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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Wall Street Week. I'm David Weston bringing you

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Speaker 2: stories of capitalism. Next week, global finance leaders travel to

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Speaker 2: Washington for the annual World Bank IMF meetings. Former Canadian

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Speaker 2: Finance Minister Christia Friedland takes us behind the scenes of

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Speaker 2: what's on the agenda. And China has put the supply

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Speaker 2: of critical minerals on everyone's agenda, threatening to cut off

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Speaker 2: supplies that it pretty much monopolizes. Is there a way

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Speaker 2: around the chokehold? But we start with the war in

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Speaker 2: Iran and the ceasefire announced this week, with negotiations taking

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Speaker 2: place in Pakistan led by Vice President Vance. Ambassador Richard

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Speaker 2: has served as a diplomat in both Republican and Democratic

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Speaker 2: and illustrations before leading the Council on Foreign Relations for

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Speaker 2: two decades. He now is with Centerview Partners. Richard, you

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Speaker 2: have been in the room, as it were, for some

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Speaker 2: very high level negotiations. Give us a guide to how

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Speaker 2: we should look at the negotiations going on right now

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Speaker 2: involving the war in Iran.

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Speaker 3: The beginning of negotiations tends to be throat clearing in

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Speaker 3: my experience that people are often posturing getting comfortable the

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Speaker 3: fact that, in particularly the US side is so inexperienced.

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Speaker 3: You've got two non diplomats who have been the principal

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Speaker 3: diplomats for the United States, and then you've got the

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Speaker 3: Vice president who doesn't have a long background, plus David.

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Speaker 3: The two sides, shall we say, to say they're far

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Speaker 3: apart would be a diplomatic understatement. They are. Someone pointed out,

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Speaker 3: it's wider than the Strait of Hormuz, the differences between

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Speaker 3: the two sides, and the question is to what extent

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Speaker 3: are they willing and able are they prepared essentially to

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Speaker 3: begin to bridge the the differences. So this is a

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Speaker 3: tall order plus one more thing. It's taking place against

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Speaker 3: the backdrop, shall we say, of something other than a ceasefire?

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Speaker 3: This is already a messy situation. It's not war, but

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Speaker 3: it's not peace or even a pause. It's something in between,

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Speaker 3: which again complicates the task as a diplomat.

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Speaker 2: How do you start breaking down that gap as you

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Speaker 2: describe it. I mean people have said in a Van dinegrad,

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Speaker 2: there's no overlap right now in the position to two sides. Well,

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Speaker 2: the first thing is, before you start thinking about what

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Speaker 2: you're going to try to accomplish across the table, you

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Speaker 2: need to have in your own mind.

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Speaker 3: Say, let's talk about the US side. What are its priorities.

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Speaker 3: You've got the nuclear issue, You've got the straight You've

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Speaker 3: got ceasefire, you've got Iranian support for proxies, You've got

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Speaker 3: Iranian drone and ballistic missile development, You've got internal Iranian

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Speaker 3: treatment of its own people.

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Speaker 4: It's a long list.

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Speaker 2: So one thing is to think about what.

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Speaker 3: Are our priorities? Where also are our opportunities. Where do

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Speaker 3: we think potentially there's some give on the other side,

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Speaker 3: or the gap between the two sides is not going

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Speaker 3: to be the same in each one of the things

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Speaker 3: I just mentioned that might be bigger.

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Speaker 5: In some.

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Speaker 3: Of the others. Where are we prepared to compromise?

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Speaker 2: What does the United States have to come out of

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Speaker 2: this with. In terms of the Strait of Hormuves, which wasn't.

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Speaker 3: Even an issue going in, I think the two biggest

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Speaker 3: issues are the Straight of Hormus and the nuclear The

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Speaker 3: Strait of Homus is the more time urgent issue because

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Speaker 3: every day that goes by is disastrous for the international

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Speaker 3: economy and for the region. The nuclear issue can be

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Speaker 3: parked for a while, not because it's not important, but

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Speaker 3: unless there's evidence that Iran is changing the status of

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Speaker 3: nuclear materials or its program, then nothing changes. So I

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Speaker 3: would say Straight of Hormuz is the big issue. What

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Speaker 3: we cannot allow is for Iran to exercise soul control

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Speaker 3: over the straight charging tolls where it derives all the revenues,

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Speaker 3: because that would also eliminate any economic pressure on the

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Speaker 3: Iranian regime. What I've argued is we have to adopt

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Speaker 3: the principle that the Strait of Hormuz needs to be

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Speaker 3: open for all or close to all, including Iran. And

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Speaker 3: what I've recommended with two of my colleagues, Neil Ferguson

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Speaker 3: and Phil Zeliko, is that we create a new Strait

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Speaker 3: of Hormuz Commission or authority that would essentially govern the operation.

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Speaker 2: Of the strait.

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Speaker 3: Perhaps you could have a fee charge, but then it

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Speaker 3: would be distributed not just to Iran but to the

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Speaker 3: other what half dozen or so local countries might be

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Speaker 3: some degree of enforcement or support from the countries in

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Speaker 3: Europe and Asia that are most dependent on the passage

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Speaker 3: through the strait. I would bring China into the equation

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Speaker 3: because it has influence obviously in tron, but we need

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Speaker 3: some type of a governing authority that dilutes Iran's ability

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Speaker 3: to decide who gets to use the strait. And if

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Speaker 3: we can't get that, David I would favor a blockade

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Speaker 3: again open for all or close to all, including Iran,

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Speaker 3: and a blockade option in the Gulf of Omant.

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Speaker 2: Even if you get to a governing authority we all

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Speaker 2: agree to it. Sounds like Iran's going to have a say,

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Speaker 2: they're going to a seat at the table. Not clear

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Speaker 2: they had that before. Is that really a step backward

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Speaker 2: because it used to be an international waterway?

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Speaker 3: You're right, and there's no return though to the status

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Speaker 3: quo anthe. I think Iran has discovered that it has

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Speaker 3: more leverage than it ever quite realized before. I don't

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Speaker 3: think we can walk this back, so we're going to

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Speaker 3: have to bring them in. So, yeah, we're going to

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Speaker 3: end up here and elsewhere, probably worse off than we

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Speaker 3: were five six weeks ago. What we want to do

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Speaker 3: that was limit the scale of that. And I think

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Speaker 3: again the probably the wisest course here is not to

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Speaker 3: do something to Iran, but to do something with Iran

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Speaker 3: to give Ran a stake in an open Strait of

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Speaker 3: Horror moves, and I think we have a chance to

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Speaker 3: achieve that, but probably only if we have the pressure

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Speaker 3: of saying, you either agree to something reasonable and again

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Speaker 3: try to get the Chinese and others to help us here,

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Speaker 3: or we're going to make it impossible for you to

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Speaker 3: benefit from the Strait of horror move. So I think

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Speaker 3: that gives us a little bit of leverage. Also, Iran's

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Speaker 3: economy is really hurting, David. Iran was in terrible shape

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Speaker 3: before this war, It's in worse shape now. So yes,

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Speaker 3: they have some leverage, obviously, given some of the things

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Speaker 3: they've done. But I think we would be wrong to

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Speaker 3: ignore the degree to which we also enjoy a degree

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Speaker 3: of Leverager.

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Speaker 2: Well, I wonder about the leverage going into this, because

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Speaker 2: looking at what the military has done in Iran, you'd say, boy,

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Speaker 2: the United States has an awful lot of leverage with

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Speaker 2: Israel as well. Is it the case that the United

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Speaker 2: States has the upper hand going in this, or is

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Speaker 2: the mere fact that Iran has survived and can still

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Speaker 2: don damage despite all we've done does actually give leverage

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Speaker 2: to Iran.

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Speaker 3: Iran emerges from this with considerable leverage. It's so interesting

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Speaker 3: that you can quote unquote win a war in the

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Speaker 3: classic battlefield sense, but lose a war and the political

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Speaker 3: leverage strategic sense. And that's what I would argue is

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Speaker 3: happening here. The United States and Israel by normal measures

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Speaker 3: of warfare have done extremely well, but strategically, politically, Iran

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Speaker 3: has emerged with far more leverage than it had before.

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Speaker 2: We in the United States have a tendency to look

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Speaker 2: at it as United States versus Iran. There is another player,

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Speaker 2: as you've pointed out in your newsletter Home and Away.

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Speaker 2: You've pointed out Israel has been a significant factor, including

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Speaker 2: perhaps in getting the war started in the first place.

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Speaker 2: How do you deal with that as a diplomat when

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Speaker 2: you've got Bbnet Now who in Israel having a say?

