The Abraham Discords, Bloody Vicious Rocket, The Grand Old Duke Of Tariffs
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Coming up this week, more ordnance in the Middle East, rumors are that Trump is agreeing a two-state solution, Israel is out in the cold, Netanyahu not having his calls returned, and a trillion-dollar deal is incoming with the Saudis. We've had shuttle diplomacy, but is this Challenger space shuttle diplomacy? Meanwhile, Pakistan has apparently shot down as many as three Indian Rafales fighter jets in recent clashes over Kashmir.

The culprit? A Chinese-made BVR system. To some, this unexpected win apparently means that in the future, BVR-equipped jets will shoot each other down from tens or even hundreds of miles away. But past a certain point, why do we even need jets?

Finally, the eye-watering 100% tariffs on China are about to be peeled back down to a manageable 30%. A victory for someone. But in the longer term, isn't this Liberation Day turning into de-dollarization? Yeah. But first, the Abraham discords. Well, this week there were some rumors bouncing around Twitter, not just kind of random accounts.

mouthing off, there's plenty of that all the time. But the Jerusalem Post, which is a pretty credible Israeli source most of the time, published an article stating that they'd been told by a Middle Eastern diplomat that the Trump administration was coming to the view that effectively, as far as I read it, they should have a two-state solution, right? So a

without Hamas. Now we'll get on to that later what that means. It's not really clear to me what that does mean. And apparently the Jerusalem Post had been told this by a Middle Eastern diplomat. So why would I put stock in this? I'm notoriously skeptical of any articles that give unsourced leaks. It's always a means by which to try and steer the conversation rather than any sort of actual information.

I suppose the reason I think that there might be something to this, there's a few reasons, I suppose you might say. So the first one is, it's not really in Israel's interest to publish this, if you see what I mean. It is not in line with the Israeli government's current strategy in Gaza and generally on their conflict policy in the Middle East.

The second point is that if it's a Middle Eastern diplomat, it's one of a few. It's someone from one of the Gulf states. One extreme, it could be Qatar, could be Saudi Arabia. It seems kind of likely it might actually be Saudi Arabia. And the reason for that is because the Gulf states are saying that

that they're willing to go back to the table on the Abraham Accords, which is effectively normalization of Israel in the region, but only if the Gaza issue is resolved in a way that they think is acceptable.

And what that basically means is a two-state solution, because I guess the only two other alternatives are perpetual war, which is what we have now, or some sort of ethnic cleansing, frankly. And no one's going to tolerate that in the region. Absolutely no one's going to tolerate that. So I think that this is in some ways credible. The other reason that it seems of interest or worth discussing is because there's actually been a lot of negative sentiment around the Trump administration

about the current strategy being pursued by the Israeli government. And this is what comes to the really interesting point to my mind. It's that there seems to be some sort of a change going on in the American-Israeli relationship. And I think it's going on on both sides of the divide. Basically, what appears to have happened here is

A conflict has opened up since October 7, 2023, and that conflict was supposed to be resolved in a very different way than where we currently are. Something was supposed to happen in Gaza. It was never clear to me what was supposed to happen, but something was supposed to happen in Gaza that resolved the situation. Instead, last time I checked, the Times of Israel was reporting that Hamas had basically recreated itself by pulling in more recruits.

And Gaza has been turned into a war zone effectively. There's constant casualties, constant fighting, etc., etc. And I don't think anyone has highlighted any credible end in sight. So when the conflict began and the IDF went into Gaza, the IDF were quite honest about it. They said that this isn't going to be a quick war.

If you think this is going to be over in two months, you're delusional. That's what some people in the West thought. Some people in America thought as well. And they said that's not going to be the case. But I think their time horizon on it was, you know, six to 12 months, maybe 18 months at a stretch. And I think they thought that they could resolve the situation there. Again, I was never sure what that would look like, but that's what they said. I expressed skepticism for that at the time. For what it's worth, I did a tweet thread on it. But here we are now.

And not much has changed. I think Israel the other day called up another batch of reservists. That was in the same article I read that said that Hamas was back to whatever it is, 30,000 people or something like that, and that they just filled up their ranks with people who'd had family members or friends killed.

