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We'll tell you Washington girds for another war. Welcome to the fastest show in politics, as the Biden administration pledges unconditional support for Israel and Congress stands ready for another funding request. Even without a speaker, we'll have the latest for you from the capital straight ahead here on sound On, and we'll just us with Brett Bruin, President of the Global Situation Room, former White House Director of Global Engagement
in the Obama administration. He'll bring us inside the situation room for the latest, with analysis from our signature panel. Well, Israel get what it needs from the US, what will that mean for Ukraine? And how will this be impacted by a paralyzed US House. We'll talk about it all with Bloomberg Politics contributors Rick Davis and Genie Shanzano, both with us for the hour. Welcome to the Monday edition of Bloomberg Sound On. I'm Joe Matthew in Washington, where
it's just after one pm. Here, it's just after eight pm in Israel, and the Gaza Strip is under heavy bombardment right now is night falls on Israel, and we have live pictures here or some pictures, I should say. If you join us on YouTube, you'll see what we're talking about. Search Bloomberg Global News with sounds of the
bombardment which continues at this hour. The Israel Defense Force is issuing a statement earlier saying it an attack to one hundred and thirty Hamas targets in Gaza and headlines are crossing the terminal. Now more than eleven hundred dead in Israel. As we try to figure out the latest on this, we're hearing response as well from Washington now
that we're seeing some lawmakers come back into town. The US House is getting back into session, and we will not be seeing senators here in Washington for some time. We did hear from President Biden yesterday who made clear that the US supports Israel no matter what happens.
I told them the United States stands with the people of Israel in the face of these terrorists assaults. Israel has the right to defend itself and his people full stop.
The President from the White House with a warning as well, for those who might seek opportunity at this time.
Let me say this as clearly as I can. This is not a moment Randy Party hostile to Israel, to exploit these attacks to seek advantage. The world is watching.
As lawmakers come back into Washington as well. We're hearing from some, including the former Speaker Kevin McCarthy actually held a news conference earlier today, almost as if he was still speaking for the Republican Conference, and he laid out what he called or described as a five point plan. The first point here.
The very first thing we need to do is rescue the American hostages. President Biden's number one priority right now must be finding out how many Americans have been taken hostage and get them home.
He also called on the administration to refreeze the money, and we're going to get into this with rerep ruin in a moment, to refreeze the money that was well unfrozen just a couple of weeks ago in the prisoner swap with Iran. Remember that was six billion dollars and the administration at the time was heavily criticized for it.
They said they had provisions to refreeze the money. If Iran has done something wrong, they should freeze the money back Today.
The Secretary of State Anthony Blincoln made clear on Sunday morning television that not a dollar of that money has been spent yet. But there's a big argument over whether just the anticipation of that money, which is specific for humanitarian use, might have inspired some of this. With the headline again now on the terminal Bloomberg reporting Iran may
have known about Gaza attack. That is referring to an Israeli minister here one of the Prime Minister's closest allies in the cabinet, Ron Dermer, speaking earlier today with Bloomberg. Let's bring in Brett Bruin. He's the president of the Global Situation Room, as I mentioned, of course, a veteran of the Obama White House where he was Director of Global Engagement, and Brett, it's good to have you with
us here. I'll start with a more broad question before we get down into the money issue, which is something that's being baited here in Washington. What is happening behind closed doors at the White House right now? What can the Biden administration do on its own to support Israel?
Well, I think there is a wide ranging assessment currently taking place, certainly across our defense support. What more does Israel need? And as you heard Joe, also what does the US need to do in order to deter the likes of Iran or other groups that might want to try and exploit this situation? And I think the movement of a carrier group to the eastern Mediterranean is designed to have that effect. You also obviously have a robust
effort on the intelligence side. I think we should expect, Joe in the coming days weeks that US intelligence will help to in some cases publicize what was known and who knew it when, what role did Tehran have in these events? Because that is going to play a large part in any subsequent action that will take place. And then lastly, my former Department of State will be looking at how do you assemble the international community for stronger
support to Israel. Because while you saw those statements of sorrow and solidarity, I think the concern in a lot of foreign capitals right now is whether or not they will stick with Israel as it exacts both retribution as well as tries to diminish Hamas's capability to inflict more harm on Israel and especially on Israeli civilians.
Not lost on us that the White House called a lid, as they call it already today, Brett. That's when they're basically telling reporters they can go home that there will be no more news here for the day. The President's going to be up to his own business and no more public events. Does that say to you that they're circling the wagons and having some important meetings at the White House this afternoon.
Well, certainly important meetings, calls. The President's call list will be extensive. And yet Joe and I think this is important that in these moments of national security concern, we need to hear from the president Prime Minister Yaho's been criticized both in terms of how long it took him to come out and publicly address the Israeli people as well as the international community, as well as how infrequent
those updates, including from other Israeli officials, have ben. I think President Biden has got to get out there more. He has got to exert more public leadership on this issue, keeping those allies publicly pressured to continue their support for Israel.
Yeah, let me ask you about the money in the swap that was being debated on Sunday morning television and continues to this moment. In Washington, d C. The Secretary of State Anthony Blincoln was out and was asked about this, even trying to get ahead of it, remembering this is six billion dollars that was in an account that was unlocked and in fact moved to a different account. I'll let you listen to his words for humanitarian uses as part of our recent prisoner swap. Here's Anthony Blake.
