QUESTION: Let’s get right to this morning’s Squawk newsmaker, Secretary of State Mike Pompeo. We want to welcome you, not only to the show but welcome you into Times Square to our set. It’s so much better to have – to see you here.
SECRETARY POMPEO: Great to be in New York City today with you all.
QUESTION: And normally if we have a secretary of state on, we think diplomacy and foreign policy. Can you believe how much of what you do now is in CNBC’s domain in terms of economics and money and oil and cybersecurity?
SECRETARY POMPEO: Yeah, it’s a great point. I have very few meetings with foreign counterparts where we aren’t talking about important economic issues, issues in trade relationships between our countries, a regulatory set of issues, all the things that drive economic growth. You all know you can’t have a good national security for your nation – whether that’s the United States or another country – if you don’t have economic growth back home. It’s an imperative.
QUESTION: It’s a good place to be that we’re not talking necessarily about missiles aimed at us, although that’s still something I’m sure that you worry about. So I was trying to figure out, do we start with Iran, which, unless it really deteriorates, that probably is not as big an issue to the markets as what’s happening in China. So I want to start with China, and then we’ll get to Iran because it affects oil prices, et cetera.
But in terms of China, I know Steve Bannon is not part of the administration anymore, but just let me – just bear with me for a second. Destroying Huawei, according to Mr. Bannon, is 10 times more important than striking an overall trade deal. And I thought that might be hyperbole, Andrew, until I looked in your paper today, and I’m reading about – no, I did. And I’m reading about what’s happening with – in the area where you have the Uighurs and these camps. They have set up a huge virtual cage of spying which supposedly – and here’s a quote from your newspaper – they’re arguing that China is using technology to strengthen authoritarianism at home and abroad, and that the United States is the only country that can stop this – I mean, is Bannon overstating the issues here?
SECRETARY POMPEO: I’m going to say something that will surprise you. I think The New York Times has that story right. There is real risk, and you saw what President Trump has undertaken with respect to China. For too long – this is not partisan – presidents from both parties had ignored the challenges that were presented to American workers, to American technology, and to American national security that China presents. And he is pushing back in every element.
The decision that was made to list Huawei had an enormous national security component to it. The company is deeply tied not only to China, but to the Chinese Communist Party, and that connectivity, the existence of those connections, puts American information that crosses those networks at risk. I’ve spent a lot of time over the last months talking to our partners around the world, explaining to them why putting their citizens’ information, their citizens’ national security (inaudible) at risk by having that technology inside of their systems.
QUESTION: Mr. Secretary, I don’t want to diminish the potential risk. Can you help us – is there evidence that we can point to specifically today to suggest that there was spyware or other kinds of spying taking place using Huawei hardware?
SECRETARY POMPEO: Yeah, that’s the wrong question, Andrew. If you put your information – your information – in the hands of the Chinese Communist Party, it’s de facto a real risk to you. They may not use it today —
QUESTION: Oh, I’m not diminishing —
SECRETARY POMPEO: They may not use it today; they may not use it tomorrow.
QUESTION: I don’t want to diminish the risk. I’m just raising the question because we’ve also heard from the CEO of Huawei who says, look, we don’t share this information, we’re not working with the Chinese government, point to something specific.
SECRETARY POMPEO: I mean, that’s just false. That’s just false. To say that they don’t work with the Chinese government is a false statement.
QUESTION: There’s a law that they must work if asked.
SECRETARY POMPEO: It is required to by Chinese law to do that. So it’s just – the Huawei CEO on that at least isn’t telling the American people the truth, nor the world.
QUESTION: We’ve seen already that some of the partners you mentioned about, some of the other countries, have already started to take up and remove Huawei equipment or say that you can’t use it going forward, several UK companies overnight and some Japanese companies as well. Do you expect us to see more of those companies in coming days or other countries?
