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tv   Charlie Rose  PBS  July 11, 2015 12:00am-1:01am PDT

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>> bremmer: i'm ian bremmer, filling in for charlie rose, who's on assignment. tonight, an examination of the ongoing nuclear negotiations in vienna. suzanne maloney of the brookings institution and gary samore of harvard's kennedy school. >> bad behavior's never been a direct function of the resources available to it. some of the worst abuses at home and around the region by the islamic republic occurred in the '80s at time of tremendous constrain due to the war of iraq and other issues. so i'm not concerned reflux as a result of sanctions release will alter what we know to be a problematic foreign policy. >> bremmer: we look at china's stock market crash we're joined by former prime minister of australia, kevin rudd. >> let's just understand this is
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a significant correction in the market. you've got chinese assets which have been overprized, even against a basic analysis with their standard price ratios. but to draw too much implication from this in terms of, number one, the overall performance of the market in recent times to what it means to the economy in general and, three the direction of reform, i think we need to take a calmer perspective. >> bremmer: finally, a look back at charlie's 2004 interview with former saudi former minister who died thursday, the world's longest serving prime minister before his retirement in april. >> i believe saudi arabia sounds going a program of reform that is not only seriously pursued but adamantly pursued by the government in spite of the opposition of the conservatives
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inside saudi arabia. >> bremmer: iran nuclear negotiations, the chinese stock market and the late prince syed al-feisal next. >> rose: funding for "charlie rose" has been provided by: 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. >> bremmer: good evening. i'm ian bremmer. president of the eurasia group filling in for charlie rose who's on assignment. we begin the program with iran
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nuclear negotiation. secretary of state john kerry remains in vienna for talks with iran. in their 15th day longest trip abroad by any u.s. secretary of state since george schultz in 1983. a third deadline has come and gone with talks extended till monday. both sides claim slow, hard progress. meanwhile, opposition to a deal is strong among american allies in the middle east and here in congress. will we achieve a deal and what are the implications of success or fairly? joining me now from washington is suzanne maloney senior fellow at the center for middle east policy at the brookings institution. and from cambridge massachusetts, gary samore. he's the executive director for research at the belfer center for signs and international affairs add harvard kennedy school. pleased to have them both on this program. let me start with the question
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of the latest latest hiccup. it seems to me that one issue that's suddenly become very, very prominent is the question of the removal of this u.n. arms embargo. i certainly haven't seen as much focus on it till recently. why has that -- suzanne why has that gotten attention lately and could this scuddle the deal as a whole? >> this is definitely the most interesting wrinkle in the phase of the negotiations. there have been any number of issues that have been seen as obstacles which both sides have focused on in their public statements. first, many of the technical issues surrounding iran's enrichment capabilities and, more recently, a lot of discussion about the timing and scope of sanction res leaf. but this week almost out of nowhere iranis began talking about the insistence that the arms embargo which is part and parcel of several u.n. resolutions but most particularly the comp responsive
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embargo included in a resolution in 2010, they want that to go and they're quite insistent about it. this is something that the administration has talked with its interlocutors in suggesting it remain in place irrespective of the negotiations. so to see this arise at this late date suggest if there have been large issues, the two sides haven't had the time and opportunity to focus on or from a con spir conspiratorial point of view that the iranians are trying to tank the process to divide the p5+1 that has been negotiating with them and in particular align russia and china more directly with iran in the failure or delay of the negotiating process. >> bremmer: that last point is important, because i saw a
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statement from the russian foreign ministry that the foreign minister lavrov actually said the u.n. arms embargo has to go, has to be one to have the first things to go. that implies a pretty significant gap between the position of russia and that of the united states and the europeans. iranian negotiators also saying that the russians and chinese have a different perfective and there are very different moves from the different countries in the p5+1, and that's confusing all of this. so, gary what's your view on this? do you think the russians are basically taking a flyer here? are they moving away and are they looking to stick it to the americans at the last possible moment with the iranians getting cold feet or is this much to do about one or two statements that don't really matter? >> well, i think it does matter a great deal. ii can understand on reasons of