And to create a Hamas militant, all you have to do is show the guy how to operate an RPG or, you know, tell him to run up to an Israeli tank with a munitions device and strap it to the side. Or, you know, there's a million ways to do this. But my point is you don't require extensive training or anything like that. You just train.

that require a constant drip, drip, drip feed of small arms, basically, small arms munitions. And they produce some of them domestically in the Gaza Strip. I don't know if they still do, but at least they used to. So basically what's happened is the whole thing has turned into a bit of a swamp.

I think the really interesting thing here is that it's producing enormous tensions in the American-Israeli relationship. Tensions that were already kind of there during the Biden administration, but I think the fact that they're coming to light in the Trump administration says a great deal more because, of course, the Israelis have invested an awful lot in relationships with the conservative movement in the United States and with the Trump movement in particular.

And if things are starting to fray around the edges there and the big dogs in D.C. are getting, you know, asking what the plan is, they want to get a Middle Eastern policy strategy in place, something resembling the Abraham Accords.

and it's the Israelis that are engaged in activities preventing that at the moment, if it's generating tensions with that crowd, that says a lot. That says that you're in a position now where something's going to have to change. Because you can kind of alienate, say, the Democrats who have a very mixed view of Israeli policy at the best of times,

But if you start alienating your kind of core among the conservatives, the Trump people, et cetera, et cetera, you might find yourself without any friends very quickly. My sense is that the more right-wing elements in the government, in the Israeli government,

in the coalition are actually getting increasingly ticked off as well with the Americans. I don't fully understand the politics of that, but I saw a report yesterday, the day before the day recording, where Bibi Nanyau in a speech said, we need to stop relying on the Americans for weapons.

That was a surprising statement, clearly motivated by a fear that the Americans might eventually throw in the towel here, just in terms of providing munitions, you know. So things are happening there. But it's a funny situation. It appears that nothing's happening.

because the whole thing's just rolling on and on and on. But I think we're getting to the point now where a conflict of this type, which is very different from the Ukraine-Russia conflict, which is a true peer competitor war, which you can clearly win or clearly lose. One of these kind of insurgency campaigns, which is almost like Iraq or Vietnam or something, that's the situation Israel are in right now,

Those things can only go on for so long. And with a small country like Israel that relies so much on its alliance with the United States, it's pretty clear where the break is going to come there. It's going to come when you alienate your allies. There's something really big at play in the Middle East for the United States and specifically for the Trump administration. I think it's fair to say when the Trump administration entered office,

And even before that, it seemed fairly clear that the instinct of Donald Trump himself and some of the key people around him, both in terms of his advisors politically and also his media supporters, took a much more realist view of the world, a foreign policy realist view, as a distinct break from the liberal foreign policy view of

that has been dominant in Washington since at least the 1990s. And what that realist view entailed was really a big focus on China. Of course, the US has been talking since at least Obama of the pivot to Asia so that it could focus on China. But the instinct, the kind of the general view of Trump and the people around him and his supporters was,

was that this now really needed to be a priority. It was a make-or-break moment. So peripheral theatres like the Middle East and like Eastern Europe would have to play very much second fiddle from here on out. And of course, part of that is managing to exfiltrate the US from the Middle East, which is easier said than done. And I think there's been a lot of playing around within the Trump administration

in terms of how to do that. I think people with, you know, I wouldn't say neocon sympathies, but people whose entire lives and careers have been built within the neoconservative or liberal universalist outlook on foreign policy kind of tend to want to use instinctively neoconservative methods, neoconservative responses to events,

Because that's all they know. And I think there's been a battle, if you like, or kind of a feeling around within the administration between those methods and perhaps some of the more untried methods, or untried in this day and age, kind of realist methods and realist ideas and realist responses. But either way...

It seems clear that Trump wants to get himself out of the Middle East and out of Ukraine and more broadly out of Europe and out of these peripheral theaters. And they're attempting a range of methods to actually achieve that. In recent days, quite a few things have happened. First of all, there's a big visit of both US business people

C-suite megastars of big US blue chip corporations and upstart corporations visiting Saudi Arabia.

