Surveillance: VW CEO Diess Still Optimistic About Trade

Volkswagen is not the Volkswagon that we know. Far more than that, it is the auto company of the world, path breaking and so many things, including this regulatory mess and that regulatory mess called into strained out Herbert's Volkswagen chief executive officer and a mechanical engineer from Munich says, uh, this morning, I am driving around the World Economic Forum in these gorgeous v W eight share vans and busses

on terrofs to the United States. The United States wants to keep your product, your vans, your trucks out of America. How are we going to get the advantage of what I'm driving around in davoson get more of those trucks into America. No, you all, you have all those advantages we are exporting. We don't exploit those trucks because the market was small. But the next generation electric we call

it bus I d bus. It goes back to the microbus, which was very successful in the sixties, and so we were bringing that product coming two thousand, twenty two, twenty three, and then you will have a much nicer car than than the cars. What do you need from the United States on terror relief to get some of your products more into the United States. We're still optimistic today. We have we have very very low tariffs for for import

to the United States. We have a manufacturing base in the United States, and we are increasing that manufacturing case, and we are doing everything to avoid tariffs for importing our cars to the US. Even as if we're making progress, which has announced a eight hundred million dollar investment in our Chattanooga factory. We received a positive tweet from the President, so we think we are in the right way. And you're one of the very few European chief executives that

has actually met with President face to face. Do you think we'll see more political friction between countries and twenty nineteen or less, You know, I don't hope, you know. And I'm still optimistic because there is always a lot to lose on both sides. And I think the President is well. On the other hand, I understand his case, you know. And my background is manufacturing, and the United States, probably forty fifty years ago was really a strong manufacturing

base of the world. This machine to linn the streets, and a lot of of of this industry came down and and and lost ground. So I understand this case and building up manufacturing again it is probably a valuable approject for every society. So I understand the case, but it takes time, and but we want to contribute. We see the US as a big market chance. We have a small market share with our brands. Still we want to grow. We think we can provide the right product

for the customer. We have a nice heritage in the in the United States. Most of the of our potential customers know us, know many many have written, have learned driving on the folks bag and so Mr He'll talk, He'll talk to you about the heritage in a second. But I want to ask about China. This is a huge, huge market for you, and we saw demand in general for cars under pressure also because of the US China

trade tensions. How do you see China performing this year. No, China is for sure is under sread as a market, we play a very important role there. We have eighteen percent market share with all our brands. We are we early to China, so we have perceived kind in the country like like a Chinese company grows. We had twenty seven years of continuous growth in China. It's also a big source of income for US. We're financing a lot of investment in future technologies out of China, so it's

really important. Last year, already, the second half of last year was already declining, which is hurting US. We could cope because we come with a lot of new products, so we could increase our market here. We had a slight growth still, but this year will be challenging. And I really hope and and trust in the governments that they come to arrangements because it's it's a lot, you know, economics is a lot about mood of the people, and and fegure and and in the right words, and the

and the few agreements would would help a lot. The romance for me is I grew up on a VW Beetle, just like in the classic Madman episode, which is the first car I learned a drive on. You've moved technologically from an engineering standpoint a little bit forward, and you have what many in America feel is the Elon Musk killer. You've got a tortue automobile. I haven't seen when driving around here, is there a tan? Is it coming? Is it's coming? It's not up here yet, and it'll be

here next year in the valley. How are you in electric vehicles can kill Ellen Musk and be a Tusla killer. Yeah, we really appreciate what what Ellen Musk has been achieving and doing and pushing the industry and really promoting electric costs. I take him very seriously. Not it's a it's a good team, very aggressive team. Uh. But we're seeing when it really comes to scaling to exactly to produce all

over the world, we have a chance to compete. There's maybe five people like you have, even put Mary Barr in this category that really understand the importance and complexity of manufacturing processes. When you look at Tesla in a tent, how does a pro manufacturer like you respond, Can you get the kind of quality control you need manufacturing in a tent. You know, I think this is probably our advantage that we are used to scale up plants in every other region of the world. We are strong in