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substance why both the russians and iranians would like the arms embargo to be lifted. the russians because they want to sell weapons to iran and the iranians because they need modern -- they need weapons and they will have extra money because of the deal to purchase additional weapons. for the u.s. and western powers, i think it's impossible to imagine that we could accept a lifting of the arms embargo. i think that wouldn't be it politically sustainable. so from iran's standpoint, this was a good issue to pick, to wait until the last -- until the end game when most of the other issues have been resolved, as far as i can tell and we just don't know whether the iranians will use this as a bargaining chip and concede to keep the arms embargo in place for the time being in exchange for getting concessions on other issues relating to inspection or
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research and development limits on their enrichment program, or whether they're serious about taking a stab at trying to get the arms embargo lifted, if not right away, then over a relatively brief period of time, and knowing they have the russians and chinese backing that, which could very easily, it seems to me, lead to a delay in the deal coming together. but i don't think it will result in a breakdown of the process and i think, ultimately, the negotiators will probably figure out a compromise so that the deal comes together. i justn't go know whether -- i just don't know whether it will happen over this weekend. >> that's fair. if there's no deal by monday, do you think we have another extension and we just continue with all the sides in place occasionally moving back and forth to their capitals or are we going to take a break and really not come back for a while? >> well, it's very hard to make
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that call if you're not in the room. obviously, kerry will have to make a decision based on whether or not he thinks some additional period of time is going to produce a compromise on the remaining issues, in particularly the arms embargo or whether he thinks they've really reached the end in this round of negotiations and there is no room for further progress, in which case i think both sides would be willing to end this round, to extend the interim agreement because neither side wants the process to collapse and make plans for having another round of discussion sometime over the summer. >> bremmer: so you really don't see -- and when we see the russians and chinese, at least, breaking, and the russians doing so quite publicly, when we see kerry coming out and saying look, we're not going to have endless negotiations, seems like, you know, the level of patience is wearing thin. you don't think there is any real danger this process is going to be derailed at this
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point. you think it's either continuation of interim agreements or we get a deal? >> yes, that's correct. neither side wants the status quo to break down. from our standpoint, that would mean iran resuming the nuclear activities that are currently frozen and which we've benefited from because they haven't been able to advance their program significantly since the interim agreement went into force in january 2014. from iran's standpoint, a breakdown in the talks means resumption of additional sanctions which would hurt their economy. so i think both sides are more comfortable with the status quo with the interim agreement being in place, and we'll try to avoid a breakdown, especially a messy breakdown where fingers are being pointed as to exactly who's at fault but certainly the country that is seen as triggering a breakdown is going to be more vulnerable to diplomatic pressure and neither side wants to be blamed for
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causing the process to collapse. >> bremmer: if we lose monday suzanne we, don't get to a deal who, 's more likely to be blamed for that at this point in the court of international public opinion? do you have a view? >> i think it's hard to say. the iranians have done a pretty good job of avoiding the blame for the delays and process to date, despite the fact it has really been washington that has invested the most in terms of devising creative proposals to try to bridge gaps where they've appeared. i think the real danger in not getting a deal in the course of the next 48 to 72 hours is what we saw after the last round the sides came together in late march, negotiated aroundothe clock for some days and actually came to this political framework in lausanne switzerland, that was hailed as a big step forward, went away and when they came back to the negotiating table, there was a
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lot of work to be done to solidify the positions they both achieved, so they had to renegotiate sm some of what they already agreed on. i think one of the dangers and incentives of keeping everyone at the table right now is, you know, we know we're this close we know it will take work to get back to this point if we all disappear for a week or two or three. we've got to try to get i across the -- get it across the finish line but at the same time there is a danger compromises will be made that will be unsustainable by the other side once they go back to political capitals and discuss this. >> bremmer: is there a danger the sanctions will erode especially if the americans are to blame for why we haven't gotten a deal? the p5+1 doesn't seem to be quite in line like they have been. >> i think the sanctions have been durable and demonstrate the
