Strategic Implications of Constant Presence

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I'm Mike Baker, your eyes and ears on the world stage. All right , let's get briefed. And first up, oil tankers are returning to the Strait of Hormu z, well, huzza. And with them, confidence is slowly returning to global energy markets. Daniel Turner, executive director of Power of the Future, joins us to discuss. Later in the show, China is quietly surrounding Taiwan, uh , turning what were once military drills into a near constant naval presence around the island. We'll be joined by Steve Yates. You know him. He's a friend of the show. He's also with the Heritage Foundation. We'll have more insight from Steve on what China's intentions are. But first, today's situation reports spotlight. For the first time in weeks, oil tankers are beginning to flow back through the Strait of Camuz , and the energy markets are taking notice. Crude prices have fallen dramatically from their wartime highs, shipping traffic is slowly recovering, and fears of a prolonged supply shock are beginning to ease . But is the market reading the situation correctly ? And what should consumers and investors be watching as the world's most important energy chokepoint gradually comes back to life. Well, joining us now is Daniel Turner, executive director of Power of the Future. Daniel, thank you very much, Man, for coming back on the PDB situation report. Great to be back home with you. Thanks for having me back Absolutely. Listen, let's start from the very top . What have we got moving through the Strait of Hamuz at this point? There's a lot of conflicting answers, but I tend to think that oil markets know a lot of things that we don't. It's why Adam Smith, if you go back a couple hundred years, why he marveled at markets and called them this invis ible hand . Oil right now, as we're talking is just above seventy dollars a barrel . So even though I've seen reports saying there's been some aggressive activity from Iran , there have been ships turned back. Markets are pretty comfortable that things are happening . So I'm going to say that we have a pretty open straits just based upon oil prices. , all right, now I will say this. One of the things and I've talked about this on the PDB, one of the things I've been surprised by for the past two or three months, frankly , is and maybe I'm reading it wrong, but I've used words like fick le or just their willingness to kind of cling to or grasp on to any positive comment or statement from the White House, right ? Social media, whatever it may be . Over the course of this time, it seems like, you know, as soon as President Trump or anyone in the White House or Secretary of State Rubio makes some allusion to, you know, here we are. It looks things are looking good. Negotiations are going well or yeah, we're getting the straight open . Bam, you would see a drop in oil prices . Despite right, what you would think is sort of a pragmatic approach because they know what this regime is like, they know how difficult these discussions are. They know how complex the problem is. Yeah, I agree with that. And oil markets are future thinking, right? So if you are an oil trader and you hear good news, that means okay tomorrow things are going to get better so we can actually start to buy and sell now because the future is bright. So that definitely has a huge impact on it. I was not surprised when President Trump made an announcement a couple, maybe like a week and a half ago. He said, actually this whole time, a lot of oil was getting through. We just didn't tell anybody. We kept it clandestine. And people were like, he's full of BS. You know, Trump, you always make stuff up. I was not surprised at that. I believe that is true. Again, just looking at oil prices. Oil, you know, for one moment hit like one hundred and twenty five when pure panic kicked in, but oil's been around a hundred dollars a barrel for a month and a half . And banks, major banks were saying two hundred two hundred fifty. I saw one bank saying oil could hit three hundred dollars a barrel. And it didn't come close to breaking the hundred dollar barrel mark. So again, oil markets knew there was activity happening, whether or not it was announced to the media. It just goes to show the power of markets on these issues . But was it was it that oil was moving through the strait or you know, and we just didn't know because it was kept such a secret or was it because we just had alternate options? I mean, you know, the Saudis started pushing through that east west pipeline like nobody's business. Others started looking for other logistical routes. And there was this sense that you know, at some point , the key players out there in that region are not going to care about the Strait of Hormuz the way that they used to because they quickly seem to have said we've got to adapt. I'm just wondering whether it was that per ception was the reality or whether in fact , you know, it was just the world's greatest kept secret that oil was moving through the strait . I'm going to go with the latter and the reason why is because we kept hearing how there were huge shortages that were going to hit Western Europe, that were going to hit South Korea and Japan, and yet no one seemed to be running out of it. Yes, President Trump was saying we're selling more in America to our international partners, but America doesn't have enough oil to satisfy the needs of the entire global community. So I know the East West pipeline was huge. I know the Iraqis started moving oil north. They were bypassing water routes completely , and they were headed north through land pipelines. So there were alternative activities, logistical activities happening . But I have a lot of confidence just based on oil prices it was reaching market. It was done so clandestinely. Again, because it never popped that one hundred dollar a barrel mark, whereas serious bankers who are making a heck of a lot more money than I am, that's for sure. We're saying we're going to be at two hundred by the end of June. And we didn't come close to breaking that. So I think there's evidence that oil is reaching to market getting through the straits clandestine . No, I think I think financially I think you're doing quite well judging for what looks to be like a posh hotel room behind. Well, do we have credible numbers on I'm wondering, again, I want to kind of pursue this a little bit. It's not that I'm skeptical, but I am a little skeptical. Only in part because it's really hard for the US government to keep a secret, right? There's always somebody willing to open their pie hole. So the idea that somehow the entire U. S. administration was able to keep this movement of oil through the tranc through the straight secret, I want to dig into that just a little bit more if I could. Do we have credible numbers on how much the US and Europe, in particular others drew down on their reserves Off the top of my head no I know weaks. I