WEBVTT - Surveillance: OPEC & Russia with UAE's Al-Mazrouei 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferroll and Lisa Abramowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.360 and of course, on the Bloomberg Terminal. The Churchill States 0:00:30.440 --> 0:00:34.440 was a British protectorate that became the United Arab Emirates 0:00:34.479 --> 0:00:37.600 and the families of the United Arab Emirates came together 0:00:38.040 --> 0:00:41.199 with the power of Abu Dhabi and their oil to 0:00:41.320 --> 0:00:44.559 control a large part of the market and culturally to 0:00:44.600 --> 0:00:48.000 be a huge part of the Arabian peninsula. So he'll 0:00:48.040 --> 0:00:51.239 Ben Mohammed al Missouri joins us right now. He is 0:00:51.440 --> 0:00:55.080 Energy Minister for the United Arab Emirates, and I'm honored 0:00:55.120 --> 0:00:58.400 to say from one of our most prestigious petroleum engineering 0:00:58.440 --> 0:01:02.600 schools the universe, you have Tulsa. He is hugely qualified 0:01:02.960 --> 0:01:06.679 to speak on his these matters. Ministers, thank you so 0:01:06.800 --> 0:01:10.320 much for joining Bloomberg Surveillance this morning. I'd like to 0:01:10.319 --> 0:01:15.280 know the power did ascendant United Arab Emirates has right 0:01:15.319 --> 0:01:20.920 now over Russia. Explained the dialogue explained the change in 0:01:20.959 --> 0:01:24.960 the relationship of you A with Russia in the last 0:01:25.000 --> 0:01:28.760 week's Well, it's great to be with you and to 0:01:29.000 --> 0:01:34.040 address your audiences. Um. First of all, you A, as 0:01:34.080 --> 0:01:38.440 you know, is a member of an alliance called Open Plus. 0:01:38.920 --> 0:01:44.479 That alliance since formed, have been doing a great job, 0:01:44.560 --> 0:01:48.520 in my view, balancing the market, balancing the supply and demand. 0:01:49.200 --> 0:01:54.080 And we we have a history within that alliance and 0:01:54.160 --> 0:01:58.640 we've been through wars. We've been member countries, been through wars, 0:01:59.080 --> 0:02:05.280 been through confort been through sanctions. Some of the members, 0:02:05.320 --> 0:02:09.040 as you know, we're on and Venezuela. But something we 0:02:09.120 --> 0:02:14.360 always do and that's almost a law in the way 0:02:14.400 --> 0:02:18.560 that we work. We have one objective only, which is 0:02:19.000 --> 0:02:24.720 trying to maintain the supply to the market and ensure 0:02:25.120 --> 0:02:30.400 that that supply is affordable. Nowadays when the new politics 0:02:30.760 --> 0:02:35.680 heads and we also the price is going higher, and 0:02:35.880 --> 0:02:41.400 we are increasing the production gradually according to a plan, 0:02:42.040 --> 0:02:49.600 but we cannot under any circumstances see a replacement for 0:02:49.720 --> 0:02:53.760 ten percent of the world production that's from oil gas 0:02:53.800 --> 0:02:58.600 as well. So I don't think practically if we bring 0:02:58.760 --> 0:03:03.080 politics into the organization we can help the consumers would 0:03:03.080 --> 0:03:06.480 start to help the consumers. Whatever you say that, sir, 0:03:06.639 --> 0:03:09.280 but very importantly, and this is your public service to 0:03:09.360 --> 0:03:14.680 desired family as well. Movebadalla and others within Abu Dhabi 0:03:14.760 --> 0:03:20.240 are considering their Russian businesses. Should the United Arab Emirates 0:03:20.320 --> 0:03:25.600 provide sanctions of some form, formal or informal to Mr 0:03:25.720 --> 0:03:29.360 Putin and Russia. Well, I'm not going to talk about 0:03:29.480 --> 0:03:32.800 the politics. I'm here to tell you about the market. 