lettin America, strong in China. We can do that. This is our advantage that makes us a little bit slower. But when we decide when it can become strongly this when you look at evaluations, the traditional car manufacturers are maybe not seen as the ones that will really deliver the electric cars of the future. So do you think

the number of traditional car manufacturers need to shrink? I think all in all, our let's say our industry will change a lot in the next ten to twenty years, and yes, it will become much more of a let's say, it will become more of an Internet logic. No where you have let's say, the economies of scale are nearly everything because it's all about software computers. So economies of scale we play a mat sure all but that is that is also an advantage for us because we are

already big. If we can converge fast into the new age of ours, we have a good chance to outperform the startups because the startups also have to grow a lot. Now they have to invest a lot, they have to scale up, and that's why I see that probably the startups and and and tech companies are a bit over evaluated, and we're probably been unevaluated when it comes to future mobility. But doesn't mean I mean how many carmakers are there now thirty in the world. Are we going to be

left for five major ones probably in twenty years. My assumption would be that there would be a consolidation process because we become more of a let's say tech uh industry. Now the economies of scale are even more important than to day. In the smartphone world, you have probably four or five manufacturers. Now will there be more on the

car sideeas but as many as today? Probably not. The French finance minister told us this morning a Bloomberg exclusive we had at first that was going to resigned last night. How does that change the automakers? You know how regard Carlos I just bought a car from him, uh and and he really was a pillar of the industry and shape the industry also worldwide, not only the European industry.

So for sure he's a loss, But there are many talented managers which which will probably step in now to speak of the sensitivities that Mr Ghan is going under right now, the business plan here is the JV the relationship that we have between the French and the Japanese. What do you learn from this fractured relationship and how does it redound over to Volkswagens acquisitions, combinations and joint

ventures with future companies. I think scale will be even more important in the future than it is today, that that you have to partner with and you're not only have to partner with competitor us, you also you have to partner with tech companies and managing such kind of network is one of the key skills we need in the industry. Are we going to see many more of

these alliances? I think so? Between what is the truck maker, I mean, is it do you have to basically, you know, our alliances of two groups that actually you know, complement each other or that where you really have synergies. Let me just mention what we just agreed with Ford. Now we we be partner in the light commercial vehicles segment. Now both companies are relatively big. Now we are we have enough economies of scale in many segments, but in

this small segment of commercial light commercial vehicles. We we we're not having the enough economies of scale each so combining we will be very competitive. And this uh you know, this is this is industry, how it works worldwide, a global industry, and so partnering makes sense. Where do you see that going? I mean, if you look at the partnership with Forward, what exactly is the end game? Yeah, we know we are we are together with Forward in

that area to compete against other partnerships. This is an open game. Important is that you have, let's add business relation, which is a trustful one. Do you have a good track record? The advantage of Ford is that we already worked with Ford some two or three decades ago in Europe together and in Latin America out of Latino. So we have a good track record and it just made sense for us for Post company in America. When you grew up as a kid, you were a Ford family

or a Chevy family. There was no other day about it. Mario Barbs, Marie Bars, trust me, the edgy families at a VW beet or with no heat in it for the first fifty miles, the romance of the moment and trust me, folks we didn't have one was the curming gear. It was the definitive design idea. Now now we're getting back to design. Now your Porsche product. I'm gonna do a shout out to Bentley. It's wonderful to drive down

