The Exchanges

Q Middle East peace efforts, which I think is going to make up the bulk of what we're excited to talk about today. Uh, just really briefly since leaving, um, office. You've been investing, running a firm called Affinity Partners, is that right? Um, maybe you can share with us just a little bit about what you've been up to, and then we'll, you know, kind of get into it here.

A Perfect. Affinity Partners is a private equity firm that I started when we left doing growth investing, private equity investing. Globally, we raised just over 3.1 billion, doing a lot of investments, trying to bring Gulf money into Israel, into the US, trying to figure out how through investments you could bring countries closer together, people closer together, Uh, looking at a lot of areas where there's, uh, structural transitions happening at large in the global economy, whether it's nearshoring from offline to online, uh, you know, software, a lot of, uh, different interesting areas, a lot of the fintech space and financial services right now, uh, but, you know, enjoying it. And, uh, the goal is really to bring the experience that we had from the previously being an investor and, um, then the time in government, and then thinking through how you could use those macro, uh, learnings and connections and relationships. Uh, and navigational skills to the investing side.

AI assessment note: “Affinity Partners is a private equity firm that I started when we left”

Q to do Lex? And why are you doing the show today? We were kind of surprised to see you on Lex. And obviously, like Lex said, it was a very different Conversation than I think any of us would have expected having the only exposure to you being through, you know, some sort of media channels. What's motivating you to kind of do this today before we get into it?

A So Lex, um, again, him and my wife are friends and I, I really follow and listen to what he does. I, I think in society today, the, the news, uh, it's kind of just one person's, you know, point of view and, and they're, they're, They're picking and choosing and editing what they put into it one way or the other. But the medium of the podcast is something that I, my personal consumption, uh, was growing with. And I felt like it was a place where you could have real conversations. I think the people who are listening to podcasts are people who are looking to have a more nuanced, uh, perspective on something and really want to, you know, try to understand something deeper. And, uh, and I respect Lex. I have all my private conversations with him. I really enjoyed Um, and I love that he was really trying to, um, find perspectives from people that maybe others didn't understand to try to bring greater understanding, um, across. And so I agreed to do it after a while. I was really, really glad I did. And, uh, based on the, the great feedback I got, uh, there, uh, my sense is, is that the podcast format is, is something that's, um, where you could have a real conversation. You can go back and forth. You could argue, you could disagree. Um, I think that that's where people really want to get their information from. So I, I turned out a lot of, you know, cable news or different, uh, inte…

AI assessment note: “I felt like it was a place where you could have real conversations.”

Q take that concept and just, can you explain the historical context of Arabs, the Arab world and their relationship with the Palestinians? Sort of because it's definitely had its ebbs and flows over the arc of history. And so how do people think about it as just broadly speaking, just in terms of like the big historical arcs that have kind of shaped this relationship between Arabs and Palestinians specifically?

A Well, that's a, that's a question we could spend about three days talking about, but I'll try to give you kind of a very quick version of it. So I think that, you know, a lot of this goes back really to, uh, People say it goes back to a lot of times, but I, I think that the, the, we have to probably go back to, and I'll try to do this very quick, is, is really in 1948, uh, which was a complicated time. It's post Holocaust, uh, post World War II. Um, you know, again, the Middle East, uh, really in the early 1900 was a lot of art, was created by a lot of arbitrary lines drawn by foreigners. And you had a situation where Israel, uh, is, is the UN puts forth the partition plan. Israel, uh, they're willing to recognize Israel as a state for the Jewish people. And also give a state to the Palestinians. Uh, the Arabs reject that and attack Israel, and there's a whole war. During that war, um, it was flared up really by, uh, General Nasser from Egypt, who at the time was the leader of the Muslim world. Uh, during that war, uh, Israel was able to defy the odds and win, and a lot of Palestinians were either forced from their homes or displaced from their homes. You know, there's, there's versions where they say the Arabs said, leave your homes, and then, um, you know, when the war's over, you're gonna come back and take, you take everything. Uh, some Arabs, uh, stayed in their homes, and…

AI assessment note: “I'll try to give you kind of a very quick version of it.”

Q Jared, last week we talked about real estate. You used to be in the real estate business. What, do you have any thoughts on commercial real estate and how good, bad, average things are?

