>> from our studios in new york city, this is "charlie rose." >> millions of afghans took to a candidate elect

between the two leading contenders. >> abdullah rejected the results of the runoff and threatened to create a parallel government. kerryary of state john rocard a deal. the results of the runoff or scheduled for july 22. 4.5% wednesday, only ballot boxes had been examined. it is a pleasure for me to have him on the program. welcome again. >> it is a pleasure to be with you. where does the audit stand

today? -- allegan in earnest the criteria has been agreed. every day will be a significant count. unfortunately, it would be suspended for three days because of a major holiday is coming. otherwise both the election commission and international geared andre all .ooking forward to when you expected to be completed? know it will take a how manyeally see .allots can be counted in a day

the united nations is supervising the process, and will determine the date to make sure the public is not given .onflicting dates expectations are built around that. >> do expect disruptions? no, i don't. all the rules and procedures have been worked out. we are keen to make sure that the audit is carried out in terms that are agreed. it is a major logistical undertaking. a significant number of the ballot boxes from our provinces are in being the process to move to cobble an assembly line is being set up in hangers.

>> is there clear evidence there was fraud in this election? >> no. the five percent does not show any irregularities. because the allegations that cast a shadow over the legends me, i propose that a full hundred percent audit be carried out. this will put to rest any .llegations if there is any evidence, it .ill be found out it should be a day of celebration.

>> to do except the audience on the basis that there was some fraud? >> accepted the audit to make sure that will transmit parents he was provided. when any candidate makes allegations, it is art duty to make sure that these allegations are fully investigated. proposed to myy noteagues that we will accept or condone any fraud in the election. was -- did not happen during the election. now we have joined hands to make sure that the afghan public voted, what was

the number of ballots, and each ballot has been examined so that there is no doubt. transparency is central to legitimacy so that the next president of afghanistan will have the full benefit of legitimacy that comes from a transparent process. >> do you believe that the , that there was widespread fraud, and that explains the difference between the first election and the runoff? or do you believe that he has other motives? >> let's put that behind us. whatever the allegations, the full process to test them. we have agreed to a testing process that can be determined. this is a matter of weeks, not a matter of months.

the community and the public will soon know whether there was any irregularities versus allegations of wide fraud. should there be any, we do not condone it. i condemn any single act of fraud from one vote to as many as there may be because i believe in public participation and honoring the citizens of this country. they braved insecurity, they overcame threats of violence. men and women came out and stood in long lines twice. that is the central fact of these elections. a grassroots movement that created the conditions of the birth of the modern citizen in

afghanistan who is a fully empowered individual who votes on the basis of her or his preferences. it is important to celebrate that accomplishment. there is a process to make sure that any allegations are investigated. >> does this put the rest any effort to form a parallel government? >> absolutely. it is crystal clear that both of us will abide by the results. the reason we were insisting that it be a fully 100% audit is that a 50% audit, which was initially proposed leaves room and doubt. both of us have made this commitment and beyond that commitment we have agreed to form a government of national unity so the people afghanistan

who have temporarily voted for two candidates would be again united as one nation pursuing stability and prosperity which is our key objective and desire. >> does a government of national unity assume sharing a power? >> the government of national unity assumes a common wide ranging program of reform to put an end to corruption, and lawlessness. to generate economic growth so we can come out of dependency, to pursue peace. to provide the platform for public participation. to make the government accountable to the people

because it is the people who we work for. it would bring us all to focus on what matters to our people. our people are poor. they are unwell. they need help. they need education. they need water. they need sanitation. more than anything else, we want to overcome violence and dependence. our people are dying every day. we need to overcome this. we need to give our country a clear sense of direction based on a vision that is credible and a system of governing that is effective and transparent. >> i am very interested on what you would do if you were chosen as president. i want to talk with those issues. that me stay with the election and the government of national unity. here is what dr. abdullah told me in an earlier interview about