0:03:32.880 --> 0:03:36.680 I'm here to tell you what can we do to 0:03:36.920 --> 0:03:40.200 ensure that the consumers in the US and Europe and 0:03:40.320 --> 0:03:45.720 elsewhere are getting an affordable supply of hydrocarbon? And in 0:03:45.840 --> 0:03:48.920 order for us to do that, we have to use 0:03:49.520 --> 0:03:52.680 every battle that is available. If you if someone is 0:03:52.720 --> 0:03:56.320 asking us to let go of ten percent, then we 0:03:56.360 --> 0:03:59.280 are asking we're telling the consumers that we are going 0:03:59.360 --> 0:04:02.240 to increase the prices higher, and that is something we 0:04:02.280 --> 0:04:05.280 cannot be part of. We have to be we have 0:04:05.440 --> 0:04:09.480 to be wise in what we are asking for. Excuse me, minister, 0:04:09.720 --> 0:04:11.680 I am wondering you keep saying it's important to have 0:04:11.880 --> 0:04:17.120 affordable gas, affordable crude. What's affordable? What barrel? Is sort 0:04:17.120 --> 0:04:18.760 of the line in the sand when it comes to 0:04:18.800 --> 0:04:21.560 a price point for you, well, the price is a 0:04:21.600 --> 0:04:24.719 result and the balance between the supply and demand is 0:04:24.760 --> 0:04:27.520 that's that's where where we are worth argeting that we 0:04:27.600 --> 0:04:31.520 had the five years the five years average, but you know, 0:04:32.000 --> 0:04:36.560 we do our best and the world six months ago 0:04:37.440 --> 0:04:41.400 have convened in COPI and asked us and asked the 0:04:41.400 --> 0:04:47.240 the financial institutions to limit the the financing of new 0:04:47.560 --> 0:04:51.080 oil and gas projects and that and now six months 0:04:51.120 --> 0:04:54.719 after that they are asking some more. Oyal that does 0:04:54.760 --> 0:04:57.560 not go hand in hand. We need now to put 0:04:57.560 --> 0:05:00.280 a strategy and we need to come up with the 0:05:00.360 --> 0:05:06.840 resources to find a new new new battles. The loss 0:05:06.839 --> 0:05:10.080 in the group more than a million battle Minister, you 0:05:10.120 --> 0:05:13.080 raise such an interesting point about the idea that there's 0:05:13.080 --> 0:05:15.800 been a lack of investment which has caused a lack 0:05:15.839 --> 0:05:18.120 of production in this market, which is the reason why 0:05:18.120 --> 0:05:21.640 people say it's so tight. Given that backdrop is the 0:05:21.760 --> 0:05:24.520 level of the price at which there is demand destruction, 0:05:24.839 --> 0:05:27.960 that supply demand push and pull a lot higher than 0:05:27.960 --> 0:05:30.159 it's that it used to be for OPAC, in other words, 0:05:30.400 --> 0:05:33.240 is a hundred dollars a barrel much more sustainable over 0:05:33.320 --> 0:05:35.800 a longer term for you, based on the lack of 0:05:35.839 --> 0:05:39.320 production and a lack of investment. Well, we always look 0:05:39.360 --> 0:05:42.680 at the consumers and we all know that the current 0:05:42.720 --> 0:05:47.080 prices today are not comfortable to many countries and they 0:05:47.360 --> 0:05:49.800 they we need to get the prices to something that 0:05:49.920 --> 0:05:53.039 is reasonable. What is that price level? I think the 0:05:53.120 --> 0:05:56.200 market will dictate that. It's the balance between the supply 0:05:56.240 --> 0:05:59.520 and demand. So if we put more resources, we can 0:05:59.600 --> 0:06:03.640 bring more oil and we can sustain that oil for 0:06:03.800 --> 0:06:06.680 years to come. As you know, where the world is 0:06:06.720 --> 0:06:10.960 almost consuming a hundred million barrels a day every year, 0:06:11.279 --> 0:06:14.360 we lose eight millions of that and then his investment 0:06:14.720 --> 0:06:19.479 who's investing. Very limited countries are investing, or our afford 0:06:19.560 --> 0:06:23.440 to invest because we've been into a rollercoaster from seeing 0:06:23.800 --> 0:06:29.520 at twenty dollars oil to a hundred hundred plus today. 0:06:29.600 --> 0:06:35.599 So it is not encouraging investments. And many countries and 0:06:35.960 --> 0:06:39.520 shareholders have been to have been telling the companies, the 0:06:39.560 --> 0:06:44.279 IOSS who are reliable partners, and the shale oil producers 0:06:44.320 --> 0:06:47.000 as well, we're not going to give you the resources 0:06:47.160 --> 0:06:51.159 to to grow your production. That is troublesome when you 0:06:51.200 --> 0:06:54.680 are hit with a geo political conflict like we are 0:06:54.760 --> 0:06:57.440 having today. So what we need to do we need 0:06:57.480 --> 0:07:01.000 to get our acts together. You will do whatever we 0:07:01.040 --> 0:07:06.080 can as an open plus, but we need the financial markets. 