A So I still have a lot of exposure to commercial real estate through my family's company. And, uh, we're mostly in the multifamily space. I think the office space right now is in for a massive, uh, change in the industry. I think you're going to see a lot of the older buildings get Uh, get transitioned. A lot of them are trading now for below, uh, land price, which is, which is pretty remarkable. I think you have, um, you also have a transition and kind of what are the cities of growth, right? So you look at a place like San Francisco, uh, and there's a big debate over whether, you know, AI is going to save, you know, the office market there, whether it's kind of like the Detroit of this industrial revolution, and it's just never going to come back. And then you're seeing a lot of these San Francisco companies move to New York and the New York people are saying, oh, there's too much crime and homelessness. And they're saying compared to San Francisco, this looks like, uh, You know, it's, it's a beautiful place. And so, you know, New York is still doing, I think, okay, but you're seeing a lot of plays throughout the country that, that are, but the fundamental with real estate is it's correlated to interest rates. And so, you know, if interest rates, you know, right now, I think the 10 years, like four and a half, if it goes up to, to six, then you're just going to see a repricing…

AI assessment note: “I think the office space right now is in for a massive, uh, change”

Q because I'm sure that was part of the calculus in what you did, because it, I think the, to your point, maybe the media's perspective was, hold on a second, this, this guy is riffing, but it clearly went very quickly from riffing to a methodical plan. And I don't think that that's ever really been talked about. Do you want to just tell us a little bit about that?

A Sure. Well, I would say it was less planned and way more entrepreneurial. And I say entrepreneurial in two different senses. You know, one is the campaign was one was run incredibly entrepreneurially. People were told that if you work for Trump, you'll never get a job in Washington again, which is why he really wasn't able to hire a lot of people initially. And why a lot of the responsibility for the campaign fell to people like myself who I really just cared about him personally and wanted to make sure that he was able to do a competent job with the operations of a campaign that led to us doing a lot of things in an untraditional way, but we actually were able to make the dollars go a lot further, whether it was building a data operation or how we targeted advertisers or how we, um, you know, did our events. We were able to just do it in a much different way, but from a viability of the candidate perspective, I really give all the credit to him because what I saw with politicians is a lot of politicians We'll take polls and then moderate their perspectives. Uh, this is somebody who without pollsters and without any political experience, um, really put forward a lot of points of view and keep in mind in a Republican primary, a lot of his viewpoints on trade were very heterodoxical. They were, they were not what was conventionally thought of. And what I saw with Trump was that h…

AI assessment note: “it was less planned and way more entrepreneurial.”

Q How does that leadership change in your view?

A The way that I would think about this is that if you're waiting for a solution to come to you, you're not going to find it, right? If you say, okay, let's go back to the UN. Well, they have a perfect track record of failure. Let's go back to the PA. Well, they have a perfect track record of failure. You're definitely not going to go back to Amaz. So you need to find something different. So I think you either need to create something new or you need to, um, look at what's working and put it together. So some places that could do it would be the World Bank has a lot of good, uh, institutional knowledge. They helped us work on the plan, the World Bank and the IMF. Um, you know, some of the other regional governments. I mean, Jordan, uh, their government is, is pretty, pretty, pretty capable. I mean, they're, they're better at military than economy, but I think they're, they're starting to focus more on economy, um, as they realize that, that that's necessary. Um, if you look at the benefits of that area, uh, the Palestinian people are, are, are like a 99% literacy rate. Again, through the taxpayer, U.S. taxpayer dollars and international donations, we've paid for them to become, uh, very educated. Unfortunately, I think we've poisoned, uh, their minds with a lot of what's been taught, um, in their curriculums. Um, they have a pretty good healthcare system there. Again, I think it …

AI assessment note: “you either need to create something new or you need to, um, look at what's working”

Q no peace possible in the Middle East without the emergence of a Palestinian state. With a two-state solution being the only path forward, a Palestinian independent and sovereign state should be on June fourth, 1967 lines with East Jerusalem as its capital. And so that the cycles of killing whose ultimate victims are innocent civilians and. Is this the only path to stabilization, Jared? And is that where we're headed?

