:20:54,440 Speaker 2: from leading economists, SMP affirmed it'saplus rating for the US. Lester, 379 00:20:54,760 --> 00:20:57,439 Speaker 2: How does the White House balance this with the argument 380 00:20:57,600 --> 00:21:00,280 Speaker 2: that Genie and Democrats are going to be making ahead 381 00:21:00,320 --> 00:21:02,840 Speaker 2: of twenty twenty six. We're already hearing it when it 382 00:21:02,880 --> 00:21:05,440 Speaker 2: comes to the push and pull here with the tariff policy. 383 00:21:07,280 --> 00:21:10,359 Speaker 13: Well, I don't happen to agree with the administration on 384 00:21:10,400 --> 00:21:12,720 Speaker 13: its tariff policy, so I'm much more likely to agree 385 00:21:12,760 --> 00:21:16,439 Speaker 13: with Genie. I think in the long run, tariffs are 386 00:21:17,760 --> 00:21:20,399 Speaker 13: not at all beneficial to the American economy. There can 387 00:21:20,440 --> 00:21:23,240 Speaker 13: be strategic moments when you need to protect a certain 388 00:21:23,280 --> 00:21:26,040 Speaker 13: industry over a couple of years. If you're very consistent 389 00:21:26,480 --> 00:21:29,080 Speaker 13: and very determined and very focused, you can do some 390 00:21:29,320 --> 00:21:32,280 Speaker 13: limited good. They can also be a tool to help 391 00:21:32,359 --> 00:21:35,639 Speaker 13: other countries or to kind of compel other countries to 392 00:21:35,680 --> 00:21:39,000 Speaker 13: lower their tariffs for American goods and services. But as 393 00:21:39,080 --> 00:21:41,600 Speaker 13: a long term strategy, it doesn't make a lot of sense. 394 00:21:41,760 --> 00:21:44,920 Speaker 13: Even if there is some income coming into the US 395 00:21:45,040 --> 00:21:47,639 Speaker 13: treasury as a result of this, that's effectively a tax 396 00:21:47,640 --> 00:21:51,040 Speaker 13: on Americans, and it's generally a very regressive tax, so 397 00:21:51,040 --> 00:21:54,920 Speaker 13: it falls more harshly on people who can less afford 398 00:21:55,480 --> 00:21:58,800 Speaker 13: that kind of additional cost. So I think it's not 399 00:21:58,880 --> 00:22:01,040 Speaker 13: a smart move. It may help the FISK a bit 400 00:22:01,600 --> 00:22:04,240 Speaker 13: over the short term, but again, and the long run, 401 00:22:04,280 --> 00:22:08,320 Speaker 13: a tariff policy is kind of doomed to failure. The 402 00:22:08,560 --> 00:22:13,520 Speaker 13: US has benefits from open trade, free trade, and if 403 00:22:13,560 --> 00:22:17,600 Speaker 13: we can find those go back to those multilateral deals, 404 00:22:17,600 --> 00:22:19,600 Speaker 13: will be in a much better position than under this 405 00:22:19,680 --> 00:22:20,400 Speaker 13: current structure. 406 00:22:22,320 --> 00:22:25,359 Speaker 6: Jennie, we've talked here about tariffs, but I want to 407 00:22:25,400 --> 00:22:29,040 Speaker 6: get to another element of the President's policy when it 408 00:22:29,080 --> 00:22:32,639 Speaker 6: comes to companies in particular, and we've seen news broken 409 00:22:32,680 --> 00:22:37,000 Speaker 6: by Bloomberg over the past week about possible US investments 410 00:22:37,040 --> 00:22:40,520 Speaker 6: in Intel, struggling chip maker and yet an iconic one 411 00:22:40,720 --> 00:22:44,560 Speaker 6: for the United States of America. Is this a good 412 00:22:44,640 --> 00:22:48,080 Speaker 6: policy move? It certainly is a pivot for the Republican 413 00:22:48,160 --> 00:22:51,600 Speaker 6: Party away from a very much hands off approach when 414 00:22:51,600 --> 00:22:53,080 Speaker 6: it comes to the corporate sector. 415 00:22:54,359 --> 00:22:55,440 Speaker 9: Yeah, absolutely, Mike. 416 00:22:55,480 --> 00:22:58,560 Speaker 12: And it has been fascinating to watch how Donald Trump 417 00:22:58,640 --> 00:23:01,520 Speaker 12: has dominated and chained to the Republican Party in so 418 00:23:01,720 --> 00:23:03,840 Speaker 12: many ways. I mean we were just talking, of course 419 00:23:03,880 --> 00:23:07,359 Speaker 12: about isolationism a few minutes ago, and in terms of 420 00:23:07,400 --> 00:23:09,760 Speaker 12: his approach to fiscal policy, as Lester. 421 00:23:09,600 --> 00:23:11,520 Speaker 9: Just mentioned tariffs of course. 