Okay, very good morning. Hope you well. Good to be back after a couple days off the desk So I hope everyone's had a good week so far and just gonna get up to speed with quite a few different things From the cold snap ongoing and the implications that energy sector in the US obviously saw yesterday WTI crude futures in the front month contract get up to close to 61 bucks We had a higher well at a record print in US equities, but generally a fairly flat finish Overall in the major three indices in the cash market, but again generally keeping that theme alive of equities fairly elevated The dollar seeing a degree of strength and we're back above a key long-term trend line Which we'll look at in a moment So just inserting a bit of downside pressure on both major currency pairs in the euro and pound this morning Which you can see both are down each respectively 30 pips So quite a uniform response to persistent dollar strength to Dixie up about two tenths this morning And then it did come after US bond yield surged to their highest in a year yesterday as everyone kind of continues to have this reflation focus With force coming stimulus and so on and so forth. So definitely some meaningful moves in yesterday's session following the US holiday We had on Monday But let's get straight into it start talking about a couple of things and I wanted to talk first of all about this Which was whenever equities get up to these types of levels of which we've been trading out late Which is record territory a lot of people start asking the question of course of you know, is this getting a little bit over stretched is it overdone and Bank of America released a global research report yesterday, which was reflecting actually quite a broad optimistic mood So of respondents only 13% sought the US equity market as in a bubble 27% thought US shares were in early stageball market while slightly more than half believe US stocks were in late stageball markets So, you know the large proportion there, you know, whether early or late still suggesting we're in a ball market However, it's not all such optimism shared across the street city Strategists have actually said they see a 10% correction in US stocks. It's very plausible And they're noting several factors just kind of these current sentiment readings stretch valuations Slipping earning revision momentum as a couple of things, but just having a look at the S&P 500 as a bit of a case study for the time being in the short term We've had quite a nice technical response in yesterday's session here this top kind of rectangle This was the breakout and trade that we saw going into the close on Friday when US stocks just went rampant into the close And that area of last week's general area of resistance was quite a nice area of support where price responded in the overnight age Pacific session and much like we've seen over the course of really 2021 any aggressive selling like this which often I think is more by product of you know, I don't think it's You should be thinking right the Fed are gonna start talking up and Removing the kind of punch-bone becoming less dovish because ultimately as I'll share with you in a moment That's the opposite They're actually towing the line as far as some of the Fed rhetoric from Bowman and daily yesterday And so when any of these dips they do tend to get bought into that technical levels of interest And that's exactly what we've had the Asia Pacific session So part of that move already being reversed and we're back up to 3931 having dropped to around 3913 yesterday But what what would a 10% correction look like in the S&P if that ever did materialize if city were right? Well, actually 10% you know 10% sounds obviously large. It's the definition of a Correction, however, if you look at it in the journey that we've been on in the post pandemic environment 10% You could argue it looks quite healthy for a pullback for us to then continue this rally on to the upside I mean definitely a 10% pullback would feel Depending on how quickly that percent was hit I the faster the more material kind of I guess panic it creates Smikes in the VIX would likely accelerate then a lot of the momentum on the downside and definitely we could drop quite quickly but If it did come down there, there's such a solid levels of technical Relevance as we kind of scale the price back down and that 3600 level really is very important If you're looking under the bigger picture That would be the the previous all-time highs in the September the fake break We had on the FISA vaccine used on the nights of November had some retests on the 30th and the November 21st A deck obviously there's there's areas we'd need to get through even before then here You can see at 36 56 and a half and and even further up if we started coming up to this kind of area 3862 so Yeah, I Personally at this point, you know, I know there's a few It always is the the kind of bears banging the drum trying to find metrics as to talk this market down But I'm still up to belief for the time being at least that any Significant selling will be brought into as far as US equities are concerned at this point Just looking at the broader asset class mix As you can see you're a dollar and cable are both down each respectively around 30 pips at the moment So quite a uniform I would say dollar response To the general move higher that we saw yesterday in tandem with the the breakout up in US yields moving to their highest in a Year the Dixie is up about a quarter percent again this morning having gapped up a little bit overnight in In terms of the Dixie futures and just having a look at this chart here This is a very familiar one I've been looking at for for the last couple of weeks and this is that kind of trend line going back from May To November test and it was an area of which when we broke out above Had had quite strong implications for how the major currency pairs were performing If we actually go back to where we were towards the end of last week You can see there that that wick about three candles ago We had a firm test there and it got rejected this one here We had another test in yesterday's session rejected But you can see now we're above that marker, so I'm quite interested to see this morning how the dollar performs Technically, I think this has been quite a good sign a good barometer for then the dollar sentiment on the day And this would be Intonating towards perhaps a more bullish day for the greenback if that is the case then I'd definitely be keeping an eye on these major currency pairs and as I speak on Q the Dixie Strength just imparting downside pressure on the euro and the euro's just seeing a bit of further Weight come in just on the break as well of technically some fairly interesting levels here in the short-term price activity So just seeing a spill down to s1 now in the euro future on the dollar strength cable obviously Has been holding up a little better But again susceptible perhaps to a little bit of dollar strength just given the breakout Strengths that we've had generally there was that level I was looking at in the briefing that I did on Sunday You know now we're above that key area of congestion of 38 It's feel like we were going to push up to towards 140 and certainly We have got close proximity to that in fact only within around a 50-pip range So a bit of a pullback from there as well with some of the dollar strength. I think Wouldn't be too untoward I guess a key level to watch today in the future is 138 63 You can see here has been a pretty good level of late and just under there on the daily pivots You've got the s1 as well But it's the little way to go for cable as the euro just touches fresh lows Okay, so some other