A So that statement is, is the same throwaway statement, right? That's the safest statement for anyone to say, because that became the international consensus. So, you know, one thing that was super interesting to me when I was working on this was, um, I kind of said to my team once I was like, where does the Palestinian claim for East Jerusalem as the capital come from? And I had a guy on my team who was a military guy who actually worked for John Kerry, and I'd always have him in the room. Cause he would represent the Palestinian perspective. Um, cause we had a bunch of Orthodox Jews and, and, you know, we tried to be impartial, but, you know, we, we did the best we could to have, you know, all perspectives represented. And, um, and, uh, he came to, I actually don't know. And then what's interesting is, you know, when, uh, when the West bank was actually, uh, governed by Jordan, the capital at the time was Amman. And so it really wasn't until the, uh, the, the, the, the Uh, uh, launch of, of this right for a Palestinian state that they self-declared that the capital should be East Jerusalem. And so, uh, that was actually an interesting notion as well. And I think that, you know, everyone knows that that's not going to be the case. And I asked one of the leaders once why they say that, and they said, well, it's a cliche. And I said, well, maybe we need a new cliche. And he says,…

AI assessment note: “everyone knows that that's not going to be the case”

Q Yeah. And what's he like as a father-in-law? I'm curious.

A Uh, as a father-in-law, he's been great. You know, that obviously brought us a lot closer together. You know, until that time, our time was mostly either playing golf together, or we'd be together at family events. Uh, working together was, uh, was, was a different element of our relationship, but I think one of the benefits I had with him was that he knew I was always going to tell him the truth, uh, whether I agreed with him or not. Uh, I also, uh, I think one of the things he liked about me was that I, I was not, uh, obviously worked hard. I gave him straight answers, and I didn't opine on things where I didn't feel like I had an expert So if you would ask me a question, um, and I didn't feel like I knew the answer, I would say, well, this is not my expertise. These are the people who I would recommend. I speak to you to get perspective and let me bring you their, their opinions. And so I think he saw me as somebody who was, who was competent, uh, obviously had his best interests at heart. Um, again, I wasn't accepting money for any of these jobs, so it wasn't doing it for, for financial gain. Um, and I just started to really believe in a lot of the policies that he was pushing and wanted to help him maybe translate it from a campaign speech to kind of technical Policy and then see once he got the opportunity to help him implement it as well.

AI assessment note: “Uh, as a father-in-law, he's been great.”

Q operation, you're starting to see more and more condemnation from various parts of the international community. So let's start with that is, you know, how do you assess what's happening on the ground? What do you think the prospects for success are? And how do you assess the risk that this sort of escalates horizontally in ways that Are kind of hard to predict and could spiral out of control.

A Yeah. So, so there's a lot of different ways you can go with that, but I'll start with kind of the first question, which is, um, in the immediate aftermath of the attack, my, my biggest concern was that Israel was clearly caught off guard from an intelligence and military perspective with the attack and the attacks were, They, they shook a lot of people. They were, they were very, very heinous beyond, um, really comprehension. It's, it's crazy the more and more stuff that comes out, and we were seeing a lot of it in real time thanks to, you know, the fact that right now with X and what, what Elon's done there to, uh, to not try to censor things in the way that it was happening before. So we were all getting a lot of information in real time, and it was really pulling at a lot of people's heartstrings. My big fear initially was that Israel would react, uh, emotionally as opposed to, uh, to, to pragmatically, and I think that Uh, the steps that they've taken since then have been, uh, very wise. I think the fact that they took their time and have been very methodical about getting their supply lines ready, about working how to garner as much international support. I mean, you have to remember these weren't just Israeli citizens that were killed. These were American citizens. They were German citizens. They were Thai citizens. Uh, they were UK citizens and, and the hostages as well…

AI assessment note: “I'll start with kind of the first question, which is”

Q Has Treasury ever tried to trace these dollars or some other organization to just show where the theft happened and where these pools of money have gone to?

A There's some intelligence on it that I can't go into, but, uh, but I think most people don't want to know, to be honest, Jamath. I mean, you could just look at it in a couple of ways. Like, you know, you look at, um, you know, we would meet with Prime Minister Netanyahu in Washington, and he would take a commercial LL flight to come meet us, and he runs a military superpower, an economic superpower, uh, in the region. Uh, President Abbas would come visit us in Washington, and he, uh, obviously represents a refugee group. And he would fly in a sixty million dollar Boeing business jet, uh, private jet to Washington. I mean, I would meet with him and we'd be sitting around and, uh, you know, he'd put a cigarette in his mouth and then somebody would come over and they'd like the cigarette for him. And I'd be like, am I meeting with the head of a refugee group? Am I meeting with like a king? You know, it was just, it was, it was a different situation. And, um, but I think people just.

