>> HELLO, EVERYONE AND WELCOME TO AMANPOUR & COMPANY .

HERE IS WHAT IS COMING UP.

I'M NOT HAPPY.

A FURIOUS PRESIDENT TRUMP ORDERS ISRAELI BOMBERS TO PULL BACK AFTER THEY VIOLATE HIS FRAGILE CEASEFIRE WITH IRAN.

>> THE QUESTION IS, DOES THAT DIPLOMACY REALLY GET TRACTION AND MOVE TO ENDING THIS RISK OF NUCLEAR PROLIFERATION?

AND, DOES IT LEAD, AS WELL, TO BROADER --WELL, A BROADER CEASEFIRE IN THE MIDDLE EAST, INCLUDING IN GAZA?

>> CHRISTIANE 'S EXCLUSIVE INTERVIEW WITH MINISTER MARK CARNEY ABOUT THIS HIGH-STAKES MOMENT FOR THE WORLD.

>> THEN , I THINK IT IS IMPORTANT, AND IT SHOWS, THAT WE NEED DIPLOMACY TO WORK BECAUSE ANY CEASEFIRE NEEDS TO HAVE CONDITIONS THAT BOTH PARTIES KNOW WHEN THE OTHER PARTY IS VIOLATING.

>> A ROAD TO DIPLOMACY.

PERHAPS.

I SPEAK TO KIA KYLES ABOUT THE NEED TO DE-ESCALATE AND THE IMPORTANCE OF NOT FORGETTING UKRAINE'S WAR EFFORT.

SPORE MAC --EFFORT.

> >> DO WE THINK THAT WALMART OR YOUR FAVORITE TECH DUMP AND HE WILL BE ABLE TO EFFECTIVELY ENFORCE KNOW YOUR CUSTOMER AND ANTI-MONEY LAUNDERING RULES?

THAT IS WHAT THE GENIUS ACT ASSUMES.

>> THE GENIUS ACT WILL BRING ECONOMIC CHAOS.

THAT IS STARK WARMING FROM ECONOMICS AND POLITICAL PROFESSOR BARRY EICHENGREEN WHO TALKED TO WALTER ISAACSON ABOUT WHAT THE NEW SENATE BILL MEANS FOR THE AMERICAN ECONOMY.

>> > >> AMANPOUR & COMPANY AND COMPANY IS MADE POSSIBLE BY JIM ATTWOOD AND LESLIE WILLIAMS, CANDACE KING WEIR, THE SYLVIA A.

AND SIMON B. POYTA PROGRAMMING ENDOWMENT TO FIGHT ANTISEMITISM, THE LEILA AND MICKEY STRAUS FAMILY CHARITABLE TRUST, MARK J. BLECHNER, THE FILOMEN M. D'AGOSTINO FOUNDATION, SETON J. MELVIN, THE PETER G. PETERSON AND JOAN GANZ COONEY FUND, CHARLES ROSENBLUM, KOO AND PATRICIA YUEN, BARBARA HOPE ZUCKERBERG, AND JEFFREY KATZ AND BETH ROGERS AND BY VIEWERS LIKE YOU.

>> HELLO, EVERYONE AND WELCOME TO THE PROGRAM.

I AM SITTING IN FOR CHRISTIANE AMANPOUR.

NATO LEADERS ARE GATHERING IN THE NETHERLANDS FOR THEIR ANNUAL SUMMIT AT A TIME OF GEOPOLITICAL DISARRAY FROM THE DAILY ESCALATIONS IN THE MIDDLE EAST CONFLICT TO RUSSIA'S WAR IN UKRAINE .

THE THREATS TO NATO AND THE WORLD ORDER ARE URGENT AND MANY.

U. S. PRESIDENT DONALD TRUMP TOOK OFF FOR THE HAGUE IN A FURY AFTER ISRAEL BROKE THE CEASEFIRE WITH IRAN.

TAKE A LISTEN.

>> ISRAEL, AS SOON AS WE MADE THE DEAL, THEY CAME OUT AND THEY DROPPED A LOAD OF BOMBS, THE LIKES OF WHICH I HAVE NEVER SEEN BEFORE.

THE BIGGEST LOAD WE HAVE SEEN.

I AM NOT HAPPY WITH ISRAEL.

WHEN I SAY NOW I HAVE A 12 HOURS, YOU DON'T GO OUT IN THE FIRST HOUR AND JUST DROP EVERYTHING YOU HAVE ON THEM.

I AM NOT HAPPY WITH THEM.

I AM NOT HAPPY WITH IRAN EITHER BUT I AM REALLY HAPPY IF ISRAEL IS GOING OUT THIS MORNING BECAUSE THE ONE ROCKET THAT DID NOT LAND THAT WE SHOT, PERHAPS BY MISTAKE DID NOT LAND.

I AM NOT HAPPY ABOUT THAT.

WE BASICALLY HAVE TWO COUNTRIES THAT HAVE BEEN FIGHTING SO LONG AND SO HARD THAT THEY DON'T KNOW WHAT THE [ BLEEP ] THEY ARE DOING.

DO YOU UNDERSTAND THAT?

>> EXTREMELY HEATED WORDS THERE FROM ISRAEL'S STAUNCHEST ALLY BUT CAN DIPLOMACY ASK THAT YOU SUCCEED IF THE CEASEFIRE SURVIVES?

CANADA IS PRIME MINISTER MARK CARNEY JUST A FEW MONTHS INTO HIS JOB, THE FORMER TOP ECONOMIST WON A SURPRISE VICTORY FOR HIS LIBERAL PARTY BUOYED BY ANTI-TARIFF RESENTMENT TOWARDS AMERICA.

YET, DESPITE CANADA'S TENSE RELATIONS WITH ITS NEIGHBOR, CARNEY HAS NOW BECOME ONE OF THE CLOSER WORLD LEADERS TO PRESIDENT TRUMP, SPEAKING WITH HIM JUST AS WE CAN AFTER THE U. S. STRUCK IRAN'S NUCLEAR SITE.

CHRISTIANE TRAVEL TO THE NETHERLANDS HERSELF TODAY FOR MORE ON THIS.

>> I AM HERE AT THE HAGUE.

THIS IS THE FIRST DAY OF THE NATO SUMMIT.

PRESIDENT TRUMP IS ON HIS WAY AND THE LEADERS WILL HAVE THEIR DINNER TOGETHER AS IS TRADITIONAL BEFORE THE FORMAL TALKS GET UNDER WAY TOMORROW.

IN THE INTERIM, I HAVE BEEN SPEAKING WITH THE CANADIAN, THE PRIME MINISTER CARNEY --MARK CARNEY WHO HAS PASSED WITH FLYING COLORS HIS OVAL OFFICE TEST WITH PRESIDENT TRUMP AND HAS DEVELOPED A RELATIONSHIP WITH PRESIDENT TRUMP.

THEY TEXT EACH OTHER.

THEY CALL EACH OTHER ON THESE IMPORTANT ISSUES.

IRAN WILL BE A BIG FOCUS OF CONVERSATION AND YOU CAN HEAR THAT IN OUR INTERVIEW.

GAZA WILL BE AS WELL.

WILL TRUMP USE HAS LEVERAGE NOW WITH ISRAEL TO GET A SOLUTION AND AN END TO THE WAR IN GAZA?

ALSO, UKRAINE, OF COURSE.

HOW WILL THE WEST BE ABLE TO SUSTAIN UKRAINE'S FIGHT AGAINST RUSSIA?

WILL THEY BE ABLE TO GET TRUMP TO CONTINUE SUPPORT IN SOME WAY OR ANOTHER?

HERE IS OUR EXCLUSIVE INTERVIEW.

>> PRIME MINISTER CARNEY, WELCOME TO THE PROGRAM.

>> TAKES FOR HAVING ME.

>> THERE IS CLEARLY A RAM THAT WILL BE DOMINATING TO A GREAT EXTENT, YOUR SUMMIT OF WORLD LEADERS, THE FIRST TIME YOU ALL GOT TOGETHER SINCE THIS WAR IN THE MIDDLE EAST.

I WANT TO TALK ABOUT YOUR PERSPECTIVE.

WHERE DO YOU THINK IT IS NOW?

IS THE WAR OVER?

>> WELL, THERE HAS BEEN OBVIOUSLY SIGNIFICANT DEVELOPMENTS IN RECENT DAYS AND RECENT HOURS.

THE POSITION OF IRAN HAS BEEN SUBSTANTIALLY DEGRADED, BOTH WITH RESPECT TO AIRSPACE, POTENTIALLY SIGNIFICANTLY WITH RESPECT TO THEIR NUCLEAR CAPABILITIES OR DEVELOPMENT OF THEIR NUCLEAR CAPABILITIES.

AND, THAT HAS CREATED A WINDOW FOR THIS CEASEFIRE AS WE ARE TALKING TODAY, AS THE PRESIDENT --PRESIDENT TRUMP --HAS DECLARED A CEASEFIRE .

