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Speaker 2: We're going to start with a quick good view here
Speaker 2: to get to June.
Speaker 3: Thirtieth onn On for the next six months from ing.
Speaker 3: Anikatrian joined US Global out of Private Banking and Wealth
Speaker 3: with their workout of the London School of Economics. Anika,
Speaker 3: have you written a midiar review or do you in
Speaker 3: the Netherlands have to rewrite it given the news.
Speaker 4: Flow a midiar review? What you mean by a midia review?
Speaker 2: In America?
Speaker 3: Everybody in banking has to write a June thirty twelve.
Speaker 2: Oh it is dead July fifteenth. That's the way it ruled.
Speaker 2: If you've written a minsiorry reviewer, are.
Speaker 3: You people smarter than this and you don't even do
Speaker 3: a midgir review, Well.
Speaker 4: We're not doing a long memo like that. No, we're fortunates.
Speaker 5: I would say, son, what's the conversation you're having with
Speaker 5: your clients these days? I mean you know, there's you know,
Speaker 5: the uncertainty surrounding the geopolitics over in Iran, not to
Speaker 5: mention Ukraine. What are your conversations like with your clients.
Speaker 4: Yeah, I think it's I mean, it's a sad it's
Speaker 4: a sad thing, I would say, because of all the
Speaker 4: human sort of tragedies going on around the world. But
Speaker 4: it feels like volatility is becoming increasingly normalized. And that's
Speaker 4: exactly what we see with our conversation with clients. And
Speaker 4: I mean practically you see it in markets, but we
Speaker 4: see it in parallel and clients' behavior. So you know,
Speaker 4: post a COVID you saw a market reaction minus thirty percent,
Speaker 4: post Ukraine minus twenty, post liberation Day minus fifteen, and
Speaker 4: post the recent Middle Eastern conflict minus ten. So you
Speaker 4: see that clients are just increasingly resilient and steadfast with
Speaker 4: what they're doing, why they're doing it, and sticking to convictions.
Speaker 5: So what is the conviction. One of the trades that
Speaker 5: we saw when you know, the teriffs were initially put
Speaker 5: out last year was some asset flows out of the
Speaker 5: US into other parts of the world, including in big
Speaker 5: way Europe. Is that still the sentiment out there or
Speaker 5: is that reversed a little bit in your mind.
Speaker 4: Well, it's really interesting. So I think two things. First
Speaker 4: of all, indeed, that that happened, and I think Europeans
Speaker 4: were very excited because it's been a long time coming.
Speaker 4: We've been talking about systematic valuation mismatches between Europe, US, etc.
Speaker 4: But then something happened. And what happened was, of course
Speaker 4: we've had this amazing earnings bonanza and that's especially driven
Speaker 4: by the US US companies, US equities again year today,
Speaker 4: it's been an amazing quarterly earning season, and I think
Speaker 4: that is just reforged the notion that European companies are
Speaker 4: just not able to grow at the speed of US companies.
Speaker 4: So I mean twenty percent earnings growth for US equities
Speaker 4: this year is expected ten max fifteen for Europe. So
Speaker 4: I think that makes things tricky. On the other hand,
Speaker 4: what's interesting if you talk about Europeans and how Europeans
Speaker 4: are deploying their capital. Number one, we're seeing a lot
Speaker 4: more Europeans start to actually invest, and this is a
Speaker 4: really important thing. And number two, you do see quite
Speaker 4: a home bias. You do see that Europeans like to
Speaker 4: buy europe We do notice this also this year.
Speaker 3: I think this is a brilliant, brilliant statement. And in America,
Speaker 3: our understanding is that Europe believes in American technology, Europe
Speaker 3: believes in American initiative, innovation and the rest.
Speaker 2: What's the first derivative of that right now?
Speaker 3: Is Europe leaning into America in twenty twenty seven?
Speaker 4: I think Europe. I think there's two things. First of all,
Speaker 4: we've waited for a long time for the continent of
Speaker 4: Europe to basically lean I call it leaning in into capitalism, right,
Speaker 4: really putting capital to work. We have trillions lying in deposits,
Speaker 4: and the US versus Europe is a very different story.
Speaker 4: Right The average European household has less than a third
Speaker 4: of the wealth invested, the average US household more than half.
