Haass on the War in Iran, Iran Oil Fallout, IMF Meeting Anxiety, US-China Rare Earth Competition

Summary

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Wall Street Week – April 10, 2026

Episode: Haass on the War in Iran, Iran Oil Fallout, IMF Meeting Anxiety, US-China Rare Earth Competition

Host: David Westin (Bloomberg)
Guests: Ambassador Richard Haass, Afsaneh Beschlos, Stephen Cook, Chrystia Freeland, Nick Meyers, David Abraham, Heidi Krebo Rediker, Ambassador Nick Burns
Main Theme:
An in-depth exploration of the fallout from the war in Iran—covering the ceasefire negotiations, the economic and geopolitical consequences for the Gulf and the world, anxieties ahead of the World Bank/IMF meetings, and the high-stakes US-China competition for critical minerals and rare earths.

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1. Iran War Ceasefire: Diplomatic Complexity and Economic Stakes

Key Discussion Points

• Negotiation Dynamics ([01:02]-[04:00])

  • Amb. Richard Haass describes the negotiations as challenging, noting the US team’s inexperience and deep divisions between involved parties.
  • There’s little initial overlap between US and Iranian positions: "To say they're far apart would be a diplomatic understatement. They are. Someone pointed out it's wider than the Strait of Hormuz." (Haass, [02:35])

• US Priorities and Challenges ([03:09]-[03:54])

  • The US must clarify its own priorities: nuclear program, Strait of Hormuz, Iranian proxies, missiles, internal repression.
  • The focus should be on issues with the most urgency and potential for compromise.

• Strait of Hormuz: Flashpoint and Proposal ([03:54]-[05:40])

  • The Hormuz strait is critical for global energy, with Haass advocating for a shared governing authority, possibly including China and benefitting all Gulf nations:
    • "The Strait of Hormuz needs to be open for all or closed to all, including Iran." (Haass, [04:15])
    • Should negotiation fail, he suggests a blockade as leverage.

• Iran’s Leverage Despite Military Losses ([07:22]-[07:45])

  • Despite military setbacks, Iran emerges politically stronger:
    • “You can...win a war in the classic battlefield sense, but lose a war in the political leverage strategic sense. And that's what I would argue has happened here.” (Haass, [07:22])

• Diverging US and Israeli Interests ([08:05]-[09:09])

  • Haass urges the US to push Israel away from actions in Lebanon, warning of deteriorating US-Israel relations:
    • "We probably have to accept the awkward reality that American and Israeli interests here are diverging." (Haass, [08:05])
    • "President ought to pick it up, get on the phone with Prime Minister Netanyahu and say stop." (Haass, [08:25])

Memorable Quotes

• “Limit the scale of that. And... probably the wisest course here is not to do something to Iran, but to do something with Iran to give Iran a stake in an open Strait of Hormuz.” (Haass, [05:54])
• “Too many people look at things as problems to be solved. Let me just suggest, if we're lucky, this is a situation, this is a condition that we will be able to manage.” (Haass, [11:25])

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2. Oil Fallout & Global Economic Ripples

Key Discussion Points

• Second-Order Effects on Global Economy ([13:51]-[15:56])

  • Afsaneh Beschlos details consequences: higher oil prices, lower growth, inflation, pressure on interest rates.
  • Low-income and importing countries are most vulnerable, facing rationing and supply challenges.
    • “Lower income countries are rationing to even cook food or to run their cooling and heating.” (Beschlos, [14:49])

• China and India’s Dilemma ([16:01]-[17:52])

  • Heavy dependency on Gulf energy imports; China attempting to diversify via renewables and nuclear.
  • Uncertainty about future security of shipping, with potential for “Chinese, Indian, or Russian protection” of oil shipments.

• Wider Global Impact ([18:03]-[19:15])

  • Rich nations can outbid poor ones for energy; poorer countries risk deeper hardship, leading to possible migration spikes and social disruption.

Notable Quotes

• “If you are a poor country... you can't afford to buy at spot price, so you're going to suffer. And... it's a question of supply to you...” (Beschlos, [18:18])

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3. Gulf States: Frontline Consequences and Policy Shifts

Key Discussion Points

• Strait of Hormuz and Gulf Reliance ([19:29]-[20:35])

  • Stephen Cook explains Gulf states’ efforts to avoid war due to their economic dependence on hydrocarbon exports through the strait.

• Unexpected Iranian Effectiveness ([21:54]-[22:05])

  • Iran’s attacks—bolstered by Russian help—shocked Gulf defenses and disrupted airspace, damaging the Gulf development model.
    • “There was a sense that the rate of fire from the Iranians would decrease significantly...that just has not happened.” (Cook, [22:10])

• Long-term Ramifications and the Abraham Accords ([23:24]-[24:54])

  • Gulf countries may revise development priorities towards defense but hope to retain openness and attract global investment post-crisis.
  • The Abraham Accords have shown resilience, but normalization between Israel and Saudi Arabia seems far off:
    • “...the price of normalization between those two countries has gone up and is much further away than some would like to admit.” (Cook, [25:50])

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4. IMF/World Bank Meetings – Anxiety and Fragmentation

Key Discussion Points

• War Dominating the Agenda ([27:23]-[28:41])

  • Chrystia Freeland: War in Iran has sidelined original topics like global trade and AI; mood at the meetings is one of near-panic (“the first thing the person said is I'm expletive deleted.” [27:51]).

• “Triple Whammy” for the World Economy ([28:53]-[30:31])

  • Stagflation (rising inflation + slow growth)
  • Limited fiscal capacity post-COVID and amid rising defense expenses
  • Fragmented global leadership—G7 and G20 more divided than ever before.

