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FAREED ZAKARIA GPS

India Holds Elections; Latest on Israeli-Palestinian Peace Process

Aired May 24, 2009 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


FAREED ZAKARIA, HOST: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria.

Last week, the results of the Indian elections were announced, in which 420 million people voted. That's more than all the people -- men, women and children -- who live in the United States, Britain and Canada combined.

The process, which is five election days over the course of a month, the votes cast, almost one million polling places, is all by far the biggest exercise in democracy in the history of the world.

But that's all just part of what made it really remarkable. This was an election in which the Indian electorate -- one of the poorest, least educated in the world -- voted in ways that were stunningly intelligent.

They rewarded the ruling Indian National Congress for economic growth. But more importantly, they punished parties that relied on appeals to hatred, fear or the politics of identity -- caste, religion, ethnicity. It was a remarkably modern vote for a country that is now clearly impatient to move into the 21st century.

China's coming out party as a world power was probably the Beijing Olympics, the opening ceremony. It was a perfect expression of its strengths, a great and expensive display of perfect organization, choreographed by a highly competent government.

These elections might prove to be India's coming out party. And it's fitting that India's rise has been marked not by some great display of governmental prowess, but by its people, in a messy, chaotic, bottoms-up process, but one that has the power to stir the soul.

Meanwhile, in Washington, the Middle East peace process, Iran and Guantanamo are all bubbling up. And we will talk about it all in just a moment with a great panel of experts. And then, later in the show, Tzipi Livni, Israel's leader of the opposition, and Nandan Nilekani, perhaps India's most famous CEO.

Let's get started.

(BREAK) ZAKARIA: So, we'll start with the Middle East. And the main question that occurs to me is, there is a growing chorus of support for the two-state solution from the usual suspects, but also from countries who haven't supported it before. The king of Jordan talks about the 23-state solution, meaning the 23 Arab countries would recognize Israel.

In fact, right now, there does seem to be only one major government that's holding out. That is Israel. Why?

Before we get to this question, let me introduce my panel.

Dominique Moisi is the founder of the French Institute of International Affairs, and now, a visiting professor at Harvard University. He's got a terrific new book coming out, "The Geopolitics of Emotion," which I promised I would promote, and just did.

Gideon Rose is the managing editor of Foreign Affairs magazine. He served on the National Security Council during the Clinton administration.

Fawaz Gerges is a professor of international affairs and Middle Eastern studies at Sarah Lawrence College. He has written a number of books. The most recent is "The Far Enemy: Why Jihad Went Global."

And Bret Stephens is the foreign affairs columnist for the "Wall Street Journal." He used to hold the job of editor-in-chief of the "Jerusalem Post."

Welcome to all of you.

So, Bret, what is the answer to my question? Why is it that you can get everybody now to say that they support the two-state solution, but one guy you can't get is Benjamin Netanyahu? When he's sitting with the president of the United States in the Oval Office, he won't give Obama that.

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST, "WALL STREET JOURNAL": It's a good question. In fact, in my column of last week, I advocated that he endorse the two-state solution himself.

I mean that train left the station a long time ago. Ariel Sharon's cabinet, when it endorsed the Roadmap in 2002 or 2003, also endorsed the two-state solution. There's broad support for it in the Israeli public.

The question isn't so much the principle. The question is the details. And what I suspect Netanyahu was doing was probably playing for concessions.

His overriding concern is Iran's apparent move toward becoming a nuclear weapons state. He sees linkages vis-a-vis the Obama administration between what the United States is prepared to do toward Iran and what Israel might be prepared to do with the Palestinians.

And perhaps the thinking -- I'm really guessing here -- perhaps the thinking is that this is a concession he can hold in his pocket until a more propitious moment.

GIDEON ROSE, AUTHOR, MANAGING EDITOR, FOREIGN AFFAIRS MAGAZINE: Now, I actually don't agree. I think that a little of this...

STEPHENS: There's a surprise.

ROSE: I think this is a bit like Pakistan. You have a situation in which the government is focused -- or obsessed, even -- with an external national security threat and is choosing to ignore or dismiss its internal national security threat, and hope that, basically, they don't have to deal with it.

The Israeli government just is not seized with the idea that settling or finding some way to get off the dime on the Palestinian issue is crucial to Israeli security, when everybody else is convinced that it is.

STEPHENS: Well, I'm not sure that's exactly right. The Israeli government has been seized with this idea, at least since the Madrid talks in 1991...

ZAKARIA: No, but to be fair, the point you just made was that he's trying to trade concessions on Iran, which is what he's really concerned about, with concessions on the Middle East peace process, which is...

ROSE: Yes, but look...

ZAKARIA: ... what the implication seems to be, what the Americans are concerned about with...

ROSE: Yes, why don't the Israelis see the peace process as crucial to their own future?