0:07:06.400 --> 0:07:10.840 We need the lenders to start easing on financing oil 0:07:10.880 --> 0:07:13.720 and gas project so we can bring more battles in 0:07:13.760 --> 0:07:17.200 the future. Minister, if you're taking this so seriously, why 0:07:17.280 --> 0:07:22.320 was the OPEC plus meeting this month thirteen minutes long? Well, 0:07:22.840 --> 0:07:26.120 we we we are meeting in a few days and 0:07:26.160 --> 0:07:29.600 we are looking at the market. That was question. Just 0:07:29.640 --> 0:07:31.640 to go back to the meeting early this month, it 0:07:31.760 --> 0:07:35.400 was thirteen minutes long. This is one of the biggest 0:07:35.480 --> 0:07:37.720 energy crisis we've seen it a long long time, and 0:07:38.080 --> 0:07:42.320 you had a gathering that lasted thirteen minutes. Why should 0:07:42.320 --> 0:07:45.480 we take what you're doing seriously if you only meet 0:07:45.560 --> 0:07:49.760 for thirteen minutes. Well, there, when we meet, we look, well, 0:07:50.000 --> 0:07:53.720 we look at the nons and NaNs and uh and 0:07:55.000 --> 0:07:58.720 there are lots of unknowns at that meeting, including how 0:07:58.800 --> 0:08:02.800 many battles are we're going to miss. And another thing 0:08:03.040 --> 0:08:07.680 is is the deal closed with Iran, which is a 0:08:07.840 --> 0:08:13.040 major partner and producer in in into the alliance, and 0:08:13.080 --> 0:08:16.520 how many battles of the stone capacity going to come 0:08:16.560 --> 0:08:19.480 to the market. All of these things are unknown to us, 0:08:19.480 --> 0:08:23.080 so it's very difficult to come and and make other 0:08:23.200 --> 0:08:26.160 than the plans. So we increased the four hundred thousand 0:08:26.520 --> 0:08:29.880 and that's what we have agreed to do earlier. Minister, 0:08:30.040 --> 0:08:33.439 I am fascinated by the view east from Dubai and 0:08:33.600 --> 0:08:37.480 Abu Dhabt India. With all of your remit for the 0:08:37.559 --> 0:08:42.240 Zayd family, can you please explain the India response to 0:08:42.320 --> 0:08:47.000 this war in Ukraine. There's such an interesting relationship between 0:08:47.000 --> 0:08:50.600 the United Arab Emirates in the India. Please explain to 0:08:50.760 --> 0:08:55.400 us the India approach that you see. Well, many many 0:08:55.440 --> 0:09:01.480 countries have have purchased from there, looked at at opportunities 0:09:02.000 --> 0:09:06.439 and some have seen a discount and acted on it. 0:09:06.600 --> 0:09:11.000 And I think I think that's the the the southern 0:09:11.080 --> 0:09:14.439 right decisions of these countries. We don't have an oil 0:09:14.440 --> 0:09:19.120 and gas sanctions or Russians on on Russian oil and gas, 0:09:19.160 --> 0:09:23.360 so I think many countries have elected to go and 0:09:23.360 --> 0:09:27.320 and purchase because there is there has been a discount, 0:09:27.360 --> 0:09:29.640 and I think that's that's what we saw in the 0:09:29.640 --> 0:09:33.160 news if if if that's what you mean, and many 0:09:33.200 --> 0:09:36.560 others are going to do the same. So thinking of 0:09:36.720 --> 0:09:39.880 squeezing barrels outside the market. When a discount is there 0:09:40.400 --> 0:09:44.160 is just illusional. In my view, countries are going to 0:09:44.240 --> 0:09:50.400 go and buy the cheaper available crude effort fits their refineries. Minister, 0:09:50.480 --> 0:09:52.439 we have to leave it there. Thank you very much 0:09:52.440 --> 0:09:54.000 for betting with us this morning. The u A a 0:09:54.200 --> 0:09:56.720 energy minister on some of the big issues in the 0:09:56.800 --> 0:10:05.640 energy markets right now. We now adapt with David Malpass. 