>> rose: welcome to the program, we begin this evening with the emerging political scandal about government chris christie and the gridlock on the george washington bridge, joining me, mike allen of politico and playbook. >> what people like about governor christie is calling card has been the toughness, the bluntness, the plainspokenness but if that gets to be looked at through the prism of being a bully, suddenly all those other qualities are looked at differently, so now we have reporters all over the state, national reporters looking into a lot of past incidents where they think that the governor might have been involved in some sort of retribution so a lot of breads on the sweaters and reporters are pulling them right now. >> we begin with ian bremmer of eurasia and his 2014 risk list. >> our ability to promote democracy, we saw what that got us in egypt.

we saw what that got us in tunisia, we see that won't get us in places like saudi arabia, our interests in energy in this part of the world are of course decreasing every day. and i think there is a lot to play for on iraq, i am very skeptical of israel palestine, kerry made the tenth trip there and i think the likelihood he is going to get something done is virtually zero, for the life of me i don't understand why he is devoting that much shoe let tore that part of the world. >> rose: we conclude this evening with pierce singer coauthor of cyber security and cyber war, what everyone needs to know. >> it is a net plus for us having a conversation about this, that we would not have, i think we will get reforms that i hope to get some reforms. >> rose: we should have had. >> but the negative, has this had a negative impact on american national standing? on measure business caused over $180 billion of revenue losses that's a negative but the

problem is, do i say known is at fault at that or the underlying program. >> rose: mike allen, ian bremmer and peter singer when we continue. funding for charlie rose was provided by the captioning sponsored by following. >>

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. captioning sponsored by >> i would never have come out here four or five weeks ago and made a joke about these lane closures if i had ever had an inkling that anyone on my staff would have been so stupid but to be involved and then so deceitful as to, just to not disclose the information of their involvement to me when directly asked by their superior. >> rose: the new year barely a week old and washington is already buzzing over a pair of new political stories.

president obama's commitment to the wars in iraq and afghanistan is being questioned in a book by former defense secretary and newly released e-mails seem to show that new jersey governor chris christie's staff shut down access to the george washington bridge as a political retribution. mike allen here, who is often here to talk about those stories as know, he is the chief white house correspondent for politico and the man behind the capitalist must read blog playbook. mike, welcome let's go to chris christie first. there was a press conference on thursday did he put to rest the questions that might have been raised about the damage to his political campaign? >> of course not, charlie, and you saw all week this was going to be something that was really going to last. now the governor said all the right things. he said he was embarrassed, he said he was humiliated, my favorite part he referred to several times as stupid, said he had been blind-sided by it, that is what people wanted to hear,

they wanted him to apologize. he had a very smart move of going to fort leave new jersey, the town that was bedeviled by in traffic and apologized to the mayor and about 50 citizens who were there in person. but charlie, this doesn't put him behind him for a couple of reasons. first, for many people across the country, this is the first and only thing they know about chris christie, who wanted to get to know them under very different circumstances. this is something that really breaks through that people understand. people get traffic jams, traffic jams really defines so much of a work a day life in america and the idea of someone creating one on purpose? crazy. is that a problem for the governor? what it says about his leadership and management, and in the wake, charlie this is the problem with healthcare.gov is you need to have someone in your organization who can tell you bad news, there has to be a way to surface trouble and bad news in your own organization.

that clearly didn't occur here and third, charlie, what people like about governor christie is calling card, his calling card has been the toughness, the bluntness, the plainspokenness but if that gets to be looked through the prism of being a bully, suddenly all those other qualities are looked at differently, so now we have reporters all over the state, national reporters looking into a lot of past incidents where they think the governor might have been involved in some sort of retribution, so a lot of threads on the sweater and reportsers are busily pulling them right now. >> rose: and the question raised right now was there a culture around the governor that made this thing the kind of, that could make this happen and, therefore might have happened in other instances because of attitude or a culture around the governor's office. >> that is exactly right. the one criticism that you heard from people who watched this whole press conference was that the governor was make naked about himself is saying what was wrong is he was lied to and didn't really addressed, he was

asked it but didn't really address the question of how he allowed this to happen, how did, how he created the environment as you say where people would feel free to do this, and so people are saying, the governor was saying, that the problem was he was being lied to, in fact, the problem was all these citizens were inconvenienced when this was going on why didn't he know that this was going on? why didn't he act on it at the time the traffic jam occurred? all of that is still left unanswered. >> so let's look at this new book by bob gates called duty. what do you make of that? >> well, charlie, we both read it and i think we both agree that it is very different a than that has been described, a few headlines that have come out of it, him being critical of the president, him recalling a moment in which secretary clinton described her vote on the iraq war when she was a senator as political, but you take those isolated packages and pull back the camera and you have a very different book.