STEPHENS: I think the issue here is sequence, because for the Israelis there are a number of clocks that are ticking. One is the Iranian clock. That's a short-term, a seemingly short-term clock.

The second clock people aren't talking about are the Palestinian elections that are coming up, which Hamas might win.

And the third clock, much longer term -- I don't know, we can debate how long a term -- is the demographic issue between Israel and the Palestinians.

FAWAZ GERGES, AUTHOR, "THE FAR ENEMY: WHY JIHAD WENT GLOBAL": I think the debate about the two-state solution has to start with a basic premise. That is really the settlements.

And I think, as you have noticed, that President Obama has made it very clear that the settlements must be stopped. Because I would argue that, if you don't stop the settlements now -- I mean, the Israeli government is devouring Palestinian land -- there is no Palestinian state to have if the settlements keep on growing.

The Israeli government basically is settling East Jerusalem, I mean, in (ph) order (ph). And this is -- the question is not just about for Netanyahu to say, we accept the premise, land for peace and a two-state solution.

I would like the Israeli government to make a clear commitment to freeze the settlements, and then to roll back the settlements, and hopefully to deconstruct the settlements in order for a Palestinian state to exist.

ZAKARIA: But then, you may want that. There's no chance it's going to happen.

People keep saying -- everybody talks about the importance of freezing settlements. Israel has the power on the ground. They're not going to do it.

GERGES: Fareed, this is the irony about what Netanyahu says. He says, I would like the Palestinians to recognize the Jewishness of the Israeli state. In fact, if you really delve deeper into his argument, in fact what he is doing, unwittingly, he's bringing about basically -- he's working against the same principle.

Because at the end of the day, if the settlements keep on growing, if Israel keeps really settling Palestinian land, you're going to have really a one-state, bi-national state in the future.

DOMINIQUE MOISI, AUTHOR, "THE GEOPOLITICS OF EMOTION": Well, what strikes me -- for a country whose first prime minister, David Ben-Gurion, used to say, "It is reasonable to believe in miracles" -- the Israelis are becoming so pessimistic, so fatalistic about their future.

They say very often, well, of course, we should have a better system of electoral representation. Of course we don't have the best government. But it doesn't matter. By the end of the day, there's no one to talk to.

And they said, the future is not about peacemaking. The future is about, in fact, maintaining the fragile status quo in which we live. And the status quo is in some ways comfortable for Israelis. And this is the most difficult thing to break.

And so, the problem is basically a problem of leadership. I mean, where is the Israeli leader that can say to the Israeli public, the security of Israel rests in the long run on the legitimacy of Israel?

There are 13 million Jews in the world. There are 1,300,000,000 Muslims in the world. Israel needs allies. And Israel keeps alienating these allies.

ROSE: Well, to be fair, the problem of leadership is not just on the Israeli side.

MOISI: No, that's true.

ROSE: It's at least as much on the other side. MOISI: Absolutely.

ROSE: In fact, the Palestinians, in a divided state of their own, with Hamas and the P.A. is controlling part of the Palestinian community, are not exactly making the moves they need to to convince the Israelis to come on board.

But it's precisely because I agree with your analysis -- and I think that the Israelis need to make the first move. And it can't hurt them. What would stopping settlements or freezing settlements, what would it cost them except domestic political issues on the Israeli side? It could just get something going.

Do you have any problem with that?

STEPHENS: Well, I mean, I think Fawaz has really made a fundamental point here. The Israelis are demanding -- and I think absolutely rightfully so -- that the Arab world recognize Israel as a Jewish state.

That's how it was conceived. That's how it was recognized by the United Nations. That's how it was recognized by Harry Truman. And that's how the Arab world must recognize it.

That's why the Arab peace initiative of 2002 is in some sense a dead letter, because it slips in the whole question of refugees.

But the tradeoff there is obviously the issue of settlements. If you're going to have a Palestinian state for Palestinians and for Palestinian refugees to return to, you need a Jewish -- an Israeli state for Jews.

But you can't make the argument, well, then, the populations need to be in some ways intermingled. I mean, if you're going to say, make a one-state solution argument, then there can be no problem with the settlements in the West Bank and -- well, no longer in Gaza.

ZAKARIA: So, let me understand this, Bret. Am I hearing you say, you're criticizing Netanyahu for not endorsing the two-state solution. You're coming out in favor of a freeze on settlements and perhaps even dismantling some, just to clarify where the geography and population are.

I think you should start working for another (ph) "The Guardian" (ph) or...

STEPHENS: No, no, no.

ZAKARIA: ... (UNINTELLIGIBLE) rather than the "Wall Street Journal."

STEPHENS: No, no, no. Don't get me wrong. My position remains, as ever, unchanged. But this is the fundamental point.

I mean, the issue of settlements remains salient. And in some sense, the question of settlements remains -- or the placing of settlements is a legitimate tactic, if you have an Arab world that refuses to recognize Israel as a Jewish state.

