WEBVTT - Where Does the Israel-Iran Conflict Go From Here?

0:00:02.720 --> 0:00:10.639
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Today marks four consecutive

0:00:10.720 --> 0:00:15.240
<v Speaker 1>days of conflict between Israel and Iran. Israel first launched

0:00:15.240 --> 0:00:18.880
<v Speaker 1>a surprise attack on Iran on Friday, striking cities including

0:00:18.920 --> 0:00:22.840
<v Speaker 1>its capital, Tehran, and key nuclear facilities, and the two

0:00:22.920 --> 0:00:26.640
<v Speaker 1>countries continued to attack each other over the weekend. As

0:00:26.680 --> 0:00:30.160
<v Speaker 1>of Monday afternoon, hundreds of people in Iran and dozens

0:00:30.240 --> 0:00:35.040
<v Speaker 1>in Israel have been killed. Conflict between Iran and Israel

0:00:35.120 --> 0:00:38.520
<v Speaker 1>has been simmering for decades, and the relationship has only

0:00:38.560 --> 0:00:42.280
<v Speaker 1>gotten more tense since Israel and Iran backed Hamas went

0:00:42.320 --> 0:00:45.680
<v Speaker 1>to war in twenty twenty three. But Golnar Mota Valley,

0:00:45.800 --> 0:00:50.080
<v Speaker 1>who covers Iran for Bloomberg, says these latest attacks marked

0:00:50.120 --> 0:00:51.400
<v Speaker 1>a major escalation.

0:00:52.000 --> 0:00:54.920
<v Speaker 2>So it's a very different type of conflict and war

0:00:55.080 --> 0:00:58.720
<v Speaker 2>than what we've seen playing out between Israel and Hamas

0:00:58.880 --> 0:01:01.640
<v Speaker 2>or Israel's operation in Gaza.

0:01:01.800 --> 0:01:05.160
<v Speaker 1>Golnar says it's different because the two sides are engaging

0:01:05.200 --> 0:01:09.560
<v Speaker 1>each other directly instead of fighting through proxies. As world

0:01:09.680 --> 0:01:12.520
<v Speaker 1>leaders convene for the G Seven in Canada this week,

0:01:12.920 --> 0:01:16.240
<v Speaker 1>many are concerned about the prospect of continued fighting and

0:01:16.280 --> 0:01:20.120
<v Speaker 1>a broader regional conflict. Asked if the US would get

0:01:20.160 --> 0:01:24.039
<v Speaker 1>more involved militarily, President Donald Trump said he didn't want

0:01:24.080 --> 0:01:27.000
<v Speaker 1>to discuss it and encouraged both sides to work towards

0:01:27.000 --> 0:01:27.640
<v Speaker 1>a resolution.

0:01:28.400 --> 0:01:31.760
<v Speaker 3>They have to make a deal, and it's painful for

0:01:31.840 --> 0:01:35.319
<v Speaker 3>both parties, but I'd say Iran is not winning this war,

0:01:36.240 --> 0:01:39.320
<v Speaker 3>and they should talk, and they should talk immediately before

0:01:39.319 --> 0:01:40.000
<v Speaker 3>it's too late.

0:01:44.360 --> 0:01:46.600
<v Speaker 1>I'm Sarah Holder, and this is the big take from

0:01:46.640 --> 0:01:50.640
<v Speaker 1>Bloomberg News today on the show, the conflict between Israel

0:01:50.720 --> 0:01:52.720
<v Speaker 1>and Iran at a tipping Point.

0:02:00.480 --> 0:02:05.640
<v Speaker 2>Has just issued a statement telling residents of a district

0:02:05.640 --> 0:02:09.120
<v Speaker 2>in northern Tehran that's heavily populated and it's a big

0:02:09.160 --> 0:02:13.240
<v Speaker 2>district to evacuate the area within the next hours in

0:02:13.320 --> 0:02:19.160
<v Speaker 2>anticipation of an air strike. That language is very, very chilling,

0:02:19.360 --> 0:02:23.560
<v Speaker 2>because what it suggests is that the IDF is going

0:02:23.600 --> 0:02:26.440
<v Speaker 2>to use the same approach that it used in Gaza.