• Fragile Multilateralism ([30:54]-[32:20])

  • The US-led international order and its institutions are eroding, partly self-inflicted.
    • “Now, what is unprecedented is that this order that America built... is being really wrecked by the country that created them, by the United States.” (Freeland, [31:23])

• Global South Hardship ([32:38]-[34:00])

  • Developing nations face the worst effects: expensive energy/fertilizer, food scarcity risk.

• UN Efforts and Prospects for Progress ([34:00])

  • UN is negotiating with Iran for fertilizer passage—a possible “bright spot” reminiscent of prior Ukraine grain deals.
  • Freeland urges G7 unity and praises Fed Chair Jay Powell’s leadership as uniquely stabilizing.

Memorable Quote

• “The combination of fertilizer having a hard time getting through this Strait of Hormuz and also fuel prices translate very directly into higher food prices.” (Freeland, [34:00])

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5. US-China Rare Earth Competition – Falling Behind, Racing to Innovate

Key Discussion Points

• US Lag in Critical Minerals ([37:17]-[40:48])

  • China has built dominance across the entire rare earth supply chain.
    • “That midstream processing stage, they pretty much dominate entirely.” (Nick Meyers, [38:50])
  • The US long neglected this sector—outsourced the “dirty work” while China saw the strategic potential.
    • “We outsourced this dirty work to faraway places. And China... saw these as seeds to their high tech and green industries.” (David Abraham, [40:23])

• Missed Warnings, Price Shocks, and Complacency ([41:01]-[41:45])

  • Past supply shocks (notably 2010 China-Japan) faded from policymaker attention as prices fell.

• How Can the US Catch Up? ([42:26]-[43:52])

  • Heidi Krebo Rediker: Out-innovate, not out-mine; focus on breakthroughs like rare-earth-free magnets or extracting metals from waste.

• Phoenix Tailings’ Example ([44:08]-[45:46])

  • Nick Meyers outlines technological advances—processing US/Australian mined materials into metals in the US, aiming to close supply chain gaps.

• Cost and Supply Chain Realities ([45:48]-[46:21])

  • US firms can be “cost-competitive” but China’s state subsidies skew the market.

• Strategic Perspective Needed ([46:21]-[47:21])

  • Abraham: The goal isn’t just producing raw materials but securing supply lines for next-gen products and defense.

• Authoritarian vs. Democratic Advantages ([48:16]-[49:46])

  • Former US Ambassador to China Nick Burns advocates industrial policy and state support—echoing WWII-scale mobilization—to strategically defend US interests.
    • "We have to isolate certain industries... and support them financially. I don’t think we compete with China... without that degree of involvement..." (Burns, [48:48])

Memorable Quotes

• “I’ll take our system every day. Our democracy is messy... but we believe in democracy and human rights and the rule of law and the balance of power. I'll take that any day over China system.” (Burns, [49:46])

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6. Notable Quotes and Moments

| Timestamp | Speaker | Quote | |------------|---------------------------|--------------------------------------------------------------------------------| | [02:35] | Richard Haass | "To say they're far apart would be a diplomatic understatement." | | [04:15] | Richard Haass | "The Strait of Hormuz needs to be open for all or closed to all, including Iran."| | [07:22] | Richard Haass | "You can...win a war in the classic battlefield sense, but lose a war in the political leverage strategic sense." | | [08:05] | Richard Haass | "We...have to accept the awkward reality that American and Israeli interests here are diverging." | | [14:49] | Afsaneh Beschlos | "Lower income countries are rationing to even cook food or to run their cooling and heating." | | [27:51] | Chrystia Freeland | "'The first thing the person said is I'm expletive deleted.' So I think that gives you a sense of ... potential crisis." | | [31:23] | Chrystia Freeland | "What is unprecedented is that this order that America built... is being really wrecked by the country that created them, by the United States." | | [38:50] | Nick Meyers | "That midstream processing stage, they pretty much dominate entirely." | | [48:48] | Nick Burns | "We have to isolate certain industries... and support them financially. I don’t think we compete with China... without that degree of involvement..." |

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7. Timestamps for Key Segments

| Segment/Topic | Timestamps | |--------------------------------------|----------------------| | Iran War Ceasefire & Diplomacy | 01:02 – 11:40 | | Iran Oil Fallout / Global Economy | 13:51 – 19:15 | | Gulf States: Damage & Response | 19:23 – 26:23 | | IMF/World Bank Meeting Anxiety | 26:23 – 37:17 | | US-China Critical Minerals Race | 37:17 – 50:21 |

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8. Episode Tone and Format

The episode features a serious, clear-eyed tone on geopolitical risk, frustration with missed opportunities, and an undercurrent of urgency—particularly about the fragility of global institutions and the need for strategic adaptation in business and policy.

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Conclusion

This episode uses frank, expert commentary to unpack cascading economic and political effects from the Iran war—energy price shocks, the strain on global governance, and industrial competition with China. The speakers consistently stress that there are no easy resolutions, only the hope of effective management, systemic innovation, and, where possible, renewed global leadership.

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Transcript

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[Bloomberg Audio Studios Announcer]

Bloomberg Audio Studios podcasts Radio news.

[David Westin]

This is Wall Street Week. I'm David Westin bringing you stories of capitalism. Next week, global finance leaders travel to Washington for the annual World Bank IMF meetings. Former Canadian Finance Minister Chrystia Freeland takes us behind the scenes of what's on the agenda. And China has put the supply of critical minerals on everyone's agenda, threatening to cut off supplies that it pretty much monopolizes. Is there a way around the chokehold? But we start with the war in Iran and the ceasefire announced this week with negotiations taking place in Pakistan led by Vice President Vance. Ambassador Richard Haass served as a diplomat in both Republican and Democratic administrations before leading the Council on Foreign Relations for two decades. He now is with Centerview Partners. Richard, you have been in the room, as it were, for some very high level negotiations. Give us a guide to how we should look at the negotiations going on right now involving the war in Iran.