422 00:23:11,560 --> 00:23:14,440 Speaker 12: And now this, and I think Donald Trump in this 423 00:23:14,560 --> 00:23:18,560 Speaker 12: regard is representing well what he ran as, which is 424 00:23:18,640 --> 00:23:21,919 Speaker 12: a populist, and this is something that he can turn 425 00:23:22,000 --> 00:23:25,719 Speaker 12: to his base and say, this is what we are 426 00:23:26,880 --> 00:23:29,680 Speaker 12: joining with these companies, this is what we are asking 427 00:23:29,840 --> 00:23:33,240 Speaker 12: of them. So it is quite a shift for the 428 00:23:33,320 --> 00:23:36,919 Speaker 12: Republican Party in this regard, and I think it's something 429 00:23:37,000 --> 00:23:40,520 Speaker 12: that we will hear more about during the campaign. Donald 430 00:23:40,760 --> 00:23:44,760 Speaker 12: Trump likes to tout his relationships with the business community, 431 00:23:45,119 --> 00:23:47,280 Speaker 12: and he wants to show that it's going to benefit 432 00:23:47,520 --> 00:23:49,680 Speaker 12: his base, and so I think that's what he's setting 433 00:23:49,720 --> 00:23:51,840 Speaker 12: up for twenty twenty six and of course for the 434 00:23:51,840 --> 00:23:53,359 Speaker 12: Republican Party going forward. 435 00:23:55,200 --> 00:23:58,240 Speaker 2: We do want to bring you some breaking and news 436 00:23:58,240 --> 00:24:00,800 Speaker 2: here at the White House Press Secretary Carroll Levitt is 437 00:24:00,920 --> 00:24:04,880 Speaker 2: briefing reporters in the White House Briefing Room as we speak. 438 00:24:05,280 --> 00:24:07,760 Speaker 2: If you're watching us on Bloomberg Television and for our 439 00:24:07,840 --> 00:24:10,520 Speaker 2: radio listeners, you see Caroline Lovitt there at the podium 440 00:24:10,560 --> 00:24:13,879 Speaker 2: taking questions and some headlines crossing the terminal. In just 441 00:24:13,920 --> 00:24:16,480 Speaker 2: the last few moments. Levitt says that the President has 442 00:24:16,560 --> 00:24:20,439 Speaker 2: ruled out boots on the ground in Ukraine, as our 443 00:24:20,480 --> 00:24:24,400 Speaker 2: allies are talking about those security guarantees in any such 444 00:24:24,480 --> 00:24:28,320 Speaker 2: potential piece steal. She also said that accommodations for a 445 00:24:28,400 --> 00:24:32,840 Speaker 2: Putin Zelensky meeting is underway. That is that bilateral meeting 446 00:24:32,880 --> 00:24:35,080 Speaker 2: that we heard President Trump talk about in his post 447 00:24:35,119 --> 00:24:37,000 Speaker 2: on True Social yesterday, but we have yet to get 448 00:24:37,040 --> 00:24:40,760 Speaker 2: confirmation from the Kremlin that that meeting is going to 449 00:24:40,800 --> 00:24:44,439 Speaker 2: take place. Lester, to get your thoughts on the strategy 450 00:24:44,520 --> 00:24:47,160 Speaker 2: here as we bring the conversation back to foreign policy 451 00:24:47,480 --> 00:24:50,400 Speaker 2: and the meeting that we saw yesterday here in Washington. 452 00:24:51,040 --> 00:24:53,359 Speaker 2: What sort of strategy are we seeing from the White 453 00:24:53,359 --> 00:24:56,240 Speaker 2: House as they try to show some forward progress, some 454 00:24:56,320 --> 00:24:59,840 Speaker 2: forward momentum here getting all of these leaders together at the. 455 00:25:01,320 --> 00:25:04,320 Speaker 13: Well. No surprise on the no US troops on the ground. 456 00:25:04,400 --> 00:25:06,359 Speaker 13: I think we all kind of knew that going into 457 00:25:06,359 --> 00:25:09,800 Speaker 13: this whole scenario that that just wasn't very realistic. But 458 00:25:10,000 --> 00:25:13,240 Speaker 13: if it's true that we're pushing towards a Putin Zelensky meeting, 459 00:25:13,840 --> 00:25:18,520 Speaker 13: that is a modest victory for President Trump. They of course, 460 00:25:18,560 --> 00:25:20,920 Speaker 13: those two have not talked. They're at war with each other. 461 00:25:21,600 --> 00:25:23,480 Speaker 13: And if he can get them in the same room 462 00:25:23,680 --> 00:25:27,159 Speaker 13: and at least begin some sort of discussion about a 463 00:25:27,200 --> 00:25:30,560 Speaker 13: way forward here is that is exactly what President Trump 464 00:25:30,600 --> 00:25:33,639 Speaker 13: has been outlining. It is effectively what he ran on 465 00:25:33,760 --> 00:25:37,040 Speaker 13: last year. American people do not want to commit their 466 00:25:37,080 --> 00:25:39,960 Speaker 13: own blood and treasure to this conflict any longer. Through 467 00:25:39,960 --> 00:25:43,080 Speaker 13: our democratic process we have learned that. So this is 468 00:25:43,840 --> 00:25:46,240 Speaker 13: kind of the logical place to be. If he