>> rose: welcome to the broadcast. tonight, one of the richest men in the world with a major investment in american companies prince alwaleed bin talal. this is an ierview that was done on friday of last week. >> politically, financially, with the crisis you're in right now, new a mess. new a mess in the united states, i have to be honest with you. i love the united states, i admire the united states. >> rose: and you're heavily invested here. >> yes, the united states is the leader of the world. it's going to be the leader of the world for many years to come. forget china's going to come out you're down. >> rose: that means? >> when you have a country has $14 trillion of cumulative debt and its g.d.p. around $14 million and both competing, that's not good. >> rose: debt or g.d.p.? >> yes. and when you have a budget deaf sit of a trillion dollars going for the foreseeable fueler, it's unacceptable.

when you have economic vices that hit you badly and it was contagious, things are not we were there but you can get out of it. >> rose: prince alwaleed bin talal for the hour next. ( coca-cola 5-note mnemonic ) captioning sponsored by rose communications

from our studios in new york city, this is charlie rose. >> rose: princeal alwaleed bin talal is here. he's chairman of the kickdom investment company. "forbes" ranks him as one of the world's 25 most wealthiest people. "time" magazine dubbed him the arabian warren buffett. his firm has major stakes in banks, hotels and media companies. his largest investment is in citigroup, the bank where he's the largest shareholder. the economic crisis has taken a toll on his holdings. he recently injected nearly $600 million of his personal wealth into his firm after a year of steep losses. his interests are not confined to business. king abdullah of saudi arabia is his uncle and he is a member of

the royal family. i'm pleased to have anymore the studio for a conversation about him and his investment and how he sees the world. welcome. >> pleasure to be with you, charlie rose, again. >> rose: my first plesh. first how you see the global economic recovery from you where you look at it in saudi arabia. and around the world. >> well, the world economy is just beginning to come out of a world crisis. almost catastrophic that began some time in summer of 2007. this crisis is unmatched but it could have been worse if the government did not have this concerted effort that helped us stable ties situation somehow. thing things are not improve bug they are stabilizing and we have the impression that the worst is over. >> so you stopped the decline.

>> the question right now is it going to be an l-shaped situation or... it's not going to be have-shaped recovery for sure but i hope that the l is going to be at least eu. >> rose: what factors are at work in determining the nature of the recovery. >> well, we see in the some of the banks invested. we see in the our hotels and companies. we see the demand is coming back slowly but surely. we see the results in the company in the united states, in europe, we are seeing the civilization where the worst is over. there are indication it is worst is over. >> you are confident that citigroup is back on the road to what? >> i met vikram, the c.e.o. and i met the chairman and we had a very good healthy discussion with them about the past two years. vikram inherited that from the previous management. >> rose: he has your confidence? >> vikram if you follow what he has been doing in the past two years or, so he's been met tick

us will louse and delivering on all his promises. i told him openly that the honeymoon is over right now. he's entrenched, we have the people all entrenched in the position. i think 2010 and twaef you have to perform and begin they willing the world that citigroup's franchise is unique. you have a total of 140 countries, it's unmatched. the second-biggest global bank is around 70 countries at present. so i believe vikram is on the right track. i'm telling him you have to deliver and perform if 2010. >> rose: 2010 you have to deliver >> yes, as shareholders we've been very patiently but i believe vikram can deliver. we're still waiting for the government to sell its stake of around $25 billion some time in 2010 without impacting the share

price. >> rose: what do you think about what the president said yesterday? >> i'm against that. many of those banks with few exceptions has gone through crisis and the patient was in intensive care unit, i.c.u. and while banks are coming out of this i.c.u. you hit them with another tax that could a billion dollars? i believe it's premature and unwarranted. there are many ways to stop the banks from having these extravagant bonuses. >> rose: how would you pay back the american taxpayers who save the banks? >> the final tally has not been done yet. many banks paid their tarp money and it t tally is not known yet. they say it's between $50 and $100 billion. if they want to have it repaid they can do it but not necessarily at this time the u.s. budget deficit running in tens of millions of dollars and

the cumulative debt is $13 or $14 trillion. so another $50 billion isn't going to hurt. i believe it's more of indebt against those banks that are still giving extravagant bonuses i think there are many ways to do it without slapping them with this extraordinary tax. >> but you think they should do something to restrict the bonuses that were being paid before the economic crisis? >> no one's against bonuses but bonus have to be linked to performance and for long term. you can not have a bonus given for those managering who go by short-term win where the bank can be hurt. there has to be a megaisim in and agreement between regulators and banks whereby this thing has evolved without enforcing additional tax on those banks. >> rose: you're also a huge investor in newscorp.

