Trump Is Beginning To Cave On North Korea: Eli Lake (Podcast)

Bloomberg dot com. Well. Last night, President Donald Trump, in a State of the Union address, said that he will meet with North Korean leader Kim John Un on February in Vietnam. Help us preview what might come out of that summit is Eli Lake. He is a Bloomberg opinion columnists. He joins us in Washington, d C. Eli, thank you for joining us. What do you expect will come out of this summit between the US and North Korean February.

I think there's a very good chance you will see um a statement, a kind of declaration of peace, which is similar to statements that have been made before, but would pave the way to a formal peace treaty that

ends the Korean conflict. Today there's only an armistice, and I think you may see a new policy where you would see the relaxation of sanctions on North Korea in exchange for some progress on what's called de nuclearization or disarmament, but not the old policy, which is that no sanctions would be lifted until they were there was verifiable disarmament from North Korea. So eli, are we any closer to de nuclearizing North Korea? Well, especially I I don't think

we are. Especially a recent report from the U N Security Council is correct that says that, you know, there's a there's not that the North queens have not only continued their development of weapons programs, but are are continuing to sell it to other rogue actors um. And you know, the leaders of the U S Intelligence community also said that they do not expect that Kim Jong un would

ever verifiably give up his nuclear arsenal um completely. And this follows a pattern we know that dictators all, you know, develop nuclear weapons in a way as a kind of insurance policy, because if you have a credible threat to and senerate a city like Seoul or other neighboring cities, then there you will not be invaded like someone like Saddam Hussein or well market Offie, So you like, who has the leverage here, the US versus North China, North

North Korea just doesn't seem like anything has materially changed over the years. And I'm just trying wondering, other than the fact that we are the President is meeting with Kim Jong un, which is historic in and of itself, what's changed, well, the Trump administration, the President himself would say that the young leader of North Korea wants to bring economic prosperity to his country, and that this is a source of leverage because the United States is a

wealthy country and it can help with that. But that defies in a lot of ways everything we know about Kim Jong Remember, you know, Kim Jong un murdered his uncle and had I think his half brother murdered and and has done terrible things in terms of his climb to power, and has acted in a in a ruthless manner that suggests that if he really is interested in the kinds of things he needs to do for prosperity, um that would mean opening up his society and opening

up his economy in a way that would be ultimately a threat to him. So I don't think that I don't I don't believe the happy talk that he's interested in this sort of economic development. But the answer that I think that the White House would give you is that, you know, the US can provide North Korea with the means to get their country out of, you know, extreme poverty.

I want to shift gears a little bit beyond North Korea because when we talk about national security, I have to wonder what's going on with Venezuela and how much is this becoming a sort of solidification of an alliance between China and Russia versus United States and other developed markets. Well, that's a very good question, and certainly Venezuela is a country where you've seen both Russia and China play the role of sort of the big power UH and development.

But you know, China last year began to call back its loans from Venezuela at a moment when you know, its economy was cratering as it is now um and its oil sector has been so depleted because of its mismanagement and the corruption of the Chavez and Madura regime. UM And in many ways, the Chinese might be looking at their in initial investments in the earlier part of

this decade into Venezuela as a pretty bad bet. Um. I think that the Russians have a different kind of interest because they see that Venezuela could potentially play the role at At Cuba played in the Cold War, which is a source for power projection in the hemisphere. Um So, you know, I think their interests a line here. I know that the U. S. Intelligence community leaders last week said that they feared a kind of research sign no alliance against you know, the rest of the sort of

more western democracies. But I still think that there are a lot of sort of sources of tension there, and they could very well be a classic mistake that the U. S. Intelligence community, many in the US intelligence community made in the Cold War, where they believe that, you know, two countries that followed the same communist ideology would be natural allies, when in fact, you know, their their rivalries between them. That border uh Is has never really been quite so quiet.

