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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Today marks four consecutive

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Speaker 1: days of conflict between Israel and Iran. Israel first launched

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Speaker 1: a surprise attack on Iran on Friday, striking cities including

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Speaker 1: its capital, Tehran, and key nuclear facilities, and the two

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Speaker 1: countries continued to attack each other over the weekend. As

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Speaker 1: of Monday afternoon, hundreds of people in Iran and dozens

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Speaker 1: in Israel have been killed. Conflict between Iran and Israel

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Speaker 1: has been simmering for decades, and the relationship has only

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Speaker 1: gotten more tense since Israel and Iran backed Hamas went

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Speaker 1: to war in twenty twenty three. But Golnar Mota Valley,

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Speaker 1: who covers Iran for Bloomberg, says these latest attacks marked

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Speaker 1: a major escalation.

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Speaker 2: So it's a very different type of conflict and war

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Speaker 2: than what we've seen playing out between Israel and Hamas

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Speaker 2: or Israel's operation in Gaza.

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Speaker 1: Golnar says it's different because the two sides are engaging

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Speaker 1: each other directly instead of fighting through proxies. As world

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Speaker 1: leaders convene for the G Seven in Canada this week,

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Speaker 1: many are concerned about the prospect of continued fighting and

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Speaker 1: a broader regional conflict. Asked if the US would get

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Speaker 1: more involved militarily, President Donald Trump said he didn't want

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Speaker 1: to discuss it and encouraged both sides to work towards

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Speaker 1: a resolution.

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Speaker 3: They have to make a deal, and it's painful for

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Speaker 3: both parties, but I'd say Iran is not winning this war,

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Speaker 3: and they should talk, and they should talk immediately before

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Speaker 3: it's too late.

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Speaker 1: I'm Sarah Holder, and this is the big take from

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Speaker 1: Bloomberg News today on the show, the conflict between Israel

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Speaker 1: and Iran at a tipping Point.

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Speaker 2: Has just issued a statement telling residents of a district

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Speaker 2: in northern Tehran that's heavily populated and it's a big

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Speaker 2: district to evacuate the area within the next hours in

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Speaker 2: anticipation of an air strike. That language is very, very chilling,

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Speaker 2: because what it suggests is that the IDF is going

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Speaker 2: to use the same approach that it used in Gaza.

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Speaker 2: People are just getting out of the city and trying

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Speaker 2: to get to the countryside, but they're not moving very fast.

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Speaker 2: I think there is a fear that they're kind of

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Speaker 2: like sitting ducks.

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Speaker 1: In Israel, residents were warned that there would be further

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Speaker 1: attacks from Iran in the coming days, and Prime Minister

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Speaker 1: Benjamin Netanyah who urged people to rush to bomb shelters

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Speaker 1: when air raid sirens sound or when they get phone alerts.

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Speaker 2: From what I've seen and from the reporting that we

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Speaker 2: have done, it's clear that Israeli residents, particularly in Tel Aviv,

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Speaker 2: have had a huge amount of diction to their lives.

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Speaker 2: And the pictures that you've seen coming from Televiv of buildings,

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Speaker 2: apartment blocks just gutted and destroyed, they're quite jarring. Having

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Speaker 2: said that, I think the reports are from the IDF

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Speaker 2: and I think from our colleagues, is that the Iron Dome,

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Speaker 2: the very sophisticated air defense system that Israel has, has

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Speaker 2: been relatively efficient at intercepting the majority of Iran's missiles.

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Speaker 1: Iran and Israel have been in conflict for decades. In

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Speaker 1: the past twenty months, as you've mentioned, have seen tensions

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Speaker 1: only rise since Israel and her mass which has been

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Speaker 1: backed by Iran, went to war. But this is a

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Speaker 1: clear escalation. How much of a surprise was this to Iran.

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Speaker 2: I think it was a huge surprise. I think people

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Speaker 2: were massively shocked. I do think that there has been

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Speaker 2: so much tension between these countries over so many years,

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Speaker 2: and there's been so much rhetoric about war and threats

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Speaker 2: of destruction, threats of annihilation or at this kind of

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Speaker 2: end game language coming both from Iran specifically the Supreme

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Speaker 2: Leader of Iran iol Alikarmene, and also threats of military

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Speaker 2: action by Benjaminette and Yahoo over the past twenty years,

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Speaker 2: specifically in reference to the nuclear program, but more broadly.

