Can the US and Iran Break Their Deadlock?

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1:42President Trump said Monday the U.S. will not be rushed into a, quote, bad deal with Iran. But he also said it is highly unlikely he will extend the two-week ceasefire with Iran if a deal is not reached before it expires Wednesday evening. and that the U.S. would continue its blockade of Iranian vessels in the Strait of Hormuz until a final agreement is reached. Trump's comments come as the U.S. and Iran weigh whether to move forward with a second round of talks in Islamabad. Iran had initially said it was hesitant to participate in further peace talks with the U.S., but people familiar with the plans now say Tehran will send a delegation to Pakistan.

2:23Tensions between the U.S. and Iran escalated sharply over the weekend. after U.S. forces fired on and seized an Iranian-flagged cargo ship. Fear and confusion growing over the Strait of Hormuz. Ships coming under fire as they try to transit the critical waterway. President Trump posting that U.S. forces have fired on and seized an Iranian-flagged vessel that tried to get past the American blockade and ignored warnings to stop. The U.S. said the ship had refused to comply with the blockade of the Strait of Hormuz. That followed more than a day of back and forth between Washington and Tehran, which included Iran once again closing the Strait of Hormuz and firing on vessels attempting to pass through.

3:05There already was uncertainty, and it feels like at this moment there's just even more uncertainty about the prospects of getting a deal here. Kate Sullivan is a White House correspondent for Bloomberg. She's been watching the president's rhetoric closely. He keeps saying, you know, it's almost done. We're basically there. And something he told me was, you know, we have all the main points finalized. and we're just working out a few things. But that's not, you know, we hear that kind of rhetoric from the president and from White House officials. And then we're hearing a very different narrative from Iranian state media.

3:36And a lot of things are being contradicted. And there's just a lot of confusion around what is actually happening. I'm Stacey Bannock-Smith, in for Sarah Holder and David Gurra. And this is The Big Take from Bloomberg News. Today on the show, with the looming expiration of a two-week ceasefire, the U.S. and Iran are once again at a dangerous impasse. What we know about a potential second round of negotiations in Islamabad, the sticking points driving the latest escalation, and where the White House could go from here.

4:15A brief de-escalation in tensions with Iran has quickly given way to re-escalation. As a White House correspondent, Bloomberg's Kate Sullivan has had a front row seat to the whiplash. She spoke to President Trump Friday when he was optimistic about the Strait of Hormuz reopening and finalizing a deal between the U.S. and Iran. I just called him. I have his cell phone number. You do? Yeah, I do. And it's really interesting because I think a lot of people, when I was talking about this with people, they thought, oh, no, you call somebody who then puts you on the line with him. or there's like a middle person or you call an assistant or somebody else, a White House official, perhaps a communications director.

4:55But no, it's just his cell phone number. On that call, the president told Kate the deal could move quickly and that most of the big issues had been worked out already. What he was projecting was a real optimism about the prospects of getting a deal. But oh, what a difference a weekend makes. Now it seems lots of sticking points remain. So I would say the future of Iran's nuclear program is the most important thing for the president. He wants Iran to never be able to acquire a nuclear weapon. And the sticking points, you know, there are questions about whether this would be, if a deal is breached, whether there would be a temporary suspension, whether Iran would be able to still enrich uranium for civilian purposes.

5:43On Friday, the president said the U.S. would work with Iran to recover its enriched uranium and bring it to the U.S. A spokesperson for Iran's foreign ministry told State TV that was never on the table and that Iran saw the transfer of its nuclear material to the U.S. as a non-starter. Then, of course, there is the issue of the Strait of Hormuz, through which about a fifth of the world's oil and liquid natural gas flowed every day before the start of the conflict. Because there are concerns now that Iran controls the strait and can really manage the flow of now indefinitely, perhaps charge tolls for ships passing through.

