"face the nation" with cbs news chief washington correspondent bob schieffer. and now from cbs news in washington, bob schieffer. >> schieffer: here is the latest from cairo. egypt is getting somewhat back to normal this morning. people are going to work. traffic is flowing through the downtown. the military, which is in power now, has suspended the constitution and dissolved parliament. and it has announced it will form a committee to draft a constitution. state television now says the military council will retain power until elections take place. for the situation in downtown cairo, now, we'll go back again to our man on the scene, harry smith. harry, it's a little different picture down there in the square this morning. >> smith: well, bob, the celebrations basically ended late, late, late last night. the square was reopened to traffic.

early this morning, traffic was actually going through. the army came in then later in the morning, and it said we want the protestors who are left here to dismantle their tents and go home. several of the tents were dismantled, but the protestors and the army don't see eye to eye on all of the issues. the army has said we want a peaceful transition of power. and the protestors have said, "but what we really want is not only a dissolution of parliament," which the army has agreed to-- they want mubarak's cabinet dissolved as well, which the army has not agreed to. these two sides there's a bit of a tug of war going on. a huge crowd has once again formed in tahrir square behind us. as for whether or not president obama had any real effect on the protestors here or the overthrow of the egyptian government, last night we spoke with the google engineer who had been arrested for 12 days and held in captivity by the egyptian authorities. one of the engineers of this

entire protest movement. and he said no way. >> president obama came out several times during the revolution and had things to say. did it help? did it hurt? >> you want the politically correct answer or the...? you know, it was good that he supported the revolution. that's a good stand. but we don't really need him. i don't think that... i wrote a tweet. i wrote to the government, you have been supporting the regime that was oppressing us for 30 years. please don't get involved now. we don't need you. >> smith: quite frankly, bob, this is perhaps where the really hard part starts. how the army, how the protestors and demonstrators are going to come eye to eye, and how they're going to form a transitional government, and how this country takes the steps necessary to get to a real democracy. >> schieffer: harry smith in cairo, as he has been for the last week.

ahmed zewail is a nobel laureate. he's been a leader of the opposition who has been negotiating with the military on reforms. i spoke to him just a while ago. he said now that parliament has been dissolved, he believes it's possible elections could be held even before september, which had been the previous goal. >> the fact of the matter is that the people here would like to have this done as soon as possible. >> schieffer: so, your hope is that you can have elections before august? is that what i understand you're saying? >> that's what my hope is. we're don't to have to wait that long. there will be a transitional government, a transition government. but also you... now the fact that the parliament has been let go, the key thing is now for the egyptian people to get this done, and then we go on with the election, which i anticipate

should be about the summer. >> schieffer: let me ask you, sir. there have been some reports that you might run for some office. are you contemplating running for any leadership position? >> well, as i said, bob, to the whole menu of the people in the international media, my role right now is to make sure that egypt will become a democratic state. that's really what i'm after. and then, i think after that, it's truly up to the egyptian people to decide on their leader. but what i'm here for is to see in my lifetime egypt becoming a democracy. >> schieffer: do you think that the government should find ways to freeze mubarak's assets that he seems to have in other countries? what do you see coming of those efforts? >> the corruption has become a way of life, and a very small number of people in the country have made billions and billions

of dollars in such a short time. and i think there will be justice made here for the egyptian people to have their own wealth back. i don't mean here to be personal on president mubarak or his family. i think all those who have abused the system, there will be a time where justice will take place. >> schieffer: let me also ask you about the emergency laws that egypt is operating under now and has been for three decades. is it time for those emergency laws to be lifted? >> in my opinion, it should be yesterday. i think there's no reason whatsoever, bob, that egypt lived for 30 years under martial law. but i would like to urge them to do it as soon as possible, because psychologically even to the egyptian people, this is very important to be done as soon as possible. >> schieffer: dr. zewail, thank

you so much. we appreciate you being with us this morning. >> thank you, bob, thank you. >> schieffer: ahmed zewail in cairo. and in the studio in washington, the egyptian ambassador the united states sameh shoukry. thank you so much for joining us. you heard what mr. zewail just said. the emergency law should have been lifted yesterday. he said that's what a lot of people think. are they going to be lifted soon? >> we are living under extraordinary times. and the suspension of the constitution itself, i think, amounts to whether the emergency law is in effect or not is a legal matter to be debated. but the supreme council said they will lift the state of emergency and i believe they will do so. this is the first day of normalcy back in egypt. >> schieffer: who is in charge now? we know the military council has taken command.