don't know barrel numbers, but I know weak numbers. Last reports that were alarming were the South Koreans, the Japanese were at less than a month of reserves , the UK and Germany, I believe, as well , were in the weeks of natural gas left. Now natural gas reserves aren't as threatening because they don't have a lot of natural gas electricity production in those places . It's more of a heating use heating fuel. And you know, we're in summer. No one's really running their heat right now. So those numbers weren't as alarming. But again , you know, it's the price point that no matter how much the president manipulates the truth or how much spin doctors get in there and say everything is great , markets know what they know. There's a reason why lithium prices tanked today. There's a reason why gold prices and this is where the genius of markets well beyond human manipulation, algorithms, AI, a few things are able to manipulate markets other than just hard cold hard numbers. And those markets, that dollar amount, one hundred dollars barrel of oil consistent for a month and a half, I don't think you could have manipulated that no matter how much media spend you put on it . Yeah, I don't I don't disagree with that. I'm just , you know, look, having spent a long time in the business of trying to keep secrets what we would be saying is if it's if the president is accurate, if the president says, I mean, this would be remarkable frankly, this would be the story of the day. If the president says, you know, actually, we didn't want to talk about it, but there was oil moving through the strait . Meaning the administration kept that secret. Anybody involved in that cargo operators, shippers, insurers were keeping that secret. The oil markets themselves were keeping it secret . I suspect we would have been crowing about it . You know, as part of this overall look, we've we've decimated Iran. We've, you know, we've obliterated them. Look now, they don't control the strait. We're already moving . You know, maybe it was for security purposes and we were engaged in some super secret convoy exercise . This is for me, I don't know why I'm beating this dead horse other than I find it fascinating. And so now we have to get to the bottom of this and find out exactly what was moving through the strait at a point in time when it appeared based on satellite imagery that we were creating a pretty large backlog of vessels just sitting there not moving. So I think if you're the military if you're our military or you're a government, you have to worry about those optics of a civilian tanker with civilian workers, right? These aren't military vessels with four hundred million dollars of natural gas or crude blowing up, right? I mean, that's a pretty bad image that they had to avoid at all costs. And maybe that was enough reason to keep this somewhat clandestine, right? And that's what everyone was worried about, right? And that's I think that's the image Iran wanted. Again, I saw reports right before we bec liameve. Sure. That they turned a couple vessels around . Supposedly they launched projectiles at one , hit the starboard side four or five times. I don't know if any of that is true. It's just what you read online They want that image of a civilian South Korean four hundred million dollars natural gas cargo ship blowing up in the water. They didn't get it . So I think that that alone is pretty remarkable. But again, I'm going to be stickler on that price point. You've seen this before, would you know? I mean, I think I'm sorry. I think the Iranians They're not unsophisticated. So I think they know that that would have been a bridge too far , you know, the the sight of a tank are blowing up. I don't I don't think they had the from my perspective, maybe I'm completely I could be completely wrong here, but I suspect this regime probably looked at and goes, you know, we don't need to blow up attacker . You know, we just need to create the image of instability, the perspective of instability . And we can do this and walk a very fine line and not continue to get our asses kicked here through military operations from the US and possibly Israel. So I take your point. I just again, I'm fascinated by this because , you know, my theory on this one is the regime doesn't think they've lost, right? They're still looking to use the Strait as a leverage point for further concessions. But I want to get to that here in just a minute . And right now I'm going to climb off my soapbox, Daniel . And And I will be right back with more from Daniel Turner. Here are the PDB situation report. So do me a favor. Stick around . The agency, all episodes now streaming on Paramount plus in the world of espionage, tr uth is a moving target and every decision carries a dangerous consequence. This new mission explores what it means to live as a double agent, twice the lies, twice the risk. The lines between ally and enemy blur, like never before and survival depends on trusting no one. Starring Michael Faspender, Jeffrey Wright, Jodie Turner, Smith, and Richard Gear do not miss the agency. All episodes now streaming on Paramount Plus . This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a fifty page restoration block or finally break down that long article you've had opened for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up required compatibility and availability varies eighteen plus . Hey, Mike Baker here with some exciting news for all of you out there who love podcasts. Now streaming podcasts on Fox One. That's right, because sometimes well, sometimes the headline isn't enough. Fox phone brings you on demand video podcasts that dive deeper into what's happening, getting you closer to the voices, shaping the conversation across news, politics, and culture. You gotta get yourself some culture, right? And check this out. The PDB. I know I buried the lead, didn't I? The PDB is now streaming on Fox One , right? You can watch my show alongside other podcasts like Hangout with Sean Hannity, the Riley Gaines Show, and of course Will Caine Country all in one place . From the stories leading the day to hot takes like the kids say to exclusive interviews, you'll hear perspectives from the boldest voices around, and mine. The best part, you can watch or listen on your schedule. Whatever it works for you. That's convenience. Stream podcasts on Fox One, anywhere, anytime on your favorite devices. Sign up today at Fox. com . Welcome back to the PDB situation report. report. Joining me once again is friend of the show, Daniel Turner. He's the founder and executive director of Power of the Future. He's coming to us live from a very fancy hotel somewhere in the world. We don't know where. I'm not going to give up your location. It's probably from a secret layer, somewhere under a dormant volcano So Daniel , we were we were talking about kind of the market reaction. I guess the question there really that we were trying to answer was from your perspective , were the