a government of national unity. i want you to listen and tell me if there is any difference on how you to perceive it. here is dr. abdullah. >> help me understand what is the commitment to a unity government. have both you and mr. ghani said you would form a unity government and whoever wins will have the top post in the other will be prime minister? >> that is right. we both agreed on the formation of the national unity government. in the presence of secretary kerry. that is a political agreement. there is a technical agreement on the issue of the audit. it is important that both agreements are implemented in good faith. we are dealing with it as such and we think it is both important. while our focus is mainly on the

auditing. at the same time, we think the political agreement is also important for the future of the country. it creates a sort of win-win situation rather than winner take all. as much as emphasis as we do and we put on the fairness of the audit process, at the same time, we realize that there are needs of the country which has to be addressed in the formation of the national unity government will help afghanistan. >> my assumption is if you are elected president and he is as part of a national government prime minister, you will have the power. am i correct? >> our constitution is modeled under the constitution of the united states. it is a presidential system. the president authorities are defined in the constitution. what we have agreed to is to

create an office for two years. that would be the equivalent of a chief operating officer or a chief executive officer. the duties of this office for the next two years will be defined by residential degree. cree. the constitution allows for the authorities of the president when circumstances require it. we have agreed within two years the president would initiate the convening of a constitutional convention to consider amending the constitution to create an office of an executive prime minister. not a parliamentary system, but one -- like many countries like

france and many others like russia that can do this. the circumstances of afghanistan require consultation. while the authority of the president is clear in the accountability of the president to the country is very clear, our national interests demand that we consult closely because reforms are required in both national and international experience. carrying out intensive and extensive reform is best done when you consult stakeholders and arrive at full understanding. dr. abdullah has enabled that. i would be honored to consult very regularly with him if i were president and push forward

a common vision and implement that vision for our country. >> if the votes of the first round are duplicated in this runoff and the audit of the runoff, a remarkable comeback. how did you do it? >> by taking a list from president obama and marshall gentz. it is a grassroots campaign. we reached every single group of stakeholders in the country through painstaking process. one of the things that did not happen because the choices, dr. abdullah chose not to participate during the second round in the national organized debate.

what we did was to take the town hall meeting that new england has made so famous -- but things -- thanks to the television, broadcasted nationally. for instance, when we had a discussion with the youth. 6 million people across the country watched it. we had a meeting. 3000 people were assembled both shiite and sunni and endorsed us. there was a mosque to mosque campaign particularly in the insecure areas of the country which resulted in creating peaceful conditions. it is the same thing that urge our women to come out. there is a family headed by a religious color whose women had not gone to medical clinics for 20 years. he rented vehicles and carried

his own wife and the entire village. this was truly a mass movement across the country with the urban areas of the country engaged in a very intensive discussion. informal property rights. that put a burden on the people because of corruption and lack of certainty. it will be turned into solid property rights. two women presided over a large public discussion. there were many such meetings, we campaigned in different parts of the country, identified the key issues. in the last five days, there was a door to door campaign across the 34 provinces of afghanistan. the results are now posted on the election commission's website and it shows that our

votes in every single province increased. some significant enough to make a difference. our voting pattern is a national phenomenon. there is no province in which we have not succeeded in reaching the public and creation of these centrists consensus. during this campaign, we have shown that people who a year ago were not willing to talk to each other were brought on the same platform and campaigned intensively across the country. this has really been a really proud moment for us to generate such a turnout in such a scale of participation. >> if you win and are the president of afghanistan, i am interested in several relationships. first with the united states. would you sign a security

agreement and what would you like for that security agreement to say? >> i would like to thank the american public first of all. the american congress and the american government for their sacrifices, blood, and treasure during the last 13 years. the relationship with the united states is a strategic relationship that is based also on the value of democracy. our people have demonstrated that we like democracy and we like our vote to count. i negotiated -- i was one of the three people involved in negotiations of the bilateral security agreement. i find it both national interest and in the united states interest.