Speaker 4: So number one, you're seeing that Europeans are really starting
Speaker 4: to invest. We don't have the four oh one K
Speaker 4: system that you have in the US, so these are
Speaker 4: deliberate choices that are being increasingly made, also by younger populations,
Speaker 4: which is great. The feeling towards the US from Europe
Speaker 4: is talking about earnings growth. I think what's happening is
Speaker 4: we're in a world where you know, we used to
Speaker 4: be very demand driven in the last decade, and I
Speaker 4: think what's happening now supply is the new demand, right.
Speaker 4: So all these enormous supply constraints, the need for computes,
Speaker 4: the need for data set towers, etc. All the AI
Speaker 4: technology you see, there are just these US champions and
Speaker 4: Europe is just keen to get involved and keen to
Speaker 4: deploy capital in that way. So I think Europeans are
Speaker 4: very pro US constructive on growth that comes out of
Speaker 4: US companies, but they don't want to neglect their own continents.
Speaker 3: And again one final question, I want to dive back
Speaker 3: to the economic history of the London School of economics.
Speaker 2: The model is a war ends.
Speaker 3: And there's like celebration and all that, as there should
Speaker 3: be with any ending war, and then there's a vector
Speaker 3: of disinflation and at times outright deflation.
Speaker 2: Should we expect given the headlines that with an end
Speaker 2: of this Middle War in Iran within the Eastern Mediterranean,
Speaker 2: that we're going to be surprised by some form of
Speaker 2: tone of disinflation.
Speaker 4: You know, it's interesting because we've indeed been walking a
Speaker 4: disinflation path. Then this conflict spiked up pricing, etc. We've
Speaker 4: even seen the ECB have to just rates in a response.
Speaker 4: But indeed, you know, if things are settling down, which
Speaker 4: they seem to be, that can bring us back to
Speaker 4: the path. What is interesting though, AI, which we I
Speaker 4: think we all believe will be a disinflationary force, it
Speaker 4: does feel like it's going to be inflationary before deflationary.
Speaker 4: And back to what I was saying earlier, there is
Speaker 4: a radical issue when it concerns supply shortages, shortage of power,
Speaker 4: shortage of compute, shortage of labor, you know in a
Speaker 4: less of a globalized labor mobility world, etc. And this
Speaker 4: supply shortage I do still think has an inflationary edge
Speaker 4: to it.
Speaker 3: And you can thank you so much, really really appreciate it.
Speaker 3: This morning with IG and this special edition of Bloomberg
Speaker 3: Surveillance from Queen Victoria Street in London.
Speaker 2: To stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
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Speaker 3: We continue to be fortunate with Janet Henry, global chief
Speaker 3: Economist at HSBC and truly a wonderful student of the
Speaker 3: linkage of the United States with a continent.
Speaker 2: In all of these events.
Speaker 3: Jennet, you've got to rewrite your global economics overview unfinished Business,
Speaker 3: get James Palmerroy to work. How do you rewrite the
Speaker 3: HSBC midyear review.
Speaker 6: Well, like a lot of central banks, Tom, we have
Speaker 6: been thinking about the world with different scenarios, and for
Speaker 6: our base case scenario, i'd say we actually have a
Speaker 6: higher degree of confidence than we did just just a
Speaker 6: month ago because we've been working on the basis that
Speaker 6: the Strait would start to reopen in the course of June.
Speaker 6: We were getting nervous that that might not happen, that
Speaker 6: we would be in our bad or our uglier scenarios. So, yes,
Speaker 6: we still talk about scenarios, but the news could have
Speaker 6: could have been a lot worse. There's still a love
Speaker 6: that can go wrong, But at least we can look
Speaker 6: towards some kind of gradual reopening at the moment during
Speaker 6: this sixty day cease fire, and hope that during that
Speaker 6: time some progress has made towards some kind.
Speaker 5: Of a deal.
Speaker 6: So we'll still be fallout from it. But yes, we're
Speaker 6: still in a scenario overlay, but a little bit more
Speaker 6: confident on that.
Speaker 3: What's amazing about this part. I think we're staggering to
Speaker 3: day fifty nine, the first day of the sixty day ceasefire.
Speaker 2: Yes, and the news has changed three times.
Speaker 5: It has changed three times here. I'm not sure where
Speaker 5: we are, but so Jennet, given you know some of
Speaker 5: the crosswinds that Tom highlights here, how are central banks reacting?
Speaker 5: We heard from our Feeder Reserve on our new feederies
Speaker 5: chief this week, but it seems like they're staying put,
Speaker 5: but they might be thinking about raising rates at some point.
Speaker 5: How do you see that?
