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FAREED ZAKARIA GPS

Britain Bipartisan and U.S. Partisan?; A New Money Man in Britain; A Voice of Radical Islam

Aired July 11, 2010 - 10:00   ET

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


FAREED ZAKARIA, CNN HOST: Welcome to GPS, THE GLOBAL PUBLIC SQUARE. We're coming to you from London this week. That's the Houses of Parliament in the background, where a new British government has been making waves, becoming the first government in the advanced industrial world to attempt a dramatic set of measures to reduce its budget deficit, including steep cuts but also tax hikes.

But what has struck me about this new government is something else - the manner in which it's a coalition of Left and Right, working together, quite harmoniously. Remember, the prime minister, David Cameron, heads the Conservative Party, and many of his fellow Tories are quite Right-wing. His allies, the Liberal Democrats, headed by Nick Clegg, are actually on many issues further to the Left than the Labor Party, so it's quite a feat to have these two groups of people in office working together, but, so far, they have.

Now, maybe this bipartisanship could yield rich dividends for Britain if they can tackle long-postponed difficult problems.

Meanwhile, in America, three political scientists have tallied up the voting record of the current Congress and discovered that it is the most partisan, polarized legislature in 120 years. The result, of course, is that major reforms of entitlements, immigration, taxes, energy policy seem impossible.

This sense of paralysis is affecting not just the public sector but the private sector as well. Corporations are hording cash rather than spending it, consumers are being very cautious.

Anatole Kaletsky, a writer returning from a visit to the States and writing in "The London Times" says, quote, "For the first time in my 35 years of experience as a journalist and economic analyst, I found Americans much more pessimistic than Brits, Europeans or even the Japanese," end of quote.

America needs to return to its historical role as the land of optimism and "can do" attitudes. You see, economic growth is based partly on reality, but partly on perceptions. If we all believe we're going to stagnate and then we hoard cash and don't spend, then we will stagnate.

On the program today, we have an exclusive, Britain's Chancellor of the Exchequer or Finance Minister, George Osborne.

Next, have you ever met a jihadi? You will shortly. (BEGIN VIDEO CLIP)

ANJEM CHOUDARY, RADICAL ISLAMIST: You'll be (ph) living in America for too long.

If there was an election between any leader of Muslim - on the Muslim countries in the world today, I'm sure Osama bin Laden, he would win, hands down.

ZAKARIA: Except that the -

(END VIDEO CLIP)

ZAKARIA: Plus, some thoughts from me on the incredible shrinking Royal Navy.

And, well, we can't visit London without showing you some soccer - I mean, football fans.

All coming up on GPS.

ZAKARIA: The British budget, unveiled three weeks ago, has become the talk of the world. It has become a central part of the debate everywhere, including in the United States, with one side saying that the government must spend more money, not less, to avoid a second recession. The other side says deficits need to be cut now to restore confidence or we will become Greece.

My guest today is the man at the center of this debate, Britain's Chancellor of the Exchequer or Finance Minister. In the three weeks since he unveiled his budget, George Osborne's austerity plan has been described by some observers as the Blood Bath Budget. It includes $25 billion in cuts to, among other programs, child tax credits and public housing subsidies.

But other programs are cut as well. The middle class and the rich are not spared. The budget contains a hike in the capital gain stacks, along with the jump in the value added tax. All of this has brought a torrent of criticism on the head of the youngest Chancellor of the Exchequer since 1886.

The 39-year-old George Osborne is an upper class Briton, private school and Oxford educated, very much in the mold of his long-time friend, the prime minister, David Cameron. Osborne's pledge to the British people is that he will not hide hard choices from them and he will make them.

Welcome, George Osborne.

GEORGE OSBORNE, BRITISH CHANCELLOR OF THE EXCHEQUER: Thank you. Thanks for having me.

ZAKARIA: Let's talk about the budget. First, did you have to do it? There are many people who say George Osborne and David Cameron say we have to do this. We're forced to do this because the international bond markets would have been unforgiving, would have made us borrow money at a very high price.