can 469 00:25:46,440 --> 00:25:51,000 Speaker 13: use his very considerable diplomatic heft to promote these meetings, 470 00:25:51,200 --> 00:25:55,240 Speaker 13: then good for President Trump. Of course, it remains incredibly 471 00:25:55,280 --> 00:25:58,600 Speaker 13: difficult to get a deal here. Genie was right earlier 472 00:25:58,640 --> 00:26:02,680 Speaker 13: in the show. This this is the thorniest issue there 473 00:26:02,720 --> 00:26:05,600 Speaker 13: is in the world today, except perhaps for Gaza. So 474 00:26:05,760 --> 00:26:08,600 Speaker 13: President Trump's taking on a big, big, big challenge, but 475 00:26:08,840 --> 00:26:12,680 Speaker 13: this could be a significant step forward for him. 476 00:26:12,920 --> 00:26:13,320 Speaker 12: All right. 477 00:26:13,359 --> 00:26:16,440 Speaker 2: Our political panel today Genie she and Zano, senior democracy 478 00:26:16,480 --> 00:26:18,400 Speaker 2: fellow with the Center for the Study of the Presidency 479 00:26:18,440 --> 00:26:21,240 Speaker 2: and Congress, and Lester Months in principle of the International 480 00:26:21,240 --> 00:26:24,520 Speaker 2: Practice at BGR Group and a Republican strategist. We thank 481 00:26:24,560 --> 00:26:27,640 Speaker 2: you both for being here on a busy newsday. We're 482 00:26:27,680 --> 00:26:29,640 Speaker 2: going to be following all of these developments. Will bring 483 00:26:29,680 --> 00:26:33,000 Speaker 2: you more headlines out of Caroline Levitt's press conference as 484 00:26:33,160 --> 00:26:36,160 Speaker 2: they come through, and we have more conversations up ahead. 485 00:26:36,200 --> 00:26:37,679 Speaker 2: You're not going to want to miss this one. We 486 00:26:37,720 --> 00:26:42,240 Speaker 2: have an Newburger, the former Deputy National Security Advisor for 487 00:26:42,440 --> 00:26:45,840 Speaker 2: cyber and Emerging Technology and the Biden administration. We're going 488 00:26:45,880 --> 00:26:48,640 Speaker 2: to talk about that. Bloomberg News reporting about a potential 489 00:26:48,720 --> 00:26:51,919 Speaker 2: US stake and Intel the race for dominance in the 490 00:26:51,960 --> 00:26:53,280 Speaker 2: AI space with China. 491 00:26:53,600 --> 00:26:54,280 Speaker 10: Stick with us. 492 00:26:54,320 --> 00:26:57,159 Speaker 2: This is Balance of Power on Bloomberg TV and Radio. 493 00:26:57,280 --> 00:26:59,720 Speaker 2: I'm Tyler Kendall alongside Michael Sheppard. 494 00:27:00,160 --> 00:27:01,760 Speaker 9: Stay with us on Balance of Power. 495 00:27:01,760 --> 00:27:03,520 Speaker 10: We'll have much more coming up after this. 496 00:27:07,880 --> 00:27:11,359 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 497 00:27:11,400 --> 00:27:14,879 Speaker 1: us live weekdays at noon and five pm Eastern on Apple, 498 00:27:14,920 --> 00:27:17,960 Speaker 1: Copway and Android Auto with the Bloomberg Business App. You 499 00:27:17,960 --> 00:27:21,440 Speaker 1: can also listen live on Amazon Alexa from our flagship 500 00:27:21,520 --> 00:27:25,440 Speaker 1: New York station. Just say Alexa, play Bloomberg eleven thirty. 501 00:27:26,800 --> 00:27:30,120 Speaker 2: The Markets and Washington watching this big story today when 502 00:27:30,119 --> 00:27:34,040 Speaker 2: it comes to Intel, Commerce Secretary Howard Lutnik confirming a 503 00:27:34,200 --> 00:27:39,000 Speaker 2: Bloomberg News scoop that discussions are underway between the US 504 00:27:39,320 --> 00:27:42,200 Speaker 2: and Intel for the government to take a stake in 505 00:27:42,240 --> 00:27:44,520 Speaker 2: the chip maker, casting the plan as a bid to 506 00:27:44,600 --> 00:27:49,000 Speaker 2: convert chips and science aced grants into equity. This would 507 00:27:49,000 --> 00:27:51,640 Speaker 2: be a big step. This could bolster the company's finances 508 00:27:51,680 --> 00:27:54,400 Speaker 2: at a time when we've seen Intel has been slashing 509 00:27:54,440 --> 00:27:58,199 Speaker 2: spending and cutting jobs and lucky for us. My co 510 00:27:58,320 --> 00:28:01,520 Speaker 2: host today is Michael Shep, who happens to be our 511 00:28:01,680 --> 00:28:05,000 Speaker 2: expert when it comes to the industry. He is our 512 00:28:05,040 --> 00:28:09,359 Speaker 2: senior editor for Tech and Strategic Industry. So, Mike, what 513 00:28:09,440 --> 00:28:12,800 Speaker 2: do we have to know about this potential deal, particularly 514 00:28:12,880 --> 00:28:15,040 Speaker 2: how it's structured here? How is this unique? 