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FAREED ZAKARIA GPS

ENCORE: Interviews with Robert Gates, Eliot Spitzer & the Dalai Lama Himself

Aired September 6, 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. This week, an encore of the interview from May with the secretary of defense, Robert Gates.

The job that Gates holds is unique, unlike that of any other cabinet secretary. He sits on the National Security Council, of course, presiding over the largest armed forces in the world by far, almost larger in dollar terms than the rest of the militaries put together.

The reach of the American armed forces is really unprecedented, 5,000 locations around the world. In addition, the SecDef, as he is called, also presides over the largest organization on the planet, a huge quasi-socialist system that offers its 5 million participants, active duty, reserve, and retired, cradle to grave services from a single payer and administrator, the federal government.

As you can imagine, any system like this is riddled with politics. The four services, for example, Army, Navy, Air Force, and Marines, each have their own directs liaisons, lobbyists with Congress to ensure that they get their funding increased to whatever the SecDef might want.

So you need to be a strategist, an administrator, a CEO, and a politician. It's a tough job to succeed at, in fact, few have. The most famous secretaries of defense are famous because they failed. Robert McNamara and Donald Rumsfeld being the most obvious examples.

But by most people's judgments, Gates has been extraordinarily successful, perhaps the most successful ever. Though I will throw in another name, Robert Lovett. If you don't know who that is, go to our Web site right now and find out.

Anyway, think about Gates's successes. He helped set course for the surge in Iraq, though, of course, that was George W. Bush's policy decision. He organized a strategic review of Afghanistan, ordered a change in command to try to fix the problems there.

He has proposed reorienting defense spending to shift the priorities away from high-tech, high-cost weapons toward battlefield equipment, manpower, and intelligence. In other words, the stuff our soldiers need to fight the wars we're actually engaged in.

As we watch Gates, you'll get a sense of why he does well. He exudes a quiet confidence but he has got his ego firmly in check. He's smart, thoughtful, focused, disciplined. But as you'll see in the interview he's remarkably frank about the challenges he faces.

In fact, in places I heard things I hadn't heard before. Listen very carefully to what he said four months ago about sending more troops to Afghanistan. If you have heard what he said in recent weeks, it seems like he changed his mind since this interview.

Also, on today's show, Eliot Spitzer's unique perspective on the financial crisis, having vigorously and controversially pursued AIG when he was the attorney general of New York State. And his response to critics who say he has no right to judge others ever again.

The Dalai Lama's unique world view on all things. And Kim Jong- il's unique recreational facilities. It's a great show filled with some GPS's best stuff. So let's get started.

(BEGIN VIDEOTAPE)

ZAKARIA: Secretary Gates, thank you for doing this.

ROBERT GATES, U.S. SECRETARY OF DEFENSE: My pleasure.

ZAKARIA: President Obama -- you've heard a lot of Republican criticism that he's going around the world apologizing about America. Do you accept that?

GATES: Well, I like to remind people that when President George W. Bush came into office, he talked about a more humble America. And, you know, you go back to Theodore Roosevelt and his line about speaking softly but carrying a big stick.

I think that acknowledging that we have made mistakes is not only factually accurate, I think that it is unusual, because so few other governments in the world are willing to admit that. Although they make them all the time, and some of them make catastrophic mistakes.

And in speeches myself, I have said that at times we have acted too arrogantly. And I didn't feel that I was being apologetic for America, I just was saying, because the next -- I was just saying that that's the way we are in terms of being willing to recognize our own limitations, and when we make a mistake to correct it.

Because I think the next line that I always use is, no other country in the world is so self-critical, and is so willing to change course when we feel that we've strayed from our values, or when we feel like we've been too arrogant.

So, I think -- I have not seen it as an apology tour at all, but rather a change of tone, a more humble America. But everybody knows we still have the big stick.

ZAKARIA: You once said that the chief lesson you've learned from 40 years in government was the limits of power. So, apply that lesson to Afghanistan today.

What does it -- what do you think of -- what are the limits to what America can do in Afghanistan? GATES: Well, I have been quoted as -- accurately, as saying I have real reservations about significant further commitments of American military -- of the American military to Afghanistan, beyond what the president has already approved.

The Soviets were in there with 110,000, 120,000 troops. They didn't care about civilian casualties. And they couldn't win.

If there's ever an example that military power alone cannot be successful in Afghanistan, I think it was the Soviet experience. And I think there's a lot we can learn from that.

