>> welcome to the program, we begin this evening with the republican senator from arizona, jeff flake, who is in favor of renewed relations with cuba and against the iran nuclear deal. >> i wouldn't expect iran to try to break out, partly because the position they'll be in, you know, 10, 15 years from now. you know, they haven't lost much. in fact, they can conduct quite a bit of research in the meantime. and in some ways, industrialize their program. so i don't think it's in their interest. and i think they don't believe it is either to break out. but i am concerned. and that's why i ultimately couldn't support the agreement, at the nonnuclear side and the licence that it might give them to behave differently there. >> rose: and we have a far ranging conversation about global emerging markets with

justin leverenz. >> it's a very heterogenous bunch, you know, in many different dimensions. some are relatively well developed like eastern europe. i mean the big difference, of course, between warsaw and bombay, in terms of levels of affluence. there is a big very big difference in terms of the commodity-- commodity orientation of these geographies. we have some unfortunately in the last 12 months who have suffered enormously because of the decline the oil price, the copper price. so places like colombia, or chile, or nigeria, russia. and we have actually resource importing countries, places like china, korea, taiwan. so it's a very heterogenous bunch. and so i do agree, i don't think the emerging markets is necessarily the right way of thinking about this world. >> rose: flake and leverenz when we continue. >> funding >> rose: funding for "charlie rose" has been provided by: >> rose: additional funding

provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> jeff flake is here, he is a junior republican senator from arizona. on friday he attended the ceremonial reopening of the u.s. embassy in havana alongside secretary of state john kerry. he has been an outspoken advocate for restoring ties between the two countries. but on saturday he announced his opposition to the president's iran nuclear accord. he joins me now from phoenix, arizona, we're pleased to have him on this broadcast for the first time. what in the end made the

difference for you? >> with regard to iran? >> rose: yes. >> you know, the nuclear side, i think, was pretty tight, particularly with the known nuclear facilities in iran and the inspections regime. and it does truly limit iran's ability to at least amass enough material to make a bomb for 10 to 15 years. and that's a good thing. the part that troubled me most is that this probably should have been a treaty where it binds all parties. instead it's an executive agreement that just lasts the length of the presidency. and when there are other issues like problems with what iran has been doing in the region, some of the terrorist activity, then i thought that the agreement unfairly restricts congress's ability to respond to that kind of behavior. so that's what tipped the scales tore me. >> for those who say thises with an easy call, i think they haven't looked closely at it or at the alternatives. so you never want to be on

the other side of nearly all of your allies. and we are. but this is the tough agreement. >> rose: if we oppose this deal, and what do you mean on the opposite side of our allies. obviously it depends on which allies you're talking about. >> the p5 plus 1 negotiated this agreement. so our european allies that have been with us on the sanctions regime. you know, we'll now go on. assuming that this agreement were to fall apart. i think that they might go a different direction. and that's not a good thing to break up this good coalition. part of the success, i think we've had, in bringing iran to the table is that it's been iran versus the west rather than iran versus the u.s. and this kind of breaks that up. and so it's not an easy thing if you go against your european allies. on the other hand, israel has some real concerns here. some genuine legitimate concerns about this

agreement. and they're obviously a very close ally of ours as well. >> there is a lot of political pressure on all side. om that group of 100 arelink voting to-- about this on the merits of this treaty, on the merits of this agreement or on political pressure. >> well, i like to think that all of us lack at the facts and the merits of the case. and i think by and large that's true. we've had a good number of hearings and briefings and meetings that have been widely attended by my colleagues and so i think that the senate, i can't speak for the house, but knowing what we've gone through in the senate, people are taking this very seriously as they issued. this is a big important agreement and i thought it was important to do due diligence on it. and i've tried to do so. >> rose: why is it important? >> well, this is going to affect not just our relationship with iran, but the entire region. and this, this, you know,

allowing or trying to prohibit a nation like iran from getting a nuclear weapon is extremely important. it's something that we've based a good chunk of our foreign policy in the middle east on for quite a while. and it will affect obviously the region. we've got to establish a regional security framework in the wake of this accord now, assuming it goes through. those kind of things are big and important. >> rose: do you believe that the president could have negotiated better, and secretary kerry and the secretary of energy and others that were part of the u.s. team, that they could have negotiated better and perhaps included some of these elements that concern you about iranian conduct in the agreement? >> yes, yes, i do. i think had this been a treaty, they obviously would have clarified some of these things that many of us have been raising for a number of months. i actually wrote to the president in february of this year expressing concern

