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Ambassador John Bolton On The Looming Naval Confrontation With Iran, And Re-Authorizing The Export-Impact Bank

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Former U.N. Ambassador John Bolton joined me on today’s program to discuss the looming confrontation with Iran in the Straits of Hormuz and the debate over the reauthorization of the Export Import Bank, which is very much one tool in America’s tool box of international influence.

Audio:

04-28hhs-bolton

Transcript:

HH: I’m pleased to welcome back now former Ambassador to the United Nations, John Bolton. Mr. Ambassador, always a pleasure, thank you for joining me tonight.

JB: No, thanks for having me, glad to do it.

HH: Two big issues, and I’ll come to the one about our looming confrontation with Iran in the Straits of Hormuz, but I’ve been talking yesterday and today about the reauthorization and reform of the Export-Import Bank. And I was reading up on the Chinese Export-Import Bank, and their China Development Bank, which together made loans of $110 billion dollars over the last, in ’09 and ’10, and who knows how much in the last few years. Are we crazy to be disarming in soft power areas like the Export-Import Bank by letting it die, Mr. Ambassador?

JB: Well, I wouldn’t do it unilaterally, and I’d have to say my experience with export credits like this, which is what the guarantees and loans and so on amount to goes back to my days in the Reagan administration at the Agency for International Development, where the policy of the Reagan administration was that we’d be prepared to eliminate all these export credits if everybody else did, too. In other words, that everybody would give up this, basically this subsidy for their domestic industries. And I still think that’s the right thing to do. A subsidy for exports is kind of the reverse of a tariff. And the way you eliminate tariffs, not because it’s the most sensible economic thing to do, but because politically, internationally, it’s the only way to get it done, is if everybody lays down their weapons at the same time, their economic weapons. And we’ve got a mechanism to do that. That’s what I would do. But I would not eliminate the Export-Import Bank until everybody, the Europeans is where we were concerned back then. But now the Chinese, same thing, and I’d go a step further. I think it’s time to privatize the multilateral development banks – the World Bank, the Asia Development Bank and so on, with the possible exception of the African Development Bank, where I think it may still serve a useful function. But I’d eliminate, I wouldn’t eliminate them, I’d privatize all the regional development banks and the World Bank, too.

HH: Yeah, and I’m open to any of these things and all of the reforms, but I am not open to saying to China’s Ex-Im Bank, their new Asian Infrastructure Bank and all these other things that they’re doing, hey, the field’s yours, go ahead, because we’ve got some conservatives who don’t believe that Solyndra was a good idea, which I agree with. But this isn’t Solyndra. This is just trying to keep the playing field level.

JB: Yeah, well, what they’ve done is outflank the Obama administration, which likes all of this idea of more government, the government lending, more projects like that that allow the development banks and their economic planners to get into the nitty gritty of national economic planning. And it’s, you know, if you’re in favor of strengthening government, then that’s the way to go. But since the administration, our administration agrees with that, they’re not going to stand in the way of it. I really think we need to go back and do what Reagan tried to do – look at all of this over again. But in the meantime, to the extent that China is using subsidized export credits or this new multilateral bank they want to create to advance Chinese industry, to advance Chinese economic goals, and let’s be real, ultimately to advance Chinese political goals, we absolutely should not leave the field free to them.

HH: That’s what I believe as well. Now let’s turn to the pressing issue. 25 minutes ago, the New York Times wrote this. The United States Navy sent a destroyer towards the Persian Gulf today after Iran took control of a Marshall Islands flagged cargo ship it accused of trespassing in territorial waters. The IRG, the Iranian Revolutionary Guard, seized this Maersk Tigris with 24 crew members. What do you interpret this as, Mr. Ambassador? What should we do?

JB: It is a direct slap at the United States. It’s a demonstration by the Revolutionary Guard that they can work their will in the Strait of Hormuz, a critical chokepoint for international oil shipments by sea. And there’s effectively no American response. I mean, God love destroyers and their crews, but they’re not called tin cans for nothing. They are a small, critical, but small element of our naval power. And if that’s the maximum that the administration’s going to do, we’re in trouble. Why do I say it’s a direct slap at us? The Marshall Islands, and I won’t go through all the history, but were a trust territory of the United States. When they came to be independent through referendum, they entered into a compact of free association with the United States. We are basically sovereign on their territory, even though they’re independent sovereign when it comes to our defense matters. And we are in charge of their foreign and defense policies. It is as close as you can get to seizing an American-flagged vessel. And let’s not forget when it was critical to avoid Iranian interference in freedom of navigation in the Persian Gulf back in 1987-1988, the United States reflagged Kuwaiti tankers, taking the Kuwaiti flag off and putting an American flag on to say to the Iranians don’t even think about it. Well, what they’ve done by taking the ship flagged with the Marshall Islands flag is essentially put their thumb right in our eye on the very day in New York when Secretary of State John Kerry and Iranian foreign minister Javid Zarif are, guess what, negotiating the nuclear weapons deal.

