>> this is the "chris matthews show." >> the time for change has come. chris: what happened? last week egypt with us a stable country. a state. now it isn i an up we're. -- it is in uproar. who will face the mobs. domino effect. we feared this in southeast asia. it worked in eastern europ this contagion of overthrow, will it end up threatening our oil? and what about israel?

obama shows sympathy for the protesters. and does our man in the white house has the troops, the rtsmas, the stuff to be another lawrence? i'm chris matthews. welcome to the show. with us today, david sanger and andrea mitchell. helene cooper and then phac kara. and now it has come to egypt. the domino effect may bring fire to other arab states. the president that has been in the watch and wait position for much of the last three days vifri spoke to the listing, revolutionaries in the rest of the arab world. >> around the world governments have an obligation to respond to their citizens. that's true here this the united states. that's true in asia. it is true in europe. it is true in africa and it is certainly true in the arab world, where a new generation of

citizens has the right to be heard. chris: we had a euro-centric foreign policy for years. this is a third-world look. he seems simm thick in talking to the people in the streets and possibly the people in the streets of the other countries. >> he is. the president put the onus completely on president mubarak. he had demands that president mubarak release the internet and telephone service, which of course would allow the protesters to organize and build up some more. he insisted that president mubarak not shoot anybody in the streets. his only request of the protesters was that they remain peaceful. this was not a president that was stepping out to say, these protests must end and we must go back to a period of stability. he recognizes that the stability in egypt has been a false one. it cannot last. >> will that be heard that way in the world? the arab and islamic world?

>> to a certain extent. i think what i'm hearing in that statement by the president is that the people of the middle east. i know you know when i took office i disavoyed the bush administration democracy agenda in the middle east. we remember the famous speech by colorado rice in cairo, it got everybody upset. what he's trying -- tryings to tell the people at least publicly, i want to seem to express that narrative, although beneath the surs for for the last three years, i have been working with n.g.o.'s and the like but now the democracy agenda in the arab world i think will become official obama policy. chris: are we with them as a country now and seeking change? >> up to a point but i think he's getting the conundrum that president obama is in.

he's sort of a johnny come lately to the democracy promotion seen in egypt. when he made his equally big speech in cairo compared to rice, rice's big part of the speech was elevating the plight of the palestisan -- it was not about democracy. it was there but so blappedly delivered. chris: what do you hear in the president's world addressed to that world? >> i think he's coming to this but is late. in fact all week they seemed to be scrambling. the shocking thing is that they were not prepared for must be bashe 82 years old and ailing and politically opposed. they were not prepared for the transition. you saw the evolution of hillary clinton's comments over the week. you heard joe biden on thursday, saying, well he's an ally, he's not a dictator. resisting, moving along. they were pulled to this because it became apparent to them that

they were sticking with mubarak too long. cline sometimes we jump on the bandwagon just in time. we were for sanctions in afghanistan over reagan's veto to be on the good guy's side and then george schultz hit me with this, we biw t in iran when they had the upheaval a year ago. we didn't get out there with the people fighting for freedom. is this a time to get -- too late to get on those people's side fighting for freedom? >> i like mark twain's look at history. it rhymes. certainly we're seeing oracles from iran. the up side of all of this is that the successive u.s. administrations have invested time and money and prestige promoting the regems. then when somebody like must be barke doesn't know if he wants

to step down or stay, beginning to promote an environment in which the united states can have some sort of clarity in the future fthe -- of the countries, i think that's the up swing. chris: let's talk about our interest. when the stock market opens, what are they going to say? instability, the worst word in the world. >> absolutely. that's what the united states is concerned about. but beyond that, even when we look at election this is,year this year in egypt, there's a lot that has to be dfe onor that to work out in american -- in america's best interests. part of that is to build up a middle, some kind of middle ground to the egyptian democratic system. you have the muslim brotherhood and the army on the other. chris: the question, economically again, our country depends on oil more than any other country in the world. it comes from there. >> the bottom line is that the otherwise prices shot up and the market began crashing on friday.