But, the reality is, international bond markets are saying Britain can borrow as much as it wants and it can borrow it at historically low interest rates. So, given that the market is telling you we're not worried. We know that you're - you're solvent. Why did you have to be this extreme?

OSBORNE: We have to start with the situation we inherited. So we - we come into office, come into the building of the Treasury. We come in with the highest budget deficit, as I've already said in the G-20 and the European Union. We come in with no real, credible plan in existence for reducing that deficit so that international bodies who look at the British economy and British government, like the European Commission had said that was not really a credible plan. And I had to come forward with a credible plan that dealt with the deficit.

So I think we certainly had to get on and do it, and if we hadn't, if you ask yourself the counter-factual (ph) question, if I got up and said I'm prepared to stick with exactly what I inherited, I think there really would have been a serious question mark over Britain's ability to pay its way in the world and whether it had a credible plan and so on.

So I think we needed to produce a budget that dealt decisively with the deficit issue as the first point I'd make. The second point I'd make is once you've committed yourself to doing that, you then have to set out credible measures.

ZAKARIA: The Keynesian argument against this budget would be that at a time when there's very little spending taking place in the economy, spending by the consumers or businesses to further reduce that spending, to take money away from consumers because of higher taxes or to put more people out of work, government workers and such, you're reducing the amount of spending of demand in the economy and you could send the - the economy into a tailspin. Why is that not true? The British economy, the recovery's still fairly fragile.

OSBORNE: Well, I think the biggest risk to the recovery is the fear about the British budget deficit. I mean, we are - we are part of the European Union. The concern obviously stalking the European Union is the sovereign debt concern and we had the largest budget deficit in the European Union, and I think that has an impact both internationally and domestically.

It has an impact on the international confidence in the U.K. and the attraction of investment into the U.K., and if people feel, well then I'm going to plan to deal with it, there's going to be higher market rates of interest. There's going to be an ever-higher spiral of business taxes as they seek to try and do it.

ZAKARIA: This was all preemptive in - well, it wasn't happening. You were getting investment. People were loaning you money, and -

OSBORNE: Well, actually, I think - I think actually, you know, concern about investment into the U.K., you know, was present and it's there, both concerns - you know, sovereign concerns reflected and credit rating agency concerns. But also concerns from international - corporate international investment.

Also, there's a domestic angle to this. British consumer confidence and British business confidence, you know, I think had this black cloud hanging over it, which was we know there's this huge debt problem. We know there's this huge deficit problem, and there was a bit of a drum roll of, like, at some point it's got to be dealt with.

Well, I wanted to say, look, this is plan. It's staggered over four years. It doesn't take effect immediately. But it's a plan that you now know where you stand, and I think there is quite a lot of it (ph) that as - the public had welcomed that. And the interesting thing has been the public reaction to this budget, which has been very, very positive, and I think that's because there's a feeling, OK, there's a government in charge, getting a grip, and that gives us confidence to spend in the future, to set up a small business to take on extra stuff, to improve my skill so I can get a better job.

You know, that's a crucial ingredient in economic performance - confidence and having that confidence that there's a government with a plan dealing with the country's biggest problem, is I think absolutely paramount.

ZAKARIA: That is interesting. You - do you think, going into it - I mean, the budget that you presented has all the hallmarks of being an unpopular budget. When Margaret Thatcher's Chancellor of the Exchequer presented a somewhat similar budget in her first year, it was pretty unpopular. I think her ratings, as I recall, went down.

In your case, actually, it seems as though it's been reasonably well received and the government's approval ratings have inched up, if anything.

OSBORNE: Well, I mean, first of all, Chancellors - Chancellor of the Exchequer, I mean, the prime minister's agenda should be careful not to pay too much attention to their popularity ratings. As, you know, (INAUDIBLE) were to caution, you know, these things can go down as well up.

But I would make - I'd make an observation. You know, I think the publics of the world, publics of the Western democracies, you know, they want governments that can show a lead, that can admit there's a problem. And, you know, the British people know there's a debt problem. They - they read about it. They see it on their television screens. They know - you know, although they wouldn't understand all the intricacies of the national balance sheet and deficits and national debt, they have a pretty good gut feeling that the country has lived beyond its means, and they want a government that has the strength and the leadership to deal with the problem, and I think we are enormously helped as a government by the fact we also campaigned on this in the elections.

