Transcripts For BLOOMBERG Bloomberg Surveillance 20151116

French economic recovery as tourists fly away. I cannot understand how you are trying to make sense of all this. Tom no question about it, as the story moves forward, i am curious of your thoughts friday night and the weekend as you look at paris. Tois one thing for americans be in two of the districts but for you it really mustve been something to observe. People were appalled. It is quite sad to say that i dont know if people were as shocked as september 11 because we have been warned of these multiple threats. It is a sad situation when you get to that point. Lets get to the bloomberg first world news. Vonnie there is an International Manhunt in the eighth terror attack. His identified as a 26yearold in brussels. And in france, the Prime Minister says there have been 150 rates overnight. A french official has identified another belgium as the mastermind of the attacks. He reportedly fought alongside the Islamic State in syria. Have bondplanes Islamic State target in syria. For the first time Islamic State attacked hundreds of trucks. They pushed back against critics of the opendoor policy. Angela merkel says those fleeing war zones should not have to bear the blame for the power attacks. Greece raised the possibility. The United Arab Emirates has taken five yemeni prisoners held for more than 13 years at guantanamo bay. Authorities at the u. S. Base in cuba determined they no longer pose a threat. Guantanamo inmate based at 107. The secretarygeneral ban kimoon will visit north korea this week. That is according to a south korean news agency. The foreign minister has said he is willing to help ease tensions on the korean peninsula. More on these and other breaking stories 24 hours a day. Tom we will preclude the data check other than to tell you the german yields are in a little bit. Copper is imploding this morning, other than that it is remarkably quiet. Quickly to the terminals before we go to paris. This is japan in a recession. That is the business headline. That goes back to john f. Kennedy. In 19 to see for this is the post world war ii miracle. This is what should have happened and didnt. This is that flat line of the japanese economy pushing two decades. Vonnie 20 years of disinflation. Tom the challenges of japan are nothing like the challenges of our political economics that we have observed since friday. Francine for more on the latest news we are joined by guy. Ohnson guy, we are hearing more and more about who these attackers were, and where they trained. Guy i think all of that will have Major Political implications. I will let hans give you the details about what we have been discovering we are waiting for this Cabinet Press conference to start. We are getting an idea of who may be involved in how they got into the country. Were they born in france . Did they come in via greece from syria . All of that will have a big bearing on what happens next politically. Session ofthis joint the parliament effectively being addressed by the french president. That is an incredibly rare event. It is the open border zone for three months. All of this will have a Ripple Effect across europe and the political story, and if it is guy camed, that this in via greece from syria, that will have a big implication for germany. Francine guy, how many questions are you seeing that French Security couldve stopped guy one of the warrants is out for a guy they already had under court supervision. They lost them. But as we heard earlier on. There are so many radicalized young men and women who have potentially been coming back from syria it is a most impossible to track all of those. It is a legitimate question that needs to be asked. Do the french resources really match up to the scale of the task in front of them. And that comes to the political story. How will the politicians square that ahead of the elections next week . Francine guy johnson from the paris bureau. You are on the streets of paris. Describe what it feels like. It seems like they are trying to get back to normality. I think that is one way to put it. You have a return to have it and heightened concern. The individual that guy was just discussing is under surveillance and is one of the five attackers. He was under surveillance starting in 2012. I just spoke with the french vicechairman and i asked her how that could happen and her response is we have over 7000 potential people they need to monitor. They just are not the resources to monitor these people. But she did call having a longer database that has a longer shelf life. You continue to track individuals that could have potentially traveled to syria. Like the map we just put up of belgium. The economist magazine talks about the idea of israeli like security across europe. Is that where we are heading . Hans that would be a complete reversal. Trade Free Movement of and goods that really has undergirded a lot of the economic progress you have seen in europe for the past 20 or 30 years. Just to give you a sense of how odd it is. Security. Tightened it is the first time i have been checked for a passport. Normally, you travel without a passport within europe. If they do impose those controls, the question among others will be with the Economic Impact will be. There could be a slowdown effect on that. Just a question that National People have to have. Will have a Regional Election here. I just spoke to describe these events as white bread for the rightwing party. Francine thank you so much. I will take it from here. We also have that News Conference we are expecting from the French Interior minister. This really was the nightmare scenario that they have been warning us about for years. Great to have you on the program. I wish it was under better circumstances. What is increased that europe is so vulnerable . I dont think much is increased. The point i want to make is that europe is not is currently doing less than they were before. They are doing more than they were before. Since the Charlie Hebdo attacks following the seventh of july attacks we had in 2005, you can change is already in improvements. But the threat has increased so radically. For a group like i. S. , they see europes weaknesses and they will be as strong as our weaknesses. And as we have seen there are expose. Knesses to francine is it because they are better organized or because Intelligence Services cannot afford everything. The threat is increasing because i. S. Is changing. It was trying to be a group that set the stage up with a only succeed if they keep expanding. Popping up in other places. And once the drive recruitment and drive its message. I think i. S. Is changing. Rising and popular parties are not an issue. Tom everyone in the International Relations is in search of a new strategy. Where is that strategy . The first strategy has to be syria. Ultimately, you cannot have a situation where you dont know who you are backing. In the moment, we do not know who we are backing. We know who we are against that we dont have a group to support. There will be no strategy toward i. S. Until you do this. The bigger strategy is that this is not just syria and iraq, youve libya imploding, yemen going backwards and afghanistan in the wrong direction. The idea that you can somehow state as places over there as opposed to hear, that is where the strategy has to start with a far more forward leaning policy. Tom richard haas will join us later in the council on Foreign Relations. In bremerton will join us. Continued thoughts from Francine Lacqua. This is bloomberg surveillance. Everyone,morning, bloomberg surveillance. Guy johnson is in the news bureau in paris. Right now from manila, ian bremmer joins us. Thank you so much for his time from the philippines. Dr. Bremmer, two quick questions. What did you write to your clients through the weekend and into