>> rose: tonight a look at the world through the perspecti of fareed zakaria of cnn and "time" magazine. >> we might find we're going to go through an intervening phase in which we have less american leadership and power but nobody else is stepping in. and we are unable coordinate on responses to climate change, on getting the world trade talks back on track, on dealing with issu like intellectual piry and intlectual property rights because ile we may have had lots of flaws, but at least we were the ornizer in chief. and now if you don't have an organizer in chief, what does a post-american world look like for providing these kinds of global cooperative goods that everyone ultimately needs? >> rose: fareed zakaria for the hour, next.

funding for charlie rose was provided by the following: . but is isn't just a hollywood storyline. it's happening every day, all across america. every me a storefnt opens. or the midnight oil isurned. or when someone chases a dream, not just a dollar. they are small business owner so if you wanna root for a real hero, support small business. shop small. additial funding provided by these funder captioning sponsored by rose communicaons from our studios in new york city, this is charlie rose.

fareed zakaria is here, editor at large of "me" magazine and hosts g.p.s. on cnn. the changing world order is a frequent theme in his work. he wrote aut that in his 2008 book "the post american world." in an updated edition, he writes about how the trends he described have accelerated. i am pleased to have him back at this table and talk the world that he writes about. welcom >> always a pleasure. >> rose: what gets the lion's share of your time? >> you're exactly right. i'm sort of now a multiplatform provideer of content. >> rose: and good for you. >> intellectually it's easy and it's wonderful because it's all feeding the same set of intellectual questions. i'm trying to ask myself what's important in the world, what are my thoughts about it, how can i

do research? how can i talk to interesting people? then it's the logistics that are difficult. i have to write the column for "time" or "whington post," i have to do the show. so i would say, you know, the end of the day probably thinking and reading and researcng and talking to people takes up the largest amount of time and i make it... make re it does. because that's really my value. i've got a great staff who helps me with the show. you know, that takes up probably two days but at the end of the day a good chunk of the week is reading, writing, thinking, talking to people to figure out what's distinctive this week. what can i say that's new? then it takes dierent forms. that might mean you put something out in the show. you put something out in the column. we now have a big web site which has amazing stuff on it. it's exhausting. >> rose: do you tweet? >> i know tweet. i now facebook.

it's all off the weapon site so the global public square is cnn's now signature international affairs web site. i do a bunch of things for it and that gets tweeted. that gets on facebook as well. i feel as though you haveo... nothing, no one place commands the kind of attention it did anymore. but if you do it from all these various places t-cas cading affect is actually quite large and it global. i mean, what's amazing to me is how many people watch the show around the world. how many people can read the column around the world. my readership has gone up dramatically. print media has a rea problem in terms of how do you monetize that? what is the business model. but when people say nobody raids anymore, it's entirely untrue. the number of people reading "time" magazine online, the "new york times" online is exponentially higher than has ever beebefore. so the reachas increased, we just haven't figured out how to make money off of it. >> rose: that's what satisfied me, too.

if you do shows and programs that you know are t going to reach the same level of penetration that an entertainment show is going to reach, at the same time you know there is a sufficiently large global audience th has the same curiosity about politics, about culture, ant movies, about technology. and that's a huge audience and you can now reach that audience. >> and then what you do-- which i think is another form of this multiplatform providing-- is you have an amazing web site where i can go to your web site and y what was the last time you interviewed richard holbrooke? when was the last time you interviewed john updike? i can find those interviews and that is an incredible cultural sour, actually. >> people like that had 2, 30, 40 interviews. i think holbrooke had 50, john updike maybe 10, 20. anyway, this. it seems to me that the most important event... what wasit originly post-america was released when? >> 2008. 2007 is basically when i wrote it. i'm trng to remember if i have

that right. >> rose: so you wrote it before we knew the implications of the global financial crisis. >> absolutely. >> rose: what did it tell you? once you had written this and you include in here now the impact of the global financial crisis on the way the world was moving. >> that's probably the most significant shift. it's funny you say that. because the financial crisis-- which i didn't predict, i talked about the problems of too much loose credit and low interest rates but i thought it would be a garden-variety financial crisis, the kind we had had many times in the last 20, 30 years. not the kind of shell shocker that this was. but the effect of the global financial crisis was to powerfully accelerate the forces i describe. because what has been the net effect of the global financial crisis? it has been to depress the growth rates of the western rld. to take them down from 3.5% down to 2% even less. you see the trouble europe is in. we're all reeling from the problem of deleveraging in this country it was largely the issue of private deleveraging.