are you comfort with their future? >> i met with mr. rupert murdoch. i'm second biggest share holder there. no doubt newscorp is moving in a big front. you've seen how fox rating is skyrocketing. fox business is beginning to improve and the avatar movie, this thing really... science fiction. >> rose: have you seen the movie >> i had to see it before i meet mr. murdoch and tell him i saw it. so i saw it, yes. >> rose: did you like the movie? >> well, the first ever i see a science fiction movie. what i said is i like the fact that people like it and you're going to gross around two the million billion dollars from it. imagine that. two billion dollars gross and the bottom line $400 million bottom line. so i'm happy for these results. whether i like it or not i'll

keep it between me and mr. murdoch. >> rose: is james murdoch the successor to rupert? >> james is now managing urine and asia. and i don't believe he appointed them but if he doesn't appoint him i'll be the first one to nominate him to be the successor of mr. rupert murdoch. >> rose: he's your candidate? >> i have full trust in him and he's capable he's rupert myrrh dmok the making and he's almost there now. >> rose: that's some kind endorsement coming from you. >> at the end of the day, rupert murdoch's company is the only global company that covers over five continents. >> rose: you're in the travel business, too. you have hotels. >> we have hotels. >> rose: are you confident about the travel business and are you confident about the hotel business?

>> our investment is in the four season brand. we own it through cascade, our partners, bill gates company cascade. we have swiss hotel. so all those brands, among them we have around 300 hui tells in the four, five and six-star brands. yes, we are seeing in the case right now of pickup in all the hotels across the globe. what you're saying is... it's the number one hotel for the last seven years. that's where you interviewed me last time. so, yes, it's a force to be reckoned with and it's almost second proof with the impact was almost minimal in the last three years. >> rose: so what do you worry about? >> we always worry about many things in this world. clearly the biggest world for every human being in the world is terrorism. this is a... it's clear the last event when this somali terrorist was on this plane, northwest airplane heading to the united states from europe, god forforbid if this plane exploded

above detroit, that would have been catastrophic. thank god they were saved. i think we have to be very careful on that and not to be lax or lenient about the threat of terrorism still prevailing over the world. even saudi arabia we have that threat. >> rose: you clearly have that threat in subpoena. >> you bet. >> rose: and we've... you've been more aggressive about opposing terrorism than in the past. >> no doubt. saudi arabia has faced a lot of acts of terrorism but thank god in the past two years we didn't have a single act of terrorism. i believe that we are really flushing them out right now before any act of terrorism was committed. and i commend the united states. you know, even against bush... but under the bush administration, no terrorist event took place after 9/11 and i think under obama and i hope this will continue also. >> rose: when you look at iraq and the americans onlying out of iraq, hopefully, and you look at afghanistan do you worry about the possibilities of things going wrong in there? >> no doubt iraq is a time bomb.

pakistan is a time bomb also. clearly we can see that iraq... we are seeing clear indications of stabilization. >> rose: in iraq. >> iraq for sure. we are seeing elements of stabilization, there are still bombs and explosions and some terrorist acts here and there, but all in all, there's an improvement. still, very incremental improvement. we're not there yet. afghanistan, this country could implode, really and with pakistan neighboring it right now, you're seeing there also that there's a lot of destabilizing elements by the taliban. so these are important elements for the international security. >> rose: you know well that the president of syria and you have a hotel there as well. many people believe that syria could play an important role. on the other hand, as you know, syria gives a lot of support to hazard, hamas, hezbollah, does

syria intent to play a positive role in the middle east peace process between the palestinians and the israelis? >> let me assure you and let me give you a quote from my friend the that. assad has all intentions to have peace in the region with israel and has all intentions to have the palestinians have peace and live in peace with israel. and, you know, in the past, you know, the united states was against him, france was against him, saudi arabia was against him, he was isolated. he had no choice now go to iran. right now we are seeing his links now with the united states his links with franz and saudi arabia. they were just in saudi arabia last wednesday. so we were getting them back. so really we are seeing very good indications to help the peace process not only between him and israel, between him and between the palestinians and israelis also. so i can assure you that bashar is going to play a big role in getting the peace process moving. >> rose: is there some

communication through turkey? although there was communication between turkey then after the gaza invasion that kind of disappeared. subpoena he still receptive to some communication with the israelis? >> actually his spogs that i will only go through turkey. as you rightedlyly said. he would only negotiate through israel with you are the any the meanwhile. israel would like to have that negotiation with him. his position, bashar, is that he would like to have negotiation through turkey as has been in the case in the past two years or so. >> rose: i just had a long hour afrgs here and an interesting conversation with george mitchell. >> i saw that. what. >> rose: what's your own assessment of something happening israel and the palestinians? >> look, mitchell is a force to be reckoned with. mitchell was the main anchor of the peace process that took place in the very complicated