monday. What did you say about belgium as the center point of terror in europe . Well, there is no question that the french government first and foremost is having a much harder time dealing with this than they did after the Charlie Hebdo attacks. That is probably the biggest take away. Season Ito Christmas will hurt the economy and it will hurt Francois Hollande. , he had 6lie hebdo million come out and the streets for him. This is a dramatically different environment. Refugees coming over by the millions. Intoelgian question plays this as well. You have a government that has admitted to have a large and local Muslim Population and they have no ability to effectively police. The french government has been on high alert and there are too many that exist to effectively monitor. Lets go to vonnie quinn right now is a new story continues in paris. Hashe interior minister been giving a press conference and he says that 23 people have been arrested and are in custody. Searches and all 19 areas of paris and the major cities. Once again, 23 people arrested and in custody. Tom this is Charles Pierces incendiary op ed in esquire over the weekend. I want to go to ian bremmer. Here is Charles Pierce in a scathing oped on the arab nations. It is long past time for the oligarchies to stop paying protection to the men in the suicide belts. Societies are stunted and parasitic. The main job of the elites is to find enough Foreign Workers to enslave i mean indenture, to do all the real work. What do you look for from the petrol states of the arab people. Pointtainly, i think the that the willingness of the gulf monarchies to tolerate particularly what happens to radical clerics to proselytize islam and have the media report tothat and as a consequence allow this to grow as an ideology that will ultimately prove and in traction for disenfranchised young men who eventually turn to violence, that is a big problem. If that is his only hobby horse he has a very narrow view. The u. S. War in iraq is a big part of it. The absence of any leadership or response to four years in syria, a sod in particular. Killing his people and creating a refugee crisis the likes of which the world has never seen. Oil prices at near 40. There isnt money for these governments, which are already problematic, to ensure their people are stable. You put these things together and you understand why we are facing the most powerful terrorist organization that the history of mankind has seen. Also hearingre from Angela Merkel life at the g20 sank the refugee crisis was a Global Challenge saying many countries have suffered from terrorism, and she says that they agreed to curb terror financing. But this goes to the heart of her chancellorship. Will she be right, and able to convince the rest of germany that they the to accept refugees . I think that Angela Merkel is really out on a limb here. Isis is trying to saw through that as quickly as humanly possible. I think Angela Merkel doesnt understand is, she feels very emotional about this issue it reminds me of the east german background and the unification. It was enormously expensive and very challenging but everyone in europe and the United States were behind the germans. They wanted them to succeed. Here she says i will take leadership on the refugees. Equally challenging, incredibly expensive. She doesnt have the europeans behind her. She doesnt have americans behind her. She doesnt even have the majority of the american german people. For is incredibly unnerving merkel. Think what incredibly different from the wall coming down. I do fear that the backlash she will receive is really going to undermine her leadership. The one thing we have been able to count on since the financial crisis hit europe was strong leadership from chancellor Angela Merkel. I fear that is no longer something we can count on at all. Ian, just a quick question. The russiau. S. Relationship. How realistic and easy will it be for obama to step back and try to do something with Vladimir Putin given the lack of trust they have had for so long . Do you think they will be about to come together and focus on syria together . I tell you, it is a lot easier for obama to deal with putin on syria than it is for him to order the kind of troops on the ground that would allow the United States to make good on obamas stated aspirational policy that isis must be destroyed. You are not going to see that. For anyone that saw the photo of Obama Meeting with putin on the sidelines of a hotel lobby in ,urkey just earlier today understands that this was a serious workman like meeting where they are talking not about the ukraine or isolating the russians but what to do about syria. Putin is more in the driver seat. He has someone on the ground to support. The person of a sod, the regime. And obama is trying to figure out a way to deal with that without a break embracing a sod individually. I thought it was interesting that in the vienna discussions you had all these governments come together and say in six months will have a ceasefire. In 18 months we will have a new government in there wasnt a single representative of syria on the table and the opposition immediately said that is too fast. The big thing that just happened in syria. Everyone knew it was slippery but it wasnt that steep. Americansthat the dont engage with the russians means that americans will have to do more in terms of bombing and special forces and troops on the ground, which they really dont want to do. If it doesnt get resolved by 2016, a new american president will make those decisions themselves. Francine and its time for my morning mustread. We are to syria and the middle east. Josh wrote in Bloomberg View that at the same time europe was taking refugees. The worlds attention is now the Islamic State. Taking the pressure off the Syrian Regime right at the moment when pressure might have been effective. Someone who has been following all of this very closely is Ryan Chilcote covering the g20. At the end of the day is this crisis going to bring World Leaders closer together . Im thinking of russia and the u. S. And how they deal a syria. It is already bringing them closer together. Your the mention that meeting last night. That was their first meeting since they met in new york. And you remember that president putin went back to russia and started bombing syria and after with the Obama Administration started planning how russia was being counterproductive. We heard more of the acrimonious language we had heard from the u. S. Before. But last night was different. The u. S. Cannot of the stock saying it was constructive and even said some nice words about the russian bombing of isis but there are huge differences between the two. And it is not just over a sod, it is also about who gets bombed. Tom does mr. Putin have the support of the russian people. As he attests and adjust adapts and adjusts to syria in the russian state. I think he does at this point. We certainly have all indications of that. What he doesnt want to see are more russians getting killed. The russians havent come out and said it was the Islamic State that downed that plane over the Sinai Peninsula that killed 200 russians, but they have indicated they are pretty certain it was. He cannot have more of that to keep their confidence. Vonnie thank you so much Ryan Chilcote militant back to the director of chatham house. When you look at the syrian situation, at the end of the day is the syrian president the one who will benefit the most. Because you fight terrorists or you keep a sod. Thehat is where we end up than the plan at the regime and had from the beginning works. Many people believe that the assad regime which released a bunch more extreme islamists when the conflict first started that we created isis. They wanted isis to emerge and provide the counterweight. That will have succeeded. The