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u.s. system to persuade the world there is a choice to be made of doing business with iran or the united states. that's not a choice for any country in the outside world except for programs belarus. i think the ability to deter cooperation with iran -- in the end the chinese are interested in retaining a good relationship with washington, in alaska seases to the u.s. financial system than in the potential upsides for business with iran. they've already had a lot of opportunity that they slow-rolled in order to sort of ensure that they are diplomatically aligned with washington, so i think at least in the short term we don't have a lot of fears of sanctions erosion or collapse, if for the -- if the process were really to break down and we were to see some sort of end to the
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negotiations, then i think all bets are off. >> bremmer: gary, what do you think of the principle risks at this point if we don't get the deal on monday? >> well, i agree with suzanne that the iranians have a tendency to walk back on commitments if the deal isn't sealed, so it's quite possible they reopen issues that have been resolved during the latest very intense round. there's a little bit of protection against that only in the sense that, as i understand it, the documents are virtually completed, so there may be a few brackets here and there but in the 100 or so pages of documents that have been agreed upon, it gives you a little more confidence that you can take a break and not reopen text. it's not absolute proof but at least gives you some protection whereas in april in lausanne, there was little agreed text or a lot of brackets in the text. the other big danger besides backtracking is some external
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event could take place which could jeopardize the negotiations. the middle east, as we all know, is in the middle of an incredibly turbulent and unstable and conflict chiewl phase with wars going on in seemen, syria and many other places. so with that kind of boiling stew, there's always a possibility something could happen to complicate the poll tex of reaching an agreement for either tehran, washington or both. >> bremmer: there has been a lot of talk in the news, of course, this week that one of the reasons why this last deadline was important was because congress only had 30 days as opposed to off0 to look at and approve the deal, needs two-thirds of a vote so you can't just have the republicans scuttling it. do you think that this also both in terms of its dragging on, and there's a longer period now, how much danger do we have that you get to yes and congress
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gets to no? suzanne? >> it's still very much a sort of minority danger. you know, i think the administration has done a good job of effectively talking to congress. the debate service interests in congress if they want to be out in public with the views on this, but in the end, i think it will be difficult for republicans and other opponents to the deal to pull together a coalition of 66 or 67 senators who are prepared to override a presidential veto, a vote of disapproval of any kind of agreement with iran. there is a danger, of course that the 60-day period provides for more public antics on the part of congress as well as some sense of dissatisfaction on the iranian side that the agreement that they may have committed to will then thereby take much longer so see in its first days of implementation. >> it's interesting.
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the majority of americans actually say they want a deal at this point. i think the outcome of the congressional review really depends on the substance of the agreement. if the agreement includes strong provisions for inspection and monitoring, strong limits verifiable limits on iran's ability to produce phisle material and relief then i think they're in a good place to extend the agreement, 30 off0 days, doesn't matter. if the transasia makes additional concessions and creates loopholes on any key issues that really haven't been resolved yet then i think it becomes more difficult and is conceivable that they would lose enough support that they would not be able to sustain the agreement. so i think it's pre-mature at this point to predict what the
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congressional review will look like. in general, i agree with suzanne that the most likely outcome will be there will be strong congressional opposition, maybe majority support for a resolution of disapproval, but unlikely congress would attend of the day be able to muster enough votes to override a presidential veto but i don't think you can make that judgment till you see the details of the agreement. >> bremmer: how do you respond to those who say irrespective if we have a deal with teeth that this regime will get more powerful and wealthier and they will use the wealth clearly antithetical to america and the regions beyond. how do you respond, suzanne. >> iran's bad behavior has never been a direct response to the are resources available to it. the worst abuses at home and in the edge occurred in the 1980s at times of tremendous
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constraint as a result of the war with iraq and other issues, so i'm not particularly concerned that tin flux of resources as a result of sanction res lease is going to alter what we know to be a very problematic foreign policy. we have to confront it, we have to deal with that foreign policy irrespective of sanctions or the resources available. i do think that, you know, there is an argument to be made that iran will have other interests as a result of reengagement with the world, that there will be some constraint on its willingness to go rogue and to cause trouble, particularly in the gulf because of its investment in ensuring that it sustains its economy. but fundamentally, this is a country which we have deep and long-standing divisions. those will not be resolved by a nuclear deal and we're going to have to ensure that we have a policy that is well devised for confronting it.