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Speaker 3: I think, now, David, we probably have to accept the

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Speaker 3: awkward reality that American and Israeli interests here and diverging

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Speaker 3: what Israel's been doing in Lebanon recently, I would argue,

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Speaker 3: is not necessary, certainly not a priority for US at

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Speaker 3: this point. So I'll be blunt. President, is this thing

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Speaker 3: called the telephone? President ought to pick it up, get

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Speaker 3: on the phone with Prime Minister. And that's in Yahoo

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Speaker 3: and say stop. The argument for continuing the war is

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Speaker 3: not nearly as strong as the argument for a cease fire.

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Speaker 3: And these peace doughts, your vital national interests are not

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Speaker 3: at stake, and Roan is not doing anything new, say

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Speaker 3: with its nuclear program, that would pose an existential threat

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Speaker 3: to you. What you're doing in lebing On is discretionary,

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Speaker 3: not essential. Knock it off, and I think that's important.

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Speaker 2: I worry, David.

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Speaker 3: I think actually one of the losers in this war

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Speaker 3: is the US is Raeli relationship. This is a relationship

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Speaker 3: already under pressure because of what had happened in Gaza

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Speaker 3: over the last few years, and I worry that by

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Speaker 3: overreaching here, the Israeli government may have contributed to a

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Speaker 3: further deterioration in the US is Raeli relationship, which I

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Speaker 3: would argue is in the interests of neither country. Your

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Speaker 3: role at center of your partners now has you consulting

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Speaker 3: with large corporations with CEOs about business and economics? What

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Speaker 3: does it mean for them? What are you advising them

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Speaker 3: of what this means over the longer term. I'd say

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Speaker 3: two things on a long list, but let me highlight

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Speaker 3: two things. One is it's a little bit difficult to

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Speaker 3: see how this part of the world rebounds completely. There

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Speaker 3: was the business model of the Gulf of the If

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Speaker 3: you will do buy at Leta's use that as a

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Speaker 3: shorthand tax havens, stability, great economic opportunity, energy data centers

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Speaker 3: a little bit hard now to imagine, and the same

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Speaker 3: scale of investment. If I told you your billion, multi

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Speaker 3: billion dollar investment would require ten years of stability to

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Speaker 3: pay off, you might think twice before opening up your

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Speaker 3: checkbook to do that. That's one thing I think people

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Speaker 3: have to think a little bit differently. Second of all,

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Speaker 3: rethink the whole notion of economic and energy security much

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Speaker 3: more diversification, less emphasis on one geography, less emphasis on

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Speaker 3: one form of energy. And so for I think corporations

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Speaker 3: in this country and the rest of the world, you

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Speaker 3: have to assume that the sort of thing we just

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Speaker 3: saw here is not a one off. It's not something

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Speaker 3: that couldn't happen again here or in other parts of

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Speaker 3: the world.

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Speaker 2: And finally, what are the chances of a true resolution

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Speaker 2: of the situation which was going on for almost fifty

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Speaker 2: years now, as opposed to sort of sort of monitoring

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Speaker 2: and managing a chronic problem where we're going back and

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Speaker 2: forth over years.

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Speaker 3: At the risk of depressing your viewers even further. David,

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Speaker 3: I don't think you get a resolution absent a fundamental

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Speaker 3: in the political system in Iran, and unfortunately I don't

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Speaker 3: see that in the cards anytime soon. Maybe down the road,

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Speaker 3: against the backdrop of further economic problems. But right now

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Speaker 3: this regime is, if anything, more entrenched than it was

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Speaker 3: five six weeks ago. So then you say, Okay, we're

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Speaker 3: not going to solve the problem, we're managing it. So

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Speaker 3: we come up with some mechanism, maybe to manage passage

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Speaker 3: through the Strait of Hormuz not perfect. Maybe we come

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Speaker 3: up with some negotiated or non negotiated maybe just red

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Speaker 3: lines and implicit signals about how we put a ceiling

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Speaker 3: on Iran's nuclear program. I don't know about their support

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Speaker 3: for proxies. They're going to continue to build drones. Every

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Speaker 3: basement is a would be factory when it comes to drones.

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Speaker 3: Look what Ukraine has done. So I think your word

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Speaker 3: management is about is the right word. You know, too

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Speaker 3: many people look at things as problems to be solved.

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Speaker 3: Let me just suggest, if we're lucky, this is a situation,

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Speaker 3: This is a condition that we will be able to

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Speaker 3: manage up next to Sonny Becheloss of Rock Creek on

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Speaker 3: some of the unintended consequences of the war in Iran.

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Speaker 3: The war in Iran has shaken the Gulf region, cost

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Speaker 3: lives and billions of dollars and royal financial markets. Asani

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Speaker 3: Bachelors of Rock Creek knows the region and its importance

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Speaker 3: like few others, having grown up in Tehran before leaving

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Speaker 3: ahead of the Islamic Republic's rise to power. We spoke

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Speaker 3: with before the US in Iran agreed to a cease

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Speaker 3: fire and asked about some of the second order effects

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Speaker 3: of the conflict on the global economy.

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Speaker 6: Depending on which way it goes, David, it could be,

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Speaker 6: you know, if all prices stay up, for the global

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Speaker 6: economy will be in a much lower growth rate, a

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Speaker 6: higher inflation interest rates with heike, you know, Kevin Walsh

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Speaker 6: was selected by the President to reduce interest rates in

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Speaker 6: the US his first first act. Even if it's not

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Speaker 6: to you know, reduce certainly maybe to keep it neutral.

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Speaker 6: Or there might be a scenario of a hike, which

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Speaker 6: is the opposite of what we would have thought a

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Speaker 6: few months ago. So there's a lot of repercussions in

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Speaker 6: the US. The biggest repercussion is obviously outside the US,

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Speaker 6: in the oil importing countries, because oil prices, even if

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Speaker 6: they go you know, you get away from this one hundred,

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Speaker 6: two hundred and fifty. It's not just a question of prices,

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Speaker 6: but it's a question of supply. What we've seen the

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Speaker 6: last few weeks where a lot of people are rationing,

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Speaker 6: particularly lower income countries are rationing to even cook food,

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Speaker 6: or to run their cooling and heating, whatever their energy

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Speaker 6: needs are. That could be a huge impact on those countries.

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Speaker 6: So that's again my sort of negative scenario. The positive is,

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Speaker 6: you know, we go back. The big question is if

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Speaker 6: there's not regime change in Iran, it may not such

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Speaker 6: a big deal for the rest of the world that

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Speaker 6: it will be very sad because if this regime stays on,

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Speaker 6: they will continue to terrorize the Iranians who are living there,

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Speaker 6: as they did killed thirty forty thousand people in January

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Speaker 6: and really got away with it. So in that scenario,

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Speaker 6: I think they will be more belligerent altogether, and that

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Speaker 6: would be worrisome.

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Speaker 2: When you talk about oil importing countries, perhaps the two

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Speaker 2: largest are China in India. What does this mean for China,

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Speaker 2: because China has had fairly friendly relations with Iran.

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Speaker 6: Yes, and that's the really big question because I think

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Speaker 6: close to thirty percent of China's energy, A very large

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Speaker 6: share of India's energy come from the Strait, from Saudi Ua, Katara, Kuwait,

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Speaker 6: et cetera, and some of the natural gas, so they've

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Speaker 6: definitely been hugely impacted. Also, we'd keep on talking about

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Speaker 6: energy intensity in the US has gone down. We're still

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Speaker 6: buying and using the same goods. Our energy intensity has

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Speaker 6: gone down because we're more services, we're more financial services, etc. Technology,

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Speaker 6: But the goods that we're buying from China, India and

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Speaker 6: the rest of the world are still very energy intensive

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Speaker 6: and they are getting hit very badly right now now. China,

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Speaker 6: as you know, has been diversifying its sources of energy

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Speaker 6: very rapidly through doing more in power from the car industry,

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Speaker 6: which has become much more concentrated on evs compared to

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Speaker 6: the rest of the world. They are diversifying into nuclear.

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Speaker 6: They can build nuclear power plants in a couple of years.

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Speaker 6: It takes us ten years to do it. It takes

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Speaker 6: them maybe two three years. So there's the longer term

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Speaker 6: and the shorter term. In the short term, they're certainly

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Speaker 6: currently impacted and they will continue to get impacted. The

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Speaker 6: big question, David is whether there is a scenario under

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Speaker 6: which we have ships that are under Chinese protection or

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Speaker 6: Indian protection or Russian protection coming in somehow into the

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Speaker 6: Strait and being safe compared to American or European alligned tankers.

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Speaker 6: So that is the big question that has not really

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Speaker 6: sort of been a thing in the last few weeks,

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Speaker 6: but it will be something to watch out for.

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Speaker 2: What does this mean for the rest of the world.

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Speaker 2: I mean, we focus on the big players, we focus

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Speaker 2: on the Middle East and the US, but what does

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Speaker 2: this mean for Africa? What does this mean for the

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Speaker 2: rest of Asia, some of the developing countries.

