Former US Defense Secretary Lloyd Austin Talks Middle East Conflict

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Ruth David** (0:07)
Welcome to Lloyd J. Austin, former US. Defense Secretary and co-founder and CEO of Clarion Strategies. Secretary Austin, thank you for speaking with us.
Just this morning, President Trump called for Israel and Iran to cease their fighting. What does a continuing war in the Middle East mean for US defense capabilities?

**Lloyd Austin** (0:30)
Well, certainly, we would like to see this cease for a hold so that we can get negotiations completed and then we can get the strait open again. I mean, it's important to you, not only to the United States, but the entire global economy.
And so the sooner we can do that, the better. And we can't get there until we stop fighting. So as you know, Lebanon or Israel has been attacking Hezbollah in Lebanon. And yesterday, Iran voiced its concern by launching an unprecedented attack on Israel as a part of this, and Israel has responded. So, but we'd like to see that tamp down so that we can get on with the business of negotiating the agreement.

**Ruth David** (1:29)
What are the military options to reopening the Strait of Hormuz?

**Lloyd Austin** (1:34)
Well, certainly the United States Navy could open the Strait of Hormuz, and holding it open for a long period of time would be pretty costly.
And so we'd like to see an international effort if that's the case, if we get it open, we want to get allies and partners involved in that, because freedom of navigation is not just important to the United States of America, it's important to the entire globe. Every country on this planet has an interest in making sure that they can sail the seas and fly the international skies as they should be able to in accordance with international law.

**Ruth David** (2:17)
You spoke of an international effort. Europe is in the middle of the two wars waging right now in the Middle East, as well as in Russia and Ukraine. Are European nations doing enough and fast enough to increase their defense capabilities?

**Lloyd Austin** (2:32)
What we're seeing in Europe right now is a significant investment in their own defense capabilities. There are a number of countries that have increased their spending. We see countries far exceeding in some cases the expected 2% of GDP investment. And so I'm pretty optimistic about the direction of travel here.
It'll be important that Europe continue to work together, the countries work together in Europe to create a capability that allows them to operate on an interactive basis going forward. So again, the investment is exciting.
It'll take the industrial base some time to be able to ramp up to create the kind of capability that Europe believes it needs. So we're looking forward to that.

**Ruth David** (3:25)
And how important is NATO for America? And what's America's involvement in it going to look like, you think, going forward?

**Lloyd Austin** (3:36)
As you know, NATO is the most successful defensive alliance in the history of the world. And, you know, we have an interest in a transatlantic cooperation. Europe has an interest in transatlantic cooperation, so it's important to both of us.
I am hopeful and somewhat confident that NATO will not only sustain itself, but continue to grow, so.

**Ruth David** (4:04)
And do you think America needs to rethink its strategy of having troops on the ground in allied countries, given there is an increasing America First policy and the conflicts are so global right now?

**Lloyd Austin** (4:18)
Well, each administration will assess its force posture and continue to make adjustments as it sees fit.
And there are opportunity costs, you know, in whatever you do. And so it's always kind of balancing the scales there to make sure that you have the right capabilities and the right places. And again, I won't speak for the administration. That's something that they'll do on a day-to-day basis.

**Ruth David** (4:47)
Are you worried that there's an increased chance of China invading Taiwan because of US vulnerabilities as it fights the war in the Middle East?

**Lloyd Austin** (4:57)
I think, you know, what we've seen as a result of the summit that was conducted in May, I think, you know, there's probably less risk of escalation going forward here in the near term.
Having said that, there are a number of things that we're going to have to continue to work on with respect to our relationship with China. I don't think that President Xi wants to take Taiwan by force. That's my belief. I believe that if he could do it through coercion and demonstration of military capability, that then he would do it that way. If there's a fight in the Taiwan Strait or in the vicinity of the Taiwan Strait, it will have a much greater impact on the global economy than what we've seen with the in the Strait of Hormuz.