markets able to adjust to the conflict and to the Strait of Cormuz issue than you would have anticipated at the outset, worse? How do you how do you analyze that? I think a lot better. You know, when we hit one hundred twenty five dollars a barrel I was petrified because that was what we saw for years during the Biden administration. Different cause of circumstances, right? It was our own willful action by the Interior Department, by the EPA, by Biden executive order that was driving up oil prices nationwide. And I remind people all the time, oil at one hundred and twenty five dollars a barrel weeks before Putin invaded Ukraine. They had that talking point after they was caused by Putin's war. No, no, no, this was caused by ORNA. That exacerbated it, no doubt, maybe prolonged it . I was amazed at how resilient our economy was. Yes, inflation numbers are way higher than I want them to be, but they will start to tick down. It's only been two weeks and oil has really tanked back to seventy dollars a barrel. Gas has dropped nationally around eighty cents a gallon . It just shows it's a remarkable sign of the resiliency of the American economy . I just hope now the American people have short term memory, right? Like we can't look back and punish this administration and start electing so cialists because you had a bad spring, right? And we did have a bad spring. And I'm a farmer, right? I paid diesel prices for my tractor, my farm equipment. It was not a fun couple of months , but we bounced back pretty darn quickly and that's remarkable . Yeah, absolutely. Look guys don't know that they'll they're going to punish the current administration for the gas prices. I think they'll punish them probably for getting engaged in the conflict to begin with. They may punish them just out of this growing anti Israel movement, right? And I think Elvis has left the building. If you just look at what happened in New York , you know, you know, Democratic Socialists of America, communists , however you want to call them or taking over yeah, it's what it's probably program. And what we're doing is these are really big and complicated questions and they should have long term long form conversations and debate and discussion. And normally we talk about Iran the way we talk about Taiwan. fifteen seconds. You know, fifteen seconds, Mike, if you're elected president, what are you gonna do when China invades Taiwan? Like you are you freaking kidding? fifteen seconds, right? These are really, really big conversations and reduce them to talking points. And that's why we can't, when they happen , we're not able to have adult conversations nationally because we've made them sandwiched between transgender , abortion, Taiwan, right? Boom boom, boom. And I applaud that you're giving this a long form platform because this is the only way we grow as a country with thoughtful conversation. Well, and I accept your applause humbly and on behalf of the entire amazing PDB team . So I hope it comes with an award , some sort of statuette. But But well if if we look at if we look at where we are now because okay the vessels are transiting the strait. We are getting movement through the strait . Depending on what ship tracking data you look at , you know, over the past couple of days, volume could have moved up to maybe seventy vessels a day, maybe as they approached the weekend , which is significant. Still behind where they were post conflict, but it is moving . Then at the same time , now you've got this separate storyline where the Iranian regime is saying, okay, well we've proven that we can impact the strait over a period of time or temporarily, however you want to phrase it. So therefore, going forward , we want that fact , that reality that we've proven during this conflict to kind of direct how we, meaning the Iranian regime man age or oversee the Strait of Hormuz going forward . Do you see world in which that could happen where suddenly we go from freedom navigation, essentially for the Strait of Hormuz prior to conflict to now a post conflict environment where the Iranian regime charging essentially, maybe not directly saying, okay tolls, but for all the various services that they're thinking of providing , where they start ra king in billions of dollars and directing traffic essentially through the Strait of Homus. Do you see that as a possibility ? I see a run demanding it and I think they did in their last set of MOU conditions, I saw Secretary of State Rubio replied to it and said, no way whatsoever , will they allow that? I think it sets a precedent that we can't possibly begin to allow, right? I mean, this isn't the Panama Canal it's not free flow of waterways, right? This is not owned by any one country . So it does set a precedent that if you are , you know, a power near a water source that's well trafficked China and the South China Seas , right? Or the Somali pirates, etc. Like now we get to control this waterways . So no, I don't see it possibly happen ing. My concern though is that whenever your kid does something wrong , like there's punishment, but you have to take away the ability to do wrong again. And usually it's just the fear of God, right? Or in certain case you take away the car keys, right ? My concern is that Iran did something really wrong by saying we can shut down the straits . If they still have that theoretically, that power to do it again and then it goes unchecked, then we'll just come back to this problem again in the future someday. And we'll come back to it when we get a WIMP president , right? When we get Secretary, you know, President Gavin Newsom, when we get President Pete Buttigieg and then we'll all go to Geneva and we'll Hemen Ha. So that's my concern is that we've allowed them this tool still or this weapon still in their arsenal unless it's a fully taken away. What fully taken away looks like? I don't want to answer that question, but right now they still know they have that leverage . Yeah, again, I think it's that's a very important point in terms of because I think the problem we're having right now is logic would say the US in concert with Israel early on won this conflict, right? Significant damage to the Iranian military, significant damage to their military industrial base . But the two sides are approaching this with completely different perspectives as to what the landscape is now. I think the U. S. is looking at it and they keep saying we have all the cards , right? And you know, in part what they're thinking is, of course, because we can always go back to bombing them, right? So therefore, we have all the cards. But in reality, it appears the regime, it's still the same. It's the Islamic Republic. No matter what anyone says that we're dealing with a new regime or a new government, it's the same ideology. It's the same behavior . And they believe that they came out of this in a strong position because they still exist . And they know that they have this leverage over the Strait of Hu . They've