Fifth Avenue yesterday. But design is coming back. What are you going to do to develop a Volkswagen ethos aesthetic worldwide in design as you had with Carmen gear years ago. I think we we folks weng remained with an iconic design. Now we had that step change between the area of the times of people and microbus and then to the golf. Golf is is world by our most relevant product, but all the design language, all the technical technical package was

driven by the golf. And now comes another step change, the electric change. A step change means that the entire design of the car is disrupted. Not from a people to a golf. There is a disruption you can see that's not evolutionary anymore. And the next disruption will come now next year, and of next year we see the idea to be launched. It will be similar to the disruption from golf, from people to golf. Now it's from golf to idea couldn't take it over like it, which

is a small but highest quality brand of Germany. I mean you look at it like a camera, and the idea is there's an evolving aesthetic of like through the years they got the new fancy one which is all stripped down and that do you need to do that out of Germany? Do you need to run your global

platform with the German aesthetic? You know we have Meanwhile, and we are a global company means while we're very strong in China, very strong Latin America, a bit weaker in the U S. Still, but we have design offices all over the world because we have to make customer happy on the world bad basis, but still it needs the ingredients of folks walking design, which has to be a bit clean, a bit timeless, not a bit class less, democratic, And we're trying to achieve the save in the next

generation of cars. What are we going to fix Devil's traffic? What's the first driverless car coming to Devils. I'm a bit conservative on on this. Now I'm driving around with lots of prototypes worldwide. There's a lot of investment going in there, but really to see their cars then perform armbing on the road, not not just being kind of a hurdle and and standing around and take time. You were correct in that I'm metatoralizing here was a Volkswagen ceo.

You yeah, I'm in the Volkswagen camp. Will take time. Particularly last night at two am outside the piano bar, joining us is Jason Board off of Columbia University, out of Brown University, long agoing far away. The cool people carried Daniel Jurgen's a Prize around campus. And as I've told Dr Jurgen, but three people read it at Brown University at that time. The only one that read it cover to cover was Jason. How big that book? You know,

I've read it a few times coming. Well, you read it cover to cover and you move on from Urgans the prize to the Quest, and then you move on to the now what for big oil and for national and international energy policy? You've got to write the Prize, the Quest Volume three. Where are we right now as we look forward to the prize? Well that's the conversation here in Davos. I think you know, extreme weather, climate

change top the list of concerns. There's a lot of discussion among corporate leaders and abroad recognition of realism in a sense that maybe is a little bit new this year about just how far away we are, despite the tremendous progress and renewable energy, tremendous growth and electric vehicles, how far away we are from taking global goals like the Paris Agreement to degree target. Seriously, how far away we are from achieved is x on here? I am sure I'm using many of the big oil here. Yeah,

of course they're big oils here. But what is their future given all that we see? Are they like, yeah, climate change go or do it? Forget about it? Or are they really listening to corporate leaders and government officials. There's a lot of variants within the oil and gas industry, but I think at the same time that there's a broader recognition we need to move much faster towards clean

energy transition. There's also a realistic recognition that we are going to be using oil and gas for a long time. People are paying close attention today to what's happening in oil markets, whether it's geopolitical risk like Venezuela or possible trade war with China that could slow down growth and put put pressure on prices. So companies are thinking about

what it looks like to transition over time. And they're also investing in things like the Oil and Gas Climate Initiative, which is meeting here, trying to do things like lower the methane emissions profile of oil and gas to try to try to start moving it more in the right direction. Jason,

let me know what you think of this argument. A number of years ago, maybe ten years ago, you could make an argument that America needs to shift away from fossil fuels because we were so dependent on fossil fuels from abroad. Ten years later, America becomes the biggest oil producer. Does it get harder to make the argument that you need to move away from something that you are the leader in producing. I think it's harder to build consensus towards that now. And so a good example of this

is the fuel economy standards. When I was in the Obama White House, we doubled fuel economy standards. The Trump administration wants to roll that back. If you read their rationale for why they're doing it, it's because in the world where we import almost no oil, uh, there's less

national security reason to reduce domestic weil consumption. Now there's still a huge reason to do it in terms of protecting consumers in terms of climate change in the environment, but we used to have the ability to build consensus across the aisle more that it was both for national security reasons and for climate reasons that we needed to do this. That breaks down a little bit in the

world where the US is almost energy independent. When you were Brown, did you have to take biology and then onto chemistry and all that or do you avoid that pain? I took a pretty diverse set of courses, but Brown doesn't require the scientists. At one point you said, these guys are really smart. How does Davos and how does America deal with the president at a good part of America which has an a science outlook, they really don't want to look at the theoretical and applied constructs of

modern climate science, do they. I think is certainly a piece of this administration and the segment of American society and not just American, other countries as well that has a challenge accepting what's what's what's broad scientific consensus? You consider that a permanence or will that change? I think it's going to change, and I think you see that already across the aisle and data with the next generation.