WE WILL SEE HOW IT HOLDS.

THE RECENT IRANIAN ACTION, AS YOU KNOW, IS CONSISTENT WITH LEADING UP TO AN ACTUAL DE- ESCALATION.

AS WE ARE HERE TODAY, IT IS PROMISING BUT MUCH MONEY TO HAPPEN.

>> WHAT DO YOU MAKE OF THE IRANIAN RESPONSE?

THERE WAS LITERALLY EVERYBODY ON THE EDGE OF THEIR SEATS AS TO WHETHER THIS WOULD BE MASSIVE OR TRIGGER ANOTHER MASSIVE U. S. RETALIATION.

IN THE END, IT WAS IN THEIR WORDS, PROPORTIONAL AND IN PRESIDENT TRUMP'S WORDS, A WEAK RESPONSE.

HE ACTUALLY THANKED THE IRANIANS FOR GIVING THEM A HEADS UP SO THEY GOT EVERYBODY OUT OF HARM'S WAY.

THERE IS A LOT OF NOISE IN THAT PART OF THE WORLD CONDEMNING THE VIOLATION OF QATAR'S AIRSPACE AND ITS SOVEREIGNTY BUT REALLY, WHAT DO YOU THINK IS HAPPENING DIPLOMATICALLY?

WHAT ARE PEOPLE THINKING ABOUT THIS MOMENT?

>> I THINK THE MILITARY ACTION --I WOULD LEAD TO WAR IN PRESIDENT TRUMP'S INTERPRETATION OF IT.

THE MILITARY ACTION WAS ALSO A DIPLOMATIC MOVE BY IRAN.

WE NEVER WELCOME, OBVIOUSLY, HOSTILITIES AND REACTIONS BUT IT WAS PROPORTIONATE.

IT WAS DE-ESCALATORY.

IT APPEARS TO HAVE BEEN PREVIEWED, WHICH ALLOWED -- THEY ARE CANADIAN SOLDIERS AT THE QATARI BASE , AS WELL.

>> DID YOU GET THEM OUT OF HARM'S WAY?

>> THEY WERE OUT OF HARM'S WAY.

>> IT IS PAR FOR THE COURSE, REALLY.

IT GIVES, AS FAR AS YOU ARE CONCERNED, AN OPENING FOR DIPLOMACY.

>> THAT IS THE RIGHT WAY TO PUT IT.

THE QUESTION IS, DOES THAT DIPLOMACY REALLY GET TRACTION AND MOVE TO ENDING THIS RISK OF NUCLEAR PROLIFERATION AND DOES IT LEAD, AS WELL, TO BROADER -- WELL, A BROADER CEASEFIRE IN THE MIDDLE EAST INCLUDING IN GAZA?

>> I AM GOING TO GET TO GAZA BECAUSE I KNOW IT IS INCREDIBLY IMPORTANT TO YOU AND TO SO MANY PEOPLE AROUND THE WORLD JUST ON THIS ISSUE.

PRESIDENT TRUMP, AT WHAT POINT --ONE POINT, POSTED ABOUT, WHY NOT REGIME CHANGE IF THEY CAN'T MAKE IRAN GREAT AGAIN?

WHY NOT CHANGE REGIME?

ISRAEL LOOKED LIKE IT WAS REALLY GOING FOR REGIME TARGETS AND A LOT INSIDE DENSELY POPULATED AREAS LIKE THE CAPITAL TO RON AND THEY SAID , TO GIVE SPACE AT LEAST FOR PEOPLE TO RISE UP AND TAKE THEIR OWN DESTINY INTO THEIR OWN HANDS.

IS THAT SOMETHING YOU WOULD HAVE SUPPORTED?

DID YOU SUPPORT IT?

I KNOW YOU TALKED TO PRESIDENT TRUMP ON THE PHONE DURING ALL THIS.

>> WE ARE NOT AN ACTIVE PARTICIPANT IN THESE HOSTILITIES.

MAYBE THAT IS AN OBVIOUS POINT BUT I WILL STATE THAT TO BEGIN WITH.

WE VERY MUCH HAVE HAD A CONSISTENT POSITION OVER MANY YEARS THAT I RAN CANNOT BE ALLOWED TO HAVE NUCLEAR WEAPONS.

WE SEE THAT EVENTS ARE MAKING THAT MUCH, MUCH LESS LIKELY AND THAT DIPLOMACY TAKING ITS COURSE.

THAT IS THE RESPONSIBILITY OF THE IRANIAN REGIME, AS IT IS.

THEY WOULD SERVE THE IRANIAN PEOPLE WELL , AT A MINIMUM, TO TAKE THE NUCLEAR OPTION OFF THE TABLE FOR IRAN.

>> DO YOU SEE A WAY --THEY INSIST ON HAVING NUCLEAR CAPACITY AND CERTAINLY CIVILIAN NUCLEAR REACTORS .

DO YOU SEE A WAY --HAS ANYONE INFORMED CANADA, YOURSELF, ABOUT THE WAY TO DO THAT?

>> I THINK THAT THE REACTION OF IRAN AND SOME OF ITS PARTNERS, ALLIES, HAS REVEALED THAT THE NEFARIOUS NATURE OF MUCH OF ITS NUCLEAR PROGRAM.

IT WAS A FICTION THAT THEY PERPETRATED THAT THIS WAS FOR ONLY PEACEFUL MEANS.

>> YOU DON'T BELIEVE THE INTELLIGENCE THAT THEY HAD NOT MADE A DECISION TO GO FOR A BOMB?

>> THEY WERE ENRICHING URANIUM TO A DEGREE.

THEY WERE HIDING THE FACILITIES OR TRYING TO HIDE THE FACILITIES OVER MANY, MANY YEARS ON A PATH THAT CREATED -- THAT WAS NOT NECESSARY, THAT WAS ENTIRELY NOT NECESSARY FOR CIVILIAN USE OF NUCLEAR TECHNOLOGY.

I THINK THE COMBINATION OF THAT, THE COMBINATION OF THEIR BELLIGERENCE, THE COMBINATION OF THEIR STATE SPONSORED TERRORISM THROUGHOUT THE REGION, ALL OF THAT POINTS IN ONE DIRECTION AND THE REACTION TO THE U. S. ACTION ALSO REVEALED THE INTENT TO CREATE THAT ABILITY, THE IRANIAN ATTEMPT TO HAVE NUCLEAR WEAPONS.

YES.

I THINK THAT IS PRETTY CLEAR.

JUST IN THE PUBLIC DOMAIN INFORMATION .

WORDS, INCLUDING WORDS OF THE RUSSIAN ALLIES .

>> HOW SERIOUSLY THEN DO YOU TAKE THEIR DESIRE TO GO TO NEGOTIATIONS TO RESOLVE THIS PEACEFULLY?

THAT IS WHAT THEY THOUGHT THEY WERE DOING WHEN ISRAEL STARTED.

>> WELL, AGAIN, WE WERE NOT PARTY TO THE NEGOTIATIONS BUT I RAN --IRAN HAD NOT PROCEEDED WITH THE FINAL PHASE OF THE NEGOTIATIONS PRIOR TO THIS ACTION.

WE DID NOT KNOW THE ISRAELI ACTION WAS GOING TO HAPPEN, TO BE ABSOLUTELY CLEAR.

HOW LIKELY IS IT?

THIS IS SPECULATIVE.

BUT, THE FACTS ON THE GROUND HAVE CHANGED.

THE RISK CALCULATION FOR THE IRANIAN REGIME HAS TO HAVE CHANGED.

THE CLARITY ABOUT WHAT THEIR INTENTIONS WERE WITH RESPECT TO THE NUCLEAR PROGRAM, I THINK, HAS CHANGED.

I AM NOT SURPRISED BY THAT BUT IT HAS CHANGED.

ALL OF THAT SHOULD POINT TO A RESUMPTION OF NEGOTIATIONS TO DENUCLEARIZE IRAQ.

>> CANADA'S DESIRE --YOU SET A LOT THEY WILL HELP LEAD, FORM NEW COALITIONS.

IF THE UNITED STATES NO LONGER WANTS TO LEAD, CANADA WILL, TRY TO BUILD A COALITION OF LIKE- MINDED NATIONS WITH LIKE-MINDED VALUES, ET CETERA AND WHO BELIEVE IN INTERNATIONAL CORPORATION.

WHAT DOES THAT LOOK LIKE AND IS THIS SOMETHING THAT WILL TRIGGER PRESIDENT TRUMP INTO MORE ANGER?

HE ALREADY HAS THESE TARIFFS AND HE HAS ALREADY SAID IF YOU GUYS TRY TO GANG UP ON ME, YOU WILL HAVE TO PAY FOR IT EVEN MORE DEARLY.

>> YOU HAVE TO LOOK AT THIS AND THE WAY WE WOULD LIKE TO LEAD, THE WAY EUROPEAN UNION WOULD LIKE TO LEAD, A NUMBER OF ASIAN COUNTRIES AS WELL IN A POSITIVE RESPECT.