6:23And just I think what happens with the strait, whether there are any restrictions, I asked the president a couple of times on Friday, are there going to be restrictions? Are there going to be tolls? And he said, no, no. So it seems this is a very important thing for the U.S. to just have it actually be completely open. Whether that is actually going to be the case is a huge question mark because Iran seems that they are really using the control of the strait as a huge leverage point here. For Iran, a big point of contention has been the United States blockade of Iranian vessels in the strait, which led to the seizure of the Iranian flagged ship over the weekend.

7:02Since the start of the blockade, the U.S. military has intercepted or turned back more than two dozen vessels. The president is very focused on projecting strength and sort of he's making these maximalist threats and demands. And it's very much in line with his negotiating style. It's something we've seen over and over again. He will, you know, I mean, going back to just that post about we will take out an entire, a whole civilization. And we've seen a lot of inflammatory, threatening rhetoric. And, you know, again, the president has renewed threats on Iranian infrastructure and saying that if we don't get a deal, you know, the bombing will start again.

7:43And so I think it's a way for the president to just try to keep up this pressure on Iran. I think the sheer volume or amount of military might that is in the region right now is just stunning. And I think he's just unwilling to really pull back those forces and wants to keep that blockade in place until he feels like this has been resolved and we have an actual deal and it's and it's signed and it's done. How much pressure is on Iran right now? Like how do we have a sense of how long they can withstand a blockade economically? And or is that kind of an unknown? I think the White House is hoping the blockade and all the pressure that they're putting on, it's something that they can't withstand for too long.

8:33But I think they have also been surprised, frankly. And I think there are people within the White House and perhaps allies of the White House and perhaps the president himself have been surprised at how resilient Iran has been throughout this. I think there was a thinking, especially with Venezuela and just how that operation unfolded and how quick that was. The president has made some references, you know, spoke about Venezuela when he was addressing the nation and giving an update on Iran. And it seems like he thought that this would be faster and, frankly, maybe easier than it has been. And I think there has been some surprise at how Iran has responded to this and certainly with the counter strikes and the missiles that they launched at neighboring countries.

9:26But just I think the way that they've been able to withstand this pressure so far, it's a great question about how long this can actually go on before there's really a breaking point. And I'm not sure anyone really knows that for sure, but I think the White House is hoping that all the pressure that they're putting on Iran is going to really help force this deal because it is an extraordinary amount of pressure that is on them right now. So the big question is, if talks resume this week, can the U.S. and Iran make any progress on these issues when the two sides seem so far apart? I think the things that I'm watching for are, do these talks actually take place?

10:09What comes out of them? Is it going to be like the first round where it fell short of their expectations in terms of trying to secure a deal? And, you know, the last round of talks did not produce a deal. J.D. Vance, I thought it was a really a big statement to send the vice president to these talks. Just as far as like sending a really high powered person? Exactly. What I was hearing from White House officials was that by sending somebody who was actually elected by the American people who was on the ballot, that it added an extra layer of credibility and weight and signaled to the Iranians that the U.S.

10:45was serious about trying to make a deal here and that they weren't just trying to drag this out.

10:55As Vice President Vance heads to Pakistan for another round of negotiations, how is Kate preparing to parse the mixed messaging about those meetings that may come from the White House? And how's that back and forth playing with voters? That's next.

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13:18Bloomberg's Kate Sullivan has been describing the mixed messages coming out of the U.S. and Iran about pretty much everything related to this conflict. The U.S. says one thing, Iran says another. So I wanted to ask her, is this strategic? Is this a power struggle? Is this a natural byproduct of chaos and confusion? It might be all of the above. Yes, and? Okay. It's a great question because what we keep hearing from the White House, I've been in a few briefings with Caroline Levitt, who has said what we're hearing from Iran publicly is very different from what we're hearing from them privately.

13:57There are a lot of contradictory messages. The president will say, you know, Iran has agreed to do this or they're even just the talks that are supposed to take place in the coming days. He said, you know, that they're taking place. Iran says those talks were never actually confirmed. So just even like agreeing to have the talks, I mean, there's so much flying around. It is overwhelming, I think, for everybody to try to get a handle on what is actually happening. It feels like every time the president says Iran has communicated this to us and this is what's going to happen, it's trickled through state media that that is not the case.