news then Elsewhere in the broader metals space Copper climbing to its highest in 2012 and tin extended a dramatic surge yesterday So some of the bit of a disconnect at the moment. I would say between industrial and precious metals industrial still being buoyed by this whole reflation picture and this pickup with the Adoption of vaccines and a reopening expectation of economies in in due course City group actually forecast copper prices will rally to ten thousand dollars a tonne in six to twelve months on better than expected Recovery and demand most known to be outside of China and that's obviously a key metric to support then those types of metals because It has been underpinned a lot by a fairly early recovery in China post pandemic But if you start to see that spill out into the rest of the globe, then that's going to be another Key catalyst but potential upside in in copper Meanwhile elsewhere though, if you were looking at the lights of gold still remaining a bit pressured by this kind of dollar yield View at the moment and the yellow metal still remains in the futures below 1800 for the time being this morning Moving over though, I've got a few notes I wanted to cover on energy markets and obviously that gas and WTI crude have seen some meaningful Movement over the last 48 hours and to get you up to speed getting myself up to speed having been off the desk the last couple of days Extreme temperatures in North America have curtailed more than two million bowels a day of US oil production So meaningful amount demand from refineries is also being crimped with over three million Bowels a day of processing capacity being idled according to energy aspects as quoted in Bloomberg the polar blast left approximately 73.2% of the US covered with snow and a deep freeze is expected to cause havoc on the oil and gas Production in North America for several days if not weeks according to industry experts Production of gas in the lower 48 states has plummeted to a three-year low as Frigid weather triggers blackouts and causes liquids to freeze inside pipes Forcing wells and processing plants to completely shut So underpinning the rally is the prospect in terms of gas of tighter infantries by the end of winter as heating demand starts sore liquefied natural gas export terminals are shut or curtailed operations amid now a Disaster declaration that we've had in Texas, which is experiencing blackouts at the moment New York gasoline futures close to their highest since August 2019 on Tuesday as a reference point. So, yeah, this is Some some really significant news actually and definitely I think a lot of this To a certain extent obviously has been reflected in price already But I guess this is going to be a rolling thing Which energy traders will be keeping an eye on day today is getting an idea then on the timeline of some return of Lomality which is hard to get a accurate read on at this point in time And obviously given the fact that you know as I just said that The snow and deep freeze is causing havoc for not just gas but also oil for refining for wells for everything Then this could be something which could be a real focal point for the rest of this week at least For for crude oil traders. So definitely worth keeping an eye on that as it develops the other thing I wanted to have a look at was We'll stick with the US and this was a few Fed comments because you know one of the things that the market's very Apprehensive about is potentially when does the Fed start to talk about the idea of optimism that's being reflected in this general reflation view at the moment start to then impact and Forced the need for change in Fed rhetoric to something less accommodative than it currently is at the moment That's probably one of the key risks actually that we're looking out for in the FMC minutes later on tonight And that is that there's a slight risk of upset in the bond market should a few members want to discuss The appropriate timing of the withdrawal of stimulus now you remember going to that last Fed meeting It was pretty much Sturma on that point. However Commentary about withdrawing stimulus will just further fuel the type of moves that we were seeing yesterday yield dollar strength Probably equity weakness If it was that they were having discussions about having the discussion if that makes sense So there's a key point. We're looking at in the minutes But with all that being said actually you've had two speakers I saw from overnight news feds bowman and feds daily both the voters and both of a kind of Neutral this position as far as the hawked-up spectrum is concerned, but they said the US economy still has this is bowman She said the US economy still has a long way to go to heal from the COVID-19 pandemic and new variants of the virus are Seen as troubling while feds daily said don't be fearful about too high inflation And so again paying heed to the fact that they see it or at least she does is a relatively Temporary thing also given the fact of the The degree of flexibility offered by average inflation targeting allowing inflation to be able to run hot above its Traditional 2% target. So the reason why I think Fed commentary will be very important going forward Is that if all things continue at this point in time and things like the vaccine continue to be rolled out and that allows then? Restrictions to be loosened and economic activity starts to then in real terms Reflects some of this overall optimism being priced in right now and the Fed have got to change their rhetoric at some point I think probably now is a little bit too soon, but when that moment comes that's going to be a real Point then of which will undoubtedly will cause some degree of response and volatility in markets because the Fed have got to tread very carefully of course not to Spook the market. They're going to act too quick. So something to be aware of And then the final thing I wanted to talk about was COVID-19 in in the UK and obviously the UK has been a real talking point because of the degree of Success that it's had with the implementation of its vaccine program, which is still well underway at this point It's by far no means over But there was a report here in Sky News last night that I saw and this is what I'm looking for now Is we've got Boris Johnson to give a strategy update on the COVID lockdown strategy on Monday on the 22nd? But then also well What are the subsequent timelines thereafter to give us a roadmap at least of when we can anticipate the economy to start? Reopening to a certain degree through this tiering system, which is obviously critically important for then ascertaining the type of value of which the current assets UK related to training today and every adult in the UK could receive both doses of coronavirus vaccine by August or September maybe sooner if we need to according to the head of the UK's vaccine Task Force this was yesterday and let me just run you through a few different things Now this was something I saw then which slightly Counter to that headline This was in the FT last night saying the UK's anticipating a dip in COVID supply in the coming weeks And obviously a dip in supply would be impactful then for the type of numbers That we could hit and the speed of which we could we could reach them now the FT has reported the UK's Anticipating a dip in coronavirus vaccine in the coming weeks with their analysis Suggesting that if it can continue at its current rate the government's latest inoculation target could be achieved by the end of March Actually The government's much longer target of April 30th, which we know of suggest that ministers either Expect supply levels to drop in the coming weeks or want to play down Expectations