>> rose: welcome to the program. tonight we take a look at the president's week with al hunt of bloomberg and david ignatius of the "washington post". >> we're going to be reading about the 111th congress or our grandchildren will 50, 60 years from now, charlie. it is truly historic congress. one can debate whether it's good or bad. republicans will try to undo some of it. but really the scope of everything that was achieved is truly remarkable. economic stimulus, health care, wall street reform, don't ask, don't tell, start. you know, presidents usually get most of their domestic agenda achieved or not achieved it in the first two years and in that sense barack obama really deserves a or a plus. again we'll see if it works that how history will ultimately judge us. >> obama has still showed that you can make government work. he came to washington with

that promise. he was going to govern across traditional party lines, the red state, blue state division. he didn't really deliver on it in a palpable way until the end. but i think the fact that he did will be reassuring abroad and i would just note as a counterpoint to what al said a moment ago, yes, there is a new congress coming in, it's going to be a lot more abrasive but they're going to have to deal with this feeling, and i think it's a good feeling at year end at christmastime that gosh, washington finally did some things. >> rose: we conclude this evening with way conversation with james wolfensohn, the former president of the world bank about his life in the private and public sector. >> i think everyone must realize that unless one deals with the question of the poorest people in the world, the world will not be safe. it cannot be safe. apart from the humanitarian issue and the moral issue, you cannot have two bill

people in the world out of 9 billion who are trailing the rest of the world so substantially. they will have 10% of the income of the people in china and india. and maybe two or three% of the income that we have in the united states and in europe. and there will be 2 billion of them. >> al hunt, david ignatius and james wolfensohn when we continue. >> funding for charlie rose was provided by the following: maybe you want school kids to have more exposure to the arts. maybe you want to provide meals for the needy. or maybe you want to help when the unexpected happens. whatever you want to do, members project from american express can help you take the first step. vote, volunteer, or donate for the causes you believe in

at membersproject.com. take charge of making a difference. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin tonight with a look at the week in washington. in morning president obama signed historic legislation to repeal the 17-year-old don't ask, don't tell policy. once enacted gay men and women will be able to serve openly in the military. before large and cheering audience at the signing ceremony, a visibly moved president obama said that

tens of thousands of americans would no longer be asked to live a lie. >> we are not a nation that says don't ask, don't tell. we are a nation that says out of many, we are one. we are a nation that welcomes the service of every patriot. we are a nation that believes that all men and women are created equal. those are the ideals that generations have fought for, those are the ideals that we uphold today, and now it is my honor to sign this bill into law. >> rose: and what looks like another victory as of this taping, the senate expected to ratify president obama's nuclear arms control treaty with russia called new start. this bill caps a week of legislative accomplishment for the obama administration beginning with a tax cut deal last friday. joining me now from washington to talk about all of this is al hunt, executive editor of bloomberg news and david ignatius of the "washington

post". i am pleased to have them here. al, tell me what this means, the fact that the president has this victory. >> on don't ask, don't tell, i think it's a huge victory for barack obama, charlie. any successful politician has to do two things. they have to keep their base reasonably happy and they have to reach out to the center. he did the latter with a tax cut and spending stimulus bill. this really makes the base very happy. he delivered on something. as far as the military is concerned, i was with general casey, the army chief of staff the other day who says there will be some short-term problems, complications in this. but the military makes things work. there were short-term complications when they desegregated. the military academy's 30 years ago had very few blacks and latinos. today they were the case study, the pride in the affirmative action supreme court decision a few years ago. so it is a great political victory for the president, i think the military will make it work without question. >> rose: is it also a victory for people like admiral mullen and secretary

gates? >> i think it is. i think when historians write this narrative, because today is a big turning point in the history of our country, they will look back to, in particular to the testimony of the admiral mullen gave, the chairman of the joint chiefs last march, in which he said we ask our service members to sacrifice for their country. we shouldn't ask them to sacrifice their integrity. and that was really from the heart it took an issue that was re disease -- divisive, very political and i think took it to a different level. and from that flowed a process, secretary gates also signing on, a process the military thinking through the consequences of this change, of repealing don't ask, don't tell. deciding after doing some surveys of members of the services that it would not have significant negative impact. and giving that evidence to

bolster the case. and i think that really made a difference. it made it in some ways less a political issue, more a question of kind of getting on with it. the military knew this was coming. i think when a court decision was ready to impose this, the legislators realized it was better to take legislative action, do it more deliberately. >> what service will have the most difficulty with this. >> i would guess the most noise you heard from the marines but i would guess the navy. i think within a very short time all the services will adapt to this. i agree with what david said. look, people realize it's a new day. younger people are far more tolerant. when you looked at some of those boats, richard burr of your state of northcarolina, charlie, voted for this. my wife moderated a debate in mid-october where he really made comments that gays and lesbians were rather offended by. i don't think he did this for political reasons. quite the contrary. i think he did it because he