in europe it's sovereign debt, government deleveraging. so the effect hasbeen to depress growth in the wtern world. whereas in the east or in the emging markets, they had a hiccup for one quarter and then they're back on track. so much that the differential between the emergin markets and the advanced world has increased. so global facts has a prediction as t when china will overtake... >> rose: jim o'neil. >> jim o'neil. and the date has come forward almost eight years. >> re: last time i saw it it was 2027. >> it's 2027 but i think it's been revised not by him but using the same data. somebody pointed out that... because he sumes china will be growing at 6.5%. it's growing at 9%. in an odd way it wasn't actually a global financial crisis, it was a western financial crisis. china exrienced no financial crisis. india experienced no financial crisis. brazil experienced no financial crisis. so the net effect has been to powerfully accelerate these forces. >> rose: beyond growth rate,

what are t common qualities of emerging nations? >> increasingly a kind of pride d confidence and a sense that they are... this is aistorical proceswhere ty're coming of age. there's a chinese official i taed to who said something to me which i thought was just vivid. he said, you know, used to be e students in the classroom and you used to be the teacher, we always listened to you. we wanted to be the brightest kids we always wanted a copy of the american incentive. if we re regulating our securities industry the first question we would ask is how do the americans do it? he said now we loo back and think to ourselves, we were the kids in the clsroom but suddenly we realized the teacher was a moron. the teacher didn't know what he was talking about. and you can see that shifting perspective. i got a lecture from the same ficial explaining to me. he said look at the last ten years, how did you handle your economy, how did we handle ours? we raised interest rates to tamp

down the gwth, we tightened consumer credit, we built up a budget surplus so we had ammunition when things went bad. what did you guys do? you lowered interest rates. you eased up on consumer credit. you told everyone go out and buy a house and you destroyed your federal budget by tax cuts, by prescription drugs, by two wars that you wouldn't pay for. now i'd never heard a chinese official talk like this. they're usually very deferential and respectful and you can see that in india. you can see that in brazil. >> does it change what their economic model will be if they look at what we did with financial markets and how we responded in terms of derivatives and a whole range of new security instruments? >> i thi it makes them much more comfortable. >> they think, you know what? we need the markets efficiencies for this b we need state control for that. and they've played that game and there have been a group of people,iberals within china who i can sympathize with who say no, you've got tomodernize more which means westernize

more. they're on the defensive. they're basically out of business, those guys. because they were the ones who said you need to copy the s.e.c. you need do... you need to listen... another chinese official said to me when henry paulson usedo come here when he was head of goldman sachs and treasury secretary he told us you have to make your financial industry look more like ours. he said i don't think we'll get b getting those lectures anymore. at the end of the day everyone is adopting american ideas but what we make the mistake of not understanding is it's a la carte. they're picking and choosing. they're not going to become us. they're looking to see what can we take. i had this fascinating conversation with lee kuan yew, the guy who built singapore and i said to him, you know, you keep denouncing the west b i look at singapore and itstrikes me as a very western place. you believe in western science and technology and western codes of law. >> rose: but not a complete american democracy. >> and that was his point. his point was you've got to understand we know what will work. we want to borrow from you but

we don't want to borrow erything. and i think that view... and you can see it in these these societies where you're getting a kind of hodgepodge. it's not as thou people say well, it's alloing to be a chinese worl no it's not. the west is still very powerful but it's going to be a post-america. it's going to be a hodgepodge, a multicultural multipolar world and people are going to have to be comfortableiving with that confusion. >> rose: and some people have told you it may very welled be b good for us, even though it's not a zero sum game. the idea that there are people around china and india makes it an interesting opportunity for the united states to develop relationships. lee kuan yew said that to me. vietnam is a perfect example. >> look... whene talk about the se of asia, as somebody who grew up in asia it always strikes me as bizarre. there is no asia, asia is a western concept. there is india, china, japan, indonesia, and they don much like each other. so when china rises it causes great apprehension in india. >> rose: and they worry about

who we canave a good relationship witd the united states becomes the place. >> so in my last long trip to asia i was struck by the dramatic change that had taken place in asian countries. two years ago if you went there they were all singing the praises of china because it was a kind of abstraction. and they thought this will be great, somebody to stand up to the americans. be tired of the one superpower world. well what had happened in the intervening year was that the chinese had gotten tough with the japanese on that island dispute, they had said a few things to the indians that the indians didn't like, they had asserted sovereignty over the south cha seas whi the south koreans and vietnamese didn't like. so all of a sudden everyone would say to me "you americans understand you have to stay involved in asia." and that was t conversation you had with lee kuan yew. >> rose: american leadership. he said what the rest of the world wants is american leadership, not hegemonic attitude about the rest of the world. a partnership but a leadership. >> what he wouldn't say is we are lookg for you to establish

a balance of power vis-a-vis china. but that's what he meant. >> rose: there is also this: when you came here as an 18-yeaold, you said you came with a great sense of citement. >> it still is, i think, our greatest advantage, even though you're getting opportunities, economic opportunities in china and india and they are very different when i came to this country india was one of the poorest countries in the world. rose: in '82? >> '82, exactly. it's a huge deferential. now there are many opportunities in india. there is a freedom here, there is a canvass here that is so broad. we're creating the first universal nation here and that's a powerful magnet for immigrants. our problem is we still attract the very best and brightest in the world. we educate them here. and by the way you're educating them largely at the taxpayers' expense because of resrch grants and tax deductions. we, the american taxpayers, are educating the world's best and brightest justt the moment they graduate and they wld start paying taxes, creating

jobs inventing products we kick them out. we tell them that's it now back go back to your country. >> rose: the question of coress and doing something abouthe immigration status. don't some of the chinese leader have kids that are in harvard and yale and stanford? >> the next president of chi's goes harvard und a difrent name. >> rose: there is theense that they arenderstanding that they have to develop a different model a domestic demand model. >> look, they have been trying to do this for a while, they are not succeeding. if you look at consumption as a percentage of g.d.p. of china they want to get it to 50%, it's still 35% and over the last six months it's actually declined. they have not figured out a way to make this happen and i think in china it's one of their great problems. why? because the chinese are making very rational calculations. they don't have a safety net. they don't have medicare. they don't have any of that stuff. so they save.

