Starmer vs Trump: King's bid to save the special relationship

0:02The Telegraph.

0:30Donald Trump: on one side and a coastal plaid on the other. The perfect spring staple. Get your closet ready for a full season of plans. Shop spring at Abercrombie & Fitch in the app, online and in stores.

0:46Keir Starmer: Ring, ring. Keir Starmer has spoken with the president in a desperate bid to save the special relationship.

0:52Camilla: But has the damage already been done? And what does it mean for the king's imminent state visit to Washington. And Donald Trump insists the rising cost of oil is a small price to pay for his action in Iran. But is the US president in danger of crashing the global economy?

1:09Keir Starmer: We speak to the president's former economic advisor, Tyler Goodspeed, who tells us that Britain's refusal to drill in the North Sea is completely self-harming.

1:18Camilla: Welcome to The Daily Tea with me, Camilla Tomini.

1:20Keir Starmer: And me, Tim Stanley.

1:32Keir Starmer: How's the war going, Camilla?

1:33Camilla: Well, it seems to be going swimmingly well. I've already had this from you downstairs. I don't need... You can say to me again what you said to me earlier.

1:41Keir Starmer: You wanted it.

1:43Camilla: Look at him.

1:44Keir Starmer: It's like someone when their wife buys a puppy. You wanted him.

1:48Camilla: Well, I did want the removal of the ayatollah and support for the good, strong, brave Iranian people. You've got a whole new ayatollah. You hiding in a cupboard going, oh, no, oh, no, we can't have a repeat of 2003, even though it's nothing like it. Can we, however, as we are now adopting this, we need to actually reverse ferret, because if we're going to try and imagine what that phone call was like last night between Trump and Starmer, you're going to have to play the role of the hawk because you're better at doing Trump, and I'm going to have to play the role of the dove. How do we think it went?

2:20Camilla: OK, he calls Starmer, so what's your opening line to Starmer? Having described him as, let's just list the adjectives, a loser, disappointing, weak, woke in terms of the Chagos deal. Bring, bring, drowning street phone ringing. Hi, Prime Minister, we've got Donald Trump on line one.

2:44Keir Starmer: Hello, Keith, how are you?

2:49Camilla: Donald, I think you'll find it's Keir is my first name. and you should know that because I did help you to pick up your paperwork when you were last in town. Look, I'm sorry we didn't fully throatedly support you. I probably, in retrospect, should have allowed you to use the air bases, but...

3:06Keir Starmer: You're too late. You're too late. We've already won. We held an edition of America's Next Top Muller and we found him and he's beautiful. He's beautiful. He's younger. He's slimmer.

3:22Camilla: You are referring to Mojtaba Khamenei, who is the son of the Ayatollah, who, surprise, surprise, has now been installed, which does make it less likely, doesn't it, to have... We were trying to drill into what comes next and people were suggesting there might be a bit more of a moderate Ayatollah, which struck me as a bit of an oxymoron. This guy seems hardline, cut very much from his father's cloth.

3:45Keir Starmer: Yes, yes. They have swapped a militant with a crazy person. And in falling back on a sort of dynastic succession, I just want to point out, because I don't think anyone else has, the 1979 Islamic Revolution was expressly anti-monarchist. Not just anti-the Shah Pahlavi of the time, but actually Khamenei had ruled that monarchy itself as an institution was un-Islamic.

4:11Camilla: Yes, it's too secular.

4:12Keir Starmer: In the same way that North Korea becoming a dynastic succession from Kim Il-sung to Kim Jong-un is a complete violation of the principles of communism. Likewise, when regimes fall back in on themselves, when they can't trust anyone, they become clan-like. And whatever the ideology is, it has to be jettisoned for the most important thing, which is promoting someone who you can trust. And who can you trust most in life? Well, as any monarchs will tell you from the medieval era, it's your own heir. That's the only people you can trust. Iran has become like the godfather.

4:50Camilla: Well, it's amazing. This guy's still alive, by the way, because the council of Muller's that convened last week to try and pick the next Ayatollah was, of course, bombed out of all existence. Yeah. So it is a miracle that this son survives. On the special relationship, because that truth social post from the weekend was extraordinary, wasn't it? with Donald Trump, as you say, saying, it's all too little, too late.

5:13Keir Starmer: Yes.

5:14Camilla: And we will never forget. We will not forget.

5:17Keir Starmer: This is very unfair. British jets are flying.

5:19Camilla: Yeah.

5:20Keir Starmer: We are playing some role in all of this. And we have also given permission for the American use of our bases. Well, finally. Of a shared basis.

5:29Camilla: Could have probably done that earlier.

5:30Keir Starmer: Yeah, exactly. But it's not true that we've not done anything at all.

5:33Camilla: The other consequence of what's been happening, Tim, is it's now called into question whether the King and Queen Camilla should be going to Washington in April for a kind of reverse state visit. So Trump's due to host them both at the White House, red carpet being rolled out.

5:48Donald Trump: Sir Ed Davey, bless him, his key intervention on this,

5:52Camilla: apart from slagging off people who choose to live in Dubai and suggesting they shouldn't be supported if they're hiding from missiles under their desks. He's also saying that Charles and Camilla shouldn't go out there because we shouldn't be supporting Trump in any way. and obviously he has been very rude about the British Prime Minister.

6:10Keir Starmer: Right, but that makes no sense, does it? Because that's politicising the monarch.

6:14Camilla: Davian making no sense shock.

