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FAREED ZAKARIA GPS

Global Warming Debate; Panel on Obama's Nobel Prize, Dubai's Economy

Aired December 13, 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 our viewers in the United States and around the world. I'm Fareed Zakaria.

We have a timely show for you today -- debate between Bjorn Lomborg and Paul Krugman on global warming, and a free-ranging discussion with a panel of stars on Obama's Nobel Prize, Dubai, and all kinds of other things.

First, my own thoughts on the subject of the Copenhagen Summit. Let me be honest. I have to confess to being unsure about the nature and extent of global warming.

The data does seem to show that it's real, it's happening, it's manmade, and could potentially be catastrophic. But climate is a highly complex system with hundreds of moving parts, and the trends can and do shift.

So, how sure am I, and how do I resolve this contradiction? I still believe we need to do something about it, and we need to put a price on carbon. That means either a carbon tax or a cap-and-trade system.

See, I think about this the same way I do about insurance. I don't think that my house is likely to burn to the ground. But I'm willing to put a small down payment to deal with that unlikely outcome.

The international body of scientists that have studied this topic suggests that temperatures are likely to rise between one and nine degrees Fahrenheit over the next 90 years. I'd be willing to put a small amount of money down now to slow down and prevent the rise of temperatures to the nine-degree range, at which point much of human life would be threatened.

And by the way, the things that we would have to do to help preclude that bad outcome are good for the economy anyway. They would move us toward an energy revolution, one in which we find a way to use lots more energy without creating pollution or warming.

Now, if we want to raise standards of living around the world and lift billions of people out of poverty, we need to find a way to use lots more energy in a way that is clean.

So, it seems to me that buying some insurance is sensible through a carbon tax or a cap-and-trade system. The real question is how much? What's the price?

Many of the estimates of what it would take to make reasonable progress on limiting carbon emissions hover around one percent of global GDP. If that sounds high, consider this. Over the past year, we have spent 5 percent of global GDP sorting out the global financial meltdown. Can we not spend one-fifth of that to ensure against a climate catastrophe?

Anyway, that's my view. Let's get started.

(BREAK)

ZAKARIA: Now, to debate the crucial questions about climate change, I brought in two people who know a lot about it.

Bjorn Lomborg wrote a book called, "Cool It: The Skeptical Environmentalist's Guide to Global Warming." And as I said the last time he was on this program, that gives you a pretty good idea of where he is coming from. Bjorn joins us from Copenhagen.

Paul Krugman, the Nobel Prize winner and columnist for "The New York Times" once wrote recently that to deny climate change is to commit treason against the planet. Paul is here in New York.

Welcome to both of you.

Let me ask you, Bjorn, one of the reasons that people wonder where you actually stand on these issues is you've been writing a series of articles in "The Wall Street Journal." And they have been an attempt to show that the poor people who live in areas affected by climate change are actually more concerned about their poverty.

But then in a recent column about the area around Mount Kilimanjaro, you threw in a couple of paragraphs saying, and by the way, it's not really clear that Mount Kilimanjaro is -- the ice is melting any faster than it's been melting in the past.

What I have to ask you is, do you really believe that global warming is a significant enough issue and a large enough probability that you're willing to buy substantial insurance against it?

BJORN LOMBORG, AUTHOR, "COOL IT": I think we would all agree that there are clearly, very, very huge problems right now on this planet. And that's important to remember, because all of the attention here is on global warming. That's understandable, and we need to find a smart solution on climate change. But we also need to remember all the other problems, mainly stemming from poverty.

Now, the issue on Kilimanjaro -- and I think a lot of other science reporters -- Fred Pearce, for instance, who is a very, very concerned science reporter at "New Scientist," who really wants a very strong deal in Copenhagen, has also said that Mount Kilimanjaro is probably the wrong poster boy, or what's that -- poster picture -- what's that phrase?

ZAKARIA: Poster mountain. LOMBORG: For global warming. Poster mountain, probably, yes. Because, fundamentally, most of what's happened is probably not due to global warming.

And we simply have pointed that out that there is a sense in which everything gets ascribed to global warming, where, of course, in reality, some of the problems that we see are simply from natural causes or from poverty. But global warming is real and it is important.

And then, to answer your last question, so, am I willing to buy, you know, to really care about global warming and do something extraordinary about it?

Yes. Global warming is an important and significant problem. So, this is a question about saying, let's be smart on global warming, but let's not have it dominate everything else.

ZAKARIA: Paul?

PAUL KRUGMAN, "NEW YORK TIMES": If you're living in a world in which global warming is dominating everything else, it's a different world from the one I'm living in. I mean we're hoping to actually get something done for the first time right now.

I do want to raise the issue of saying, well, there are more important things, there are other things that matter. That is not the relevant trade-off. You know, it's not the case that, if Republicans manage to block climate change legislation in the Senate, that Mitch McConnell will then turn around and say, well, now that we've saved that money, let's all spend it on aid to the poor in Africa. Right?

