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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Certain places in Europe

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Speaker 1: are not even recognizable. Frankly anymore, they're not recognizable.

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Speaker 2: In his second term, President Donald Trump has been upending

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Speaker 2: global trade and breaking geopolitical norms faster and more dramatically

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Speaker 2: than in his first and a lot of that is

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Speaker 2: playing out with his relationship to Europe.

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Speaker 1: I love Europe and I want to see Europe go good,

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Speaker 1: but it's not heading in the right direction.

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Speaker 2: After a striking speech from the President in Davos last

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Speaker 2: week where he rashed it up the pressure on countries

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Speaker 2: who opposed his goal of acquiring Greenland, European leaders gathered

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Speaker 2: at an emergency meeting to consider how to respond. The

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Speaker 2: mood was grim.

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Speaker 3: The word shell shocked is not too much of an exaggeration.

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Speaker 2: Suzanne Lynch is Bloomberg's Brussels bureau chief.

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Speaker 3: I think the feeling in Europe after Donald Trump reiterated

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Speaker 3: his threat to Greenland and to tariff to put extra

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Speaker 3: tariffs on a number of European countries over their opposition

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Speaker 3: to Trump's plans on Greenland really took European leaders by surprise.

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Speaker 2: Just a few months ago, the US and the European

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Speaker 2: Union agreed to a new trade deal, but European leaders

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Speaker 2: suspended the approval of that deal in response to Trump's

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Speaker 2: tear threats over Greenland. Hours later, Trump walked them back. Now,

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Speaker 2: many leaders in Europe feel like the time has come

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Speaker 2: to reconsider the continence relationship with the US on a

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Speaker 2: fundamental level and to be prepared to push back even harder.

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Speaker 3: I think what they're wondering now is can they trust

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Speaker 3: the United States administration? What happened if in two or

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Speaker 3: three weeks, in two or three months, Donald Trump again

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Speaker 3: threatened to tariff or indeed threatened to annex Greenland again,

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Speaker 3: Should the European Union be more forceful and be ready

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Speaker 3: for this kind of action by the President and really

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Speaker 3: stand up to the US in a stronger way if

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Speaker 3: this happens again.

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Speaker 2: And says it'll take time for the European Union's twenty

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Speaker 2: seven member states to align on what to do next.

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Speaker 2: But one thing seems clear.

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Speaker 3: Europe feels that the United States has crossed the rubicon here,

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Speaker 3: that it cannot depend on the United States as an ally,

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Speaker 3: either in the defense or in the economic sphere, and

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Speaker 3: that really Europe has to look after itself.

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Speaker 2: I'm David Gera, and this is the big take from

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Speaker 2: Bloomberg News today on the show, how Europe could fight

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Speaker 2: back against the US as it makes moves to stand alone.

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Speaker 2: President Trump's threat to punish European nations with additional tariffs

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Speaker 2: is the latest chapter in what's shaping up to be

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Speaker 2: a long story, but his speech at Davos last week

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Speaker 2: led to more serious talk among European leaders about how

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Speaker 2: they should respond and how they could retaliate. I asked

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Speaker 2: Bloomberg Suzanne Lynch what tools Europe has to push back

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Speaker 2: on the US and President trum starting with what's been

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Speaker 2: called the trade bazooka, the Anti Coercion Instrument or ACI.

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Speaker 3: It's one of these acronyms, the ACI, that the EU

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Speaker 3: loves to use, but it's important. Look, this was a

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Speaker 3: new tool that the EU agreed on a few years ago,

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Speaker 3: and really its objective was to potentially counter China in

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Speaker 3: the future. They didn't necessarily think it would be something

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Speaker 3: they might use for the United States. But here we are.

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Speaker 2: Can you explain what that is exactly and how it

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Speaker 2: would work if it were implemented.