Yale just came out with a study showing rising public opinion recognition that climate change is real, it's caused by human activity, and and that we need to do something John to bring us up because we're gonna do the radio remote next week from the western southwestern shore of Greenland. Didn't there anymore? Is that the Iceberg cup? We'd be on an iceberg, like they'd like us on an iceberthday, they would like Ampany from Jersey wants us on an iceberg.

I mean, we're already seeing impacts of climate change, and when you look out ten twenty years the current status quo, the impacts of climate change are gonna be pretty unpleasant people to deal with. And I don't think a broad public is going to accept that. There will be a tipping point at some point where people turn around and say, we just can't keep functioning in this way. I'm gonna try to make this as simple as I possibly can.

Do you think there are members of the public and areas of the public that still needs some form of educating to draw a distinction between weather and climates. Absolutely, Yeah, it's well, it's really cold here, and and and we have cold spells all the time. But but the climate is a system, and so what's important is the way that system is changing. Average temperatures are rising. We've had four of the five hottest years on record in the last few years. So people need to understand that this

is important. There's a new liberal definition coming up in the next election. There are progressive there's forty seven presidential candidates. You worked within the Democratic Party. Theology of Barack Obama. Where is the liberal aesthetic, the liberal ethos moving on climate change and environment? Is it shifting or we're going

to see the same debate in two thousand twenty. There's a huge amount of momentum on on the left and many people in the Democratic Party that came in with the Democratic takeover the House to push for stronger action

on climate change, and that's great. There is not full agreement on what that looks like and how you implement it and web or we can achieve that with a hundred percent renewable energy, or whether we need a broader set of solutions, advanced nuclear power, putting a price on carbon and a recognition that there is going to be a role for oil and gas in the economy for decades to common. Thank you so much for colombiators to visit us in our New York studios. It's far away

from anytime it's comfortable. I have been remiss on this. It's really been something one of my weaknesses here. If Bloomberg surveillance is to look at the machine of Europe and always devolves down to the Spanish economy. There's a vibrancy, there, a difference there within all of their domestic cultures as you see across all of Europe. Nadia Calvino as Spanish Economy Minister and she joins us today. The stereotypes of Spain in America and for that and so much of

the Western world are so much unfounded. Give us an update and the cultural solidity of Spain. Right now we see this riot, that riot, Barcelona, this I don't even know half the places. Give us an update and the cultural solidity of Spain. Yeah, but thank you very much. First of all, it's a pleasure to be here in Bloomberg. I don't know if the prejudice is there or whether

the opinions are unfounded. What I can tell you is that the Spanish economy after a very deep and long crisis, has been bouncing back, growing quite significantly in the last years. There is a quite stable society, very strong social fabric and political stability to so I'm gonna get you in hot water at home. What's the distinction between Spain in Italy and recovery of this crisis. Well, I mean the growth rate is not comparable. We've been having very high

growth rate. We reached the maximum above three percent in twenty fifteen. Our expectation for twenty nine is two point two percent, so we will be growing more than the rest of the large European economies, significantly more than the EU average. Well, there's no comparison. I mean from the physical policy dimension. Also, we're really committed to fiscal consolidation,

reducing the deficit, reducing the debt. Social stability is quite remarkable. Also, very open liberal economy, trying to in society, I would say welcoming. You know, we really encouraged for an investment. I think that there are a number of areas where you know, I wouldn't be like to be compared to anybody. Of course, a little bit earlier this morning in Dallas, Switten, the Dutch Prime minister made some waves he thinks that the Italians have been led off lightly for their approach

towards where is every day of Boomberg surveillance. Do you think the Italians are being led off lightly by the EU? I'm a bit surprised that the Prime Minister would say that, frankly, because last Monday we had the Eurogroup meeting with the finance ministers, and the Dutch Finance minister actually asked the European Commission what their assessment was of the Italian situation. The commissioner explained it and there was no further question.