stung by the criticism that they suffered during the pandemic which started Stated deadlines have not been met So yeah, I do think this is actually probably prudent planning from the UK They've met that first target, which was if you remember, this is the priority group order And they've managed to get them the first four key categories completed Which is the priority groups going from care home residents residential care workers 80 plus category You know clinically extremely vulnerable So all of these people have now received their first dose, which is that mid-February Beginning of this week 15th target has been achieved now It's about where are we in April and actually then what this is suggesting is the data is telling us that here I think it's on this chart here At the current pace in fact the UK will have given a first COVID-19 vaccine dose to All over 50s by the end of March Well, if you actually look at that then all over 50s is basically then the next Five key priority groups meaning then we've done all nine and the only thing remaining then is the rest of the UK adult population So it again strategy-wise. I think it makes a lot of sense on a couple of different fronts I think the UK wants to avoid any further criticism So they've effectively bought themselves here an extra month by setting the expectation bar relatively low in order then that they've got some flexibility should they Face any type of supply disruption. So I think this has been well managed again by the UK government The telegraph this morning to add to this has said that COVID lockdown is to continue until cases drop below 1000 a day Now currently COVID cases as of yesterday were around ten thousand six hundred and twenty five So still some way to go there and the plan from Boris Johnson according to UK press sources Is that he's unlikely to commit to a clear timetable in the coming months and instead? Promising a series of reviews and again, I think that's probably the most prudent course of action Definitely do not want to be putting your flag in the ground saying right gets to this date We're doing this because with something so volatile as a as a Virus and potential mutations. There's no way that you can really commit with a great deal of Accuracy to hitting these targets better than give yourself flexibility Even though you feel quite bullish about your ability to vaccinate people to first dose and hit these other priority groups And then also as well only commit to then just giving very regular updated reviews I'm responding to the situation as you see it. So How impactful is this for the pound right now? Not particularly, but I do think it Does favor the UK well in its COVID strategy going forward over the coming months And so hopefully that's a fairly thorough update for you a quick look then at the calendar for today We have had the UK inflation data already come out So let me just quickly read out the year-on-year zero point seven percent CPI Expectations were for zero point six no movement in pound as you would expect You know inflation figures They're just not that important right now because obviously they're particularly low We're still in the midst of course of a national lockdown at this point If there is any future pent up demand inflation to emerge It's not going to be until most likely later It is the first of some important UK data They will get as updates this week a few more things coming out later In the week retail sales and you've got the PMI flash data, which is going to be particularly important on Friday morning So other than that Definitely, I think currency-wise it's more of a dollar day than it is Sterling for sure. So as I mentioned keep an eye on the green back Otherwise the morning quite quiet We're going to see the US afternoon and we've got retail sales Coming out of North America alongside industrial production manufacturing output These figures should show the US economy started 2021 on a fairly firm footing retail sales expected to bounce back up to a positive 1.1 from a previous minus 0.7% Bear in mind that stimulus checks the previous ones started hitting in early January So it should help to some degree to have lift that number a little bit So again, this is not talking about the Biden proposal at the moment. These are the prior checks And then you've got the FFMC minutes, which we've already discussed and then speaker-wise Feds Rosengren a non-voting member speaking at 2.15 London Bank of England's Ramsden speaking at 4 p.m. London time And then from the US Fixed income well for fixed income traders. You are UK guilt auction this morning I read about really solid demand we saw for Italian auction yesterday Obviously given the renewed optimism over draggy coming in looking to steer the ship You've then got a longer dated German auction and 27 billion in a 20-year bond auction from the US coming later as well And that's your wrap. So hopefully that's got you up to speed And the guys will be going over the charts from a more technical perspective on Amplify live I'm going to be doing a masterclass myself tonight 6 p.m. London time We're I'm going to be joined by my guest Merit black joining us from the States to share some of his insights and philosophy About trading with our community. So if you want to join that discussion live, just go to Amplify live comm Thanks very much guys and have a great day head


Well, thank you very much. I'm David Sanger from The New York Times. And it's a great honor to be here at the CSIS event here. And our discussion today is going to be about financial intelligence. It flows very nicely from what you just heard from Stuart and also from the first panel. And we've got a great panel of experts here. To my immediate left, to your right, Michelle Flournoy, who was, of course, Undersecretary Policy at the Pentagon for how many years? Three. And has been out just about long enough now to have plunged back in, as seen as. Jane Harmon, who, of course, served in Congress and served in a number of different intelligence committees along the way and now runs the Wilson Center. And General Keith Alexander, who just left eight years. Was it eight years at NSA? The last year was a doozy out of Zuppill in the rain. Yeah. Some people try to leave the last year their job quietly. But General Alexander decided that would be too boring. So my hope today is to pick up from where the panels were talk a little bit about the role of intelligence in some of these individual cases and then look forward to where these tools are going, how they've been affected by some of the recent disclosures, but also begin to talk about what kind of utility they could have that we haven't thought of yet, that where this may be headed. I thought that one place to start might be with the question of what's worked and what hasn't, something that you heard Tom Donilon and Steve Hadley take up. And Mr. Donilon made the point that, for example, we've been much more successful in the sanctions implementation in Iran than we have in North Korea. And one of the natural questions that raises is, is that because of the unity on sanctions? Or is that in part because of the intelligence challenge that one faces? Obviously Iran is a much more interconnected society. So there are a lot more opportunities, a lot more transactions to go look at. North Korea, obviously, a much more reclusive one. But Michelle, let's start with you on that subject. What's your overall sense about how much of this is an intelligence issue versus non-intelligence related challenges? I do think that having a very high quality of detailed financial intelligence with regard to Iran's money flows did enable us to build a much stronger sanctions