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Speaker 3: It would allow the European Union it would have to

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Speaker 3: agree to this a majority of countries and to hit

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Speaker 3: back on the United States if it felt or other

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Speaker 3: countries if it felt it was engaging in course of

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Speaker 3: trade practices. And then once they would make that decision,

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Speaker 3: then they would have to take another vote on what

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Speaker 3: measures to take. So in other words, we don't know

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Speaker 3: what measures yet. They would have to decide that. But

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Speaker 3: what this tool does allow the EU to do is

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Speaker 3: hit really the services sector, for example, potentially increased time

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Speaker 3: axes on US tech companies, curb US access to procurement

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Speaker 3: markets in the European Union. These are the kind of

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Speaker 3: trade connections and deep links that the United States services

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Speaker 3: in industry, the United States tech companies have into the

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Speaker 3: European Union. They're less easy to quantify. They're not just

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Speaker 3: products getting on ships and moving between Europe and America.

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Speaker 3: But at the Europeans feel that they really could hit

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Speaker 3: America hard with this, and the US knows this.

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Speaker 2: In the days leading up to President trump'speech in Davos,

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Speaker 2: Suzanne says the pressure was building within the EU to

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Speaker 2: consider using that trade bazooka. Trump's decision to take those

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Speaker 2: additional tariffs off the table has alleviated some of that pressure,

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Speaker 2: but it's left many EU leaders feeling unsure that the

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Speaker 2: status quo will hold.

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Speaker 3: The question is will they do that again? And I think, look,

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Speaker 3: there's a broader issue, in a broader soul searching going

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Speaker 3: on in Europe now about how they've handled Donald Trump

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Speaker 3: for years, for decades, the European Union always said, and

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Speaker 3: rightfully so, that they're big plus. Their big advantage is

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Speaker 3: their single market. The EU is a market of four

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Speaker 3: hundred and fifty million people. It's a very very important

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Speaker 3: trade partner for the United States. It's got a lot

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Speaker 3: of power in the regulatory space, for example, regulating tech companies.

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Speaker 3: So its force as an economic power is much more

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Speaker 3: powerful than its force as a defense power. For example,

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Speaker 3: that's more for NATO, not the European Union. Last summer,

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Speaker 3: it agreed on this trade deal that was pretty much

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Speaker 3: suboptimal for the EU, and now there is a school

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Speaker 3: of thought that that was a strategic blunder by the EU.

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Speaker 3: So I think now the conversation is that the EU

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Speaker 3: needs to show, according to some people, that it's got

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Speaker 3: the muscle for the fight, it's got the appetite for

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Speaker 3: a fight if it needs to, And in the meantime,

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Speaker 3: it's looking to try and strengthen its own single market,

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Speaker 3: get rid of some of that regulatory burden that's holding

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Speaker 3: back investment in Europe, that's holding back the development of

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Speaker 3: the capital markets unions in Europe, and it's holding back

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Speaker 3: businesses in Europe. Because this is something that the EU

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Speaker 3: does need to work on and try and close that

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Speaker 3: competitiveness gap that it has with the United States.

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Speaker 2: If Europe doesn't reach for that bazooka, are there smaller

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Speaker 2: weapons of retaliation that Europeans can go to?

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Speaker 3: There are? I mean, the other main option it had

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Speaker 3: and has is that it has a series of countermeasures

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Speaker 3: of tariffs that it could impose very quickly if it

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Speaker 3: needed to. And that's about ninety three billion euro worth

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Speaker 3: of tariffs they could hit US goods with.

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Speaker 2: And these are, if you.

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Speaker 3: Like, on the books, and they could be activated if

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Speaker 3: these tariff threats return or if Donald Trump acts again

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Speaker 3: in a more course of manner towards the EU when

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Speaker 3: it comes to trade.

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Speaker 2: Another option Europe could target the US tech sector.

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Speaker 3: The EU has huge regulatory oversight into tech companies and

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Speaker 3: most of the big tech and social media companies operation

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Speaker 3: in Europe are American now with a lot of figures

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Speaker 3: close to Donald Trump, people like JD. Evans take in

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Speaker 3: a big interest in US tech companies, so like that

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Speaker 3: is also something to watch. How does the EU respond

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Speaker 3: in terms of its regulatory powers. Look, the European Commission

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Speaker 3: is saying all the time that it looks at each

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Speaker 3: on a case by case basis, that it does not

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Speaker 3: have a bias against the United States. But ultimately this

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Speaker 3: is something that the EU does have power over when

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Speaker 3: it comes to US tech companies operating in Europe.