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Speaker 6: So again, if you're a big Asian country right now,

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Speaker 6: if you're a Japan or again even you know China,

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Speaker 6: the biggest countries Korea, you can buy energy at spot prices.

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Speaker 6: You can afford to still import energy as we speak.

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Speaker 6: You're paying a lot for it, but you're able to

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Speaker 6: afford it. If you are a poor country like the

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Speaker 6: Philippines or Bangladesh, you have two problems. One is that

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Speaker 6: you can't afford to buy at spot price, so you

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Speaker 6: know you're going to suffer. And two, it's not even

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Speaker 6: a question of just price, it's a question of supply

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Speaker 6: to you because the US and other people who are

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Speaker 6: selling will prefer to sell to the bigger richer versus

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Speaker 6: the lower income countries, so they will get hit again. So,

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Speaker 6: together with all the other forces on going on in

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Speaker 6: the economy, between what's happening with AI, what's happening with

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Speaker 6: this war, you could be what's happening with climate and

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Speaker 6: you know the parts of Africa that are running out

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Speaker 6: of water, you're going to have potentially very major problems,

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Speaker 6: particularly for Europe when it comes to immigration.

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Speaker 2: As profound as the effects of the war are on

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Speaker 2: the rest of the world, nowhere is it felt more

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Speaker 2: or more immediately than in the Gulf states like Saudi Arabia,

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Speaker 2: the United Arab Emirates and cutth Before the ceasefire was

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Speaker 2: agreed to, Stephen Cook of the Council on Foreign Relations

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Speaker 2: told us that the critical importance of the strait of

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Speaker 2: war was not lost on those closest to it.

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Speaker 7: Anybody who was looking at this situation and was concerned

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Speaker 7: about the outbreak of hostilities between the United States and

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Speaker 7: Iran or Iran and anybody had to be concerned about

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Speaker 7: freedom of navigation through the Strait of Horror moves. And

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Speaker 7: of course, despite the fact that you know, the major

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Speaker 7: heavyweight Gulf States, Saudi Arabia, the United Arab Emirates Cutler,

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Speaker 7: have all placed billion dollars trillion dollar bets on their

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Speaker 7: countries to undertake a model of development that is beyond hydrocarbons.

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Speaker 7: They still all rely on hydrocarbons and therefore they all

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Speaker 7: rely on the Strait of hor Mooz. So that's one

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Speaker 7: of the reasons why they sought a diplomatic solution ahead

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Speaker 7: of hostilities, because I think everybody, with perhaps the exception

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Speaker 7: of the President of the United States, understood that the

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Speaker 7: Iranians would at least try to close straight.

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Speaker 2: Do the Gulf States at this point have President Trump's

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Speaker 2: ear or is it just beving in in Yahoo and

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Speaker 2: his alliance with Israel.

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Speaker 7: Well, I think there's been a lot of furious lobbying

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Speaker 7: on the part of the Golf leadership on the president.

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Speaker 7: They all have direct lines to the President in one

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Speaker 7: way or another, and they have made it clear now

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Speaker 7: that the war is underway and now five weeks old,

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Speaker 7: that even though they didn't want the conflict, they don't

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Speaker 7: want the president to end it prematurely. Their feeling is

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Speaker 7: that if Iran were to have some measure of control,

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Speaker 7: if not outright control of the Strait of Hormuz, if

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Speaker 7: it still retained the ability to menace these countries with

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Speaker 7: drones and missiles at will, it would undermine their model

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Speaker 7: of development, which they have nurtured over the course of

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Speaker 7: the better part of the last decade. And that model

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Speaker 7: includes being open to the world, welcoming investment from around

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Speaker 7: the world in high tech, logistics, entertainment, tourism, those kinds

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Speaker 7: of things that have been sources of success in development

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Speaker 7: beyond hydrocarbons. Would be a question if these countries are

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Speaker 7: threatened by an even weakened Iran.

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Speaker 2: Did the Gulf States anticipate the level of effectiveness of

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Speaker 2: the Iran attacks, because they've been hit pretty badly, UAE

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Speaker 2: has been Saudi Arabia has been added, Did they anticipate

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Speaker 2: them being this effective?

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Speaker 7: I think that no one anticipated how effective the Iranian

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Speaker 7: response would be. We know they're getting help from from

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Speaker 7: the Russians in terms of targeting and I think that

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Speaker 7: there was an expectation that the Iranians might respond, but

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Speaker 7: that there would be a limit to their response, and

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Speaker 7: after the first week or two, there was a sense

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Speaker 7: that the rate of fire from the Iranians would decrease

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Speaker 7: significantly and they'd be able to get back to some

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Speaker 7: sense of normalcy. That has not happened, and I think

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Speaker 7: that this is a very significant miscalculation on the part

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Speaker 7: of the United States. I'm the part of Israel, and

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Speaker 7: I think that the Gulf States, although very concerned about

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Speaker 7: what would happen to their cities, cities like Dubai, Abu Abi, Manama,

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Speaker 7: Riad even and critical infrastructure in and around those countries.

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Speaker 7: I think that they were worried about it, but didn't

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Speaker 7: expect this relentless fire for five weeks and counting.

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Speaker 2: At some point this will settle down or be resolved.

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Speaker 2: However it's resolved. How much damage has already been done.

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Speaker 2: It's the Gulf of States you mentioned before, the billions

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Speaker 2: even trillions of dollars that they've been investing in making

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Speaker 2: that a real center for investment, for tourism, for everything else.

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Speaker 2: Has that been permanently damaged?

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Speaker 7: Do you think, well, the Gulf States have certainly taken

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Speaker 7: a beating. Their air defense systems have worked better than

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Speaker 7: some had expected, but still the damages is undeniable. Golf

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Speaker 7: airspace has been open only in limited at limited times

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Speaker 7: for limited purposes over the course of the last five weeks,

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Speaker 7: and this entire model of development is based on attracting

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Speaker 7: the best and brightest from around the world, attracting tech companies,

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Speaker 7: providing entertainment venues for tourists and the like, and I

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Speaker 7: think at the moment at least that model has been

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Speaker 7: significantly damaged. My sense is is that when the crisis

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Speaker 7: is over, there will be a deviation from this model

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Speaker 7: so that the golf countries can harden their cities and

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Speaker 7: invest in in their defense and titan in some cases

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Speaker 7: their relationship with the United States in support of that,

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Speaker 7: but then will return to this model of openness to

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Speaker 7: the world so that people will come and invest, and

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Speaker 7: that they can proceed along some semblance of the path

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Speaker 7: that they were on prior to the outbreak of hostilities

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Speaker 7: on February twenty eight.

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Speaker 2: One of the foreign policy and issues that President Trump

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Speaker 2: has been proudest of are the Abraham Accords. He thought

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Speaker 2: he should have gotten the Nobel Peace Prize the first

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Speaker 2: time around for what was done there. In light of

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Speaker 2: what's happened, what's left of that initiative? Can it be revived?

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Speaker 7: Well? What's been surprising about the Abraham Accords is how

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Speaker 7: actually durable they've been. Setting aside for just a moment,

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Speaker 7: the current conflict. Through two years of very intense combat

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Speaker 7: in the Gaza Strip in which tens of thousands of

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Speaker 7: Palestinians were killed, the Abraham Accords survived. The core countries

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Speaker 7: of the Abraham Accords have never broken diplomatic relations with Israel,

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Speaker 7: and throughout this conflict there has been some measure of

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Speaker 7: coordination between Israel and countries in the Gulf by just

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Speaker 7: by dint of the fact that they are all members

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Speaker 7: of Central Command, the combatant command from which the United

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Speaker 7: States secures the Middle East. So it is certainly a

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Speaker 7: surprise that they've been durable through these last now almost

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Speaker 7: three years of conflict throughout the Middle East. The big

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Speaker 7: question prior to Hamasa's October seventh attacks on Israel was

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Speaker 7: when Saudi Arabia and Israel would normalize. Now the question

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Speaker 7: is if Saudi Arabia and Israel will normalize, and I

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Speaker 7: think that as a result of both the conflict in

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Speaker 7: the Godza Strip and the sense among Saudi leaders that

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Speaker 7: Israel has been an agent of chaos here, that the

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Speaker 7: price of normalization between those two countries has gone up

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Speaker 7: and is much further away than some would like to admit.