regime than had previously been possible. In a couple of ways, one was the one that Stuart mentioned in that we could go to private sector entities and raise their level of awareness of the reputational risk of their dealings with some of these Iranian entities and financial institutions. But the second is on the diplomatic side. When you walk into a country like China or Russia where there may be some at least ambivalence, if not reluctance, to go headlong into joining a sanctions regime, and you're able to not just urge them with arguments, but actually show them specific relationships and specific financial flows that tie directly to illicit activities that they themselves are on record condemning, that's extremely helpful. I mean, it just puts the diplomatic conversation on a completely different basis. You're talking like somebody who has a specific memory in mind of moments of dealing. No specific memories, yeah. And I think most of those discussions, frankly, happened between my State Department colleagues with the help of Stuart and then David alongside them, too, and Neil often as well. But your point is that the Chinese can't simply say, all this kind of stuff happens. Who knows? We've asked them to cease and desist. It's a different thing. You could say institution X and institution Y are having these kinds of relationships and flows, and that's going to put your institutions at risk. It's going to put you politically at risk in terms of being a power that says your anti-proliferation and yet allowing this to go on right under your nose. So I think the detailed intelligence was extremely helpful in making the diplomacy more effective. The point was made in the first session that, I think, Tom Ballin made it, that North Korea was really the first place where we saw a lot of this being used with the Macau Bank. This was obviously during the Bush administration. And then we saw some pulling back later on at that time. But Jane, you were in Congress at that time. Tell us what lessons you think one should have emerged from the Macau Bank experience and the North Korea experience and then carried forward into Iran and into the financial terrorism cases. OK, well let me make a couple of general comments first. First, my Stuart Levy story.  So I'm on the House Intelligence Committee. I'm the senior Democrat, and I just love this guy. He's so good at what he does. So I remember telling him, Stuart, you can never leave. She started trembling. No, no, he left first. So I repeated that every time I saw him. And then, so finally, one Sunday night, I'm at home eating dinner with my family and the phone rings. Hi, Jane, it's Stuart. I'm leaving. And it was a hugely disruptive moment in my life. I never really recovered. But I think he was also trembling. So I'm pleased to have that impact on him. But it turns out, as fabulous as he was, that the crowd that has followed is also fabulous. That's kind of my personal story. Now about all this stuff. A few comments about Congress, and I may be the only recovering politician in the room. Is anybody else in my situation? Isn't that fabulous? You are all so much more intelligent that you didn't pick that line of work. But seriously, one of the best things you can say about Congress in this program is that Congress has not messed it up. And it has been treated as a bipartisan effort from day one. I haven't seen no. This is probably singular. Sniping, that is partisan in nature. I'm sure some folks like this and don't like that. But I haven't seen one shred of it. And that is truly amazing. So congratulations to all of you for doing this job in such a seamless way. But on the sanctions, I may be right or not, and David. But I think that in this case, Congress hasn't micro-managed this either. And in terms of sanctions against specific banks, that judgment has been delegated totally to people who actually know what they're doing. And so in the Macau case and North Korea, I don't think, I mean, obviously North Korea went ahead and did what it did. So I don't think it paid a penalty in the way that other places have. I mean, I just want to say that I'm one who thinks that the sanctions against Russia played a very big role in Russia's change, of course, on Ukraine. I think they worked, even though a lot of people poo-pooed this and said, just sanctions on individuals don't matter, they mattered. So I think in general, this stuff matters. On North Korea, I think less effective. I don't think that means that this crowd was not effective. I just think North Korea, because of its sort of strangio economy, can be less impacted by sanctions than perhaps other places. OK. General Alexander, let's start first with this question of whether or not it was the intelligence on Iran that made it so much more effective, how that compares with dealing with a society like North Korea. And then I wanted to take you to some of the terrorism examples that Treasury has pursued in recent times. I actually, well, first, Juan, thanks for setting this up. And thanks for all you did. It was a privilege and honor to work with you. Stuart, David, Leslie, it really has been. And I think what they've done for our country, what Treasury has done in this area, has been absolutely superb. I think we all have a big round of applause. You're here. But it's the only way I can get an applause. So when you look at the impact that you can have on a country like Iran, and I agree with what Jane said, the fact is Iran's got some economy. And by withholding it, you can have a larger impact. But if you don't have anything, telling them you're going to take something away when they look around and say, what's left? Which is essentially where we are in North Korea. I think the differential is much less. I do think there are credible cases where both of these apply to it where it can. And so from my perspective on the intel side, I think there's great work being done. It's just the impact on Iran is going to be more. You can have more. And they're more connected. Their people in Iran see this. They're a factor. And because they're a factor and it impacts the people, it makes it more difficult on the regime. And so I think that in and of itself is a big differential. Where in North Korea, the people are essentially out. There is no real credible network there where the North Korean people see that difference. So I think when you combine all that, that's really the real case that I think drives the apparent success of sanctions on Iran versus North Korea. And how much time at the NSA do you spend devoting resources, signals intelligence resources and so forth to following the financial flows and to what degree is that done now elsewhere in the centers that Stuart was just describing and so forth? Is there going to change of mission over the years you were there? Well, I don't spend any anymore. Yeah. So it's down to zero. But they were great partners. And I think they're doing incredible work. And so counterterrorism and on the sanctions, a great partner for the whole intelligence community, not just NSA. And so we were part of a bigger team that was working this in the interests of our country and our allies. I think the people who understand the financial stuff really brought in some great, great work here. We had some great analysts that we occasionally used, OK, all the time, that helped in this case. So I wanted to turn to a couple of cases involving terrorism. We asked Treasury in the run-up to this if they could give us a list of some cases which have come out into the public now in which there were good examples of the terrorist finance tracking program being used. One they brought up that we've been discussing here was the investigation