0:02:26.600 --> 0:02:29.560
<v Speaker 2>People are just getting out of the city and trying

0:02:29.600 --> 0:02:33.600
<v Speaker 2>to get to the countryside, but they're not moving very fast.

0:02:33.680 --> 0:02:35.240
<v Speaker 2>I think there is a fear that they're kind of

0:02:35.280 --> 0:02:36.360
<v Speaker 2>like sitting ducks.

0:02:36.800 --> 0:02:39.400
<v Speaker 1>In Israel, residents were warned that there would be further

0:02:39.440 --> 0:02:42.519
<v Speaker 1>attacks from Iran in the coming days, and Prime Minister

0:02:42.560 --> 0:02:45.679
<v Speaker 1>Benjamin Netanyah who urged people to rush to bomb shelters

0:02:45.680 --> 0:02:48.960
<v Speaker 1>when air raid sirens sound or when they get phone alerts.

0:02:49.240 --> 0:02:51.360
<v Speaker 2>From what I've seen and from the reporting that we

0:02:51.440 --> 0:02:57.480
<v Speaker 2>have done, it's clear that Israeli residents, particularly in Tel Aviv,

0:02:58.440 --> 0:03:01.760
<v Speaker 2>have had a huge amount of diction to their lives.

0:03:01.919 --> 0:03:06.200
<v Speaker 2>And the pictures that you've seen coming from Televiv of buildings,

0:03:06.280 --> 0:03:12.000
<v Speaker 2>apartment blocks just gutted and destroyed, they're quite jarring. Having

0:03:12.040 --> 0:03:16.680
<v Speaker 2>said that, I think the reports are from the IDF

0:03:16.680 --> 0:03:20.200
<v Speaker 2>and I think from our colleagues, is that the Iron Dome,

0:03:20.360 --> 0:03:24.280
<v Speaker 2>the very sophisticated air defense system that Israel has, has

0:03:24.400 --> 0:03:29.760
<v Speaker 2>been relatively efficient at intercepting the majority of Iran's missiles.

0:03:30.120 --> 0:03:32.519
<v Speaker 1>Iran and Israel have been in conflict for decades. In

0:03:32.600 --> 0:03:35.040
<v Speaker 1>the past twenty months, as you've mentioned, have seen tensions

0:03:35.040 --> 0:03:37.880
<v Speaker 1>only rise since Israel and her mass which has been

0:03:37.920 --> 0:03:41.240
<v Speaker 1>backed by Iran, went to war. But this is a

0:03:41.280 --> 0:03:45.200
<v Speaker 1>clear escalation. How much of a surprise was this to Iran.

0:03:45.560 --> 0:03:47.760
<v Speaker 2>I think it was a huge surprise. I think people

0:03:47.800 --> 0:03:52.920
<v Speaker 2>were massively shocked. I do think that there has been

0:03:53.000 --> 0:03:56.080
<v Speaker 2>so much tension between these countries over so many years,

0:03:56.120 --> 0:04:00.640
<v Speaker 2>and there's been so much rhetoric about war and threats

0:04:00.640 --> 0:04:06.080
<v Speaker 2>of destruction, threats of annihilation or at this kind of

0:04:06.240 --> 0:04:11.400
<v Speaker 2>end game language coming both from Iran specifically the Supreme

0:04:11.520 --> 0:04:15.200
<v Speaker 2>Leader of Iran iol Alikarmene, and also threats of military

0:04:15.280 --> 0:04:18.960
<v Speaker 2>action by Benjaminette and Yahoo over the past twenty years,

0:04:19.600 --> 0:04:22.680
<v Speaker 2>specifically in reference to the nuclear program, but more broadly.