you have a very honest book by secretary gates talking about how miserable the job was, how much he really didn't like it and, charlie, he told you this at the time he told us this at the time, i think we are inclined not to believe people when they say that the high office is such a burden. but in fact we read this and see it really was, that he would sit in those congressional hearings and answering what he really wanted to, making fun of the banal lame questions he was asked and the difficulty of working with administration, west wing and this is where you got the criticism of the president, where they were very involved in operational matters, this is a west wing, i it is extremely controlling, managing and they didn't just point the secretary of defense in the direction they wanted to go, and have him do it. they were very involved beyond that and i think that is some of the frustration you saw boiling

over in this book. and that is the part that is more honest, and i think most, than most people would have predicted. secretary gates, such a company man, but talking very candidly here about some of his raw dealings. >> rose: a couple of things about that. one, i thought i what was interesting about this book is this conversation about the president and afghanistan, suggesting that the president did not have great confidence in the mission, did not have -- feel that good about his command, he selected david competent address and believed what he ought to do is get out of there, but nevertheless he went forward. >> right. >> rose: so here you have the president prosecuting the war, that he has grave doubts about and that's not the first time in history that has happened but here you see a president at contravening ends. >> fascinating point and secretary gates says in the book he agreed with the president's

strategic decisions as you point out, but felt like he didn't really believe in it, and that makes it -- that filters down into the organization, and so they felt it was certain to fail before they even went ahead. >> rose: on the positive side, the president is the most deliberate if the president he ever met, he reached into the third level of people around the table to get their opinion, said very complimentary things about gates did about hillary clinton, called her smart, tough mind, tough minded, a great sense of country, on the other hand, said about joe biden that on every major foreign policy decision for 40 years he had been on the wrong side. >> yeah, that was one of the little shots that he took and it is funny. that's the one passage that the white house has really pushed back. the white house has been very low-key in reacting to this, secretary gates overnighted some books to the white house so they would have them to respond to,

this was the one comment that came out they defended, vice president bind the next day, bide tend, we saw vice president biden with the president but didn't say much about anything else that was in there because these fumes by secretary gate are no surprise to them, and he has good documentation, this was a book that was written with a lot of con tel contemporaneous s aides had taken and secretary gates home there in washington state at a nearby military base, they even set up a secure facility for him where he could use classified documents as he was preparing this book so as you read it you saw this is a very serious book, very, lots of documentation, it is not a rant or a scream. >> rose: mike, thank you. >> have a good weekend. >> rose: mike allen from washington. back in a moment. this week i have seen two sort of significant changes in the risk profile around the world that are linked to questions of the united states. the first is everyone has been

talking of course about president rouhani from iran. i think that the likelihood of an actual breakthrough deal on their nuclear program is significantly greater today than it was three months ago. >> rose: ian bremmer is here again, he is president and founder of eurasia group a political risk consulting group, every january he produces a report on the top risks for the year ahead. this year's list includes america's troubled alliances, new china and al qaeda 2.0, and also picks a few red herrings on issues that are unlikely to pose a significant threat despite media attention. and that category bremmer places syria, europe and u.s. domestic politics. i am pleased to have him back at the table. welcome. >> happy new year. >> happy new year, indeed. so jump for the benefit of people who may not have hear you heard you talk about this before, what is it you do?

>> i am a political scientist who tried to look at how politics affect the markets all over the world. usually if you are a political scientist and you get your degree, you get your ph.d. you go and become an academic or you go into policy, you don't go into the private sector, and my conceit is that political science and politics actually matter for the market, matter to the marketplace, global marketplace. >> rose: how do you do it? in other words what is it you and your team do to understand and evaluate the risk? >> some of it is quantitative. some of it is, you know, moppeds that assess country risk and sector risk we have developed over 15 years now. a lot of it is spade work on the ground. when i started the firm back in 1998 i was an expert on the former soviet union and lived there for three-year, i speak russian, and there was a time when i was probably one of the world's best experts on kazakhstan, who cares? but i could have told you back then

who the people were on the ground in kazakhstan that knew the country, i lived there and understood the place and i could have given you a really good sense back then of what the risks were in kazakhstan, i can't do that anymore, my top expert on kazakhstan can and we have people covering those countries all over the world. >> so you have a collection of experts whose business it is to know what is going on in every important country in the world. >> it has taken a long time and built it very gradually but i think we have gotten to the point we can do this stuff a little. >> rose: is information easily accessible for the kind of decision making that must be made? >> it is filtering that information and understanding what exact matters, getting the noise and the ideology out because it is easy to get access to someone who will talk to you about a decision. it is also very -- >> rose:. >> it is not easy to get access to putin in. >> it is interesting putin, of course which will show up on the report, but putin is a unique challenge precisely because even if you get to the people who are very close to him, you are not