You've had from day one, under our law, under our sanctions, the right to use these monies for humanitarian purposes. They were moved from one account to another in another country to facilitate that use. As of now, not a single dollar has been spent from that account. And again the account is closely regulated by the US Treasury Department, so it can only be used for things like food, medicine, medical equipment.
That's what this is about, all right. So that's the official line here. But I wonder if listening to NICKI Haley might help illuminate the other side of this, Brett. This is NICKI Haley on Meet the Press yesterday saying, grow up, everybody. It's irresponsible for Anthony Blincoln to be speaking that way and definibly.
I actually think it was irresponsible for Secretary Blincoln to say that the six billion dollars doesn't weigh in here. I mean, let's be honest with the American people and understand that Hamas knows and Iran knows. They're moving money around as we speak because they know six billion is going to be released. That's the reality. When I was at the United Nations, you saw that when those planes full of cash sent by Obama to Iran. I went to the International Atomic Energy Agency, I met with them.
What happened was those funds were sent to Hesbla and Lebanon. They were sent to Hamas and Gaza. They were sent to the Houthis and Yemen. They go and spread terrorism every time they get a dollar.
All right, So look, Nikki Haley is running for president, but also our former UN Ambassador Brett Is there some truth to both of these We know the restrictions on the use of this money, but does the anticipation mean that some of this is fungible? What's your take?
Yeah, the truth lies somewhere in the middle. Yes, if six billion dollars in funds are coming in, that frees up funds for other purposes. And that's essentially the argument that Ambassador Haley is making. And yet at the same time, it's important for the audience to understand that this money isn't US money. It was money that was frozen in
an account that belongs to Iran. And what the Biden administration is trying to do is use it as leverage to obviously get the release of five Americans who were unjustly held in Iranian prisons. I think, now, Joe, the interesting question is can they use the release or partial release of some of that money to free some of both the US as well as is rally hostess is they're held by Hamas, and tell Tehran if you want any of this funds, you're going to have to ensure
the release of those hostages. But just as a point of reference, when it is soldier a couple decades ago was captured by Hamas. The deal that came out of it was one thousand Hamas fighters for one Israeli's soldier. So that's the scope of and the president of what we're looking at.
Well, and I don't think that's going to be happening this time. Kevin McCarthy says, refreeze the money, Brett, Is that possible?
Well, the money currently is not in Iranian hands. It is in a Katari bank, and the US does need to green light it's further release by the Katari bank. And so I think it's important here not to give the impression that this money is already in Iran's hands. As I said, look at because of and I think there is certainly some strong indications that Iran new and.
In some.
Suggestion that there may have been irradiant involvement in this attack as an effort to disrupt any advancement in the Israel Saudi Arabia normalization of relations. So I think you know, as that intelligence starts coming to the fore, it will provide more cover for the Biden administration to say we're not releasing those funds. We're not releasing those funds until the following things happen.
I know you're not a military strategist, Brett, but before you leave us, we're looking at some pretty tough pictures here with constant bombardment. Now that night has fallen in Gaza. What will happen of the Israeli's taken hostage.
Well, I think what we are looking at right now is a plan by the Israeli forces to completely dismantle Hamas's structure and their quasi government control over the Gaza strip. On the Hamas side, I think they have to be careful here because they have created images, video and just obviously the reports of what's happened to civilians are horrifying.
And I think, you know, if in the case of these hostages, any harm comes to them, any additional harm, if they are not going to release them for an extended period of time, that will only increase pressure international pressure on Hamas. So I would expect that we're going to see an effort to try and reach some sort of negotiated agreement at least when it comes to a significant portion of the civilian hostages.
Wow.
Great to have you with us, Ruin of the Global Situation Room, A perfect time with conversation, Brett Wei, thank you for the insights and bringing your experience to us here on sound On. I'm joined in studio by Rick Davis, of course, Bloomberg Politics contributor, Republican strategist who has deep ties to the defense and intelligence communities here in Washington. Before we assemble the panel, Rick, I just wonder your first thought on this. This is going to be a
long night. It looks like in Gaza, what can Israel do to protect its own Yeah.
Look, I think that the number one thing they're doing right now is rooting out Hamas terras inside of Israel already, and that operation continues this moment, and there is some expectation that that roll up will will take some time. And so regardless of whether or not the troops that have amassed on a border with Gaza from Israel are planning a ground assault, the.
Number one issue for the Israeli.
Defense and intelligence community is to make sure that the terrorists that are within Israel can do no more harm.
And so once.
We see that operation starting to peak out, I think you'll start to see the hammer of Israel come down on the Gaza Strip and and it'll be interesting to see, you know, how much support the US gives to that. Our aircraft carriers in the region, our most high tech carrier in our entire fleet, that's the Gerald Ford and and this administration is fully committed as they've articulated to Israel's defense.
Rick Davis with US Live in Washington. We will add Genie Shanzo to the conversation. Our signature panel is up next on an important day. Thanks for being with us on sound On. 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.
The Biden administration pledging unconditional support to Israel, but being blamed all the while for many Republicans for causing or enabling what we saw over the weekend in Israel. The former Speaker of the House, Kevin McCarthy, held a news conference this morning. You might wonder why is well he's no longer speaker. He sure looked and sounded like one as he took aim at the Biden administration.
I think a new administration that goes to appeasement, that didn't embrace Abraham Accords, that actually went after our allies like Saudi Arabia and rewarded those who were evil like Oran.
