WEBVTT - US Reportedly Eyes War Exit, Fully-Laden Tanker Hit, Russia Spies Tighten Grip

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg daybreaker of podcast Good Morning. It's Tuesday,

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<v Speaker 2>the thirty first of March. I'm Caroline Hepgar in London.

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<v Speaker 2>Coming up today, the US President is said to be

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<v Speaker 2>considering a rapid end to the Iran war, even as

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<v Speaker 2>troops continue to arrive in the region. Iran strikes a

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<v Speaker 2>vessel full of oil just outside Dubai, as the houthis

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<v Speaker 2>consider a renewed campaign against red sea shipping. Plus a

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<v Speaker 2>special report on the KGB's successor the FSB tightening its

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<v Speaker 2>grip in Putin's Russia. Let's start with a roundup of

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<v Speaker 2>our top stories. President Trump has reportedly told aids he

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<v Speaker 2>is willing to end the US military campaign against Iran

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<v Speaker 2>even if the Strait of Hormuz remains largely closed. According

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<v Speaker 2>to The Wall Street Journal, the White House has concluded

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<v Speaker 2>that reopening the waterway would likely extend the conflict beyond

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<v Speaker 2>the President's preferred timeline of four to six weeks. Eric Nuttall,

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<v Speaker 2>who is senior portfolio manager at Nine Point Partners, says

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<v Speaker 2>the situation is likely to deteriorate further.

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<v Speaker 3>If the street does not open, and we need to

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<v Speaker 3>kill demand. Past scenarios would be when about five point

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<v Speaker 3>five percent of the global economy global GDP is being

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<v Speaker 3>spent on oil. That is when the onus is too

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<v Speaker 3>great and you see real demand destruction that in today's

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<v Speaker 3>measurement would be about one hundred and seventy seven dollars

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<v Speaker 3>per girl. That is where we're going if the straid

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<v Speaker 3>is not opened.

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<v Speaker 2>That was Eric Nuttall speaking. Despite Trump repeatedly saying a

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<v Speaker 2>deal with Iran is imminent, the US has deployed additional

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<v Speaker 2>troops to the region as the conflict enters its fifth week.

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<v Speaker 2>On Monday, the President said the US with target i

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<v Speaker 2>Brainian power plants, oil facilities, and possibly desalination infrastructure if

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<v Speaker 2>Tehran not reopen the Strait of Hormuz. While Iran has

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<v Speaker 2>hit an oil tanker fully loaded with crude oil inside

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<v Speaker 2>Dubai's port in an escalation of the attacks on shipping.

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<v Speaker 2>The Kuwait flagged vessel was carrying more than two million

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<v Speaker 2>barrels of oil when it was struck by a drone.

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<v Speaker 2>Bloomberg's Romana Bissecci is in Dubai and.

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<v Speaker 4>This showcase say is once again the rests that are

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<v Speaker 4>being posed to vessels to tankers that should choose to

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<v Speaker 4>pass the street. Iran effectively reminding everybody that they still

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<v Speaker 4>can harass ships that want to pass through. And if

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<v Speaker 4>you look at the flow of traffic, there have been

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<v Speaker 4>a handful of vessels that have managed to make it through,

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<v Speaker 4>but only ones that have had the permission or received

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<v Speaker 4>the permission from it around before.

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<v Speaker 2>Have Dumana Bassecchi, who added that a fire on the

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<v Speaker 2>boat has now been extinguished and all twenty four crew

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<v Speaker 2>members are safe. Tevan has targeted ships and energy infrastructure

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<v Speaker 2>on several occasions, but the latest attack is the closest

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<v Speaker 2>to the major port of Dubai and elsewhere in the Gulf.

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<v Speaker 2>Iran is pushing Huthi militants to prepare for a new

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<v Speaker 2>campaign against shipping in the Red Sea. European officials Tel Bloomberg,

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<v Speaker 2>the group in Yemen is considering how aggressively it would

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<v Speaker 2>respond to any further US escalation. CIBC Private wealths Rebecca

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<v Speaker 2>Babin says it could be a critical shift for the market.

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<v Speaker 5>If the HOHO theies escalade in this conflict, they have

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<v Speaker 5>a meaningful ability to actually kind of put more pressure

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<v Speaker 5>on the market. They will move from a chokehold and

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<v Speaker 5>the horror most kind of a stranglehold where even the

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<v Speaker 5>flows that were able to reroute now cannot escape.