that congress hadn't been involved, particularly in what will happen with sanctions should this agreement go into effect. and i do think that we could have clarified, with a treaty, you can do what are culled ruds, those are reservations, understandings and declarations, where you clarify some of the confusing aspects of a treaty. we didn't have that opportunity here. so i encouraged the administration to at least support some parallel legislation that might clarify some of these items. and they just aren't clear. the administration will say that we do maintain or retain all the tools that we have to deter or punish iran for behavior in the reg be in the nonnuclear side. but if you read the agreement, that's just not the case. and so i think that those things needed to be clarified. they aren't. and i think they'll present a big problem going forward. >> rose: do you think the president wants this deal

too much? >> well, i don't want to say that. i know that the administration wants an agreement. i wanted an agreement. i supported the negotiations all along. and i wanted to support a good agreement. i wanted to be there. i don't think it's a good thing to have a big important agreement like this just pass with a bare plurality of part san-- partisan votes. so i would have liked to have been there. but i just couldn't get over these hurdles. >> rose: you would have liked to have been there supporting the president. >> yes. >> rose: how do you think it's going to come out in the end? >> if i had to guess, i would think that the president may lose a few more democrats that have already-- then have already declared but in the end will have votes to sustain a veto. >> rose: so he will be able to get this agreement that he wants so very much. >> i believe so. i believe the votes will be there. >> rose: what is it you think he doesn't understand? >> well, i don't want to put it that way.

i think certainly these negotiations have been entered into in good faith. and i think we're trying to get an agreement that will both restrict iran's nuclear ambitions but also you've got to deal with the behavior in the region. the president believes that we can separate those things. and i'm not sure that we can. in fact, i think in the agreement, the fact that iran has agreed on the nuclear side to something that-- that it can get out of if we impose sanctions for other behavior, ties the two nonnuclear and nuclear aspects together in ways that i'm not sure is fully appreciated by the administration. >> but the president would argue as you well know, the president will argue two things. one, he will argue that it was a nonstarter. it was a nonstarter to include these things as part of an agreement. they weren't-- they simply were not going to go there. and that the intent of the

p5 plus 1 was only to use sanctions to get an agreement to prevent iran from having a nuclear weapon. >> well, i would simply disagree. i don't want to disparrage the president or the administration. like i said, i applauded their efforts and their willingness to negotiation. i think we should have been doing this long before. but i think we have a stronger hand than we have shown. and so i think that we could have gotten some more commitments or at least not bound congress's hands with regard to responding to iran's behavior in the region. i think that we could have clarified that. and that would have provided more deterence than is currently there with this agreement. >> also the president would argue that it's much better to have-- be in competition and to be engaged in a conflict with iran that does not have a nuclear weapon,

about these issues. whether it's a support for hezbollah, whether it's denunciation of israel and all of that. to be engaged with an iran that does not have a nuclear weapon than one that does. >> there's certainly something to be said for that. but i'm not sure that you can take that to the full extent. if iran believes that we are so worried that they will get out of their nuclear obligations, that we won't challenge them on some of the regional behavior, they simply have far too much leverage in that regard. and i think that there's some of that in this agreement. so i take the president's t if they can use that asar leverage to increase bad behavior in the region, then i'm not sure that argument holds. >> rose: do you believe there are things that the congress can do now that even though the agreement

will go into effect, can make a difference? >> yes, and i think congress will. and that's part of what i was talking to the administration about, as late as last friday. i think the congress is going to move ahead. for example, to reauthorize the iran sanctions act which expires next year, simply so if there is need, a need for snapback we have sanctions to snapback to. and that has been met with resistance by the administration. they say you know, we can deal with that when it comes up. that it would be too provocative to do that now. and that's what makes me and others concerned that the administration will be simply unwilling to challenge iran's behavior in the region when it comes to it, if we're that afraid to challenge their interpretation of the agreement now. and to be-- to allow congress to move ahead and

reauthorize sanctions without challenging the president's waiver authority, nobody's disagreeing with that. but to say if iran behaves in ways that, or if they violate even on the nuclear side, we want sanctions to snapback too. i think that the congress will move forward on some items like that. and it may be uncomfortable for the administration and certainly for the iranians who have already said that they would consider that provocative behavior. but it should be done. >> rose: many people who support the agreement will say i don't think it's a perfect deal by any means. i don't think i have met anybody who said i think this is a perfect deal. but they do believe that in the end, that this will be the more important element of preventing iran from nuclear weapons than anything else that is on the table or off the table. having said that, i mean when you look at the dangers of iran getting a nuclear weapon under living under

the-- this agreement, is it the covert possibility that that concerns you the most of what they might do? >> no, like i said, i think the nuclear side, it's not perfect, obviously. the inspections regime that pertains to the nonknown nuclear sites, so the suspected sites is certainly far from ideal. but i think given our knowledge and what we know about the supply chain and the points at which we can intervene and look at what is going on, i think frackly on the nuclear side, although there are trade offs, like i said, there's not a perfect agreement there, but i was willing to go for that part of it. and i think frackly that iran has little incentive to cheat big on the nuclear side. if you look at it, they've been a threshold nuclear state for a while.

