Global Insights with Roger Altman and Bill Burns

This is Evercore Edge. Evercore's thought leader sharing insights on today's markets and events. Hi Bill. Hey Roger, how are you? I'm well sir, nice to see you. Great to see you too. But Bill let me start by just saying how happy again I am that we've joined forces together. Yeah. I think it's a wonderful combination. I think we're fortunate to have been able to do that with you. And we're very optimistic as to this being a strong successful long-term partnership. So I'm very happy. Thanks very pleased for that. Now as I've said to you many times before I have exactly the same view. I've really enjoyed it over the last five or six weeks. It's been great and look forward to it. So let's cover a few subjects that we would be of interest. I think to our clients and I want to start trying to start with a bit of an economic framework. I want to start with China. So the great big deal that Trump has not yet done is China. And I wonder what your view is as to how the Chinese are thinking about this. Because Trump loves big splashy. High profile, dramatic things. And he's rattled off a few big ones. How do you think the Chinese are thinking of it? Whether you think there will be some grand bargain that goes beyond just tariffs and related trade issues. Or whether there won't be an agreement. Because the task of achieving it is really too difficult. And the Chinese. I'll just. The Chinese seem. Characteristically shrewd about it to me. Meaning that they view their own future in much longer term frameworks than Americans typically do. I'm not a comment about Trump just Americans generally. And so. They probably feel or they may feel it's a question to you that they have the ability to wait us out in various. As various ways not just in terms of tariffs, but various aspects of. See what politics and. Territory of influence. So how do you think the Chinese are thinking about. The relations with the United States right now. And what whether you think they'll be a big agreement or they won't. Well, first I think you're right, Roger that Chinese leadership is not just president Xi, but Chinese leaderships I've known over the decades do tick along view. I think Xi in particular, you know, views China's rise as something that's almost inevitable and does see the United States as over the long term a declining power. So he approaches the relationship with a fair amount of confidence, I think. Second, I think he believes in terms of tariff conflict that his tightly repressed political system is better able to absorb political pain than ours is. So he does believe he cannot last us in that sense. However, the third point I'd make is you know, he's some doubts about his own system right now to. You know, whether or not his military is ready for example by the end of this decade for you know a military adventure in Taiwan. I think he has doubts about that right now. He knows that even though he operates in a very close system where, you know, people are very careful. I think what information they pass along to him. He knows that China is not 10 feet tall today that it faces some domestic economic and social pressures too. But I think the short answer is he approaches this relationship with a fair amount of confidence. I don't think he's prepared for the kind of grand bargain you were describing in which China makes significant concessions. And I think right now he believes he can use his other cards like the possibility of a visit by president Trump to China sometime before the end of the year as enough of an inducement to create a kind of framework agreement that you know doesn't you know amount to the kind of. And kind of big beautiful economic agreement with China that as you said would be very, very difficult to you know negotiate and execute. But enough to produce some space in the relationship right now for China continue to try to strengthen its hand bearing in mind its long term confidence I think you know as it looks at over the next few decades. And if there were not to be an agreement on tariffs and Trump were to go back to his threat of a few months ago to impose extremely high ones I think at one point he was at 125% Yep. Do you think China could withstand that for the rest of a second Trump administration? I think she's you would be that they can withstand it longer than we can and that therefore even if you talk about the next three or three and a half years that you know he's still playing on stronger hand I think that's his view now whether that's right or not I mean that would cause a lot of pain for China right now and a lot of you know combustion in the global economy as well. But I think he you know was playing his hand now with a fair amount of confidence but I do think there's a chance even if it's not going to be the big strategic economic agreement that people talk about there's a chance of coming up with a framework understanding on tariffs and you know greater investment in the US. And the president's already I think shown a lot of flexibility and high end chips for semiconductors and so the kind of things that they really matter most I think the Chinese leadership right now I think he's you know she is increasingly confident he can get enough of that. To buy time over the you know next three years or so. Well I question on China how do you think China sees its relationship today with Russia. I think she and Putin have built pretty strong partnership which is not just about personal bonds because it's not like they have a enormous amount of trust in one another. But I think right now they share an interest in shipping away and what they've both seen for a long time to be an American led international order and I think she has a stake in you know Putin survival and the survival of Russia. Even if you made out of agreed with everything Putin has done in Ukraine