danger of defeating isis and not defeating a sod is he will confirm their message that this is all a big plot against the sunnis. That america overthrew Saddam Hussein to the shia could overtake iraq. Now they are not taking out the shia they are backing a runs guy. He talk about the strategy of the saudis the gulf states will become more suspicious of u. S. Interests if a sod survives. The needle that will be threaded here is to get the russians to agree in a way that their interest will be pursued and whatever happens in the future in syria. Tom very quickly here. I want to focus on the United Arab Emirates. Respond, sandwiched between iran and all of the Eastern Mediterranean . They are deeply worried, as are most of the gulf states that in a run that has access to the type of money it will get, frozen assets are unfrozen and it rejoins the global economy. Unless iran has a different ,ttitude to its own stability well it doesnt support has ezbollah. Ha tom coming up at 10 30, president obama will speak. State with us. I just had a horrible nightmare. My companys entire network went down, and i was home in bed, unaware. But that would never happen. Comcast business monitors my Companys Network 24 hours a day and calls and emails me if something, like this scary storm, takes it offline. So i can rest easy. What. You dont have a desk bed . Dont be left in the dark. Get proactive alerts 24 7. Comcast business. Built for business. Francine we are seeing live pictures from turkey where the g20 took place and we are hearing that News Conference from Angela Merkel and her finance minister. What she is talking about is that the g20 is a the knot agreed on measures to curb financing. , theas the proponent person spearheading for europe to take on these refugees and now there are links between some refugees and terrorists in paris. Lets get to the first word news. Vonnie the belgian connection is widening in the parent attacks. An unnamed official tells them that a belgian is expected in the friday killings. Has beenys the men linked to four to terror attacks on a french plane and a french church. At the same time, another belgian is the subject of a manhunt. Investigators say he rented a vehicle used by the attackers. In the meantime, french more planes bond isis targets. For the first time u. S. Warplanes attacked hundreds of trucks that the Islamic State uses to smuggle the oil it has been producing. One day before the attacks, iraqi intelligence warns there maybe imminent assault by the Islamic State. Iraq told members of the Usled Coalition that the isis leader ordered an attack on countries fighting them in syria and iraq. The wake of attacks on paris, David Cameron is preparing for a long fight against terrorism. Cameron will be for the security processes with 1900 security officers. The u ks intelligence agencies currently employed 13,000 people. Turning to last thursdays terror attack, lebanese Officials Say seven of the suspects are syrian. Islamic state claimed spots ability for the suicide bombings. 43 were killed by the explosions. You can get more on these and other breaking stories 24 hours a day. Nellis had to brussels where French Police have been working with belgian colleagues we understand is a manhunt underway. Lets go straight to our bureau chief. When you look at elgin and the strong links they have with belgium, it seems it is just adding to the evidence that this has been one of the havens where radical young men are intent on terrorizing europe. It certainly seems that way. Going back at least one year, it seems like brussels had a connection with most of the terror activities going on. This is true for Charlie Hebdo in paris, and shortly after that they foiled a plot in eastern belgium that also had ties back to brussels. There are a lot of questions being asked by officials here about what is going on. Answers do have any why these recruiting networks are centered around the belgium. These are the questions. A lot of people are looking at the system the passport free travel. Once you get into the eu you can get lost in the system going without passports across the borders. Of course france has tightened its borders after these attacks and that is one of the things coming out of this. Restrictionsmore and less of the Free Movement brought. Tom we have been through this discussion before. Do you sense any will on the part of the belgian people in the belgian government to stop this action . Your Prime Minister calls it a playground for terrorists. When does that end . Will . S the they are trying to do as much as possible. It is frustrating. They have indicated that they are aware there is laxness among them in policing certain areas in brussels that has been seen as the hotspots for terrorist activity. Today the Prime Minister came out and said we might have to do something about mosques in brussels. They are trying to do something. The trouble is it is not just belgium. Have terror hotspots in other places as well. It is true, for the recent past, brussels has been the connection. Francine thank you so much. We are joined by the deputy leader and a very close ally to Angela Merkel in berlin. As we try to find these question, the other is, what does intelligence suggest. Will germany be stepping up security. Is this a game changer . We wanted to say that we should not mix terrorism and refugees because so far it is either belgian citizens are french citizens who were the terrorists in paris. Momentum at the moment. Of course germany is willing to cooperate in any way that we can. Weve already decided yesterday to hire another 500 people for secret service. In order to help in any way that we can. Im quite sure that we will be capable but as a matteroffact the super see that have a prolonged time already in europe and living in europe and grown up in europe and being able to find out why there started to have such radical suspects. Francine michael, you are saying, and this is a point we have been trying to make on air, the three governing party seem to be rallying behind Angela Merkel and saying you should not confuse the refugee crisis and the sectarian them response. Merkel will angela be less popular because she was spearheading the Refugee Movement . The Refugee Movement is there. We have no other choice. But what can we do with people in greece and macedonia. Theyre all coming into central europe. Of course we are trying already to find ways in order to check where they are coming from, what kind of reason they have to come into europe and germany. We are trying our best to do so. Were sending back people, which is necessary. It all andnot take we are talking about safe countries which is serbia, kosovo, so on, and so forth. They cannot send anyone to us. They have to go back to their respective countries. Tom what would germany and the netherlands like from belgium. A recent question with our bureau chief in brussels, where is the will of the belgian people to assist france and germany to assist netherlands. What do you need from brussels . First of all, the belgians have to do their homework. There must be reasons why there are so many of these terrorists. I think they have to find it out. But the problem is, we are not talking about people who are , or then from syria matter what other place. But theyre living in europe already for some time. They speak the language perfectly. One of the terrorists was perfectly speaking french. It is very difficult to judge it and pointed out. Europe and germany need a more israelilike security . I think we have our security and so far nothing has happened in germany. And i cross my fingers that that will not be the case. As i mentioned, we are strengthening our efforts and having more people for our Security Services. Were trying our best to find out him a but it is not easy. Francine always a pleasure, thank