B (3:24)

So Neil, to the question, will it be the start of World War iii? The answer is what A definite maybe?

D (3:29)

No, it's not World War iii, though I don't think it's a stupid question. As I point out in the piece of World War II didn't just all begin with a bang. It was several distinct wars that coalesced in late 1941. And we already have one war raging Eastern Europe. Now we have a war that has began really in 2023, but it really escalated in the past week. But I, I said in the piece, and I think this is where I stand, this is Gulf War 3, and it has to be understood in the context of Cold War II. Gulf War 3, I think I wholly agree with HR is going to look a lot more like Gulf War One than Gulf War two. That is, it's a Desert Storm type scenario. It's something that takes weeks as opposed to what happened after 2003, where we ended up with eight years of being bogged down in the Iraqi insurgency. So this is going to be much more like 1991. I think HR is dead right that the total dominance of the skies has now been established and it's going to be very, very hard for the various different armed elements of the Iranian regime to survive. And I think in short order there will be a steep, there already is a steep decline in the missiles that they can fire and I think the drones too will, will tend to dwindle. So I agree with HR's military analysis. What is harder is to say anything clear about the political future of Iran. Unlike Desert Storm, where the goal was kick Saddam out of Kuwait and restore the Kuwaiti regime. What we're doing here is we decapitated the Islamic Republic. And we've not just killed Khamenei, we've killed a substantial part. I say we. I should say the US And Israel have killed a substantial part of the leadership elite of the regime, and more will be killed. But we have not specified what comes next. And it's very hard to get any Iranian expert to say with any degree of confidence what will come next. That's the part that's uncertain.

B (5:47)

John.

A (5:48)

Yeah, let me chime in. I agree. This isn't World War iii on it becomes World War III if a mother major power comes in on the side of Iran. And no one's doing that, not even China, who's losing access to a lot of oil here. I mean, that's World war. That's when World War III breaks out. And more importantly, nobody likes China. You know, in our great fight against communism, World War II, Cold War II, Cold War I is different from Cold War II. This there was an ideological component. Some people like the Soviet Union's model. Nobody likes the Chinese model. It's a military confrontation. I do think, though, the focus on what's going to happen next I think is misplaced. So the lesson I'm getting from this is how America operates in the absence of an ideological competition with China, is that we are happy to let you screw up your country. Afghanistan, Syria, Somalia, do whatever you want. Your country, no matter how horrible it is. We don't like it, but we're not going to interfere unless you start causing trouble internationally. And then we're going to come in and we're going to kick you out of power and. And we don't care what happens next. I think it's pretty clear the US doesn't really care what happens next. And that's if you're going to actually interfere and say, look, you got to stop this international causing trouble to your neighbors if you're bound to. We can only do it if we have a plan to restore democracy. You're never going to do it. And the US has figured out that it's not in our interest. In our interest is we can come in regime modification, regime change, whatever you want. We don't care if we leave a mess behind so long as you don't bother your neighbors. This is not a very moral, ideological, beautiful thing, but it is the way that the US will now be able to fight these little things on the edges of the world scene.

B (7:48)

Well, HR John is suggesting we will essentially cut and run at Some point. And here's my question. Can you achieve what we want to achieve with air power alone? Our experience In Iraq in 2003, we had shock and awe, but then we sent him, what, a quarter of a million troops after that. What if the regime does go down? And then what if Iran turns into a version of Iraq where you have sectarian violence in a civil war? Would we be compelled to go in at that point?

C (8:12)

Well, you know, I see kind of three alternatives here. You know, alternative one is that that there is a weakened Islamic Republic, right? Theocratic dictatorship that stays in power, you know, with the IRGC running for their lives, operating as they are now out of schools and hospitals, you know, for, for example, because all of their headquarters are getting bl and they're being hunted down. The second, the second, I think alternative is that there's kind of a fissure, a fracture within, within the security apparatus. And then somebody emerges and says, okay, enough of this, you know, contacts the. The United States and says, hey, I'm your guy. You know, I've put together this group to splinter off, and we're going to. We're going to establish an alternative, a transitional government, something like that. And I think the CIA, I would hope, I'm sure they are, is working overtime to identify those people who can use existing security force capacity to transition away from the Islamic Republic into something else. The third would be a devolution into some form of a civil war. And I think the first and third of those are bad options. And what we want to make sure we don't do is set conditions for a destructive civil war, kind of like in Libya, except many orders of magnitude larger than Libya. This is why I'm kind of concerned about this idea of arming the Kurds. Not a new idea. The Brits tried it in the early 20th century, but I think what that will do is create deep anxiety among the Persian population and other elements of the population and really reduce their enthusiasm, which they have now for just ending the Islamic Republic. So anyway, I mean, it's tough to do this remotely, you know, and then you can't. You can't control it, you can influence it, but you've got to find really essentially somebody on the ground, groups on the ground who can begin to affect this transition as you continue to weaken the repressive arms of the regime. And that's kind of the new class of targets that are coming on now are really going, as Neil alluded to already, to. To weaken the security apparatus.