realized that the military was ready to adapt, that as david cited admiral mullens saying the case of integrity here. and i think that vote was very impressive not just in millions-- numbers but who some of the people were. >> rose: let me turn to start. what has the president done to enenable-- enable him to look at this expected victory in the senate, al? >> i think he handled this very skillfully. it was an expected victory but it was expected earlier this year. by november there were a lot of people that thought it wouldn't happen. they skillfully brought out all the former republican national security leaders. i think they were blessed to have richard luggar as the ranking majority member in the foreign relations committee. they showed some patience. they knew they had to get republicans. they got those republicans. they gave the assurances that were necessary. i give the administration skill-- or credit for skill in handling this matter. >> what did the democrats have to do in terms of, to

negotiate this with the senators beyond sort of being willing to press for modernation, david? >> well, there was a process of negotiation that really has been going on since the summer. principlesfully with john kyl who was the designated republican hitter on this. that involved issues of modernization of our nuclear arsenal that involved assurances that nothing in this treaty would limit our ability to pursue missile defense. the questions were answered fairly systemically. each time a new objection was raised there was a quite deliberate attempt to answer it. i remember three weeks ago going to the white house for a briefing given by vice president biden on the new start issue. and you had a sense almost of political panic in the

white house, that they felt that after the election defeat the president's ability to lead both at home and abroad was in question. they really made his ability to pass the new start treaty a test of his ability to speak for the country. and you wondered how they were going to pull this off in what seemed at that time a creative could lapts of public support. >> rose: so does this mean that somehow coming out of the election, the midterm elections that this administration somehow has come to understand what it needs to be? >> well, the president might have gotten the message but i wouldn't be sanguine about the early part of next year. i think we're going to see much less compromise and conciliation, far more conflict and flashes. let's remember a couple of things, charlie. this was a lame duck section. usually they are dreadful. this happened to be a productive one. it is a different congress and congress will deal with these issues starting in january. some of these issues would

not have gotten through the house with that new congress. moreover, some of these are lame ducks themselves, some of these republican members who felt much more able to vote for things than they might in the next congress. i think the cooperation level is different. so i think as encouraging as some of the things that have transpired over the last three weeks, i think to see this as a harbinger for peace and harmony and kumbayai next year is a reach it is to be hoped that the white house and even some congressional republicans learn some lessons about the public receptivity for when they get results. but i think it's going to be a very difficult first three or six months next year. >> and what will be the big issues? >> budget, deficit. >> and paul ryan was going to propose a hundred billion dollars in cuts? >> and there's not a democratic leader in congress that's going to go along with that. that will let the bargaining begin. and it's difficult t will be very difficult for both sides because they had deadlines. they can't just practise over this because the junk

resolution only continues, keeps the government going until march. they have a debt sealing they have to increase. i think there will be ferocious struggles over this. let's not forget there are about 85 new republican house members who are coming to washington next year. and they're not coming in the mood to compromise. they're not coming in the mood to sacrifice what they consider some of their sacred principals in order to get results. so you i think the environment is going to be quite different in two weeks. >> this is from lisa lara and laura litvan of bloomberg news coat 111th congress made more allows affecting more americans since the great society legislation of the 1960sment for the first time since president roosevelt began the quest for national health-care system more than a hundred years ago, the democrat led house and senate took the biggest step achieving that by giving 32 million americans access the. congress rewrote with the rules since the great depression, it send more than 1.vi trillion to revive a economy on the verge of depression.

it is almost a two decade ban on openly gay men and women serving in the military and poised to have a nuclear reduction with russia. >> . so does that count for nothing? >> no, it counts for a great deal. we're going to be reading about the 111th congress or our grandchildren will 50, 60 years from now, charlie. it is truly historic congress. one can debate whether it's good or bad. republicans will try to undo some of it. but really the scope of everything that was achieved is truly remarkable. economic stimulus, health care, wall street reform, don't ask, don't tell, start. you know, presidents usually get most of their domestic agenda achieved or not achieved in the first two years. and in that sense barack obama really deserves a or a plus. again we'll see if it works. that is how history will ultimately judge it but i don't think any of us anticipated that there would be a congress that would be