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>> in addition to that we see a lot of folks not just republican but in the region that strongly oppose the deal. the saudis stronglyo supposed to the deal. do you think that's an accurate read by them of their national interests that they should oppose a deal from their perspective or is it mostly posturing to get nerns to do more for them? >> whenever we're talking to allies in the region, we have to recognize their fundamental concern about iran is not the nuclear issue derricks spite the fact that it is part of the threat perception and part of the underlying worry about what iran is up to. fundamentally what they're concerned about is the support to terrorists, subversive groups abroad and role in destabilizing some of its neighbors. but, you know, at the same time we have to recognize that some of our own allies, in particular the saudis and others in the gulf have been either asleep at the wheel or engaged in a way
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that's not been productive in terms of addressing some of the long-standing concerns about stability in iraq and elsewhere, and, so, i think we have to be careful to avoid accepting the narrative of the gulf states in particular, about how to handle iran. i think the administration has been right to try to craft a diplomatic resolution to the nuclear crisis and right to try to address the issues of the islamic state in the levant in a way that is, in some respects correspondent to what the iranians are doing on the ground. >> bremmer: so gary, do we have our priorities right in we're focusing re-sentlessly on the technical side of the nuclear deal. we're not focusing on these other issues many of the gulf states and the israelis think are more important, we're not focusing on cyber, we're not focusing on ballistic miss also, not focusing on support for
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hesbollah or proxy fights with allies in the region, is that an appropriate use of american sources and the view on riern. >> i think it is. if iran acquired nuclear weapons it would pose such a direct threat not only to u.s. national interests but the national security interests of our allies and partners in the region that it's right to address that issue as a separate isolated matter. but we should also recognize this is a transactional agreement that's being negotiated. we're getting restrains on iran's nuclear program in exchange for sanctions relief. it doesn't fundamentally change the nature of the iranian regime nor various areas of conflict between the u.s. and iran as well as u.s. allies in the region in iran. to be sustainable any agreement has to be part of a broader regional context that takes advantage of the time that went by under nuclear agreement to
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encourage political change in iran and to contain iran's influence in areas. you will see the administration be more active in terms of trying to craft policies in iraq and syria and so forth that would be both an effort to reassure our allies who are nervous about this agreement as well as an effort to try to contain iranian influence. whether that will be successful or not in the short time remaining for the obama administration, i think this is going to be an exercise that's going to continue well into the next administration because there doesn't appear to be any near-term end to the various civil wars and conflicts taking placin the region. >> with syria policy clearly in disarray, iraq policy a tough slog whether you're the obama administration or any of the republicans running for president, if we have an iran deal, do you see the united
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states working more closely with the iranians to try to bring about resolution or at least improvement in those two areas and how do you think that would be articulated if so, suzanne? >> i don't think we'll see a quick condominium between the two countries. as gary said, this is very much a transactional deal for the iranians. the interest in iraq and the region remain. their perception of the regions has not and probably will not change. i don't expect to see any sort of cooperation in the short term. there are also any number of logistical issues including the key aspects of the iranian fightings force in iraq under u.s. sanctions, so there's no
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real opportunity for direct coordination or discussion. >> in many ways the americans and iranians are on the same "side" in iraq right now and so, the question i guess would be do you think there will be more high level strategic coordination, military discussions, if everyone's trying to defeat i.s.i.s. and that is the top priority, are you going to see the americans and iranians suddenly see themselves as more cooperative strategically in an area that is clearly of great national security concern to the americans and also great concern to the saudis who see things going in directions geopolitically that is not in their favor? >> i think there are real limits to the extent to which the u.s. and iran can openly cooperate in islamic state in the case of iraq. i mean, obviously, there's some tacit cooperation going on now. we're training the sunni tribal fighters to do the house-to-house fighting in ramadi. the shia militia have been
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deployed on the outskirts of town to sort of seal the ring. but to the extent we're trying to cobble together a sunni-arab coalition to defeat i.s.i.s., that would be severely undercut if we appear to be operating overtly with the iranians in a way that would cement iranian influence in iraq. so i think the limits on our ability to cooperate with the iranians in the battle against i.s. is going to continue even after a nuclear deal. >> bremmer: it's been a long slog and it's hard to be too optimistic about a break thru in the next 48 hours, but if we come out of monday with a deal, what does this mean for the region and the obama administration more broadly? >> well, again, it really depends on the details of the agreement. if the agreement is sound and in particular, has strong measures for verification and monitoring, then it curbs iran's ability to produce nuclear
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weapons for some period of time -- 15 years maybe more -- and the question is whether, having neutralized that issue we can take advantage of the hiatus in order to deal with more structural underlying problems in the region, and it's going to take a long time. i mean, the middle east is fundamentally broken in the wake of the arab spring, and the u.s. appetite for deploying major military assets and ground forces to deal with that instability is very limited. that's going to don't for the next president -- that's going to continue for the next president and i think we're going to have our hands you will full trying to deal with the structural problems in the region. >> bremmer: i get the sense gary, you're concerned that, in the 11th hour, we're going to cave and this deal isn't going to look the way we want it to. you've said this a couple of times, if this doesn't look great. what are your concerns? if the deal is lousy how will it be lousy in your view?