they save because they know that they will have to look after their grandparents, they will have to look after their parents they don't have unemployment insurance. so until you change that structure i don't know how much you're going to do it by tinkering here and there which is the way the chinese have approached it. people are saving for their old age, for their parents and their grandparents unless you create a different structure, that's a rational thing for the chinese people to do. >> rose: do you worry about what chinmight be doing 20 years from now when its economy is even stronger? >> that's a great question. i think there is no questi that china is ierested in having a very large footprint on the world stage. people who say china just want to free ride and let america do everything, that's for now. but ifou look at the simplest indication,it's military modeization plans. the chinese are trying to build a world-class military. they'rdoing it slowly, not trying to compete with us but they are clearly trying to modernize every element of it.

look at chinese diplomacy. if you met chinese diplomats 20 years ago, they couldn't speak english, they were pretty hapless. now they have extraordinarily sharp diplomats at every level. most of them are deployed to the west speak english very well. so you're beginning to see everywhere a desire for the chinese to have a footprint on the world. now will they have the same kind of desires that we have? no. i think there are huge cultural preferences here. america believes that it fulfills its historical role by converting the world to our ideas. i mean, this is a... >> rose: it's not a religious thing but more in terms of ideas of freedom and transparency and democracy. >> it probably stems from a kind of high protestant sense of universalism. because britain had it before as we did. the chinese really view their world historical mission as making china great. and, by the way, if you're not chinese, don't apply. you can't be great. it's a very culturally parochial

sense. and as a result it's possible they won't have that very broad sense of... yo can see they don't have much of a global vision, a regional vision. they are very narrowly protecting chinese interests. but if you bump up against those interest will they hesitate to use force? not at all. the chinese can be pretty tough, as we learned in the korean war. >> rose: and in both places you have to united states and in china you have people that believe there will be conflict. what's necessary to avoid conflict? >> i think probably more than anything else create an interweaving set of dependencies. because, look, you can have good diplomacy in confidence building measures and all that stuff, that's fine. but ultimately what is it that stops china from selling our treasury bills? to take that example. because it would destroy the chinese economy. if they were to do something like dump u.s. treasury billst would be mean that you would ha huge crisis in america, economic crisis, and we would stop buying chinese goods, which

would put... >> rose: self-defeating. >>... millions of chinese workers out of work. you need those kind of depen den sis. i believe very strongly in power and hard power in at sense. it would be very nice to hope that the chinese will love us and that we we will love the chinese. i will be more comfortable if there were a kind of pattern of interdependence that ensured that there would be stud on both sides to do it. >> rose: who has the biggest future-- india or chin >> my indian frandz-- i grew up india-- like to say th're going to overtake china. i said indians are supposed to be good at math. chinese economy is now three and a half times the size of india's and it's still growing at a faster pace. you explain to me the compound arithmetic by which you're going to overtake... it's very tough. china is going to be the largest economy in the world without any question. it will overtakthe united states at some pot and then establish itself. >> rose: by 2050 they'll be the

third-largeest? >> i think ind will do it very well. people talk about all india's problems and they are real, the corruption, the bad infrastructure, the lousy roads. with all that india has over the last 15 years been the second-fastest growing economy in the world. so india has lots of problems but it's a totally different model. china grows because of its government, india grows despite its government. china has an amazing infrastructure, india has an amazing private sector. it has terrible infstruure. but india will do ne. >> rose: but it's a democracy. >> it's a democracy which means it has incredible political stability. you know. china has solved all the little problems like the highway, but it hasn't solved the big problem which is what will it look like politically 25 years from now? india has solved the big problem. 25 years from now india will look exactly like it does now: a complicated dysfunctional democracy but ultimately a stle one. it's got all e small problems.

it's got bad highways, bad train systems, all that stuff it has to deal with. >> rose: people always worry that the future leaders will forget history and one of the things that lee kuan yew s said is that he worried that somehow future leaders of china will have forgotten the kinds of problems china had and especially some of the cost that it paid because of certain innovations that mao tried, whether it was the great leap forward or cultural revolution cost china enormously. >> i think you are exactly right. this is the central idea in understanding china. the chinese by 1973/'74 when kissinger and nixon opened the door to them, they were flat on their back. they had... just everything had gone wrong. mao had taken over, mao had tried two completely madchemes the great leap forward and the cultural revolution. per capita g.d.p. was basically the lowest in the world. itas bangladesh level. th hadothing. and so deng xiaoping says we are

