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It's day four in Israel, where the deathtoll is now approaching two thousand. Welcome to the fastest show in politics, as Israel prepares for the next phase of its retaliation against Tomas, which has already brought hundreds of deaths as well in Gaza. We'll talk about the strategies at hand now for the Israelis, as well as potential US involvement with the former Secretary of Defense Mark Esper. He'll be with us in just a moment, we're standing by to
here from President Biden. He'll be addressing the situation in Israel from the White House. So welcome to the Tuesday edition of Sound On as we wait to hear from the President, as I mentioned, set to address the nation from the State Dining Room, and we do have a sense that he will be obviously condemning the attacks from Hamas, but it's unclear exactly what he's going to say about a potential supplemental request for funding to what extent the US will lean into this.
We know we have, of.
Course a carrier strike group that's on its way to Israel right now, and that's where we begin our conversation with Mark Esper, chairman national security partner at Red Cell Partners. As we've told you, he is also author of the New York Times best selling memoir A Sacred Oath, and mister Secretary, I welcome you back to Bloomberg. It's great
to have you. We're reporting on the terminal now that the build up of forces is getting to be something of note here as Israel stands by for the next phase, and I wonder what you see in the days ahead as the next phase in this retaliation against Hamas.
Yeah, Joe, good afternoon. First of all, good to be with you and your viewers and listeners. Look, at this point in time, I think the Israeli defense forces certainly need to make sure that all militants in Israel have been killed or captured. The reports are that that has been accomplished. Second, we see that they're massing forces now they've called the reserves three hundred and sixty thousand or so. You see heavy equipment coming in, tanks, armored personnel carriers,
et cetera. It will take them a few days short days to again muster, mobilize, brief plans, and then be prepared to move into Gaza. In the meantime, what they really have to do is tamp down on this rocket fire coming out of Gaza. As we speak, Hamas is shooting rockets into Ashkalan, have been doing so for a couple hours or so, continue to pummel Iran. I'm sorry, Israeli towns and cities. So I think those are the
next few steps. As we look at it politically, bbing Net and Yaho's already come out and talked about forming a unity government. That's a good move. Obviously lining up supporters globally. I think that's one of the things we'll here about from President Biden when he comes on. But there's this political international dynamic that needs to happen as well, particularly warning off would be opportunists. Opportunists such as Syria, Iran and other groups like Hezbalah.
We see today Boeing speeding one thousand smart bombs to Israel following the attacks. Mister Secretary, to what extent can we transfer weapons now, either from our stockpiles here in the US or our stockpiles in Israel without going to Congress, without further delay.
Well, we do have some stockpiles presently in Israel, so that's available, and we can move other munitions from throughout the region and of course from the United States. But
you know, the munition's precision. Got munitions in particular will be a top request for the israelis Actually a top of that will be intelligence, both tactical with regard to what's happening on the ground in Gaza, around Gaza, but also strategic what's happening in the region, making sure that we had our eyes and ears out about what other moves countries might make. So I think intelligence munitions. Maybe
air defense might be another request as well. And of course, as you mentioned up front, the presence of the Carrier Strike Group and the Eastern Mediterranean sends a very very powerful message of support for Israel, but also deterrens again from others who might want to act here in the coming days and weeks.
Are there guardrails on transferring weapons from our stockpiles in Israel to the Israelis? Are there guardrails on using them in Gaza, of course, a heavily populated area that's full of civilians.
Well, the transfer or sell weapons from the United States to Israel, it's something been happening for decades. We know it very well.
Of course.
I think the United States provides over three billion dollars a year in assistance to Israel. Good chunk of that military, so we know what they need, we know what's been improved in the past. We always expect those to whom we sell provide weapons will act in accordance with the laws of war and the Geneva Conventions. The Israelis the IDEA F is a very professional military force. We're confident they take great care to avoid civiling casualties and unnecessary harm.
That's going to be difficult to do in Gaza, of course, because of the density of that area, but also the fact that Hamas uses humans to include not just the Israelis they've captured, but Palestinians as well, to hide within those densely populated as populated areas, putting weapons where they shouldn't, such as in schools and whatnot. So it's a challenge in that place when you're dealing with Hamas.
It's been pretty remarkable seeing the Iron Dome in action over these past four days. Mister Secretary, you know all about it. I mean, they're obviously dealing with overwhelming numbers of rockets, but they've repelled an incredible number of them. I think most would suggest that it's a success, and at some point they're going to need many more missiles to make up for those that have already been used.
This is something that came up with Kevin McCarthy, the former Speaker, yesterday, and I'll play you something that he said in a moment. But I wonder how quickly I believe Raytheon helps to make those missiles in partnership with an Israeli company, how speedy could those be? Replaced.
Yeah, you know, I don't know the exact number, but it's not like you're making donuts. They don't go in at night and come out in the morning. I mean, these things take weeks, if not months. Has been my experience, many months to build missiles. So I'm I'm sure Israel has stockpiled a good deal. But as you said, what Hamas is shooting three thousand and four thousand rockets in a two to three day period, you have to have
a lot of stockpile because not every interceptor hits. Although it's a great system, right, a ninety percent success rate, But if you figure if you're shooting at one thousand missiles and you hit ninety percent, that means one hundred are getting through and so not perfect very good. I think it's when you compliment that with Israeli warning systems and bunkers and whatnot, it goes a long way. But clearly you have to continue production. We have to accelerate that.
Keep in mind that Hesbala has well over one hundred thousand rockets and missiles in southern Lebanon. Estimates have been as high as one hundred and forty or one hundred and fifty thousand that can easily overwhelm Iron Dome, particularly if you fire you know, hundreds and hundreds at once. So it's a big concern. And we're not even talking about Iran yet too. So it's something that we have to accelerate on our end, and I'm sure they are doing on theirs as well.