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how do we know it's a bad deal? >> there were a couple of issues not fully resolved in april if you look at the lausanne parameters and, in particular, the most important had to do with the verification and enforcement mechanism. we, i think, have a very robust proposal that the p5+1 with agreed to, but the iranians, naturally, are contesting that. they're trying to weaken the challenge inspection mechanism in particular. they may have agreed to to have all structure but there are a lot of details in terms of time line, process and so forth and my impression is some of the issues haven't been addressed yet, and i hope the administration feels comfortable keeping the process in place not making further concessions agreeing to continue the negotiations, because i do think, at the end of the day the iranians want this agreement, i think they need it for sanctions relief, and the administration, i think, would be wise not to feel under any
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particular pressure to get a deal in the next 48 hours. >> bremmer: a broader question about the deal -- if we get it done and the iranians stick to it and they open up and we invest and the market develops and they're producing more oil the place is run by theocrats. it's fairly locked down and suddenly all the forces of globalization are buffeting what many would say would become one of the most dynamic economies in the region. how confident are either of you that this country, that this regime can stay together? and if it doesn't are we looking necessarily at a very messy transition? suzanne, do you want to give a shot at that one? >> i almost would never try to predict political change in iran. if you think about it, this is the regime that survived
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everything short of the plague -- war, civil insurrection at home tribal insurrection earthquakes drought, just about everything else. signing, in fact, it's a fairly stable regime at this point despite the upheaval we saw only back in 2009. we've seen a real reconsolidation of the authority of the i lank republic since the election of president rouhani two years ago, and i think they're well prepared to handle the influx of capital, of contact with the wider world in effect, in part, because their population is already exposed to so much of this as a result of connections to the internet and other ways. that's not to say iran will never change. it's not to say that the islamic republic is going to be around forever. but i think, in effect, we can expect that we will be dealing with some it regulation -- with some iteration of the current leadership for
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some time to come and should make our plans around that. iran can grow a great deal. it's an incredibly wealthy country with a well-educated population and a really diverse resource base, so i think we're going to see a lot of opportunity but, at the same time, iran is not china doesn't have the same ability to impact the international marketplace and won't draw the same sort of demand, irrespective of the political risk climate there. so it's going to be an interesting time but i think one relatively stable. >> there are a lot of governments in the middle east certainly thought they were stable and found out they were somewhat less over the last few years and i guess that's the question. gary, do you want to respond to this? >> i'm include to agree with suzanne. i think it's unlikely we'll see any dramatic political change in the near term. the islamic republic seems to be pretty firmly entrenched. they survived what was a fairly serious, spontaneous, internal
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threat in the green revolution in 2009. in the longer term, i think it's very hard to predict. once khamenei dies, no one knows who the next will be. how that develops in the future is hard to say. >> bremmer: gary samore suzanne maloney, thank you so much for joining me today. >> thank you, ian. >> bremmer: we now turn to children. a massive 30% correction wiped out more than 3 trillion u.s. dollars in wealth. beijing is working to turn it around, but with government intervention many argue was a large step backward in the chinese government's plans for economic reform. recent drama in the u.s.-china relationship the u.s. government's office of personnel management revealed details this week about one of the worst hacking scandals in u.s.