and the Russians are in a position where they're sharing you know technologies military technologies in particular that you know when I was invested or they're 15 years ago they wouldn't have imagined doing I think so it's not a formal alliance relationship in the sense that NATO is today but it's a pretty strong partnership and I think it would be very very. I call to drive a wedge between Russia and China right now in the way that you know Nixon and Kissinger did half a century ago between China and the Soviet Union. All right let me shift gears. The issue of foreign policy point of view it's on the front pages day after day now is of course Gaza and here's my first question. Great distance it seems to me but at least until now neither the homosilatorship nor the Israeli leadership has actually wanted a deal. And therefore there hasn't been one great do you think that's still the case. I think in a way you know as despicable as the most leadership has been especially the terrorist attack on October 7th 2023 that by this point I think both the Israeli leadership and the most leadership have become kind of mutual. Enableers in you know sustaining a conflict in Gaza right now too which comes at you human cost hostages and their families and I've met with them you know many many times over the last couple of years and for innocent civilians in Gaza who are caught in the crossfire. And it's past the point I think where there's any particular military political any kind of benefit to begin by continuing the military conflict in Gaza. The big question all along has been you know what comes next everybody agrees I'm I shouldn't govern Gaza what that means then as you got to have an alternative credible maybe technocratic Palestinian leadership there that the Gulf Arabs for example are willing to invest in. And you know work with to try to rebuild what is essentially a flattened you know place right now in Gaza it's rubble from one end to the other to the Gaza strip and which is enormously sad. So I think the other reason why I I hope anyway that this moment is a little different in terms of breaking that cycle of two leaderships that neither of which are particularly interested in ending the conflict. Is it there's a real strategic opportunity now in the wake of what the Israelis and 12 days of all out conflict with the support of the United States at the end of that. And in the 12 months that preceded that have accomplished is to leave the Iranian regime in the weakest state it's been in 46 years since the revolution. And so the question is how do you take advantage of those very impressive tactical achievements and produce an outcome that you know provides strategic advantage and that's where I would connect the dots between Gaza and Iran because you know if you go into the conflict in Gaza that opens up the opportunity of normalized relations between Israel and Saudi Arabia and potentially some of the other Gulf states beyond the United Arab Emirates and that's in the long term the best way to both keep the pressure on and turn the tables on the Iranian regime to but the road to that. I think anyway leads you know through and the conflict in Gaza the sooner the better because the human cost to this is just mounting every day. Bill how's it going to come about how could it come about that the type of new leadership. Gaza that you just touched, you just described would actually come into being. Well, you need, you need some kind of connection to the Palestinian authority. And I don't need to be convinced of all the flaws and weaknesses in that leadership, but some kind of nominal connection. But I think you could come up with, you know, a number of respected Palestinians who could play that role. More technocrats than any political connection. But how do you get Hamas on board for that? I think Hamas, my own impression is does not expect to be formally governing Gaza. I think what they want to do is be the power behind the scenes and try to rebuild themselves. And that's a real threat. But I think the best way to defeat that threat is that, you know, be able to invest in alternative leadership and demonstrate that it can produce things that Hamas has never been able to produce. Because, you know, Hamas has brought the ruination of people in Gaza right now. So I'm not trying to suggest that any of what I just described is easy. I'm just saying the alternatives are a lot worse. And I think there is a strategic opportunity here. And for the type of reprieveable, with Saudi Arabia that you just touched on, to happen, does it require that Israel finally support some form of two-state solution? Over the long term, Roger. I mean, I don't think Obama had been someone or the Saudi leadership expects that you're going to turn a switch and produce a Palestinian state next year, the year after, you know, anytime very soon. But I think what they want to see, and that's why ending the conflict in Gaza is the critical first step, is at least the possibility of a realization of Palestinian political aspirations in a demilitarized state somewhere way down the road. And I would argue, I don't underestimate for a moment the difficulties of coalition politics in Israel. But that's a pretty big deal, a pretty big achievement to normalize with Saudi Arabia. And it just seems to me that recognizing what I think is also in the long-term security interest of Israel, which is the possibility of some form of demilitarized Palestinian state is a reasonable price to pay for that since you're not going to have to pay it, you know, anytime really soon. But Roger, let me can I just ask you about your sense of, you know, with all the drama in the Middle East and all the fighting and all the focus, what do you think the economic and financial impact has been or the market impact of it? Well, I think so far very little because it one level is realized