And so, I worry. It is absolutely critical that the Afghans believe that this is their war. It is their war against people who are trying to overthrow their government that they democratically elected. For all of its flaws and shortcomings, it is theirs.

And they -- we must be their partner and their ally. If we get to the point where the Afghan people see us as occupiers, then we will have lost.

So, the way we treat the Afghans, the importance of keeping the Afghans in the lead in many of these activities -- the military as well as the civilian -- I think is absolutely critical, so that they know -- so that these villagers know that its their people who are leading this fight. This isn't some foreign army coming in there, like all the previous foreign armies, to just occupy them.

ZAKARIA: But that means that a year from now, six months from now, you are unlikely to approve a request for additional troops in Afghanistan.

GATES: I would be -- I would be a hard sell. There's no question about it. And I have not made a secret of that, either publicly or in government meetings.

I think we will have -- between the American military commitment and our coalition partners, the ISAF partners, we will have about 100,000 troops in Afghanistan. That's only about 10,000 shy of what the Russians had. And I think we need to think about that.

My view is, it would be a far better investment to focus on building the strength of the Afghan army and the Afghan police, making sure that, of the numbers of people we have there, there are adequate trainers so that we can accelerate the growth of those forces.

It's that combination of a certain level of international support for the Afghan military effort and the growing of the Afghan security forces themselves, it's that partnership that I think eventually will be successful in Afghanistan.

As long as -- if we try to do it all ourselves, I think it won't work.

ZAKARIA: A final question, Mr. Secretary. Do you worry -- you're a student of history, do you worry that we are falling into a kind of imperial trap?

We have the largest defense budget in the world. We spend more, basically, than the rest of the world put together. Meanwhile, the Chinese are building this great industrial machine. We're in Iraq, in Afghanistan. We have to deal with Somali pirates.

It does begin to have this image of the British Empire, putting out the fires all over the world in somewhat peripheral areas, while the great industrial and economic challenges are coming up. And we're sort of -- we're caught by the reach of our own power.

GATES: Well, if we are an imperial power, we are a unique one in history, in that we are the only one in history that is always looking for an exit strategy.

The reality is, the United States has global interests. And our defense budget is about the same as the defense budgets or military budgets of every other country in the world put together.

But, as I say, we have global interests. And that defense budget is still less than 4 percent of our gross domestic product. During the Korean War it was as high as 9 percent, much higher, obviously, during World War II. And it was 7 or 8 percent during Vietnam.

So, I think, first of all, that the size of military we have is not a burden on our economy compared historically to where we've been. I think that -- I think a former secretary of state put it in a different way than an imperial power. She said, we are an indispensable power.

Because the reality is, if you look around the world and the variety of problems that exist, nothing ever gets done without American leadership, at the end of the day. And I think that's going to continue. We're going through our economic troubles today.

I think it ties back to the first question you asked me about, you know, is the president on an apology tour? And absolutely not. This is about how the United States exercises global leadership. And being willing to listen, as well as to talk, is important in that regard.

ZAKARIA: And we thank you for having talked to us, Robert Gates, secretary of defense.

GATES: Thank you.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: So now to my guest today, the former governor of New York, former attorney general of New York, Eliot Spitzer.

Welcome. ELIOT SPITZER, FORMER GOVERNOR OF NEW YORK: Thank you. A pleasure to be here.

ZAKARIA: When you saw the news about these AIG bonuses, what did you think? This was the company that you prosecuted way back when.

SPITZER: On the one hand, I was not surprised. Bonuses are part and parcel of Wall Street compensation. And I think if you looked at any company, you would see bonuses of an equivalent size.

So I think to a certain extent, what we are now doing is looking at what is a typical part of Wall Street compensation, voicing a visceral outrage that is legitimate, but is not particular to AIG.

ZAKARIA: But when you took on AIG, what troubled you about it? What made you look at AIG and say, something's wrong here?

SPITZER: Their fundamental accounting structure was wrong. And when we prosecuted them, we brought a case alleging that they had manufactured false, fictitious reinsurance contracts. It's a very technical issue, but there were false reinsurance contracts designed to create the appearance of capital on the books, which was not there. And this was a structure that had been designed and orchestrated at the very top of the company.

And as we dug into the accounting...

ZAKARIA: So, they were basically fudging the numbers to make it seem as though they had a stronger balance sheet than they had.