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history, with beijing alleged to have stolen records of 25 million people. katherine archuleta resigned today. kevin rudd joins me. the economist came out and is doing his best and apparently not effectively in propping up the markets. we've got 30% down and the last couple of days almost as dramatic going back up. >> if you bought the stock in june last year, you probably would be about 85% up. so let's just understand that this is a significant correction
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in the market. you've got chinese assets which have been overpriced, even against a basic analysis with their standard price ratios. but to draw too much of an implication from this in terms of, number one the overall performance of the market in recent times and, two, what it means to the economy in general and, three, the direction of reform, i think we just need to take a calmer pspective. i think the economic reform program is continuing and let's face it, the chinese government is not the first government in the world to intervene in markets. u.s. of a. did that in the early '70s, japanese did it in the early '90s, and hong kong government did it in the late '90s. those were larger order of magnitude than this and this is significant intervention by the
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chinese government but not unprecedented. >> bremmer: but as you say the chinese market was in effectively bubble territory before this drop and in historical context, don't look that big. yet the statements made by the chinese leadership, by the state media, the interventions made certainly seemed both significant, a little bit alarmist domestically. is this -- i mean, are they acting too conservatively? is the the issue not the investors are taking a hit or being protected from the market actually becoming markets. >> if we step back a little, china is in transition, the economy is in transition. 30 years or so ago, this was a socialistic economy where there was no market. 30 years later it's a mixed economy where there is some market and they're heading ia direction where they say the market will be the central organizing principal for economic behavior. so this is the transition period and i think what you see as far as these actions by the chinese
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government on the stock market is a government which is learning the difficulties of handling a market in very turbulent circumstances. i think this institution, the shanghai exchange, ain't as old as the new york stock exchange, and if we were to look at the history of the new york stock exchange over a long period of time, you will find interesting gyrations as well. so my real point is this is a market in transition. people take time. this has been a significant intervention and, yes, they have acted to seek to protect individual investors. >> xi jinping, is this the biggest knock on him as president that you've seen or would you point to something else? >> i think if you stand back a
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little, there's a great danger as we look at china that we are captured by the instantaneous rather than looking where the country and economy is going to in the long term. i am much less concerned at an anist of china about what's happening in the stock market at present than i am how stable the chinese growth rate is over time. that i think is a much more legitimate basis for lengthy public policy debate around the world than the stock market. bearing in mind the stock market occupies a fairly small proportion of chinese total economic activity. it's not par reel role to what's played by the n.y.s.e. in this country. so frankly, i think the real challenge they face and if i was xi jinping, i would be focused ton sustaining growth rate at 7%, i think they can keep it as 6 over time. it's going to get harder.
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global is down, europe bumping on the bottom, america a bit better and chinese consumers are not consuming as much as the chinese government would want. they're still saving like frenzy. these are the big questions which are actually on the mind of the chinese policy leaders how do we engineer the deep, economic transition and growth model? the stock market frankly is a smaller concern over here. >> bremmer: why not let the markets slip further? again a small piece of the economy, 90 million investors but short-term people have taken massive gains in the runup, they have been told to do so, get in the market because these are becoming more international. in other words, is the danger here that they've not left it alone and this is a problem, but rather intervening too much. the problem long-term is one of growth that requires opening the economy, doesn't that mean that you don't want to see these sorts of interventions? >> i think, in an ideal world
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into the future you don't want to see government interventions in markets of this order of magnitude, but, again, chinese actions are not unprecedented. it's being done elsewhere. within a decade or so ago, it was done in hong kong, which is you know, not far from beijing. but the overall point is this, that this is a government dealing with a the regulation of financial instruments and financial markets which, historically, they have not had to do because they have had a centric planned economy. secondly, they're concerned about the impact on individual investors, and while there are not voters in the chinese system, they're concerned about public support for the government. they're not unique in that sense. so i think this is frankly a stock market which is not mature. it is a stock market which only barely has 20 25rbgs years worth
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of history and -- 20, 25 years of history and as a consequence is a process of learning on the way through. investors in my country of australia have seen ups and downs over decades and you kind of, you know you're accustomed to swings and round about when it comes to the stock exchange. chinese investors haven't had that experience. so they've acted for political reasons to stabilize the market. remember, this is a one-party state. it is a country which says we are not about to become a liberal democracy. we are an authoritarian state and, in my judgment hearing what could best be described as a state capitalist model. so it will always be different to what we anticipate in our own countries. >> bremmer: this will be gone in a week, we'll stop talking about it but i wonder, if we think about the longer term, is there a danger that the chinese government is increasingly going