D (10:33)

The, the challenge, it seems to me, is the, the Venezuelan analogy doesn't fit too well because that's kind of what has motivated at least a part of President Trump's thinking that what worked in Caracas can work in, in Tehran. Now, I, I give great credit to Dan Kane, the Chairman of the Joint Chiefs. He clearly warned the President this would not be like Venezuela. It would be a great deal more difficult. And it's worth just pondering as to why that is. And I think it's partly that there is a degree of ideological radicalism which is greater that the Chavista regime had its ideology, but it wasn't remotely like the radical Shia Islam on which the Iranian revolution was based. The other difference is the neighborhood. It's the fact that chaos in Iran spills over into the Gulf. And I hope you're right, HR that we'll see normal service resumed in the Strait of Hormuz pretty soon. If we don't, and I'm throwing this to John Cochrane, if we don't see normal service resumed in the Strait of Hormuz pretty quickly, then the world is going to be on the receiving end of one of the biggest energy shocks of our lifetimes. The potential supply disruption is much greater than anything we have seen this century. It would be greater than anything that occurred at the time of Desert Storm. We're looking at the 1970s because of the sheer volume of oil, not to mention natural gas, that goes through the Strait of Hormuz. So the reason it's not Venezuela is that the stakes are much, much higher. It's going to be hard to find De lce Rodriguez amongst the IRGC generals. Maybe at some point somebody comes out and says, I'll sign the instrument of surrender. Where do I sign? I'll do that over getting killed. But that person is immediately going to be denounced by the surviving remnants of the theocratic regime. I think the tough thing, hrc, if you agree, the tough thing here, is to make it sufficiently stable that the traffic in the Strait of Hormuz can resume. And my impression is that the shipping and insurance interests are nervous as hell. It's not like a ton of ordinance was raining down on the strait that many people were hurt or ships were damaged. There's just a fear of what can be done. And until that fear is removed, there's going to be a significant economic shock. Actually, I want to get John's thoughts on this.

B (13:11)

Yeah, John, let me add here in Palo Alto, my gasoline is already up 10%. There are dire prophecies of gasoline going to eight, nine dollars a gallon.

D (13:17)

But yeah, this is a, this is like the, the nightmare for the, the inflation hawk that we end up getting on top of all the kind of monetary and fiscal kindling we get the gasoline of an oil price shock a la 73, 74 or 79. John, are you worried that we're about to revisit the 70s because of this?

A (13:42)

Well, always especially considering the bad fashions of the time. So I do think this partly explains. I think the military objective is simply either that they're unwilling or unable get rid of all their military assets and then who cares if they turn into another Libya as I think the attitude. But boy it's hard to get rid of you know, all the, it only takes one share a drone to keep an oil tanker out of the straits of Hormuz. So I'm not sure if you know, maybe we keep putting this one around but I'm not sure you can do it by just removing all of their military assets and then letting them rot. Yeah. So let's do the economic fund. Neil posted a great graph that I, I copied and passed on on how inflation in this recent period looks exactly like the 1970s. And here we are just about the exact time when the Iranian revolution happened and said in big oil price shock. So yeah, there's reason to worry about I think less so than the 1970s. Our economy is less dependent on oil than it was in the 1970s. We are an oil exporter so although you know, higher world prices hurt our economy, they are they also, you know, help our balance of trade. We, we make money, we weren't as export dependent. China is the one who, you know, they got most of their oil from Iran or Venezuela, also some from Russia. So it's going to hurt, hurt them in the short run more than it hurts us. And you know my hope that this doesn't last as long as the last one did. But yeah, if the streets of Hormuz close for a long time I think it could be. And you're seeing the beginnings of stagflation now. The latest jobs report is weak and the latest inflation is up. So get out those bell bottom jeans. Still I don't think that's baked in and I do think the resilience of the American economy, the fact that we produce a lot, we're less dependent on oil, less, lots more domestic production means the outlook is not as severe nature.