and they simply haven't gone there because they have gauged, i think, appropriately the reaction, whether it's a military response or increased sanctions. so i wouldn't expect iran to try to break out. partly because the position they will be in, you know, 10, 15 years from now, you know, they haven't lost much. in fact, they can conduct quite a bit of research in the meantime and in some ways, industrialize their program. so i don't-- i don't think it's in their interest and i think they don't believe it is either, to break out. but i am concerned and that's why i ultimately couldn't support the agreement at, you know, the nonnuclear side. and the licence that it might give them to behave differently there. >> rose: and what do you think might restrict their behavior beyond this nuclear deal? what are the elements that you would like to see in

american foreign policy to restrict these activities whether it is support of hezbollah and using hezbollah as an agent in syria, or whatever it might be. what are the tools in american foreign policy that can change that behavior? >> well, obviously a real threat that is known and understood and believed and i believe that that is a problem right now. i'm not sure after the syria issue and the red line there, that our threats are believed as much as they should be. ambassador dennis ross wrote a couple of good pieces where he talked about a couple of items that he suggested that we could do simply on the deterrent side to insurance iran that any move on the nuclear side to enrich uranium beyond what is needed for peaceful purposes would be met immediately with a strike. no questions asked. those kind of things that we

could do hopefully that would be believed would help on the nuclear side. on the nonnuclear side i think iran needs to understand that it is our understanding as congress and we will move ahead to impose sanctions, tough sanctions, even if they're the same type of sanctions or the same sanctions that we've imposed on the nuclear side, if they break out on the nonnuclear side and increase their support for terrorism in the region. they need to understand that. and as i mentioned, that's part of my problem with this agreement. i think that they believe that they have neutered our ability to impose sanctions on them, tough sanctions like financial sanctions on their central bank, should they misbehave on the nonnuclear side. so congress needs to make clear that we will come hard even if it's the same

sanctions. >> rose: all right, let me turn to cuba. what do you say to your fellow senator marco rubbio about the reestablishment of relationships with cuba? >> i think this represents the ultimate policy for today and tomorrow, and not yesterday. i think that this is long overdue. obviously my concern over the years has been the travel ban more than anything else. as an american, i should be able to travel wherever i want unless there's a compelling national security reason otherwise. and to restrict americans' ability to travel is just wrong. some people view this kind of as a concession to the cuban regime. it's not a concession to allow your own citizens to travel. and it's not a concession to have diplomatic relations, that is an agreement between two countries to speak and work things out with diplomacy. so that's not a concession either. so this was a great move.

i think it's good for cubans. it's certainly good for americans as well. >> rose: so where do you stand on the embargo. >> i would lift the whole thing. as i have said before, we ought to tell the cuban regime that we're lifting elements of the travel ban, we'll establish diplomatic relations. and unless you clean up on the human rights side, we're going to lift the whole embargo. i have never seen that as a concession either. nothing will guarantee better behavior on the cuban government's side. but we're more likely to get it, if one we have diplomatic relations. and twos there's increased commerce and contact and travel from americans. >> rose: but are you suggesting, let me understand you. that they fear-- that they fear the lifting of the embargo because of what impact it might have on changing the-- in changing cuba? >> no doubt. no doubt. this policy and the embargo or the blockade as they call it has been used as a scape

goat for the failures of socialism for decades now. and so although they say they want it all to be lifted, then you know, whenever we make moves in that direction, we usually see behavior on the cuban government side that makes us step back. and it shouldn't. it should make us move forward more quickly. and so i applaud the obama administration for moving forward on this. it's the right thing to do. it is already making lives better on the cuban side, particularly when the president lifted restrictions on cuban american travel in 2009. you know t went from 100,000 or so visits a year to about 400,000 within a year. and also money has been invested with family members in cuba. family members in cuba have been able to lead better, richer lives. and the number of people in