we don't know what is going to happen over the weekend. it is beginning to roar in other places. the interesting thing is the dollar shot up. the dollar is still the safe haven for -- for all of the talk about china andther countries are surpassing, we're still the currency that people run to when they -- they're fearing a crisis, oil and otherwise. chris: who is scared in your part of the world, middle east part, you come from morocco, are those moderate states worried? >> i think every state is running scared. chris: including israel. >> especially israel. they have an agreement, a peace agreement with israel, egypt -- israelis so -- so -- so -- is the linchpin of stability in the middle east and egypt is the lynch pin of israel's -- chris: would the next government of e egypt -- e -- jiment

elected would they keep peace with israel. >> that's interesting. egypt will go through turmoil but in the end a compromise will be found whereby the aspirations of egyptians are med meth somewhat but egypt will have to keep its international commitments. cheryl: as you reported, is there are an interest in egypt that surmounts all revolutions and arguments? they have an interest in not going to war with israel again. >> they do but the only scenario under which i think you would see them walk away is the one helene brought up, if the muslim brotherhood or another islammist group came in. chris: cheryl: are the ones that killed sudad. >> the israels said they were happy because this was a doup fall of a secular leader but they got to be nervous. >> the fact is egypt is the garn

tore as good as it gets of gaza of the fact that -- that terrorists and other black market materials are not getting in through the tunnels with egypt turning over if it were to turn nonsecular, that would be the biggest threat to israel. the other people worried is abdullah and jordan and saudi arabia. chris: 85% of jordan's palestinian may be encouraged by this. >> as helene pointed out, thises a movement without a ledaer. it is -- there's a huge vacuum at the top. it ctreainly is not el bare die. we don't know who will involve. >> he could play an important role as an interim leader if they needed a way to chill out before the election. chris: cop tagen here. i was -- contagion here. i asked why all the changes. he said we're watching television and yeltsin. what is it about watching

television and paying attention to the internet, among those in the 20's and 30's. >> they're watching al jazeera. >> they're going through something they never gone through before. this is about young people. it is not about political parties. and if i could make a reference to the muslim brotherhood, whatever happensen igypt, the army will be crucial. there's fears about the muslim brotherhood taking over and the -- outside about the muslim brotherhood taking over, but the army is the backbone of power. think about that. when obama said yes, we can to this and that, th ebrotherhood is the same. if they brought into power, when you're in power, you have different cal clays and narrative. chris: we could trust that. >> i don't know if you could 100%. but turkey has done the 180 degree transformation. i'm not saying the brotherhood. chris: becoming stable and

responsible. it is different than being a protest organization. it is the biggest foreign policy crisis of this presidency, of president obama's watch. is he suited perhaps to face this question at this moment, for our country? scoops and predictions and the top reporters. be right back.

chris: welcome back. the crisis in egypt may be a moment of promise, not just egypt but this country. president obama hinted at that when he talked friday night. >> this moment of volatility has to be turned into a moment of promise. if the egyptian people want a future that befits the heirs for a great and ancient civilization.

the united states always will be a partner if pursuit of the future. chris: there's president obama coming up with a difficult political situation at home and jumping out and facing probably the toughest foreign policy crisis of his president so far. how he doing? >> i think they started this in a week or two ago. i think he's doing fine. but the reality is, he has to run now to catch up. i think his statement on friday night was notable for what he said as well as for what he did not say. he did not call for president mubarak to resign. he did not call for elections. he did not mention elections. everything he did. the most important thing for the white house when they came out, when president obama came out friday night was to make sure he got ahead of any consideration that president mubarak may have been given to cracking down on the pertests. he wanted to go out on record and say, don't ko this. that's -- that's -- s:chri because that would be

blood on urohands. >> it would be seen that way. chris: the same question. broker if you can who is playing the leader. is the president being secretary of state. so is he behind the scenes calling policy. >> i think both the president and secretary offer state realized that the u.s. was not in a good place mid week. by coming out and saying the most important thing was stability, which is where secretary clinton started the week and biden saying that -- that he was a great ally and so forth, they realized they were not on the right side of history on this one. and they made it very clear to us that they had to move. you saw the president move on that. but we have to remember, this one isn't about us. the difference between this and the other foreign policy crises that the president faces, for example afghanistan, is that -- this one has only a little to do

with what is said and decided. chris: you and i talked about this. there's a struggle between the realists and the more aggressive neoconservatives that push democracy and change the face. who can say i told you so the loud snest >> knoweo cons right in saying this was going to come. we should have gotten out ahead of this before? >> you could argue that because -- some of the, so called realists are -- are still today, and i just spoke to a prominent one, arguing that we should support mubarak. s is iour military, we built it and paid for it. chris: are these the same that would support the shaw, anybody, marco. >> while the analogy to iran is incorrect because this is se cular and iran was not, the analogy between a u.s. government, a white house that seems trying to straddle all sides and not knowing how much