SECRETARY POMPEO: We do. We’ve been working at the State Department to make sure that everyone understands the risk. It’s been really an educational mission as much as anything else. Every nation, every private company gets to make its own sovereign choices for the countries and private decisions for those entities; but as we share with them the risks, as we share with them the incapacity to mitigate those risks, which I think some thought could take place as a technical matter – we don’t think there’s much mitigation opportunity. As we share that, we’re seeing them come to the same understanding that the United States has come to.
QUESTION: Do you think we eventually wind up with two internets, one that is based around China and its closest partners and one that is the Western world?
SECRETARY POMPEO: I hope that’s not the case. We need a single place where information can be exchanged, but it has to be a systems that has Western values embedded in it, with the rule of law, property right protections, transparency, openness. It can’t be a system that is based on the principles of an authoritarian, communist regime.
QUESTION: How do you think about Huawei as a chess piece, if you will, in this larger trade discussion? And does it ultimately help us or hurt us? I mean, does China look at this and say: Okay, they’ve got us, and therefore we’re going to – we’re going to now work with them in a better way? Or do you think they say to themselves: You know what? They got us and we’re really not going to work with their companies now?
SECRETARY POMPEO: So remember there’s two pieces to this. There’s the national security component, and then there’s what President Trump has been driving at to create a fair, reciprocal, balanced trade relationship between the two countries. I hope that we can keep those issues in their own place.
We have an imperative to protect American national security. We have a need to make sure we get these trade rules right. I mean, you all know this. I come from Kansas. American workers in Kansas creating intellectual property, trying to grow their business, trying to take care of their families, and the Chinese steal that information. That’s not right. We’re trying to fix that.
They force companies that invest in China to – and create JVs with the sole intention of making sure the government has access to the information that comes across there. Those are the kind of things that President Trump with Secretary Mnuchin and Ambassador Lighthizer are working on, and I hope they can come to an arrangement. If they do, it would be a good thing for China and for the United States.
QUESTION: But global 5G is not going to include Huawei. It’s not – it – we will not – is that our stated policy right now, that it’s not going to be Huawei?
SECRETARY POMPEO: We want the global 5G system, when it’s ultimately built out, to have a Western value set embedded in it.
QUESTION: Well, we’ve got —
SECRETARY POMPEO: Not just American technology, but technology that will come from Europe. It’ll come from other parts of Asia. This is a global phenomenon. Our requirement is that this technology create trusted networks. And if we have trusted networks, then, as you described, we can have a single system which will benefit the world.
QUESTION: That sounds like – well, that’s not just a small chess piece, I mean, that’s not a pawn. That’s like a – it’s at least a rook, or maybe a queen, right?
QUESTION: Why do you think —
SECRETARY POMPEO: A bishop or a rook for sure.
QUESTION: Why do you think we’ve not led on 5G? Why has Huawei been able to get as far ahead as it has, and we don’t have a company that’s been able to build the microcells and some of the other devices that they’ve created?
SECRETARY POMPEO: It’s an important question, because we need to make sure that’s fixed going forward, so it’s not just a rearview mirror, “Why didn’t we get there,” but how is it the case that we’re going to ensure that there are Western alternatives to Huawei.
Yeah, I think there’s lots of pieces to it, one of which is, if you’re a state-directed business and you take on subsidies from the Chinese government, there’s no doubt you can make real hay. When you show up not only with a low-cost, affordable product, but engage in behavior that the Foreign Corrupt Practices Act would prevent, yeah, you can get a little bit of foothold. I am convinced that the West will ultimately prevail, because I think the world wants systems that they can trust.
QUESTION: What are the prospects for us actually getting a deal that has teeth, given that so much is at stake for the way the Chinese operate now? They would need to be dragged kicking and screaming into an agreement. Either it’s lukewarm agreement or it’s going to take years and years and years. Are you pessimistic?
SECRETARY POMPEO: Joe, I don’t know the answer to that. I’ve spoken to Secretary Mnuchin almost every day as they’ve been part of these discussions. I haven’t been at the center of the actual negotiations.