IF THE U. S. IS PULLING BACK FROM MULTILATERALISM AS IT IS WITH RESPECT TO TRADE, THESE ARE EFFECTIVELY U. S. TRADE POLICIES, NOW BILATERAL.

A FOR THE U. S. IS PULLING BACK, THERE ARE OTHERS OF US WHO DO BELIEVE IN MULTILATERALISM.

AS YOU KNOW, I AM COMING HERE IN THE LAST --12 HOURS AGO I WAS IN BRUSSELS AGREEING TO CANADA EU SUMMIT, AGREEING A VERY CONFERENCE A PARTNERSHIP AND A PROCESS TO HAVE AN EVER CLOSER ECONOMIC DEFENSE AND SECURITY PARTNERSHIP BETWEEN CANADA AND THE EU.

THAT IS AN EXAMPLE OF TWO JURISDICTIONS, IN THE CASE OF THE EU THAT BELIEVE IN MULTILATERALISM, BELIEVE IN THE RULE OF LAW, BELIEVE IN FAIR AND OPEN TRADE, BELIEVE IN DEFENSE COOPERATION.

THAT IS AN EXAMPLE OF LEADERSHIP, IF YOU WILL THAT IS POSITIVE.

IT IS A REACTION, IF YOU WILL , TO WHAT IS HAPPENING IN THE UNITED STATES BUT IT IS SOMETHING THAT IS NOT HAPPENING AGAINST THE UNITED STATES.

IT IS FOR SOMETHING, NOT AGAINST.

>> PRESIDENT TRUMP TENDS TO BE TRANSACTIONAL AND PERSONAL.

MAYBE YOU KNOW DIFFERENTLY.

THEY SAY YOU ARE THE TRUMP WHISPERER OF THE LEADERS AND THAT YOU ARE TEXTING RELATIONS WITH HIM AND CONSTANTLY TALKING.

IS HE STILL SAYING HE WANTS TO ANNEX CANADA?

>> HE IS NOT.

HE ADMIRES CANADA, I THINK IT IS FAIR TO SAY.

MAYBE FOR A PERIOD OF TIME, COVETED CANADA .

>> YOU HAVE PUT THAT TO BED.

>> WE ARE TWO SOVEREIGN NATIONS WHO ARE DISCUSSING THE FUTURE OF OUR TRADE RELATIONSHIPS, OUR DEFENSE PARTNERSHIP, WHICH HAS BEEN VERY STRONG IN THE PAST.

HOW WILL THAT EVOLVE?

AGAIN, I WOULD SAY IT THIS WAY.

THE PRESIDENT IS FOCUSED ON A SERIES OF CHANGING BILATERAL NATIONS.

WE ARE A NATO.

HE HAS BEEN FOCUSED ON MAKING SURE ALL MEMBERS, CANADA INCLUDED, PAY THEIR FAIR SHARE, CARRY THEIR WEIGHT .

I THINK WE ARE NOW DOING THAT.

WE HAVE MADE MAJOR INVESTMENTS IN DEFENSE IN RECENT MONTHS.

WE ARE NOW AT THE NATO 2%.

WE ARE COMMITTED TO ACCELERATING THAT.

WE'VE GOT THIS NEW DEFENSE PARTNERSHIP WITH EUROPE, AS ANOTHER EXAMPLE.

THAT IS OTHER COUNTRIES STEPPING UP.

I THINK THAT IS POSITIVE.

WE ARE DOING IT FOR OUR OWN REASONS BUT I THINK IT IS POSITIVE -- >> IT IS PRETTY CERTAIN AND IT IS OVERNIGHT, THE WHOLE DUMPING YOU --NOW WE HAVE TO TAKE CARE OF OUR OWN SECURITY.

NOT ONLY THAT, WE HAVE TO PREVENT THIS INCREASING INVASION BY A HOSTILE FORCE IN EUROPE AGAINST A DEMOCRATIC SOVEREIGN INDEPENDENT STATE.

SUDDENLY IT HAS LANDED ON YOUR LAP.

HOW REALISTIC IS IT IN A TIME WHEN YOU ALREADY HAVE ECONOMIC DIFFICULTY WITH EUROPE AND OTHERS TO ACTUALLY --YOU ARE AT 2% AND NOW THEY ARE A 5%.

ISN'T THAT GOING TO CRIPPLE YOUR BUDGET?

>> IT IS IMPORTANT.

THESE ARE IMPORTANT QUESTIONS AND IT IS IMPORTANT TO BE CLEAR WHAT WE ARE POTENTIALLY, AND LIKELY TO ALL AGREE TOMORROW.

LET'S TAKE THE 5% OF GDP FIGURE , WHICH IS A HUGE CHUNK.

>> HOW MUCH IS IT FOR YOU?

>> 5% OF OUR GDP WOULD BE $150 BILLION.

>> THAT IS $1 MILLION.

>> PER YEAR?

>> IT MEANS A LOT.

>> LET'S START TO BREAK THIS DOWN.

PART OF IT -- A LITTLE LESS THAN ONE THIRD OF THAT OVERALL NUMBER IS SPENDING ON THINGS THAT QUITE FRANKLY WE ARE ALREADY DOING TO BUILD THE RESILIENCE OF OUR ECONOMY.

IT CAN BE DOMESTIC RESILIENCE.

AND CAN BE DEPENDING IN AREAS THAT SUPPORT DEFENSE BUT ALSO SUPPORT OTHER THINGS.

CRITICAL MERRILLS.

IT IS OBVIOUS TO EVERYONE NOW THE RISK THAT IS RUN, BEING FULLY DEPENDENT ON CHINA FOR CRITICAL MINERALS, NOT JUST FOR DEFENSE INDUSTRY BUT FOR THE AUTO INDUSTRY AND OTHERS.

CANADA HAS ONE OF THE BIGGEST DEPOSITS OF CRITICAL MINERALS WHICH TRUMP IS COVETING.

>> WE ARE GOING TO DEVELOP THOSE IN CANADIAN INTERESTS.

WE WILL DEVELOP THEM IN PARTNERSHIP WITH THE EUROPEAN UNION ITSELF AND EUROPEAN UNION MEMBER STATES WITH THE UK, OTHER PARTNERS.

SOME OF THE SPENDING PART COUNTS TOWARD THAT.

A LOT OF IT WILL COUNT TOWARD THAT 5% BECAUSE IT IS INFRASTRUCTURE SPENDING ON PORTS AND RAILROADS AND OTHER WAYS TO GET THE MINERALS UP.

IT IS SOMETHING THAT BENEFITS THE CANADIAN ECONOMY AND IS ALSO PART OF OUR NATO RESPONSIBILITY.

I AM NOT TRYING TO DOWNPLAY IT.

THE OTHER THING I WOULD SAY IS, WHERE WE SIT TODAY COLLECTIVELY, WE NATO COUNTRIES ARE LIKELY TO AGREE TO THE OTHER COMPONENT OF THAT, THE 2% GOING TO THE 3.

5% IN 10 YEARS BUT THE NATURE OF WARFARE IS CHANGING VERY RAPIDLY.

WE JUST LOOKED AT WHAT WAS HAPPENING IN UKRAINE.

YOU DON'T NEED AN AIRCRAFT CARRIER ANYMORE.

SOME DO BUT MOST OF US DON'T.

YOU NEED DRONES AND YOU NEED THE INTEGRATION OF DRONES WITH YOUR CYBER CAPABILITIES, YOUR BROADER SATELLITE CAPABILITIES.

WE ARE MAKING A COMMITMENT BUT WE ARE NOT LOCKING OURSELVES -- WE ARE NOT SIGNING A BUNCH OF POSTDATED CHECKS FOR THE MILITARY HARDWARE OF TODAY TO PROTECT OUR CITIZENS.

>> WE ARE TALKING ABOUT UKRAINE WHICH IS THE WAR IN EUROPE.

THE EXISTENTIAL WAR AS EUROPEANS SEE IT.

YOU ARE THE DIASPORA IN CANADA AND THE WORLD WAS INCREDIBLY ON UKRAINE'S SIDE FOR SO LONG.

IT IS ALMOST LIKE IT IS AN AFTERTHOUGHT.

PRESIDENT ZELENSKYY WAS ESSENTIALLY --I'M GOING TO SAY THESE WORDS --STOOD UP BY PRESIDENT TRUMP AT YOUR G7.

I DON'T KNOW WHETHER HE IS COMING AND THEY ARE GOING TO MEET HERE BUT IF THE UNITED STATES WALKS AWAY , DON'T YOU THINK RUSSIA WILL WIN?

>> NO.

THE SHORT ANSWER, NO.

>> CAN YOU MAKE UP FOR THE WEAPONS -- >> WE CAN FULLY MAKE UP BUT FIRST OFF, I DON'T THINK THE U. S. IS GOING TO QUOTE, WALK AWAY.

>> DO YOU THINK TRUMP WILL KEEP GIVING WEAPONS TO UKRAINE?