So in a lot of ways, I would say that, you know, we still have to sort of wait and see. But there is a different point which is also worth making, which is that we see it all the time that autocrats and autocratic regimes will band together when there is a democratic threat to to to those regimes. So it's in the interest that of China and Russia to see that the democratic tumult that we're seeing now in Venezuela fails, because that is that kind of same thing can be

a threat to them at some point. Are you saying that right now China is very much an autocratic company country and that its alliances are going to be with other autocrats period the end, Well, China is an autocratic country and its alliances are you know, largely with other autocratic countries. And we see the China I mean we see with Russia for example, protecting Bashar al Assad and the UN Security Council um and I think you'll see more and more with China the same kind of behavior.

I mean, I think that. So, like, what do you what do you think of the next steps in Venezuela. It's been kind of comps since Guido assumed his position as I guess president number two or President number one. What do you think our next steps? Well, we're seeing more and more pressure. I mean, most of Europe has now come out and recognized Guido as the interim president.

I think that there will be more and more pressure now through humanitarian aid that you know will be delivered, and we'll see will the real question here is if Muduro gives an order not to accept or to block humanitarian aid to his starving population, will the mill of terry follow that order? If if Maduro gives an order, which by the way, apparently he didn't over the weekend in the face of mass demonstrations for his military to fire into the crowds, will the military follow that order.

That's really where the rubber hits the road. And I think that there is an understanding that, you know, he can have his generals, as he did last week, show up in a press conference saying that they're still loyal to him. But if the order is given, how many of the middle and lower ranking members of the Venezuelan military will follow it. They are suffering the same kind of privations as the rest of ordinary Venezuelans. And so in that respect, I do think that Medora's days are numbered,

just real quick. In one word, which is a bigger threat North Korea or Venezuela. Well, North Korea is a bigger threat because they have nuclear weapons. Sorry, North Korea, ELI like, thank you so much for being with us, Eli Lake. We always love reading your columns for Bloomberg Opinion coming to us from Washington. D see read his columns. They are fabulous. He covers national security. But we were right in the middle of media industry earning season right now.

We had twenty one century Fox report pretty decent numbers this morning, and of course the Walt Disney Company last night out with their numbers which are also slightly better than expected. The stocks are both kind of unchanged here this morning, so it help us dive into kind of what we're seeing in the media landscape. Let's bring in Porter bib Porter Bibs and managing director of Media Tech Capital Partners. He joins us in our Bloomberg Interactive Broker

studio here in New York. And Porter has been covering the media business close to forever. I'll put it that way. So Porter, as you kind of look at the landscape today and again we had those results just recently from Fox and um And and Disney. We have some more

to go. You know. It looks like investors are stepping back and saying, gee, I have to make a bet here whether some of these big media companies can really survive in a world where there's Netflix and Facebook and Amazon, let's just take a look at Disney, you know, probably the biggest and best position arguably. What's your view on Disney and how they play out over the next several years. Well, Bob Iger in his conference call UH yesterday said direct

to consumer is his highest priority. He's putting Disney Plus, his main streaming service, on on fast forward. They're gonna show in April a demo to the world to see how it flies, and hope to launch by the end of this calendar year. Um. But the real bombshell that Disney has is not just Disney Plus, and not their sixty ownership of Hulu, which they probably will um end up owning a pent of buying out Comcast and a T and T the minority shareholders so they can control

the whole thing. The bombshell is ESPN Plus, which is going gangbusters, has two million paid subscribers. But where the real money tree is going to start shaking down on Disney is when online betting goes across the country, which is going to do There are three states now where it's legal, and all of a sudden, you're going to find in the next couple of years fifty states legalizing online betting, and who has the most live sports and

just a gigantic archive of debtor sports information. It's it's interesting that you bring it up because it's one way that Disney diversifies away from what Netflix has in addition there, in addition to their other original content. My question is we talk a lot about Netflix being sort of the big elephant in the room. Is Netflix going to remain an independent company? Well? It um, I may be in the minority, but since the day that Netflix launched, I

said it was an unsustainable business model. Um. They don't make profit, they absolutely and they have gigantic, almost eighteen billion dollars of off balance sheet obligations. And the reason that they don't have to show those is because they don't. They don't come do and payable until they air the content that they've paid over overpaid for. So they're gonna face serious competition already from Amazon, from Disney, from uh, everybody else who wants to get into the streaming business.