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<v Speaker 2>CIBC Private Wealth's senior energy trader Rebecca Babin there with

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<v Speaker 2>Hormuz blog. Saudi Arabia has ramped up crude exports from

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<v Speaker 2>the Red Sea port of Yanbou. The Huthis themselves are

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<v Speaker 2>so far split though, on the merits of any campaign,

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<v Speaker 2>where roughly half of Yemeny's are suffering from acute hunger

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<v Speaker 2>according to the UN. US Secretary of State Marco Rubio

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<v Speaker 2>has suggested that the United States may need to reassess

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<v Speaker 2>its relationship with NATO after the Iran War. Speaking to

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<v Speaker 2>Al Jazeera, Rubio criticized what he sees as a lack

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<v Speaker 2>of support for US operations in the Middle East from

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<v Speaker 2>member countries. America's top diplomat also took issue with the

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<v Speaker 2>Alliance for denying access to some European air space and

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<v Speaker 2>military bases.

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<v Speaker 1>And so you ask yourself, well, what is in it

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<v Speaker 1>for the United States. And I've been a big supporter

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<v Speaker 1>of NATO. And one of the reasons why I've been

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<v Speaker 1>a supporter of NATO is because I believe that these

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<v Speaker 1>basing rights give us leverage and give us flexibility and

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<v Speaker 1>operational capability all over the world. But if NATO was

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<v Speaker 1>just about US defending Europe of their attack, but them

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<v Speaker 1>denying us basing rights when we need them, that's not

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<v Speaker 1>a very good arrangement. That's a hard one to stay

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<v Speaker 1>engaged in it and say this is good for the

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<v Speaker 1>United States. So all of them are going to have

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<v Speaker 1>to be rea examined.

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<v Speaker 2>Rubio's remarks come as NATO members have largely rebuffed US

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<v Speaker 2>requests to help reopen the vital Strait of Hormuz, and

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<v Speaker 2>in other news, China's factories are unexpectedly boosting their output

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<v Speaker 2>even with the war in the Middle East. PMIS in

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<v Speaker 2>March hit fifty point four, beating estimates in a sign

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<v Speaker 2>of growth from the first official data from the period

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<v Speaker 2>since the war began. That's despite many Chinese factories struggling

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<v Speaker 2>with higher cost due to the conflict. The data also

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<v Speaker 2>shows the fastest surgeon war materials costs and output prices

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<v Speaker 2>in roughly four years. Beijing lowered its annual economic growth

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<v Speaker 2>target to a minimum of four and a half percent,

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<v Speaker 2>the least ambitious goal since nineteen ninety one, and here

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<v Speaker 2>in the UK, shopers are being worn to brace for

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<v Speaker 2>a wave of price increases. Bloomberg's un Pots has more

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<v Speaker 2>details on the survey from the British Retail Consortium.

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<v Speaker 6>The prices of goods sold UK stores rose one point

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<v Speaker 6>two percent in the year to March, just ticking up

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<v Speaker 6>slightly from one point one percent in February. Food inflation

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<v Speaker 6>actually slowed during the month, coming in at three point

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<v Speaker 6>four percent year on year. The Retail Industury survey was

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<v Speaker 6>taken immediately after the outbreak of the Iran War, with

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<v Speaker 6>the BRC warning it will take at least three months

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<v Speaker 6>before the effects of high costs passed through to consumer prices.

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<v Speaker 6>With petulan diesel costs already soaring, that will come as

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<v Speaker 6>welcome relief for consumers for now, at least in Hong Kong.

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<v Speaker 6>I'm you and Pots Bloomberg Radio.

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<v Speaker 2>And those are our top stories. Looking at the market,

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<v Speaker 2>it's that the Iran driven stock route continues, buyers looking

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<v Speaker 2>pretty elusive. The MSCI Asia Pacific Index this morning is

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<v Speaker 2>down by one point two percent. Remember that Dubai's main

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<v Speaker 2>stock index, the DFM, is now down sixteen percent in March,

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<v Speaker 2>so the world's worst performer so far. The costb in

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<v Speaker 2>South Korea also seeing a significant decline today of three

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<v Speaker 2>point six percent, but futures actually for Europe and the

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<v Speaker 2>US are in the green bond markets, Treasury yields easing

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<v Speaker 2>two basis points to four point three two percent. Oil

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<v Speaker 2>prices have stalled, with that report on a potential US

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<v Speaker 2>early exit as one option that President Trump has floated.