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Speaker 2: Coming up, we get ready for next week's World Bank

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Speaker 2: IMF meetings in Washington with a guided tour from our

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Speaker 2: contributor Christian Freeland, who attended as a principal when she

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Speaker 2: served as Canada's Finance Minister. When the World Bank and

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Speaker 2: IMF hold their annual meetings in Washington next week, they'll

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Speaker 2: have the usual issues to discuss global growth, climate change,

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Speaker 2: energy needs, but this time they'll have a war in

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Speaker 2: the Middle East to deal with as well. To take

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Speaker 2: us behind the scenes, we welcome our special contributor, Christiaan Freeland,

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Speaker 2: who knows these meetings well from her time as Deputy

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Speaker 2: Prime Minister and Finance Minister of Canada. We have the

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Speaker 2: IMF World Bank meetings in Washington next week. A year ago,

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Speaker 2: if you remember, it was just after Liberation Day. Now

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Speaker 2: this time we have a shooting war instead of a

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Speaker 2: trade war. How will that affect these meetings?

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Speaker 5: I think that at the beginning of the year, as

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Speaker 5: people were getting ready for these meetings, what officials, finance ministers,

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Speaker 5: central bankers were getting ready to talk about is global trade,

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Speaker 5: how resilient is it AI, What is the impact going

436
00:25:07,040 --> 00:25:09,280
Speaker 5: to be on the world economy? I think those were

437
00:25:09,280 --> 00:25:13,280
Speaker 5: probably the big issues. But with the war in Iran,

438
00:25:14,000 --> 00:25:19,080
Speaker 5: that has now pushed everything off the agenda, and I

439
00:25:19,080 --> 00:25:23,560
Speaker 5: think the central focus is going to be what is

440
00:25:23,640 --> 00:25:28,960
Speaker 5: happening to the global economy. I think you're going to see,

441
00:25:29,080 --> 00:25:32,680
Speaker 5: you know, nervous is maybe the wrong word, but some

442
00:25:32,880 --> 00:25:38,280
Speaker 5: very concerned finance ministers and central bankers. I spoke to

443
00:25:39,320 --> 00:25:44,280
Speaker 5: one person who is a principal participant in these meetings

444
00:25:44,960 --> 00:25:46,960
Speaker 5: and I asked this person, I said, you know, I

445
00:25:46,960 --> 00:25:49,119
Speaker 5: want to talk about these meetings, what you're thinking, what

446
00:25:49,119 --> 00:25:52,240
Speaker 5: you're getting ready for, And this person said to me.

447
00:25:52,480 --> 00:25:56,880
Speaker 5: The first thing the person said is I'm expletive deleted.

448
00:25:57,560 --> 00:26:00,200
Speaker 5: So I think that gives you a sense of, of,

449
00:26:00,800 --> 00:26:04,959
Speaker 5: you know, the degree I would say potential crisis that

450
00:26:05,080 --> 00:26:06,560
Speaker 5: leaders are preparing to deal with.

451
00:26:06,880 --> 00:26:08,679
Speaker 2: Talk about the state of the global economy as far

452
00:26:08,720 --> 00:26:11,000
Speaker 2: as we can see it right now. We see, for example,

453
00:26:11,080 --> 00:26:15,160
Speaker 2: OECD estimates at where we're taking growth down, inflation up,

454
00:26:15,520 --> 00:26:18,760
Speaker 2: and people at least are talking about stagflation, that dreaded term.

455
00:26:19,320 --> 00:26:21,560
Speaker 5: The concern that I would have if I were headed

456
00:26:21,560 --> 00:26:26,080
Speaker 5: there as Finance Minister would be that there is a

457
00:26:26,119 --> 00:26:30,080
Speaker 5: triple whammy that the world is facing right now. One

458
00:26:30,119 --> 00:26:35,280
Speaker 5: stagflation that is hard enough to deal with. Two it

459
00:26:35,400 --> 00:26:39,359
Speaker 5: is coming at a time when the fiscal capacity of

460
00:26:39,440 --> 00:26:43,159
Speaker 5: countries is really strained. You know, remember COVID was not

461
00:26:43,400 --> 00:26:47,959
Speaker 5: that long ago. And in addition to you know, treasuries

462
00:26:48,000 --> 00:26:52,560
Speaker 5: having been depleted by COVID, governments are spending a lawn

463
00:26:52,600 --> 00:26:55,919
Speaker 5: on defense, So the money available to deal with a

464
00:26:56,000 --> 00:27:00,199
Speaker 5: crisis is really really not there in the way it

465
00:27:00,320 --> 00:27:04,680
Speaker 5: was before. And then the third thing is, you know,

466
00:27:04,960 --> 00:27:08,920
Speaker 5: it's not just that there is a vacuum in leadership.

467
00:27:10,080 --> 00:27:14,080
Speaker 5: There are a lot of fights going on. In two

468
00:27:14,080 --> 00:27:19,040
Speaker 5: thousand and eight, the big global financial crisis, the G

469
00:27:19,200 --> 00:27:23,560
Speaker 5: twenty really rallied to pull the world through. During COVID,

470
00:27:23,600 --> 00:27:26,959
Speaker 5: when I was Finance Minister, it was much more the

471
00:27:27,000 --> 00:27:32,200
Speaker 5: G seven. You'll remember that Russia invaded Ukraine early on

472
00:27:32,320 --> 00:27:35,320
Speaker 5: in COVID and that made the G twenty much less effective.

473
00:27:35,760 --> 00:27:40,840
Speaker 5: But the G seven really acted today it's really hard

474
00:27:40,880 --> 00:27:43,840
Speaker 5: to see where the leadership comes from. The G seven

475
00:27:43,880 --> 00:27:49,400
Speaker 5: itself is deeply divided, and there are obviously deep divisions

476
00:27:49,400 --> 00:27:53,800
Speaker 5: in the G twenty between Russia and the NATO countries,

477
00:27:54,280 --> 00:27:56,480
Speaker 5: between China and the United States.

478
00:27:56,960 --> 00:27:59,400
Speaker 2: It strikes me the IMF and World Bank and other

479
00:27:59,520 --> 00:28:02,920
Speaker 2: incisions where the essence of multilateralism coming out of World

480
00:28:02,920 --> 00:28:05,320
Speaker 2: War Two? And now, as you say, it's not so

481
00:28:05,440 --> 00:28:07,960
Speaker 2: clear where the leadership comes from. I wonder whether they

482
00:28:08,000 --> 00:28:09,959
Speaker 2: could even get together in the same room. I mean,

483
00:28:10,000 --> 00:28:12,040
Speaker 2: you have the United States in Israel in one place,

484
00:28:12,400 --> 00:28:14,040
Speaker 2: and you've got the rest of the West and another

485
00:28:14,080 --> 00:28:16,880
Speaker 2: place before you get to China and Russia. I mean,

486
00:28:17,000 --> 00:28:19,680
Speaker 2: what is the future of multilateral organizations in that sort

487
00:28:19,720 --> 00:28:21,480
Speaker 2: of world? Really really rough?

488
00:28:21,760 --> 00:28:25,040
Speaker 5: And you know, the IMF and the World Bank are

489
00:28:25,040 --> 00:28:29,720
Speaker 5: not just multilateral institutions at the end of the day.

490
00:28:30,119 --> 00:28:34,600
Speaker 5: These are the Breton Woods institutions that were created by

491
00:28:35,040 --> 00:28:39,320
Speaker 5: US leadership in the world. These were the institutions created

492
00:28:39,720 --> 00:28:45,120
Speaker 5: as the Allies looked at the carnage the destruction of

493
00:28:45,160 --> 00:28:48,479
Speaker 5: World War Two and said, we have to build a

494
00:28:48,480 --> 00:28:51,240
Speaker 5: world that works better. You know, there's a great line

495
00:28:51,240 --> 00:28:54,160
Speaker 5: from Dean Atchison that I love where he said, we

496
00:28:54,280 --> 00:28:57,240
Speaker 5: have to at least build a world that works for

497
00:28:57,600 --> 00:29:00,440
Speaker 5: our half of the world, for the free world. And

498
00:29:00,840 --> 00:29:06,880
Speaker 5: I know it's quite in vogue to criticize that US

499
00:29:07,120 --> 00:29:12,239
Speaker 5: led international order, but actually it worked pretty well. You know,

500
00:29:12,360 --> 00:29:16,360
Speaker 5: the time from World War Two to today, certainly for

501
00:29:16,800 --> 00:29:19,959
Speaker 5: North America, for Western Europe, has been a time of

502
00:29:20,080 --> 00:29:24,600
Speaker 5: unprecedented peace and prosperity, and that is in part because

503
00:29:24,600 --> 00:29:26,120
Speaker 5: of the Bretonwoods institutions.

504
00:29:26,880 --> 00:29:28,160
Speaker 8: Now what is.

505
00:29:29,960 --> 00:29:37,040
Speaker 5: Unprecedented is that this order that America built, these institutions

506
00:29:37,080 --> 00:29:41,360
Speaker 5: that America was the leader in creating, is being really

507
00:29:41,440 --> 00:29:45,080
Speaker 5: wrecked by the country that created them, by.

