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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordert. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg
Terminal and the Bloomberg Business App. Tracking a whole host of news stories this morning, of course, with one central focus developments in the Middle East. This this morning, just dropping you've all seen reports I'm sure about three down jets, three down to US jets over Qwa. The latest from the United States. They say those three jets were down due to apparent friendly fire over Qa or six air crew have ejected safely, the jets mistakenly shot down by
qwaity air defenses. Those headlines just crossing months ago. To build on this conversation a much more, I'm place to say the Norman Rule, the former senior US intelligence official and senior advisor at CSIS joins us now for more normal, so much to cut through, Let's start with this. Who is in command of the IGC as things stand?
The commander of the IRGC is an individual named Ahmed Vihidi. He's highly experienced, born in nineteen fifty eight. He joined the IRGC in nineteen seventy nine. He was the predecessor of cost Some soul Mine in the Koods Force and was extensively involved in terrorism and has indeed been red listed for his involvement in the ammy of bombing in Argentina.
Many years ago. He is an individual with a very dark history.
So we have an individual who was cut from the same playbook as his predecessors in the IRGC.
Norman given the layers of concentric power in Iran in the IRGC and a new leader already stepping in, what does it actually look like and what does it take to have true regime change in our well?
At present we have the regime has already been changed. Their strategic power has been severely diminished. We've had two thousand air strikes by the United States and Israel. Yesterday, the IRGCY headquarters is rubble and beginning yesterday and today, the United States is conducting a massive tectonic strikes on Iran's missile, nuclear and other subterranean holdings. So Iran's strategic capacity is being reduced. Its missile launchers are being whittled away.
That doesn't mean it won't have capacity to fire, but Iran's strategic resources are being already transformed.
The Supreme leader is dead.
His successor is being selected according to the standard process.
So the regime has changed.
It's still the same type of administration and the besieged their militias on the street, armed, keeping the protesters down as before. We have a similar type of regime, but it is severely weakened.
What do you then understand about what this president of the United States aims are in Iran? Than Norman and his initial address, he gave a variety of reasons of why the US was attacking Iran, it became clear that he wanted that regime shift. What is the president's goal at this moment? What does that tell you about how long a conflict may last?
Well, to be clear, I think the goals are consistent to reduce to end Iran's capacity to rebuild a nuclear enterprise and the military operations that are being conducted now will achieve that, although Iran could make a decision to rebuild that at some point in the future absent of political decision to second to end the missile threat at present, although Iran could rebuild that in the future unless it
was a political change. And finally, to severely degrade Iran's regional adventurism in goods force and we destroyed the i ERGC headquarters and are conducting strikes against a revolutionary guard capacity. So again, the president is conducting military operations to achieve all of those goals. The challenge becomes he's got to now have an Iranian government that in order to survive and sustain the regime, they've got to say we will agree to not rebuild that in order to survive, have
a normal relationship with our neighbors, and sanctions relief. That government has not yet agreed to do this. But again I must say, we're one day into a conflict, so these are still early days.
So let's go through what we know and what we've seen so far. I think a notable feature for many over the weekend with account of strikes across the Gulf. Do you see those strikes as maybe risking bringing others into this war or producing a different response, getting gunners in the golf to push back against the interactions they've seen so far.
The response was entirely expected. Iran's goals would have been as following. First, they're going to try to achieve as much losses in the United States to promote a political debate within the United States against the press.
And second, they're.
Going to want to punish or attack golf partners in other countries to cause them to turn to the president and say and the conflict.
Now, what we've seen.
Is actually a diminished attack. Normally you would have seen saturation strikes by the Iranians of missile drone and it hasn't been mentioned cyber strikes as well. The fact that these have actually been on a fairly reduced scale shows the relative success of American strikes in limiting the number of launchers. Now, it's still been a terrible impact. We've had losses that are significant, but this is far less
than Iran would have hoped to achieve. And I must also say that Iran has transformed its relationship with the golf. It's a terrible defeat for the Iranian diplomacy. They've literally turned their relationship with the Golf one hundred and eighty degrees from a detante to enemies. And this will last for a generation for the Iranians.
No, and do you see a path to de escalation in the coming days.
Yes, The Iranians, in essence, through this conflict will have to be compelled to through defeat, through a military defeat, to accept the President's terms. That's the path at this point. There is not a path through diplomatic negotiations. At this point, there is not going to be a path through mediations. The Iranians are going to have to accept that they cannot in order to survive, in order to stay alive, they're going to have to accept that they're going to
have to come to terms. And again, we're about one day in two thousand strikes, and they've watched multiple colleagues be killed, the Supreme leader, the heads of their military. The lifespan of an Iranian leader is not a very long one at present.
Stay with us. More Bloomberg surveillance coming up after this. So here's the LISUS this morning, the President telling the New York Times the assault on Iran could last four to five weeks, the President calling on Tehran's leaders to sink power to the nation's people, and the former National Security Council member, Retied Colonel Joe Rapen joins us now for more conor Raye, but welcome to the program soon.