able to do this many things that are so sweeping and effect so many americans. >> can the next congress do anything to turn it back? >> they can certainly go with the margins. they're not going to repeal health care. they're certainly not going to repeal financial reform. but they will try to defund some small elements of it i think the greatest danger that this administration faces as far as their legislative legacy's concerned is frankly from the courts. i think it's possible the courts could undo some of this particularly in health care. >> as we have seen with the district court judge. david, you focused on the politics in the midterm election by following a congressional race out in virginia but you also travel around the world. tell me how people that you talk to, who are either speaking with or the people who in power who are speaking feel about this administration at this time. >> well, you know, i got back from my latest trip abroad to afghanistan, pakistan and iraq on

saturday before this final crescendo of legislative success. what i have been hearing over the last few months is growing anxiety that the obama administration was really dead in the water. it was losing its ability to govern. that our political system was so gridlocked bipartisan division that it was not reliable. that american leadership was in question. i think the chinese feel that acutely. the chinese have made a huge bet that the united states can lead a global economy in which they play a growing roll and there was real concern on two visits to china from chinese leaders that that was changing. i think the importance of what has happened over the last ten days is that obama has shown all it be with a lame duck congress as al says, with a lot of people who are willing to konsyl yate but will be replaced by

people without won't, obama has still showed that you can make government work. he came to washington with that promise. he was going to govern across the traditional party lines, red state, blue state divisions. he didn't really deliver on it in a palpable way until the end. but i think the fact that he did will be reassuring abroad. and i would just note as a counterpoint to what al said a moment ago, yes, the new congress coming in is going to be a lot more abrasive but they're going to have to deal with the feeling, and i think it's a good feeling at year end, at christmas time that gosh, washington finally did some things. and so you know, running against washington, running against this washington that the public seems to hate i think will be harder. on the questions that will dominate next year about reducing the deficit, about our fiscal problems, i think if obama does what he did on

the tax bill, moves sharply toward the center, moves to republicans and embraces some of their demands, even as he takes eat from the democrats in doing so, it's going to be hard for the republicans to derail that. that's really what we've seen this month is if the president says yes and moves toward them, it actually is possible to pass legislation that you would have thought was just a bridge too far. so you know, i think if he continues with a strategy, he may make some headway. >> and on afghanistan w what did you see when you were there and what is petraeus saying and where is the dynamic at the moment? >> charlie, i think the president's summary in releasing his review captures what i saw on the ground. that is to say there are some signs of progress, some gains. but they are fragile and reversible. let me focus on what's getting better. general petraeus has taken a strategy and really screwed

down all the bolts so that you can actually see the taliban being pushed back in contested areas. i saw that particularly to the west kandahar in a place called zahra which was where mullah omar the taliban lead her had his own mosque, been a taliban stronghold for years and years. and we talk withed about changing it. we've had various little offensives. the canadians came in and cleared it in 2006. the taliban immediately came back, so people are very cynical. this time it's being done systemically with widely dispersed posts where you've got five u.s. soldiers and an equal number of afghans out, really out in the boondocks, this is tough country. but they really are pushing the taliban back and the level of violence in this area has gone down. the question going forward is whether afghan governance can come into these spaces,

that means the afghan security forces, but even more the people who provide services. this is been an absolutely dead area. what government there's been from kabul has been corrupt. it's taken from people. that's why the taliban rose in this area. people felt they were being cheat bid kabul and they revent-- resented it. so that's the challenge. general petraeus understands it, he is working on it. but if you want to know why this is fragile y it is still iffy with all of the good generalship that is going on, it's because this piece of it, the governance, the complement to security is so hard to make happen on the ground. >> albert, that was richard holbrooke's portfolio, was it not? >> yeah, and i think david what probably agree that that is a huge void there. and we all can hope that general petraeus is successful. but again david is the expert on this.

no ones what written better or more cogently on this. but i would think that unless they get the governance issue right, and that's been-- there's not a whole lot of options unless they get the government this year right i don't see how everything else follows. >> but is there someone who can attempt to fill richard holbrooke's shoes because the governance issue was his mission. >> let me yield to david on that. i would think not. but david ignatius knows the issue better than i do. my own guess, charlie, is that holbrooke's shoes will be filled in large part by general petraeus himself. petraeus more than any general i've seen is able to play in both the military and the political space. he is a masterfully man i latif person. you see that in his dealings with karzai. he has just outfoxed karzai.

it comes from the top, from the bottom. he's organizing a national army at the same time he's organizing local militias. in iraq why did he succeed in iraq. he basically armed both sides in the civil war. and he managed to pull it off. so he is, you know, he is a very skill 68, i sometimes think kissingerian player in these things. and i think the space that richard holbrooke filled wanted to fill and it was difficult, sometimes for richard, i see petraeus filling. >> so what should we expect in the next six months. >> well, i think you should expect this strategy to accelerate. petraeus will try as hard as can to clear the areas where the taliban has been strong. to build local security through what he calls the afghan local police which are basically u.s.-created and funded militias.