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to be not democratic but nonetheless, increasingly caught up with the dmandz of chinese constituents, a component here and there to make them take their eye off the ball for the structural changes which are so hard to implement? >> remember the chinese are dealing with something different in history, pursuing market forms in the country which has the effect of disseminating information across the society as well while maintaining the fabric of a one-party state. and we looking across the collective west, would say well, that's not actually sustainable long-term. xi jinping's determination out of the chinese communist party is to prove he could right against what we would describe as the inevitable forms of history so they are imembarked in a unique experience in my judgment. we are going to have the consistent, difficult interrelationship between a state apparatus which wishes to
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maintain political control and on the other hand, realizing at the the optimal use of the resources of the chinese economy lie in letting the market rip. so that's the dilemma. how it will turn out in the next decade, difficult to tell, but xi jing ping believes he can reconcile the two forces. >> development and priorities are a consequence of where the chinese and americans are now and also changes in the bilateral relationship. let me shift you to that. can 25 million americans with their records taken a belief or allegation from circles including the u.s. government that this originally emanated from china not a great deal of response from the chinese government on this front. what's the u.s.-children relationship look like to you now and how much of a problem is this? >> well, cyber, i think is a real problem, and not, of course, just in the
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u.s.-children relationship but in the u.s.-russia relationship as well and a range of other state and dare i say it non-state actors. it does point to the absolute need for what is called in the distance now rules for the road, rules of the road, both in terms of state-to-state cyberactivity and also state the corporation or individual cyberactivity. at present it's a bit like the wild wild west out there. it's like dodge city 1680 without a sheriff. that's what the fiber looks like in terms of protocols for how actors should behave. so in the overall spectrum of chinese-u.s. relationship this is one of the big once but wrong to conclude it's the only one. >> bremmer: south china sea? the recent developments in the south china sea have been obviously watched acutely in the states, not just the country in the region.
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the photographs posted by cnn coming off the back of arial surveillance of united states of chinese land re lamedication activities in the south chin sea have taken the debate into the main street out of the thing tank where people see what they believe will impact the relationship. my argument is you need a framework for the relationship which could manage the sort of very large differences and incrementally resolve them over time and, at the same time place primary emphasis on what you can do to get up in the world and let me tell you there is a lot of those starting with the korean peninsula. >> bremmer: before i go to korea, let me talk about u.s.-china for a second. sitting here in the united
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states, it seems to me you can look at a lot of what the chinese are doing, whether cyber, south china sea, anti-monopoly issues and frame it as things the chinese are doing noto the americans that we don't like. is that an appropriate way to think about the challenges in the u.s.-china relationship or should we be a little more balanced? >> well, as a former prime minister of australia, i never come to another country and say let me tell you what you should be doing. i don't think that's helpful. how america itself construction its own policy's responses to the people's republic is a matter of the u.s. body of politics. but what i have experienced in relations is the beginning of wisdom to understand how the other person thinks. the american view of china's behavior in the south china sea is clear. if we were sitting in a tv studio in beijing having a similar conversation, the questions would be like why does the nate fly spy planes up and down the 12-mile limit every day of the year? and sometimes day in, day out
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collecting data on us? why is this the united states through complex array of alliances in the west pacific, why are they seeking to contain china's freedom from policy movement and freedom of policy action? surely this is all part, from the united states' perspective, of keeping china contained within its boundaries and at the end of the day seeing the chinese communist party system fall. having spent 12 days in china myself, that's the internal narrative in so many parts of the chinese think tanks about what motivates u.s. policy but it is negative about what the u.s. is doing, as i see it, the reaction to china is in this country. so if those two realities exist, the real challenge for the future, is well, it is a good
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thing this relationship continues to retierate in the future and slides or should it begin constructing a different way in which such radically different countries with different political systems can construct common ground in the future? and i've always been in the latter camp. >> bremmer: you've mentioned an area for common ground you suggested was in korea. do you want to give us a sense of that? >> yeah, because here in the u.s. and rightly so we're focusing on the iranian nuclear negotiations. these are significant, but let me tell you, if they're resolved and resolved successfully, i believe the lens will increasingly get on what's happening with the north korean weapons program. this is a state which already has sufficient nuclear material to manufacture up to five, ten bombs. secondly, it has quite significantly advanced rocket tri. thirdly, it's miniaturizing weapons to put them on the end
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of rockets. and if you were sitting in south korea, japan or thation as they perfect i.b.m. technologies, this remains a bigger threat for the wider region than does iran, even. so as this unfolds over time, i believe there will be an increasing basis for strategic cooperation between the united states and china on how do you achieve the denuclearization of north korea. ten years ago, very little common ground. now, i think xi jinping would see the north korean weapons program is potentially derailing so much of what he's seeking to achieve for his country and the region. >> bremmer: now even a willingness, do you believe on the part of chinese leadership to engage with the americans to talk strategically about the peninsula, if that was on the table? >> i believe so, very much so. and i think these sorts of dialogues are very important.