into the Nawaz brothers. They were arrested in September of last year. They were traveling from France. They were arrested in the UK, I believe. And they were accused of traveling to a terrorist camp in Syria. And data that was derived from the finance program provided a lot of the transaction information, account numbers, and so forth that I guess helped track them. But I was hoping that by use of an example like this, and you can generalize these out to some other cases, you might be able to give us a little bit of a sense of how this actually works in real life. I think that's a great example. If I could just step back and give some information for everybody here, I think this is really important to set the stage for what's going on in the terrorism arena. When you look at 2012, there were 6,771 attacks. And over 11,000 people were killed. If you go to 2013, that grew to 10,301 attacks. And over 20,641 deaths, almost doubled. And that's an incredible set of statistics. Now, we can argue, this is the University of Maryland start program that does it for state departments, so state will go through and validate all of that. We can argue over, so you counted this level of things. My comment is, let's argue over the things, but look at doubled in a year. Syria is really a problem. And our intelligence analysts across the community have tools to work with. And we were talking about that. What kind of tools do they have? Well, they have this, they have the metadata programs, they have everything to work with, where they're trying to guess like a wheel of fortune. There's a set of blank numbers up here. You get to say, I can use this program, is there a T? And if a T doesn't come up, they say, is there a financial component to this? And if there is, they can put that on there and start to look at letters. And armed with that, what they are able to do is get out in front. And that's what happened to the Nawaz Brothers. When you think about it, because they had information account numbers and all these things that you named there, they were able to see from guys who had been trained in Syria, who were traveling through France to Dover, were picked up because there was information that from this program and others were able to stop. But that's not the key thing for us to remember.  There were 20,000 people killed in 2013. Look at how secure Europe and the United States are. Why is that? It's because of the great work of people like this across the community, pulling all those tools together, putting them on the table. Now the great part about this set of tools, the thing that I think is really good about these tools that sets the framework, is it's been done with Europe involved. So Europe says, we're there. We agree with the way you're using it. We'll give you access to it. We're all in because we see what you're doing with it. And that may, these tools that they've set up may set a framework for using other tools like metadata. And I think that's a huge step forward for us because it's not gonna get less. The DNI talked about what's coming out of Syria. So you have the Nawaz brothers, but there's several thousand in Syria. A great deal of them coming out of Europe, some out of the United States. They're leaving to conduct attacks. It's gonna happen. We need these tools, and we need partnerships with countries in Europe and around the world if we're gonna stop them. Well, Michelle, you were in office at the beginning of the Syrian revolution, of course during the early days of the Arab revolutions. And you were getting this constant flow of both the financial data and then the other data that you're using, of course, to try to target individual cells and so forth and have to make the decisions along the way about where the limits are, what the US can go do. Tell us a little bit about how the kind of financial data plays in, that you're getting from these kind of programs, plays in with the other stream of information and decisions you're having to make along the way. Well, I think with, whether it's the case of Syria or other cases like Afghanistan, Iraq, what this kind of financial intelligence becomes a pretty critical enabler for lots of other agencies as well. So in some cases, it's going to enable a combination of justice and law enforcement to actually take, to pursue prosecutions or to take law enforcement action. One of the things we saw, we had an Afghan threat finance cell on the ground, which had not only traditional intelligence community representatives, but folks from Treasury, folks from DOD, folks from DEA, FBI and the pooling of the information, the pooling of authorities and the fact that we had vetted Afghan partner units to work with meant that you had much greater effectiveness in actually taking some of this data and disrupting the financial flows that were supporting the insurgency and associated groups. This kind of data also has helped enormously for DOD special operations forces to really just better their understanding of these networks. And so if there is an occasion where the military has to action a target, having the understanding of the financial flows is just that much, helps you understand the network that much better. I also think that this kind of work, when it's done in our agency and with partners, can be a very important part of building partner capacity for taking action. I mean, the president in his speech lately, just recently talked about a shift towards really emphasizing building the capacity of partners at the local level to deal with terrorism on their soils. This helping them use this kind of information, develop their own sources of this kind of information would be very, very important. And then the last thing I'd note is, in the case of Syria, you have groups like Hezbollah, very, very active. I mean, some of the sources of Hezbollah's funding with regard to international drug trapping and so forth, we talk about reputational risk. I mean, having the opportunity to publicize some of that, the sources of their funding, which are very much cast a, raise a lot of questions about their stated, poke a lot of holes in their rhetoric, shall we say, in terms of what they're trying to do in the region. So I think this is an enabler for law enforcement, for helping our military understand these networks and our intelligence community writ large for partner capacity building and for putting some of these groups at reputational risk. And again, whether it's Syria or Afghanistan, I think these elements are common across the various cases. You talked before about the utility and say dealing with the Chinese on say weapons proliferation in North Korea. Tell us a little bit in the terrorist case, if you tracked something back and then ended up in Saudi Arabia or some other country where there's obviously been a lot of funding going on of madrasas and so forth. How did that same dynamic that you described with the Chinese, for example, translate when you're doing this in the terror context? Sure, I think it does has enabled conversations with certain countries about support that is happening in their society that the state may or may not condone and may not even be aware of. My own knowledge has to do more with the case of Pakistan, where we were able to trace financial flows across the border and among different groups. And even initially when the Pakistani authorities were sort of in denial about some of what was happening and supporting a terrorist and a surge in action coming across the border that was directly impacting American forces, we were able to say no, here's the evidence, this is happening, look for yourselves. So I think it can be, again, make the diplomatic effort much more compelling.  