Surveillance: Afghanistan with NATO's Stoltenberg

so good about this. We speak of an allied response. We've heard many defenses of the permanence in need for NATO. We are now joined by the Secretary General, of course, his affiliation with his Norway against Stoltenberg, joins us this morning. Yen's what should be NATO policy after America exits from Afghanistan.

First of all, to stay committed to uh to ensure that Afghanistan doesn't once again the concepts safe avan for national terrorists, because we have to remember that the reason why NATO allaizes joined the United States going into Afghanistan in two thousand and one was a direct response to terrorist attack attack on the United States and the hundreds of thousands of Canadian European NATUS soldiers and partners have served alongside US soldiers there for twenty years, and and

for those twenties we have prevented Afghanistan from being a safe havan for international terrorists. We need to ensure that that also the case in the future, so so we will we will follow monitor the new rulers and Cobbled very closely, and we will also make it clear that NATO allies have the capabilities to strike from long distance terrorist groups if they try to re establish themselves in Afghanistan.

Because at the time constrained this morning, Secretary General, I really want to focus on the important Resolute support mission, the idea of the Italians in the west of Afghanistan, the Germans up north where the Northern alliances, and then there's a Turkish flag in the middle providing support NATO's support to Afghanistan. Now Turkey is in a unique position. Explain NATO's relationship with Mr Rajuan and the New Afghanistan.

The NATO has ended its military presence in Afghanistan, as NATI states as huh and I would like to thank and praise and and and command all those men and women who have served there for so many years, and their efforts and their service was not in vain. Turkey Is has spread the key role in in operating the airport and and Turke has offered to continue to support

the airport. And the airport is in cobble Is vitallys a vital link to the world to get a humanitarian aid in but also to enable safe passage for those who want to leave. And NATO allies have strongly stated that we will not forget all those who are still in Afghanistan who supported those who are at risk, and we will continue to work to ensure that they can leave Afghanistan. Will that be in NATO support directly and the many adjacent borders of Afghanistan to continue to get

people out. So NATAL allies are first of all working on how to make sure that airport can continue to operate. A second, we expect the Taliban to live up to their commitments both on safe passage but also on open land borders UH and of course also what they are promised when it comes to preventing Harris organizations being able

to reconstitute themselves in Afghanistan. If you're just joining us on radio and television in Stoltenberg, where there's a former Prime Minister of Norway, Secretary General of NATO or honored that he could join us on this historic morning, Mr. Secretary General NATO. It's not so much in search of a mission, but it is a morph It is a

changeable Europe, a changeable NATO North Atlantic Treaty organization. As we move into two thousand twenty two, all of that butcher stuff against a question of migration, a question of refugees across Europe, I would suggest this is the third rail. How can NATO support its nations and continental Europe confronting

a new round of mass refugees and migration. Our main talk is to help to stabilize our neighborhood and that's the reason why we are working with partners in North Africa Enemy least to help to stabilize countries in our neighborhoo. Because we're our neighbors on most table, we are more secure. We also have some presents, for instance in the Agen where we help to implement agreement within Turkey and the European Union on illegal migration over the Agine see from

from Turkey into the rest of Europe. But the NATO's main purpose is to make sure that we stand together thirty allies, one for all, and all for one. This is important for Europe, but it's also important for the United States. In a world with a shifting global balance of power with the rights of China, it is a huge advantage for the United States to have twenty nine

friends and allies in NATO. No other major power has anything like that, and therefore a strong NATO, Europe and North American standing together is important both for North America and for Europe. How can NATO assist your members in what we're hearing interview the interview general commit of the United States Ambassadorable Alton, Congressman Davidson, and others. They all circle back to a relationship of a new Afghanistan with China and with Russia. How can NATO respond to that

perceived new alliance? So for US, it's obvious that all the countries in the region, and that of course also includes China and neighbor Afghanistan and the Russia not so far away, it is in their interests to have a stable Afghanistan and Afghanistan where terrorist groups like isis K cannot work. Established themselves operate plan Taririst attacks against any