So we had a Democratic mandate for dealing with it. We're a government, unusually, of two political parties, both of whom campaigned to deal with the deficit in the election. And the fact you've got two parties working together, trying to deal with this problem, I think, at the moment, is quite attractive to the British people.

ZAKARIA: If the - if the cuts that you have in the budget start having an effect of - of producing a downward spiral on the economy, will you reconsider?

OSBORNE: Well, I'd just say I think the biggest threat and the - and the most likely cause of a downward spiral in - as you put it, to the British economy, would be a concern that we couldn't deal with our deficit, that the sovereign debt concerns that other European economies have hanging over them, would hang over the British economy. So I think that's the clear - clearest threat and I think we've acted to deal with that.

Look, the plan I've set out in the budget, I've been very clear that we've got a mandate to - fiscal mandate to put these structural power (ph) of budget in balance by 2015, '16, but we've built in some caution. We're seeking to achieve it a year earlier. However, the fiscal mandate is the fiscal mandate.

I think, at the moment, if you look at the British economy, you can see independent forecasts show growth every year. You can see independent forecast show unemployment falling every year. You can show more confidence in our country's ability to pay its way in the world because the low market interest rates.

In other words, I think the budget is doing what I hoped it would do.

ZAKARIA: Do you fundamentally believe that there should be a distinction between proprietary trading and banking? You know, the so-called Volcker Rule?

OSBORNE: Well, I am personally quite attracted to that, so I personally think that for large proprietary trading, large internal hedge funds don't sit terribly easily along the side of retail banking, and I've said that for a year or more now.

However, that is, you know, I'm very happy to have a debate and be persuaded. So I've asked John Vickers, who's a very respected economist in this country, to clear this on the (ph) Banking Commission. It's got on it both champions of consumer interest but also experienced investment bankers, and, you know, they are going to look at this precise question. I think the - more broadly, in the British context, the competition within the banking sector because one of the effects of the last two years is that a pretty consolidated banking industry suddenly got a lot more consolidated and the direct issues of competition there as well.

ZAKARIA: And we will be back with more from George Osborne, Britain's Chancellor of the Exchequer.

(END VIDEOTAPE)

(BEGIN VIDEO CLIP)

ZAKARIA: What would you say to the Tea Party Movement in the United States? OSBORNE: I'm not going to - I'm not going to be handing out, you know, advice to the Republican Party. But, you know, I would make a general observation -

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we're back with the Chancellor of the Exchequer of Great Britain, George Osborne.

I've got to ask you, you are often described as not just the brains behind the British government but the brains behind the Conservative Party, so what do you make of having, after 13 years of Labor rule, an unpopular prime minister, terrible economic recession, the conservative party couldn't get a majority and was forced into an alliance.

OSBORNE: Well, we were starting from a very difficult position. You know, we had to gain an enormous number of seats in the election, and it's sometimes forgotten when people look at the result that the Conservative Party gained more seats in the election we just had than in any election since 1931.

So, in the election, I mean, we won more constituencies, more districts, as you put it in the United States, than at any election since 1931. And so that was a pretty heroic achievement. But we fell short of achieving the overall majority.

Now, I think that was -- you know, we knew that was always a big ask, a big and difficult task. But, actually, we've been able to deal with the result, which was we were clearly the largest party. We had the largest number of seats. We had the largest number of votes by a distance.

And, interestingly enough, because of the way our electoral system worked, if the results have been reversed, the Labor Party would be sitting in office with one of the biggest majorities ever. So we're partly victims of that as well. Still -

ZAKARIA: And that's - that's the drawing of - of -

OSBORNE: That's the drawing of the boundaries, the district boundaries, as you put it. So if the Labor Party got our result and we've got the Labor Party's result, they'd have a huge majority.

