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Roundtable on Obama Foreign Policy; British Election Update

Aired April 23, 2010 - 15:03:00   ET



CHRISTIANE AMANPOUR, CNN ANCHOR: This week, breakthrough or deadlock, or something in between? What is ahead for President Obama's engagement strategy?

Hello, everyone. I'm Christiane Amanpour, and welcome to our program.

This week, we look at where global power is shifting and what it means for the United States, for its allies, and even its adversaries. Also, upending the balance of power in Britain, where the first televised election debate ever have electrified the campaign, signaling potential changes in Britain's role in the world.


GORDON BROWN, PRIME MINISTER OF BRITAIN: You know who these guys -- these two guys remind me? They remind me of my two young boys squabbling at bath time. And they're squabbling -- they're squabbling about whether to have--

UNIDENTIFIED MALE: Was this line in rehearsal?


BROWN: They're squabbling about whether to have referendums on the European Union.


AMANPOUR: We'll dissect all of this with historian Simon Schama.

And we'll look at Greece's appeals for urgent international help. We talk exclusively later with World Bank President Robert Zoellick.

And in a new challenge to the United States, Tehran shows off its military muscle in the Strait of Hormuz, amid continuing confusion over how to deal with Iran's nuclear program.

And U.S. peace envoy George Mitchell makes yet another trip to the Middle East, but no peace talks yet and no sign that Israel will stop new settlements in East Jerusalem.


SAEB EREKAT, CHIEF PALESTINIAN NEGOTIATOR: This is a formula for disaster, not a formula for peace. This is a recipe for confrontation and war and not for peace.



AMANPOUR: So to find out where all of this is headed, I turned to a panel of distinguished experts.


AMANPOUR: Joining me now to dissect all of this is foreign policy analyst Robert Kagan, who's also senior associate at the Carnegie Endowment for International Peace; the former U.N. peace envoy, Terje Roed-Larsen, who's president of the International Peace Institute; and the former U.S. Assistant Secretary of State James Rubin, who despite the fact that he is married to me remains nonetheless a sharp and keen observer of foreign policy.

So welcome, all of you, to this program.

Let me start, Jamie, because you are outside, but were inside an administration dealing with Iran and all these challenges. All of this that's in the newspapers about Robert Gates, what does it mean, these memos that are leaked, these contingency plans for Iran? Break it down.

JAMES RUBIN, FORMER U.S. ASSISTANT SECRETARY OF STATE: I think what's going on here is that the administration is beginning to face the choice that's always been there, which is, how do you deal with a country that is probably not going to be affected by economic sanctions?

Do you pursue a containment course, which means essentially improving your military relationship with Saudi Arabia, the gulf states, Egypt and Israel so that you can deal with a nuclear Iran without losing your security, or do you begin to develop military options for attacking Iran?

AMANPOUR: So, Robert Kagan, do you agree with that? Is the administration positioning itself in the right way?

ROBERT KAGAN, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Well, I actually think that the administration is actually trying to help its own diplomatic efforts. I think there is an understanding which was lost at a certain point in this administration that in order to have a successful diplomatic strategy, you need to have the threat of military force. That's partly aimed at Iran, but I think it's partly aimed also at China.

What is the incentive for China to cooperate with the United States on sanctioning Iran? They have no economic incentive to do so. The one plausible incentive would be fear that China might have of a U.S. military strike and the disruptions that that might cause.

I think what the administration's trying to do here is put the military option back on the table so that it can help the diplomacy.

AMANPOUR: Well, let me turn to Terje Roed-Larsen, because this obviously all comes back to Israel, and everybody fears that Israel may be forced to take matters into its own hand.

How do you think this current debate is playing in the Israeli government?

TERJE ROED-LARSEN, NORWEGIAN DIPLOMAT: I think not only in Israel, but in the Middle East, this is perceived on two levels. One is that this is part of psychological warfare against Iran, but it's also a part of psychological warfare in order to drum up support for sanctions driven by the U.S. and its allies in the Security Council.

But, secondly, there is the stark reality on the ground here, and I think there are four options. One is that the regime in Iran implodes because of the internal turmoil and opposition. The second one is that sanctions and diplomacy works and the Iranians step back from the brink.