>> I WILL LEAVE THAT TO THE U. S. TO DETERMINE BUT THERE ARE OTHER MEASURES THAT CAN BE TAKEN.

FIRST OFF, HAVE WE FORGOTTEN ABOUT UKRAINE?

ABSOLUTELY NOT.

AS YOU JUST MENTIONED, PRESIDENT ZELENSKYY WAS AT THE G7 .

CANADA ANNOUNCED A MAJOR PACKAGE OF NEW FINANCIAL SANCTIONS AGAINST RUSSIA, MAJOR DEFENSE SUPPORT, MAJOR SUPPORT FOR THE UKRAINE BUDGET, THE EUROPEAN UNION IS LAUNCHING ITS 18th PACKAGE OF SANCTIONS WHICH WILL HAVE VERY SIGNIFICANT IMPACTS ON THE FINANCIAL SECTOR IN RUSSIA.

THERE IS A SANCTION PACKAGE MAKING ITS WAY THROUGH THE SENATE.

LINDSEY GRAHAM IS SPONSORING THAT AND IF IT IS ENACTED, WHICH IS A CHOICE, IT WILL BE A GAME CHANGER.

>> THE U. S. , EVEN WITHOUT MILITARY --MILITARY IS HUGELY IMPORTANT HERE.

>> ARE YOU GOING TO TRY TO SWAY TRUMP TO KEEP SUPPORTING THE UKRAINE MILITARY?

>> ABSOLUTELY.

IT IS NOT --YES, WE HAVE A DIASPORA AND IT IS IMPORTANT WITH PERSONAL TIES BUT THIS IS ABOUT RULE OF LAW.

IT IS ABOUT TERRITORIAL INTEGRITY.

IT IS ABOUT SUPPORT FOR DEMOCRACY AND IT HAS --IT DOES HAVE THOSE WIDER IMPLICATIONS.

IT ALSO HAS REAL SECURITY IMPLICATIONS FOR MUCH OF EUROPE.

WE ARE AT NATO.

WE HAVE, UNDER ARTICLE 5 , WE HAVE RESPONSIBILITIES TO EACH OTHER.

WE TAKE THOSE RESPONSIBILITIES SERIOUSLY.

THAT IS WHY WE ARE HERE.

THERE ARE MANY, MANY FACTORS.

PERSONALLY, IN CANADA, WE WOULD START AND STOP AT THE HUMAN.

WE DON'T NEED ALL OF THOSE RESPONSIBILITIES IN ORDER TO SUPPLEMENT OR MAKE THE CASE FOR SUPPORTING UKRAINE.

PERHAPS IN THE UNITED STATES, A FEW OTHER JURISDICTIONS, THEY NEED ALL OF THOSE ELEMENTS.

THEY NEED THOSE ELEMENTS TO EXIST.

WE WILL MAKE A STRONG CASE TO THE PRESIDENT.

>> I WANT TO CIRCLE BACK TO THE MIDDLE EAST AND WHAT YOU BROUGHT UP, WHICH IS GAZA.

DO YOU THINK THERE IS ANY WAY THAT THERE CAN BE THAT KIND OF PEACE THAT PEOPLE ARE TALKING ABOUT NOW IN THE MIDDLE EAST IF THERE ISN'T A RESOLUTION FIRST TO THE GAZA CATASTROPHE AND SECOND, IN GENERAL TO THE ISRAEL PALESTINIAN CRISIS?

TRYING TO GET A STATE FOR THE PALESTINIANS THAT LIVE IN HARMONY, PEACE AND SECURITY FOR ALL AND FREEDOM?

HOW MUCH DO YOU THINK YOU ARE ALL COMMITTED TO THAT?

WHAT WILL YOU DO?

WHAT STRIKES YOU AS THE MOST IMPORTANT THING TO DO NEXT?

>> FIRST, THE CORE QUESTION.

CAN THERE BE A LASTING PEACE IN THE MIDDLE EAST WITHOUT PEACE IN GAZA THAT TAKES INTO ACCOUNT GAZA AND WEST BANK INEFFECTIVELY WORKING ON A PATH TO A PALESTINIAN STATE?

YOU USED SEVERAL ADJECTIVES.

I WOULD AGREE WITH ALL OF THOSE, LIVING SIDE-BY-SIDE AND SECURITY WITH ISRAEL , A ZIONIST, IF YOU WILL, PALESTINIAN STATE THAT RECOGNIZES THE RIGHT OF ISRAEL TO EXIST --NOT JUST TO EXIST BUT TO PROSPER AND NOT LIVE IN FEAR.

NOW, WE CAN'T HAVE PEACE UNLESS WE MOVE TOWARD THAT.

SECOND POINT , DEVELOPMENTS.

AS WE SIT TODAY AND THE POTENTIAL TRAJECTORY WITH RESPECT TO IRAN, DOES CREATE ANOTHER WINDOW FOR THAT.

ONLY EIGHT DAYS AGO, NINE DAYS AGO AT THE G7, WE ALL AGREED, PRESIDENT TRUMP INCLUDED, THAT RESOLUTION OF THE CRISIS WITH IRAN SHOULD BE ACCOMPANIED BY A BROADER REDUCTION OF HOSTILITIES IN THE REGION, INCLUDING --THESE ARE EXACT WORDS, INCLUDING A CEASEFIRE IN GAZA.

>> DOES THAT MEAN PRESIDENT TRUMP COULD USE HIS LEVERAGE TO GO TO A MEANINGFUL PLAN WHICH WAS IN THE OFFERING BEFORE TRUMP WAS INAUGURATED FOR ISRAELI FORCES TO COME OUT, FOR AN ARAB FOR SEND INTERNATIONALS TO GO IN AND TO START REASONABLE CONVERSATION?

>> LET'S START WITH THE BASICS, GIVEN THE DIRE SITUATION THERE, IN GAZA, WHICH IS THE SIEGE, THE NEED FOR THE CEASEFIRE NOW, A FULL RESUMPTION.

A FULL RESUMPTION OF HUMANITARIAN AID, MOVING FORWARD FROM THAT.

I AM NOT JUMPING ALL THE WAY TO A BROADER PEACE PLAN.

ACCOMPANIED TO THIS, LEST ANYONE THINK I AM NOT ACKNOWLEDGING THIS, IS RELEASED AS A HOSTAGE.

THE POSSIBILITY CREATED AGAIN IN THE CURRENT CIRCUMSTANCES.

IT IS TO KEEP THE FOCUS ON THAT.

>> THE PRIME MINISTER --THE HOSTAGES HAVE NOT BEEN RELEASED EXCEPT THROUGH THE CEASEFIRE AND NEGOTIATIONS.

THE LAST BATCHES OF HOSTAGES WHO WERE RELEASED WERE UNDER THOSE CIRCUMSTANCES.

IN ISRAEL ITSELF, LIKE THE FORMER PRIME MINISTER --FORMER SECURITY AND INTELLIGENCE AND DEFENSE AND SECURITY ESTABLISHMENT ARE BEGINNING AND SAYING LOUDLY THAT ISRAEL NEEDS TO STOP THIS TRAJECTORY IN GAZA BECAUSE IT IS LEADING TO WAR CRIMES .

WAR CRIMES ARE BEING COMMITTED.

YOU HAVE SAID THAT YOU STRONGLY OPPOSE THE EXPANSION OF THE OPERATIONS IN GAZA, THE LEVEL OF HUMAN SUFFERING IS INTOLERABLE.

DO YOU BELIEVE, LIKE MANY IN THE INTERNATIONAL COMMUNITY, THAT THE SIEGE PREVENTING FOOD, MEDICINE, WATER, AND ALL THE REST OF IT SHOULD BE PROSECUTED AS WAR CRIMES?

I KNOW THAT ROYAL MOUNTED POLICE ARE INVESTIGATING SOME ASPECTS OF THAT.

>> WHERE WE ARE FOCUSED IS USING THIS OPPORTUNITY TO THE EXTENT WHICH WE HAVE --USING THIS OPPORTUNITY, IF I CAN TERM IT THAT WAY.

I THINK IT IS AN OPPORTUNITY TO ESTABLISH --TO REESTABLISH THE CEASEFIRE IN GAZA, REESTABLISH THE FULL RESUMPTION OF HUMANITARIAN AID.

WE ARE ALSO FOCUSED ON STOPPING THE VIOLENCE IN THE WEST BANK AND THE ENCROACHMENTS IN THE WEST BANK WHICH IS WHY WE TOOK ACTION ALONGSIDE A NUMBER OF OTHER COUNTRIES AGAINST SOME CABINET MINISTERS WHO HAVE BEEN ACTIVELY PERPETRATING THAT.

FOCUS ON THAT IMMEDIATE ASPECT IN ORDER TO START TO BUILD BACK.

>> DO YOU THINK PRESIDENT TRUMP --I KNOW YOU ALL SIGNED THIS COMMUNIQUÉ AT THE G7 BUT RESIDENT TRUMP, HE IS DEFINED BY UNCERTAINTY.