we have our special forces out all over this ragged country. training little tiny villages, little tribal chiefs and building up militias. where people say i want the taliban out, we're going to help them do that. the role that our special forces are playing in this war, both in the capture and kill rate that go-- raids that go on every night and have lit the taliban pretty hard, and in training these folks around the country just can't be over-- overstated. it is a huge role for the special forces. it's really changing warfare. >> is it going to be enough that by july 2011 you will see the kind of progress that allows a handover to the afghans? i have to be honest and say i don't think so. i think this is going to be too enough. so the country is going to face a really tough decision next year. you will see some progress. but it won't be enough that you can hand it over and people have to decide do we want to, you know, continue our presence at the level

pretty much at the level it's been for a while longer. and we'll see how that political debate goes. >> would petraeus tell the president if he thinks that it's not doable? that there is no way even to negotiated deal? >> charlie, i have never met anybody i can think of in public life who wants to bin more than david petraeus. this is a guy who, you know, has got to beat if you it is a road race, if it is call is tenics, he's got to do more push-ups than you, this is a force of will here is overwhelming. that's what he is good at. is that enough? willpower alone doesn't change fundamental realities like this. and i think we're going to see an absolutely fascinating debate. a real collision between a great general and a pretty strong willed president as they try to figure out

what's the right thing to do. >> finally, al's state of the union is the next big moment for the president. what are the earlier-- early indications of the tone, the narrative. >> i think the tone will pick very much up from the last couple of weeks. it will be a-- it will reach out. will say there is some important principleses that we stand for but i want to work with republicans. i think it will all sound nice and they will go back to fighting the next morning. >> charlie one note of caution. i really give the obama administration great credit for the last month or so. i still think-- still think, however that there is a need for some infusion in this administration that is true after two years for most administrations. they have some problems with outreach to the business community. secretary gates leads that is a very important void to fill. i think we have some top white house jobs and economic jobs that need to be filled. and if they just keep with the same group, and they don't bring any fresh bloods

i'm not talking about a house ban. i'm talking about just some important elements that to really kind of repot, if you will, and to help obama retool will be a challenging year. i think they will be making a mistake. i'm not saying they won't do that, we just haven't seen it yet. >> rose: why is so hard to find a successor to larry summers. >> that's an interesting question. it's taken a long time. they knew larry was leaving before the election. they've interviewed a number of people for that job. they have a couple, i think, pretty strong can the das. but it may well be the president has taken all this in and wants to spend the next week in hawaii thinking about itment and they are going to have a bunch av announcements in early january. one white house aide fold me that but i don't know that is the case. >> al, david, thank you very much for joining us on this program. >> thank you, charlie. >> rose: after i completed that conversation with al better hunt and david ignatius the white house announced a press conference for later this afternoon. here are some excerpts from

what the president said. >> first of all, i am glad the democrats and republicans came together to approve my top national security priority for this session of congress. the new start treaty. this is the most significant arms control agreement in nearly two decades. and it will me us safer and reduce our nuclear arsenals along with russia. with this treaty our inspectors will also be back on the ground at russian nuclear bases. so we will be able to trust but verify. we'll continue to advance our relationship with russia which is essential to making progress on a host of challenges from enforcing strong sanctions on iran, to preventing nuclear weapons from falling if into the hands of terrorists. and this treaty will enhance our leadership to stop the threat of nuclear weapons and seek the peace of a world without them. the strong bipartisan vote sends a powerful signal to the world that republicans and democrats stand together on behalf of our security.

in our ongoing struggle to perfect our union we also overturned a 17-year-old law and a long-standing injustice by finally ending don't ask, don't tell. as i said earlier today, this is the right thing to do for our security. it's the rite thing to do period. jim amus expressed the same concerns to me privately that he expressed publicly during his testimony. he said that there could be disruptions in the consequence of this. and what i said to him was that i was confident looking at the history of the military with respect to raise integration w respect to the inclusion of women in our armed forces that that could be managed and that was confirmed by the attitudinal studies that was done prior to this vote. and what he assures me of and what all these service chiefs have assured me of is that regardless of their

concerns about disruptions, they were confident that they could implement this policy without it affecting our military cohesion and good discipline and readiness. we are going to have to compare the option of maintaining the tax cut force the wealthy permanently versus spending on these things that we think are important. and that's a debate that i welcome. but i completely understand why not just democrats but some republicans might think that that part of the tax package we could have done without. having said that, i want to repeat, compromise by definition means taking some things you don't like. and the overall package was the right one to ensure that this economy had the best possible chance to grow.