cuba that are working outside. state environment with private businesses has increased substantially. and that's a good thing. it spells, you know, spells relief for a lot of people. and it also i think spells traubl for the government if they want to continue socialist government going ahead. >> rose: with respect to the future of the relationship, do you think that when the castro brothers leave the scene, that you'll see democracy in cuba? >> i don't think it will be immediate. but i do think it will accelerate. and a lot of that depends on how much we open it up and how much we continue to push. and allow you know activity between cubans and americans to go forward and develop. but i do think it will accelerate. but it's not going to be immediate. >> rose: may i just turn to immigration for a moment. >> sure. >> rose: what's happening in your party with respect to

immigration because of the president and their recommendation of donald trump? >> well, we're a good year out from serious political activity, well, not a year out but we're a ways out, gratefully. >> rose: you could fool new hampshire and iowa. >> well, that's-- we still got awhile until they actually vote in those caucuses and in those primaries. but i think that by that time hopefully some of these statements and these policies, if you want to call them that from mr. trump, will be a faint memory. because certainly it's not a serious policy to talk about building a wall and forcing the mexican government to pay for it. or imposing fees and tariffs like he has talked about doing. it borders, well, it runs from insensitive to

laughable frackly. some of these policies that have been advocated by mr. trump. >> rose: then why is he leading the polls? >> well, when you have so many candidates you can still have-- when you have 20%, you've got a majority of those for plurality and that will no longer be the case as the field narrows. and as people start really thinking. we don't just need to think about a primary, but we need to think about winning a general as well. and nobody can talk seriously about winning a national election when you use rhetoric like mr. trump is using. and i think the broader electorate on the republican side understands that. and as we get into next year, it will be a more serious debate. >> rose: could you sport donald trump if he was the republican nominee? >> i will support the republican nominee. and i don't think it will be mr. trump. >> rose: senator, it is a pleasure to have you on the program. >> thanks for having me on. >> rose: we'll be right back.

stay with us. justin leverenz is here, director of emerging markets equities at oppenheimer funds, he overseas a portfolio of investments with assets of over $40 billion. that makes it the largest actively active he personing market in the u.s. and likely the world. top holdings include companies located in china, india and hong kong. nearly 7% of developing market funds invested in russian stock. the emerging markets arounded world have suffered over the last area as global growth and economic crisis have rattled investors' sentiment. i'm pleased to have justin leverenz at this table for the first time. welcome. >> thank you very much, charlie. >> rose: you and i met at a conference and you and i had an opportunity to talk about this world as you see it. has the definition of emerging markets changed? and what ought it be. and what should the brick

countries all be considered emerging markets, brazil, russia, india, china? when does china become something other than an emerging market? when does russia become something other than an emerging market? these are not new societies. >> so my fund deliberately is called the developing market fund, not emerging market fund. i think what unites the other 90% of the world's population, because we're talking about 90% of the world's population as being big part of the world. what unites it, of course, is different levels of development and institutions which aren't as stable or robust as the developed world, which is largely the united states, europe, japan-- japan. it's a very-- . >> rose: and are you talking about -- >> socio, political institutions, rule of law, levels of political engagement, institutions that foment development. and so it's a very

heterogenous bunch. you know, in many different dimensions. some are relatively well developed like eastern europe. i mean the big difference, of course, between warsaw and bombay in terms of levels of affluence. there is a very big difference in terms of the commodity orientation of these geographies. i mean we have some, unfortunately in the last 12 months, who have suffered enormously because of the decline of the oil price, the copper price. so places like colombia or chile or nigeria or russia. and then we have actually resource importing countries, places like china, korea, taiwan. so it's a very heterogenous bunch. and so i do agree, i don't think the emerging markets is necessarily the right way of thinking about this world. but the you asked also about the bricks. i think they are all appropriately considered part of the emerging world. >> rose: let me turn to china. and specifically talk about china and what is going on over there. and what is happening with

their economy. >> sure. so i just got back from china late saturday night. i spent a lot of time in china. as you know, it's a passion of mine. >> rose: you speak the language, spent some time over there. >> i spent a decade in china. i think this is one of the most misunderstood geographies in the world. now and probably in the future because they're bad communicators, author tearian communities aren't generally good in public relations which we have seen with the stock market and most recently with the deliberallization. but what is really happening in china is it has had unimaginable progress. i mean 20 years ago it was a desperately poor emerging economy. even at the turn of the century a $1 trillion economy. today it is a $10 trillion economy. this year it will be an $11 trillion economy. it is a very powerful dynamic country. and i think what is happening is part of the misunderstanding about the economy is that china is gos