but who's running things right now? >> just a short while ago, there's a pattern that the chief of the military council, the supreme military council is now effectively undertaking the responsibilities that are presented to the state, both externally and internally. the field marshal. >> schieffer: you heard harry smith reporting from cairo. he said some of the people out on the street, the demonstrators, they want every... the cabinet dissolved. they want all of those people out there. is that a realistic hope? >> at this time, it is also difficult. the government has been requested to stay in a caretaker capacity. there are enormous challenges facing egypt in terms of the security void that was created with the withdrawal of the police force, in addition to the economic conditions which are very difficult by virtue of the impact of these demonstrations and the length of time that they were underway.

and the overall global recession. so there are challenges to regain economic equilibrium and to deal with the challenges related to unemployment. >> schieffer: are you confident that the military will hand over power, as they say they are going to do. >> certainly by the fifth communiqué, where they indicated a very specific time frame of six months to undertake both parliamentary and the presidential elections. that i think has come as a surprise. most analysts thought that it would take longer for them to specify now that elections will be undertaken in six months i think is an added guarantee that there is their intention to hand over.... >> schieffer: so it's your understanding now from this communiqué, because they were talking about august, september to hold elections. you think now it is possible and the intent now is to hold the elections before this? >> well, a period of six months is very definite in its meaning.

if elections were to be held before that, that is what the communiqué indicated-- that this is possible to hold elections prior to the six-month period. that would be an expedited timeframe. >> schieffer: is your understanding that it is in the intent of the military council and the government now to honor all of egypt's treaties with other countries, including the camp david accord. >> certainly, that's been reiterated three times so far in various communiqués. egypt is a state of institutions. it honors its commitments, and it enters commitments that are in its best interest. the peace treaty has been in the best interest of egypt and has provided regional security and has provided for egypt the opportunity to concentrate on its development. >> schieffer: all right. mr. ambassador, i want to thank you so much for joining us this morning. i know this hasn't been an easy time for you personally. thank you so much. >> thank you for having me.

>> schieffer: we turn to the other side of the table now, where there sits the senior senator from arizona, a member of the armed services committee, senior republican on the armed services committee john mccain. senator mccain, should we have seen this coming? >> i think so. we should have seen this coming when the egyptian government failed to move forward with a process of democratization. the last election was particularly flawed. by the way, madeleine albright, the head of n.d.i., called for observers. russ feingold and i had a resolution in support of human rights in egypt. so a lot of this should have been seen. this administration and the liberal left in america viewed bush's "democracy" efforts as a way or an excuse to go to war. when president obama refused to support the people in the

streets of tehran, when a young woman bled to death and that was a scene seen by the world and this administration did nothing, that sent a very bad signal to all of these dictatorships. >> schieffer: what should we have done? you're not saying we should have gone to war. >> no, but we should have spoken up for them, just as ronald reagan spoke up for the people behind the iron curtain, just as throughout our history we have had a fundamental belief and commitment that all of us are endowed with certain inalienable rights. these winds of change that are blowing, i think i would be a little less cocky in the kremlin with my kgb cronies today if i were vladimir putin. i would be a little less secure in seaside resort that president hu and a few men who govern and decide the fate of 1.3 billion people. i don't think this is confined to the middle east. just as we believe that human rights are universal. i think the president has handled this situation well.

i think that we need to get a transition that really understands that elections are not the answer. we've had election after election in places that have been meaningless. it is the apparatus. it is the modalities. it is the education of voters. it's all of the things that go to a free and fair election. i think that i.r.i., n.d.i., national endowment for democracy who helped the countries behind the iron curtain after it fell to move forward with a free and fair election. we don't want this revolution hijacked by an extremist organization. we've seen examples of both over the last 20 years. >> schieffer: i want to ask you about that, because i want to ask you about the muslim brotherhood. but first, i mean do you think this was an intelligence failure on the part of the united states, or was it just a misunderstanding by our diplomatic...