Speaker 6: I think that's absolutely fair. You know, if we go
Speaker 6: back to even January of this year, or even late
Speaker 6: last year, we certainly never expected the FED to cut again.
Speaker 6: We thought there'd be seventy five basis points of easing
Speaker 6: and that would be it. The US economy is pretty robust,
Speaker 6: and obviously we've got the tax cuts already, and relative
Speaker 6: to the rest of the world, and I do talk relative,
Speaker 6: it's relative winners and relatives losers, and the US obviously
Speaker 6: an energy exporter and absolutely at the forefront of this
Speaker 6: whole AI boom that is underway globally, so is a
Speaker 6: relative winner, and no central bank at the moment is
Speaker 6: going to give any hint that they are not prepared
Speaker 6: to take the kind of action that they might need
Speaker 6: to take, because even in a positive environment, we haven't
Speaker 6: seen the lasting impact of it. At best, we're going
Speaker 6: to see a peek in inflation, but then get a
Speaker 6: hump for some time. They've got to keep all expectations
Speaker 6: very anchored.
Speaker 3: Jenn and I've got to go to the stunning elections
Speaker 3: that we've seen, a set of elections of the United Kingdom,
Speaker 3: the HSBC collapse of real GDP four percent United Kingdom
Speaker 3: zero point four percent.
Speaker 2: United Kingdom, maybe one.
Speaker 3: Point four percent out there in an inflation that goes
Speaker 3: from nine percent down to three percent is well, what
Speaker 3: kind of economy will the next Prime minister, whether Starmer
Speaker 3: or Burnham, what kind of economy will they have?
Speaker 5: Well?
Speaker 6: I think if we start the year looking back on
Speaker 6: the UK, things were finally getting to a slightly better
Speaker 6: At least we had a fairly robust start to the year,
Speaker 6: without a doubt, without the spike in oil prices, we
Speaker 6: would have seen inflation below two percent as soon as April.
Speaker 6: We were certainly looking for some pretty big read cuts
Speaker 6: in the course of this year. So, unlike for the US,
Speaker 6: the outlook has changed considerably in the UK.
Speaker 2: So it's not an easy.
Speaker 6: Palette of choices that face has faced any of our
Speaker 6: recent prime ministers in the UK, and we've had quite
Speaker 6: a few in recent years. The fiscal dynamics are not easy.
Speaker 6: Difficult political choices are going to have to be taken,
Speaker 6: and you know, any prime minister is going to have
Speaker 6: to get people on board with making those necessary political
Speaker 6: decisions and to restore global confidence in the outlook for
Speaker 6: the UK. But actually we now think that the Bank
Speaker 6: of England won't actually have to raise interest rates, even
Speaker 6: if they can't tell anyone that anytime soon.
Speaker 3: HSBC has such a grasp before an exchange. What's your
Speaker 3: year old call here? Do we have weaker euro from
Speaker 3: a one to fourteen to sixty three?
Speaker 2: Yes?
Speaker 6: Actually we do now look for a slightly weaker dollar. Obviously,
Speaker 6: since the beginning of the war, the dollars have the
Speaker 6: upper hand. It's been moving with the oil prices, and
Speaker 6: while some of the oil exporting currencies have actually weakened
Speaker 6: a little bit, especially the likes of Norway and others. Actually,
Speaker 6: the US dollar has remained pretty firm on that whole
Speaker 6: AI exceptionalism story. So we look for a broad based
Speaker 6: Firmer dollar, and that does include a slightly weaker Euro,
Speaker 6: even from these kind.
Speaker 3: Of levels, Doctor Henry. Thank you so much, Janet Henry.
Speaker 3: I have to say it. She knows they hate when
Speaker 3: I say this. The Hong Kong and Shanghai Banking Corporation.
Speaker 2: There you go, it's so romantic.
Speaker 3: I mean, you got to say it. HSBC. Thank you
Speaker 3: so much, Janet Henry.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
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Speaker 1: weekday afternoons from seven to Tenstern. Listen on Apple Karplay
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Speaker 3: Joining us now, last time she was on spectacular. Vanya
Speaker 3: Stavrakova joins us here from the London Business School with
Speaker 3: all sorts of other good affiliations behind. It is prodigious
Speaker 3: mathematics from Franklin and Marshall. I want to talk Vanya about,
Speaker 3: as you say, of you from sixty thousand feet an.
Speaker 2: Inflation persistence, slowing growth, geopolitics. The fact is looking backwards, Vanya.
Speaker 3: I have a central bank regime, particularly the FED, at
Speaker 3: a three percent range, nowhere near a supposed two percent range.