The moment...

(CROSSTALK)

ZAKARIA: But Bret, you've upped the ante a little bit on this Arab states recognizing. They haven't said they won't. The Arab League declaration was relating to -- well, it basically says...

STEPHENS: No. You're mistaken. Mahmoud Abbas stated clearly...

ZAKARIA: ... if you have a two-state solution, we'll recognize Israel.

STEPHENS: ... he will not recognize Israel as a..

ZAKARIA: Yes, yes.

GERGES: Since we're talking about the Arab world, truly, there has been a sea change in the Arab world towards Israel. I mean, a sea change. All the Arab states -- all the Arab states, including the so- called radical Syria and Libya -- recognize now the so-called, the comprehensive peace Arab initiative. And that is land, land for the peace formula.

In terms of the -- I fully agree about the lack of political will on the part of leadership. Despite, Fareed, everything that has happened, despite the bloodshed and the pain, you have between 60 and 70 percent of Palestinians and Israelis who subscribe to a two-state solution -- 70 percent, 68 percent of those camps.

The new factor in the equation is really the American leadership. I think this is the first time in many years when you have the president of the United States basically publicly saying, you must begin with the process of freezing the settlements and recognize the land-for-peace formula.

And more than that, I think it's -- I mean, till now, Israel has had a blank check, literally a veto over American policy...

(CROSSTALK)

ZAKARIA: We can go on about this forever.

And we will be right back.

(BEGIN VIDEO CLIP)

GERGES: Regardless of we think of the mullahs, regardless of whether the mullahs are our cup of tea, Iran has never invaded a neighbor in 200 years.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And I am back with Dominique Moisi, Gideon Rose, Fawaz Gerges and Bret Stephens.

So, Gideon, what about Bret's point about what Netanyahu wants? Is this a -- is it true that this is the great existential problem in the region, that is, the rise of Iran, and not the Middle East peace process?

ROSE: No. Iran is a major challenge to Israeli security. And a nuclear-armed Iran with fancy missiles would be an even greater challenge. But other states have dealt with such challenges before, and Israel has a very strong, serious nuclear deterrent of its own.

Bret, what are Israeli nuclear weapons for, if not to deter Iran? And if they're not good for deterrence, why not throw them into the pot as a bargaining chip for a nuclear-free zone across the Middle East?

STEPHENS: Since you're such a good realist, let's not talk about the Iranian nuclear weapon. Let's talk about the Saudi nuclear weapon and the Egyptian nuclear weapon...

ROSE: So, let's put the Israeli...

STEPHENS: ... and the Turkish nuclear weapons...

(CROSSTALK)

ROSE: ... (UNINTELLIGIBLE) problem (ph) on the table as nuclear- free zone.

STEPHENS: ... and tell me how containment or mutually assured destruction works when you have a Middle East of four or five nuclear weapons states.

But I want to go back to a point that was made very briefly earlier. The sea change that you see in the Arab world, it seems to me, isn't so much a function of Obama, it is a function of Iran.

You listen to people like Hosni Mubarak, and they keep talking about the Persian threat. The fact that Hezbollah operatives were seized, were caught in the Sinai Peninsula raised huge alarm in Egypt.

And the sense is that the Iranians are making common cause, not only with Hezbollah, which has obviously a sectarian connection, but with every radical movement in the Arab world that has reasons to want the regimes (ph) overthrown (ph).

ZAKARIA: All right, so, on this issue, how exercised (ph) are the Arabs, really, about the Iranian threat?

GERGES: They are. And the United States, as you know, since 2005, has been basically playing this particular card: the moderate, Arab, Sunni-based states versus Iran. And I think, to a large extent, there's a great deal of competition now between the so-called Sunni- dominated Arab states and Iran.

But let me -- I mean, you asked the question about Iran. Ironically here, here you have Israel that has -- and you're absolutely correct -- almost 200 nuclear devises, saying that Iran acquiring one nuclear devise would represent an existential threat to Israel.

Iran, Fareed, is a rational player. Regardless of what we think of the mullahs. Regardless of whether the mullahs are our cup of tea, Iran has never invaded a neighbor in 200 years. Iran has never aggressed against its neighbors.

And the question is, we must be able to find a formula to engage the Iranians. And I think, at the end of the day, we must entertain the idea, could the world basically coexist with a nuclear Iran? In addition...

MOISI: I think...

GERGES: I mean, this is a legitimate question. But basically to follow Netanyahu and say, Iran represents an existential threat to Israel, well, Mr. Netanyahu you have 200 nuclear devises. And what for? Can't you deter Iran?

And since Iran is a rational player, since Iran is a rational actor, I believe the Iranians...

ZAKARIA: Let Dominique weigh in on this.

MOISI: Yes, well, the problem is that Iran may be a rational actor, but Iran doesn't speak as a rational actor. And would you give willingly the absolute weapon to a regime imbued with such an absolute ideology?

