>> from our studios in new york city, this is "charlie rose." >> we begin this evening with china. it is a moment of turmoil in

hong kong, thousands have taken to the street in protest over new legislative bills from beijing. over the weekend the protesters were met with tear gas and pepper spray. the conflict has escalated into one of the largest demonstrations hong kong has seen since tiananmen square in 1989. it raises new questions about the rights of citizens in modern china. joining me is the senator on u.s. china relations. his new book is called "wealth and power, china's long march to the 21st century." he has lived in hong kong for 20 years. i'm pleased to have both of them here. nicholas, let me have you explain to us what is happening, what is the conflict? >> to put it simply, the hong kong people are making their voices heard. to the local government, to the

hong kong government and to beijing as well. the crux of the matter is the governance of hong kong. the chief executive of hong kong was nominated by beijing. he is hand picked by beijing and the hong kong people don't feel he is representing their interests. in particular, beijing had promised that the next chief executive would be elected through universal suffrage, and beijing is not keeping its promise. it has laid out some rules that say that beijing will pick the candidates that the hong kong electorate can vote for, therefore screening out any candidate that beijing doesn't like. the hong kong public doesn't like it. hong kong citizens don't like it, and the result is the protest we are seeing today. >> what is the risk for the

chinese government in beijing? >> beijing i think has been quite tone deaf to the demand of the hong kong people. but really it is a conflict about the governance of hong kong. the hong kong people want to maintain their way of life, which is different from the mainland. hong kong has a high degree of autonomy. it has the rule of law. it has a free press, freedom of expression. hong kong people want to keep this. they have a different language, different history and culture. they don't want to be assimilated into an authoritarian, one party like the mainland.

the hong kong government, however, has sided with beijing and with the big property tycoons in hong kong, and not representing the interest of the hong kong people. that is really what is driving and fueling the protests. the one party system and the fact that the party in power in beijing is not really the target of the demonstrators. >> when i asked the risk, i meant does this have a possibility of spreading and jumping from hong kong to china? because of the idea people incorporating it into their own protest about rights are whatever issued there might be. >> the rulers in beijing never like a demonstration. they never like to hear people

expressing their voices. but i think the risk of contagion is quite limited. this is above all a conflict about autonomy, how much autonomy hong kong people should have and how much beijing is ready to give them. this is not a conflict about the monopoly of state power i the communist already. >> do you think the chinese government is prepared to make some compromises here? >> i think the climate in beijing now is quite rigid. i think one of the results of china's success, economically, which is quite a success story, is they have accrued a certain level of confidence, even arrogance, and it's coupled also with a certain kind of insecurity historically, which means they are becoming more and more obdurate and how they approach problems. in their country and also outside of the country. >> are they unlikely to compromise because they are arrogant and insecure? >> i had a person well placed in beijing tell me the other day that he would not be surprised if ultimately the occupy central movement in hong kong came full-blown, which it now has, that they might send in the

people's liberation army troops. to me, having seen the results of 1989 in beijing, where nobody could quite believe they would send troops, but they did. i think this is an extremely sort of dangerous prospect that lies on the horizon, that china will be humiliated, feeling insulted, feeling their authority challenged in hong kong, could move to quash these students. >> do you imagine that could happen? >> i don't think it is likely at the very moment. beijing has a lot of options. they can force the chief executive, who is deeply unpopular, to resign. this is actually the main demand of the occupy central.

he was replaced after a million hong kong people took to the streets to oppose the passing of draconian legislation. the problem is that even if beijing was sending the people's liberation army to hong kong, it would not end dissent or protest in hong kong. people would retreat. they would not try to confront the pla as in 1989, the organizer made that very clear. but you would see massive immigration and you would see continued opposition to beijing. it would make the city ungovernable. this isn't really an option for beijing, only if the party feels threatened itself, which it did in 1989. i don't think it's the case right now if there is no contagion or protest in the rest of china. but i don't see this happening. this is really about autonomy. beijing is doing a terrible job of managing places it promised autonomy to. >> but you talked about a friend who worries this city may become another tibet. >> for hong kong people who

would benefit from freedom of information and the free press, they have been increasingly aware of the authoritarian nature of the regime in beijing. what was unthinkable even a few years ago, that is that you have a strong confrontation and beijing using force, is now at the back of the mind of hong kong people. but this is precisely the prospect they're trying to stop before it gets there. >> you have been writing about china and going to china for a long time.

