♪ announcer: from our studios in new york city, this is "charlie rose." charlie: jeff flake is here, the junior republican senator from arizona. of thended the reopening u.s. embassy in havana. he has been an outspoken advocate for restoring ties between the two countries, but on saturday he announced his opposition to the president's iran nuclear accord. he joins us from phoenix. what in the end made what -- made the difference to you?

senator flake: the nuclear side was pretty tight. it does truly limit iran's ability to at least amass enough fissile material to make a bomb for 10-15 years. that's a good thing. the part the troubled me most is that this probably should have been a treaty where it binds all parties. instead, it is an executive agreement that just lasts the length of the presidency. when there are other issues, like problems with what iran has been doing in the region, some of the terrorist activity, i thought that the agreement unfairly restricts congress's ability to respond to that type of behavior. that's what tipped the scales for me. for those who say this is an easy call, i think they have not looked easily at it or all the -- closely at it. this is a tough agreement.

charlie: if we oppose this deal -- what do you mean on the opposite side of our allies? it depends on what's -- which allies you are talking about. sen. flake: the p5 plus one negotiated this agreement. the countries who have been involved in the sanctions regime will now go on. assuming this agreement were to fall apart, i think they might go a different direction. that is not a good thing to break up this good coalition. part of the success we have had in bringing iran to the table is that it has been iran versus the west rather than iran versus the u.s. this kind of breaks that up. it is not an easy thing to go against your european allies. on the other hand, israel has some real concerns, legitimate concerns about this agreement. they are obviously a very close ally of ours as well. charlie: there is a lot of political pressure, but in the

end, do you think that the fellow senators you know well from that group of 100 are voting on the merits of this agreement or on political pressure? sen. flake: i like to think that all of us look at the facts and the merits of the case. and i think by and large, that's true. we've had a good number of briefings and hearings and meetings that have been widely attended by my colleagues. i think the senate -- i can't speak for the house -- but knowing what we have gone through in the senate, people are taking this very seriously, as they should. this is a big, important agreement, and i thought it was important to do due diligence on it. charlie: why is it important? sen flake: this will affect not just our relationship with iran, but the entire region. allowing or trying to prohibit a

nation like iran from getting a nuclear weapon is extremely important. it is something we have based a good chunk of our form policy in -- of our foreign policy on in the middle east on for quite a while. it will affect the region. we have got to establish a regional security framework in the wake of this accord now, assuming it goes through. those kinds of things are big and important. charlie: do you believe the president could have negotiated , and the others that were part of the u.s. team, could they have negotiated better and perhaps included some of these elements that concern you about iranian conduct in the agreement? sen. flake: yes, i do. had this been a treaty, they obviously would have clarified some of these things that many of us have been raising for a number of months. i actually wrote to the president in february this year expressing concern that congress had not been involved, particularly in what will happen

with sanctions should this agreement go into effect. i do think we could have clarified. with a treaty, you can to what ruds, reservations, understandings, and declarations, where you clarify some of the confusing aspects of a treaty. we didn't have that opportunity here. so i encouraged the administration to support parallel legislation that would clarify some of these items. they just aren't clear. the administration will say that we do maintain or retain all the tools that we have to deter or punish iran for behavior in the region on the nonnuclear side. but if you read the agreement, that is just not the case. i think that those things need to be clarified. they aren't and i think they will present a big problem going forward. charlie: do you think the president wants this deal too much? sen. flake: well, i don't want to say that.

i know the administration wants an agreement. i want an agreement. i supported the negotiations all along, and i wanted to support a good agreement. i wanted to be there. i don't think it is a good thing to have a big, important agreement like this pass with a bare plurality of a partisan vote. i would have liked to have been there, but i couldn't get over these hurdles. charlie: how do you think it is -- how do you think the presidential race will come out -- president obama will come out in the end? sen. flake: if i had to guess, i would think that the president may lose a few more democrats that have already declared. but in the end will have votes to sustain a veto. charlie: so he will be able to get this agreement that he wants so very much. sen. flake: i believe so. i believe the votes will be there. charlie: what is it you think he doesn't understand? sen. flake: i don't want to put it that way. certainly, these negotiations have been entered into in good faith. i think we are trying to get an