6:16Keir Starmer: The special relationship we are all hoping is something that survives this because it's stronger than the personalities of here-today-gone-tomorrow politicians and the king embodies that sense of the endurance of the relationship, right?

6:30Camilla: So if ever you needed the king to be parachuted into a situation, It's probably now to try and repair some of the damage caused by Keir Starmer.

6:37Keir Starmer: And whatever respect the president has lost for Keir Starmer, we know he adores the royal family. Yes. So if our hope is we can rebuild some bridges with the United States, we want the royal family to be out there. But it does raise this interesting question of how does the special relationship work if one partner is distrusted by the other?

6:59Camilla: Yeah.

7:00Keir Starmer: Now, in a conversation that we suspect was not meant to be publicly shared, Tony Blair said to the Jewish News.

7:10Camilla: Yes. I think if you're in conversation with the Jewish News, you should expect it to be shared, by the way. But he thought it was a private event that took place on Friday night, I believe.

7:20Keir Starmer: Right.

7:20Camilla: And then, of course, the quotes end up in the Sunday papers.

7:23Keir Starmer: But apparently, Sir Tony said, we should have backed America from the very beginning, adding, if they are your ally and they are an indispensable cornerstone for your security, you had better show up.

7:35Camilla: Are we all in danger of salivating too much in general over the special relationship? I mean, this is the Davy, Polanski and lefty argument. What is this relationship anyway? Why is it more special than any other relationship? I mean, historically, the closeness of the US and the UK has been significant, hasn't it? It's been instrumental. If we think back to prime ministers of yesteryear, I mean, obviously, Thatcher and Reagan come to mind and indeed Bush and Blair. And maybe that's a less attractive memory for Brits. But are we going completely over the top, Tim, especially on the right, in our desperation to maintain star spangled relations?

8:12Keir Starmer: I don't want to be too critical of the right because...

8:15Camilla: Please don't be. They're my friends and employers. It's like shooting yourself in the foot.

8:18Keir Starmer: But some of them, I think, have confused the personalities and the countries. It is possible to have a president who you just fall out with, but you still retain a good relationship with America.

8:28Tyler Goodspeed: Yes.

8:28Keir Starmer: But let's be realistic. In the wake of 1945, we signed up to a Western alliance in order to contain communism. In 1956 with Suez, we discovered that we couldn't operate independent foreign policy anymore because America just said whatever America says no to, we can't do. Since then, we have wound down our military. We don't have operational independence. You think about things like our nuclear submarines. They can't function without US technology and US parts. So if everything is so integrated, you need the special relationship because it's a fact of life. Britain has made this decision to move from being a warfare state to a welfare state.

9:03Keir Starmer: We've chosen hospitals over military bases. I don't blame us for that. But part of the price for living in the social democracy that Zach Polanski wants is being integrated into America's defence, right? That's why we literally cannot afford to walk away from it.

9:17Camilla: No, and we can't afford to annoy them too much because for precisely the reasons you've just mentioned, we are going to be reliant upon them should, God forbid, something happen and the UK be dragged into a fight that it can't actually finish.

9:31Keir Starmer: Yes. Well, this is the argument about the use of Diego Garcia, for instance. If we're saying no to that, what happens in the future if Argentina decides to have another go at the Falkland Islands? Will America back us over that? We do not have the size of navy we had back then. We probably couldn't actually send our troops there.

9:49Camilla: Well, we can't even send our current only available warship to Cyprus. Precisely.

9:54Keir Starmer: So even I, as a foreign policy realist who has fallen out with Donald Trump over this one, would still say, but we need the special relationship. Of course we do. Because realistically speaking, we cannot operate by ourselves and Europe can't operate by itself. Europe doesn't function as a political body yet. It doesn't have a polity. It's not properly integrated. it. We can't do anything without the United States' support. Therefore, it would be very silly to talk about walking away. And so the Blair argument is, even if you don't agree with American policy, if they're only asking you for permission to use their bases, give it.

10:31Camilla: Well, doesn't he have a point? I admit that his critics will say, oh, this is absolutely typical of you. You're Bush's poodle. You can't change your spots. I'm mixing my animalistic analogies there, but this is vintage Blair, you know, gung-ho, go over the top with whatever America says or does. On the other hand, if it were just a quick decision about the use of the bases, I now think that Keir Starmer does look ridiculous because he wasn't being asked to participate in any greater way than merely allowing the US access to these bases. And Diego Garcia had been in contention. There had been some politics around that base purely because of the, what I consider to be quite idiotic great 30 billion pound Chagos Island giveaway.

11:18So even if you

11:19Camilla: are more pacifistic in all this, like you are, surely you can see the argument for just allowing the use of the bases, if not to take part in aerial bombing raids and all the rest of it, right?

11:30Keir Starmer: Well, we also have a better understanding of the timeline. So when the war began, only a week ago or so, we were under the impression that Britain had been taken completely by surprise and that it needed time to figure out the legal position. That was what I inferred from what the government was saying. We now know that they were aware something was happening almost three weeks in advance. And yet assets in the region were still taken out like that submarine. They should have been leaving things there so there were things on hand so we'd be ready. But they also had plenty of time to decide whether or not it was appropriate to use the bases.

12:05Keir Starmer: It's plenty of time to have this conversation.

12:07Camilla: Plenty of time to weld HMS Dragon.