going to just do what it takes to succeed. we're going to be ruthlessly pragmatic. we don't care whether it's called communism, capitalism, couldn't give a damn. >> rose: (laughs) what d he say about a rat? >> if a cat can catch the mouse, who cares if it's a white cat or black cat? and en he goes through that and he saysby the way, we'll be allies with the aricans. the hated americans who were... mao regarded the americans as devils and he was like we're going to be pro-american because we need their technology, we need their military support, we need them as an ally against the soviet union. it's a totally pragmatic approach. and that produced 30 years of stability. so the question is will the people who have now lived through 30 years of stability and growth and prosperity and only seeing the china of the beijing olympics and not the china of the cultural revolution do they have a different world view? do they remember how difficult this was? probably not. lee kuan yew says not this generation who are going to be president but the next one, the

people in their 40s not in their 50s. but i sense a growing chinese arrogance even people in their 50s and0s. look, how could you not? why do people get arrogant? we meet businessmen all the time. somebody gets very rich, he thinks god has blessed his world right? >> rose: right. >> countries that do well begin to think they have the secret success and that there's something intrinsally..and it was true of the germanshen they wereastering the world and, look, it's why... why is it when you go around the world people will say "you americans are arrogant"? because we're successful and successful people generally... >> rose: what do you think of t historical comparison kissinger makes between germany and britain? >> i think it's... you can go backo... and it's the rise of athens and the furorhat it causes in sparta. these t rising power and the established power, this is one of the great dramas of history. >> rose: and will the rising

power challenge the established power through means beyond its economic growth? >> precisely. and will the established power accommodate that rise in a way that allow there is to be two players on the block. >> rose: or try to stop them. >> and that's why getting that relationship right is clearly the central challenge of american diplomacy. i think if you look at what obama is trying to do at a very broad level, he's trying to rebalance american foreign policy and say we're going to try an spend less time on a these crisis areas from afghanistan to iraq. that's why he's been so hesitant toet more involved in libya. and where we need to devote our time is to the 21st century which is asia and particularly to china. and i think that' fundamentally correct. >> rose: will this century be asia's censurely. >> i don't think it will be anybody's century. i thought long a hard when writing the book about how to term it. i could have called it the chinese world. it's n. it's going to be... >> rose: it' only

post-american? >> precisely. it's just that we're going from this extraordinary domination of america which dominated politically, militily, cultural, economically. >> rose: beginning at the end of world war i. >> right. and then it goes into warp spd after the collapse of the soviet union whe you have for 20 yeara situationhere no country has ever been this werful. >> rose: i think one of the great stories is going tobe the final assessment as to whether we screwed up that opportunity. from the end of the decline of the soviet union and the collapse of the wall, how did the united states over the next 20 years manage that period of time? >> i think that's right and i think part of what happened, you remember the period, charlie, is that we withdrew. ople forget, americans got so uninterested in the world so fast after having been so engaged during the cold war because we only get engaged in the world when we're scared. the soviet union scared us and al qaeda scared us briefly. and that was the only two times that we were... we could get a real interest in engagement. >> rose: speaking about al qaeda i want to go back to obama but the killing of osama bin laden means what in your judgment in

the conflict of the... the threat of terrorism? >> think it is at a very fundental level the end of al qaa. i think people don't want to say things like this because there's a danger that tomorrow there will be some incidentnd maybe there will. but al qaeda has never been about the fact that a few people can do bad things. that technology allows you to do it. it was the appeal, the political appeal of al qaeda and the fear that there were masses of people in muslim cotries that were enchanted by this. that were mobilized by it. >> rose: because they felt a resentment against their own government as well as western governments? >> precisely and western governments for supporting their... >> rose: repressing them >> exactly. so there's been a one/two punch if you will. the first punch is called the arab spring which bin laden said the only way to get rid of these governments was through violence and through islam. and what you had in egypt was eight million people on the streets at the end of it, 10% of

the egyptian population was out there. non-violent, non-islamic democratic revolution. so it in a sense undermined the entire rationale and the raison d'etre of al qaeda. and the second part is that muslims had been tiring of it anyway. bin laden's dth washe capstone to a phenomenon of waning support for al qaeda in every muslim society. everywhere. because they realized nobody really wants to live in a caliphate. nobody wants to go back to the eighth century. this was all romantic. >> rose: and media today they can see what all the advantages of modernity are. >> precisely and they can also see the violence which then haened over the last ten years to them and their citizens and their neighbors. >> rose: in your opinion egypt. what's going to happen there? how's it going to end up? >> short term i'm pessimistic, long-term i'm optimistic. short term i'm psimistic because they face huge problems. the problems they face, charlie, is the bad economy that caused everybody to use faith in mubarak, it's still there. and the new regime faces allhe

problems that mubarak faced. compound with that the problem that the lid has been taken off the society and some of the turmoil you see, the anti-christian violence, the rise of the muslim brotherhood, you're seeing an thaerpl's reluctant to give power. here's why i'm long term optimistic. when indonesia went through a transition, when suharto fell, 98, everyone said ts country won't even exist because it was a creation of dutch colonialism. you're going to see the rise of islamic fundamentalism, you're going to see the collapse of this country, there are all these islands that will go independent. but actually what happened was over time-- and there was a bit of a rocky process-- the democratic process asserted itself, the army wielded enough power to allow a fledgling democracy to take power. that democracy needegrowth and sohey started reforming more and more. i think egypt may go down that path. >> and the economy is growing about 7%. >> they had e. now it's down to zero.