other country. So there are many differences between Russia, China, NATO allies and all the countries in the region, but we all have a common interest in preventing Afghanistan from once again as it was before we went in in two thousand and one, becoming a place where TIS organizations can plan, organize, conductors attacks against other countries. Mr. Secretary General Angelo Merkell of Germany speaks of an existential need

to have a Kabbal airport open. You mentioned it earlier, like in our final moments here to speak about the new Kabal airport. How do you perceive and you mentioned Turkey and their affiliation of protecting and sustaining it over the years of this war, how do you perceive a new Kabbal airport with NATO support. NATO Allies are strongly supporting the efforts to make sure that we have a functional operational airport in a cobbal U. Turkey is playing

a key role. I discussed this uh just yesterday with the with the Turkish Foreign Minister, and I would like to praise Turkey for the key role both in supporting, helping facilitating the evacuation, getting people out from Cobble, out from Afghanistan into the airport over the last days, but also now the offer they have made to help to operate the airport, because the airport is are so essential both for aid coming in but also for people to be able to leave. But how will we affect that,

I mean America's it's done over what occurred yesterday. We all knew it was coming, and yet particularly those of us with an understanding of nineteen five, are stunned. How do we actually affect a reopening with the Tailiban? As we work, NATO is not planning to deploy any forces or personnel at the Cobble Airport. We have ended our military presence there as as as as an alliance and as for instance allies like the ninety States have done.

But we are working with other countries, including a need to ally cad UH and they have what I will call operational contact with Taliban to see if we can help ensuring that the continue, that the airport continues to function. Mr Secretary General, thank you so much for joining Bloomberg this morning. Yen Stoltenberg, NATO Secretary General, and this historic morning, we now finished whatever year Politics is with John Bolton.

He is a former national security advisor. The book A Sensation a year ago, the room where it happened, and we're thrilled that Ambassador Bolton could join us this morning. I'm not going to mince words, Ambassador Bolton. You are scathing about the urgency and the magnitude of the Pakistan problem. How should the Secretary of State advise a president on

our new relationship with Pakistan? Well, I think for many years we've been constrained by our concern for Pakistani logistical support to our forces in Afghanistan, and our concern about Pakistan's nuclear weapons, which if they fell into the hands of terrorists one by one, or worst case, the terrorist regime took over Pakistan, would be a global threat immediately. But the fact is we've been played by the government

of Pakistan for a long time. Terrorist elements within that government already, particularly Inner Services intelligence, have played a double game, and we've put up with it. I just think with the end of American involvement in Afghanistan, with a terrorist government in place there now, which gives potential support for terrorist activity and take over Pakistan, we've just got to get tough on the government either to crack down on

terrorism or to face the consequences. To me, the critical sentence and you're wonderful essay and the Washington Post, John Bolton, was you say, now we tilt to India. Let's take it back to John Galbraith's ambassador to India, long ago and far away. We've always been struggling with this tilt to India. How do we tilt to India now to

assist the memory of our soldiers in Afghanistan. Well, the principal threat that we face globally in the twenty one century is China, and India has moved away a long way from the so called neutrality of the Cold War, where it actually tilted towards the Soviet Union, which was

one reason we tilted towards Pakistan. I mean, it kind of goes back and forth, but but India now sees China as the threat, and it sees the same thing we see in Pakistan, a large and growing Chinese presence of Chinese assistance to Pakistan over the years for its nuclear and ballistic missile programs. Uh and I think the time is is here for the US to tighten up

with with India. With Australia, with Japan, which we already formed what we call the Quad with UH and and really to put to Pakistan as clearly as we can give up this flotation with terrorism and UH. If you do, there's a there's a real prospect for cooperation. But we're not going to go on any longer pretending you're not doing it. There's always been a struggle. You're institutionally within our international relations with India. What form of relationship would

you advocate after your travels to Central Asia? Does Biden need to go to Delhi now? Well, I think he needs to go soon. And I think we've got some real issues with India too. This is not this is not going to be easy. They've got to break their dependence on Russian weapons systems, which they've relied on and purchased for decades, going back to the Cold War. Uh And.