And there's a state visit of the U.S. to Saudi Arabia as well. They're hoping to close something like a trillion-dollar deal that involves a range of Saudi investments in American companies and purchases of goods and services from American companies. These things involve things like advanced armaments and artificial intelligence. There have also been stories going around that the U.S.,

relation with Israel isn't just fraying, but it's almost been put on ice for a while. Like, there are rumors going around that Trump feels constantly manipulated by Netanyahu. And if there's one thing that Trump hates, apparently, it's the feeling that somebody's manipulated him.

You know, Netanyahu, whether you think he's great or whether you think he's got huge faults, I think it's undeniable that he's a hugely experienced political operator. He's a very smart guy. I think he's a graduate from the Massachusetts Institute of Technology, the MIT. Did his national services in...

Israeli special forces and special forces in general around the world tend to naturally select for high intelligence. And of course, when you combine that with the fact that the Israel lobby in Washington is just awesomely powerful and holds sway over a tremendous number of Congress people, you know, it seems understandable that Trump would feel that his administration is being manipulated at the moment. I think even Mike Huckabee

who's about as dyed-in-the-wool pro-Israeli, pro-Zionist, in fact, as you can possibly get, and is now U.S. ambassador to Israel, has also said something along those lines. And I wonder whether Trump feels that now Israel is the main impediment to the U.S. being able to exfiltrate itself out of the Middle East. Ideally, Trump would like to get the Saudi buy-in into the American AI suite,

get it to buy in into US armaments and weapons systems. And he would be able to maintain control over a keystone Middle East state through those means from a distance. Could leave Israel in a fairly safe position if they could calm this Hamas stuff down. He could maybe try to do a deal with Iran, which is the other thing that's going on at the moment. The Americans and the Iranians have agreed to continue their talks on nuclear matters.

So all of these things are happening, and I wonder if Trump at the moment feels that Israel is an impediment to getting out of the Middle East. He sees potential dominoes falling, and kind of Israel as a piece of cardboard in between one and the last one, stopping it from happening.

Now, we could say that relations are fraying, but we've seen what's happened in Ukraine. It seemed that relations between Trump and Ukraine had frayed, and it was clear that Trump wanted out of Ukraine as well. And now things seem to have switched back.

So these things appear to change when it comes to the Trump administration. But my impression is that that's the situation at the moment. Like Trump wants to get out of the Middle East. He sees negotiations progressing with the Iranians. He sees an opportunity to sign a big deal with the Saudis. He sees an opportunity to deal with Hamas and tell them to end things. And the only thing that's preventing his version of events from working out is the Israelis at the moment.

who are, of course, run by somebody far more experienced than him and who has at his disposal a tremendously powerful lobbying organization within Washington and therefore is pressuring and manipulating Trump or making Trump at least feel as if he's been pressured and manipulated. And it's blocking, it's kind of gumming up the whole works. That's the kind of big picture at the minute, Philip Pilkington, at least as far as I see it. I think this will be a real learning moment for politics insofar as...

As a country, you can form as close an alliance with another country as you like. I mean, you can become borderline 51st state. I'm not saying Israel is, but it probably is as close to it as the United States possesses. But at a certain point, if you start getting in the way of actual kind of machinery, as it were, and by machinery, I mainly mean money. I mainly mean investment and so on. Things that need to get done, those kind of things.

You start hemorrhaging political capital, actually, like really, really quickly. And you start alienating more and more people, not just, you know, you talked about Trump there. And I've heard the same reports, too. And I have no reason to think that they're not credible. Trump actually hasn't had a great relationship with Bibi Netanyahu since his late first term.

He's very angry, I think, that Netanyahu didn't back him up on his electoral fraud claims. And I think there was some other issues as well. He felt manipulated in previous dealings and so on. But it's not just the question of the president. It's when you start kind of stepping on toes all over the place, money mainly, investment flows, that kind of thing. And then the other big thing that's happening that I probably should have mentioned in the intro is –

I think we did something on it last week, but the aircraft carrier in the Red Sea that the United States have there, I think it's the Harry Truman, has now lost two planes, presumably in some shape or form to the Houthis. Now maybe one of them fell off the side. Maybe it turned left and one fell off the side and it turned right and the second one fell off the side. I'm not so sure. But whatever they were turning left and right to avoid probably came from Yemen.

I think that's probably safe to say at the moment, unless, as I said on Twitter, a Bermuda Triangle has opened up over the Red Sea. That's another explanation. It could be the Greys, it could be the Martians, but I think it might actually be the Houthis in Yemen that are causing those planes losses. Now, that may not seem like a huge deal. Two planes, as far as I know, no one was killed.