But, you know, put all that aside, we face the situation of not having an overall majority. We could have tried to go it alone as a minority government. I mean, there are countries that made a success of that, like in Canada at the moment. But we decided that a stronger, more stable government would be to be - would be one where we brought in the third party in British politics, the Liberal Democrats, formed a proper coalition so they have seats in the cabinet. My number two in this building is a Liberal Democrat. And that has worked incredibly well. It's strong. It is guided by common principles. There are clearly areas of disagreement, but we've identified those in advance so we know where they are and we can - we can step around them.

And, I think the country out there actually quite likes two political parties working together on a common problem.

ZAKARIA: But there are people who say that David Cameron and you have tried to modernize the Conservative Party. You've made it more environmentally friendly, kinder, gentler on all kinds of issues, homosexual rights, and things like that. But that you - it didn't - it didn't work. What would you say to them?

You know, you only - you set up 36 percent of - of the popular vote and there are certainly conservatives in the United States who say the lesson from this is don't try to move to the center because it doesn't work.

OSBORNE: Well, you know, the Conservatives in the United States can come to their own conclusions. Although, as an interested observer, I would suggest that moving to the center is normally the best place to try and win an election.

The Conservative Party in Britain had to change, and not just change its image, but change the way it thought about things, change in practice as well as in perception. And that has meant changes to - for example, the kinds of people who represent us in the Parliament. So we have many more ethnic minority members now in the Parliament. We have many more women members in the Parliament, which is a good thing, not just because it look different, but because it is different and it thinks differently.

Second, we had to accept that, you know, we can't abandon whole areas of policy to the Left in British politics. So there is no reason why the Conservative Party should not have a progressive policy on climate change or be interested on issues of poverty and equity in our society and have answers to those issues.

So you - you know, I think you found us being prepared for - to go into territory where the Conservatives were not previously comfortable. And I think, as a result, we now very clearly occupy the center ground of British politics.

And it's had an interesting impact on our principal opponents - the Labor Party, you know, who are now heading very sharply leftwards. They've got a leadership contest at the moment. It is run by the big trade unions in this country. And the party leadership candidates are falling over with themselves to - to say of more left-wing things and pull themselves off the center ground. Now -

ZAKARIA: Because you - you move to the center there and --

OSBORNE: You know, and I'm - and I'm, you know, I'm biased too (ph) in what they're doing is it's madness, because that - that is exactly what we did in the opposite direction when we lost power. We headed off to the right with fringes of British politics and stayed there for 13 years until we managed to come back to the center and - and win an election. And, eventually, I suspect my political opponents will discover the same thing.

ZAKARIA: What would you say to the Tea Party Movement in the United States?

OSBORNE: I'm not going to - I'm not going to be handing out, you know, advice to the Republican Party. But, you know, I would make a general observation about the - the center right around the world, whether it's the Republicans in the United States or Christian Democrats in Europe or Conservatives in (INAUDIBLE) or wherever.

You know, the best place to win elections is from the center and that there are good conservative arguments based on Conservative principles about how you reduce carbon emissions or how you increase social justice in a society or how you increase social ability. You know, and the Conservative families should not be afraid of advancing those arguments. And when we do advance them, we can challenge our opponents on territory which - which they've always thought of as theirs.

And then - and certainly you'd be looked as successful center Right Conservative parties around the world, those who have been the ones that have been prepared to do that.

ZAKARIA: There's a non-tradition in British politics of very young people holding enormously important offices - I think of the younger (INAUDIBLE). But you are I think the youngest Chancellor of the Exchequer since the 1880s. Do you ever get up in the morning and think to yourself how did I get in to this job?

OSBORNE: Not quite of that - of that. I am, of course, very fortunate and on the contrast of that all the time. But is - it's partly because our party have been out of office for so long. The generation above me left and they've went through elections that they lost and then moved on.

And a new generation came up under David Cameron's leadership, and we are, so - at least most of us are relatively young, but we're full of energy and ideas. And the - the previous chancellor, you referred to, in 1880s, was one of the least successful chancellors.

ZAKARIA: He's Winston Churchill's father.

OSBORNE: He's - that would be - the only really substantial thing he did for the world was produced Winston Churchill as his son, for which we're all grateful, but he was not a very successful chancellor and he - he resigned after four months. So it's certainly not something I'm planning to follow.