And the real problem, also, is that Ahmadinejad is shrewdly, but dangerously, manipulating the emotions of a country that is a country of survivors. When Israelis are facing with what they call an existential threat, they have the memories of the shah (ph). You could say it's the overweight of history. But it's part of them.

And so, this is an essential factor which you have to put them in.

GERGES: May I add one point on Iran? I mean, I think you're absolutely correct. The rhetoric of Ahmadinejad does not help -- very reckless and silly and stupid.

Let's remember, I think Iran has achieved most of its objectives, now. Iran now is recognized by the United States. The United States is willing to sit down and negotiate with the Iranians.

Iran is a regional, pivotal superpower. The United States has -- I mean, it talks about the Islamic Republic. The United States is willing to recognize the legitimate interests of the Iranians.

And I think a formula could be found where Iran would say Iran has the right, the legitimate right for Iranian enrichment without Iran really developing a nuclear weapon. And here the final point, Fareed. Iran now faces a grave social and economic crisis, a grave -- more than 70 percent of Iranians are under the age of 30 years old. Basically...

(CROSSTALK)

STEPHENS: You've just said Iran is a strong state, has achieved these objectives. And then, oh, by the way, it turns out to be incredibly brittle, because it has these social factors...

GERGES: That's what I'm saying.

STEPHENS: ... that must be terrifying the mullahs. They understand. They were swept in in a revolution.

ROSE: Do you think they're going to launch a war just to get out of their...

(CROSSTALK)

GERGES: But what I'm really saying -- I didn't complete -- I didn't complete my...

(CROSSTALK)

GERGES: Sorry.

STEPHENS: Well, A, that wouldn't be the first time in history.

But I think your other premise is questionable, at best, because, you know, look. There are regimes that are classic nation-states. They operate according to certain rules which we observe. But there are also millenarian, revolutionary states.

ZAKARIA: What has Iran done in the last 30 years that makes you think it's millenarian? Everywhere that I've watched, it seems very shrewd, calculating. It pushes where it can. It goes back -- has been defeated to a certain extent in Iraq. It's quietly licking its wounds. It backed a couple of the wrong militias.

You know, there doesn't seem to be...

(CROSSTALK)

ZAKARIA: They don't watch a lot of...

ROSE: How is it connected to the Palestinian issue?

GERGES: I mean, a point -- sorry, please.

STEPHENS: One, it's connected to the Palestinian issue, because lately it has become, A, the principal funder and supporter of Hamas. It has become the mouthpiece of the radical Arab world through Hezbollah. And you saw this in this extraordinary Sunni support...

(CROSSTALK) ROSE: If the Islamic Republic were to...

STEPHENS: ... for Hezbollah in the 2006 war.

ROSE: If the Islamic Republic of Iran collapsed tomorrow, Israel would still be stuck as the overlord of millions of people who don't want to be part of its state, and would still have to figure out some way of dealing with that problem.

STEPHENS: You're saying (ph)...

GERGES: Two-state solution.

ZAKARIA: And as you can imagine, we could discuss this forever. We will discuss it forever, but we have to move on.

Final thing, Guantanamo. Gideon, was this a case where Obama seems to have done that rare thing, which is actually to have miscalculated? He seems to have announced something pretty declarative early on in his presidency. We're going to close Guantanamo within one year.

And he seems to be back in the same problem that Bush was. If you remember, in the last of Bush's presidency, he kept saying, I kind of want to close Guantanamo, but I don't know what to do with these people.

ROSE: The problem is with these kind of events is that a bad choice doesn't get any better over time. So, the Bush administration had real tough choices. But once that he created a problem getting -- closing Guantanamo is more difficult than dealing with it in the first place.

And the Obama administration has no choice but to sort of fudge this, because they can't keep it going forever, and they also can't just let everybody go. So, it's a tough one, and basically, everyone should cut him a lot of slack.

ZAKARIA: Does this affect Obama's image abroad? He was meant to be the anti-Bush. One of the things people didn't like about Bush was Guantanamo.

MOISI: Well, it affects the image of the Congress, who acted in such a political, politicized manner. I think, personally, the initial intuition of President Obama was the right one, combining both ethics and politics. We've seen politics with a small "p" at work within some parts of the legislative power of the United States. I don't think it affects the image of President Obama.

The closing of Guantanamo does not hurt, in my mind, the security of the United States. It improves the image of the United States.

ZAKARIA: The last word.

ROSE: I'm not entirely sure that the closing of Guantanamo wouldn't in any way affect the security. The question is, is the price to be gained -- is the price to be lost worth the value that you're gaining from it? And I think the answer is maybe "yes."

I would give the Obama administration a lot of the benefit of a doubt here, that it's handling a very tough issue in a sensible, calibrated way.

ZAKARIA: On that note, Bret Stephens, Gideon Rose, Fawaz Gerges, Dominique Moisi, thank you all very much.