an important economic ally of the United States because it's among other things, it's become a big center of innovation. And technology. But at another level, it's still a very small country from an economic point of view, just in terms of the GDP and everything else. So and in addition, Israel has managed to keep sucking along economically despite all of these extremely difficult and very upsetting military and political factors. So the economic and financial impact of what's happened between Israel and Gaza, that bilaterally has been very, very small. Now at one level Iran, and this is back to you in charge of a question, is at its weakest point as you said, 46 years. But to the best of my knowledge, it's oil production and oil export capacity wasn't particularly damaged by presumably by careful design on the part of Israel. And so the impact of the war, brief war, but the war with Iran economically hasn't been much either because what Iran really stands for economically is oil. Oil prices are actually fairly weak, but it's not because of that. In fact, we know it was because of that because if they had really damaged Iran's productive capacity, oil prices will be higher because supply would be curtailed. So that hasn't really had an economic impact either. And at the moment, the earlier fears of a wider continuing conflict have faded because Israel has succeeded to such a broad extent. They've inquished as Bala. They in a certain major sense of anguish to Iran, they've seemed to have the Uthiz at bay to some degree. And they're doing what they're doing and come up with Hamas. So Iran's keep proxies, by the way, in Syria, which is also in a certain sense gone backwards because of the collapse of the Assad regime and the attacks that Israel waged on Syria in military facilities. So Iran's keep proxies, Syria has Bala, etc., are all flattened. And so the risk that everybody was concerned about earlier of a continuing wider conflict that could engulf, for example, the Saudis and others now are seen as very low risk. But let me ask one more question about Hamas and Iran. Israel. It's very difficult for someone sitting in New York who doesn't have access to intelligence. I mean, real intelligence. So understand this violence around the food deliveries. You know, these terrible episodes where a humanitarian food mission is conducted and all of a sudden 20 or 30 or 40 Palestinians are killed. And every time I ask, why is Israel doing this, I'm told that it's not as simple as it looks. And that it's not entirely Israel's doing. And things that I just don't understand what's actually happened there. But it has turned opinion, which was already not very warm towards Israel to ice cold these four or five episodes. What has really happened there? Well, I think the problem is that ultimately you're not going to be able to get your food, stuff, medicines, humanitarian supplies to people who desperately need it if you don't have a cease fire because that's the only way in which you can have access across the Gaza Strip. And what the Israeli government has tried to do with a humanitarian foundation is to offer assistance, humanitarian assistance, and some very limited quantities in very limited parts of Gaza as well, surrounded by IDF, by Israel defense force, you know, detachments as well. And so who are not trained at crowd control or anything else? You're creating a very combustible situation with desperate people who literally are starving. And Hamas, which is sitting back and, you know, in many ways making this situation worse too. So I think all of that just strengths since the argument for finally now, after all these months in October of 2023, at a moment when Israel is playing such a strong hand, when some hostages are still alive and it may be possible to, you know, safely return them to their families to end the conflict because that's really ultimately the only way in which you're going to be able to get people in that desperate, you know, civilian population, what they need. Okay. So, but let me turn to your front minute. And here's my question. Even though there has been a lot of criticism over the last 48 hours within Europe of the tariff agreement they struck with President Trump at Scotland, and even though President Trump in various ways bludgeoned them into increasing their commitments to NATO and their defense spending commitments. Could all this end up being in your view of blessing in disguise for Europe? Because economically it puts pressure on Europe to begin to make some changes along the lines perhaps of the Draghi report many months ago which talked about what Europe really needs to do to modernize itself economically. And then in terms of national security, assuming they fulfill these commitments, yes. And then they end up with more of their own provided protection, which in most senses would be good. So could all this end up being a plus figure? Yeah, sure, sure to answer I think is yes right now. I mean, you can agree or disagree with the tactics and the rhetoric and everything else, but I think in security terms, as you said, you know, NATO allies, the majority of them stepping up and doing more of their fair share and their own self-interest and their own, you know, security self-interest is a good thing. And if most NATO nations stick to that 5% goal over time, which is partly about military hardware and partly about defense industrial complexes, that would be a good thing. Not just for the United States as an ally, but for them, not really a favor to us. And the end, the same is true in economic terms because, you know, one of the truths, I think, of the last decade is we rightly talk about what sets us apart in the United States from lonelier powers like China and Russia. We have allies and partners they don't. But the truth is that many of those allies and partners have been fading a little