So I'm a bit surprised that there's this assessment of the situation. I think other people are surprised as also. Some people, though, do think the Italians might be right. Maybe we do need a bit of fiscal stimulus onto the continent. You've done a lot of hard work in Spain, a lot of fiscal consolidation, a lot of structural reforms,

and you're reaping the rewards of that. What's your message to the Italian government as they look over the next couple of years, potentially to loosen the strings a bit fiscally speaking. I think that the way forward and this is what our government is pushing for, is striking the right planlets between fiscal discipline and social policy. I think that we don't have to wait until the streets are really full of people complaining to act to try to

address the imbalances and the inequalities in society. Let's talk about the imbalances. Minister, you still have a high unemployment rate in Spain. What can you do about it? You've had the growth, it doesn't seem to have taken a big bite out of it. Well know, I mean we we've moved down from twent which was bridgeously higher in the crisis, to around We hope to close a year around fourteen, so that's a very significant reduction. It's still

unacceptably high. Fourteent to a lot of this audience that will sound a high Yeah. Well, you know, we have a structural unemployment situation in Spain and then very high cyclical variations. We want to address that. We want to actually in the coming weeks. And I was a number of structural reforms in order to try to address the duality that we see in the labor market in Spain. This was the color of those. That's important. Well, I

have to, you know, keep the secretary we announced the reforms. Frankly, next you that your government can get a budget through anytime soon. Sorry, how confident argue that your government can get a budget through. I am quite confident because what we are trying to do with this budget proposal, which we put forward a couple of weeks ago, it's precisely

this balance I was referring to. We want to be very ambitious on reducing the public deficit and public debt, very ambitious, but at the same time tried to focus on some policies which have been neglected in the last years and which are important for social cohesion. In the time that we got your minister, I want you to talk to our radio and television audience in America and across all of Europe. I want you to be Iberia Airlines right now. The Prado in Madrid is one of

the great jewels of the world. I don't think it's talked about enough. What do you need to do to move tourism forward, to get more people in Madrid, more people in Spain. Well, last year we had eighty two million persons coming to Spain. Actually, we are the record in Europe in terms of welcoming tourists. What we're trying to do is move to a more quality tourism so that well, we are trying to go beyond the sun and beach kind of exactly to the po in Madrid.

In the Madrid one of the great jewels of the Western world. Well, I would say, come to Spain, come to Madrid, because not only the city is very attractive and the Proto is outstanding jewel, but there are many very interesting sights and cities around that you can very easily in this I don't care about draggy. I just want to go to the Plato and get a private tour. So you need arn Sorens and a Marriott, Sir Sir Roko of Forte Hotels. You need better hotels in Madrid

and in those areas. Away from what we've seen last year. Actually there is that there has been a move from the beach and some kind of truism going to the central of Spain and trying to visit these old cities, you know, traditional cities in April and in May with team services. I think it works all the minister that she's going to be paid for an all expensive trips. No, but I will buy you a lunch, that's for sure, very good. We wouldn't be able to accept. We would

have to pay the Spanish economy. It is great to catch up with you. Thank you very much. Right now, an important guest for us at Bloomberg is Prime Minister of the Netherlands Mark Ruta. But far more than that, he's one of the few politicians not only here at Davos but worldwide who has actual business experience heres ago. You know Weaver as well, Prime Minister. Wonderful to have you with us, so much to talk about. I know John wants to go from the distance from say Amsterdam

on down to Rome. Will cover that here? Uh? And what's coming now? Well, I do you know what's coming, but totally unexpected. There is a there's a distance from Amsterdam to Rome. I want to go to the distance right now from your Netherlands to Brexit. You know, I think of the TV show wolf Hall Henry the Tudor England Antwerp in the Netherlands was a nexus of capitalism. Right now, is capitalism in London at risk because of this arch United Kingdom debate? I don't believe so, but