That right there gives you challenges.
Secondly, the president's decision when it came to Afghanistan. People then question would America be there?
He went on to talk about the administration's energy policy. As we reassemble our panel, Rick Davis and Jeanie Shanzeno are with us on this Monday edition of Sound on Bloomberg Politics contributors Rick is with me in Washington and Jeanie is in New York. What's the defense here for this White House? Genie, the President's about to ask, likely for a supplemental funding request for Israel. He's pledging support. He actually agrees I think on most everything here involving
Israel with Kevin McCarthy. But Republicans are blaming him for enabling what just happened.
They are and we heard it. You played the clip from Mickey Haley, we heard it from Chris Christy, we heard it from Donald Trump, all of these people running for president. You know, I think we can chalk this up to an election year. This is what happens in an election year. You know, the Biden administration is not responsible by any stretch of the imagination for what happened
horrifically in the Middle East yesterday. In the last two days, they you know what the six billion dollars says, as Anthony Blinkoln talked about, there's no evidence any of that has been used, but arguably the optics don't look great, and they've to address that. I think what has happened with the Biden administration, like so many leaders around the world, is they were lulled into a sense that the Middle
East had gone relatively calm and quiet. You know, we heard from Jake Sullivan eight days ago that the Middle East was shockingly quiet, and that, unlike his predecessors, he was able to turn his attention elsewhere. And of course, if you know the history of the Middle East, just when everything seems quiet, that's when something like this happens, and that's what did happen. So they do have to
take responsibility for that. And he's got to do what he's doing, which is pledged support for Israel, and see if the Republicans in the House can get their act together to make sure that that money is sent and the support is sent to Israel. Hard to do without a Speaker of the House.
Yeah, well, we're going to talk a bit more about the speaker battle here, Rick. The President said just last week that he was preparing to announce a major address US on funding the war in Ukraine in which she would reframe the argument here ahead of what will be a brutal debate I'm sure in Washington over all of this. Once we get a speaker and end up funding our government, what happens to the Ukraine argument when he now needs to make one for Israel.
Yeah.
It's a crowded space in the world today, and the President's calendar is even more crowded than it otherwise would be.
And we've heard repeatedly.
All you know, prior to the attack on Israel from Republicans in the House saying we expect the President to make his case for continued Ukraine funding. Otherwise we're not going to lift a finger. And so he's getting the demand side from Republicans in Congress saying we're not going to act. Of course they can't until they get a speaker, but we're not going to act even with a speaker until you make your case on why by the way, And I think that's a very good thing for Joe Biden to do.
There's a great case to.
Be made for our support for your Ukraine, and so I think that would result in a positive outcome for funding. The downside is that right now there's a shooting war with one of our allies, one of our strongest allies in the world, and our primary ally in the region,
and we have to be there for them. And so if I were, you know, drawing the lines, I would say it's very much time and appropriate for Joe Biden president to go to the American people right now and talk about why Israel is so important and why our support for Israel is needed, and why we're going to need to hunker down for the long term there. In other words, this is not a weekend kind of initiative.
This is going to be a war that will spend time just like Ukraine, and we got to be there for them too.
So, Genie, did this Ukraine speech that we're anticipating just turn into a dangerous world speech if you will from Joe Biden?
Yeah, it very much may have. And I don't think we know you, and you know a challenge for the Biden administration and quite frankly for all Western nations and nations around the world who have issued calls of support for Israel in the last forty eight hours, is that unlike what we've seen in the past, and we saw it over the weekend. It was stunning the pictures on social media coming out of Israel. That is going to intensify.
And so as we issue calls and support financially, militarily and otherwise for Israel, we are going to have to contend with the really difficult situation Israel finds itself in. Does it try to occupy Gaza? Look at the pictures coming out of Gaza just today. They are horrifying, you see them, and there as horrifying as the ones we saw on the other side early in what happened over
the weekend. The Biden administration is going to have to contend with all of that, and that probably means they are going to have to ask Benjamin and Yahoo to stop what he has been doing domestically, to form some kind of cab that is unified and that is focused on Israel and not focused on his political survival, and get out some of those ministers he's got in that cabinet right now who are saying and have been saying
pretty horrific and anti democratic things. Biden has to contend with all of that as he makes this case to the American public to fund Israel in the same way he's got to do it with Ukraine and the issues of corruption and elsewhere. So it is an enormous challenge, not of Biden's doing, but something that we have a duty to support. But it is not going to be easy because we do have these pictures coming out and they are particularly chilling.
They sure are rick. We see the headline now in the Associated Press hamas Wing Warrens that Israeli strikes will bring hostage deaths. What we're about to see unfold and are seeing unfold in Gaza does make you wonder where the line is here and the to which Israel could overplay its hands.
Yeah, I don't think you have to worry about Israel overplaying its hand right now. One of the things we have to remember and take a step back. This is a horrific event that's occurred in Israel, innocent people being slaughtered by Hamas terrorists.
But Americans were killed too.
Last count I just saw was nine Americans have died at the hands of Hamas terras. If this were anywhere else but Israel right now today, the US would be preparing significant countermeasures to Hamas on a global scale, including their chief benefactor Iran.
On our own right.