you so much. One of the strongest allies for Angela Merkel and the head of the party. With revenue let. We have been talking about the implication of belgium. Tom was asking, what can belgium do . But what can we do for belgium . It is not a lack of will, but a lack of means. I think a lack of will is an unfair point to make. Belgium has the highest per capita foreign fighters in syria any country in europe, per capita. Particularlysome disadvantaged ghettos where people do not integrate and have 30 unemployment. But they also have a completely fragmented Police Intelligence system. It is wellknown and commented on. It is difficult for them to fix lyrically. It is not politically. But it is no longer acceptable to have some six Police Forces dealing with brussels alone when information is in shared. Will the francine will the change that . Think they have to. This is the wakeup call to break down those selfimposed weaknesses. It is easy for isis when you have this kind of policing. We will be back shortly. Coming up later speak with the Italian Foreign minister. She is very involved in the refugee crisis in europe. Surveillanceberg streaming on your tablet, phone and boomer. Com. Francine it is a sad state of affairs in europe today and the terror we saw friday now bringing a nation together. You can see some live pictures from paris where a lot of the french have been looking at going and traveling to the places of the attacks leaving hundreds of thousands of flowers. This morning, the French Interior minister announced 23 arrests in the wake of fridays attacks. Meanwhile, Angela Merkel comes under fire for her handling of the refugee crisis. To discuss all of this we have the codirector of the European Council on Foreign Relations. Tragiceat guests in this situation and thank you so much for joining us. We are talking a little bit about the situation in syria. We talked to the key ally to Angela Merkel and the point he was making is we absolutely must not mix refugees and terrorists. Yet there is a concern that this will radicalize europe. That these attacks mean people fear the worst and will stop refugees from coming in. First of all, this is a very sad day and i must add my words of sympathy and solidarity to the french people. I think that we have to be very measured in our reaction and im what hundred percent behind him when he says that terrorism is one thing and migration is another and there is no excuse for mixing them up. Francine for me, the most shameful thing we have seen in europe in the last 48 hours has been removed by the polish governments to remake on their refugee quotas used as this terrible event as an excuse to say we wont take refugees. It is easier said than done. Because there are Political Forces across europe what to conflict stories. Who love the absurd idea that one of these terrorists swam ashore. We dont know what happened but i would be surprised if that happened. Unfortunately, we have terrorists within our european policy, without needing them to be encouraged. Tom i look at the polarity that we see within the different parties and i guess it goes to the surprise of the right across europe. I went back and found a quote from 2012 of what a lot of people dont see within the stereotypes which is a right leaning Muslim Population. To both of you esteemed academics, here is karima. A policewoman in paris, my vote is an expression of my rejection of certain muslim arabs i consider thugs. They have destroyed french society. In the old days they lived in the same areas. Many of my colleagues boat far right but do not dare say so. That was three years ago. If i can go to you both, mr. Whitney, first, where will that shift be . Do you see the ascendancy of the right by people including arabs who are fed up . And certainly the case that the vast majority of the people in europe are as outraged as anybody else by these atrocities. Sense that they stand in a medium to longterm to suffer more from them. Islamophobia is only encouraged. It is a virus which we have in europe and it is only encouraged by these events. I think there will be muslims who are very keen to see the toughest possible crackdown. But we need to be careful about not taking that go far because that will only feed the Islamic State narrative. Francine the point is that we do not know how people will vote. We dont know their how the reaction to these attacks will end up. We have president ial elections 18 months from now. Marie and thethat front are polling very high. It is nice for folks to say we should not mix terrorism and refugees, but the Islamic State will mix terrorism and refugees because they want to play to the phobias of a minority of the european public. But the antiimmigration feeling will grow on the back of the refugee crisis. They are taking advantage of the moment. Of our weaknesses. As much as we want to says separate, widely the passport there . To place nvenient plate to precisely this kind of worry. , nick whitney as well, thrilled to have both of you from chatham house. Ambassador haas will join us at hour. P of the next mohammed will be with a some Bloomberg Radio in the 9 00 hour and we will return to our reporters in paris. Is one of the most beautiful places in new york city. This is the end of fifth avenue. Ordergton square park in of the centennial of George Washingtons presidency. Years after the arc de triumph. I thought the Sydney Opera House was extraordinary in its quiet throughout the weekend. Vonnie and a report predicting what many economists had predicted. Japan falling into its second recession since shinzo abe took office. It also fell in the second quarter. The news could put pressure on a and the bank of japan to improve fiscal and monetary stimulus. The swiss bank hired four top bankers in the region and plans to add one dozen more increasing the market share in china. Spendinglongterm starting to slow down for the First Time Since 2009. The study says it will fall almost 4 . The reason . Plumping commodity plunging Commodity Prices have her demand. Francine here are some of the events we are watching today. Eight 15, at 8 15, model 8 15, Angela Merkel will meet with cameron and obama will stop we will hear more from president obama at 10 30. We expect them all to talk about collaboration with parisian authorities. Lets continue our conversation with nick whitney. Us is also, our guest host from chatham house. When you look at this freedom of movement idea, it is probably even more the basis of what europe is and the euro. Are you concerned this is now at stake . I think it is definitely at risk in the near term, given the type of threat taking place and to the ultimate sponsor ability responsibility of any government is to protect their citizens. People will turn to the government and say the only way to protect our people is to have increased levels of perfection. Is this a disaster for europe . So wee here in london have to show our passports all the time. Terrible. So for business traffic, cargo, it could have some type of effect. But ultimately people will understand. I think the euro is ultimately a bigger issue and can handle it. Francine i found a quote from 1984 and it is one of the most famous quotes. Today we were unlucky but we only have to be unlucky once and you have to be lucky always. This was a warning from the ira hours after failing to murder Margaret Thatcher in 1984. This resonates with everyone today which means that surveillance needs to be right 100 of the time. It is an enormous challenge and the reality is that it is a challenge that the Security Services cannot meet. There will be more atrocities in europe and possibly the u. K. And we have to a knowledge that is a fact the matter how much surveillance we institute. Irasd say that the Terror Campaign took a long time. And eventually we did manage hopefully to find a