but fundamentally why am i optimistic about egypt? it's a real country, unlike a lot of arab countries to be honest. many of those places were created by the british in 1920, egypt has been a country. if you look ck and sayhat country existed 3,000 years wag the same capital, egypt and iran are probably the only two places in the world. not one european country would qualify by that logic. it has a deep civil society. it has real middle-class movements. so while the is the muslim brotherhood, there are also coptic christians who are 10% of the population. there are liberals, moderates. it has the diversity that you need to create checks and balances. ultimately that's what you have to hope that is... not that there won't be some characters who are reactionary, but that they get balanced by other forces. >> rose: do you think it obama has it right? >> i think obama has had it right in the sense that we would all wish that you could just

immediately support these democratic revolutions and... >> rose: and the point of this speech was to say that, number one, we support the universal values of these people risking their lives for us and at the same time you have to understand that we are living in a world... a political world in which we can't havehe same relationship with every country. >> rose: and, in fact, people didn't pick up on the point you're making which is h said, look, our short-term interests will not always coincide. and i think that that's... you know, an american president should not be criticized for effectively saying "i'm not going to jump up and dow calling for instability in saudi arabia." instability in saudi arabia will mean $250 a brel oil. it will mean a global recession. and as psident of the united states, i'm not going to advocate something that's going to put americans out of work. if it happens i'll deal with in the a way that balances our values and interests. so i think that that was right. i think on libya he has again got it about right in the sense

that clearly with the libyans asking, with the arab league asking, with the u.n. endorsing we couldn't do nothing. but i like the fact that this is a very tightl limited operation. we don't need a third major military commitment and when you make a military commitment of that size, colin powell is right you break it; you buy it. we don't need to buy another torn muslim socie. we've got two already, iraq and afghanistan. >> rose: how do you think iraq will turn out? >> i think it's pretty messy. i think it will be perhaps in the very long run it will work itself out but you can't look at the price we've paid in terms of people, iraqis, americans... >> rose: in terms of our reputation... >> right and say it's worked out all right. i think it remains a case right now where the costs significantly outweigh the benefits. >> rose: and one of those costs is afghanistan. >> one of those costs is afghanistan. and, you know, who knows if afghanistan, by the way, could have been resolved perfect.

i think one of the things we've learned about both these places is perhaps you have to do some element of nation building as part of a counterinsurgency strategy to win the local population over but it is a hellishly diffult, time-consuming, expensive mission and it is a mission without end because you're taking a country like afghanistan-- which is the third poorest country in the world-- an you know when do you stop when do you say "we've done something"? >> this is the "washington post." cost of war will be big factor in true production. obama advisors say price of conflict is too high. >> and you know what? >> rose: the debate is beginning about the price we're paying. >> and this reminds me. i talk about in the book about the parallels with the british. the one thing we shouldbe conscious of... >> rose: the decline of the empire? >> that britain in 1910 ruled the world. anywhere anything happened people will ask "at is london going to do about it?" >> rose: the sun never set on the british empire. >> and it was true that they had political control and influence

all over the world. but they forgot at the end of the day that the real challge to britain as a wld power was the rise of germany as an industrial power. if t rise of america as an industrial power. that if you lose that you're like a supernova. what is a supernova? surnova is something that everywhere around the world the light is sll shining but at the core there's a black hole. so the core here is o competitiveness, our ability to be innovative. the built to send troops plac is a consequence of that economic strength. if you lose that, you' lost everything. >> rose: pakistan. >> (ughs) most difficult country in the world. >> re: so did yourecommend... i think i read a column in which you said that our government should demand that they create a judicial authority to look into what happened. >> look, there's absolutely no question that the pakistani government at rious levels and in various ways supports many of

these militant groups. and we have got to at some point explain to them you just have to stop this. you know, because we are supporting you, we are modernizing your army for you, we've given them $10 billion of aid over the last ten years. and yet we cannot get them to get off... >> rose:ut if they were telling the truth what they would say-- and maybe they do to leads-- they say we don't attack the haqqani network because we worry about you leaving afghanistan and if afghanistan all of a sudden becomes similar play tribal conflict we want to have somebody there who represents us >> that's exactly what they would say. and what we have to try to make them understand is fundamentally this game that pakistan is play is a kind of 19th century rial politic game. they talk about needing to have strategic depth in afghanistan. what does that mean in today's world? controlling afghanistan is the

booby prize. it's not the prize. you don't want be in charge of lar tracts of ungovernable territory with tribes that hate you and are warring against you. pakistan should be saying our strategic goal is to grow at 6% a year, to raise the standard of living with people and that means we need a peace deal with india, stability in afghanistan and if that means there are a few members of the northern i lines that we don't particularly like, who cares? that is in a sense a civilian conception of national interest rather than a military conception and this is pakistan's fundamental problem. other countries have armies. pakistan is an army that has a country. until you change that fundamental definition of national interest, pakistan is going to keep playing this absurd game where they're trying to gain strategic... you're right, charlie. theyould say we need to have those options. we need to keep those options open. we can't beat india in a conventional war so we keep these militants. and we'll... at a low cast we're