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<v Speaker 2>Brenkrewed futures currently trading just above one hundred and seven

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<v Speaker 2>dollars per barrel, Aluminium heading for its biggest monthly gain

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<v Speaker 2>in two years. Gold and silver seaing gains, gold extending

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<v Speaker 2>two days of increases. Those are the markets now. President

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<v Speaker 2>Trump continues to vacillate between saying that the end of

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<v Speaker 2>the war in Iran is near and also threatening a

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<v Speaker 2>further escalation US military action. Joining US now to discuss

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<v Speaker 2>as Bloomberg horizons Middle East and Africa. Anchor Jumana Bussecci,

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<v Speaker 2>Good morning, Jumana. President Trump is considering leaving without reopening HOMEMUS.

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<v Speaker 2>What happens in that case? Do other countries attempt this

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<v Speaker 2>daunting time? Do they agree to paying up to paying

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<v Speaker 2>Iran which is their demand? Yeah?

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<v Speaker 7>I mean I think it's important just to take a

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<v Speaker 7>step back here and to reiterate that this is sourcing

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<v Speaker 7>from the Wall Street Journal. This isn't coming directly from

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<v Speaker 7>the White House themselves, but clearly the White House are

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<v Speaker 7>considering a range of options here. And what they have

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<v Speaker 7>framed the last couple of days, and this has come

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<v Speaker 7>through via many calls that President Trump has had with journalists,

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<v Speaker 7>is that they deem themselves to be militarily very successful

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<v Speaker 7>and that the operations having gone very well over the

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<v Speaker 7>course of the first month. Of course, the lingering issue

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<v Speaker 7>remains and will continue to be so for the foresellable future,

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<v Speaker 7>the effective closure of the Strait of Hormas, and so

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<v Speaker 7>it looks as though they're trying to sort of draw

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<v Speaker 7>a line between what they're trying to achieve militarily with

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<v Speaker 7>the war versus the reopening of the Strait of Hormas,

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<v Speaker 7>and this Wall Street Journal article suggests that he may

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<v Speaker 7>look to separate the two issues.

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<v Speaker 3>Not.

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<v Speaker 7>The problem, as you say, is that it is unlikely

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<v Speaker 7>at this point for there to be a huge uptake

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<v Speaker 7>of other nations who would be willing to join in

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<v Speaker 7>on these efforts. And the Wall Street Journal articles suggests

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<v Speaker 7>that the first, the first point of call would be

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<v Speaker 7>for them to try to get to a diplomatic solution

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<v Speaker 7>with Iran on the street, and if that fails, then

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<v Speaker 7>perhaps look together, look to put together this so called

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<v Speaker 7>coalition of the Willing that might be comprising some of

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<v Speaker 7>the golf Arab states as well, but for golf Arab states,

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<v Speaker 7>and I just want to remind viewers as well, they

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<v Speaker 7>have been very vocal over the last couple of days

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<v Speaker 7>about how Iran is effectively terrorizing the world via their

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<v Speaker 7>hold and their grip on the Straits of Hormos. An

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<v Speaker 7>outcome in which they still have that control is not

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<v Speaker 7>something that would be palatable or acceptable for golf nations.

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<v Speaker 2>Yes, so I think that's very important to understand the

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<v Speaker 2>view of those golf countries. Is this turning into a

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<v Speaker 2>loss for the US then a strategic disaster? I mean,

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<v Speaker 2>what would be the consequences of that.

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<v Speaker 4>Well, I think you have.

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<v Speaker 7>To also distinguish between military success and strategic success. Militarily,

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<v Speaker 7>there's no doubt that the US has superiority over the skies.

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<v Speaker 7>They've managed it, and this is joint US Israeli operations.

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<v Speaker 7>I should say, they've managed to really incur a lot

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<v Speaker 7>of damage on Iran's missile capabilities, on their launchers, on

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<v Speaker 7>their air defense systems, on their navy. So there are

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<v Speaker 7>a series of military successes to speak of. Politically questionable

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<v Speaker 7>at this point whether this has actually resulted in a

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<v Speaker 7>change of leadership or even not necessarily regime change here,

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<v Speaker 7>but a regime that is more compliant, at least to

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<v Speaker 7>the west.

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<v Speaker 4>Unclear that that has come through.

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<v Speaker 7>There are no signs on the ground of regime collapse,

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<v Speaker 7>and ultimately, you know, going back to Gulf arb States,

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<v Speaker 7>the worst case scenario is one in which you end

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<v Speaker 7>up with an Iran that is angry, that is defiant,

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<v Speaker 7>and is still maintaining ownership of the street.

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<v Speaker 4>So if the.

