Life Inside Iran, Trump and Cuba, Fed Interest Rates

0:02Iran lashed out after the killing of his security chief. Drones and missiles flashed across the region and over the head of our correspondent in Iraq. Iranians crossing the border out of their country say life is unbearable. I'm Michelle Martin, that's Steve Inskeep, and this is Up First from NPR News. U.S. Secretary of State Marco Rubio talks of forcing a change in the leadership of Cuba. They're in a lot of trouble. And the people in charge are in, they don't know how to fix it. So they have to get new people in charge. President Trump cut off oil to Cuba and now contends he can do whatever he wants.

0:35What is the Trump administration planning? Also, the Federal Reserve meets today to set interest rates. The war in Iran has sent energy prices soaring, and the job market has been weakening. How does that affect their calculation? Stay with us. We've got the news you need to start your day.

0:55Support for NPR and the following message come from HomeServe. Owning a home is full of surprises. And when something breaks, it can feel like the whole day unravels. HomeServe is ready to help, bringing peace of mind to 4.5 million homeowners nationwide. Plans start at just$4.99 a month. Sign up today at homeserve.com. Not available everywhere. Most plans range between$4.99 to$11.99 a month your first year. Terms apply on covered repairs. Several countries across the Middle East have been shooting down Iranian missiles and drones. The barrage is seen as Iran's response to the killing of Iran's security chief and the head of its paramilitary force.

1:38Iran said it fired multiple warhead missiles at Tel Aviv. This morning we have a glimpse of life inside Iran. It comes from people who left their country crossing the border into neighboring Iraq. And Pierre's Arzu Rezvani met them at a border crossing. Arzu, welcome.

1:53NPR News Team:Good to be with you, Steve. What did you see? So I spent a few hours at the Haji Amran border crossing. It's tucked in the mountains, which at this time of year are covered with snow. And as I was interviewing people, we spotted a couple of Iranian drones flying overhead into Iraq. Those are the cheap, noisy drones Iran's been launching at U.S. targets all over Iraq and the region. But beyond that, one of the most striking things I observed from my border visit was just how terrified people were to speak. I mean, you could see it in their eyes and you could hear it in what they chose not to say.

2:33NPR News Team:I spoke with one woman in her 60s coming from a border city in Iran. She asked not to be named for fear of government reprisal, even though she was no longer in Iran. And when I asked her about the war, she was really, really vague. She spoke only about the poor economy and avoided any talk about the war or the government. And then she asked me to turn off my mic.

3:01NPR News Team:She burst into tears and told me that she wished the airstrikes on her city had killed her. That, between the war and the security crackdown, life had just really become unbearable. You mentioned a security crackdown. What do you hear about that? So there's been an intense internet blackout in Iran these last couple of weeks. It's been very hard to reach people inside the country. But those who do manage to get online, go through Starlink, for example, describe seeing many more checkpoints in their cities and towns. They say security forces are checking phones. They look for apps that help bypass the internet blackout.

3:41NPR News Team:They look through videos and text messages. People say they've been getting text messages, presumably from the government, warning them not to join crowds that might turn into protests. There was one 40-year-old man who lives in a city in eastern Iran. He asked me not to identify him for fear of government reprisal. And he said in a voice memo that he has seen security forces abandon their stations and move into a mosque and a sports stadium, which is not a common practice. Those stations have been targets. So it's really difficult to verify these accounts, I should note, but numerous people I've spoken with in recent days have shared similar details from this crackdown.

4:24NPR News Team:And these are also accounts that match testimonies that many human rights groups are also compiling. So a lot of suffering inside Iran. And how is Iran trying to push that suffering out into its neighbors? They have ramped up attacks in the last several hours. Saudi Arabia, Kuwait, Qatar have intercepted Iranian missiles and drones in recent hours. There were strikes in Israel overnight, including in Tel Aviv. There are deaths reported there. The Iran-backed group Hezbollah in Lebanon launched rockets into Israel in the early morning, and Israel has been hitting central Beirut. I'm talking to you right now from Erbil in the Kurdistan region of Iraq.