destabilizing afghanistan. >> rose: it was said it went to mumbai, too? >> absolutely and now the evidence of that is overwhelming and it would be a help to pakistan... i talk a lot, many friends in pakistan. they all the civilians, liberals moderates say plea tell our military this, please condition your a. don't just keep giving them money because it's not simply a problem for you geopolitically, you're destroying pakistani democracy. >> rose: speaking of aid and leverage, what leverage do you think we have with the israelis and what do you make of the prime minister's trip to the congress, to the white house, and to aipac? >> i think it's sad. look, at the end of the day let's remember the palestinians have notanted to make a deal, either. the palestinians have turned down two solid interesting israeli offers, one from ehud olmert and one from olmert.

but i still thinkhat... the fundamental... >> rose: and the olmert proposal i understand, recognizes the '67 boundaries with some division. r and agreed negotiations. >> bibiis picking a quarrel with obama for ludicrous. it was a way of saying i'm going to stand up and fight for israeli interests. >> rose: but did the president make a mistake in terms of the way he made his speech beforehand and not fully explaining that other people had saidssentially what he has said? >> look, you can... this is... now you get back to... it becomes a kind of jesuitical diinction where they say he didn't say... the land swaps will take into account demographic realities and that bush made that qualificaon. at the end of the day everybody who has worked on this peace process for the last 20 years know it is way you're going to get a deal is start with the '67 borders and do land swaps that are mutually acceptable.

>> rose: did he they? >> that's pretty much exactly what he said. let's say even if there was some small difference here, for a foreign prime minister in the white house in the oval office with the cameras on basicay give the president of the united states a lecture on history and in effect correct him is very disrespectful. why is he doing it? you're right. here's the tragedy of netanyahu. netanyahu sounds like the most powerful figure who's standing up for his country but really he's not. hi never takes any bold decision. he never takes any risks for peace. he never takes any risks to solve israel's strategic dilemmas. he's counting his votes in his coalition. he realizes he's got the lieberman party and he needs to keep them happy and in order to keephem happy he has to seem unyielding on the peace process. >> rose: you make your point better in what you have written in whichou say he'll be the

person who came before, is t person who's willing to take the risk to brin about something that was in israel's interests. >> and that's the only way he'll be remembered, unfortunately. he has an objection to anything you propose. when the palestinians were divided he said "i can't negotiate with these guys because they're divided." then they got together and he says "i can't negotiate with them because hamas is now part of it." all individually acceptable but the point is what's your vision what's your vision for peace? what kind of risks are you going to take and here's the tragedy. if this goes on for 20 years and you have five million palestinian arabs living between the river and the sea and israel is ruling over them at what point does it not become a democracy. at what point do you say you can't rule over five million people who have neither a vote nor a country and call yourself a democracy? it corrodes the essence of what makes israel so special. >> rose: this is the apartheid argument. >> yes. yes. and look've never heard anyone explain toe how you can... what else... it's been 60 years,

in 20 years you'll have had0 years of ruling over a people. they don't have a vote, they don't have a country. in the old days they used to call that colonialism. >> rose: so the president righto say he's going to oppose t statehood vote at t united nations? >> i think he is because the essence of the argument against settlements, israeli settlent which is the united states has ways opposed i you shouldn't... that neither the tw parties should... >> rose: oppose but do nothing about? >> but that's a separate issue, we have said we don't want ther side to take unilateral steps that will change facts on the ground. well going to the u.n. and unilaterally trying to get statehood is changing the facts on theround. >> rose: but will building a wall be changing the facts on the ground? >> no, i think that was a legitimate security interest but i think building more and more settlements which, in effect, create facts on the ground which meanthat land swaps can't be the way you want them to. so i think the israelis can build settlements, which i believe they shouldn't, the

palestinians shouldn't be going around declaring independence, either. >> rose: well, they should be talking but they're not talking. >> they should be talking and the united states should be pushing hard. >> rose: and should the u.n. have pushed far stronger american plan rather than a statement about the borders? >> you can see the firestorm from him even having done what he did but i think yes. i think ultimately nobody wants more peace process. this process has gone on for 30 years. whate should say is this is what the final... let's start with the clinton camp david plan. when we say look, this is what we all know. this is roughly where we're going to be. why don't we stewart this? >> it's essentially the plan of the arab league. >> right. and say what are the minor modifications people want to do along these lines and let's now have a conversation. >> rose: so you put it all on the tabl iluding jerusalem or try to get to some of the ports and save, say, the return of refuge d jerusalem to the

end? ll. >> >> look, people say... people more experienced at this than i say you should leave everything... leave those things to the end. i think we've been trying that for 20 years. >> re: exactly. but i think what clinton did at camp david with barak and arafat was put it all on the table. >> well, effectily they became pretty close and i think what you then do if you can manage it is you take it to the two people. you go over the leaders, because the leadership? both places is dysfunctional. i think that in israel you will probably find majority that will support this because the israeli public is much more willing to accommodate to something like this than netanyahu. palestinian side may be more complicated but who knows? to be rid ofhis problem you might nd that there is... at some point what happens in these societys is everyone gets tir. one da it's going to happen. we don't know if it's right now. >> rose: if lestinians become siapore the people who fen fit