survived the military assault, they've survived economic sanctions. Now they're reaping benefits. And I wanted to ask you about that because we've got a temporary waiver of sanctions. They're able to trade oil on a broader market in dollars for at least the next sixty days , while at the same time already pushing back on a variety of things that the U. S. has been talking about as in terms of the memorandum of understanding . So I guess I'm a very cynical person when it comes to this regime and I agree with you when you say that you know some future administration that doesn't have the same wherewithal or spine or Cahones , we're going to be dealing with this again because it's the same regime. And they're not going to change their stripes. So we do have a problem staring us somewhere down the road because we were not able to, whether anybody wanted to admit it or not, orchestrate a change in this regime . It's the only thing that brings long term stability to the region is getting rid of this regime. But that's got to come from inside. That's got to be an internal situation. But so at this point, I guess yeah, the NATO countries also have to have to get involved in. I think this was one of the points of the MOU that they tried to emphasize , you know, if you're the Kuwaitis, you've had a rough couple of months also. Same with I mean, the Saudis moved their oil production, oil and gas distribution to the Red Sea rather than the Gulf , but they still took a hit and not just attacks from Iran itself, but UAE , Qatar, right ? A lot of these countries suffered economically I'm waiting for them to step up a little to the plate also and say like, we don't want to deal with this threat anymore. We want legitimacy in this region. Remember, it wasn't long ago that UAE , excuse me left OPEC and said, you know, hey, we our oil production could be at five million barrels a day. We're at three point five because the OPEC regimes won't allow us to produce more. Well, who the hell needs you? You know, you're all a bunch of guys in Vienna, which always made me laugh at OPEC based in Vienna , right? But you're a bunch of guys in Vienna, and well, we want to be off a beautiful city . You get a great cup of coffee in Vienna . So and pastry. Don't forget the pastry , but they split, right? They're like, we don't want to be beholden to OPEC. We want to make our own decisions. Yeah. I kind of want that attitude to take over a little in that region if they want more legitim acy on the world stage, right? I mean, Dubai is Dubai for a reason. It's oil and gas money. If you're not selling oil and gas , then something 's a problem and you can't keep turning back to America to say , hey, you have to you have to balance out of this problem. So this is where the neighboring regions of regional partners have to step up big time. And I don't think they have quite frankly. I really don't. Yeah , I don't disagree. UAE has actually done more than I think a lot of people understand , but it's true. Look the golf partners out there, they they've always done an uneasy dance, right , between sort of their dislike of the Iranian regime and their desire for stability to keep their economies in solid shape. So , you know, that's kind of it's a little bit like how the Saudi, you know, the royal family has kind of dealt with the fundamentalists there in Saudi . You know, it's it's a kind of a difficult bargain that they've made . So I agree and I think a lot of people would agree with you that there was hope that you would get more from our Gulf State allies and frankly from the EU as well . But I don't suspect where we're heading with this is probably back into conflict unless unless I'm completely misreading this and somehow the regime changes its stripes and decides to for once negotiate in good faith and allow transparency, they could solve this problem today if they said, okay, full transparency. Inspectors come on in you can che,ck any of our facilities, parching, you know, this fan, the Tons anywhere . And we'll help you and you can have full transparency. They can do that . And you know, we'd be in a much better position, but that's not them. That's not who they are . And so I think we've been planning this a little bit . Yeah . Yeah, I've been planning with this for decades, right? I mean, they knew this day would eventually come . So they they have, you know, war gamed the scenario out because they knew eventually we would get to this the situation. So yeah, I'm with you. I don't think there is ever going to be good faith with this regime. You know, you'd mentioned regime change and it scares a lot of Americans because they go back to, you know, the lot of nonsense and the Gulf Wars and everyone's got a buddy or a cousin or an uncle and blah, all the movies that have been made since et cetera, et cetera. But that's why the expression is so simple. War is hell. And I tell folks all the time when we have these conversations and you know, we're paying a price in oil for what Trump's doing and the Middle East. And like, here we have, but we've been paying a price in oil for the Middle East for forty seven years, right? You know every time you go to the airport, you take it off your shoes and getting groped by TSA, that's because Iran is funding terrorism around the world. We are paying a price for this regime. Wouldn't it be nice to kind of resolve it once again and for all ? I don't want a half asset., that's for sure I don't know what it looks like again. I'm not a military guy, but I don't want to half ass because if we do we'll just be back to square one and it will be worse. If we have to go back three years, five years, ten years down the road, it will be it will be wor se . Well, first of all, if you're getting groped by TSA Daniel, you're sending off the wrong signals . I'm just lonely. I'm gonna hour swim by switching down. Yeah, yeah You don't even have a flight to cats, you're just going for the intention human contact . So , yeah, listen, this has been delightful man. We got a lot more we could be talking about and so that means you just gonna have to come back on when we give you another call and I hope you do . I would love to . Thanks for having me on. How steady man, safe travels, Daniel Turner, Executive Director of Power of the Future . Great guy, terrific insight. Listen , here we go. Coming up after the break , China's strategy toward Taiwan is changing, right? Everybody's watching Iran. China is maintaining its focus on the key object ive, of course that would be Taiwan. They're replacing occasional shows of force around the island with a near continuous military presence. We'll be joined by a good friend of the show Steve Yates I hear on the conut telegraph that he's got a new podcast. Anyway, Steve Yates of the Heritage Foundation, he'll be with us for more on that. Please stick around. Today, summer belongs to the super. Your powers are gonna start kicking in right about now . 