But then we are left with the two hard options here, and one is, will the world allow Iran to get a nuclear capacity or will it, if necessary, use force to do it? And here I think we come down to hard choices, which is at the second layer.

There is realpolitik, as well, here. And at the end of the day, you have to choose, are you going to pursue a Chamberlainian policy or a Churchillian policy? And I think this precisely is also the dilemma which is discussed in Tel Aviv, but also in--


RUBIN: I see Bob nodding, because I think he's really hoping that it will be Churchillian, not Chamberlain. And I think that in this case I -- it's not a question of desire. I think -- and analytically, I find it extremely difficult to imagine that a president who has made a policy of ending wars in Afghanistan and Iraq -- his policies about ending these wars is going to initiate another war. And I'd put the chances of that extremely low. Whether it's a good idea or a bad idea, I just don't think it's going to happen.

AMANPOUR: I want to discuss that a little bit more. But, first, Jamie, we always discuss, how do they know what Iran has, when every time we turn around somebody has a different assessment on what it's doing and when it's going to be a nuclear power or nuclear weapons capable?

RUBIN: Well, there's different thresholds. In the past, the Israeli threshold was, do they have enough material or are they able to make enough material to theoretically have a bomb? They've passed that threshold now. They can make enough material. When exactly they do it is what Secretary Gates is talking about.

Then he's talking about the even harder part, which is if they have this material, assembling it into a workable bomb is something that would go on inside a factory.

The crucial next step, which can be detected, is to test a weapon the way North Korea did. That we could definitely detect. But to -- to the difference between capability and assembly of a weapon is not really very much.


AMANPOUR: So, Robert Kagan, again, on this issue, President Obama was asked by the New York Times whether he saw a difference between a nuclear- capable Iran and one with a fully developed nuclear weapon. He declined to go there, to answer that.

But, I mean, isn't the dilemma of trying to have a policy for something that you don't know whether it exists or not or when it will?

KAGAN: Well, it's a dilemma. And, unfortunately, it's a dilemma we faced in Iraq, as well, and we saw how that turned out. And I'm sure that that's on people's minds.

On the other hand, we do have the IAEA making pretty strong statements about Iran's intent. There is a fair degree of international agreement -- at least certainly in the West -- about what Iran is up to. So I think we have to, you know, plan accordingly, and I think the administration is. And I think the president is right not to try to parse those issues.

I think the capability to have a weapon is going to turn out to be the same as having a weapon. And I'm not sure we should count on Iran stopping short of getting a weapon. I think they want to create as much of a fait accompli as they can, and that's what we have to confront--


RUBIN: I'm going to have to disagree with Bob on that. I think the difference between having enough material and having a test or a brandishing of a nuclear weapon, declaring yourself a nuclear weapons state, I don't think the Iranians get much more out of that, and they get a whole lot of pain as a result of it.

So my prediction would be that they're going to be capable, they're not going to test, they're not going to declare themselves a nuclear weapons state, because I think if they did, then a lot of people who have been reluctant to use military force might change their mind.


AMANPOUR: And as the week ended and after we had taped this discussion, the U.S. publicly ruled out using force against Iran's nuclear program any time soon.

And next, does the U.S. have the power to break the deadlock between the Israelis and the Palestinians? We'll continue with our panel discussion in a moment.



AMANPOUR: We continued our discussion on the Middle East impasse and the rising frustration of would-be peace-makers.


AMANPOUR: A lot of people are losing help -- losing hope, rather, including many of the people who have put their whole careers towards the peace process. Aaron Miller -- used to be a colleague of yours and has served many, many presidents in the United States of all parties -- has got a new article called "The False Religion of Middle East Peace and Why I Am No Longer a Believer."

What does that say about the Obama administration or anybody's efforts and likelihood of making a change in that?

RUBIN: Well, Aaron is a very frustrated peacemaker. He worked at it for a long, long time. And when he left, things really did collapse. But I don't think that the United States or the international community is ready to give up on this, despite Aaron's frustration.


The problem, of course, is that right now what is happening is that everybody is worse off. The Americans are worse off because the current American president has less leverage with the Israelis, because he's not very popular there. The Israelis are worse off because their relationship with the United States has gotten to a new low. The Palestinians are worse off because there's no prospect for peace. And Hamas is worse off because they've shown that, when they're in charge, the situation gets even worse.