515 00:28:15,160 --> 00:28:17,840 Speaker 6: Well, the structure it remains a bit fluid, But our 516 00:28:17,960 --> 00:28:20,800 Speaker 6: understanding is that they intend to take some of the 517 00:28:20,920 --> 00:28:25,280 Speaker 6: money that was going to be allocated over time to 518 00:28:25,440 --> 00:28:27,840 Speaker 6: Intel as part of the Chips Act and do it 519 00:28:27,920 --> 00:28:32,320 Speaker 6: much more quickly and give the government in return equity 520 00:28:32,359 --> 00:28:34,280 Speaker 6: and equity stake in the company, and that would amount 521 00:28:34,280 --> 00:28:37,120 Speaker 6: to about ten percent of Intel, and it would make 522 00:28:37,160 --> 00:28:41,160 Speaker 6: the US the largest shareholder in this iconic chip maker, 523 00:28:41,360 --> 00:28:45,000 Speaker 6: of the one that really put the semiconductor industry on 524 00:28:45,160 --> 00:28:48,520 Speaker 6: the map. And you coined in a way the words 525 00:28:48,520 --> 00:28:51,000 Speaker 6: Silicon Valley. If you think about a Tyler. It really 526 00:28:51,080 --> 00:28:55,920 Speaker 6: is an iconic venture and it's one that the US 527 00:28:56,000 --> 00:28:59,120 Speaker 6: and certainly the Biden administration also made its own efforts 528 00:28:59,240 --> 00:29:02,480 Speaker 6: to try to show up domestic chip making. But some 529 00:29:02,600 --> 00:29:06,040 Speaker 6: of the questions Howard Lutnik did answer were what governance 530 00:29:06,120 --> 00:29:08,440 Speaker 6: role would the US have, would it take a board seat, 531 00:29:08,560 --> 00:29:11,120 Speaker 6: would it get a golden share? At least for now, 532 00:29:11,120 --> 00:29:14,360 Speaker 6: it doesn't look like that is going to be the case, 533 00:29:14,560 --> 00:29:17,920 Speaker 6: but that could all change. The negotiations are still underway. 534 00:29:18,000 --> 00:29:21,080 Speaker 6: It's still kind of a fluid situation, so we will 535 00:29:21,120 --> 00:29:24,040 Speaker 6: have to see what emerges. And of course Intel is 536 00:29:24,120 --> 00:29:26,400 Speaker 6: up today because they also got good news of an 537 00:29:26,440 --> 00:29:30,880 Speaker 6: investment from SoftBank, a two billion dollar equity stake from 538 00:29:30,920 --> 00:29:34,520 Speaker 6: them to help on the artificial intelligence front. So there's 539 00:29:34,520 --> 00:29:37,280 Speaker 6: a lot of movement in this whole chip space right now. 540 00:29:37,120 --> 00:29:39,240 Speaker 2: Well, a lot of movement, right because this does seem 541 00:29:39,280 --> 00:29:44,000 Speaker 2: like perhaps a reversal from President Trump, right because just 542 00:29:44,040 --> 00:29:46,320 Speaker 2: a couple of weeks ago he was caused calling for 543 00:29:46,440 --> 00:29:49,880 Speaker 2: the ouster of the head of Intel, right after we 544 00:29:49,920 --> 00:29:53,320 Speaker 2: saw this inquiry or this request for documents from a 545 00:29:53,400 --> 00:29:56,280 Speaker 2: leading US senator over some ties to China. 546 00:29:56,400 --> 00:29:59,480 Speaker 6: It really was an extraordinary turn about because you saw 547 00:30:00,240 --> 00:30:03,720 Speaker 6: within a matter of days the President pivot from calling 548 00:30:03,840 --> 00:30:08,360 Speaker 6: essentially for Lipbhutan, the Intel CEO, to resign, to them 549 00:30:08,440 --> 00:30:11,520 Speaker 6: welcoming him to the White House and then essentially calling 550 00:30:11,600 --> 00:30:14,720 Speaker 6: him a great leader and a great CEO, embracing whatever 551 00:30:14,840 --> 00:30:17,600 Speaker 6: vision he may have presented to the President about turning 552 00:30:17,680 --> 00:30:21,480 Speaker 6: the company around. And yet the turnaround that Lipbhuten is 553 00:30:21,560 --> 00:30:26,160 Speaker 6: pushing may not comport entirely with the US effort to 554 00:30:26,240 --> 00:30:30,400 Speaker 6: try to get more investment in the chip industry. It's 555 00:30:30,440 --> 00:30:33,680 Speaker 6: an expensive proposition and it also requires a lot of 556 00:30:33,720 --> 00:30:36,880 Speaker 6: customers for Intel. So this is a major challenge for 557 00:30:37,040 --> 00:30:39,400 Speaker 6: the company and for the government, and we'll have to 558 00:30:39,440 --> 00:30:42,720 Speaker 6: see what tension there is between the two. And we're 559 00:30:42,800 --> 00:30:46,840 Speaker 6: pleased today to be joined by Ann Newberger. She is 560 00:30:46,960 --> 00:30:50,840 Speaker 6: the Pain Distinguished Lecturer at Stanford University and a former 561 00:30:50,880 --> 00:30:54,959 Speaker 6: Deputy National Security Advisor in the Biden Administration for cyber 562 00:30:55,080 --> 00:30:58,840 Speaker 6: and Emerging Technology. And thank you so much for joining us, 563 00:30:58,920 --> 00:31:00,840 Speaker 6: And we do want to stay on our main story 564 00:31:01,040 --> 00:31:03,600 Speaker 6: of the moment in this area of tech with Intel. 