[music]

>> Bloomberg Audio Studios podcasts, radio,

news.

>> We start the week with the news that we

have all been waiting for for months. A

Middle East deal on the prospects and

not quite in time for

>> The US and Iran announced a proposed

interim peace agreement that would end

nearly 4 months of fighting and reopen

the Strait of Hormuz.

>> Trump saying the street will reopen

entirely and toll-free after the deal is

signed later this week, saying "Ships of

the world, start your engines. Let the

oil flow." Brent oil traded below $85 a

barrel in reaction to the news, down

from a peak of over $125

a barrel at the height of the war.

>> And the stock market is shooting up like

a rocket today and they're like record

kind of numbers.

>> But neither the US nor Iran has released

the text of the 14-point negotiating

blueprint, what they're calling a

memorandum of understanding, which is

scheduled to be signed Friday. And

Israeli officials said on X that they

are not bound to the agreement.

This is the Big Take from Bloomberg

News.

>> [music]

>> I'm Sara Holder. Today on the show,

Bloomberg's national security editor

Nick Wadhams [music] on the US and

Iran's latest deal to make a deal, what

it will take for the two sides to come

together, and [music] what it means for

global markets.

Nick, neither the US or Iran has yet

released details of what is in this

memorandum of understanding, but based

on what you're hearing, what are the

main areas that the two sides have

agreed to hash out over the coming days?

>> What we're seeing here are broad

contours right now with not a lot of

specifics. And the main things are one,

essentially extending the ceasefire

between the US and Iran for a further

60-day halt in fighting. and then as

quickly as possible reopening the Strait

of Hormuz to get

oil flowing again. Obviously, markets

have responded quite favorably to that,

but there is so much here we do not

know, and we just got off of a briefing

with a senior administration official

talking to reporters,

and they made clear that essentially

there's going to be this 60-day window

where the Strait will be open, but a lot

of the details and mechanics about how

ships will pass through the Strait in

the future still has to be negotiated.

So, it's a little bit of a situation

where the more we learn about this

memorandum of understanding, the

narrower its objectives seem to be and

the more it seems to leave the thorniest

issues for later.

>> In a sea of unknowns, the clearest

outcome from these talks over the

weekend is that the Strait of Hormuz

will reopen for this 60-day window. Talk

through what that actually means, what

mechanics still have to be negotiated,

and how long it could take global

shipping operations to go back to

normal, you know, during these 60 days

or beyond.

>> Well, there a bunch of things there.

One, we don't know how many mines are

actually in the Strait [music] of Hormuz

right now. So, what you've heard

President Trump say yesterday was

essentially, "Okay, we're going to sign

this deal on June 19th

>> [music]

>> because we need those four or five days

to clear the mines from the Strait and

essentially reissue shippers that they

can send their vessels through." We had

senior administration officials on a

call this morning telling us they had

actually already signed the deal, and

shipping should resume almost

immediately, though they didn't expect

traffic to really get back to more

robust levels for a couple of weeks. The

big issue there, of course, is that as

much as the US and even Iran can offer

those reassurances, it's the shippers

that are going to decide whether they

want to risk [music] sending their ships

through that very narrow waterway. And

so far everything we're hearing from the

shippers is they are not ready to just

sort of fire up the engines and and head

through the street. They want to wait

and see. They want to see the text of

the document itself. And they also want

reassurances about what's going to

happen. It seems right now that Iran

will not charge any tolls uh for ships

moving through. But what we do know is

that Iran has already made some

indications that it's going to charge

sort of a service fee, which feels a

little bit like a toll by another name.

But again, uh those details have not

been explained to us.

>> In terms of the timeline here, what

happens next?

>> Well, this is one of the big questions

that we are all trying to answer. It's

still very much unknown. We do have some

broad outlines. So, they signed a deal

in Switzerland on the 19th. That then

starts the clock ticking on what's meant

to be a 60-day window to negotiate these

big issues around Iran's nuclear

program. But these are the type of

negotiations that are extremely

technical and would take weeks uh or

months. I mean, when the Obama

administration was negotiating its own

deal with Iran, that took years to do.