irish... >> rose: exactly right. >> ...civil war. and he was able to manage to get this thing to into a peaceful process. i believe that president obama and mrs. hillary clinton has to look more attention to the middle east. i believe the attention mr. obama has put on health care and the past year and the economy, i believe the middle east is the core problem. not fronl the middle east, but with all the side effects, the terrorists acts and all the things that really... this nesz to be resolved as soon as possible. >> rose: it clearly needs the involvement of the arab neighbors and saudi arabia and egypt and others, jordan, to be a force that's willing to take a risk. what's going with the arab neighbors? >> the arab summit, when they net lebanon unanimously, 22

countries-- or 21 countries-- have adopted king abdullah's... conference abdullah's initiative to acknowledge the presence of israel and even establish diplomatic relations with them. >> rose: every country wants to establish depthic relations. >> israel did not really step that position yet. i think if israel wants to have peace they can have peace within a month two with the counterpart in syria and palestine, to be honest with you. >> rose: you think they can have peace... but just last week there was some shelling from gaza into israel. >> i understand. israel is a stronger party. israel is a dominant force in the meese. we all know it has the biggest military army there, it has the... has nuclear bombs. so no one's going to touch israel. israel is untouchable. now if israel can get its house in order and have... >> rose: what do you mean by get

its house in order? >> because the netanyahu government has some folks that there that do not want to have peace with the palestinians. >> rose: you mean the foreign minister? >> well, i mean some people in the government. remember when sadat went to plooin and he gave a peach over there and look what happened. so i think if you have a good strong likud party and netanyahu is a likud party member he can do what begin did. and we're so close in getting a peace treaty. we're talking about a couple hundreds of meters. >> what separates with bashar and assad, the president of syria, and what negotiations may be taking place through turkey or wherever. what separates the possibility? is it a... >> it's a small piece of land that really... >> rose: on the golan heights? >> exactly. the golan heights. it's very technical that could be resolved if there was a will from the israelis.

>> rose: what does he need from the israelis to make a deal? >> he wants his land back, period. his land was taken with him. period. this is syrian land. the golan is syrian. period. >> rose: what are his intentions with respect to lebanon? >> i think lebanon situation is over right now. he pulled out his troops from lebanon. he had elections. you have right now a president duly elected by the parliament. you have right now a prime minister who's the son of the on.. and guess what? hariri number two visited syria and he had three separate meetings tete-a-tete with bashar. so this is the issue of lebanon and syria is other and behind us right now. for him to go there and visit them, this is very courageous for them to take that move. >> rose: do you think it would be a wise thing for hazard to give up its weapons and just simply engage in the political process in >> no doubt. the official position of saudi arabia and any prudent person, you're... you can not have one nation, no way.

>> rose: but syria would have influence with hezbollah. i mean, they have significant influence with hezbollah in lebanon. >> but hezbollah is very independent, really, and they take the power really from iran. let's be very blunt about that. his. but the power and the supply of all the tools, all the military equipment comes... all the money comes from iran. this is really... a situation that's been exaggerated by the iranians and look what iran has done by supporting those people in saudi arabia and yemen. so really iran is not playing helpful role at all. not only the united states. the whole community... >> rose: so what should be done about iran? >> i think a very firm position has to be taken against iran by the united states. a lot firmer than what it is right now and really box them in. >> rose: okay. but then lay out a policy that you would like to see the united states initiate which the arab world would support vis-a-vis iran. >> well, i think on iran i think

you have to engage with them. like you engaged with... >> rose: it's hard to engage with them right now because of the internal split between... >> you have to see what's going to happen internally. right now what's happening in iran right now reminds us of the pre-revolution era when the shah of iran was forced and khomeini came and took over. so there are indications that this may happen:. so i don't think the united states can do anything right now. i think you have to wait until the whole thing subsides. in the meanwhile, you have to engage with them and mr. khomeini mr. ahmadinejad is now the duly elected president of iran. so we're still waiting for the dust to set over there. >> rose: you have people who talk to people who talk to people. do you believe ahmadinejad will survive or... what do you think will happen to the reform movement? mr. most most? >> the way he's handling the opponents is really a very savage way.