12:10Keir Starmer: Right, exactly. Yeah. So the government's trying to present its position as one of principle, but as is always the way with Keir Starmer, there's a little bit of old-fashioned incompetence mixed in there too.

12:22Camilla: Also, Blair's intervention doesn't help him. Well, it helps him with the Labour backbenchers who are very much leaning towards Polanski's position and don't want us to intervene at all. But on the other hand, I mean, he's been such a political chameleon. I can't really work out where his Blairite credentials start and finish. I mean, he wasn't a Blairite when he stood for the leadership.

12:42Keir Starmer: No.

12:42Camilla: He was literally, you know, channeling his inner Ken Loach. I don't know where he is now. Any of the sensibles in cabinet will look at the criticism of a former highly successful Labour PM, regardless of how it all ended for Blair. Let's be honest. When it comes to politics, Starmer's not really fit to shine Blair's shoes, is he?

13:00Keir Starmer: Well, no, he doesn't have his communication skills. That's true. As someone who's against the war, I suspect I'd be happier with Keir Sommer being in charge at this moment than Tony Blair. But another way of reading this is, are we seeing the impact of the removal of Morgan McSweeney?

13:14Camilla: Possibly.

13:15Keir Starmer: Because McSweeney was a Blairite, blue Labour, and one suspects might have argued for a different policy. He is gone. And we're seeing a number of things that Starmer's doing now. There's a shift in his rhetoric and his tone that suggests he's moving back to the soft left, part of which is the issue of Islamophobia and the definition of Islamophobia.

13:37Camilla: Well, we're now getting an Islamophobia czar, even though many people, including moderate Muslims like Fayez Mughal, who I interviewed on Friday's episode of The Daily Tea, do catch up on that because it was a fascinating chat.

13:49Keir Starmer: It was.

13:50Camilla: Making the point that there is a difference between anti-Muslim hate, which is to try and protect Muslims from literally hate speech in the street, having their mosque windows caved in, being attacked, spat at and whatever. And then Islamophobia, which would include criticism of the religion of Islam. We don't have blasphemy laws in this country. So even the use of the term Islamophobia czar rather than anti-Muslim hate czar has going to cause consternation. But again, nobody's admitting it. Gorton and Denton has played a role in how he's played this. I'm sure it has. People in Downing Street are saying, no, it hasn't.

14:29Camilla: First of all, he's lost his brain in Morgan McSweeney. Second of all, he's now being advised by people who have barely been around for five minutes and were at a critical point in global affairs. And third of all, he is being pushed in opposite directions by his own party. He's like a push-me-pull-you. He's in the middle now. The lefty's trying to drag him to the left. the righties wanting him to stay real and honour the special relationship and be statesman-like because, by the way, that was the one thing he was actually quite good at and now he's squandered those credentials on the world stage.

15:03Keir Starmer: Yes. Well, our understanding of the timeline has changed in the last few days, but so has our understanding of the internal conversations. Again, at the very beginning, you were led to believe that this was the Prime Minister's decision. He is the decider. But we now sense that there might have been a bigger cabinet discussion, that Starmer was actually leaning towards allowing use of the bases, but was talked out of it by...ed Miliband. Ed Miliband. Rachel Reeves and others within the cabinet. Ed Miliband, of course, wants us to pursue energy independence through net zero.

15:37Camilla: Trouble is, it takes too long. It takes far too long.

15:40Keir Starmer: And we're not there right now.

15:41Camilla: Well, we're nowhere near that. So we've got, at the moment, on the ticker, a story about the AA warning drivers to not drive as much. So we have Steve Reid, the housing secretary, out on the broadcast round this morning, first of all saying, oh, Blair's wrong about Starmer. OK, Blair's wrong about this whole war. Starmer behaved in the right manner and was considered and not gung ho. And that's a good thing, which, of course, he has to say in support of his own prime minister. But second of all, the argument that Steve Reid has mounted against the suggestion, do you know what? Maybe we should insulate ourselves from what's going on in the Middle East by just producing our own oil and gas from the North Sea.

16:19Camilla: I mean, it's interesting to think back to 1979. At the very moment that revolution is taking place, the UK is rather insulated from it because at that point, Callaghan has given the green light to mass North Sea oil and gas production. We can't do that now, apparently, because we're all wanting to import solar panels from China, of all people, and have windmills in the sky producing energy. It's not coming online quick enough. And I do think that the one thing that people can cogently agree with on Trump is the ludicrous and lunatic nature of buying in oil and gas when we could ourselves produce millions of barrels of the stuff.

17:03Camilla: It doesn't make any sense. And now we're talking about where are the reserves? Oh, we don't really have any reserves.

17:08Keir Starmer: Well, Steve Reid, I believe, has said that the reserves are where we would expect them to be at this time of year, which I imagine means very low and inadequate. To be fair, even if we drilled a lot more, that energy would go towards the European grid and we're still tied to the wholesale price. And that mysterious question of why it is that that remains defined by gas rather than by renewable energy. Nonetheless, we are not ready for that independence right now. So the war has come at a difficult moment, one also in which we're just starting to get on top of our borrowing. But the markets are now betting upon an interest rate rise and it's likely that the cost of national borrowing will go up too.

17:50Keir Starmer: So none of this is good for a British economy that's just recovered from the Ukraine fossil fuel shock plus the lockdown of COVID.

17:59Camilla: No, indeed. So this whole inflation down to 2 % by April isn't going to happen. Interest rates coming further down doesn't look likely to happen. Energy costs will skyrocket. Can we talk about reform's role in all this? Yes. It was interesting, wasn't it?

