WEBVTT - SpaceX Weighs Tender Offer, Geopolitical Turmoil 0:00:02.920 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg Business Wait Inside from the reporters and 0:00:13.039 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:27.560 --> 0:00:29.240 This is just one of those days, right Amy, It's 0:00:29.240 --> 0:00:31.800 just hard to keep up. It just fast and furious. 0:00:33.080 --> 0:00:35.480 You're doing great, all right, Amy Morris There, Hey listen, 0:00:35.520 --> 0:00:37.519 folks who do want to get to a Bloomberg exclusive. 0:00:37.520 --> 0:00:40.040 SpaceX is in talks to sell insider shares in a 0:00:40.120 --> 0:00:43.319 transaction valuing the rocket and satellite maker at about three 0:00:43.400 --> 0:00:45.720 hundred and fifty billion. That's accring to those familiar with 0:00:45.720 --> 0:00:48.640 the matter. It's a massive jump, highlighting the post election 0:00:48.720 --> 0:00:51.879 gains across Elon Musk's business empire. It turns out it's 0:00:51.920 --> 0:00:53.840 good to be acquainted with the president elect. 0:00:54.120 --> 0:00:57.360 Just look at Tesla since you know, November up forty 0:00:57.720 --> 0:01:00.880 in the month of November alone. Back SpaceX, though, would 0:01:00.880 --> 0:01:03.560 be a significant premium to a previously Muld evaluation of 0:01:03.600 --> 0:01:05.840 two hundred and fifty five at billion dollars, as reported 0:01:05.840 --> 0:01:07.440 by Bloomberg News and other media outlets. 0:01:07.480 --> 0:01:08.080 Just last month. 0:01:08.360 --> 0:01:10.560 SpaceX was last valued at about two hundred and ten 0:01:10.600 --> 0:01:11.160 billion dollars. 0:01:11.160 --> 0:01:13.600 That was a tender offer earlier this year. 0:01:13.800 --> 0:01:16.679 For more on all of this and the big glon universe, 0:01:17.280 --> 0:01:19.600 back with us as Max Chafkin Bloomberg Business with Columnists. 0:01:19.600 --> 0:01:22.040 He's also the co host of Elon Inc. The podcast. 0:01:22.319 --> 0:01:24.360 He's also the author of the contrarian Peter Thiel and 0:01:24.480 --> 0:01:27.880 Silicon Valley's Pursuit of Power. Max joins us here in 0:01:27.959 --> 0:01:31.760 the studio. So SpaceX operates in a space where they're 0:01:31.800 --> 0:01:34.520 pretty much the only player in certain certain elements of it. 0:01:34.560 --> 0:01:36.280 I mean, look at what Boeing had to like call, 0:01:36.360 --> 0:01:38.680 you know, the US government had to call on SpaceX 0:01:38.720 --> 0:01:41.800 to rescue those astronauts because Boeing couldn't do it. 0:01:41.959 --> 0:01:44.440 They are the only player in the United States for 0:01:44.680 --> 0:01:47.680 at launching astronauts, and they are the major player for 0:01:47.800 --> 0:01:49.360 all rocket launches of all kinds. 0:01:49.440 --> 0:01:52.080 Okay, so that huge share of the market overall. Why 0:01:52.280 --> 0:01:55.160 why is the world so much better for SpaceX under Trump? 0:01:55.600 --> 0:01:58.800 Because SpaceX is a government contractor and most of its 0:01:58.800 --> 0:02:01.160 money comes from the US gun That would have happened 0:02:01.240 --> 0:02:06.560 under It's true but so, but you know, it's it's 0:02:06.600 --> 0:02:08.000 easy to get you don't want to you don't want 0:02:08.000 --> 0:02:10.720 to overstate their dominance. So they dominate, But there are 0:02:10.800 --> 0:02:13.600 a bunch of other players, including a bunch of large 0:02:13.639 --> 0:02:18.120 defense contractors that also have programs uh, both for launches 0:02:18.280 --> 0:02:19.880 and also for for astronauts. 