Most of the conversation has been how can the US help Israel, But we need to help ourselves too. It is absolutely unacceptable by any stretch of the imagination that Hamas has killed Americans, potentially holds them hostage inside Gaza and could be among those that they slaughter if they can keep this commitment that somehow, if the Israeli's bomb Gaza, they'll start killing hostages. This started conversation started with paying for hostages release out of Iran. I'm not going to
second guess that. I'm happy those people are back safely in the United States, especially right now. Can't imagine what would happen if they were still hostage in Iran. But we have to be able to project our power in a way that makes every American safe as much as possible around the world, regardless of where they are.
Is it the right thing to send the aircraft carrier strike group closer to Israel? Genie?
To make Rick's point, it is the right thing to do, and the point is to show support, but also to deter anything that could escalate in this it, particularly as it pertains to Iran, particularly as it pertains to Hepola, We've got to deter, We've got to contain, and so so those aircrafts, they are important to make a statement that we are there to do that. So it is absolutely the right move.
We have a lot more to talk about with Rick Davis and Genie Shanzana, remembering that this is all happening domestically here in the US against the backdrop of a speaker's fight and lawmakers are coming back into town.
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.
And to think we were going to be leading with a speaker's battle today, that will be the big story of the week here in Washington, even with what's happening in Israel, and they do collide in a way as we consider what will likely be a sizeable supplemental request from the administration the Biden Whitehouse when it comes to supporting Israel. I'm Joe Matthew and Washington, joined by Rick
Davis and Jeanie shanzan Oh Bloomberg Politics contributors. Only hours after the former Speaker of the House, Yes, Kevin mc carthy, actually held a news conference on Capitol Hill with an eye on Israel.
The very first thing we need to do is rescue the American hostages. President Biden's number one priority right now must be finding out how many Americans have been taken hostage and get them home.
He's actually giving direction to the administration here as if he were still Speaker. Rick Davis, what's your thought on why Kevin McCarthy On a Monday morning, the day before the two candidates for speakers, Steve Scalise and Jim Jordan, are to debate in front of the caucus. Why is he holding a news conference?
Well, I would say everything he said in that news conference Joe Biden should have said over the weekend on national television.
So I'm glad he's out there talking about this stuff.
He blamed Joe Biden for whatever other than that part, or he could have taken responsibility, I guess.
But the bottom line is.
He is still I think the most high visibility Republican in Congress, right, even more so than virtually everyone.
So would conference have asked him to do this?
Or Man, I'm sure he took it upon himself saying, look, I'm still a leader in my caucus. We don't have a speaker to sound out about this, and I'm just going to take the.
Lead and do it now.
Look, i mean he's got an ego too, right, and I'm quite certain that you know his view is take the heat off my caucus, go out there, you know, articulate this policy and all of that in nursed my benefit because I still look like a leader in my caucus. See, things get tied up there after a couple of days in the caucus where they can't come up with a consensus, maybe they will turn back to old Kevin McCarthy, Congressman from California.
So you're holding out for that.
I'm not holding out for that, but he's certainly putting it in play himself.
Well, listen, if no one else gets to two eighteen, it certainly makes you wonder, Genie, how is what's happening in Israel right now? Never mind the request for Ukraine get an impact. Who becomes the next Speaker of the.
House, it's going to have a huge impact. And you know, let's let's be honest. Kevin McCarthy went out and gave a press conference. He is not speaker, which means he wasn't briefed on the situation. So I'm not so sure that Joe Biden should have, you know, taken any lessons from what Kevin McCarthy is doing. Presumably Joe Biden was briefed and has been briefed. He's been in contact with net and Yahoo, his team has as well, and everybody
over in Israel. Because Kevin McCarthy couldn't hold his job, he has not gotten any of the information he needs to make a clear assessment on this. So, you know, Kevin McCarthy, he's trying to line up in case they can't get to two seventeen to eighteen, which is a big possibility at this point, he would like to be, you know, called out as the speaker in waiting to come out. I think it's probably more likely they may point McHenry for thirty or sixty days on an interim
basis to do something like that, but who knows. You know, Mike Lowler was over out over the weekend. He's the representative from New York. He's saying he would welcome McCarthy back. So he still has the ninety six percent support. But I think we have to be very very cautious about what he's saying because again he has not gotten the briefing or the benefit. Even the minority leader did, Hakeem Jeffries.
So you know, Kevin McCarthy is going out on a limb here in an effort to do what he does, which is try to get this job back.
Seems pretty clear no one is close to two hundred and eighteen. Rick, we'll hear from Steve Scalise and Jim Jordan tomorrow. But what's your thought on this idea of a temporary speaker, a caretaker speaker, maybe a Patrick McHenry with an end date that allows them to actually maybe get something done. Yeah.
Look, I mean, look at the process.
Monday, they all get back today, They'll have a little conference tonight. When they get in, they'll start pitching members in a private caucus meeting on Tuesday, and on Wednesday.
They're expected to take a vote.
They've already said that they're going to continue to take votes in the caucus amongst themselves until somebody looks like they can get to two hundred and seventeen votes, and that means the fight is going to be behind closed doors inside the caucus, and who knows how long that will take. It took Kevin McCarthy fifteen ballots an all night to do it. This is even a bigger divide because there's actually two active campaigns that at best are
split in the caucus right down the middle. And so by Thursday morning, if they wake up and they don't have a pretty good idea of who the consensus candidate's going to be by then I think they have to take action and empower Patrick McHenry to be an acting speaker. Regardless of how much time they give him, it's going
to be beyond when the cr runs out. And his job at that point will be to pass appropriations bills, and if need to cut another deal for a cr beyond that, and if that's the only thing that happens this week and they don't come up with a speaker that will at least let Congress keep moving forward.