bit in recent years in economic terms because they've tied themselves around a lot of bureaucratic red tape and regulation and in security terms because they haven't at least until the Ukraine war been willing to step up. So I think if this is an opportunity to get them to do more, it's in their interest, it's in the U.S. interest. I would just add though that I think it is important to continue to build some trust, you know, with our closest allies too, so that they're not surprised by, you know, sudden decisions by the United States on one issue or another because this is going to be a long term process for them to undertake the kind of economic changes that you described as well as invest more in their defense and and that's where they're not just going to be budgeted in that direction. They're going to have to be encouraged as well. Let me ask you a different type of question about defense. So we're all reading a lot and hearing a lot. And I recently interviewed General Patreus, who spoke really quite powerfully about this. Of the new technologies, especially drone technologies, super, faster, etc. that are being deployed in the Ukrainian theater. And how much as so often happens in real war, it has it's changing the face of war. And it raises this huge question. We're approaching a trillion dollar defense budget, but so much of it is old stuff. I mean, I read yesterday that we were trying to modernize our land-based nuclear tip to the end of the listing missiles. And it's costing a colossal amounts of money. It's way behind. Turns out they have to dig brand new silos for every missile because the old ones are corroded. And I was thinking to myself, certainly we'll be spending a lot more money on new advanced technologies, including robotic technologies and AI-related technologies because Ukraine is showing where warfare is going. How are we going to adjust to this? We need to adjust faster. And even more ambitiously than we have been in recent years. And you have to look no further than the Chinese to see them learning the lessons of how the battlefield has been transformed in Ukraine as well. In terms of drone technology, robotics, electronic warfare. The war in Ukraine is a strange and brutal combination of like Verdun 1916, you know, trench warfare of the old school most brutish forum and all the modern technologies that you just described. And that's going to be the future face of warfare, I think, too. The United States and the Defense Department are entirely capable, I think, of learning those lessons. But, you know, we're just going to have to do it faster than we're doing it right now, too. But it's been fascinating. It was for me because the agency I was really proud to lead over the last four years CIA was deeply involved in Ukraine and supporting our Ukrainian partners and helping them, you know, to do what they have a natural talent for anyway, which is to develop, you know, really sophisticated but relatively cheap drone technologies, which are extreme effective against a much bigger military, the Russians and pushing them back as well. So, you know, I'm really proud of the way in which the agency I led is helped to, you know, bring those lessons home to the US military and to others. I think it's been a really valuable role to play because we were on the ground and could, you know, see and be able to transmit some of those lessons. Okay. Well, the same spirit of Ukraine. You have a sense of what you think Putin may be thinking because here you have Trump, who's to the moment changes to them dramatically on Putin. And now has adopted a threatening tone, including a couple of days ago again in Scotland. Yep. He's only giving Russia 20 more days and so forth before he's ostensibly prepared to let these sanctions go forward. These new sanctions. And Putin seems disinterested and, you know, hasn't thrown any sign, any interest at all, changing his actual military approach to Ukraine. So, where do you think this goes? The only way you get to a serious negotiation. And today, I don't think, Vladimir Putin is interested in a serious negotiation, is to puncture his hubris. I think right now Putin believes time is on his side. He can grind down the Ukrainians over the next year that sooner or later the United States will lose interest in the Europeans will not be able to step up to the challenge. And you've basically got to convince him that time's not on his side. Now Russia's already suffered enormous casualties over a million killed and wounded in, you know, three and a half years of war. They've mortgaged the medium-term future of their economy to rebuild their defense industrial base. And, you know, we've seen at different times during the war at least some faint rumblings, you know, of disaffection inside Russia, you know, about the direction of the war and the cost of it as well. So, I think that's the challenge. And I think the, you know, recent sort of shift, the parent shift, at least in the president and the administration's attitudes is a good thing. That's self. I'm well aware of all the human cost of conflict and the sooner it's ended on just terms for Ukraine, the better. But I think the only way you're going to produce that kind of possibility is by supporting the Ukrainians, getting the Europeans to do more and demonstrating to Putin that, you know, it's time for a serious negotiation. I don't think that's impossible, but I think it's going to take, you know, a real clear practical demonstration of support for the Ukrainians to get to that point. And is the battlefield picture itself changing much? So, I have a lot. Yeah, not a lot right now. And again, I'm six months removed from, you know, being inemantly involved in this and seeing the intelligence and anything else. But, you know, the Russians are making kind of slow progress on the ground, but at enormous cost. And so far, it hasn't