it is not good. I mean Brexit is not good for you. It's not good for you. Out of Kingdom. It will be a smaller, smaller economy and it will have less of an impact on the world stage after Brexit. So I'm very I'm very negative about it. But we don't know what Brexit looks like yet. That promise, that's an assessment. It means it will look like they leave the Upen Union and of course then the question is on the on which terms and will it be negotiated

leaving or will it be a no deal brexit. But in any case, it seems like they will leave and that is not good news for the UK. So the City of London, I'm just wondering, from the European perspective, is there an acknowledgement that the City of London needs to flourish to provide the type of financing that the rest of Europe needs? Do you need the City of London?

Does the EU need? We need strong financial centers like Hong Kong, New York, London, but we have others like Amsterdam, Frankfort, Paris. Can Amsterdam really step up? Yes, we are doing that. Frankfort stepping up, Paris are stepping up. We see other financial centers in Europe. Yeah, this is of course reaping some benefits from this very negative situation of over Brexit.

We see many companies from the UK, particularly with the Japanese or Indian background and American beckons coming to the Netherlands. Do you have to shed up a setup shop now in Amsterdam? The Financial Times in editorial today had a lovely subhead about capitalism not being debated here in Davos described for us the new capitalism of the Netherlands. There are so many ato types of the Netherlands evolving from

World War Two. There can be anything from Audrey Hepburn and under that experiment of the sixties and the seventies. What's the new capitalism of the new Netherlands. Well, I believe it is not new. I I don't see a new alance. But we have always agreed to think that people starting a business earn their own money hiring people, that that is the best way to have a strong working demarket sings story economy and that economy has to deliver for the people. And it means for me as

a politicians that I have basically two tasks. I have to make sure the economy is doing well, that we have enough jobs and have to make sure that there is enough safety security in the country. You've made some wives in the last couple of hours in Devil Switzerland. I think you know you have um the comments about the Italians being let off the hook by the Europeans. I'm very angry about. Build on that a little bit more. What are you angry about. Well, you're facing some new,

huge challenges. We can make progress on climate change, we can make progress on the internal market like digital and services. We can make progress on many issues. But there are two big problems. One is the East West divide, which has to do with migration, and the other is a North South divid and there is at this moment a lack of trust in Europe between the North and the South.

And You'repean Commission had the task to force Italy to do more to bring its state finances in order, because it's a basic deal in your zone that all of us have to make sure our own house is cleaned up, is working well, and then collectively we can make sure we become more competitive. But the Commission has not done so, so they have not fulfilled on the task, which is

to uphold the treaty. Some people watching this program and listening to this program on Blomberg CV and Bloomberg Radio might say, well, why is it okay for the French to lift their budget deficit and not for the Italians. It's not okay for the French. But at this moment we have to assess what the mccan proposals in December, his speech to the nation, what that will mean in

terms of their microeconomic numbers. We have not seen that, whether that will mean that they will deviate or not from what they have promised to the European Commission, to our colleagues and their colleagues in the European Union. With Italy. We what the situation is. And given that situation, it is a debt to GDP of again, a budget deficit of more than two percent. It's not good, and we and Thelans have food in place changes, we forms, uh

fiscal contraction. We are now growing at a fast space tries the pace of our competing economies because we made those great forms. Italy to Bloomer Surveillance, have tried to

advocate this debate, this conversation for years. Yakham Fells, Morgan Stanley out PIMCO, Professor Martin Feldstein at Harvard and others have really tried to study the core of Europe and as you say, the troubles, the challenges in the South, are we going to revisit that in the next one two and five years, the idea of a core of Europe choosing to separate from the South. I don't think so.