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Speaker 2: There was this moment during Davos when a Danish pension

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Speaker 2: fund offloaded a bunch of US treasuries, and we saw

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Speaker 2: the Treasury Secretary Scott Besson downplay that. He talked about

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Speaker 2: Denmark's insignificance and the insignificance of what that pension fund did.

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Speaker 2: But then President Trump had kind of a totally different answer.

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Speaker 2: He seen a lot less blase about that effort to

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Speaker 2: get rid of US treasuries. How do you think about

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Speaker 2: that moment in the context of potential retaliation, the kind

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Speaker 2: of financial might that these countries could bring to bear.

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Speaker 3: It's been a fascinating topic of discussion here.

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Speaker 1: Yeah.

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Speaker 3: Absolutely, I mean this idea that trading partners of the

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Speaker 3: United States in the United States could use their leverage

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Speaker 3: as holders of US bonds is a fascinating one. We

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Speaker 3: reported during the week that this particular Danish pension fund

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Speaker 3: was going to sell off one hundred million dollars in

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Speaker 3: US treasuries. And however, look in one way, this is

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Speaker 3: a small fry when it comes to the bigger picture

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Speaker 3: of the amount of treasuries that are out there. But

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Speaker 3: at the same time, I do think it is given

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Speaker 3: some people, at least in the administration, maybe, as you say,

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Speaker 3: Donald Trump himself, food for thought about this reality about

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Speaker 3: the stock of US treasuries, the reputation of US treasuries,

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Speaker 3: and the ability of others to hit back, even though

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Speaker 3: a lot of these treasuries are in fact held privately.

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Speaker 2: Coming up next, President Trump says he's reached a framework

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Speaker 2: deal with NATO over Greenland's future. Will it de escalate

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Speaker 2: tensions between the US and the EU or make them worse?

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Speaker 2: The reversal happened in just a few hours. President Trump

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Speaker 2: went from threatening Europe on the world stage to announcing

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Speaker 2: in a social media post that he and NATO Secretary

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Speaker 2: General Mark Ruta had agreed on a framework for a

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Speaker 2: future deal with respect to Greenland and, as the President

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Speaker 2: put it, the entire Arctic region. Trump also walked back

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Speaker 2: his tariff threats, but whether that deal could de escalate

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Speaker 2: tensions with the EU remains to be seen. I asked

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Speaker 2: Bloomberg Suzanne Lynch, what we've learned about that framework agreement

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Speaker 2: since Trump announced it.

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Speaker 3: I think what's very interesting about this is that, in

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Speaker 3: one way, a lot of what this deal seems to

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Speaker 3: be emerging as are a lot of the ideas that

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Speaker 3: the Europeans had been suggesting to the US administration in

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Speaker 3: the days running up to Davos. This idea that NAJO

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Speaker 3: itself could expand at Bolster is present in the Arctic.

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Speaker 3: So I mean, I think that's important to say that.

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Speaker 3: Even though, as we know, Mark rit To, the National

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Speaker 3: Secretary General, did have a big role in convincing Donald

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Speaker 3: Trump on Wednesday in Davas to rope back from his threats,

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Speaker 3: I think interestingly, there were some back channels and some

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Speaker 3: discussions about this beforehand. Now what is different is that

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Speaker 3: we heard Donald Trump talking, for example, about a golden

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Speaker 3: dome in Greenland during his speech at Davas.

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Speaker 2: His missile defense system like the one that exists in

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Speaker 2: Israel exactly.