B (15:37)

I'm going to defend the 70s, it gave us the birth of funk. So it wasn't a ton of defend. But I have a question for you General McMaster, roaring Lyon, the Israeli operation. The first wave of Roaring lion takes out the Supreme Leader and 40 of his friends, who, for reasons historians one day tell us, decided it was a good idea to have a meeting above ground at Tehran. Not a good idea, fellas, but this is a departure we are used to shanghaiing foreign leaders we don't like. We take Maduro out of Venezuela, we take out of Panama, we put him on trial. Now we've been part of an operation that dropped a missile and killed a leader. So two questions, as Neil would say, is this cricket? And secondly, hr, there are probably people out there thinking, well, if we did this as a supreme leader, but a lot of other bad actors as well should probably go, so why aren't we doing it to Putin? Why aren't we doing it to Kim Jong Un?

C (16:23)

Yeah, I think would change the calculus for probably President Trump and those around him, although it was an Israeli strike that took out that, that large group of leaders was that, hey, they had just murdered over 30,000 of their own people in a 48 hour period. I mean, I think that really changed the perspective, you know, from the period of the 12 Day War when President Trump was like, hey, let's get a ceasefire after the strikes against Ford. O. And really a lot of Iranians were, you know, up in arms about that because they're like, why did you guys stop? You know, I mean, and so I think that the biggest difference was the degree to which the regime had inflicted so much, you know, suffering, death, you know, on their own people.

A (17:03)

You don't assassinate foreign leaders in two circumstances. One is when they could assassinate yours. And this is sort of an agreement. We don't go this way or when you can't do it. I think we would have happily dropped a bomb on Hitler's bunker in World War II if we had any, you know, if we had precision munitions and would have saved an enormous number of lives in doing so.

C (17:22)

And they did try to kill President Trump also. I mean, you know, right. And he did say, I got him before he got me.

A (17:28)

Zelensky and Putin are. It's just the, the lack of means rather than the lag then politeness that's stopping that one.

D (17:34)

Let's bring it back to the Cold War to. Because China's situation in, in many ways is, is the thing that people aren't talking enough about. I do believe that part of what we have seen this year has been a conscious flexing of American military might in Venezuela, now in Iran, both in effect, client states of Beijing Both suppliers of contraband sanctioned oil to China. And it seems to me that a part of the goal here is to communicate to the Chinese Communist Party, do not mess with America. And I think that message has got through. But there, there is a kind of another side to this, which I think HR will have thoughts on. We are conducting extraordinarily fast paced naval and air operations as we dismantle the military capabilities of the Iranian regime. We do not have an infinite supply of the precision weapons that are being used. John's right. This is a kind of precision that didn't exist in the first age of air power, didn't really come into existence until quite recently. The problem is these are beautifully and extremely expensively made weapons and there's a finite stock of them. The Chinese are sitting thinking to themselves, do we rely on the United States to keep the Strait of Hormuz open and our flows of oil and gas coming? You know, what does that mean? Are we simply going to accept that position? Are we going to be next? And this is an important question that I am sure they're asking themselves in Beijing. Is the United States now so unbound, so unrestrained, that it may contemplate preemptive action against us too? If that's their thinking, and it wouldn't surprise me, given what we know about Xi Jinping and communism generally, then they will say to themselves, we should not hang around and wait for that preemptive strike. On the contrary, we should be acting when the United States has depleted its capabilities before they've been replaced. And while it is entangled not only in Iran, but entangled in its Western Hemisphere strategy and still playing some role in the war in Ukraine. So I worry about how this is going over in Beijing. And you know what's really, really kind of eerie? They've said so little by the. By comparison with the Wolf Warrior diplomacy we got accustomed to, they have been very quiet indeed. All of the flights that they have been doing in recent months in the vicinity of Taiwan have stopped. Now, there are a bunch of explanations for this, none of them wholly compelling. Are they just making nice because there's a summit coming up at the end of this month between Xi and Trump, maybe? Or is something else going on here? And I think it's the unintended consequences of military action that you need to worry about. The consequences of a war between the United States and Iran were entirely predictable. Iran was going to lose. I think we underestimated the impact on the energy markets, the insurance plan, I thought John, was cobbled together and wasn't convincing. I think we underestimated the Shaheds, which we did not have defenses against, nor did the Gulf states. So the unintended consequences in Asia are the thing that I'm thinking a lot about. Xi Jinping's very quiet. What's he thinking? Nobody knows.