0:02:19.919 --> 0:02:21.000 And if you look at. 0:02:20.960 --> 0:02:24.160 The plans for the Moon mission, right it, SpaceX is 0:02:24.200 --> 0:02:28.040 only one of a handful of companies that have contracts 0:02:28.280 --> 0:02:30.720 for this mission. Now if now, Trump could very easily 0:02:31.080 --> 0:02:34.320 change that mix, and and there's already talk. Musk has 0:02:34.600 --> 0:02:37.480 has suggested that it would be you know, better to 0:02:37.480 --> 0:02:39.400 to skip the Moon and you know, go straight to 0:02:39.400 --> 0:02:41.640 Mars or something like that. So so there are lots 0:02:41.639 --> 0:02:46.440 of ways that Trump or Trump administration could help elon Musk. 0:02:46.600 --> 0:02:48.840 And like the most basic basic one has to do 0:02:48.840 --> 0:02:52.440 with Starlink. So starlink was in the running for subsidies 0:02:52.480 --> 0:02:56.520 for rural internet. It lost out on some of those subsidies. 0:02:56.600 --> 0:02:59.880 Musk has been very angry about that, and the nominee 0:03:00.000 --> 0:03:02.519 Trumps nomine to run the FCC was one of the 0:03:02.600 --> 0:03:04.840 voices saying, hey, this is a great injustice. He's a 0:03:04.960 --> 0:03:08.640 huge fan of SpaceX and of Elon Musk. 0:03:08.720 --> 0:03:11.040 So, so like, even if. 0:03:11.160 --> 0:03:14.400 You don't see some kind of dramatic shift in space policy, 0:03:14.680 --> 0:03:17.520 this is very likely to lead to more revenue for 0:03:17.720 --> 0:03:20.360 SpaceX than it was already going to get. And you 0:03:20.400 --> 0:03:22.760 know that's why the valuation has gone up. It's actually 0:03:22.800 --> 0:03:26.200 much more straightforward than the case for you know, why 0:03:26.240 --> 0:03:29.440 Tesla should be worth forty or fifty percent more than 0:03:29.560 --> 0:03:30.160 was worth before. 0:03:31.560 --> 0:03:33.840 So in other words, their businesses make sense and it's 0:03:33.880 --> 0:03:35.440 likely to just keep growing exactly. 0:03:35.520 --> 0:03:38.040 Yeah, there's there are there are a bunch of clear ways. 0:03:38.240 --> 0:03:41.920 And you see analysts, both telecom analysts and space analysts 0:03:41.960 --> 0:03:42.600 talking about this. 0:03:42.600 --> 0:03:44.840 This is not Isn't that some kind of like hypothetical. 0:03:45.080 --> 0:03:48.200 You have to squint and imagine some some weird huge 0:03:48.240 --> 0:03:52.160 regulatory changes to to you know, how how the government 0:03:52.160 --> 0:03:54.760 regulates Elon musks empire. This is just like the government 0:03:54.840 --> 0:03:58.160 taking out it's it's very large paycheck and and giving 0:03:58.160 --> 0:03:59.640 Elon Musk a little bit more money. 0:03:59.800 --> 0:04:01.680 It's interesting because we're seeing it play out. So this 0:04:01.760 --> 0:04:03.000 is this is this, This is. 0:04:02.920 --> 0:04:05.600 Playing out in the private markets right now. We've seen 0:04:05.640 --> 0:04:07.360 it play out in the public markets over the last 0:04:07.400 --> 0:04:11.720 month with Tesla forty percent basically in the month of November. Yeah, 0:04:11.600 --> 0:04:15.400 why why is SpaceX more of a beneficiary than Tesla, 0:04:15.480 --> 0:04:18.440 Because certainly public market investors are saying, hey, Tesla's a 0:04:18.480 --> 0:04:19.279 huge winner here too. 0:04:19.400 --> 0:04:22.039 Yeah, I mean it's it's essentially the same argument, and 0:04:22.080 --> 0:04:24.599 I would be surprised. You know, this is what makes 0:04:24.640 --> 0:04:27.080 it surprising is the size of the figure and the 0:04:27.120 --> 0:04:29.159 fact that they just had they just wrote up the 0:04:29.240 --> 0:04:32.240 valuation very recently, as you said. But I would not 0:04:32.360 --> 0:04:36.599 be shocked if everywhere in Elon Musk's empire, so x 0:04:37.040 --> 0:04:40.839 XAI that's his AI thing, the boring company. 0:04:40.600 --> 0:04:43.520 If we are, if they are also quietly. 