508
00:29:44,920 --> 00:29:47,880
Speaker 2: The United States. In another time, another place, we would

509
00:29:47,880 --> 00:29:50,719
Speaker 2: be talking about development some of the less fortunate countries

510
00:29:50,760 --> 00:29:54,160
Speaker 2: around the world and what they needed. When the big

511
00:29:54,240 --> 00:29:58,440
Speaker 2: powers conflict, often it's the little guys who really take

512
00:29:58,480 --> 00:30:01,440
Speaker 2: it in the neck, as it were. What's going on

513
00:30:01,480 --> 00:30:03,920
Speaker 2: in Asia, what's going on in Africa as we see

514
00:30:03,960 --> 00:30:05,120
Speaker 2: this war and iron unfold.

515
00:30:05,760 --> 00:30:09,720
Speaker 5: That is a hugely important question. I hope that it

516
00:30:09,800 --> 00:30:12,720
Speaker 5: is a question that we hear a lot of people

517
00:30:12,760 --> 00:30:18,760
Speaker 5: talking about next week. The reality is that challenging as

518
00:30:18,880 --> 00:30:23,360
Speaker 5: this moment in the global economy looks in Washington, in

519
00:30:23,480 --> 00:30:27,680
Speaker 5: New York, in San Francisco. It is much much worse.

520
00:30:28,040 --> 00:30:31,960
Speaker 5: In Asia, in Africa. These are the countries that depend

521
00:30:32,320 --> 00:30:36,440
Speaker 5: on fuel coming through the strait of horror moves. They

522
00:30:36,480 --> 00:30:39,000
Speaker 5: depend on fertilizer that comes through the strait of horror moves.

523
00:30:39,640 --> 00:30:44,840
Speaker 5: And that is where you are really seeing the stagflation

524
00:30:45,320 --> 00:30:49,040
Speaker 5: because in those countries, in addition to seeing higher prices

525
00:30:49,600 --> 00:30:53,800
Speaker 5: because energy has become much more expensive, you're also seeing

526
00:30:53,880 --> 00:30:57,360
Speaker 5: governments acting to slow down the economy. You're seeing governments

527
00:30:57,400 --> 00:31:00,520
Speaker 5: saying that people need to be working from home, government

528
00:31:00,560 --> 00:31:03,160
Speaker 5: saying that people can't be driving their cars, and that.

529
00:31:03,200 --> 00:31:05,840
Speaker 2: Of course has major repercussions for countries that need to

530
00:31:06,200 --> 00:31:09,680
Speaker 2: import oil and natural gas. But also we've talked about

531
00:31:09,720 --> 00:31:12,120
Speaker 2: fertilizer before. As you say, you're a farmer's daughter. You know,

532
00:31:12,200 --> 00:31:14,960
Speaker 2: this world a fertilizer and it's one thing for April,

533
00:31:15,000 --> 00:31:17,680
Speaker 2: which is critical in North America for planning. What about

534
00:31:17,720 --> 00:31:19,720
Speaker 2: for the rest of the world, where the planning may

535
00:31:19,720 --> 00:31:21,880
Speaker 2: come a little later. Could we be facing more than

536
00:31:21,960 --> 00:31:25,560
Speaker 2: just higher prices. Could we be facing real food shortages

537
00:31:25,880 --> 00:31:26,600
Speaker 2: one hundred percent?

538
00:31:27,560 --> 00:31:32,120
Speaker 5: You know, the combination of fertilizer having a hard time

539
00:31:32,160 --> 00:31:35,360
Speaker 5: getting through this straight of horror moves. And also fuel

540
00:31:35,400 --> 00:31:41,720
Speaker 5: prices translate very directly into higher food prices. It takes fuel,

541
00:31:41,840 --> 00:31:47,160
Speaker 5: usually diesel fuel to farm. So you're already seeing that

542
00:31:47,160 --> 00:31:51,120
Speaker 5: that is already a challenge right now for countries in Africa,

543
00:31:51,200 --> 00:31:54,560
Speaker 5: for countries in Asia. I don't want to just talk

544
00:31:54,600 --> 00:32:00,400
Speaker 5: about bad news. Something that is promising that is happening

545
00:32:00,480 --> 00:32:05,160
Speaker 5: right now is the UN is involved in some negotiations

546
00:32:05,680 --> 00:32:09,200
Speaker 5: trying to get a deal with Iran to allow fertilizer

547
00:32:09,600 --> 00:32:12,760
Speaker 5: to pass through the Strait of Horror moves. There's some

548
00:32:13,040 --> 00:32:19,680
Speaker 5: precedent there because a deal was done to allow commodities

549
00:32:19,800 --> 00:32:24,160
Speaker 5: to pass through the Black Sea after Russia launched its

550
00:32:24,160 --> 00:32:28,160
Speaker 5: full scale invasion of Ukraine. So that would be a

551
00:32:28,200 --> 00:32:33,920
Speaker 5: piece of good news first and foremost for the countries

552
00:32:33,920 --> 00:32:36,080
Speaker 5: of the global South, but for the whole world. So

553
00:32:36,640 --> 00:32:38,800
Speaker 5: let's hope that the UN can do it, and you know,

554
00:32:39,160 --> 00:32:42,400
Speaker 5: it would be a sign that multilateral institutions can work.

555
00:32:42,680 --> 00:32:44,560
Speaker 2: Christian, let me impose on you for a moment, put

556
00:32:44,560 --> 00:32:48,760
Speaker 2: your old hat on as finance minister from Canada. If

557
00:32:48,800 --> 00:32:51,120
Speaker 2: you were going to these meetings, what would be your goal?

558
00:32:51,280 --> 00:32:53,080
Speaker 2: What do you think you might be able to accomplish

559
00:32:53,200 --> 00:32:54,360
Speaker 2: in these meetings.

560
00:32:55,000 --> 00:33:02,400
Speaker 5: My goal this year would be to spend a lot

561
00:33:02,440 --> 00:33:10,040
Speaker 5: of time first and foremost, talking to the having meetings

562
00:33:10,080 --> 00:33:13,160
Speaker 5: within the G six, I'd be spending a lot of

563
00:33:13,200 --> 00:33:16,240
Speaker 5: time talking to France. I think Macron's leadership right now

564
00:33:16,320 --> 00:33:18,520
Speaker 5: is extraordinary. I think, by the way, my own Prime

565
00:33:18,520 --> 00:33:21,680
Speaker 5: Minister Mark Karney is showing extraordinary leadership. I think we're

566
00:33:21,720 --> 00:33:24,960
Speaker 5: seeing the UK stepping up, working hard on the straight

567
00:33:24,960 --> 00:33:32,080
Speaker 5: of horror moves. I think the EU, Germany, Italy, all

568
00:33:32,080 --> 00:33:34,480
Speaker 5: of those countries are playing an important role. I would

569
00:33:34,480 --> 00:33:37,880
Speaker 5: say Spain is another country to watch.

570
00:33:38,840 --> 00:33:41,640
Speaker 6: It has been a leader in.

571
00:33:41,680 --> 00:33:45,600
Speaker 5: Saying it's time to say to the White House enough

572
00:33:45,920 --> 00:33:48,200
Speaker 5: is enough, and I think we're seeing a lot of

573
00:33:48,240 --> 00:33:52,960
Speaker 5: European countries follow that advice. So, if I were headed

574
00:33:53,000 --> 00:33:58,160
Speaker 5: to the meetings, the personal thing that I would be

575
00:33:58,200 --> 00:34:02,080
Speaker 5: planning and how I would start my remarks at the

576
00:34:02,120 --> 00:34:06,000
Speaker 5: G seven Finance Minister in Central Bankers meeting would be

577
00:34:06,160 --> 00:34:09,440
Speaker 5: by saying thank you to Jay Powell, thanking him for

578
00:34:09,520 --> 00:34:13,440
Speaker 5: his leadership, thanking him for his integrity, thanking him for

579
00:34:13,520 --> 00:34:17,000
Speaker 5: his courage. And I bet I'm not the only person

580
00:34:17,040 --> 00:34:22,240
Speaker 5: thinking that. So I am pretty sure that behind closed doors,

581
00:34:22,520 --> 00:34:26,200
Speaker 5: a lot of people are going to be congratulating him,

582
00:34:26,200 --> 00:34:29,400
Speaker 5: wishing him well, and I wouldn't be surprised if you

583
00:34:29,480 --> 00:34:33,160
Speaker 5: hear people saying that in public too. And I'd like

584
00:34:33,200 --> 00:34:35,879
Speaker 5: to take this opportunity to say thank you very much,

585
00:34:35,960 --> 00:34:40,080
Speaker 5: Jay Powell. You're an example of American integrity. The world

586
00:34:40,160 --> 00:34:41,000
Speaker 5: needs you more than ever.