WE DON'T KNOW WHAT HE WILL SAY NEXT.

DO YOU THINK THAT HE IS REALLY --IN YOUR PRIVATE CONVERSATIONS, IS HE COMMITTED TO RELIEVING THE SITUATION IN THE MIDDLE EAST IN A FAIR AND JUST WAY?

>> HE HAS THE POTENTIAL TO BE DECISIVE IN THE SITUATION.

HE HAS USED HIS INFLUENCE IN OTHER SITUATIONS.

WE HAVE SEEN THIS IN IRAN .

AGAIN, TO REPEAT MYSELF, IT DOES CREATE THE POSSIBILITY OF MOVING FORWARD HERE.

THERE IS A MORAL IMPERATIVE TO MOVE FORWARD.

THERE IS ALSO AN IMPERATIVE, AS YOU INTIMATED IN A QUESTION EARLIER, ABOUT THE PATHWAY TO ULTIMATE PEACE.

THIS IS NOT GOING TO LEAD TO ULTIMATE PEACE IN THE REGION UNLESS GAZA IS STABILIZED AND THEN ULTIMATELY ON A PATH TOWARD A PALESTINIAN STATE.

>> ON THAT NOTE, PRIME MINISTER CARNEY, THANK YOU FOR JOINING US.

>> THINK OF HAVING ME.

> >> AS TENSIONS IN THE MIDDLE EAST REMAIN EXTREME A HIGH, EUROPEAN LEADERS, MUCH LIKE CANADIAN PRIME MINISTER CARNEY ARE ALSO CALLING FOR THE POLICY.

EMPLOYING IRAN IN THE UNITED STATES TO REENGAGE DIRECTLY.

LINES OF COMMUNICATION NEED TO BE KEPT OPEN AS WELL AS TAKING DOWN TEMPERATURE IN THE MIDDLE EAST.

UKRAINE IS FIRMLY AT THE TOP OF HER AGENDA OR SUPPORTING KYIV IS A KEY OBJECTIVE.

SHE HAS BEEN SOUNDING THE ALARM ABOUT UNCHECKED RUSSIAN AGGRESSION AND SHE JOINED ME EARLIER FROM THE HAGUE TO DISCUSS ALL OF THIS.

>> THANK YOU SO MUCH FOR JOINING US.

WELCOME TO THE PROGRAM.

LET ME GET YOUR REACTION TO WHAT APPEARS TO BE A FRAGILE YET SET CEASEFIRE NOW BETWEEN ISRAEL AND IRAN.

PRESIDENT TRUMP REITERATING THAT , QUITE EMOTIONAL THIS MORNING IN HIS ANGER AND FRUSTRATION WITH BOTH SIDES BUT IT DOES APPEAR THAT THE CEASEFIRE IS IN PLACE.

YOUR REACTION?

>> WELL, THE CEASEFIRE IS IN PLACE.

BOTH PARTIES SEEM TO BE VIOLATING IT BUT IT IS IMPORTANT AND IT SHOWS THAT WE NEED DIPLOMACY TO WORK BECAUSE ANY CEASEFIRE NEEDS TO HAVE CONDITIONS SO THAT BOTH PARTIES KNOW WHEN THE OTHER PARTY IS VIOLATING AND WE HAVE OFFERED THIS PATH TO DIPLOMACY.

WE HAVE HAD CONTACTS WITH BOTH PARTIES AND ARE WILLING TO DO SO ALSO ON OUR BEHALF.

>> AHEAD OF THE U. S. STRIKES OVER THE WEEKEND, YOU ACTUALLY HELD TALKS WITH THE IRANIAN FOREIGN MINISTER ON FRIDAY.

YOU POSTED ON X AT THE TIME, CALLING THESE TALKS THEY WRECKED DISCUSSIONS AND THEN FOLLOWING THAT, PRESIDENT TRUMP TOLD REPORTERS BEFORE TAKING OFF, BEFORE THE U. S. JETS TOOK OFF TO BOMB IRAN, HE SAID IRAN DOES NOT WANT TO SPEAK TO EUROPE , THEY WANT TO SPEAK TO US.

EUROPE IS NOT GOING TO BE ABLE TO HELP ON THIS ONE.

WHAT IS YOUR REACTION TO THAT AND WHAT ROLE, IF ANY, ARE YOU WILLING AND ABLE TO PROVIDE TO MAINTAIN THE CEASEFIRE?

>> EVERYBODY HAS THEIR OWN ROLE, IF YOU THINK BACK.

EUROPE WAS THE ONE CONDUCTING THESE NEGOTIATIONS.

IT WAS CLEAR THAT WE HAVE OTHER ISSUES BESIDES THE NUCLEAR.

THERE ARE CYBER ATTACKS AGAINST EUROPEAN COUNTRIES, EUROPEAN PEOPLE DETAINED.

ALSO, THERE HELP TO RUSSIA IN THIS WAR AGAINST UKRAINE.

THERE WAS A LOT OF ISSUES.

ALSO, THEIR BALLISTIC MISSILE PROGRAMS.

THERE WERE A LOT THAT WE RAISED AND ALSO IRAN SAID THAT THEY ARE OPEN TO DISCUSS WITH US.

WE NEED TO SEE THIS PATH OF DIPLOMACY.

EVERYBODY HAS THEIR OWN ROLE.

THE UNITED STATES AS WELL AS THE EUROPEAN UNION.

>> OBVIOUSLY, THAT IS NOT THE ONLY WAR IN THE REGION RIGHT NOW.

THE ONGOING WAR IN GAZA HAS RAISED A LOT OF QUESTIONS AND EVEN AN OPPORTUNITY WITHIN ISRAEL, WITHIN THE OPPOSITION.

I KNOW MILITARY FIGURES I HAVE SPOKEN WITH AS WELL THAT, PERHAPS, THIS WILL OPEN THE DOOR TO FINALLY SEE A RESOLUTION TO THE WAR THERE AND AN END TO THE WAR AND A RETURN OF THE HOSTAGES.

EVEN THE OPPOSITION LEADER POSTED ON X, NOW IN GAZA.

THIS IS THE MOMENT TO CLOSE THAT FRONT AS WELL, TO BRING THE HOSTAGES HOME.

ISRAEL NEEDS TO START REBUILDING.

HOW OPTIMISTIC ARE YOU THAT THIS CEASEFIRE COULD LEAD TO AN END AS WELL.

>> WE HAVE REALLY BEEN PUSHING BOTH PARTIES TO AGREE ON THE CEASEFIRE AND RELEASE ALL OF THE HOSTAGES.

YESTERDAY, WE HAD THE DISCUSSION WITH THE FOREIGN MINISTERS OF THE EUROPEAN UNION REGARDING THIS ISSUE BECAUSE WE ARE EXTREMELY CONCERNED ABOUT THE HUMANITARIAN SITUATION IN GAZA .

THEREFORE, THE CEASEFIRE IS, OF COURSE, IN EVERYBODY'S INTEREST AND WE REALLY HOPE THAT THIS WAR AND THE HUMAN SUFFERING WILL STOP.

>> WE KNOW THE EU HAS CONDUCTED A REVIEW OF THE ASSOCIATION AGREEMENT WITH ISRAEL DUE TO THE CONCERNS OVER THE HUMANITARIAN CRISIS IN GAZA.

ARTICLE 2 OF THE DOCUMENT OUTLINES THE RELATIONS BETWEEN THE PARTIES SHALL BE BASED WITH RESPECT TO HUMAN RIGHTS AND DEMOCRATIC PRINCIPLES.

WE SHOULD NOTE THAT THE ISRAELI FOREIGN MINISTER HAS REJECTED MORAL AND METHODOLOGICAL FAILURE BUT WHAT ARE THE FINDINGS OF THE REVIEW THAT YOU CAN SHARE WITH US?

>> THE QUESTION IS WHETHER THEY ARE IN BREACH OF ARTICLE 2.

THIS REVIEW WAS DONE BY EXPERTS OF THE HUMAN RIGHTS SPECIAL REPRESENTATIVE OFFICE.

IT SAID CLEARLY THAT THESE THINGS ARE VERY FACTUAL THAT THEY SEE IN THE GROUND BASED ON THE U. N. REPORTS AS WELL.

THEY ARE BREACHING THE HUMAN RIGHTS.

OUR DISCUSSIONS IN THE FOREIGN AFFAIRS CONCEPT TOGETHER WITH ALL THE MINISTERS WERE REALLY FOCUSED ON HOW WE CAN IMPROVE THE SITUATION ON THE GROUND.

OUR GOAL IS NOT TO PUNISH ISRAEL.

OUR GOAL IS TO PUNISH THE PALESTINIANS, END THE SUFFERING OF PALESTINIAN.

PEOPLE WOULD GET HELP.

>> LET'S TALK ABOUT THE NATO SUMMIT TODAY.

UKRAINE HI-FI IS ON THE AGENDA, GOING BACK TO THIS CEASEFIRE NOW BETWEEN ISRAEL AND IRAN.