Speaker 3: Are we in an era where we're losing two percent
Speaker 3: and we're going to a higher inflation regime.
Speaker 7: So thank you so much for having me, and it's
Speaker 7: lovely to join it from the London office. I do
Speaker 7: believe Kevin Walsh is laying out a completely different playbook
Speaker 7: for the Federal Reserve, which in many ways I do
Speaker 7: believe is a positive change. So we are in the
Speaker 7: beginning of a regime change that acknowledges that effectively the
Speaker 7: fact has to regain control over inflation because it needs
Speaker 7: to be prepared for fiscal dominance regime. And I believe
Speaker 7: that his first speech that we witnessed just a couple
Speaker 7: of days ago was precisely about that. Now the job
Speaker 7: is not going to be easy because even though he
Speaker 7: emphasizes the importance of regaining control over the broad money
Speaker 7: supply so effectively, the balance sheet of the central bank,
Speaker 7: which is front and center in his view of how
Speaker 7: central banks should conduct montary policy. One thing that he
Speaker 7: kept mentioning during that speech is that at the moment,
Speaker 7: the fact that we have such high stock valuations is
Speaker 7: probably an important driver of the inflation that we're seeing. Right,
Speaker 7: we have a key shape growth in the US economy.
Speaker 7: So the stock market is the more demand there is
Speaker 7: by the high income consumers that also hold the stock market.
Speaker 7: And even if you hike interest rates to the extent
Speaker 7: that the stock market is driven by this AI boom,
Speaker 7: you might need to hike by a lot in order
Speaker 7: to put a dent in stock market valuations, which we
Speaker 7: in turn put a lot of pressure on housing markets
Speaker 7: clearly the cost of borrowing for government. So it is
Speaker 7: a very difficult situation he finds himself in, given that
Speaker 7: getting the stock market under control is not something that
Speaker 7: is easy to do or he might be willing to do.
Speaker 7: But it's an important driver. But this wolf effects an
Speaker 7: important driver of the inflation that we see in the
Speaker 7: US at.
Speaker 5: The moment, Professor, we know you have some political issues there.
Speaker 5: The Prime Minister does with the election earlier or yesterday,
Speaker 5: and up at Birmingham talked to us about the divergence
Speaker 5: between kind of the past of economic growth in the
Speaker 5: US versus the UK. What is it all AI or
Speaker 5: what else is going on?
Speaker 7: Well, sadly, the UK has been hit by a number
Speaker 7: of negative productivity growth shocks. So first of all, the
Speaker 7: global financial crisis in acted London and the UK much
Speaker 7: more and much more negatively than the US. Granted that
Speaker 7: the financial sector was the main driver of growth in
Speaker 7: the United Kingdom, whenever recovered from that. And you can
Speaker 7: see it from the pound right, the pound is a
Speaker 7: very good parameter of the state of the economy. And
Speaker 7: after the pound depreciated with the onset of the global
Speaker 7: financial crisis, it never really recovered against the door and
Speaker 7: the second big shot whose breaks it. So essentially the
Speaker 7: UK hasn't really had much of a growth since the
Speaker 7: global financial crisis. The US is a very different story.
Speaker 7: We have, of course, the high taxation, the high tax burden,
Speaker 7: which doesn't help with innovation, creating new job pretention of companies, startups,
Speaker 7: attracting high talent individuals. So yeah, the UK is no
Speaker 7: much more challenging position than the US in that sense.
Speaker 5: So here one of the other phenomena over the last
Speaker 5: several years has just been the decline of globalization, the
Speaker 5: on shoring, maybe the French shoring and some concerns that
Speaker 5: that structurally will push global inflation higher.
Speaker 2: You describe to that.
Speaker 7: Thought, Well, what's interesting is that, yes, we have seen
Speaker 7: inflation being higher, and probably a big chunk of that
Speaker 7: inflation is because of the globalization, if you wish. But
Speaker 7: also what surprising is that the global economy has remained
Speaker 7: quite resilient. It is possible that a lot has been
Speaker 7: absorbed by firms lowering markups in sectors and industries that
Speaker 7: are essentially more competitive, But I'm not seeing the main
Speaker 7: issue with inflation around the globalization, at least as of yet,
Speaker 7: because the facto tarifrates are not as high yet and
Speaker 7: hopefully it will not be.
Speaker 3: Van I'm sure at Franklin and Marsha you crushed your
Speaker 3: first exam on dynamics stochastic general equilibrium theory.