inside putin's head and his ability to make decisions as an have id has so much impact on what russia does domestically and internationally. >> and not many checks and balances on him. >> precisely. >> but you say he is weaker than he was. >> yes and i think that makes him more unpredictable because he is not happy with that position, his popularity has decreased and the lowest it has been since he was elected in in 2000, the economy is doing worse than it was and while he has done well on the international stage he is clearly concerned about the way that issues are going to go in a few weeks. >> and that explains these cart koff ski and pussy riot? >> i think it does, he want to show you can be magnanimous and doesn't affect you, it is no threat to to you do have this man out of jail when he has been there ten years but also taking $20 billion out of the russian pension fund and throwing it at the ukrainians overnight he made

that decision by himself. where else in the world do we have individuals making those kinds of decisions? you know, changing the trajectory of an entire country. >> rose: was it worth $20 billion? >> it was to putin. i wouldn't have done it. i don't think it helps the russian people at all. i mean, you look at russia, you look at what putin has gotten over the course of the last year, he has gotten assad, he has gotten yanukovich and snowden. god bless him. that is not a portfolio that i would want. and. >> rose: well -- >> no question. and he has gotten himself, he is now the incoming president of the g-8 and i think he is going to use that. this is a guy that wants to matter on the international stage individually. it pains him if it doesn't happen. >> rose: let's talk about two big things. how will policy makers define the role the u.s. should play in the world? >> well. >> rose: that's a big question. >> yes. american policy makers.

>> rose: yes. >> that is the $64,000 question and they are not doing it. i think the united states i mean obama came over and said the u.s. ended the war in iraq, well of course what he really meant is the u.s. ended the war in iraq for the americans. the war is still going on. it is not quite mission accomplished, it is not that bad but it does define, even though you will be talking to secretary gates shortly, gates clearly very upset about obama's lack of commitment to the mission in afghanistan. president obama has been trying to minimize the risk of u.s. exposure internationally, we have seen him do that with some balancing between china and japan and seen him do that with everything in the middle east, it doesn't mean it is not going to succeed for the americans. >> rose: i think what bob gates wrote was that with respect to that, that they never thought the president was committed to the mission in afghanistan. wow know, he engaged it, he said

he was the most question asking of any president he ever worked, with he debated and analyzed stuff more than anyone else he had ever seen in the oval office, but he thought he was not really, never was somehow believed in the mission. he put it into effect, there was a surge. >> there was. and then there wasn't. and it didn't go very well and he was probably right to question the mission in afghanistan. cnn polled just a couple days ago 82 percent of americans oppose the war in afghanistan. according to that poll, that would be the highest opposition directly to a war we have seen in u.s. history. >> rose: there is a lot of conventional wisdom, it has been expressed recently in the paper about the united states and what it can and cannot do in the middle east today. >> our role is not as consequential. >> rose: true. >> and we don't want it to be as

consequential but even if we did it would be more challenging. our ability to promote democracy, we saw what that got us in egypt. we saw what that got us in tunisia. we see what that won't get us in places like saudi arabia, our interests in emergency in this part of the world are of course decreasing every day, and i think there is a lot to play for on iraq. i am very skeptical of israel palestine, kerry made his tenth trip there now and i think the likelihood he is going to get something done is virtually zero for the life of me i don't understand why he is devoting that much shoe let tore that part of the world, but iran, there is, i think, a better than 50-50 chance that the u.s. gets a nuclear deal on iran this year. >> rose: and what will that deal look like? >> that deal will have .. the iranians limiting their enrichment and putting caps on it, full inspections, it means

that they effectively renounce their capability to be a breakout nuclear power. >> rose: and will do things to make sure that they are not? >> that's right. and. >> rose: and announce they will do things perhaps to slow centrifuges and perhaps they bring down the level of their enrichment. >> there is no deal that is going to happen unless they put that in place. >> rose: they will do that. >> because the extreme leader came out just in the last 24 hours saying, you know, it is not because of economic sanctions we will deal with the devil, the americans if we have to just to get this nuclear thing for the cause of peace but of course the reality is. >> rose: what did they say they were doing it for? >> they say they were doing it for the cause of peace in the world. but the reality is that the bush administration and the obama administration have led carefully constructed international coalition to put crippling sanctions on this country. >> rose: and who deserves more credit? my impression i may be wrong that, is that the obama

administration really tripled the amount of sanctions. >> yes. and congress deserves credit too, frankly, i mean this is one -- >> rose: and the government gets credit because they were a part of it. >> and not just the americans, the japanese they came to the table and pushed hard, we asked the europeans, you can give a lot -- you know it is a funny story. you could give credit to the clams, for the iran sanctions to the collapse of the euro zone because the euro zone crisis, s sticky -- >> rose: i it collapsed? it i thought it was still intact. >> to the massive, procession, germany putting everyone to the brink. you are picking on me. we could not get the greeks, we could not get the italians to support sanctions. couldn't do it, they had too much interest directly in getting energy from iran, then they lost their government, they lost effective right to have a government and new government is put in place by effectively by the germans, by the ecb.