So that's why Aaron is grim, but I don't think the answer is to give up.

AMANPOUR: Robert, what do you think about this? There's been a lot of talk about the U.S. administration putting a peace plan on the table. Where do you stand on what should be done right now and how much the U.S. should do?

KAGAN: In terms of the United States now coming out with a plan, it's not as if administrations in the past haven't approached that idea and looked at it and ultimately had to balk, and the simple reason is, the administration would propose a plan, both Israel and the Palestinians would reject it, and we'd be right back to where we started.

I think whatever else is true, we -- you know, if we're going to go forward with a peace process, we have to go back to the idea of some incremental steps and confidence-building measures.

Clearly, this moment is not ripe for a big peace plan breakthrough. That's not where we are. That's not where we are on the Palestinian side. It's not where we are on the Israeli side.

AMANPOUR: And, Terje, not only is it not ready and that's not where anybody is, but you have posited the fear that there could even be another outbreak of hostilities somewhere in the Middle East, between Israel and one of its neighbors.

ROED-LARSEN: I think the dilemma is, shall we do crisis maintenance or shall we do crisis resolution? And what he points out is that to do crisis resolution right now is very difficult, because all the conflicts of the Middle East are so intertwined now. It's very difficult to resolve one without resolving the other.

And also the agreement today is extremely difficult, maybe impossible, because all the conflicts are so intertwined, the Iranian issues, the Syrian issues, the Lebanese issues, et cetera.

So -- and this leaves us with an option. Either you're going to tread water and just say, OK, business as usual, suicide bombings here, killings there, assassinations, et cetera, or to work for a diplomatic breakthrough.

And then, two, define timelines and high ambitions in this situation is dangerous, because the chances of failure are enormous. And if you fail, it will lead to new violence, as the failed Camp David negotiations, as Jamie knows very well, led to several years of violence and thousands of dead, and add the collapse of the Annapolis process, in many ways, was a backdrop for the war in Gaza.


AMANPOUR: And to read former diplomat Aaron Miller's op-ed that we were talking about in Foreign Policy magazine, which is called "The False Religion of Middle East Peace," log on to and give us your take.

And next, has President Obama policy of engaging with the rest of the world hit yet another wall? More with our panel when we return.




BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER (through translator): It's our preference that America will lead in this. It's as clear as the sun. If the United States, for example, with sanctions, strong sanctions on the export of fuel to Iran, I'm not sure the Security Council would allow that. But if the Security Council, under the leadership of the United States, can pass it, yes, it will have a great effect on the Iranian leadership.


AMANPOUR: That was Israeli Prime Minister Benjamin Netanyahu in an interview this week talking about Iran, and President Obama came into office promising a new era in U.S. relations with Iran and, of course, the rest of the world. So what is the result? We asked our panel.


AMANPOUR: So let me ask all of you now. President Obama came in talking about engagement. One of his first acts was to name a special envoy to put the Middle East peace process back on track, engagement with Iran, engagement with the Islamic world in his Cairo speech.

How would you assess engagement as having worked or not, Jamie, on Iran?

RUBIN: On Iran, obviously, engagement has not succeeded in making diplomacy more likely. Whether it's helped a little bit with sanctions, perhaps, but that's not going to solve the problem.

I think on the Middle East peace process, President Obama was right to give it priority. The last administration made a mistake because the whole word, as frustrating as it is, as bad as things are, the whole world expects the United States to at least be trying and failing, rather than not trying at all, and that is important.

AMANPOUR: Engagement, Terje? Has that worked in your--


ROED-LARSEN: I'm not quite sure I disagree with the last, because engagement is dangerous, because if you engage the wrong way -- and let me use one example. When Ehud Barak was prime minister, he did a very heroic thing. He wanted to address all the conflicts, put an end to all of them in one go. It was heroic, and it was the right thing to do, in a way.

But when it failed, it led to violence. That's why how you do things are very dangerous. That's why those who are involved at the front lines now in negotiations, they had to study very carefully why -- how did the failures of the past come about and why?

AMANPOUR: And, Robert Kagan, it's not just about engagement. It's about language, as well. There's an article today talking about how -- how language has been changed under this administration. For instance, rogue states are being pushed aside in favor of outliers. How do you -- how do you think that helps or doesn't?