how has china changed because of this leader? >> he has an emphatic quality, in essence saying the old system of western pressure is no longer to be tolerated. there is much more a sense in beijing now that china is going to be in the world on its own terms. this poses a whole lot of new questions for the united states and the west. how do we comport ourselves in relationship to this country which now is much less willing to yield, accommodate, make concessions. so all around, particularly in asia, we do see a much more militant posture. >> do we see a forward projection of that in terms of pushing forward chinese power? >> look at its posture toward the philippines. vietnam and ireland disputes, malaysia, brunei, indonesia, and its posture toward japan in island disputes. we find it very unwilling to counter play any sorts of

concessions or accommodations. i think this has been 150 years of history working itself out, to the point where china has gotten to the point where they are able to say we are not going to say, "we are not able to accommodate." >> are you surprised by that? >> no, i think that for the past 20 years, this is what we have been saying. we have been saying that it was a fantasy to hope that giving beijing everything it wanted, investment, cooperation, respect on the international stage without any counterpart, was a losing tactic, and all it would do is encourage and strengthen the one party system and its intolerant attitudes, and this is exactly what we're getting. >> has the been any progress on human rights? >> it has gone the other way.

there has considerable slide back. there has been tightening of the internet, a crackdown on the press, a strengthening of the ideological controls, a crackdown in tibet and the arrest of many human rights and civil society leaders. just last week, a uighur academic was advocating for better understanding of at think minority groups from northwest china and the chinese, was sentenced to a life sentence. that shows a very strong, authoritarian, hostile attitude

from the government. >> at the same time, china is going through some sort of push to do something about pollution on one hand and corruption on the other hand. >> the commonest party recognizes that it has to deliver on more than just certain economic growth. certainly one of the places where it's been most vulnerable is on the environmental front, where extraordinary developments have taken place. with very deleterious side effects. they are making progress and they recognize they have to do so, or they will be endangering their own one-party system of rule. i think what really strikes me about this regime is that what has been taken off the table is any notion that china is going to reform publicly. economically, yes, politically, no. they look at the united states, they look at commerce, they look at europe. >> we have a better system, more

efficient system. >> in other words, they get confirmed in the notion that maybe they do have a more viable political model, that they should start standing up for and proclaiming, rather than just accepting. >> but the political model is simply that the communist party controls the economy. >> there are even people in the west who are expressing a certain admiration for this form of government. >> the merits of state capitalism. >> beijing is facing mounting crises on the environmental front, you cannot breathe in beijing, basically. food safety. it is unable to ensure minimum standards of safety. there are food safety scandals every week, every day. i'm not talking about some product being contaminated. i'm talking about thousands of dead pigs floating down the river of shanghai, the financial capital of the city.

>> thousands of dead pigs floating down the river in shanghai? >> yes. >> and they still haven't figured out where they came from. >> i remember sitting and watching that river, and i can't imagine what it's like seeing thousands of dead pigs floating down it. >> they are facing many complex social challenges that they don't know how to respond to without using force and repression. >> what restrains them, then? >> in hong kong, in beijing and shanghai, throughout all the provinces, what is the restraining influence, other than doing what we think we want

to do? >> so far it has been the unspoken contract that chinese people can enrich themselves with that we will take care of the politics and you leave us alone. >> you don't tread on our turf, which is politics. >> but in the end, it's a worry about the dominance of the commonest party that propels them. >> ultimately, that is the number one concern, to maintain a monopoly and power of the communist party. >> what about the idea of wanting to be a stakeholder? >> this is china's great challenge. it wants to be equal. it wants to be a great power, yet it is very or reluctant at this stage to shoulder the full measure of responsibility. >> doesn't believe the united states want to restrain them from being of great power? >> they think the united states and europe are out to contain them. there is tremendous admiration for america, so it is a very complicated sort of love-hate attraction.