587
00:34:43,160 --> 00:34:45,959
Speaker 2: Up next, the ten year head start that the US

588
00:34:46,000 --> 00:34:49,160
Speaker 2: has given China on critical minerals and whether there's any

589
00:34:49,200 --> 00:35:05,560
Speaker 2: way America can catch up. This is a story about

590
00:35:05,560 --> 00:35:08,040
Speaker 2: having the right playbook, not the kind drawn up to

591
00:35:08,080 --> 00:35:10,520
Speaker 2: make sure your local team can win on Friday night,

592
00:35:10,920 --> 00:35:12,960
Speaker 2: but one that works when you're competing on the field

593
00:35:13,000 --> 00:35:16,360
Speaker 2: of the world economy. While the US playbook focused on

594
00:35:16,440 --> 00:35:20,000
Speaker 2: all the things smartphones could be used for, China's constraint

595
00:35:20,040 --> 00:35:22,600
Speaker 2: on what was needed to go into those smartphones and

596
00:35:22,680 --> 00:35:26,560
Speaker 2: automobiles and defense systems. Rare earths and critical minerals have

597
00:35:26,600 --> 00:35:29,680
Speaker 2: been at the center of China's playbook for over a decade,

598
00:35:29,800 --> 00:35:33,000
Speaker 2: and now the US is playing from behind, looking for

599
00:35:33,120 --> 00:35:36,000
Speaker 2: new ways to compete, and doing it with new players.

600
00:35:38,040 --> 00:35:41,920
Speaker 2: In Exeter, New Hampshire, inside this unassuming building, an international

601
00:35:42,040 --> 00:35:46,360
Speaker 2: race is taking shape here at Phoenix Tailings. They're processing

602
00:35:46,400 --> 00:35:49,759
Speaker 2: critical minerals, a key part of the global supply chain.

603
00:35:50,560 --> 00:35:53,759
Speaker 4: So Phoenix Sailings produces the final rare earth metal and

604
00:35:53,800 --> 00:35:57,920
Speaker 4: metal alloys that are needed for magnets, for aerospace applications,

605
00:35:58,040 --> 00:35:59,960
Speaker 4: and for many different other types of applications.

606
00:36:00,560 --> 00:36:03,520
Speaker 2: But companies like Phoenix Tailings, led by co founder and

607
00:36:03,640 --> 00:36:08,040
Speaker 2: CEO Nick Myers, are up against a giant. There's been

608
00:36:08,080 --> 00:36:11,480
Speaker 2: a lot of talk about critical minerals rare person otherwise

609
00:36:11,800 --> 00:36:14,359
Speaker 2: and the disparity between China and the United States. How

610
00:36:14,400 --> 00:36:16,600
Speaker 2: far behind is the United States right now.

611
00:36:16,480 --> 00:36:20,239
Speaker 4: That midstream processing stage. They pretty much dominate entirely, so

612
00:36:20,360 --> 00:36:22,440
Speaker 4: much so that it's extremely tough for the US to

613
00:36:22,440 --> 00:36:23,920
Speaker 4: compete in any way, shape or form.

614
00:36:24,440 --> 00:36:28,280
Speaker 2: The US needs critical minerals for a range of military applications,

615
00:36:29,560 --> 00:36:33,320
Speaker 2: but even more for many consumer products defenses.

616
00:36:33,400 --> 00:36:36,759
Speaker 4: Functionally speaking, a pretty small market. It's roughly about five

617
00:36:36,840 --> 00:36:39,440
Speaker 4: hundred tons per year is the need for metal for

618
00:36:39,480 --> 00:36:44,719
Speaker 4: the Defense Department, and that's not that much, whereas the

619
00:36:44,920 --> 00:36:47,560
Speaker 4: US commercial needs are about twelve thousand tons per year,

620
00:36:47,960 --> 00:36:50,480
Speaker 4: So pretty much all of our demand comes from automotive.

621
00:36:51,080 --> 00:36:53,960
Speaker 4: Many people think that it's actually for electric vehicles, to

622
00:36:54,000 --> 00:36:56,840
Speaker 4: be honest with you, not really like yes, electric vehicle to

623
00:36:56,960 --> 00:36:59,560
Speaker 4: use much more rarest than other vehicles. However, our internal

624
00:36:59,560 --> 00:37:02,160
Speaker 4: commustionion motor vehicle is quite heavily used rare roots.

625
00:37:02,960 --> 00:37:07,320
Speaker 2: China's dominance spends the entire supply chain from extracting critical

626
00:37:07,360 --> 00:37:11,040
Speaker 2: minerals to processing them and then turning them into magnets

627
00:37:11,120 --> 00:37:14,680
Speaker 2: used in everything from cars to defense systems. It all

628
00:37:14,760 --> 00:37:17,640
Speaker 2: raises the question, with that level of control, what can

629
00:37:17,680 --> 00:37:23,160
Speaker 2: be done and why wasn't more done sooner? David Abraham

630
00:37:23,200 --> 00:37:26,640
Speaker 2: has spent years studying these issues and they're the subject

631
00:37:26,640 --> 00:37:28,920
Speaker 2: of his book The Elements of Power.

632
00:37:29,880 --> 00:37:34,439
Speaker 1: We didn't focus on the challenges of the market. We

633
00:37:34,560 --> 00:37:38,520
Speaker 1: saw that these minerals were a sector of the economy

634
00:37:38,520 --> 00:37:41,799
Speaker 1: that was not interesting to us. We were focusing on

635
00:37:41,840 --> 00:37:44,640
Speaker 1: building apps. Back in twenty ten and twenty eleven, it

636
00:37:44,760 --> 00:37:47,840
Speaker 1: was how do we create a technological country that was

637
00:37:47,880 --> 00:37:51,720
Speaker 1: built on services, was built on financial services, and mining

638
00:37:51,880 --> 00:37:56,480
Speaker 1: was dirty, and so we outsourced this dirty work to

639
00:37:56,560 --> 00:38:00,720
Speaker 1: faraway places. And China was realizing that the these ingredients

640
00:38:00,800 --> 00:38:04,000
Speaker 1: were providing them capital that they needed to grow their economy.

641
00:38:04,320 --> 00:38:07,480
Speaker 1: But more importantly, they saw these as seeds to the future,

642
00:38:08,040 --> 00:38:11,839
Speaker 1: seeds to their high tech and green industries that are

643
00:38:11,960 --> 00:38:13,720
Speaker 1: at the heart of their economy today.

644
00:38:14,760 --> 00:38:18,320
Speaker 2: As China quietly built its dominance, the first alarm bells

645
00:38:18,360 --> 00:38:20,760
Speaker 2: for the US came more than a decade ago.

646
00:38:21,239 --> 00:38:24,960
Speaker 4: The American manufacturers need to have access to where Earth materials,

647
00:38:25,040 --> 00:38:26,320
Speaker 4: which China supplies.

648
00:38:27,640 --> 00:38:30,280
Speaker 1: We realized that there was a structures back in about

649
00:38:30,280 --> 00:38:34,360
Speaker 1: twenty ten, and that's when China and Japan had a

650
00:38:34,440 --> 00:38:38,239
Speaker 1: territorial dispute, and within that China had restricted access to

651
00:38:38,600 --> 00:38:42,840
Speaker 1: rare earth to Japan. There was an initial shock, and

652
00:38:42,880 --> 00:38:45,839
Speaker 1: the prices of these materials, especially where Earth's jumped about

653
00:38:45,880 --> 00:38:49,280
Speaker 1: twenty times. But what happened afterwards was that the prices

654
00:38:49,320 --> 00:38:52,440
Speaker 1: themselves dropped, and they dropped to such low levels that

655
00:38:52,480 --> 00:38:55,560
Speaker 1: people in the halls of power in Washington, in Europe,

656
00:38:55,640 --> 00:39:00,000
Speaker 1: and some within Japan became less concerned about security of supplies.

657
00:39:00,920 --> 00:39:04,160
Speaker 1: And so between about twenty fourteen and about twenty twenty two,

658
00:39:04,680 --> 00:39:08,080
Speaker 1: there wasn't much concern looking at these critical minerals because

659
00:39:08,120 --> 00:39:09,759
Speaker 1: the market was supplying them.

660
00:39:11,160 --> 00:39:15,160
Speaker 2: Fast forward to today, critical minerals are dominating the conversation

661
00:39:15,480 --> 00:39:16,880
Speaker 2: from the halls of Congress.

662
00:39:17,280 --> 00:39:21,040
Speaker 3: The necessity of these minerals literally cannot be overstated.

663
00:39:20,600 --> 00:39:22,920
Speaker 2: To boardrooms look for rare earth.

664
00:39:22,960 --> 00:39:25,480
Speaker 8: We continue to diversify our supply chain.