PRESIDENT ZELENSKYY SAID THAT RUSSIA WAS TRYING TO SAVE IRAN'S NUCLEAR PROGRAM.

WHAT IS YOUR RESPONSE TO THAT?

ARE YOU SEEING ANY INDICATION?

YOU KNOW THAT THE RUSSIAN PRESIDENT MET WITH THE IRANIAN FOREIGN MINISTER AND OFFERED AT LEAST, IN WORDS, TO COME TO IRAN'S HELP IN DEFENSE.

ARE YOU SEEING ANYTHING SIGNIFICANT IN TERMS OF TANGIBLE HELP?

>> WELL, PUTIN IS NOT THE HONEST BROKER OF ANY KIND.

IF YOU REMEMBER 100 DAYS AGO, UKRAINE AGREED TO UNCONDITIONAL CEASEFIRE WHEREAS RUSSIA HAS JUST BEEN PLAYING GAMES.

FIRST, THEY SHOULD STOP THE WAR THAT THEY ARE WAGING ON UKRAINE AND LOOK AT THE OTHER WARS.

WHAT IS READY AND IMPORTANT IS THAT RUSSIA AND IRAN HAVE ALWAYS BEEN OPERATING TOGETHER.

IRAN HAS BEEN HELPING RUSSIA IN ITS WAR AND I GUESS IRANIANS ARE NOW ASKING THE FAVOR IN RETURN.

THAT IS WHY IT IS VERY IMPORTANT THAT THEY ARE STRONG ON RUSSIA, PUTTING THE PRESSURE ON RUSSIA SO THAT THEY COULD ALSO WANT PEACE.

>> DO YOU SEE AN OPPORTUNITY HERE FOR THE SITUATION IN IRAN AT ITS WEAKEST POINT IN DECADES?

IRAN HAS BEEN PROVIDING A NUMBER OF DRONES OVER THE LAST YEAR AND A HALF FOR RUSSIA, FOR ITS WAR IN UKRAINE.

DO YOU SEE AN OPPORTUNITY FOR PUTIN TO COME TO THE NEGOTIATING TABLE, IF FOR NO OTHER REASON, THEN CONCERN ABOUT THAT PIPELINE BEING SHUT DOWN?

>> FIRST OF ALL, I SEE AN OPPORTUNITY FOR FOREIGN NEGOTIATIONS.

THEY ARE IN A POSITION RIGHT NOW AND REALLY, THE CONCERNS THAT I MENTIONED BEFORE ARE FOR ALL OF THOSE.

WHEN IT COMES TO RUSSIA, I THINK IT IS IMPORTANT THAT RUSSIA HAS NOT REALLY HELPED THEM IN THIS.

ALTHOUGH, THE QUESTION IS, IT DRIVES A WEDGE BETWEEN THEM.

I AM DOUBTFUL THAT IT DOES.

WE CAN SEE THAT ALL THESE MOVES TAKING ATTENTION AWAY FROM THE WAR IN UKRAINE ARE TO THE BENEFIT OF RUSSIA.

>> ANOTHER FOCUS OF THIS SUMMIT, OF COURSE, IS RAISING ANNUAL MILITARY SPENDING, DEFENSE FOR EACH COUNTRY OVER THE NEXT SEVERAL YEARS.

THAT IS QUITE AN AMBITIOUS GOAL, GIVEN THAT IT WAS AT 2% CURRENTLY AND THE PREVIOUS SEVERAL YEARS.

WHAT MAKES YOU HOPEFUL THAT THE MAJORITY OF COUNTRIES, AT LEAST, WILL BE ABLE TO ACHIEVE THAT GOAL?

>> THIS IS A VERY AMBITIOUS GOAL.

THAT IS VERY CLEAR.

THE NATO COUNTRIES AGREED IN 2014 THAT BY 2024, IT WILL BE 2% OF GDP.

NOW, THE DISCUSSION IS ABOUT 5% .

IT IS A HUGE INCREASE BUT THE TIMES ARE SUCH THAT WE NEED THIS.

THE PROBLEM WITH THE DEFENSE SPENDING IS THAT YOU NEED IT WHILE YOU DON'T HAVE TIME TO MAKE THE INVESTMENTS.

YOU NEED TO MAKE THE INVESTMENTS WHILE IT IS PEACE TIME AND IT IS VERY HARD TO EXPLAIN TO THE PUBLIC WHILE WE HAVE TO SPEND ALL THAT MONEY.

IF WE SPEND THE MONEY ON DEFENSE AND REALLY DEVELOP THAT CAPABILITY IS, IT IS ALSO ACTING AS A DETERRENT THAT THE AGGRESSORS WOULD NOT LOOK OUR WAY.

>> PRESIDENT TRUMP HAS BEEN PUSHING TO MEET THAT 5% GOAL AND HAS TAKEN ISSUE ON HIS WAY TO THE SUMMIT, SPEAKING OUT ABOUT SPAIN SPECIFICALLY FOR THEIR PUSHBACK ON ATTAINING THEIR GOAL.

HOW IMPORTANT, IS IT , FOR PRESIDENT TRUMP TO HAVE A ONE- ON-ONE MEETING WITH PRESIDENT ZELENSKYY.

I KNOW THEY WERE SCHEDULED TO MEET AT THE G7 IN CANADA LAST WEEKEND EVENTS IN THE MIDDLE EAST CHANGED THAT.

HOW IMPORTANT IS IT FOR THE TWO OF THEM TO BE ONCE AGAIN HERE?

>> IT IS VERY IMPORTANT THAT THEY MEET AND DISCUSS THE ISSUES AND PRESIDENT ZELENSKYY AND ALSO EXPLAIN WHAT IS HAPPENING ON THE GROUND AND HOW THESE SECURITY CHARACTERS ARE INTERLINKED.

RUSSIA AND IRAN, ALSO MORE COVETED IN CHINA .

IT IS FOR THE SECURITY OF THE WORLD THAT WE GET THIS RIGHT .

>> WE WILL HAVE TO LEAVE IT THERE.

THANK YOU SO MUCH FOR THE TIME.

REALLY APPRECIATE IT.

>> THANK YOU.

ALL THE BEST.

>> NEXT, TO THE U. S. THE SENATE RECENTLY PASSED THE GENIUS ACT, A BILL ESTABLISHING REGULATORY FRAMEWORKS FOR THE STABLE COIN, A CRYPTOCURRENCY THAT WILL HOLD THE SAME VALUE AS THE U. S. DOLLAR.

FOR THE DIGITAL ASSETS INDUSTRY, THE MOVE IS A HISTORIC MILESTONE.

UC BERKELEY PROFESSOR OF ECONOMICS AND POLITICS BARRY EICHENGREEN WARNS THAT IT COULD BRING ECONOMIC CHAOS.

HE JOINS WALTER ISAACSON TO EXPLAIN WHY.

>> THANK YOU, BIANNA AND PROFESSOR BARRY EICHENGREEN.

WELCOME TO THE SHOW.

>> THANK YOU, WALTER.

>> THE SENATE JUST RECENTLY PASSED SOMETHING CALLED THE GENIUS ACT.

IT WAS A BIPARTISAN BILL PASSED OVERWHELMINGLY AND IT WOULD CREATE SOMETHING CALLED STABLE COINS WHICH ARE A CRYPTOCURRENCY OR DIGITAL CURRENCY.

COULD YOU EXPLAIN FIRST WHAT A STABLE COIN REALLY IS?

>> A STABLE COIN IS A CRYPTOCURRENCY.

IT IS A SPECIAL KIND OF CRYPTO.

THE COMPANY THAT ISSUES IT MIGHT BE A BANK, MIGHT BE A TECH COMPANY, MIGHT BE CRYPTO EXCHANGE.

MIGHT BE PEGGED ONE-TO-ONE FOR THE U. S. DOLLAR.

>> IT DOESN'T FLOAT LIKE BIT COIN DOES.

>> IT IS SUPPOSED TO HOLD ITS VALUE AND THE ISSUER BUYS AND SELLS IT WITH THE INTENTION OF KEEPING THAT VALUE STABLE.

>> COMPANIES LIKE WALMART AND OTHERS COULD ISSUE STABLE COINS IN ORDER TO HAVE FINANCIAL TRANSACTIONS THAT DON'T HAVE TO GO THROUGH CREDIT CARDS.

IS THAT RIGHT?

>> THAT IS RIGHT.

YOU COULD USE WALMART COIN BUT CONCEIVABLY WITH OTHER RETAILERS AND YOUR NEIGHBOR DOWN THE STREET, WORLD LIBERTY FINANCIAL, CRYPTO COMPANY HAS A STABLE COIN PLANNED UNDERWAY SO THERE COULD BE HUNDREDS OR EVEN THOUSANDS OF THESE IN PRINCIPLE.

>> HOW ARE THEY DIFFERENT THAN SOMETHING THAT ALREADY EXISTS?