And somebody is going to have to pick up Netflix and take them over. And who will that person be? Well, a lot a lot of analysts are positing Apple. I'm not sure Apple is the only buyer. I think that Verizon may have to do something because they're they're looking at uh, being dumb pipes for the for the future if they don't have some content to create multiple revenue streams, stories,

subscription revenue, and advertising. Uh. It could be Microsoft, which has Xbox distribution network, tens of millions of Xboxes all over the country, all over the world actually, and no content except games. So Microsoft, well, let's take a lot. I mean, Netflix has a hundred and fifty billion dollar market cabin so obviously, Uh, only a handful of companies

out there could possibly do that. Are you one of those folks that says that, g as we the landscape today in the in the media consumption world, it's Time Warner, you know, Comcast, Disney, Viacom, and so on and so forth. Are you one of those folks that says, boy, if I look five years into my crystal ball, five years down the road, it's not those companies. It is Amazon, it is Microsoft, it is Netflix. Are you one of those people? And if so, sorry for the two point question.

What happens in the traditional media landscape? Do we have to have another massive wave of M and A it vaporizes. Uh, we're the whole media industry right now. Um, every ten years or so, Uh, everybody start screaming content is king. Well that's the scream today. Content is king. And the distribution means that you reach out to the consumer through uh is really irrelevant. It's all going digital. It's and

five years and now it'll be virtually all mobile. So uh, the legacy media linear television, cable is not going to exist in any great shape or form alright, So in that vein what major media company that currently exists will be no longer in five years. Well, one of the most vulnerable right now is Comcast because there such a big cable, linear television, Universal Pictures and NBC, um, the

major networks. They're trying to go digital right now and trying to walk away from their core businesses on on network television as we know it today. But it's not gonna work. You don't think their broadband business is what's going to be the future of Comcast. And I think the thing that we'll save Comcast as as a business is their ability to deliver five G content and it's probably going to be mostly somebody else's content porter bib it is wonderful having you here. Thank you so much

for being with us. Porter bib is managing partner at Media Tech Capital Partners. Has been in the media space for decades. Was the first publisher of Rolling Stone magazine. Talking about that's my favorite part of them. I love it. There's so many favorite parts, talking about shifting industries and UH and just Amazon. This year has seen a significant rally and the price of crude, but there are still some archer existential questions hanging over at the oil market.

Joining us now is Jim Crane, Energy Studies Fellow at Rice University's Baker Institute for Public Policy, joining us from Houston. He's also the author of a new book, Energy Kingdoms, Oil and Political Survival in the Persian Gulf. Jim, I think one really pressing question for oil markets recently has been is Opeque on its deathbed? No pick is is alive and kicking UH and getting bigger by the signs

of UH. You know the talks that have been revealed recently with Russia and the you know, the OPEC plus countries that that are now caucusing UH frequently with with Saudi Arabia and the other OPEC. In the real OPEC members. UM. A lot of that is because of the U s shale. So you know, this rise in in US oil production has really undercut OPEX market power. So to get it back, uh, it brought in Russia and now we've got the you know, two of the three largest global oil producers, Saudi Arabian

Russia working together. Uh. So I think, uh yeah, OPEC is still a going concern for sure. So, professoral Crane, when we think of OPEC in the Middle East, I mean it's obviously oil has transformed that region of the world so dramatically over the last seventy five years. Um. You know, obviously tremendous oil reserves there. Despite the fact that the US is now coming online with a shale. What are some of the downsides that you're concerned about

in that region? Um, as they continued to progress. Well. So this basically that's you know, the whole crux in my book. So it's basically a history of energy consumption. You know, these countries were extremely poor. Uh when oil was discovered, they didn't use any oil at all, which was great for the companies that that we're producing that oil.

They could export every bit of it. Uh, and over the past oh four or fifty years, they've gone from zero to leading the world in oil consumption, uh, you know, which also happens to be their main export commodity. So that that trend, that continued growth and energy demand was threatening their economies because you know, they were diverting evermore exportable crude oil into their economies, and it was also

threatening their political systems. You know. They these are autocratic political systems that are based on patronage by basically giving away stuff. So they were giving away too much, uh in terms of energy domestically, and they needed to get rid of these subsidies that they that they put in place in the nineteen seventies. And they're they're starting it's starting to happen. They're starting to to to raise energy prices.