[Ambassador Richard Haass]

Well, the beginning of negotiations tends to be throat clearing in my experience, that people are often posturing, getting comfortable. The fact that in particular the US Side is so inexperienced, you've got two non diplomats who have been the principal diplomats for the United States. And then you've got the vice president who doesn't have a long background. Plus, David, the two sides, shall we say. To say they're far apart would be a diplomatic understatement. They are. Someone pointed out it's wider than the Strait of Hormuz, the differences between the two sides. And the question is to what extent are they willing and able, are they prepared essentially to begin to bridge the differences? So this is a tall order. Plus one more thing. It's taking place against the backdrop, shall we say, of something other than a ceasefire. This is already a messy situation. It's not war, but it's not, it's not peace or even a pause. It's, it's something in between, which again complicates the task as a diplomat.

[David Westin]

How do you start breaking down that gap as you describe it? I mean, people have said in a Venn diagram, there's no overlap right now in the position of the two sides.

[Ambassador Richard Haass]

Well, the first thing is before you start thinking about what you're going to try to accomplish across the table, you need to have in your own mind say the, let's talk about the US Side. What is, what is, what are its priorities? You've got the nuclear issue, you've got the strait. You've got cease fire, you've got Iranian support for, for proxies. You've got Iranian drone and ballistic missile development, you've got internal Iranian treatment of its own people. It's a long list. So one thing is to think about what are our priorities? Where also are our opportunities? Where do we think potentially there's some give on the other side or the gap between the two sides is not going to be the same in each one of the things I just mentioned that might be bigger and some of the others, where are we prepared to compromise?

[David Westin]

What does the United States have to come out of this with in terms of the Strait of Hormuz, which wasn't even an issue going in?

[Ambassador Richard Haass]

Yeah. I think the two biggest issues are the Strait of Hormuz and the nuclear. The Strait of Hormuz is the more time urgent issue because every day that goes by is disastrous for the international economy and for the region. The nuclear issue can be parked for a while, not because it's not important, but unless there's evidence that Iran is changing the status of nuclear materials or its program, then nothing changes. So I would say Strait of Hormuz is the big issue. What we cannot allow is for Iran to exercise sole control over the strait, charging tolls where it derives all the revenues, because that would also eliminate any economic pressure on the Iranian regime. What I've argued is we ought to adopt the principle that the Strait of Hormuz needs to be open for all or closed to all, including Iran. And what I, what I've recommended with to two of my colleagues, Neil Ferguson and Phil Zelico, is that we create a new Strait of Hormuz commission or authority that would essentially govern the operation of the strait. Perhaps you could have a fee charge, but then it would be distributed not just to Iran, but to the other what half dozen or so local countries might be, might be some degree of enforcement or support from the countries in Europe and Asia that are most dependent on the passage through the Strait. I would bring China into the equation because it has influence, obviously, in and Trump. But we need some type of a governing authority that dilutes Iran's ability to decide who gets to use the strait. If we can't get that, David, I would favor a blockade, again, open for all or closed to all, including Iran, and a blockade option in the Gulf of Oman.

[David Westin]

Even if you get to a governing authority that we all agree to, it sounds like Iran's going to have a say, they're going to seat at the table. It's not clear they had that before. Is that really a step backward? Because it used to be an international waterway.

[Ambassador Richard Haass]

You're right. And there's no return, though, to the status quo. Anthony I think Iran has discovered that it has more leverage than it ever quite realized before. I don't think we can walk this back. So we're. So we're going to have to bring them in. So, yeah, we're going to end up here and elsewhere probably worse off than we were five, six weeks ago. What we want to do, though, is limit the scale of that. And I think, again, probably the wisest course here is not to do something to Iran, but to do something with Iran to give Iran a stake in an open Strait of Hormuz. And I think we have a chance to achieve that, but probably only if we have the pressure of saying you either agree to something reasonable and again, try to get the Chinese and others to help us here, or we're going to make it impossible for you to benefit from the Strait of Hormuz. So I think that gives us a little bit of leverage. Also. Iran's economy is really hurting, David. Iran was in terrible shape before this war. It's in worse shape now. So, yes, they have some leverage, obviously, given some of the things they've done. But I think we would be wrong to ignore the degree to which we also enjoy a degree, degree of leverage here.

[David Westin]

Well, I wonder about the leverage going into this, because looking at what the military has done in Iran, you'd say, boy, the United States has an awful lot of leverage with Israel as well. Is it the case that the United States has the upper hand going in this or is the mere fact that Iran has survived and can still done damage despite all we've done, this actually give leverage to Iran?

[Ambassador Richard Haass]

Iran emerges from this with considerable leverage. It's so interesting that you can, quote, unquote, win a war in the classic battlefield sense, but lose lose a war in the political leverage strategic sense. And that's what I would argue has happened here. The United States and Israel, by normal measures of warfare, have done extremely well. But strategically, politically, Iran has emerged with far more leverage than it had before.

[David Westin]

We in the United States have a tendency to look at it as United States versus Iran. There is another player, as you pointed out in your newsletter, Home and Away. You pointed out Israel has been a significant factor, including perhaps in getting the war started in the first place. How do you deal with that as a diplomat when you've got Bibi Netanyahu and Israel having a say?

[Ambassador Richard Haass]

I think now, David, we probably have to accept the awkward reality that American and Israeli interests here are diverging. What Israel's been doing in Lebanon recently, I would argue is not necessary, certainly not a priority for, for us at this point. So I'll be blunt, President. There's this thing called the telephone. President ought to pick it up, get on the phone with Prime Minister Netanyahu and say stop. The argument for continuing the war is not nearly as strong as the argument for a cease fire. And these peace talks, your vital national interests are not at stake. Iran is not doing anything new, say, with its nuclear program that would pose an existential threat to you. What you're doing in Lebanon is discretionary, not essential. Knock it off. And I think that's important. I worry, David. I think actually one of the losers in this war is the U. S. Israeli relationship. This is a relationship already under pressure because of what had happened in Gaza over the last few years. And I worry that by overreaching here, the Israeli government may have contributed to a further deterioration in the US Israeli relationship, which I would argue is in the interests of neither country.