That would be actually enormous progress based on what we've seen. Genie would how came Jeffrey's sign onto something like that?
He might And you know, at this point, the funding needed for Israel and Ukraine is so critical that I think Democrats should seriously consider something like that. But you know, we're talking about this speaker. The dysfunction in Washington is everywhere. We need the ambassador to Israel to be confirmed. We need Tommy Tupperville to stop holding up these nominations from the State Department. They need to be confirmed. We need to get the speaker done, We need a budget pass.
And maybe, in the best case scenario, this could be a teachable moment for Americans to say, this kind of domestic you know, really dysfunction has real world consequences, and we are seeing those played out in the moment. We've got to address all of these issues in order to move forward. In any way that is becoming of the United States and the country that we should be.
Well, we've got a moment here, Rick, I have to ask you separately about the comment from Ron McDaniel over the weekend. Of course, she runs the RNC, and she's being beat up for suggesting this is a moment of opportunity for Republican candidates. It was from an interview on Fox Here's what she said.
Absolutely, I think this is a great opportunity for our candidates to contrast where Republicans have stood with Israel.
Time and time again and Joe Biden has been weak.
Was that just bad wording or something that needs to be I think that's.
You know, crass opportunism, right, I mean, like, what kind of moment of courage was that where she wouldn't rather than you know, say we should be uniting our country politically around defense of Israel, to hey, let's take advantage of this politically domestically.
I guess this will be an issue on the campaign trail one way or the other. Though, right, people say, we don't vote on geopolitics, but we're going to have two big geopolitical influences to weigh in on.
Yeah, the poster's got a lot of catch up work to do. Israel has not been on a single poll that's been taken in the last year, and now we're going to see a lot of data about like you know, where the country is on offending Israel.
Yeah. Rick Davis with me in Washington. Genie Schanzeno is in New York. 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.
And we're live in Washington. I'm Joe Matthew now joined by Kaylee Lions with the headline nine hundred. The death toll in Israel topping nine hundred according to the latest reporting that we have here, Kayley, in a story that's just getting uglear as we go, night has fallen in Gaza. We've seen some heavy bombardment as we see a warning
as well. The Associated Press reporting a short time ago Hamas saying that Israeli strikes, we'll bring hostage deaths, and this is the balancing act that we're seeing here with those hostages of course stuck in Gaza.
Yeah, it's absolutely devastating, not only when you consider the death toll, but consider the elderly women and children who have been taken from Israel. And now there's a very real question about what exactly will happen to these hostages, and frankly, when or if there can be a resolution to this conflict in the immediate term. What started over
the weekend, frankly, is still ongoing. This has been kind of a continuous attack that we are seeing playing out, and the devastation is only rising as time goes on.
We heard from Ron Durmer earlier, Israeli's Minister of Strategic Affairs, was on Bloomberg's Surveillance. Let's listen to what he said.
The critical question of whether we're going to be able to achieve this historic piece with Saudi Arabia that pulls pushs the whole Arab Israeli conflicted to a completely different place and can lead to a broader reconciliation between Muslims and Jews as well. The critical factor will be how Israel emerges from this fight, do we emerge as a victor? Because people may peace with winners. People make peace with a strong they do not make peace with a WII.
He went on to say that Iran may well have known about the Gaza attack, which for many seems to be I guess obvious, but we're waiting for some real evidence on that kill.
Yeah, we still have a lot of questions that remain and the answered as to exactly what Iran knew, what role it may have played. But of course, we heard the likes of now former Speaker Kevin McCarthy talking specifically about Iran at the Capitol earlier today. Yes, talking about how the US just last month released six billion dollars in frozen Iranian assets in exchange for the release of
five Americans that were being detained by Iran. Kind of hearkening back to the question around hostages and just the Iranian policy of the Biden administration. Knowing that a lot of these questions still remain unanswered.
Yeah, this is a big point of debate here. It certainly played out on Sunday morning television, Nikki Haley accusing the administration and Anthony blankn have being irresponsible to even argue with that fact. But we have to let everyone know that that money hasn't moved. I mean it was put into a new account, and not a dollar of that has actually been allocated. The question is this fungible? Does that mean Iran can move money around in advance
of getting those dollars. Anthony Blincoln was asked that on Meet the Press. Here's how he reacted to the idea of fungible money in Iran.
Iran has unfortunately always used and focused its funds on supporting terrorism, on supporting groups like AMAS. And it's done that when they've been sanctions, it's done that when there haven't been sanctions.
And it's always prioritized that.
And again I come back to the proposition that from these funds have always been under the law, available to Iran to use for human of train purpose.
This is where we start our conversation with Mick Mulvaney, of course, the former acting chief of Staff, the Trump White House, co founder of the Freedom Caucus, who has an understanding of both ends. Certainly from the Republican perspective, both Thans of Pennsylvania Avenue and it's with us now, make it's good to see you. I wonder your thoughts on this, knowing that that money has not been unlocked, is it still something that you blame the administration for setting up?
