Crisis insights with Thomas Nides, former U.S. Ambassador to Israel
Willy Walker: Good afternoon and welcome to another Walker webcast. It is my great pleasure to have my friend and former U.S. Ambassador to Israel, Tom Nides, joining me today. First of all, Tom, thank you for taking the time.
Thomas Nides: My pleasure.
Willy Walker: Well, let me do a quick intro and then we'll dive into obviously everything that's going on today.
Tom Nides is an American banker and government official who served as the United States ambassador to Israel from December 2021 to July of 2023. From 2013 to 2021, he was the managing director and vice chairman at Morgan Stanley, serving as a member of the firm's management and operating committees, not just previously Deputy Secretary of State for Management and Resources from 2011 to 2013 during the Obama administration.
He has served in various financial and government roles throughout his life. He has a B.A. from the University of Minnesota. He is the recipient of the Secretary of State's Distinguished Service Award. He is the father of Max and Taylor and husband of the wonderful Virginia. It's my honor and pleasure to have you here today.
So, Tom, do you wish you were still U.S. ambassador to Israel?
Thomas Nides: Hahaha! I think about this all the time because obviously, I'm in constant contact with my friends, my colleagues there. You know, I observed a little bit of PTSD, a little bit like: I was there, should I be there? The reality of this is that Jack Lew has just taken my role. Ironically, I took his job as deputy secretary of state. So we've got to switch jobs. He's done a pretty good job.
Willy Walker: So now we know what you're going to do next, right?
Thomas Nides: Your mouth to God’s ear. So, the reality is, he is well placed. What has happened in Israel is probably the most significant event since 1948 to the birth of the state. And obviously, we'll spend time talking about this. But what Israel is going through right now, it would be the equivalent of 350 million Americans, God forbid, have lost a family member in 9/11. That's what Israel is going through.
Every single Israeli, nine million Israelis live in Israel. Obviously, they're all affected by this. Not just I mean, either they know someone was kidnaped on October 7th. Their family members have now been called up to reserves because of the huge amount of anyone who's under 40 and called up to serve. They were killed. They're kidnapped. I'm literally leaving here today to go sit with a bunch of the family members of those who were held hostage in Gaza. So the whole country, Israel, will never be the same – never be the same after what they have just gone through.
And so, to be honest, you know, not being there obviously is difficult. Actually, going there next week, I will spend some time not in an official capacity, I feel this compulsion to be with my friends, to see what they're going through and feeling the pain that they all feel.
Willy Walker: So before we dive into October 7th and what's happened in the aftermath of October 7th. You were there in a relatively speaking, peaceful time. Talk for a moment as it relates to what you were doing as U.S. ambassador leading up to this, because everything has changed so dramatically. But it's interesting when you were there as ambassador, what were the big issues at that time? Because right now everything has been sort of pushed to the sidelines.
Thomas Nides: I mean, first of all, people need to understand, America is Israel's most important ally. There's no question that Israel counts on the United States not only for its support both for the systems that they have, such as the Iron Dome, but the kind of the moral support they get from as a diaspora community that the Jewish community that lives in the United States. So this relationship, as Joe Biden says, is kind of an unbreakable bond between our two countries. So that has all the benefits of it, plenty of challenges along the way.
The threat around Hamas that was going on when I was there, there were multiple periods of time where Hamas was shooting off rockets into Israel and Israel would respond and this would go back for a few days. The issues around Hezbollah in Lebanon was certainly a real issue. Obviously, the threat of Iran was there. I also was involved heavily in this whole judicial reform that Israel was going through. I also had three prime ministers. You know, I got there but Naftali Bennett had just gotten elected, he then switched jobs with Prime Minister (Yair) Lapid. And then ultimately (Benjamin) Netanyahu won the election against Lapid. Three prime ministers in less than two years, which means it was a little bit chaotic for all of us.
But again, the basic issue is the relationship between these two countries is like this: it's like family members. We say it “mishpucha” in Yiddish and in reality, it is like a family. You know, it's to me a kind of a food fight family, as we all know, coming up for Thanksgiving. And we know what all happens if they join the Thanksgiving table.
But this is because the relationship is strong, the issues that the United States and Israel have are really around security, democratic values, and the question around a two state solution. So there's plenty of issues. It's not a boring place. And quite frankly, I would bet you I just left the capital an hour ago. I spoke to all the Democratic senators. There are 535 members of Congress, I bet you 300 of them came to visit me in two years. I mean, it's nuts. Every single Jewish, non-Jewish, black, white, Republican, Democrat, they all come. Everyone believes they want to be part of what goes on in Israel. It's a magical place. Complicated as it may be, even more complicated post-October 7 but it's a very cool place, very important for us. And again, this is a democratic country in a region. There aren't many of us like that and it's an important ally.
Willy Walker: The Trump administration moved the U.S. Embassy from Tel Aviv to Jerusalem. Beyond the fact that it was difficult to find you somewhere to live when you first got over there, talk about that move and the significance to the Israeli people of the U.S. moving the embassy from Tel Aviv to Jerusalem?
