The Munk Debates Podcast - Friday Focus: Iran's window of maximum leverage and a new AI model puts financial systems at risk

Episode Date: May 1, 2026

The U.S. and Iran are locked in a long-term stalemate over the Strait of Hormuz. With the midterms looming, the Iranians view the next few weeks as the window of maximum leverage. If the strait stays closed into the summer months people will start to feel the pain in a very real way that could tip into a global recession. The consequences of this high stakes game of poker are getting much more serious as both parties are digging in. Who blinks first? In the second half of the show Rudyard and Janice turn to Mythos, a new AI model from Anthropic which allows users to find and exploit vulnerabilities in major operating systems. This new software will give malignant actors access to private information that could cripple our financial institutions. We did not learn our lesson from social media and the laissez faire attitude we have taken towards AI will lead to a very real and dangerous Y2K moment. Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus. Go to www.munkdebates.com to sign up.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

So this really becomes who who blinks first, right? This is the highest game of high stakes poker for the whole world because nobody in the world will be immune to the consequences of this. Welcome to the Friday Focus podcast for the first of May, 26. I'm Roger Griffiths bringing spring flowers in Janice Gross Stein, my co-host, who is laboring under a spring. spring cold. These are the worst, Janice. You know, you go through winter dodging viruses right and left. And then you're in the home stretch. Baseball's underway. You're a big baseball fan. And you got a cold. So all of our sympathies go out to you. We should be done with all this, Roger. We should be done with cloudy weather and rain

and cold. But it is me the first revolution day. Yeah. And how are you feeling about your beloved Jays this year? You don't hesitate there. The best way to put it is, I remain relentlessly optimistic. They have been felled with a bit of injuries. The team has not had a fair chance yet to show what it can do. And I am confident. Okay. Well, unlikely fans who are watching the first round. of games in the Stanley Cup. One Canadian team left, the HABs.

We lost the Oilers last night. I don't know, Janice. If we go through a round two, the Stanley Cup with no Canadian teams, dark days, dark days ahead. What do you think? What do you think about a trophy for just Canadian teams to end this drought?

Maybe. So we all have something to cheer for. Supposedly the problem, Janice, is sunshine and high taxes. None of the good players like playing in Canada because you got higher taxes and less sunshine. So all these weird teams like Tampa and, you know, I don't know, Colorado and the coyotes in Arizona, they seem to attract some really good players. I think the golf courses are all year round and NHL stars like their golf. What can I say to that?

Except it's really hard to play hockey in Colorado when the oxygen is so thin in the air that when you rush down the ice, you gasp. Let's talk about gasping, maybe gasping for air in terms of oxygen to keep this ceasefire alive. Do you like that transition? I really used a lot of alliteration there to get us from hockey to... Really smooth. It was an effort. It was an effort. Trust me.

What's happening here, Janice? It seems this week like positions are hardening. We heard from the Supreme Leader of Iran, a pretty emphatic statement that the nuclear program is not on the negotiating table at this point, and that the Straits of Hermuz remain in Iranian eyes a critical deterrent. for the country going forward vis-a-vis the risks of more strikes, more attacks. The president, on the other hand, doing what the president does, which is kind of all over the map, but I think trending towards, again, some more bellicose language. So I know you are feeling a bit down this week.

Maybe you can tell us why. Yeah, I think we are locked during in a long-term stalemate. there's no there's no quick way out here because neither party really wants a quick way out. There is a way out I mean, the Iranians could say open

the streets, we'll do, we'll both do it and then we'll start negotiating right away about the nuclear program and that would probably be enough for Donald Trump but you know it really is telling whether

how strongly they feel about that program and have a take enrichment, the right to enrichment, off the table relentlessly. And this has been the story for, frankly, the last 20 years on and off, except the period when we had the Obama agreement. So it taps an nerve inside Iran. And we could speculate why, but it really does. So if you think about this, if the Strait's, stays closed another three weeks when the summer season finally starts. And people start taking vacations.

It's going to hit home because gas at the pump will be higher. Flights are going to be canceled because of jet fuel. People are really going to start to feel it at the public level. And we are at the point, Rudyard, if there's not an agreement very quickly, we will, there is a real possibility of tipping into a global recession. We've missed the spring planting season in much of the global south. That one's gone already. And so the consequences of this are getting much more serious as the two parties are digging in.

That's not a good story, frankly. Yeah, there are elements, a word we often use on this podcast, Polly Crisis. You're seeing a huge drought opening up across the U.S. plains. We've seen record temperatures across India, parts of South Asia. Climate is stocking in the background. I've seen recent reports this week that fertilizer prices in a lot of the developed South have doubled in costs. So imagine that in terms of the yield for whatever harvest can be planted.

There's talk maybe of a significant El Nino event in the work. We'll know more about that in the coming months. But, Janice, it just seems like neither protagonist here, the United States or Iran, is looking down the pipe, so to speak, beyond what I guess is the next couple of weeks. So why is that? Why does, on one hand, the president believe that he seemingly can wait Iran out? There's a lot of talk about Iranian oil production running out of storage, and then if they have to shut in their wells, that could do permanent damage to their energy industry. The president seems to be putting a lot of hope on that.

But the Iranians have talked about the three M's, markets, munitions, and midterm elections as the primary vulnerabilities that this president faces. It's hard, I don't sympathize with the Iranians at all, but it's hard not to think that they must be. thinking that their maximum leverage is now, that after the midterms or even as we get closer to the midterms, if the president feels that he can't turn the midterms around, then his attitudes towards Iran and his actions may subsequently change. But the next few weeks is extending into the next month or so, this Janus similarly must be from an Iranian point of view, the window of maximum leverage.