Hey, Joe, Okay, let's go to see you. I'll answer your question because you've asked you a question, but I really don't want to get in the blame game at this point. The answer your question is yes, that I've said from the very beginning, I'm not the only one. It's obviously become an issue in wider circles. If it's getting asked on a Sunday talk show, it means even the Democrats are talking about it now. And that is
the fungibility of this money. That yeah, if the six billion is Saudi excuse me, is Iranian money, no question. We are monitoring it. There's no question there are limitations that cannot be used for anything but humanitarian purposes. All of those statements are true. But if you were going to spend a dollar on food today and I give you an extra dollar to spend on food today, does that free up the dollar you were going to spend on food to spend on something else, like maybe guns.
Sure it does. That's just common sense and Blinkeln sort of go halfway on his answer by saying that Iran is always funded this kind of stuff, And I guess the follow up response would be yeah, uh, secretary, And if you give them six billion dollars of additional money, do you think they're going to spend more on on terrorism?
The ANSWER's got to be yes. So but again, I'm more interested right now in the American response that Biden administration is going to have a lot of answers to questions to answer the net and Yahoo administration is going to have a lot of questions to answer, but now is probably not the best time to do that. I get the fact that folks are politicizing it because that's the DC we live in. It doesn't surprise me that Kevin raises it, you know, because that's Congress is, you know,
sort of what Congress does. They're not really involved in the day to day on responding like the administration is. But I'm not sure it benefits many people by starting to point fingers on the second day.
Okay, so Mick, let's then talk about what the appropriate response is. You have been in the West Wing advising a former president on policy, if you were advising the administration, Now what should it do? Knowing that really the administration at this point is where a lot of the action is going to have to emanate from, because Congress at the moment is a little paralyzed with no Speaker.
Of the House.
Yeah, Katie, you're right, but Congress wouldn't have a role anyway short of doing sort of a quick resolution of support for Israel, which is important, don't get me wrong. It certainly carries weight in the international sort of arena. But the administration is going to be the one, even with a properly functioning Congress, to be in charge for at least the first couple of weeks.
If you get.
Deep into this and you need to give additional authorities that are not already bound up in law, you like we're doing in Ukraine, we're getting supplemental spendings, We're going above and beyond what's already hardwired into the law, then yeah, Congress would have to act. But we've already got agreements in law with Israel on sending the money, on sending the material, on sharing information and people with them, and those things will be executed now by the executive branch.
That's why they are there. That's what they're supposed to do. So yeah, the answer to your question is what should the administration be doing? And we're starting to see pieces of this now. You're already seeing the Pentagon move assets, you're already seeing them send support and so forth, and that's the right thing to do. The larger answer is
an all of government approach. You can call a cabinet meeting and say, look, I'm not sure what the Department of Education can do here, if anything, but if you figure out some way to help in this effort, let me know. This needs to be an all of government response. And my guess is if they haven't done that already, they'll be doing it shortly.
The former speaker was asked about this strange timing for a news conference when you're no longer holding the gavel. But Kevin McCarthy was asked about the supplemental request for funding in Ukraine along with a looming and expected supplemental request to help in Israel. It's interesting the direction he took with this answer. Let's listen 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.
Mick Maulvaney, he said, Hakeing Jeffreys agrees with him on that. I don't know if the minority leader wanted that to go public here, but there's a lot in this question. I realized. I just wonder what's going to happen with competing interests when it comes to Ukraine, Israel and restocking our own munitions here. If you look at the shares of the defense contractors, investors obviously expect a lot of money to be spent. Will it go in all of those areas?
Let me answer this that this way. It's absolutely good to Israel. There's no question the two things are not even close. This is not an equivalence between Israel and Ukraine. Israel is one of our closest, most historically important allies. It is a nuclear power. It's our only friend, although we're starting to garner other friends. We talk about that in a bit. If you want to in the area, Israel is it's up there with Australia and the UK right,
that's one of our best friends. They're going to get what they need from us. You heard that from the Biden White House, so clearly it's one of those Byparson things in Washington, d C.
Right now.
Ukraine is different.
Ukraine is not one of our historical allies. There's still these issues about corruption that I think are rightly raised. Ukraine's one of the most corrupt countries in the world. I know people want to sort of look the other way on that because of what's happening there militarily, but that is a true statement. So the two things are not the same. As to our rebuilding of our stockpiles. I'm glad to hear it's bipartisan. I hope they figure
out a way to pay for it. One of the things that I think is going to become painfully obvious in the years to come after Ukraine, after Israel's can we afford to do everything we want to do? Or have we spent our nation's wealth, our savings and our grandchildren's wealth and savings on other things. When you run up thirty three train dollars in debt, you will have limitations.
I think it was ten years ago, Joe, when the Chairman of the Joint Chiefs testified at the Budget Committee and he was asked, what's the greatest threat to our national security? And at that time ten years ago, he said the nation's debt. And I think the debt at that time was half of what it is today. So
those are real conversations. It's easy for politicians to say beat their chests and say, you know, we give all the money that Israel needs, but at some point you actually have to pay for that, and that's going to get harder and harder to do.
Well and paying for it. The issue of the debt and of government spending, Mick, is one that is constant on Capitol Hill. We still have a government that is going to need to be funded past November seventeenth. The no real path at this point to figure out how to get there, not just because of the issue of funding for Ukraine or Israel or anything else, but funding as a whole. And this was an issue for former Speaker Kevin McCarthy, who we mentioned a moment ago, was
speaking on Capitol Hill on this Israel issue. As we look for his success or figure out if either Steve Scalie or Jim Jordan could get enough votes this week to get the gavel. Does this conflict in the Middle East have an accelerant effect on that process?
Mith?