Thomas Nides: Would it have happened under a Democratic administration? Probably not, because it wasn't just the decision of moving the embassy. Remember, we always declare that Jerusalem was the capital of Israel. That was that, both Democrat or Republican administrations have always agreed to that and both Democratic and Republican administrations before Trump left the embassy in Tel Aviv. So George Bush (41), (43) Ronald Reagan, this is not something new guys. And the Trump administration moved it now. The reason we never moved it and the Republican administrations before us, is we were worried about the implications of it because ultimately if you believe it is a solution, then what's going to happen in Jerusalem was supposed to be the last issue on the table and what message you send to the Arab world if you move the U.S. embassy to Jerusalem. Now, virtually very few countries, not none that actually moved it there.
By us doing it, we were worried that we'd ignite the Middle East. We were wrong. The Trump administration did it, there really wasn't much blowback from the Middle East countries. It's the capital of Israel. I've never, ever suggested it was going to be moved back, was going to be moved back. That is the capital. They did what they needed to do in their view. And we obviously supported it. I mean, we supported that post after it was done. You're right, part of that move, sadly, also meant that my house or the house of the Ambassador, which was in Herzliya, beautiful house, I've just got it done. I may start crying now, but they sold the house to Miriam Adelson and Sheldon Adelson for like $85 million, a lot of money, (since there are a lot of real estate people on this phone call - that was in dollars, by the way.) Ironically, I became quite friendly with Miriam.
Willy Walker: You were trying to get your house back? Hahaha.
Thomas Nides: I was invited to her house, our old house, the American embassy house. I was invited by David Friedman, my predecessor. Oh, David and I agree about nothing politically, actually like it was a human being, he says Miriam wants you to the house for Shabbat dinner. So I go towards Herzliya, I walk in, and Miriam is standing in the living room, and she looks at me, goes, “This could have been your living room.” She and I became friends and I really have a lot of respect for her. Again, our politics are a little different. Like, very different. But she's a very nice person, and cares deeply about the state of Israel. I went with her and David Friedman to Poland, to the thing called the “March of the Living" and the two of us, David Friedman asked if I was kosher with him, and I said, "Sure, why not. “Don’t you need to ask the White House?” I'm like, No, it's defining anti-Semitism. 25,000 to 30,000 kids walk from Auschwitz to Birkenau (For any of you on this call, that's about a two mile walk. It's the same walk as a train tracks took people at the labor camp at Auschwitz and then basically killed them at Birkenau.) We walked and there I was holding hands with Miriam Adelson, Bob Kraft, David Friedman, as we walked in behind us were 20,000 kids, all with a theme never to forget.
Anyway, so the point is, they sold my house. It's okay. I lived in a hotel. Don’t feel sorry for me. We finally got a house in Jerusalem later. But listen, the moving of the capital - the capital of Israel is Jerusalem that will never change. And this was one of the different policy issues that the Trump administration did. I will tell you, though, even though I wasn't necessarily supportive of that at the time, it was fine. But what they do need to get credit for is the Abraham Accords, and I think that's an important part of what they did.
Willy Walker: So why don't we dive into that for a second? So the Abraham Accords were negotiated by the Trump administration. One of the things in looking back on those versus the deal that the Biden administration was trying to put together between Israel and Saudi Arabia was the Abraham Accords between Bahrain, UAE, Morocco and Sudan and Israel was done in secrecy before they were announced versus there was quite a public view of what was going on with Saudi Arabia.
If the agreement with Saudi Arabia had been done in the same way that the Abraham Accords have been done, do we have what happened on October 7th? I mean, in other words, was October 7th, a move to try and arrest that negotiation?
Thomas Nides: No. Let's do two things. First of all I applaud it at the time, Jared Kushner, I was texting with him before I walked him, was the UAE ambassador was really the architect with the administration getting this done, very important. It made Israel quietly, I'm not sure it was called secretly, but definitely quietly, because again, when you do this or that ultimately it was great. In fact, if you look at what happened post October 7, all through those countries have obviously spoken up worried about the plight of the Palestinian people. None of them have severed relations with Israel. I wouldn't say muted on the criticism of Israel, but, you know, critical but have not suggested they're going to change their relationship with Israel for the time being, which says a lot about the strength of the Abraham Accords, and the importance of it for the region. So that's good.
There's been rumors about, you know, did Hamas do this with Iran's blessing so they could screw up the signing? That's ridiculous.
Willy Walker: That is ridiculous.
Thomas Nides: Yeah, there's a few reasons. Number one, the planning of this has been going on for a year, maybe longer. The real conversations with the Saudis only really started coming together the last few months. So the reality of this is it wasn't a factor in the decision because at the end of the day, Hamas's decision to attack Israel is for one decision only – which is to destroy the state of Israel. They are not into a two state solution. Do they care about this or care about that? What they care about is destruction of the state of Israel and the way to get Israel destroyed, in their view, was to create a war because ultimately, they knew what they were doing would trigger off a response by Israel, as you seen play out, which their hope would be that the whole world would come against Israel, and they would then drag Iran and Hezbollah into it. Is it a good conversation to say, you know, this was created because the United States was talking with the Saudis? I personally think it's nonsense. I mean, do Iranians like the idea of more chaos? Sure. But again, I think it is one step too far because given the timing of it, the intelligence that we had, and the reality is that the side deals were always going to be a different deal than the other deals of the other countries. Saudi’s a much bigger deal. I mean, obviously Emirates are important to Bahrain, Morocco, but the Saudis' relationship with Israel has been fraught for a long period of time. So it was important to put this in context. So I don't believe that was the major reason why Hamas did it. Maybe around the edges would that be interesting? But I think ultimately it was really that Hamas did what they did, and I'm sure we'll talk about this more for the sole purpose of destroying the state of Israel. That's their game.