solution which involved cooperation with the dublin government. It involves a lot of patience. Those are the solutions we have to be thinking of in terms of the middle east. Kissingers order has ended, what will replace it . That is a nice, big question. Diplomacythe former we would recommend, or that i would recommend, is one that is not led, and cannot be led by one country. Period ining out of a which western leadership has dominated. Lacking in proved the middle east it also the economy. Arehe kind of leadership we talking about is what we see in the g20. When that is more inclusive and legitimate even though it will be less effective. End up saying is we transition to a more International Form of cooperation. The place where International Order will start is not between states but within states. Tom thank you so much. Thanks to nick whitney as well, and a special thanks to ian bremmer for coming to us from manila. Next we speak with richard haas from the council on Foreign Relations. Stay with us worldwide. Tom this monday, france attacked the Islamic State. Police roundup suspects in five french towns. Within our new world order, president and Vladimir Putin consider a new and endless terror. Good morning, everyone. Tom keene in new york, Francine Lacqua in london. Guy johnson and hans nichols in paris. Now, francine, a moment in e, thee, at the cerbonn old site of the university of paris. Tom it is a moment of silence nne university, the university of paris from the 13th century. Thismotion of 2015 in 13. Mber Francine Lacqua, you study there. What is the significance of this moment . Francine we understand the french president wanted to be close to the students. They seem to be very young, a vulnerable people, closer to the youth of france. It was a very moving moment that we heard there. It reminds us on friday when we first heard of the deadly attack. When people were evacuated, that is exactly what they were singing. Tom francine, this was different than what we saw. I believed it was january. This is a changed moment for france and for all of europe. What will you be watching for in the coming days . Francine this feels different from when we were from what we were talking about with the attacks on january 6. This was a nightmare scenario that Security Services, that Intelligence Services had been warning about for years. The three main points as you look at those pictures of people morning together in france is the steps that france will take in the middle east with its allies. There will be political fallout in france, and of course the isis. On the schengen as some politicians are trying to link refugees and these terrorist attacks. Guy johnson and hans nichols and Brendan Greeley are in paris. A gigantic American Hotel deals today. Billion deal with Starwood Hotels and marriott. The shareholders of starwood. 92 dollars and tom it speaks to what we are seeing with struggling economies, including in europe, of consolidating businesses. It is not a surprise, industry to industry. And we arectly, seeing it in the pharmaceutical industry. Now in the tourism industry, a 12. 2 billion deal. Sorenson is going to remain on as the ceo of marriott international. This is marriott buying starwood. Tom there we are with the transaction of the day. German yields are in like they were two hours ago, and copper continues the imploding that we saw over the last number of days. Copper has really been something and signals the weaknesses in the commodities. He is in paris, guy johnson at our news bureau near the opera house. As you came in to paris, what did you observe . Y heightened levels of security. Hans nichols and i walked around the Public Square last night. We saw people trying their best to put a brave face on what is clearly a difficult situation, but a very heightened level of security, which looks like it will be around for some time. The wooden rifles that you see in the arms of the Police Officer are absolutely everywhere. They seem oldschool but i think it reinforces here is an obvious symbol of the fact that the police are on the street. Bureau in london is gorgeous with its closed doors to the street. That seems to be an old European Security measure. You have big doors at the street entrance. How do you think democracy and the free flow of people, business, and information will be in pinched, whether in london, will be i impinged, whether in london, paris, or warsaw . Guy they will be held under a state of emergency. That is what we will hear from Francois Hollande later, so a real change in the nature of democracy in europe. In terms of the free goods the Free Movement of goods and people, that will be hugely different in the next weeks and months. Businesses trying to operate in europe, having to do with more paperwork and delays, and the friction that will come as a result of that further slowing down this already tired european economy. You were talking about the fallout on political fronts. You had local elections december 6, and president ial elections 18 months from now. How is she placing herself . And the real front runner . Guy i think the point is that it is nicolas sarkozy. The reaction is that Marine Le Pen will be better out of this, but sarkozy will be one of the big winners if you describe him this story in politically. The nature of politics is changing. You may end up seeing a second round. Sarkozy has not formally been put into the process yet with Marine Le Pen. Quickly, what is the latest news . There is actually news flow today. What is the latest news you see . Guy the interior ministry in germany has just put out a statement saying that it still the syrianve passport that may or may not have been it does not have the identity on a syrian has poor that may or may not have been found next to one of the suspects. There is an rtl report. The germans are clearly nervous about the passport because if it is found to have been coming from greece, it has implications for Angela Merkel as well. Tom guy johnson in paris, and of course Francine Lacqua with us in london. Now by telephone, ambassador haass with the council on Foreign Relations, who just joined us if you changed days ago. Your cfr has a mustread backgrounder on the Islamic State. How would you and your experts rewrite that this morning . Richard the biggest difference carryingw emphasis on out military operations, terrorism, outside iraq and focusing onnger building up the local caliphate, but what we are seeing instead in places like lebanon and paris, there is a globalization, someplace closer to what al qaeda was doing, rather than their initial emphasis on just rolling up in a local society. Tom within the local society and the broader reach that we have, the one photo we have over the weekend was president obama. Nd president putin huddling what would you like them to speak about . What would be their action plan . Richard one thing is to persuade the russians that the targeting of their bombing cannot be all these groups that in some cases are quite usefully taking on Bashar Alassad. We want them to take on isis, which hopefully should leave them to do. Also the russians should be frightened that what happened in paris could easily happen in moscow. Secondly, it is more diplomatic, which is under what circumstances with the russians move away from supporting Bashar Alassad, who is the principal for isis. Tool this argument that we heard over the weekend that Bashar Alassad has to be part of the solution is dead wrong. Leave, butneeds to we also need to make sure there is a Competent Authority once he does leave. We do not want to see the collapse of authority in damascus like we saw in libya after qaddafi. How do we protect ourselves . Is it through security and intelligence, or is it dealing with the middle east . Richard the short answer is you have to playoff that you have to play