A (21:35)

May I add to that you said the word preemptive and that's right. You know, people talk about why now. I think it was very clear that Iran was arming itself quickly and it was making ballistic missiles, not drones, ballistic missiles faster than we could make interceptors. And it was kind of now or never. And you're right, that points to a now or never moment for, for China on the other hand. Two thoughts on this. What about where are the Europeans? This sort of seems to signal the end of NATO that they are busily getting together to have a meeting to talk about a joint declaration maybe some couple of weeks from now. But we certainly have cleaved a big one between us and NATO here. And a final thought. Oh, we've got it. You know, in the last decades so many institutions of America government have shown themselves completely incompetent. But the amazing job our military has done, just worth calling out and the Israelis on top of it. HR I don't know how your buddies stay so amazingly good at what they do, but hats off dude.

C (22:38)

Well, you know, it's cultural, you know, in our organization, you know, in our military to just be at a high level of readiness and we train really hard, you know, and realistically in our training centers and so forth. And, and you know, in this case, you know, we've had you know, decades of preparation in terms of planning against this, against this particular enemy. You know, I'll just say for Neil's point about like capacity, we are rushing to triple the annual manufacturing capacity of some of the key weapon systems. So the big ones here are, you know, the Patriot missiles, the which are like the PAC 3 or the Interceptors from those, the THAAD systems, you know, the SM3s, SM6s, you know, so that we're, we're racing to do it. But back at the envelope math here, this may not be accurate, but we might have fired about one fifth of our interceptor stockpile in three days. You know, and so that gives you an idea of how much you have to build up now for stockpiles to recover from. But I think China would make a mistake if it would think to miss to act now because we still have, you know, a pretty significant amount, especially with this about 90% reduction in the launch rate, which is probably going to fall off the cliff even further here in the next couple of days.

B (23:53)

Yeah.

C (23:53)

So I think that, you know, it does highlight, though, the lack of depth in our industrial base, the degree to which we need to make our supply chains more resilient, you know, stockpile some of the components and, and precursors for some of these weapons systems. And all that is underway under the Trump administration right now. You know, it's just, hey, will it be too late? We don't know. So we got to keep rushing to build up this capacity. But also, I think overall the capacity of our armed force is too small. We assumed for way too long that we could just do, like one thing at a time. And what you're seeing now is how interconnected these theaters are. Okay. You know, Venezuela was, you know, was China and Russia's main platform, and Iran's actually too, in the, in the Western hemisphere. Now we're seeing, you know, this is, this is of import, as Neil has mentioned, to China, because, you know, China doesn't want us to have the keys to its gas station. And I think from a geopolitical perspective, these two actions have been very beneficial. I hope we can capitalize on that diplomatically. I would like to see a lot less of, you know, the chest beating, you know, in, in briefings, and a lot more of just a clear headed articulation about why this, this was necessary. Hey, well, ex post facto, you know, they just fired 2 million drones and 600 ballistic missiles in 10 different countries. So was that a threat? Hell, yeah, I guess it was. So maybe it was smart to do something about this. But then also now what you've seen is because of the attacks on the Gulf states, that the US Is seen as really the only reliable partner for security in the region. China, one of its big entrees in the Middle east was, hey, I've got influence over the Iranians. You need me in the Middle East. That's gone now or potentially gone. So I just think that what has happened is under the Biden administration, the axis of aggressors coalesced. They were the protagonists, they were setting the terms. Go back to April 23, when Xi Jinping turns to Putin, he goes, oh, Vladimir, we're seeing changes like we haven't seen in a hundred years. And you and I, we're driving those changes. And Putin smiles. He goes, oh, yeah, you're right, you're right. Hey, man, they're not in the driver's seat anymore. You know, and I think what Trump deserves probably the most credit for is regaining the initiative over this axis of aggressors who thought they were conditioned to think that they could act against us with impunity, that we were weak, decadent, divided, feckless, you know, so there's a huge opportunity here. I would like us to be, you know, a little more diplomatic, you know, and, and, and understand our audiences. And on Europe, hey, Europe, better get a wake up here, because you know what? Those Iranian missiles, they could reach Europe. What is the state of European missile defense? Not as good as it needs to be. Right. The drone threat Neil mentioned, this goes back. There's continuity here. This is the V1, V2 threat to London in many ways, but now it's coming home to everybody. And so we have to be ready for this kind of emerging and new threat to all of our security.