KAGAN: Well, I don't think it makes that much difference. I mean, there's been so much emphasis in this administration on being not Bush, not using the language of Bush, trying to do whatever the opposite that Bush did, and that's not very unusual.

When Bush came in, he was going to be the opposite of Clinton, as Jamie recalls, but it's not a policy. And I think where we are right now finally on a lot of these issues is the beginning of an effort to actually have a policy. Not Bush was never a policy, just as mere engagement is not a policy.

Now the administration is having to face the hard questions and so not surprisingly, in some cases, is finding itself much closer to where Bush left off, in any case.

AMANPOUR: Very quickly -- we've got a minute-and-a-half left -- Robert Kagan, quickly on Afghanistan, is it going the right way or not?

KAGAN: It's going all ways. I still have relative confidence in our military effort. I think that the plan that McChrystal has put together and that the president approved will show some success over the next year or so. The Taliban will be beaten back. The big question is governance, and there I would say there's not a lot of reason for optimism.

AMANPOUR: All right.

KAGAN: We had two chances to get rid of Karzai, and we passed them both up. Now we're stuck with him, but we're going to pay the price.

AMANPOUR: Sanctions on Iran, Jamie. Obviously, the permanent five seem to be sort of all over the place. Secretary Clinton is taking a lot of pleasure in China and Russia at least agreeing to talk about sanctions. Turkey doesn't want it. They're on the Security Council. What chance of real sanctions?

RUBIN: I think we'll get a resolution. I think it'll take two, three months, and it'll be very thin, but there will be some sanctions on Iran, and that will give the administration an opportunity maybe to get some bilateral things going hard, banking sanctions with European allies and perhaps with individual countries, but it's not going to be crippling.

AMANPOUR: And, lastly, Terje, what chances and when will the proximity talks start, the proximity talks, not even face-to-face talks, between the Israelis and the Palestinians?


ROED-LARSEN: If we want the straight, short answer, I believe they will never take place. But this may be too pessimistic.


ROED-LARSEN: Because I think the parties are stuck. I think it's very difficult to get out of the trenches. I think this is very ominous for those efforts.

AMANPOUR: Gentlemen, thank you all very, very much.


AMANPOUR: And next, unprecedented TV debates have helped a young contender shake up U.K. politics. And as global finance ministers meet this weekend in Washington, Greece calls for urgent help. Our exclusive interview with World Bank President Robert Zoellick.




AMANPOUR: -- international phenomenon. He's the leader of Britain's third-ranking political party, the Liberal Democrats, and he's breaking the mold of traditional party politics with his performance in the first-ever TV debate in a U.K. election, and that's scheduled for May 6th.

CNN's Robin Oakley reports from London.


ROBIN OAKLEY, CNN CORRESPONDENT (voice-over): Now shake hands, participants ending the second debate were told. Labour Prime Minister Gordon Brown and David Cameron, leader of the main opposition Conservatives, would rather have gripped Nick Clegg warmly by the throat.

The Liberal Democrat leader, the third man in British politics, is wrecking what has traditionally been a two-party game.

GORDON BROWN, PRIME MINISTER OF BRITAIN: Will you continue to fund the police?

DAVID CLEGG, LEADER, LIBERAL DEMOCRATS: Yes, of course. But, Gordon, let me give you an example. Let me give you--


BROWN: -- funding on the police. The answer is no.

CLEGG: I'm not sure if you're like me, but the more they attack each other, the more they sound exactly the same.

OAKLEY: Clegg dominated the first TV debate, deriding the other two as representing the old politics, and catapulting himself to public attention. One poll made him the most popular politician since Winston Churchill.

(on-screen): Why such a leap forward? After the last corrupt parliament, dominated by stories of lawmakers' expenses fiddles, the public wants change. Hard for Gordon Brown's Labour, after 13 years in office, to be seen as the agents of change, yet after two years leading the opinion polls, Cameron somehow hasn't sealed the deal with the public, either.

(voice-over): Clegg, normally shouted down by the big parties in parliament, used the TV debates to seize the mantle of change. If he keeps it, the whole shape of British politics and policy could change.