agreement that will both restrict iran's nuclear ambitions. but also, you've got to deal with the behavior in the region. the president believes that we can separate those things. i'm not sure that we can. in fact, i think in the agreement, the fact that iran has agreed on the nuclear side to something that it can get out of if we impose sanctions for other behavior, it ties the two nuclear and nonnuclear aspect s together in ways that i am not sure is fully appreciated by the administration. charlie: but the president will argue two things. one, it was a nonstarter to include these things as part of an agreement. they simply weren't going to go there. and that the intent of the p5 plus one was only to use sanctions to get an agreement to

prevent iran from having a nuclear weapon. sen. flake: well, i would simply disagree. i don't want to disparage the president or the administration . like i said, i uploaded their -- applauded their efforts and their willingness to negotiate. i think we should have been doing this on before. i think we have a stronger hand than we have shown. gotten someould've more commitments, or at least not bound congress's hands with regard to responding to iran's behavior in the region. i think we could have clarified that and that would have provided more deterrence than is currently there with this agreement. charlie: and also the president would argue it is much better to have or be in competition and be engaged in a conflict with iran that doesn't have a nuclear weapon about these issues, whether it is support for

hezbollah or the denunciation of israel and all of that. to be engaged with an iran that does not have a nuclear weapon than one that does. sen. flake: there is certainly something to be said for that. but i'm not sure you can take that to the full extent. if iran believes that we are so worried that they will get out of their nuclear obligations, that we won't challenge them on some of the regional behavior, they simply have too much leverage in that regard. i think there is some of that in this agreement. i take the president's point on dealing with an iran without nuclear capability, that is certainly better, but if they can use that as leverage to increase that behavior in the -- bad behavior in the region, then i'm not sure that argument holds. charlie: do you believe there are things the congress can do now, that even though the agreement will go into effect,

can make a difference? sen. flake: yes. and i think congress will. that is part of what i was talking to the administration about as late as last friday. i think they congress is going to move ahead. for example, to reauthorize the iran sanctions act which expires next year. simply so, if there is a need for snapback, we have sanctions to snap back to. that has been met with resistance by the administration. they say we can deal with that when it comes up, but that would be too provocative to do that now. it makes me and others concerned that the administration would be unwilling to challenge iran's behavior in the region when it comes to it. if we are that afraid to challenge their interpretation of the agreement now, and and to allow congress to move ahead and reauthorize sanctions without challenging the president's

waiver authority, nobody is disagreeing with that, but to violates, even on the nuclear side, we want sanctions to snap back to. i think congress will move on some items like that. it might be uncomfortable for the administration and for the iranians, who said they would consider that provocative behavior. but it should be done. charlie: many people who support the agreement will say i don't think it is a perfectly deal by any means. i don't think i have met anybody who said this is a perfect deal. but they do believe that, in the end, this will be a more important element for preventing iran from a nuclear weapon on for anything else that is on the table or off the table. having said that, when you look at the dangers of iran getting a nuclear weapon living under the

disagreement, is it the covert possibility that concerns you the most, of what they might do? sen. flake: no. like i said, i think the nuclear side -- it's not perfect, obviously. the inspections regime that pertains to the non-known nuclear sites, or the suspected sites, is certainly far from ideal. but, given our knowledge and what we know about the supply chain and the points at which we can intervene and look at what is going on, frankly on the nuclear side, although there are trade-offs -- like i said, it is not a perfect agreement there, but i was willing to go for that part of it. i think frankly that iran has little incentive to cheat big on the nuclear side. if you look at it, they have been a threshold nuclear state for a while and they simply haven't gone there because they have gauged, i think appropriately, the reaction,

whether it is a military response or increased sanctions. i wouldn't expect iran to try to break out. partly because the position they will be in 10 or 15 years from now, they haven't lost much. in fact, they can conduct quite a bit of research in the meantime. and in some ways, industrialize their program. so i don't think it is in their interest, and i don't think they believe it is either to break out. but i am concerned. that is why i ultimately could not support the agreement. the nonnuclear side and the license that it might give them to behave differently there. charlie: and what do you think might restrict their behavior beyond this nuclear deal? what are the elements you would like to see in american foreign-policy to restrict these activities, whether it is support of hezbollah and using

hezbollah as an agent in syria , or whatever it might be? what are the tools in american foreign-policy that can change that behavior? sen. flake: obviously, a real threat that is known and understood and believed. i believe that is a problem right now. i am not sure after the syria issue and the redline there that are our threats are as believed as much as they should be. ambassador dennis ross wrote a couple of good pieces where he talked about a couple of items that he suggested we could do simply on the deterrence side to ensure iran that any move on the nuclear side to enrich uranium beyond what is needed for peaceful purposes would be met with a strike, no questions asked. those kind of things we can

hopefully do that would help on the nuclear side. on the nonnuclear side, i think iran needs to understand that it is our understanding as congress -- and we will move ahead to impose sanctions, tough sanctions, even if they are the same type of sanctions or the same sanctions that we have imposed on the nuclear side -- if they break out on the nonnuclear side and increase their support for terrorism in the region. they need to understand that. as i mentioned, that is part of my problem with this agreement. i think they believe that they have neutered our ability to impose sanctions on them, tough sanctions, like financial sanctions, on their central bank, should they misbehave on the nonnuclear side. congress needed to make clear that we will come hard, even if it is the same sanctions. charlie: let me turn to cuba.

what do you say to your fellow senator marco rubio about the reestablishment of relationships with cuba? sen. flake: i think this represents the ultimate policy for today and tomorrow and not yesterday. i think this is long overdue. obviously, my concern over the years has been the travel ban more than anything else. as an american, i should be able to travel wherever i want. unless there is a compelling national security reason otherwise. and to restrict americans' ability to travel is just wrong. some people view this kind of as a concession to the cuban regime. it is not a concession to allow your own citizens to travel. and it is not a concession to have diplomatic relations. that is an agreement between two countries to speak and work things out with diplomacy. so that is not a concession either. so this was a great move. i think it is good for cubans and certainly good for americans as well. charlie: where do you stand on the embargo?

sen. flake: i would lift the whole thing. as i have said, we ought to tell the cuban regime that we are lifting elements of the travel ban and establishing diplomatic relations. and unless you clean up on the human rights side, we will lift the whole embargo. [laughter] i have never seen that as a concession either. [laughter] nothing will guarantee a better behavior on the cuban government side. but we are more likely to get it if we have diplomatic relations, one. and two, if there is increased commerce and travel from americans. charlie: let me make sure i understand you -- they fear the lifting of the embargo because of the impact that would have on changing cuba? sen. flake: no doubt. the embargo, or the blockade as they call it, has been used as a

scapegoat for the failures of socialism or decades now. so although they say they want it all to be lifted, whenever we make moves in that direction, we usually see behavior on the cuban government side that makes us step back and it shouldn't. it should make us move forward more quickly. i applaud the obama administration for moving forward on this. it is the right thing to do. it is already making lives better on the cuban side. particularly when the president lifted restrictions on cuban-american travel in 2009. it went from 100,000 visits a year to about 400,000, within a year. also, money has been invested with family members in cuba. family members in cuba have been able to lead better, richer lives. and the number of people in cuba that are working outside of the state environment with private businesses has increased

substantially. that is a good thing. it spells relief for a lot of people. it also spells trouble for the government if they want to continue a socialist government going ahead. charlie: with respect to the future of the relationship, do you think when the castro brothers leave the scene, that you will see democracy in cuba? sen. flake: i don't think it will be immediate, but i do think it will accelerate. a lot of that depends on how much we open it up and how much we continue to push and allow activity between cubans and americans to go forward and develop. but i do think it will accelerate. but it is not going to be immediate. charlie: may i turn to immigration for a moment? senator flake: sure. charlie: what is happening in your party with respect to immigration because of

recommendations and the presence of donald trump? senator flake: we are a good year out of serious political activity. not a year out, but a ways out. could fool new hampshire and iowa. [laughter] senator flake: we still have a while before they actually vote in those caucuses and primaries. i think by that time, hopefully, some of these statements and these policies, if you want to call them that, from mr. trump will be a faint memory. certainly, it is not a serious policy to talk about building a wall and forcing the mexican government to pay for it or imposing fees and tariffs, like he has talked about doing. it runs from insensitive to laughable, frankly, some of these policies that have been

advocated by mr. trump. charlie: then why is he leading the polls? senator flake: when you have so many candidates and have 20%, you have a plurality. but that will no longer be the case as the field narrows and people start really thinking we don't need to just think about a primary, but winning a general as well. nobody can talk seriously about winning a national election when you use rhetoric like mr. trump is using. and i think the broader electorate on the republican side understands that. as we get into next year, it will be a more serious debate. charlie: could you support donald trump if he was the republican nominee? sen. flake: i will support the republican nominee, and i don't think it will be mr. trump. charlie: it is a pleasure to have you on this program. sen. flake: thanks for having me on. charlie: stay with us. ♪ ♪

charlie: justin leverenz is here, director of emerging equities at oppenheimer funds. top holdings include companies owns a portfolio with assets over $40 billion. top holdings include companies located in china, india and hong kong.

nearly 7% of developing markets are invested in russian stocks. i am pleased to have justin leverenz at this table for the first time. welcome. justin: thank you very much. charlie: you and i met at a conference and had an opportunity to talk about the world as you see it. has the definition of emerging markets changed? should all the bric countries be considered emerging markets? brazil, russia, india, china? when does china become something other than an emerging market? it is not a new society. justin: my fund is deliberately called the developing markets

fund, not an emerging markets fund. we are talking about 90% of the world's population, being a part of the world. what unites it is institutions which aren't as stable or robust as the developed world, which is largely the united states, europe, japan. charlie: you are talking about -- justin: sociopolitical institutions, rule of law, different levels of political engagement, institutions that ferment development. and it's a pretty generous bunch, in many dimensions. some are very well-developed, like eastern europe. there is a big difference between warsaw and bombay in terms of levels of affluence. there is a very big difference in terms of the commodity orientation of these geographies. we have some who, in the last 12 months, suffered enormously

because of the drop of oil prices or copper prices. laces like nigeria, chile, and russia. and then we have resource importing countries, places like china, korea, taiwan. so it is a very heterogeneous bunch. i agree, i don't think the emerging markets is the right way of thinking about this world. but you asked also about the brics. i think they all probably are perfectly considered part of the emerging world. china,: let me turn to and what is going on over there and what is happening with their economy. justin: i just got back from china late saturday night. i spend a lot of time in china. it's a passion of mine. i think this is one of the most misunderstood geographies in the

world, and probably the future, because they are bad communicators. authoritarian governments are not very good with public relations. but what is really happening hadhina, is that it has unimaginable progress. 20 years ago, it was a desperately poor emerging economy. even at the turn-of-the-century, it was a $1 trillion economy. today, it is a 10 trillion -- $10 trillion economy. it is a very powerful, dynamic country. i think what is happening is part of the misunderstanding about the economy is that china is going through enormous change. the last decade, 15 years have really been about twin-engine. the first, of course, is integration to the world trading system. china, even when i lived there, was a very small part of the world's exports. it becomes the biggest exporter in the world. the biggest trading nation in the world. that engine of growth in the last three or four years for many reasons has collapsed.

it is not as -- charlie: collapsed. justin: collapsed in terms of incremental growth. in the last four years, we have had no growth in world exports. this has many non-china related issues. that engine of growth has collapsed for china. it is still a very big base, but the growth is moderate. charlie: the growth has collapsed. first of all, i don't know what the numbers are and people have convinced me that the numbers -- justin: very large. charlie: yeah. there is some question about the numbers. china forknew that some of those years was growing at 10%, and then down to 8% and 7%. now i hear people say it is more accurately at 4% or 5%. justin: i think what is happening in china is that the last decade has been about trade and real estate. it has been about the enormous,

unprecedented expansion of the property market in china. both of those are no longer big growth contributors. yet we are still looking at real physical indicators, things like rail transportation, cement and steel production, indicators which were part of the big industrialization of china. those are not growing anymore. in fact, there's massive recession in those areas. charlie: because they are not building? justin: two reasons. global trade is not in a healthy healthy state. global growth is not in a great state. the second is we had this massive transformation. it was not like in america in 2007 or 2008. it was not a speculative circumstance -- it was decades of underinvested housing stock because there was no property market prior to the 1990's, which is almost inconceivable for us. what happened was a big transition. the economy is growing in areas that are not those indicators,

service sectors, the mystic consumption. china has an $11 trillion economy and is not going to go back to double-digit growth. however, it will grow 6% compound for the next five years and 5% or 6% compound will be the world's largest growth engine for some time. charlie: what dried-up was the demand for chinese products globally, or the demand per se of all these other economies around the world -- they were not necessarily consuming as much in terms of products, therefore, china, a next morning -- and export nation, germany, and exporting nation, and brazil, which is the next morning nation -- an exporting nation, found a diminishing market for their goods? without that demand, china found its economy slowing down?

justin: it's no longer reliant on the export market. it is reliant on the domestic market. the reason the export market has been weak is not a phenomenon related to china. it is that post-great financial crisis. we have never really recovered. the developed world has never really recovered. charlie: and the united states? justin: the united states has recovered, but not growing at the same levels we were free crisis. and i don't suspect we will be growing as an economy at those levels. charlie: you suspect at best 3%. justin: i think that's likely. it is difficult for the united states to escape the rest of the world. charlie: you have some unique experience here. at some of the conventional wisdom -- china had been an expert in country. xi jinping and the chinese leadership understood that they had to move to a domestic demand economy, as you have suggested. most people did not think that would be easy and most people

did not think it would be immediate. justin: yes. charlie: you think what? justin: surprising the most -- their is a master plan, but it will never be executed well. however, we have a complex adaptive system, like all economies, and things are moving. the economy is transforming, and there is no invisible hand leading this transformation. china is an economy that is growing at very healthy levels for a large economy. and there are all kinds of investment opportunities related to that. charlie: what kind? justin: service industries, consumer industries. the most important thing for an investor is not necessarily about the level of growth. it's about the uniqueness and differentiation of the business. it is about the ability to monopolize or really dominate a particular industry and extract strong returns. charlie: and has the chinese government changed in terms of

two things -- one, its willingness to have international companies come in and play a significant role in their economy? b, the balance between state owned enterprise and nonstate owned enterprise? justin: nothing is perfect. that's why we have literature. charlie: that's true. justin: if i look at china, there has been clear disappointment in the last few years. this was an administration that came in with the view that they were going to restructure, that they were going to legalize the economy, that they were going to do many things to orchestrate china's evolution to being a very prominent nation in the world. i have been incredibly disappointed with the lack of reform of the economy. we do have pockets, for example, the renminbi last week, that was

really about the levels of the exchange rate -- charlie: the devaluation. justin: it was not really about the devaluation. language is important. it was a depreciation. you look at the euro, the japanese yen, any currency in the world, we have been an incredibly strong dollar environment in the last 12 months for many reasons. part of it is the strength of the u.s. economy. part of it is the anticipation of interest rate increases. part of it is dysfunction in the rest of the world. but in fact, the renminbi has been the strongest currency in the last eight years. u.s.ie: even though the dollar is the largest reserve currency in the world. justin: right. we had a 2% or 3% move in the

renminbi, which is almost nothing in terms of the reality of the world. but every headline was about the devaluation and there was no devaluation. andjapanese yen can move 2% nobody gets bothered about it, because it does not have serious implications. charlie: is there a real estate bubble in china? justin: there are pockets of real estate bubbles in china. which is clear from his they mismatch in supply and demand in -- particularly on high-end real estate in second and third tier cities. we don't have a bubble in shanghai and beijing. one of the things that most have not noted is that we have been in two years of relative property recession in china. inventories have been digested. in fact, the most recent indicators are we are back to record highs in terms of volumes and value of transactions. the property market is slowly percolating after two years of recession. charlie: you haven't spoken to the stock market. justin: yes.

i believe that the stock market -- in fact, i want to write a public letter about this but i was busy last year. i believe it requires a certain level of creativity and a certain level of releasing control. if you think about what the real issues are for china, the real issues are capital formation. they have the capital stock, which is more than appropriate for its level of development, but the productivity of that capital stock. it is about unleashing the enormous creative talent of highly educated and entrepreneurial society. it is about providing pensions because china is aging. it is about redistributing wealth because china's wealth, like much of the world, is extremely concentrated. the stock market is the solution to many of china's problems. ♪ ♪

charlie: the problem was too many people were entering the market. justin: correct. who should not have been in the market. the stock market and china that i am referring to is really about privatization and reform. you know, there is an unfortunate understanding in the

party that china can become singapore. that is sort of the model. charlie: alibaba. justin: yes. i spent all last week with the team at alibaba. charlie: jack ma and the rest of them? justin: the whole team. charlie: what is going on with that company? justin: i think this is going to be the largest internet company the world has ever known. the stock has not done well since the ipo late last year, and i think like many things in china, there is a bit of a misunderstanding. alibaba at present is two massive marketplaces. and its core is also the largest internet finance company in the world. paypal pales in comparison. what alibaba will be in the future is not just two powerful marketplaces and a finance company -- this is a company which is going to be the biggest data analytics firm the world

has ever seen, because they are developing the cloud computing, like amazon. they've got data from the marketplaces, the data from all the financial transactions, the biggest payment processor in the world, and the developing in terms of investments in other companies, like the competitor to uber. it is going to be an incredibly powerful company with access to data that is unparalleled on the planet. charlie: you describe china as an entrepreneurial country. justin: yes. charlie: there is a lot of evidence of that. is it also an innovative and creative culture? justin: another common misnomer about china is that it lacks creativity, entrepreneurial dynamics, and simply borrows from the rest of the world. and i would say it's a big country. china and united states are the

two countries with extraordinary depth. you see that just in terms of the underlying corporate distribution. this is a country, america, where we've got big companies all over the map. china is a very deep economy. in terms of creativity, it's a big country. it still has 500 million peasants. it has some real issues. charlie: is this the tension between urban and rural or deeper than that? justin: there is so many tensions in china, but we have made enormous progress. those tensions will continue to be alleviated through time, but there will always be tensions in society. but in terms of innovation, in the last five or 10 years there has been a big transformation of china. i think a level of confidence,

capital markets that are supportive, and entrepreneurs have done a number of things. alibaba is a good demonstration of that. the film industry is a wonderful dimmitt -- demonstration of that. the films are remarkably different even just last five years ago. it is an economy that now has a level of balance, and enormous confidence about the future. and you see that in terms of creativity, entrepreneurial activity, venture capital. charlie: in terms of the leadership of xi jinping, we have -- the narrative has been he is consolidating power and authority, that he is committed to the anticorruption drive, that he is committed to doing something about the pollution, and that he is committed to

certain ideas that have more to do with philosophy than either economics or foreign policy. justin: yes. so i think the way -- in my interpretation, in everything, when it relates to politics in china, it is reading heelys that feelings that none of us understand. but it is my view that the way xi jinping thinks about the world, like many chinese, that it's a travesty, a civilization of thousands of years of continuous history with periodic uprisings, but generally speaking a continuous history in really one of the most largest, most sophisticated economies in populations in the world. unfortunately, in the 19th century, colonialism, china was frail. it was raped. frankly. and there were huge, historic and thatfor 150 years,

china is developing and china is going to take its place. i think that is the motivation. thinking about modern history, i think probably the way he thinks is that mao zedong crated the party and re-created the states. his successors were all about the growth of china's economy , and xi jinping will be about the development of governance in china. china has not been well governed. charlie: but he continues to believe that it will be governance by the party. justin: by a monopoly party. the principal mandate is to preserve a single party state. charlie: the biggest fear they have is what they consider a threat to that. justin: correct. charlie: india, is modi changing india in a positive way? justin: i was there when modi was elected. i was there when modi was coronated. there was this almost religious view that modi is shown in white

robes and jesus christ like, he was the savior of india and will save the problems that the congress party had failed to do. it's not really easy, as we've discovered. india is a much less centralized country than china is. it is an unruly democracy. maybe a democracy somewhat ahead of its time. and the underlying things need -- that made to happen in order to restart india's economic hindu rate ofhe growth, are very difficult to do from a constitutional perspective. that includes land reform and labor reform. and infrastructure. justin: and they included for structure. those things are not easy to do. -- include infrastructure. those things are not easy to do.

and we haven't seen significant progress. frankly, it's has been very disappointing. charlie: under modi? justin: under modi. charlie: really? so therefore, we should lower our expectations of what modi can do? justin: my expectations were never extremely elevated. i understood the restraints, the difficulties, the corruption, the low points of the congress party rule. but i am also a pragmatist. i realize the world is difficult. many of these things take a lot of time. and as an investor, you have to be all about time. charlie: so let's move to russia. st. petersburg, a wonderful city. justin: one of the great european cities. charlie: understandably so. my point is, tell me what you think of vladimir putin and his goals for russia before we consider ukraine and sanctions and all of that.