>> so how has this changed? >> i have been wanting this for a long time, and several generations have gone by. i have heard people say wait for the next generation. >> exactly. >> what is so interesting to me is the way this powerful patriotism manifested itself, even if they don't approve of their form of government or one thing or another, but the sense

of wanting china to be respected in the world is a very deep force. >> but if that's true, you would think that with respect to tibet and hong kong, not having people protest and being judged by showing a certain informed attitude about these things, it would be a positive thing to be respected. but this is a great contradiction, that at the same time there is a yearning to be respected and the earning to gain power in the world. they do these various things which mitigate against that happening. so it's kind of a tremendous unresolved dilemma. i think there is no resolution for it, given the way the present system is constructed. >> i've had this conversation a thousand times at this table. for while there is a notion that right now china just wanted to focus on peace and prosperity. we want to develop this economy to make sure that we can get it to its strongest point, and also that it will serve somehow to modify tensions within the society, whether rural or urban

or whatever they might be. you know more about this than i do. and that it some point when it felt like it had maximized that, it would turn to be a broader, more participatory force in the world community. >> we are still waiting. >> this notion that we are all ultimately going in the same direction, this is one of the things the chinese are now saying loudly and clearly to us. our history goes here, your history may go there. we are not in the same dream. i think the dream is a dream of china that is resurgent, it is revived, strong, and if it is not respected in the way you just alluded to, at least it is feared. at least it does not need to worry about being exploited or enroached upon. >> back to hong kong, if you

treasure the notion or you care about the fact that you are feared, you're not going to allow demonstrations to get out of hand, are you? >> well, if you can control them -- >> it looks like you are capitulating to the crowd. >> yes, but there is a layer here, which is the hong kong government and the chief executive, which is equally unpopular. he was not the initial choice of beijing. he had another candidate who was a tycoon. ultimately they had to change horses. i don't think he's going to survive. he will have to step down. one of the reasons being exactly what you said, that it will shield beijing from the responsibility in hong kong. he does not have the support of the elite of the hong kong elite and the tycoons. they never liked him.

so there won't be a lot of resistance if beijing chooses to put him aside. i don't think beijing has a lot of options there. besides, he inherited the executive of hong kong. they did not choose him. it is easier politically to cut the losses of beijing by sacrificing him in finding a way of reducing the tension in hong kong. >> but it's a temporary fix. then you get a new leader appointed essentially by beijing and you still have the same dilemma that is making people demonstrate in the streets. >> we have to remember that the turmoil in hong kong we are witnessing now is not something anyone could have imagined just a few weeks ago.

what happened is that it is started to demonstrate. the use of force by police is what triggered people to converge to protect the students, and for the leader of occupy central to declare that the movement was starting now. without the response by the police, which was disproportionate and in the eyes of the media and the world, this would not have happened. all they have to do is propose to hong kong something acceptable to the majority of hong kong. if it meets the majority of the hong kong people, which is to have a reasonably good government that listens more or less to their needs, then it can

buy stability for hong kong for another 10 years. >> thank you, we believe it there. back in a moment. we will talk to congressman paul ryan about the republican party and his own future. stay with us. ♪

>> paul ryan is here. he is house budget committee chairman and also ran as republican vice presidential candidate alongside mitt romney in 2012. he has new thoughts on poverty, conservatism, and renewing the american idea. he explains them in a new book, "the way forward." where does this come from? you wrote a book, how many years ago, that has similar ideas. >> this comes from my own experiences growing up, it is part memoir, part why i am who i am, why think the way i think, and the environment i grew up in and how it shakes me and gave you real appreciation for the american idea. and then it's also a description of two different governing philosophies, liberal progressivism and founding

governing the loss of the. and how if you don't like to track the country is on right now, which i don't, and a lot of people agree with that, how we should do things differently. we need to offer alternatives as conservatives, that is able to get a majority of americans to support. >> my impression is that you've gotten smarter in the last several years. >> i have learned a lot. that's one way of putting it. >> you learned things from the campaign. you learn certain phrases you could use were wrong. >> i made some mistakes. people in public life, for some reason they don't think it's right to own up to mistakes. in private lives we are supposed to, as adults. i have made some mistakes, and i own up to those mistakes, so maybe i can learn from them. >> what made you change your mind, and what did you mean when you said it? >> what i meant when i said it was that we have a system where too many people are becoming dependent on the government, and there won't be enough people paying for the government to keep that kind of system going.