i will be signing it within days of taking office. the agreement has been reviewed by a consultant, counsel across the board. afghanistan has recommended that it be signed. i find its signing in our interest and i hope we can demonstrate that president obama's decision to scale down the number of american troops very significantly within 2.5 years can be matched by a major program of reform of our security institution, of our legal system, our system of governance, and our economy so we can demonstrate both to the american public and the world at large that we can take charge of our destiny and afghanistan is a working and growing proposition. we would like to broaden the

partnership from just being focused on security to being in -- an economic and cultural relationship. we would like a university to university set of relationships. mosque to church relationship. people to people. >> do i assume you are saying you were confident that afghan can, as american troops result, -- withdraw fill the void and , therefore, the schedule that has been proposed and committed to by president obama will be adhered to by all concerned? >> i had the honor to lead for three years the security transition. when i began, people thought it was suicide to accept a job where most pundits thought it was impossible to reduce the number of american troops by

over 100,000. i worked with some of the greatest military minds of the united states. general petraeus, general allen. in the process that i designed and then reached agreement was in phases. instead of jumping straight into a pool and not knowing whether it is empty or full, we adopted a strategy of testing in five phases. the u.s. troops with through -- withdrew with honor, with full honor and dignity. a significant commitment was made to building up security forces. afghan security forces has shown that their patriotism and their commitment. now we are assuming that the

process of building that afghan security force would be supported for 10 years. the united states' administration has repeated that assurance that we need to understand and acknowledge that they would not just be the administration but the congress and the american public. and the media. that would review this. given the decision that the president of the united states has made, we need to focus on these 2.5 years. we cannot waste the moment. we must make every effort and then we will see where our american partners would see the accomplishments and then we can make sure the commitment of the 10 years are honored and support continues. >> do you think there is a lesson to be learned from iraq? >> there are.

in one of the key lessons that fortunately from day one that i entered as a candidate, we insisted on. exclusion does not work in politics. a winner take all approach is counterproductive in conditions of post-conflict. we need to have a sense of a citizen front and center because it is the citizen that figures out the stability of the government. all parties must bring their differences within the government, bring people within the tent so that the country at large can be secured from the disputes of the elite is a very important lesson. in iraq, they practiced exclusion. they did not bring everybody together around a common table.

they did not create the trust that is necessary to assure the people that government is not an instrument to be used against them but an instrument to work together for realization of common goals. >> what is your assessment of the taliban threat? are you prepared to negotiate with them? how do you see the nature of those negotiations? >> a government of national unity means an end to all parallel governments. we must create the condition that there is only one government in afghanistan with the full legitimate mandate of the people that speaks for the country. one of the slogans on the basis of which i run.

the telegram is a political reality of afghanistan. they cannot be wished away or eliminated through use of force. all conflicts must be at the negotiating table. we are committed to ensuring that those issues that are grievances, that are about participation, that are about paving of political solutions are brought forward. the key to this is that the taliban who believe in operating themselves from larger regional networks of violence, that are dedicated to nothing but destruction, and would like to use our country as a battlefield for half-baked ideas. this means serious engagement.

this election has already created a major platform for peace because in the insecure provinces, previously conceived a wide provinces of the country where participation was impossible, our religious colors and our people have created the conditions of engagement. >> to achieve that, would you sit down with omar and talk about the conditions for taliban forces to lay down their arms? >> peace requires sitting down with those who are engaged in conflict. one of the key advantages that i bring is that i have not been a participant in conflict. the country largely has funded to my appel of clean hands. one of my hands is free of the blood and my other is free of corruption. we need to engage in discussion.

discussions must be based on preserving the gains of the last 13 years the same way we have insisted on formation of governments of national unity. we both acknowledged our constitution is our key framework. there is a constitutional mechanism for changing the constitution, not the fundamental values of the constitution, but specific arrangements that can improve governance and bring people together. >> you had the support of president karzai's brother. it is said you had the support of president karzai. he is, as you know, among the american public, a controversial figure and among members of the u.s. government who have dealt with him. there have been consistent allegations of corruption. he would not sign a security

agreement. so, what is it that you think karzai's legacy? >> president karzai's elder brother endorsed our campaign. we were very engaged. the family endorsed different candidates. i have not had support from the president. we have maintained cordial relationships, but dr. abdullah, thanks to the legacy of the very large political party, it is a major presence in government. ministries governorships, police posts, etc. i have not appointed anyone in the government. i have not had backing from the government. the president -- president karzai took power in a very difficult time. his legacy will be both a person

who has managed to maintain an umbrella under which very different people with different backgrounds and persuasions have managed to cohabit. also, a legacy where corruption became a cancer that could not be contained. we are determined to build on the positive legacy and deal with corruption in a really determined manner because without tackling corruption, our people in general and our poor people and youth and women who have been the key drivers in the campaign will not have a place under the sun.