By the way, they don't give a crap about how many Palestinians will die in the meantime because they're martyrs and it's all about martyrdom. Which is why more Palestinian die, they're dying for the cause. Now, you might want to ask these poor Palestinian, these Gazans, if they think it's worth the cause for whether they are dying is a whole another question.
Willy Walker: On Iran, the Trump administration had some pretty significant sanctions against Iran as it relates to oil sales. So my understanding was that pre-sanctions selling about two million barrels a day on the global market under the sanctions of the Trump administration went down to 100,000 barrels a day. That strip somewhere between $30 and $40 billion of, if you will, hard money coming into Iran to both fund everything they want to do as well as fund their payments to Hamas to foment terror in the Middle East.
The Biden administration pulled back on those sanctions, which then brought additional revenues into Iran. As you think about that, Tom, because at the same time as pulling back on the sanctions, the Biden administration also gave significant aid to the Palestinian people and brought up the humanitarian aid that was going to Palestine at that time. As you think about the sanctions against Iran and, if you will, a tough stance versus a more appeasing, “Let's work with you” stance. Given everything that's happened, how do we move forward as it relates to relationships with Iran and the sanctions against Iran that were in place that had been pulled back?
Thomas Nides: Look, I fundamentally disagree with what you said. First of all, the evidence, the facts are that the vast majority of the sanctions that were put in by the Trump administration were not left in place by the Biden administration or then strengthened to get the rest of Europe to buy into it. Okay. So ultimately, the idea under the Trump administration, the Trump administration's goal was/is to break Iran, is to get them crawling back to the table and saying no mas. So, again, this is not political. Just giving what facts are following the Trump administration's sanction regime. What happened? Basically the economy in Iran did not collapse. Quite the opposite.
Number two, they got closer and closer to building the bomb, which is ultimately what they were trying to prevent. In fact, arguably, they moved from a percentage of enriching uranium to almost a breakout, which is around 90% Iranian breakout, which would be able to create the ability for them to create a nuclear weapon, which is what Joe Biden said he would never stand for doing.
The reality is we didn't, contrary to what all the detractors were suggesting, that the Biden administration was going to go back into the JCPOA. That never happened because the president himself basically put on the table many more hurdles that the Iranians would have to do for us to even get back to the table which the Iranians were refusing to do so.
Ultimately, as I like to say to people - tell me right now, today, that the actions that were taken in the previous administration did it help us or hurt us? Did we get closer to basically having Iran without a nuclear weapon or closer to a nuclear weapon? And my argument would be, and I’ve had this argument with many of my Republican friends who were opposing the JCPOA, didn't like the JCPOA, ripped up the JCPOA. And I think like Ronald Reagan said, “Are we better off today than we were before?” Answer that question and then I'll give you the facts. So on the sanction regimes, the vast majority of sanctions that were put in place were not only left in place but strengthened against the Iranians.
Now, to be clear, Iran is still at that place where they could one day decide they are going to breakout. They're going to have a nuclear weapon. Joe Biden has said very clearly, we're not going to let you have a nuclear weapon. You can now come to whatever creative thoughts you have and what we will do if that happens. Arguably, you might want to ask the Iranians, when they look at those big, huge ships that Biden put in the Mediterranean and basically telling Hezbollah and the Iranians don't screw with Israel. There's a reason why Hezbollah has not got to do this right now. You know, Biden likes to say, “Superpowers don't bluff.” One of the benefits of Biden means all he knows is this stuff. He knows it really well. He understands that he's been at the table, and I won't screw with him on this.
So I think ultimately the Iran issue itself, do we want to go to war with Iran? Not really. The American people want to go to war with Iran? Not really. A war with Iran is much more significant than watching what's going on with Hamas, their abilities to have an enormous toll, what we were willing to do, what we need to do to stop Iran from having a new weapon. But there's no question that Biden would like, they to talk about the 3Ds, degradation and deterrence. We talk about the third D, which is diplomacy. Is there a diplomatic piece of this? And we'll see how this all plays out.
But again, as someone who spent a lot of time on this Iran issue, I was involved early on the JCPOA under Secretary Clinton. It wasn't a perfect deal, without question. But let me tell you something. I'm a big believer in facts first. I'm a big believer in what's going to get us to what we need to do. And ultimately, I think most people listening to this call would like to figure this out without putting our troops in harm's way and getting into a war with Iran.