You ever see any objections to the US program in that format? Well, I saw a feigned outrage because deniability is built into a lot of the actions of governments, including our government. That's sort of part of the whole intel landscape. I also saw efforts which are longstanding, I don't think they were developed to defeat these programs, but they work. I mean, the Huala network is one, the sort of barter system in Muslim countries that makes it very hard to track what's going on. And another is just the moving of large amounts of cash that don't go through financial institutions, which still happens. And I remember the frustration of some of us in Congress on the Intelligence Committee trying to figure out who was supporting Hamas and who was supporting some of the terror operations in the region, especially in Gaza against Israel. And $25,000 ahead went to families of suicide bombers, for example, and where did that money come from and how did it get there? And we had a lot of trouble. Just one more comment about this because I do think it's such an effective remedy and I think the Treasury Department so capably applies it. And that is, let's never underestimate our asymmetric strength using financial tools against either non-state actors or state actors. A lot of state economies are very fragile and obviously individual wealth, if you can bar people's access to assets, is fragile. And these tools are just enormously effective. I don't think we have any other tools that are this effective. And a final comment just in terms of Congress's bipartisan support is that in each party there are, and no one has missed this, sort of isolationist wings or in the Democratic Party sense more of a pacifist wing and engagement wings. And financial tools are supported by both of these wings. Military tools are not. And certain other kinds of engagement tools are not. So this is probably the best set of weapons that we have in a very dangerous world. General Alexander, in your first set of comments you made the observation that because the Europeans and others have been so helpful in the financial area this may be a building block to get them to help in metadata programs, other intelligence collection. But if you look across Europe these days, in fact if you hear anything you hear something in the reverse direction that since the revelations of the past year including the surveillance of European leaders Chancellor Merkel and others but also the revelation of some of these programs that if anything it seems as if there's pressure on these governments not to cooperate less than they have. And you heard one of the earlier sessions that there is a sense, I think Steve Adley said that the Europeans don't believe they're under as great potential terrorist threat as the United States does that they don't believe that the weapons proliferation threat is as great. So in the last year, that famous last year you had an office, did you see a reversal of cooperation in any way in some of these cases? I think there's a public discussion and then private work. I think all the countries realize the threats on terrorism. And anyone that says they don't I think is not being candid because they get in their ones wrapping up the terrorists. We give them the leads, they wrap them up. And they know that this type of data is helping them. I think you asked an important thing here that I would just take the next step on and that is so the terrorist program actually has a way of treasury can go to Europol show that the data they're requesting meets a set of standards that everybody's agreed to. And so my comment with respect to the metadata program is in reality, Europe and many of the European nations have a way of working with metadata. So do we. And we want it for a common good. Why can't we use that together and come up with a framework that does it and helps us? And I think we can. And I think there is good in taking these steps on what we can do together. That's a policy decision, it's not mine. Now as a citizen, but what I can say is there is tremendous value in the partnership. And I think what the policy makers need to do, that's a Michelin company. I'm a former too. Former policy makers. We do is say. Recovering, I think. Recovering, yeah. So what they would do is say, so where is the benefits here? From my perspective, it's gonna be in the counter-terrorism and in the cyber arena. We have to work together here. We've got to set the framework up. And I think we've got to have a way of saying this is where we all agree. Here's where we're gonna have parts that we're gonna have to settle. And here's where we will never agree. And in those, I think you've got some of these. Every nation's gonna act in its best interest. It gets down to it. Nations and the elected officials are responsible for protecting that nation, are gonna act in their best interest. That's us, that's all the other countries. Michelle, he's perfectly set you up because of where this is going a few years out. So we heard in the first session significant disagreements on cyber policy, not only between the US and China where we're defining the problem differently, but I would say the US and Europe where the privacy debate is underway in a great way. Differences with many of our other partners. So if you had to look at where you would like to see this and where you think it will be in five years, the degree of cooperation on things like terrorist finance, on setting some common rules on cyber that would enable the intelligence to go beyond just finance, where do you think we will be? Those are two different things where I would like us to be and where we may be. You can answer them separately. Where I would like us to be is, having benefited from a truly sort of elevated strategic debate about the benefits and risks to be managed associated with collecting and using different kinds of metadata. I would like to have that intelligent, dispassionate conversation in the United States. I know that's a big tall quarter. And then based on that have some much stronger foundation for some legislation and some reform that we need. I mean, we need cyber legislation in this country. The danger is we're gonna rush to it based on the emotional response to the Snowden leakage as opposed to based on a truly informed strategic debate about benefits and risks and how best to manage the latter. And what would you hope that legislation had in it? I think that I would hope that it would have positive sort of post-war authorization of certain types of cyber collection and analysis because I think it is a critical tool. I also would like to see the same kind of discussion in Europe and then building some kind of cooperative framework again that is rooted in a balancing of the very real security risks and the very real privacy concerns. Right now, we have a lot of heat and very little light. We have a lot of emotion. We have a lot of people using this for political purposes. And if that's the basis on which either we in the United States or our close partners in Europe actually come up with legislation, we will get it exactly wrong. Jane, at the Wilson Center, you are going to be doing a conference, I think in about two days time on the post-Snowden period. And one of the features that we have seen of this, which speaks right to what Michelle was discussing, is we've got individual countries now talking about walling off parts of their internet. Part of the exactly wrong. Right, so that was sort of my question, which is what's the actual danger if that happens, both through intelligence gathering and also just to internet freedom? Well, let's start with Edward Snowden. I'm hopeful that his 15 minutes