>> there is when marion monty came in. >> that's right .. >> and immediately overnight the new appointed technocratic governments says we will join the sanctions with you. so, frankly, i don't think you would have gotten those, and what i am trying to say is, we can give bush some credit and give congress some credit and obama some credit, we can give the europeans some credit, the russians and the chinese as difficult as they were actually did get to the table. i created the term the g zero that there is no leadership. >> rose: and g 2 and everything else. >> but the fact is on iran we had international leade leadersp this is one place in the international community the u.s. and others have made the difference and now the iranians are on the table there is a good chance we get a deal and if they do that is going to help salvage u.s. positions. >> rose: what do you mean america's trouble alliances i will go through the top list, american troubled alliances means what? >> america's trouble alliances means snowden, syria, government shutdown, second term not as strong and lots of other things that have led american allies to

question the commitment of the u.s. to them, and so, now there are some countries in the world that don't have many choices but the u.s., right? i mean japan, israel and write contain, britain have no strategic alternative to the u.s. and canada and mexico have no economic alternative to the u.s. but you get under that and you have countries and governments that are actually really rethinking how they want their relations with the u.s. and other parts of the world. >> rose: is it moving they are moving toward somebody else or simply looking to reevaluate the nature of the relationship request the united states? >> well, they are moving -- >> rose: the germans are going to say, ah, our principal alliance won't be with the united states, but with china, so regoing to double our relationship with china but do nothing but keeping our relationship with the u.s. stable? >> no one is replacing the, section, no single country, certainly not china. if you are saudi arabia and you are thinking, i used to buy all of my arms from the united states and now i am going to start buying a lot more from the

french, if you are turkey i will buy a lot more from the chinese, if you are germany, you are doing actually you are cording, coordinating economic policy more closely with the china than you were and if you are brazil you are putting regulations this place that make it much hard know the americans to invest, all of these things are happening. >> rose: you make a point about diverging markets. >> it means if the risk. if you look at emerging markets that can have elections and the chinese don't have elections but those that do, over 50 percent of the population of the emerging market world in that category, february percent, 15 percent of the economics economies, the size of economy are actually having elections this year. >> and a new middle class to deal with. >> and a new middle class to deal with which is demanding, you request sell more to them and demand more of the government you put those two things together you get populist policies and hot much reform coming out of those elections, some of these economies will do reasonably well, some are going to do very poorly and so the

last ten years as an emerging market if you want to grow you didn't need to actually do very much, it was risky but the growth was there, the environment has gotten much more challenging so emerging markets, 200014, columbia performs quite well, independen indonesia perfy well, brazil performs, ah, turkey, really not so much, india, really disappoints, south africa, hasn't performed so well, so all of these countries having elections in 2014 are moving in different directions. >> the diplomatic row implies that, go uh saw that, the response to this diplomat that had -- i mean, really surprising how the national indian government came down hard on the u.s. as a consequences of that. the indian, they used to be much more of a willingness of the indians to hedge between china and the united states. you go and talk to any indian

businessman right now and they tell you we are making tons of cash in china. the indian development has been so slow that the indian and chinese economics are much more compliment i are than they used to be, complementary than they used to be. >> rose: because they need each other? >> they need each zero other. >> rose: and provides a market for china. >> india provides a market, india provides cheaper labor for manufacturing, indian entrepreneurship goes to china and teaches them and make a lot of money. >> rose: we will skip iran, petrostate. >> energy prices are risk. >> rose: the top risk for 2014. >> energy prices, risks are on the down side, not the upside on 2014, even leaving aside iran, even before we have an iran deal, the iraqi are powering more oil, the libyans are producing more this year, the americans are producing much more this year, you also have mexican reform which is starting to excite people about more energy coming out of mexico. the saudis are probably going to have to reduce production at the

end of the first quarter just to defend piece. if we get an iranian deal, the downward pressure on prices of oil is going to be significant and multinational corporations are going to be much more interested in investing in safer places like the u.s. and mexico than places like venezuela or nigeria or russia so the pressure on those cubs that are fairly badly run that basically have oil and gas to play for is going to be much more significant than it has been and that stay real risk. >> rose: so what do you mean by strategic data as a risk? >> i mean that the internet was really a product of the information revolution for a long time. which empowered individuals. but now we focus on the data revolution, which empowers organizations. first corporations and now the state. and the combination of china, the world's second largest economy that thinks of data as an area where chinese