But it is kind of a big deal. It's a big deal for two reasons. First of all, because my sense is that from the leaked signal chat messages from a few weeks ago, the real hawks on the Middle East at the moment are centered around Pentagon, around DOD.

And if DOD have to stomach losses to their materiel and they have a bunch of disillusioned sailors or, you know, colonels maybe who are saying this is an impossible mission, that becomes a big problem. And the other aspect of it is that regarding the Middle East situation, the chatter is constantly about whether there might be a war with Iran.

Personally, I don't think it'll get to that point. But, you know, that is the chatter and there is a chance that the whole thing spirals out of control and you get an eventual war with Iran. Well, I think they're starting to see now

how much damage Iranian missiles, even a couple of Iranian missiles, given over to a group that, let's be honest, are not probably the Iranian regular troops, especially the rocket forces in Iran, who are presumably a lot better trained, a lot better educated, etc. This group is able to cause some serious mischief for the U.S. military.

Well, if they can cause that much mischief for the military, what can the Iranians do? So those are going to be the questions that people are going to be asking at a planning level in the Pentagon. And as I said, my impression is that many of the Middle East hawks who probably sit down in the Oval Office and kind of push for more engagement and to give the military solution more of a chance,

they're getting kind of attrited, as it were, at the moment as well. So this seems kind of unsustainable to me. I'd be very, very surprised if something fundamental hasn't changed on the Middle East situation by the end of the Trump administration. Open question what that might be, but by the end of the Trump administration, I think something major will have changed, maybe even by the end of this year. Bloody vicious rocket.

As we know, and as we covered in last week's show, India launched an air attack against Pakistan in retaliation for a terrorist massacre in Kashmir. And I think there is a big story here and something of big relevance for future war planning, future strategy, in fact. A little bit like last week, we discussed the implications of

of the democratization of precision strike and missiles on the ability of navies to control maritime choke points and trading routes. I think something might have happened in this very brief conflict between India and Pakistan, which has similar implications. As I said, India, I think it was on May the 6th, actually, so we might have missed it on last week's show.

they launched an air attack against Pakistan in which they apparently did some damage to Pakistani forward airfields using missiles. And some other locations as well, some supposed kind of militant leader hideouts or headquarters, if you like. But I think of more importance to us is something that a friend of the show, Steve Hsu, said.

the entrepreneur, physicist and polymath who we interviewed last year drew my attention to on Twitter or ex-formerly known as Twitter. And that is that the Indian air attack and the Pakistani defences against that might be the first example of a larger scale BVR air battle and BVR kills

So what is BVR? Well, BVR stands for Beyond Visual Range. And that means air combat, i.e. between two fighter jets or other military platforms that can't actually see each other as they're fighting each other. So that typically means beyond about 18 or 19 kilometers away, which for Americans is about 12 or 11 and a half miles or about 61,000 feet in distance.

far enough so that even two planes high up in the sky can't actually see each other. And obviously they involve long-range air-to-air missiles. Now Pakistan have claimed in this beyond visual range air battle that they shot down five Indian fighter jet and drone platforms, including I think three Rafale French fourth generation fighter jets and two drones.

The Indians deny this, but the word from US sources and French intelligence is that at least one Rafale was shot down. And this is serious because the Rafale is a highly capable fighter jet. It's fourth generation, so it comes from the same generation as the kind of the F-15 Strike Eagle in the US and the Sukhoi 30 and MiG-29 from Russia.

But it's not really like the F-15. It's more like a kind of fourth generation plus fighter jet because it has several advanced features on it. And, you know, as I say, it's a highly capable jet. It's proven itself on several occasions. But it seems that at least one of these, it was equipped apparently with Meteor air-to-air missiles, which is the primo European air-to-air missile.

But it seems that at least one of these jets was shot down by a Pakistani J-10C, which is a Chinese-made craft. I believe it was a joint Pakistani-Chinese project. And it's most analogous to something like an F-16 or maybe a Eurofighter or Rafale indeed. It's quite inexpensive, designed for the Pakistani and Chinese air forces.

and it's a lightweight aircraft. It's not one of these really big ones like a Sukhoi, an Su-35 or an F-15. It's much lighter than that. But crucially, it was armed with the export variant of China's PL-15 air-to-air missile. Now, the key thing to understand about beyond visual range or BVR combat is that what's really important is that you see first and then you shoot first.

