Emil Michael, Undersecretary for Research and Engineering at the Department of Defense, joins Jason Calacanis, Chamath Palihapitiya, and David Friedberg for an emergency podcast discussing ongoing military operations and AI policy disputes. Michael previously served as Travis Kalanick's right-hand man at Uber, raising $20 billion for the company before joining the Trump administration.

The conversation covers Operation Epic Fury against Iran, the Pentagon's contract cancellation with Anthropic over AI usage restrictions, and broader defense technology initiatives. Michael provides unprecedented insight into modern warfare tactics, drone technology advancement, and the challenges of managing AI partnerships with Silicon Valley companies that impose ideological constraints on military applications.

Operation Epic Fury: Iran Conflict Strategy and Execution

Day six of Operation Epic Fury has resulted in Iran's Supreme Leader killed, 40 senior officials eliminated, and Iran '90% depleted of all of their munitions' according to Michael, with no more missiles firing from Iran.

The operation targets Iran's ability to supply terror groups: 'disarming the regime or the country in such a way that they can't supply Hezbollah, Hamas, Muslim Brotherhood' - Michael.

Polymarket shows 40% chance of U.S. boots on the ground by March end, 59% by year end, though Michael emphasizes 'no scenario where we have some protracted boots on the ground, Afghanistan, Iraq II-like scenario.'

The conflict creates leverage for China negotiations, as '90% of the oil that comes out of Iran goes to China' and disrupting this supply chain strengthens U.S. negotiating position - Friedberg.

Modern Warfare Technology and Rules of Engagement

Venezuela operation demonstrated new capabilities: '100 guys go into the most fortified compound in Venezuela where the president is, take him and his wife out safely and are out with no KIAs' in four hours.

Rules of engagement have been reformed from previous restrictive policies where 'if the guy had a small gun, you had to have a small gun' to allowing commanders to 'use your judgment' within red lines.

As described in The Battle for the American Mind, previous rules of engagement were 'so punishing that we were at risk all the time because you had to have like a legal understanding of what was happening in every minute in the battlefield.'

Drone warfare has fundamentally shifted conflict: 'drone on drone warfare, robot on robot warfare, those things are the future for sure' with 70% of Russia-Ukraine casualties from drones.

Anthropic Contract Cancellation and AI Policy Dispute

Pentagon designated Anthropic a supply chain risk after they refused 'all lawful use' terms, instead wanting to restrict military applications through their own constitutional framework rather than U.S. law.

Anthropic's contract contained restrictions preventing use for 'kinetic strikes' or moving satellites, with Michael noting 'this is the Department of War. This is what we do.'

The breaking point came when Anthropic executives called Palantir asking if their software was used in the Maduro raid, seeking classified information to potentially enforce terms of service violations.

Michael emphasized the risk: 'what if this software went down, some guardrail kicked up, some refusal happened for the next fight like this one, and we left our people at risk.'

OpenAI, Google, and Grok have agreed to 'all lawful use' terms, with Elon's Grok being 'all in for all awful use cases across all classified and unclassified networks.'

Defense Industrial Base and Supply Chain Security

Office of Strategic Capital has '$200 billion in lending authority' at 'treasuries plus 100 bips' to domesticate critical defense manufacturing currently outsourced to China.

Critical dependencies include batteries, solid rocket motors, fiberglass, and critical minerals that are 'totally outsourced both technologically and from lithium to China.'

Defense tech venture capital has grown '3x more than last year' but needs 'some of these companies win big contracts quick' to create a sustainable flywheel of investment and innovation.

DARPA is working on using 'biology to synthesize critical minerals' to 'pull them out of ground, use biology to do it so you don't need to do all this crazy, messy, dirty refining.'

Economic Warfare and Maritime Insurance Crisis

Insurance companies canceled war risk coverage for Gulf vessels, with 'super tanker traffic dropped 94% within the first 48 hours' after Iran threatened the Strait of Hormuz.

Maritime insurance premiums spiked from 0.25% to 1.25% of ship value before markets shut down entirely, threatening 3.3 million barrels of daily production.

U.S. International Development Finance Corporation now provides political risk insurance for maritime trade, potentially creating 'an entirely new insurance industry here in the U.S.'

China's economic vulnerability is exposed as about 40% of their oil imports come from Iran, Venezuela, and Russia - all now disrupted or controlled by U.S. actions.