ZAKARIA: But do you - do you think that your - your energy needs to be balanced for greater experience? Do you actively - how do you think about this? Do you seek out the counsel of older people, wiser people, gray-haired people? OSBORNE: Well, I - the way I conduct my own professional life is to constantly seek second opinions, alternative views. And the way I hold my meetings in this building is to have large numbers of people who can come in and say what they want to say. And I'm very frank with my permanent officials in this building, you know, tell me what you think and let's come to a collective decision. And, you know, whether it's alternative economic views or the advice of the Central Bank governor or the advice of my political colleagues, and I'm - I'm there to listen.

And, of course, in the end, the Chancellor of Exchequer and the Prime Minister have to make a decision, and once we make a decision we expect certainly the official machine to come behind it. But I think, you know, one of the - one of the things we've shown is the readiness to listen to ideas.

Let me give you just one example, because it happens to be something that happened this morning, but we've been asking people in the - in the Board of Public Service for their ideas on how we can reduce these budgets in a way that doesn't damage the frontline services people receive. And over 65,000 public servants - teachers, nurses, doctors, civil servants, have responded in the space of just a couple of weeks. I had some of them around my table at Number 11 Downing Street, talking to them this morning. You know, good, sensible ideas.

And I think it - you know, we don't pretend we have all the answers. We're out there listening for the answers. And I think, you know, that - that has been quite a refreshing thing about this new government.

ZAKARIA: George Osborne, I hope very much that you do outlast Randolph Churchill and that you try to reach your 40th birthday in this building. Thank you very much.

OSBORNE: Thank you very for doing this (ph).

(END VIDEOTAPE)

(BEGIN VIDEO CLIP)

CHOUDARY: So let me tell you something, if there was an election between any leader of Muslim - of the Muslim countries in the world today, I'm sure Osama bin Laden, he would win hands down.

ZAKARIA: Except that there are elections in half the Muslim world and the Muslim fundamentalist, let alone the jihadist do terribly.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: Have you ever met a jihadi? Well, you're about to. It's easier to find them in London than in New York. In fact, earlier in the decade, London took on a nickname, Londonistan, the origins of which were obvious. A brand of radical Islam seemed to flourish here.

At the center of the movement was the infamous Finsbury Park mosque. Its imam, Abu Hamza al-Masri, openly preached jihad and played host to terrorists ranging from the missing 9/11 hijacker Zacarias Moussaoui, to the shoe bomber, Richard Reid.

Britain has cracked down on some of the activity. The Finsbury Park mosque is closed and Abu Hamza al-Masri is imprisoned. Yet, jihadis continue to preach openly in mosques and meeting houses here.

One is Anjem Choudary, an activist who has praised both the 9/11 attacks in New York and the 7/7 bombings in London five years ago. He has called for the imposition of Sharia law in Britain. I thought it would be worth your meeting him.

Anjem Choudary joins me now.

Tell me, we're five years past the 7/7 attacks, the subway bombings in London, and you say that you think there will be more because Britain hasn't learned the lesson of 7/7. What was the lesson of 7/7?

CHOUDARY: Well, the lesson was that if you have certain causes in place, the occupation of Muslim land, the murder of innocent men, women, and children as in Iraq and Afghanistan, if you support the enemies of Islam and Muslims like the Israelis who are occupying our land, and if you bring in a whole host of the common (ph) laws in this Muslim community, then this is bound to have a backlash.

This has not changed. In fact, the situation has regressed five years on.

ZAKARIA: Many mainstream Islamic scholars who have very wide followings which are documented say that people like you are a fringe of a fringe, that you really have almost no followers.

CHOUDARY: Yes.

ZAKARIA: That you're - you're - this is a great publicity-seeking enterprise but you have -- there's nobody behind you.

CHOUDARY: I believe that there are many people in fact who have the same ideas because my ideas are Islamic. I don't speak for any one individual organization. I speak Inshallah, you know, and I try to propagate what is the Islamic viewpoint.