corporations must be dominant and the chinese state must have influence and surveillance because it is a threat to the chinese stability, and the united states, which is a free market, but views data as part of a military industrial technological complex, you have a very large sector of the global economy that used to, we used to think of as truly free market but actually now states are play a big role, fundamental role and that is fragmenting the way we think about that market, it is making it less efficient, it is creating more regulatory hurdles, it is making it more expensive and making it harder for corporations to be global and that doesn't just mean google, it even means credit card companies and telecommunications companies and the rest, it is a very big change when you said at the beginning oil companies find politics valuable in understanding what you think of what is happening in the world, exxon-mobil has known this for a long time but telecom companies didn't care about this stuff five years ago, 2014 they

increasingly have to. >> rose: the middle east expands, al qaeda 2-poin .0. >> yes. we. >> al qaeda 2.0. >> we saw fallujah, ramadi and cities in iraq flying al qaeda flags. which are significant al qaeda presence. >> rose: but they are fighting among themselves. >> yes, they are not fighting gets the u.s., al qaeda declared war against assad the first time al qaeda has done that against a committed enemy of the united states, they are fran wises and local sites and no long ferre big threat to the united states, the war on terrorism -- >> rose: what are they fighting over? >> they are second fair yanls. >> they are, secretary yanls. >> who will get the spoils of victory if there is victory. >> that's right and if there isn't they are trying to ensure that they have the ability to feign cash and recruits and have ideological power in those localities and that is -- al qaeda is absolutely getting stronger as a brand, it is just a very different kind of brand than it was.

>> rose: and it has a new name. >> and a new name. >> rose: the capricious criminal we talked about, turkey. >> turkey. >> rose: what is going over there with erred want? >> well, the they have gone after his son and you do empty rdowa in so in fight is going too the end and they are going to come after, you know, they are going to imprison all sorts of members of the police forces, there is going to be -- >> rose: and the military? >> oh, my god, of course and the sad thing is turkey and russia were always very different in the sense that turkish political institutions were stronger than russia's organizations and what is happening right now is that despite all -- you have these decades of benefits the turks got from being candidate members of the european union, that forced them to build legitimacy and now you see those institutions, the legitimacy is eroded and the rule of law in

turkey is eroding and the desire -- >> rose: so membership in the european union is over? >> yes that was clearly over, that was kind of a nonstarter, full membership but, you know, more disturbing turkey's place as the one, the one developing. >> with great passion and great idea, great mission was to make turkey a bridge to the muslim world. >> yes and i don't know how successful that bridge looks now. >> red herrings these are things don't over evaluate they are less than a threat of what we might have otherwise thought or were in the past year. >> yes. >> u.s. domestic politics, we a budget agreement of a kind. >> yes. >> so not going to be pan giotakos nicked every other month. >> i think that is clear. >> rose: europe, euro zone survives. >> not only does it survive but all of the concerns that populism is growing and you have european parliamentary elections and extremist ze xenophobes will win, even if they win, the

european does parliament doesn't matter and not just xenophobes but also in football matches they won't work together, this is actually another kick the a can down the road for europe, slow growth but not much to see there. >> and syria? >> and syria is clearly not a red herring for the syrians, but it is for everybody else, i think violence goes down a bit, you have got, one of the interesting things happening. >> rose: why does violence go down. >> because the rebels understand they are not getting the international support, a lot of them are cutting deals with the assad's military, in iraq. >> rose: rather than with the islamic -- >> yes. >> rose: rather than with the ski had disneys. in iraq, a lot of the sunni tribal leaderers leaders are cutting deals with maliki, in egypt a number are cutting away from the muslim brotherhood, assad, the over 130,000 dead, it is devastating, devastating conflict, and yet we are not going to pay much attention to it 2014.

>> so are you optimistic? >> >> i think for the last five years for the world. >> rose: 2,000 you 2014. >> for the last five years the big risks have been economic risks, it has been u.s., you know, sort of debt limit crisis, it has been china hard landing, it has been the european crisis, it even has been japanese debt, i think all of those risks have been placed off the table in 2014. >> rose: the economic risk is over and now new kind of live. >> i it is much more political risk. >> rose: in a changing world. >> the as changing world politically, i am almost optimistic, we are here, how can you not be optimistic. >> rose: ian bremmer, eurasia, the top risks of 2014. back in a moment, stay with us. >> we expanded the definition to be able to get them through horse trading giving them something, giving the local regime something they wanted which was -- a bad guy and pain a bad buy but not a bad guy in terms of how the original legal justification defined it and

that is the politics, that's a strategy to get into. >> peter w singer here, senior fellow of the brookline institution, defense initiative, also the coauthor of a new book called cyber security and cyber war, what everyone needs to know, the author explains why cyber issues matter and what ought to be done, google executive eric smith cause the work an essential read, i am pleased to have peter w singer at this table, welcome. >> thank you. >> rose: so let's start with the book breakdown in terms of what are we talking about ? explain what we talk about when we talk about the world possess cyber. >> the world possess cyber. >> the .. it is this world we incredibly depend on, everything 98 percent of military communications go over the internet to 800,000 hours of cute cat videos are uploaded every day, to the infrastructure that runs our commerce, our communications, so we depend depend on this online world and yet we also live in a era of

