Part 1: Conversation With David Petraeus | Part 2: Conversation With Steven Mnuchin

Tony Blair: Globalization, Governance, and Systemic Rivalries

• The Tony Blair Institute for Global Change operates with four primary objectives: improving governance, fostering coexistence, countering isolationism, and preparing for technological disruption.
• Blair identifies the quality of governance, rather than aid, as the primary obstacle for poor countries, citing the need for effective and honest implementation of state functions.
• The Institute is currently active in approximately 14 countries in Africa and 30 countries globally, focusing on programs to cultivate open-mindedness and counter extremism among youth.
• Blair views the potential for an alliance between Israel and Arab states as the "key to solving the Palestinian question" and achieving regional stability in the Middle East.
• He attributes current populism to pessimism about the future and argues that reigniting optimism requires a "generational promise" that the next generation will economically surpass the current one.
• The Institute focuses on the economic and cultural impacts of rapid technological change in life sciences, energy, and IT, specifically addressing the risks of displacement.
• Blair asserts that the European Union will persist as a geopolitical necessity to exercise collective power against the "three giants" of the US, India, and China.
• While personally opposing Brexit, Blair predicts it will likely occur but argues the UK will remain a creative nation if it forges a new future outside the EU.
• He states that the "worst day of the 20th century" for Vladimir Putin was the dissolution of the Soviet Union and that Putin aims to reassemble as much of that territory as possible.
• Blair notes that Russia's economy is now comparable in size to a few small US states (Georgia, New Jersey, Massachusetts) and that Putin's actions serve as a catalyst for NATO's renewed relevance.
• He advocates for a strategy of being "firm but not provocative" toward Russia, Iran, and North Korea, while accommodating China's legitimate aspirations but pushing back on illegitimate ones.
• Regarding the Middle East, Blair identifies the abuse of religion and the politicization of Islam into a totalitarian ideology as the region's primary challenge.
• He explicitly supports the reform efforts of Saudi Crown Prince Mohammed bin Salman (MBS), citing the link between necessary social/economic reforms (such as women's rights) and economic diversification.
• Blair highlights the potential for an Israel-Arab alliance as a fundamental security interest for the West, particularly for European nations.
• He warns that sub-Saharan Africa faces a crisis of "exploding populations, poor governance, and high radicalization," necessitating immediate investment to prevent future extremism and migration waves.
• The dialogue suggests a "new dialectic" or "return of history" is occurring, characterized by a competition between authoritarian models (China, Russia) and the liberal democratic model (US/West).

General David Petraeus: Geopolitics, The US Role, and Economic Shifts

• The post-WWII rules-based international order is currently under more stress and strain than at any time since the end of the Cold War.
• Petraeus identifies the rise of China as the most significant geopolitical change of the 21st century, creating a scenario of "great power rivalry" where the two nations are also top trading partners.
• He references Graham Allison's "Thucydides Trap," noting that in 12 out of 16 historical cases of a rising power challenging an established power, war resulted.
• Petraeus observes a resurgence of Russia under Putin and the potential for a rise in India, though he questions if India can replicate China's two decades of double-digit GDP growth.
• He notes that China's growth has slowed from double digits to slightly under 7% annually, which remains extraordinary for the world's second-largest economy.
• Petraeus argues that the 21st century is defined not just by great power rivalry but by a "rivalry of systems" between authoritarian capitalism and Western liberal democracy.
• He cites the Munich Security Conference to highlight that four of NATO's five largest powers (UK, Germany, Italy, US) faced domestic political challenges, while France under President Macron stood out as a stable leader.
• Regarding the North Korea situation, Petraeus states that while previous administrations negotiated based on similar agreements, the current US administration insists on "complete, irreversible, and verifiable denuclearization" as the only acceptable outcome.
• He characterizes the US-South Korea leadership dynamic as potentially unpredictable, suggesting unpredictability can sometimes serve as a strategic advantage.
• Petraeus compares the economic size of Russia to California, noting Russia's economy is roughly the size of Georgia, New Jersey, and Massachusetts combined.
• He emphasizes the role of the stock market and risk-sharing mechanisms in the shift of power from Southern Europe to Northern Europe, a dynamic that has not reversed.
• He states that private equity firms in the US employ seven of the ten largest employers and control over 8,000 firms, carrying enormous responsibility for global employment.
• Petraeus confirms that Saudi Arabia is undergoing "four revolutions": in governance, economy, society, and foreign policy, moving away from reliance on US protection.
• He suggests that the US and allies should encourage China to evolve toward partnership rather than confrontation by presenting a strong, values-based West.
• Petraeus argues that the "End of History" narrative is false; history has returned, and the competition of ideas between systems is the central political question of the era.
• He predicts that the US must maintain its leadership role in the rules-based order, even while managing the strategic rivalry with China.
• He notes that the Soviet Union's economy collapsed because it could not compete with the West in an arms race that required superior economic output.

Secretary Steve Mnuchin: Economic Policy, Trade, and Fiscal Strategy

• Secretary Mnuchin asserts that the economic impact of the tax cuts (reducing the corporate rate from 35% to 21%) has led to increased business spending and investment in R&D.
• He projects sustained GDP growth of 3% or higher, rejecting recession forecasts for 2020 and arguing that economic growth will allow the tax plan to "pay for itself."
• Mnuchin defends stock buybacks as a legitimate mechanism for returning capital to shareholders and recycling capital through the economy.
• He notes that while the unemployment rate is at historic lows, the administration is focused on increasing the labor participation rate through job training programs.
• Regarding the Federal Reserve, Mnuchin expresses confidence in Chair Powell and argues that rising interest rates are a positive sign of a strengthening economy rather than a risk of inflation.
• He outlines plans for a "Phase II" tax bill to make middle-income tax cuts permanent and address technical drafting errors in the 2017 tax reform.
• Mnuchin confirms his intention to travel to China to address trade imbalances, specifically the $500 billion vs. $135 billion trade gap, and issues regarding forced technology transfer.
• He states that US sanctions on North Korea and Iran were the primary drivers forcing these nations to the negotiating table.
• Mnuchin indicates that the administration is considering withdrawing from the Iran Nuclear Deal (JCPOA) if the waiver is not signed by the deadline, citing flaws regarding ballistic missiles and terrorist activities.
• He reveals that the administration is considering secondary sanctions on Iran, which would prevent European banks from transacting in dollars with designated Iranian entities.
• Mnuchin states that the Trump administration is actively negotiating a new NAFTA deal with Canada and Mexico, aiming to complete it before Mexican elections.
• He distinguishes between tariffs on steel/aluminum (a national security measure to protect domestic industry) and trade negotiations with China/Europe (focused on fair and balanced trade).
• He confirms that CFIUS blocked the Qualcomm-Broadcom acquisition for national security reasons but declined to disclose specific details of the assessment.
• Mnuchin expects the administration to push for a balanced budget and increased military spending, with President Trump willing to consider a government shutdown if border security funding for the wall is not included.
• He supports bipartisan legislation to reform the Dodd-Frank Act, particularly to benefit small and community banks, expecting it to pass within 30 to 60 days.
• Mnuchin highlights the establishment of a new Terrorist Financing Center in Saudi Arabia as a key achievement in combating global terror funding.
• He validates the structural reforms in Saudi Arabia under MBS, noting the shift toward a diversified economy and a more active foreign policy independent of US protection.
• He asserts that the US is the most open market globally, with CFIUS intervening only on national security grounds to protect US technology and companies.
• Mnuchin believes that the uncertainty in trade markets can be resolved through tough negotiations, citing the North Korea deal as an example of how pressure leads to progress.