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Speaker 2: The Isamic Republic is a state system and a regime,

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Speaker 2: so it's been on a low boil for many many years. However,

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Speaker 2: with all that in mind, I don't think anyone in

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Speaker 2: Iran would have expected this for the simple reason that

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Speaker 2: Iran was engaged officially in negotiations with the United States

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Speaker 2: over its nuclear program. And you know, normally when countries

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Speaker 2: are involved in a diplomatic tract like this, they don't

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Speaker 2: expect to be attacked by a close ally of their

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Speaker 2: counterpart in their negotiations, and these were very sensitive negotiations.

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Speaker 2: So I think there's a strong element within the Iranian establishment,

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Speaker 2: and I've spoken to business people as well in Tehran

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Speaker 2: who were extremely worried, but many of them feel a

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Speaker 2: genuine kind of betrayal and humiliation that they've entered this

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Speaker 2: diplomatic process expecting the other side, that counterparts the US

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Speaker 2: to also like them, be looking for a deal that's

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Speaker 2: going to resolve this standoff.

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Speaker 1: Trump had suggested that those talks were going well just

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Speaker 1: a few days ago, and he had advised Israel not

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Speaker 1: to attack Iran while they were ongoing. So why did

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Speaker 1: Israel attack now?

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Speaker 2: I think from the point of view of Netanyahu, it's

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Speaker 2: a very opportunistic move, and I think he felt that

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Speaker 2: it was a kind of now or never situation for him.

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Speaker 2: This defense strategy that Iran has relied on pretty much

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Speaker 2: since the US invasion of Iraq to surround itself at

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Speaker 2: arm's length, This kind of like forward defense strategy of

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Speaker 2: having militias, whether it's in Iraq or whether it's in Yemen,

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Speaker 2: whether Huthisa, or whether it's Lebanon and Hezbolah or Hamas

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Speaker 2: in Gaza or Bashar al ah Soud in Syria, having

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Speaker 2: this sort of like network of allies that can help it.

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Speaker 2: That strategy kind of crumbled after Israel began bombarding southern

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Speaker 2: Lebanon and southern Bay Route and it effectively completely sort

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Speaker 2: of crippled Hezbollah and At the same time, Iran's economy

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Speaker 2: has continued to struggle. It's still being sanctioned actively by

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Speaker 2: the US. Those sanctions have been increasing and expanding under Trump.

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Speaker 2: The leadership in Iran harmony and the Republic of widely unpopular.

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Speaker 2: Their support base has been shrinking, and they have had

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Speaker 2: some extremely challenging demonstrations. So there's a kind of common

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Speaker 2: fluence of things going on that, perhaps from netanna Who's

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Speaker 2: point of view, make this the best time to attack Iran.

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Speaker 1: How much of this is about damaging Iran's nuclear capabilities

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Speaker 1: versus pushing sort of a broader regime change in Iran.

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Speaker 2: From what Netnau has said, he kind of wants it

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Speaker 2: to be both. So as a statement he made addressing

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Speaker 2: the Uranian people, you know, he made very explicit remarks

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Speaker 2: about how we're going to go after the targets of

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Speaker 2: the Ayatola's regime, and.

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Speaker 4: Our pilots over the skies of Tehran will deal blows

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Speaker 4: to the Itolo regime that they cannot even imagine. And

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Speaker 4: I can tell you this, we have indications that senior

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Speaker 4: leaders in Iran already packing their bags, they sense what's coming.

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Speaker 2: That very much suggests that He's not just looking for

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Speaker 2: a narrow strategic opportunity to incapacitate the nuclear program. He

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Speaker 2: actually wants regime change. I think that's quite clear.

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Speaker 1: You've reported that Tehrana is walking a difficult line here

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Speaker 1: in terms of its response. It wants to avoid in

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Speaker 1: escalation that would get the US involved in this conflict.

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Speaker 1: But what is that point? What would get the US

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Speaker 1: to step into this conflict?

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Speaker 2: There is a point where Israel will have to seek

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Speaker 2: help from the United States if the conflict continues and escalates.

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Speaker 2: It's not something that Israel can continue alone. The other

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Speaker 2: thing that's going to trigger US involvement is a very

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Speaker 2: important issue of Iran's membership or it's a signature of

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Speaker 2: the MPT, the nucle Non Periferation Treaty. Iran's parliament is

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Speaker 2: going to have a discussion about whether they should propose

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Speaker 2: a bill to exit and withdraw from the MPT. Doing

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Speaker 2: that could trigger a very serious response from the US,

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Speaker 2: because once they do that, koreated in two thousand and three,

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Speaker 2: then that's Iran's way of saying, like Pakistan, like India,

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Speaker 2: like Israel itself reportedly, we are going to develop a

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Speaker 2: nuclear weapons.