665
00:39:25,840 --> 00:39:28,520
Speaker 2: And now to the center of President Trump's trade war

666
00:39:28,600 --> 00:39:32,920
Speaker 2: with China. My administration has taken extraordinary steps to make

667
00:39:32,960 --> 00:39:35,840
Speaker 2: sure that the United States has all of the critical

668
00:39:35,880 --> 00:39:39,200
Speaker 2: minerals and rare earth that we need. But ensuring the

669
00:39:39,320 --> 00:39:42,120
Speaker 2: US has what it needs may require a different approach.

670
00:39:42,640 --> 00:39:46,000
Speaker 2: In a new report, Heidi Krebo Reddicker, a senior fellow

671
00:39:46,040 --> 00:39:49,480
Speaker 2: at the Council on Foreign Relations, says leapfrogging China is

672
00:39:49,520 --> 00:39:54,200
Speaker 2: possible if the US is strategic in its focus. If

673
00:39:54,239 --> 00:39:57,680
Speaker 2: the number one priority for the country were to somehow

674
00:39:57,719 --> 00:40:01,279
Speaker 2: catch up on critical minerals and rare earth, how long

675
00:40:01,320 --> 00:40:01,919
Speaker 2: would it take?

676
00:40:02,560 --> 00:40:05,759
Speaker 8: So like through traditional mining, it actually takes a very

677
00:40:05,800 --> 00:40:09,319
Speaker 8: long time. But the context that the report that we

678
00:40:09,400 --> 00:40:12,200
Speaker 8: wroteed the Council on Formulations was that, Okay, so we

679
00:40:12,280 --> 00:40:15,399
Speaker 8: have this traditional approach and we're going as fast as

680
00:40:15,400 --> 00:40:19,160
Speaker 8: we can. It's going to take years, decades. It's going

681
00:40:19,200 --> 00:40:20,560
Speaker 8: to take a very long time, and we have this

682
00:40:20,640 --> 00:40:26,240
Speaker 8: timing mismatch. So we can't out extract, out process or

683
00:40:26,320 --> 00:40:31,520
Speaker 8: outfund China. But we can actually have a separate track

684
00:40:31,600 --> 00:40:34,319
Speaker 8: that looks to innovation because there are a lot of

685
00:40:34,400 --> 00:40:37,440
Speaker 8: great new companies and innovations rolling out that can actually

686
00:40:37,600 --> 00:40:39,680
Speaker 8: leap frog China's choke cold.

687
00:40:40,200 --> 00:40:44,640
Speaker 2: And that innovation has already begun to take shape across labs, startups,

688
00:40:44,680 --> 00:40:46,160
Speaker 2: and in new technologies.

689
00:40:46,800 --> 00:40:50,560
Speaker 8: You have material engineering that has been able to create

690
00:40:50,880 --> 00:40:55,080
Speaker 8: rare earth free magnets up in Minnesota. You have new

691
00:40:55,160 --> 00:40:59,640
Speaker 8: startups that came out of lab innovations that are able

692
00:40:59,680 --> 00:41:04,440
Speaker 8: to manipulate proteins so that they act like protein robots

693
00:41:04,480 --> 00:41:08,360
Speaker 8: and go into waste and extract rare earth from pools

694
00:41:08,400 --> 00:41:11,600
Speaker 8: of waste. And waste is a very ripe area for

695
00:41:11,680 --> 00:41:15,160
Speaker 8: the US to be able to look to for our

696
00:41:15,200 --> 00:41:18,160
Speaker 8: own capacity to generate our resilience.

697
00:41:18,360 --> 00:41:20,640
Speaker 4: It's almost like feel is the right way to go,

698
00:41:20,840 --> 00:41:21,440
Speaker 4: So where did it go.

699
00:41:22,360 --> 00:41:25,560
Speaker 2: One of those companies looking to extract critical minerals from

700
00:41:25,600 --> 00:41:30,359
Speaker 2: mind waste, known as tailings, is Phoenix. Tailings take us

701
00:41:30,360 --> 00:41:33,360
Speaker 2: through the Phoenix approach and why it's so much faster

702
00:41:33,840 --> 00:41:34,440
Speaker 2: so Phoenix.

703
00:41:34,440 --> 00:41:38,360
Speaker 4: We started this back in twenty nineteen, I metic co

704
00:41:38,400 --> 00:41:40,239
Speaker 4: founder at a Bible study and we started talking about

705
00:41:40,239 --> 00:41:42,440
Speaker 4: the biggest problems in the world. One is exactly this

706
00:41:42,520 --> 00:41:45,640
Speaker 4: issue that we talk about here with critical minerals. So

707
00:41:45,680 --> 00:41:47,239
Speaker 4: we said, let's find a way to solve it, and

708
00:41:47,239 --> 00:41:49,480
Speaker 4: we built the first prototype with seven thousand dollars back

709
00:41:49,480 --> 00:41:52,399
Speaker 4: then in a backyard in Cambridge, Massachusetts. Now we've raised

710
00:41:52,400 --> 00:41:54,400
Speaker 4: one hundred and twenty million dollars and we're back by BMW,

711
00:41:54,480 --> 00:41:57,640
Speaker 4: cim Tomo and many other players. But our approach is

712
00:41:57,640 --> 00:42:00,080
Speaker 4: to really use technology and develop the novel technology to

713
00:42:00,080 --> 00:42:02,640
Speaker 4: be able to process and produce the final metals free

714
00:42:02,680 --> 00:42:05,399
Speaker 4: of emissions, free of discharge, and a safe way right

715
00:42:05,440 --> 00:42:08,360
Speaker 4: here in that states. So we solve all three parts

716
00:42:08,400 --> 00:42:11,160
Speaker 4: of the value chain, which is the extraction. That's what

717
00:42:11,160 --> 00:42:13,359
Speaker 4: we think about when we think about normal mining. That's

718
00:42:13,400 --> 00:42:15,160
Speaker 4: digging a hole in the ground and digging up the

719
00:42:15,239 --> 00:42:18,399
Speaker 4: raw material and we harvest that material from the ground. Now,

720
00:42:18,440 --> 00:42:21,239
Speaker 4: once we have that mixture of rare earth oxides or

721
00:42:21,280 --> 00:42:23,560
Speaker 4: carbon eats, we have to separate that out and that's

722
00:42:23,600 --> 00:42:26,160
Speaker 4: the next stage of the process called separation, and you

723
00:42:26,239 --> 00:42:28,360
Speaker 4: take that and you split it into the individual pieces.

724
00:42:28,640 --> 00:42:32,359
Speaker 4: Now they still remain in their oxide form, but they're

725
00:42:32,360 --> 00:42:35,040
Speaker 4: split out. And that's generally what historically was the product

726
00:42:35,040 --> 00:42:36,799
Speaker 4: it would send a China to be processed into the

727
00:42:36,800 --> 00:42:39,000
Speaker 4: metal and Phoenix. What we do is we take that

728
00:42:39,040 --> 00:42:41,319
Speaker 4: oxide and convert to metal and that's one of our

729
00:42:41,360 --> 00:42:43,200
Speaker 4: revolutionary key things that we do. We're one of the

730
00:42:43,200 --> 00:42:44,880
Speaker 4: best in the world on how to take oxide and

731
00:42:44,880 --> 00:42:47,360
Speaker 4: convert to metal. Stages a huge supply chain gap and

732
00:42:47,360 --> 00:42:49,920
Speaker 4: that's what we do primarily right here in New Hampshire.

733
00:42:50,239 --> 00:42:52,200
Speaker 4: This facility is designed, is that one key part of

734
00:42:52,200 --> 00:42:52,840
Speaker 4: that process.

735
00:42:53,480 --> 00:42:56,080
Speaker 2: The materials that you work with in your facility in

736
00:42:56,080 --> 00:42:58,640
Speaker 2: New Hampshire, where are those mind tailings from?

737
00:42:59,040 --> 00:43:02,560
Speaker 4: So the facility Campsure is buying actually normal mind products.

738
00:43:03,360 --> 00:43:06,560
Speaker 4: We will vertically integrate to go upstream, meaning going closer

739
00:43:06,560 --> 00:43:08,879
Speaker 4: to the mind sight in the future, but right now

740
00:43:08,880 --> 00:43:12,120
Speaker 4: it's normal mind products coming from the US and Australia.

741
00:43:12,360 --> 00:43:14,440
Speaker 2: Can you be competitive with the Chinese.