>> as a keen student of american economy as well as american politics, you know that we have here a kind of standard of looking at presidents and measuring the first 100 days of their time in office. what do you hope to accomplish in your first 100 days after you are inaugurated as president, if in fact you are? >> within the first 100 days, the first is to set a course. that means our partnership with our people will be turned up to a set of reforms. we will evaluate every ministry in a public manner. define its objectives, allow for

honest, capable people to come to the top. this will allow us to deliver on the promise of good government. we promise to transfer 40% of the national budget to the provinces because our system is centralized. our provinces do not have to fiscal resources on the base to which to be accountable to people. the reform of the security sector will start in the same 100 days. the office of the commander in chief, a function of the president of afghanistan will not be turned into an office. i will be turning this into an office so that each eight hours we will have a security report given that security is the number one desire of our people. in concrete ways on the basis of measures and evaluation.

then we have a very busy international council. our first action internationally will be renewing our partnership with the united states by signing the bilateral security agreement and by making sure that both the strategic partnership agreement and the bilateral security agreement are firmly in place. simultaneously, the 100 days we will be engaging the region. china has become very interested in the peace process. also, the new chinese president has opened up an initiative, a major initiative that the region, the surrounding neighboring countries should benefit from china's development. so seeking these relationships and ensuring that both the region and the world at large sees us

moving and moving the engine of government to full speed. it is going to be sped up during these 100 days and we very much hope the public would see the results of its massive participation in terms of accountability to them. >> i thank you for this time. we look forward to watching the audit and the political and economic developments in afghanistan as you have suggested earlier. >> i very much thank you for the opportunity. i would like to thank the american public for the engagement. >> he is the president of the multi-billion-dollar investment fund. he gained prominence in 2001 on lucrative wager on the demise of

enron. he is been focused on china. following the credit bubble that has yet to occur in shanghai. he warned by doing business in the cities i like going to new york on the eve of the financial crisis. i am pleased to have him back. you were bearish last time. are you still bearish? >> we are still bearish. not much has changed except the credit public is gotten bigger. everything that we talked about in 2010 has just basically doubled whether it is credit, the amount of vacant real estate. >> some people argue the chinese appreciate the threat of a bubble and they are doing more in order to address it then other nations have. because of the nature of the political system, they can do it. >> the same people do not see it four years ago and now they believe the authorities have it under control. the problem is data.

we take it with a large grain of chinese salt. the data shows the credit is completely wide open in that more and more credit is going to support less and less growth. the chinese economy based on construction is really manufactured growth. the minute you stick a shovel in the ground and put up a building or bridge, that counts as gdp. the problem with that model is when you finish building it, you have to put up another one. is not based on ongoing consumption. in this reform, it still is elusive. >> many of those buildings are still vacant. >> a lot of them. a lot of them will not be economic. >> therefore, the economy has gone from gdp growth of double digits down to seven plus percent. >> we have to color this with

the concept that china is the only major industrialized nation that knows its annual gdp on january 1 of that same year. >> because? >> it is what they say it's going to be. >> if they make it what they say there's going to be or whatever they say is what they will report? >> we have a cartoon of the seven them standing at a table and saying ok, the growth will be 7.5%, how do we get there? >> i know corporations do that as well. >> i think there are a lot of corporations that do that to. [laughter] >> so, clearly, there is a lot going for the economy. they have an emerging middle class, they have social tensions. they are making a serious effort to deal with corruptions. clearly, a serious effort to try to deal with pollution. it is a priority for them. the third priority they say is sustainable economy.