off you have to playoff that tear. Sure, there is intelligence, there is homeland security. There are all the things you do to make yourself less vulnerable. This is going to be a war with multiple tools and multiple domains. To some extent it is going after that. To some extent it is dealing with the internal challenge, and dealing with our borders. Tom you interviewed Henry Kissinger at length as your cfr here it was a wonderful session. Here is Henry Kissinger in his book world order. Noninterference in other countries, Domestic Affairs cannot serve as a governing principle because National Loyalties represent deviations from the true faith. Purity, not stability, is the guiding principle of this Islamic State conception of world order. For the parents with kids in france and for all of france, how do we fight against purity and not stability . Richard it is a big issue to some extent. There are things that we can do. We can make sure that this determination is not there so people can be integrated into society. The u. S. Has done a better job that then many european countries. Leaders have to delegitimize some types of action, and a sense that have people they have to work with the authorities. There are things that we can do but there are also things that parents and communities have to do. Tom richard haass, thank you so much, with the council on Foreign Relations. House,ear from chatham the council on Foreign Relations are the next, from the fletcher school, tufts university, we speak with james stavridis, the former nato supreme allied commander. Over the weekend, many calling stridently for a new and engaged nato. Stay with us. From paris, london, and new york, this is bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance, from london, paris, and new york this morning. There are transactions as we continue. Here is vonnie quinn on a Hotel Transaction of modest size. Vonnie a 12. 2 billion deal, in fact. It will be a behemoth, the wilpons Largest Hotel chain, marriott, buying starwood. Starwood is up almost 4 . Starwood shareholders are dollars for every share of theirs that they will own. A Conference Call at 9 00 a. M. Eastern, and the timeshare portion will be spun off at 1. 3 billion. Tom with us from paris, hans nichols. When we look at the greater europe, what did you see in the newspapers this week . I felt incredibly frustrated at my lack of foreign languages, the expertise that Francine Lacqua and you have, and Brendan Greeley. What did you read in the papers that caught your attention . Hans i think the ongoing sort of challenge that Angela Merkel may face domestically from her refugee response. You have seen poll numbers drop. You have seen her Approval Rating go from the 70s down to the 50s. When you look at her party where it is pulling, it has where it is holding where it is polling, it has dropped. The individual who blew himself found next to the serbian passport that we did not know if the serbian passport was a fake or belonged to him that individuals fingerprints match that of someone who was in greece in early october, which is to say that one of the terrorists who blew himself appear on friday in early october was in greece. It is not too far to reason to think that he came from syria. Tom within the diplomacy that you cover, who is Angela Merkels ally . Or is she alone . Hans parallel technocrat,y is a but within her party she has been somewhat isolated. Tweak some of her own comments. I think the better question is, to what extent does Angela Merkel have enemies, or at least rivals in her own party . It seems she has several. We look athen schengen, this is of course a freedom of movement, the basis of the european union. If that gets put into question seriously, how will that affect businesses and what europe is . It will be impossible to disaggregate those questions. It will end europe since the way we have known europe since the introduction of the euro. This has been the e. U. s response. They have wanted to grow economically. They have had soft economic growth. It will effectively suspend the e. U. As we know it. What we do not know is when mr. Hollande requests a threemonth state of emergency, will that shenzhen . Y suspend tom we greatly appreciated. On the new game theory of our western diplomacy, later today we will bring you mohamed elerian. He is writing for Bloomberg View. He doeselerian on what best, the complexity of game theory and difficult outcomes. In the 9 00 a. M. Hour on bloomberg surveillance. Francine this is bloomberg surveillance, and we are speaking to the smartest people in relation to the paris terrorist attacks. We are speaking to the x Italian Foreign affairs commissioner, one of the smartest minds regarding Foreign Policy. When you look at how the terror attacks have unfolded, how important is it that we are able to rally the u. S. , the u. K. , and turkey, making them step into action to fight isis in the middle east . I think we are having some technical difficulties. We have been talking with Angela Merkel allied policymakers, to this has implications not only for extremism in europe but also on how countries will come together and find a solution for syria. Tom your perspective has been so good. I have a limited perspective. In america, often we turn to roger and of the New York Times. Here is roger cohen. Hen that from roger co with his decades of experience. Phil mattingly, i was stunned at how fractious the dialogue was in a unified Republican Democratic party response. What was your thought as you saw the primary debate and the republican candidates address the tragedy of paris . Isl if each candidate trying to figure out my thought is that each candidate is trying to position themselves. When a tragedy like this occurs, when it comes to Foreign Policy and terrorism, you expect certain types of candidates to rise. You expect somebody with Foreign Policy experience like hillary clinton, or marco rubio, to have an advantage. The difference now is that this is a different race. Everybodys expectations and predictions have turned out wrong. You look at somebody like donald trump, who has forever pounded against refugees, this all of the sudden may be a benefit to him. The most interesting thing to him the most interesting thing was watching them in an unsettling way to position themselves. Do these candidates want to speak about Foreign Policy . Phil some do. Hillary clinton, because of her record and her time as secretary of state, that is something that she thinks is a strength in the democratic primary. The one you need to watch his marco rubio. He has been hawkish throughout the race, and he believes this puts him head and shoulders above any other candidates. He and jeb bush will try to seize on this. Those are the two who want to benefit from this. The two who will not our bernie who canand rand paul, easily be tagged as an isolationist. Tom phil mattingly, thank you for the briefing from washington. Coming up, arguably our most important just of the morning, james stavridis, the fletcher school. The former ally commander. Jim stavridis on a needed and possible response. With Francine Lacqua in london, i am tom keene in new york. This is bloomberg surveillance. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Francine welcome back. You are looking at live pictures at a bar, a cafe in eastern paris, in the area that was struck on friday the you can see hundreds of people paying respect to the dead with hundreds of flowers. Lets get the bloomberg first word news with vonnie quinn. Vonnie the investigation of the paris attacks is leading more to belgium. The Associated Press cites a french official who says belgian was the mastermind of fridays killings. As lgian was identified he has been connected to foil attacks on a french plane to foil the attacks on a french plane and a french church. Investigators say he rented a vehicle used by the attackers. The French Interior minister say 23 says 23 people are now under arrest. 