through enormous change. the last decade, 15 years have really been about twin engines. the first of course is integration to the world trading system. so all of a sudden china even when i lived there, was relatively small part of the world's exports. it becomes the largest exporters in the world, the biggest trading nation in the world. that engine of growth in the last three or four years for many reasons has collapsed. >> rose: collapsed. >> collapsed, in terms of incremental growth. what we've seen is an unprecedented postwar phenomenon that the last four years we have had no growth in world exports. it is a very unusual-- and this has many different nonchina related issues. so that engine of groeft has collapsed for china. it's still a very big base but the growth is moderate. >> rose: and did it shall did -- the growth has collapsed. first of all, i don't know what the numbers are. and people have convinced me that the numbers -- >> large, very large. >> rose: yeah, what the numbers are, there is some

question about the numbers. you know, first we knew that china nor some those areas you recommended was growing at ten percent, we thought. then it dropped down to eight and seven percent and now i hear people saying no, it is more accurately at four or five percent. >> well, i think what is happening in china, of course, is that the last decade has been about trade. and it's been about real estate. it's about the enormous, unprecedented expansion of the property market in china. both of those are no longer big growth exhibitors. and yet we're still looking at real physical indicators, things like rail transportation, cemented steel production, indicators which were part of the great industrialization of china. those two engines of growth. and those are not growing any more. in fact, there's massive recession in those countries. >> rose: because they're not building? >> for two reasons. one is global trade is not in a particularly healthy state, global growth is not in a very great state. and the second is because we had this massive transformation. the real estate

circumstances was not like america in 2007 and 8 it was not a speculative circumstance. it was decades of underinvestment in housing stock because there was no private property market prior to the 1990s. which is almost incon safable for us. but what is happening on the other hand is a big transition. you know, the economy is growing in areas that aren't those indicaters. those are the service sectors. that's domestic consumption. and so china has an $11 trillion economy is not going to go back to double-digit growth. however it is an economies that's going to grow five or six percent compound for the next five years. and five or six percent compound is going to be the world's largest growth engine for some period of time. >> rose: what dried up was the demand for chinese products globally? or the demand per se of all these other economies around the world, they were not necessarily consuming as much in terms of products. and so therefore china which

was an exporting nation, germany which was an exporting nation, found-- and brazil which was an exporting nation, found a diminishing market for their goods. and therefore without that demand, china found its economy slowing down. >> it's no longer reliant on the export market. it's reliant on the domestic market. the reason the export market has been weak is not a phenomenon related to china. it's that most great financial crisis. we've never really recovered. the developed world which is clear if you spend time in europe or japan, has never recovered, it's never really recovered. >> rose: and the united states. >> and the unites states has recovered but we're certainly not growing at the same sort of levels we were precrisis. and i don't suspect we will be growing as an economy at those sort of levels. >> rose: you expect we will be growing at best 3%. >> i think that's likely.

it's very difficult for the united states to escape the rest of the world. >> rose: i'm trying to look at-- you have a unique experience here at some of the conventional wisdom. conventional wisdom, for example, china had been an exporting country, xi jinping and the chinese leadership understood they had to move to a domestic demand economy as you have suggested. most people didn't think that would be easy. and most people didn't think it would be immediate. >> yes. >> rose: you think what? >> i think that surprising the most, there is a master plan. but the master plan will never be executed well. however, we have a complex adaptive system like all economies. and things are moving. the economy is transforming and there is no invisible hand leading this whole transformation. china is an economy that is growing at very healthy levels for a large economy. and there are all kinds of

investment opportunities related to that. >> rose: what kind? >> well, again, service vestor is not necessarilyr about the level of growth, it's about the uniqueness and differentiation of the business. it's about the ability to monopolize or really dominate the particular industry and extract strong returns. >> rose: and has the chinese government changed in terms of two things, one, its willingness to have international companies come in and play a significant role in their economy. and b, the balance it sees as appropriate between state-owned enterprise and nonstate-owned enterprise. >> i news if there is one thing, nothing is perfect, that is why we have literature. if i lack at china there have been clear disa pontments in the last few years. this was an administration that came in with the view that they were going to

restructure. that they were going to liberalize the economy. that they were going to do many things to orchestrate china's revolution to being a very prominent nation in the world. i've been incredibly disappointed with the lack of reform of the economy. we do have pockets, for example, the-- last week it was really about financial liberallization, both in terms of interest rates and exchange rate. >> rose: ed devaluation. >> you know, it was in the a devaluation. this lan guage is important. >> rose: i noticed you didn't use the word. >> language is important. >> rose: you use liberallization. >> it was a depreciation. so you look at the euro, the japanese yen, any currency of the world. we have been in a strong dollar environment for the last 12 months. for many different within reasons. part of it is the strength of the u.s. economy. part of it is anticipation of interest rate increases, part of it is dysfunction in the rest of the worlds.