HH: When we come back from break, Mr. Ambassador, I want to pick up on this, because it’s so vital that people understand exactly what’s happened.

— – — –

HH: How ought we to respond? We do have carriers in the area, don’t we, Mr. Ambassador?

JB: Yeah, I think that let’s start at the diplomatic side. The, Secretary Kerry should suspend all nuclear negotiations with Iran until that ship and its crew are released, there is a formal apology from the government of Iran, and if any damage or harm has been caused to the ship or the crew, that there should be compensation in an appropriate amount. And then I think there ought to be a cooling off period of the negotiations while the Iranians learn the lesson. And I think bringing the carrier that we sent to Yemen back to the Persian Gulf and other activities would be warranted. You know, how are we supposed to convince the Arab states of that region that we will protect them against Iran when we can’t even protect innocent merchant vessels engaged purely in commerce? This is, as I said before, a demonstration that Iran’s navy can essentially stop commercial traffic in the Gulf and through the Strait of Hormuz, and that is the signal, really, of I think a potentially significant escalation. Certainly, it’s a political escalation of a potential problem we’ve all seen for a long time.

HH: Now the ship departed Saudi Arabia headed for the United Arab Emirates. It’s harder to pick a more symbolic ship than this one given that it’s flagged by the Marshall Islands other than an American flag. Do you sense the Iranian Revolutionary Guard are trying to sink the deal? Could they possibly be harder-lined than Khamenei?

JB: Well, you know, the Revolutionary Guard are not part of the defense ministry of Iran. They have since the 1979 Revolution taken their orders directly from the Supreme Leader. So there are only two possibilities here. The Supreme Leader ordered this, or you’ve got a rogue element in the Revolutionary Guard, which would be unheard of. I think it underlines where the real power is. You know, here’s news for the Obama White House. The Iranian foreign ministry does not run the government. Indeed, President Rouhani does not run the government. The Supreme Leader, the Ayatollah Khamenei, and the men with guns run the Iranian government, and that’s what we’ve seen today.

HH: Mr. Ambassador, how serious an incident is this, because it’s not being picked up very much? It’s breaking news, the New York Times finally got around to it. It happened eight hours ago, but they just published their first story 25 minutes ago. I don’t think people get how important this is.

JB: Apparently not, and it would certainly be another inconvenient reality for the administration to see that this is an insult. This is calculated to show to America’s friends in the region that we can be pushed around and not respond. Maybe it’s in part an answer to the fact that that Iranian flotilla was not able to offload supplies to the Houthis in Yemen. But I think it’s more serious than that. I don’t, as we used to say in the Cold War, that’s no coincidence, comrade, to have Javad Zarif negotiating with Kerry on the very day that this takes place.

HH: Last question, Mr. Ambassador, last week the Washington Post ran a so-called fact check on Republican candidates arguing that the naval strength of the United States has declined precipitously, who cite Reagan’s 600 ship figure. They say that’s apples to oranges, our sea power is much stronger, and I went round and round with a Washington Post reporter who is a fine professional. But she gave three Pinocchios to Republican candidates who even bring up Reagan’s 600 ship Navy as at all relevant today. What do you say to that fact-checker and to people who want to silence the discussion about the decline in American naval strength?

JB: Well, the argument that that fact-checker used with you is the Obama argument, that our ships today are more capable and more sophisticated than the ships of 1980, or the ships of 1916, which is the level we’re at now. That’s true. And you know, if we were fighting ships from 1916, I’d be very happy about that. But guess what? Just as we build more capable ships, so do your adversaries so that numbers and size and mass all matter, and we are way behind where we ought to be. We are a global power. We don’t have to worry about confronting the Chinese Navy in the Mediterranean. But we certainly have to worry about seeing them in East Asia. We have to see the Russians in the North Atlantic and the Mediterranean. We are committed worldwide for our own safety’s sake, and our number is, it’s a very real concern.

HH: Mr. Ambassador, always a pleasure, thanks for joining me, John Bolton, I look forward to talking to you again soon.

JB: Anytime. Thank you very much.

End of interview.

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