SPITZER: Precisely. That's exactly right.

And the underlying effort was to create an illusion of financial strength that was not there. And as we dug more deeply into the underlying structure and organization and accounting that was ongoing at the company, we knew there was a problem.

And just parenthetically, four people have been convicted of this. The former CEO was called an unindicted co-conspirator in the federal courtroom by the federal prosecutor. So, this was a fundamental effort to alter the actuality and to lie to the public.

ZAKARIA: So, do you think that the problems that AIG got into later on stem from some of the same practices that you were trying to get at?

SPITZER: They stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries in a way that would garner returns almost regardless of risk.

And so, to the extent that there is a discussion, did this begin before or after the tenure of Hank Greenberg, it's unambiguous, unambiguous that the structures and the flaws and the policies began while he was there.

That is why the board that he had controlled with an iron fist asked him to leave. It was their decision -- not my decision, their decision to ask him to step down, something that was then and is now very unusual.

He has invoked the Fifth Amendment, which, of course, is his right to do. But he was asked to leave by his own board, because they saw the flaws and the problems that have since multiplied and created this monster that has -- can bring down the financial system.

Back then I said to people, AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued.

And as I have written...

ZAKARIA: Meaning what? Meaning that a lot of the money that we the taxpayers gave AIG has ended up being paid to Goldman Sachs...

SPITZER: Precisely. And...

ZAKARIA: ... and other companies.

SPITZER: The so-called counterparties to these very sophisticated financial transactions.

When AIG initially received $80 billion, a decision that was the consequence of a very brief meeting of the president of the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke, and arguably, some reports say, the chairman of Goldman Sachs, $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.

Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system had it not been paid?

These are the questions that should be pursued. Look, bonus is a real issue. It touches us viscerally. The real money and the real structural issue is the dynamic between AIG and the counterparties.

ZAKARIA: Because those payments are in the tens of billions of dollars. The bonuses are a few hundred million.

SPITZER: The bonuses, we think, are $164 million, give or take -- huge money. I mean, nobody should diminish that. These counterparty payments, tens and tens of billions of dollars.

ZAKARIA: And it -- to your mind, it seems as though this taxpayer money may have been recklessly and unwisely paid off?

SPITZER: Well, it may be that a case could be made that it should have been paid.

But at a moment in our nation's history when everybody is being asked to bear a piece of the burden -- everybody, people are being told work four days a week, not five. Sales taxes are going to go up. Contracts are being broken and renegotiated for workers across America. Our 401(k)s and our savings have been depleted by the recklessness of Wall Street.

For Goldman and the other counterparties not to be able to say, we can make do with only 50 cents on the dollar, 30 cents on the dollar, after we've already given Goldman a $25 billion cash infusion, they are sitting on vast amounts of cash on the sidelines, which is their right, but they're going to invest it in due course, based upon their judgment, for them, on top of all that to get another $12.9 billion in the dark without questions, after a meeting of this sort, is fundamentally wrong.

And that is the nature of the inquiry that should be raised.

ZAKARIA: Is there, as far as you know, a congressional inquiry into these monies?

SPITZER: I do not know if there is or isn't. I certainly hope that Barney Frank, who is the chairman of the right committee, will do so. He's a brilliant guy, a spectacular legislator and lawyer. I have absolute confidence that if he pokes at this, he will get to the bottom of it.

He is somebody -- there are many on Capitol Hill who are beating their chests so loudly, you know it's just to cover-up of their neglect and failure over the last decade. They sat there and watched and did nothing, as they clearly should have known that we were building a system that was a house of cards.

And they enjoyed it and prospered from it, and there was a symbiotic relationship between them and Wall Street. Barney Frank is not one of those. Barney Frank will ask the right questions, and I hope he does.

ZAKARIA: Was the regulation -- was the regulatory regime in place strong enough? And I'm thinking particularly of the New York Fed, which was headed by Tim Geithner, of the SEC?

Where do you see the flaw having been over the last few years?

SPITZER: Here's my answer to that. The regulatory system was structurally flawed, but that's not why this happened.

After the last round of scandals, Enron, et al., we passed Sarbanes-Oxley. And we said, aha, we've solved the problem. Now we have another set of scandals.

There are enough laws, enough regulations on the books for smart, aggressive regulators and prosecutors to make all the cases. What was missing was judgment. And you can't legislate judgment. You can't regulate judgment.