The trade-off is, in fact, between doing something about global warming or just having it go into the same hopper as everything else we do. Holding up these other things that we ought to do as an alternative to global warming, that's essentially a fake tradeoff. It's not the trade-off we actually face.

LOMBORG: Paul, could I just comment on a few of those points?

I think you're right that this is not -- cutting carbon emissions is not going to, you know, drive us to the poor house. I do believe that probably we are living in slightly different worlds, because you're right. In the U.S., global warming is much less of a problem and it's much less feared.

But I think, if you look at the surveys from around the world, pretty much everywhere else, it's a much greater issue. And certainly it's one that looms very high on many newspapers and TV stations, and, of course, especially with the Copenhagen meeting going on.

The second part is to say, sure, it doesn't cost the world to do climate change. But let's just remember, fixing all the other problems in the world don't cost the world, either. They actually cost even less. And so that's also slightly a fake argument. And the last point, to say that it's not going to go from developing aid budgets, that, again, may be true in the U.S. I'm not familiar enough with that process. But it's certainly not true in the rest of the world.

"The Guardian" just leaked that the E.U. is actually expecting that most of the money -- and possibly all of the money -- that's going to go to help the developing world cope with global warming is going to come from development aid budgets. And OXFAM was out and saying, if you remove $50 billion from that budget, that is going to kill 4.5 million kids.

Instead, had we spent that money on climate change policies, even rather smart climate change policies, it would have reduced temperatures by the end of the century by about one one-thousandth of one degree Fahrenheit.

And that is a question. What do we want to be remembered for? Which of these two should we be focusing on first? I don't think you can reject that as just a false choice.

KRUGMAN: Look, this is not -- to judge the importance of things as a policy issue by how much they're on TV would be to be saying that the most important policy issue in the United States right now is the state of Tiger Woods' marriage. Right?

I mean this is -- the point is, are we, in fact, spending a lot of money on climate change? Is it, in fact, crowding out development assistance? Is it, in fact, crowding out -- it's not. I mean, let's be serious here.

If we, in fact -- if we actually do this climate change policy, one of the things that certainly strikes me from the U.S. point of view, is that it's actually going to be revenue-positive. It's going to be a source of money, which will actually free up some resources to do other things.

But, again, I think that what it really comes down to in the end is that we have a reasonable probability of catastrophe. We don't know exactly how we're going to avoid that catastrophe, if we do.

But getting in place a system that gives people an incentive to reduce their emissions has got to be an important part of the set of precautions we're going to take. And I think it's bizarre to be arguing all of these other reasons why we shouldn't do this, when it's actually not all that expensive.

ZAKARIA: Hold those thoughts. We will be right back after this, with Paul Krugman and Bjorn Lomborg.

(BEGIN VIDEO CLIP)

LOMBORG: If you're really concerned about global warming, it seems odd to me that you are then saying, so, let's tackle it through a policy that has failed for 18 years.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Paul Krugman and Bjorn Lomborg, debating climate change and what to do about it.

Bjorn, do you fundamentally agree with the efforts of particularly the European countries in Copenhagen, which is to put a substantial price on carbon to slow down the emission of CO2 into the atmosphere?

LOMBORG: Fundamentally, the Europeans are claiming that they want to do this, but they're not really doing it. What we've actually seen is...

ZAKARIA: But I'm asking you...

LOMBORG: ... there doesn't seem to be a significant drop in the price of the...

ZAKARIA: ... I am asking you, do you support a carbon tax or a cap-and-trade system...

LOMBORG: OK.

ZAKARIA: ... that would raise the price of carbon?

LOMBORG: I support a limited rise of the carbon price, because that's what the economics tells us, that cutting carbon in a way that's substantially related to what the damage of the carbon cost is, that's absolutely warranted. But we should also recognize, that's not actually going to cut carbon emissions dramatically.

What we do need is to have a lot more investment into research and development of green energy technologies. We need the technologies before we can make the switch to a low-carbon future.

KRUGMAN: Where we are now on the climate science is that some studies -- quite a few of them -- are now suggesting the possibility of really catastrophic warming, really catastrophic warming.

And a fundamental principle here is that you don't look at the average of the studies. You look at the high-end risks, because that's where the real -- that's what you have to guard against. You have to guard against the substantial possibility of really catastrophic change.

That means that you don't say, well, this is a small problem. That's not what these are saying. We have a lot of studies now saying that we're looking at something like a nine degrees Fahrenheit rise in temperatures by the end of the 21st century.

That's huge. That means that you start working on all fronts.

Of course we do -- you know, of course we do research and development. Of course. And we do research and development in medical care, but we also try to provide incentives for people to actually do the right thing. And that's what the health care debate in the United States is all about.