Saudi Arabia is leading the way. But now, you know, sort of the latter stage of my book, I look at how climate change is likely to affect these countries. Uh, and that's a whole new existential issue, sort of a lose lose situation if you will, for them. Uh. You know, if climate action succeeds in reducing carbon emissions, that will

probably affect oil demand in their economies. If climate change, if the world does not succeed in reducing oil demand, uh, you know, the raising rising temperatures, you know, Saudi Arabian the Gulf are going to be you know, on the front lines of climate victimhood, with some of those cities along the Gulf coast possibly getting to be too hot and humid for you know, the human for humans to withstand, uh, so by you know, sort of the end of this century.

So you're talking about how sort of the the existence of oil and the production of oil in the Middle East really gave rise to the current political regimes and also to the capital there. At the same time, this is going to be a problem for them since this is how they've established, uh, the entire infrastructure of how

they operate. I'm just wondering, you know. You we started with talking about OPEC and how it's broadening out and still alive and kicking, But is the center of focus moving away from the Middle East because of some of these challenges and because of uh, the fact that it needs to have a bigger critical mass to fight the U S shale presence. I think, you know, Saudi Arabia and Riad is still the you know where the critical mass of OPEC lies. I mean the Saudi Oil Ministry

and the Saudi Minister himself. Um, you know, is still the key personage within OPEC who still calls the shots. Um. You know, the other countries in in the Gulf, you know, the the other monarchies tend to caucus with Saudi Arabia in within OPEX. So there you know, it's still um but yeah, I think you know, Saudi Arabia is still that the heavyweight within OPEC. We're talking to Jim Crane,

energy Studies fellow at Rice University's Baker Institute for Public Policy. Jim, you know to the extent that these I mean, we know some of these Gulf area countries are trying to diversify their incomes, diversify their economies. How successful have they been at attracting foreign capital and actually achieving some of that diversification. Well, you've got the first successful post oil economy in the Middle East now in Dubai, right. So Dubai's GDP is you know, about three percent or less

now from oil and gas. So so Dubai's done it. They've They've developed a you know economy based on financial services, on tourism and conventions and on shipping and logistics, uh, and on real estate, right those crazy real estate projects we've seen with their the you know the world's tallest building and the you know the islands in the uh

you know shaped like palm trees in the Gulf. UM. You know, there's a lot of other real estate projects that are you know, maybe a bit a bit more sense that they've they've managed to convert into a non oil economy pretty successfully. Also airlines, um. But now you've got the you know, the other Gulf Cooperation Council countries, the other monarchies have not followed Dubai's example until recently

they're starting to do the same thing. So a giving Dubai a bunch of competition in airlines and in real estate and tourism, um. But they need to go a lot further than this, I think for for oil derived economies, diversification is really something that they really have to be dragged, kicking and screaming into because you know, these these sectors

are just not as profitable as oil. I mean, if you can produce oil for five or ten bucks and sell it for fifty or a hundred dollars, you know that's a you know that that level of profit is just not going to be available in pretty much anything else. So uh, it's a tough cell diversification, but unfortunately for them, it is vital. Uh, and that is what they've got to do. Jim Crane, thank you so much for being with us. Jim Crane is Energy Studies Fellow at Rice

University's Baker Institute for Public Policy based in Houston. Is a book is Energy Kingdoms, Oil and Political Survival in the Persian Gulf. A very interesting kind of reflection at a time when there is this pressure about global warming and about the use of fossil fuels, and as a lot of these Middle Eastern kingdoms do try to diversify their investments and the resources away from oil. Well. Of course, President Trump delivered his State of the Union address last night,

touching on a number of topics. To help us parts through what the President said and the democratic response, we bring in Lonnie Chen. Lonnie is the David and Diane Stuffy Research Fellow at the Hoover Institution, also a director of Domestic Policy Studies and Lecture in the Public Policy Program at Stanford University. Calling on the phone from of