What do you think it makes the Republican Conference think about trying to coalesce around one individual.
It could, Although you know, I'm putting myself fi because I've been I've sort of been in this circumstance when we were opposing John Bayner for Speaker. I still think it's different because we had a coordinated effort. It wasn't a bunch of anarchists and so forth. It was a
little bit different. But there are certainly parallels, and I acknowledge those that if we were having that fight and someone came to the podium at a Republican conference and said, well, we have to do something now because of Israel, right, my response to that is, why what are we going to be called on to do? What is the House going to be doing in the next week on Israel? The answer is nothing. And if somebody got up to say that, I would dismiss that person as being non serious.
They're using this as an excuse to sort of avoid the issues at hand. Again, I'm not defending what Matt Gay's is by any stretch the imagination. But if someone got up and said that, I can see where certain members would say that doesn't change the analysis.
Here.
Listen, if we get twenty days into this, thirty days into this, as you get close to the government, the government funding issue, as you might have to start acting in the legislature on Israel, those things are becoming can become real, but they're not real this week. I don't think it changes the dynamic in this week Joey opened or I think it was kaylor who said, you know, will it be Kevin, Will it be Steve Scalie or
Jim Jordan. I still think there's an equal likely chance that it's Kevin McCarthy because I still think he's the only person who can get the votes, and that may become more apparent by the end of the week.
I'm hearing this more and more fascinating, and it's just it's amazing to hear it from Mick mulvaney, who knows these two players about as well as anybody. Mick. Is that why Kevin McCarthy held a news conference this morning? He sure was acting and sounding like a speaker. Yeah, Well, I don't think.
I don't think that shouldn't come as a surprise to anybody, especially after Trump got into the race over the weekend. Trump coming out for Jordan hurts Jim, and listen, I would be voting for Jim Jordan for speaker.
Let's be clear.
I would be supporting him on the floor if I were there. Trump coming out for him makes it highly unlikely that Jim will become speaker because that will upset enough people on the left and the center of my party to say, there's no way I'm voting for Jordan. Trump had kept quiet. I think that could be different. I still don't think Steve Scales is enough support in the party. I keep coming back in all of these dynamics of there's one person who can get the votes,
and it's Kevin McCarthy. So it doesn't surprise me as that they're speaking. By the way, members of Congress, we always used to want to have press conferences. Members People say, oh, Kim McCarthy's having a press conference because he wants to be speaker. Members of Congress would have a press conference every day if somebody would cover them. We love cameras, especially when we're elected office, so.
It's so much for the humility, so much for the humility of losing the gavel. I don't know, maybe I'm just maybe that's just me. I don't think I would have held that news conference this morning, Kaylee. But just imagine I hope you lost the gallup Hadatchine if he becomes speaker. Though, we're going to play this tape back, Nick. I hate to interrupt you, but thank you for that. He's not the only one who has suggested as much here. Mick knows them though he talked to them over the weekend.
Yeah, of course. I just wonder when he says Kevin McCarthy's the only one who can get the votes, does that mean he gets some of those eight Republicans who voted to oust him back Democrats come into the picture. Just how does that math equation add up?
And you thought things were confused on Friday, This doesn't help us understand any more. Big thanks to Mick mulvaney, who's with us each week at this time on sound On. I'm Joe Matthew with Kaylee Lines. 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 alf 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.
Live from Washington with initial reactions from the Capitol today. So the Hamas attack over the weekend in Israel and now the response with heavy bombardment that we're reporting on in Gaza. Keep your eyes on the terminal for more tracking the price of oil as well, Kaylie. We're at just about eighty six dollars a bar a little more when it comes to WTI crude. Brent also moving on this, and there are a lot of questions about how much more movement we could see.
Yeah, up four percent today. The questions really surround two things. Won the issue of Iran. We've already discussed Kevin McCarthy earlier today talking about how the US needs to be more harshly enforcing sanctions against Iranian crude, what that could mean for global supplies and therefore prices. But also if this conflict spilt has ripple effects around the rest of the Middle East, that could affect the flow of crude to the rest of the world. I'm thinking specifically of
the Strait of Warmus. There the vast majority of the world's crude, or the biggest I think it's one in every six barrels go through that waterway that Iran territorium.
We haven't spent a lot of time on the program talking about this potential deal with Saudi Arabia as well when all of this factors in, because there are big questions about whether that is even possible now. And glad to say that Bob McNally is with US Rapidan Energy Group founder and president, former National Security Council Senior director for International Energy. He spent time in the White House
and in the oil patch and with us here on Bloomberg. Bob, you're one of the first voices we wanted to hear from, and I saw you quoted over the weekend about the initial reaction here with a slightly contrarian view, because there was a knee jerk and initial panic, and you've been pointing to calm here as we anticipate further headlines. What do you think about what we know now and the move that we've seen in crude prices, Is it justified.
Sure, Hi Hi, Joe and Kayley.
The market is appropriately discounting the risk, and it's certainly gone up of as you said, Iran being implicated and the region experiencing or having the conflict expand beyond the levant, beyond just Israel in Gaza. So given Iran's heavy handed support for Hamas, that is a real risk.
So I think the premium.
We've seen three dollars four dollars is appropriate. When we didn't see Hezbolah join the attack over the weekend, it became clearer to us and we were more confident that at least initially, this would not expand to the Middle East and to the Gulf right because Hamas, while supported, aided funded by Iran, and there's some question about whether Iran actually directed or was operationally involved in this attack.