So, I think it's -- you know, I really don't think, if I may say, I don't think this is sincere.

If you say, well, you know, let's do research, that's mostly a way of postponing, when there's a lot of reasons to think that time may be running out.

ZAKARIA: So, Bjorn, let me ask you about this crucial element of the argument, which is, it would be all right to take a kind of modest and incremental approach, unless you worry about the small probability of a very bad outcome.

So, that would be the small probability of temperatures rising six degrees Celsius, nine or 10 degrees Fahrenheit, by the end of the century, at which point human life on the planet seems at risk.

KRUGMAN: If I could interject, small probability is not what I'm hearing from the climate scientists.

ZAKARIA: OK, so...

KRUGMAN: It's a substantial probability.

ZAKARIA: ... some probability. And should you be buying insurance against that probability?

LOMBORG: Well, I think, fundamentally, let's get off that high horse of who is sincere. I'm sure Paul is sincere. I'm also being sincere about this.

And the fundamental point here, of course, is, what we are trying to do right now, and what Paul is also saying, is that we should cut carbon emissions by implementing large-scale cap-and-trade. But I'm just looking around and saying, it's not actually happening.

If you're really concerned about global warming, it seems odd to me that you are then saying, so, let's tackle it through a policy that has failed for 18 years.

It failed in Rio. It failed in Kyoto. And it's probably also -- mostly, at least -- going to fail in Copenhagen.

And there's a good reason for that. Because most of the economic studies show that cutting carbon emissions right now is fairly expensive, especially if you want to cut a lot.

Why? Because we don't have the technology.

So, this is not about being insincere. It's about being sincere, of wanting to do something about climate, so saying we want the technology and not put the cart in front of the horse and say, let's just put up these caps or these targets and then, unfortunately, not actually see them materialize, because governments are not willing to pay for them, and because we don't have the technology that'll actually be able to pick up the slack.

KRUGMAN: We haven't had a real cap-and-trade system for carbon. We've had some gestures in that direction.

We have had cap-and-trade systems for other things. We have a cap-and-trade system for sulfur dioxide in the United States, which has been highly successful. It's cut it by more than 40 percent at much lower cost than was predicted.

The idea that we can sit here -- sit here in our respective studios -- and say, well, we ought to have the wise men in a big research project somewhere in Geneva, or something, figure out what the technology is going to be, and that's the only serious thing we should be doing, that we shouldn't be providing a schedule of gradually tightening caps on emissions, which will give people a market incentive to worry about it -- that's just bizarre.

And, you know, again, a lot of the things you can do. The McKenzie study, a lot of these studies do suggest that there's energy savings stuff that people would actually save money by doing, that they're not doing. I have enough sense that there are limits to rational behavior, that some of that is probably true.

But the main thing is, there are lots of low-cost, prosaic, ordinary stuff -- not high-tech -- painting your roof white, you know, using a -- driving a smaller car. All of these are things that, given an incentive, people will do. Why not give them that incentive?

ZAKARIA: On that note, we've got to bring this debate to a close. One of these rare opportunities where I didn't have to do very much.

I hope to have both of you gentlemen back on -- Paul, probably on the economy next time.

KRUGMAN: OK.

ZAKARIA: We will do it again. Thank you very much.

And we will be right back.

(BEGIN VIDEO CLIP)

SIMON SCHAMA: The Afghanistan speech seemed to be a man in the state of terrible moral cramp, actually. And he's sort of neurotic, almost, about part of his own party fleeing because of Afghanistan.

Hence, for me, the kind of fatal compromise of saying, we're going to do this, we are going to do this, but we'll do it 18 months.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: Now that we have solved the problem of global climate change, it is time to turn our attention to the rest of the world's problems. I've gathered some very smart people to help in this endeavor.

Simon Schama is a historian and writer whose expertise ranges from Rembrandt to the history of Great Britain. He's currently teaching at Columbia University, was at Harvard University, where I first encountered him as one of my professors.

Dan Senor specializes in Middle East studies at the Council on Foreign Relations. You may also remember him from the Iraq War. He served as the spokesman for the Coalition Provisional Authority and the viceroy, Paul Bremer.

And Chrystia Freeland is the managing editor of the "Financial Times."

Welcome to you all.

Simon, let me ask you. As a great wordsmith, what did you think of the president's Nobel oration?

SIMON SCHAMA, AUTHOR, "THE AMERICAN FUTURE": Knock out. He finally summoned his Abraham Lincoln. Now we know what he was doing when he was supposed to be writing the speech for West Point.

If only -- it was incredible. It was -- everything he said, even at his classic Cairo, Philadelphia race relations length (ph) was true and important. You can't actually get better than that.

It was about -- it was an anti-pacifist speech, but it was a nobly anti-pacifist speech. It explained -- it was absolutely unequivocal about there being evil in the world, and what you have to do about that.