14:38And so the president, he famously, you know, considers himself a powerful negotiator. And I think part of the deal, it's a big part of his public persona and image and reputation. There is some thought that goes into, you know, like what is the public messaging here in terms of what is the pressure that we can put on them publicly? Perhaps they have not actually agreed to this, but if we say that they have. And I'm just curious how J.D. Vance is going to explain what happened in those talks versus how the Iranians are going to say what happened in those talks and whether, you know, the ceasefire is going to get extended or we're still going to be back to square one, basically.

15:20I mean, as someone who has reported on this White House, spoken with the president, I'm assuming you've got some insider sources. Is this kind of a mess right now? Is there a strategy happening beneath the seeming chaos? I learned a long time ago to never predict anything with certainty when it comes to Donald Trump. And I do think that there is a real desire by the White House, by the president to find an off ramp here and try to wrap this up as soon as possible. Relative to other – the president keeps pointing out the Vietnam War was so much longer. As was the Hundred Years War. Right. We have been in this for a while now, but I think there is a real desire by the White House to try to figure out how to walk away with this and declare victory in some way.

16:14I think regardless of what happens and what the Iranians agree to, there will be a great deal of spin about what the U.S. got out of this war as he tries to justify it to the American people. Again, it's a very unpopular war. I think a lot of people who voted for him are confused about why the U.S. is involved in this in the first place. And we've seen a lot of people who voted for the president, conservative podcasters and influencers and just people online saying, this is not what we voted for. We voted for a president who said that he was not going to, you know, no new wars, get us out of wars.

16:52And I think the White House is very aware of the criticism that they're getting because it's just it's becoming louder and louder. How do you expect all of this back and forth and the attack on Iran and everything happening right now to play in the upcoming midterm elections? Very critical. And it will have a huge impact on what the president is able to accomplish, what he's able to get through Congress and just his agenda. I think the White House and the president, I think, are very aware of the economic pain points that high gas prices and how people are really feeling that the unpopularity of this war, it could potentially have a huge impact on the midterms.

17:37If you remember, gas prices was a big part of this, where the president was at the beginning touting, you know, we've had lower gas prices than under Biden. And this is that this is a big selling point. Now it's still over four dollars a gallon. And we're hearing mixed messages from top cabinet officials about when that might go down, because frankly, they don't it depends on what's what's happening with the Strait of Hormuz and the war. And they don't know what's going to happen there. 67 % of Americans now disapprove of the way Trump is handling the war with Iran. That is according to a new poll from NBC.

18:13The same share, 67%, also said the U.S. is on the wrong track. That's up from 60 % a year ago. Kate traveled with the president last week as he attempted to shift focus to domestic issues. He held a roundtable in Las Vegas on his initiative to eliminate taxes on tips. Thanks to our cuts today, the economy is booming. Our economy is booming. You know, you don't read about it. You don't see it so much because of what's going on in Iran, which is really, you know. There was a very clear attempt at trying to pivot the conversation to, you know, domestic politics and the economy. And it's a pivot that we've seen attempted several times.

18:54You know, I feel like every few weeks. I mean, every politician tries to pivot. Right, exactly. Yeah, this is like a tale as old as politics. Exactly, exactly. And it's just I think the people around Trump and his top officials are really eager to have that be the messaging. But of course, there's no breaking through when these like massive headlines about the Iran war are really dominating. You know, one person close to the White House was telling me, you know, there's just you cannot control when he gets in front of the cameras, what he's going to say, what he's going to get asked about. And the implications are huge.

19:27It is a critical election year. It's, of course, not a presidential election year, but it will have a huge impact on what the president is able to get done, depending on what, you know, if Democrats are controlling the House or the Senate or just what happens in the midterms. Kate Sullivan, thank you so much for talking with us. Thanks for having me.

19:47This is The Big Take from Bloomberg News. I'm Stacey Bannock-Smith. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you get your podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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