ZAKARIA: You know, people - just listening to you, the first thing I think they would think, at least in the United States and I think in many parts of the world is, gosh, this guy doesn't sound like a jihadi. Do you think of yourself as British?

CHOUDARY: I'm a Muslim first and a Muslim last. If I'm in Britain and I have a passport, then that's a travel document. If I was in America, I would have a travel document with an American, you know, institution on it. At the end of the day, you know, our identity is defined by our thoughts and our ideas. My ideology is Islam. It's something I believe in, I live by, and I want to struggle for and I'm willing to sacrifice for. So, you know, I am determined and I'm defined by what I believe, not where I was born or my lineage or, you know, or what the government would have me labeled as.

ZAKARIA: Is there any government of any - a country that is -

(CROSSTALK)

CHOUDARY: No, we have - we have today about 55 so-called Muslim countries. None of them are implementing the Sharia. Some of the worst and the most barbaric, in fact, are, for example, the Iranian regime and the Saudi regime. Many people would believe that they are Islamic countries but in fact they're implementing non-Islamic, (INAUDIBLE) law, and in fact, you know, this is much more dangerous because when you give a semblance on Sharia and you after that oppress the people and you implement injustice, you know, it gives the impression that there's something wrong with the Sharia, and that's not the case.

ZAKARIA: So why don't you want to spend more time overturning the government of Saudi Arabia rather than Britain?

CHOUDARY: Well, I live in - I live in the world which has been created by God. Wherever I am, I will propagate Islam. Who said that Britain belongs to David Cameron? Britain belongs to God. I will implement the Sharia here if I can.

If I go to Saudi Arabia I'll do the same there. If I'm in Pakistan, the same there.

ZAKARIA: But isn't it fair to say, though, it is much easier for to you to - to espouse your views in an open democracy? If you were to say what you're saying in - in Iran, they would kill you. If you were to say it in Saudi Arabia they would at the very least imprison you. Here you - here you get to be on television.

CHOUDARY: I don't believe so. I believe in fact America and Britain and much of the West is looking for an alternative. You can see from the credit crunch to the MPs (ph) and the -

ZAKARIA: You think the solution to the credit crunch is Islam, Sharia law?

CHOUDARY: Of course it is. Yes. I mean, you can - you can talk to me about anything, about the economy in the West, I can give you an Islamic alternative.

ZAKARIA: All right. What I want to first talk to you about, though, is if you look at polling done across the Islamic world, what you find is support for the kind of ideas you're describing has been dramatically falling all over the world -

CHOUDARY: I don't think so. You've been living in America for too long. If you go into the streets of Indonesia or into Malaysia or Pakistan, if you go into the streets of Lahore and say to them what they think about Sheik Osama bin Laden or the current -

ZAKARIA: When - when was the - OK, when was the last time you were in Indonesia and -

CHOUDARY: I was in Indonesia about three, four months ago.

ZAKARIA: All right. Because I've been to both places and I would disagree. I would say the polling is also consistent with my personal observations. So -

CHOUDARY: Let me tell you something. If there was an election between any leader of Muslim - of the Muslim countries in the world today and Sheik Osama bin Laden, he would win hands down.

ZAKARIA: Except that there are elections in half the Muslim world and the Muslim fundamentalists, let alone the jihadis, do terribly.

CHOUDARY: No, you've got -

(CROSSTALK).

CHOUDARY: Wait a second. Wait a second, I'm not propagating the idea of elections and democracy and freedom because these things are anathema to Osama --

ZAKARIA: Except when you want to make your point.

CHOUDARY: No, no, no. My point is that these fellows are more popular among the Muslim -

ZAKARIA: But they're not. Demonstrably, they're not popular because they are -

CHOUDARY: Of course they are. No, of course they are (ph).

ZAKARIA: There are elections in Pakistan. There are elections in India. There are elections in Indonesia.

CHOUDARY: If you - if you go to any ordinary practicing Muslim in any part of the Muslim world, they will say we believer the Sharia needs to be implemented. We -

ZAKARIA: So how do you explain that when there are elections they don't vote for these people?