And we will be right back.

(BEGIN VIDEO CLIP)

TZIPI LIVNI: On the Iranian issue, there is no coalition or opposition. Iran is a threat to Israel, a strategic threat. Iran is a threat to the world, to the entire Arab world and Muslim world, and the free world.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: We've been talking about the fact that Benjamin Netanyahu is not endorsing a two-state solution. So, let's hear from an Israeli leader who does.

Tzipi Livni is Israel's former foreign minister. She was beaten out by Netanyahu for the top job, and she is now the leader of the opposition, the Kadima Party.

I sat down with Livni a short time ago.

(BEGIN VIDEO)

ZAKARIA: Tzipi Livni, thank you so much for joining me.

TZIPI LIVNI, LEADER OF THE ISRAELI OPPOSITION KADIMA PARTY: Thank you.

ZAKARIA: You yourself have called this new government very right wing.

LIVNI: Yes.

ZAKARIA: Tell us what that means. What does it mean to a global audience to have a very right-wing Israeli government?

LIVNI: I believe that just saying "no," or just looking at the threats in the region, without seeing the opportunities that there are, it's not enough. There is a new camp of moderates in the region.

How can we work with the Arab states, not only in order to confronting Iran, but to change realities for the future, to work together? How can we work with -- when we are looking at the Palestinian side?

There are those from the right wing saying, oh, we have Hamas in Gaza Strip, which is true. They are acting in terms of their (ph) role (ph) against Israel, which is true. We need to undermine Hamas. We need to act against terror. And I believe in all of this.

But simultaneously, my strategy is a dual one. I say, OK. Let's undermine Hamas. Let's act against terror, as we should.

But we need also to work with the moderates in order to create not only a vision of peace, but to translate it into concrete agreement. And I believe that these are the differences between us and what is called the right wing in Israel.

ZAKARIA: You know that there are some people, though, who say that it is Bibi Netanyahu who will be able to make peace with the Palestinians, just the way that Richard Nixon went to China.

And in fact, this is not just being said by Likudniks. It is being said by people in the region.

I had a conversation with the Syrian ambassador to the U.S. I want you to listen to what he said.

LIVNI: OK.

ZAKARIA: OK?

(BEGIN VIDEO CLIP)

ZAKARIA: It strikes me as hopeful that you believe that a peace of sorts could be instituted between Israel and Syria, despite the recent Israeli election, despite the fact that the foreign minister of Israel is Avigdor Lieberman.

You believe that you can do business with any Israeli government?

IMAD MOUSTAPHA, SYRIAN AMBASSADOR TO THE UNITED STATES: Personally, I believe that it's better to deal with someone like Lieberman than to deal with someone like Livni. At least Lieberman is candid. He exactly says what he believes in.

Tzipi Livni and her colleagues were, as I said, talking all the time about their desire to make peace while committing the atrocity in Gaza or doing other things similar in the rest of the Palestinian territories.

(END VIDEO CLIP)

LIVNI: Oh...

ZAKARIA: What do you think?

LIVNI: OK. It looks like he is looking for excuses to say that there is no partner on the Israeli side. That's fine.

But talking seriously, listen. Asking whether -- let's hope so.

I mean, as I said before, I'm an Israeli. I entered into Israel politics even though I hate politics, because I was driven by the understanding that the division of the land is in Israeli interest, that we need to address this issue, and we need to end this conflict, because this is the explosive in which we are sitting on. And this is the reason for me to be in politics.

If somebody else, if the current government is doing so, it will be blessed. And I said to Netanyahu also that, even as the leader of the opposition, if he's going to do the right things, I'm going to support him. Kadima is going to support the government from the opposition, if this government is going to do the right things.

But as I said before, in the negotiations before the formation of the government, I came to the conclusion that this is not going to happen. But let's see.

ZAKARIA: You said in a speech to AIPAC recently that, on the issue of Iran, there is no opposition party.

LIVNI: No.

ZAKARIA: If Prime Minister Netanyahu decides to have a military strike against Iran, will you support him?

LIVNI: I said to Netanyahu, and I said publicly, that on the Iranian issue there is no coalition or opposition. Iran is a threat to Israel, a strategic threat. Iran is a threat to the world, to the entire Arab world and Muslim world, and the free world.

And now, during the next few months, and since this is the beginning of the engagement process between the United States and Iran, we need to sit together, Prime Minister Netanyahu and myself, and to have -- to assess the situation and to make the decisions.

ZAKARIA: Do you believe that President Obama's overtures to Iran are the right move?

LIVNI: This is a decision that was taken by the United States of America, and we respect it.

But I think that, in order that the dialogue will be effective enough, I think that there are certain things that need to be done and accompany this, including a timeline, including making clear to the Iranians that the fact that the international community or the United States start this, it doesn't mean that they gave up or that the world is going to accept them with a nuclear weapon.