There was a wonderful moment where he said -- classic Obama, this -- he said, while I'm a negotiator, he said, all the negotiations in the world wouldn't actually have stopped Adolf Hitler. True. And it needed to be said.

So, it was important eloquence, and accessible. If only he could talk to the American people that way from time to time. It's as though, when he puts his professorial hat on, he gets a little history. We had Woodrow Wilson. We had Gandhi. We had...

ZAKARIA: Well, and just war theory.

SCHAMA: Oh, we had just war theory...

ZAKARIA: And it was quite philosophical, yes.

SCHAMA: Nothing -- and also, it was -- didn't you think it was in a language, actually, which was not really ivory tower? It was about things that really, every day, and when we brood on Afghanistan and other places, still matter.

ZAKARIA: Let's hear a little bit of Barack Obama's Nobel address.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We are at war. And I'm responsible for the deployment of thousands of young Americans to battle in a distant land. And some will kill, and some will be killed.

And so, I come here with an acute sense of the costs of armed conflict, filled with difficult questions about the relationship between war and peace, and our effort to replace one with the other.

(END VIDEO CLIP)

DAN SENOR, CO-AUTHOR, "START-UP NATION": I was stunned by it. I sat there listening to that speech thinking there's no way the speechwriter who worked on that speech was the same one who worked on the Cairo speech.

This was him channeling Truman and John F. Kennedy. This was a sort of muscular, moralist, Democratic foreign policy. So, when Democrats have typically talked in those terms, this is how -- traditionally, sort of more hawkish -- this is how they sounded.

This is -- I actually think, if you look at Afghanistan and then today's speech, it is a break from the way he has been speaking the first 10 months of his presidency. I don't quite understand it.

I mean, I'm wondering if the Afghan review policy sort of changed his...

(CROSSTALK)

ZAKARIA: Let Chrystia get in, and then...

CHRYSTIA FREELAND, U.S. MANAGING EDITOR, "FINANCIAL TIMES": I think that Dan's point is a really good one. I think that the Afghan decision is probably the most consequential decision of his presidency. And he felt, to me, empowered by that.

What I thought was really interesting also was, this was a tough audience. You know, he is accepting the Nobel Peace Prize. So many people have said, "You don't deserve it."

He is accepting a peace prize, having just increased the number of troops he's committing to a war. He's in a place which is not that keen on America going to war. And yet, he defends in, I thought really robust and eloquent terms, the reason for it.

So, it was terrific.

SCHAMA: What a wonderful disclaimer beginning, I mean, as a rhetorical tactic. Cicero was up there somewhere applauding his head off.

He started with the fact that it's a bit of joke, that everyone said, Obama, you know, what the hell's he done lately for the world peace? So, he got that out of the way. That freed him and the speech up to do what he wanted.

ZAKARIA: I think -- I also thought it was a great speech. But I disagree slightly, I think, with you, in the sense that, while it was a very eloquent speech, and it was a very moral speech, it was different from the typical John F. Kennedy kind of Democratic, rah-rah internationalism, in that it was quite -- it was a kind of a speech that reminded me more of somebody like Reinhold Niebuhr, in the sense of, it was pragmatic.

He talked about the modesty of what you can do. It was not about bringing liberty to the rest of the world. It was not about ending tyranny in our time.

It had a kind of moral seriousness in its pragmatism, which strikes me as actually very much Obama, in that he is very much a moralist, but he is somebody who also understands the limits of power, the dangers of over-reach, and...

SIMON: Sober. A more sober...

ZAKARIA: Yes. And it was about peace and stability more than...

(CROSSTALK)

FREELAND: Not only sober. I mean, I think Fareed is absolutely right, that he wasn't saying, "I have become George Bush." He wasn't saying, we are the city on a hill, and we are going to bring liberty to every corner of the planet.

SCHAMA: Well, Chrystia...

FREELAND: He was saying, we're (UNINTELLIGIBLE) into war...

SCHAMA: ... he was saying, "I'm George Bush." He was saying "I was George H.W. Bush."

SENOR: No, I...

SCHAMA: And amazing moment was when he actually -- I mean, he didn't need to talk about Gulf War I.

SENOR: Yes.

SCHAMA: He actually took a sentence to actually say, I stand by Kuwait.

ZAKARIA: Right, but...

SCHAMA: I thought it was actually not so Niebuhr-ite.

ZAKARIA: But that was all more about -- but that was more order. Right?

I mean, George H.W. Bush was about international institutions and order. It was less about we're going to teach the Iraqis how to vote.

FREELAND: Right. And he didn't go into Baghdad. Right?

SENOR: But if you look at -- this morning, after the speech, I looked at President George W. Bush's speech after 9/11, his Joint Session of Congress. Boy, you match up some of those paragraphs, some of the language he used, President Obama is strikingly similar to some of the language President...

ZAKARIA: The defense of war...