Yeah.
So when Kevin McCarthy was asked yesterday about potential supplemental funding for Ukraine, potential supplemental funding for Israel, and also replenishing our own munitions, I thought it was an interesting turn that he took here, and I'd love for you to listen to what he said and respond when it comes to and something that you know about, intimately the supply chain and the manufacturing chain on these weapons systems.
Here's Kevin McCarthy right now.
Ukraine still has another nine billion that they can draw down sitting there for arms. The question comes now in our stockpiles.
We need a whole.
New ability for the procurement and movement of the building of our weapons. It's too slow, it takes too long, and we've watched others try to take advantage of it.
Secretary Esper, I wonder your thoughts on that what needs to be done now, knowing that the push and pull from Ukraine in Israel are not going to be going away anytime soon, and they will be continued. Major asks here of the US and requests for supplemental funding to create these weapons, but we don't have the infrastructure to make them.
What needs to be done, well, you have to go back in time. I mean the speed by which we produce, deliver order weapons equipment is too slow, not just for what Israel is asking or Ukraine is asking for, but for what the United States military itself needs. And look, there are two guilty players here. One is the Pentagon with the slowness of contracting and determined requirements and building
their budgets and sorting through this and that. But then it goes to Capitol Hill, and Capitol Hill is an eighteen month process, right, and then they put restrictions on how many can be built, and they don't allow multi year purchases. In many cases they could not just give predictability to industry but also lower the price per unit for the United States taxpayer. So all hands are dirty on this. We certainly need a new system, I think
the defense industrial base. If we're willing to make the investments in it to have sufficient not just in time delivery, but just more than enough delivery as well, so we have ample room in case we get into a bigger fight with China. So I think there's a lot of needed. But if you look at the defense budget of the past few years, each budget submitted by President Biden has been below inflation, so it's been a cut in real terms.
And then the budget cap is that was recently agreed to the last several months also imposed as a cap and next year will be even further smaller. So defense is not keeping up with the needs of what the world is presenting us. The threats are far greater than the supply. And I think it's not just more money. I've always argued for three to five percent annual real growth. We certainly need that, but we also need reforms to
both how Congress works and how DoD works. I co chair commission at the Atlanta Council that has focused just on that. I work in the venture capital space. I see it from the innovator's perspective. We are way too slow to bureaucratic and it's not just a pentagon that's in the way, but it's the White House and it's Congress too.
Well, in the meantime, sir, it's going to be door to door fighting. It appears in Gaza with a hostage rescue operation underway. God knows what is going to follow. When we consider the idea of a ground invasion, what is it that Israel actually needs? Obviously Hamas doesn't have an air force. What are the tools required for this job?
Well, I think in terms of munition's request, it's going to be smart weapons, particularly you know, precision bombs, small bombs that don't create as much collateral damage, such as the small diameter bomb and so on. But look, the bigger question is what does Israel aim to do. Are they going to go in to punish Hamas by decapitate,
decaptaining the leadership, knocking out command centers, destroying stockpiles. Are they going in there to create a more of a buffer within the Gaza strip itself, to push back the settlements even further? Are they going to go into occupy to make sure that Hamas doesn't rise up again? And each one of those has pros and cons. Clearly, I think the sentiment is nobody wants to do another because of you know, another occupation of Gaza, but I think
that has to be defined first. And the big complicating factor here is that Hamas is holding somewhere between one hundred and thirty to one hundred and fifty Israelis hostage and they promise to start killing them on TV filming it if Israel continues to attack without warning severe sites, and of course that would include an incursion into Gaza. So it's very complicated for the Israelis. What do they do?
How do they conduct this war in a manner consistent with the laws of war and whatnot when they're dealing with a barbaric enemy who doesn't follow any rules and is holding their people hostage. And some, by the way, we suspect of those hostages are foreign nationals, to include possibly Americans, So it's real complicated. This is not an easy situation for these Raelis at all, and for anybody.
It sure isn't. So to what extent, then, does the gerald Ford Carrier group actually play a role in all of this? We're talking about precision maneuvering in a congested urban environment. Where does an aircraft carrier come into play? Or is that simply about projecting American strength?
I think first and foremost that's about projecting Americans support and confidence in Israel. It's a very muscular, visible thing to do. Second, it's about deterring adversaries, particularly nation states like Syria like Iran, from doing anything trying to take
advantage of the situation. A Third, it does give us, of course, capability between the carrier and then the cruiser and four destroyers that are accompanying the carrier to provide firepower, long range missiles strike aircraft if something were to go awry.
But I think the other thing it more likely provides is a platform by which we can conduct non combatant evacuation operations for Americans, and if worse comes to worse, we actually have the capability to use those ships as platforms to go and conduct hostage rescue missions alongside with side by side with the Israeli So I think it provides a number of functions. But first and foremost it's about sending a power signal to Israel and to Israel's adversaries in the region.
To what extent it is also potentially for a widening conflict. The long game worst case scenario, well, the.
Long game is that the roots to this operation, not just the funding and the arming and the training, but actually the planning and the green lighting are positively, definitively determined to go back to Iran. Then I think it's a much bigger game. It's now could be a regional conflict, depending on how Israel responds or wants to respond. They can't take on too much at once. But in that case, you can suspect that we will be providing more support.
The TEL here for me would be more American forces, particularly strike aircraft and air defense systems, moving into the region. That tells us that something bigger may be up. And I look, at the end of the day, all roads lead back to Iran. They're funding all this terrorism throughout the region, whether it's Amas has Belah and Yemen, she I militia groups in Iraq or you know Shea groups in other countries, it all goes back. Then, we've been
dealing with this for forty years. You're never going to get rid of it until you deal with the I told all once.