So, you know, there is that possibility

that negotiations could extend well

beyond the 60 days. But then that brings

up another issue, which is that

President Trump is under a lot of

pressure from hawks at home who believe

that Iran's sole goal here is to

essentially drag out these talks for as

long as possible. So, if if things move

past that 60-day deadline, he's going to

come under a lot of pressure to either

walk away from the talks, get a

solution, or restart the military

campaign.

>> There's also pressure coming from

voters, right? The midterms are looming.

Trump's approval rating is slipping. How

does that context play into

the timeline here?

>> Right. I mean, this is an unpopular war.

Uh there are a lot of criticism uh on

both sides that this was not something

that President Trump really needed to do

and obviously you're seeing the pain

points at the pump. And of course when

he campaigned for president he billed

himself as the peace president who

didn't start any new wars. The question

for his voters of course is

does this MOU and whatever comes from it

allow him to essentially declare victory

even if the situation remains

unresolved? You have a precedent there

with the Gaza conflict where they

announced a first phase deal even though

none of the big issues resolved it

essentially allowed the president to

walk away from that and to divert some

of the scrutiny around his handling of

what happened between Israel and Gaza.

>> Another thing we've seen reported is

this question of whether or not billions

of dollars of frozen Iranian assets will

be released under the terms of this

deal.

>> Well, it's believed that Iran has about

24 billion dollars in frozen assets.

They're essentially it's money locked in

foreign bank accounts that the US is not

allowing to be released. Iran has

insisted that it get essentially 12

billion dollars, half of that at the

start and then get the rest later on. US

officials have been adamant no, Iran is

not going to get any financial reward

until they take certain steps.

Uh, but this is again a very very thorny

issue that's going to open up the

president to a lot of criticism from the

right as well as left because you don't

only have the frozen funds, 24 billion

dollars a lot of money. You also have

the sanctions regime and the US can

either lift sanctions or push to lift

sanctions or could decide not to enforce

sanctions.

>> Is that on the table?

>> Yeah, I mean very much so. So I Iran's

argument and demand is that as a result

of the negotiation 168 negotiation it

get to a point where all sanctions and

secondary sanctions on its economy are

lifted.

That would require approval from the US

Congress.

It would be a big risk for the president

because what happens if Iran only makes

tentative steps and says, "Okay, we're

not going to take another step until you

release or ease these sanctions." But,

the president does have dials that he

can really turn there because he can

say, "Okay, we're going to waive

sanctions and allow you to sell your oil

to China or we're not going to waive

these other sanctions, but we're not

going to enforce them. We're not going

to try to punish companies that do

business with you." So, there are a lot

of signals that the president can send

to the market that would essentially

give an indication of whether even if

those sanctions remain in effect,

they're not enforced.

>> After the break, where Israel stands in

the negotiating process and how nearly

four months of war have affected

President Trump's relationship with

Benjamin Netanyahu.

Nick, a key player in the Iran conflict

is Israel. Its Prime Minister Benjamin

Netanyahu was instrumental in persuading

Trump to strike Iran, but we've been

talking about a possible framework

between the US and Iran that doesn't

include Israel. Israel's reportedly

dissatisfied [music]

with the terms of this

potential path for an agreement.

Is it possible to broker a lasting peace

without Israel? And how?

>> This is essentially the fundamental

question. I mean, and Israel's attitude

toward Iran really has not changed. They

were vehement opponents of the joint

comprehensive plan of action, the deal

that the Obama administration did with

Iran. They continue to have grave

concerns around the extent of Iran's

ballistic missile and drone program.