0:04:43.800 --> 0:04:47.240 Doing this kind of thing, looking at higher valuations, looking 0:04:47.279 --> 0:04:49.760 at what they can do to take advantage of this moment, 0:04:49.800 --> 0:04:53.559 because investors are very excited about this, and we should 0:04:53.600 --> 0:04:55.960 one thing to I should note about SpaceX that also 0:04:56.000 --> 0:04:58.960 makes it different from Tesla. And one of the reasons 0:04:59.000 --> 0:05:01.280 why this is more likely, it's more likely that they 0:05:01.320 --> 0:05:03.560 will benefit is that they have a good argument for this. 0:05:03.600 --> 0:05:06.200 Their product, as you said, is good it. 0:05:06.560 --> 0:05:08.880 You know, they are doing a good job, so you 0:05:08.920 --> 0:05:11.400 don't have to squint and see some kind of back 0:05:11.440 --> 0:05:13.560 room political thing you could just move the needle a 0:05:13.600 --> 0:05:15.360 little bit and it might lead to a lot. 0:05:15.760 --> 0:05:16.839 Max mentioned X. 0:05:17.400 --> 0:05:17.599 Yeah. 0:05:18.360 --> 0:05:21.360 Axios reported earlier this week that Fidelity actually wrote up 0:05:21.400 --> 0:05:25.280 the value of X, which is, you know, in the 0:05:25.320 --> 0:05:27.080 last few months they've written down the value of their 0:05:27.120 --> 0:05:28.680 investment in X, but a lot of that. 0:05:28.680 --> 0:05:29.640 Might have to do with XAI. 0:05:30.279 --> 0:05:32.479 I mean, it's no I think it makes sense that 0:05:32.520 --> 0:05:34.200 they wrote the value up. And we've been saying that 0:05:34.240 --> 0:05:36.560 on the Elon podcast that this was going to happen. 0:05:36.640 --> 0:05:37.640 I mean X. 0:05:38.320 --> 0:05:41.080 If the election of Donald Trump a few weeks back 0:05:41.120 --> 0:05:43.960 showed us anything, it is that Elon Musk's media company 0:05:44.200 --> 0:05:48.479 is influential. And yes, the advertising business isn't looking great, 0:05:48.920 --> 0:05:51.280 but they have other ways to make money AI and 0:05:52.000 --> 0:05:55.039 making their data available to AI companies including X is 0:05:55.080 --> 0:05:55.599 one way. 0:05:55.920 --> 0:05:58.920 Subscriptions could be another way. This is a company that has. 0:05:58.839 --> 0:06:01.839 Gotten more important than it was before, and I think 0:06:01.960 --> 0:06:03.359 there's a case for raising the valuation. 0:06:03.400 --> 0:06:06.000 We were just showing some footage of was it last 0:06:06.040 --> 0:06:09.480 month where president like Donald Trump was there with Elon 0:06:09.600 --> 0:06:14.880 Musk at another launch by SpaceX having said that, so 0:06:15.240 --> 0:06:17.680 great for Elon to be able to say, hey, Trump, 0:06:17.760 --> 0:06:20.080 you know he's there right very accessible in terms of 0:06:20.120 --> 0:06:22.920 talking to him. If they have a falling out, does 0:06:22.960 --> 0:06:25.960 everybody kind of rethink some stuff, and especially when it 0:06:26.000 --> 0:06:26.919 comes to valuations. 0:06:27.240 --> 0:06:32.520 Look, any time you a business politicizes itself, it creates risk. 0:06:32.600 --> 0:06:34.599 And one of the reasons that business leaders try not 0:06:34.680 --> 0:06:36.800 to do this, try not to show up on stage 0:06:36.800 --> 0:06:39.320 with Donald Trump, is because if there is a break 0:06:39.480 --> 0:06:41.480 or if the political wind shift, then. 0:06:41.360 --> 0:06:42.640 All of a sudden, you're in a box. 0:06:42.920 --> 0:06:46.040 Now, I would say that I think Elon Musk has 0:06:46.080 --> 0:06:49.640 a lot to work with Even if the relationship this 0:06:50.160 --> 0:06:54.760 probably stressful and inevitably, you know, there may be a 0:06:54.800 --> 0:06:56.440 fracture interpersonal relationship. 0:06:56.520 --> 0:06:58.080 Even if it falls apart. 0:06:58.040 --> 0:07:01.559 Musk is going to have power or both in terms 0:07:01.560 --> 0:07:04.800 of at the negotiating table with the US government as 0:07:04.800 --> 0:07:07.280 SpaceX tries to sell it more launches or tries to 0:07:07.320 --> 0:07:11.000 sell at satellite internet services, because the competition is not 0:07:11.080 --> 0:07:15.120 that well established, because no one is shuttling astronauts back 0:07:15.120 --> 0:07:17.600 and forth, and also because Elon Musk will be important 0:07:17.600 --> 0:07:20.840 within the conservative movement whether or not Donald Trump likes him. 0:07:20.880 --> 0:07:22.720 So are all the other billionaires who are doing space 0:07:22.840 --> 0:07:27.040 Jeff Bezos and Richard Brandson. It's not happening anymore. 