5:06NPR News Team:Shortly before we started our conversation, there were sounds of large explosions in the distance. There is a large consulate here that's been targeted, but it's really Iraq's capital city, Baghdad, that's been getting hit hard from Iran-backed militias. So the U.S. embassy there is under constant attack, and it just doesn't seem like this war is slowing down. If anything, it feels like it's intensifying. And Perzhar Azur Razvani is in Erbil in the Kurdistan region of Iraq. Azur, thanks so much. You're welcome.

5:46President Trump apparently is in an expansive mood. In other words, he's talking again about expanding the United States. Venezuela's team won a world baseball tournament last night, defeating Team USA. And the president responded on social media by promoting the South American nation as the 51st state. If you can't beat them, join them or make them join you. The U.S. recently deposed Venezuela's leader and appears to be dictating terms to the new one. Trump has also been talking about taking over Cuba. And there's a connection. Cuba depended on Venezuelan oil that the United States has stopped.

6:22Cuba right now is in very bad shape. They're talking to Marco, and we'll be doing something with Cuba very soon. Marco is Secretary of State Marco Rubio. So what is the something Trump wants to do? NPR White House correspondent Franco Ordonez has been trying to read the clues. Franco, good morning. Good morning, Steve. What's the president been saying, first of all? Yeah, I mean, earlier this month, Trump raised the idea of a friendly takeover of Cuba, you know, signaling some kind of regime change. The Secretary of State Marco Rubio has also been in talks with leaders in Havana about opening up the government.

6:57And actually, Rubio yesterday at the White House spoke of both economic changes, but also the need for shakeup of Cuban leadership. The bottom line is their economy doesn't work. It's a non-functional economy. It's an economy that has survived. It's the 40, that revolution, it's not even a revolution, that thing they have has survived on subsidies from the Soviet Union and now from Venezuela. They don't get subsidies anymore. So they're in a lot of trouble. And the people in charge are in, they don't know how to fix it. And so they have to get new people in charge. Now, Rubio does say, however, that it is important to be realistic and that Cuba doesn't need to change all at once.

7:31Ah, interesting. So what are some possible scenarios here? Well, this week, actually, Steve, is the 10-year anniversary of when former President Barack Obama visited Cuba to celebrate his deal with Havana that opened up relations between the two nations. I called Mark Fierstein, who was at the Obama White House, and he told me he sees what's shaping up as some kind of Obama 2.0 deal. And the difference, of course, is that Cuba is much more vulnerable now. The United States has a lot more leverage. But the contours of an agreement, I think, look a lot like what Obama and the Cubans agreed to 10 years ago, which was basically the Cubans opening up the economy, releasing political prisoners, pledging to ease oppression, and in turn, the United States lifting sanctions.

8:17Yeah, at the time, Firestein says the Cubans didn't go far enough. And that has basically led them to this point today where they are very much more vulnerable. So you can look back to that example, Franco, but Obama's agenda seemed to have to do with democracy, human rights, which are not things that President Trump has emphasized. Yeah, I mean, that's definitely right. But Rubio has cared about these issues a lot when it comes to Cuba. He is the son of Cuban immigrants, and he has long called for changes in regime in Cuba. Which, of course, is true of a lot of people in South Florida, where it happens that the president lives.

8:53Yeah, it is. And Trump has talked very nostalgically about Cuba recently. This is a big deal in South Florida. And Trump also has friends and advisors who care about Cuba. He's complemented the real estate. You know, he's talked, you know, favorably about the political benefits he has from the community. And at an event earlier this month celebrating the Major League Soccer Champions Inter Miami, Trump actually turned to the co-owner of the team, Jorge Mas, whose family's from Cuba. And Trump said Moss will soon be able to go back to Cuba and that they would celebrate soon. And he also said that would be a great day.

9:29NPR White House correspondent Franco Ordonez. Franco, thank you so much. Thank you, Steve.