And then the upshot of that is that you get to kill first. Now, the US Air Force has been convinced for many years that beyond visual range combat is going to be the future. And we've seen this in some of their designs. So the F-35, for example...

It's not a very good dogfighter. I mean, just to look at it, you can tell it's not going to be effective in dogfights. And indeed, that's been one of the key criticisms of the F-35 is that it just doesn't work very well as an actual fighter aircraft. Once it gets into one or two circle dogfights, it's pretty much toast.

However, the US Air Force has consistently said, well, dogfights simply aren't going to happen that often in the future. What we're going to get instead is these kind of beyond visual range duels that take place over, you know, 50 or 100 kilometers or, you know, 100 miles even. And that's why the F-35 instead was stealthy to make it harder to spot beyond visual range with radars.

and also had tremendous data fusion capacity, i.e. its computing capacity and its ability to take data from multiple sources, including its own radar systems, AWACS, Aerial Early Warning Systems, these bigger airplanes with kind of rotating disks on the top of them that circle around behind the battlefront and can vector in fighter jets on their targets.

as well as from other sources in addition to that, and fuse all this data together and get a much crisper and clearer and more detailed and broader, in fact,

picture of the battlefield in doing that and by having this kind of stealth and this amazing data fusion the f-35 would indeed be able to see first i.e it would be able to spot opposing fighter jets at a much greater distance than they could spot it and then because of that shoot first okay

But maybe the problem is here, we have a Chinese-made jet and a Chinese-made missile that's been able to see one of the West. Okay, it's not a fifth generation. The Rafale is not a fifth generation jet, but it is a highly capable jet. It forms the backbone of the French Air Force and the Eurofighter Typhoon, which is incredibly similar and started out developing with the Rafale, forms the backbone of the British, the German, the Italian, and the Spanish Air Forces.

has just been shot down by this Chinese system. Okay, the Pakistanis were also operating Swedish AWACS systems by Saab in the background. But what this suggests is that maybe, maybe there's a problem here for the West.

because it seems that the PL-15 just has much greater range than the French Meteor system, and the J-10 was able to fuse enough data. Maybe it was just a direct data link from AWACS systems or ground-based radar. We don't know yet. But anyway, the combination of the two was enough to see the Rafale first, to shoot it, and kill it. And that might be a long-distance problem because when you look at these things...

It does seem that the PL-15 does have longer range than the Meteor, it has longer range than the American AMRAAM. So this could be a big problem in the event of any war over Taiwan. Are the Chinese about to outrange the US? Can they see the US stealth to fire this stuff? Well, who knows, but having much longer range missiles does seem to pose a big issue for any BVR combat in the future, especially if the US Air Force

has made a big bet on BVR and now it's just being outraged. I mean, that seems like a problem. I guess I'll send a note of skepticism about pretty much all of it, really. The whole situation with respect to Pakistan, India and the kit and all that. I've been following it relatively closely. I think we don't know a great deal. I think definitely some jets were downed. There's some footage of the jets and I think one of them is almost definitely a French roundup.

Rafale. But it was interesting to see how the narrative was shaped after the conflict, because that narrative is big bucks for whoever wins it, actually. It's a lot of money on the table. And the first interpretation when we got the downing of some of the Indian jets was that the Pakistani air defense system had shot them down. And Pakistan have mainly Chinese-made air defense systems, which are, as far as I can tell, not very different from

Russian systems or American systems. I mean, all these things have their own differences, but ultimately an S-300, S-400, a Patriot, one of these Chinese things works on relatively similar principles. Now you'll get like people who promote their product, shall we say, saying the Patriot is the best in the world. The S-400 system is moments away from shooting down hypersonic missiles.