18:16Keir Starmer: Well, we imagined a conversation between Keir and Trump, right? We could imagine a conversation between Nigel Farage and Donald Trump at the weekend, and it would just be dead air for about five minutes.

18:28Camilla: It's hashtag a little bit orcs this, isn't it?

18:31Keir Starmer: Nigel went to Mar-a-Large. Now, it was spun as I'm going to have a chat with the president about the Chagos Islands. It turns out he was there at the invitation of a member of the club. And the plan was to be there for when Trump arrived so that he could get a word with him. But Trump at the last minute decided to go somewhere else down the road. So over the weekend, Nigel Farage does not seem to have spoken to Donald Trump. Now, why does all this matter? Well, it matters because Farage has staked much of his sort of political reputation in the UK on his closeness to Trump. And it does seem like they were closer a few years ago.

19:09Keir Starmer: You remember there was a point in which he offered himself as a potential ambassador or a conduit for Britain and the White House.

19:16Camilla: Might have worked out better than Peter Mandelson, to be fair.

19:18Keir Starmer: Right. But all of that seems to have been undermined since Trump too in the second term because the administration made the decision that it wanted to be closer to the people actually running the country, the Labour Party and Keir Starmer. So Farage has been pretty much frozen out and doesn't enjoy the contact that he used to.

19:36Camilla: So do we think this has an influence on Robert Jenrick coming out with some fairly surprising remarks? This is what is interesting.

19:43Keir Starmer: Donald, Nigel Farage is on a Kissingerian diplomatic tour of America, trying to win America around to his point of view. And then he fails to get that. And then on Sunday morning, Rob Jenrick comes out and reformed previously, having been all for the war, now offered a note of caution.

20:02Tyler Goodspeed: We will always put the interests of the British people first. I think that's what matters the most. We don't see a cause for the UK to be deploying our personnel, such as airmen offensively in bombing raids over Iran. As far as I'm aware, we've not been asked to do that. Our allies are proceeding with this action without us. And I think it's perfectly sensible for us to protect the security of our own troops first. What we also want to see, Laura, is this war come to an end as quickly as possible. Because at the end of the day, reform is a party for working people. And working people are being clobbered as a result of rising energy bills.

20:39Camilla: Why do we think Robert Jenrit's doing that? Well, clearly they've been out and about over the course of the last few days speaking to reform supporters. And I wouldn't imagine there's much support among reform supporters.

20:53Keir Starmer: As there isn't in the national polls.

20:55Camilla: To send troops out to Iran. I mean, I know we're not even contemplating that at the moment. But funny enough, I would suggest that the reform support base is probably quite isolationist, although there was some YouGov polling, of course, suggesting that the left are the most vehemently opposed to this and that the support does increase when you move across the political spectrum rightwards. But it's complicated because working class voters, whose sons are the ones sent to the front line often, are obviously very, very worried about yet another catastrophe for British forces in the Middle East.

21:30Keir Starmer: And they'll feel the pinch from oil prices going up as well. The left tends to oppose it for ideological reasons, the right for very pragmatic reasons, which is memories of Iraq, lack of a game plan, etc., etc. etc. Reform internally is totally on board with this, right? Because it ticks the two boxes of their relationship with the Persian diaspora, which is close. Persian diaspora, very articulate, quite wealthy, very influential. And for the last week, they've said a number of things, particularly Richard Tice, who had a pop at me on Twitter. That's fine. I'm okay with that. Free speech.

22:00Camilla: What was the pop? Because I'm going to get onto somebody having a pop at me. Oh, right. Okay.

22:05Keir Starmer: Okay. I think the word cowardly may have been used. but um so they've spent the last week kind of sort of digging into that ideological base that i think that is what they really think but you're quite right they will have spoken to the average reform member or voter and they will have said what's this got to do with britain why are you going on about this i do think some people on the center right in the past week have been saying some things that they assumed the voters agreed with them on and then they've discovered they haven't And that's partly because they've looked at this conflict through a culture war lens.

22:38Keir Starmer: They thought voters hate Keir Starmer, which they do. Therefore, they'll take Donald Trump's side in this fight, which I don't think they do.

22:46Camilla: The person who had a pop at me on X was Terry Christian.

22:51Keir Starmer: Oh, oh, yeah. We've all been christened.

22:56Camilla: The avuncular Mancunian.

22:57Keir Starmer: We've all been christened at some point in our career. He pops out of the woodwork and he always says something horrible. And your first thought is, you're alive?

23:05Camilla: Terry Christian for the uninitiated. I remember you. He used to present a brilliant show on a Friday night called The Word that was always rather controversial and featured music but also a lot of swearing and very kind of unscripted moments of rock stars going nuts.

23:19Keir Starmer: I would do anything to get on TV. Do you remember that?

23:22Camilla: Yes, that's right.

23:22Keir Starmer: So there was one boy who the price of getting on TV was snogging his grandma. Yes. Another boy, the price was dragging a brick across the stage by his winkle.

23:31Camilla: By the way, the boy who snogged the grandma, it wasn't his grandma. It wasn't his grandma. It was a grandma. That was a real low.

23:39Keir Starmer: That's nothing, isn't it?

23:41Camilla: What's that? It would have been better if he had agreed to slog his granddad. But that could have been a little bit too forward thinking for the time because the word was popular in the 1990s.