0:07:27.200 --> 0:07:29.800 No, No, they are all trying to do this. 0:07:29.880 --> 0:07:34.160 And we saw Bezos, you know, offer his congratulations to 0:07:34.760 --> 0:07:37.800 the President elect on x on Twitter, where he hadn't 0:07:37.800 --> 0:07:40.360 posted for a long time. He also saw, you know, 0:07:40.440 --> 0:07:43.520 the Washington Post declined to make an endorsement, which at 0:07:43.600 --> 0:07:46.800 least some critics we're seeing as a you know, politically 0:07:46.800 --> 0:07:49.440 motivated thing designed to help Bezos' rocket company. 0:07:49.480 --> 0:07:50.320 Now he denied that. 0:07:50.880 --> 0:07:53.960 No, he very much wants to sell launches to the 0:07:54.040 --> 0:07:57.880 US government. And you're going to see other defense contractors, 0:07:58.080 --> 0:08:00.119 traditional defense contractors push back. 0:08:00.120 --> 0:08:01.960 And it's not like they have nothing to work with. 0:08:02.120 --> 0:08:06.000 These companies provide jobs and states, they operate factories, they 0:08:06.000 --> 0:08:07.360 have constituencies as well. 0:08:07.520 --> 0:08:09.360 So it's not like Elon Musk. 0:08:09.160 --> 0:08:12.840 Can can overnight take over the entire aerospace industry. He's 0:08:12.880 --> 0:08:15.120 just in a much better position than he was a 0:08:15.160 --> 0:08:15.600 month ago. 0:08:15.760 --> 0:08:18.200 Okay, so Max talking about how powerful Elon is or 0:08:18.240 --> 0:08:20.520 t love excuse me, Yeah, Max talking about how powerful 0:08:20.560 --> 0:08:23.280 Elon is. Certainly when it comes to Tesla, when it 0:08:23.280 --> 0:08:26.400 comes to having the year of the President elect. 0:08:26.160 --> 0:08:27.200 He doesn't win all the time. 0:08:27.400 --> 0:08:27.600 Yeah. 0:08:27.640 --> 0:08:29.480 I was going to say, there's a Delaware judge that 0:08:29.560 --> 0:08:31.520 seems to sort of have an edge right now. 0:08:32.520 --> 0:08:34.240 Yeah, he's going on with this pay package. 0:08:34.280 --> 0:08:38.160 So for a second time, Elon Musk's very very large, 0:08:38.280 --> 0:08:43.040 historically large pay package, which you know, as of now 0:08:43.120 --> 0:08:45.400 is worth more than one hundred million dollars according to 0:08:45.440 --> 0:08:48.240 the Bloomberg story that we published, although has been worth 0:08:48.320 --> 0:08:50.480 you know, fifty billion dollars. The last time it was 0:08:50.520 --> 0:08:54.520 rejected was rejected. Now, if you remember a judge had 0:08:54.559 --> 0:08:58.560 rejected this, there was a shareholder vote. Shareholders approved the 0:08:58.600 --> 0:09:02.120 pay package, and the thought, at least from Elon Musk 0:09:02.120 --> 0:09:05.160 and Tesla's point of view, was that this would essentially. 0:09:04.800 --> 0:09:06.559 Invalidate the Delaware ruling. 0:09:07.040 --> 0:09:10.720 The judge said, no, you can't undo a court ruling 0:09:11.000 --> 0:09:13.960 by having a vote of shareholders. That's a novel application 0:09:14.000 --> 0:09:16.719 of law. That's invalid. And so we're sort of back 0:09:16.760 --> 0:09:20.760 where we started. Tesla's shareholders would very much like to 0:09:20.960 --> 0:09:23.719 keep Elon Musk happy, which as far as they many 0:09:23.720 --> 0:09:26.280 of them see it, and he sees it, means paying 0:09:26.360 --> 0:09:29.880 him a huge amount of money, and Delaware is not 0:09:29.960 --> 0:09:35.240 amenable yet, although we'll see, Musk and his lawyers have 0:09:35.240 --> 0:09:38.480 said they're going to appeal to the Supreme Court of Delaware, 0:09:38.559 --> 0:09:40.760 so it's possible they could overturn it, and then it's 0:09:40.800 --> 0:09:44.840 also possible he could just take his business to Texas, 0:09:44.840 --> 0:09:46.880 as he's threatened to do. 0:09:46.240 --> 0:09:49.440 We do you does this change when I know this 0:09:49.520 --> 0:09:51.240 is a state issue right now? But does this change 0:09:51.240 --> 0:09:52.800 when Donald Trump becomes president? 