I mean, maybe. I don't know. But it all looks the same to me. It's a bunch of tubes that fire off missiles and they hit planes at a long range with a radar system next to them. I don't think these things are. Forgive the pawn rocket science. But basically, the first narrative was that the Indian jets were shot down

at least in part, by Pakistani air defense. And that made a lot of sense to me just from watching the Ukraine war, which the Ukraine war has been a lot more difficult to shape the narrative because we get so much data on it. And if you watch it closely, there's very, people don't have time to try and shape the narrative and you tend to get a pretty real time feed. And my sense is in the Ukraine war that the vast majority of airplanes that have been shot down have been shot down by American and Russian made air defense systems.

And it makes a lot of sense. I mean, that's what these things are designed to do. That was the initial interpretation of the entire thing. The interpretation that came next was that Chinese planes shot them down, as you said, with a long range missile. Now, what was really interesting to me was that didn't actually get much resistance from the Americans. They kind of promoted it in a sense. As you said, they confirmed the shooting down of the Rafale. I read that as competition, actually. I think there's a competitive dynamics taking place trying to shape the narrative, but

I think for America, what this tells us is that it's a lot more threatening to say that jet technology is useless against air defense than it is to say that Chinese long-range missiles can shoot down French planes, you see, French planes, or even maybe an F-16. I think they could probably live with that.

Because if you say that, then there's still a space for the F-35, right? But if you say, no, the air defense systems have completely neutralized the skies, in effect, once they're of sufficient vintage and of sufficient capacity, then you're calling into question the entire value of the fixed wing manned aircraft in general.

The problem is that we don't know. We know that stuff was shot down in Pakistan. We don't really know what did it. Could have been long range missiles. By the way, I have no objection to the idea that a long range air to air missile could shoot down a plane, but I just don't see why a surface to air missile can't do the same thing. We've seen it a million times in Ukraine. So it's either or for me. I'm just noting that the narrative dynamics greatly favor one side, the Americans who are trying to sell their F-35.

The fact of the matter, as far as I'm concerned, is we'll never really know if an F-35 can fly against air defense or against long-range missiles from Chinese planes unless it happens. And the Americans do not want that to happen. You'll recall that

when they were making promises to Ukraine of giving them weapons platforms, the kind of limit, the hard limit was on F-16s. We remember F-16s, F-16s, F-16s. And that's because F-16s are an old technology. They're Top Gun stuff from the 80s, you know, basically, retooled or whatever with new electronics. And so if an F-16 got shot down, I think an F-16 did get shot down. I can't remember. Maybe I'm misremembering, but I think one did.

If an F-16 got shot down, they can stomach it. But if a so-called stealth plane like the F-35 got shot down, it kind of ruins the brand, right? And the Americans have put a lot of money into that F-35 program, and it's been much criticized.

So I don't think we really know. I think this weapons thing is a bit of a shell game. There's an account on my Twitter, I suspect it's somebody in the defense world, who I had an argument with about the utility of fixed-wing aircraft anymore. And these guys get really passionate about it. Their passion is...

is not quite balanced with the amount of evidence or argument that they're willing to put up. It reminds me of people commenting on sports or something like, well, I know who would have won the match if they'd listened to me. It's that kind of chess beating stuff. It's always struck me as it's not scientific and it's not a particularly rational form of discourse. But yeah,

He highlighted to me today after, you know, having this discussion about fixed wing aircrafts a week ago or something, a Pakistani claim that the or an Indian claim, I should say, that they'd taken out a Pakistani air defense system or maybe it was the other way around. I can't remember. Someone took out the other person's S-400 Russian air defense system.

And the article was entitled Russian air defense system absolutely ruined Russia's entire strategy is on the ropes and blah, blah, blah. And I just Googled it there before the show. And it seems to be registering as fact check incorrect or whatever. Not that any of this stuff means anything because none of it means anything anyway.

The one thing I'd say, okay, because we can only go on very minimal amounts of evidence here, is that air defense against fixed-wing aircraft have been enormously successful in Ukraine. They have pretty much denied access to either side until one side has been able to attrit the air defense away. Russia have managed to do that with Ukraine, and it has taken a very long time, and it's taken a lot of their most advanced missile systems,

cat and mouse games, everything. It has not been an easy process. And until we see a static air conflict like that broken by some new technology, the tank of the skies breaking the trenches, we can't really believe anything we hear. I think that's really the best thing I can come away with. And when I look at it a priori, when I look at the technology,

I still look at fixed-wing aircraft. I say, at best, you are unproven. You're just making promises that you might not be able to cash, at best. And on the other hand, we know these ballistic missiles that we see raining down all over the Middle East can smoke air defense. They just can, every single time, in Ukraine as well, but even the less advanced ones that the Iranians are firing.