cyber insecurity, where we are seeing just a huge amount of threats, whether you are doing it by the number of attacks that are out there, nine new pieces of malware are found literally every single second to organizations and states that are engaged in various activities, intellectual property theft, you name it so a lot of things going upon in the space and part of the reason we wrote the book there is arguably no issue that is more important but less understood when we talk about these cyber issues. >> rose: and you suggest that the corporations fall into two kablghts, categories those that know that they have been hacked and those who will find out they have been hacked, that's essentially it. >> all corporations have been attacked? >> if you are online in any way, shane or form, you have experienced some kind of cyber threat so, you know, the point you are making is 97 percent of fortune 500 countries have been hacked and the other three percent, yeah they probably have been too and we see that popping up in the news and in a lots of different ways,

whether it is, you know, the latest stuff with target or snapshot, to we have got hacked, attacked, it is everything from people trying to embarrass you to know people trying to steal information from you, we are probably living through one of the biggest nefts in all of human history right now, massive intellectual property campaign that is coming through china. >> rose: i saw a number like $200 billion? is it bigger than that? >> some think it might be a trillion-dollar worth of business that has been lost but when you talk about the measure, it depends on what is being taken. so it is being, what is being taken is everything from sophisticated jet fighter designs to a small furniture company in new england saw its design for a chair taken to negotiating strategies, coca-cola was going to be negotiating with the china government in another case an oil company and they apparently lost, it was reported what they were going to be bidding, so how do you measure those things? that is the problem here but the

bottom line is, they are experiencing these kind of thefts and then when you talk about this the attack we also have, you know, the various nsa issues going on. >> rose: we will get to that. so who is doing the taking? >> in terms of intellectual property theft, that kind of taking, which is distinct from someone say going after your credit card information, they are all happening on the network, and too often we lump them together by saying they are attacks but talking about ip ineffective, frankly, china is at the center of this, lots of different states play in it as well as nonstate groups, particularly you have got -- >> >> rose: is that a case of government serving business in china's case it would be state capitalism but -- >> it is interesting because while we frame it as an economic issue, for them it is a morphing of an economic and a national security issue. you can think about it a couple of ways, the first, the chinese

factory that built the first iphone, that cost about $600 per, that factory got 15 dollars out of each iphone, so they want to move up the profit cycle, secondly to keep their economy humming they need to gain more of the fruits of innovation. they need to keep their economy humming to keep political stability. so that is when it becomes more of a political issue and then you also have the competition that is going on between the u.s. and china in terms of national security so we are looking at stealing things like jet fighter designs and the like, they are all kind of morphing together. >> rose: what do they do that we don't do? >> to me, we are all engaged in this, it is very clear from the disclosures of snowden that we also carry out some of these efforts to me it is a difference of quantity and quality, so when you are talking about the chinese program and this effort

there is a translation for one of their activities called the human flesh search engine, it is just literally just a massive scale of people in action, and again when we talk about china it is not just theft of intellectual property, you are also seeing this in terms of what they call the patriotic hacker community, where if you are seeing something negative, they are gone after, to a lot of it is self policing within china. and so, again, what is interesting is some of this is of specially state linked and then wrote uh have got this hacker community that you can almost think of it sort of like a militia but in the book we make different historic parallels and talk about going back to the age of sail and understanding the difference between pirates and privateers, paift tears, privateers giving you some of the ability to say that is not us but gaining the fruits of it. >> how do you see it with snowden, whistle-blower or

worse? >> the challenge of snowden and the way we talk about it is that he disclosed so much that it involves at that -- i categorize it into three different things. the first was he revealed that the nsa engages in espionage against american enemies. the second. >> rose: that was a surprise? >> no. shouldn't be surprised by it, they are probably upset about some of the things that are disclosed but that is one category that was revealed. the second category we could describe it as questionable. basically activities that involved american citizens through some way, shape or form, legal fudging, back doors, use of foreign, et cetera and the third category, you could kindly described it describe it as unstrategic or stupid. >> rose: right. >> with situate going after american allies and american tech companies, so the problem when we talk about. >> rose: allies make meaning

the tapping of phones. >> gentleman, in germ any, so when people talk about snowden, his impact whether it was right or wrong, whistle-blower, should he get clemency or the like is they a usually talk about one category. >> rose: i understand but did he damage national security? >> if he did, does that define him as a traitor? did he provide as whistle blowers often do information that simply gives the citizens of a country, as he defines it, the opportunity to make a decision about what they want their government to do? >> can he not be simultaneously all of these things at once? so he both revealed information. >> rose: that was -- >> that was, yes -- but he also drove this conversation that wouldn't for all the way -- it would not have happened if those disclosures had not been out there. we wouldn't be having this conversation today an without it gla so was there a net plus or not? >> for me the problem is focusing on him by saying will