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There's a reason why I guess everybody's been focused on Iran. I can't remember, there's a conflict of something going on . But meanwhile , despite that, it does appear that China is not really taken their focus off of one of their key objectives, and that would be Taiwan. Talk to people what's going on here because we talked about a little bit on the PDB this week , but I really want to jump into this because I do think that what they've created as a completely new normal here . And that seems to be a very smart strategy on the part of the CCP. Well, you're right about them sort of establishing a new normal. It has some limits, which so analytically I would basically support the idea that they have very successfully deployed a pressure campaign that tries to normalize the very frequent presence of increasingly advanced people's liberation army capabilities around Taiwan that's on surface vessels, subsurface vessels and air vessels , usually just tickling up against the boundaries of what would be considered territorial waters around Taiwan , but occasionally they'll violate those you know rules based international order norms and will cross in and try to inflict some it's not terror necessarily because the people of Taiwan have lived with the reality that they could be hit , destroyed in any number of ways for decades . And so they go about their everyday lives with this stuff going on . But what they've done for the huge percentage of the world that depends on container shipping traffic that goes around the water ways of Taiwan, fifty percent of all global container shipping traffic transits the waters that are within reasonable range of Taiwan , they've made it somewhat normal for the presence of Chineseunist Comm Party military vessels being in that mix . And they've also sort of normalized the idea that they'll conduct military exercises and circle with the impression of boycotting or creating some kind of a blockade around Taiwan . And so that definitely is a new normal. For most of my career , it was very episodic where you'd see these kinds of demonstr ation that China reserves the right to use force . There's never really a question about whether the US would intervene. It's just sort of whether and how , but that's now expand ed beyond just the United States to allies of the United States in the North with Japan. People just if you don't live in that area or don't look a lot at maps, you would be forgiven for forgetting or never knowing that there's sovereign Japanese territory just a few hundred miles off of Taiwan. I mean, Japan is really an archipelago that has a lot of small islands to its south that come very, very close to Taiwan . In fact, closer to Taiw an than mainland China is in one instance . And then same goes for the north of the Philippines. They have a lot of islands to the north of the Philippines that come very, very close. And so if China going to' haves this block ade like or intimidation campaign , it really can't do it without stepping on the toes of those other allies. And that's somewhat of a new wrinkle in this. But it does seem like I agree with you back in the old days, back wards young . If there was a, you know, a decent sized Chinese military exercise near Taiwan, that made the headlines, but they talked about it. And it was an international issue. And typically there'd be a statement from the government, the U. S. government, and certainly the Taiwanese government and it caused some angst . But now it does appear as this is just a continuous deployment almost. Not the same ships. And I wanted to ask you about that because it seems as if what they're doing is they're cycling through on a regular rotation their navy, right? Their vessels, their crews . And that's giving them because obviously what China lacks is, you know, modern day actual combat experience. But this is giving them significant trading experience , not to mention obviously all the information they're gathering by just virtue of being out there constantly . So that part of it seems concerning as well . For sure. And I mean, the signals intelligence and other kinds of intelligence harvests they get from this constant presence is not for nothing. That is also at a new normal . And of course they use what people would regularly recognize as surveillance or military kinds of platforms, but they also have this sort of gray zone fleet of what are supposed to be civilian fishing vessels, but obviously have more than civilian capabilities . And they're out in huge, huge numbers, and from time to time they will have orchestrated formations that can look exactly like a line on a map, which wouldn't happen sort of spontaneously if you're just a bunch of very well tanned fishermen off trying to exploit the seas . And so and the other part of it too that really should have gotten more notice is that they have shown up on the Pacific Ocean side of Taiwan and the Pacific Ocean side of Japan and also the Pacific Ocean side of Australia , which are things that didn't used to happen . And you know, so they're not necessarily breaking any records about proof of joint concepts of abilities to operate some of the technology that they've developed and deployed, they've given to the likes of Iran, and it's gotten smoked very quickly when not just ours, but some of our allied capabilities come up against it . But I don't think they're giving their best to their friends. They're probably keeping the best for themselves . But there's a demonstration effect of being able to operate with impunity, sort of normalizing people to the idea of their persistent presence , and not just a persistent presence near their shore s, but going to the Pacific Ocean side , that I think is the more alarming part of the trend. The sort of balance back is that while they have invested heavily in this power project ion capability , their ability to invade and control and occupy has not really improved . While Taiwan's ability , along with a lot of allies in the world , to deter and to hold and resist with advanced technology, whether it's drones or other high tech platforms has increased. So I think the proposition of sort of quote unquote winning by taking and controlling Taiwan , that is more elusive for China than people might think. But its ability to hit and destroy has definitely gone up. Yeah. And I guess you could argue also that look, again, these constant deployments because what that does is that forces the Taiwanese military to respond and every time they respond you have the ability to learn something about your ad versary, right? So they're looking at response times. They're looking at, you know, manoeuvrability, they're looking at kind of command and control issues for the Taiwanese military. Every time they have to come out and make some response to the Chinese naval presence . So I think you could argue that they are getting better at this concept. Should they ever decide to eventually try to use some level of force in taking