We have to your zone. It's it's it's working. If the Netlans would still have had the Guilder, the Dutch Guilder when the banking crisis erupted in two thousand and eight, we would have run the risk that the speculator food have killed us, being given the size of our banking sector compared to the size of our own currency. So we have been very fortunate to have the Euro. It

has brought us many positives. Yeah, but the basic promise of the euro is that collectively we will aim for a higher level of convergence to competitiveness, whilst making sure that we deal with our own problems at home. You cannot explort those problems to the collective. The Eurozone has been very fortunate as well to have President Mario Draki over the e CP. The Eurozone will not have him at the end of this year. Have you endorsed the

nation yet that could head the European Central Bank? Have you got any idea of who and what country you would like to see at the top of the e c B. I have some ideas, but the first these decisions have to be taken a little bit behind the scenes. I cannot comment. Let's get into some of the ideas because some people are worried that if it is someone from say Germany, that the decisions made won't be for

the continent on aggregate. The decisions that will be made, as Tom points out, with that North South divide in mind, that we will have stricter title monetary policy. I don't mind the passport of the new ECP president. What we need again is a president who understands that he or she is there for the collective. Is there not to

fill the gaps which the politicians have left. My Duckie was forced in two thousand and twelve to fill some of those gaps when he said I will never let the Euro down and I will do whatever it takes. Every remember that goes around to the London Olympics in two thousand twelve and he has done a marvelous job over the last seven years, six and a half years, and I would hope for his successor that the politicians, me, my colleagues, we will do what we need to do

and don't leave it to the sp president. Don't you think we get a decision on all of this. It has to be somewhere this year, but I don't know exactly exact timing from Margreta cried the canuality the Netherlands here in damas one thousand, twenty two miles from Amsterdam

to run. I'm joining us right now, an important voice for europe, an important voice for the trans Atlantic politics, going back to the Atlantic Charter of ages ago, the debris out of World War two and the development of the North Atlantic Treaty organization that leads to the Norwegian Yeah and Stoltenberg and among other things. I should say, absolutely remarkable. That's seven or eight years ago you wandered to the Self Pole in honor of your Amazon. What

was it like going to the South Pole? And you know, not by helicopter? Now what I didn't go on skis to the South Pole. We went in by a plane. But we were there to to to celebrate the hundredth anniversary of the first man reaching this old South Pole, and that was actually Norwegian and at that time it was an owegn Prime Ministers. We had a big event there to to mark that expedition. The big event for

NATO is it's survival. You have a challenge in President Trump, you have a challenge, and now you regroup and move forward. Give us the NATO philosophy three four two nine into the future. The NATO philosophy is that as long as Europe and North America stands together, then we are strong. And then we are fifty percent of the world's economic might and fifty of the world's military might. So therefore, my main task is to make sure that we stand together.

Despite some differences on issues like trade or climate change. NATO has proven extremely capable of uniting around the court aask to defend each other. And the good thing now is that European allies are stepping up when it comes to defense spending since President Trump came into office in twenty six talk about that because the President's instinct there is correct. The various governments of NATO have not made

their contributions in the way they promised to. Did you agree with him when he first started making those concerns and vocalizing them a whole lot more louder over the last year or so, so I agree with him. But even more importantly, all allies agree with him that we need fair burden sharing in their lines. And that's exactly why NATO allies in Europe and Canada now are investing

more in defense. Since twenty sixteen, they have added in total forty one billion more for defense spending, and next year, by the end of they added hundred billion more for defense. This is a significant change. It helps to improve burden sharing. So we still have a long way to go, but we are really turned the corner and European allies are investing more. Getting those contributions up is really important where

the money goes. It's also equally as important where does that spend need to be made on modernizing our capabilities, investing in modern planes, battle tanks, military infrastructure, but also training and and and and and allies working more closer together, and also on operations, for instance, fighting terrorists. A couple

of weeks ago, JAMR. Scheimer Chicago gave a speech to the London School that comics his notoriety is that NATO in the Western world and particularly United States overreached and their enthusiasm to move towards Russia, to move towards the former Russian states, to expand NATO give us an update and your desire to keep NATO status or to expand NATO towards Russia is Mr Prutin fears. But first of all, this whole idea that NATO in the kind of aggressive

way have moved east is wrong. What we speak about is that new countries who got their independence off to the end of the Cold War shows they wanted two democratic decisions to join a niance and it is for every independence of the nation to choose their own path. They wanted to join NATO, and we welcome them. You know, the idea that it's it's a provocation to Russia if a neighbor joins NATO, that's a very dangerous ideas Mr Prutin feel that though does he feel it's a provocation.