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Speaker 3: He mentioned that specifically, Bloomberg was reporting during the week

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Speaker 3: that the US wants to rewrite its nineteen fifty one

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Speaker 3: agreement with Denmark so that any military presence can be

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Speaker 3: limited in Greenland. We also know that there is going

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Speaker 3: to be more of a presence of the United States

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Speaker 3: in Greenland now. I mean, the Danes have been saying

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Speaker 3: from the get go that the United States made the

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Speaker 3: decision to take out their military from Greenland to dial

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Speaker 3: that down, and they were welcome to dial that back

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Speaker 3: up at any point. But look, we do know that,

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Speaker 3: and this framework deal will entail the stationing of US missiles,

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Speaker 3: will involve mining rights that are aimed at keeping Chinese

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Speaker 3: interests out, and will involve a bolstered NATO presence in

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Speaker 3: the Arctic.

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Speaker 2: How do the Danes and Greenlanders feel about both the

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Speaker 2: framework for this deal and also the process by which

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Speaker 2: we've gotten to this point.

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Speaker 3: Look, this is a huge subject, a huge topic for Denmark.

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Speaker 3: It's a small country, but it's a powerful country. Denmark

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Speaker 3: has been a member of the European Union for over

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Speaker 3: fifty years now. It was one of the earlier members

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Speaker 3: of the Union it's Prime Minister Meta Friedrison is very

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Speaker 3: well known, very very prominent figure on the European political scene,

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Speaker 3: and it was interesting that she made the point that

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Speaker 3: she welcomed the development last Wednesday in Davos, where Donald

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Speaker 3: Trump agreed to a framework deal. She welcomed the move

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Speaker 3: by Mark Rutte, but she also made the points that

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Speaker 3: Ruta could not nego on behalf of Denmark. That's not

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Speaker 3: his prerogative as she sought. And of course the two

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Speaker 3: governments are saying that the government in Greenland and Denmark

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Speaker 3: that the island is not for sale, that sovereignty is

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Speaker 3: not up for discussion, but that they're open to talks

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Speaker 3: on issues like security and economic development. But look, undoubtedly

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Speaker 3: this has really taken you know, the Danish people, the

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Speaker 3: Danish government and the people of Greenland by surprise. And

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Speaker 3: one of the objectives for Meta Frederickson as Prime Minister

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Speaker 3: of Denmark is to ensure that the European Union, and

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Speaker 3: more importantly really that NATO is behind Denmark and has

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Speaker 3: got its back.

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Speaker 2: A question for you, Susayne, that's kind of geopolitical meteorology.

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Speaker 2: I'm wondering how much the temperature has come down as

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Speaker 2: a result of President Trump backtracking in the way in

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Speaker 2: which he has.

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Speaker 3: Yeah, I mean the way I put it during the

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Speaker 3: week when we were writing about this so much, I mean,

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Speaker 3: it was such a big moment. Was you know, the

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Speaker 3: crisis had been averted, that is for sure, But I

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Speaker 3: think the trust has been completely broken, There's no doubt.

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Speaker 3: I think there's been a lot of wishful thinking that

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Speaker 3: you know, ultimately the Transatlantic Alliance will get through this.

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Speaker 3: That Donald Trump, particularly after last summer when the Natal

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Speaker 3: Summit that happened in the Hague went out pretty well.

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Speaker 3: European allied members of NATO agreed to increase their spending

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Speaker 3: of five percent of GDP. Donald Trump left the Hague

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Speaker 3: a happy person back to America, claiming and rightly saying

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Speaker 3: that he had succeeded in encouraging European members to cough

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Speaker 3: up more for the alliance and seemed to be committed

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Speaker 3: to that. So I think there was a sense that

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Speaker 3: things were going to be back on track, but this

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Speaker 3: Greenland issue had really really taken people by surprise, and

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Speaker 3: there's been a lot of anger. I think. Look, I

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Speaker 3: think at the summit on Thursday, the overwhelming view was

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Speaker 3: we're shaken by this and we are no longer going

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Speaker 3: to be naive. But let's try and be pragmatic about

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Speaker 3: it and get this relationship back on track. I think

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Speaker 3: wayna minds is the serious issue of Ukraine. The Europeans

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Speaker 3: know that they need the United States to remain engaged

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Speaker 3: in this and that is of existential importance to Europe.