0:04:23.240 --> 0:04:26.040
<v Speaker 2>The Isamic Republic is a state system and a regime,

0:04:26.800 --> 0:04:32.040
<v Speaker 2>so it's been on a low boil for many many years. However,

0:04:32.520 --> 0:04:35.560
<v Speaker 2>with all that in mind, I don't think anyone in

0:04:35.600 --> 0:04:39.720
<v Speaker 2>Iran would have expected this for the simple reason that

0:04:39.800 --> 0:04:45.200
<v Speaker 2>Iran was engaged officially in negotiations with the United States

0:04:45.320 --> 0:04:48.799
<v Speaker 2>over its nuclear program. And you know, normally when countries

0:04:48.880 --> 0:04:52.880
<v Speaker 2>are involved in a diplomatic tract like this, they don't

0:04:52.920 --> 0:04:58.320
<v Speaker 2>expect to be attacked by a close ally of their

0:04:58.360 --> 0:05:02.919
<v Speaker 2>counterpart in their negotiations, and these were very sensitive negotiations.

0:05:03.120 --> 0:05:06.800
<v Speaker 2>So I think there's a strong element within the Iranian establishment,

0:05:06.839 --> 0:05:09.200
<v Speaker 2>and I've spoken to business people as well in Tehran

0:05:09.760 --> 0:05:13.080
<v Speaker 2>who were extremely worried, but many of them feel a

0:05:13.200 --> 0:05:17.640
<v Speaker 2>genuine kind of betrayal and humiliation that they've entered this

0:05:17.720 --> 0:05:23.960
<v Speaker 2>diplomatic process expecting the other side, that counterparts the US

0:05:24.800 --> 0:05:28.680
<v Speaker 2>to also like them, be looking for a deal that's

0:05:28.720 --> 0:05:30.719
<v Speaker 2>going to resolve this standoff.

0:05:31.240 --> 0:05:33.919
<v Speaker 1>Trump had suggested that those talks were going well just

0:05:33.960 --> 0:05:36.839
<v Speaker 1>a few days ago, and he had advised Israel not

0:05:36.960 --> 0:05:40.320
<v Speaker 1>to attack Iran while they were ongoing. So why did

0:05:40.800 --> 0:05:41.839
<v Speaker 1>Israel attack now?

0:05:42.560 --> 0:05:45.800
<v Speaker 2>I think from the point of view of Netanyahu, it's

0:05:45.800 --> 0:05:49.680
<v Speaker 2>a very opportunistic move, and I think he felt that

0:05:50.040 --> 0:05:53.279
<v Speaker 2>it was a kind of now or never situation for him.

0:05:53.360 --> 0:05:57.360
<v Speaker 2>This defense strategy that Iran has relied on pretty much

0:05:57.400 --> 0:06:00.320
<v Speaker 2>since the US invasion of Iraq to surround itself at

0:06:00.440 --> 0:06:04.039
<v Speaker 2>arm's length, This kind of like forward defense strategy of

0:06:04.440 --> 0:06:09.599
<v Speaker 2>having militias, whether it's in Iraq or whether it's in Yemen,

0:06:09.720 --> 0:06:14.160
<v Speaker 2>whether Huthisa, or whether it's Lebanon and Hezbolah or Hamas

0:06:14.240 --> 0:06:17.640
<v Speaker 2>in Gaza or Bashar al ah Soud in Syria, having

0:06:17.680 --> 0:06:21.039
<v Speaker 2>this sort of like network of allies that can help it.

0:06:21.760 --> 0:06:27.279
<v Speaker 2>That strategy kind of crumbled after Israel began bombarding southern

0:06:27.320 --> 0:06:30.440
<v Speaker 2>Lebanon and southern Bay Route and it effectively completely sort

0:06:30.480 --> 0:06:35.960
<v Speaker 2>of crippled Hezbollah and At the same time, Iran's economy

0:06:36.120 --> 0:06:40.760
<v Speaker 2>has continued to struggle. It's still being sanctioned actively by

0:06:40.760 --> 0:06:45.239
<v Speaker 2>the US. Those sanctions have been increasing and expanding under Trump.

0:06:45.880 --> 0:06:51.280
<v Speaker 2>The leadership in Iran harmony and the Republic of widely unpopular.

0:06:51.720 --> 0:06:54.720
<v Speaker 2>Their support base has been shrinking, and they have had

0:06:54.760 --> 0:06:59.960
<v Speaker 2>some extremely challenging demonstrations. So there's a kind of common

0:07:00.120 --> 0:07:04.719
<v Speaker 2>fluence of things going on that, perhaps from netanna Who's

0:07:04.760 --> 0:07:08.839
<v Speaker 2>point of view, make this the best time to attack Iran.