I think a lot of the the political class in India is going to have to wake up to the fact that the neutrality, which was never really neutral during the Cold War, is no longer an option. I think they're beginning to move in that direction. I think, uh there's a lot of opportunity there, but I don't underestimate the amount of work that's going to be involved, impassatable

and how can so? And are you about some sort of alliance between the Taliban and Islamic State or other groups that could become something reminiscent of the al Kada of your Well, I think I think it's an important question. I think we should first remember the al Qaida of your is the al Qaida of today as well, and they have remained in close touch with Taliban during twenty years of exile in Pakistan. They're back in force now.

We see that even in U N reports before the fall of the Afghan government, isis K has been at odds with Taliban because they don't think they're tough enough, they think they're insufficiently strict in the implementation of Islamic law. So so there's there's tension there now. But but let's be clear, this could turn into cooperation in the blink of an eye. And isis K does have worldwide thread capabilities, as does al Qaeda, and I'm worried we have slipped

back into a pre nine eleven situation. Meanwhile, we do have a poor that there are a number of American citizens still in Afghanistan UH, and the US has completely pulled out. What do you see as the best pathway to get some of these people who are remaining out of the nation safely? I mean, especially whose alliance are we going to rely upon. Well, I'm I'm very worried

that that they're not coming out. Let's let's remember a lot of these US citizens may well be dual citizen US and Afghan or they may have been Afghan and and become US citizens. So from Taliban's perspective, there's still Afghans and UH. I would not UH rest any comfort in cooperating with Taliban that we may get a few more people out who are American citizens. I think the number of Afghans who worked with US and other coalition forces for the last twenty years are going to be

few and far between getting out. I think I think we're real risk here of a long brutal hostage situation. Did we do the right thing? We left, and we left those people behind, and we knowingly did it. We never should have left. I think that's the fundamental mistake. I think the exit itself was badly bungled, no question

about that. But the mistake here goes back to the Trump administration negotiating with the Taliban, not negotiating with a terrorist group, not negotiating with the government of Afghanistan that we helped create twenty years ago, and that whatever its deficiencies, and it had plenty, it had at least some democratic legitimacy, of which the Taliban has zero. Yeah, certainly complicated. Can you come back and just do big picture with us?

A lot of the concerns about the way in which we withdrew has been China now stepping in the Belden Road initiative, as you know, through Pakistan. You wonder if it continues through Afghanistan. Is that a real threat? Yes? I think it is. In fact, I have up in the Well Street Journal today on the reaction both by China and Russia to what we've done in Afghanistan. And I think while we're all understandably concentrating on what's gone

wrong in Afghanistan, what's the global terrorst threat? As a consequence, if you look at the big picture, our main adversaries read this as a sign of American retwreet, retreat and weakness. John Bolton, you came out of Baltimore. Your father was a fireman, you did the military academy thing and wandered up to the liberal swamp known as New Have in Connecticut, and and it must have been a real shock your first day at Yale University. You did pretty good up

there as well. You've got a great perspective on the international relations establishment of Washington. Are we in search of an operative theory? We went from the civilizations, the Washington consensus, maybe Zakaria's post American world. What does John Bolton's new foreign policy theory look like? Well, you know, I'm a Burkean conservative, so I'm not so interested in the broad

scale theorizing. But I think American foreign policy has to be based on American national interest, which is why we were in Afghanistan, not not We weren't there to do charity work for the Afghans. We were there as a strategic defense against the recurrence of terrorism like we saw on nine eleven. And I think when we give up that very hard headed approach, we leave American danger, which

is exactly where I think we are today. Meanwhile, we are hearing the administration is turning its focus much more to the Far East, into cyber security, to cyber warfare, to the protection uh, that could come from space and other types of fronts for the new war. What do you foresee in terms of the U s IS priorities and how it should chart a path in that direction. Well, I think cyberspace has been a kind of a garden of Eden for many people for twenty years or so.