9:41Policymakers from the Federal Reserve are meeting in Washington today amid darkening economic clouds. The U.S. and Israeli war with Iran has triggered a spike in energy prices, and the U.S. job market is showing more signs of weakness. NPR Chief Economics Correspondent Scott Horsley joins us now. Good morning, Chief. Good morning, Steve. What makes this a challenging moment? We talk all the time about the two jobs the Federal Reserve has to support the job market and to keep inflation in check. And right now, both those jobs are looking really difficult. You know, for a moment, it looked as if the labor market was starting to stabilize.

10:16But a week and a half ago, those hopes were kind of dashed when we got that February jobs report, which showed employers cut 92 ,000 jobs last month. They've actually now cut jobs in three of the last six months. Ordinarily, that would be a sign the Fed might want to consider lowering interest rates to goose the economy. But it's really hard to do that when you've also got inflation that is stubbornly high. And now on top of that, you've got this energy shock triggered by the war with Iran. I wonder, given that they try to look at longer-term trends and longer-term data, how does a sudden spike in energy prices the last few days affect the Fed's calculation?

10:49Well, you're right. They generally don't give too much weight to a temporary move in gas prices because, of course, gas prices go up and down a lot. Right now, though, they're up a whole lot. Diesel prices are up above$5 a gallon. And Michael Pierce of the forecasting firm Oxford Economics says those high fuel prices could start to spill over into the price of lots of other goods. It's going to put big upward pressure on inflation in the near term. At the same time, it's going to affect the real economy. That rise in prices is going to restrain the pace of consumer spending. The policy outlook this year, I think, has been completely scrambled by this new shock.

11:23We've also seen a spike in the cost of fertilizer and jet fuel. And nobody knows how long the war is going to last or when we might see a resumption of normal oil tanker traffic through the trade of Hormuz. Given all those unknowns, what do you think about interest rates? Today, at least, the Fed is widely expected to stand pat and hold its benchmark interest rate steady, as it did back in January. But it might not be unanimous. At the last meeting, two of the 12 policymakers voted to lower rates by a quarter point because they were more concerned with the weakening job market than they were about rising prices.

11:56We'll see how that risk assessment may have shifted now, if at all, since we've had that disappointing February jobs report and two plus weeks of soaring prices at the gas pump. How much longer is Jerome Powell going to be in this job? To be determined. Powell's term as Fed chairman was supposed to expire in May, so he would have just one more meeting to oversee after this one. But it's possible he's going to wind up serving a little bit longer. That's because a key Republican senator, Tom Tillis of North Carolina, says he will block a vote on Trump's nominee to replace Powell, Kevin Warsh, until the Justice Department drops its criminal investigation of the Fed.

12:34Now, last week, a federal judge put the brakes on that probe, saying it was part of an improper harassment campaign to get the Fed to lower interest rates. But the DOJ is not backing down, and Pierce says that means Powell might get to stick around for a while. That would be highly unusual, but then what's also unusual is an ongoing criminal probe into the sitting Federal Reserve chair, and I think he sees it as part of his mission and part of his legacy in defending the independence of the Federal Reserve from this political influence. So far, Powell's kept his own plans to himself, but I'm sure he'll be asked about his timeline once again this afternoon.

13:05NPR's Scott Horsley, thanks so much. You're welcome. Before you go, we have a suggestion. Actually, a request. Please rate and review Up First on Spotify or Apple Podcasts. One listener recently told us that Three Stories is just right. It provides just enough of a summary to decide what to research further. Only takes a minute to review this podcast and it helps us keep this essential service going for everyone. Also, we love reading your feedback. Thanks.

13:36And that's Up First for this Wednesday, March 18th. I'm Steve Inskeep. And I'm Michelle Martin. Today's episode of Up First was edited by Hannah Block, Rebecca Metzler, Raphael Nam, Mohamed Elbardisi, and Alice Wolfley. It was produced by Zia Batch and Nia Dumas. Our director is Christopher Thomas. We get engineering support from Nisha Hainas, and our technical director is Carly Strange. Our supervising producer is Michael Lipkin, and we hope you'll join us again tomorrow.

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