but the-- recommending b has been the strongest currency in the last eight years. >> rose: even though the u.s. dollar is the reserve currency the world. >> correct. because the b, if you recall eight years ago started to appreciate against the dollar. and it has been tethered to the world's strongest currency. so we had a 2 or 3% move in the recommend-- b which inflaunss almost nothing in terms of the reality of the world. but every headline of every newspaper was about the great devaluation, and there was no dedrall vacation. the jeans yen can move 2%-- the japanese yen can move 2% and nobody is brothered because it doesn't have real -- >> is there a real estate bubble in china. >> there are pockets in china. inti clear with the mismatch between supply and demand particularly on the high end aces like shanghai andnnd beijing. one of the things that most

haven't noted is we have been in two years relative property recession in china. inventories have been digested. and in fact the most recent indicators are we're back to record highs in terms of volumes and value of transactions. so the property market is slowly percolating after two years of recession. >> rose: you haven't spoken to the stock market. >> yes. i believe that the stock market, in fact i'm going to write a public letter about this. but i did it too slowly last year. i believe the stock market is the solution to most of china's problems. but it requires a certain level of creativity, and a certain level of release and control. if you think about what the real issues are for china. the real issues are capital formation. you know, they have the capital stock which is more than appropriate for its level of development. but the productivity of that capital stock.

it's about unleashing the enormous creative tall end of a very highly educated and entrepreneurial society. it's about providing pensions because china is aging. it's about redistributing wealth because china wealth like much of the world is extremely concentrated at the moment. the stock market is the solution to many of china's problems. >> rose: but i mean a lot of other people step forward and say based on what i read, that the problem was too many people were entering the market. >> correct, who shouldn't have been entering the market, yes. the stock mar-- stock market in china that i'm referring to is really about privatization and reform. you know, there's an unfortunate, i think, understanding in the party that china can become singapore. that is sort of the model. >> alibaba. >> yes, i spent all of last friday with the team at alibaba.

>> the whole team. >> rose: what is going on with that company? >> i think, charlie, this is going to be the largest internet company that the world has ever known. the stock has not done well since the ipo late last year. and i think like many things in china, there is a bit of a misunderstanding. alley baba at present is two mass-- alibaba at present is two massive marketplaces. at its core is also the largest internet finance company in the world. i mean pay pal pails-- peals in comparison in terms of transaction volumes. but what alibaba will be in the future is not just two really powerful marketplaces and internet finance company, this is a company which is going to be the biggest data analytics firm the world has ever seen. because they're developing the cloud computing like amazon. they have got data from the marketplaces, data from all the financial transactions,

the biggest payment processor in the world. and the developing cap-- in terms of investments in other companies like the competitor to uber, it's going to be an incredibly powerful company with access to data that is unparalleled on the planet. >> rose: is there-- you described china as an entrepreneurial company, country. >> yes. >> rose: and there's a lot of evidence of that. is it also an innovative and creative culture? >> another sort of common misnoer about china is that it lacks creativity it lacks entrepreneurial dynamics. and it simply borrows from the rest of the world. and i would say it's a big country. you know, china and the united states are the two countries with extraordinary depth. and you see that just in terms of the underlying corporate distribution. i mean this is a country in

america where we've got big corporates all over the map. in china you have a huge-- this is not true in most countries. it's a very deep economy. china in terms of creativity, it's a big country. it still has 500 million peasants. it has some real issues that are large development challenges. >> rose: is this the tension between urban and rural or deeper than that is this. >> i think there's so many tensions in chinament but we've made enormous progress and those tensions will continue to be alleviated through time. but there will always be tensions in society. but in terms of invasion, in the last five or ten years there has been a really big transformation of china. i think a level of confidence, capital markets that are supportive, and entrepreneurs who have done a number of things. alibaba is a good demonstration of that. the film industry is a wonderful demonstration of that. the films are remarkably

difference in the last five years than really they were five years ago. it is an economy that now has a level of ballast, you know. balance and enormous narrative , he is consolidateing power and authority. that he is committed to the anti-corruption drive under the leadership of it -- that he is committed to doing something about the pollution. and that he is committed to certain ideals that have more to do with philosophy. >> yes. >> rose: than either economies or foreign policy. >> yes. >> so i think the way that in my interpretation in