it's like the shah of iran. so to me it's deja vu. so we don't really know how... >> rose: so what should the west do and what should the arab countries do who worry about the regime in iran? should they be more supportive of mr. moussaoui and the reform group? >> you have to engage with ahmadinejad because you're going to fuel the opposition... you're going to fuel those allies of ahmadinejad even more. >> rose: ahmadinejad will say that the reform movement is tied to the west or is tied to our enemies and therefore... >> yes. you have to engage ahmadinejad, no doubt about that. he has no choice. until you see what happens in iran it's going to be... are you going to have system like we had during the shah of iran whereby khomeini came to power? we have to see. things are very bad in iran. very bad. >> rose: you think there will be

another civil twlar? >> that i believe the hegemony and the strength of and the power and the prestige of the ruler over there, mr. khamenei, has been impacted badly right now. so i'm not sure he can really hold to power a lot longer. i've seen early indication of the disintegration of the regime and that's my personal view. >> rose: do you think the world's perception of islam is misunderstood? >> oh, yes. for sure. i mean... >> rose: you've given a significant amount of money for an islamic center at the louvre in paris. and >> and georgetown and harvard and cambridge. >> rose: exactly, exactly. and you're doing that because what? >> after 9/11 the world has changed and islam came under attack and to a certain extent rightly so. because you had all these terrorist acts against united states soil in new york

committed by muslims and arabs and more particularly saudis. so i don't blame the west by really being worried about islam. but this profiling issue should not really be on the table. you cannot generalize and say "all arabs" "all muslims are terrorists." >> rose: clearly you cannot say that. >> so i think we're doing to bridge the gap by having centers in georgetown, harvard, cambridge and the louvre in paris. >> rose: and their role is to make sure the world appreciates the diversity and the depth of islamic membership around the world in >> sure. >> rose: but the question then becomes are those moderate elements of islam-- of which you would be reflective and which the royal family would be reflective-- speaking out, making sure that more than anyone you are criticizing suicide bombers and those kinds

of things which are sometimes carried out in the name of islam? >> rest assured. see, the west does not really cover the criticism that happens from saudi specifically. >> rose: well, tell us about it, then. >> i'll tell you. all the discussions being around this somali guy who tried to bomb this airplane above detroit. but his father, his father... >> rose: turned him in. >> he went to the u.s. embassy and said "my son is a terrorist in the making, please take care of him." that guy represented islam and the 1.3 million muslims, not this guy who was going to bomb this airplane above detroit. really. and i think we have... we have a role to really to prove to the west and the whole world that islam is not the terrorist religion at all.

we are peaceful. islam means peace. that's the irony of it. but the problem is that small number of supreme hijacked islam and because they shot and scream and they bark and they commit terrorist acts, they've hijacked the religion. >> rose: you're the ones who ought to be the most angry about that, as you know. >> you bet. you bet. governments, everybody has to do more. >> rose: so what do you want to do? what's your plan? what you think... you say you've got do more. what's "more" mean? >> we have to be more vocal about these terrorist acts. we have to tell the west we are against them. we do that publicly, but we have to even more. >> rose: make sure that the west knows. >> oh, sure, because now the west thinks that we don't mind what's happening. far from the truth because saudi arabia gets attacked, jordan gets attack, yemen is under attack right now, bahrain is under attack, all those countries have been attacked by those terrorists, by those extremists. so we are in sync and we are in the same game, ball game with you, the united states.

>> rose: so where is the battle against terrorism today? is it being fought effectively? >> i think fact that the acts of terrorism have really... not disappeared but diminished substantially, and this single act of terrorism has taken place besides this attempted attack and acts of terrorism has really dissipated almost in saudi arabia proves that we are on the right track, but still a lot more work has to happen, because we have all these cells that are still dormant, but they could come up anywhere and any time for sure. we have to be vigilant. this thing is going to take another generation to weed them out completely. it's not going to end right now. so we have to be vigilant and be careful because they have a lot of new tactics. like you've seen this underwear terrorist that almost blew this plane. >> rose: how does the arab world see the president, president obama? >> well, you know, when he took over and he gave his famous speech in cairo, expectations went up. but right now we are still

waiting. >> rose: you're waiting for what? >> we're waiting for initiative from president obama, mrs. hillary clinton and mr. mitchell who was on your program just last week to jump start the process. because the the united states does not jump start the process, no other country in the world is going to jump start it. period. >> rose: there could be no peace without the active participation of the united states? >> there will not be. never. it's like when president carter took active participation, he got a a saa dat and begin and he got the peace agreement signed at camp david. we need active participation by president obama. i hope he continues with that after he gets his health care situation behind him. >> rose: and the economy. >> and the economy. >> rose: dubai and dubai world. once we heard the evidence of... and saw the evidence of the difficulty they were in, people began to say "where's the next dubai?" >> well, you know, greece was facing some difficulty. >> rose: exactly right. >> but i say that, you know, nations don't go bankrupt, companies go bankrupt. you can merge a company or shut

it down but a nation will never go bankrupt. and clearly the dubai matter is very serious, but it's contained. >> rose: contained because of abu dhabi and support they're giving? >> one factor abu dab bye, support was around $20 billion plus. so this is a temporary solution. but really it's not like a crisis that's going to affect globally. so it's very contained. but those banks, i said publicly that those mature banks that lend to those companies they have to differentiate between the sovereign wealth, the sovereign security of dubai or abu dhabi oru.a.e. and lending to certain companies in dubai. so you cannot say i thought i'm lending to dubai, which means there's a sovereign grantee is implied there. not true. so you may have other dubais or other greeces in the world, sure. you may have. >> rose: united states-- you have heard this many times-- has