Willy Walker: Let's jump to Hamas, 2005. Israel steps out of Gaza, is then accused of having Gaza be an apartheid state and so says, okay, great, you have your own elections. The Palestinian Authority allowed Hamas to, if you will, run at that time. How did Hamas win that election in the sense that was there actually a true election? Because Hamas has been in power, my understanding for the last sixteen years, how did the Palestinian Authority allow Hamas into that? And then I guess the other thing is, as we look forward, where the clear intention is that Hamas will not exist going forward, what exists of the Palestinian Authority after Hamas has been in power for 16 years?
Thomas Nides: So let's step back. So as you know, the disengagement in Gaza was done for the sole purpose that Israel did not want to manage Gaza. They didn't want to with the money, the troop presence, they fundamentally disengaging in Gaza was important and also for the for the sake of the Gazans, the two million Gazans who live there and felt they should be there was going to be a government, whatever that will look like – it should be a non-Israelis who can debate was a good decision or bad decision, but that was the decision at the time. The Palestinian Authority was there. Obviously got voted out by Hamas. You know, we've seen this in plenty of other countries, you saw it as Egypt with the Muslim Brotherhood. They came in, they got elected.
Willy Walker: And Hamas is an outcropping of the Muslim Brotherhood?
Thomas Nides: Without question. To be clear, for those people who listen to this to understand it. Hamas is like ISIS. They're a terrorist organization designated as a terror association by the United States and most of the world. They operate in Gaza with an iron fist. I mean, it was not dissimilar to some of the worst instincts of Castro in the 1940s, even worse. Because it was a military operation, a jihadist operation, which prevented women basically from working, gay rights, women's rights. You know, they taught the schools. It was a fundamentalist driven, not dissimilar to ISIS in some places.
Ultimately, there was never an election in Gaza, to your point, because they were afraid of the outcome. Ironically, the people who are actually relatively popular in Gaza are the Palestinian Authority, which is completely ironic because they're the ones who were pushed out 60 years ago. Now, one of the reasons is that the Palestinian Authority still pays for many of the salaries in Gaza, ironically. And you know, who's really popular in the West Bank? Hamas. It's basically like you want what you can’t have. And that's the reason why in the West Bank and under President Abbas, why President Abbas has not allowed elections to happen because he could wake up and realize Hamas has taken over the P.A. So it's the Middle East, guys. But ultimately, what people need to understand is Hamas does not speak for the Palestinian people. I said this at the Senate just a few minutes ago, Hamas is an ideology. It's an ideology, and it's a terrorist organization. When they wake up in the morning, they don't say, wow, wouldn't it be grand if more Palestinians had a better education or wow wouldn't it be interesting if we have a two state solution? They don't give a crap about any of that.
By the way, a miscalculation on Israel's part. This is what I think ultimately when they really study how this happened, one of the miscalculations was that they actually believe that Hamas wasn't reforming itself but wanted all the goodies more than they thought, meaning they wanted the work permits; 15,000 Gazans Israel went into Israel every day, 15,000. They got money which Israel allowed to happen from Qatar into Gaza to pay for things. Went through Egypt. Right.
And I think the miscalculation on Shin Bet was, you know, they like all this too much and there's no way they could do anything, basically screw that up. And that was the mistake in my view. We could get into a longer debate about how it all happened. But I think it's important, this is complicated stuff. You don't really understand it. But the reality of this is Hamas’ whole sense of being, their whole focus is just like any ISIS-like organization. It's an ideology. And their belief is martyrdom will come with the destruction of the state of Israel occurs, everything else be damned.
I mean, the idea that they have all this food and medical equipment under the tunnels, and they don’t want to share it with the Gazans, because basically that's the UN's job. Let the UN take care of the people. We got to take care of ourselves. This is the logic that's going on and this is what we're doing.
Willy Walker: Your comment about the money coming into both Hamas as well as the Palestinian Authority, I was listening to Jared Kushner on a podcast he was talking about when he was in the White House and Netanyahu came over to visit him and took an El-Al flight over from Israel and landed in Washington and came to visit with the White House. When Abbas came over, he flew over on a Boeing business jet and when he was in the White House, had someone light a cigarette for him. And he was just basically saying the difference in the way.
Thomas Nides: I mean, that's all such nonsense. You know, we get all like crap about the welfare ladies and limousines. Oh, come on. It's ridiculous. This is a way that Arab countries behave. We may like it or not like it, but the reality is, it is the way the Israelis behave that we may or may not like. That's all kabuki. That's all nonsensical. No, is there corruption in the West Bank? Sure. Is Abbas, no question about it. Are some of the behaviors that Prime Minister Netanyahu allowed to happen during his tenure, as expressed in his last ten years, created a difficult environment for the Palestinians? Without question.
My view is there's plenty of things to pick on. Abbas is 86 years old, and he chain smokes and he's got some corruption stuff and I'm sure you know, but if you went around and determined the corruption in the Middle East or, quite frankly, anywhere, you could have a lot of debate. So again, Jared is Jared. It's interesting, it's a funny kind of anecdote about what they do or don't do. But the other day, for good or for bad, we're going to rue the day, folks, when President Abbas is not in the West Bank, because at the end of the day, although he's not very strong and certainly not particularly well-liked in the West Bank, he still does plenty of cooperation with the Israelis.