We now realize it's filled with dangers. As I said before, I do think China is the main threats, the existential threat of the twenty one century. But but I think what's most important to understand is with the with the end of the Cold War, the collapse of the Soviet Union. Although people had this dream of the peace dividend and whatnot, actually in the past thirty years the world is more dangerous from more diverse threats that we've got to be

ready for. It's not with Afghanistan gone we're more secure. The clear point today is we are less secure and we need to be ready across a multiplicity of threats. Inbassador Bolton, thank you so much writing in the Wall Street Journalist morning, and we thank him for his conversation. He watches the euro on an hour by hour Basis. Ibrahim Urbari City Group Global had a foreign exchange analysis, but much more than foreign exchange folding in the sum

of all its part. How correlated are the markets right now, Abraham, Well, they remained pretty correlated, and in fact, when we look at the FX market, one of the major ques we of course always take is what happens in in in interest rates and what happens in terms of global risk appetite and ex has been moving more or less in tandem. That being said, for the dollars specifically, it means that it's been called in the cross currents to a degree.

As you said, it's been a little range fund over the last few weeks because interest rates in the US have been low even as equity markets have been pushing up so raises. You were him the economic question, what could potentially push the Fed to act more quickly and thus to create some strength in the dollar that could disrupt the rest of the ffex world. What are you

looking for in this Friday's jobs report on that front? Well, I think when it comes to the FED, they're actually drivers that matter a lot and drivers that matter much less. And I think the tapering question is much more in the latter category. And that was the main takeaway coming out of Jackson Hole. And therefore we don't think there's all that much that this paywall report can do for the actionality of the dollar beyond the day itself. What is much more important is what is the outbook for

the fence price hiking intentions? And there I don't think this payroll report will do a great deal. So I think it will be a time until the FIT becomes the major market driver again in FX. If that's fascinating, Abrahim, especially when we take a look at what's happening over in Europe with the inflation print that we saw this morning, coming in at the hottest in two thousand and eleven, hotter than people previously expected. How much does this actually

bleed into the potential for dollar strength? You're a weakness as you start to look at inflation really pick up, and perhaps people recognize that in the FX world. Yes, there I guess too too interesting observations here. One is, as you said, inflation in Europe has has crept high, much higher in a way that few of us have expected.

And I think that puts the spotlight on to what the e CV may do at their next meeting just over a week from now, because they themselves have to consider whether to taper asset purchases, and our our expectation has been that they will be very slow in indicating that.

But I think this inflation print could in fact increase the urgency for them to prepare to wind down there as a purchase program, and that in turn, it's not so much your negative factor, but it could actually suggest that there's a bit more upside linked to central like expectations from the s S outthom in the coming weeks, we also start China pm is weakening just a little bit overnight, and I'm curious how that impacts our inflation. If they are exporting it and we are importing it,

is it indeed transitory? So I think China is in fact, or global growth more generally is in fact right now. The key question for for effects, it's to some degree the debate between reflation versus stackflation, and what we got out of the China PMS was that maybe the manufacturing part held up, and that tends to be the more important between the two, But what was striking was that non manufacturing was extremely weak relative to expectations and relative

to the previous trend. So it does raise some warning signs, but they're actually not necessarily inflationary. To the degree that demand in China is folding back in line with some of the supply restrictions, we don't think that it fuels necessarily makingary impulses that we're seeing elsewhere. But it does leave that major question open, which is where does global

growth go from here? And the one thing we know is that the dollar tends to strengthen when global growth weakens, So that I think is the key scenario under which the dollar strengthens in the coming ups. Everyhom and our collective memories, there are emerging market crises Ecuador, Mexico, on and on. Do you feel like we're near great instability within selected emerging markets or is its studies she goes