CHOUDARY: Because they don't stand for those elections, number one, and they don't believe voting is allowed. They believe -

ZAKARIA: They do stand for them. In Malaysia and Indonesia there are Islamic fundamentalist parties.

CHOUDARY: -- but they're - they're not - they're not actually abiding by the Sharia because if you were a Muslim practicing, you don't believe in democracy because democracy separates God from life's affairs and politics.

We believe the whole of the system, including the politics and the judiciary, must be according to the Sharia law.

ZAKARIA: This is like having a debate with a - with a pure Marxist where nothing -

CHOUDARY: Oh, forget Marxism. No, no.

ZAKARIA: -- no Marxism has ever been implemented so you can never test it. You talked about the reasons why's there was jihad and why you were advocating it and why the Brit - Britain had not learned the lessons of 7/7, and you've talked about the occupation of Afghanistan, Iraq, et cetera.

So what were the reasons for the planning of the attacks, 9/11, the attacks in Nairobi, in Kenya, during that - that period when al Qaeda was planning attacks on the United States, the United States's foreign policy, central objective in the mid 1990s was saving Bosnia's Muslims from ethnic cleansing and annihilation by the Serbians.

CHOUDARY: Wait a second. History did not begin in the 1990s.

ZAKARIA: I'm asking -

CHOUDARY: Before the 1990s, the Americans were supporting the pirate state of Israel occupying Muslim land. Before the 91990s they had puppet regimes in our countries who they were feeding with weapons of mass destruction, which were being used against our own -

ZAKARIA: But you don't - you don't deny that the United States sent an armed force to try and save Bosnian Muslims?

CHOUDARY: No, no. It was not about the Bosnian Muslims.

ZAKARIA: What was it about?

CHOUDARY: They were in - they were in Europe to - to secure their own military, economic, strategic and ideological interests.

ZAKARIA: What does that mean? That sounds like a lot of big words. They went and tried to save the Bosnian Muslims from being massacred.

CHOUDARY: That is nonsense. No. What they did - what they did -

ZAKARIA: What did they gain from it? What is that? What is that?

CHOUDARY: When they came into Bosnia, what the - what the NATO alliance did is they took the weapons from the Bosnian Muslims and they allowed the Serbs to slaughter them. That's why you have mass graves in places like Srebrenica and other places. This is the reality.

ZAKARIA: That was not - that was not the American policy. The Americans were to come in and correct that.

CHOUDARY: They were not. They were lying as much as they can about their foreign policy. But the American policy there was to establish their own interests. They were wanting - ZAKARIA: We're going to argue around this. All right. Kuwait, saving the people - they, the people in Kuwait from an Iraqi invasion. That is saving one Muslim country from another's advantage (ph).

CHOUDARY: This is - aggression. There's no difference between Iraq and Kuwait and Saudi Arabia. All of this is Muslim land. There's nothing wrong with --

ZAKARIA: There's one of group of people were killing the others.

CHOUDARY: That is not true.

ZAKARIA: Saving lives is not true?

CHOUDARY: That is not true. That's not true.

The ordinary Muslims don't have a problem with each other. We believe our land, our war, our peace is won. We have --

ZAKARIA: The ordinary Kuwaiti Muslims were being killed by Iraqis.

CHOUDARY: No, no, no. This is not - this is not correct. The -- the Iraqi and the Kuwaiti regimes had interests, mainly oil interests, with the British and the Americans. They changed hands after the first Gulf War. They shifted in favor of the Americans. So the Americans had interests, economic interests in the area.

Besides which the two regimes there, one well known to be puppets of the Americans and British. So it's not about, you know, actually the Muslims -

ZAKARIA: The Iraqi, Saddam Hussein was a puppet of the British?

CHOUDARY: He was originally - no. He originally was -

ZAKARIA: I will ask you, in 1990, when he - when he invaded Kuwait.

CHOUDARY: The fact is, look, the - the main superpower -

ZAKARIA: I was just trying to see to what lengths you have to go to make your - your world view work.

CHOUDARY: (INAUDIBLE).

ZAKARIA: Tell me, your - you present yourself as a man of religion and as a - as a holy man. Islam says if you kill one life it is like killing the whole world.