I’ve seen them make real progress. I hope they can continue to make it. These issues are not only important to the United States. We remind people these are good for the world and good for the people of China. If we get this right, this will create a trading system that can continue to create prosperity for citizens all across the world.
QUESTION: Secretary Pompeo, can I just ask you, if you’ve – in touch with Steven Mnuchin almost every day, you’ve seen him make progress, but recently has there been more – a more downbeat sort of outlook on what happens? Because that’s what the market seems to think.
SECRETARY POMPEO: I think he said yesterday they don’t have any meetings scheduled for his team to travel to China. I hope that by the time this show ends this morning they are back at it. It is important for the conversation to continue. It’s important to both of our nations to try and get this right.
It’s tough, Joe, to your point. The things that – the changes, the transition we’re asking China to make to create these fair, reciprocal trading rules is no doubt a big ask, but it’s important for the United States, and President Trump is firmly committed to it.
QUESTION: I briefly mentioned the Chinese ambassador. Was he – was that for a U.S. audience? I mean, or is that really the —
QUESTION: Or for a Chinese audience, yeah.
QUESTION: Or was that really the policy positions that – I mean, I watched him say that there’s been no military buildup in the South China Sea on any of the islands. I watched him say that everybody knows Huawei is just a private corporation and it has nothing to do with the – I watched him say that the internment camps are actually jobs training for the Uighurs. I watched him say that every – that everything they had decided on, that the United States had pulled out three or four times and taken back what they had – I mean, it was —
SECRETARY POMPEO: Yeah.
QUESTION: I – maybe Baghdad Bob is too strong, but that’s – that was the – that was the feeling I got listening to some of – and if that’s what we’re hearing from our – the negotiators in the trade talks, I don’t see it going anywhere ever.
SECRETARY POMPEO: Yeah, the Chinese are building up in the South China Sea. The —
QUESTION: That’s a fact?
SECRETARY POMPEO: The authoritarian nature of what’s taking place in Xinjiang to the Uighurs, some million people held in camps – these are not community colleges. These are authoritarian re-education institutions, and we’ve seen what’s going on in the technology space. Those are facts. I can’t account for why the Chinese ambassador said what he said.
QUESTION: They’ve criticized you overtly too in saying certain things, have they not?
SECRETARY POMPEO: I’m sure they have.
QUESTION: They may be watching this and they’re going to be mad that I said “Baghdad Bob,” but it just —
SECRETARY POMPEO: Yeah. What’s important, Joe – what’s important, Joe, is not that – not name-calling. It’s important to be honest, get the facts right, and then ensure that our nation protects its interests, and President Trump has done that at every turn.
QUESTION: And he – again, referencing some people that know him, they are saying he’s not going to back down. He’s going to listen to Chuck Schumer and not going to back down on this. Is that —
SECRETARY POMPEO: President Trump has made clear his expectations for how the United States will behave with regard to China.
QUESTION: There’s not an S&P, Standard & Poor 500-level where we decide to start talking more?
SECRETARY POMPEO: These are important commercial – long-term commercial economic interests of the United States and national security interests. President Trump understands them.
QUESTION: We could go till nine o’clock talking about China, but we should mention Iran. What is the latest there in terms of – you have on record saying that we have plenty of oil, we’ve got partners that will make up for any disruptions that we see from Iran. In recent days, have you seen them pull back on some of the more bellicose moves they made, whether it’s the bomb near the embassy or the – and we don’t know it’s them, for sure —
SECRETARY POMPEO: Yeah.
QUESTION: — with the ships, but it certainly looks like them.
SECRETARY POMPEO: This threat, this threat from Iran, remains. We’ve had some luck in disrupting some of the tactical things that were in front of us, I think it’s fair to say. But make sure we’re still on high alert, we’re still making sure we have the right resources in play. Your point – I remember when we began the maximum pressure campaign, there was talk probably on this show of oil going to 150. Your listeners should all know that when May 2nd came and we withdrew from the JCPOA, oil is now well below that. I think I saw Brent Crude at 69-something when I walked in here this morning. It’s below where it was when we designated the IRGC a terrorist organization. We are confident that we’ve done the hard work to make sure that the market is well supplied, and I hope that we can continue to maintain that. I think we can.