23:48Keir Starmer: I think you get an A-B for that now. Anyway, Terry Christian had a go at me when I had suggested on social media

23:53Camilla: that it wasn't particularly British or in line with British values, some of the people who were going on the so-called peace march on Saturday. And he was like, oh, I thought you public school types. Can I just say, Terry, I wasn't public school educated. I did go to a private school, but there is a difference. I don't want to school you in that, Terry. And by the way, if I had ever referred to your state school education in a derogatory way, they'd be all hell to play. But it's perfectly all right.

24:17Keir Starmer: It's like saying comp boy, isn't it? Isn't it?

24:19Camilla: Just like that. But it's perfectly all right to point out my apparent poshness. I wasn't saying for one minute, you know, ban this march or anything like that. I was merely pointing out that there were some elements of the so-called peace march that did give me pause for thought. The first one was the woman who held up a banner saying, let's bomb the F out of Israel. Yeah, it's not very peaceful. I'm not sure it's completely compatible with CND-esque instincts. There was also the other protester who was heard leading a chant of Kebat Kebar Yahud. I appreciate I've probably got the pronunciation of that very, very wrong and mangled.

24:55Camilla: And that's an anti-Semitic slogan celebrating the defeat of Jewish tribes by Muhammad in the oasis of Kaibar in 628. Now, I just pointed out that such medieval sentiments, let's kill all Jews, let's bring back Mohammed's army and slaughter Jews on the streets, probably isn't compatible with Britain or British values. That's all I said.

25:15Keir Starmer: And also, whenever British people reference the war, there's always someone who says, will you let it go? Why are you obsessed with the past? Exactly that. The war was only 80 years ago, whereas this was about, what, 1400 years ago.

25:30Camilla: And it was because the headline had something about flag burning in it. But I said, no, I was saying about the whole thing. If you're going to attend a peace rally calling for peace, do you know what? All credit to you. Let's all sing Kumbaya together. If, however, you're going to attend a peace rally and call for Israel to be bombed or Jews to be slaughtered. I'm sorry. You know, it's not really in the spirit of what this great nation is all about. How tolerant can we be? We're so tolerant of these people that are allowed to mourn an ayatollah on the streets of London and come out with this absolutely violent rhetoric.

26:05Camilla: I just found it completely appalling.

26:07Keir Starmer: Well, this is my frustration with the peace movement. They are not really motivated by peace. They're motivated by a partisan dislike of one side or the other. Demonstrators chanted, we are the people. We won't be silent. Stop the bombing now, now, now. Zionism is a crime. Shut them down for Palestine. and my favourite, Keir Starmer, be afraid, we will see you in The Hague. Poetic. Poor Keir, he's done nothing.

26:28Tyler Goodspeed: No.

26:28Keir Starmer: And yet he's still being threatened with a war crimes trial. And March has also carried photographs of Ayatollah Khomeini, the Old Testament scholar who died the way he would have wanted under a pile of stones.

26:40Camilla: And then this weekend we've got the annual Al-Quds rally, which does take place every year, but now there are concerns it's going to be hijacked by Ayatollah fans and others. among those asking for it to be banned. Oh, we've got actually got a little bit of political union here. How extraordinary. Nigel Farage, OK, fine. Lord Walney, who used to be an anti-extremism advisor to the government. Former PM Gordon Brown and Baroness Foster, the Northern Ireland politician. So, I mean, I would suggest that a rally that could inflame tensions on the streets of London is probably not a great idea.

27:15Keir Starmer: No. And my consistent argument is that the Iranian war has nothing to do with us. In which case, why all these marches about it in London?

27:23Camilla: Well, also, why didn't anyone march when the Ayatollah was slaughtering to death thousands of people in the streets?

27:29Keir Starmer: And I'm sure some people did. I'm sure some people did indeed protest. Not in these numbers. But not in these numbers and not like this. Absolutely ridiculous. And did not take it as an opportunity also to call for war against Israel, which again, I just see as unrelated.

27:42Camilla: Coming up next, is Donald Trump in danger of crashing the world economy?

27:49Keir Starmer: We'll be speaking with his former economic advisor, Tyler Goodspeed.

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28:40Keir Starmer: Camilla, Donald Trump must have known that this war would affect the world economy. The Strait of Hormuz has been shut. That's going to constrict the oil supply. That's going to affect prices, including for consumers in the United States. The price of a barrel of oil has hit$120. On Truth Social, Trump has said, it's not a problem. Yeah, prices are going to go up, but it's a price worth paying and they'll come down again when the war is over.

29:05Camilla: But when will the war be over? When will the war be over?

29:08Keir Starmer: We don't know. But that idea that it's a price worth paying, it does cast one's mind back to the 1970s, which is the origin of this crisis. The 1979 Iranian Revolution, which brought the Ayatollahs to power, which humiliated America, and also triggered that year an economic crisis that would destroy the presidency of Jimmy Carter.

29:29Camilla: Poor Jimmy Carter. And we weren't reminiscing earlier because Jimmy Carter was ridiculed in an episode of The Simpsons once where there was a statue of Jimmy Carter put up in Springfield and it was attacked by the local residents and he was described as basically a monster.

29:44Keir Starmer: History's greatest monster, I think was the phrase. I'm very defensive of Jimmy because I wrote my PhD about Jimmy Carter and Ted Kennedy and the 1980 election, and I like peanuts, etc. And what you have to understand is... And you're a Christian. America had already been through... Not that kind of Christian. No, indeed.