This is just another way to stop them, in a different way. But there is or (ph) else (ph), and all the options are on the table. And this is something that the Iranians need to understand right now -- I mean, to stop it.

ZAKARIA: You talk about the prospects for peace. And you say that, you know, they are -- it is possible you'll be able to get peace. But there's also a possibility that things will just continue to muddle along. And I wonder whether you think time is on Israel's side. That is to say, can you just muddle along for another five years, 10 years, at which point you will have an Arab majority between the River Jordan and the sea?

And is it possible for Israel to be a democratic state, effectively ruling over a majority population that does not have any political rights?

LIVNI: This is the most important question, because we in Israel, even though we celebrated the 61st anniversary of Israel, Israel is still fighting for its existence, its physical existence.

We have terror. We have to fight it. And this is one issue that we need to address.

The other is the raison d'etre of the State of Israel, and the reasons for its existence, the values of Israel as a democracy and as homeland for the Jewish people.

As an Israeli, I believe that the Israeli interest is to combine, or to have these two values of Israel as a democracy and Jewish state living together, not in contradiction (ph). The idea of two states for two peoples serves this interest.

And time is of the essence. Waiting will lead to nothing.

ZAKARIA: But then, why not stop the settlement activity, as the United States government asks? Why have more and more checkpoints in Gaza, where it becomes more and more difficult to undo these things to create a two-state solution?

LIVNI: On Gaza, just to set the record straight, Israel left Gaza Strip.

We decided to dismantle all the settlements. We took our forces out in order to create a vision of peace, even though it was not according to the Roadmap. We could have waited forever after (ph) the fatwa (ph).

And we decided to do something unilaterally, not against the Palestinians, but to create a vision of peace. And we got terror in return.

ZAKARIA: But it is effectively...

LIVNI: This is not...

ZAKARIA: But it is effectively strangled by a system of Israeli checkpoints, guards. It is impossible...

LIVNI: Not checkpoints.

ZAKARIA: ... to really exist in a viable way.

LIVNI: Not checkpoints. Israeli forces are not in Gaza Strip (ph).

We are...

ZAKARIA: They're at all access points.

LIVNI: We withdraw to, you know, a '67 line in Gaza.

Now, there are two possibilities for us. We don't want to control them. We don't want to be the -- we don't want to be responsible for them.

The idea was to end what the world called occupation in Gaza Strip and withdrawing (ph) from (ph). But since they're acting in -- they use terror, they use anything. And Iran transferred weapons to Gaza Strip, that they used against our cities. And so, what other options we had?

It's not because -- it's not that Israel is closing Gaza Strip and they used terror in order to open it. Since they used terror, we need to check what enters into Gaza in terms of weapons. So...

ZAKARIA: And the settlements?

LIVNI: And the settlements. Just to -- since I mentioned Gaza Strip, so Israel has shown that, when it comes to decision-making, we dismantle settlements in Gaza Strip completely. So, this is one understanding that the Palestinian...

ZAKARIA: But you're going to dismantle the settlements in the West Bank completely?

LIVNI: When we define the borders between Israel and the Palestinians, the Israeli interest is to keep most of the Israelis who live in what we call blocks of settlements, which takes only a few percentage of the West Bank as part of Israel. But it is clear that, when we define the borders, the other side of the border, which is going to be the Palestinian state, is not going to be with Israeli settlements there.

So, this is part of the final status agreement. This is one thing.

And the other is, when it comes to illegal outposts, the way I see it is that this is something between Israel and its citizens. And since I believe in law and order, also in Israel, I believe that this is our responsibility as a government to take it off for the sake of Israel's democracy, and not even as a favor to the Palestinians or to the United States of America.

ZAKARIA: Tzipi Livni, a pleasure to have you on.

LIVNI: Thank you.

ZAKARIA: And we will be right back.

(END VIDEO) (BEGIN VIDEO CLIP)

NANDAN NILEKANI: People realize that, if the entire country could be skilled and made ready for work, that could have a huge economic impact.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: Now, you look at the Indian elections. You may think it's grand, but you think they don't matter to you. Think again.

My next guest, Nandan Nilekani, is the best person I could think of to help explain how Indian politics affects Indian business, which in turn has begun to affect so much of the world.

He is one of the most successful businessmen in India -- indeed, in the world. He and six others started a company called Infosys 30 years ago with $250. Today, the company has annual revenues of $4 billion.

Nilekani also, in my mind, is India's first businessman- intellectual. Most of you have read Tom Friedman's bestseller, "The World Is Flat." Well, Friedman got the title and the concept from Nilekani, who has a new book of his own out called "Imagining India," which we have recommended.

He maps a brilliant future for the country, if it can overcome certain hurdles. I sat down with him recently to talk about this.

(BEGIN VIDEO)

ZAKARIA: Welcome.