given the information flow. So so for now we think that the risks and emerging markets are more ideosynchronic than systemic. And that's in the context of expecting that the global recovery will persist, that Chinese growth will bottom out and do okay. But this is one area where eventually fed policy and interest rates could matter a great deal. Via n S Chief Economists just highlighted that the other day that emerging markets are not in a position where they

can weather a major increase in US interest rates. Well, for now, it's reassuring to see that US interest rates are really subdued, and under that scenario, we think that emerging markets will in fact be an interesting investing opportunity,

including in effects. But again it is with with a bit of stomach ache, because we're all a little confounded by how low interest rates in the US are and if that changes, I think it could make the likelihood of more commonly emerging market crisis a lot more a lot more likely. REMBERI thank you so much for joining us today with City Group. Cathy Jones joins us right now Trumps Center for Financial Research here and the oardities of the bond market, Cathy, the wall of money out

there is tang Will. What do you advise to savers exhausted from low nominal yields in non existent real yields? Yeah, Tom, you know, I think the key is that you need a pretty diversified portfolio. So you know clearly you're not going to get much return in traditional treasuries, and so

you need a fairly diversified portfolio. But yields are low, and that that reflects as you mentioned with tremendous liquidity in the markets, sort of secular forces that continue to pour money into high quality bonds and um, that's probably not going to change, so you need to really have

a lot of diversification to deal with it. Kathy, can you put into perspective the discussions of tapering bond stimulus that we're hearing both from the Federal Reserve and now also from the e c B. I mean, will there be a material effect that just hasn't come through yet on bond yields moving higher as the taper plans get effectuated. Well, you know, my feeling on tapering is the slower I go,

the higher the yield. So the reason is, of course, because tapering is kind of the first step towards tightening policy and reducing liquidity and slow in growth and aggregate demand and inflation. So if the Fed takes a very slow approach, that allows longer term expectations about inflation and growth to stay higher. So if we move slowly, I

think yields move up. If the Fed moves very quickly, and certainly if Germany starts are the ECB UM starts to taper quickly and clamp down on this Uh, on the stimulus, then we're probably going to see yield stay lower longer term. This is really confusing, and frankly, the whole backdrop of the what could be and what maybe's have been basically a soup out there, which is possibly why the market hasn't done all that much. And I'm

wondering why. If what you're saying is the case that there is this faith that the Federal Reserve is going to remain on hold for longer, why aren't we seeing a steepening in the yield curve. Why aren't we seeing longer high, longer term high inflation. It reads, We're just not seeing it in the markets. Does this makes sense to you? Um? Well, I think yields should be higher.

I mean, I think reflecting the growth we have, particularly for fiscal stimulus, less about the FED, but more about fiscal stimulus, which has been really pretty powerful so far and has the potential I think to continue to keep the economy pretty strong, and we have enough income growth, particularly in the lower income cohorts, that we should start to see aggregate demand pick up relative to supply and and for a longer term prospects keep inflation a bit

higher and real yields a bit higher. I don't think the market is quite convinced that that's going to happen. You know, we have a twenty year history of the FED missing their inflation targets, of of the economy not you know, coming into its full potential growth, and I think the market is skeptical about that. At the same time,

just have tremendous demand. You know, there's us a lot of demand for yield out there, and the lesson a lot of institutional investors have learned is that you just take every opportunity when yield flip up to to put money to work exactly. That's increasingly what we've heard from Matt Real even of Investo saying that the goliath sitting on yield it might not be the FED, it's some of the fore and overseas buyers where you wake up every morning and Japan wants to be buying your bonds.