I mean, the Israeli security forces come in and come out of the West Bank all the time, and there's a lot of information sharing that goes on, which I can't really get into here. But the reality is, they need to transition the elections in the West Bank. Yes, they probably need a little succession planning, given the fact that he is 86 years old, and he smokes three packs of cigarettes a day. So that needs to happen. But again, I'd like to be clear, there's a lot of reasons why we're here.
Willy Walker: So October 7th, another thing that I've heard is that there was a lot of thought that Iran was intimately involved in the planning of October 7th. And what I've heard from various government officials, not you, is that actually from our, if you will, listening in on Iranian communication, it came as much of a surprise to them as it came to the entire world in the sense that the Iranians were not in the actual planning. They may have been in the funding of it, leading up to it, but it came to them as a surprise on the day of it. I'm not looking for you to respond to that.
But on October 7th, to your point at the beginning, you have to keep in mind the scale of this and you sized it as it relates to in the United States what it would have been in relation to 9/11. Many people that I've spoken to about October 7th for Israel and for the Jewish community, this was their 9/11.
Was there any ability Tom for Israel not to respond to this in the way that they have responded to it? So we clearly in the United States, after 9/11, responded to 9/11 and a war on terror that had massive cost, financial, life, and huge civilian casualties across the Middle East. But I think about the Mumbai terrorist attacks in 2008 where terrorists from Pakistan came into Mumbai for days, killing 175 people. And other than tracking down those terrorists, the ringleader who was hanged in 2012 as a result of it, India didn't attack Pakistan. Would there have ever been the ability for Israel to not have responded in the way that they have responded?
Thomas Nides: No way. Absolutely not. I mean, I again, am more liberal than many of the people in this call. I mean, the reality is, Hamas needs to be destroyed. Think about what these people did. Not only do they come into Israel and slaughter 1,400 people. They then took 240 hostages, babies, grandmothers, dads, moms, I mean, brutally just grabbed these people wholeheartedly and brought them into Gaza. And God knows how many of those people. I'm going to go see the hostages' families after I leave here. And so the brutality of what they did and the threat in which they pose and the idea that they don't give a crap about any humanity, meaning forget the Israelis for a minute. They don't care about the Palestinians. The Palestinian people need to be rid of these people as well. Ultimately Israel now, beyond the sheer number and the magnitude and the shock, if Israel is going to live in a peaceful neighborhood, they have to have a deterrent.
A deterrent is going to be two fold. One is destroying Hamas, as quickly as humanly possible. You're not going to destroy it completely because it's an ideology. So you can destroy the infrastructure, you get the leaders, you can blow up the tunnels, but don't kid yourself, like ISIS is to years and years and years. And this will be a fight that Israel will have to do for years and years, years. But yes, they have no choice. If you are Israel's enemy and you're in Hezbollah in Lebanon or ultimately in Iran, or you're the Houthis. You look around with maybe this big, strong Israel, which we all thought was so strong, maybe they aren't so strong? Nope. No, really. The reality is, Israel has to do four things at the same time here. One, they must dismantle and destroy Hamas. Once again, as liberal as I am, they have no choice. They have to do it for their own security. 225,000 Israelis are now being displaced from the north and south and are living in hotels because they can't live in the north or the south. So they have to get rid of Hamas.
Number two, they have to do everything in their power to get these hostages out. I mean, there are 36 different countries of people that they have taken. I mean, who takes a six month old baby? I mean, what nonsense is this? What barbarism? Who could do something like this? So we have to basically do that. At the same time, they have to try to free these hostages. And that runs a complete contrary to the first, which is destroying Hamas.
The third thing is they got to keep Hezbollah out. Now, one reason to be able to keep Hezbollah out, in my humble view, is the fact that Biden has said, “Guys, don't screw with us.” They sent two very large ships in the Mediterranean with all the military equipment those come with. They basically sent a very strong message to Iran, do not do this or you're going to see the force of the United States and we've got Israel's back.
And fourth, which is very important. We have to keep in mind, Israel has to do everything they can possibly do to save innocent Palestinians’ lives. And there's a war. But the reality is, they have to work as hard as they can, which is very difficult to do to prevent innocent Palestinians lives from being lost. And by the way, given the fact that Hamas doesn’t give a crap and given that they're using these Palestinian people as human shields, as proved by what's going on in the hospitals, what's going on, telling innocent Palestinians not to leave the north, stopping them from leaving and either killing them or forcing to stay in the apartments, they know those apartments are going to be bombed, this is how they think. But Israel needs to do the things they can do to basically not only get the humanitarian equipment in from the Rafah gate, from Egypt into the southern Gaza to do everything to preserve is like who wants the innocent people killed? I certainly don't. There's no human being in the world who wants that. But the problem is we're doing all four of those things at the same time, is very difficult because they're all contrary to each other. So ultimately, what Israel is going through, Israel will never be the same. Make no mistake, when I was in Israel, we always talked about the Yom Kippur War. We talked about the war of independence. This is the war of October 7th. It will forever change the state of Israel until we get a clear sense of security. Israelis need to do the things they need to do to secure the homeland.