Speaker 2: Clarita told me that said Vinue is down at Franklin
Speaker 2: and Marshall is just killing it. Vanian.
Speaker 3: When you look at the mathematics of all this is
Speaker 3: the worst FED going to be is post after the
Speaker 3: fact is the power FED is. The bottom line is
Speaker 3: you're just going to have to wait to see what
Speaker 3: the data is like. Mere mortals they put their pants
Speaker 3: on one leg at a time.
Speaker 7: I mean, they will look at the data, but I
Speaker 7: think they will try to use completely a new set
Speaker 7: of tools. They will try to push unconventional MONTI policy
Speaker 7: to completely a new level. I'm not talking about for
Speaker 7: what guidance quantity visiing. This is old news at the moment.
Speaker 7: I do believe he is going to try all kinds
Speaker 7: of new instruments. And you know, it's no surprise that
Speaker 7: he favors the old regime where we had to required
Speaker 7: reservations that could be used to manipulate the manupply, et cetera.
Speaker 7: You know, he's a fan of essentially regaining control of
Speaker 7: the BROADGMA is supply. So in principle is that useful. Yes,
Speaker 7: the more tools you have, you don't have to use
Speaker 7: a single blunt instrument. Having said that, it's not easy
Speaker 7: to achieve. So we'll have to wait and see. And
Speaker 7: it's one thing to say I want inflation to go
Speaker 7: down to two percent. It's another thing to deliver and
Speaker 7: you would have to show some actions behind that, any.
Speaker 3: Right, Doctor Servakava, thank you so much for joining us
Speaker 3: today from London Business School.
Speaker 2: Really I appreciate it. Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 3: We are honored to bring you now a gentleman who,
Speaker 3: perhaps more than any American, spans Robert D. Kaplan's The
Speaker 3: Loom of Time from Morocco over to Persia. Ambassador Puoni
Speaker 3: Tower is the United was former United States Ambassador to
Speaker 3: Morocco and is directly involved with many negotiations with an ambassador.
Speaker 3: Thank you so much for joining Bloomberg this morning.
Speaker 2: It's great to be with you both. Ambassador.
Speaker 3: I look at this moment at hand, and I want
Speaker 3: you to take it back to Albert Harani and his
Speaker 3: definitive one volume on the history of the Arab people
Speaker 3: is the Arab World from your Morocco to yur Iran.
Speaker 2: Is it blown up?
Speaker 8: The Middle East has been in a period of incredible
Speaker 8: turmoil for at least a century, especially following the collapse
Speaker 8: of the Ottoman Empire. So what we're seeing today is
Speaker 8: really a continuation of this cycle that has been going
Speaker 8: on for many decades. Now it's intensified, it's quite for
Speaker 8: periods of time, but it has been largely in this
Speaker 8: period of disquiet and unrest for a long period of time.
Speaker 8: And of course, as you know, Persia is not Arab,
Speaker 8: but they have a significant influence on parts of the
Speaker 8: Arab world, especially through their ties to the Shia communities
Speaker 8: and their support under this ideological Iranian regime for non
Speaker 8: state actors like Hamas hasbalah so, including non Shia groups.
Speaker 2: When you look.
Speaker 3: At Iran and you take it from the span of
Speaker 3: the seventy nine revolution to the horrific War of the
Speaker 3: Rock and the balance between the theocracy and maybe a
Speaker 3: middle class in Iran, where does the theocracy of Iran
Speaker 3: place right now versus the military that seems so dominant.
Speaker 8: That's a great question and that still has to shake
Speaker 8: out a little bit. Prior to this war, the Islamic
Speaker 8: Revolutionary Guard Corps, the Defenders of the Revolution, if you will,
Speaker 8: have had the upper hand in the Iranian decision making process,
Speaker 8: and that has only been strengthened through this war. The
Speaker 8: campaign of assassinations, the taking out of the Supreme Leader
Speaker 8: who's a theocrat. The theocrat if you will, in Iran
Speaker 8: has been replaced now by his son, who's still untested.
Speaker 8: And what we've seen is that the ir GC is
Speaker 8: in a more dominant position. So the hardliners have been
Speaker 8: strengthened through this war, and we have to see how
Speaker 8: this shakes out and whether the theocracy and the clerics
Speaker 8: will actually take more of a not a backseat, but
Speaker 8: maybe not having as dominant a position as they once
Speaker 8: did in the past.
Speaker 5: Ambassardor can you give us an assessment of the memorandum
Speaker 5: of understanding? What's your view?