Either the people who are the regulators will walk into a bank and say, your leverage is too great, we are going to take actions to pull it back, or, this type of investment is flawed, or they won't. You can't pass a law that says, you must use sound judgment.

Bubbles have been there through history, through over-regulation and under-regulation. This is a question of judgment and of failure of judgment.

When I was attorney general, people said, oh, you're using this crazy little statute, the Martin Act in New York, to bring all these cases. The Martin Act had a simple anti-fraud provision. That's all we used.

The federal government has exponentially more regulatory power than we did. What was lacking was the judgment, the tenacity, the desire to rein in a financial system that was spiraling out of control.

ZAKARIA: How do you think President Obama is handling this crisis?

SPITZER: Well, I think he is doing stupendously. I mean, I'm a huge fan of his. I think we all have to be and should be, if only because he has been thrust into a dynamic that is almost impossible.

He is trying to put out not 500 small fires, 500 forest fires simultaneously. And he is addressing them sequentially, trying to keep a political coalition together. But it's very hard.

And I think one of the largest, most difficult tasks that he has is to control the outrage that is brewing in the public, sympathize with it and garner it, but use it to get good policy, not policy based upon anger.

Populism, if we go to the other extreme -- and we've had libertarianism masquerading as capitalism for the past 30 years. That didn't work. And we knew it wouldn't work. I'm worried that we will go to the other extreme and end up with rank populism. That could be just as dangerous.

And it's very hard to craft the reasoned policies that make the market work without losing the support of the public. That's what he's trying to do. It's a very difficult task. He is a brilliant communicator and a brilliant leader, and I think we all have to hope that he succeeds.

ZAKARIA: Do you worry about this kind of populist anger when you watch the outrage over the bonuses?

SPITZER: Yes, yes. The outrage is legitimate, but it is being fomented by sort of a faux populism by many on Capitol Hill who saw this coming, who knew this was going on.

And so, I look at them and I say, come on, guys, you're supposed to be more mature. Express the anger, but then say, how do we solve it? Don't just throw more oil on the fire.

And I am worried about that. And I'm worried that it will be destructive to our capitalist system. And I've said since the very beginning that my energy was directed at preserving and protecting capitalism.

The libertarians didn't understand it. Populists don't understand it. But capitalism is what we want to preserve.

ZAKARIA: A simple legal question. If you were in a position where you could do something about it, what would you do about the bonuses? Legally, what strategy would you employ?

SPITZER: I think I might go back to a very old tort theory of unjust enrichment -- contract theory, tort theory, and say, you know what, guys? There's a theory in the law that says -- a couple of theories, one, impossibility, saying, AIG just doesn't have the money to pay you. And absent the federal infusion, it wouldn't have it, so we can't pay.

And second I would say, unjust enrichment. You simply don't deserve it. It's an equitable argument. Some courts might go for it, some courts might not.

But as a practical matter, as the president of the United States, I think I would call the CEOs into the Oval Office. And I would say, guys, this is untenable. We're all going to have to suck it up a little bit and show the American people that we know what it means to be part of a community, and share the sacrifice. Let's see if we can't solve this without the legal wrangling.

And I bet he could. I have no doubt that President Obama could do that.

ZAKARIA: And we will be back with Eliot Spitzer right after this.

(BEGIN VIDEO CLIP)

ZAKARIA: You know there are a number of people watching who are going to say, Eliot Spitzer doesn't have credibility to talk about these issues, because of what happened over the last year with your own behavior.

(END VIDEO CLIP)

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we are back with Eliot Spitzer.

Eliot, you've spent a lot of time looking at Wall Street, battling with them often. What do you think is the fundamental thing that got us into this mess?

SPITZER: Recklessness, greed, and a misunderstanding of what capitalism is all about, and a belief that financial services alone could generate wealth. Financial services doesn't really generate wealth. Financial -- the capital markets are designed to raise money and then apportion it to industries that are creative, whether it's biotech or automotive, or anything else.

Financial services should be a conduit. Instead, we became enamored of the products themselves. And what resulted was this enormous bubble in assets, ginned up and supported by a financial services sector that, because of a series of improper incentives, got us to where we are right now.

ZAKARIA: And what should have been done? Should there just have been a lot more attorneys general like you kind of battling this?

SPITZER: We had one who was enough, I thought. But it was...

ZAKARIA: But should there have been a different kind of regulation? How should this have been prevented?