And I can't but come to the conclusion, until somebody proves otherwise, that these fixed-wing aircraft, manned aircraft, have either no role or an extremely limited role on the modern battlefield. Yeah, just to respond to that, I think you're 100% right to be sceptical. In fact, the whole concept of beyond visual range air combat and air battle was viewed with extreme scepticism among experts within that field.

until relatively recently, but that in itself is the reason that we should pay very close attention to this because if it indeed proves that at the very least one country in the world, Pakistan, can score beyond visual range kills or a beyond visual range kill against a near-peer opponent, then at least it proves the concept that, you know, BVR air battle will

play a significant role in air combat in the future. And given the US and more broadly the West bases its warfighting doctrine on securing some degree of air superiority before or during naval and land operations, I think it's important that we consider the fact that air superiority is going to involve at least some BVR combat.

Now, the other thing is, you're 100% right in saying that air defense systems like the S-400 or the Patriot or whatever have proven pretty successful, it seems, in knocking fighter jets out of the air. I think that in theory, there's no reason to imagine that air-to-air missiles, BVR air-to-air missiles wouldn't be the same because...

Although you can't lug up a huge Patriot missile on a fighter aircraft, or you can't lug many up anyway because they're much bigger, they carry more fuel. At the same time, you don't need as much fuel if you're firing the thing at 62,000 feet, traveling at Mach 1.2, right? Because that's already a lot of height and momentum to take it towards some kind of enemy aircraft.

So I think it's an important consideration. It's clear that the US Air Force has placed pretty big bets on BVR in terms of where it thinks air combat is going. It seems that the logic of BVR is that you need to be able to see your opponent first before he sees you. You need to be able to fire first before he fires against you. And hopefully that means that you get the kill and he doesn't kill you.

The Americans have got stealth and it seems that US stealth is probably still better than the rest. How far that works anymore, we don't know given the improvements in radar systems. The Americans have invested heavily and have exceptional data fusion, it seems, within platforms like the F-35.

Do we know anything about the Chinese radar systems and AWACS systems and satellite systems and their ability to fuse all of those together with the ACI radars that are in modern fighter jets and present fighter pilots or operators of drones with a detailed and long range enough vision of the battlefields to be able to see first and shoot first? We don't know.

but what we do know at present it seems that the Chinese are producing an air-to-air missile that is longer range than air-to-air missiles that the West produces even the more primo ones like the Meteor at the moment and that seems pretty important when it comes to BVR so if

it turns out to be the case that the Pakistanis scored a BVR kill in this first BVR battle, then that should be something that's consequential because it should break through some of our skepticism of how these things work. So,

Notwithstanding the fact that yes, the Americans would love to sell the Indians F-35s if they have a problem in inverted commas with their Rafales. Yes, the Chinese would love to think that their PL-15 missiles are fantastic and their J-10C aircraft are fantastic. So yes, there is a lot of incentive here for certain sides to take positions that yes, this is all working.

But still, I think it's something very much to bear in mind because it is consequential in a relatively small way for the balance of power in the Western Pacific. The grand old Duke of Tariffs.

Well, breaking news today, I'm recording Monday, the Trump administration seems to be backing down on the tariffs. The White House announced that the talks, the sort of informal talks that they were having in Switzerland, which by the way, were billed by the Chinese as not being talks that would actually lead anywhere unless the US agreed to drop its tariffs.

Well, lo and behold, the US has agreed to, I think, fully drop its tariffs. The BBC is reporting tariffs on Chinese imports will fall

from 145% to 30%, China will drop theirs from 125% to 10%. I don't even know what to make of these numbers anymore. They've become a blur. No one can make sense of them. They're borderline meaningless. But I think when you look at that, you're looking at ballpark. There was some insane number put on them, and now they're coming down to some sort of a sensible number. Even if it's a full 30% tariff on Chinese goods,

That's a significant price increase for the U.S. consumer, but the U.S. consumer will get their product at a higher price, presumably. The previous tariffs were tantamount to cutting off trade, and I think everybody knew that.