Taiw . Now the eastern side of Taiwan , correct me if I'm wrong, that's where that's where they have some military facilities, some important military facilities. Is that right? Yeah, well, I mean, for not every normal person tries to pay attention to the geography of the bottom of the ocean , but if you look at that, in the straits of the strait of Taiwan , it is a more shallow waterway. It's much choppier waters as a result. And so that's one of the things that enders invasion type scenarios. But once you get past Taiwan, there's a struggle, there's a steep shelf that drops off into the Pacific . And that's why we have a lot of blue water capability that is across that first island chain. That's why we have a lot of bases that are over along that first island chain. And that's why you know, basically the Pacific has been America's domain, especially since the Japanese awakened us to our vulnerability of hop skipping and jumping across the Pacific to be able to challenge the United States in World War two. So post World War two that's been incredibly important to us and thus because it was important to us, it became important to China to be able to operate in those areas . But also the topography of Taiwan on the eastern shore more mountainous cliff like . And so it's a smoother plain on the western side. That's where they grow all their agriculture , almost all their population is . And as a very young, skinny, curly haired, bespectacled missionary back in the nineteen eighties, I lived on that eastern side . It's a spectacular area. It's where the aboriginal tri bes of Taiwan are more plentiful . They speak Japanese and native languages more than they speak Mandarin in that area. But it's a very difficult topography to navigate. And that's why that's so when the people came from China and took over the plain and that's why the Aboriginals retreated up into those mountains. And that's why as you're alluding, if you're going to have holes dug into mountains maybe to store things that are needed in a time of crisis, that's the side you would use. And since the Chinese military hasn't had this Blue Water Pacific capability demonstrated for up until recently, that's where your safe haven would be to be able to resupply and operate . So let me get this straight Steve . You were a missionary with hair ? Not just hair wild curly hair that I would say looked out wav .es It wasn't a mullet, was it? Tell me it was a mullet. It wasn't a mullet, but you know, I had these distinguished high temples that some might have said was very telegenic, but not everyone agreed . Eventually that's all right, well next time look, next time you're on the show, you have to bring a picture . So my wife has it. She shows, he says, look, if you look like this when we met, we never would have dated. That's fantastic. We'll see, look, if you could stay right there, we got a couple more pages of questions to throw your way , but I do have to take a quick break . We'll be back with more from Steve Yates, right? Don't forget, he's got a brand new podcast out . It's called Nation States with Yates . Anyway, we'll be right back with more here on the situation report. Stick around . This episode is brought to you by Google Health. Stop chasing someone else's definition of health. What matters is what's healthy for you. Google Health offers a new kind of coach built with Gemini for effort less tracking, sleep insights, and holistic coaching tailored to you. Visit googlestore. com to learn more and start a new relationship with your health requires Google account, Google Health App, Internet, and Google Health Premium Subscription. Feature subject to change, availability and results vary, not intended for medical purposes, works independently of Gemini apps. Check responses for accuracy . This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture. com slash spotify. I'm Mike Baker here with a message for all you dog lovers out there and there are a lot of you. We've got two at the Baker Compound. We've got Hendrix, our good old boy golden retriever, and we've got Monty, he's our lovable but dim witted King Charles Spaniel. Now, when it comes to your dog food , there does always seem to be a compromise. 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Once again, it's Sundaysfordogs dot com slash pdb and use the code pdb at checkout. Welcome back to the PDB situation report. Joining us once again is Steve Yates, senior research fellow at the Heritage Foundation. He's also host of the brand new podcast Nation States with yats and and I love the name. I'm just gonna keep repeating that. Rolls right off the tongue, say it every day. It's good for you. It does, it does. It's gonna look good on a t shirt or a coffee mug you got to get swag . Yeah . Yeah. Oh, we've been talking about PDB swag here at the president's daily brief for ages , right? But it's it's like pushing a rock up a hill , right ? So all I want is all I want is some coffee mugs, maybe beer cuzzies and my some of my friends entire world . They look you up. Yeah . No, it's got to be all made in the U . S. That's the problem. That's the problem. But here, here's my brilliant idea, Steve. This is I'm gonna float this by it. Don't tell anybody else, this is between you and me, although I did patent the idea. President's daily brief , days of the week briefs . Oh yes, go yes. See, see almost spy like almost , almost , you know? The little waste handle say things like yeah, actual stay informed. Yeah, no, the brave brave, you know, will have like stay cool on 'em, stay informed, stay safe. Absolutely safe. That's good for your brief.s Yeah Yeah , yeah, that'll remind people always know where your pants are. So anyway, already is right . Yeah, well, that's all the time we have for today Steve . Drive safely . Listen , where do you think because again there was this talk of and I think some people misinterpreted at the twenty twenty seven time frame, right when they , you know, be ready for Taiwan. And this sort of this edict came from the top in the Chinese regime from Xi Jinping . But that was more about being prepared, right, as opposed to twenty twenty seven is an invasion date. Right. Well, my whole life has been spent trying to read the tea leaves. And you know, when you're working in intelligence, govern ment, policymaking, diplomacy, whatever the different angles might be . And you got a hard target that doesn't exactly open its kimono and let you explore everything just frivolously and get good answers on a lot of different stuff , you're making approximations . And so our targets notice . And so there's a lot of things that they put out there for the general discourse , which in the terms familiar to you may be meant to influence more than to inform . And so there have been some articles that would go out in party literature. They might come from the central party school. They might go through the state owned media platforms. They might pick a favorite American egg head professor