29:59Camilla: But I mean, same thing.

30:01Keir Starmer: But America had already been through the oil shock of 1973, which again was a consequence of a Middle Eastern war. And this is important. The government responded to it badly by imposing price controls on the price of gas. And what Carter was trying to do in 1979, because it was a bit ahead of his time, was actually deregulate the price. and hence cost of gas was already going up because companies were free to set their own price. At the same time, he pursued a policy of support for the Shah of Iran, in part because America depended so much upon Iranian imports. And when the revolution happened, Shah left the country in January of 1979 and he sought refuge in America for cancer treatment in October 1979.

30:41Keir Starmer: Jimmy Carter, as a humanitarian gesture, granted that to the Shah. And in response to that, 66 American hostages were seized at the U.S. embassy in Tehran, which began the hostage crisis. So the combination of America then slapping a ban on imports of Iranian oil, plus the already high price of fuel, created an economic crisis, which was twinned with a political crisis for Carter because Americans endured the humiliation over a year of seeing their people held hostage by this barbarian regime. and so much of that has shaped Donald Trump's thinking. Yes. And there is some irony in has he engineered a crisis which feels not dissimilar to that which took place in 1979.

31:25Camilla: I mean, to be fair to Carter, his entire presidency was plagued with problem after problem. So I was reading over the weekend, it was just eight days between him declaring Pahlavi as he then was in place in Iran, his closest ally, to the beginnings of the revolution taking place where he's then forced into hiding. Then you have bizarre political decision-making by Jimmy Carter, like to give this speech to the American people as the oil price was shooting up, telling Americans, who at that point probably hadn't really even heard of Iran, listen, we can get through this, but can you not get in your cars?

32:01Camilla: Can you please conserve fuel? And if it gets cold, do you know what? We've got to preserve heating, so don't put the radiator on, wear a cardigan instead, which I'm basically signalled the beginning of the end of his kind of self-styled brand of Puritanism which went down really, really badly with the American people. It's just not what the voters want to hear. No, they don't.

32:21Keir Starmer: I think this is the crisis of confidence speech of July 1979. And the thing about that speech is it was initially really popular. The problem was that a few days later, in a display of strength, he sacked his entire cabinet and got them to reapply for their own jobs. And the American people realised he doesn't have a clue what he's doing.

32:39Camilla: He doesn't have a clue. And then, of course, the attempted rescue of the hostages went terribly, terribly badly wrong with a helicopter falling out of the sky and hitting a plane. And it was just a complete and utter unmitigated disaster from start to finish. Look, Trump is certainly not modelling himself on Carter.

32:57Keir Starmer: No, he's not.

32:57Camilla: It would be his replacement Reagan first and foremost, I'm sure. However, we need to get into the basic question of whether Trump is in danger of crashing the world economy because of his action in Iran.

33:10Keir Starmer: So let's talk to an American economist and give us some insight into the effects of this policy. Tyler Goodspeed, thank you for joining us. You are the former economic advisor to Donald Trump and author of Recession, The Real Reasons Economies Shrink and What to Do About It. The first thing I actually want to ask is about your name. With a name like Goodspeed, tell me your ancestors must have landed at Plymouth Rock. Surely they were pilgrim fathers.

33:35Tim: Surprisingly, most of us actually came over to Massachusetts in the 19th century. Oh, right. But some did go back a bit farther, but they were more recent arrivals, but originally Godspeed.

33:46Keir Starmer: Okay. It's a wonderful, evocative name. Do you agree with Donald Trump that the rise, the inevitable rise in energy prices is a small price to pay for this war?

33:57Tim: It depends on the time horizon you're talking about. If we are talking about a matter of weeks, then national security is a very important priority and eliminating the Iran nuclear threat is probably a valid and important goal. If this does stretch out into weeks or months, then this is very fundamentally different from 2022. 2022 was a reconfiguration of global flows of oil and gas. In 2026, we are looking at the disruption to actual barrels equal to about 20 % of global oil and gas supply. That's a big deal if that were to persist.

34:34Keir Starmer: These are barrels which would normally travel through the Strait of Hormuz. At present, who's buying that oil? Who would normally be buying it?

34:43Tim: At present, the vast majority of liquids that flow through the Strait of Hormuz flow east to Asia Pacific, including China. However, it is a global commodity. Therefore, US and Canadian and Mexican barrels that would otherwise flow between each other or to Europe will now be pulled westward to Asia Pacific. And at the end of the day, scarce barrels will be rationed by price.

35:12Camilla: OK, so what's being witnessed right now on the streets of America? here we are leading the website at the moment with a warning from the AA, the Automobile Association, saying conserve fuel, don't use as much in the UK. What's the impact on the ground in the US? Because we've got midterms coming. The US president came in on the promise of bringing down the price of eggs. If the price of fuel goes up, even though he says it's a small price to pay, it's going to be politically very damaging in a country where I think only one in four appear to support this Iranian intervention?

35:46Tim: So when it comes to natural gas, the United States is relatively insulated because even though there will be considerable foreign demand for U.S. natural gas, our ability to export is limited by pipeline capacity and export facilities. However, as I said, oil is one of the most, no pun intended, liquid commodities in the world. And so increased demand for American barrels in the rest of the world will drive up the price for Americans. And oil doesn't just flow through to petrol. It flows through to heavy fuel oil for maritime commerce. It flows through to aviation fuel. It's also oil and gas are used to generate the heat required to produce steel, aluminum, glass, cement.