Yeah, I think that's exactly right, Richard. You have in both places, in Iran and in the United States, the sense that time is in their favor, right? Each side feels time is in their favor, and therefore no urgency to get this done. Paradoxically, all the pressure that Donald Trump is under, and I think he is under pressure from his own party. and the midterm says, and that's real, he's doubled down. And telling me so, no, no, no, I'm not under pressure. I can wait this out.

You just made a strong argument why Tehran would wait this out, and unless I had one other factor that is becoming increasingly clear now, that the real hardliners are in power now in Tehran. You know, Speaker of the National Assembly, Gailabafu, is more pragmatic, functionally sidelined, possessing, and the president doesn't matter. And the Supreme Leader injured, not very much power, and the hardest of hardliners, Vahidi, who is a commander of the Revolutionary Guards, really making most of the decisions, and easy to get a consensus there.

So this is the worst recipe. What's going to puncture that, Richard? Okay. Well, it could become apparent to Donald Trump that the political fallout will be so bad for his party in the midterms that he swears. And you and I know that's not the first time we've seen that with him. The Iranians are under real pressure too.

They are not able to export oil. Yes, they're not landlocked. and you can open landlines to get to other ports. Trains to China. Trains. Yeah. And that's not insignificant. But boy, that economy isn't tattered.

And there are leaked intelligence reports. How much way would you put on this? Roger, I don't know. But there are leaked intelligence reports that the population, particularly in the city of Tehran, is becoming so angry. so desperate because you're seeing the ruination entirely of the middle

class. They're impoverished. You know, people are not working. There's no functioning economy. People are this, it's really interesting because some of the pictures, you know, people are going out to restaurants and why are

they doing that? Because this is the last bit of money they have. And so that incentive to save is gone because the economic situation inside around the economy. is so bad. So this really becomes who who blinks first, right? This is the highest game of high stakes poker for the whole world because nobody in the

world will be immune to the consequences of this. Yeah. I think the DNR, the Iranian DNR to the dollar, 1.8 million just this week, an all time, an all time low. so hyperinflation has effectively set in. Yeah. When's the last time we saw something like this in the 30s? And in, you know, the 20s more accurately in Germany.

When people, you bring wheelbarrows of cash with you. Yeah. So as we wrap up this, the complementary front half of Friday Focus, what do you give the odds that one or both sides, reverts to force to break out of this stalemate. Because you could see potentially two scenarios. One that the blockade, I mean Iran this week already seems to be telegraphing that they considered the blockade an act of war and that the state of war has continued.

That seems like a bit of prepositioning on their part possibly to try to break out of the blockade. On the other hand, the Americans have indicated that they've deployed their untested. hypersonic missiles, Central Command, said those missiles are going into the region in order to provide greater strike depth into Iran. The president has supposedly been briefed on a kind of strike package that would not be, you know, his strumen drang of destroying Iranian civilization, but instead targeted, but nonetheless not insignificant attacks on Iranian bridges and infrastructure. So it seems like both sides are contemplating Plan B actively.

What do you give the potential waiting of that scenario, a Plan B scenario where one or both sides decides this is enough? the situation is intransigent and we're going to act. Well, you can never rule it out, Richard. And you can't rule out military action. And I don't believe you can bomb your way out of this, either side. You really cannot. You know, I've been saying for two months now, the only way out is some kind of negotiated solution.

You cannot bomb your way out of this. And does that mean that one of the other won't try? Just for the reason that you mentioned, Roger, this is lose, lose. Both sides are losing. Iran is, believe it or not, a big loser. It's a loser in its relationship with the Gulf. It's losing in terms of its capacity to restructure an economy. It's oil fields are on the verge of experiencing significant damage.

I don't have to tell you why the United States is losing. So what do you do sometimes? The worst possible thing, you're frustrated. You lash out in order to break the sale of me. And nobody knows in all honesty. I don't think anybody that tells you they know, don't believe, because you have to get inside Donald Trump's head and who can do that. And even more opaque and more difficult is to get inside now of Vahidi's head inside Tara

and understand what kind of calculation he'll make. So no one knows. Okay, let's say goodbye to our complimentary listeners and viewers. Before we do that, though, remind them that next week the public on sale for the remaining tickets to the May monk debate on do not go hunting monsters. A famous quote by John Quincy Adams that a generation of Americans have either chosen to listen to or not. We're going to debate that on the main stage, 3,000 people gathering in downtown Toronto, Mike Pompeo, former head of the CIA and Secretary of State under the first Trump administration joined by Victoria Newland, one of America's most

seasoned and experienced diplomats who played a major role in Ukraine in the years leading up to and after the war. And on the other side, Stephen Walts and John Mearsheimer, two wise, thoughtful, considered thinkers on why America might be better off stepping back from the world and not leaning in as hard as it has over the last few decades. So we've got all that debate information for you on our website, triplew.munk, MUNK, debates with an S.com. Lots of different ticket prices.

We will be offering people 25 and under a $25 ticket, because the Monk Foundation, the Monk family are committed to exposing younger audiences to the art of civil and substantive debate. So look for those promo codes on the website next week and head over to Meridian Hall. all in Toronto and the box office to get your seats before they're gone. I'm Roger Griffith.

Thanks for listening to this. The complimentary first half of Friday Focus will now join with our monk donors after this short break. Thank you for listening to the first half of the Friday Focus podcast. To get access to the full episode right now, become a monk donor. You can do that for just $50 a year. That's less than a dollar a week. You also get advanced access to full-length editions of our weekly monk dialogues with Andrew Coyne, exclusive live streams of our main stage debates and all kinds of other great

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