SPITZER: There should have been a very different regulatory framework. Not in the sense that we needed more words in the books. We needed more aggressive voices at the SEC, the FTC, the OCC, this welter of federal agencies, people who came to Wall Street and said, wait a minute, that leverage is crazy.

And it was -- it's kind of odd, because everybody derided leverage in public, but in private, participated to the hilt. And when you look back at these deals, you say, this was crazy. We needed regulators who said it. We needed wiser voices on Wall Street.

This was sort of a disease that got into the bloodstream and the DNA of Wall Street leadership. Now, there were some who were spectacular who disagreed with it, who said, wait a minute, guys, we can't afford this.

The more traditional, old-fashioned investment bankers, you think of a Felix Rohatyn, who said, wait a minute, guys, this doesn't work. And...

ZAKARIA: Right, right. Or a Warren Buffett or a Paul Volcker...

SPITZER: Or a Warren Buffett. Well, I love Warren Buffett. We all do. He also invested in some of these vehicles that had the leverage, but I think he always was a voice of modulation.

And we needed more of that and, frankly, less of the sort of, you know, hot dog, cowboy mentality that leveraged everything up, sent it out so that people would structure deals without retaining any of the ownership.

If you want a technical answer, all of the securitization that was done, where you had the rating agencies, you had the originators who would originate loans they knew were bad, securitize them, get AAA ratings, securitize it out into a market, they didn't maintain any ownership. So, a simple rule could be, if you securitize a stream of debt, you've got to retain 10, 15, 20 percent, so you are at risk. You evaluate deals very differently if you are actually at risk, rather than merely selling it to somebody else.

ZAKARIA: And that could have been part of the regulation.

SPITZER: Absolutely. The power of the federal agencies to do this stuff was unlimited.

And any time I hear the SEC say, we didn't have the power to do this or that, forget it. They had more people, more power, more money than was necessary. What they lacked was the creativity and the will.

ZAKARIA: So in a sense, this is almost a greater failure of Washington than Wall Street.

SPITZER: Well, there have been debates, Washington, Wall Street. It's one of those debates where, of course, both were at fault.

Now, I happen, having been on the government side, to have a slightly more aggressive view of what government should do, perhaps. And I believe that Wall Street was at fault for fostering an ideology, and imposing an ideology, or buying its way into an ideology in Washington that said, let us alone, we will self-regulate.

So, Wall Street created this notion of self-regulation, sold it to Washington with all of its tremendous capacity through fundraising and intellectual capital. Washington was happy enough to succumb to the temptation.

Self-regulation was a mirage. It was an abject failure. Some of us were saying, it always will be a failure. So, Wall Street is to be blamed for creating the notion, Washington is to be blamed for buying into it. Who's more at fault is sort of a puerile debate, but I think both parties.

ZAKARIA: You know, there are a number of people watching who are going to say, Eliot Spitzer doesn't have credibility to talk about these issues, because of what happened over the last year with your own behavior.

What would you say to them?

SPITZER: I would say to them that I never held myself out as being anything other than human. I have flaws, as we all do, arguably. I failed in a very important way in my personal life, and I have paid a price for that.

I have spent a year with my family, with my wonderful and amazing and forgiving wife and three daughters, and have rebuilt those relationships, and hope to do that as time goes on.

I also feel that, to the extent, if I'm asked, and I can contribute to a very important conversation, I will do that as well. That is our right, arguably our obligation as citizens. I will do what I can, and with full awareness and heaviness of heart about what I did.

ZAKARIA: But it wasn't just a personal failing. There were also legal issues involved...

SPITZER: Well, those were not pursued by those who decided to pursue them.

But I have made no excuses. I have not shirked, and I will not do so. I failed. I resigned my position, because I said this is the appropriate step for me to take.

ZAKARIA: Do you feel like you wish, watching all this, you were back in office doing something about it?

SPITZER: Well, obviously, I, first and foremost, hope that we can solve the problems, because the future of our economy, and without overstating it, our nation, is at stake here. If I can contribute, I will do so in whatever way I can.

Obviously, I care deeply about these issues. They were central to what I did as attorney general. And so, I read the papers and say, sure, these are issues that I feel deeply about. But I am where I am because of my own conduct. And as I said, I make no excuses.

ZAKARIA: Do you imagine you could ever be back in government?

SPITZER: I don't think about it. I don't worry about it. I focus on family, on the issues. If I write an occasional column and speak occasionally, that is all I'm doing.