[David Westin]

Your role at Centerview Partners now has you consulting with large corporations with CEOs about business economics. What does it mean for them? What are you advising them of? What this means over the longer term.

[Ambassador Richard Haass]

Let's say two things on a long list. But let me highlight two things. One is it's a little bit difficult to see how this part of the world rebounds completely. There was the business model of the Gulf of the, if you will, Dubai. Let's use that as a shorthand. Tax havens, stability, great economic opportunity, energy data centers is a little bit hard now to imagine the same scale of investment. If I told you your billion multibillion dollar investment would require 10 years of stability to pay off, you might think twice before opening up your checkbook to do that. That's one thing. I think people have to think a little bit differently. Second of all, rethink the whole notion of economic, of economic and energy security, Much more diversification, less emphasis, emphasis on one geography plus less emphasis on one form of energy and so forth. I think corporations in this country and the rest of the world have to assume that the sort of thing we just saw here is not a one off, it's not something that couldn't happen again here or in other parts of the world.

[David Westin]

And finally, what are the chances of a true resolution of the situation which was going on for almost 50 years now, as opposed to sort of, sort of monitoring and managing a chronic problem where we're going back and forth over years?

[Ambassador Richard Haass]

At the risk of depressing your viewers even further, David, I don't think you get a resolution absent a fundamental change in the political system in Iran. And unfortunately I don't see that in the cards anytime soon. Maybe down the road against the backdrop of further economic problems, but right now this regime is if anything more entrenched than it was five, six weeks ago. So then you say, okay, we're not going to solve the problem, we're managing it. So we come up with some mechanism maybe to manage passage through the Strait of Hormuz. Not perfect. Maybe we come up with some negotiated or non negotiated, maybe just red lines and implicit signals about how we put a ceiling on Iran's nuclear program. I don't know about their support for proxies. They're going to continue to build drones. Every basement there's a would be factory when it comes to drones. Look what uk, Ukraine has done. So I think your word management is about is the right word. You know, too many people look at things as problems to be solved. Let me just suggest, if we're lucky, this is a situation, this is a condition that we will be able to manage.

[David Westin]

Up next, Afsani Beschlos of Rock Creek on some of the unintended consequences of the war in Iran.

[Narrator/Reporter]

Foreign

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[David Westin]

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[David Westin]

The war in Iran has shaken the Gulf region, cost lives and billions of dollars and roiled financial markets. Afsaneh Beschlos of Rock Creek knows the region and its importance like few others, having grown up in Tehran before leaving ahead of the Islamic Republic's rise to power. We spoke with her before the US And Iran agreed to a cease fire and asked about some of the second order effects of the conflict on the global economy.

[Bloomberg Audio Studios Announcer]

Depending on which way it goes, David, it could be, you know, if oil prices stay up for the global economy will be in a much lower growth rate, a higher inflation, interest rates would hike. You know, Kevin Warsh was selected by the President to reduce interest rates in the US his first act. Even if it's not to reduce, certainly maybe to keep it neutral. Or there might be a scenario of a hike which is the opposite of what we would have thought a few months ago. So there's a lot of repercussions in the U.S. the biggest repercussion is obviously outside the U.S. in the oil importing countries, because oil prices, even if they go, you know, you get away from this 100, 250. It's not just a question of prices, but it's a question of supply. What we've seen the last few weeks, where a lot of people are rationing, particularly lower income countries are rationing to even cook food or to run their cooling and heating, whatever their energy Needs are that could be a huge impact on those countries. So that's again my sort of negative scenario. The positive is, is we go back. The big question is if there's not regime change in Iran, it may not be such a big deal for the rest of the world. But it will be very sad because if this regime stays on, they will continue to terrorize the Iranians who are living there as they did killed 30, 40,000 people in January and really got away with it. So in that scenario, I think they will be more belligerent altogether. And that would be worrisome.

[David Westin]

When you talk about oil importing countries, perhaps the two largest are China and India.

[Bloomberg Audio Studios Announcer]

Yes.

[David Westin]

What does this mean for China? Because China has had fairly friendly relations with Iran.

[Bloomberg Audio Studios Announcer]

Yes, and that's the really big question because I think close to 30% of China's energy, very large share of India's energy come from the Strait, from Saudi, uae, Qatar, Kuwait, et cetera, and some of the natural gas. So they've definitely been hugely impacted. Also we keep on talking about energy intensity in the US has gone down where we're still buying and using the same goods. Our energy intensity has gone down because we're more services, we're more financial services, et cetera, technology. But the goods that we're buying from China, India and the rest of the world are still very energy intensive and they are getting hit very badly right now. Now China, as you know, has been diversifying its sources of energy very rapidly through doing more in power from the car industry, which has become much More concentrated on EVs compared to the rest of the world. They are diversifying into nuclear, they can build nuclear power plants in a couple of years. It takes us 10 years to do it. It takes them maybe two, three years. So there's the longer term and the shorter term. In the short term, they're certainly currently impacted and they will continue to get impacted. The big question, David, is whether there is a scenario under which we have ships that are under Chinese protection or Indian protection or Russian protection coming in somehow into the Strait and being safe compared to American or European aligned tankers. So that is the big question that has not really sort of been a thing in the last few weeks, but it will be something to watch out for.

[David Westin]

What does this mean for the rest of the world? I mean, we focus on the big players, we focus on the Middle east and the US but what does this mean for Africa? What does this mean for the rest of Asia, some of the developing countries?