and create jobs. and there's no better anti-poverty program than an economies that's growing. there's no better deficit reduction program than an economy that is growing. and if the economy started contracting as it might have had we not gotten this tax agreement, than the choices we would have to make would be even tougher. >> rose: so there it is, the president of the united states putting a cap on what has been a remarkable week in washington for the president and the congress. coming up next, a conversation with james wolfensohn, the former president of the world bank. >> rose: james wolfensohn is here. he is a well-known philanthropist, not so well thrown as a cellist and most billion known as former president of the world bank. he was appointed to that position by president clinton. he served two terms as the bank's ninth president from 1995 to 2005. he put debt relief for poor

countries high on his agenda and fostered a more open agenda encore ruption and wooed critics and especially the script call ngos. the economist magazine said above all his indefatting ai believe energy served as a tonic to an institution that what been in the doll trouble for some time. he has done many things, he fenced in the olympics for his native country australia before becoming an international banker. today he is a man of the arts and is familiar us for his love of music. he plays the cello and performed with yo-yo ma add carnegie hall. his memoir is called a global life, my journey among rich and poor from sydney to wall street to the world bank. i am pleased to have james wolfensohn back at this table. welcome. >> thank you very much. >> rose: when you were growing up in australia, what was your ambition? >> at that time i think what i wanted to do was to be a judge in the australian courts and i set my light on

trying to qualify. and then i got into a situation where i was doing a case with an american lawyer in australia, and he asked me a question about what is the current ratio of such and such a company. and i didn't know anything about accounting. >> rose: price earns ratio. >> something to do with the accounts. so he said why the hell don't you go to harvard business school. i was so embarrassed that i wrote that night and six months later i went to the har vad business school. >> rose: you got accepted to the harvard business school and then you realized finance was your place rather than law. >> yes, i did. and also i recognized that finance was international. it was not limited by the court system or by the law. you could travel in the world. and i also saw at that time that there were a lot of challenges coming up in finance. the world was changing. and i never realized how much it would change, but i had a sense even then that the place i wanted to be was on a global stage. >> rose: what's interesting about you too is that even though you worked for the biggest investment banks in

the world, you also wanted to be on your own. >> yes, i did. >> rose: says something about you. >> yeah, i-- i worked for as you said for some wonderful institutions. but for 15 years i had my own firm. it was a great experience. my friend paul volker joined which made it an even better firm. and we had a great experience. and then president clinton's office called to say would i leave that and go and become president of the world bank. and i did it in a second. >> rose: but were you good? >> i wasn't too bad. >> rose: you were on the olympic team. >> yes, i made the olympic team and i did pretty well in the melbourne, olympics, and then again in the world championships in philadelphia. less well there because i was already studying in the states. but it was for me a sport, always a sport. and met one of people. and when with you compete at that level, you really feel that you are at the centre of the activity that you are engaged in. >> rose: was there a point that you gave it up.

>> yes, i gave it up in 1958 when i was in the middle of my work at harvard. >> rose: there is also this, the cello which i mentioned which is famous that you told me on this program. >> yes. >> rose: but because this is about a memoir it is worth tolding you had a great friend that was a cellist. >> right. >> rose: she had a horrible disease. >> multiple sclerosis and was to the going to be able to play. >> that's right. >> rose: and you said to her. >> you should teach. and she said no one would study with me. and i said well, i would. and the following day she called me in london and said did you mean what you said. and i said yes. and she said well i bought you a cello. and i said sunday at 3. i went on and had listens with jack lin dupre who was the cellist. and she insist add that he would only teach me if i promised to play a concert on my 50th birthday. i was then 42 so that seems a long time away and i never thought she would remember. 49th birthday danny-- her husband calls me and says where is the concert. and i said what concert. so he reminded me.

and i said we'll do it at home. he said that's not a concert. corn eggee hall is a concert sof ree ten years i have done a concert and people like danny and yo-yo-- yo-yo ma and pinkie zuckerman have joined me and covered up my ininadequacy. >> rose: theworld bank. >> i did not siege this job. it was a surprise when i heard i was on the list. i was thrilled when president clinton asked me to do it. >> rose: and so when awe rifed. >> yes rdz there is a police that they got an economist as smart as larry summers. >> absolutely. >> rose: he was an economist there, for a brief time. you have a whole lot of range of interesting people. >> right, right. >> rose: what did you find and what did you want to do? >> well, i found to be quite honest a great skepticism in the president for appointing me. and even more skeptism in me. >> rose: because they thought this is another rich banker that knows nothing. >> he is a guy who is coming