serious people with serious skills. >> they absolutely are very serious people. the technocrats are not to be underestimated. however there is a saying in , china -- the mountain is high and the emperor as far away. all of the action when the rubber hits the road happens at the local level. that is where the technocrats in beijing, although they can direct things, there is a little bit too much space that is put in the central committee and planning committees because at the local level, the centers are -- incentives are still to produce numbers and growth at any cost. the anticorruption drive which is something we have been focused on for the past year and a half is actually much more than that. it appears to us to be a far more serious effort to cleanse the party. if you look at the people's daily of overnight announcements -- there are four or five head

shots put up on twitter, on the website of people being taken away every night. it is almost as if you are seeing a soviet style purge through social media. people are falling out of buildings. i am not exaggerating. >> i think we know about all the prominent people that have been -- >> there are a lot of people below that level. it is happening impact on the economy because a large number of things like apartment sales, high-end luxury products were bought with basically dirty money. >> is there some sense that he is becoming more authoritarian? >> i think so. >> in his own way, he is on a lot like putin. he is a nationalist. i think that two years ago or

three years ago, we would be -- have said that he is first among equals. i think it is fair to say he is first. he is going to be much more firm, much more aggressive, and much more muscular and the way he looks at the world. >> and eliminating opponents? >> i think that is happening as well. >> consolidating his power and those people that might be a challenge to them. so, when you look at them both in terms of things they might want to do, what is it that is essential for them to do if in fact they are able to deal with this possible bubble? >> navigating the credit issue will be the issue. reforming the economy so it is less reliable on investments and more reliant on consumption. a more traditional economy. >> which is exactly what they are trying to do.

>> since we sat down four years ago, investment has increased, not decreased. for all the talk and optimism about reform, the results still showed that in fact it is not happening. that is the troubling part. >> number one, the dramatic shift they are trying to impede is an export economy to a domestic demand economy. they hope they have a rising middle class that will enable that and manufacture all these things and it goes on and on. you are saying you don't think they are able to do that within any reasonable amount of time? >> first of all, it is much less an export economy than people think. net exports last year was only a couple of percentage of gdp. this is down double digits from a couple of years ago. this is still basically an bifurcated economy of

consumption and investment. they have to flip it. they have to flip basically so that the ongoing consumption services are a recurring form of growth as opposed to more projects because ultimately, you wind-up with enough projects. that is still the issue that they cannot seem to navigate. every time the economy slows, i like to joke that china is the only economy where when growth slows from 7.5% to 7.4%, what does that tell us? they are worried about stall speed. it tells us they are worried about hitting the brakes and growth not going former reality point of view to something much lower even though we will never see that. i think that is a real challenge of looking at china from the outside which is trying to find out what is really happening beneath the gloss of the official statistics. >> you also want to know what their long-term ambitions are.

the consolidation power often has a reason you want to consolidate power and a reason what you want to do. do we have any sense of what he wants to do with china? what he wants china to become? >> this leadership in china is pursuing a more muscular strategy extra that is new. point. the dispute with japan, the claims in the south china sea, the american pivot to asia all is bringing forth a more firm chinese response than we've seen in previous decades even. so, i think that that is something that is new. whether it is just a resurgent nationalism, whether as any country grows, it exerts its

power politically and militarily, it remains to be seen. that is a new development. i think china's ongoing outreach to other countries like countries in asia, building very quietly a port facility to pakistan with a high-speed rail to get a port on the indian ocean, all these things are new developments and are going to have major implications for our strategists and our political leadership. >> turning the subject to japan, you have said the biggest threat to asia is not china, but japan. >> what i meant by that is that the change to japan is suddenly a destabilizing. >> in asia? >> yes, and asia. the fact that japan is getting ready to announce its