Thank you for joining us in your experience, given what you've seen over the weekend, do you see a path to de escalation here?
Well, yes, because I mean in this military phase, the outcome is essentially it's concluded already.
It's just a matter of time.
The Iranian regime has lost control of its own airspace over its capital. The Israeli Air force, US Air Force is essentially control. It can strike targets at its leisure over Tehran. You just simply can't continue and organize a defense against that kind of military pressure.
What kind of nuisance do you think Iranian proxy still can cause in the region?
Just that a nuisance. They're not going to be able to tip the strategic balance. You saw overnight a group that was probably Hesbala launched six missiles from Lebanon into Israel. That's essentially that's fairly suicidal. If Hezbala were to try to escalate, they don't have any capacity to resist Israeli pressure there either, and I'm sure the Israelis have a pretty robust war plan contingency to be able to take out those kind of Hesbala assets if it does escalate.
So, if it is a weekend regime that needs to negotiate, Colonel, what does that look like, What do negotiations look like, and what sort of leadership do you estimate will arise and or on.
I would think if you do go into a scenario, as the President sort of outlined Venezuela type of scenario, you'd be looking at the remnants of Revolutionary Guards leadership reaching out. There are some political factions and figures that are also associated with the Revolutionary Guards. I would expect them to be sort of at the head of the
remnants of the regime to reach out. I've always thought that figures such as the RANNIE in Parliament Speaker Mohammed Baker Khlobov, for example, I know his name's not really known in the West, but he's.
Very well known in Iran.
This is a guy who is a former Revolutionary Guards general, was also the mayor of Tehran and is now Speaker of the Parliament. He's always been, He's had one foot in politics and one foot in the revolutionary guards.
He's not alone. There are different figures like.
That who, if they survive the coming week or so, I would think I would be voted most likely to be the Delce Rodriguez figure in Tehran for.
An interim phase.
I don't think that that means that that kind of regime would be sustainable because of the intense popular pressure against that regime in its own week in state, But at least for a transitional phase, as the President was referring to, I think you would have figures like that who are sort of pragmatic survivors as opposed to ideologically driven millenarians who are just looking for martyrdom.
So if you then have an Iran that's more willing to speak and to negotiate with the US, what does that mean of China's position? Who not only witnessed that happen in Venice, one of its key allies, but now we witness the same change happening in Iran. What is the country? What is leadership? What does in President She do in this scenario?
Yeah, it's a tough situation for President She, because the Iranian regime has been such as an energy supplier as well as a strategic military lever that the Chinese have been able to use from time to time. So they're going to be looking very hard at what comes in the wake of this common day regime.
They're going to have an enormous stake in trying to.
Retain their influence in Tehran with a follow on regime, no matter whether that's a remnant regime of the Islamic Republic or that's some kind of new democratic regime. The Chinese have a huge stake in trying to ensure that it's that it's a China friendly regime. So they will be in there competing, but so will all the other regional powers in the world powers. It's going to be an incredible race for influence in Tehran if there is a follow on regime.
Acono, it's been unbelievable that as we've already seen in twenty twenty six, you mentioned Venezuela and what we saw out at Carancas just two months ago, and now in Iran, it's there a coherent strategy here in your mind that we should be following.
A national security strategy.
Mean, I think there is I think and I think with President Trump, it's he has an instinct for essentially trying to trying to reduce the influence and the capacity of this crank alliance or coalition if you will. It's China, Russia, Iran, North Korea and some of its other satellites like Venezuela, like the Cuban regime were formerly you know, the Assaud regime,
and some of their non state actors like Hesbala. I do think the president, and I saw this in the in the first administration as well when I was on the National Security Council staff, he has an instinct to try to break up that coalition using different levers of power, including the economic lever of power, which is I think his instrument choice, if you will.
What do you think the next step will be.
In Iran or in the national security strategy?
I think in Iran, look, the military phase is not going to last too long. I know people are apprehensive about that right now, but we're talking about an Iranian regime that simply doesn't have the military capabilities to continue for very long. They have a finite number of missile launchers which are being hunted right now, and eventually those will come down to a level where they're not operationally significant anymore.
So we're really talking about what will be the political next step in Tehran.
Will there be a Venezuela or Delsea Rodriguez type of interim phase there where there will be there will be a remnant regime that will say, okay, okay, no Moss, let's talk about those four demands you had of us a couple of weeks ago. And if you get to that stage, then I think you can see things stabilized. And also that would open up a window of opportunity for a very different Middle East, because the common A regime has been so destabilizing over the last three decades.
It's absence already is going to have a huge impact regardless of how things go forward.
Connel, just finally and just quickly, with regards to the national security strategy as they developed, sent around pattaying to that, what would the next steps be?