36:36Tim: Fertilizer is one of the most energy intensive products in the world. And that's not to mention the products into which oil is an input. That's petrochemicals, plastics, medical ointments, aspirin, polyester, carpet. It's basically in everything.

36:54Keir Starmer: Best case scenario, the war ends soon, either because the Iranian regime suddenly turns democratic or Trump just loses patience. Can this all be corrected for then? Or will there be a long tail to this shock?

37:06Tim: It can be mostly corrected. There are two challenges. One is the reversibility gets more costly the longer this goes on because we have shut in of production in Qatar, in Iraq, in other Gulf states. Also, they're going to be queuing costs because you have thousands of tankers that will need to load, unload. There's going to be traffic congestion. So there are going to be reversibility costs the longer this goes on. In addition, a lesson from the 1970s is that major supply disruptions like this that involve actual physical loss of supply typically results in a premium being placed on future barrels because of the risk of supply unavailability.

37:55Camilla: So at the moment, we think that a barrel is around$120. Goldman Sachs is predicting that if this war isn't ended within days and weeks, that price could go up to$150. 120 is the highest since 2022, as you pointed out, Tyler. What's your prediction in terms of just the price of a barrel? Do you agree with Goldman Sachs' analysis there?

38:18Tim: Well, there's also market consensus, which is what the current spot price is. And then you can look at futures, which imply the price declining to$74 a barrel, last I checked, by December. I take that as a point estimate of the market's view of for how long supply will be disrupted. I tend to think that there are more and more probable scenarios in which supply is disrupted harder and for longer. And therefore, I would think that the distribution of possible prices is skewed much more to the upside than to the downside.

38:58Keir Starmer: Correct me if I'm wrong, but I take it your thesis in your book is that recessions tend to be caused by things like disasters and wars. But what can turn them into a long-lasting, really damaging economic phenomenon is government policy. So in the case of energy, how has Britain handled its energy policy in the last few years? And does that leave us particularly exposed to this kind of event?

39:24Tim: So to your first question, yes, the book fundamentally challenges our conventional thinking about recessions. Recessions are not about boom and bust. We think that expansions have some fundamental flaw to which recessions constitute the inevitable and even necessary remedy. But the reality is, to paraphrase former Federal Reserve Chairman Ben Bernanke, economic expansions don't die of infirmity or old age. They're murdered. And they are murdered. And if you look back over the past four centuries, as I put it, energy supply shocks have been serial killers of economic expansions on both sides of the Atlantic.

40:06Tim: And typically, when you have an economic recession, the sharper the contraction, the deeper and faster the contraction, the sharper the rebound. So short, deep recessions are followed by quick recoveries. There have, however, been exceptions to that. And the UK recovery from 2008, 2009 is a salient example of that. That was an historically very, very slow recovery. In fact, you never return to your pre-2008 trend growth.

40:37Keir Starmer: I just want to pick up on that there because I've seen some interesting graphs that you've put out. If you compare America and Britain's response to the credit crunch, as you say, America is growing and then it hits the credit crunch and it contracts, but then it grows again. By contrast, Britain is growing, it hits the credit crunch, and then it just flatlines. Yes. That's our growth story for the last 14 years. We've just not recovered where we were going. We're not back to where we were going.

41:03Camilla: And also the spring statement said last week in the spring statement, the chancellor was trying to celebrate growth. It's been revised down from 1.4 to 1.1 this year. It does go up to 1.5 and 1.6. But any growth rate starting in a one, Tyler, isn't exactly inspiring.

41:18Tim: Not at all. Not at all. And it's very sad because that translates into lower income, lower prosperity for all Brits. And what was very different about 2008-2009 for the United Kingdom is that thereafter, you and we and most of Europe mandated that our economies produce with less of a critical input for which there is really no substitute, namely bank capital. So we mandated that banks substitute lending to the government for lending to the private sector. Now, in the United States, that didn't impact us as much because we have a whole ecosystem of non-bank lenders, private equity, venture capital.

42:04Tim: We also have thousands of regional banks. In the U.K. and most of Europe, you have fewer banks. They're on average bigger, so they were caught up in this new regulatory regime. And you were historically much more reliant on banks for lending to businesses. So small and medium-sized businesses in this country have a very difficult time accessing external finance. Hmm.

42:26Keir Starmer: Exactly. Yeah, this is so important and so misunderstood, because in this country, if we say the bankers, the bonuses, the bankers, you know what I'm talking about. The Harry and Paul sketch is a parody of Question Time, which someone in the audience, and it reminds us of that period where we thought we need to regulate banks. We need to constrain what they can do. But what the effect that actually had was it limited their borrowing to the private sector. And this is when we start to turn around into giving all our money towards the public sector instead. But we mentioned oil to bring us back to energy then.

42:55Keir Starmer: So that's one policy decision we made at the time, regulate our banks. What have we done on energy that leaves us particularly vulnerable now?

43:03Tim: So the United Kingdom has the highest industrial electricity prices just about anywhere in the world. Mad. That is a choice. That is a choice. The easiest place to find oil and gas is where you know it already exists.

43:20Donald Trump: Yes.