>> a lot of it is understandable. the egyptians helped us in the fight against al qaeda. by the way, this revolution is a direct repudiation of al qaeda, who believe that the only way you bring about change is through violence. they were incredibly important in the israeli-palestinian peace process. they provided us with a great deal of intelligence and help. so i can understand that side of the equation, but there was a failure to realize that a sophisticated, educated freedom- yearning people, sooner or later, were going to demand their rights. by the way, my hindsight is 20/20. >> schieffer: this whole question of the muslim brotherhood, do you think the muslim brotherhood should be a part of the negotiations leading toward these reforms? should they be a part of the new government? >> i think that's up to the egyptian people and government. i'm very concerned about a lot of the behavior of the muslim brotherhood, and a lot of the

positions they have taken, including their failure to recognize israel's right to exist. so i'm very worried about it. the best way to ensure that no extremist element hijacks this election is to have a free and fair election that is truly transparent, that brings in all the democratic forces and factors in egypt into this process. and voter education has a lot to do with it. >> schieffer: well, how do you view the muslim brotherhood? you know, i mean i think the hit ... head of national intelligence, general clapper had, kind of caught washington's attention when he said on capitol hill he thought they were a secular organization. >> he later... his spokesperson later took back that statement. >> schieffer: that's what the captain means to say. >> i am concerned about it. we have reasons to be concerned about the muslim brotherhood, but at the same time, for us to dictate what the role they should play in a way may be

harmful to us because, as you just heard that young man say, this revolution is theirs. they want us to assist; they don't want us to dictate. >> schieffer: why don't we take a break. we'll come back and talk about some more of this in a minute. ♪ [ male announcer ] from jet engines that have fewer emissions, to new ways to charge electric cars, to renewable sources of clean energy, ecomagination from ge is advanced technology that's good for both the economy and the environment. ♪ it's technology that makes the world work. [ squawking ] ♪

>> schieffer: back again with senator mccain. senator, let's talk about this just across the region. what do you see the impact of this? >> i see it as very unclear and unpredictable in many respects except that i believe that the egyptian people are educated, they're sophisticated. they are not a country in all due respect, one like yemen where there are stark contradictions exist within that country. >> schieffer: there were some demonstrations there today by the way. >> yes, indeed. it's not only spreading

throughout the region, but it's going to spread throughout the world, in my view again. so i think the israelis have reasons for concern. if you have a government... whatever government is going to come into power is not going to have a close relationship that they with mubarak. let's just make that assumption. then the question is, what will be the nature of that relationship and will there be places like gaza that are flashpoints anyway that will cause the likelihood or possibility of conflict? i'm very worried about lebanon, hezbollah taking over there. lebanon has been the miner's canary of the middle east. and the syrians, obviously, and the iranians will be much more harsh if demonstrations take place in their country. and the message to the iranians is "let your people have

peaceful demonstrations and let's have democracy in iran, syria and other countries which are not only are not our friends, but are in many ways our enemies. >> schieffer: they're calling... some of the protestors are calling for demonstrations in iran monday, tomorrow. >> yes. >> schieffer: already, the government has told them no. >> already, i'm glad to see that our vice-president biden has called for these demonstrations to be allowed. i know that the president will too in direct contradiction of two years ago. i'm happy to say. this... this is spreading, and it's great news. and it is fraught with uncertainty. but some of these things were bound to happen, number one. number two is it's good for everything we believe in. we've got to believe, in the long run, that countries that have free and open societies are going to be natural allies of ours over time. >> schieffer: let's talk a little bit about what's going on in washington. we've got a whole new congress here.

it certainly is going to be a different kind of congress. do you think there is the chance that this congress can get anything done? i mean, everybody is talking about spending cuts. the president is out today saying he's going to be for some deep cuts, not nearly as much as the republicans want. where does all this come down? >> i think it's going to be a confrontation. i hope it's one that can be worked out between the president and congress. obviously the "continuing resolution" will be the first area of confrontation. there is a different environment here, though. it's not nearly what it was before the election. that gives me guarded... room for guarded optimism. and sometime soon, some of us are going to come forward and say, look, we not only have to cut all this spending which is 12 or 15% of our spending, but we're going to have to reform social security and medicare. we're going to have to take it on. we're going to have to rely on the good sense of the american people to realize the same thing. no longer can it be the third rail of american politics.