NANDAN NILEKANI, CO-FOUNDER AND CO-CHAIRMAN, INFOSYS TECHNOLOGIES, LTD.; AND AUTHOR, "IMAGINING INDIA": Thanks, Fareed.

ZAKARIA: So, Nandan, when people look at the economics of India, it's all very impressive, because the private sector seems to be, you know, very capable, confident. I mean, you look at yourself.

And then you look at the politics of India, and you have -- you know, if you look at the Indian government, it's populated by people who are between 70 and 85 years old. The governments seem very dysfunctional, a lot of paralysis. You look at the state governments and there's corruption. There are people who get into high office who probably should really be in prison.

(LAUGHTER)

I mean, does that make you...

NILEKANI: You're drawing a very sorry picture.

ZAKARIA: Well, you paint some of this in your book. NILEKANI: I do.

ZAKARIA: Does it make you despair?

NILEKANI: No, I think, certainly, governance is a big question. But my whole theme is that India's strategic opportunity is unrivaled. Its strength of its democracy, its entrepreneurs, its young population, its ease with technology, the English language, global factors in our favor -- we can't let it go by just because of poor politics. In other words, we have to make it happen in spite of the politics.

In some sense what I'm trying to say is that we -- that's why I'm going to create the safety net of ideas, saying that, if enough people believe in enough of these ideas, then hopefully that will help navigate through these torturous politics that we have.

ZAKARIA: Is Indian democracy a strength or a weakness in economic development?

NILEKANI: Oh, absolutely it's a strength.

ZAKARIA: But look at China and India's response to the crisis. The Chinese have been fast. They've been - they've had a massive response, big fiscal stimulus. Their budget is in much better shape.

India, on the other hand, is sort of meandering around, not really doing anything.

NILEKANI: But meandering is our theme.

(LAUGHTER)

It's nothing new.

But look at it this way. Our population dividend is coming because of democracy, because we were never (ph) able to implement a coercive style of family planning. So the population growth rate went down through factors like health and infant mortality coming down. And therefore, it's much more normal, as opposed to the Chinese, where it is much steeper because of the one child policy.

And similarly, democracy kept English alive in India, because the people said we have to keep this language here.

So no, democracy also intervenes to ensure that we don't make radically wrong decisions. So, you know, it saws both ways.

ZAKARIA: One of the big things you talk about in the book is this young population. I mean, it used to be that when people looked at India, they'd always say, there's too many people. And now they look at it and say, this is going to be India's -- you say this is going to be our hidden strength.

NILEKANI: That's right. I think the big change in the mindset is from looking at population as a liability to population as an asset, to looking at population as human capital. I think that's the big change.

And a lot of that has happened because of the outsourcing industry, because when people started working for the global environment, they actually did it only on the basis of their skills and brains. And then people realized that, if the entire country could be skilled and made ready for work, that could have a huge economic impact.

ZAKARIA: But if you had to -- to the extent you can be objective -- if you had to pick or bet on India versus China for the next 25 years, what...

NILEKANI: Oh, I would bet on India, definitely.

I think the structural advantages, the fact that we'll have this young population when China starts aging, the fact that we have paid the democracy deficit, so that's behind us now, the fact that it's much more of a bottom-up economy...

ZAKARIA: What do you mean by bottom-up economy?

NILEKANI: It's not a top-down thing where policy decisions are driven from the top. It's millions of people bubbling at the bottom who are driving this thing, and it looks very chaotic. But in the final analysis, that is much more sustainable in terms of the durability and longevity of any change.

ZAKARIA: So, when people travel to India and they see these terrible airports and roads and, you know, bullock carts, and then they go to China and they see incredible eight-line highways, what message should they take?

NILEKANI: No, no. Clearly there is a huge gap, a huge deficit on infrastructure, and that'll take some time to figure out.

But fundamentally, I think, the strategic advantages we have are unparalleled. There is no other country on the planet which has the strategic advantages India has.

And therefore, it's not a -- it's a challenge of execution. In other countries, there is the challenge of strategy itself. You know, you are starting with a bad set of cards. Here we have an excellent set of cards, except the way we play it is going to decide the future.

ZAKARIA: Nandan Nilekani, thank you very much.

NILEKANI: Thank you, Fareed.

(END VIDEO)

ZAKARIA: One closing note on the Indian elections. When Shashi Tharoor, the former U.N. undersecretary and a good friend of this show, was on the panel two weeks ago, I promised to update you on how he personally fared in the Indian elections as a candidate for a seat in the Indian parliament from the state of Kerala. In case you missed it, here's a bit of my conversation with him.

(BEGIN VIDEO CLIP)

ZAKARIA: Shashi, let me talk about Indian elections. You can't tell us -- we're all, obviously, hoping that you win and become foreign minister.

(LAUGHTER)

But short of that...

UNIDENTIFIED MALE: Your chances...

ZAKARIA: ... short of that prediction, which you can't...