QUESTION: You have no problem saying unequivocally that this wasn’t hyped by the administration for political purposes? The Democrats are sort of sounding that alarm.
SECRETARY POMPEO: Yeah, none, no overhype, and we briefed Congress extensively Tuesday of this week. I think almost every member, Democrats and Republicans alike, walked out of that room understanding that the threats that we were discussing and the decision that President Trump made to take a posture to deter those threats and to protect our forces were wholly justified and reasonable.
QUESTION: You and Bolton are on the same page?
SECRETARY POMPEO: Yes.
SECRETARY POMPEO: Yes. Well, look —
QUESTION: Nothing going on there?
SECRETARY POMPEO: Look —
QUESTION: Nothing to any of those stories, Politico —
SECRETARY POMPEO: Look – look, every – every – look, these stories – these stories are crazy. Every senior leader in the United States government will have a different view on something and they’ll make their case where – none of us are wallflowers. President Trump wouldn’t want a wallflower in his administration. He wants people who are voicing their views based on the facts as they see them. John does that. I do that. There are days when we don’t agree perfectly, but John and I, from a policy perspective, and as we stare at the risk to the world, are in nearly complete alignment.
QUESTION: Although the stories suggest that you’re in favor of negotiating and he’s in favor of not negotiating, not believing. Those are pretty important differentiations. Is —
SECRETARY POMPEO: He’s – talking about Iran?
SECRETARY POMPEO: Well, the President’s made clear that at the right time, negotiations are important. What John and I think is interesting – what the President says is really important, and the President has said that he is prepared at the right time, when the Iranians conclude that it’s in their best interests to negotiate, we stand ready to take their call.
QUESTION: I wanted to ask you one question. Your predecessor, Rex Tillerson, was in Washington apparently in the past two days. There was a report that he was interviewed by some congressmen and was asked about the President, President Trump’s values, and he said that he – meaning Rex Tillerson – was guided by, quote, “American values” such as democracy and freedom, but that he could not offer the same assessment for the President. What do you make of that comment?
SECRETARY POMPEO: It’s pretty outrageous and it probably explains why Rex Tillerson is no longer the secretary of state.
QUESTION: John Kerry’s no longer secretary of state. Do you feel —
SECRETARY POMPEO: Yeah, no, we got lots of folks still hanging around the Hill.
QUESTION: Do you feel confident that you’re the only one speaking for – with Iran’s leaders at this point? Is there a cease-and-desist order there? I mean, now I hear they’re waiting for 2020, China’s waiting for – everybody’s waiting for 2020 before we do anything. It’s —
SECRETARY POMPEO: Sadly, I’m not confident that we don’t have others out trying to speak on behalf of the United States working against President Trump’s policies. I wish I could say that I was confident of that. I’m not. I’ve seen – I saw Secretary Kerry travel to Munich. There’s a security conference there every year. He was with Ernest Moniz, Wendy Sherman, and the whole gang that put in place the JCPOA, which fundamentally failed America, and it’s what we’re working to correct today. No, I’m not confident that we’re in that place, and I hope when I – here’s my assurance to you all.
SECRETARY POMPEO: When I’m done being the Secretary of State, I’ll get off the stage.
QUESTION: You see how well this dynamic works? He’ll ask the Tillerson questions, I’ll ask the John Kerry questions, and we cover the entire spectrum, right, Mr. Secretary?
SECRETARY POMPEO: I love predictability, yes, sir.
QUESTION: Yeah, exactly. (Laughter.)
SECRETARY POMPEO: Exactly.
QUESTION: Mr. Secretary, thank you.
QUESTION: Mr. Secretary, thank you.
QUESTION: Thank you.
SECRETARY POMPEO: Thank you all.
QUESTION: Please come back.
QUESTION: We appreciate it very much.
QUESTION: Thank you very much.