0:07:09.520 --> 0:07:13.640
<v Speaker 1>How much of this is about damaging Iran's nuclear capabilities

0:07:13.720 --> 0:07:17.520
<v Speaker 1>versus pushing sort of a broader regime change in Iran.

0:07:17.760 --> 0:07:20.640
<v Speaker 2>From what Netnau has said, he kind of wants it

0:07:20.680 --> 0:07:25.000
<v Speaker 2>to be both. So as a statement he made addressing

0:07:25.040 --> 0:07:27.960
<v Speaker 2>the Uranian people, you know, he made very explicit remarks

0:07:28.000 --> 0:07:31.440
<v Speaker 2>about how we're going to go after the targets of

0:07:31.520 --> 0:07:33.920
<v Speaker 2>the Ayatola's regime, and.

0:07:33.840 --> 0:07:38.280
<v Speaker 4>Our pilots over the skies of Tehran will deal blows

0:07:38.360 --> 0:07:42.040
<v Speaker 4>to the Itolo regime that they cannot even imagine. And

0:07:42.120 --> 0:07:46.760
<v Speaker 4>I can tell you this, we have indications that senior

0:07:46.960 --> 0:07:51.240
<v Speaker 4>leaders in Iran already packing their bags, they sense what's coming.

0:07:52.000 --> 0:07:55.080
<v Speaker 2>That very much suggests that He's not just looking for

0:07:55.480 --> 0:08:03.640
<v Speaker 2>a narrow strategic opportunity to incapacitate the nuclear program. He

0:08:03.760 --> 0:08:06.760
<v Speaker 2>actually wants regime change. I think that's quite clear.

0:08:07.120 --> 0:08:09.880
<v Speaker 1>You've reported that Tehrana is walking a difficult line here

0:08:09.920 --> 0:08:12.240
<v Speaker 1>in terms of its response. It wants to avoid in

0:08:12.520 --> 0:08:15.840
<v Speaker 1>escalation that would get the US involved in this conflict.

0:08:16.680 --> 0:08:20.480
<v Speaker 1>But what is that point? What would get the US

0:08:20.600 --> 0:08:21.840
<v Speaker 1>to step into this conflict?

0:08:22.080 --> 0:08:25.480
<v Speaker 2>There is a point where Israel will have to seek

0:08:25.640 --> 0:08:29.360
<v Speaker 2>help from the United States if the conflict continues and escalates.

0:08:29.760 --> 0:08:33.680
<v Speaker 2>It's not something that Israel can continue alone. The other

0:08:33.720 --> 0:08:37.240
<v Speaker 2>thing that's going to trigger US involvement is a very

0:08:37.280 --> 0:08:42.280
<v Speaker 2>important issue of Iran's membership or it's a signature of

0:08:42.280 --> 0:08:46.959
<v Speaker 2>the MPT, the nucle Non Periferation Treaty. Iran's parliament is

0:08:46.960 --> 0:08:50.040
<v Speaker 2>going to have a discussion about whether they should propose

0:08:50.120 --> 0:08:53.520
<v Speaker 2>a bill to exit and withdraw from the MPT. Doing

0:08:53.559 --> 0:08:58.160
<v Speaker 2>that could trigger a very serious response from the US,

0:08:58.200 --> 0:09:01.760
<v Speaker 2>because once they do that, koreated in two thousand and three,

0:09:02.520 --> 0:09:06.319
<v Speaker 2>then that's Iran's way of saying, like Pakistan, like India,

0:09:06.400 --> 0:09:10.160
<v Speaker 2>like Israel itself reportedly, we are going to develop a

0:09:10.240 --> 0:09:11.320
<v Speaker 2>nuclear weapons.