AI assessment note: “There's some intelligence on it that I can't go into”

Q You concur, Jared, you think the Republican Party is going to change their position or need to change their position to win elections? Presidential election aside.

A Well, ultimately, if you don't win, then you can't govern and you can't impact the change that you want to do. So I do think that Uh, people are definitely paying attention. You know, the results are the results. I will say that, you know, one thing with, with Trump, he won, you know, with his operation, we were able to overperform our polling. I think here in these last times, there's been underperformance of polling. And so that's something that obviously you have to look at, which is very troubling. But I'll also say that with, you know, what I found again, you know, I'm not really, um, as somebody who's newer to the Republican party, what I found is that, you know, both parties are really, I would say collections of, Of, of tribes, right? You have different tribes that kind of make up the party. But what I found in the Republican party was that there was a ton of infighting and finger pointing and purity tests. And, um, you know, instead of saying like, you know, you know, I'm happy you agree with me on, on 70% or 80%, it was basically saying, well, if you don't agree with me on a hundred percent, then, then, then you're a bad Republican. And I think that, uh, that's a, that's a culture that's going to lead to you, um, having very strong opinions, but having no ability to effectuate things. I think that people have to You know, say, where do we agree on, on different issues…

AI assessment note: “that's a culture that's going to lead to... having no ability to effectuate things.”

Q always another group that seems to emerge. You cut off one group, you get rid of Al Qaeda, ISIS emerges. And there's this almost like, you know, fluid transition of, uh, of this intention. And particularly in this Gaza community, it's very difficult perhaps to distinguish between who's Hamas and who's not Hamas. So how do you actually achieve the objective there? And, you know, how does the military target?

A Yeah. So, so that's probably the most important question that I think people have to, um, really be thinking about as we kind of enter this phase, right? So, uh, it's both, how do you do this in the short term and then the long term? And so you can't kill your way out of an ideology, but there obviously are some bad leaders at the top who are culpable, who, um, who, who are military targets. And I imagine that it's really, you know, knowing the capabilities of Israel and the Mossad, it's just a matter of, you know, when and how, as opposed to Uh, anything else, but then you have a lot of mid-level and, and, and younger members of this group, and I do think that a lot of these people are in this situation more circumstantially. I think this is what they've been taught to believe. I think this is, uh, really the place they were, and this was the, the system in Gaza, where if you wanted to advance and live a better life, then you really had to succumb to this, uh, tiered system. So how deep the ideology is, um, people will debate that in different ways. If you go back to, um, in the campaign when we were dealing with ISIS, Uh, the talking point that everyone used was you have to defeat the territorial caliphate of ISIS, and then you have to win the long-term battle against extremism. Uh, one of the things that President Trump did when he went to Saudi Arabia in 2017, uh, the reaso…

AI assessment note: “If you go back to, um, in the campaign when we were dealing with ISIS”

Q But he's the reasonable one, right? The alternative is Hamas and those guys, I mean, those are billionaire hypocrites who live in Qatar at the Four Seasons, right?

A Yeah, but, but my sense is, is you're, you're gonna get what you demand, right? And I think that from the US's perspective, right? We give about four billion dollars a year in foreign aid to the PA, to UNRWA, to Jordan, to Egypt, and, uh, and we've, we've tolerated, you know, a status quo that's not acceptable. And, you know, one of the differences, again, Trump had a lot of tension with the foreign policy, you know, establishment, and it was over a lot of things, right? Obviously, he wanted to end the forever wars, Uh, he felt like we should get some return on the investments we were making. He felt like USAID wasn't an entitlement. Um, but I think the biggest difference was they wanted to all maintain the world. They wanted just to manage it and he wanted to change it. And, you know, what we did by the, by the time, again, this was one of the disagreements I had with the incoming administration, um, is that when we turned over the Middle East to them, again, we, I spoke earlier about what a mess, uh, you know, we kind of inherited when we started, but we had, Uh, five peace deals between Israel and majority Muslim countries. Uh, Iran was totally broke. Again, under Obama, uh, when he left, they were selling about 2.6 million barrels of oil a day. Under Trump, when he left office, they were selling a 100,000 barrels of oil a day. They were out of foreign currency reserves. The…

AI assessment note: “Yeah, but, but my sense is, is you're, you're gonna get what you demand”

Q like it's never been further away in terms of Israeli domestic politics, and it's never been further away in terms of having a negotiating partner to negotiate something like this with. So That would be sort of my pessimistic outlook. I mean, I know you're pretty optimistic about the situation. Do you see it differently than that? Is that framing wrong somehow? How would you, how would you see it?