is a net plus or not because the reality is, he wasn't the one engaging in the broader programs and activities that we are talking about here so if we are saying a net plus or negative, he disclosed activities -- >> rose: it is a net plus we know all of this information? >> therefore, clearly, the government has had recommendations of a committee and clearly the president is considering making changes in our national security policy. >> yes, to clarify, it is a get plus for us having a conversation about this, that we nowld have have, i think we will get reforms, i hope to get reforms, but the negative, has in had a negative impact on american national standing? on american business that has caused over $180 billion of revenue losses? that's a negative by the problem is, do i say snowden is at fault or that or the underlying programs? and to me, no, it is the underlying

programs that simply they were focused on collecting a certain kind of information, driven towards counter-terrorism, and yet they had these massive ripple effects into all of these other areas and that's where these kind of diss it gives you a good reason why you should not stove pipe issues. >> rose: let's turn to cyber espionage, tell me the extent of that, all of us know about stockinette and talk talked about it on in program an had some damage to the iranian centrifuging centrifuges clearly they acknowledge that, is that simply a tip of an iceberg of the kinds of this i think so that are happening on the part of governments against governments? >> so when we are talking about espionage and these covert operations, stuck net was the first of many to come .. it is interesting because you can put stuck net in the category of espionage but to me why it is really important in history is

it is the first true cyber weapon. >> rose: right. >> it is like any other weapon in history and it causes physical damage, you know, a stone, a drone, stockinette did that but it is unlike any other weapon in history in that it was both here, there, everywhere, nowhere, it was software, it was zeros and ones, and so it is interesting, another way to think about it it was probably the first ethical weapon, it could only cause harm to the very thing that it was intended to, but one of the guys we quote in the book with essentially discovers stuck net says it is like opening pandora's box there will be far more of this to come and we are clearly going to see greater activity, not just on the espionage covert actions, sabotage effect but the real next step when it comes to cyber war is integrating those kind of weapons the together within the broader nature of war so you can sort of thin think of it as parl

to world war one. >> rose: is this strategic thinking by most nations today considering cyber warfare as an element of their offensive, offensive military strategy in the case of either defending or initiating steps that they think advanced their national security? >> you hit on one of the big problems maybe in terms of the assumptions that are out there, so there is a huge sum hundred -- assumption that cyber offense will be more effective, easier than cyber defense, as the u.s. military put it quote for the foreseeable future. well there is a problem with that kind of thinking. the first is, it is actually really difficult to pull off a effective offensive network this was a manhattan effort style effort, it wasn't like we somehow see officials say defense officials say, a couple

of teenagers stipulating red bull in their basement could create a weapons of mass destruction effect. no. no, it is actually pretty difficult. second problem is, history has a wonderful way when you look at war of every time someone thinks the offense is dominant it turns out not to be the case. world war i, great illustration of that and actually how back then they assumed that new technologist, technologies, so you had to go to war quick and it turned out to be wrong. third is, where that assumption takes you so the u.s. is actually .. spending, depending on which measure you are using, two and a half to four times as much on cyber offense research as we are cyber defense research, and my joke about that is, that it is a lot like, you know, standing in your glass house and thinking the best way to deal with gangs of roving teens is to buy a stone sharpening kit. >> rose: so therefore if you look at how we balanced

priorities you are arguing in this book what we need to do is spend a lot more money on cyber defense? >>s to not just about spending money, in terms of having a balance and we think about the balance that affects how you deal with cyber offense and defense to the balance between public sector and private sector responsibilities, but it is really, when you are talking about -- we over economy te this space it is not about the software, it is not about buying the shiny new program. it is not about the hardware, spending a lot on a widget, it is about the wet wear, it is about the people, it is about getting the awareness, getting the incentives right, there is a reason why finance companies are better at their cyber security than power companies and it is all about incentives and all about how they understand costs and getting the organization -- >> rose: there is money as stake is what you are saying. >> they feel the immediate cost -- >> rose: their whole life -- >> yes there is also a regulatory side of it in terms of, you know, think about how when credit card fraud happens

there are limitations on what you pay versus what the company pays and so then that is why they have all of tease measures in place to make it easy for you to buy things in safe and secure ways. when we post to power grids -- >> rose: just imagine for us for a second, what do you think that strategic planners in beijing, say, our moscow say or whoever is now -- or al qaeda, who would have, i would think a different level of sophistication, are thinking in terms of how they could best damage the united states? would it be an attack somehow as difficult as it might be on the financial system would it be an attack somehow on the electrical grid? would it be an attack somehow on something, something else? >> it is interesting because it is a great way of illustrating this wall of, balance of threats and how we plan and react to them. >> rose: that may be interesting and stupid too. >> no, no, because you hit the crux of the problem too, because there have been over half