what i meant to say is we need to focus on getting people off of welfare and into work. so they can be overly mobile, self-sufficient, and so they can reach their dreams. the whole american ideal is that the condition of your birth doesn't determine the outcome of your life. the role of government is to promote equality of opportunity so we can make the most of our lives. i was trying to articulate the fact that our federal government has gotten too big, it is gotten too top down, too, and a lot of people are getting these opportunities. i was slighting people who were depending on government who earned benefits.

that was not what i meant to say. it took a liberal democrat in wisconsin to come up to me and tell me really what it sounded like. i realized after this guy laid into me, he is right. i think it does come across that way. i need to change the way i talk and the thinking behind it so i can communicate more effectively. we want a system where everybody can make the most of their lives. those of us who are conservative, we want government to be effective and limited so it can do what it's supposed to do well to get people where they need to be. >> governor romney had the same problem with his 47% comment. >> what we are trying to communicate is we want to have a system where we want to get where we want to be in life. the philosophy prevailing in government in washington right now, doing nothing very well, having huge mounds of debt occurring, and having a top-down approach to growing the economy and to society, it's crowding out civil society. we are 50 years in the war on poverty, and poverty is the highest it has been in a generation.

45 million people in poverty. it's not working the way it ought to be working. those of us who don't like this direction need to show how we would do things differently. we need to put up, here is a better energy policy, a better health-care system, smarter educational policy. your is a more effective way of fighting poverty. those are the kinds of things we conservatives need to offer.

>> tell me if this is not what you believe, that most people would believe what you said, we want to create a system where everybody has an opportunity to achieve their dreams. democrats, republicans liberals, aggressive, conservatives. all of us agree with that. the question comes down to who has the best ideas to get there. >> i think that's right. >> not that one person hates the poor and one person loves the poor. everyone believes in the american ideal. >> i agree with that. in his hyperpolarized time we are in, i would like to think there is a majority in this country that if given a very clear mandate, a very clear choice, built upon a clear governing philosophy, that we can recapture that spirit in this country and get these reforms passed. what i'm trying to describe this, you have to first define your governing philosophy, in contrast with what now is prevailing.

>> what is that government philosophy that is prevailing? >> the government centered view of american life that is top-down down, that is not respecting people and communities. >> what is the evidence of that? >> 45 million people in poverty. tens of millions of people not even in the workforce or in education. we are not hitting the kind of economic growth we need to be hitting. i could go on and on. the worst recovery since world war ii. the point i would make is, we've got these big challenges. they are very real and urgent but they are not insurmountable. i do believe that a vision for american life that is society centered, based on collaboration and partnership with the american people, where we really do replicate the notions of self-government in how we do the things were supposed to do in our life, health, retirement, security, economic growth. i would argue the prevailing philosophy now in washington and the policies coming from him are giving us a stale economy, debt crisis in the future, confiscation of the health-care sector, suppressing the energy renaissance we could have in this country, on and on.

my point is, we need to show how we can do things differently so we can have the kind of economic growth and revitalize american life in community so we can make sure people are getting to where they need to be. i really think with this top-down kind of slow growth policy that we have, you're going to have more tabs than have-nots. bottom-up, progrowth policies based on collaboration, customizing in the 21st century is the way to go. >> the problem with that in terms of collaboration is the question, who is responsible for the absence of collaboration? >> i think we ourselves. one of the things we did in the war on poverty, meaning society and government, inadvertently, we gave people the impression that this is government's responsibility. pay your taxes, don't worry about a thing, the government will solve these problems. that's not true. we need to have a new re-engagement with people in society so they can collaborate and get involved in making differences in their communities. >> and the best example of not respecting that? >> 45 million people in poverty. >> tell me why what this government is doing is why 45 million people are in poverty.