A So number one is I'm naturally optimistic, and I, I just find it's more fun to be optimistic than pessimistic, but I'll say everything I'm saying in the context of the fact that this is a really, really, really, really hard problem set, right? So, uh, I'll, I'll try to say this, um, In the right order. So number one is I, I don't think there's any viability to a one state, and I don't think that that's something that will ever occur. Um, number two is, um, and I'll actually, you know, what's interesting, one of the problems is a lot of the, uh, the Arabs and the Palestinians would actually prefer to be part of Israel than a Palestinian state. So right before COVID, we released the Trump peace plan, which, uh, which again, you can, you can still find online. And, uh, I think the political part of it was about Um, we at the time got the right wing and the left wing. Again, it was, they were in the third election and we had, uh, Prime Minister Netanyahu and Benny Gantz, who's also an amazing, um, person came in and they, they all endorsed it. And so what I would find, what I tell you is that semantics, you know, state has to do a lot with semantics. So, uh, you can definitely give them a state. The question is, is, you know, you have to give Israel certain overriding security controls so that, uh, so that the state cannot be, A threat to them, and then you can let them kind of ear…

AI assessment note: “I'm naturally optimistic, and I, I just find it's more fun to be optimistic”

Q it that and sort of this is why I kind of asked you just for a little bit of a history. How is it that people aren't taking all of these views in? How is it that there is this radicalization that may not be happening in the same level in the Middle East, but is maybe happening actually in the West? Whether it's in our universities or other ones.

A Yeah. So that's something like my friends in the Middle East, a lot of them are laughing at the West because they're basically saying, you know, we, we got all these Islamist radical Muslim brotherhood people the hell out of our countries. You don't see the same protests, uh, in those places that you see in the West. And, um, and I think that in, in, in the West, what's occurred is, is people, I saw this a lot when I dealt with the Europeans where people's understanding of the issue, uh, is more with their heart than it is with their head. And obviously nobody wants to see any suffering, uh, Um, of any human beings, but the reality is, is that, you know, the, the solutions that they've proposed for the last 75 years have all been, uh, just nonsensical, and they, they've more often than not perpetuated the problem, and they've been solutions to the problem, and, you know, I faced tons of criticism when I was, you know, in my role working on this issue, uh, and mostly because I, I kind of looked at all the things that have been done in the past, and keep in mind, being asked to, to work on, you know, the Middle East, it's like, uh, it's almost like a joke, right? It's, it's the hardest problem set you can get in the world, and, I think we almost made it look too easy getting the results that we did, and, uh, we left it very quiet, and, uh, I think now people are starting to appre…

AI assessment note: “people's understanding of the issue, uh, is more with their heart”

Q get involved. They don't want this to escalate in a, into a wider regional war, but they've sort of intimated that If the bombing continues that they might have to take action, they might feel pressure to do that. So I guess one question there is, is time on Israel side? It does seem like, again, there's more pressure to stop the military operation over time, as opposed to less.

A Yeah, so, so the answer is, is everyone's talking their book, and that's what they should be doing. They're talking to their populations. The question is what people will actually do. I would say that, you know, the hardest thing for us all is obviously you see civilians in Gaza who are being used as human shields, and the last thing that anyone wants is for more civilian deaths to occur. It's funny, this morning I was speaking to a friend in Israel who was telling me that yesterday there was a major evacuation of, of, uh, civilians in Gaza. And, uh, a lot of people were surprised that the Israeli defense forces were basically putting themselves in between the Hamas militants and the Gazan civilians to protect them and open up a corridor. And again, one thing that Israel's done, I think a good job of is getting out a lot of the facts about how, uh, they've been warning the Gazan civilians to flee, ask them to go. And, um, and what happened was Hamas was, you know, shooting them down with snipers and trying to prevent them from going because they wanted them to stay in place As human shields, uh, in, in the schools and the hospitals where they were conducting their terror activities. And so, uh, what was interesting to me was, um, what my friend was telling me is speaking to a friend of his who was a soldier was that, uh, was that, um, is that a lot of the civilians are really t…

AI assessment note: “the answer is, is everyone's talking their book, and that's what they should be doing.”