00:00We haven't heard a great deal of progress in terms of what's going on with this, what feels like an
00:05increasingly intractable stalemate, this economic isolation plan that we're waiting for details on.
00:12What are you expecting, given that, well, Iran is and has been for a long time economically isolated?
00:21Well, I think a lot of us are going to be interested to see what Secretary Besson has to say
00:25tomorrow.
00:25I think he wrote a piece over the weekend that announces or describes what he's about to announce as an
00:32economic D-Day, sort of the beginning of a final assault on the Iranian economy.
00:39But it feels like, as you say, this is something we've been working on for more than a decade or
00:45maybe several decades now in terms of isolating and sanctioning the Iranian economy.
00:49I think a couple of things spring to mind right away is we really have very little sense of how
00:55bad things are within the Iranian economy right now.
00:57We know it's bad, but we're not really sure exactly where the pressure points are.
01:01And then secondly, you know, this is a regime that is not popularly elected, not facing any midterms anytime soon.
01:09So even if the pain gets worse for the people of Iran, it's not clear how that's going to change
01:13their behavior or any of their negotiating positions.
01:17Does the greatest impact potentially come down to what Beijing and what Russia can be persuaded to do?
01:23And we do know that President Xi is expected to head to Washington in September.
01:28Is there any leverage there for President Trump?
01:32Well, I mean, as you say, the biggest trading partners are China, and we have a whole lot of other
01:40business to do with China beyond Iran.
01:43So I'm not sure what kind of leverage the President expects he can exert other than maybe tariffs or sanctions.
01:49But we also know that the Chinese aren't just going to stand and take it if those sorts of threats
01:57are raised.
01:58And so they have played their cards before, responding with both sanctions, as well as blocking critical mineral exports.
02:07And so I'm not sure that's a game that the President wants to start playing at this stage.
02:11You know, the other key players in the region, Afghanistan is on one border.
02:16Turkey and Russia are on northern borders, not clear we have any relationship with either Afghanistan or Russia.
02:24Turkey might be able to help out, but it's not clear that that's at the top of their list.
02:30I think the one encouraging point that the President and the Treasury Secretary can look to is the announcement earlier
02:38this week
02:38that the United Arab Emirates was going to stop all of its economic relationships with Iran.
02:47That's been a key conduit of a lot of money in and out of the country.
02:51The question will be, is the government able to crack down on illicit and illegal flows back and forth?
02:59Christopher, part of the whole rationale for this conflict in the first place was to prevent Iran from getting a
03:04nuclear weapon.
03:05But a couple of thoughts here.
03:06Does this entire experience reinforce the Iranian desire for a nuclear weapon, sort of prove their point to a degree?
03:14And in terms of economic isolation, Exhibit A, North Korea endured decades of economic isolation, got a nuke anyway.
03:24Yes, you know, you make excellent points all around.
03:27I think others have pointed that out as well.
03:29If you if you the attacks on Iran, as you say, reinforce the case of the hardliners within Iran, that
03:38this is something that needs to be done.
03:39Now, obviously, the bombings last year and then this year have done a lot to set back that program.
03:45But I think expecting to resume a course of negotiations that requires trust to be built on both sides and
03:53requires inspections and transparency in Iran to trust the fact that its security is not threatened, have been delivered a
04:02big setback right now.
04:04And the question, though, remains, I think, what good does a nuclear weapon do for Iran?
04:11Maybe it it it helps it avoid another attack like this.
04:17But to be honest, I think what what we've demonstrated all from from what's happened in the last six months
04:22is that attacks like this don't really work.
04:24They don't really change the behavior of the regime in the way you want to change it and in fact
04:28has opened up these problems on the strait that we're all dealing with.
04:35Well, the regime's been around since the 1980s.
04:38President Trump this term's been around for slightly under two years.
04:41You mentioned earlier the Iranian regime doesn't have to face midterms, but the president does.
04:46Is that part of the play here to make things extremely uncomfortable for the U.S.?
04:50Do you expect any retaliation from Iran in the hope that they might be dealing with a new regime, a
04:56more sympathetic one in the United States, a couple of years down the track?
05:02Well, two years is a long time for the difficulty of having lost their access to global oil markets.
05:10The strait being closed is inflicting pain on them.
05:12I'm sure they would prefer not to have that blocked the way it is right now.
05:17And to expect that to go on another two years, I think, is probably something they would love to avoid.
05:22But I think the real question is just the imbalance in, I guess, steadfastness, for lack of a better word.
05:31I mean, Iran is defending its country.
05:33It's never going to give up on that.
05:35And the hope is that the U.S. will either get distracted or realize that the costs of continuing this
05:42effort militarily as well as economically are too high.
05:47And so it feels like we're still going to have to come to terms with some kind of agreement that
05:54neither side loves.
05:56But we're clearly not there yet, and we're going to have to see what the secretary announces tomorrow.
06:02You know, I'll just say as an aside, he has had two big announcements in the last two weeks with
06:07the yen intervention and then with the buybacks of the U.S. Treasury debt.
06:11You know, his credibility has been dented in the past couple of weeks.
06:15And so it's not clear that he's going to be, you know, restoring or reinforcing that reputation with whatever he's
06:24able to announce tomorrow, unless it's something completely surprising.
06:29Christopher, at one point, this felt like a war that needed to be dealt with before the midterms.
06:34As we get closer to November, it feels like the kind of incentive or interest is lapsing, right?
06:40Is this just setting up for kind of a continued war of attrition, well, potentially beyond midterms?
06:50Well, I think we're in a position where, if we're lucky, things will stabilize into kind of a neither war
06:57nor peace.
06:58Maybe there's no agreement, but way maybe ships are allowed to pass.
07:02Maybe not the flows that existed before the war.
07:06However, the broken trusts between the U.S. and Iran are going to make it very difficult to tackle these
07:14bigger issues right now.
07:15But I think the hope is that things will be able to at least get back to some more normal
07:23set of flows in the next few weeks or months.
07:29The president, I think, would have been delighted to get things over with a few months ago, but I think
07:33what he didn't realize that once he started this, it wasn't really his to decide whether to finish it or
07:38not, because the Iranians have that choke point in their hands.