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Speaker 1: Arsenal after the break with the region and the rest

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Speaker 1: of the world are most worried about if Iran and

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Speaker 1: Israel's conflict deepens. Even as Trump suggests that Iran is

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Speaker 1: open to talks, Israel's strategic affairs Minister Ron Durmer told

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Speaker 1: Bloomberg Monday that it will continue to strike targets in

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Speaker 1: the country. I asked Bloomberg's Golnarmata Valley about the concerns

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Speaker 1: of world leaders as they watch this unfold.

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Speaker 2: I think, obviously the thing that they're most concerned about

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Speaker 2: is that the war doesn't widen, or it doesn't expand

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Speaker 2: to engulf more of the region, that other countries in

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Speaker 2: the region don't get involved. There's a massive fear there.

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Speaker 2: One of the things that's preventing that from happening is

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Speaker 2: the fact that Iran and the Gulf Arab State, they've

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Speaker 2: really worked on their relationship since the last Trump administration,

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Speaker 2: and after the twenty to fifteen nuclear deal, relations between

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Speaker 2: Iran and Saudi deteriorated considerably, they actually cut diplomatic ties.

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Speaker 2: So rebuilding those relationships was a key part of this

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Speaker 2: whole nuclear talks process that was going on between Iran

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Speaker 2: and the Trump administration because those countries were really encouraging

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Speaker 2: Trump to do a deal with the Iranians, reduce the

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Speaker 2: tension in the region, reduce the tension with Iran. But

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Speaker 2: obviously Israel had other ideas.

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Speaker 1: What impact is this having on energy and oil markets?

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Speaker 2: So it's obviously going to have a direct impact on

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Speaker 2: oil markets because Iran is a major producer of oil.

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Speaker 2: Not only that it sits on the Persian Gulf where

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Speaker 2: we have the Strait of Hormones. There's a huge amount

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Speaker 2: of oil that passes through that narrow passageway in the

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Speaker 2: Persian Gulf every day. Iran has threatened numerous times in

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Speaker 2: the past that it will shut down or block the

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Speaker 2: Strait of horrm wares and countries like China rely on

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Speaker 2: a secure means of securing energy from the Middle East

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Speaker 2: so that they can run their economies effectively. But yeah,

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Speaker 2: the impact on oil prices is immediate. If the market

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Speaker 2: thinks that it's going to have an effect on supply,

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Speaker 2: then prices will obviously rise. There are some others.

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Speaker 1: And they are arising, yes they are, But.

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Speaker 2: There are other fundamentals that affect whether the market thinks

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Speaker 2: that supply is going to be protected or it's going

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Speaker 2: to come from somewhere else. It's going to be offset

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Speaker 2: by other factors in other countries, amongst other oil producers.

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Speaker 2: But fundamentally, yeah, the market is directly affected by any

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Speaker 2: conflict that happens around in and around the Persian Gulf,

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Speaker 2: and after all, Iran is a major opic producer.

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Speaker 1: We're seeing reports starting to service that Iran is signaling

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Speaker 1: an interest in de escalation. What does that mean?

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Speaker 2: Yeah, we have seen those reports today and I think

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Speaker 2: also Trump himself may have alluded to this. He's made

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Speaker 2: some reference to Iranians wanting to talk behind the scenes.

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Speaker 2: The Uranians haven't said any such thing, But interestingly, they

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Speaker 2: haven't actually said explicitly that will never go back to

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Speaker 2: the negotiating table again. They've said that nuclear talks for

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Speaker 2: now are useless while Israel is bombarding us, which is

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Speaker 2: different from saying we will never talk to them. And

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Speaker 2: maybe at the moment that looks like the most sensible

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Speaker 2: way through this, a back channel de escalation where through

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Speaker 2: mediating countries Iran says we want to end this. How

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Speaker 2: can we start? Tell the Americans we want to do this,

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Speaker 2: Tell them to tell the Israelis, X, Y, and Z.

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Speaker 2: But a lot of this, I think depends on what

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Speaker 2: Israel does and what Nettana who wants to do. Israel

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Speaker 2: has acted with a level of impunity over the past

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Speaker 2: twenty months in the face of a lot of international criticism,

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Speaker 2: so it's hard to know who, whether that's Trump or

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Speaker 2: someone else, is able to say to these Raelies, draw

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Speaker 2: a line under it. The Iranians want to draw a

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Speaker 2: line under it, and you know, listen to us.

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Speaker 1: This is the Big Take from Bloomberg News. I'm Sarah Holder.

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