0:10:05.760 --> 0:10:08.160 He is President of the World Bank, and I know 0:10:08.280 --> 0:10:10.640 he's laughing at me because he knows I really want 0:10:10.679 --> 0:10:13.760 to quiz him on the end of valuation dynamics, but 0:10:13.880 --> 0:10:17.960 that would be inappropriate this morning with the President of 0:10:18.080 --> 0:10:21.400 the World Bank, Mr Malpass, thank you for joining. I 0:10:21.400 --> 0:10:23.800 want to cut to the chase, David, with wheat down 0:10:24.920 --> 0:10:28.720 from the panic peaks. If you shift at the World 0:10:28.760 --> 0:10:33.280 Bank to aid for whatever ends up in Ukraine, how 0:10:33.320 --> 0:10:39.280 will you affect that process? Hi? Hi Tom. It's a 0:10:39.320 --> 0:10:42.880 worldwide problem. So that with the prospect of wheat shortages 0:10:42.960 --> 0:10:47.440 drove up the price, but the markets are really adjusting some. 0:10:48.200 --> 0:10:50.760 The World Bank puts a lot of money into food aid, 0:10:50.840 --> 0:10:53.880 which is one of the crises facing poor people. We 0:10:53.880 --> 0:10:58.120 we do seventeen billion dollars per year UH in various 0:10:58.160 --> 0:11:01.280 forms of food support. One of the critical things for 0:11:01.400 --> 0:11:04.760 people UH in poor countries is that there they have 0:11:05.080 --> 0:11:10.319 targeted support meaning UH not subsidies that that support everyone 0:11:10.600 --> 0:11:13.640 uh and are costly, but can you target it towards 0:11:13.679 --> 0:11:16.240 the people that need it the most. As we look 0:11:16.280 --> 0:11:19.800 at Ukraine, then we're we put in a lot of 0:11:19.800 --> 0:11:22.600 money already. We were able to disperse in the in 0:11:22.720 --> 0:11:26.000 recent weeks over half a billion dollars, which is very 0:11:26.080 --> 0:11:29.480 fast aid that was much needed by the government at 0:11:29.480 --> 0:11:32.199 the here at the at the beginning of the or 0:11:32.280 --> 0:11:36.160 early in the in in the war. And I'm hopeful 0:11:36.200 --> 0:11:41.040 the headlines that you were you were just giving sound optimistic. Thanks, David, 0:11:41.120 --> 0:11:44.400 I am absolutely fascinated. I say this with great respect 0:11:44.440 --> 0:11:49.439 for the institution. How the World Bank treats Russia moments 0:11:49.440 --> 0:11:53.280 ago Johnson and Johnson with further sanctions as many of you, 0:11:53.360 --> 0:11:56.200 I'm sure I heard in the Bloomberg World Bloomberg making 0:11:56.840 --> 0:11:59.600 decisions in the last forty eight hours on the use 0:11:59.600 --> 0:12:03.160 of our terminal within Russia. David mel Pass, how does 0:12:03.200 --> 0:12:10.200 the World Bank address as sanctioned Russia around your usual mandates. 0:12:12.240 --> 0:12:15.640 Russia is a shareholder of the World Bank and participates 0:12:15.640 --> 0:12:18.520 in board discussions, but we stopped lending to them in 0:12:18.640 --> 0:12:24.760 teen after the Crimea invasion and we've suspended all operations 0:12:24.800 --> 0:12:29.280 and programs UH in Russia and in Belarus. UH. In 0:12:29.440 --> 0:12:33.280 the current environment are people UM Many people have come 0:12:33.360 --> 0:12:36.400 out of Russia UH, and so that's not so much 0:12:36.400 --> 0:12:40.000 an issue for us. The bigger issue is building the 0:12:40.120 --> 0:12:44.199 response for not only Ukraine but also people the refugees 0:12:44.240 --> 0:12:47.160 in the Eastern Europe. How do you build a response, David, 0:12:47.240 --> 0:12:49.800 when you do have these constraints on prices, when you 0:12:49.840 --> 0:12:53.840 do see to Tom's point, we still is incredibly elevated. 0:12:53.880 --> 0:12:56.080 You have seen some of the farming of fields in 0:12:56.240 --> 0:13:00.040 Ukraine decimated. Farmers can't get out there. How much is 0:12:59.840 --> 0:13:03.199 this going to disrupt frankly, your ability to help and 0:13:03.280 --> 0:13:07.079 what you think should be priced into the market. The 0:13:08.520 --> 0:13:14.000 critical is that supply increase outside of of Russia and 0:13:14.080 --> 0:13:17.920 even and of Ukraine. Ukraine may have some comeback in crops, 0:13:17.960 --> 0:13:20.679 but they need to need to have fertilizer and seeds 0:13:20.679 --> 0:13:24.640 and meet the planting cycle. So critical variable for the 0:13:24.679 --> 0:13:30.520 world is how responsive is supply elsewhere. That gets into UH, 0:13:30.559 --> 0:13:34.040 the the UH, the subsidies that are being done that 0:13:34.200 --> 0:13:38.920 sometimes stop people farmers from from producing and increasing their output. 