104 more are under house arrest. 168 searches have been conducted across the country. French planes bombed Islamic State targets in syria. Thefrench say they had nicest command center. For the first time, lebanese Officials Say some of the suspects in last week us beirut attack are syrians. Nine people are under arrest. Islamic state claimed responsibility for that suicide bombing. 43 people were killed in an explosion thursday in a busy neighborhood. Doubling its security, and the government is recruiting 1900 security and intelligence agents. The moves are part of an overall review and not a direct response to the paris attacks. Stock markets in the u. S. And europe will offer a moment of silence today for the victims of the paris attacks. The nasdaq and new york stages will do so at 9 25 eastern before trading starts. We welcome all of you worldwide to our coverage. Nichols, Brendan Greeley, and guy johnson in paris, and francine in london. I am tom keene in new york. In turkeys Ryan Chilcote as we prepare a discussion on nato. This seems to be the crux of the matter. Nato seems to be the obvious institution, but i believe russia is not part of nato. How will nato fit into the view forward . Ryan it is a very big question because even if president obama and president putin agree on what to do in syria, just acrimonious the relationship between the two countries has become and how difficult it will be for the intelligence communities in the United States, the militaries in the u. S. And russia to work together. They are basically enemies, so that will be very difficult. Obviously russia will not have anything to do with nato and nato will not have anything to do with russia. They are targeting each other in other parts of the world. The french airstrikes we have last 24syria, in the hours, the only reason why those are happening is because the u. S. Has offered new targeting information to the french. The french and the americans are close allies. Imagine how much more difficult that will be if it was russia they were supposed to share intelligence with. Francine what solution will we have for syria . We had the vienna talks. There was no one from syria at the table. Will this push t20 leaders to push for something more will this push g 20 leaders to push for something more stable and comprehensive . Ryan we heard the british Prime Minister saying there will be have that there will have to be some sort of that there will have to be some sort of compromise. Perhaps Bashar Alassad has more of a political life then the brits would have allowed earlier on. We have are the same kinds of things from the germans. The russians are getting listens to. Thed not really want west did not want Bashar Alassad to stick around, but it sounds like they are caving in on that idea, as they work with the russians to try to find some kind of solution. It starts with talks that will be mediated by the u. N. It is supposed to be a twoyear process that would lead to elections at the end, and presumably peace with syria if you believe it is possible. Tom Ryan Chilcote, thank you so much. In turkey. Meetings Jim Stavridis is in fletcher school, Supreme Commander of nato. Emotionalt the very 10 years on view of nato and what nato did in september of 2001. We will call upon nato now. What has changed. What is different, and what does this nato need to do to assist in containing the Islamic State . James just as you said, after , nato stood up and stood with the United States. The first time article five, but attack on one is an attack on all, in the history of the alliance. I believe it will happen again. s that point i think nato gloves come off and you will see a directed nato campaign against the Islamic State. Was war declared on a nation that could allow nato to act . Is a i think that distinction without a real difference. The Islamic State styles itself as a nation. It certainly acts as one, and it ought to be attacked in response to what has happened in paris. The Syrian Regime has avoided these largescale fights with i. S. Because they want to give the International Community a choice, either me or the terrorists. Lost . Shar alassad james not at all. There are two Different Things happening in one is a Hard Military campaign that has to go after it Islamic State. On the Bashar Alassad side, we will have to have a political, diplomatic settlement. The way to think about the Bashar Alassad side of this is the way we did with the balkans. I think we will see a partition of syria. Overtime Bashar Alassad will probably be eased out. Meanwhile, we have to go after the Islamic State. Radicalizing are radicalizing in europe. Are the airstrikes working . James we want this to be an away game, not a home game. On the other hand, those kinds of acts will increase the ability to recruit and proselytize. On balance you have to use the hard power to go after the Islamic State. You aboutlked to boots on the ground before. How do you put boots on the in paris, in the impoverished suburbs of russells . Of brussels . James the way that must be a compass is the internal workings of those nations, and that is going to require a lot more of what we think of as policing in the neighborhoods. It will decrement privacy somewhat. We have to use electronic means to surveillance. All of that is going to step up. It is not going to be popular, but it is the reality of where we are going forward. It is not paris, it is also shooting down russian airliners. That is the position of the Islamic State now. Tom this is from the center of the American Progress in the post. Stavridis, is this a state . Do they deserve a chair at any organization . I cannot get there. How do we get there to nationhood . James we should think of the Islamic State in International Legal terms the way we think of pirates, which is to say they can be attacked by any legitimate nation, that they are reprehensible, and that in every sense they will not have a seat at any table that i am aware of in International Relations. Tom admiral, thank you so much. We greatly appreciate him changing his schedule this morning for us. Later on Bloomberg Radio, we will speak with mohamed elerian, and i particularly want to speak to him about the game theory of his middle east, and particularly how his agents can assist to a more stable moment. Stay with us. Bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance from paris and london this morning with our Bloomberg Business flash. A major expansion for marriott, announcing this morning it is buying Starwood Hotels. The deal is estimated to be worth 12. 