said we have to move away from our dependence on fossil fuls and dependence on isle. do you believe we can? >> 2 t dependence on oil will remain for tens of years to come. no doubt about that. >> rose: for at least half of this censurely. >> for sure. but i think there's a better way. i mean saudi arabia-- and king abdullah specifically-- tried to open dialogue and he was successful to a certain extent by getting the consumers and producers to meet in saudi arabia, to find a way to get some fair price whereby the oil consuming countries don't get hurt by an exuberant high price. at the same time those count flees the middle east and the whole other world that produce oil also don't get hurt by having a very low price of oil. oil an important commodity. >> rose: but there's a finite supply of oil, is there not?

>> but it's going to take us another 150 years. 120, 150 years depending on today's consumption so you have plenty of time until you find alternatives to oil. but you know, we're not saying no. there are wind, solar. many ways. look... >> rose: your point is you don't think it's going to work for a long time. you don't think alternative energy sources will be... will have the impact that you would want them to have for significant number of decades. >> that's for sure. every time the price of oil comes up we see a lot of hoopla around ethanol, every time the price goes down, we see the whole thing subside. i think best thing would be to have the companies meet together and find a way whereby this is strategic and crucial commodity does not hurt the oil-consuming

countries and does not impact the oil-producing companies by one day too high. one day it's $150, the next day it's $30. how can you prepare a budget of a country based on that? >> rose: and how do you see the future of oil prices and where it's going to go? >> right now it's hovering around $80 and i don't see it going down soon. because $80 with recession all over the world and you can imagine what's going to happen when the economy gets out of the recession. >> rose: it will drive the price of oil up. >> inevitably. >> rose: back up to $140, $150? >> i hope not. we don't twhant in saudi arabia. our position, we'd like that hover around $70, $80. no more. >> rose: so you like oil at around $70, $80. >> it will hurt the oil countries. it helps short-term. vice president a stabilizing price where it doesn't hurt the west or oil-consuming countries and does not impact the budget and planning of those developing count wlez are still being developed on a daily basis.

>> rose: how is saudi arabia changing? >> well, saudi arabia under king abdull will l.a. is changing a a lot politically, economically, financially, socially. many movements are taking place in saudi arabia. king abdullah of saudi arabia and saudi arabia in general has a lot of constituencies. they have not only the 26 million population they have to look at. >> rose: because of mecca or because of... >> exactly. 1.billion muslims look at it and they have also... saudi arabia and a certain extent are anchor countries in our region. so 26 million saud disand 380 arabs and 1.35 million muslims they have to cater for. so there's a lot of constituencies to saudi arabia's role locally, regionally and internationally. and we take that very seriously. >> rose: how do you want to exercise that power? >> i think saudis are part of g-20 right now with only our country there. saudi arabia is always invited to the big meetings on the economical front and political

front. >> rose: but when the president of the united states went to see the king he didn't get the kind of support he wanted in most recent visit. >> charlie, i was there. he got all support. on the record. i saw what king abdullah said to him. the. >> rose: tell me what he said? >> he said we are very optimistic about mr. obama and we believe he know it is needs and wishes and desires of the arab world and we hope he will deliver. but rest assured king abdullah and saudi arabia support him 100%. and you know what? he stayed in the ranch. obama stayed in the ranch. >> rose: but... >> no, i understand they had a lot of deep discussions and successful discussions, i know. staying at the ranch does not mean successful but... >> rose: so let's understand what was said because that goes against the conventional wisdom which was which was that the president expected to get more support from the king in terms of what he wanted to do in

playing out the u.s. role. >> look, i was not privy to the private meeting head to head between king abdullah and president obama. they met privately. >> rose: but you know the people in the room. >> i understand. we got tim presentation that king abdullah is very happy and he said we're going to support obama no matter what he wants to do. but there are minimum requests that you have to give the palestinian their legitimate rights, like getting the state, giving them back jerusalem, getting back their... finding a solution... and we were very happy with obama's initial reaction when we said settlements have to stop before the peace process begins. but obama had just taken over one year ago, we have to give him time. but i think time's running out also. >> rose: time's running out? >> we cannot wait any longer >> tell me that's where the rubber meets the ground. what is it?