ZAKARIA: Eliot Spitzer, thank you for coming on.

SPITZER: Thank you.

ZAKARIA: And we will be back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: Thank you for joining us.

TENZIN GYATSO, 14TH DALAI LAMA: (MAKES ANJALI MUDRA GREETING)

ZAKARIA: What do you think could be Tibet's contribution to the world? You have sometimes spoken about how Tibetan culture could be an example for the world of how to be less violent, less conflictual. Do you really believe that there's a way to reduce the levels of violence and suffering through the world through a kind of an inner search?

DALAI LAMA: I don't think, anybody would say, still, I want violence. I don't think these people really say that. And then these people who involve -- like bin Laden, I don't think when he was a child in his daily lifestyle he want now today I wish more violence. I don't think.

Out of desperate, out of hatred, out of anger, out of frustration, violence took place. So therefore, violence does not come from sky. Violence not come from guns alone. Ultimately is with motivation, emotion. So unless we tackle emotion, we're stuck to the emotion, we cannot stop violence.

ZAKARIA: How do you tackle that?

DALAI LAMA: Now here, the sense of concern of other human beings, other beings also part of humanity. So the reality, see, we are all just one. So the very concept, we and they, I think I feel the concept of they is no longer relevant. We must consider all 6 billion human beings part of we.

And then whenever a conflict different interests come, firstly, we must realize and they're also part of humanity, they also have every right to overcome suffering. So we must respect them. We must appreciate. We must respect their right. And then with that dialogue, talk, I think if we -- right from the beginning, if we sit together with bin Laden and listen to his grievance, I think that things may be different.

As a matter of fact, September 11th even happened, the next day I wrote a letter to President Bush because I know Bush is a nice person. As a person -- regardless of his policy, but as a person, very nice.

So I wrote a letter and expressed my condolence and my sort of sadness, in the meantime I also expressed now this problem. I wish handle this problem more nonviolent way.

ZAKARIA: You said last November that you thought your model of leadership had failed, that you felt that you had failed as a leader of the Tibetan people. You've spoken of China having turned Tibet into a hell on earth. Why do you think you've failed? What leads to see that you have failed?

DALAI LAMA: Well, I think I should say all my sort of responsibility, spiritual, as was some other -- I hope not failed -- complete failed. But as far as our dialogue with the Chinese government is concerned, there is also is some aspect -- one aspect to make clear to the Chinese people we are not seeking separation. We are very much willing or committed to remain (ph) within the People's Republic of China. That's our only interest, economic development is concerned is our sort of interest, to remain a more powerful nation, economically, rapidly developing.

Provided we also have some unique cultural heritage, including our unique language, so every Tibetan (INAUDIBLE) on these things. And also I think from a wider perspective, I think a Tibetan cultural heritage is a compassionate cultural heritage, peaceful cultural heritage. It's something useful on this planet, where a lot of sort of violence and too much sort of competitions or too much hatred, these things.

(INAUDIBLE) Tibetan cultural heritage, I think (INAUDIBLE). Of course our country heritage mainly comes from India based on Buddhism. And so that I really feel not only myself but also many of our friends also appreciate Tibetan peaceful cultural heritage. So that we must preserve that.

And long run, to the Chinese government also -- I mean, Chinese people also I think Tibetan culture heritage can serve them, bring some meaning of life now, here.

Now one aspect of my approach is bring better situation out of closer understanding with Chinese government inside Tibet. Now, that aspect completely failed. So I admit it. It is sort of my moral responsibility to admit failure.

ZAKARIA: You call it what is going on inside Tibet today a cultural genocide?

DALAI LAMA: Yes, some kind of cultural genocide. Whether intentionally or unintentionally, the problem is, some of those Chinese communist hard-liners eye the unique Tibetan cultural heritage and Tibetan spirit, they see that's the source of threat of separation from Mainland China.

ZAKARIA: You have been in negotiations off and on with the Chinese government. Are those negotiations still going on?

DALAI LAMA: No.

ZAKARIA: Why have they ended?

DALAI LAMA: Now only thing is, the Chinese government insists there's no problem, in fact the Tibetan people are very, very happy. Now, if that is the case, then our view is wrong. I admit clear, when the time comes, our return with certain degree of freedom, that means autonomy, then we will return and all Dalai Lama's legitimate authority handed over to local government.