>> IT WOULD BE EXACTLY LIKE TETHER BUT IT WOULD BE REGULATED BY OUR FEDERAL GOVERNMENT, BY THE FED, BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BY THE COMPTROLLER OF THE CURRENCY.

THEY WOULD BE GIVEN LEGITIMACY, IF YOU WILL, BY THE FEDERAL GOVERNMENT.

>> THAT WOULD MAKE IT MORE REGULATED, MORE SAFE AND FREE THINGS WE HAVE NOW.

WHY IS THAT NOT A GOOD TIME -- THING?

>> NUMBER ONE, WE DON'T KNOW IF IT IS SAFE.

THE PRINCIPLE IS THAT A COMPANY ISSUING A STABLE COIN WOULD HOLD ONE DOLLAR'S WORTH OF RESERVES IN LIQUID, RELIABLE FORM FOR EVERY DOLLAR STABLE COIN TOKEN THAT IT ISSUED BUT -- >> BY THAT HUMANE TREASURY BILLS OR SOMETHING?

>> TREASURY BILLS.

THAT IS BASICALLY WHAT MONEY MARKET FUNDS DO AS WELL.

IF YOU THINK BACK TO THE GLOBAL FINANCIAL CRISIS IN 2008, YOU WILL REMEMBER THAT IMPORTANT MONEY MARKET FUND BROKE THE BUCK.

THE DOLLAR SHARE WENT DOWN TO $0.

97 BECAUSE THE BONDS IT HELD TURNED OUT TO BE LESS THAN PROMISED.

YOU HAVE TO THINK THAT REGULATORS ARE GOING TO BE REALLY SMART AND ON THE BALL AND YOU HAVE TO THINK THAT THIS ALL HAPPENED WITH STABLE COINS.

>> THE NEW YORK TIMES OP-ED SAID IT COULD CAUSE ECONOMIC CHAOS.

EXPLAIN WHY YOU SAY THAT.

>> WE WOULD HAVE DIFFERENT DOLLAR COINS CIRCULATING SIDE- BY-SIDE, CONCEIVABLY ALL WORTH DIFFERENT NUMBERS OF DOLLARS, DIFFERENT AMOUNTS.

SOME COINS WOULD BE WORTH $0.

97.

OTHERS WOULD BE WORTH $0.

98.

>> I THOUGHT THEY WERE SUPPOSED TO BE PEGGED TO THE DOLLAR.

>> THEY ARE SUPPOSED TO BE.

WHETHER THAT WILL BE THE REALITY OR NOT IS A REAL QUESTION.

THINK BACK TO THE MONEYMAKER FUND.

YOU CIRCULATE DIFFERENT VALUES SO YOU COULD PULL OUT THE EQUIVALENT OF A PHONEBOOK AND CHECK EACH AND EVERY COIN, EACH AND EVERY ISSUE WERE.

THE VALUE OF THE BACKING BEHIND EACH AND EVERY COIN TO KNOW HOW MUCH TO VALUE IT AT.

ECONOMISTS TALK ABOUT THE SINGLE MISS OF MONEY THAT EVERY DOLLAR BILL IS WORTH EXACTLY A DOLLAR.

THAT WOULD BE AT RISK UNDER THIS STABLE COIN REGIME.

>> WOULD IT BE POSSIBLE TO CREATE A STABLE COIN THAT WAS ACTUALLY PEGGED TO THE DOLLAR?

>> IT IS POSSIBLE IN PRINCIPLE.

THE QUESTION IS, WILL IT BE TRUE IN PRACTICE?

THERE COULD BE DECADES, CENTURIES OF FINANCIAL REGULATION.

WE HAVE TO BELIEVE THAT THE REGULATORS WILL BE ON THE BALL.

THEY WILL ENSURE THAT EVERY SINGLE STABLE COIN ISSUER IS REALLY HOLDING BANK DEPOSITS OR TREASURY BILLS WORTH A DOLLAR FOR EVERY DOLLAR STABLE COIN.

THIS HAS NOT BEEN TRUE IN THE PAST.

TETHER VALUE HAS FLUCTUATED IN RESPONSE TO EVENTS IN THE PAST .

WE HAVE TO BELIEVE THAT REGULATORS WILL REALLY KNOW WHAT THEY ARE DOING.

THEY CERTAINLY HAVEN'T PREVENTED BANKS FROM FAILING IN THE PAST, EVEN THOUGH THAT WAS THEIR CHARGE.

>> THEY HAVEN'T PREVENTED BANKS OR MONEY MARKET FUNDS FROM FAILING.

WE HAVE SILICON VALLEY BANK, A LOT OF THINGS.

WHY IS THIS ANY DIFFERENT?

THIS IS A PRETTY GOOD SYSTEM BUT NOT PITCH PERFECT.

>> IN THE CASE OF BANKS, WE HAVE FEDERAL DEPOSIT INSURANCE.

THE PREMIUM FOR THAT ARE PAID BY THE BANKS.

THE BANKS PAY INTO A FUND AND THAT FUND IS THEN USED TO MAKE DEPOSITORS HOLE IN THE EVENT THAT A BANK LIKE SILICON VALLEY BANK IN 2023 FAILS.

THERE IS NOTHING LIKE THAT IN THE GENIUS ACT SO PEOPLE WHO HOLD AND USE STABLE COINS ARE GOING TO BE MORE NERVOUS ABOUT THEIR VALUE THEN BANK DEPOSITORS.

THEY ARE GOING TO RUN AT THE FIRST SIGN OF TROUBLE AND THAT CAN CAUSE ANOTHER FORM OF CHAOS AS THE RUN SPILLS OVER CONTAGIOUS LEAP FROM ONE STABLE COIN TO ANOTHER.

THERE WILL BE PRESSURE ON THE GOVERNMENT TO BAIL OUT STABLE COIN HOLDERS IF SOMETHING GOES WRONG, JUST LIKE THERE WAS PRESSURE TO BAIL OUT THE BIG UNINSURED DEPOSITORS OF SILICON VALLEY BANK.

THERE BEING NO INSURANCE FUND, THAT IS --THE COSTS ARE GOING TO FALL ON YOU AND ME, THE TAXPAYER.

>> LET'S TALK ABOUT THE THEORY OF IT IF IT COULD BE IMPLEMENTED RIGHT.

THE FINANCIAL SYSTEM THAT WE HAVE NOW IS REALLY, IT SEEMS TO ME, ARCHAIC.

IT HAS NOT BEEN DISRUPTED IN A VERY LONG TIME.

IT IS VERY HARD FOR ME TO MAKE SMALL TRANSACTIONS DIGITALLY.

ISN'T THAT NECESSARY TO FIND SOME WAY TO HAVE A DIGITAL CURRENCY?

>> THE TRANSACTION YOU DO WITH YOUR VISA OR YOUR MASTERCARD IS A DIGITAL TRANSACTION.

AFTER ALL, IT IS SETTLED DIGITALLY.

IT MAY TAKE A FEW DAYS BEFORE THE VENDOR ACTUALLY GETS HIS OR HER FUNDS.

IF YOU USE YOUR BANK ACCOUNT TO PAY YOUR ELECTRIC BILL ONCE A MONTH, THAT IS A DIGITAL TRANSACTION AS WELL.

>> THOSE ARE ONLY AVAILABLE TO PRIVILEGED PEOPLE LIKE ME AND YOU WHO HAVE CREDIT CARDS.

WHAT ABOUT MOST AMERICANS WHO DON'T HAVE CREDIT CARDS?

>> MOST AMERICANS ARE BANKED.

IF YOUR CREDIT IS BAD, YOU HAVE A DEBIT CARD, WHICH IS ALSO DIGITAL, INSTEAD OF A CREDIT CARD.

THERE MAY BE A LITTLE BIT OF ADDITIONAL CONVENIENCE HERE.

FOR MOST OF US WITH CREDIT CARDS, WE DO PAY A FEE.

THEY DO PASS THE 2% FEE ON TO US.

I WILL REMIND YOU, YOU COULD PACKAGE OF SERVICES.

YOU GET FRAUD PROTECTION, THE OPTION OF PAYING NEXT MONTH RATHER THAN NEXT MONTH.

IN THE CASE OF A STABLE COIN, YOU WILL BE ABLE TO MAKE A PAYMENT ALL BUT INSTANTANEOUSLY BUT YOU WON'T GET THESE OTHER PROTECTIONS AGAINST FRAUD.

>> SENATOR TIM SCOTT IS ONE OF THE PROPONENTS AND TALKED ABOUT THIS BEING VERY IMPORTANT FOR FINANCIAL INCLUSION.

ISN'T THERE SOME ADVANTAGE TO HAVING MORE AND MORE PEOPLE TO BE ABLE TO MAKE TRANSACTIONS LIKE THIS?

>> IN SOME COUNTRIES, I THINK THAT IS THE CASE.

WE DON'T HAVE A BIG PROBLEM OF FINANCIAL INCLUSION IN THE UNITED STATES.