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Speaker 3: But at the same time, I think they've learned their

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Speaker 3: lesson that ultimately they need to be able to stand

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Speaker 3: on their own two feet and have more strategic autonomy,

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Speaker 3: as the new phrase is going. In one way, this

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Speaker 3: should not be a surprise. I mean, Donald Trump is

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Speaker 3: someone who is instinctively skeptical of multilateral institutions and the

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Speaker 3: European Union. This idea of a collection of twenty seven

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Speaker 3: countries is not something he warms to. So I think

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Speaker 3: in a way, the European Union needs to accept that.

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Speaker 3: Quite frankly, it needs to understand that Donald Trump and

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Speaker 3: this White House doesn't really see the EU in the

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Speaker 3: same positive terms that American leadership did, particularly during the

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Speaker 3: foundation of the European Union after World War Two, as

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Speaker 3: a stabilizing force, as a force for economic good in Europe. Instead,

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Speaker 3: the Trump administration sees it in a very different way

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Speaker 3: as a kind of fading block and a fading power,

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Speaker 3: and it prefers to do business elsewhere.

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Speaker 2: Suzanne says that what many European leader recognize is that

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Speaker 2: there are other benefits to charting a more independent path

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Speaker 2: forward beyond protecting Europe itself from the whims of President Trump.

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Speaker 3: The reality, if we step back a bit, is that

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Speaker 3: Europe as a major economic power has obviously been losing

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Speaker 3: ground relative to China in particular, and indeed has the

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Speaker 3: United States. But I think the European Union is aware

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Speaker 3: that it needs to look beyond the Transatlantic Alliance now

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Speaker 3: and it needs to diversify and forge new relationships, be

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Speaker 3: it in security, but particularly economically elsewhere. So it's realizing

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Speaker 3: that it have been too dependent, for example, on China

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Speaker 3: for critical minerals, on China for many of the imports

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Speaker 3: that go into a lot of the production in Europe.

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Speaker 3: So there has been an awakening I think over the

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Speaker 3: last couple of years that the European Union needs to

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Speaker 3: strengthen its industrial base, needs to pair back your regulation,

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Speaker 3: and needs to ensure that there's a working capital market

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Speaker 3: and an investment climate. So it can leverage it's very

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Speaker 3: rich single market.

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Speaker 2: Last question I want to ask you, I'm curious about

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Speaker 2: this idea of European self improvement and looking for silver

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Speaker 2: linings here. Europe is often criticized for being too fractious,

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Speaker 2: It has many member countries with trouble speaking as one.

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Speaker 2: As you mentioned, different countries, different economies. Is a potential

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Speaker 2: silver lining for Europe here that European nations have come

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Speaker 2: together as a result of this recent fracas in a

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Speaker 2: way that has been previously very challenging for this block.

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Speaker 3: I mean, it is the case that the European Union

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Speaker 3: really only moves forward at a moment of crisis. So

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Speaker 3: for example, we saw that during the height of the

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Speaker 3: Eurzone crisis. We saw them with Brexit, when Britain decided

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Speaker 3: to leave the European Union, a huge rupture for the

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Speaker 3: block that a member and a big member at that

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Speaker 3: had decided to leave the EU, and that's now ten

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Speaker 3: years ago almost Rather than spawn copycat movements across Europe,

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Speaker 3: that actually I think served to galvanize the European Union

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Speaker 3: and realize a kind of be careful what you wish

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Speaker 3: for in some countries that yes, people might complain about

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Speaker 3: the EU, but it's better to be in the block

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Speaker 3: than outside it. So I think this shock, this rupture

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Speaker 3: that's happening now between the United States and the European

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Speaker 3: Union may actually serve to generate and some much needed

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Speaker 3: action in this area. And I think that's what you're

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Speaker 3: going to see a lot of focus on in the

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Speaker 3: next year or so in Brussels.

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Speaker 2: This is the Big Take from Bloomberg News. I'm David Gerrat.

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