0:13:39.240 --> 0:13:42.240 So that's one. And then as far as the refugees, 0:13:42.320 --> 0:13:46.360 we have a great deal of contact with the other 0:13:46.480 --> 0:13:49.880 agencies that along with the World Bank are responding to 0:13:50.160 --> 0:13:54.800 two refugees in Poland, in Moldova, UH, in Romania, UM, 0:13:54.960 --> 0:13:57.439 and we have programs in each of those that are 0:13:57.520 --> 0:14:02.960 directly UH engaging with the refugees and helping the European 0:14:03.040 --> 0:14:06.920 agencies and the national agencies that are helping those people. 0:14:07.400 --> 0:14:10.000 We hope that your efforts are successful. David, we were 0:14:10.040 --> 0:14:13.520 talking about what this changes if this ceasefire does come 0:14:13.520 --> 0:14:17.000 to fruition, if this is real coming to the table 0:14:17.120 --> 0:14:20.280 on both sides with Ukraine and Russia. How much does 0:14:20.320 --> 0:14:23.680 that change your outlook? How much of an improvement versus 0:14:23.720 --> 0:14:26.320 just removing some of the worst tail risks does this 0:14:26.400 --> 0:14:31.320 present for you? Well, I was watching your market indicators 0:14:31.320 --> 0:14:34.320 this morning, so you were showing the decline in oil prices. 0:14:34.400 --> 0:14:38.160 That helps. I was just in Senegal and Morocco. One 0:14:38.160 --> 0:14:43.600 of the burdens on countries that are that are facing UH, 0:14:43.640 --> 0:14:46.280 that are facing fragility in the region. You know, in 0:14:46.360 --> 0:14:50.680 North Africa, big problem is the weapons inflow coming from 0:14:50.720 --> 0:14:56.320 Europe through Libya into North Africa into Islamic Uh fundamentalism 0:14:56.360 --> 0:14:59.800 that even this morning there was a bombing in Nigeria. 0:15:00.160 --> 0:15:03.200 These are big problems. And on top of that, then 0:15:03.280 --> 0:15:06.480 the price of diesel fuel goes up and of of 0:15:06.560 --> 0:15:10.560 wheat goes up. So the the best response from the 0:15:10.600 --> 0:15:15.880 world can be more production and market access. For Senegal, 0:15:16.040 --> 0:15:18.920 the most important thing in the world really is if 0:15:18.960 --> 0:15:21.160 they were able to where if they were allowed to 0:15:21.520 --> 0:15:24.600 to ship peanuts to the United States right now their 0:15:24.600 --> 0:15:29.320 biggest customers China advised some four hundred thousand tons per year, 0:15:29.520 --> 0:15:33.080 and uh, the the US not because we have so 0:15:33.200 --> 0:15:36.960 many barriers. Also, you know, the ethanol subsidies in the 0:15:37.080 --> 0:15:43.840 US are so punishingly expensive that it distorts common agricultural 0:15:43.960 --> 0:15:46.480 policy in Europe. I just want to make the point 0:15:46.560 --> 0:15:49.360 that there's a lot that the advanced economies can do 0:15:49.480 --> 0:15:53.520 to allow people to sell to those markets and ethanol. 0:15:53.560 --> 0:15:56.120 There there's a David mal Pass we know, we love 0:15:56.160 --> 0:15:58.560 and know from another time in place Mr male Pass. 0:15:58.640 --> 0:16:02.680 One final uh comment, if you will, you have a 0:16:02.720 --> 0:16:07.960 staff that is world class, including Dr Pangestu from Indonesia. 0:16:08.040 --> 0:16:12.920 Marie al capangestu is she speaks of resiliency and food. 0:16:13.640 --> 0:16:18.080 How do you bring food resiliency to the planting season 0:16:18.560 --> 0:16:26.120 of Ukraine. Uh So fertilizer from western Europe would help. 0:16:26.200 --> 0:16:29.000 You know they've been cut off from Belarus. But I 0:16:29.040 --> 0:16:32.400 think cessation of the of the violence is the starting 0:16:32.440 --> 0:16:36.800 point the You know, farmers are resilient by nature. They work, 0:16:37.160 --> 0:16:39.800 they work their tails off and they grow a lot 0:16:39.920 --> 0:16:43.600 for the world, Ukrainian farmers included. So you have to 0:16:43.760 --> 0:16:48.560 stop the war, uh and then quickly provide them enough 0:16:48.600 --> 0:16:53.440 funding for