742
00:43:14,560 --> 00:43:18,200
Speaker 4: It's a tricky question, honestly, because fundamentally speaking, the Chinese

743
00:43:18,280 --> 00:43:22,759
Speaker 4: control the market indices that dictate price. It's extremely challenging. Now,

744
00:43:22,800 --> 00:43:24,359
Speaker 4: what I will say is that we are generally cost

745
00:43:24,440 --> 00:43:27,080
Speaker 4: competitive with the Chinese operations. That's a very important thing

746
00:43:27,120 --> 00:43:29,640
Speaker 4: to note. However, China does subsidize a lot of these

747
00:43:29,680 --> 00:43:32,719
Speaker 4: operations and the pricing does not quite indicate how an

748
00:43:32,719 --> 00:43:35,560
Speaker 4: actual process will work, so it's always tricky to answer

749
00:43:35,600 --> 00:43:36,080
Speaker 4: that question.

750
00:43:36,840 --> 00:43:39,640
Speaker 2: David Abraham says, it's not enough just to be cost

751
00:43:39,680 --> 00:43:42,680
Speaker 2: competitive with Chinese alternatives. You also need to have a

752
00:43:42,719 --> 00:43:46,760
Speaker 2: complete supply chain that relies on the critical minerals you're producing.

753
00:43:47,719 --> 00:43:50,360
Speaker 1: My concern, as crazy as it sound, is not for

754
00:43:50,400 --> 00:43:54,719
Speaker 1: the materials themselves. It's to create supply lines so that

755
00:43:54,760 --> 00:43:57,560
Speaker 1: we can make the products of the future. No one

756
00:43:58,040 --> 00:44:02,040
Speaker 1: sells dysprosium or neo imum in the market. You can't

757
00:44:02,080 --> 00:44:05,400
Speaker 1: just go to the store and buy it. They're critical

758
00:44:05,520 --> 00:44:11,239
Speaker 1: to our phones, our robots, our vehicles, and that's where

759
00:44:11,280 --> 00:44:13,359
Speaker 1: we need to be spending our time. Is how are

760
00:44:13,360 --> 00:44:17,640
Speaker 1: we creating the products that our next generation needs, How

761
00:44:17,640 --> 00:44:20,200
Speaker 1: do we create the economy that our children want? And

762
00:44:20,239 --> 00:44:23,360
Speaker 1: how do we ensure that defense systems that we're setting

763
00:44:23,440 --> 00:44:28,200
Speaker 1: up to protect our countries are invulnerable to supply chain challenges.

764
00:44:29,000 --> 00:44:31,000
Speaker 1: So you really want to start with the end, with

765
00:44:31,120 --> 00:44:35,920
Speaker 1: the demand, and then use the inputs these materials and

766
00:44:35,960 --> 00:44:37,479
Speaker 1: then focus on how to get tom.

767
00:44:38,200 --> 00:44:41,240
Speaker 2: And in many ways, that is exactly what China has done.

768
00:44:41,600 --> 00:44:44,319
Speaker 2: Building not just the supply of these materials, but the

769
00:44:44,400 --> 00:44:46,440
Speaker 2: industries that depend on them.

770
00:44:46,880 --> 00:44:51,360
Speaker 1: China, for many of these materials is the market They produce,

771
00:44:51,640 --> 00:44:54,480
Speaker 1: depending on the material, seventy eighty ninety percent of a

772
00:44:54,480 --> 00:44:58,600
Speaker 1: particular material, but they also consume sixty seventy eighty ninety

773
00:44:58,600 --> 00:45:02,879
Speaker 1: percent of the material. Their supply lines are becoming increasingly tight.

774
00:45:03,560 --> 00:45:05,560
Speaker 1: I was back in China in twenty eleven, and they

775
00:45:05,560 --> 00:45:09,200
Speaker 1: were quite clear the materials that they were producing in

776
00:45:09,280 --> 00:45:12,960
Speaker 1: their country are set to be consumed in their country.

777
00:45:13,040 --> 00:45:15,640
Speaker 1: They did not see a benefit to export.

778
00:45:16,520 --> 00:45:20,160
Speaker 2: China built its playbook around critical minerals long before the US,

779
00:45:20,680 --> 00:45:24,000
Speaker 2: and it's used its entire system of government to execute

780
00:45:24,000 --> 00:45:27,600
Speaker 2: on its plan, something that former US Ambassador to China,

781
00:45:27,760 --> 00:45:31,319
Speaker 2: Nick Burns says, we need to take into account how

782
00:45:31,360 --> 00:45:35,120
Speaker 2: does our system compete on something like critical minerals given

783
00:45:35,120 --> 00:45:37,160
Speaker 2: where we are, because it may take a long time

784
00:45:37,200 --> 00:45:39,200
Speaker 2: for our system to come around to the right decision,

785
00:45:39,520 --> 00:45:41,360
Speaker 2: and the meantime, China is off to the races.

786
00:45:41,840 --> 00:45:44,640
Speaker 9: So when I was educated a long time ago, college

787
00:45:44,680 --> 00:45:47,480
Speaker 9: and graduate school, I prayed at the altar of free trade,

788
00:45:47,520 --> 00:45:50,000
Speaker 9: and I became a free trader in my youth, and

789
00:45:50,520 --> 00:45:54,640
Speaker 9: like most people in Washington, as an official, Young official eighties, nineties,

790
00:45:54,880 --> 00:45:59,080
Speaker 9: even into this century, free trade was our gospel. I

791
00:45:59,160 --> 00:46:02,080
Speaker 9: now think, to directly answer your question is a really

792
00:46:02,160 --> 00:46:07,120
Speaker 9: important question. Both President Biden and President Trump have now

793
00:46:07,120 --> 00:46:11,239
Speaker 9: engaged in a degree of industrial policy, recognizing, if you're

794
00:46:11,320 --> 00:46:16,279
Speaker 9: up against this authoritarian, colossal economic power, and that's what

795
00:46:16,400 --> 00:46:20,520
Speaker 9: China is, we have to isolate certain industries, pick out

796
00:46:20,560 --> 00:46:23,319
Speaker 9: certain industries in the United States for special support. The

797
00:46:23,440 --> 00:46:27,200
Speaker 9: United States government needs to pick out our national champions

798
00:46:27,239 --> 00:46:29,480
Speaker 9: in rare earth there are very few of them and

799
00:46:29,560 --> 00:46:32,600
Speaker 9: support them financially. And President Trump's gone all the way

800
00:46:32,600 --> 00:46:35,600
Speaker 9: to take a financial stake for the usg in this,

801
00:46:35,760 --> 00:46:39,520
Speaker 9: And frankly, I don't think we compete with China in

802
00:46:39,600 --> 00:46:44,640
Speaker 9: certain industries without that degree of involvement by the US

803
00:46:44,840 --> 00:46:47,279
Speaker 9: executive branch that we really haven't seen in a way

804
00:46:47,320 --> 00:46:49,799
Speaker 9: since FDR's time when we had to have a war

805
00:46:49,880 --> 00:46:53,040
Speaker 9: production economy in the nineteen forties during the Second World War.

806
00:46:54,239 --> 00:46:56,600
Speaker 2: When it comes to critical minerals, the US has to

807
00:46:56,640 --> 00:46:59,759
Speaker 2: recognize that it's playing from behind. It has to get

808
00:46:59,760 --> 00:47:02,480
Speaker 2: his playbook right, and it needs to see how much

809
00:47:02,520 --> 00:47:05,920
Speaker 2: the Chinese government is doing to promote its industry. But

810
00:47:06,040 --> 00:47:09,680
Speaker 2: with all that Ambassador Burns still believes the US can

811
00:47:09,760 --> 00:47:11,080
Speaker 2: get back in the game.

812
00:47:11,920 --> 00:47:15,480
Speaker 9: I will say this, President Xixhinpin has basically become a

813
00:47:15,480 --> 00:47:18,799
Speaker 9: one man show. So there is an advantage in a

814
00:47:18,840 --> 00:47:21,960
Speaker 9: way that Chesian Pin can order things to be done

815
00:47:22,000 --> 00:47:24,080
Speaker 9: and have them implement it. But you know, if you

816
00:47:24,120 --> 00:47:27,120
Speaker 9: compare our system to theirs, I'll take our system every day.

817
00:47:27,520 --> 00:47:31,719
Speaker 9: Our democracy is messy, there's too much partisanship in Washington.

818
00:47:32,440 --> 00:47:34,840
Speaker 9: But what's not a problem is that we believe in

819
00:47:34,880 --> 00:47:37,880
Speaker 9: democracy and human rights and the rule of law and

820
00:47:37,960 --> 00:47:41,760
Speaker 9: the balance of power among three branches of the US government.

821
00:47:41,800 --> 00:47:50,759
Speaker 9: I'll take that any day over its China system.

822
00:47:47,560 --> 00:47:49,239
Speaker 2: That does it for us. Here at Wall Street Week,

823
00:47:49,440 --> 00:48:02,920
Speaker 2: I'm David Weston CEU. Next week for more stories of capitalism.