along. and they hoped that it would fake five years and coy imagine them every day taking a cross and cutting off a day every day. and so i had a pretty rough beginning because i was with some of the best people in the world in the field of development. but i after a year or two of traveling and of working pretty hard, we started to work together and then when i got my second term after four years, then people thought well we can't wait him out. and i had a remarkable final five or six years and we achieved a great deal. >> rose: but you decided to focus a lot on debt relief which has a huge impact on african countries. >> right. >> rose: the only people i know to talk about that were you and bono. >> that's right. >> that's right. >> rose: what was it about, what did you believe you can do for the poor in underdeveloped countries? >> well, first of all we had an interesting thing at the world bank which was that there were no bad debts. and you were lending to the poorest countries in the

world. and yet there was the fiction that they had to pay you back. and so we got to a stage when i was there when we were lending them money in order to pay the same amount of money back to them. and it was ridiculous. and i said to my colleagues, how you can possibly get an effective development if all the people do is to take the money that you are lending them to pay you back your debts. and it seems so obvious but i was supported by mitchell camedoes who was running the fund after a certain amount of discussion and we got that through. and tens of billions of dollars of debts were foregiven and then the money going to these countries was able to be used for education, health care and real proper developmentment and i think was a very, very important change in the development cycle. but today we still have a huge problem of people living under a dollar a day. maybe half the world living under $2.50 a day. so we have an immense issue

confronting us. there change a bit because china is moving fast forward. >> more people have entered the middle class out of poverty than any time in the history of civilization. >> and will continue in the next few years. >> because the base is so low and the numbers to large. >> that is correct. and the same will be true about india, but it will be a billion people and then a billion people in africa who will still be trailing world very, very substantially. >> rose: do you think you failed or do you think you have succeeded. >> well, i don't think success or failure was possible in a span of ten years. what i think i was able to do was to put a focus on this issue. and i believe that in better times than we have today because today the leaders of the major countries are concerned about their own economies, not about economies -- >> they all have debt. >> and they are all concerned about how to get the economies moving again. but i think everyone must realize that unless one deals with the question of

the poorest people in the world, the world not be safe. it cannot be safe. apart from the hoourn issue and the moral issue, you cannot have two billion people in the world out of $9 billion who are trailing the rest of the world so substantially. they will have 10% of the income of the people in china and india. and maybe 2 or 3% of the income that we have in the united states and in europe. and there will be 2 billion of them. so this is an issue which is not just for me as a dreamer or someone who is involved in development it is an issue that all of us need to look forward to as an issue of stability on the planet. >> rose: and tell me why, could you, if you had had more something have dramatically changed it. i mean were the things that you wanted to do believed in that would have made a dramatic difference that you could not do for reasons

beyond your control? >> i had the great privilege of spending nine years going to the g-7 meetings and ultimately the g-20 meetings. and i discovered that being president of the world bank was not being president of the united states or being president of germany. and the people that can make the differences in this is not the intermediary such as the head of the world bank or even the monetary fund it has to have the political push of the major leaders. that was the g-7. but it becomes the g-20. and really the g-20 needs to focus on this in a very, very focused way. they have to bring to the attention not only-of-themselves but of the world that one needs to look at the poorest segments of the society. or will you not have stability in the world. and i believe and my hope is that when we get through this current economic downturn that the g-20 will, in fact, address itself to

this issue. it has to. it's a matter of necessity not for people of my age but for our kids. >> but my impression is, there have been at times in which it got on the agenda. >> yes. >> i remember scottland i think it was. >> right. >> but it just seems to somehow be overwhelmed by the economic collapse that they had to address for one issue or another. so that it seems to gather some momentum, something comes along to grab the headlines. >> it is also in the communiques of g-7 and g 20, there are always two or three paragraphs which refer to the issue of development and the poor in the world. >> right. >> it is a matter of necessity. it is probably written weeks before. >> right. >> the right is action taken. is there a decision to put resources at the command of the people who can do it. and is there an account ability for the people in the developing countries to make sure that that money is not stolen and not wasted.

there are a number of things wrong with the system but we are getting a greater sense of accountability and a greater sense of transparency. >> are there possibilities unexplored where there is some combination of public private. >> the issue s i think, that when you have people of wealth, they are go fog have their wealth for years. when you have the poll significance-- politicians they are in for a period of time, two years, four years. and so the time frame at which politicians have to look at this issue is different from the time frame of philanthropists. and what i am hoping is that by bringing this two groups together that you can have the people of the quality of bill gates who are looking beyond the next election. >> who can afford a long -- >> can afford a much longer view. i think it is a hugely important development. >> rose: so you had two terms there. >> yes. >> rose: would you have liked a third term? >> i think probably i i had run out of steam. >> rose: really. >> i wanted another few months but then i was asked