0:09:11.000 --> 0:09:14.880
<v Speaker 1>Arsenal after the break with the region and the rest

0:09:14.880 --> 0:09:17.640
<v Speaker 1>of the world are most worried about if Iran and

0:09:17.800 --> 0:09:28.640
<v Speaker 1>Israel's conflict deepens. Even as Trump suggests that Iran is

0:09:28.720 --> 0:09:32.520
<v Speaker 1>open to talks, Israel's strategic affairs Minister Ron Durmer told

0:09:32.520 --> 0:09:35.680
<v Speaker 1>Bloomberg Monday that it will continue to strike targets in

0:09:35.720 --> 0:09:40.480
<v Speaker 1>the country. I asked Bloomberg's Golnarmata Valley about the concerns

0:09:40.480 --> 0:09:42.800
<v Speaker 1>of world leaders as they watch this unfold.

0:09:43.320 --> 0:09:46.320
<v Speaker 2>I think, obviously the thing that they're most concerned about

0:09:46.440 --> 0:09:50.360
<v Speaker 2>is that the war doesn't widen, or it doesn't expand

0:09:50.480 --> 0:09:53.640
<v Speaker 2>to engulf more of the region, that other countries in

0:09:53.640 --> 0:09:56.600
<v Speaker 2>the region don't get involved. There's a massive fear there.

0:09:57.160 --> 0:09:59.440
<v Speaker 2>One of the things that's preventing that from happening is

0:09:59.440 --> 0:10:02.800
<v Speaker 2>the fact that Iran and the Gulf Arab State, they've

0:10:03.160 --> 0:10:07.160
<v Speaker 2>really worked on their relationship since the last Trump administration,

0:10:07.480 --> 0:10:10.560
<v Speaker 2>and after the twenty to fifteen nuclear deal, relations between

0:10:10.640 --> 0:10:15.120
<v Speaker 2>Iran and Saudi deteriorated considerably, they actually cut diplomatic ties.

0:10:16.040 --> 0:10:19.719
<v Speaker 2>So rebuilding those relationships was a key part of this

0:10:19.840 --> 0:10:23.559
<v Speaker 2>whole nuclear talks process that was going on between Iran

0:10:23.600 --> 0:10:27.160
<v Speaker 2>and the Trump administration because those countries were really encouraging

0:10:27.440 --> 0:10:31.520
<v Speaker 2>Trump to do a deal with the Iranians, reduce the

0:10:31.600 --> 0:10:34.880
<v Speaker 2>tension in the region, reduce the tension with Iran. But

0:10:35.000 --> 0:10:37.480
<v Speaker 2>obviously Israel had other ideas.

0:10:37.760 --> 0:10:41.000
<v Speaker 1>What impact is this having on energy and oil markets?

0:10:41.200 --> 0:10:44.040
<v Speaker 2>So it's obviously going to have a direct impact on

0:10:44.040 --> 0:10:46.959
<v Speaker 2>oil markets because Iran is a major producer of oil.

0:10:47.080 --> 0:10:50.280
<v Speaker 2>Not only that it sits on the Persian Gulf where

0:10:50.320 --> 0:10:52.720
<v Speaker 2>we have the Strait of Hormones. There's a huge amount

0:10:52.720 --> 0:10:56.000
<v Speaker 2>of oil that passes through that narrow passageway in the

0:10:56.000 --> 0:11:00.120
<v Speaker 2>Persian Gulf every day. Iran has threatened numerous times in

0:11:00.160 --> 0:11:02.600
<v Speaker 2>the past that it will shut down or block the

0:11:02.640 --> 0:11:07.240
<v Speaker 2>Strait of horrm wares and countries like China rely on

0:11:07.480 --> 0:11:12.319
<v Speaker 2>a secure means of securing energy from the Middle East

0:11:12.520 --> 0:11:15.920
<v Speaker 2>so that they can run their economies effectively. But yeah,

0:11:15.960 --> 0:11:21.000
<v Speaker 2>the impact on oil prices is immediate. If the market

0:11:21.040 --> 0:11:23.280
<v Speaker 2>thinks that it's going to have an effect on supply,

0:11:23.920 --> 0:11:27.200
<v Speaker 2>then prices will obviously rise. There are some others.

0:11:27.000 --> 0:11:29.160
<v Speaker 1>And they are arising, yes they are, But.