And for all.
Well, there you have it from the former Secretary of Defense. Mark Esper is now a partner and board member at Red Cell Partners and of course author of the book A Sacred Oath.
It's great to have you back.
Mister Secretary, and appreciate your insights here at an important time. As we assemble our panel, Rick Davis, Bloomberg Politics contributor with us, as well as Genie Shanzano, Bloomberg Politics contributor in New York, we're going to get to hear from both of them. Genie, I'm going to start with you as we stand by for President Biden. What does he need to say today from the White House.
He needs to express sympathy and empathy for all of the victims and their families. That is critical. He needs to express again rock solid support for Israel, our closest ally in the region. He needs to condemn what Hamas has done, and he needs to express full US support for whatever it takes to help Israel in this moment of distress. Beyond that, I think he needs to rally the American people. This is particularly important. I have just been talking to young people. You look at college campuses
across the country. There are some very divergent opinions on this issue as it pertains to the treatment of the Palestinians. He needs to address that. It is something we are going to hear an awful lot about the fear of many supporters Israel is that you go forward in a few weeks, a few months, support that is now very robust will diminish as we see Israel do what it needs to do to take care of Hamas. So these are very real concerns for the President and the administration.
Brick Davis with me here in Washington. How much of a hardline then, does Joe Biden need to take today?
Look, I think that he's got to be pretty tough. You know, there's been a deafening silence from the administry so far on this. I mean, they've obviously said the minimum basic requirements for support for Israel. I think the President needs to put this in the context of where the United States is in the world and how dangerous it is.
We're going to take the deep dive with our panel coming up, Rick Davis and Jeanie Shanzano. As we stand by for the president. We will bring you his remarks from the White House live as well here on the radio and on YouTube search Bloomberg Global News. The cameras are lit here on another important day in Washington. We haven't even mentioned the battle for speaker. Yet we'll get to all of it ahead. I'm Joe Matthew. This is Bloomberg.
You're listening to The Bloomberg Sound on podcast. Catch the program live weekdays at one Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
President Biden said to address the nation from the White House well twenty three minutes ago. Clearly things have been delayed because we've just learned that he's been on a phone call with Prime Minister Benjamin net and Yahoo both Joe Biden and Kamala Harris on this call, which might mean that we'll hear from him shortly. As we know the call has ended. I'm Joe Matthew in Washington with our panel, Rick Davis and Jeanie Shanzeno with a s
Bloomberg Politics contributors, trying to understand the way forward here. Rick, you were making the point that the President needs to take a pretty hard line today, and I suspect that getting off the phone with Benjamin nett Yaho would go a long way to getting him to that point.
That's right, And I think that you know, we're in a bipolar world situation. We're very much in competition with our adversaries China, Russia, Iran, and this is a hot war that Iran has either inspired or instigated. And so in that context, we see a lot of storm clouds gathering, whether it's in Lebanon with Hesbala, what's already happened with Hamas, and ultimately we're going to have to deal with Iran
on all this. And so the President needs to start to set the stage that this is not just a Hamas incursion into Israel, but this is a competition you know that we have going on around the world. We have a hot war in Ukraine, now, a hot war in Israel. We have a lot of tensions around Taiwan. I mean, I don't want to take the attension away from Israel, but the President needs to understand, you know, like communicate to the American public that we live in
dangerous times and these are our adversaries. They're not our competitors, right, there are adversaries, and we need to start thinking about what we need to be prepared to do. We have these lame debates in the House of Representatives out whether we give aid to Ukraine at a time when you know, we've got all these adversaries gathering around us. This is
not a safe place for Americans in the world today. Well, Genie, we know that forces are amassing along the Gaza border here and that there will likely be a ground invasion. It's just a question of timing and scale. What do you expect to see.
From Israel and so what extent will it color the way Americans are looking at this.
Yeah, I mean it is a very moment. They are gathered at that border. We do expect a ground invasion. They have to respond, and they have to respond with force, and I'm sure we will hear the President support that.
You know.
The challenge for Israel, and the challenge for the president is that so much of this is going to be covered on social media and we are going to see
live pictures. So the president is going to have to underscore the brutality of what happened, of what Hamas did to the Israelis and to the Palestinians, what they did to their own people over this weekend, and the terror that they wrought and explain why this tough response is necessary, why we need to support it not just today and tomorrow and for the next few days, but for weeks and months going on forward, because that's how long it
is going to take. I think he has also got to address what is a looming public opinion challenge for him in the United States and for Israel, which is that you see an awful lot of dissension already in hours after this on college campuses and in cities across this country. He has got to bring people along to explain why this isn't our interest and what we can do as peace loving democratic people to support a proper
way forward on this. So it is an enormous challenge for him, and he is doing so with the United States, you know, United States rather one hand behind our back, having no Speaker of the House, and our own domestic politics and something of disarray. So an enormous challenge. But the president has got to be up to it. It has been two days of silence, as you mentioned yesterday, at this time, Joe, they put a lid on the president at eleven yesterday. We haven't heard from him since.
He's got to come out strongly here and he's got a promise to be president every day going forward to lead the world through this crisis.
Update from Turkey, Rick Davis, I've been waiting to hear what kind of language that Erdawan would use, and it's not good. We heard from him at a news conference with the Austrian Chancellor a short time ago. This is just off the terminal, Rick. He says, what is a US aircraft carrier doing in Israel? This is a direct quote. It is going to shoot around Gaza and cause a very serious massacre. This is of course a NATO member speaking. How much does the US need to worry about President Erduwan?