to do the israel-palestinian negotiations. so i didn't have long to think about it. >> rose: she chose paul wolfowitz as your successor. >> they did. >> rose: then follow by bob zell ig, how does he do this different than dow. >> i think bob and i have very similar views. i see quite a lot of him. i think he's doing an outstanding job in trying to bring the bank to focus on this. he's increased the lending. he's of course very active politically because he's had huge experience. >> and before that in dealing with trade. >> right. >> and many other things. >> so he is a person that i think is ideal to try and get this, keep this on the agenda. >> when you look at where we are, i just did a conversation this week or beginning, end of last week, there is this push for some kind of international cooperation and rules. are we making headway on that, is that, because my impression is ze zellic

wants to be part of that conversation. >> i think dominique is at the centre of that conversation. and he is in my judgement a remarkable individual in terms of having him there at this time. he feels that he is responsible to his institution and to the world. and i think he's doing a fantastic job in reminding people that the stability of the system is the thing that we really need to be very concerned about. and he looks through -- >> the economic system. >> of the economic system. and he looks through national politics at the moment. he's looking at what are the fundamentals to keep our global economy on track. >> and what are the rules and regulations that will guide us s there a rule of law and stability and capital ratios. >> he is looking at that, but of course again politicians would have to agree to this and as we saw at the last g-20 meetings, you can have very good statements but in terms of the practicallities of what follows, very often you need a crisis to make people recognize. >> rose: interesting things are happening among

individual countries. some are choosing austerity. and some are saying we believe in austerity and growth and some are going with austerity, greece, britain. some don't have a choice. you have two things within is a bit of stimulus before austerity, if they have the political will to do it. what is the right course? >> well, i am not president of this country but i have to say that i think that-- . >> rose: you're not qualified since you were not born here. >> that's exactly right. but i think personally that it is important that we pay significant attention to the growing debt. i think our country is getting to a point where the excessive debt is going to affect the value of our currency. is going to affect the way people look at us. and i'm personally worried about that. but the president is saying and he must know something. >> and ben bernanke as well. >> yes, the president, ben bernanke and even larry summers is saying let's give this a go first because we have to get president

economy moving again. and then we can deal with this question. >> right. >> well, i hope very much that they're right. it seems to me to be a high risk game but i hope very much that they're right. >> but there are serious people. >> very many. >> including the last director of omb including-- saying we may not be able to afford these tax cuts beyond two years out. that if we don't start looking at the revenue side as well as the spending-- as well as the spending, the revenue side as well as producing revenue as well as spending side, then we're going to be in trouble. >> well, charlie, if you look out five, six, seven years, the prospect is that we will owe the same amount and our income. >> right. >> we will have 100 percent debt to our income. >> ratio. >> and i say as an individual if i have 100 percent debt which is equivalent to my salary. >> right. >> i'm in trouble. >> right. >> and it is the same with countries. it may be that people come and lend you the money

because of the strength of your country. but at a certain moment someone will wake up to the fact that you just owe too much money. >> because you are locked in some mutual dependence. >> exactly. you are. and so i personally worry about that. but our current leaders, i think, view us as having a bit of time. and they're taking the view that we got to get the economy moving first. >> but the interesting thing is whether the-- you look at what happened to the deficit commission and how many vote these could get and divisions within there. you look at paul ryan said that he is talking about a hundred billion dollars in cuts and where do they come. and you know. >> well, the deficit commission came out saying we need to save 3.5 trillion dollars over the coming years, so that we can save half the deficit that we will have by 2020. and they couldn't get the votes. but if you read the document which i did, i thought that as a bipartisan document it was a remarkable document and for me, was a statement,

a searing statement of truth. >> there's also this question that people are talking about and the president will be talking about this i think a lot next year. david brooks on this program said, you know, one of the great questions today which request be misleading is america's decline. and america's competitiveness, living in a world in which emerging nations which you focus on a bit now have growth rates that are triple our growth rates. >> that's crect. >> rose: what's the strategy to remain competitive? what's the strategy to say we recognize the new reality, but there's a way that we can be part of a larger pie. >> in my opinion we have to start wed case. i think our education system is fallen behind. we rank number 18th or 20th in the world in the quality of our secondary education. china and india each have