to move in which direction, that remind me of 1979. chris: the government we had of about, the administration of george w. bush with so many idealogues. were they better equipped than this president to deal with this crisis because they're more attuned to what is going on over there? >> i think the bush administration was certainly not ready for this in its first term. by the second-term, you got to the speech that you discussed before that rice gave. even then we don't though how they would have felt if they really thought mubarak was not ready. mr. donlan and others in the administration were handle this. they're realists of a different kind. their realism is a recognition that mubarak was not going to last and they may as move on. chris: let's go to the middle east. there's a world over this. you spend any time in the middle east and if you're from over there, it is about the sunnis and shia. only interesting when it affects

us. we saw iran jumping on this, fishing in troubled waters. we're all for the protesters, why? >> if you allow me a few seconds to fillifies the bebait a bit. egypt is a country that allows everybody to expand their influence, from within or outside the region. it is also a country that doesn't offer anybay 100% to be optimistic, even the americans. let's think about the egyptian military chief was here in washington just a few days ago, cut short his visit and went back to egypt. what does that tell me? it tells me that now the president has appointed a -- a vice president who is -- is from a military background. chris: saved his life. >> saved his life. the prime minister with a military background. the air force. chris: you're tell me the army is the key institution in egypt.

>> i'm telling you the president of the united states is betting on the obvious thing which is the army. just what part of -- what part of the conundrum. we have seen the army so far in egypt. they haven't attackeded civilians and the demonstrators. they haven't done that because the egyptians are very proud of their arm. it has fought several wars on their behalf. when push comes to shove, will they open fire on demonstrators, that's the question. chris: thank you, when we come back, scoops and predictions. right from the notebooks of these top reporters. tell me [ man ] i was deciding what to do

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and earn them fast with the new citi thankyou preferred card. chris: tell me something i don't know. >> we're focused on egypt and rightly so. but over the next year, what may well decide american interventions in the middle east is actually how well the computer worm manages to cope the irans from getting to a bomb very quickly. so far it has been the cheapest weapon to slowing the iran yaps -- anybody could imagine and it has been a big surprise, not only to the iranians but i think to its creators. chris: was that israeli or joint job with us? >> we believe it was a joint job with the united states but the code probably wasn't written here. >> there's going to be trouble

this israel because the palestinian leadership is thretched by the leaks of the document that is showed that abbas was cutting a deal and making concessions to omar the prior prime minister, and it has completely undercot any authority. it is a tragedy, a moment missed. chris: even though they traded land, it won't look good for abbas. >> i think president mubarak there was relief at the white house when mubarak finally made a much delayed speech. he had to be pushed andikcking and screaming. he didn't want to go that far. that's a sign -- chris: who wrote it sth he was sight reading. >> they looked good. chris: he wasn't barack obama. >> whoever did his makeup job. >> chris: like the word he was speaking. >> i just want to quickly affix my prediction to the prediction

that andrea made about the israelis and palestinians. this is a resolution that the minhs will take the security council to have israeli settlement in the west bank. in light of what is happening in egypt, if i were the obamaed a strigs and i were to read the crystal ball, i would probably be thinking, one of two things. either how do i keep that resolution from going to the security council or how do i change my conventional attitude which is to veto it. chris: the big question of the week. will this cool the fires? wwhate're seeing on the streets of cairo. cool the fire of anger and terrorism in that region. be right back.

chris: our question of the week. will this action in the streets of cairo cool the fires of terrorism in the region? >> i don't think it is going to make a difference. what we're seing is another manifesttation of a civil war. >> it won't but real action comes from the -- from this protest and not terrorism. terrorism never changed governments. >> i don't think it will either. i think the protesters in egypt have accomplished so much more than anybody with a bomb could.

>> if it empowers the people of egypt and the people in the region, you may if terror and the governments think they can't defend their interests then maybe. chris: street action better than terrorism. >> thanks to all. that's the show, thanks for watching. by the way, this is our first week under the ownership of philadelphia based comcast. to quote w.c. fields, i rather be in philadelphia than see you back here. next week. [ wheezing breaths ] [ woman ] the first time i smoked, i was 13. i was in a hurry to grow up and wanted to look cool. big tobacco knew it, and they preyed on me.

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