time is running out for them to do what? >> we need peace in the middle east. the more there's no peace, the more extreme schism going to take over. the more you're going give hamas the clout and the power and the strength to say, look, nothing is happening right now, we have to fight our way out. and you strengths against... abu mazen, for example, in the west bank. they become desperate. >> rose: but you know this as well as i do. hamas is in part located in damascus where your great friend runs the country and your great friend has some influence over hamas and could play a very positive role in trying to bring hamas and fatah together so they're... am i right or wrong? >> wrong. >> rose: okay. (laughs) >> let's say tomorrow bashar gets hamas on board. what's the use of getting on board? there's no peace process. they have no partner. you can't tango alone, you you need to tangle with someone. >> rose: you're israel.

israel would say who do we negotiate with? there's a country is split. hamas and fatah... there's nobody that... >> like the israeli government. >> rose: no, the israeli government is not split. there is a democracy that as you know has a coalition government. >> rose: the moment you ask for peace there and say settlements have to stop, look what happens to israel. look, i can guarantee you thats... if you extract from them any logic, any reason, all the palestinian people will hover around abu mazen. but right now people are saying look, look at the united states, bush has left, you have obama now and now no peacerocess. nothing on track yet. israel has the upper hand. >> rose: your answer to the conflict in the middle east between the israelis and palestinians is that the united states must pressure the israelis to do more. that's your answer. >> that's my answer. because all the power is in the hands of israel. they have the land in their

possession. they have... they have gaza. everything is in their hand. >> rose: why don't you influence the palestinians more so that they can... so that the israelis feel more secure. that's the problem. >> let me tell you what my other friend told me, abu mazen, the president of palestine. he said we are ready, forget hamas, let him make peace with me right now. >> rose: you can't forget hamas, can you? >> mach make peace with the west bank. hamas, the power comes from the fact that there that there's stalemate, stagnation, they capitalize on the stalemate and stagnation that there's no peace. give it a try. give it a try. israel has the upper hand. they're a stronger force among all our countries combined. it's israel and mazen told me "i'm ready for peace. i'm ready." >> rose: what about refusing to recognize the state of israel's right to exist? >> sure the palestinians... abu

mazen for sure, yes, officially. >> rose: but i'm saying hamas refuses to... here you have... >> for now, yes. for now, yes. >> rose: you think they will change? >> because hamas is as strong as its people. if its people go back to be under the power of mazen, if the peace is in progress and is imminent, they'll move. they are fed up. i mean, the way they're living there right now is disgusting. i've been there three times. the poverty level, 30%, 40%. >> rose: in gaza, where? >> i'm talking about gaza. west bank things are improving there. >> rose: they are. >> the economy is growing 6%, 7%. >> rose: and what are you doing to support the prime minister? >> oh, yes, we have fayyad is a good man. >> rose: and what he's trying to do create some model of government there is the way to go in your judgment? >> the model there is happening already and israel is cooperating with them. but not to the extent they have full-fledged peace. >> rose: is now, seems to be,

many people believe, the best way to go because it is changing on the ground. >> correct. and it's a role model and they're growing 6%, 7% every year. >> rose: what are you doing to help the economic development. >> oh, we all support them, oh, yes. we are invested in three companies over there that really a dominant force in palestine and we give them all the support they need for sure, yes, yes. i've been there. you know, i mean, we gave them some time ago a private plane, we gave them money, clinics, hospitals. we always have charity with them. >> rose: to help them succeed in terms of creating a viable political force. >> you bet. >> rose: can deal with the israel lis. >> you belt. and that's what we need. and israel is doing the same. >> rose: they're pulling back from some... >> yes. >> rose: we haven't talked about the rise of china. i mean, you're a man with business interests and the world. do see you china today? >> schin a force to be reckoned with. china has just replaced germany as being the biggest exporter in the world.

china has just replaced the united states as being the biggest car buyer in the world and china is going to replace japan in being the second biggest economy in the world. china is for real, they're coming and what they're doing all over the globe is incredible. they have $2.5 trillion of foreign reserves. this country is a force to be reckoned with and as buffett said in your program, their g.d.p. will always be above the united states. maybe not necessarily the g.d.p. per capita. >> rose: right. for sure. by the year 2050 they nave largest any the world. >> but not necessarily g.d.p. per capita. so china is a big force to be reckoned with so right now they are concentrating on increasing their g.d.p., g.d.p. per cap tashgs fixing the internal problems and issues but eventually china is going to ask for a political price. right now the united states leads the world and most of the time we have been them. but i think china will translate that power from being a economic force to political force.