[Bloomberg Audio Studios Announcer]

So again, if you're a Big Asian country right now. If you're a Japan or again, even China, the biggest countries, Korea, you can buy energy at spot prices. You can afford to still import energy as we speak. You're paying a lot for it, but you're able to afford it. If you are a poor country like the Philippines or Bangladesh, you have two problems. One is that you can't afford to buy at spot price, so you, you're going to suffer. And two, it's not even a question of just price, it's a question of supply to you because the US and other people who are selling will prefer to sell to the bigger, richer versus the lower income countries. So they will get hit again. So together with all the other forces going on in the economy, between what's happening with AI, what's happening with this war, you could be what's happening with climate and the parts of Africa that are running out of water. You're going to have potentially very major problems, particularly for Europe when it comes to immigration.

[Narrator/Reporter]

As profound as the effects of the

[David Westin]

war are on the rest of the world, nowhere is it felt more or

[Narrator/Reporter]

more immediately than in the Gulf states

[David Westin]

like Saudi Arabia, the United Arab Emirates and Qatar. Before the ceasefire was agreed to, Stephen

[Narrator/Reporter]

Cook of the Council on Foreign Relations told us that the critical importance of the Strait of Hormuz was not lost

[David Westin]

on those closest to it.

[Stephen Cook]

Anybody who was looking at this situation and was concerned about the outbreak of hostilities between the United States and Iran or Iran, and anybody had to be concerned about freedom of navigation through the Strait of Hormuz. And of course, despite the fact that, you know, the major heavyweight Gulf states, Saudi Arabia, the United Arab Emirates, Qatar, have all placed billion dollar, trillion dollar bets on their countries to undertake a model of development that is beyond hydrocarbons, they still all rely on hydrocarbons and therefore they all rely on the Strait of Hormuz. So that's one of the reasons why they sought a diplomatic solution ahead of hostilities. Because I think everybody, with perhaps the exception of the President of the United States, understood that the Iranians would at least try to close the strait.

[David Westin]

Do the Gulf states at this point have President Trump's ear or is it just Bibi Netanyahu and his alliance with Israel?

[Stephen Cook]

Well, I think there's been a lot of furious lobbying on the part of the Gulf leadership on the president. They all have direct lines to the president in one way or another. And they have made it clear now that the war is underway and now five weeks old, that even though they didn't want the conflict. They don't want the President to end it prematurely. Their feeling is that if Iran were to have some measure of control, if not outright control of the Strait of Hormuz, if it still retained the ability to menace these countries with drones and missiles at will, it would undermine their model of development, which they have nurtured over the course of the better part of the last decade. And that model includes being open to the world, welcoming investment from around the world in high tech, logistics, entertainment, tourism, those kinds of things that have been sources of success in development beyond hydrocarbons would be a question if these countries are threatened by an even weakened Iran.

[David Westin]

Did the Gulf states anticipate the level of effectiveness of the Iran attacks? Because they've been hit pretty badly. UAE has been, Saudi Arabia has been. Did they anticipate them being this effective?

[Stephen Cook]

I think that no one anticipated how effective the Iranian response would be. We know they're getting help from the Russians in terms of targeting. And I think that there was an expectation that the Iranians might respond, but that there would be a limit to their response. And after the first week or two, there was a sense that the rate of fire from the Iranians would decrease significantly and they'd be able to get back to some sense of normalcy that just has not happened. And I think that this is a very significant miscalculation on the part of the United States, on the part of Israel. And I think that the Gulf states, although very concerned about what would happen to their cities, cities like Dubai, Abu Dhabi, Manamah, Riyadh even, and critical infrastructure in and around those countries. I think that they were worried about it, but didn't expect this relentless fire for five weeks and counting.

[David Westin]

At some point this will settle down or be resolved. However it's resolved. How much damage has already been done to the Gulf states? You mentioned before, the billions, even trillions of dollars that they've been investing and making that a real center for investment, for tourism, for everything else. Has that been permanently damaged, do you think?

[Stephen Cook]

Well, the Gulf States have certainly taken a beating. They're air defense systems have worked better than some had expected, but still the damage is undeniable. Gulf airspace has been open only at limited times and for limited purposes over the course of the last five weeks. And this entire model of development is based on attracting the best and brightest from around the world, attracting tech companies, providing entertainment venues for tourists and the like. And I think at the moment, at least, that model has been significantly damaged. My sense is, is that when the crisis is over, there will be a deviation from this model so that the Gulf countries can harden their cities and invest in their defense and tighten, in some cases, their relationship with the United States in support of that. But then we'll return to this model of openness to the world so that people will come and invest and that they can proceed along some semblance of the path that they were on prior to the outbreak of hostilities on February 28.

[David Westin]

One of the foreign policy issues that President Trump has been proudest of are the Abraham Accords. He thought he should have gotten the Nobel Peace Prize the first time around for, for what was done there. In light of what's happened, what's left of that initiative? Can it be revived?

[Stephen Cook]

Well, what's been surprising about the Abraham Accords is how actually durable they've been. Setting aside for just a moment the current conflict. Through two years of very intense combat in the Gaza Strip, in which tens of thousands of Palestinians were killed, the Abraham Accord survived. The core countries of the Abraham Accords have never broken diplomatic relations with Israel. And throughout this conflict, there has been some measure of coordination between Israel and countries in the Gulf, just by dint of the fact that they are all members of Central Command, the combatant command from which the United States secures the Middle East. So it is certainly a surprise that they've been durable through these last, now almost three years of conflict throughout the Middle East. The big question prior to Hamas's October 7 attacks on Israel was when Saudi Arabia and Israel would normalize. Now the question is if Saudi Arabia and Israel will normalize. And I think that as a result of both the conflict in the Gaza Strip and the sense among Saudi leaders that Israel has been an agent of chaos here, that the price of normalization between those two countries has gone up and is much further away than some would like to admit.