But sometimes they speak as if stole now a lot we are joining NATO is a threat to them. No, it's a sovereign, democratic decision by independent nation to choose his own path. Nor where the country I come from is a neighbor of Russia. And if anyone has told us back in nineteen nine with the joint but that was a probably under the south, far away from the tradition of the Baltic Sea. This is a little more of a heated debate. I love that you favor, but I mean but but but but but but. NATO is

an organization for Europe and and US and Canada. So we're not going to Africa or or art of Europe right now. We look at the two modern Turkey in the last twenty four months. How do we get Turkey back into the European sphere and dialogue. So Turkey is a very important ally. When we see all the progress we have made in the fight against dosh Isle. They controlled the territory as big as UK eight million people. They were threatening Baghdad and Damascus. We have been able

to take away that territory for from them. Not is because Turkey, as a native ally has contributed to that fight against that told me about the landmark Iron f Nuclear Treaty and the risk of the United States leaves it and walks away. The challenge now, the threat now is that Russia is violating the treaty. This Ironate treaty banned the whole category of weapons. All intermediate range weapons are banned. Russia has over the last years developed and

deployed new intermediate range missiles. These are mobile, these are hard to detect. The short warning times meaning that the decreased the level of any potential use on nuclear weapons in the conflict. So they are extremely dangerous. Therefore, we call a Russia to combat into compliance with this treaty. We will meet Russia tomorrow in the Native Russia Council in Brussels, and we will continue to call on them to come back into compliance. Mr Trump has chosen not

to attend this year. If you were running the Mry Trump in the hallway of this Congress and her, what would be your message to the President and do his allies in the United States that want to reach back from NATO and reach back from our post World War two alliances, as in my message to him, will be two folded. One, Europeans are stepping up hundred billion more from twenty. Second, a strong NATAL is also good for the United States. To have friends and allies is good

for them. Russia, China, don't they don't have eight allies and friends, and the only time we invoked article files often talking not the States eleven. Let's go granulars we can do. A good friend of Bloomberg surveillance is Admirals te Vedas with tough University, now the Carlisle Group, and with him, it always turns to submarines. How many different nations have submarines underwater right now in the Baltic Sea. Are they gonna all bump into each other? There's so

much military activity there. There are several nations with submarines in many places. I will not give you precise figures because that's about keep it down to turn now ten

submarines there are. There are several and many nations. So the challenge is that with more military presence under the water, on the surface, online, in air, there is a risk for incidence accidents, Yes, seriously, and that's one of the reasons why we need to strongly believe also in dialogue with Russia, because we need to have military lines of communications, we need to have a mechanisms to reduce risks, to agree on how to operate, to prevent those instance and

accidents from happening, and if they happen, prevent them from spying out to control and that sounds like a Syrian discussion to take it down south where you're worried about military communication. So let's talk about that. What you see happening next in Syria and the United States is declared they want to pull out. I think the important day now is that we all focus on ISIS and NATO is part of the global collition to the feat ices.

We have made enormous progress from the control the big territory. Now they hardly control any territory at all. We strongly believe in training local forces, so we are in Iraq training the Iraqi forces, enabling them to stay blast their own country. Nature is not present on the ground in Northern Studia, but we strongly believe that we need a

political solution. We support the U and efforts for the polctical solution, and then we welcome the fact that Turkey and US present in Northern Studia talk together and try to coordinate the efforts there. NATI Sect General Yan Stelton book that you want to gets on day three every World Economic Forum in Dava, Switzerland. Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, sound Cloud, or whichever podcast platform you prefer.

I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio