>> from our studios in new york city, this is charlie rose. charlie: george osborne is here. he is britain's chancellor of the exchequer. the house of commons authorized airstrikes in syria. president obama addressed the nation after the attack in san bernardino. the president said he would draw on american power to combat isis. europe is facing threats. authorities are trying to increase security cooperation

across countries. a man was charged with attempted murder at a london underground station. the police is treating the attack is a terrorist incident. david cameron is going to put united kingdom european membership to referendum. these are issues osborne faces as the number two man. george: it is good to be back. charlie: how do you see where we are, at this time? you have san bernardino, what happened in paris, a series of re-examinations a policy in europe. george: there is huge sympathy. this is part of a pattern. we see this terrorist eitheration,

orchestrating attacks as in paris it seems, or inspiring people to attack, as may be the case in the united states. either way, it is a murderous cult that is a threat to the way of life. if you want some good news and bad news. the good news is that there is a concerted coalition with other countries we do not always agree with, like russia, that will prosecute a campaign against this organization and eliminate it. we need to work together on the battlefield, in cyberspace, and in our communities and schools to make sure the poisonous ideology does not create a breeding ground for this.

charlie: would you have had the ,ote if there had been no paris to authorize airstrikes? george: the answer is, yes. would it have an as decisive? i am not sure. the house of commons made the decision to stay out of the syrian conflict. charlie: this is at a time when the president was preparing to bomb syria because of gas. george: we drew a redline because assad used chemical weapons. but house of commons voted against. that was, for me, a terrible moment. it was a bad decision and not one that i supported. i think, for me, what is significant about the decision in the house of commons last

week was that it was not just that we will provide military support for the efforts to degrade isis on the battlefield of syria, but it also signals that britain has the means to defend itself, and the political will to do so. it is a significant moment. charlie: how do you stop the radicalization process on the part of the husband and wife in san bernardino? george: it is a massive task. we have to start by accepting that there is the islamist ideology that creates a culture of grievance and talks about violence. it needs to be tackled. there has been, in too many quarters, a willingness to turn a blind eye over the ideology.

we cannot tolerate it in our mosques, schools, colleges, universities. defeating it is important. there is something else we need to do and it is a lively debate in america. we have to give security forces the powers to intercept communications between those who wish us ill. this country, under the constitution and rule of law, it has always given those who defend us a right to intercept mail and listen to telephone calls. there have been proper protections and warrants. we have ultimately had the power to intercept them. charlie: what will you say to companies that encrypt? george: these companies are exciting and they have created thousands of jobs and new

industries that did not exist before. they have changed all of our lives for the better. these companies are not villains. but this technology and the encryption causes this problem that you cannot intercept communications between people you suspect are going to do harm. it can be terrorism, child abuse, organized crime. now, i do not think a civilized country can accept channels of communication where it cannot access it. we are not at that stage yet. we are at a stage where we do not want to have to go to that. it is not acceptable. we would rather do it on a basis of corporations with relationships with these top companies. i do not want to name names. they have developed wonderful

technology as a general power for good in the world. let's make sure it is not used for evil. charlie: when you look at the coalition today, tell me what the strategy is. the united states, britain, france, saudi arabia. george: the general strategy is to deny physical space to isis by making sure the leadership is killed and the forces are pushed back. denying space, in cooperation with forces on the ground, much easier in iraq. there are forces we work with in syria. to deny forces on the internet. to deny them financing. i will be back in new york next week and we will deny the terrorists financing. finally, denying the ideology

that has gone unchallenged for too long. charlie: how long do you think there will be a move on mosul? the second largest city in iraq controlled by isis. george: the good news is that the territory that is controlled by isil has been reduced by 30%. mosul is an objective. i do not want us to have a false view of this. ultimately, this will be a decision that will lay with the commanders on the ground. charlie: can you do this with airstrikes alone? george: i think the airstrikes degrade the leadership of isis. underestimate the u.s.-led drone strikes against al qaeda in pakistan. there have been some very successful recent strikes against senior isil leadership,

including that man who called himself jihadi john, who executed american and british on television. he is dead. drones. airstrikes can degrade things, like the financial resources of isis. you have seen the authorization to take action on the oil fields under isis control. most effectively, in coordination with the horses on ground,forces on the they do not have to be western, they can be iraqi, coordinated action can push isis. i'm not saying that is the solution to the piece. of course, we need to find a resolution to the syrian civil war. we need to reconstruct the country. we need to remove the poison of

the ideology. not a bad place to start is killing terrorist leadership who have taken the fight to us. charlie: how about cooperation with russia? george: russia is a country we don't see i to i with -- eye to euyye with on a lot of issues. one thing we agree on is that isil is a threat to us all. start where we agree. we are already cooperating. american, british, russian pilots fly in the same airspace. there is a deconfliction taking place -- charlie: how do they do that? george: it is essentially handled by the military and air traffic controllers of the coalition and the russian military done informally.

it helps avoid tragic misunderstandings. charlie: with respect to assad, what is your position on this? george: i don't think assad can be part of a lasting solution. charlie: no one does. george: a lot of people will sit around the table and tell you why everything is going from bad to worse. i want to present the optimistic picture. the russians say we are not assad today.f charlie: we are not in favor of a transition. george: we say assad should go and we have accepted that it does not need to happen today. i suggest there is something to work with. it is difficult to imagine a situation in syria that the not

just involve the american. charlie: can you defeat isis without a change in the government? george: you can potentially defeat isis. are you going to create conditions where other forms of extremism emerge or don't emerge? you are not. you are going to have a regime there that brutalizes the people. many people have fled that country. they are not going to come back, if they think they will be brutalized again. a lasting solution to extremism in the country is a change of leadership at the top. we are not proposing -- saying the entire syrian

government needs to go. that is an example of learning from the lessons of iraq. we are saying assad cannot be part of it. charlie: his family and closest lieutenants? george: this is part of the discussion. charlie: are we making any progress on it? george: there are talks in vienna. you have russia, saudi arabia. it is not always easy. if you do not have them all involved in the discussion, it is difficult. again, the areas where people agree are more numerous than you might imagine. charlie: turning to the european union, tell me about the speech with the minister that was made in the house of commons.

were you there? george: yes. he is the son of a radical left-wing politician. he is a foreign affairs spokesperson. the labour party leadership has gone hard left and they are completely antiwar. charlie: so left that people say it leaves the center to your party. george: we currently occupy the political center of the british politics. he was in the job before the labor leader turned up. he used the opportunity to make a case for airstrikes and supporting david cameron. charlie: he wanted airstrikes. george: he led with this and the

labor mps, through the speech, which was remarkable. with the house of commons, they will speak with the leaders sitting next to them. he talked about the international history of the left fighting franco, confronting hitler, and how it has been labor that joined nato. he was specifically making a center-left appeal. we could have won the vote without labor. by having some labor support, we are able to say that this is not just the view of the british government. this is the broader view of the political spectrum and the house of commons. in terms of the message, it was helpful. charlie: here is the famous speech and what we were talking about.

>> it has been argued that the airstrikes achieve nothing. not so. look at the military capacity and freedom of movement put under pressure. ask the kurds. of course the airstrikes will not defeat isis. they make a difference. they are giving them a hard time and it makes it more difficult for them to expand their territory. charlie: you are asking them to continue the membership. george: yes. britain is a member of the european union. the british people are going to decide if we remain in the european union. we want a better deal for europe so they create more jobs and

that britain, which is not in the euro and is not part of the common borders arrangements, is not discriminated against. the good news is, speaking today, the european union got back to us and proposed a number of things we put on the table as a way forward. there is still lots of negotiation to be done. we are going to be ready to fight for the best national interests in the referendum. charlie: the outcome will be what? george: let's have the negotiation first. i think if we get a good deal and recommend that to the british people, they will want to remain in the european union. but we have to have a deal that works for britain. charlie: here is a piece in the "wall street journal." how britain got its mojo back.

there is a case that you have to have a strong economy to have a strong government that can pull the national security responsibilities and function the way it wants to with investment in people, opportunity, and providing quality of life opportunities. george: i would make the broader argument that i am part of a political generation that took part in the iraq war and has also been through this great recession. in the united states and britain, it caused our countries to look in on themselves and be wary of the cost of not intervening. if you take the case of written tain, you have a strong economy and you have risks you have to deal with.

we have a plan to get rid of the deficits and we will pay our way in the world. britain is growing faster and it enables us to have national security. we signed up to a new set of defense commitments with aircraft carriers, submarines, and so on. through a vote at the house of commons, we have shown a political will to protect and project values. that is why i can say britain has gotten its mojo back. we are back on the stage and we're the only country in the world meeting a nato commitment on defense expenditures and international development. britain has the hard power to theort our allies, but also

soft power to say that we are not going to leave these problems to others. we are going to help solve the problems of the world to make sure our western values are held and projected. charlie: is this the end of british austerity? george: we still have some difficult decisions. if you look at what happened in britain, the state was consuming 45% of national income. it is now consuming just under 40%. it will be 36% by the time the plans are complete. it is the biggest consolidation in 100 years of british history. it is also the biggest consolidation of any g7 country for 50 years, including the u.s. we have done it in a way that i think shows you should not have to choose and do not have to

choose between good public service and strong defense. my whole argument is that national security and public services are the flip side of sound public finances and economic security. charlie: do you think you can make the argument that the austerity and programs have not, in any way, diminished the ability for the government to take care of the poor and make sure that there are not people who were receiving benefits that are no longer receiving benefits? george: when the public finances fail, the people who suffer are the poorest in the company. sound economics is the most progressive. charlie: the poor are better off? george: they are better off in

an economy that creates jobs, that can sustain itself. public finances can be funded and do not go through spans of feast and famine. we are undertaking radical education reforms and we have just announced prison reform. it is deeply unfashionable. charlie: how are you doing that? george: we are taking old prisons in the middle of the ies that are not suitable and are not really fit and we are shutting the prisons down. we just closed the largest women's prison in europe. we're closing the victorian prisons down and building new ones. i'm putting over one billion pounds to build these prisons. we are conservative and there are plenty of conservative

movements that do not think it is public policy. i think that conservatives can be progressive. charlie: martin wolf writing, despite his flexibility, most starting points remain on flexible. george: the problem is, with not running a surplus, you are saying you should borrow forever. surplus afterun a eight or nine years of economic growth, when are you going to run the surplus? i do not know when the next shock is coming in.

maybe emerging markets are going to overwhelm us. there may be shocks coming. there will be some shocks somewhere and britain's national debt has increased because of the impact of the great recession and the poor management of public finances before. now, we are putting our house in order. we are fixing the roof when the sun is shining to use an old john f. kennedy phrase. we are ready for whatever the world throws at us. charlie: the closer relationship between your government and the chinese government, what does that suggest? george: we are a democracy and they are not. we have concerns about human rights abuses in china and we raise them. but this chinese government represents over one billion people. it is overwhelmingly in our interest that this strong emerging power is comfortable with the international system.

i want to make sure they've got their rightful seat at the imf, that they get -- charlie: that their currency has the appropriate designation. george: if the outlet for china's energy and ambition is that it wants its currency part of the imf basket of currencies, i say that is a great place for its ambition to be channeled. charlie: some people suggested it is the end of a special relationship. george: that is nonsense. we have a hugely deep relationship with the united states, at the security level, culturally and economically. charlie: not to be replaced by china. george: we want to be a partner for them. let's be clear that the single biggest force in the elimination

of poverty in the world is china. i want to make sure that continues and it does not cause great problems. let's be their partners. let's help them on a journey to become a stronger economy with richer citizens. let's not be blind to all the disagreements. but to not have a conversation and not partner in the world would be a huge mistake. charlie: thank you for coming. george osborne is the chancellor of the exchequer of the british government and the first secretary of state. back in a moment. stay with us. ♪

charlie: archibald is one of the great modernists of the 20th century. he was born in new orleans, but moved to chicago as a child. he came to prominence during the early days of the harlem renaissance. he is known as a radical interpreter of urban culture. his work captured life on chicago's south side as well as paris and mexico. archibald is the first survey of

his paintings and it is on view at the whitney museum in new york. richard powell joins us now. he is a professor at duke university. i am pleased to have him at this table. welcome. we did a show, how many years ago? 25 years ago. before the show even existed. put him in context, archibald motley, of 20th-century art. guest: archibald motley was inspired by urban and african american life. to contextualize, american scene painting, portraiture, the harlem renaissance, all of those categories. charlie: he stood tall in each.

guest: i would say so. charlie: there has not been a retrospective on him in 20 years. guest: the last big show was at the chicago museum in the 1990's. the idea at the nasher was that this was a good time to look at motley again and this was an important moment to think about him and his work, given the changes in the art world, given the fact that african-american artists are more prominent than they've ever been, given that there are a lot of artists that are interested in satire, irony, humor, provocation. motley fits into all of that. charlie: what do you mean by "jazz-age?" was that just a chronological reference? guest: it is also a cultural reference. the 1920's and 1930's were moments where americans and the

world were inspired and moved by jazz and urban black expression. whether it was louis armstrong or duke ellington or josephine baker or bessie smith, this was a moment when modern african-american culture took the imagination and the artwork fit in to the ascetic. charlie: how was he influenced by chicago? guest: chicago was one of the most exciting places in the early 20th century. i'm not just saying that because i was born there. unlike new york, it had infusions of people from the mississippi delta and people from eastern europe and southern europe. there was a huge migration of people from all over the world. it is a place where they had meatpacking and industrial activity, and business.

african-americans were entrepreneurial during that time. this was kind of a hotbed of modernist ideas and innovation and art as well. charlie: his use of color is extraordinary. guest: it is extraordinary. when you look at these works, you wonder if they could have been painted in the 1920's or 1930's. he has a quality, when he is trying to invoke neon, where he creates a glow that circles the figures. i do not know any artist who does that. charlie: you say what he painted was a reflection of the urban culture. guest: yes. in a celebratory way and in challenging aspects. he was not afraid to tap into the things that make up the

city, the celebratory and the problematic. charlie: he was a portrait artist. guest: some of my favorites are his portraits. they capture a likeness and a kind of the inner spirit of the subject. charlie: take a look at some of these images and talk about this. the first one is 1933 and this is a portrait. guest: he has just come back from paris. you can tell with the beret, the smock. he was a good catholic and a lot of new orleans catholics came to chicago. you see the crucifix. he has his palette and his colors are laid out elegantly. this was a highly constructed

composition and it speaks to all aspects of his identity. in particular, the right, where we have a greco-roman statue, his muse, a classical figure, a woman, speaking of industry and imagination. this portrait he is painting, a nude of mixed racial ancestry. it is hard to tell if she is a painting or if she is crawling out of the canvas. charlie: what do you think of the cross? guest: there were a lot of black catholics, present company included. charlie: the next, his portrait of mrs. aj motley. guest: archibald motley married his childhood sweetheart. they had a formal relationship

-- a very stormy relationship. it was not easy being interracial in the 1920's and 1930's. her family was estranged. this portrait shows her at the height of his talent and career and she is wearing a fox boa. she is a woman of success and connected to a prominent artist. nude portrait "a of my wife." guest: this was painted in paris. it speaks to modernity. i have described this in conjunction with a movement in germany about photographic accuracy and the undercurrent of

dis-ease. one feels this in the portrait of edith. you can see paris. he underscores that this is a continental image. charlie: the next, but dutch the state. guest: as we say in the vernacular, motley was color struck. he was preoccupied with interracial mixtures, and legacy of louisiana. you have mixed-raised people and he is continuing the fascination in this portrait. i would add that this is a mixed-race woman who is a seductress. look at the sculpture to her left, the headless male nude. there is a subliminal message about the power of her feminine wiles.

,harlie: the next is tongues 1929. guest: he was a roman catholic and he was fascinated with the sanctified church of people who came from the mississippi delta who were not connected to organized religion. they opened up churches in storefronts and garages. this reflects that and it is an expressive experience. what makes this stand out for me is the prominence of the women in the sanctified church, unlike the organized religion. women played prominent roles. charlie: next, we have cafe blues. guest: if you google "the harlem

renaissance," you will see this. it is iconic for the era. the irony is that it was not painted in harlem or chicago. it was painted in paris. we think it was a club that was patronized by everybody. charlie: how long was he in paris? guest: a year. he got a guggenheim and he loved it. he had a diary that had him talking about working by day and partying by night. charlie: cafe paris, 1929. this is a year he spent in paris. guest: it is great that we have identified these locations. we think this is a cafe and it shows people drinking and the characters outdoors and indoors.

he really made his home that year in paris and, by the end of the year, when the foundation asked if you want to extend his stay, he said that he wanted to come back. charlie: getting religion in 1948. a later period. guest: it is. ist is fascinating for me the address for the house in the back is 350. this may be autobiographical. there is a little boy sitting on the porch and looking at all the activity going on. old men, young women, street ofgers, the vans -- bands church people and he was talented at capturing the african-american committee in chicago. you went there at night and it was like daytime because the neon lights and the people

filling the streets. charlie: the next is "hot rhythm." 1961. guest: this is one of the latest works in the show regan -- the show. you can see that motley by this point is in his 70's and he still has the chops. this is not the jazz age. not the louis armstrong age. this is the jazz age of ahmad jamal. it has a sense of using urban energy and energies of jazz and syncopation. it translates into shapes and patterns that will speak of the energy. charlie: congratulations. say hello to my friends. archibald motley is on display at the whitney museum downtown

until january 17. if you are in new york, go see it. back in a moment. stay with us.

charlie: andre is here, the chairman of the global coffee icon founded by his grandfather in 1933. the company operates in 141

countries and has served in 105,000 in the top cafes, restaurants, and hotels. they expanded recently to include stores and other items. the coffee world is being introduced to climate change and challenges to the industry. i am pleased to have him at this table. welcome. guest: thank you for having me. charlie: tell me about your grandfather. guest: my grandfather was hungarian and was courageous. he left home very young and went from hungary to vienna. he fell in love with coffee. as a soldier, after the first world war, he came and he decided to stay. he found other loves of his life. he decided to found the business to pursue the dream of offering the greatest coffee to the world.

he had innovations of pressure espresso and pressurization to preserve and enhance coffee. he started with the technology in the coffee. charlie: he pioneered the espresso machine? guest: yes. the espresso machine was always existing before but it was with no pressure. he introduced pressure for the sake of lowering the temperature for a better aroma. too high a temperature makes the coffee bitter. he wanted to lower the temperature. he added external pressure. that is how pressure espresso was born with the crema and the mouth feel you enjoy now. charlie: it is a private company or public company? guest: it is family owned and operated.

charlie: how many family members work in the firm? guest: all of us are in the holding of the company and, in the management, it is myself as ceo and representatives of the next generation, my nephew and niece. charlie: you said the virtues of coffee are pleasure, health, and sustainability. guest: absolutely. we drink coffee for pleasure. caffeine could be a reason to drink coffee. there are other ways to get caffeine. if you choose coffee, it is because it is pleasure. a positive revolution has made coffee more aesthetic and it has been inspired by italy and the italian espresso baristas and

the culture of italian coffee that came to this country. it made not only coffee to become more popular and accessible, but thanks to much better quality, coffee was able to develop the three goodness. it is much better. there are better places and there are more varieties of recipes that you can enjoy. very much like in line. -- wine. charlie: coffee is grown in different countries. guest: 70. mostly still developing and this is something that is positive. charlie: beyond pleasure, what is the evidence that it is good for health?

guest: there are 25,000 scientific studies about coffee and health in the last 15 years that confirm the coffee is not bad for health. charlie: i'm talking about good. guest: wait, there are studies that say coffee prolongs life. seven of those studies only last year. you can live better and longer. charlie: how is it that it prolongs your life? guest: it is unknown. it is probably because it is the most preventative cure against the elder age diseases, degenerative diseases like alzheimer's and parkinson's. charlie: there is evidence? guest: statistical. no clinical studies.

these are difficult to get. charlie: what is the difficulty? guest: clinical studies are long and require a lot of budgets and many people. there are confounding facts and a clinical study is a little difficult. charlie: some people talk about the antioxidant factor. guest: it might be a reason why coffee is good for health. in the american diet, it is the number one contributor of antioxidants. the substances that create the brown colors are antioxidants and there are natural antioxidants in coffee that combine to make a strong antioxidant effect.

charlie: take me from the bean to the cup. guest: the bean is grown. arabica is the best quality. two thirds of the arabica is produced in latin america. brazilian being by far the leader. , thether one is robusta lower grade. the crop is once a year and you can process the crop with the cherry where the coffee bean tries under the sun -- dries under the sun, or wash it and it ferments. when the coffee is process, you have to take care. you can damage the quality of the plant by mismanaging the practices.

this is why we created the university of coffee to teach growers better quality. the coffee has been processed and exported. we had to import. charlie: 20 countries? looking for the perfect blend? guest: illy has one blend. this dream of my grandfather, offering the greatest coffee, the best can be only one. it is a blend of nine arabica beans made exclusively for illy by growers who have been trained in guatemala, india, and many others. we received all the blends and the beans and we store them. we have to buy them immediately after the crop to make sure the

best selection has been made for us. we must buy immediately. we get the coffee and we roast. roasting is exclusive. we know that the aromas are generated during roasting. people do not know that. the flavors that are present in green coffee have nothing to do with the final flavor. the quality is originated with the bean. roasting is a critical phase. charlie: america is a coffee drinking country. guest: the number one coffee market in the world. it is growing and there is a value and an increase in the value per cup consumed, which is

interesting. charlie: when you took over the company as the ceo, there were fewer countries. guest: correct. we were in 29 countries. now we are in 144. it became global. charlie: that was under your initiative? guest: no personal initiative. we are a family and we operate together and it was something i executed with my team. charlie: what has starbucks done? guest: they changed the culture. they brought quality coffee to the americans. before the arrival, it was impossible to get a decent cup of coffee out of home. there were no places to drink coffee and the idea of the

italian cafe was good for getting access to quality and it helps the consumer discover. charlie: you talk about high-end and not luxury. guest: not luxury, because coffee is inclusive and everybody should be able to afford a good cup of coffee. it is not something that you can make exclusive. charlie: has the mission changed since your grandfather founded the company? guest: we are still pursuing the dream of offering the greatest coffee constantly by implementing new technologies and initiatives. it is a challenging mission we have with the three pillars.

the best coffee nature can provide with the best technology and beauty. we need coffee equipment and we produce our own coffee machines. charlie: how do you expect to grow? guest: this is a great market. we are specialized in the market and we have a business model where we can offer the customers all the services they need with training, consultants, equipment. whatever is needed, they get. charlie: thank you for coming. guest: a great pleasure. ♪

quest consumer inflation rising. prices remaining sip do. -- prices remain subdued. yahoo! shares surging after it was confirmed it will scrap plans to spinoff alibaba. and under pressure from investors who are tired