[David Westin]

Coming up, we get ready for next week's World Bank IMF meetings in Washington with a guided tour from our contributor Christia Freeland, who attended as a principal when she served as Canada's finance minister. When the World bank and IMF hold their annual meetings in Washington next week, they'll have the usual issues to discuss global growth, climate change, energy needs. But this time, they'll have a war in the Middle east to deal with as well. To take us behind the scenes, we welcome our special contributor, Chrystia Freeland, who knows these meetings well from her time as deputy prime minister and finance minister of Canada. We have the IMF World bank meetings in Washington next week. A year ago, if you remember, it was just after Liberation Day. Now this time we have a shooting war instead of a trade war. How will that affect these meetings?

[Chrystia Freeland]

I think that at the beginning of the year, as people were getting ready for these meetings, what officials, finance ministers, central bankers, were getting ready to talk about is global trade. How resilient is it? AI, what is the impact going to be on the world economy? I think those were probably the big issues, but with the war in Iran, that has now pushed everything off the agenda. And I think the central focus is, is going to be what is happening to the global economy. I think you're going to see nervous is maybe the wrong word, but some very concerned finance ministers and central bankers. I spoke to one person who is a principal participant in these meetings. And I asked this person, I said, I want to talk about these meetings, what you're thinking, what you're getting ready for. And this person said to me, the first thing the person said is I'm expletive deleted. So I think that gives you a sense of, you know, the degree, I would say, of potential crisis that leaders are preparing to deal with.

[David Westin]

Talk about the state of the global economy as far as we can see it right now. We see, for example, OECD estimates out where we're taking growth down, inflation up. And people, people at least are talking about stagflation, that dreaded term.

[Chrystia Freeland]

The concern that I would have if I were headed there as finance minister would be that there is a triple whammy that the world is facing right now. One, stagflation that is hard enough to deal with. Two, it is coming at a time when the fiscal capacity of countries is really strained. You know, remember Covid was not that long ago. And in addition to, you know, treasuries having been depleted by Covid, governments are spending a lot on defense. So the money available to deal with a crisis is really, really not there in the way it was before. And then the third thing is, you know, it's not just that there is a vacuum in leadership. There are a lot of fights going on. In 2008, the big global financial crisis, the G20 really rallied to pull the world through. During COVID when I was finance minister, it was much more the G7. You'll remember that Russia invaded Ukraine early on in Covid, and that made the G20 much less effective. But the G7 really acted. Today, it's really hard to see where the leadership comes from. The G7 itself is deeply divided, and there are obviously deep divisions in the G20 between Russia and the NATO countries, between China and the United States.

[David Westin]

It strikes me the IMF and World bank and other institutions like that were the essence of. Of multilateralism coming out of World War II. And now, as you say, it's not so clear where the leadership comes from. I wonder whether they can even get together in the same room. I mean, you have the United States and Israel in one place, and you've got the rest of the west in another place before you get to China and Russia. I mean, what is the future of multilateral organizations in that sort of world?

[Chrystia Freeland]

Really, really rough. And, you know, the IMF and the World bank are not just multilateral institutions. At the end of the day, these are the Bretton woods institutions that were created by US Leadership in the world. These were the institutions created as the Allies looked at the carnage, the destruction of World War II, and said, we have to build a world that works better. There's a great line from Dean Acheson that I love where he said, we have to at least build a world that works for our half of the world, for the free world. And I know it's quite in vogue to criticize that US Led international order, but actually it worked pretty well. The time From World War II to today, certainly for North America, for Western Europe, has been a time of unprecedented peace and prosperity. And that is in part because of the Bretton woods institutions. Now, what is unprecedented is that this order that America built, these institutions that America was the leader in creating, is being really wrecked by the country that created them, by the United States.

[David Westin]

In another time, another place, we would be talking about development, some of the less fortunate countries around the world and what they needed. When the big powers conflict, often it's the little guys who really take it in the neck, as it were. What's going on in Asia, what's going on in Africa, as we see this

[Chrystia Freeland]

war in Iran unfold, that is a hugely important question. I hope that it is a question that we hear a lot of people talking about next week. The reality is that challenging as this moment in the global economy looks in Washington, in New York, in San Francisco, it is much, much worse in Asia, in Africa. These are the countries that depend on fuel coming through the Strait of Hormuz. They depend on fertilizer that comes through the Strait of Hormuz. And that is where you are really seeing. Seeing the stagflation, because in those countries, in addition to seeing higher prices because energy has become much more expensive, you're also seeing governments acting to slow down the economy. You're Seeing governments saying that people need to be working from home, you're seeing governments saying that people can't be driving their cars.

[David Westin]

And that, of course, has major repercussions for countries that need to import oil and natural gas. But also, we've talked about fertilizer before. As you say, you're a farmer's daughter. You know, this world of fertilizer. And it's one thing for April, which is critical in North America for planting, what about for the rest of the world, where the planning may come a little later? Could we facing more than just higher prices, could we be facing real food shortages?

[Chrystia Freeland]

100%. You know, the combination of fertilizer having a hard time getting through this Strait of Hormuz and also fuel prices translate very directly into higher food prices. It takes fuel, usually diesel fuel, to farm. So you're already seeing that. That is already a challenge right now for countries in Africa, for countries in Asia. I don't want to just talk about bad news. Something that is promising, that is happening right now is the UN is involved in some negotiations trying to get a deal with Iran to allow fertilizer to pass through the Strait of Hormuz. There's some precedent there because a deal was done to allow commodities to pass through the Black Sea after Russia launched its full scale invasion of Ukraine. So that would be a piece of good news first and foremost for the countries of the global south, but for the whole world. So let's hope that the UN can do it and you know, it would be a sign that multilateral institutions can work.

[David Westin]

Christian, let me impose on you for a moment. Put your old hat on as Finance Minister from Canada. If you were going to these meetings, what would be your goal? What do you think you might be able to address accomplish in these meetings?