Willy Walker: As it relates to the calculus Tom, as it relates to civilian casualties. I think right now you accurately stated the number of people who died on October 7th. There are ongoing Israeli casualties of people who are fighting. There's ongoing shelling coming both from the north as well as from Gaza today. So it's not as if this is a one sided conflict. But right now the number is up to, I think, about 11,000 deaths in Palestine. As I sit there and say, okay, if Netanyahu is sitting there saying there is some acceptable amount of collateral damage or not, how should we think about both the endgame as it relates to -- does the world community, as the United States. Because obviously President Biden is getting a lot of pressure right now as it relates to the humanitarian casualties that are coming, that there needs to be some line as it relates to this has to be a cease fire at some line. In our prosecution/persecution of post-9/11. We went into the Middle East and my numbers from the Wilson Center at Brown University are that 420,000 civilians died, over 900,000 people total and that we put 19 years and $7 trillion of investment into prosecuting that war.
You look at that, the United States doesn't really hold the moral high ground as it relates to going after that or with the collateral damage is. How should we think about what you think would be acceptable as it relates to the collateral damage that's going to happen here, to doing exactly what is such a stated objective, which is ridding the face of this earth of Hamas?
Thomas Nides: This could end tomorrow, it's quite simple. Hamas just basically gives back the 240 hostages, hopefully most of them are alive, and they basically get out of the tunnels and get on a boat and go to Qatar. And this ends tomorrow, the cease fire starts, just give up hostages. But they're not going to do that - they're not going to do that. So ultimately, the cards are actually in Hamas's hands. They need to make the decision what they're going to do, because Israel will do what it needs to do to basically rid Gaza of Hamas and the threat that Hamas poses in Israel.
That said, as I said earlier, Israel needs to do as much as humanly possible to prevent the loss of innocent lives, one life is too many. I mean, you can't be a human being and look at these pictures, what's going on in southern Gaza or what's going on in the hospital and have any sense of torment. It's terrible. But again, as much as it hurts me, I got to remind you, how did we get here? What we got here was basically Hamas's whole objective is to create exactly what's happening in Iraq and that this is all in their control, being in their control of stopping this, but they don't want to.
Willy Walker: Could Abbas step in the sense that if we know that Hamas cannot stay in power and that nothing will end until Hamas is completely out of power, is there an opportunity here for the Palestinian Authority to step in, to say, game's over?
Thomas Nides: Yeah, it's interesting. The current Prime Minister Netanyahu, basically kind of pooh-poohed that idea on Sunday when he was doing his TV shows, which I totally reject. I think we don't know yet what the outcome is. And certainly, in my view, Israel can't reoccupy Gaza. That is inherently going to create more conflict for the Israelis around the region. It just is not workable. Now, they can, in the short term, create a security corridor, put some distance between Gaza and southern Israel to create a corridor around which this kind of activity won't be able to happen again. They can do that.
But long term, my view is the rest of the Middle East, you know, Saudi, Kuwait, Qatar, Emirates. But they all need to be part of the solution, right? Jordan and Egypt. They need to be part of the solution. So it can't be just Israel dictating this is what's going to happen. Or Abbas, who's not particularly well-liked in many parts of the Middle East, to be clear, for him to just walk in, to knock on the door of the Hamas parliament and say, I'm here, that's not going to work. But it's got to be done in a thoughtful way. It's like they say it in Israel: “Slowly, slowly.” First things first. You got to get rid of the infrastructure of Hamas. The leadership, basically, for all practical purposes, destroy Hamas. And then second, they have to create a security corridor between Gaza and Israel to get people feeling a sense of comfort like they can live back their normal lives. Then third, they have to figure out what they're going to do in Gaza to basically run a country of two million people. And again, it's a functioning state. I mean, Gaza's got support, quality of the people that exist there, minus Hamas. So ultimately, that's going to have to be part of it. I don't know. I'm not smart enough yet. I know for sure, this administration or Mr. In Biden's administration, the situation will be very clear that the answer is not having the Israelis basically, you know, go in and basically run Gaza. That is a recipe for disaster. And I think we will stand by that. I think that's a good idea. But again, I think they have to do first things first. And this is getting rid of Hamas and getting these hostages back.
Willy Walker: On more technical things, is Gaza on the shekel or does it have its own currency? Does it have its own electricity grid?
Thomas Nides: It has all that. But basically, it has different currencies. They got hard currencies, and they got plenty of shekels going in and out, not dissimilar to what happens in the West Bank. There's lots of dual currencies. Most of their power there is some generated power in Gaza. Some of it's gotten from the PA, some of it is in Egypt. There's lots of fuel being transferred. And if you look at these pictures prior to the bombing, you know, if you look at the pictures, I mean, it's not a Bethesda, but Gaza actually had plenty of you know, it wasn't a terrible place in some places. Plenty of my friends or my former colleagues who lived there worked there for USAID. So I knew them quite well. But again, they're now going to need billions of dollars of infrastructure. They're going to need a whole new government, a new ability to kind of manage this. And it's going to need a lot of support over the next decade and forever.