>> we're spending billions on cookie-cutter, top-down, disrespectful of what works at the local level. i would argue that when we can get more local control, we can have welfare support that is customized and localized to a person's particular needs. you can do a lot more to help that person get out of poverty than what we have right now. we have a poverty management system, not a poverty eradication system. >> this is peggy noonan. i'm sure you read it. >> i'm a fan of peggy, she is great. >> she thinks about the republican party in an interesting way.

there are some republicans who want to say -- they just want to blame washington. >> what they say is the other party is unpopular, the president is at all-time lows. let's win by default. don't risk putting a proposal out there that you could get criticized for. the story of my public life is the opposite of that. i put medicare reform plans out there which we are six years into. i'm still standing. i think we have a moral obligation to tell people specifically what you would do differently if you don't like the direction we are in. that's what this book is about. it's basically a road to showing the country how we can fix our problems based on this kind of governing philosophy am trying to describe so we can give the country a legitimate choice. that's the fear i have, we are

doing this in every election by hammering the other guy. what i would like to do is help contribute to giving the country a really clear, specific choice of a different way forward so that if you win that election, and you have the mandate to actually put these ideas in place and saved the american idea, from my perspective. >> would you debate paul krugman? >> i will let joe scarborough do that. >> he did that here, actually. the idea of having someone who is a liberal economist --

>> i will debate people i'm running against in office. >> the point is we need to have a serious conversation where we have mutually shared objectives. at the same time, understand that nobody wants people to be poor or sick. you just sat here and watched an interview with the young man -- >> the go pro guy. only in america. >> he did this during the obama administration, by the way. >> i'm not saying that everything is wrong in america. my point is, we've got some big problems. we have a debt crisis coming. health care is going in the wrong direction. we have a possible energy renaissance that could be fantastic.

rhetoric is one thing, results -- >> we are going to be energy independent because of -- >> he should open up drilling on federal property lands, he should streamline regulations, he should stop killing coal, fill the alaska pipeline -- i could go on and on. >> without any environmental damage. >> convert to natural gas, all of these things could be gained on with the right policies. as conservatives, we can just criticize, we need to propose. we need to show what the horizon looks like that we are shooting for so the country knows we have a better idea and a better plan. >> if you had control over the midterm elections right now, you would talk and a national debate era. >> i wrote this book before the midterm elections because i want to put out there that we have a

partnership with america plan that shows how we would govern if we had the opportunity. >> on immigration? >> it's a broken system, we need to fix it. >> let me turn to politics personally. it is said that you want desperately to be -- you are waiting to know what i'm going to say. >> i want desperately for the packers to win the super bowl. you're going to ask me about ways and means, i take it. >> you want to be chairman of ways and means. >> it is a path i am on. >> i'm not saying you desperately want to be, you just want to be. >> we have an existing chairman who still has work ahead. we have term limits on our chairmanship. he is at the end of his term. but he still has more work to do. we have a lame duck session. it's just not in good form to comment on this until after the elections, until he is done with his work.

>> the question is who will succeed him, and people say someone else has gives on that job, a ranking member of the house ways and means committee -- who is number two? >> sam johnson, and then there is kevin brady and myself. he is a great guy, by the way. i'm a big fan of kevin brady. either way we go, we are going to be well served on ways and means. speaker of the house is not a good family job. you're expected to spend your weekends traveling across the country campaigning for others. i'm going to spend my weekends with my family. my kids are 9, 11, and 12. being a good husband and father other most important things to me in my life. i lost my dad when i was young, and i want to be the kind of father to my kids and husband to my wife that i didn't get.

>> can you do that and have the kind of -- is that what you want to prove, that you can be both a great family man, spent a lot of time at home and not travel on the weekends? >> i think you can. i wouldn't have joined the ticket with mitt romney if i didn't believe we could manage it all. >> were you home every weekend when you were running for vice president? >> i took my family on the road. that's the way i did it. >> speaking of mitt romney -- right now everybody is saying to mitt romney, "run, mitt, run." if the president is in a bad way in the polls, the alternative looks better. all of a sudden the game changes if he announces he is going to run. where do you think his head is?