Labour, in red, currently holds 345 seats in the House of Commons. The Conservatives, in blue, 193. The Liberal Democrats, in yellow, 63. The rest are held by smaller parties. If the Lib Dems score significantly, then no party will have more than half the 650 seats, and it will be a hung parliament.

One of the big two will either have to govern as a minority or seek a coalition with Mr. Clegg. That's why Brown is representing himself as the voice of experience.

BROWN: Like me or not, I can deliver that plan.

OAKLEY: And it's why Cameron is warning the British public a hung parliament could panic the financial markets, imperil the pound, and see interest rates soar.

DAVID CAMERON, LEADER, TORY PARTY: One of the problems with hung parliament and coalition forming is there's quite a lot of bickering going on already.

OAKLEY: It's also why both Brown and Cameron set about Clegg over his willingness to review the future of Britain's Trident nuclear missile system.

CAMERON: I profoundly believe that we are safe having an independent nuclear deterrent in an unsafe and uncertain world.

BROWN: I have to deal with these decisions every day, and I say to you, Nick, get real. Get real.

OAKLEY: The television debates, the first ever, have brought British politics alive. They've changed the rules of the game and probably the game itself.

Robin Oakley, CNN, London.


AMANPOUR: And joining me now from London is historian Simon Schama.

Simon, thank you very much for joining us. Tell us--


AMANPOUR: -- who emerged the winner after the second round?

SCHAMA: Well, I think it really was -- it was -- it was sort of equal, really, Christiane. I'm not sure there was a clear winner. The expectations were all on David Cameron, who put in a sort of eccentrically strange performance in the first week, really.


Somebody who is in full master -- fully mastery and command of punchy kind of argument in the House of Commons seemed amazingly to be utterly off his form before the cameras, and nobody -- neither of the other two, neither Gordon Brown nor David Cameron -- were quite expecting what hit them in the shape of winsome, exceptionally eloquent Nick Clegg.

Nick Clegg is not a fluke. This was shown last night. He inevitably didn't make a spectacular impact coming from nowhere that he did in the first week, but he was very quick on his feet, he was not at all defensive, he was fluent even on behalf of some, I have to say, occasionally quite bizarre policies.

Nick Clegg, comparisons have been made with Obama, which are oversold. However, there is one thing I think that is right in the comparison between Barack and Nick -- Obama and Nick Clegg, Nick Clegg is very, very comfortable in his own skin.

AMANPOUR: So let me ask you--

SCHAMA: He has an extraordinary composure in the camera, rivaled only by you, and that stands him in very good stead, indeed.

AMANPOUR: Well, let me ask you this. How come it took Britain so long to get to the debates? I mean, look, we've got Kennedy and Nixon in 1960 -- that was the first ever -- right the way to Ahmadinejad and Mousavi, Tehran, 2009, and has taken yet another year for Clegg, et al, in Britain. Why has it taken this long?

SCHAMA: Well, remember -- you do, of course -- that there were no television debates in the United States between 1960 and 1976. They only happened because Gerald Ford was trailing so desperately badly in the polls as the incumbent president taking over after Richard Nixon resigned.

Television debates usually come about when somebody really needs them. And there was the sort of sense that David Cameron could somehow put the nail in Gordon Brown's coffin by having a television debate.

Brown certainly needed the debate, even though he's not really naturally telegenic. He was, incidentally, very much better, I think, in the second debate than the first debate. He still has to learn now to do absolutely buttock-clenchingly horrible light humor that is just ghastly and not Gordon Brown's thing.

But what happened really was, for a long, long time, British politics said, oh, we don't do things the American way. We're the master of rapier wit in the House of Commons. We don't descend to that tacky sort of circus, actually.

And suddenly it really has seen that, far from being a tacky circus, it actually can be an authentic debate.

AMANPOUR: Well, you--

SCHAMA: And there was something else that--

AMANPOUR: You pointed out, actually, along these lines that the British pundits were sneering quite heavily at the idea of having these debates.

SCHAMA: Right.

AMANPOUR: But what has it done to the population? It's kind of electrified them.

SCHAMA: Oh, it's -- yes, absolutely. You've got -- I don't know why -- what you're doing in New York, for God's sake, before you -- you should be here. It's a humdinger of an election, and it is because of the debates.

There was all this kind of yawning among the hacks saying, "Oh, it'll be style over substance, nothing serious, nothing will happen, nothing will change." Wow.

I saw one particular hack -- me -- didn't say that at all, because I've spent most of my life in the United States. So I'll crow a little for having said the opposite in the Financial Times. But I really did see this coming, but I most certainly didn't see Nick Clegg coming in the way he did.

Crucial, Christiane, crucial, crucial is that British elections are three weeks -- get that, America? I didn't say three months. I said three weeks. Number two, there is a ban on television and radio advertising. So for three weeks, it becomes very, very intense, and the population that would - - might yawn at this, at the usual antics, kissing babies and visiting town halls and so on, suddenly could all tune in to this spectacle.

If the first debate had been boring, it would have been -- it would all have gone flat. But my god it was so not boring.

AMANPOUR: But isn't another thing that's so different the fact that they have tiny war chests compared to U.S. politicians? I think something like $35,000.

SCHAMA: Do you know how much is in the war chest--


SCHAMA: Do you know how much is in the war chest of the Liberal Democrats?


SCHAMA: It would barely pay for Mitch McConnell's lunch, I think, actually, although I'm sure he lunches very austerely; $50,000 is what the Liberal Democrats' war chest is right now. It does go up to millions, actually, and that pays for jet planes and trains and billboards. The notion that, you know, it can all be done in fighting billboards, that's, in a way, how cottage industry our democracy is.

But how exhilarating that democracy is alive and well and arguing and arguing about, you know, the fate of Britain at a very, very serious crossroads at this particular moment in its history, without the spin doctors, without advertising, without sort of unhinged radio talk show hosts, without any of that. Democracy is alive and well as the Athenians wanted it to be--

AMANPOUR: All right. Well--

SCHAMA: -- shouting in the marketplace. Great.

AMANPOUR: The Athenians are one thing.


How about the British people when it comes to May 6th? Are they going to put Nick Clegg in power? Will there be a hung parliament? If he does well, who will he choose to go into coalition with or whoever? Who will the -- how will they choose?

SCHAMA: It is very fascinating, isn't it? And we -- practically everybody you talk to does think a hung parliament is likely. The Conservatives in particular -- Ken Clarke, ex-chancellor of the exchequer, is doing a kind of Chicken Little thing, saying there will be no pound sterling left if there's a hung parliament.

The fact is that people aren't quite that naive. They know that most of the world actually has either a minority government or forms a coalition. It serves the Germans very well. The Swedes had a coalition -- post-election coalition that succeeded in halving their deficit. We wouldn't mind that at all.

So he's not -- it's very, very unlikely -- you know, I'll eat my socks and shoes if, actually, he becomes the next prime minister.

Quickly, he has -- he has -- he will get -- find it easier, I think, in the end. The British public will go crazy if he keeps Gordon Brown in power. The most likely is Cameron -- mark my words -- Cameron will win with not enough of a majority, so Clegg will Clegg-ify the Tories, and that's what we'll have for the next few years.

AMANPOUR: And that's what I was going to--

SCHAMA: That's what I'm predicting.

AMANPOUR: That's what I was going to get to. Quickly, give us a quick pracy (ph) of the difference between British Conservatives, the Tories, and the American conservatives and Republicans? How do they stack up?

SCHAMA: Oh, the British Tories -- British Tories look like Lenin and Trotsky compared to American conservatives. David Cameron spends all his time defending, uh-oh, socialized medicine, the National Health Service. He loves it.

It's quite true that David Cameron very, very smartly, I think, is defending the idea that families have to take responsibility for issues, that local government is better than big state government. And I noticed the sort of comically ill-informed piece in the New York Times which thought that was -- you know, that this message had been passed down by Newt Gingrich or something. I think it had been passed down by Edmund Burke, actually, in the 18th century.

AMANPOUR: And on that note--

SCHAMA: The conservatives from--


SCHAMA: Kicking me out. Over and out.

AMANPOUR: Thank you so much. And we'll be watching to see what happens on May 6th, whether Clegg-mania translates, as you have said, on the day of the election. Simon Schama, thank you so much for joining us.

SCHAMA: You're so welcome.

AMANPOUR: And in 1946, Winston Churchill declared a special relationship between the U.S. and the U.K., but do Americans or the British still care about that relationship? That's the conversation at, so weigh in there.

And next, a key country in Europe on the brink of economic collapse sends out an urgent SOS. Our exclusive interview with World Bank President Robert Zoellick when we return.





GEORGE PAPANDREOU, PRIME MINISTER OF GREECE: The government and the Greek people have inherited a boat that was ready to sink, a country without prestige or reliability that had lost the respect of its friends and its E.U. partners, an economy that was left unprotected to the appetites of profiteering.


AMANPOUR: That was the Greek prime minister, George Papandreou, as he appeals for urgent help for an economy that is teetering under the weight of massive debt. Joining me to discuss this and other global financial matters is the World Bank president, Robert Zoellick, in Washington.


Thank you for joining us, Mr. Zoellick.

ZOELLICK: Pleased to be with you.

AMANPOUR: So about Greece, is it going to get the financial rescue that it needs?

ZOELLICK: Well, that's really now up to the Greek government and the people of Greece to sustain it along with the European Union and the IMF. So the big step now is that the IMF is in there, which I think is a -- is an important and timely step.

AMANPOUR: And if it doesn't have a rescue, what will happen to Greece and could it pull down other economies in that European neighborhood?

ZOELLICK: Well, it's certainly risky not only for Greece, but -- but for other countries in the neighborhood, but also globally. This is not a time to be playing with some of the sensitivities in markets. But I think the -- the key point here is, is that, you know, what's been -- one of the things that's been missing in this is that we need to sometimes have regional organizations work with the global organizations. And in this case, having the IMF and the E.C. together is a step that I think is vital to get this addressed.

AMANPOUR: Now, when it comes to -- to what you have been discussing at the World Bank meetings and what you're sort of focusing on right now, you're talking about developed countries and developing countries, formerly known as the third world, and some of those becoming economic powers. How does that work?

ZOELLICK: Well, it's exactly your point. You know, we used to live in a world of the first and second and third world. The second world went by the by with the end of Communism in 1989. And I think what this crisis is highlighting is the old concept of the third world doesn't fit anymore, because you've got great diversity in the so-called developing world, and many of the countries are now the sources of demand that are going to pull developed and developing countries out of the downturn.

And over time, I think that they have the possibility to become multiple poles of growth, so not only China which everybody reads about and India, but Southeast Asia, Latin America, and ultimately Africa, as well.

AMANPOUR: You say "ultimately Africa," where so many people live on less than a dollar a day. What is it going to take, then, for the developing countries there to become, let's just say, middle class. How much do they need to earn, and how long will that take?

ZOELLICK: Well, you know, middle class has different definitions. But if you can get the countries in sub-Saharan Africa up to $2 or $3 a day -- that's definitely possible even with increases in agricultural productivity -- you'd start to have a base of consumption for basic manufacturing. Some of those could be produced locally. Some of them might have, for example, Chinese manufacturers come and relocate into sub- Saharan Africa.

So, in essence, the core question that you're asking about what it needs, it needs what Europe had 50 years ago, which is it needs regional integration, link the global markets. It needs the infrastructure, energy, and it needs a healthy private sector. And there's a number of African countries that have been growing at 5 percent or 6 percent. They are definitely candidates for that.

There are some others that depend on natural resources. For them, it's a real question of good governance to use those resources.

And then we have a third category of states coming out of conflict. And those are the most dangerous ones, because they not only hurt their people, but they pull down their neighbors.

AMANPOUR: You've also been talking about investment in those countries -- in Africa. And, obviously, China is one of the biggest investors in Africa right now. But many have said that what China does is for China's benefit and not necessarily for the benefit of the country itself.

Does China have to do more to not just take resources and benefit its own economic needs, but to actually help build up those countries there?

ZOELLICK: Well, you know, it's -- it's a little sensitive for Americans and Europeans to talk about being so generous to Africa, because there are many years where not only in colonial and post-colonial period that American and European companies kind of took care of their own, too.

I think what we found is when we work with the Chinese companies and the Chinese government, they recognize to be in there for the long term they need to try to develop the relationships that build support in terms of creating jobs, try to make sure that some of the debt relief programs we have, for example, aren't thrown away, and that allow Africans to be able to have a -- a say in their own future.