SENOR: Right.

ZAKARIA: ... I think you're absolutely right on, I think you're absolutely right on.

But do you think that the reason for this is that he thinks that this is a more elevated audience, that he can't speak like this to the American people?

SCHAMA: Oh, no. I don't think he -- no. I think -- because some of the speeches on the campaign, the speech at Philadelphia -- maybe still the greatest speech he's given -- on March the 18th...

ZAKARIA: That was the race...

SCHAMA: Yes. It was in the heat of the Jeremiah Wright controversy.

So, I don't think he is patronizing, actually. I really don't.

But I do think that the thing that sort of fouled his lines a bit is Congress, actually, a bit. I mean, the Afghanistan speech seemed to be a man in the state of terrible moral cramp, actually. And he's sort of neurotic, almost, about part of his own party fleeing because of Afghanistan.

Hence, the, for me, kind of fatal compromise of saying, we're going to do this, we're absolutely going to do this, but we'll do it in 18 months. So, we'll be gone.

And that, it seemed to me, had the smell of congressional politics about it. He's supposed to paying Nancy Pelosi to do that, or something. And this, he didn't have to worry about Congress today.

ZAKARIA: Let's talk about domestic politics in a different sense. Britain this week suggested a super tax -- it seems like it's going to happen -- a super tax on bankers. There was a one-time, massive bailout. Alistair Darling says -- the chancellor of the exchequer -- so there's going to be a one-time tax.

Frankly, I mean, the 50 percent number sounds a bit scary. But it doesn't seem so implausible to say, look, you guys were massive beneficiaries of the government. Pay back a little this year -- only this year.

FREELAND: I think you're absolutely right, Fareed. And what I thought was really interesting about the British logic was, they're also saying it's not just institutions that owe the government money. They are saying, everyone who's part of the system, even if they didn't get money directly, benefited from the systemic bailout.

And that's why we think that the community, society, deserves to get some of that money back, now that you're making a lot of money.

I think it's a powerful argument. And I think that it will have really interesting political implications in the United States, because the classic argument you hear on Wall Street when Washington talks about higher taxes is, well, then, we'll lose our strength as a global financial center. London will overtake us.

Hard to make that argument now.

SCHAMA: But, Chrystia -- oh, I'm sorry.

SENOR: No, I would just say, I think there are plenty of investment firms and financial service firms that were responsible players, that were solvent. And the idea that, even though they're interconnected, the idea that they are being subjected to this sets a very dangerous precedent.

Because if you're going to argue that they benefited from the bailout, even though they didn't directly need it, where does that end? Just about every company in the U.K., you could argue, benefited from the government stepping in and saving the financial system.

So, you just start imposing these massive taxes on every private enterprise?

SCHAMA: Well, it ends with the general election, is where it -- it is, actually, the first shot across the bows in a pathetic attempt to actually win the general election next May, really.

There's nothing -- if you're desperate -- nothing like a bit of good populist, you know, pseudo class war to sort of start it off.

FREELAND: Actually, I disagree with Dan's point, actually. I think that it is actually quite easy to draw the line of who benefited, who needed the systemic bailout and who didn't. And I think you just say, which are the institutions which are part of that too-big-to-fail circle? Which are the institutions which are government regulated?

Hedge funds, for example, I would say, are not part of that. And hedge funds failed. Governments around the world didn't bail them out, and they didn't need it.

And I think that's absolutely legitimate.

ZAKARIA: And, you know, the governments are providing most of these banks with low interest rates, artificially low interest rates, an implicit guarantee that they couldn't fail.

Look, if you were running...

FREELAND: It's not an explicit guarantee, Fareed. Right?

ZAKARIA: ... another kind of company, you would love to have those kind of government supports.

And what they're saying is, look, we have to do this just to prevent the whole system from collapsing.

FREELAND: The other thing that Darling has said is, I would prefer to see banks conserve this capital.

SENOR: But...

FREELAND: You don't have to pay out the bonuses this year.

SCHAMA: We're not...

FREELAND: Keep the money. Do it next year. He's not saying...

SCHAMA: We're not seriously thinking that it's going to happen here. We had the spectacle...

SENOR: Well...

SCHAMA: ... of the governor of New York going to Wall Street saying, how can people be throwing stones at these Christian saints and martyrs, you know. If they do this, don't they understand that they will flee the coop, and New York will be, well, you know, Baltimore within two years, you know.

So, it's not -- it's just not going to happen here. Also because, we know, the administration, the present administration, is filled with people who were part of the problem in the first place.

SENOR: If you look at the financial regulatory bills moving through the Congress right now -- Senator Dodd's bill and Congressman Frank's bill -- they actually include a provision that would impose a fee on just about every financial institution to create a fund, a sort of preemptive bailout fund, if there's ever a crisis again, they want to raise funds necessary. But they want to raise, like, $200 billion.

That's institutionalizing too-big-to-fail. That's basically saying...

FREELAND: No, no. But, again, actually, that's what community banks are subject to right now. That's what the FDIC does. It's not that shocking.

And we have already institutionalized too-big-to-fail. That's the thing that I think Wall Street really needs to get its head around.

(CROSSTALK)

The guarantee is explicit.

ZAKARIA: We are too small not to take a commercial break. We will be right back.

(BEGIN VIDEO CLIP)

SENOR: The Israelis are waiting to see what happens with Iran. That is the big question.

You know, the Obama administration says it's all about linkage. We can't do anything for you, Israel, unless you make progress on the Palestinian front.

The Israelis say, we have our own linkage. We can't do anything unless we have confidence you're going to deal with Iran.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Dan Senor, Chrystia Freeland and Simon Schama.

Dan, you're an expert of sorts on Israel. You've written this great, a new book about it.

What I was struck by, there's a new poll out in Israel that shows that Barack Obama is actually quite popular there. You know that the conventional wisdom has been that, while Obama is popular in most of the world, one of the places where he's actually very unpopular is Israel.

Well, it turns out that's not quite true.

SENOR: Yes, I mean, his popularity is, I think, slightly lower than previous presidents, but that's slight. I mean, it's not...

ZAKARIA: Like 2 or 3 percent, yes.

SENIOR: Yes, yes. I mean, the master, by the way, of this was Bill Clinton, who managed to be adored by the Israelis and the Palestinians. They all thought he was a sort of champion for them.

The Israelis are waiting to see what happens with Iran. That is the big question.

You know, the Obama administration says it's all about linkage. We can't do anything for you, Israel, unless you make progress on the Palestinian front.

The Israelis say, we have our own linkage. We can't do anything unless we have confidence you're going to deal with Iran, because they think Iran is the root of all their problems. Iran supports Hamas. Iran supports Hezbollah.

I think Israelis -- coming back to that poll -- are sort of waiting, observing. They watch that Netanyahu is being responsive to the administration. But if there's no real progress on Iran in the next six to 12 months, and the administration doesn't do anything about it, I think you really could see support in Israel crater for the United States.

SCHAMA: Well, it depends what they expect, actually, to see the American administration to do about Iran. If they expect much tighter, more serious sanctions imposed, we had a signal, again, in the Nobel Prize speech, that that was very much moving swiftly. It's at the top of Hillary Clinton and Barack Obama's agenda. If they're expecting the Americans to do some sort of preemptive military attack, to, say, if the Israelis aren't doing it -- and that's, of course, absolutely not going to happen.

And the tricky thing for all parties concerned, of course, is how much you need to think about sustaining the opposition movement in Iran, which is, as we saw this week, also, very much not dead at all.

SENOR: And President Obama had great language in his speech this week. He broke from his prepared remarks to say we stand with opposition movements, including in Iran, which is pretty amazing.

SCHAMA: That's more forthright than he was when they began, those months back.

ZAKARIA: But I think...

FREELAND: Right, but I think he's being careful about it for a reason. Right? I mean, what I think he has to be really worried about with Iran is giving the hard-liners the card of playing against American imperialism.

And the thing which I think you have to remember about the Iranian revolution is, this was an indigenous revolution. A lot of it was nationalism, which can be really, really powerful. And he has to be careful not to sabotage the reformers by making them feel unpatriotic at home.

ZAKARIA: But I want to just Dan to respond to the point Simon was making, which is, what do the Israelis expect?

Because, I mean, the Obama administration is pushing pretty hard. And frankly, I think it's been working a lot harder than the Bush administration was on getting China and Russia to try and support sanctions in a very systematic way. But if the only test is a military strike, Obama is going to fail that test.

SENOR: I think the view within the Israeli government is, we will give -- we the Israeli government -- will give the Obama administration the time it needs and the space it needs, as long as we have some commitment that, if it fails, and sanctions -- even if they go down the path of real aggressive sanctions, sanctions can fail. Sanctions take time to implement. They can become very leaky, very quickly.

And if sanctions don't go anywhere, and the sort of powers of persuasion don't go anywhere, we want to know what happens at the end of that. Do you...

ZAKARIA: But what does that mean? SENOR: Do you...

ZAKARIA: You keep saying this. Are you talking about a strike?

SENOR: OK, yes, military strike. Is the United States government prepared to take a military strike? Or is it willing to bless, or at least turn a blind eye to the Israeli government taking a strike?

ZAKARIA: And you know what'll happen. The next day, the Iranian opposition will have to come out and support the government. That'll be the end of the Iranian opposition.

Is it worth it for a temporary delay in Iran's nuclear program?

SCHAMA: It'd be the end of any possibility...

SENOR: But the...

SCHAMA: ... of restarting Palestinian-Israelis peace talks, as well.

SENOR: The attitude within Israel is, if Iran develops a nuclear weapon, it is an existential threat to the United States. You have leaders in Iran that...

ZAKARIA: Wait, wait. Are you saying...

FREELAND: To the United States?

SENOR: An existential threat -- an existential threat to Israel, sorry.

And you have the leaders of Iran using genocidal rhetoric, and then they'll suddenly get a genocidal weapon.

Yes, there are all sorts of second and third order effects that Israel taking military action could have. But they pale in comparison, in terms of the threat to Israel, to Iran having a nuclear weapon. And if we can delay that program for 18 or 24 months, the Israelis say, it's worth the risk.

ZAKARIA: What do you think about this, Simon? Because you've written -- you're a very strong Zionist, I think it would be fair to say.

SCHAMA: Yes.

ZAKARIA: And you've been very tough on people who have been anti-Zionist.

SCHAMA: Well, I think, actually, it's not surprising. I do think the only possible policy, actually, is a much more aggressive set of sanctions. So, it depends -- that's why we're going around saying what the Israelis expect from the Americans. The tricky thing about sanctions, of course, is that it gives the Iranian government a possibility of saying, all of our people are being punished for simply taking what is, in any case, you know, due to us -- what the Israelis have, what the Pakistanis have, you know. We're simply being punished for our temerity here.

So, even sanctions are difficult, I think.

But if you don't do sanctions, if you stand pat, then you are certainly going to -- you know, you're certainly going to guarantee some sort of Israeli military action.

The creepy thing is, however, if we're being terribly Machiavellian -- which, God forbid, any of us around this table are, eh, Fareed...

(LAUGHTER)

... it might suit the Americans to have the Israelis do it, rather than themselves.

ZAKARIA: Sure, if it had to happen.

Now, let me ask you, Chrystia, about another topic entirely, but we are still in the Middle East, which is Dubai.

"Financial Times" is a great journal of record of globalization. This is one more panic that hasn't caused the markets to really collapse. And I sort of wonder whether things like Dubai show that, actually, the global economic system is a lot more stable than people think.

Yes, we went through a very big financial crisis. But subsequent to that, the most remarkable thing in 2009 has been the rather rapid return to normalcy. And Dubai, in a way, proves that.

FREELAND: I think that's exactly right. And actually, I interviewed a fund manager -- Simon mentioned the fears of New York becoming Baltimore, and he's a big Baltimore fund manager -- this week, Mark Fetting, who runs Legg Mason.

And he said exactly that, that actually, the markets had digested Dubai. And sort of paradoxically, we're taking confidence from it, that the global economy was now sufficiently robust that it could take this knock.

SENOR: I think that the analysis over Dubai and the impact of its creditworthiness, or its lack of creditworthiness, the blur between the finances of the government and the finances of the Emiratis, the royal family, the idea that it's been over-leveraged -- are all important, but it's overshadowed a separate question about Dubai, which I think is equally interesting.

It's the degree to which Dubai had become a model for the region, for economic development, for countries that don't have oil or don't want to depend on oil. Dubai always had a fraction of the oil of Abu Dhabi, and even a smaller fraction than Saudi Arabia.

And the family -- the ruling family's strategy all along was to sort of become this Mecca, if you will, of re-export and exporting to the entire region. Bring every company there. Create these clusters -- Dubai Internet city, Dubai media city, Dubai health care city. And the truth is, and they spent a fortune doing all this.

It was never an innovation-based model. It was just, bring a bunch of people there, bring a bunch of companies there. Zero taxes. Make it easy to export and re-export, and hope that you have all this economic activity.

And the reality is, it seems to be a facade.

SCHAMA: Sounds like the Emerald City, that.

SENOR: These companies are all bailing now.

And I sort of felt like, Dubai not having oil was an opportunity for them. It was an opportunity to prove that you could develop an economy without oil. And they went down a path that wasn't innovation-based. It wasn't R&D-based. It wasn't idea and knowledge- based. It was Las Vegas.

FREELAND: Because (ph) it was financial services-based. And I think one thing that we are seeing more generally is people questioning how big should financial services be in your economy, and how much of a real engine for growth can that be.

ZAKARIA: I think that's all true. But I want to make a plea for Dubai, in the sense that I...

SENOR: In (ph) defense of Dubai.

ZAKARIA: I'll tell you why. Because this was a Muslim Arab city, a city-state, that was trying to be modern, open, oriented towards the world, oriented towards economics rather than, you know, than politics, welcoming to all kinds of people -- the Hindus, Christians, Jews -- allowing people to work there, worship there.

SCHAMA: Could you get a drink?

ZAKARIA: You could get a drink. You could -- and...

FREELAND: You could...

ZAKARIA: ... it was actually, really trying to present a model, even of decent government. You could get a passport in a day. You could get a visa in an hour.

So, I wish it had -- I wish it succeeds, and I still wish it well.

And on that note -- it's my show. I get the last word.

(LAUGHTER) Thank you all very much.

And we'll be right back.

(COMMERCIAL BREAK)

ZAKARIA: Now, for our "What in the World?" segment.

What got my attention this week was this man, David Coleman Headley.

Headley was in a U.S. federal courtroom in Chicago this week to answer to charges that he aided in the Mumbai terror attacks of just over a year ago. This is a 49-year-old American citizen, born in Washington, living in Chicago, with a wife and four kids.

Now, since 9/11, there have been surprisingly few serious terror attacks that involved American Muslims. The few that the FBI has uncovered have been more like casual daydreams of a handful of nuts, rather than serious operations.

But this one appears to be different. Headley wasn't casually fantasizing about some terror plot that couldn't ever have been pulled off. He is alleged to have been a conspirator in at least one major operation that actually succeeded.

Headley wasn't acting on his own. He is alleged to have been in close contact with senior terror leaders abroad. Investigators say that, on orders from the Pakistani terror group, Lashkar-e-Taiba, Headley surveyed and made video tapes of several Mumbai landmarks, including the city's main train station, the Taj Mahal Hotel, the Oberoi-Trident, Nariman House and the Leopold Cafe.

Now, if you saw "Terror in Mumbai," the documentary I narrated for HBO, or our preview of it on this show, you know that those are the very locations that the Pakistani terrorists devastatingly attacked last year, leaving 170 dead and more than 300 injured. Six U.S. nationals were among those killed.

And Headley is now charged with aiding and abetting their murders, along with many other counts. On Wednesday, he pleaded not guilty to all of it. But he is now said to be cooperating with the authorities.

So, how did this middle-aged American dad find himself mixed up with terror? Well, authorities are still working on that.

But this much is known. Headley was born Daood Gilani, the offspring of a Pakistani broadcaster father, and an American socialite mother.

He is thought to have spent most of his formative years in Pakistan, returning to the U.S. after high school. And I wonder whether those years in Pakistan are key.

You see, the British government has found that in almost all terror plots it uncovers in Britain, the trail of either money or inspirational training leads back to Pakistan.

By and large, Muslims in America have not seemed to be prone to jihad, or even Islamic fundamentalism.

A 2007 poll by the Pew Research Center found Muslims in the U.S. tend to be largely middle class, mostly assimilated and happy with their lives, and rather American in their basic outlook -- not quite the makings of hotbeds of extremism in their communities.

And American values work to keep it that way. Instead of turning Muslims inward with actions like Switzerland's recent minaret ban, America's pluralism and tolerance allows Muslims to think and feel and pray and act essentially as they like.

People get radicalized for a whole bunch of complex reasons. But certainly isolation and alienation from mainstream culture is part of the problem.

So, while the Headley case is incredibly disturbing on many levels -- and I'm following it closely -- I don't believe there are many David Coleman Headleys -- or Daood Gilanis -- out there in America.

If you're watching us in the United States and you missed the "Terror in Mumbai" documentary, you can catch it tonight at 8 p.m. Eastern right here on CNN.

We'll be right back.

(COMMERCIAL BREAK)

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

Last week I asked you whether it was a mistake for President Obama to announce that American troops will begin pulling out of Afghanistan in 18 months. Do you think it gives the Taliban and al Qaeda a chance to hold their fire until the U.S. leaves?

The majority of our viewers said it was not a mistake and, indeed, argued that it was the only path open to the president.

Penny Norman of Oklahoma City said, "An open-ended commitment would invite continued corruption from the Karzai crowd."

Some others felt that the president was simply trying to please everyone with the 18-month deadline.

Keith Zimmerman of Oakland, California, represented a sizable minority when he said, "There is no way, shape or form the White House can sell this war to me."

Now, to this week's question.

I want to ask you about "climategate," the scandal over those e- mails from British scientists that indicate that they may have discounted evidence that weakens the case for global warming. Has this controversy made you doubt that climate change is really happening? Or do you believe a few dishonest scientists do not disprove the large body of science on global warming?

Let me know what you think, and why.

And please, when you e-mail, don't forget. Give us your name and where you're from.

As always, I'd like to recommend a book. This one is a big bestseller. It's called "SuperFreakonomics," by two economists, Stephen Dubner and Steven Levitt. It's a sort of sequel to their huge bestseller, "Freakonomics," or what the publicists are calling a "freakquel."

It's more of the same clever idea that made the first book sell so well. When you see irrational behavior, you need to understand the incentives that led to that behavior, and then it will make perfect sense.

The authors use their counterintuitive approach to everything from prostitution to children's car seats. You don't always agree with them. Some of them are gimmicky. But it's actually a wonderfully entertaining and quick read.

Now, don't forget that GPS has joined the social networking revolution. Go to cnn.com/gps to find out how to follow us on Facebook and Twitter.

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