>> rose: and is that good or bad? or is it just going to happen? >> inevitable. i think china still... it's a strong force but not a strong force politically. >> rose: it wants to use that force to create more economic wealth so it can use that wealth to in some cases ease the social tensions that might exist. >> you bet. >> rose: you saw what google did and you know technology. what do you make of that? >> well, you know on one hand, if any company goes to a country it has to respect the rules of that country no matter how different it is from the united states. now i understand that your answer is that well, the chinese government got involved. >> rose: what do you think? >> i think we don't know the answer yet. but i think, you know, china is china. >> rose: what does that mean "china is china"? >> if you want to go there, you have to play by their rules. >> rose: but the rules were... that's not what was happening, playing by the rules.

google was there and they found out that... >> i understand. but china a communist country politically speaking. although economically it's capitalist to the bone. >> rose: right. >> you have to massage your try china slowly but surely. >> rose: some people, james jay knows you may have read, is begin beginning to say there may be a bubble in china... >> and i also read mr. friedman's gnarl the "new york times" saying forget it. so i'm with mr. friedman it was a good article. >> rose: do you stay up all night reading like i do? >> he gave me me a good reply. i love it. i stick with friedman reply. he was on your program, by the way. very good episode. >> rose: he said many things, but basically those who say china may not be as strong as we think it is, those people are wrong. you look at china and you see nothing but a country that's going to get stronger? >> oh, yes, no doubt. i disagree with chan knows

completely. and i agree with mr. freedman complete lift thank god next day he jumped on him. >> rose: what do you think of america and our future? >> america is down not out. >> rose: but that's not good. >> i know, but you're down now. >> rose: down in what way? >> there was a book written about the islamic world "what went wrong". i think right now you could write a book about the united states "what went wrong" politically, economically, financially, you know, the crisis that you're in right now. you're a mess. new a mess in the united states. i have to be honest with you. i love the united states. i admire the united states. >> rose: and you're heavily invested here. >> yeah, sure. the united states is the leader of the world. it's going to be the leader of the world for many years to come. forget china's going to come out. but you're down. i mean... >> rose: "down" means what? >> i tell you. when you have a country has $14 trillion of cumulative debt and its g.d.p. around $14 billion and both competing who's going

to grow faster, that's not good. >> rose: debt or g.d.p. >> yes! and when you have these budget deficits of a trillion dollars going for the foreseeable future that's not acceptable. when you have this economic crisis that really hit you very badly and was contagious the whole world, you know, things are not where they were in the united states but you can still get out of it. >> rose: how can we get out of it? >> well, i think we're betting on obama that's going to have the good policies. at least he's acknowledging these problems. before you used to be murky about this issue, there was no reality. right now he's saying that we have all those people that are uninsured, we're going ensure them. >> rose: health care reform. >> yes, health care reform, i understand. i mean... >> rose: his popularity is declining, as you know. >> i understand. i understand. he's taking tough decisions. now, i only wish the united states the best. i'm not an american man, i'm a saudi, but i love the united states and i admire the united states and i'm public with that, i'm vocal about that. sometime this is puts me in trouble. i don't mind, i will speak my

principles. so the united states has to do a lot of work and i only hope and wish good for the united states. >> rose: here's what i hear you saying. lee kwan said the same thing at the same table. most of the people he knows worry more about the american deficit, debt, than any other issue about america. >> yes. >> rose: can we deal with the massive debt that we're facing? >> $14 trillion of cumulative debt, no matter how big your economy is, is big. and guess what? you're adding to it for the foreseeable future. around a trillion dollars every year. something these happen there. >> rose: what should happen? >> well, i'm not the u.s. president. >> rose: no, but you... >> i say you have to accomplish... >> rose: it's in your interest for the u.s. to have a healthy economy. >> my worry is that taxes have to increase eventually. there's no doubt about that. and i hope that they increase not when you have a recession whereby the impact will be minimized. taxes have to be raised. no doubt about that in my mind.

across the board. >> rose: a value added tax? capital gains tax. >> whatever it is. taxes are going to increase ininnocently. >> rose:'s a hard political snell america. >> i understand. very dangerous. but i see nowhereway out of that. you're going to have to pay this debt eventually. this can no go without being paid. >> rose: it's the economic reality. >> for sure. >> rose: bewe went too long for being a consuming society and not a savings society. >> you're beginning to be now. >> rose: but there are also the people who have been preaching that and are arguing strongly that we need financial reform here. regulatory reform. are you supporting the regulatory reform that people like paul volcker and others are suggesting? >> well, i mean, the crisis that you went through here, you almost had the meltdown here. when lehman brothers collapses and bear stearns followed by a big bank... >> rose: j.p. morgan. >> j.p. morgan, and then merrill

lynch is absorbed by bank of america and goldman sachs and morgan stanley, although they're healthier but on the verge of collapse also and citigroup also i mean something went wrong for sure here. no doubt about that. and you can't just put the blame on the bank and bank management, you have to share that between bank management and regulators and i think you have to have reform, for sure. it's about time to get it right this time. >> rose: saudi arabia a sunni country. >> we're shiite also. >> rose: but the majority the. certain a shi'a country. iraq majority shi'a. jordan sunni. there used to be some great concern that would be manifest in iraq a kind of civil war between shi'a and sunni. has that... has that been eliminated, number one? >> you mean in saudi arabia? >> rose: in iraq.