for for seeds and for the fertilizer. Uh 0:16:53.720 --> 0:16:57.160 that I think those steps can't could still be taken 0:16:57.440 --> 0:17:01.600 here in March mon pass thank you not evel conversation 0:17:01.680 --> 0:17:03.560 set and a Tommy wants to thanks for reacting to 0:17:03.560 --> 0:17:05.560 that breaking news to have amount pass that the president 0:17:05.800 --> 0:17:14.080 of the World Bank. There are moments John and Lisa 0:17:14.440 --> 0:17:17.399 of privilege at Bloomberg, and one of them was a 0:17:17.440 --> 0:17:20.760 good long decade or more so ago in a small 0:17:20.880 --> 0:17:25.000 room with Thomas Shelling, the giant of thinking about war, 0:17:25.119 --> 0:17:29.120 the Nobel Laureate, where he sat and I sat mesmerized. 0:17:29.240 --> 0:17:34.560 Is Professor Shelling spoke about how you end wars. Michael 0:17:34.600 --> 0:17:37.600 Kimidge and Leona Fix have taken this to a new 0:17:37.760 --> 0:17:41.840 wonderful extreme in Foreign Affairs magazine. Leona Fixes, with the 0:17:41.920 --> 0:17:45.080 Corbel Foundation in Berlin, were honored that she could join 0:17:45.200 --> 0:17:48.520 us this morning. Leon. I love how you frame if 0:17:48.640 --> 0:17:53.359 Russia wins, if Russia loses. Professor Shelling would suggest, the 0:17:53.400 --> 0:17:56.760 only way to end the war is exhaustion. Do we 0:17:56.840 --> 0:18:03.439 need an exhausted putin? What we certainly need is we 0:18:03.520 --> 0:18:06.679 need a sustainable piece and not a provisional piece. And 0:18:06.720 --> 0:18:10.199 despite the optimistic news of today, this will be the 0:18:10.280 --> 0:18:14.560 main challenge for Ukraine moving ahead in negotiations. So basically, 0:18:14.640 --> 0:18:18.159 how to prevent that any negotiated agreement right now with 0:18:18.280 --> 0:18:23.560 Russia will only leave Ukraine weaker, especially in military terms, 0:18:23.680 --> 0:18:27.280 and could encourage Russia to come back in a couple 0:18:27.320 --> 0:18:29.639 of months or a a couple of years to finish the 0:18:29.680 --> 0:18:33.840 business they've started. And that's the crucial, the crucial point. 0:18:33.880 --> 0:18:38.119 How to prevent an unjust piece, as sit Settle said 0:18:38.600 --> 0:18:44.080 um and prevent also a continuation of a very cool 0:18:44.440 --> 0:18:47.879 war that we've seen so far. If Russia wins or 0:18:47.960 --> 0:18:52.880 Russia loses, is the equal outcome a partition of Ukraine. 0:18:55.920 --> 0:18:58.680 I think the challenge now is that we don't see 0:18:58.720 --> 0:19:02.440 this clear cut options anymore. So Russia is too weak 0:19:03.160 --> 0:19:06.440 to win, but at the same time they are too 0:19:06.480 --> 0:19:10.440 strong to loose, and that makes the situation right now 0:19:10.640 --> 0:19:14.960 so difficult to navigate UM and the Ukrainians have put 0:19:15.000 --> 0:19:17.800 up a formidable resistance as we've seen the last weeks, 0:19:17.840 --> 0:19:21.680 but again they are also too weak to finally, UM 0:19:22.440 --> 0:19:26.280 make Russia withdraw from all parts of Ukraine. So the 0:19:26.359 --> 0:19:30.040 question of territorial concessions that you just raised will be 0:19:30.040 --> 0:19:33.560 a crucial one in negotiations. And for President Zelenski, who 0:19:33.560 --> 0:19:37.239 has been able to gather Ukrainians behind his brave and 0:19:37.280 --> 0:19:41.880 courageous stands UM, he has a little room for compromise 0:19:42.000 --> 0:19:46.000 there because there's no appetite whatsoever to give up on 0:19:46.200 --> 0:19:50.040 Crimea on other parts of Ukraine. But also from the 0:19:50.080 --> 0:19:55.520 Russian side, they will want to leave negotiations with successes 0:19:55.600 --> 0:19:57.919 that they can sell at home, and the minimum success 0:19:57.960 --> 0:20:02.159 from a Russian perspective would be to have liberated quote 0:20:02.240 --> 0:20:06.159 quote um di don bust in eastern Ukraine. Leanna, so 0:20:06.160 --> 0:20:08.800 that we can understand the points of leverage here and 0:20:08.920 --> 0:20:12.080 what exactly brought both sides to the table at the 0:20:12.080 --> 0:20:14.639 place where they are now. Was it the sanctions or 0:20:14.760 --> 0:20:17.760 was it really the resistance that has brought Vladimir Putin 0:20:17.800 --> 0:20:23.040 to a more compromising stance. Absolutely both of it, and 0:20:23.040 --> 0:20:26.679 I want to underline this, without Ukrainian Ukraine's resistance, we 0:20:26.680 --> 0:20:30.120 would not have seen this incredible sanctions package, also because 0:20:30.119 --> 0:20:34.000 there was such an international outcry in the European public, 0:20:34.040 --> 0:20:37.840 in the US public. So what helps Ukraine is to 0:20:37.920 --> 0:20:43.399 strengthen its negotiation position by weakening Russia's position and putting 0:20:43.480 --> 0:20:49.080 further pressure on Russia to not put out maximalist positions 0:20:49.080 --> 0:20:52.800 in negotiations with Ukraine, but to be open for compromises. 0:20:53.000 --> 0:20:55.600 So this is the moment where we have to keep 0:20:55.680 --> 0:21:00.000 up pressure on Russia, and only if Ukraine asks us 0:21:00.160 --> 0:21:05.040 to lose some of the pressure to think about sanctions, 0:21:05.200 --> 0:21:08.320 then we can consider these options. Our main aim should 0:21:08.320 --> 0:21:13.000 be how can we help Ukraine to negotiate a sustainable piece, 0:21:13.320 --> 0:21:16.120 and that should be the goal of all Western policy 0:21:16.160 --> 0:21:18.600 at the moment, Leona. Then it goes to this question 0:21:18.880 --> 0:21:21.600 of what the West response should be in order to 0:21:21.600 --> 0:21:25.119 get Vladimir Putin to continue negotiating and to continue to 0:21:25.160 --> 0:21:29.160 make good how much will there be discussions about loosening 0:21:29.240 --> 0:21:31.920 some of the sanctions in response to a certain period 0:21:31.960 --> 0:21:34.800 of ceasefire. Is that feasible or does that seem wrong 0:21:34.880 --> 0:21:37.600 considering the fact that we're still talking about war crimes. 0:21:40.840 --> 0:21:43.520 This is a discussion that we might have at some point, 0:21:43.560 --> 0:21:45.919 but this is certainly not the discussion that we should 0:21:45.920 --> 0:21:48.600 have right now. We've seen in the past that Russian 0:21:48.760 --> 0:21:52.080 words have always very often not being followed up by 0:21:52.119 --> 0:21:58.560 rushington deeds. So until we really see some credible Russian deeds, 0:21:58.600 --> 0:22:03.200 some credible withdraw, some signals that Russia is seriously willing 0:22:03.520 --> 0:22:06.800 to make concessions and to negotiate, we should not waste 0:22:06.840 --> 0:22:10.159 the issue of sanctions yet. Only if we see that 0:22:10.200 --> 0:22:12.840 there's a credible path ahead and Ukraine asked us to 0:22:12.880 --> 0:22:16.880 do so, then we should again put our efforts into 0:22:16.920 --> 0:22:19.919 the service of Ukraine, even if this might be a 0:22:19.960 --> 0:22:23.399 tough decision to make. As a broader strategic goal is 0:22:23.400 --> 0:22:28.040 certainly to weaken Russia in general, to prevent that Russia 0:22:28.160 --> 0:22:33.720 has further ambitions towards you pen security. But at the moment, 0:22:33.760 --> 0:22:36.560 it really is about keeping up the pressure to help 0:22:36.680 --> 0:22:40.840 Ukraine Leona fix We started with Thomas Shelling, and of 0:22:40.880 --> 0:22:44.800 course he defined our study of deterrence in nuclear threat 0:22:45.800 --> 0:22:53.439 is putin a nuclear threat. He is certainly willing to 0:22:53.760 --> 0:22:58.119 use nuclear coersion as an instrument. Um he has a 0:22:58.160 --> 0:23:02.080 lot many more conventional means at his disposal before he 0:23:02.119 --> 0:23:05.760 would actually consider the nuclear option. We've learned from the 0:23:05.800 --> 0:23:08.440 past that we should never say never when it comes 0:23:08.480 --> 0:23:12.439 to Putine and to Russia. But again this is something 0:23:12.480 --> 0:23:16.040 that at the moment he uses to curse the West 0:23:16.400 --> 0:23:20.280 to deter the West from further support for Ukraine, and 0:23:20.359 --> 0:23:23.640 that is something where the West should