43:20Tim: Now, the North Sea is a mature field. It is costly and risky to extract. But successive government policies have rendered the North Sea extraction even less economical. And it's a lot cheaper to source your marginal gas from an offshore pipeline, just offshore, than to import liquefied natural gas because liquefied natural gas is a lot more expensive. You need to transport it to a U.S. liquefaction facility where you cool it, then you ship it across the Atlantic, and then you let it turn back into a gas. That's expensive. And on top of that, the U.K. unilaterally after 2008 chose to implement carbon budgets.

44:10Tim: The European Union did not do that. Your utility bills include legacy subsidies, including the grid operator sometimes paying variable renewable energy, particularly wind, not to produce when there's too much wind generating too much electricity. So these are policy choices.

44:29Camilla: Break it down, Tyler. Do you think it's bonkers? I do not think it is hitting the right tradeoff of competing priorities. Because Donald Trump, of course, has been very critical of the way that we manage our energy here and has pointed out that, you know, you do have the North Sea. For goodness sake, just drill, drill, baby drill. I'm interested to learn you were economic advisor. You were chair of his advisory board back in Trump 1.0. You fell out with him over January the 6th. Is that right, Tyler?

45:02Tim: I did not fall out with him over January 6th, but I did resign because of January 6th.

45:08Camilla: Fair enough. What's your analysis of Trump 2.0? Because obviously he wins that election in 2024 on the back of promising to make Americans richer. And this action in Iran may squander that opportunity. What are your thoughts about where this is headed for Americans?

45:26Tim: One of the underappreciated strengths of the first Trump administration was that it was a team of rivals. And had it been a Democratic administration, it would have been described as such. So particularly in the economic realm, we had an evenly divided team of free traders and trade hawks. And the debates that we would have would be quite heated at times. And the president loved that and appreciated that and would pay close attention to the arguments presented in the debates. I do worry that in Trump, too, to correct for some errors in Trump, one, in terms of never Trumpers being in position in important positions, there has been excess error correction towards selection on so-called loyalty purity.

46:22Tim: and he doesn't have the same diversity of views that he had in term one. And the irony is that's not POTUS's preference. That is not POTUS's preference.

46:33Keir Starmer: He prefers to have people arguing and then to make a decision about which person he agrees with.

46:39Camilla: Correct. And what's the economic consequence of that for the second presidency? I mean, where do you think this is headed?

46:44Tim: I think the economic consequence is that when you don't have balanced views, when you don't have the kind of vigorous debate that we had in term one, then you can end up with suboptimal policy.

46:56Keir Starmer: But the choice has not perhaps gone the way that I might have expected. So surrounded by a chorus of approval, he has done things we'd expect, like policing the border, like tariffs. But he's also done a complete about turn in foreign policy that lots of people like me from a sort of Ron Paul, anti-interventionist position find very surprising and disappointing. How did the neocons win that debate within the administration?

47:21Tim: So foreign policy is going to be outside my expertise. Fair enough. I can say that in my experience in government, a lot of policymakers and politicians, their views are formed in their 30s. And if you think about the geopolitical context of the 1970s, then one can begin to understand why this is a major priority for the president because he lived through the shocks of the 1970s and the toppling of the Shah. And I think that experience is very much on his mind.

47:58Keir Starmer: That's so interesting. So if you came of age in the 1970s, the two things you really want are energy independence, because you don't want to be dependent upon Iranian oil anymore. And you want to topple the Ayatollahs because they're the people who humiliated America through the Iranian hostage crisis.

48:13Tim: Correct. And he does view 1979, 1980 as a humiliation. Yes.

48:17Camilla: But at the same time, we discussed this a little earlier. Some of his rhetoric in recent hours has been slightly Carter-esque, only in the sense of, you know, you're going to have to wear a bit of a hair shirt on this. I mean, obviously not going as far as literally telling people to wear cardigans and travel by bus. But this whole idea, small price to pay, has got to be a bit careful here, because I'm not imagining that the American people, not least, as I said earlier, three quarters of them are against this intervention. You know, if the economic shock continues to play out, then they're going to be even less supportive.

48:54Camilla: So this whole argument, well, I'm doing this for a higher purpose. Americans have witnessed this before. It didn't end well for Carter.

49:01Tim: And this is a fascinating nuance because markets are expecting that the president will de-escalate and recalibrate precisely because of what you just highlighted, that it's unpopular, that it's hitting pocketbooks. and therefore markets last week and to a certain extent maybe even this week are not fully pricing in the repercussions of a persistent supply disruption. But the president actually relies on signals from the market so that he can calibrate his approach. And so that is what something that had me concerned last week is that the president wasn't getting the signals from the markets that actually if this does drag on that it would be a major economic disruption.

49:47Keir Starmer: OK, so one thing Trump takes very seriously is how the stock market is performing.

49:51Camilla: Final question, though. When it comes to the midterms, what are your predictions? Is this going to come back to bite him? I mean, I appreciate we don't know where this is going. We don't know where it's heading. We don't know if it's ending or when it's ending. But I mean, I thought before all this, the midterms were looking a little dicey.

50:07Tim: The weight of history is upon the Republican Party in 2026. If you look back over the past century, there have been very few exceptions to the rule that the incumbent party who holds the White House, there have been very few exceptions patterned that they lose the House at the midterms.

50:28Camilla: Tyler Goodspeed, thank you very much indeed for joining us on The Daily Tea. Your book, Recession, is out on Thursday, I believe.

50:35Tim: It is. Great to be with you.

50:37Camilla: We'll be back tomorrow, 5pm.

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