0:11:29.600 --> 0:11:33.000
<v Speaker 2>There are other fundamentals that affect whether the market thinks

0:11:33.040 --> 0:11:35.480
<v Speaker 2>that supply is going to be protected or it's going

0:11:35.520 --> 0:11:37.400
<v Speaker 2>to come from somewhere else. It's going to be offset

0:11:37.880 --> 0:11:42.160
<v Speaker 2>by other factors in other countries, amongst other oil producers.

0:11:42.280 --> 0:11:46.160
<v Speaker 2>But fundamentally, yeah, the market is directly affected by any

0:11:46.160 --> 0:11:48.800
<v Speaker 2>conflict that happens around in and around the Persian Gulf,

0:11:48.840 --> 0:11:52.160
<v Speaker 2>and after all, Iran is a major opic producer.

0:11:53.000 --> 0:11:56.319
<v Speaker 1>We're seeing reports starting to service that Iran is signaling

0:11:56.600 --> 0:11:58.880
<v Speaker 1>an interest in de escalation. What does that mean?

0:11:59.400 --> 0:12:01.760
<v Speaker 2>Yeah, we have seen those reports today and I think

0:12:01.800 --> 0:12:04.559
<v Speaker 2>also Trump himself may have alluded to this. He's made

0:12:04.600 --> 0:12:08.400
<v Speaker 2>some reference to Iranians wanting to talk behind the scenes.

0:12:08.920 --> 0:12:11.959
<v Speaker 2>The Uranians haven't said any such thing, But interestingly, they

0:12:11.960 --> 0:12:15.680
<v Speaker 2>haven't actually said explicitly that will never go back to

0:12:15.720 --> 0:12:19.120
<v Speaker 2>the negotiating table again. They've said that nuclear talks for

0:12:19.160 --> 0:12:22.280
<v Speaker 2>now are useless while Israel is bombarding us, which is

0:12:22.360 --> 0:12:26.280
<v Speaker 2>different from saying we will never talk to them. And

0:12:26.520 --> 0:12:31.199
<v Speaker 2>maybe at the moment that looks like the most sensible

0:12:31.240 --> 0:12:36.680
<v Speaker 2>way through this, a back channel de escalation where through

0:12:36.800 --> 0:12:41.800
<v Speaker 2>mediating countries Iran says we want to end this. How

0:12:41.840 --> 0:12:44.839
<v Speaker 2>can we start? Tell the Americans we want to do this,

0:12:45.360 --> 0:12:47.920
<v Speaker 2>Tell them to tell the Israelis, X, Y, and Z.

0:12:48.760 --> 0:12:51.280
<v Speaker 2>But a lot of this, I think depends on what

0:12:51.840 --> 0:12:56.520
<v Speaker 2>Israel does and what Nettana who wants to do. Israel

0:12:56.559 --> 0:12:59.560
<v Speaker 2>has acted with a level of impunity over the past

0:12:59.600 --> 0:13:03.360
<v Speaker 2>twenty months in the face of a lot of international criticism,

0:13:03.840 --> 0:13:08.800
<v Speaker 2>so it's hard to know who, whether that's Trump or

0:13:08.840 --> 0:13:12.240
<v Speaker 2>someone else, is able to say to these Raelies, draw

0:13:12.280 --> 0:13:15.160
<v Speaker 2>a line under it. The Iranians want to draw a

0:13:15.200 --> 0:13:18.520
<v Speaker 2>line under it, and you know, listen to us.

0:13:21.400 --> 0:13:24.280
<v Speaker 1>This is the Big Take from Bloomberg News. I'm Sarah Holder.

0:13:24.559 --> 0:13:26.920
<v Speaker 1>To get more from The Big Take and unlimited access

0:13:26.960 --> 0:13:30.520
<v Speaker 1>to all of Bloomberg dot com, subscribe today at Bloomberg

0:13:30.559 --> 0:13:34.200
<v Speaker 1>dot com slash podcast offer. If you liked this episode,

0:13:34.400 --> 0:13:36.800
<v Speaker 1>make sure to follow and review The Big Take wherever

0:13:36.800 --> 0:13:39.679
<v Speaker 1>you listen to podcasts. It helps people find the show.

0:13:40.480 --> 0:13:42.560
<v Speaker 1>Thanks for listening. We'll be back tomorrow