2 billion. Star which will own one third of the combined companies stock. Inquiry is down 1 , the in the acquirer, marriott, is up 2 . Companies slowed spending and production. That is the latest Bloomberg Business flash. Francine . Francine French Police are rating hundreds of locations iding hundreds of locations across the country. One of the applications for syria the implications for syria and the middle east these are ongoing ways to try to crack down on these terrorists. Guy they are finding weapons, 168grades being conducted raids being conducted overnight. Drawing a clearly with the availability of weapons and organized crime. Remember, many people argue these weapons have flooded into western europe from the balkans as a result of the overnight as a result of the crime length between western europe and the balkans. We are waiting to see what happens next. We understand operations are taking place in brussels, and one of those that could have potentially been involved in the attacks friday night may be involved in that. We are waiting to see the report that one suspect may have been arrested. That is unconfirmed. Francine when you look at the political spectrum, sarkozy saying we need to do more, are people saying this is a failure of french surveillance and the french Intelligence Services, or is the problem really in belgium, where you have a police that is very diversion and that is not talk to each other . Ryan i think it is it guy i think it is a multitude of factors. Clearly there is a problem that takes place in brussels, and the inability of a Cohesive Strategy to be formed with the authorities there. Then you could argue and this is a point that many people are that it is too easy to get from one place to another, and it is too easy for terrorists to travel from belgium into france to carry out these attacks. All of these elements will be part and parcel of the political debates. We have election sex month, and it will be a discussion that will be running at we have elections next month, and it will be a discussion that will be running until then. What has changed in london is an upping of the security in the united kingdom. I suspect there is going to be an increasing cooperation between authorities in terms of information that they have about what is happening in syria or the terrorist story. It is interesting that David Cameron would like to make a case for more action in syria. He still needs parliamentary approval for that to happen, and that has not been that forthcoming. Tom guy johnson, thank you so much, in paris. We will continue our discussion with hans nichols in paris and guy johnson throughout the morning. It seems odd to speak of the fed after such horrific terror in paris, but nevertheless, these actions fold into our monetary debate. Michael mckee with important perspective here. Did the press conference for december you will be in the , and mr. Applebaum of the New York Times will be there as well. Press conference change for chair yellen . Michael these two Central Banks have faced an annual crisis that have affected her ability to make monetary policy. I have put together a chart that shows that each year there has been something greece for a number of years. The budget shutdown. In august, china. All of those things affected. Whether theye, will spend money or hire people, that led the fed to hold off. Goldman sachs is out with a note this morning. Tom i saw that. Michael tourism and Consumer Spending is going to be down, but the impact depends on whether or not there are more attacks than if there are not. You and i know that these actions are what Peter Bernstein would call and uncertainty. That folds over mathematically into no one is talking about euclidean mathematics, and yet frances gdp must be dampened. Michael it will be dampened a little bit. Unless there are more attacks, the impact will be so muted. We saw this in the United States. Confidence went way down, immediately rebounded, and the overall effect on the economy was very small. The same thing happened in the dream in 2004, london in 2005. These things do not have longlived impacts on the economy. The question is what happens in political terms, if the refugee debate puts an additional strain on the ecb. Chair yellen thinks Central Banks will step in. One reason we do not see huge Market Reaction this morning. Francine i guess the situation was a little bit different or it we have schengen in europe and the security of the border actually hurt french growth because it will take so much more time for goods to come in and out of various countries, especially france. So is the ecb qe a done deal because of the situation . Michael yes, it will be assurance it will be an insurance policy. However, we saw the same impact on what is coming in and out of , the United States. A lot of stuff is assembled in canada, brought back into the u. S. They have problems with inventory, but you look back and you can barely see it in the statistics. Tom as mr. Mckie mentions, i know copper as mr. Mckee mentions, the japanese yen is not a flight to quality this morning. Later, the former secretary of hen,nse, william co will be with us. This is bloomberg. Good morning. Tom good morning, everyone. Quiet markets in Foreign Exchange. The euro a little bit weaker, but nowhere near the weakness we saw thursday and friday. The dollar index remarkably stable as well. That is all we need out of the Foreign Exchange report. Greeley, hans nichols, and guy johnson are in paris. David westin will drive the discussion forward on bloomberg. David we will continue the discussion you have been having on surveillance talking about the aftermath of paris and the effect it will have on the g20. Well have the former head of homer a foam in the United States, michael chertoff. And a Prominent Hedge Fund manager who is himself critical of a fair number of hedge funds. That is coming up on bloomberg surveillance. To london, and here is Francine Lacqua. Is aine joining us now managing partner on the future of france. Thank you for coming on the show. When you look at france, the Market Reaction has been muted, but the repercussions from the fallout we saw on friday will be first of all on the political scene. Are you worried that france will become radicalized and more in stream and more extreme as we head into an election . There are local, Regional Elections in three weeks. If the government does not step up with the measures that are most required and expected from the french people, from public opinion, i think there will be the risk that the french will be radicalized. Francine what does it mean for france . Brice the French Economy will be quite muted because the French Economy is diversified, and if you look at what happened after 9 11, if you look at what happened in 2005 in london and 2004 in madrid, the impact was minimal. Francine madrid was a long time ago, but now we have a divided europe that cannot speak with one voice. Angela merkel is now getting pushback. It is a very different timeline that we are looking at. Fabrice Angela Merkel, for the rest of her political stance, has been very good for your but is clearly taking this position, which is a unilateral decision to placebo get to basically get nearly one million refugees. Clearly if they do not get into germany, it means they can set up shop in france. 1 , ough even with even if 1 of them present a risk, it is 10,000 people. So it is actually dangerous. Tom within the new france that we will see and the new europe, will there be a change in democracy . Will there be a change in the rights of the individual . Theice i think it will be same result with what happened in the u. S. We have to understand that we are in a new situation, that is requiring restrictions. It has already been the case that the french government passed a more restrictive law on intelligence, and they are now allowed to do things that they were not allowed to do before. I suspect this movement is going to continue. But i think we have to do what the u. S. Has done and done very well. They have indeed almost destroyed al qaeda. Very much appreciated. We need to say thank you to our team in paris. They will continue on both television and radio. And of course, Francine Lacqua in london. Bloomberg is next. Withportant conversation the secretary of defense, bill cohen. Crisis in europe. The markets react. What paris means for the investors and the economy. Just how vulnerable is new york gekko we will talk with the head of just how vulnerable is new york . David welcome to bloomberg. Im david westin. Stephanie we are focused on the fallout of the terror attack in paris, and joining in on what this means for local business. To kick it off, bloomberg editor in chief john micklethwait. Welcome. We have a lot to cover. Lets take a look at the markets. It seemed like we were falling back earlier, but now we are back in the green. Matt we are seeing futures up across the board, and not insignificant gains. Five points on the s p