not be intimidated 0:23:23.640 --> 0:23:27.280 because especially military support for Ukraine, even if there is 0:23:27.320 --> 0:23:32.000 a negotiated outcome, will be incredibly important again because Ukraine 0:23:32.000 --> 0:23:36.119 should not leave these negotiations weaker than they've entered it 0:23:36.480 --> 0:23:39.040 and be at risk of another Russian aggression in a 0:23:39.080 --> 0:23:44.119 couple of months or or years. Perhaps so not being intimidated, 0:23:44.200 --> 0:23:47.240 but at the same time being cool headed as the 0:23:47.359 --> 0:23:50.119 US President has been when he did not raise the 0:23:50.160 --> 0:23:53.639 alert levels of US nuclear forces. That is at the moment, 0:23:53.720 --> 0:23:57.640 the right strategy, but obviously not to take off anything 0:23:57.960 --> 0:24:01.080 from the list because the Russian press that has proved 0:24:01.119 --> 0:24:04.679 in the past to do, um to do things that 0:24:04.760 --> 0:24:07.639 we've not expected him to do. Leanna Fix thank you 0:24:07.640 --> 0:24:16.399 with the Coba Foundation and fixed income on the Mystery. 0:24:16.480 --> 0:24:20.440 Serradorajapa joins us now with Society General, where they've got 0:24:20.480 --> 0:24:25.040 just terrific dynamic analysis. Sobrato, the dynamics of equities is simple, 0:24:25.400 --> 0:24:28.119 down we go a vix of thirty six, boom, up 0:24:28.200 --> 0:24:31.600 we go with a huge growth rally. Is there any 0:24:31.640 --> 0:24:36.679 presumption of price down in fixed income and the idea 0:24:36.760 --> 0:24:39.200 that we get a hall mary of lower yield and 0:24:39.440 --> 0:24:43.879 higher bond prices. Um. I think we're starting to reach 0:24:43.960 --> 0:24:48.120 some key resistance points. At two fifteen tents, for instance, 0:24:48.640 --> 0:24:51.000 is going to be a level that I'm going to 0:24:51.040 --> 0:24:53.040 be watching to see if tenny years can actually break 0:24:53.080 --> 0:24:56.119 through that level. But to me, really all the focuses 0:24:56.200 --> 0:24:57.920 on the curve, as you guys have been discussing them 0:24:57.920 --> 0:24:59.320 in the two times part of the curve is very 0:24:59.400 --> 0:25:01.600 very close to voting. It could actually invert by the 0:25:01.680 --> 0:25:04.040 end of this this week. I was thinking you could 0:25:04.200 --> 0:25:06.720 invert in the first half. It looks like it's gonna 0:25:06.760 --> 0:25:09.240 happen a lot sooner. So that's really where the focus 0:25:09.280 --> 0:25:12.280 is right now. The nuance to pros and the derivative 0:25:12.320 --> 0:25:16.720 expertise of society general is the idea of a flat 0:25:16.880 --> 0:25:23.320 curve saying yield twos intense or a true inversion or 0:25:23.359 --> 0:25:28.600 a depth of inversion. Do you predict a certain negative 0:25:28.640 --> 0:25:33.280 amount which gives us that depth of inversion which signals recession. 0:25:35.000 --> 0:25:36.560 So I don't think that there's any sort of a 0:25:36.640 --> 0:25:40.439 magic number that we're watching. What typically tends to happen 0:25:40.600 --> 0:25:44.359 is when the curve gets flat or inverted, you tend 0:25:44.400 --> 0:25:48.040 to see that in about a year's time or years lag, 0:25:48.080 --> 0:25:51.080 I should say, you start seeing a meaningful store around 0:25:51.119 --> 0:25:54.919 in growth. And so you know, the the inversion starts, 0:25:55.000 --> 0:25:56.679 you know, first in the back of the curve typically 0:25:56.720 --> 0:25:59.280 and then as we progress it starts moving towards the 0:25:59.320 --> 0:26:01.080 front of the curve. Now you see the two stands 0:26:01.080 --> 0:26:03.480 part of the curve chare Powell is looking at the 0:26:03.520 --> 0:26:05.640 three montenure part of the of the curve and saying 0:26:05.640 --> 0:26:07.400 that part of the curve is not avert, so we're 0:26:07.400 --> 0:26:09.760 not concerned. But the two stands part of the curve 0:26:09.840 --> 0:26:11.840 is saying that the tent that the three month part 0:26:11.840 --> 0:26:14.000 of the curve is going to start. Three month rates 0:26:14.000 --> 0:26:16.560