THERE ARE DIFFERENT FIGURES FOR PEOPLE WHO DON'T HAVE BANK ACCOUNTS, DEBIT CARDS AND SO FORTH BUT MANY OF THE PEOPLE WHO DON'T, DON'T WANT THEM BECAUSE THEY FLY UNDER THE RADAR, ESPECIALLY IN THIS DAY AND AGE WHEN WE HAVE AGGRESSIVE IMMIGRATION ENFORCEMENT.

ONE USE CASE FOR STABLE COINS IS REMITTANCES WHERE WESTERN UNION WILL CHARGE 6%, 7% FOR SOMEONE WORKING IN THE UNITED STATES TO WIRE MONEY TO A FAMILY IN MEXICO.

A STABLE COIN CAN DO THAT QUICKLY AT LOW COST.

MORE GENERALLY, STABLE COINS ARE USED AS ON RAMPS AND OFF RAMPS FOR BUYING OTHER CRYPTO.

IF YOU WANT TO USE YOUR DOLLARS TO BUY BIT COIN, THE EASY WAY IS TO FIRST BUY TETHER AND PARK YOUR DOLLARS THERE AND THEN BUY A BIT COIN.

STABLE COINS ARE USED FOR REMITTANCES LIKE I DESCRIBED AN STABLE COINS ARE USED FOR ILLICIT TRANSACTIONS OF VARIOUS SORTS, MONEY LAUNDERING, TAX EVASION AND SO FORTH.

THERE IS ANOTHER PROBLEM WE HAVE TO WORRY ABOUT.

DO WE THINK THAT WALMART OR YOUR FAVORITE TECH COMPANY WILL BE ABLE TO EFFECTIVELY ENFORCE KNOW YOUR CUSTOMER AND ANTI- MONEY-LAUNDERING RULES?

THAT IS WHAT THE GENIUS ACT ASSUMES.

>> WALMART, LET'S SAY IT DOES SOMETHING LIKE A WALMART COIN AND IT STANDS BEHIND IT.

WHY WOULDN'T I TRUST WALMART, AS MUCH AS I MIGHT EVEN TRUST A MONEY MARKET FUND TO SAY, OKAY, I WILL PUT SOME STORE VALUE INTO WALMART COINS?

>> I THINK IT IS ENTIRELY POSSIBLE THAT THAT WILL WORK BUT IT MAY START WITH WALMART BUT IT WON'T END WITH WALMART.

AGAIN, THE GENIUS ACT FORESEES ALL KINDS OF RETAILERS LIKE WALMART, BANKS, TECH COMPANIES AND OTHERS ALL ISSUING THEIR OWN STABLE COINS.

IT IS CERTAINLY POSSIBLE THAT A BIG PLAYER IN THE END LIKE WALMART OR EVEN ONE OF THE CREDIT CARD COMPANIES WILL END UP DOMINATING THIS SPACE .

DO WE WANT OUR PAYMENT SYSTEM RUN BY WALMART?

>> WHAT WOULD HAPPEN IF THE U. S. GOVERNMENT DECIDED THAT FED SHOULD DO THIS.

WITH THE MAKE SOME SENSE?

>> IT WOULD MAKE A LOT OF SENSE.

A LOT OF COUNTRIES ARE MOVING DOWN THE ROAD, PROVIDING THEIR PUBLICS AND THEIR BAKING SYSTEMS WITH THE CENTRAL BANK ISSUED STABLE COIN, CALLED A CENTRAL POINT DIGITAL CURRENCY.

CHINA HAS DONE IT.

IT IS MOVING DOWN THAT ROAD AND MANY OTHER COUNTRIES ARE EMULATING ITS EXAMPLE.

THERE ARE OPPOSITION IN THE CONGRESS TO DO THAT IN THE UNITED STATES.

THERE ARE SUSPICION OF THE FED.

THERE IS A LONG TRADITION IN THE UNITED STATES GOING BACK TO ANDREW JACKSON AND BEFORE, DEEP AND ABIDING SUSPICION OF CONCENTRATED FINANCIAL POWER WHICH MEANS THE FED IN THE U. S. CASE , U. S. POLITICIANS DON'T WANT A CENTRAL BANK DIGITAL CURRENCY.

THEY ARE LEFT BY DEFAULT, IF YOU WILL, WITH A STABLE COIN AS A WAY TO TAKE ADVANTAGE OF NEW DIGITAL TECHNOLOGY.

I THINK CBD C, A CENTRAL BANK ISSUED STABLE COIN WOULD BE A BETTER WAY TO GO.

>> ISSUE, STABLE COINS BACKED WITH THE CENTRAL BANK, WHETHER IT IS CHINA, THAT UAE, EUROPE, OR OTHERS.

COULD THOSE BE USED IN THE UNITED STATES?

AT THE MOMENT, PEOPLE ARE USING A NUMBER OF DIFFERENT NATIONAL CURRENCIES AND THEIR CROSS- BORDER TRANSACTIONS.

THE EURO IS USED WITH INTERNATIONAL FAITH AND FOREIGN INVESTMENT.

THE GREATER CONVENIENCE OF USING A DIGITAL CHINESE MIGHT CREATE A MORE SERIOUS ARRIVAL TO THE U. S. DOLLAR.

I THINK THERE IS A DANGER OF THE STEALING A MARK ON US.

>> X, FORMALLY KNOWN AS TWITTER IS GOING TO LAUNCH ITS OWN DIGITAL CURRENCY HERE.

IT HAS BANKING LICENSES OR A BANKING TRANSFER ABILITY.

DO YOU THINK SOCIAL NETWORKS ARE BECOMING A FINANCIAL MONEY TRANSFER SYSTEM IS A GOOD IDEA?

>> I WORRY ABOUT THE WAY SOCIAL NETWORKS ARE PRIVY TO INFORMATION --OTHER INFORMATION ABOUT USERS, ABOUT YOU AND ME AND ABOUT HOW WE CAN USE THAT INFORMATION TO THEIR ADVANTAGE IN THE BANKING AND FINANCIAL SPHERE.

YES, I THINK THERE IS A HIGH LIKELIHOOD THAT X OR THE OTHER PLATFORMS WILL MOVE INTO THE STABLE COIN SPHERE.

>> IF THAT IS THE CASE, IS IT BETTER TO REGULATE IT?

WHETHER THE GENIUS ACT IS EXACTLY RIGHT, IT HAS TO BE BACKED DOLLAR FOR DOLLAR BY A LIQUID CURRENCY.

>> I DON'T THINK THAT OUR GOVERNMENT CAN IGNORE STABLE COINS ENTIRELY, AS THEY HAVE PRETTY MUCH DONE UP UNTIL NOW BUT I WILL SAY THAT THE BETTER MODEL IS A SIMPLE BANK DIGITAL CURRENCY END IF THE BANK -- THAT IS WHAT THE PUBLIC WOULD GRAVITATE TOWARD.

DO WE WANT TO X TO KNOW EVERY DETAIL ABOUT OUR EVERY TRANSACTION?

WHICH, THEY WOULD, IF WE USE THEIR STABLE COIN.

OR, WOULD WE PREFER THE FED TO BE THE ENTITY THAT ISSUES THE DIGITAL MONEY THAT WE USE?

FOR MOST AMERICANS, I THINK THE ANSWER WOULD BE THE FED.

>> THE SENATE PASSED THE BILL TO CREATE A REGULATORY FRAMEWORK FOR STABLE COINS.

NOW, GOES TO THE HOUSE OF REPRESENTATIVES.

WHAT WOULD GO TO CHANGE IT THAT WOULD MAKE YOU FEEL MORE COMFORTABLE WITH THIS CONCEPT?

>> I DON'T THINK THERE IS A LOT THAT WOULD MAKE ME FEEL MORE COMFORTABLE.

ANYTHING THEY CAN DO TO TIGHTEN REGULATORY OVERSIGHT.

FOR EXAMPLE, THERE IS A PROVISION IN THE SENATE VERSION THAT PERMITS, QUOTE, SMALL STABLE COINS TO BE LICENSED AND REGULATED BY STATE GOVERNMENTS.

I WORRY ABOUT COMPETITION BETWEEN THE STATES AND THE CAPACITY OF ALL 50 STATES TO ABLY REGULATE STABLE COINS, EVEN SMALL ONES BELOW $10 BILLION OF ISSUANCE.

THAT IS AN EXAMPLE OF SOMETHING I WOULD ELIMINATE IN STRENGTH AND REGULATION.

MORE GENERALLY, I WOULD FEEL BETTER WERE THERE MORE SUPPORT FOR THE FEDERAL RESERVE ISSUED ALTERNATIVE, WHICH I THINK WOULD BECOME THE DOMINANT STABLE COIN.

>> PROFESSOR BARRY EICHENGREEN, THANK YOU SO MUCH FOR JOINING US.

APPRECIATE IT.

>> THANK YOU, WALTER.

> >> THAT IS IT FOR OUR PROGRAM TONIGHT.

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