And most crucially, its support for

proxy groups in the region like

Hezbollah and Hamas. And Israel's

argument is, "Listen, this is a country

whose leadership chants death to Israel,

death to America. Until that changes,

until we essentially have a different

type of leadership in Iran, there is

nothing that is going to stop Israel

from protecting itself and defending

itself against what it sees as uh

grave and extremely dangerous Iranian

aggression. And you also see Israel sort

of newly emboldened and especially since

October 7th, where it's willing to go

after these proxy groups with

devastating effect. Obviously, Hamas in

Gaza and then Hezbollah in Lebanon. And

there's very little indication uh that

Israel is going to let up on that

campaign even if it makes life harder

for Donald Trump.

>> I mean, in fact, Israel launched attacks

on Sunday in southern Beirut striking

what it said were Hezbollah targets

there. Trump was not happy with that. He

told Axios that Israel strikes had

delayed the signing of an agreement.

How much has this conflict changed or

damaged the relationship between Trump

and Netanyahu?

>> Well, it's an extraordinary situation

because on the one hand, Benjamin

Netanyahu has gotten so much of what he

wanted out of President Trump. I mean,

he got the president to commit to a

full-scale military campaign against

thousands of targets across Iran. Uh

that was something that no US president

had previously been willing to do. So,

it's like Benjamin Netanyahu can say,

"Wow, Trump gave me so much of what I

want." On the other hand, Israel is not

going to be happy if there is an

agreement that essentially returns to

the status quo, which is partly why you

see a lot of the dissatisfaction around

the deal because there is that anxiety

that in pursuit of the deal, President

Trump is going to essentially tell

Benjamin Netanyahu

uh to cool it. But at the same time,

very little indication that he's going

to be willing to do that in the long

run.

>> Trump and Israel attacked Iran and

started this war at the end of February

for various reasons. Trump initially

said the strikes were aimed at keeping

Iran from developing a nuclear weapon

that could pose a threat to the US. He

said the attacks would let the Iranian

people rise up to overthrow their

government. As the work continued, Trump

voiced other priorities. Now, reopening

the Strait of Hormuz, which was open

>> [music]

>> before the war started, is a key demand.

So, Nick, if this blueprint leads to a

deal with some kind of compromise,

what will have actually changed from 4

months ago? And and what has this war

achieved at what cost?

>> This This is a a huge question. I mean,

what has the US actually achieved here?

In some ways, what the president can say

is, "Listen,

I have shown you the extent to which I

am willing to go to achieve my

objectives, even if that means

launching all-out war on another

country, with the exclusion of ground

troops, of course,

>> [music]

>> in a way that no president had

previously been willing to do. And what

you saw was that while markets were

certainly roiled by this and oil spiked,

it didn't provoke the sort of global

economic meltdown that a lot of people

had feared. I mean, the the human cost

of this war has been devastating.

Thousands of people have been killed. Of

course, the economic fallout for other

countries that depend on fuel moving

through the Strait of Hormuz has also

been devastating.

But in other ways, the economic fallout

has not been as severe for the US

economy. But then there's this other

element of sort of a geopolitical

element where Iran, which is a

significantly weaker country than the

United States, has a much less powerful

military, has shown an ability to

essentially exert the leverage it does

have to in some ways push the US into

these negotiations. So, just by being

able to control the strait, it has shown

that it has a way to inflict pain on the

United States. So, you have this weird

contradiction where the more the US has

exerted and flexed its power against

Iran, in some ways the weaker its

standing has been in the world because

you can be certain that other countries

are looking at this and saying, "Wow,

okay, well, the Iranian regime remains

in place.

It has not fallen. Regime change has not

occurred. Iran was able to exert this

control and now we're in this 60-day

peace conversation with the potential

for a long-term deal that could actually

benefit Iran." So, the lessons that are

being drawn here are not necessarily

that the US won this war that

demonstrated this sort of awe-inspiring

power, but in some ways it looks a

little bit weaker than it was when

[music] the war began.

>> This is the [music] Big Take from

Bloomberg News. I'm Sara Holder. To get

more from the Big Take and unlimited

access to all of Bloomberg.com,

>> [music]

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