350,000 students studying abroad every year at university. >> 100,000 each in the united states. we have 13,000 students studying in china and 3,500 in india. 35% of their students abroad are studying engineering or engineering related degrees. >> computer science. >> we have five percent of our students studying. i worry tremendously at the way in which we see this happening. and essentially are not reacting. and it is my hope that educators in this country and indeed the government of this country will recognize that we really need to restore the advantage that we had over years which was intellectual, creative, and with with the system that would allow for the rewards of people who have new ideas. and we've just got a bit steal, charlie. >> your role is ongoing to the quartet. >> yes. >> how would you define that

experience. >> well, i got there at the time when you if you remember. >> sharon was still active and at a time when the withdrawal was taking place in gaza. and i had the too task at that time to try and help inter-- intermediate between the israelis and palestinians. >> the israelies were leading, palestinians hoped to be able to. >> and it was not really an official role. the official role for the bank essentially offered the quartet which was the u.s., the u.k., european union and the united nations which i represented was essentially on the economic side. but the economic side was so much tied up with the political side that i was allowed at that moment to intervene and to really play a role beyond the role of just economics. >> rose: so what was your frustration. >> my frustration was we got out of gaza, or they got out of gaza, i had nothing to do with it.

but the withdrawal took place in gaza. we organized organized for primary industry to be available to the palestinians that were living in gaza. we took the greenhouses, if you remember, there was a group of greenhouses which were the economic activity of gaza, that had previously been owned by israelis and we arranged for the transfer of those to the palestinians. and then the problem was that we couldn't get the goods out of gaza. we couldn't get them to be exported. >> and part of the reason was. >> because. >> part of the reason is because there were groups of israelis and palestinians working together who were shaking down the truckers coming across. but that was near, that was an unfortunate abrasion. what happened in the end was though that rockets started to fly. and the political situation deteriorated to such an extent that as we tried to move goods across the border there were more and more concerns on the side of the

israelies that they might be bringing weapons or such things in. and essentially the whole of that brilliant plan to try and make gaza self-sufficient just eroded. and i'm afraid what we are suffering from now as you know is essentially there is a border around gaza. there's very little trade going on. there's a lot of -- >> since the conflict in which the israelis boarded the ship, they tell me that there is more than had been in the past. there has been some progress of some goods getting in that had not gotten in before. >> also the tunnels were being used. >> right. >> so you can still buy a lot of things that you want in gaza but they are coming in unobservationly through the tunnels. they are being imported. but i think that there is some move to try and make it essentially more open. but it is all now tied up with what i think is the most important issue which is what is happening in the israel-palestinian negotiations for a broader treaty. and that i think should be --

>> tell me what is happening there, because as you know, the united states has just made an announcement that they are going to go back to the strategy they had developed about settlements is no longer in effect. they have gone back to whatever the 12r59 gee was to develop some kind of dialogue between the palestinians. >> it now an unofficial dialogue which is being conducted by george mitchell. >> because there is no direct kpun cases. >> i think this is a-- i think for both the palestinians and the israel this is a tragic situation. >> lots of people now talk about this big idea including the prime minister who has done a remarkable job in terms of developing institutions and israelies will acknowledge that and have loosened some of their check points and things like that. >> that's right. >> is that, and he said this to me sunday at a thing i did with him and the former foreign minister, you know, that he expected to be on

track to create some kind of palestinian statehood. >> by the end of next year. >> by the end of next year, that's right. >> that is his view. >> exactly. now what do you think of that idea that the palestinians will continue to do the thing they are trying to do from the ground up, proving, you know that they can accept responsibility, whatever they need, how would they define it, not me. and that they can go to the world opinion and to the united nations and say -- >> well there are two things going on at the moment. as i think you know. there are some who are looking for immediate recognition and two or three countries that have said they will recognize palestine now. but salemme is of a very clear view that he needs to get things in order first and that he will then do it at the end of next year. i think it will be an absolutely compelling case. it will be very, very difficult, i think, for israel to defend against that. they may defend against the borders and the delineation of the country. but it would be my hope that long before that they in fact reach some agreement that the moment i have to

say doesn't look very positive. >> are you saying that you think, are you endorsing that idea in a sense you think that-- fayyad will definitely it-- develop it from the ground up. >> i don't need to endorse the idea because he is doing it. >>ight. >> which think if i were in his position it is exactly what i would do. he is a person of great integrity. and a person who i think has the respect of the israelis as well. and i think the respect of world opinion. so i think he is the right person to do it. he may be less popular with some of the political figures in palestine but he is an outstanding -- >> you mean hamas. >> even within-- because it is a very politicized atmosphere and salemme is outside it. but i think personally that they are extremely fortunate to have him. and if you have interviewed him will you know why. >> i do. >> there is something about you that wants to tackle the biggest problems there are. tell me two bigger problems than eliminating the poverty divide and creating some

peace in the middle east. what is it about you? >> that likes these challenges. >> i don't know what it is but i must say they are a lot of fun. and i think if you can page even a small contribution on the big issues, you are a very fortunate person. >> thank you for coming. >> thank you, charlie captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org