Lee Stanford. So, Lonnie, a lot of topics covered in a State of the Union address last night, maybe light on a detail, but certainly a message that was consistent with his past messaging. What did you take away from the State of the Union address last night? Well, I thought the President actually sounded a number of unifying themes

during his speech. Obviously there were elements of it that were classic Trump claiming credit for avoiding nuclear armageddon with North Korea was chief among them, But fundamentally, as a as a speech, I think the President from a policy perspective, focused on a few items that ought to get support from Republicans and Democrats. Prescription drug pricing, infrastructure reform, UH, boosting economic growth. Those are all themes that Republicans and Democrats,

at least in theories, should agree on. So as a general matter, I would say the President's speech sounded many more unifying tones that might have been president his recent rhetoric. Okay, so, Lunny Chain, this actually does not necessarily jibe with what a lot of other people are saying about the speech in that uh, President Trump did not seem to throw Democrats a bone when it came to the wall and negotiating about avoiding another government shutdown. Why do you disagree well?

On immigration? That's an area where obviously the president feels very strongly that he needs to continue to play kate and and uh promote policy that's popular with his base. But bear in mind the current process is largely in the Congress's hands. There's a negotiation going on. We'll see where the President comes out on it. But as a general matter, if you look throughout the speech, I think there were many more times when he tried to bring

people together then he tried to drive them apart. Now, with respect immigration, that's obviously a very controversial issue, one where I think there was more divisiveness, but we've come to expect that from the president. Immigration is a hallmark issue for him, and obviously it's kind of central to his political coalition. So it's understandable, not excusable, but understandable the degree to which he uses immigration as an issue

to divide Republicans and Democrats. So, Lonnie, I guess the rubber will meet the road, if you will, really, over the next week or so, as we approached the deadline for a potential second shutdown, was there anything you heard in the address last night? Or even in the Democratic response that would lead you to believe that there is

a path forward to avoid a second shutdown. Well, the the only question I think will be whether the negotiators who are talking about this issue in Congress now, the Conference Committee that was convened to end the last shutdown, the question is whether they can achieve resolution that's going to be satisfactory to the far left to the far right. I think that's the that's the bigger issue. As far as the path forward, I think that the path forward

is actually relatively straightforward. From a policy perspective. We all know the sorts of things that Democrats and Republicans would want. The question is whether as a political will there to avoid a second shutdown. And I would argue that the first shutdown was was considered to be so distasteful by both sides that there will be a very strong push

to to avoid a shutdown. And frankly, if it comes down to a question of whether there will be a shutdown or if the President is going to act in some way unilaterally, my senses that the President will act unilaterally and Congress will do what it can to avoid a shutdown. That's not the optimal solution from a policy outcome, but it's not an unlikely outcome given where things are.

As we said right now. So your former advisor to the Marco Rubio and make Romney campaigns, and I'm wondering putting that hat on for a minute, how would you view Stacy Abraham's response to Democratic response to President Trump's State of the Union where she talked about voter fairness as she talked about the middle class and the plight there.

How would you advise President Trump to respond? Well, the of the themes, You know, if Stacy abrams response echoed the themes that we've heard from Democrats consistently over these many years since the campaign, it was very much a preview of coming attractions in for the president, he has one of two courses pretty fundamentally. One is to to triangulate, and I think you started to see some of that last night, triangulation around issues relating to healthcare, for example,

and infrastructure. As I mentioned earlier. The other pathway is for the president to hold firm to some of these more divisive issues like immigration and to really focus in on that. As we moved towards this election, Bill Clinton sort of showed the way he had. You know, Bill Clinton had very low approval ratings entering this year of his presidency in much the same way as President Trump does, and Bill Clinton elected to essentially co opt much or

part of at least new Gingrich and Republicans agenda. So if President Trump tries to co opt some of the issues that Democrats care about, various historical evidence to suggestive could be successful in rather than sort of holding firm to what one might consider a based strategy. Lonnie Chen, thank you so much for being with us. Lonnie Chen is a research fellow at the Hoover Institute, also Director of Domestic Policy Studies and lecturer in the Public Policy

Program at Stanford University. Joining us from California. We appreciate that look at the State of the Union address as well as a democratic response heading into the elections. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney, I'm Lisa A. Bram Woyd's I'm on

Twitter at Lisa A. Bram Woyds. One. Before the podcast, you can always catch us worldwide on Bloomberg Radio.