Speaker 8: Sure, I think it's not a very good deal, but
Speaker 8: I think it reflects a reality, a reality of a
Speaker 8: war that was started on faulty assumptions, the assumption that
Speaker 8: Iran was so weak following those massive protests which killed
Speaker 8: thousands of innocent protesters, that a quick military operation could
Speaker 8: essentially either topple the government or force it to capitulate.
Speaker 8: And neither of those things happen. So war that started
Speaker 8: on that premise actually has resulted in an Iran that
Speaker 8: is in a stronger strategic position, and this memorandum essentially
Speaker 8: will for sixty days reopen the Strait of horror moves,
Speaker 8: restoring it to the way it was after sixty days.
Speaker 8: It seems to contemplate the potential for Iran to collect fees,
Speaker 8: and if Iran is unhappy with US at any time,
Speaker 8: they can continue to regulate the flow of traffic. It's
Speaker 8: not necessarily an on off switch. And they're getting a
Speaker 8: significant amount of upfront sanctions relief, which will undercut I
Speaker 8: think the leverage that the administration will want for the
Speaker 8: second phase of this deal to get into the nuclear discussions.
Speaker 5: So I guess that begs the question. It seems like
Speaker 5: we're no better than we were before the war, maybe
Speaker 5: worse off. If this strait is now weaponized in the future,
Speaker 5: how does the US move from here?
Speaker 2: That's a good question.
Speaker 8: We are worse off. I think Iran certainly has been
Speaker 8: set back in terms of its conventional military capabilities, its
Speaker 8: defense industrial base. But the United States has now lost
Speaker 8: two key pieces of leverage. The use of force is
Speaker 8: no longer credible because we've shown the limitations of that
Speaker 8: and Iran has withstood this powerful assault. And the oil sanctions,
Speaker 8: which were our most powerful piece of leverage on the
Speaker 8: sanctions front, those are being waived at this point, and
Speaker 8: so what we have to go back to is really
Speaker 8: the drawing board and what the administration can offer now
Speaker 8: to get to that nuclear deal that we all want
Speaker 8: to see to constrain their program and to prevent them
Speaker 8: getting a weapon is essentially incentives incentives of over three
Speaker 8: hundred million dollars in a reconstruction fund, and we can
Speaker 8: have to try to rebuild our alligance structures as well,
Speaker 8: which are in bad in many parts of the world.
Speaker 3: Ambassador to span this from the Arab spring in Tunisia,
Speaker 3: in Cairo and bring it over to your Morocco where
Speaker 3: you were our representative in Marrakesh and all of the
Speaker 3: kings Morocco. How does this war destabilize the distant Arab world?
Speaker 3: How does this war destabilize Morocco and Mohammed to sixth.
Speaker 8: Well, Morocco, I don't think is fundamentally destabilized by this.
Speaker 8: Morocco's actually this is our two hundred and fiftieth anniversary
Speaker 8: we're going to be celebrating this year. It's actually a
Speaker 8: moment to remember that Morocco was the first country to
Speaker 8: recognize American independence. So this is an old, longstanding relationship.
Speaker 8: Morocco is an incredibly stable country. It's one of two
Speaker 8: countries in Africa that has has reached investment great status
Speaker 8: and it's going in a great direction under a very
Speaker 8: progressive king. Now that said, they're having some influence from this.
Speaker 8: What we're seeing is that sulfur, for example, which is
Speaker 8: necessary for fertilizer exports, the biggest export earner for Morocco,
Speaker 8: those have been affected and as a result, Morocco's fertilizer
Speaker 8: exports will be hurt this year. Moreover, Morocco's no friend
Speaker 8: of Iran. They've broken relations with them twice. They actually
Speaker 8: have no relations right now. Part of that goes back
Speaker 8: to the fact that they actually hosted the Shaw after
Speaker 8: he was overthrown, and so they have no love lost
Speaker 8: and they're probably very concerned, just like many other allies
Speaker 8: in the region, that Iran is apparently emerging from this
Speaker 8: in a stronger position. They want to see Iran put
Speaker 8: in a corner and not having the ability to expand
Speaker 8: hiss tentacles all across the region.
Speaker 3: And Besser Tolmar, thank you so much for joining us today.
Speaker 3: Paul Swinian Time Kane heard Blowenberg. The former ambassador in Morocco,
Speaker 3: Peny tallar with US or global strategies and the course
Speaker 3: of the console un foreign all right relations.
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