Well, I think it's very Look you're talking about suddenly the removal of a key lynchpin, a Hinge member of this strategic military coalition of China, Iran and Russia, and it's going to be a huge setback to both China and Russia in their regional ambitions. The absence of the Kamine regime is going to have a ripple effect in Ukraine, for example, I would say it's going to put vlader been putting under a lot more pressure because he will have lost his drone and missile supplier, as well as
an energy partner and a strategic intelligence ally. And you have to think that over in Asia will have a ripple effect too on the kind of pressure that President She is able to put on the local region.
Stay with us, all Bloomberg Savannah's coming up after this, Let's talk about energy under Savannahs this morning a standstill in Homer's.
While President Trump, like his predecessors, do not want to see high oil prices, he is willing to take risk of high oil prices. Iran has the means, the ability to make Hormuz unsafe for longer than the market I think expects. The only real leverage the Iranian regime could hope to have is over the price of oil.
So here's the lacest this morning in crude spiking the most in almost four years. As tensions are escalating in the Middle East. Tank of traffic through the straight and foremost effectively halted threatening about a fifth of the world's crued Stephen Shark of the Short group right in the following, A regime fighting for its survival would eventually make a move The surprises position for volatility, not direction. Stephen joined us.
Now for more, Stephen, welcome your line from over the weekend. Whether the template from June twenty twenty five is the right one, is this different?
It very well could be. Now we actually have two templates to play with here. Of course, we have what occurred in the late nineteen nineties, in early nineteen ninety one when Iraq invaded Kuwait, and then of course we had the twelve Day war back in June. In both instances, we saw a significant spike in prices immediately, but in even greater drop in prices afterwards, and that was the market's way of telling us that the resolution was going to be quick and it was going to be positive.
In nineteen ninety one, it was kicking Sodom out of Kuwait that was a positive prices crash, and twelve day war the objective we had a finish line. It was to neutralize, excuse me Iran's nuclear program, and that was for the time being achieved quick resolution prices crashed.
Now we have the asymmetry.
We have an open line, now we have no finish line, and so the stated goal is to overthrow the theocracy in Tehran, So whether that happens quickly or not depends, So that is the key asymmetry. So what we are concerned about, and the only catalysts that will drive oil prices sustained higher would be a disruption in long term disruption to the flow of oil.
So of course we're talking about the straight Amos now.
Right now we do have an effective blockade on the street, being that we have now made it unensurable, so there are no tankers that are going to.
Transit the Straight, So that is the key situation.
But if we do get a quick military resolution, that blockade effectively gets lifted immediately, and there we have the scenario loyal oil prices. The concern now is that the theocracy in Tehran is able to hold on. We're no longer dealing with a rational player. Back in June, there was no concern about a closure to the Straight of
Homoves because the regime did not they're threatened. Regime wasn't going to alienate itself from its arrob trading partners in the Golf or its clients in India and China.
Therefore, they had consequences.
A regime that is now under threat does not fear consequences. So there is the very real threat now that we go beyond a soft blockade of the Strait and a hard a blockaded straight with either mining or missile attacks on vessels transit in. So, by the way, it all comes down now to timing, how quickly is this resolved. It's resolved quickly. I eat in a couple of weeks. That blockade gets lifted immediately.
And let's not.
Let's recall that we have about one point seven billion barrels sitting in can I.
Ask about that blockade and the likelihood of it because a lot of digital link has been spilled, that perhaps Iran doesn't have the capabilities to fully issue a blockade, that they don't have unlimited supply of weapons, that laying down minds would be costly for them themselves once they want to reopen the waterway. What, in your summation is the full extent of pain that Iran can have when it comes to oil energy infrastructure in the state.
Of hormous Yeah, absolutely so, The big threat now here is first of all, with the blockade, they don't need to take a hard blockade. As we said, you've made it straight right now, unpassable, it's unensurable.
Therefore, you do effectively have your blockade. Now.
The real concern now is what do we do about oil production. Well, there have been reports that around has gone after some of Saudi Qatari as we know, has been shut down, and that is a real concern. The concern that we do not have from a US Israeli standpoint is we do not have any sort of threat on Iran's oil production. We are not going through That is not a threat back in June and is not a threat today. That is the worst thing that the
Israelis or the Unastates could do. What we want, what the stated goal is is to overthrow the theography and bring in a more democratic, egalitarian government into Iran. That government's going you need cash go, the need income to succeed. That income comes to the form of oil production. So
oil production is not under threat at this point. From a standpoint of being attacked by the US or Israeli or even Arab forces in reaction to attacks unerve infrastructure, the concern here now is once again we have an irrational player. What did Saara Hussein do when he lost He burned Kuwaiti's oil fields.
So that is your threat at this point limited, but it is a threat.
This is the Bloomberg Survendans podcast, bringing you the best in markets, economics, angier politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business Amp