everything when it relates to politics in china is reading tea leaves that none of us understand to be honest, but it's my view that the way that xi jinping thinks about the world like many chinese is the great travesty that this was a civilization of thousands of years of continuous history with periodic imperial uprisings. but swrenly speaking a continuous history and really one of the largest most sophisticated economies and populations of the world. and that unfortunately, in the 19th century colonialism, chaina was frail, it was raped, frackly, by the foreign community. and that there were huge historic problems for 150 years. and that china is developing and that china is going to recover its place in the world. i think that's the principal mott vacation. and then thinking about modern history, i believe probably the way he thinks is that-- maltadon created

the party, recreated the state. that dung zhou ping and his successors were all about the growth of china's economy and that xi jinping is going to be about the development of governness in china because china has not been well goff everyoned over this turb lent periods. >> rose: he continued to believe it will be governed by the party. >> by a monopoly party. i think that's the principal mandate is to preserve a single party state. >> rose: and the biggest fear they have is always what they consider a threat to that. >> correct. >> rose: india, is moti changing india in a positive way. >> i was there when he was elected. i was there when he was core on ated. and there was this almost religious view that he was shown in white robes and jess is christ like, the saviour of india, that he was going to be able to restart all the problems that the congress party had failed to do. and it's not really easy as

we have discovered. i mean india is much legs centralized country than china is. it is an unresulty dem sockee. maybe a democracy somewhat ahead of its time. and the underlying things that need to happen in order to restart india's economic growth from you know, its hindu rate of growth are very difficult to do from a constitutional perspective. they include land reform. they include labor reform. and it goes against -- >> and they include intra structure. >> and they include intra structure which includes both land and labor reform. and those things are not easy to do and we have seen significant progress. i think it's very disappointing. >> rose: under motti. >> under motti. >> rose: really and so therefore we should lower our expectations of what he can do? >> my expectations were never extremely elevated.

i understood the restraints, the davids, the corruption, the inadequacies of the congress party rule. but i'm also a pragmatist. i realize the world is difficult. many of these things take a lot of time. and as an investor you have to be all about time. >> rose: so let's move to russia, the place that i have been recently. st. petersburg, a wonderful city. >> one of the great european cities. >> rose: one of the great european cities, absolutely. understandably so because of-- catherine and peter. i have never been in the winter. but my point is that tell me what you think and your assessment of vladimir putin and his goals for russia before we consider ukraine and sanctions and all of that. >> i think most large important countries have a sort of historic narrative. i explain the china aes narrative is about great civilization that was violated. >> rose: right.

>> in the russian context, i suspect probably what motivates putin beyond power and personal interest is related to this narrative of recent russian history. which is the demise of the empire, the soviet empire and the fact that that was not dealt with very well. and that-- . >> rose: by the russians or by the outside forces. >> both by russians and also outside forces. this sort of understanding that the west had made promises and they didn't deliver on those promises. >> rose: is that true? >> is it true. i mean-- . >> rose: yes, is it true. >> i'm obviously not-- is it true-- . >> rose: what promises did the west make and not deliver on? >> i think it's important to realize that everything is complex. and that great countries have certain prerogatives. we discovered that with

cuba. under crush ef, we came close to a massive, massive problem. >> rose: you mean a nuclear exchange. >> correct. for russians, crimea and the ukraine is a little bit like cuba. you know, it's almost unfathomable for most russians to have the idea that nato will show up on the border of russia. it's provocative. >> rose: was nato in cry mea with nuclear weapons? >> the issue i think is-- again, i am not making a moral argument but i also understand how the russians see existing circumstances. which is the empire falls apart. and there was this understanding whether it was right or wrong, i don't know. this understanding that-- . >> rose: the west would not take advantage of it. >> yes, because you have to recall, russia also was

violated. have a lated by the japanese, by the germans. and it always went straight through the ukraine. in fact, right, that is where napoleon went as well so this sensitivity about-- . >> rose: did hilt letter come through ukraine. >> yes, i believe so. >> rose: i'm just asking, but that is now napoleon came. >> yes. >> rose: these are the very questions i ask, about respect, about borders, about having a seat at the table. >> yes. >> rose: which is all the things that he wants and he cares about. >> i respect he cares about other things. >> rose: no, no, but those are how he defines-- that's exactly what you are talking about, tell me if i'm wrong. you were talking about crimea and borders and i mean you were talking specifically, i assume, without saying it, about after, after the fall of the berlin wall and the collapse of soviet union. >> yes. >> rose: what you saw from the west was an expansion of nato.

and even an expansion that it was intended to go right up to the russian border. >> yes. >> rose: an even though they assured them it was not directed at russia, russia didn't accept that. rcumstances in georgiaou first and now in the ukraine, you know, they tended to see it as an opportunity to sort of puferb akback. >> yes. >> rose: those. and that russia recognized the ukraine in its own judgement as in a sense a place of russian history, connection and influence. >> yes, of course, kiev, historically, the origins of russia. i think that's true. it is not a more issue, but i do think there are a lot of commonalities with russia that we have as americans. the world is in a chaotic state. and russia, we have many similar interests in the middle east. north africa sense syria.