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<v Speaker 7>US were to walk away today, it could actually be perceived,

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<v Speaker 7>as you know, militarily successful, but strategically not successful, only

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<v Speaker 7>because you've created an even more ferocious enemy on your doorstep.

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<v Speaker 2>Indeed, Jumana, thank you so much for your time this morning.

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<v Speaker 2>That is Bloomberg Horizons Midle East and Africa anchor Jumana

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<v Speaker 2>Bassecci on the latest when it comes to Iran. Stay

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<v Speaker 2>with us. More from Bloomberg daybakeuope coming up after this

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<v Speaker 2>now to put in Russia, where the successor to the KGB,

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<v Speaker 2>the Federal Security Service, is tightening its grip on many

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<v Speaker 2>aspects of Russia's economy and social life. Joining me now

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<v Speaker 2>is Tony Halpin, who leads our coverage of Russia's economy

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<v Speaker 2>and government. Tony, this is a very interesting story that's

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<v Speaker 2>been written. What are the changes at the FSB that

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<v Speaker 2>have increased its power so much good?

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<v Speaker 8>I mean, actively, from tomorrow, the FSB will have the

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<v Speaker 8>authority to obtain copies of any organization's databases that it

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<v Speaker 8>wants to examine without a court aura, and businesses will

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<v Speaker 8>simply have to ensure that their IT systems allow them

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<v Speaker 8>to hand over that data on demand from the FSB.

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<v Speaker 8>And there's very little monitoring of what the FSB will

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<v Speaker 8>would do with that information. And although they're under some

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<v Speaker 8>obligation to destroy it after they've made use of it

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<v Speaker 8>for their given purpose, there's no real guarantee that will happen.

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<v Speaker 8>And clearly that has big implications, implications for things like

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<v Speaker 8>commercial secrecy company's ability to do business without wiring that

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<v Speaker 8>they may be, for example, submitted to some kind of

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<v Speaker 8>pressure or black mail by unscrupulous agents. So it's a

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<v Speaker 8>matter of concern for a lot of companies and a

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<v Speaker 8>lot of organizations. Generally, it's not restricted simply to businesses

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<v Speaker 8>and banks, but any organization at all. And that comes

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<v Speaker 8>on top of things like the FSB's ability already to

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<v Speaker 8>order major banks to install surveillance systems so they can

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<v Speaker 8>monitor messages and other content in banking applications. So it's

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<v Speaker 8>a very extensive surveilment power.

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<v Speaker 2>Yeah, that is very widespread, that is it.

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<v Speaker 1>I mean the.

0:13:13.480 --> 0:13:15.920
<v Speaker 2>Fsp's also got of course, you can't forget the ability

0:13:15.960 --> 0:13:19.120
<v Speaker 2>to shut off the Internet and phone lines. It's trying

0:13:19.160 --> 0:13:22.880
<v Speaker 2>to move away from telegram and get people to use

0:13:22.920 --> 0:13:26.600
<v Speaker 2>state sponsored messenger platform called Max. What do you think

0:13:26.600 --> 0:13:30.560
<v Speaker 2>it shows in a nutshell about Putin's control over the country.

0:13:30.559 --> 0:13:31.679
<v Speaker 2>Why is he doing this now?

0:13:32.120 --> 0:13:33.720
<v Speaker 8>Well, I mean it's all part of a continuum in

0:13:33.760 --> 0:13:36.520
<v Speaker 8>many ways when Putins since about twenty twelve has been

0:13:37.120 --> 0:13:39.920
<v Speaker 8>slowly tightening the screws ensuring that there's no challenge to

0:13:39.960 --> 0:13:43.520
<v Speaker 8>his rule. But undoubtedly the war in Ukraine has intensified

0:13:43.559 --> 0:13:47.600
<v Speaker 8>that and accelerated that trend. The authorities and the criminal

0:13:47.640 --> 0:13:52.000
<v Speaker 8>are more and more concerned about public disappointment with the

0:13:52.040 --> 0:13:55.440
<v Speaker 8>outcome of the war so far, and they're worried about protests,

0:13:55.520 --> 0:13:58.360
<v Speaker 8>and they're intensifying their scrutiny because they want to be

0:13:58.400 --> 0:14:01.040
<v Speaker 8>sure that they can snaff out any kind of descent

0:14:01.480 --> 0:14:03.040
<v Speaker 8>while putting continues as a flaw.

0:14:04.360 --> 0:14:07.080
<v Speaker 9>This is Bloomberg Daybreak Europe, your morning brief on the

0:14:07.160 --> 0:14:10.199
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