ZAKARIA: Through a democratic process?

DALAI LAMA: That government, I imagine, I don't know. That's up to the Chinese government. The totalitarian vision, one part of the democratic sort of practice, I think difficult. But hopefully even China as a whole, I always believe the future of China, future of over a billion human beings' well-being I think very much needed with an open society, rule of law, (INAUDIBLE). That's everybody's interest. The Chinese people themselves also want that.

So we have sort of an emphasis or slogan, "harmonious society," is very good. So harmony very much linked with trust. Trust and fear cannot go together. So Tibetan people there, according to our information more than 90 percent Tibetan very unhappy and actually they are facing, usually -- sometimes I describe almost like a Tibetan nation -- an ancient nation with a unique cultural heritage now passing through something like a death sentence.

So Tibetan people, I think generally, I think are quite proud people. So when the Chinese say, oh, they can help us, then sometimes we feel we have no trouble -- no need to help. For a thousand years, we've managed ourselves.

(LAUGHTER)

ZAKARIA: But let me read to you something that Wen Jiabao said to me in a conversation we had.

DALAI LAMA: Yes.

ZAKARIA: I asked him about you. I said, the Dalai Lama has said he would accept China's rule in Tibet, he accepts the socialist system. What he asks for is cultural autonomy and a certain degree of political autonomy.

He says: "Many people in the United States have no idea how big is the so-called greater Tibetan region that the Dalai Lama wants. The greater Tibetan region covers Tibet, Sichuan, Yunnan, Qinghai, and Guangzhou. Altogether five provinces and the area by the so-called Greater Tibetan Region is a quarter of China's territory."

Is that your definition of Tibet?

DALAI LAMA: My definition of Tibet is those people who speak Tibetan, who practice Tibetan culture, Buddhist culture, that's Tibet. So in order to carry the meaningful preservation of Tibetan culture (INAUDIBLE), all these Tibetans, including my own birthplace area, Tibetan, we must work together.

ZAKARIA: But does it comprise these five areas?

DALAI LAMA: Part of Qingha, part of Guangzhou, part of Yunnan, Sichuan, only part they are Tibetan ethnics (ph) there. So some there, I think some among the Chinese leadership also I think some confusion.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World?" segment. Can you make out what this image is? It's a satellite image of a waterslide, but not just any waterslide. This is North Korea, in a compound where the country's "Dear Leader," Kim Jong-il, and his henchmen, live, just outside the capital of Pyongyang.

This mini water park was discovered by a band of cyber sleuths. They pore over Google Maps of North Korea, looking for landmarks that might aid our understanding of this bizarre nation.

They have found what they say are the countless idolatrous statues of Kim's father, the golf courses that Kim built for himself, the massive shelves of buildings never finished, and stadiums rarely used, all further evidence of Kim's megalomania and his profligate spending.

The ridiculous amounts of money wasted, especially egregious in a country when millions of citizens have died of starvation because of Kim Jong-il's ruinous policies, which brings us to this picture.

Experts confirm that what you're looking at here is a mass burial site, hundreds upon hundreds of individual graves that many believe are filled with the victims of the mass starvation.

These separate graves are much different from the mass graves that you find in other countries. One more quirk of North Korea, I suppose, even if the living have blood on their hands, they will always bury the dead with honor.

(COMMERCIAL BREAK)

ZAKARIA: This week I'm not asking you a question, because GPS is taking a brief vacation, but to exercise your brains, please take our weekly world affairs quiz, "The Fareed Challenge." Go to cnn.com/gps.

And in the dog days of summer, we thought that instead of recommending a book this week, we'd recommend a couple of movies. These recommendations come from my staff. I haven't actually had time to see them yet, but I hope to in the next few weeks.

"The Hurt Locker" is an intense film about an Army bomb squad working the streets of Baghdad. Don't go expecting a summer blockbuster filled with constant explosions and special effects. There is some of that, to be sure. But this movie is really more of a character study about how the men of this elite unit handle the immense strain of their jobs. A serious film about a very serious subject.

On the other side of the spectrum is a very funny film about a very serious subject. "In the Loop" is a farce about the United States and Britain rushing to war and the people who are trying to stop them. One of the show-stoppers is "The Sopranos" James Gandolfini as a peace-loving American general. The jokes come too fast to absorb all of them, but it is very sharp comedy.

Thanks to all of you for being part of my program this week. I will see you next week.

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