[Chrystia Freeland]

My goal this year would be to spend a lot of time, first and foremost talking to the, having meetings within the G6. I'd be spending a lot of time talking to France. I think Macron's leadership right now is extraordinary. I think, by the way, my own Prime Minister, Mark Carney, is showing extraordinary leadership. I think we're seeing the UK stepping up, working hard on the Strait of Hormuz. I think the eu, Germany, Italy, all of those countries are playing an important role. I would say Spain is another country to watch. It has been a leader in saying it's time to say to the White House, enough is enough. And I think we're seeing a lot of European countries follow that advice. So if I were headed to the meetings, the personal thing that I would be planning and how I would start my remarks at the G7 finance minister and central bankers meeting would be by saying thank you to Jay Powell, thanking him for his leadership, thanking him for his integrity, thanking him for his courage. And I bet I'm not the only person thinking that. So I am pretty sure that behind closed doors a lot of people are going to be congratulating him, wishing him well. And I wouldn't be surprised if you hear people saying that in public too. And I'd like to take this opportunity to say thank you very much, Jay Powell, you're an example of American integrity. The world needs you more than ever.

[David Westin]

Up next, the 10 year head start that the US has given China on critical minerals and whether there's any way America can catch up. This is a story about having the right playbook. Not the kind drawn up to make sure your local team can win on Friday night, but one that works when you're competing on the field of the world economy. While the US Playbook focus on all the things smartphones could be used for, China's concentrate on what was needed to go into those smartphones and automobiles and defense systems. Rare earths and critical minerals have been at the center of China's playbook for over a decade. And now the US Is playing from behind, looking for new ways to compete and doing it with new players.

[Narrator/Reporter]

In Exeter, New Hampshire, inside this unassuming building, an international race is taking shape. Here at Phoenix Tailings, they're processing critical minerals, a key part of the global supply chain.

[Nick Meyers]

So Phoenix Tailings produces the final rare earth metal and metal alloys that are needed for for magnets, for aerospace applications, and for many different other types of applications.

[Narrator/Reporter]

But companies like Phoenix Tailings, led by co founder and CEO Nick Meyers, are up against a giant.

[David Westin]

There's been a lot of talk about critical minerals, rare earths and otherwise. And the disparity between China and the United States. How far behind is the United States right now?

[Nick Meyers]

That midstream processing stage, they pretty much dominate entirely. So much so that it's extremely tough for the US to compete in any way, shape or form.

[Narrator/Reporter]

The US Needs critical minerals for a range of military applications, but even more for many consumer products.

[Nick Meyers]

Defense is, functionally speaking, a pretty small market. It's roughly about 500 tons per year is the need for metal for the Defense Department, and that's not that much, whereas the US commercial needs are about 12,000 thousand tons per year. So pretty much all of our demand comes from automotive. Many people think that it's actually for electric vehicles. To be honest. You not really like. Yes, electric vehicles use much more rare earths than other vehicles. However, internal combustion motor vehicles quite heavily use rare earths.

[Narrator/Reporter]

China's dominance spans the entire supply chain from extracting critical minerals to processing them and then turning them into magnets used in everything from cars to to defense systems. It all raises the question, with that level of control, what can be done and why wasn't more done sooner? David Abraham has spent years studying these issues and they're the subject of his book the Elements of Power.

[David Abraham]

We didn't focus on the challenges of the market. We saw that these minerals were a sector of the economy that was not interesting to us. We were focusing on building apps back in 2010, 2011. It was how do we create a technological country that was built on services, was built on financial services, and mining was dirty. And so we outsourced this dirty work to faraway places. And China was realizing that these ingredients were providing them capital that they needed to grow their economy. But more importantly, they saw these as seeds to the future, seeds to their high tech and green industries that are at the heart of their economy today.

[Narrator/Reporter]

As China quietly built its dominance, the first alarm bells for the US Came more than a decade ago. American manufacturers need to have access to

[David Westin]

rare earth materials which China supplies.

[David Abraham]

We realized that there was a structural risk back in about 2010, and that's when China and Japan had a territorial dispute. And within that, China had restricted access to rare earths to Japan. There was an initial shock and the price of these materials, especially rare earths, jumped about 20 times. But what happened afterwards was that the prices themselves dropped and they dropped to such low levels that people in the halls of power in Washington and Europe and some within Japan became less concerned about security of supply. And so between about 2014 and about 2022, there wasn't much concern looking at these critical minerals because the market was supplying them.

[Narrator/Reporter]

Fast forward to today. Critical minerals are dominating the conversation from the halls of Congress.

[Ambassador Richard Haass]

The necessity of these minerals literally cannot be overstated.

[Narrator/Reporter]

To boardroom look for rare earth.

[Ambassador Richard Haass]

We continue to diversify our supply chain

[Narrator/Reporter]

and now to the center of President Trump's trade war with China.

[Ambassador Richard Haass]

My administration has taken extraordinary steps to make sure the United States has all of the critical minerals and rare earths that we need.

[Narrator/Reporter]

But ensuring the US has what it needs may require a different approach. In a new report, Heidi Krebo Rediker, a senior fellow at the Council on Foreign Foreign Relations, says leapfrogging China is Possible if the US is strategic in

[David Westin]

its focus, if the number one priority for the country were to somehow catch up on critical minerals and rare earths, how long would it take?

[Heidi Krebo Rediker]

So for like through traditional mining, it actually takes a very long time. But the context that the report that we wrote at the Council on Foreign Relations was that okay, so we have this traditional approach and we're going as fast as we can. It's going to take years, decades. It's going to take a very long time. And we have this timing mismatch. So we can't out extract, out process or out fund China, but we can actually have a separate track that looks to innovation because there are a lot of great new companies and innovations rolling out that can actually leapfrog China's chokehold.