in iraq. that conflict. and secondly, is the idea of some great conflict between the sunni population and the shi'a population in various different countries, has it gone away? that risk, that conflict, that... whatever it meant. >> for sure it's not gone away. actually, it just began. let's take yemen. >> rose: exactly right. >> yemen is a majority sunni, a minority are shiite and others are huetys. look what's happening right now. we have some of those insurgents coming to saudi arabia and we have war right now from the south attacking through yemen and in the north saudi arabia. so for sure it's not... it's simmering and it could pop up elsewhere. although in iraq this has subsided a little bit because they are trying to fight the wars through parliament and through the democracy there's prevailing over there. this time bomb could happen anywhere. in bahrain, a big population of

shiite, you have it in saudi arabia, but saudi arabia thanks god that they're very much assimilated in the system and part of the saudi system so thanks god nothing there. but it's a time bomb because iran is not playing at all and they're getting this insurgent move. >> rose: all the arab countries that i know fear iran. fear iran. especially if it gets the nuclear capacity. so what are they prepared to do? >> well, iran is a very strong power n our region. >> rose: and should be recognized for that. >> you better believe it, 70, 80 million people over there. >> rose: and a huge reservoir of oil. >> sure. and they're a very rich country, although not developed at all because iran it looks like a third-class country. >> well, iraq does in terms of its oil. but go ahead. >> rose: >> so iran is a threat and we're concerned about that. >> rose: but how do you see the

threat from iran? >> if iran gets atomic bomb, nuclear bombs, it's going to begin dictating its conditions. >> rose: and so what should the rest of the world... >> the rest of the world... >> rose: do. >> they should unite through the u.n. and take very tough resolutions as you took against peshg. >> rose: have you talked to the chinese about this? have you talked to the soviets... to the russians about this? you know where they stand on strong sanctions, don't you? >> for now, yes. but eventually they think this also, it's not good for them to have nuclear bombs because they don't want to have them destabilize sod the interest of the russians, the interests of the chinese coinswidz the other three permanent u.n. members: united states, france and britain. you know, no one can lead but the united states. it's very complicated matter. i think you need to have uniformity among all the... i met with sarkozy, for example. and he told me we need to have sanctions against iraq.

very imminently. and he's willing to participate with the russians and... >> you can't have sanctions by the security council of the u.n. unless you have the chinese and the russians sign off. >> you bet. you bet. you are seeing indications that are accepting of that. and the more intransient iran is, the more amenible the chinese and russians will be. >> rose: and what's the possibility that the iranians will get the bomb before the sanctions... i mean, there's a window of opportunity here. how close do you think they are. >> based on the studies i read among the c.i.a. and other intelligence, they are not there yet now. but the direction they're moving in... >> rose: how long do you think they are, though? within several years or... >>. >> two or three years. they can do it. i mean, look at... pakistan had it, iran had it, i mean india had it so iran could have it also. so it's not that complicated. south africa has it and they gave it up. >> rose: right. >> and libya gave up its... >> oh, yes. they gave it up for free.

(laughs) >> rose: saudi arabia and democracy and any change in the political dwrrb dough do you... >> see, the word "democracy". >> rose: go ahead, talk about that. >> in islam we have another word shura. and this began 1,400 years ago. and it's islamic. shura began way beyond the magna carta. it began in the u.k. and western third of the united states. so in saudi arabia we have ma sure t shura who is our parliament equivalent and no decision is taken by the executive branch until it goes to it. for sure... you cannot have full-fledged democracy in saudi arabia like the rest. >> rose: and the united states and others should not be promoting democracy... it's model democracy as appropriate for anyone other than the united states. >> rose:

>> you will love this one. i have having lufrng will lee kwan you. i told him "you're my friend. i have a question, what kind of democracy do you have in sing snore" he said prince, i have my own democracy, not the american democracy or western democracy but i have democracy for sure. but it's not going to be the way it's in my country. and democracy in singapore is not the american type or british type or english type or french type democracy. so really... i mean, we can never just transplant democracy. >> rose: it's a pleasure to have you here. >> it's a pleasure, charlie. >> rose: you leave with us a lot of things to talk about. in terms of america's economic future yet at the same time i hear you clearly saying that you people that you know in your region, including your own country, are looking to the united states, even though you

worry about it to exercise leadership now. it's very important that the united states... >> gets its house in order. >> rose:... gets its house in order to it take leadership. >> if you are weak economically you cannot be strong politically. >> get your economic house in order so you can exercise geopolitically. >> no doubt about that. >> rose: thank you for coming. >> pleasure to be with you always. >> thank you for joining us for the hour. see you next time.

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