565 00:31:03,880 --> 00:31:06,480 Speaker 6: The question I have for you is what are the 566 00:31:06,680 --> 00:31:09,920 Speaker 6: risks of the US actually taking a stake in such 567 00:31:09,960 --> 00:31:14,560 Speaker 6: a critical company and essentially becoming an owner and owning 568 00:31:14,600 --> 00:31:16,200 Speaker 6: whatever problems it may have. 569 00:31:18,240 --> 00:31:20,960 Speaker 10: To be with you, Mike, thank you so much. So 570 00:31:21,840 --> 00:31:24,960 Speaker 10: the core risk is that doesn't achieve the overall goal. 571 00:31:25,000 --> 00:31:27,600 Speaker 9: What's the overall goal? I think we know that the. 572 00:31:27,600 --> 00:31:32,200 Speaker 10: Global semiconductor's supply chain is both fragile and concentrated. While 573 00:31:32,200 --> 00:31:34,800 Speaker 10: over just about fifty percent if chips are designed by 574 00:31:34,840 --> 00:31:38,880 Speaker 10: American companies, only twelve percent of chips are manufactured in 575 00:31:38,920 --> 00:31:41,520 Speaker 10: the United States and ninety two percent of the most 576 00:31:41,520 --> 00:31:46,240 Speaker 10: advanced chips are manufactured in Taiwan, which gives both unique 577 00:31:46,240 --> 00:31:49,680 Speaker 10: dependence on the economic side and from a national security perspective, 578 00:31:50,240 --> 00:31:54,880 Speaker 10: it's deeply concerning with regard to potentially a crisis around 579 00:31:54,960 --> 00:31:58,680 Speaker 10: Taiwan and the dependence on manufacturing in Taiwan. So the 580 00:31:58,720 --> 00:32:01,760 Speaker 10: goal of a US investment would be to essentially help 581 00:32:01,800 --> 00:32:05,640 Speaker 10: in this strategic sector, help the company be successful because 582 00:32:05,760 --> 00:32:09,200 Speaker 10: having domestic US manufacturing is so critical because of the 583 00:32:09,360 --> 00:32:12,600 Speaker 10: range of uses of semiconductors from defense and military to 584 00:32:12,640 --> 00:32:15,800 Speaker 10: critical infrastructure all the way through to connected toys our 585 00:32:15,840 --> 00:32:16,600 Speaker 10: children play with. 586 00:32:18,160 --> 00:32:20,080 Speaker 6: And at the same time that we've seen the Trump 587 00:32:20,120 --> 00:32:25,560 Speaker 6: administration discuss whether to buy a portion in essence of Intel, 588 00:32:25,760 --> 00:32:29,720 Speaker 6: we've also seen them open the door essentially to Invidio 589 00:32:29,480 --> 00:32:33,880 Speaker 6: to resume sales of some of its AI chips to 590 00:32:34,000 --> 00:32:37,800 Speaker 6: China and perhaps even sell a downgraded version of its 591 00:32:37,880 --> 00:32:42,760 Speaker 6: more advanced Blackwell AI chip to Chinese customers. Is this 592 00:32:42,880 --> 00:32:46,800 Speaker 6: a good idea? The Trump administration certainly think so in 593 00:32:46,880 --> 00:32:49,840 Speaker 6: terms of disseminating the US tech stack, But what are 594 00:32:49,880 --> 00:32:52,600 Speaker 6: the risks embedded in that strategy? 595 00:32:53,240 --> 00:32:56,320 Speaker 10: As you know, both our core to the larger strategic 596 00:32:56,400 --> 00:32:59,960 Speaker 10: tech competition the US has with China. Right, the goal 597 00:33:00,120 --> 00:33:02,200 Speaker 10: of the first and equity stake would be to say, 598 00:33:02,640 --> 00:33:05,480 Speaker 10: the potential is to take the model that worked with 599 00:33:05,560 --> 00:33:08,160 Speaker 10: the two thousand and eight bailout of the auto industry, 600 00:33:08,480 --> 00:33:12,560 Speaker 10: and equity stake tied to outcomes restricted to a time period, 601 00:33:12,680 --> 00:33:16,680 Speaker 10: again tied to those outcomes and replacing the Biden administration approach, 602 00:33:16,720 --> 00:33:19,240 Speaker 10: which was grants and loans, which the CEO of Intel 603 00:33:19,320 --> 00:33:22,960 Speaker 10: said was taking too long and potentially