justin: i think most large important countries have a historic narrative. like i explained, the chinese heritage about great civilization that was violated. in the russian context, i suspect probably what motivates putin beyond power and personal interest is related to this narrative of recent russian history, which is the demise of the empire, the soviet empire. and the fact that that was not dealt with very well. charlie: by the russians or by outside forces? justin: both by russians and outside forces, the sort of understanding that the west had made promises and they didn't deliver on those promises. charlie: is that true? justin: is it true? charlie: is it true? what promises did the west macon not deliver on? justin: i think it is important

to realize that everything is complex. great countries have certain prerogatives. we discovered that with cuba, if you recall, under khrushchev. we came very close to a massive problem. charlie: you mean a nuclear exchange. justin: correct. for russia, ukraine is a little bit like cuba. it's almost unfathomable for most russians to have the idea that nato will show up on the border of russia. it is provocative. charlie: so my impression is that you and other global investors that i know feel strongly that these sanctions are a bad idea. my question is do you feel that way because you think it threatens your economic interest in russia?

justin: i feel as an american rather than an investor that it is not a great idea. there have been two obvious implications of the recent sanctions. the first, if you look at putin's popularity, almost his whole country is behind him. he's got greater polls that he has had in his whole duration as the leader of russia. charlie: why do you think that is? justin: most russians have a national narrative and a similar view. most countries have narratives. we do as well. the shining light on the hill. charlie: but you have somebody like donald trump running on the theme of make america great again. justin: yes. and the second application of the sanctions has frequent in, as americans, we do have to worry about guiding the rise of china.

china is going to be a very important influential competitor in many different dimensions. we don't have to worry about the rise of russia. charlie: what you do have to be concerned about -- i am suggesting this as a question rather than a statement -- that russia may view its alternative as a closer relationship with china. that is not an easy thing to do. justin: that is very clearly the second implication. i see this as an investor. i am an investor in a very entrepreneurial company. it is one of my only commodity holdings i have ever had. it has been a wonderful long-term investment and it has a lucrative, interesting project in what will be russia's first natural gas field. that is very difficult to finance now because of sanctions imposed upon the company.

the funding is coming from beijing. this is a lost opportunity. the french are still involved. charlie: for the western the -- the west or the united states? justin: for the west, subcontractors and the west. charlie: so by imposing sanctions, you could invest. justin: well, i think from to it -- i think from two perspectives. one, there is an investment loss. secondly, i don't think it is a good idea to put russia in china's hands. it is not necessarily wise. if you recall, there has always been this triangular relationship with russia and china since the communist days. of course kissinger did a great pulling china into the orbit of the united states. charlie: as a wedge against russia. justin: precisely. not necessarily a wonderful idea. charlie: we are running a time -- what is your emerging voices

program? justin: i love the developing world. i live and breathe this. my whole ecosystem is really the developing world. i invest in extra ordinary companies and for long periods of time. i have many companies that have been held for over a decade. i want to provide a platform, because most of my friends are financially ample people -- they are artists, painters, directors, novelists -- i want to provide a platform for the other 90% of the people in the world to be able to identify extraordinary voices and talent in the arts. we are collaborating with financial times. we have put up a significant amount of money, the largest award in this particular geography for three categories -- literature, film, and digital arts. it rotates across three geographies. --s year it will be african middle eastern literature, latin american visual arts, and asian

film. charlie: what do you want to do for them? justin it's a prize. : it was originally modeled off the book of prize. i want to make this a significant platform for the discovery of talent in the developing world. just like i discover great companies. charlie: what is the best book you have read in the last year? justin: i am reading one by caesar hindalco, who runs the m.i.t. media lab, called "why information grows." very interesting one. charlie: i hope you will come back. i enjoyed the conversation. justin: thank you. enjoy the summer. charlie: thank you for joining us. we will see you next time. ♪

rishaad: i'm rishaad salamat. this is "trending business." here's a look at what we are watching. factory data, further contraction in manufacturing in china. the pmi reading coming in at 47.1, the lowest since march 2009. the disappointing number stoking worries about the state of the global economy. it is a sea of red across the asia-pacific. the hang seng entering a bear

market. oil heading for an eighth weekly fall. it will be the longest streak of such deadlines since 1996. follow me on twitter. ndingbusiness#tre as well. some big guests on the show. goyder is from australia's biggest employer. more worries about the state of manufacturing in china, the lowest since march of 2009. here's steve engle with this green -- this grim reading. stephen: it is a 6.5 year low for the market. we get the flash number about a week and a half before the final number is out september 1. it is about 80%-80