0:09:53.400 --> 0:09:57.040 No? I mean it's a state issue. And it's also again, 0:09:57.480 --> 0:09:59.080 Musk has already. 0:09:58.840 --> 0:10:00.480 Moved the company to tech Exis. 0:10:00.520 --> 0:10:03.160 You could imagine trying to do this again and then 0:10:03.200 --> 0:10:06.040 fighting it out in a Texas court, which in theory 0:10:06.360 --> 0:10:09.959 would probably be more amenable to the pay package than 0:10:10.240 --> 0:10:13.480 than Delaware was. I just look at this as it. 0:10:13.559 --> 0:10:16.479 Musk doesn't need the money right now. He's very wealthy. 0:10:16.120 --> 0:10:18.400 Well, you don't need to start a go fundme page 0:10:18.400 --> 0:10:18.719 for him. 0:10:18.880 --> 0:10:21.120 No, he'll be fund on. 0:10:22.679 --> 0:10:22.839 Later. 0:10:22.920 --> 0:10:26.520 Yeah, I'm sure he'll take any checks we send him, 0:10:26.559 --> 0:10:29.400 but he doesn't need the money now. I do think 0:10:29.400 --> 0:10:32.880 this is a reminder that Elon Musk cannot He cannot 0:10:32.920 --> 0:10:35.559 change the laws of gravity, and he cannot. 0:10:35.320 --> 0:10:36.680 Change the law laws. 0:10:36.960 --> 0:10:39.199 You know, there are a lot of people making huge 0:10:39.200 --> 0:10:42.040 investments in his companies right now, including in Tesla, and 0:10:42.080 --> 0:10:45.040 even with this SpaceX deal based on some kind of 0:10:45.080 --> 0:10:49.439 vague sense that politics will sort of shift the laws 0:10:49.440 --> 0:10:51.760 of business in his favor. And but there are there 0:10:51.800 --> 0:10:53.480 are laws of business that are not in his favor, 0:10:53.520 --> 0:10:56.000 and this is one of them. He's he's repeatedly gone 0:10:56.000 --> 0:10:58.320 out against this Delaware judge. Remember this is the same 0:10:58.400 --> 0:11:01.440 judge that forced him to buy Twitter slash x. 0:11:02.200 --> 0:11:04.440 So, so you know, he can't do everything. 0:11:04.480 --> 0:11:08.160 And again there are going to be battles ahead, legal battles, 0:11:08.200 --> 0:11:12.560 political battles, and and he's vulnerable to you know, the 0:11:12.559 --> 0:11:14.600 whims of law and democracy and all that, just like 0:11:14.600 --> 0:11:15.200 everyone else. 0:11:16.360 --> 0:11:18.240 I mean, he can't get it everything he wants. 0:11:19.640 --> 0:11:21.880 What almost what? 0:11:22.080 --> 0:11:24.240 Well, why is the Why is the money so important 0:11:24.240 --> 0:11:27.360 to him? I don't know, honestly, Like if you were 0:11:27.800 --> 0:11:29.839 let's see, you know here it goes in. 0:11:29.800 --> 0:11:31.560 There, it's it's three hundred and fifty three. 0:11:31.440 --> 0:11:34.960 Billion dollars ethicly SpaceX right. I mean, he's what's an 0:11:35.000 --> 0:11:37.160 extra fifty billion dollars? What can you buy with four 0:11:37.200 --> 0:11:38.920 hundred million dollars that you can't buy with three hundred 0:11:38.920 --> 0:11:39.640 and fifty million dollars. 0:11:39.720 --> 0:11:41.680 I mean, he has said that he intends to, you know, 0:11:41.679 --> 0:11:43.960 play a big role in the midterm elections. There also 0:11:44.000 --> 0:11:48.599 there's chatter about potential huge donations to British politicians, so 0:11:48.960 --> 0:11:50.680 maybe he wants to just a little extra cash for 0:11:50.720 --> 0:11:53.280 his political stuff. But really I think this is more 0:11:53.360 --> 0:11:56.120 for him and the people who back him. About the principle, 0:11:56.200 --> 0:11:59.439 and Elon Musk is somebody who has put now now 0:11:59.440 --> 0:12:01.360 a principle. You know, I think there are people who 0:12:01.360 --> 0:12:03.800 would snicker at that. But Elon Musk has put his 0:12:04.000 --> 0:12:07.480 own role in Tesla, in Tesla and its growth central 0:12:07.520 --> 0:12:09.760 to its brand, and he sees this as an. 0:12:09.640 --> 0:12:11.440 Attack, you know, right, rightfully wrongly. 