has the risks 604 00:33:23,080 --> 00:33:27,440 Speaker 10: of reducing the competitiveness of the company. So that's what's 605 00:33:27,520 --> 00:33:30,840 Speaker 10: driving in terms of the broader US China tech competition 606 00:33:30,960 --> 00:33:34,680 Speaker 10: and shuring there's a sovereign capability for chips on the 607 00:33:34,840 --> 00:33:37,800 Speaker 10: high end in video chips and AI. AI is a 608 00:33:37,840 --> 00:33:40,920 Speaker 10: strategic arena both because of the application of AI for 609 00:33:41,040 --> 00:33:44,640 Speaker 10: military and intelligence capabilities as well as the broader economic 610 00:33:44,760 --> 00:33:47,960 Speaker 10: competitiveness that we believe AI over time will. 611 00:33:47,840 --> 00:33:49,200 Speaker 9: Drive across industries. 612 00:33:49,600 --> 00:33:53,760 Speaker 10: So as a result, currently the highest end US chips 613 00:33:53,760 --> 00:33:58,400 Speaker 10: manufactured for AI are manufactured in the US, and balancing 614 00:33:59,480 --> 00:34:03,960 Speaker 10: providing them to China or whether broader uptake of the 615 00:34:04,080 --> 00:34:09,040 Speaker 10: USAI stack would drive global development on US chips is 616 00:34:09,080 --> 00:34:11,759 Speaker 10: the trade off the Trump administration has been thinking about 617 00:34:11,800 --> 00:34:15,319 Speaker 10: and making a number of people criticize the decision to 618 00:34:15,360 --> 00:34:18,040 Speaker 10: provide highest end chips to China because of a concern 619 00:34:18,120 --> 00:34:22,319 Speaker 10: it'll advance Chinese military capabilities. Certainly, CEO of Nvidia makes 620 00:34:22,360 --> 00:34:26,520 Speaker 10: the case that it'll deepen global reliance on the US 621 00:34:26,560 --> 00:34:29,759 Speaker 10: tech stack. For this critical new industries being built on AI. 622 00:34:32,000 --> 00:34:35,040 Speaker 2: We do want to bring in some breaking news headlines 623 00:34:35,080 --> 00:34:37,960 Speaker 2: from the White House Press Secretary, who has now concluded 624 00:34:38,000 --> 00:34:39,960 Speaker 2: her briefing at the White House, But as we're having 625 00:34:40,040 --> 00:34:44,040 Speaker 2: this conversation, she was also having this conversation with reporters 626 00:34:44,120 --> 00:34:47,480 Speaker 2: commenting on this story on Intel, saying that the Commerce Secretary, 627 00:34:47,520 --> 00:34:52,080 Speaker 2: Howard Lutnik, is currently ironing out the details of that deal. 628 00:34:52,160 --> 00:34:56,360 Speaker 2: She said that it is a creative idea, in her words, 629 00:34:56,360 --> 00:34:58,799 Speaker 2: as we try to glean some more details about what 630 00:34:59,440 --> 00:35:01,920 Speaker 2: its structure or is actually going to look like, and 631 00:35:01,960 --> 00:35:04,680 Speaker 2: she adds that President Trump's interest in this really does 632 00:35:04,719 --> 00:35:09,200 Speaker 2: have to do with reshoring manufacturing. To build on this conversation, 633 00:35:09,719 --> 00:35:11,640 Speaker 2: and can you just give us a little bit more 634 00:35:11,680 --> 00:35:15,200 Speaker 2: context here about the urgency that the US is facing 635 00:35:15,280 --> 00:35:18,480 Speaker 2: when it comes to competitiveness in this space and how 636 00:35:18,560 --> 00:35:22,799 Speaker 2: the White House is dealing with those different factors here 637 00:35:22,840 --> 00:35:25,560 Speaker 2: to try to strike a balance between making sure that 638 00:35:25,600 --> 00:35:28,520 Speaker 2: our producers, our companies have enough time to move their 639 00:35:28,520 --> 00:35:31,440 Speaker 2: supply chains, but also keeping up with this idea that 640 00:35:31,480 --> 00:35:32,880 Speaker 2: we are in this race with China. 641 00:35:34,360 --> 00:35:38,600 Speaker 10: Absolutely, so the core issue is around manufacturing of advanced 642 00:35:38,680 --> 00:35:44,000 Speaker 10: edge semiconductors, and that's where there is an urgency in 643 00:35:44,120 --> 00:35:49,200 Speaker 10: changing Intel's course. Intel's facility foundry plant in Ohio has 644 00:35:49,200 --> 00:35:54,640 Speaker 10: been delayed until twenty thirty, so accelerating the timeframe for 645 00:35:54,760 --> 00:35:58,320 Speaker 10: foundry capability so there is a backup in the United 646 00:35:58,320 --> 00:36:01,560 Speaker 10: States is key with them. That said, you know, chips 647 00:36:01,600 --> 00:36:05,360 Speaker 10: are components used across industries. Companies have supply chains, So 648 00:36:05,440 --> 00:36:09,279 Speaker 10: having more reliance and understanding of when ships will be 649 00:36:09,280 --> 00:36:12,719 Speaker 10: available in the US at what quantities, frankly, at what 650 00:36:12,920 --> 00:36:16,080 Speaker 10: sizes larger end which are used in consumer products, all 651 00:36:16,120 --> 00:36:21,279 Speaker 10: the way through through the most refined smaller semiconductors which 652 00:36:21,320 --> 00:36:24,360 Speaker 10: are used in high end products. So really having a 653 00:36:24,520 --> 00:36:29,560 Speaker 10: knowledge of helping Intel meet its timelines and tying potential 654 00:36:29,600 --> 00:36:32,719 Speaker 10: equity stake to those timelines also would give greater assurance 655 00:36:32,719 --> 00:36:35,440 Speaker 10: to the number of sectors relying on chips, because so 656 00:36:35,560 --> 00:36:39,040 Speaker 10: much of manufacturing is still just in time needs to 657 00:36:39,040 --> 00:36:41,120 Speaker 10: rely on knowing when ships will come where. 658 00:36:42,920 --> 00:36:44,799 Speaker 6: And I wanted to pivot a little bit to the 659 00:36:45,200 --> 00:36:48,319 Speaker 6: of the area of your expertise, and of course that 660 00:36:48,440 --> 00:36:52,120 Speaker 6: is cybersecurity, and I wanted to ask you about how 661 00:36:52,239 --> 00:36:56,120 Speaker 6: much artificial intelligence is changing the game when it comes 662 00:36:56,200 --> 00:37:01,319 Speaker 6: to both defensive and offensive cyber security operations. 663 00:37:02,640 --> 00:37:04,960 Speaker 9: It's a game changer across both. 664 00:37:05,239 --> 00:37:07,840 Speaker 10: First, it's always easier to be on attack than defense, 665 00:37:07,960 --> 00:37:10,480 Speaker 10: right an attacker has to find one way in, a 666 00:37:10,520 --> 00:37:13,360 Speaker 10: defender has to be monitoring every virtual. 667 00:37:13,000 --> 00:37:14,040 Speaker 9: Door and window. 668 00:37:14,560 --> 00:37:17,319 Speaker 10: What we're seeing now on the attack side is more 669 00:37:17,400 --> 00:37:21,799 Speaker 10: attackers leveraging it for spear phishing, very focused emails that 670 00:37:21,840 --> 00:37:23,840 Speaker 10: get people to click on them, that are often the 671 00:37:23,880 --> 00:37:27,640 Speaker 10: first point of entry and compromise, making them more believable. 672 00:37:27,920 --> 00:37:30,799 Speaker 10: We're seeing that on offense. I think we also can 673 00:37:30,840 --> 00:37:35,240 Speaker 10: anticipate that we'll see more advanced attacks, multi stage attacks 674 00:37:35,239 --> 00:37:38,920 Speaker 10: that use AI to adjust as a defender tries to defend. 675 00:37:39,440 --> 00:37:42,000 Speaker 10: And I concerned that one of the first areas we'll 676 00:37:42,000 --> 00:37:46,279 Speaker 10: see that is in the burgeoning ransomware industry, where criminals, 677 00:37:46,360 --> 00:37:49,840 Speaker 10: often in safe having countries like Russia, try to attack 678 00:37:49,880 --> 00:37:55,200 Speaker 10: companies that have insufficient defenses in order to force them 679 00:37:55,239 --> 00:37:57,200 Speaker 10: to pay ransom to get back their data or get 680 00:37:57,239 --> 00:38:00,719 Speaker 10: back the operations of their network. On the defail, inside 681 00:38:00,920 --> 00:38:04,160 Speaker 10: AI can be a game changer in terms of actually 682 00:38:04,160 --> 00:38:09,040 Speaker 10: helping identify misconfigurations in a network, making sense of firewall 683 00:38:09,080 --> 00:38:11,200 Speaker 10: logs that are often hard to parse and automating a 684 00:38:11,200 --> 00:38:14,720 Speaker 10: lot of the manual work around cybersecurity. We're just seeing 685 00:38:14,760 --> 00:38:18,719 Speaker 10: companies build in AI for defense. Google announced, you know, 686 00:38:18,760 --> 00:38:21,719 Speaker 10: they had used an AI capability to find a major 687 00:38:21,800 --> 00:38:22,799 Speaker 10: vulnerability in one of. 688 00:38:22,719 --> 00:38:24,040 Speaker 9: Their products and patch it. 689 00:38:24,800 --> 00:38:28,480 Speaker 10: DARPA at the recent Hackers conference announced the second phase 690 00:38:28,480 --> 00:38:30,759 Speaker 10: as well of using AI to not only find but 691 00:38:30,920 --> 00:38:32,160 Speaker 10: patch vulnerabilities. 