>> i communicate quite often with him. he is pretty clear in saying it's not his intention to run. he doesn't want to run because he thinks it is somebody else's turn in time and he has had his crack at it. >> he is also said he is weighing it, he is evaluating it. >> i want him to run, i think he should. i think it would be a fantastic resident. i wouldn't have signed up for his campaign if i didn't believe that. >> if he would ask you to be the nominee again, you would go

there? >> i would be his bus driver if he asked me. i think he would be a great president. he has the character, integrity, intelligence, and just the wisdom to be a great president. he saw the foreign policy challenges ahead of the curve. russia, iran, china, the military, all of these things. mitt cares about these things and knows the issues extremely well. he also knows domestic policies in the economy. this gives you a sense of who he is. i am e-house cai from wisconsin. usually you pick some money who represents a statewide -- he asked me to join the ticket because he thought i complemented his skills in helping govern for half of the election. i'm not going to make a decision for the next few months so i can make -- so i can win an election. i want someone to help me govern the country, to help me lead. that's exactly the kind of person you want.

>> george bush chose dick cheney because he thought he could best help him run the country. >> those are decisions that counter the narrative or are contrary to conventional wisdom. what mitt has shown is that he is a man of character and integrity but also great knowledge and wisdom. temperament is a big deal in these things too, i think. there is a lot to that. >> they reference the great comment that was made about franklin roosevelt, that he had a second-class intellect and a first-class temperament. that does not mean they are stupid. they said that's true but truman, eisenhower, and reagan. all people who get high votes for being very successful presidents. what does that say to you?

>> in that kind of job, you have a lot flying at you, and you have to be able to handle it all on and even keel. it's important to be passionate and have great feelings. what is more important in the job of commander-in-chief is to have the even temperament that you can juggle all the balls at once without losing your mind, keeping your cool, not getting ahead of yourself, and making sure you have the right kind of attitude. you don't want to make rash emotional decisions. >> doesn't that describe barack obama, what you just said? he's not rash, he seems to be a calm and reasonable guy. some argue he thinks about it too long, like the afghan policy, not that he doesn't rush into things. in your criticism about syria is that he should have done more earlier in time. >> the kind of temperament i was about to get into is not being too ideological, being able to

listen and learn and not thinking you are the smartest guy in every room you walk into. >> does the president think he is the smartest guy in the room, every room he walks into? >> that is my impression of him. i get along with him fine. i like him personally. then they hit me with a two by four after that. metaphorically speaking. i'm a big boy, i'm used to these things. the part of temperament i'm trying to describe is this, you can be so fixed in your ideological ways. my mom always told me you have two ears and one mouth, try to use them in that proportion.

that is a key part of temperment. for instance, the military. give them the job and the mission and then let them do their job. don't micromanage. >> who is your favorite president? >> modern era, reagan. historically, i'm a huge james madison fan. i'm a big fan of the founders. >> was that because of federalism? >> it was the drafter of our constitution. and his temperament, he had a phenomenal temperament as well. the war of 1812, look at the kinds of things he confronted. i would have to go back to madison. where i come from, lincoln. you have to put lincoln high on that pedestal. and he demonstrated temperament as well. lincoln demonstrated an ideal that he was shooting for, but he knew that he had to set the horizon and he had to make tactical decisions in fulfillment of that horizon. he made important tactical moves but had the steel and resolve he needed to get to where he needed. he was a perfect combination of idealism and temperament and prudence, which is then

underscored virtue these days, but is extremely important if you want to get things done. >> you will make a decision in the spring of 2015. tell me the three most important questions you have to answer. >> family, and is there somebody else i would like -- it doesn't have to be me. i don't have the ego to think only i can do the job. i don't think like that. family, country, and duty. meaning is there somebody else that i really think would be a great president, could win and could be good, and then the family considerations. >> isis, that crisis the country faces, and we are engaged in airstrikes in syria. characterize the challenge for us, and how far we may have to go. >> it is existential, long-lasting, it's going to be a generational struggle.

we set the trajectory and trend of these things by how we act. i'm pleased that the president has changed his policy for the better.