Willy Walker: You said previously, Tom, that this could end tomorrow if you were putting some type of bracketing on how long you think this goes on for and then followed by, what do you think as it relates to the chance that this escalated beyond the current conflict?
Thomas Nides: On the second, first, I think it's unlikely in my view that this dramatically escalates. The Iranians are making the bet now, the calculation is that the Iranians have multiple proxies in the region, as you pointed out earlier. For all practical purposes, Hamas will be dismantled now, it may not be completely gone, but it will be dismantled. Israelis will be sure of that. So one of their proxies, for all practical purposes now, is gone or at least severely displaced. And they're making that calculation.
The second proxy, which is Hezbollah, which is a much more powerful proxy than Hamas, do they want to see the same fate? And by the way, Israel and the United States will make sure that if they attack Israel in a serious way, that I think the Iranians believe that this could be a huge setback for Lebanon, where Hamas is again, seeing the political power in Lebanon is Hamas. So they could be blown back to the stone ages.
So I think the Iranians realize, one, we're serious. Americans are serious. Israel is serious. So I don't think about today's facts because they didn't get it early, that's when you get it. You get it early. Coming in later doesn't feel like the right thing to do, but who knows what they were doing with Iran, for God sakes, It's not a normal conversation.
The question of how long it lasts, I don't know. There's two parts of this war that people need to understand: one is the air campaign. The air campaign and I've talked to many of my Israeli friends is done for the sole purpose of making it safer to do the ground operation. If there are people in buildings shooting rockets out at you, it's pretty hard for the Israeli military to come into Gaza City without putting many, many lives at risk, which they've already lost 40 or 50 IDF soldiers already inside Gaza. So the air campaign dismantled the communications towers, the sites onto the ground. So that has been going on. But unfortunately, when you do an air campaign in a city the size of Chicago, you're going to kill a lot of innocent people, no question about it, especially given the fact that Hamas is not ready to allow these Palestinian to leave. If they all left, is what Israel told them to do, you know, obviously the loss of lives would be less. But so I think that the air campaign and again, I'm not a military strategist, but I think what we've been told, what the White House has been telling Israel to limit the air campaign. And I think the air campaign has a limited shelf life. I can't tell you if it is days or weeks, but it’s definitely limited because that’s just the way it is, because of the political pressure on innocent lives we lost.
The ground campaign, the door to door, tunnel by tunnel, this could last a long time. Now, weeks, months, I don't know. But, you know, we are fighting on the ground and ISIS for a long time after the massive amount of air power that was put into Afghanistan and what we attack. But again, I think ultimately, they have time, but they don't have indefinite time because the world community, you know, will demand it. You can just see how this kind of shifts in attitude. But I think the ground campaign will certainly last longer than the air campaign.
Willy Walker: You talked about while you were ambassador, there were three distinct leaders of Israel. Netanyahu is clearly back in power. I think back to 9/11 and the fact that President George W. Bush's popularity in the United States post-9/11 rose to, I think, 92%, which is an all-time high in the modern era for a president.
Does Netanyahu, if you will, garner additional support because of this and that they need his heavy hand in dealing with this issue? And how long can he stay in power just from a parliamentary system and so they can call the election at any time? Does this embolden Netanyahu or is Netanyahu still, if you will, compromise because this happened in the first place?
Thomas Nides: It's a complicated question. I don't really want to answer it. I guess, you know, I've got my own personal views. First of all, we're in a war, so any discussion about what leadership will look like during a war seems a little premature. There is no question that going into the war, the prime minister wasn't particularly popular, as you know, as you point out, as a parliamentary system. He got into bed with some very right wing parties, which drove him even more to the right. Quite frankly, he's probably the most liberal guy in his own government, but he does. That's who he is. So ultimately, there is going to be lots of recriminations here.
One thing us Jews are good at is self-examination. Self-reflection and examination are key words for what we do. A lot of people do, but we are really good at this. For those of you who have not watched the “Golda” movie, which just came out a couple of days ago, it was really about again, they didn't know this was going to happen, but the movie was based around the commission that was set up to examine Golda Meir’s involvement in the Yom Kippur War. What they did after that, what they're going to do, examine this is going to happen will pale in comparison what Israel is going to do post this. There is going to be a massive examination. And one would suggest, when you are the leader, you're responsible for good and for bad. You know, the buck stops here. Now, he has yet to articulate that, even as late as you know, this weekend when the other shows wouldn't take responsibility. I think there'll be a reckoning at some point, though, we can debate good or for bad, but that's going to happen. So ultimately, I can't see a scenario.
Personally, to declare I'm not in the government anymore. It's my personal views, not necessarily shared by the White House, doing a lot of, you know, qualifiers here. I can't imagine the government as currently configured is the same government a year from now. It's hard to imagine. In fact, already, as you know, there's a war cabinet that's been set up with opposition leaders who joined the war cabinet, led by my friend Benny Gantz, who ran against, you know, as part of the team was running against obviously, he joined the government. There's seven or eight people in his war cabinet and he's part of that. So they've already assembled some new faces. But I would be hard pressed to believe that this government looks like it does today a year from now, it may be even less than four months from now, but who knows? As you point out, there's a system. It's not our normal system. It's a parliamentary system. So you can have votes of no confidence. Things can happen to create all sorts of cascading events. But there's going to be a lot of self-reflection here, a lot of conversation about how we got here. And again, that's why your leader.