0:12:11.559 --> 0:12:14.800 Max Chafkin always appreciated co host of the Elon Inc Podcast. 0:12:14.920 --> 0:12:17.720 A new episode downloading you're. 0:12:17.520 --> 0:12:21.080 Listening to the Bloomberg Business Week podcast. Catch us live 0:12:21.160 --> 0:12:24.160 weekday afternoons from two to five pm Eastern Listen on 0:12:24.240 --> 0:12:26.760 Apple car Play and then brought auto with a Bloomberg 0:12:26.800 --> 0:12:30.040 Business app or want us Live on YouTube. 0:12:30.559 --> 0:12:33.600 Well, I got to say to politics, yes, you know, 0:12:33.720 --> 0:12:36.200 there is so much going on Russia, Ukraine, Middle East, 0:12:36.320 --> 0:12:40.080 US China relations. And then it feels like, out of nowhere, 0:12:40.240 --> 0:12:42.280 what has become one of our most read stories on 0:12:42.320 --> 0:12:44.280 the Bloomberg. It's been a top the list for most 0:12:44.280 --> 0:12:47.120 of the day about a declaration of martial law in 0:12:47.160 --> 0:12:50.600 South Korea by the South Korean President Yun, only to 0:12:50.640 --> 0:12:53.360 be followed hours later by the country's parliament voting to 0:12:53.400 --> 0:12:55.600 lift the declaration. I gotta say, Tim, it's a bit 0:12:55.600 --> 0:12:56.559 of a whipsite, yea it is. 0:12:56.559 --> 0:12:58.240 We got a great live log on it from our 0:12:58.280 --> 0:12:59.960 team over at Bloomberg News. If you're on the URN, 0:13:00.360 --> 0:13:03.839 do check that out by going to tliv here with 0:13:04.000 --> 0:13:07.240 what is going on? Sidney Siler Senior Advisor, nonresident or 0:13:07.280 --> 0:13:10.319 career Chair, Center for Strategic and International Studies. Sidney was 0:13:10.400 --> 0:13:13.760 the National Intelligence Officer for North Korea at the National 0:13:13.760 --> 0:13:16.640 Intelligence Council from twenty twenty to twenty twenty three, one 0:13:16.640 --> 0:13:19.040 of the nation's top experts when it comes to North 0:13:19.120 --> 0:13:21.960 Korea and Carol. Before that, he was the US Forces 0:13:22.040 --> 0:13:25.679 Korea Senior Analyst and Senior Defense Intelligence Expert for North Korea, 0:13:25.720 --> 0:13:28.520 serving as the principal advisor and senior expert on Korean 0:13:28.520 --> 0:13:32.360 Peninsula security issues to the USFK Commander and the US 0:13:32.400 --> 0:13:33.760 Defense Intelligence Enterprise. 0:13:33.760 --> 0:13:35.079 All Right, we had to lay it out, and this 0:13:35.120 --> 0:13:37.720 is why we wanted to talk to Sidney. Hey, Sidney, 0:13:37.760 --> 0:13:41.400 great to have you here back on Bloomberg. Tell us 0:13:41.400 --> 0:13:43.600 about marshal law. Came as a shock I think to 0:13:43.679 --> 0:13:48.720 many domestically and abroad when they declared martial law. But 0:13:48.800 --> 0:13:52.120 the country has a history of martial law and military rules. 0:13:52.120 --> 0:13:55.800 So give us the history. What's important for the Bloomberg 0:13:55.840 --> 0:13:57.120 audience to know at this hour. 0:13:58.480 --> 0:14:00.920 Well, thank you first vote for the vitation to speak 0:14:00.960 --> 0:14:04.040 on this. The history is relevant and important only because 0:14:04.120 --> 0:14:08.199 it's so from a different era. It's worth a warning 0:14:08.320 --> 0:14:11.880 not to actually view these recent developments in that context. 