UNIDENTIFIED MALE: You just went right down the tubes. You can forget about that.

ZAKARIA: Short of that prediction, what's -- how would you read the elections?

SHASHI THAROOR, FORMER U.N. UNDERSECRETARY-GENERAL: I think my party, the Congress Party, the party of Prime Minister Manmohan Singh, is likely to be the largest single party, and will then be asked by the president of India to put together a government -- that and assembling a coalition that gives you a majority in parliament.

(END VIDEO CLIP)

ZAKARIA: I'm happy to tell you that Shashi was right. But not only did his party win, he won, and by a landslide. And it appears that Shashi has quickly taken to his new role as a politician.

The day after he was elected, he reportedly attended a dozen weddings in his new district.

Congratulations, Shashi.

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What In The World?" segment. Here's what caught my attention this week: your e-mails.

Hundreds of you wrote in about my interview with former Pakistani President Pervez Musharraf last week. And a sizable number of you had a complaint.

You thought I wasn't hard enough on Musharraf, specifically on one issue. You wanted me to ask him about the controversial actions he undertook at the end of his presidency, when he put in place emergency rule, amended the constitution, fired the country's chief justice.

One viewer asked, "Did you make a deal with Musharraf? Did you agree not to ask those questions, in order to secure the interview?"

Well, in fact, that specific request was made. And I said, "no," as I usually do in such circumstances.

However, I did ask him about the events that shook his hold on power. I asked him about all of it.

But our interview ran long, and certain things had to be cut out. When we make those decisions, it's usually because the interview's subject never really answers the question. And that was how I felt in this case.

But take a look and see if you agree.

(BEGIN VIDEO CLIP)

ZAKARIA: Let me ask you about 2008. A lot of people look at your reign in Pakistan and say you were a force for modernity, you opened up the press, you opened up the economy. But then the argument goes like...

PERVEZ MUSHARRAF, FORMER PRESIDENT OF PAKISTAN: And introduced real democracy.

ZAKARIA: I leave it to you to say that.

But then, people say, like many dictators, you couldn't give up power. And you amended the constitution, you put in place emergency rule. You tried to stay on in ways that were -- that undermined your tenure.

Do you regret what you did in firing the chief justice and amending the constitution?

MUSHARRAF: Well, I -- I did everything legally and constitutionally. Whatever I did, which was -- maybe had been violative of the constitution -- was legalized, analyzed and legalized.

Now...

ZAKARIA: By a legislature that was pliable.

MUSHARRAF: No, it was not by -- by the -- judicially, also. It was...

ZAKARIA: Which was one you appointed to be there.

MUSHARRAF: Well, then, whatever judgment they passed. And every time, one can say that they are not correct.

Well, there is a system running. The legislature is running, and the judicial is running.

And we have to look into -- now, whatever I did, right from the beginning to the end, it was not at all meant to perpetuate myself. The easiest thing was for me to quit and say, thank you very much, I have done enough.

(END VIDEO CLIP)

ZAKARIA: And after that answer, I tried again one more time, but never really got a specific explanation or admission.

Now, were we wrong to exclude this part of the interview? You, the viewers, have made me think about that question, and I'm glad you're there. You don't miss much. I'm grateful that you're watching it that closely. But that was my judgment call.

And we will be right back.

(COMMERCIAL BREAK)

ZAKARIA: Now, for the "Question of the Week."

Last week I asked if you thought President Obama would be able to negotiate a peace between the Israelis and the Palestinians in this term.

One-third of you were optimists, and you said, "Yes, he can." You believe he'll negotiate it.

The majority of you didn't see such a rosy scenario. Some of you said the Israelis don't want peace, others, the Palestinians don't want peace.

And many echoed the sentiments of viewer Aaron Gentzler (ph), who said, "I'm going to answer that by thinking back 2,000 years in history to see if they have ever had peace." Mr. Gentzler (ph) correctly surmised that they have not, and thinks it's not going to change any time soon.

Now, we're rapidly approaching a big day for GPS, the first anniversary of the show. So, for this week's question of the week, here's what I want to know.

What's the one moment that stands out for you on this program in the last year? What shocked you, amazed you, made you think, laugh or got you angry -- some combination of all of that?

Send me an e-mail. Let me know.

In addition to the question of the week, as always, I want you to try the Fareed Challenge, the weekly world affairs quiz on our Web site, cnn.com/gps.

And, as always, I'd like to recommend a book. Juan Cole's new book, "Engaging the Muslim World," has been called a field guide to the politics of modern Islam. And that's a good description.

If you really want to understand the players and the policies in a crucial part of the world, this is the book for you. It's controversial, strongly argued, but very intelligent.

Also, please check out our Web site, cnn.com/gps, for highlights from the program, previous shows, our weekly podcast and our current affairs quiz. And you can e-mail me at gps@cnn.com.

Thanks to all of you for being part of this program. I'll see you next week.

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