Hamas is different than Hezbolah, hes Bolan Lebanon. That's an authentic Iranian proxy, one hundred and thirty thousand missiles.
They take orders right from a right from Tehran.
So had we seen the northern front open up, we would be sitting here at a much higher crude premium, and Rapidan would have a higher than sort of twenty percent odds that this expands imminently to the global oil market and the global gas market too.
That's interesting, Bob. Of course, we're looking to see if there is any further escalation in this conflict. It could be really early days here. We have to keep that in mind. But do you think the greater risk is that we see the US not turning a blind eye to Iranian exports more strictly enforcing those sanctions knowing that the primary buyer of that crewed in the first place is China, and sanctions enforcement maybe a little hard in
that aspect. Or is the greater risk this kind of expansion the disruption of crude from elsewhere in the Middle East being disrupted.
I think the bigger disruption risk comes from an expansion of the conflict to Hesbaalah and to Iran. Look, President Biden is going to be very cautious about tightening oil sanctions on Iran. Why Because this sort of winking and nodding at Iran's exports to China, Venezuela and Syria was the quiet part of this deal they did that included freezing the enrichment Iran's enrichment. On the surface, it was about six million dollars for six hostages, but under the surface,
it was let's call it freeze for a freeze. So if President Biden starts cracking down on Iran's exports to those three countries, Iran could start enriching again. In light of what just happened this weekend, with tensions so high, that would put us even closer to a regional conflict.
So I wouldn't rule it out. I wouldn't rule it out, but I.
Don't think President Biden's going to be in a hurry to tighten sanctions on Iran's crude oil exports.
Bob. We heard earlier from Kevin McCarthy, then now former Speaker of the House, who like many Republicans, was calling out the Biden administration and pointing to Iran. Here's what he had to say.
Sanctions should go on Iran's production of oil. Under the last administration, Iran was only producing four hundred.
Thousand barrels of oil a day. Now it's three million.
They're making billions of dollars. They are wealthier, richer, and stronger under this Biden administration, and they're using that wealth to fund.
Terrorism, qualifying what Kaylee was just referring to We spoke with Ron Dermer today as well, Bob, the Strategic Affairs minister in Israel. He says Iran may have known about these attacks. Didn't think they knew about this initially, but says, quote, there's some evidence they might have known about it. We're working to verify that evidence unquote. What happens if they do show the world evidence linking Iran to what happened last weekend.
Yeah, so I saw that interview.
It was fantastic and I raised it to my clients as well right away.
Fantastic. Now that was very important.
If Iran formally accuses excuse me, If Israel formally accuses Iran of operational involvement in this attack, right, directing it, coordinating it, knowing about it, and produces incontrovertible evidence of that in public, I think the markets will discount a much higher crude disruption risk, and that will set up an expectation that Israel will inevitably or ultimately settle accounts with Iran as well that Iran will have to pay
for it. Now, there is the issue of sequence, though I don't think the Israelis would be in a hurry to show the evidence and to take Iran. Now, I think they want to deal with one problem at a time if they can, And the next big thing is going to be the ground invasion of Gaza, and I think for now they're trying to deter and dissuade Hezbollah
and Iran and other actors from broadening this conflict. But if we see that revealed of evidence, then we all should be raising our odds that eventually Israel will pay back Iran directly and in a way bigger than we've seen in the past material attack on Iran in payback for this.
Okay, So, Bob, in that scenario, what role would you expect, to say, Saudi Arabia to play. Knowing before these attacks there was a revived conversation about the relationship between Saudi Arabia and Israel, potentially steps toward normalization. Obviously these events could easily disrupt that. But knowing Saudi Arabia also has been holding back severely on output, could they come in
and help the oil markets? I mean, how would you see the other countries in the Middle East playing a role in this hypothetical scenario.
Well, in the hypothetical scenario though, where there's an attack in Iran and a conflict with Iran. The problem is all of the excess spare production capacity almost five million barrels today.
The good news is that's quite a bit.
The bad news is it's all north of the Strait of Hormuz or just about.
Saudi Arabia could maybe divert a couple barrels.
To the Red Sea and UAE to Fujera, but there's not much there. So in a conflict scenario, the spare capacity in Saudi Arabia's ability to increase doesn't do you much good. Secondly, let's remember Iran attacked the most vital important oil facility on the planet, the ab cake processing plant Saudi Arabia seven million barrel day facility in September of twenty nineteen. Now they did that and they didn't
inflict lasting damage. They sort of sent a signal. But in a broader conflict scenario, not only the flow through the strait, but these key facilities, processing, refining, gathering, transport, loading facilities, all of these would be vulnerable to permanent damage or long term damage. So it's a pretty horrible scenario, and in that environment, Saudi Arabia's ability to increase production doesn't really help much if all that would happen in the war zone.
Bob, it's great to have you with I'd like to stay in touch with you to the extent that we can in the coming weeks. This is obviously not just a story that will continue developing, but one that might have a real impact on oil prices, and we count on your analysis. Bob McNally at Rapidan Energy with us once again on Bloomberg. Pretty fascinating stuff there, Kaylee. We're seeing fairly commensurate increases in WTI and Brent Brood on this story.
Yeah, In fact, WTI November futures just settling eighty six dollars and thirty eight cents of barrel, and we'll see if there is more upside surprise to prices as we see this conflict go on dig.
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