The tariff war is as important as it is becoming tedious, because what ultimately comes out of all this is enormously important. It'll determine the structure of the global economy. It'll determine how fast certain aspects of the multipolar developments and so on come about. These are enormously important issues.

But following it has become an exercise in complete tedium because it's really hard to know what anything means. I just said I don't even know if the 30% tariff on China is normal or not. I don't have the energy to try and find out, frankly, because in two days' time, somebody will say some other number or something. So markets have become subjected to this too. The markets have now become wholly beholden to White House announcements.

The gold market today, gold price fell through the floor on the back of this, just to give an example, and the NASDAQ flew up. None of this stuff really makes sense anymore. I saw that Scott Besant gave a talk recently to Wall Street heads. The way it was reported was that they said to him, look, we understand that you need to undertake these measures. We understand that you're trying to change the structure of the US economy, but please get it out of the way. Just get it sorted out quickly.

And I don't think that Wall Street have any huge amount of pressure on the administration. We've talked about that before. But I think that's just becoming the general vibe. I think even a lot of the initial supporters of tariffs

When they saw the amount of chaos they caused and when they started hearing that they could actually result in shortages, major inflation and so on, they said, okay, well, hang on a minute. We don't really want to destroy the entire Trump administration to get an ideological tariff policy over the line.

So I'd say expect a lot more back and forth. Look, there's two things to remember going forward. I'm taking a long-term view on this, and I'm not going to stop taking a long-term view until I have something concrete to show me that this isn't the case. And my long-term view is this.

Number one, the Trump administration has committed to bringing back jobs to America, which ultimately means rebalancing trade. I never thought the tariffs were a good idea. I don't think either of us did, but we recognized it as the first serious attempt to do that.

I do not expect that the Trump administration now just gives up. I expect, as we predicted, I think, at the very beginning of this administration, that it will turn to currency policy, that it will turn to U.S. dollar policy, which is where this should have always been. So that's number one. Number two.

Even if that doesn't happen, I think that the Liberation Day has done significant damage to the credibility of the US dollar as a reserve currency, that it's set in motion an acceleration of the process of de-dollarization. Not full de-dollarization. Again, we want to be specific about this. Just the loss of the dollar as the reserve currency status. I just cannot see it coming back.

He can put Humpty Dumpty together again once he's broken. The dollar may have soared today. I think it did. I checked the stock market in gold. Gold definitely fell, and gold's been a good indicator. And the stock markets went up.

but it all feels to me like a dead cat bounce. I don't think that Trump dropping the tariffs on China is going to alleviate the market scares, not least because the Trump administration, despite the fact having dropped it for now, have indicated that they're still pursuing this policy, broadly speaking. Even if there were a maximalist attempt

to try and reverse the damage process, whatever you want to call it. My view on the dollar reserve currency is well known. I think it's bad for America. I think it's bad for the world. But even if there was a serious attempt to try and reverse that process, that attempt would have to be the Trump White House not coming out and saying, we're giving you respite on tariff, we're dropping the tariffs, we're opening further negotiations. It would have to be to say, we are returning to globalization.

to business as usual. That's what they'd have to say. And to do that, the entire Trump platform would just melt into the ether. They'd have their foreign policy platform left, but their entire domestic platform will be gone. And you'll recall that the geopolitical aspect of the Trump promise, which was to get out of foreign conflicts, get out of foreign wars, that was to refocus energy on the domestic economic aspect. So for them to actually throw in the towel and say, we're returning to business as usual,

globalization, et cetera, et cetera, might not even work if they set it at this stage. But even if they turned around and said that, they'd basically have to pack it in. At that point, what could they do apart from that? They could try and rein in the Middle East a little bit. They could stop the Ukraine war, and they could try and tamp things down in Taiwan.

But that's all well and good for the world. That's all well and good for the world. But the MAGA voters, the American voters, voted for their jobs back. They voted for higher wages in America. They voted for a rebalancing of the economy. So I just, I don't see it. I think this back and forth, we're going to be going at it for the next while. I think Liberation Day was a mistake ultimately. And I think they've mainly walked it back now, mainly. But again, Humpty Dumpty is broken afterwards in terms of financial markets and so on. But I think they've mainly walked it

back and now they're going to have to feel like a new strategy and my prediction is that strategy will center in the US dollar.