are almost up. I thought his interview the other night with NBC was extremely revealing of his incredible personal arrogance and misguided approach to all this. He's not a whistleblower. There's no real evidence that he is. It would have been nice by the way, Keith. I'm sure you don't just agree with me. If the NSA had been able to put out this email chain, this pathetic little email chain earlier, but in any rate, it's out. And he's not a whistleblower and his actions moving first to China and then to Russia are enormously suspicious, whatever they may turn out to be and claiming that none of his material was exploited, just it doesn't pass the last test. Having said that, the debate we're having is useful and I keep cringing every time someone talks about the balance between security and liberty. I don't think it's a zero sum game. I think it's a positive sum game and this relates to everything you're asking me, David. I think we either protect civil liberty and security at the same time or we have neither of those things. And as we think forward to what we should do in this country and how we should collaborate with others, we have to keep that in mind. The cyber legislation that Congress is not passing has to include a requirement for the private sector to share and then indemnification to the private sector if they share information. 85% of the cyber capacity in this country or the last time I looked is in private hands. Let's understand that including a lot of our grids that are essential to keep all of us safe from cyber attacks so there better be some cooperation. And they're not sharing for competitive advantage and for fear of lawsuits. So they have to share and Congress has not made this possible. It takes legislation. There is an executive order, it's just not adequate.  And I think in technological terms, Keith would know I don't really, I don't think it can work. But this notion even that U.S. providers are gonna set up different protections for Europeans and so on in different places. I view is really pretty silly and I think in the end consumers are not gonna want this. They may purchase it and then they're gonna figure out that there are firewalls blocking them from getting things that they really want that are not in their particular service providers range of action. I think this thing will fall to a great big thud in the virtual world, a virtual thud and won't work. But back to the beginning, we need to have the right conversation in this country and internationally with the anxious publics in both places that explains why security and liberty are not a zero sum game. And if we can make that sale and it will take some serious conversation and some intelligent hearings in Congress, that may be an oxymoron. But if we could do that, I think in the end we would have decent cyber legislation and decent cyber regimes, which would be good. Norms of international conduct that will in the end protect consumers and the public better than anything else. Well, we have about 10 or 12 minutes left to take a few questions from the audience. We'll ask that they be succinct and bear in mind that your questions are the last thing between all of your compatriots here and lunch. So we'll start with you, ma'am, right here. There's some microphones coming through. Good morning. Hi, General. Hi, Jane, how are you? I don't know you, Michelle, but I think you're really brilliant. You should have been national security advisor. But this is, my question is twofold. We removed the sanctions. We removed the defense shield from Poland because the argument at the democratically controlled Congress was that Iran wasn't a threat. Then we moved even further and we decide to remove the sanctions from Iran, even though we know that Iran, along with Russia and China, are obtaining electronic and computer and information they shouldn't be. I need to understand what type of smart power was it to remove the sanctions from Iran at the time we removed them when we're not out of Afghanistan and Iran is you water and other forms of natural resources as weapons. So we're talking financial, but the commodity in the world now is water. And we removed the sanctions. I'll do this, Michelle. Two points of clarification. One is that we have not removed the sanctions. The sanctions remain in place there. When Iran accepted the interim deal, which halts its program, there was a very small release of frozen assets or funds. But the sanctions regime is still very much in place and that's part of why they are still at the negotiating table. And I don't believe it's administration power. I mean, I'm not in the administration anymore, but I believe that they have every intent of keeping that regime in place until we get to the objective of preventing Iran from pursuing nuclear weapons and reaching a final agreement. The other point of clarification is we didn't abandon missile defense in Europe. We deployed it a more robust system more quickly. That includes systems that are already being deployed in Poland today and in Turkey and with the SM3 block two missile and so forth, which is actually a more capable system that will be deployed faster than the original timeline. So, and that is because there is shared US and European concern over the ballistic missile threat that Iran poses to Europe. Steve Clements. Sometimes talking about fiction allows us to talk about the real world more easily. David Ignatius is one of his last novels, Blood Money, essentially takes financial tracking intelligence and you see in that novel that that is taken by adversaries and used against agents of the CIA, the NSA and others. And I'm interested into what degree implied in our discussion today is the United States is in such a leading position in this capacity. There hasn't been discussion that much about where the gap is with the next leaders and whether or not some of what we're talking about today can be used in a way against American interests by others. Good question, General Alexander. What did you see in the way American partners and adversaries were developing their own capabilities? Well, I think, you know, this is the issue about the bulk, almost drops you back to the balkanization. And you know, it is interesting to see technically what's going on out there and how good Silicon Valley and all the people we have are in advancing some of these technologies. It's doubling every two years, which means that what you learned in your first year of college, by the time you get to junior year, half of what you learned is outdated. So I think in that respect, dropping out and that kind of power doesn't make sense. You know, it quickly gets you to dropping back analogous to where Iran has dropped back because of sanctions and the way they live today. If you look at their infrastructure versus everybody else. With respect to others using this against us. So, you know, I think there's always a concern of countries going after ours, the risk of the dollar and things like that because it's used in some of this. I think that's where the Europol approach is really a great foundation because it's one that's respected, not just by us, but by many countries. And I think in some of these areas, we need partners and allies to take the same kind of stance that we do. It can't be done alone. Unless we can't get anybody, I recognize that, you know, the White House policy makers can choose to do something like that, but it sure is strengthened when you get others involved in it. I've not seen though, to that extent, where it's been used that way. And I'm trying to think of a case, but I can't think of one. I can see where they're using it to attack people. The Barbsey case is one of the ones