to write an interesting article that sounds like it's coming from America, but it's really coming from what their key findings were from the super spectacular trip they took to the PRC just brought back for them. And through these various channels , no one has sort of been able to give the video evidence, the audio evidence or authoritative written in Xi Jinping 's name evidence that he said, I want to be able to invade Taiwan by twenty twenty seven . But basically the broad mandate was we got it we've been behind the eight ball in being able to convince people or even ourselves that we have the capability to do this . And there are rational voices in the PLA that are hesitant about this because anyone who knows anything about real military be hesitant. This is harder than Day . And I think Ukraine should be a sobriety checkpoint for Chinese hubris about what big continental powers capabilities are to project. That's over a land border. This sea border is bigger . And I don't think that Japan or the Philippines will stay on the sidelines. I think that's kind of where Xi Jinping missed the mark. He definitely pushed for this twenty twenty seven be ready kind of notion. There was never any correction or pushback on that floating and going through America , through congressional testimony, through official reports that come from the Pentagon. And so the Chinese would have pushed back if they didn't want that out there . At the same time, though , it doesn't necessarily mean they're going to invade. Now, my point of view is twenty twenty seven isn't here yet. They do always every single day of twenty twenty six and of twenty twenty seven. They have the ability to hit, cause a crisis. What they don't control is the blowback . And I think the blowback now is potentially bigger because Taiwan is now I think the fifth most valuable stock exchange on the planet . It is I think the fourth largest trading partner of the United States of America and many other countries too . And now neighbors have been provoked because of China's encroachment on their territorial waters. Well, this isn't really seen as internal politics by China . It's seen as a broader power play that's hostile to the interests of other allies . And so I think that the levers that Xi Jinping thought he had to be prepared by twenty twenty seven have changed And also in Taiwan, there's been , I think, a greater sense of a need for resiliency , imperfect, and they definitely still have a ways to go. But even as you were alluding to , these different exercises Chinese learned by watching how Taiwan reacts , but Taiwan's public has also learned it costs them to do it . They can't have a low base all volunteer force. They have to have more people conscripted into their milit ary and better trained for longer periods of time because if you have pilot hours who have to go up and respond to these sortes, they'll run out of pilots and pilot hours . And so they've recognized some gaps that they have to fill and that pendulum swing is net advantage for team freedom first island chain, not so much advantage for Xi Jinping's twenty twenty seven plants. But okay , let me let me go back to something you said earlier. There's some senior officers in the PLA who are possibly less enthusiastic about the concept a takeo ver of Taiwan does that matter to Xi Jinping? I mean, are those people free to express that opinion if they do, are they among those who have been moved out he certainly hasn't been shy about removing officers . You know, is there an environment where anybody is willing to tell Xinping, man, I don't know that's a good idea . I question whether they have that sort of safe space to express the truth. I don't think that Xi Jinping is the kind of guy that Jack Nicholson like can handle the truth . And he's eighth grade educated . He was smart enough in power politics, people politics, and ruthless enough to climb to the top of the world's largest, most well sourced mafia , but I don't think of him as a wonder kid of strategy . He has had this sort of brute force model. It's been subtle enough to allow for coercion rather than just ground and bound . But I think that a lot of those guys that know about intelligence know about what's happening in Taiwan. And you know, Taiwan now admits there's plenty of penetration inside Taiwan, where there have been PLA operatives and Chinese intelligence operatives in Taiwan. They know a lot of the truth. And I think some of the hesitancy in their system is because some of the system knows the truth of how hard this is becoming for them . And that's also provoked the urgency. They don't see Tai necessarily as their friend . So they might want to try to do some things, maybe not to destroy Taiwan , but to try to see whether they can coerce concessions , whether they can coerce the United States or some of the rest of the international community into concessions where they can consolidate gains that buy them more detail. What does concessions be? What sort of concessions would they be looking for? Trying to I think solidify the isolation against Taiwan's leadership and its policy to try to further push Taiwan out of international space . So there's still some things even in what I consider to be wrong headed American policies where we'll let s of, I think, some pretty bad regimes come through the United States, whether it's to attend the United Nations or to come for negotiations for other purposes. We pretty much block Taiwan's elected leadership except for very rare occasions from even being able to set foot in the United States. And if they set foot in the United States, heaven forbid, they shall not enter the District of Columbia because everyone knows that's where amazing things happen . But yeah, so we play we play it 's ground zero for amazing things yeah exactly but we play these games and China would like us to cut that off. They'd also like us to cut back on selling deterrent capability to Taiwan . And that still is an issue that remains in play. The Trump administration has approved over ten billion dollars in military assistance to Taiwan, which they buy, we don't give to them. And there's a question of whether ten plus billion more will be approved. And that adds up to more than was approved in the two terms of Obama and one term of Biden . So while there's sort of this question of whether Trump on Taiwan, this is still something that matters to China. They'd like that spigot turned off. Yeah . What let me ask you this being mindful of time, this may seem like an odd question to wrap it up with, but where does the US stand on this whole concept of reshoring chip manufacturing to the U. S. that was that was taking up the headlines for a while , you know, as people would talk about the potential for China to move on Taiwan. Oh my God, we've got to get chip manufacturing under control . Where is that gone? Well, it's one of these things that I don't see as an either or proposition. I don't think economic reality