Do you see that changing anytime soon? I doubt that it changes a lot um. It can ebbs and flows over time. You know, if seasonal factors and you have kind of sudden moves maybe make foreign investors pull back, but you still look at those yield spreads whether a nominal even then real terms. But in real terms ours are low. But in nominal terms, which is what people trade in the short run, Um, you still have a big gap between where we are and where Japan is

or where Europe is. And if you're an institutional investor, if you're a pensionbund insurance company, you have money that has to go to work, has to be in a high quality asset. Where do you go? Is that what you also see? You migrate away from full faith and credit to investment grade spreads. I'm looking at the Bloomberg eight basis points of her treasuries high yield to eighty eight. The minute you got above three hundred, the buyers came in. Yeah,

I think there is a fundamel story here. Um. I think the yields darts ordinarily law obviously, but the fundamental story is that we have strong enough gro good cash flow incrporations. You know you have um manageable levels of that for most companies, and so you know, again that's the meld is really strong. Kathy Lisian Saunders yesterday age the stock market was going up so fast. She's never seen that in her career. How do you handle the

wall of money. I mean, can we revisit there's super low yields like breakdown under one sixteen, breakdown under twelve, price up, yield down. Can that happen with this wall of money? Well, I think it's possible, but I think we need some bad economic news to make it happen. So we we visited those laws when you know there was a big scare. Um, I think we need another pretty big scare. And it just doesn't seem, at least for the next six months or so, to be on

the horizon. And we're looking at pretty strong job growth. We're looking despite the delta variant, the economy continues to run at a pretty healthy rate UM, and I don't think revisiting one twelve, one fifteen is very likely. There's also a question about long term, whether the FED is going to be too slow and we do get faster

than expected inflation. And this is almost sacrilegious to say, especially to someone who's been in the bond market year after year and watched the yield just go lower and inflation go nowhere. But ragam Rajan of the North to Chicago and formally the Bank of India really illuminated this yesterday on Bloomberg Television saying, look, the FED is going to remain on hold, but we are seeing movement. It

is a different world based on fiscal support. What do you say the arguments like that, Um, you know, I tend to agree that the fiscal support is the most important. Whether the FED finds itself so far behind the curve that they have to ratchet upgrates really fast, it's kind of a question market in my mind, because they can they have the ability to you know, taper more quickly, taper more slowly, raise rates more quickly. Um. I think it's premature to say that they're going to get behind

the curve. It's a risk, clearly. Uh. And I think fiscal stimulus is the big game changer in this market versus really the past thirty forty years. We haven't had this kind of fiscal support for the economy in a very long time, and monetary policy isn't set for that. But I do think it's on the radar of the

Fed on that tone of the fiscal policy. You guys sort of this idea within the equity markets of this reflationary trade, and Kathy we joked that every equity analyst is well now also a bond analyst and a bond strategist. What are the equity guys next to you asking you? What information do they want about your world of bonds? Yeah? They just want to know what the BET's gonna do. Um that that's really always the question. You know how I got some shade there. I mean, it's it's obviously

it's important. The discount rate for equities is set by the risk free rate, which is set for the fat. So it's a logical question. I think there is some concern amongst equity strategists that we're not saying yield move off as quickly as inflation, and they're sort of like everyone else, kind of scratching their heads and saying, is this gonna, you know, come out and bite us in

the short run? Um? And so they're on the they're on watch for that, but we're not hearing much more than you know, focus on the fat, Kathy, completely unfair question. But for the retirees America crushed is savers? When do we see a positive real yield? Do you need to go into two thousand, twenty three or four? Probably? Yeah, I think it's gonna take some time. Um. Now, on the other hand, if a if a retiree and a saver has a balanced portfolio, there of appreciation on the

equity side. So let's not forget if you're hoping for higher yield, it may have some sort of effect on a second But Kathy, the implication there then being if somebody has a balanced portfolio, and it's a good balanced portfolio, does this mean that bonds can still serve as sort of the buffer? I mean, this has been a perennial question before we let you go. Do they serve as that buffer or no? I think they do. I have I reject the argument. I've rejected that argument for a

long time. They're still there when the stock market really goes south. I just looked here. I'm looking up right now, Lisa carefully balanced portfolio to see what that return has been. Cathy Jones, thank you so much. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations.

And subscribe to the Surveillance Podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course, on the terminal. I'm Tom Keene, and this is Bloomberg