>> he has the right policy now? >> but don't nickel and dime your generals, don't say which you will never do, do whatever it takes to win. i fear that he is not fully committed to doing what is necessary. when you have thousands of foreign passports, there are americans there as well. this is a threat to us. they have money, country, arms, and they are being seen as winning, so they have recruits coming in. this is a threat we have to take very seriously. this is a part of the world that whether we want to were not, we have to have a handle on. this is why we have to see this thing through and do what it takes. success is destroying isis, but also having a coherent middle eastern foreign policy. having a coherent foreign policy. making sure that we are embracing moderate muslims in moderate muslim countries. making sure round just devastating our military. i write about this quite a bit in the book, how he has a -- we are at war right now. the president hopefully won't

bring a budget that seeks to devastate our military like the last two budgets he has given us. >> paul ryan him of the book is called "the way forward, renewing the american ideal." back in a moment. >> you spent most of your time in office trying to get the military out of entanglements. last year at the united nations, you noted that we were out of iraq and unwinding our position in afghanistan. this year, and in your state of the union message, you said, and i quote, america must move off permanent war footing. but it feels once again like we are on one. >> i distinguished between counterterrorism and the sort of occupying armies that characterize the iraq and afghan war. that's very different from us having 150,000 troops in iraq on the ground, or 60,000 in afghanistan. >> are you saying this is not really a war? >> i'm saying that we are

assisting iraq in a very real battle that is taking place on their soil, with their troops, but we are providing air support, and it is in our interest to do that because isil represents sort of a hybrid of not just a terrorist network, but one with territorial ambitions. and the strategy and tactics of an army. this is not america against isil, this is america leading the international community to assist a country with whom we have a security partnership with, to make sure they are able to take care of their business. >> how did they end up where they are in control of so much territory? was that a complete surprise to you? >> i think our head of the intelligence community acknowledged that they underestimated what had been taking place in syria. >> he didn't say that we underestimated isil. he said we overestimated the ability and the will of our

allies, the iraqi army, to fight. >> that's true. that is absolutely true. >> these are the people we are now expecting to carry on the right. >> here's what happened in iraq. when we left, we had left them a democracy that was intact, a military that was well-equipped, and the ability to chart their own course. that opportunity was squandered over the course of five years or so, because the prime minister, maliki, was much more interested in consolidating his shia base and very suspicious of the sunnis and the kurds who make up the other two thirds of the country. so what you did not see was a government that had built a sense of national unity. >> or an army. >> or an army that feels

committed to the nation, as opposed to a particular set. the good news is that the new prime minister, who i met with this week, so far at least has sent all the right signals. that's why it goes back to what i said before. we can't do this for them. we cannot do this for them because it's not just a military problem, it is a political problem. if we make the mistake of simply sending u.s. troops back in, we can maintain peace for a while. but unless there is a change in how and not just iraq but countries like syria and some of the other countries in the region think about what political accommodation means, think about what tolerance means -- >> do you think we can teach them that? >> there's going to be a generational challenge. i don't think this is something that's going to happen overnight.

they have created an environment in which young men are more concerned, whether they are shia or sunni, rather than when they are getting a good education or whether they are able to have a good job. many of them are poor. many are illiterate and are therefore more subject to these kinds of ideological appeals. the beginning of a solution for the entire middle east is going to be a transformation in how these countries teach their use -- teach their youth what our military operations can do is to just check and rollback these networks as they appear, and make sure that the time and space is provided for a new way of doing things to begin to take root. but it's going to take some time. >> you are saying buy them time so they can get their act

together. >> but in the meantime, it's also making sure that americans are protected, that our allies are protected. ♪

>> live from pier three in san francisco, welcome to bloomberg "west" where we cover innovation, technology in the future of business. i am cory johnson. after months of pressure, ebay makes the decision to spin off paypal. is this a good move? we will speak to members of the original paypal mafia. and marissa mayer opens up to me about some plans for the company.