>> syria. >> unfortunate. >> and the president has given credit to russia because it is part of the p5 plus 1 in irannian negotiation. he and advisors all have given credit. so my impression is that you and other global investors that i know feel strongly that the sanctions are bad idea and my question is, do you feel that way because you think it threatened your economic industry in russia? >> no, i feel as an american rather than an investor that not a great idea there have been two obvious implications of the sajss. the first of course is that if you look at putin's popularity, almost his whole country is behind him. he got greater polls than he's had in his whole duration as leader of russia. >> rose: why do you think that is? >> because most russians, that national narrative that

we just discussed, have a similar view. >> rose: right. >> countries again, they have narratives. we have a narrative which is the shining light on the hill. >> rose: but at the same tie you have somebody like done all trump who is running on the theme, whatever you think about his campaign, of make america great again. >> yes. and the second implication of sanctions has frack leigh been as americans we do have to worry about guiding the rise of china. >> rose: right. >> china is going to become a very important influentialal competitor. many different dimensions. we don't have to worry about the rise of russia. >> rose: but i mean-- what you do have to be concerned about, what you do have to be concerned about, and i'm suggesting this, as a question, rather than a statement, that russia may view its alternative as a closer relationship with china. that's not an easy thing to do. >> that's the second implication and i see that

as an investor. i had a company called novatech, a company that has also been on the sanctions list. it is an enormously entrepreneurial company. it's one of my only commodity holdings that i have ever had. it's been a wonderful long-term investment. and it has an incredibly lucrative, interesting project in the-- peninsula, russia first i will question quite-- set of fields. enormous opportunity, multidecade circumstances that is very difficult to finance now because its sanctioned imposed upon the company. the funding is coming obviously from beijing. this is a lost opportunity. the french are still involved. >> rose: for the west or for the united states. >> for the west, for contractors in the west, for subcontractors. >> rose: so missed opportunity is by imposes sanctions you could invest. >> i think from two perspectives. one there is an investment lost. the second frackly is i'm not so sure it's a good idea

to put russia into china's hands. it's not necessarily why. i mean if you recall there has always been this triangular relationship between russia, china since the communist days. an of course kissinger did a wonderful job of pulling the chinese into the orbit of the united states. s this's y you know, ultimately one of-- . >> rose: and as a wedge against russia. >> exactly. the idea that you push russia, it is not necessarily a wonderful idea. >> rose: okay, i am out of time. i want to go to a couple of things, what is your emerging voices program? >> so i love the developing world. i live and breathe this. my whole ecosystem is really a developing world. i invest in extraordinary companies. and i invest in them for long periods of time. i mean i have many companies i have hell for over a decade. i wanted to provide a platform because most of my friends are not financially oriented people. they are artists, they're film directors, they're painters, they're novelists. i wanted to provide a platform for the other 90%

of the world's population, the developing world, to be able to identify extraordinary voices and talent in the arts. and so with what we have done is we are collaborating with "the financial times". we've put up a significant amount of money, the largest award in this particular geography for three categories. literature, film, visual arts. and it rotates across the three geographies, this year it is going to be african, middle eastern literature. latin american visual arts and asia film. >> rose: what do you want to do for them? >> well, it's a prize. i want to-- it was originally modelled off of the booker prize. i want to make this a very significant, important platform for the discovery of great talent in the developing world. just like i discovered great companies. >> rose: what is the best book you read in the last career. >> i'm reading a very interesting one now, perhaps you should look him up bisys ar hida, g works is who runs the m.i.t. media lab, called why information grows. >> rose: why information

grows. >> it's a very interesting one. >> rose: i hope you will come back. enjoyed the conversation. >> absolutely, thank you for your time,. >> rose: thank you for joining us. we'll see you neck time. >> for more about this program and earlier episodes visit us on-line at pbs.org and charlie rose.com. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org

the fires rage. >> outdated and overcrowded. our nation's airports have been overcrowded for decades. the big fix explores how all that fire frustration can be alleviated. all that and more on "nightly business report" on wednesday, august 19th. good evening, welcome. call it the land of confusion. the federal reserve says it is inching closer to its first interest rate hike in nearly a