0:14:12.520 --> 0:14:16.199 North Korea, as you call the Korean Peninsula, divided right 0:14:16.240 --> 0:14:19.480 after World War Two, underwent a war trying to unify 0:14:19.520 --> 0:14:23.680 from nineteen fifty to fifty three, and South Korea's history 0:14:23.680 --> 0:14:27.160 has been moving from a very right wing pro US 0:14:27.680 --> 0:14:32.400 authoritarian dictaintorship to the democracy we have today. Along the lines, 0:14:32.440 --> 0:14:37.240 there's been a couple of military coups, again ensuring a 0:14:38.080 --> 0:14:43.800 conservative hardline towards North Korea authoritarian in terms of its 0:14:44.080 --> 0:14:48.640 domestic system, but a gradual growth today to the economic 0:14:48.720 --> 0:14:52.120 miracle that has begun. And the last coup was nineteen eighty, 0:14:52.240 --> 0:14:57.040 so many years ago, such a different context today. That said, 0:14:57.120 --> 0:14:59.360 you know, it is one of the few tools at 0:14:59.400 --> 0:15:01.680 the dispo of the president. It's one you don't want 0:15:01.720 --> 0:15:05.160 to break the glass on too early when you have 0:15:05.320 --> 0:15:09.480 the type of political deadlock that President Un has faced 0:15:09.480 --> 0:15:12.640 with the opposition, which is all focused on trying to 0:15:12.680 --> 0:15:16.800 regain power. In South Korea has a five year presidential system. 0:15:16.880 --> 0:15:20.840 One term you become a lane duck real quickly, and 0:15:21.320 --> 0:15:25.360 the opposition has been tasting blood. With President Un having 0:15:25.640 --> 0:15:29.160 twenty percent and below approval ratings, it was a surprise 0:15:29.240 --> 0:15:32.520 that he chose this tool at this time. At the 0:15:32.560 --> 0:15:36.600 same time, there are elements of it that warned us 0:15:36.760 --> 0:15:41.400 not taking it too alarmedly and have reacting with caution, 0:15:41.520 --> 0:15:43.640 as the US government has so far. 0:15:43.640 --> 0:15:45.520 Well, why is that the US government was certainly caught 0:15:45.520 --> 0:15:47.480 off guard? The White House was not notified ahead of 0:15:47.520 --> 0:15:50.720 time about this, but it sounds pretty alarmist. I mean, 0:15:50.760 --> 0:15:53.720 the idea of martiall rule in a democracy, that is 0:15:53.720 --> 0:15:56.320 certainly one of those things that I think people would say, 0:15:56.720 --> 0:15:58.480 you know, it'd be fair to respond with alarm there. 0:15:58.480 --> 0:15:59.960 Why should we be cautious about doing that? 0:16:01.120 --> 0:16:02.920 Well, yeah, I hate to draw parallels, but I mean, 0:16:02.920 --> 0:16:05.680 if you just look at the dynamics of US political system, 0:16:05.840 --> 0:16:10.280 you know, back around the first Trump administration or even today, 0:16:10.360 --> 0:16:15.720 you know, worries about mobilizing national guards and using military capabilities. 0:16:15.800 --> 0:16:18.840 I mean, it, unfortunately, is something that we've seen in 0:16:18.880 --> 0:16:23.040 other democracies throughout the world. I think the quickness. You know, 0:16:23.160 --> 0:16:27.000 first of all, President yun is a career prosecutor. He 0:16:27.120 --> 0:16:30.080 was very heavily involved in the impeachment that removed Pacinet 0:16:30.160 --> 0:16:33.880 from office, and so you know what he embarked on this, 0:16:34.560 --> 0:16:37.480 he does so from a position of understanding the constitution 0:16:38.240 --> 0:16:42.520 and probably understanding that has happened, it would be overturned 0:16:42.600 --> 0:16:45.560 or rejected within hours. And so the fact that the 0:16:45.640 --> 0:16:49.240 system worked so quickly to have the National Assembly come 0:16:49.280 --> 0:16:52.840 together and reject the declaration, and that it looks like, 0:16:53.040 --> 0:16:56.560 you know, the initial steps involved with martial law are 0:16:56.560 --> 0:16:59.120 being backed off. It is a time to now kind 0:16:59.120 --> 0:17:01.560 of focus on the morning after, as it were. 0:17:01.720 --> 0:17:05.360 Hey, I want to also bring into the conversation