692 00:38:32,480 --> 00:38:33,520 Speaker 9: So the race is on. 693 00:38:34,080 --> 00:38:36,640 Speaker 10: It'll advantage both, and I think the race is really 694 00:38:36,680 --> 00:38:38,960 Speaker 10: on to see which one advance is further. 695 00:38:40,320 --> 00:38:42,360 Speaker 2: Well to put a finer point on this, And you 696 00:38:42,440 --> 00:38:45,600 Speaker 2: had a really fascinating piece in Foreign Affairs earlier this month, 697 00:38:45,600 --> 00:38:48,160 Speaker 2: and I want to pull a quote from it. It's 698 00:38:48,160 --> 00:38:51,080 Speaker 2: titled that China is winning the cyber war, and you 699 00:38:51,160 --> 00:38:57,200 Speaker 2: write that China's cyber dominance extends well bite beyond telecommunications espionage, 700 00:38:57,280 --> 00:39:01,279 Speaker 2: going on to say, these intrusions show little evidence of 701 00:39:01,360 --> 00:39:06,040 Speaker 2: traditional intelligence gathering. In your view, in your expertise, what 702 00:39:06,120 --> 00:39:09,040 Speaker 2: is the biggest, most urgent action that the US government 703 00:39:09,400 --> 00:39:12,480 Speaker 2: could take right now to fend off these threats when 704 00:39:12,480 --> 00:39:13,560 Speaker 2: it comes to competition with. 705 00:39:13,600 --> 00:39:19,360 Speaker 10: China fundamentally using AI for defense. So we're in a 706 00:39:19,400 --> 00:39:23,680 Speaker 10: battle between democracies like the US and authoritarian countries like China. 707 00:39:24,200 --> 00:39:28,800 Speaker 10: In democracies, traditionally, governments haven't monitored the critical power, water, 708 00:39:28,960 --> 00:39:32,880 Speaker 10: and pipelines that underpin American lives because they're privately owned, 709 00:39:33,440 --> 00:39:37,800 Speaker 10: and traditionally governments haven't monitored privately owned networks in countries 710 00:39:37,840 --> 00:39:41,480 Speaker 10: like China. Not only are pipelines, water, and power companies 711 00:39:41,520 --> 00:39:45,080 Speaker 10: often state owned enterprises, but China has a great firewall 712 00:39:45,239 --> 00:39:49,400 Speaker 10: where they monitor for both surveillance obviously of their citizens, 713 00:39:49,400 --> 00:39:51,960 Speaker 10: but also for cyber attacks, and they can block those 714 00:39:52,000 --> 00:39:55,640 Speaker 10: attacks in line. So the asymmetry between the models means 715 00:39:55,680 --> 00:39:58,759 Speaker 10: that in the US we are at a disadvantage. We 716 00:39:58,920 --> 00:40:01,200 Speaker 10: need to use AI to find and fix the most 717 00:40:01,280 --> 00:40:05,839 Speaker 10: critical vulnerabilities in our critical infrastructure that Americans rely on. 718 00:40:06,160 --> 00:40:08,480 Speaker 10: AI gives us the way to pull that data together, 719 00:40:08,600 --> 00:40:13,319 Speaker 10: simulate attacks, or make the investments most purposeful for the 720 00:40:13,400 --> 00:40:17,200 Speaker 10: attacks that could actually disable large amounts of critical infrastructure. 721 00:40:17,600 --> 00:40:20,000 Speaker 10: So that could work within our model in a partnership 722 00:40:20,000 --> 00:40:23,680 Speaker 10: between government agencies like the Department of Energy building digital 723 00:40:23,719 --> 00:40:26,880 Speaker 10: replicas of our energy grid to model attacks and then 724 00:40:26,920 --> 00:40:29,800 Speaker 10: work with companies to fix the most critical vulnerabilities. 725 00:40:31,360 --> 00:40:35,520 Speaker 2: All Right, and Newburger Pain distinguished lecturer at Stanford University 726 00:40:35,520 --> 00:40:39,440 Speaker 2: and former Deputy National Security Advisor for cyber and Emerging 727 00:40:39,480 --> 00:40:42,560 Speaker 2: Technology in the Biden administration. We thank you so much 728 00:40:42,640 --> 00:40:46,080 Speaker 2: for your insight and that fastening conversation about the competition 729 00:40:46,520 --> 00:40:49,480 Speaker 2: with China when it comes to artificial intelligence. 730 00:40:52,040 --> 00:40:55,239 Speaker 10: Thanks for listening to the Balance of Power podcast. Make 731 00:40:55,239 --> 00:40:58,200 Speaker 10: sure to subscribe if you haven't already an Apple, Spotify, 732 00:40:58,320 --> 00:40:59,040 Speaker 10: or wherever. 733 00:40:58,719 --> 00:41:00,360 Speaker 9: You get your podcasts, and 734 00:41:00,440 --> 00:41:03,040 Speaker 10: You can find us live every weekday from Washington, DC 735 00:41:03,200 --> 00:41:06,360 Speaker 10: at noontime Eastern at Bloomberg dot com.