sees as an either or proposition, but it's, I think, settled in a somewhat balanced place , the world's most leading manufacturers of the most advanced chips are in Taiwan . And a lot of our ecosystems are completely dependent on that as part of our supply chain. But those leading enterprises are also investing in manufacturing in the United States. The Taiwan semiconductor manufacturing company is one of the most famous, it is among the most wealthy companies on the planet is a huge chunk of Taiwan's gross domestic product right now. One of the reasons they have the fourth largest or fourth most valued or fifth most valued stock exchange in the world . But they have a huge footprint in the state of Arizona. They have an ecosystem that's in other states. There are other big semiconductor manufacturing companies in Taiwan that aren't as big as TSMC but are also developing manufacturing in the United States. And what that does is it creates people who are vested in that in America. And I think that's dulled a little bit of the urgency of we need to sort of penalize Taiwan or bring all of this here now. I think there's also been a recognition that semiconductors aren't the only thing that ties us to a national interest in this part of that first island chain being a priority national interest of the United States . I think there was sort of this escapism dream that if but for the semiconductors we could wash our hands of this Taiwan thing and then we could get along with China and things might be okay. Let me ask you this, Steve, to wrap things up . And then you and I'll spend a few minutes before we actually do finish writing the jingle for your new podcast. But I love it. What's your perspective? Let's say Communist Party decides next month is the month. We're moving on Taiwan . From your perspective , do you see the US getting engaged in that conflict? And if so in what fashion? I know this is that's a lot to ask you, but you know, it is a long, but you won't fifty in fifteen seconds or less. In fifteen seconds or less, tell me how to solve that problem . Well, solution might be too long a bridge . But I think the United States would have no choice but to intervene. I think we would intervene at a distance. It wouldn't involve so called boots on the ground, the overused trope of recent military analysis. And I think among the reasons is that I for Japan will certainly be involved as they see this increasingly as a core national interest of theirs . And because it's not just about that island, it's not just about dealing with China . And so for those many factors, I think the U. S. will be involved. The question is, do we hit targets on the mainland? Do we enable or encourage Taiwan to do so ? If Japan gets involved, what way would it be involved? All these things are unknowns at this point, but those are the wrinkles that I think should give Beijing pause. Those are what give me confidence that we have time to improve deterrence , and improve some of the military capabil ities, maybe improve what we're doing so that Sin City and Washington isn't getting fat and happy on long manufacturing supply chains that are slow to deliver to customers that pay good old cash that I want coming into the American economy. Yeah , and I guess it also depends on the political landscape of the U. S. at the time . Should something like that happen if the democratic socialists of America have taken over the political landscape . We know they're west. And I guess yeah, yeah, yeah, exactly. I guess we won't have to worry about whether we get involved in the conflict unless they want to jump in on the Chinese side . Well, I tell you what, Steve, as always , really appreciate your insight, your experience . And I encourage everyone to jump on. When does your podcast start? Is it already started? It's's under itway. We've got we've got a few episodes under our belts, you know, we're we're nowhere near the great Mike Baker, but you know, we'll be we'll be getting we're getting lift off sometime we'll achieve altitude, but we got a few' evepisodes out there, but every one of them is built around something that is related to the nation's state. I mean, it's my way of emphasizing new realism that with the end of globalism, with questions about where things go in the world and with the United States. I want to try to use some common sense ways of talking about this. But the nation state is the building block of the international system. It matters more to us than we have been told in recent times. And so whether it's immigration , things like fentanyl , things like technology or alliances, key things in the headlines when conflicts, prudent use of force , things that would be familiar to you, Mike, and everyone who's been listening to you over the years. And so people can find it. It's on the Clay Travis and Buck Sexton network, nation states with Yates , is it true that every episode, Buck Sexton just kind of sits in an easy chair next to you like your Ed McMahon and laughs and your jokes and clay is that like dream. That's the dream. I'm sure Buck would be thrilled to play that kind of role . But you know what ? If we're talking about the relative net worth of host versus the color commentator he's a little bit ahead of me, I'd say well, I tell you what, I encourage everyone to check this out. Nation states with Yates, man, listen, thank you very much. I hope you'll have time now that you're get your own podcast, I hope you have time to get back on the situation report, man. Thank you so much for your time, Steve. Thank you. Take care man. Well, that is all the time we have for this week's PDB situation report. I know, I know. Don't worry though, 'cause we're going to be back . And that's not a threat. We just come back every weekend. If you have any questions or comments or humorous anecdotes, just reach out to me at PDB at the firsttv . com. And of course, the highlight of every week at the PDB arters, which is located under a dormant volcano , surrounded by a moat filled with sharks with l theaser beams on their heads, is when Carl a mailman, I don't know even how he shows up or how he found us, but he drops off another mailbag with all your cards and comments and we take a bunch of 'em and we mush 'em into an episode every month that we call Ask Me Anything. So if you could keep your cards and letters coming, right ? And if you'd like to listen to the show ad free, you can do that. It's very simple. All you have to do is become a premium member of the President 's Daily Brief by visiting PDBPremium . com. That's right. You can have an ad free experience and you also have access to special premium member content, including our brand new series the PDB Dictator Files. You gotta check that out. I'm Mike Baker, and until next time, well you know the drill. Stay informed and stay safe. Stay cool Ever think a lyrics says one thing and it's actually something totally different ? See, not everything is what it sounds like, but hotels dot com