constitution. >> there seems to be some pullback from that. >> there is pullback within the country but the leadership is very intent on basically bringing forth a new look japan. that new look japan is scaring china. i think it has basically brought two countries that peaceably coexisted for years in the region back to butting heads. we have seen that in last two years. >> what is the role of the u.s.? clearly, we have alliances with japan. we have relationships with vietnam and korea. what is our role? >> that is a good question because the $64 billion question is what happens if japan and china clash? i don't mean a full-fledged war,

i mean someone miscalculates on the open seas and a boat is sunk or a plan is shot down and now you're the crisis. what happens? do we pledge the full faith and support of the u.s. military behind japan to fulfill our treaty? i don't know. a lot of strategists fear we won't. will we send american boys and harm's way? i don't know. this is a new calculus that we have not had to worry about in the last handful of years as we have been focused on the middle east and elsewhere. in fact, our alliances in the pacific are very much open and active. with what is going on with china and others, i think the obama administration is right to consider the need to refocus on asia. >> has that pivot taken place? >> not practically. we move forces and arena units and strengthen ties with countries like vietnam.

reopen and strengthen ties with the philippines. these are all early moves in a chess game. i teach the history of financial fraud. >> how did that come about? >> it came about a number of years ago. i was joking with the former president at one of my -- i would go get my doctorate in history. he joked that we have something we want to talk you about. he asked if i would be interesting teaching at the yale school of management. i jumped at that chance. it is one of the best things i have ever done. >> why? >> the ability to teach graduate students a framework about thinking about corporate wrongdoing which goes back as long as there has been corporations. it is really a history class back in the late 17th century, the first ipo in england.

when you teach to frameworks as well cases and the wonder, -- wonderful rogues that you, cross you begin to realize that , bernie madoff with just one in a long time line and it has been going on for hundreds of years. >> after 2008, nobody is going to jail. we had people go going to jail for insider trading although the most recent case came back. should there have been more people indicted? >> i think so personally. we know now with what attorney general holder has said that in fact the justice department took in economic factors and financial factors in deciding whether or not to prosecute individuals. they are on the record for saying that. that is a very, in my view, very questionable form of justice in this country that if you in fact work for a too big to fail

institution that you can get away with all kinds of criminality that the average person cannot. i think still to this day most people in the united states -- it bothers them. an amount that people from boston to washington do not appreciate. >> people do not appreciate the fact that a lot of people across the country believe there was an unfairness about what was necessary to do in order to - >> there is still a two track system of government in this country. if you look at the response from the 1930's and even the response in the post savings and loan crisis as well a what president bush did post-enron to clean up the markets, there was a firm response. there was aggressive use of the justice department. that is not what we of seen.

we have seen insider trading. >> it is not policy. >> to take it to its logical extreme, i pointed out that you almost get to a point where if your management team is bored of a significantly large financial institution and you know that by and large the only penalty you might face is just simply financial fines, you might have a fiduciary duty to skirt the line or closing out across the line if you think the cost benefits are worth it. that is a scary thought. >> i was a conference last week and several people made the case for bitcoins. do believe that will have a prominent place? >> i do not buy gold. if i was to worry about another currency outside the realm of governments which is what

bitcoin is, i think being as old as i am, i would prefer gold or diamonds to a digital currency because deep down i am worried about the idea that the geniuses who ever develop the algorithms to create bitcoins at the end of day might have a backdoor that you don't know about. >> thank you. it is good to see you. a conversation with artist jeff >>a conversation with artist jeff koons on the next charlie rose. >> it was nice for me to get some of the images because i do not live with all those pieces. a lot of them are kind of just fresh to me again. >> owned by collectors. >> i tend to live with other art, art by other artists. i am at my studio all day long. i do not live directly with my work, but it shows to me that it has been fun. i think i have been doing exactly what i have been wanting to do.

it makes me feel more ambitious. i really would like to do something. i really want to put something on the table. i think i have been having a dialogue but i want to do more. ♪

>> this week on political capital, house foreign affairs committee chairman walter dillinger on what is next for obamacare. margaret carlson and megan mcardle on poverty proposals and who will win the georgia senate race. we begin the program with house foreign affairs committee chairman ed royce of california. thank you for being with us.