D (27:07)

Couple of points that I just want to make, which are important. I don't think John's right about NATO, because actually, Friedrich Mertz, who's the Chancellor of Germany and therefore in many ways the most important NATO leader, has made it clear that he's supportive of what the US And Israel have done. The leader who's most out of line is the British Prime Minister, Keir Starmer, who has had a disastrous week in diplomatic terms because he's playing to a domestic audience that is largely opposed to the war. But this is going to really hurt relations between the US and the UK the second point that's important is the law of unintended consequences. Once again, one of the main beneficiaries of the events of the past six days is Russia. First of all, because we don't have a ton of spare crude oil to take the place of that which is no longer flowing through the Strait of Hormuz. We've had to ease sanctions on the Russians, make it possible for the Indians to buy Russian oil. Russia's already reaping a benefit in the higher oil prices. There's a dual benefit in the sanctions being eased. Secondly, Ukraine is a loser because Ukraine's access to air defense systems was already compromised. They need them desperately because they're attacked nightly by Russian missiles and drones. Ukraine can say goodbye to any sophisticated air defenses like the Patriots, because those are going to the Gulf if they're going anywhere. So although I agree with you, HR the Axis of Authoritarians has had a terrible 12 months, and President Trump has changed the game. He seized the initiative. He's undone much of the damage of the previous administration. But there are ways in which the big players in that axis, Russia and above all China are not necessarily beaten here. Venezuela beaten, certainly. Iran beaten. Russia not so much. China. Watch very carefully what comes in the next weeks. I think it'll be a relatively harmonious summit because I think the Chinese are still biding their time and they have absolutely no military leadership at this point. So I think we can probably rule out a Taiwan crisis this year. Next year, I'm not so sure.

C (29:28)

And then Taiwan election again being a huge turning point for that decision.

D (29:32)

Maybe 2028's the year.

B (29:34)

Running out of time here, guys. Let me ask you one quick exit question before we go. We're doing another goodfellows in five days, so tell me one thing you're looking for between now and the next five days.

C (29:42)

HR well, I'm looking at some sort of a diplomatic outreach from some element within the Iranian government or reach out to one of our intelligence agencies to sort of negotiate some kind of an end to this. Because I'll tell you, I mean the, the, the strikes are going to go up by orders of magnitude, you know, until they just run out of targets, you know, so. And they're going to be relentlessly hunting down the rgc.

A (30:14)

John yeah, Some sense of what the end game is. I, I was, I was cynical about we're going in and we don't care what the end game was, which I think we went in not caring, but it matters tremendously. So does this turn into, you know, the Kurdistan gets established in the north, ethnic dismemberment of the country, civil war, some horrible part of the IRGC manages to stay in place. I think we'll learn a lot more about that in the next five days and I hope it's good.

D (30:44)

I'm counting tankers, I'm just counting tankers in the Strait of Hormuz. There's a reason for them to start risking sailing again, and that is the depletion of the regime's destructive capability and the gradual emergence of some kind of solution to the insurer's problem. If that volume starts to really pick up and it turns out that you can get through the Straits safely, then I think this is all going to turn out pretty well. If not, then we go back to John's nightmare of flares and kipper ties returning.

B (31:16)

Right, gentlemen, great conversation. We'll leave it there. As I mentioned, we're doing another goodfellows we recorded on March 11 and our guest will be the Hoover Institution's director, former Secretary of State Condoleezza Rice. So you don't want to miss that on behalf of the Goodfellows, Sir Neil Ferguson, John Cochrane, Lt. Gen. H.R. mcMaster. Hope you enjoyed the show. Till next time. Take care. Thanks again for watching.

A (31:35)

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