Look, I think we have to always be on alert that Erdwan is under enormous pressure within his own region. He is dependent upon Russia for oil and gas supplies. He treads lightly with Russia on security assistance because he is a member of NATO and we obviously have a shooting war are going on in Europe. So so he finds himself in a very particular position. And not to mention the fact that he has a lot going on with Russia, you know, vis a vis the fighting that's
going on in Syria. So they are engaged in the backyard of Israel with Russia, you know, fighting you know, various groups of terrorists. So he is completely conflicted, and I am confident that that Vladimir Putin is using this opportunity to try and divide allies and nations in a way that can create as much disruption for Israel as possible.
Uh.
This is a This is a great day for the desk spots around the world because they see America now having to traffic cop another skirmish in the region that otherwise, you know, a week ago, seemed like a peaceful, relatively peaceful location. So I think Erdawan is making good use of his his his geography, uh and trying to preserve options for himself. But it doesn't do the United States any good whatsoever.
GINI, what does Joe Biden need to say about hostages today? There are a lot of worries about Americans who might be held in Gaza as we speak.
He's got to say, we are going to do everything we can to support Israel and to bring all of the hostages home safely.
You know.
One of the things that we haven't talked a lot about. It is a major precept of Judaism that you don't leave anyone behind. So this is not only an issue of national and political commitment, but also a religious commitment for anybody who is Jewish. And so the President has got to say, and we just heard from Mark Esper, there may be Americans held over there as well other foreign nationals, that we are going to do everything we
can to support bringing those hostages all home safely. And you know, just to follow on what you were talking about about Turkey. This is why the tweet that came out of the State Department that they then deleted was so frustrating for so many people. This was that tweet which said Anthony Blinken saying and obviously not written by him, that they were talking to Turkey about a ceasefire, and then that was deleted. It was the second deleted State
Department tweet since this crisis. They've got to be very very careful about statements like that. Obviously, again not something Tony Blinken himself, you know, sent out or was justified, and they did delete it. But it is very very concerning because of the situation in Turkey. Yes we should be talking to them, but they have to be very careful about the statements that come out, and that tweet was a mammoth mistake by the State Department.
Well, you know, it reminds us how careful President Biden will need to be with his words. Albeit stern. I think to your point, Rick, this would be one of those days where the communications office is saying, no questions, right, We're going to go out there, We're going to stick to the script, a strong message, come back behind closed doors.
Yeah, you would think that would be the case. It'll be interesting just moments from now from the president directly and see whether or not he undermines that potential request by the communications officer to let the speech speak for itself.
That would be your advice.
That would certainly be my advice, especially if the speech has any kind of importance to it visa VID, the American people and the Israeli people.
I gotta believe it will, right.
And the presumption is he's going to say something important because he's the president and this is an important time. But like the minute he starts taking questions, because he loves to take questions. I give him credit for that. He likes to talk to the American public through the press. You know, no, tell him what's going to come out of his mouth? And this is one where you just want to leave well enough alone and let the speech or the talk speak for itself.
What do you think, Genie, no freelancing today or is this the moment where he digs down and speaks passionately from the heart.
You know, I'm not sure he should freelance. That's never a good idea in times like this. But certainly all the reporters from Bloomberg and Elter will be trying to get a question in and he is a very trick's point tempted to answer them. We know that's his personality. So they're going to give it a try, and we'll see if he goes for it.
He should not, however, Okay, you got the advice from two crack strategists here. I hope the President, of course, is listening.
You're listening to the Bloomberg Sound on podcast. Catch us live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
There have been many questions in our time here without a speaker of the House about what happens with funding for Israel, never mind Ukraine. With the White House already making that supplemental request, we do have a headline important on the terminal right now. Democrats introduce House bill to restock Israel's Iron Dome. Bipartisan bill to appropriate two billion dollars for Israel, introduced as we reassemble our panel, Rick
Davis and Genie Shanzano, Bloomberg Politics contributors. Rick, We've talked a lot about life without a speaker here. It's not making things any easier. And incidentally, if you're following along on your home game, they're going to be behind closed doors five pm a few hours from now, Steve Scaliez, Jim Jordan making their case to the Republican Conference. But
we don't expect an actual speaker's vote. Well, I guess it could happen as soon as tomorrow, Rick, But I don't think a lot of folks see an outcome in the immediate term here. To what extent will that hamper our ability to help Israel?
Yeah, I think that we're a bit tied up. I mean, even people like Congressman McCall was asking for resolutions of support to Israel be done on the floor of the House of Representatives a relatively benign but important measure to show us support for our ally in the region, and we have no mechanism to get a resolution passed. I mean, that's how dysfunctional the House of Representatives are. I mean, tonight, the caucus will meet and hear from you know, Steve
Scalize and Jim Jordan. They will ostensibly start trying to select a caucus candidate. Democrats will unanimously support tonight in their own version, Hakim Jeffreys for the job of Speaker, And so they'll be standing on the floor tomorrow morning saying.
Let's vote.
We got a candidate, and so Republican are like, oh, we'll get right back to you. So you're right. We don't know how long it's going to last. But there is more urgency today than there was a week ago when they broke because the reality is the business of the House is important and it does need to get going. And in addition to funding our government in just a few short weeks, we need to start showing our support for Israel, and that includes being able to allocate economic and military aid.
Genie. When you see the headline like this, Democrats introduce House bill. This is the Republican majority right in the House. The Democrats introduce House bill to restock Israel's Iron Dome. Are democrats 's running the House right now?
Yeah, they don't have the numbers too, but they're certainly trying to get their statements out there. And you know, the reality is, we hope that this what's happened in Israel introduces some urgency to the Republicans on all of this, but the fact is that the Speaker's vote is going to have very little to do with messaging to the outside world or even the rest of the United States. It's going to be about the rules of the speaker, how you overthrow and funding the government, all the things
it was about before this happened. And it just shows us once again how this kind of dysfunction in our own domestic politics has in real world consequences on everybody around the world and ourselves included, and has to be addressed. But there's little mechanism to do that. So we suspect we will get votes, as nobody seems ready or nearly close to the two seventeen to eighteen necessary to become speaker on the Republican.
Side, there's a debate within the Republican Conference, Rick Davis about whether to pass a rule that requires the votes to be counted before they bring this speaker's battle to the floor. So you get behind closed doors, you pick a Jordan, Escalise, whomever gets to two seventeen, and not until that moment do we go in front of the American people. Does that need to happen?
That's what's happening. That's the plan to hopefully produce a caucus not just a majority of the caucus, but literally the entire weucus stands behind a winner. You can assume that there'll be a few members who choose to go the other way, a different way, but the reality is it would be an immense embarrassment to recreate the fifteen ballot slog that Kevin McCarthy had to go through to
become speaker. And if neither one of these candidates actually can get there, the question then is who within the caucus can try and create a you know, sort of coalition to rule the Republicans. And and and we haven't gotten anywhere near there, right, We've got to test Scalise and Jordan to see whether or not they can actually
move votes from one to the other. And if not, uh, then people are going to be starting to look at other people like hern or you know, others to to see if there's a third, fourth, or fifth candidate and ultimately potentially even Kevin McCarthy again uh, to serve as speaker and unite the caucus.
We spent some time here in the bloomberg of Washington Bureau today with Larry Hogan, the former governor of Maryland, of course Republican who's on all the shortlists of potential third party candidate, no labels, what have you. But of course you know, he was one of the Republicans to come out early against Donald Trump and sort of buck the conventional wisdom in his party. And he's dismayed.
At what's going on right now.
Here's here's how he put it earlier today.
It would have been a mistake anyway. And and then it's in the middle of an election year. We're trying to show that we can govern, and we're showing that we can't. We're proving what everybody hates about Washington. It's nothing but divisiveness and dysfunction that they can't get out of their own way. And to make matters worse, We're now in multiple crisises around the world, with the war in Ukraine and this war in the Middle East, and we're rudderless.
We are rudderless, Genie. What are Democrats to do in the midst of all this? Just keep voting for Hakim Jeffries every rounder? Are they engaging with the Republican leadership as it stands now? Patrick McHenry, whoever else qualifies to try to create a relationship, to try to maybe strike a deal to move this forward.
Yeah, at this point, all we know is that there are lock step behind takeem Jeffries, as they have been since this House began. Would that change? I'm not sure, but i will tell you we do hear from people in the last forty eight hours on the Democratic side, and I'm talking just people in passing constituents who say Democrats should do something, particularly given what's going on in Israel, to get even a temporary speaker in place. So they may be hearing some of that from their constituents who
say enough is enough. And you know what's fascinating to Hogan's point, You go down to Matt Gates District while he is being you know, really you know look down at in Washington, d C. In his own district, they are cheering on what he did. And that is the
problem for people like Larry Hogan and others. They are getting support the Matt's Gates of the world and the Marjorie Taylor Greens in their own districts, and so the idea that anything would be different this time around is probably not in the often.
Rick, Larry Hogan was asked about Matt Gates at a different part of the conversation. You referred to him as a cancer on the party and the institution.
So is it surgery or chemo?
I don't know about that. You'll have to tell me. You're the insider. I'm Joe Matthew and Washington, Rick Davis and Genie Shanzeno.
You're listening to the Bloomberg Sound On podcast. Catch the program live weekdays at one Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.
Welcome to our two of Bloomberg Sound On. I'm Joe Matthew in Washington alongside Kaylee Lines, who joins us for the conversation every day at this time, and Kaylee, we thought we would have heard from President Biden already, this would be our post speech analysis with you, and he hasn't started yet, and there's a good reason for that. He was actually on the phone with Benjamin at and Yahoo.
As we understand, the Vice President was as well, kind of outlining the actions taking place here, and Bloomberg is reporting that he's going to take a pretty hard line in this address.
We're expecting him to outline specifically what the US is doing to support Israel after these attacks from Hamas and amid the ongoing violence that we are still very much
seeing in the region at the moment. But of course it becomes a question of what exactly the President is going to promise and whether or not he needs congressional buy and buy it in order to actually deliver, because if it's any aid that requires congressional approval, there is a giant question mark, Joe as to how quickly that approval can actually be granted, considering there is no Speaker of the House.
We just finished a conversation with Rick Davis and Genie Shanze, and I don't think either of them see a speaker emerging by the end of the week, never mind something tomorrow. But that is actually what the Republican Conference is hoping.
They're going to try.
They'll try. Whether Jim Jordan Stevescals get to two seventeen is another thing, but it might take a small miracle for that to happen.
Yeah, you need the majority number in order to actually get the speaker's gavel, and if you're kind of splitting votes in the different factions of the Republican Conference, it's hard to figure out how exactly the math is going to work, and frankly, whether they're going to be ready to bring something to the floor in the next, say, twenty four hours in r.
Yeah, look, my question right now is you know, is Hakim Jeffrey's running the House? You see Democrats introduced a bill to restock Israel's Iron Dome, which is exactly what you're talking about here. You're not going to get anywhere without a speaker though, or the rest of the House, and so a lot of question marks. As we wait
to hear from the President. Will bring you those remarks live once again and a great opportunity to bring in the general, Lieutenant General Ben Hodges, retired, former Commanding General US Army Europe. It's great to see you, General, Welcome back to Bloomberg. We have very specific questions about what's going to happen next here as this retaliation unfolds. We know that the first order of business, though, is what's
been described essentially as a hostage rescue mission. To what extent can the Israelis, working with the US get these hostages out of Gaza before this ground invasion.
Well, of course, what Hamas has done and the reports that came out today the infants that were murdered just really highlights who it is Israelis are dealing with and what kind of people Hamas has probably a major concern for the IDF Israeli Defense Forces. How do they carry out their mission and also try to get hostages out of there. That's going to be very difficult because Hamas of course, will be using these hostages exactly for the
purpose of making it difficult for the IDF. At some point the mission is going to have to be not only is it hostage rescue, but also the response to Hamas they're not going to be able to wait a lot longer before they have to put troops in there, I believe.
Okay, So if you think that moment is coming, it also is a question of how this fighting should be done general, how do you fight this kind of war? Obviously we have all seen the images videos in the past several days of the Iron Dome in action, you know, blocking missiles coming from Gaza, and yet this is also kind of door to door warfare in some sense, right, what does Israel need to be utilizing in this moment?
Well, Kaylee, you've touched on a couple of important points here. There are different aspects to this fight. The missiles and rockets that are coming. Still, they're coming from somewhere. I mean Hamas has belied they are being resupplied by Iran. And so if you can step back from the door to door fighting for just a minute and think strategically, this is connected to Russia. I mean, Russia is who's benefiting from this to see the US and others distracted.
Nobody's even mentioned Ukraine in the last seventy two hours, and I think that this is Russia and it's the most important ally Iran opening a second front to relieve pressure on Russia to distract support away from Ukraine. Iran, of course, which is the closest ally to Russia, has been wanting to prevent Israel and Saudi Arabia, Iran's number
one rival, from coming closer together. So that's the strategic level of what's going on, and so keeping the pressure on Russia will help reduce I think Iran's ability to help Hamas and his Bolah. Now to the actual fighting that's going to happen once it begins. Interestingly, the Israelis have mobilizer called up three hundred thousand reservers. I mean that's everybody. So they are thinking long term massive combat power. But I think also they don't want to go rushing
in there. They're going to I think they'll take their time, doing what they can to get as many hostages out of there as possible. They're going to be conscious that the world is watching to see how much damage is done to civilian infrastructure inside the gas's but they are not going to mess around. They're going to do what they have to I think, to punish Humas so much that it's a very long time before they try this again.
We have eyes on the State dining Room and the podium that has been set up for President Biden, we will be hearing from the President. Will bring you his remarks live when he is set to speak, or about an hour and ten minutes late for his appointment right now. General. We spoke earlier in the broadcast with the former Secretary of Defense Mark Esper, who talked to us about the ability for the US to transfer American weapons that are being actually housed in Israel to Israel for their use.
Is that something that should be happening now? Do we kind of unlock the doors and give them everything we've got, or do we need to hold some of these munitions for our own use?
Well. I think the President has stated that rock solid support of the United States Israel has have other countries. So I imagine if the Israelis asked for specific things, to include weapons that might be stored inside Israel, that they will probably be handed over unless there is some overarching reason that we would not want to do that. But I imagine this kind of thing will go quickly once the decision is made. But one of the key factors is and if I was the Israeli ground commander,
I would want to know what is my mission? What is the expectation? And they're not just going into Gaza to kill a bunch of people. Is it going to be a punishment mission, a punitive mission or is it going to be something Are they going to have to occupy Gaza for the long term? That calls for a different sort of approach to doing this, and that will also require a lot of people and there will be
a lot of casualties. So what is the mission? And then if I know what the mission is, and that tells me what kind of the munitions and other weapons systems and support I'm going to need.
Well to your point on the mission, does the mission change if other players get drawn into this in a more material way? General, you're just speaking about the notion of Iran supporting this effort, potentially Russia by extension. What if Iran were to get drawn into this in a more material race, should Israel hypothetically decide to retaliate for supporting Hamas for example, or the role of Hesbealah in this? How are you viewing the Iran wildcard right now?
So this is an important consideration for the Israeli staff, the commander and staff. They don't they want They will not all go rushing into Gaza because they have to be concerned about in the West Bank, they have to be worried about Hasbellah in the north of Israel. So I think that they will be very alert to all
the different possibilities. They'll maintain forces and capabilities that could flex to where other requirements might arise, and I think it would be I think Iran actually does not want to get drawn into this. I think they're quite happy to have Hamas and has be allowed to do all the fighting Iran being able to stay out of that to avoid strikes not only from Israel but from anywhere else.
If that's being considered, So the Iranians will have I mean, they know what kind of a punch the Israelis have, and so I think that they are not right ready yet to see it expand in that way.
Well, so what are we in for here when this retaliation really kicks into gear. Obviously Israeli troops are amassing on the Gaza border general, will Israel have any regard for Palestinian civilians who are living in Gaza?
Yeah? Absolutely, Look the President Natya who has been telling Palestinians they need to leave. They need to move away from places where Israeli's forces are likely to strike. And I think the Israelis know that the whole world is watching to see. You know, will the Israelis be indiscriminate? Will they just launch weapons into the heavily, very densely populated area, or or will they be consideration given I think there will Hamas knows this. Of course they will
use even their own the Gozins as shields. They will they will use mosques to store ammunition and to operate. So now this is this will be tough at the end of the day. It comes down to what is the mission? What is the desired end state that Israel has? Is this punitive or are they thinking they may have to occupy a portion of Gaza to try and eradicate it as a base or attacks against Israel.
In general.
There's been a lot of comparison here to Hamas and ISIS, and the idea that maybe Hamas needs to be targeted in the same way that Isis was health fair? Is that comparison and where are there difficulties in making that kind of comparison when viewing the terrorist organization itself as it's been designated.
Well, that's an interesting comparison. I think the similarity, of course, or that these are terrorist organizations that absolutely do not care about whether or not they kill innocent people if it helps them accomplish their goal. Hamas does not care about Palestinian people. This is all about trying to kill as many Israelis as they possibly can. So when you talk about fighting against ISIS or fighting against Hamas, and the target is similar, but the context the environment is different.
I mean ISIS of course was spread over much of the Middle East and Africa, whereas Hamas is a very specific organization in a specific place, which, by the way, has a rival organization as well, another Palestinian organization that is not as militant as is Hamas. So the Israelis will have to go after that in a way different from the way we have gone after ISIS.
General, it's great to have you. We appreciate your insights today. Obviously something that we're going to continue talking about. We'd love to include you in our conversations going forward. General Ben Hodges a former Commanding General US Army Europe with US here live on Bloomberg. I'm Joe Matthew in Washington, along with Kaylie Lines as we bring you the show here on the radio, on the satellite, and on YouTube, where you can join us right now search Bloomberg Global News.
Our cameras are up and our guests are smiling, although there's not a lot to smile about today, Kaylie, with the news that's coming from overseas and here in Washington. We have to keep getting back to the fact that this is actually a very important day in the capital as well as the Republican Conference meets behind closed doors to try to coalesce around a candidate for speaker, and as we began this hour, there's no clear direction in
where that is going. All these stories overlap when it comes to the matter of funding.
Absolutely, as we await remarks from President Biden, who is going to support express US support for Israel. Congress may have a very large role to play there, and as you said, the Joe Congress, while paying attention to this conflict obviously we've heard a number of members outspoken about it in recent days, also has the distraction of trying to elect new leadership, trying to get someone the speaker's gabble,
and they're going to try further this evening. Theoretically five pm is when the Republican conference will meet to try to coalesce around one candidate. But right now it is so very fractured it's very hard to see how you get to a majority vote.
Yeah, absolutely right. They're going to gather in the Ways and Means Committee room at five pm, just in time for balance of power. I figured they're all going to gather around the television. The candidate's forum at one time, though, was supposed to be on television. Just when you think about the stuff that has being gone over the last week, for about twelve hours, that was a Fox broadcast that it wasn't Is he still doing the thing behind closed doors?
I don't even know where that stands right now, because they've got to make their case here and they're meeting as well with the delegations. You were outside that Texas delegation meeting a couple of days ago. Today, the Florida delegation, that's twenty members as they pick their way through the conference, trying to find enough people to make this work, and so far neither can make that claim.
Yeah, and you mentioned the Florida delegation. Yeah, there's a Republican congressmen from Florida. Carlo Samenez said he'd only vote for Kevin McCarthy.
Uh huh.
The guy another representative from Florida got fired, right, So that's going to be an interesting meeting.
You're listening to The Bloomberg Sound on podcast. Catch us Live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcasts.
I'm Joe, Matthew and Washington alongside Kaylee Lines. This is Bloomberg's Sound on the fastest show in politics, and just heard from President Biden. Kayley taken a pretty hard line on the situation in Israel. It's pretty difficult to tell what's going to happen though in the next twenty four to forty eight hours when it comes to Israel's own strategy.
They've been amassing troops on the border of Gaza for some time, but we've got American hostages, as we've just learned you pointed out here along with many Israeli civilians who are being held captive, and that's certainly going to direct what comes next.
Yeah, and President Biden saying the US is engaged with Israel in terms of how to best retrieve those hostages. But he did say in the speech, as he has said over the course of the last several days, that Israel has a right and indeed a duty to respond to these vicious attacks. The idea that the US is supporting Israel, and I wonder if that does extend, will extend, should they actually have to occupy it as part of this disputed area.
We have a lot still to learn a broad end here in Washington, which is why we want to add the voice of Jennifer Welsh, one of the best titles I think at Bloomberg in Washington. Bloomberg Economics Chief geoeconomics analyst, Jenny Welcome. It's great to see you. Welcome to the table, and welcome to Bloomberg here in Washington. You're formerly of the Biden administration, you worked with the CIA, and you have a unique view on what's going on here when
we consider the idea of geoeconomics. Though, how are you viewing what's happening here in Israel with a stock market that seems to think there's no immediate impact. What's got your attention?
No, Thanks so much for having me first of all. So obviously very early stages at this conflict. There's a lot of different ways in which it can involve, including the amassing of troops suggests that there is a major military operation in the future, at least towards Gaza. There's also this open question of Iran's involvement and what that might lead to. And the larger the scale of the
conflict obviously the larger the market impact. But if you look back at some of the past commerces we've seen between Israel and Gaza, there tends to be a pretty limited impact, in part because we're not affecting oil directly here. I think we'll just have to see how the conflict evolves, though it is better assess the market reaction.
Well.
Of course, you heard the former Speaker Kevin McCarthy in the Capitol yesterday speaking as no one else seemed like they were going to step up and fill that void at the time, Joe, as we discussed yesterday, but he talked about the idea of the US needing to more strictly impose sanctions on Iranian oil, and that kind of is one of the concerns, right, the flow of oil, not just from Iran, whether that supply could be restricted, but also what Iran may do in retaliation in the
strait of hooor moves. Can you just kind of walk us through what that could look like hypothetically.
No, I think that's a really good question. And again we know that Iran has been watching this closely. No direct evidence of Iranian involvement yet, including coming from senior officials in Israel from the White House. Biden just spoke to this, as did John Kirby earlier today. I think it remains to be seeing the reaction there, and I think that will enlarge part drive Israel's reaction towards Iran.
I think another key variable here is what happens to the frozen then unfrozen funds, which billion dollars exactly which the White House has said earlier and made very clear that they could suspend that again if they felt the need to. There's clearly a deterrence effort here to try and prevent any other regional forces from trying to take advantage of the situation, which is why I think they made that threat clear and put it on the table. But still very much an evolving situation here.