>> schieffer: there's also a pentagon spending. isn't the pentagon going to have to make some very deep cuts here? >> the pentagon-- and i think it shows what a great secretary of defense we have. he's gotten out ahead of this as you know with some significant cost savings that he's already proposed. we're going to have to make a lot of reforms in the way we procure weapons and a lot of things like that. but at the same time, we are in two wars. our biggest costs are personnel costs because we're an all volunteer force. so let's recognize some of the realities of our national security needs, and i hope that some of my new colleagues on the other side of the capitol understand that we've got to be very careful with cuts in defense spending. >> schieffer: some of your colleagues on the other side of

the capitol are talking about $100 billion cut out of this year's budget. you've been a maverick a lot of your career. do you really think that's realistic? >> i think a lot of it is realistic. i think a lot of fundamental changes also can be made. look, they are complying with the wishes of the people that elected them. that's what they have to do. they have to keep coming back to that. maybe they can educate the voters that all this may not be totally necessary, but right now that's what they were told their message was when they were elected. i applaud their courage. we'll see what happens. >> schieffer: thank you for being with us this morning, senator. i'll be back with some final thought in just a minute. logistics was once the dominion of a very few. the largest and most powerful organizations.

logistics was our secret weapon. logistics was our black heart. the thought that any business... any upstart could access the power of logistics... that's... unthinkable. it's like hardwiring the market right into my desktop. launch my watchlist -- a popping stock catches my eye. pull up the price chart. see what the analysts say. as i jump back, streaming video news confirms what i thought. pull the trigger -- done. i can even do most of this on my smartphone. really, it's incredible. like nothing i've ever experienced. unleash your investing and trade free for 60 days with e-trade. sadly, no. oh. but i did pick up your dry cleaning

and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business. >> schieffer: finally today,

what happened in egypt was a long time coming. who among us was not moved by the unbridled joy? the crowd's heartwarming response to our own harry smith said it all. >> thank you. everybody in the world. thank you. >> schieffer: this was not just a great day, but a wonderful moment in history. yet for all the joy, we are now in uncharted territory. nothing underlines that so much as how u.s. policy makers were blindsided on all of this. we never saw it coming. nor as it progressed, could we do much about it. in one side of my mind's eye, i kept seeing our intelligence agents monitoring it with the latest tools of modern spy craft. but behind the curtain, just a bunch of people watching events unfold on tv like the rest of us. in the end, u.s. policy came out about right, maybe because by then, there was not much we could do about it. we sided with those who wanted

freedom, but were not seen as either publicly driving mubarak from power or, worse, trying to prop him up. that is not all bad. mubarak's crimes can never be justified. but for 30 years, he brought a certain stability to a dangerous part of the world and was a reliable ally in maintaining israel's security in fighting terrorism. if the past days have taught us anything, it is that no one can really say right now what the impact of his leaving will be. the president rightly said this is the beginning not the end of this story. he could have added, "and this is after all the middle east." back in a minute. fee court is now in session. ♪ [ judge ] let me get this straight -- you changed flights in order to get home to your buddies for new year's. and i paid the difference in airfare... plus, i paid a 150-dollar change fee. oh, man! southwest would never do that. how did it cost you 150 dollars to change my ticket?

your honor, will we be here very long? 150 bucks for a five-minute transaction?! kid, put it on your credit card and stop complaining. [ coughing ] guilty. [ male announcer ] don't pay a change fee on top of a fare difference. fly southwest, the only major airline that never charges change fees. affect wheat output in the u.s., the shipping industry in norway, and the rubber industry, in south america? at t. rowe price, we understand the connections of a complex global economy. it's just one reason over 80% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment objectives, risks, fees, expenses, and other information to read and consider carefully before investing. executor of efficiency. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national. because only national lets you choose any car in the aisle...and go.

you can even take a full-size or above, and still pay the mid-size price. now this...will work. [ male announcer ] just like you, business pro. just like you. go national. go like a pro. >> schieffer: that's it for this week. we'll be back here next week, same place, same time. captioning sponsored by cbs captioned by media access group at wgbh access.wgbh.org ,,,,,,,,,,