that they released where I think it was $100,000 that go after the Saudi ambassador here in the U.S. and Washington. So when you start to look at some of those, there is tremendous impact that these programs have. There's a question, hand down here, right here. Hi, Nicholas Ansinger. I'm an intern here at CSIS. I greatly enjoyed your talk. My question is, are American and other Western multinational oil companies who are doing business in Russia, like Exxon, Shell, and Stead Oil, are they affected by sanctions against Russia? If so, how? Who's best on this? Anybody? On what the actual effect has been? Go ahead, Jim. Go ahead. No, I don't know. He's weak. I know the answer is yes, but the specifics of the answer, I think we could handle better in the front row. We're allowed one free question to the audience here, or one free answer. David knows. David, you wanna pick that one up? Yeah. Go ahead, David. As has been noted, the sanctions in relation to the Russia-Ukraine situation have been largely focused on individual actors, not on the companies in Russia. That being said, the fact that we have applied sanctions against a number of significant Russian business people, including some of the cronies quite close to President Putin, who themselves supervise significant operations in Russia and the energy sector and other sectors, has had a chilling effect. And I think Secretary Lew noted this in his remarks, that the sanctions and the threat of sanctions, we have the ability under a recently adopted executive order to apply sanctions against actors in various sectors of the Russian economy, including the energy sector, the financial sector, what have you, combined with the fact that we have, in fact, applied sanctions against individuals who are the chief operating officers of some of these entities, has had a real impact on the Russian economy. So there isn't, as we sit here today, any direct sanctions impact on any of those entities operating there. There is, however, the risk of additional sanctions if the Russians continue to act in a destabilizing fashion. I think that has its own market impact. Very good. Barbara? Thank you. Barbara Slavin from the Atlantic Council and I'll monitor.com, and David Cohen is welcome to answer this one too. This morning has been... We should just get him on up here. This morning has been all about the success of sanctions, how well they've worked, reputational risk, how well it's worked, and how the private sector is totally spooked by all of them and so on. Is there a concern that it's going to be difficult to unravel these sanctions? And in the event there is an agreement with Iran, Iran is going to insist on this, but once you have terrified the private sector into avoiding a country, how do you convince them that it's safe to go back? Well, let's divide that question up into two parts. Part number one, which I like to give to Jane, is let's say there was an Iran deal. This takes three deals, one between the U.S. and the Europeans in Iran, Western and the others in the group, one between the Iranians and negotiators and the clerics and of course the IRGC, and then the hardest one of all between the President and Congress. So could you imagine Congress voting to lift the sanctions that Barbara was referring to if there was a deal? Not easily, I think it would take, buy in, it would take Congress understanding that Israel was supportive of the deal in order for Congress to eliminate sanctions. I think there could be adjustments and surely right now everyone is aware. Bob Menendez who chairs the Senate Foreign Relations Committee has teed up a bill to impose stronger sanctions and held it for the nine month period of the negotiation on the deal. And if there is no deal by whatever it is end of July, I'm guessing, well Congress will be in recess, so probably. So I'm guessing in September that proposal's on the Senate floor. So Congress won't roll this back easily. I think it's a great question Barbara, are we ever gonna undo these regimes? I also think that the sanctions on Iran have to do with more than the nuclear deal. They also have to do with Iran's conduct, bad conduct with respect to proxy terror organizations in the region and that's not on the table. And so I would say in the Iran case, very unlikely that all sanctions would be lifted certainly by the US.  The French have already been in there having conversations, nothing was consummated, but I think much of the world wants to resume trade with Iran and has agreed to our sanctions because the treasury folks in the front row have been so brilliant at building an international coalition to do this. But I think a lot of members of that coalition, if there is no deal, are gonna wanna roll back their participation in the multilateral sanctions regime and that will be very harmful to achieving the result we all wanna achieve in Iran. You know, I just add to that, I think there's tremendous benefit if we can get an agreement to raising, to releasing, getting rid of the sanctions. And the reason is what that does is it gives the Iranian people more access to what's going on. And I think having them closer to the Western world is a good thing. And I think that's part of the solution. Getting that information out there, they're good people. I think if you sent Arnold Schwarzenegger or any movie star over there, they'd be treated great. And the problem is we're not communicating with them. So I think it's in all our best interest to get there. The problem, I agree, the problem is if they continue down the road to build a weapon, it polarizes the region in such a way that it just goes really bad. So we've got to win, we've got to get to that point. And that's a huge set of issues that are on the table. Shall any last thoughts on this, and particularly on the Iran deal? What do you think the big challenges would be if we actually got to a point of lifting sanctions? I do think that getting some agreement about what are the elements of a good agreement? What does a bad agreement look like? What does a good agreement look like? Getting, doing some, and think tanks can play an important role in this regard. Building that bipartisan consensus that is right now sorely absent and very much needed. I also think that, as you said, Israel will have a lot of influence as to how people view the ultimate terms of the agreement. So there are challenges associated with actually lifting the sanctions regime, but I also want to underscore something that Steve Hadley said earlier, that even if we get to a good agreement, sanctions are lifted, figuring out how do you hold Iran accountable and prevent cheating, disincentivize them in terms of cheating, and what kind of instruments do you, short of the use of military force, do you have at your disposal to enforce? Which may mean being able to turn these sanctions back on very quickly. Right, which is, I think we should not, that would not be an easy task. Right. I mean, I think once this particular regime, which took years of hand crafting and lots of work to get all the compliance that we've had and all the buy-in, once you let this go, I don't think there's any hope of getting anything that looks like this back for a long time. So figuring out what your leverage is to enforce this agreement, it speaks to the level of transparency and inspection and intrusiveness that you have to get as part of this, but it also speaks to thinking through what is going to be, it's going to be your enforcement leverage down the line. Very good. Well, I thank you very much. I think we have run slightly over our time here, and so thank you for your patience with that, and we look forward to the rest of the program. Thanks. Thank you.