Willy Walker: I'd be remiss if while I had you, I didn't ask you about your views on the US economy, given your role as Vice Chairman of Morgan Stanley. I remember distinctly, Tom, it was just about two years ago right now where you and I were together and you turned to me and you said something along the lines of, “Hey, you know, I hope you're ready for this downturn because things can't keep running this hot. Asset values can't stay up where they were.” And sure enough, two years later, you were spot on in saying to me, get ready for some pain over the next year or two.
Thomas Nides: That's when I told you your stock was hitting 300.
Willy Walker: I appreciate that. I eventually went the other way.
Thomas Nides: Close! It will be back there.
Willy Walker: We'll see.
Thomas Nides: Yeah, we'll see.
Willy Walker: But I guess my question to you would be, first of all, fair to say that Jerome Powell pulled it off?
Thomas Nides: Listen, I think there's no question that there's a view that inflation is slowing down. That's a fact. How dramatic it is, we'll see what happens over the holiday season. But all the indicators would suggest today it feels a little bit like a soft landing. However, the people on this call know better than anyone. Rates this high are going to create a lot of breakage. And just plenty of people on this call are feeling that every day. I don't think it's sustainable for another year or a year and a half at this rate, given the impact it has on the real estate market, on home ownership and on the base economy that is going to be affected because it is this balancing act between cooling and getting down to 3% inflation and not tipping this over into a recession. And the people on this call know this better than I do, that your industry in particular is a bellwether for the economy and all sorts from offices to multifamily to individual. I mean, this is the bellwether and there's no question it is very complicated as all these companies try to refinance and they can’t, and that will have dramatic effects. So I think today, put the stock market aside because, you always are telling me it's not necessarily a barometer, but you tell me you don’t look at your stock price, which makes me feel comfortable. But the reality is I think today on today's facts, Powell has done a relatively good job.
There are other people who think that we are still going to go into recession, that the rates are way too high, that we will create a catastrophic event, especially given the fact that all this debt is beginning to roll off and people can't refinance, and people are handing over the keys and all the things you and I talk about. But, you know, again, I think the good news about this stuff, it'll come in real life. This is not some sort of academic exercise either. It's either we're going to go into recession or not. Either the economy is going to slow down, meaning that inflation's going to slow down or it's not. Unemployment is going to stick at this number or it's going to spike dramatically. So we'll be sitting here which, by the way, will have a huge impact on the election. Because as you know, people still vote their checkbook. They still vote for their financial security as much as they care about their regular security. But their economic security is front and center of people's lives.
Willy Walker: The fiscal deficit obviously has a big play on rates in your first well no not your first president that you worked under because you worked under previous presidents. But in the Obama administration, we were at about a 2.8% GDP fiscal deficit, in the Trump administration that increased to 5.6%. COVID took it up to 13%. We have it now down to 8%. We can't afford an 8% fiscal deficit. Any confidence that regardless of who the president of the United States is elected a year from now, that we can get our fiscal budget, given what's going on on Capitol Hill. You were just there meeting with Democratic senators. Can we get our fiscal house in order?
Thomas Nides: Yeah, I mean, listen, we will get the whole political conversation here because we can do that, next time. But the reality is a couple of things. As you know, there are some people that think we overstimulated the economy. You know for those of you on the phone here and you know more about America than most of us here in Washington, right. I think the decisions that the Trump administration made and then doubled down by the Biden administration, both on the COVID Recovery Act, plus investments in infrastructure, things that we've done will create long-term benefits. But you are 100% right. You can't run these high deficits this long. Now, part of it, as long as the economy begins to improve, the real economy begins to improve. And obviously, that will also help on the revenue side. But they're going to have to address some of this stuff. And we have complete gridlock in Washington. I mean, we always had grid lock. You and I have known each other for 35 years. We've been involved in politics. Obviously, I even served on Willy’s board before it was a public company.
Willy Walker: I appreciate you putting that out there. I didn't say that in your bio.
Thomas Nides: It was a private company, very small than what it is today. But I've had this conversation many, many, many times. And, you know, ultimately, the real economy is what's going to drive these elections. You guys see the real economy more than most. So there is no question that we cannot run because the deficit is hot. Now, another question is with a dysfunctional Congress, you know, can you address these things that need to be addressed, the lower low deficit? And that's anyone's guess.
Willy Walker: You came back from Israel to go back into the private sector. You have delayed going back into the private sector to focus on this exceedingly important issue. For those of us who are both very, very concerned about it, sympathetic to it, have friends who have been directly impacted by it. I would just say thank you so much for all you are doing.
I and many others are looking forward to seeing what you do next. I am deeply thankful that you’ve taken an hour to spend time with me and inform us so deeply on these issues that are so important to our world.
Thomas Nides: Thanks, Willy.
Willy Walker: Thank you, Tom. Thanks, everyone for joining us today. Have a great day. We'll be back next week. Take care.