So I think what -- in addition to China, another good sense of evidence, though, is that we at the World Bank have created a new equity fund through IFC, our private sector side, for investments in the private sector in Africa. And we already have $800 million of support from a Korean investment fund, a Saudi fund, a Dutch pension fund, and a fund from Azerbaijan.

That is an indicator that people now see that developed markets can be risky, too. Growth potential is good in Africa, but, frankly, they didn't have the investment platform to go. So they looked to ours, and that's great if we can help build that private investment in Africa.


AMANPOUR: And everybody is looking at the global financial crisis and the eventual recovery. Are you concerned about the massive numbers of unemployed around the world and whether any recovery will be a so-called "jobless recovery?"

ZOELLICK: Well, that's clearly one of the big issues for developed and developing countries. You know, we're not out of the woods yet. It looks a lot better than it did a year ago. But if you look at the expectations for growth, pretty modest in Europe, maybe 1 percent, not much better in Japan, U.S. doing better, but maybe at 3 percent, much less than you would normally have in a recovery that had hit such a bottom.

This shows, again, the need for the developing world, because a lot of the demand they have as they expand might be for capital goods from North America and Europe and Japan. They buy agricultural goods from the United States. They expand services.

But one of the core issues, of course, is that when you do have large- scale unemployment, does it have feedback effects? Or, for example, in the U.S., people not being able to pay their credit card loans, their consumer loans, their mortgages. So this is one reason why we all have to be attentive to issues in, say, sovereign credit markets, like Greece, or the broader challenges of protectionism in trade, because this is still a sensitive time.

AMANPOUR: Can I get back to the United States for a moment? As you know, President Obama this week was on Wall Street calling for regulation. Do you agree with that? And, also, you were once at Goldman. Do you think Goldman went too far?

ZOELLICK: Well, I was at Goldman for about a year. And I think, you know, the key question for all those financial institutions is one that President Obama tried to highlight in the speech -- I had a chance to read it -- which he was trying to connect Wall Street to Main Street.

And he was trying to say what we need is a financial sector that serves what economists call the real economy, whether it ends up trying to help create innovation, you know, the types of things that brought us an information technology sector, you know, help companies become more effective.

And I think one of the anxieties was not only did people move to some ventures that strayed too far in terms of risk, but they lost the sight of how do these financial activities help people create jobs, help people create innovation?

Now, it's not always so easy. For example, you know, in the field of derivatives, we at the World Bank use rain index futures to help the people of Malawi to make sure that, if the rain isn't very good and agriculture is poor, that they can get some returns.

So sometimes it's not so easy to know the direct relationship. But I think at this point what the president was also trying to do was Congress is clearly moving towards a financial reform bill. He's trying to push it in a way that brings Republicans and Democrats together. To be fair, these are not easy issues, as people still try to understand the complexities of what got us into this mess and how to prevent it in the future, that I've been in meetings all this morning with the G-20 countries where people are struggling with these issues with economies around the world.

AMANPOUR: On that note, World Bank President Robert Zoellick, thanks so much for joining us.

ZOELLICK: Pleased to be with you.

AMANPOUR: And next, we'll have our "Post-Script," how the Middle East conflict is disrupting plans for one 13-year-old boy's bar mitzvah in South Africa. That's when we return.



AMANPOUR: And now our "Post-Script."

He's one of the world's preeminent jurists who played a key role in the struggle against apartheid and had jurisdiction over war crimes trials for the former Yugoslavia, and he's also of a U.N. report that accused both Israel and the Palestinians of war crimes during the Gaza War.

Judge Richard Goldstone has been a frequent guest on this program. But now his investigation into the Gaza War is having a profound impact on his family life. He says he will not attend his grandson's coming-of-age services, his bar mitzvah, next month in Johannesburg, South Africa, because some Jewish leaders there are threatening to disrupt the ceremony because of that Gaza report.

This week, Judge Goldstone told us, quote, "Imagine the effects of such protests on my 13-year-old grandson and his family. I have also received reports that I will likely be physically prevented from entering the synagogue." He added, "It deeply saddens me that I will not in the circumstances be able to be in attendance."

That's our report. And you can see our program whenever you like at For all of us here, goodbye from New York.