would be the israelis. >> but the palestinians... the palestinian goal should be israel is becoming this dynamo powerhouse economy, how do we tch ourselves to this wagon. >> final poin american unemployment you say is a bigger crisis than debt or deficit. it is, in fact, a situation we found ourselves in because productive city back but unemployment is finding out that we can do as much with fewer workers and this is a central american dilemma. >> this is the crisis of the western world and it's a cris of the united states. if you look at what is happening they have seven million people officially unemployed but if you add the people who have only gotten part-time work, and that part-time work pays only $19,000 on average, so that's half the median page and the people who've stopped looking it' 24 million ople. as a percentage it's basically pretty close to great depression levels of unemployment. and we don't seem to be getting

out of this any time soon. we're adding 250,000 jobs a quarter. that's barely enough to take into account the new entrants into the labor force. we're no chipping away at the unemployment numbers. and these people, the longer they stay unemployed they lose work ethic and they lose work habits, they lose skills, they lose the ability to get new jobs so there's a danger here of a permanent unemplod, underemployed underclass that is enormous. we're talking about 10% of america. >> rose: unless they can create new kinds jobs. unless we can develop the german model i assume is the answer. >> well the german pod dell is part of the answer because that's about manufacturing. >> rose: manufacturing... high level manufacturing. not bic manufacturing. >> it's a b.m.w. model. overengineered products for which you can command a premium and the injure mans do it superbly. you've also got to double down on the things that do well in this country. we do medical tourism could be much larger, tourism in general could be much larger, entertainment. we are the world's great

producer of entertainment. >> rose: culture is our biggest export. >> all these products, your show goes all over the world. we've got to be thinking whereabout can we find these new jobs because the old jobs aren't coming back. we're not going to be doing autoparts manufacturing, that's gone to china and india. you're not going to be doing the steel, that's in south korea. we won't be doing ship building so where's the future here? it's in the things you mentioned and education and retraining and all the stuff is hard but if we don't deal with this problems this going to... by the way it will dwarf the debt problem because if you don't have more people employed you don't have tax revenues to pay down the debt the deficit explodes if you don't have unemployment come down. >> rose: it's not american deine but participation in a different future >> we have to look around the world and ask ourselves where what cane learn? how do we adapt?

we're very bad as a society at doing best practices, at asking ourselves,kay, let's look at health care. why is it germany can provide better health care at half the cost per capita? >> rose: and what's the snans >> well, in each case there are different answers. one of the answers is, frankly, they consume much less of these very expensive procedures. germans get per capita half the number of m.r.i.s we do. in america your wrist gets hurt you get an m.r.i. in germany people would say no, first see a doctor and if the pain... >> rose: you may not need it. there's lots of things like that. the fee for service system. in general, wherever we have a problem we tend to think our constitution is the best ever created in the history of the world, the people who wrote the constitution were demi-gods and it never needs to be changed, our political system is the best in the world, the senate is a model of the world. >> rose: transparency and openness. >> right. the uth is we have a

complicated antiquated system that has gone dysfunctional. the role of money in politics has become so large, our tax systems a joke. 14,000 page tax code which is basically institutionalized corruption. and nobody we have to be introspeblgtive and say let's look at how people do this. that's what i mean about adapting to this world. we have to ask ourselves why can't we do best practices? businesses do it all the time but as a country if we don't learn from this new world.. >> rose: is that bause a legislature, a congress that is essentially inward looking rather than outward looking? >> we have a very parochial congresst's on a two-year cycle. i think the role of money is just extraordinary. john mccain would say why do people pay $50,000 to have coffee with a congressman. not because of his personality.

it's because they want a specific favor, usually in the tax code, which is why the tax code is 14,000... >> rose: doesn't that work that way in every country? doest money play a prinent role... >> no. the entire british election cost less than midwestern senate seat. >> rose: and lasts about a month. >> and lasts a month and you can't... there are many things you can't do. you can't buy ads on t.v., there's very sharp limits. when we brought democracy to iraq, we said there will be public financing of campaigns because we were worried about the royal in an oil-rich country that money would play. it's not just congressman. as a society, as a country we have to ask ourselves are we willing to accept there's a big world throughout? we're a suessful parochial country. wear large country, we're too vast oceans, too weak neighbors with a history of success. those are bad conditions from ich to lea. we're like i.b.m. or general motors in 1975.