brought them any big strategic advantage. And the Ukrainians have been very resourceful with audacious, you know, long-range drone strikes way inside Russia. I mean, you know, Russia is still the largest country on earth over what used to be at least 11 time zones and they're managing the strike all the way in the Russian Far East as well. So it's been really impressive. And, you know, that's been Zelensky's way of keeping the Russians a little bit off balance too. But they're not making, you know, huge progress on the ground right now. They're they're inflicting a lot of pain on Ukrainian civilians through their constant drone and missile strikes virtually every night as well. But it's not Putin thinks he can break the will of Ukrainians. I don't think it's going to have that effect. Do we still have, so that there's this sanctions legislation that people like Lindsey Graham have been championing and Trump has today given them a police holdoff kind of message. But do we still have in our arsenal of tricks the ability to impose really damaging sanctions on the Russian economy? Yeah. Yeah. I mean, I think it's true. There's certainly more that we could do. A lot of that is in the Graham bill. You know, you still have a significant number of, you know, Russian assets outside the country that you could make a credible argument should be seized and then used by the Ukrainians to help rebuild their country or to defend themselves. So yeah, there are other levers that could be pulled. And, you know, I think it's it's obviously going to depend on decisions the president makes. But I think, you know, if you do that, you know, in a, you know, in a strong and effective way, that's the best way to get to a serious negotiation. Otherwise, I think Putin's going to continue to believe the times on his side. So Bill, just before we finish here, of all the matters we've discussed here and maybe some we have on what keeps you up at night. Why don't you worry the most about? Well, I mean, I'd say two things. I mean, what worried me the most in my old job as, you know, director CIA was the security of my people because, you know, there's, I had a lot of really courageous officers working for me who did hard jobs in very hard places and I could anticipate risk. I could mitigate it, but I could make it go away. So that was a very personal reason to stay up at night. I think, you know, in terms of the big challenges we talked about, I think the revolution at technology is transforming so much of the international landscape and human society right now. And in many ways, it's the main arena for competition with China. And I have great faith in the dynamism and, you know, vativeness of, you know, of the sort of US-based kind of world of tech specialists. But I do worry that, you know, in a circumstance in which, in effect, we lost the race in quantum computing. We would be a huge disadvantage. If we failed to, you know, put in place sufficient cybersecurity against what is an increasingly capable Chinese set of cyber actors as well, who have already penetrated critical infrastructure in the United States as part of a long game, you know, to be able to undertake disruptions if there ever was an all-out conflict. You know, that would pose real challenges. So would advances in biotechnology that can be used for great good for human society, for curing illnesses, for dealing with diseases, but also, you know, can be used to create bio-weapons, which could use, you know, create huge damage. So I think that those are the kind of things that keep me up at night. And, you know, investing enough in research, doing everything US government can do to create favorable circumstances for biotech industry as one example or tech industries in general, I think is critically important right now, because it is a serious race in a way. And beyond the race, the competition dimension of it, it's going to be important to, you know, begin to have a conversation with the Chinese and others in the international community about rules of the road on some of these technologies too, much as we did at the dawn of the nuclear era, you know, decades and decades ago too. So a really tall order, but it's that, you know, the revolution and technology with all of its use. potential benefits, but also its darker side is what concerns me. Well, what concerns me are two quite different things. One is that democracy, as we've always thought about it, the United States, is eroding, and may possibly erode permanently into a form of what some scholars call competitive authoritarianism. We still have elections as they do in places like Hungary, but it's really an authoritarian, much more authoritarian government than we've historically had. That's number one. Number two, very different. I worry that it may not happen in my lifetime, but that we've been lucky for the past 80 years in the sense that nuclear weapons have only been used on the surface once, but that that could happen again. There were so many nations wanting to be nuclear powers in some very dangerous ones already having that capability. Pakistan and so forth. One of these days there's going to be nuclear weapons are going to be used again. We've settled and it's a good thing into a sense that the world understands you can't use them, but I worry that that's not a permanent state of affairs. But on that, a little bit downward. Let's get to say we're renting on a very uplifting note. Yeah. Well, I don't mean to be downbeat because I don't see any evidence of that right now, but again, I appreciate very much the discussion. I know our employees and clients do. I look forward to more than Bill. Thank you for your time. No, me too, Roger. And I'm delighted, as I said at the beginning, to be at Evercore. I look forward to doing everything I can to contribute. So thanks so much. Copyright 2025 Evercore. All rights reserved.