[Narrator/Reporter]

And that innovation has already begun to take shape across labs, startups and in new technologies.

[Heidi Krebo Rediker]

You have material engineering that has been able to create rare earth free magnets. Up in Minnesota, you have new startups that came out of lab innovations that are able to manipulate proteins so that they act like protein robots and go into one and extract rare earths from pools of waste. And waste is a very ripe area for the U.S. to be able to look to for our own capacity to generate our resilience.

[Nick Meyers]

It's almost like steel is the right way to go.

[Ambassador Richard Haass]

It's the way to go.

[Narrator/Reporter]

One of those companies looking to extract critical minerals from mine waste, known as Tailings, is Phoenix Tailings.

[David Westin]

Take us through the Phoenix Phoenix approach and why it's so much faster.

[Nick Meyers]

So Phoenix, we started this back in 2019. I met my co founder at a Bible study and we started talking about the biggest problems in the world. One is exactly this issue that we talk about here with critical minerals. So we said, let's find a way to solve it. And we built the first prototype with $7,000 back then in a backyard in Cambridge, Massachusetts. Now we've raised $120 million and we're backed by BMW, Sumitomo and many other players. But our approach is to really use technology and develop the novel technology to be able to process and produce the final metals free of emissions, free of discharge in a safe way right here in the United States. So we solve all three parts of the value chain, which is the extraction. That's what we think about when we think about normal mining. That's digging a hole in the ground and digging up the raw material and we harvest that material from the ground. Now once we have that mixture of rare earth oxides or carbonates, we have to Separate that out and that's the next stage of the process called separation. And you take that and you split it into the individual pieces. Now, they still remain in their oxide form, but they're split out. And that's generally what historically was the product that would send to China to be processed into the metal in Phoenix. What we do is we take that oxide and convert to metal. And that's one of our revolutionary key things that we do. We're one of the best in the world on how to take oxide and convert to metal.

[David Abraham]

Sages.

[Nick Meyers]

A huge supply chain gap in the what we do primarily right here in New Hampshire. This facility is designed as that one key part of that process.

[David Westin]

The materials that you work with in your facility in New Hampshire, where are those mine tailings from?

[Nick Meyers]

So the facility in New Hampshire is buying actually normal mined products. We will vertically integrate to go upstream, meaning going closer to the mine site in the future. But right now it's normal mined products coming from the US And Australia.

[David Westin]

Can you be compared to with the Chinese?

[Nick Meyers]

Yeah, it's a tricky question, honestly, because fundamentally speaking, the Chinese control the market indices that dictate price. It's extremely challenging. Now, what I will say is that we are generally cost competitive with the Chinese operations. That's a very important thing to note. However, China does subsidize a lot of these operations and the pricing does not quite indicate how an actual process will work. So it's always tricky to answer that question.

[Narrator/Reporter]

David Abraham says it's not enough just to be cost competitive with Chinese alternatives. You also need to have a complete supply chain that relies on the critical minerals you're producing.

[David Abraham]

My concern, as crazy as it sounds, is not for the materials themselves. It's to create supply lines so that we can make the products of the future. No one sells dysprosium or neodymium in the market. You can't just go to the store and buy it. They're critical to our phones, our robots, our vehicles, and that's where we need to be spending our time, is how are we creating the products that our next generation needs? How do we create the economy that our children want? And how do we ensure that defense systems that we're setting up to protect our countries are invulnerable to supply chain challenges. So you really want to start with the end with the demand and then use the inputs, these materials and then focus on how to get them.

[Narrator/Reporter]

And in many ways, that is exactly what China has done, building not just the supply of these materials, but the industries that depend on them.

[David Abraham]

China for many of these materials is the market. They produce Depending on the material, 70, 80, 90% of a particular material, but they also consume 60, 70, 80, 90% of the material. Their supply lines are becoming increasingly tight. I was back in China in 2011 and they were quite clear the materials that they were producing in their country are set to be consumed in their country. They did not see a benefit to export.

[Narrator/Reporter]

China built its playbook around critical minerals long before the US and it's used its entire system of government to execute on its plan. Something that former U.S. ambassador to China Nick Burns says we need to take

[David Westin]

into account how does our system compete on something like critical minerals, given where we are? Because it may take a long time for our system to come around to the right decision. In the meantime, China is off to the races.

[Nick Burns]

So when I was educated a long time ago, college and graduate school, I prayed at the altar of free trade. And I became a free trader in my youth. And like most people in Washington, as an official, young, official, 80s, 90s, even into this century, free trade was our gospel. I now think to directly answer your question is a really important question. Both President Biden and President Trump have now engaged in a degree of industrial policy recognizing if you're up against this authoritarian, colossal economic, economic power, and that's what China is. We have to isolate certain industries, pick out certain industries in the United States for special support. The United States government needs to pick out our national champions in rare earths. There are very few of them and support them financially. And President Trump's gone all the way to take a financial stake for the USG in this. And frankly, I don't think we compete with China in certain areas industries without that degree of involvement by the US Executive branch that we really haven't seen in a way since FDR's time when we had to have a war production economy in the 1940s during the Second World War.

[Narrator/Reporter]

When it comes to critical minerals, the US has to recognize that it's playing from behind. It has to get its playbook right and it needs to see how much the Chinese government is doing to promote its industry. But with all that, Ambassador Burns still believes the US can get back in the game.

[Nick Burns]

I will say this, President Xi Jinping has basically become a one man show. So there is an advantage in a way that Xi Jinping can order things to be done and have them implemented. But you know, if you compare our system to theirs, I'll take our system every day. Our democracy is messy. There's too much partisanship and Washington. But what's not a problem is that we believe in democracy and human rights and the rule of law and the balance of power among three branches of the US Government. I'll take that any day over China system.

[David Westin]

That does it for us. Here at Wall Street Week, I'm David Westin. See you next week for more stories of Capital Sa.