>> rose: both of tm are on the uptick now. because they learned about smaller cars on the one hand and finding service opportunity on the other. let me mention two very important countries. one is russia, the second is iran, and those two in some wa are connected. and will iran play a role until the arab spring or not? >> you're absolutely right to pair them together because in both case what is you have is political systems that have some elements of modernity in them. the iraniansave some kind of democratic system but lots of elements of... and the russians simply and what allows the authoritarianism in both cases to take the upper hand is that they are both oil rich countries. and ultimately what has happened is that the price of oil going up has meant all the forces for reform, all the forces that forced you to modernize and be nice to the world... >> rose: this is not just those two, all oil rich countries ere whether it's venezuela or

iran or iraq. they used that money not to have to develop other industries, not to have to become... >> i called them the trust fund countries because in effect they have a trust fund which allows them not to do the hard work of earning the money. >> rose: can you imagine an arab ring coming to in? buding on what happened in terms of the last election crisis? >> honestly, i can't it's a very rich society with enormous possibilities. >> rose: it's a young country in terms of demographics and it has an amazing sense of reform. it's clear right underneath the surface. >> right, but the people in charge, the rescream in charge has a lot of money it has guns and some public support. you can see that ahmadinejad may have lost the election but he got a lot of votes. >> rose: right, he did. >> it's not like nth korea where nobody supports the regime. so you combine that, some base of support, lots of money to buy... tre a lot of patronage and it has really

repressive instruments betwe the republican guard, the army. i look at that whole pakt and i think it's very tough to s how you crack... it'ssad, a tragedy because in many ways it's the most civilized place in the region. >> rose: will turke be a dominant plar? will it beompetitive wh iran even though it's friendly with iran? >> it's fascinating you say that because what you've been seeing in the last five years in the middle east is that the two countries that are trying to vie for leadership of the arab world are not arabs. the turks and the iranians and the contest has been which of these two non-arab countries will dominate the arab world. i think turkey is... future looks veryright. it's a perfect picture of the post-american world. if you look back to 1975 turkey was the subordinate vassal state of the united states. did whatever we asked. the t perfect nato ally. fought in every war america asked it to fight in. people look at it and say it's

because it's islamist that it's become uppity. it's not because it's islamist, it's because it's the thirds-fastest growing economy in the world. it has a consolidated democratic revolution. it's political stable, a powerhouse economy and it's trying to recreate its old sphere of influence as the ottoman empire. it'sothing to do with islam and if you pick more broadly about this neworld we're in in the middle east, charlie, think about this. in 1975 the four most importan countries in the middle east. >> iran, saudi arabia, egypt and turkey were close american allies. and really subordinate... >> rose: and all run by aught cats. >> right. now look at it. iran has gonehrou this anti-american revolution and is hostile. rkey has more complicated retions with the united states egt is going to have more complicated relatiohips and saudi arabia is pissed off because we weren't supportive. so it tells you we're in a new world and we'll have to navigate

th these new forces of popusm, demracy, economic growth. >> rose: and at the same time look at the huge problems that we face. one is environmental climate, sccity of water, fuel prices going up, fo prices going up. all of these things that have no respect for bount reis. >> rose: and what used to help us organize responses to this was american leadership. and so in an odd way for so many people in the world that regarded american leadership as hegemony and imperial, we might find that we are going to go through an intervening phase now in which we have less american leadership because we have less american power but nobody else is stepping in and we are unable to coordinate on responses to climate change, on bringing world trade talks back on track, on dealing with issues like intellectual piracy and intellectual property rights because while we may have had lots of flaws but at least we are the organizer in chief. and now if you don'tave an ganizer in chief was whatoes

a post-american world look like for providing these kinds of global cooperative goods that everyone ultimately needs? >> rose: go back to 1982. as an 18-year-old you come here and you get the finest education we can offer at yale and harvard as i remember, was it yale and harvard? then you work at forei affairs magazine o"time" magazinend then seen nen. >> in the middle my brief shining moment was for four days i guest hosted the charlieose show when you were out. >> you've done everything. so if you came here as an 18-year-old today in 2011, do you think you would stay here or would you get that very fine education and probably go back to india where your parents still live? >> you know it's a tough question. i like to think that i would still come here because still believe in this country. i still believe that there is such an enormous sense of freedom and opportunity and freedom to be whoever you want

and the canvas is so large. intellectually it is so stimuling. i nell love with this country when i came here. i was not... i came from a middle-class family. i wasn't rich but i didn't come here out of desperation economically. so i think that there's still an enormous amount th country has to off. it's still creating this extraordinary thing. you go to an american company and you see this all t time. blacks, whites, people of chinese american descent, latinos all working together, men, women, noby cares where you come from. reagan had this great line "americans don't care what your origins are, they care what your destination is." and i think as long as we can be thatind of country is open to the world's ideas, its cultures, its people and try to take that as an enormous advantage will be distinctive, will be unique. will we ve the kind of unrivaled dominance that we have from 1989 to 2005.

no but that was one moment in american history. america has been a vibrant fascinating challenging interesting country and a trendsetter in the world even before that when there was a soviet union and british empire and so people shouldn't think just because we can't be in the position we were, the rome of the world, we will somehow be finished, we won't. america has an enormous amount to offer and will play a central role in this world as long as we can adapt to it and as ng as we don't find change. the great danger here is that we close ourselves off to these currents of change and then you become irrelevant to this new world. >> rose: the book is called "the post-americaworld." fareed zakaria, thank you. >> thank you, charlie. captioning sponsored by rose communications

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