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bear in mind, if you're looking at the world again through the lens of beijing and trying to develop your economy, managing this market transition with all the bumps and twists in the road like the stock market which goes out of control for a few weeks and with the objective of raising living standards elsewhere in china where you've still got hundreds of millions of people still in poverty, the main name of your game is to complete the development of your economy. over here, you've got this pyongyang whose leader demonstrated attitude to nonproliferation through his consistent underground testing program, from xi jinping's point of view this is bad. the commonality of interest is becoming sharper having the u.s. and chinese engage in this sort of dialogue, is i know in both
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countries, and the constituency in washington and beijing the say. we can talk about pace of market based reform in the economy and implication force chinese growth into the future and impact on the global economy, that's important. when i look at the nuclear weapons program this is the area where the u.s. and china have so much in common. >> bremmer: thanks for joining me. >> thanks for having me on the program, ian. >> bremmer: is there a possibility that democracy could arise from within scrape? >> i made a bet with somebody that even with the presence of iraqi forces in iraq presumably to bring democracy that saudi arabia will democratize before your eyes. >> rose: do you still believe
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it's true? saudi arabia will democratize before iraq? >> i believe saudi arabia is undergoing a program of reform that is not only seriously but adamantly pursued by the government in spate of the opposition -- in spite of the opposition of the cob servets inside saudi arabia against modernism and in spite of efforts from the outside to influence it to move in ways it's not going to. >> rose: how does that manifest itself? >> our democracy will be our democracy. >> rose: what will they look like? >> the institutions will look like our institutions. >> rose: what will they look like? >> like the institutions emerging from the the dialogue we have in saudi arabia. >> rose: and what happens from the royal family? your grandfather brought it
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together. >> my grandfather, his grandfather and his great great grandfather, this is a family that has come and come back again three times, the kingdom of saudi arabia was established in saudi arabia if you read the book. >> rose: i think you know i've read it. >> there is a connection between the people of the country and this family. >> rose: you know -- if the family did not serve a purpose for the saudi system they would be like any other family, they would disappear from the scene. but we are serving the people of saudi arabia, and the service we are going to do now is the service of bringing modernization to saudi arabia. >> rose: these are what we are talking about in terms of reforms coming from the crown prince. >> exactly. >> rose: those reforms will be enacted? >> and the king, remember, has
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started the reform by establishing the basic law that provides rights of the citizens and the responsibilities of government, and established a conservative council, and his reforms are what started the ball rolling in saudi arabia and the crown prince is pursuing it with vigor. >> rose: it is said saudi arabia, regardless of how fast the move to democracy, it is a society that is of change, having to do with some of the things you're talking about. >> you're absolutely right, it's a society in change, but we have two aces in the deck that will work for us, and i hate to use
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again those. it is a family that works for the interests of the people, that has the judgment to know if a bad decision is made to go back and correct it. that will move with the people, for the people, and not in spite of the people. and the other aspect of that is the face of the saudi citizen and their religion, which will be the binding force that allows this great transformation to happen in the country and keep the social cohesion of the country together and the unity of the country together. >> rose: for more about this
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this is "nightly business report" with tyler mathisen and sue herera. >> what a week drama in greece volatility in china, big swings in our market so what should investors inspect when the corporate earnings parade starts to roll? >> on track, the head of the federal reserve says the central bank remains ready to hype freight this year. >> new rules how the change in our nation's hostage policy alters the game in the fight against terror. the final part of our series "held hostage: the big business of ransom" tonight on "nightly business report" for this friday, july 10th. good evening everyone and welcome. hope in greece a rally in china resulting in big gains on wall street. investors were in a buying mood


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