So when we consider economic impact. Your broad view then drives this through the oil market, right, are we missing the ball somewhere else when it comes to consumer behavior the impact on travel, for instance, So there are other areas of the economy that could be impacted by a conflict like this.
I think there's definitely other areas that can be affected. Obviously, Israel is also a major tech cub There's a lot of industries that run through this region. So I don't mean to simplify it just in terms of oil, but I do think that oil tends to be kind of the big marker in the region in terms of what people are looking for and when they're reacting to events
in the region. That being said, I also think it's early days to go too far in saying that the rest of the supply chains and the region are going to shut down at this point. I think a huge part of this might be how long Israel can sustain Iron Dome and its defenses and make sure that the rest of its economy can continue to run as normal. Right now, I don't see any indication that that's under challenge. The US is already sending resources towards air is Reel.
There's a stockpile available in country that can help reinforce. But the duration of the conflict is going to be a key variable here. Obviously, Ukraine's been stretching global ammunition resources, the DIB, the US sorry defense industrial base is under strain as it is, So there's a question looming on the horizon of if this extends much further, will there be enough resources to sustain Tho's air defenses, allow their economy toction as normal.
Well, and just the question of can additional resources go through the appropriate approval process in a timely manner given what we're seeing in the legislative branch at the moment. President Biden and part of the speech he just gave said we will make sure Israel has what it needs to take care of its citizens. So that speaks to kind of more of the economic element here and defend itself. But is that something that can be guaranteed at this moment?
How does what is happening on Capitol Hill make what the White House is trying to promise more difficult.
The current moment. The resources that are already on their way to Israel, so additional ammunition and other equipment to help sustain Iron Dome Duty has made clear that they can send that with the current resources and authorities don't
need anything from Congress at the moment. At the same time, we're seeing the administrations clearly trying to keep Congress up to date, briefing members of Congress earlier today on the situation, and I think laying down a marker that that situation might evolve and that they want to have the ability
to seek additional resources if needed. So, yeah, a real question looming on the horizon the House discussion leader tonight among Republicans on selecting a speaker candidate, the possible vote tomorrow where that will land the House, and then obviously pushing an aid package through. I do think there tends to be broader bipartisan support for Israel, then say for Ukraine,
and then say for Ukraine exactly. And so the odds there if they can get us speaker so that they can actually start pushing business through the House, I think the odds there are pretty good. But the first question, the prerequisite is obviously they have to select a speaker.
God knows when that's going to happen. As we spend some time with Bloomberg's Jenny Welch, having just heard from President Biden, if you're just joining us. We did hear at last from the Commander in Chief on the situation in Israel, following a conversation that he had with Benjamin Netanyahu.
Here he is at this moment, we must be crystal clear. We stand with Israel. We stand with Israel. We will make sure who has what it needs to take care of its citizens, defend itself respond to this attack.
Jenny Welch, you mentioned the dib I, like that, the Defense Industrial Base. This is something we talked about with Mark Esper last hour about the challenges in manufacturing a lot of weapons at once. If we are going to stand with Israel as long as it takes, according to President Biden, much like we are with Ukraine.
According to President.
Biden, will there need to be an executive order, an Act of Congress, or something to start accelerating supply chains and manufacturing chains.
To this end.
There are a lot of options at the administration disposal. There's things like the Defense Production Act, where the administration can kind of push defense companies to surge production of certain things, or even surge production of widgets that go into those things. It really depends on kind of the package of materials that they're looking to increase production of. There's also obviously additional orders that can be put in that help incentivize production. The challenge here is really the
lead times that are often involved in weapons production. So a lot of times defense companies won't start a production line until they actually have a contract or order on hand, then they'll invest the resources. So you kind of have to walk backwards from that point to determining where you're going to end up in the future. And that's been part of the challenge with Ukraine is there has been such a relatively quick surge in terms of need and it's hard for supply to catch up to that.
Of course, as Ukraine has engaged in this conflict with Russia, just as Israel as now engaged in conflict with Hamas, and we have heard Russia coming up in these conversations as well. We were just speaking at the top of this hour with of retired Lieutenant General Ben Hodges, who was talking about Russia's influence on Iran. We heard Kevin McCarthy again at the Capitol yesterday talking about a new
access of evil being Iran, Russia and China. Jenny, how much is this really about the Middle East and how much of it is about these wider geopolitical dynamics.
I think you can't isolate the region from the wider geopolitical I think that's a really good point, and China is walking headfirst into this with some of their recent comments and response to what's been happening over the weekend. I think from China's perspective, they are clearly trying to stay as neutral as possible, while also recognizing that they have interests in the region and want to be more
of a player in global geopolitics more broadly. I at the same time, don't expect that they will play nearly as much of a direct role as the United States will be. Clearly, the US has already engaged in the region, sending the carrier strikeforce right up there to support Israel, engaging with diplomatic partners all around the world to try
and kind of rally around Israel. I think China is still kind of watching and waiting to see how things develop, but we'll want to at least have a voice in the discussion.
So much for being a peacemaker. Huh. That was the conversation about China and Ukraine.
Six months ago.
We'll see how that goes this time. Jenny, I'm so glad you could come to talk to us many thanks for sharing your expertise. Bloomberg Economics Chief geo economics analyst. She doesn't know it yet, but she's going to be a regular on Bloomberg sound On. I think Kaylee would agree. I'm sure Matthew, along with Kaylee lions in Washington. Thanks
for listening to the sound On podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, and anywhere else you get your podcasts, and you can find us live every weekday from Washington, DC at one pm Eastern Time at Bloomberg dot com