Rosalind Matheson, 0:17:05.400 --> 0:17:09.080 Bloomberg News News director of EMEA. Of course we're talking 0:17:09.080 --> 0:17:11.440 about Europe, the Mid East, in Africa. She's typically based 0:17:11.440 --> 0:17:13.480 in our London bureau, but lucky for us and we 0:17:13.560 --> 0:17:16.960 have been tapping into her big time that because she 0:17:17.040 --> 0:17:18.760 is here in New York and with all the news 0:17:18.760 --> 0:17:21.600 she's here in our New York studio, Raz we're listening 0:17:21.600 --> 0:17:25.600 to Sydney his view and giving us some context. How 0:17:25.600 --> 0:17:27.400 are you seeing about what's going in South Korea? Because 0:17:27.400 --> 0:17:28.840 I have to say, when we all walked in, we're like, 0:17:29.400 --> 0:17:31.280 what is going on? And how do we make sense 0:17:31.320 --> 0:17:31.560 of it? 0:17:31.640 --> 0:17:33.000 Everybody was shaking their heads. 0:17:33.040 --> 0:17:35.520 We were quite stunned to see this news and particularly 0:17:35.560 --> 0:17:38.480 you know, coming in that late night televised address just 0:17:38.520 --> 0:17:42.600 denouncing you know, emergency martial law and the words marshal 0:17:42.680 --> 0:17:45.359 law of course resonating you know, in a very tricky 0:17:45.480 --> 0:17:50.360 environment historically in South Korea. And it's interesting to see 0:17:50.359 --> 0:17:52.840 how quickly again parliament, they managed to get into parliament 0:17:52.840 --> 0:17:55.560 and they voted to overturn it. So the question is 0:17:55.600 --> 0:17:58.600 what was he trying to achieve with this and what 0:17:58.680 --> 0:18:02.159 does he do next? I mean, does he remain defiant 0:18:02.200 --> 0:18:06.520 in the face of parliament and trying marshal military support 0:18:07.359 --> 0:18:09.960 or does he accept you know, what people are saying 0:18:10.000 --> 0:18:13.280 here about his actions and does he resign or is 0:18:13.280 --> 0:18:15.359 he impeached at some point? I mean, it can't be 0:18:15.800 --> 0:18:18.280 necessarily a good outcome for him here. So does that 0:18:18.359 --> 0:18:21.440 plunge South Korean into a further period of political term 0:18:21.520 --> 0:18:23.439 or where you've got to maybe have elections, you've got 0:18:23.480 --> 0:18:25.920 to have a new administration. And what does that mean 0:18:26.000 --> 0:18:27.719 for stability in South Korea? 0:18:27.920 --> 0:18:31.480 Which we think that's North Korea we expects stuff to happen, 0:18:31.640 --> 0:18:32.320 not South Korea. 0:18:32.400 --> 0:18:34.200 Well, we'll talk about the North Korean angle in a second, 0:18:34.200 --> 0:18:36.439 but City, I want to get your thoughts on you know, 0:18:36.520 --> 0:18:40.560 this idea of an unpopular leader declaring martial law. Does 0:18:40.600 --> 0:18:44.240 that make him less popular? I mean, this doesn't necessarily, 0:18:44.440 --> 0:18:46.919 as an outsider, seem like something that would you know, 0:18:48.280 --> 0:18:50.840 engender him with a larger group of folks. 0:18:51.600 --> 0:18:54.399 Good point. Well, he did open his, you know, his 0:18:54.680 --> 0:18:58.080 announcement by stating that, you know, kind of using deep 0:18:58.119 --> 0:19:01.160 state like language, that there was no Korean agents throughout 0:19:01.160 --> 0:19:04.159 the US government, anti state agents that were out to 0:19:04.240 --> 0:19:07.680 undermine the very you know, foundations of the state of 0:19:07.720 --> 0:19:10.199 the Republic of Korea. So it seems like he was 0:19:10.240 --> 0:19:14.280 hoping to try to galvanize support from the right, his 0:19:14.359 --> 0:19:18.000 conservative base, and maybe even some in the middle who 0:19:18.080 --> 0:19:21.800 would be more concerned about what the opposition was successfully 0:19:21.880 --> 0:19:24.920 doing and building support to challenge the ruling party in 0:19:24.960 --> 0:19:29.720