million references in media to cyber 9/11, cyber pearl harbor. >> rose: that was made by leon panetta in testimony before a senate committee. >> helped drive that. cyber terrorism, 31,000 articles about it, despite the fact there has been no one actually hurt or killed by cyber terrorism. power grid scenario, squirrels have taken down the power grid more times than the zero times that hackers have, let me be clear i am not saying these are not threats out there, and i wrote a book on it, but you asked, you know, how people are viewing it, if we are looking at direct threats right now, beijing scenario, to me it is death by 1,000 cuts, the potentially trillion dollars worth of intellectual property and national security secrets taken we should pay more taken to, versus turning the volume up to 11, you know, spinal tap style and worrying about cyber

pearl hear war, pearl harbor, you have to be balanced in your approaches because one thing that matters here it is a lot like regular terrorism, it is not just action that matters, it is how you respond to it, including your psychological responses to it, and so what we talk about is how resilience is the key, resill yebs on your technology side but also psychological resilience to this, keep calm, carry on, manage it. >> rose: what legislation do we need? >> we need to in essence raise standards and drive-in 7 it was towards the good cyber security. so like we were chatting about before you have the impact of -- you have got the difference between how finance companies dealing with this versus power companies. this is not rocket science. there is a study that found that the top 20 measures fairly simple measures to take would stop 94 percent of all attacks. >> rose: say that again. >> the top 20 measures which are

fairly simple would stop at least according to one study 94 percent of all attacks. now, people sometimes will go, well i am really special i am in the six percent. >> rose: right. >> or they may say, how damaging would the six percent be? >> bingo, but their response to that would be go talk to your it guys and say if i didn't have to spend so much time on the low level stuff, i could focus on the high level stuff, they would also let you know that guess what? the very advanced stuff actually usually gets in through these low level things so the best example would be the most important penetration of secure u.s. military nell works from the outside happen because a soldier picked up a memory stick that they pound in the dirt of a parking lot, took it into the base and plugged it into their computer. >> rose: and what happened? >> we had a foreign intelligence agency penetrate u.s. military networks. so the soldier, you know, they didn't just follow basic cyber

hygiene, and it involved basic hygiene there is a 5-second rule. look at the most popular password out there right now, password. second most popular, 1-2-3 456. that's what i used on my luggage ago a joke. >> rose: i know it is inkrebld incredible. >> i have worked on my stuff and i will sign a temporary password and always password. and this is not just awareness but also is the presidential right when they set the tone, there is an attitude of luditism among leers loo. >> leaders that matter. the former secretary of homeland security is ostensibly in charge. >> rose:. >> hadn't used social media for over a decade, not because she didn't think it was secure but just didn't think it was useful,

to the supreme court, they, in their words haven't yet gotten around to e-mail, they are going to, to decide some of these issues so you can see the same things this business. 70 percent of business executives have made a cyber security decision of some kind for their firm, not 70 percent of ctos yet no major mba program teaches it as a regular part of -- >> rose: so this book, boys and girls, this is what we have to do is understand cyber security, cyber espionage, cyber warfare, we have to understand the threat to our intellectual property and understand how it works and what the threat is so that we can take the wisest steps is essentially what you are saying. >> essentially, the sub title what everyone needs to know is the focus on it and this is a realm that matters for everything from your privacy, your bank account to the future world politics, and yet we are not well equipped on it and if

-- a way of more directly saying it, as long as we use the internet we will have cyber security and cyber war issues, so we better get smart on it so we can deal with it and in an effective way rather than either handing off the problem to someone else and being taken advantage of or moving around in this space of -- and let's be blunt, ignorance. again, we treat this as really too complex for me but there is very basic stuff and my hope on this is that i mention that idea of hygiene, i think rather than those cold war parallels, and to be frame frank, when people make the parallels to the cold war, sometimes you see generals do this or columnist they don't get if there is any parallels to the cold war, we took dr. strange love seriously, instead let's look from different parts of history, one is public health, you know you can look at the history of the cdc and what ben franklin said about an ounce of

prevention versus a pound of cure but also the idea of basic hygiene gets you a long way and we teach our kids to cover their, you know mouths when they cost not just to effect themselves but an ethic of responsibility to others, we need the same thing when it comes to on lane. >> rose: washing your hands often. >> and you should change your passwords not just to protect you but all the people that you connect to online. >> rose: right. thank you. great to have you here. cyber security and cyber war what everyone needs to know wring by peter w singer and alan friedman. thanks for joining us. see you next time. >>

>> funding for charlie rose has been provided by the coca-cola company, supporting this program since 2002. and american express. additional funding provided by these funders. and which bloomberg, and by bloomberg, a provider of multimedia information worldwide. you are watching

every single bite needed to be -- >> it's like a great big hug. >> about as spicy as i can handle. my parents put chili powder in my baby food. >> a lot of