CHOUDARY: A Muslim life.

ZAKARIA: Are you - are you - yes, a Muslim Life. Are you comfortable that the kind of thing you're advocating, most of the jihad being taking place is - it kills Muslims. It kills Muslims and -

CHOUDARY: That's rubbish.

ZAKARIA: What? The jihadist in Pakistan, whom are they killing? The jihadist in Indonesia, whom are they killing?

CHOUDARY: Actually, they're not. Well, you have - you have (INAUDIBLE) -

ZAKARIA: The jihadist in Saudi Arabia -

CHOUDARY: Wait a second. Wait a second. If you look at the reality, if you open your eyes a little bit, you will find that the CIA agents in the area like Blackwater and others, they are the ones that are carrying out operations in public places and then they are trying to discredit the Mujahideen by blaming it upon them, the Asian -

ZAKARIA: So you're saying all the - all the Jihadi operations that are taking place now in Pakistan, in Afghanistan, where people go and blow up cafes, blow up at bus stops, those are all actually secret CIA operations?

CHOUDARY: No, I'm not saying all of them, but -

ZAKARIA: The young Muslims who have bombs strapped to their belts are actually undercover Blackwater agents?

CHOUDARY: Wait a second. Wait a second. What I'm saying is that, you know, each operation needs to be looked at on its own merit. You will - you will find that many of them which have been carried out in the public arena are in fact carried out by agents of the Americans via the CIA. You know -

ZAKARIA: The 7/7 attacks killed Muslims.

CHOUDARY: Wait a second. But the 7/7 operation was not targeted towards the Muslim community, was it? It was targeted by -

ZAKARIA: It killed Muslims and there are Muslims in the -

CHOUDARY: But in the - in the time of the prophet, they used catapults and they targeted the enemy and die, for example, and there were innocent -

ZAKARIA: So those were OK because they're killing -

CHOUDARY: Wait a second. Wait a second. Wait a second. Let me just finish. Let me just finish.

And there were no innocent women and children there among the dead. And the prophet said - he said, don't target them. But if they - if you target the enemy and they're there they are part of the target. I mean, nobody will target women and children and people who are not part, you know, of -

ZAKARIA: What were they targeting?

CHOUDARY: Well, obviously, they were targeting the infrastructure of the - But you need to look at (INAUDIBLE).

ZAKARIA: Wait - wait. They were targeting subway cars? CHOUDARY: Wait a second. Wait a second. Wait a second. Wait a second.

ZAKARIA: They were targeting the people. Of course -

CHOUDARY: Obviously - obviously, you haven't seen the will of Mohammed said - (INAUDIBLE). They were carrying out their operation against the British and obviously they were carrying out the operation against the British public and the infrastructure because of what was taking place in the foreign policy.

ZAKARIA: They were trying to attack the subway cars, the empty subway buses?

CHOUDARY: How do you - how do you know they were targeting the empty subway buses? Is that what (INAUDIBLE)?

ZAKARIA: I'm asking you. They were deliberately trying to kill people and innocent men, women, and children.

CHOUDARY: Yes. I agree - I agree with you. Yes. No, not men - not women and children. But they were - they were targeting people -

ZAKARIA: There were - there were women and children there.

CHOUDARY: Wait a second. Wait a second. Let me ask you a question. Let me ask you a question.

ZAKARIA: That's not the rules of -

CHOUDARY: Let me ask you - let me ask you a question.

ZAKARIA: The covenant we're under here, my friend is I guess -

CHOUDARY: Well, let's change - let's change the rules. Let me ask you a question. Who were the people who elected the British prime minister or the American president?

ZAKARIA: You may say it's OK.

CHOUDARY: Let me ask you a question.

ZAKARIA: So you're saying it's OK.

CHOUDARY: No, I'm asking you a question. Who are the ones who - who elected them?

ZAKARIA: Sir, let me - I'll answer your rhetorical question. What you're saying is that because ordinary -

CHOUDARY: No, no. I'm asking you a question. Who is the one who elected the president of America?

ZAKARIA: Are you going to let me answer?

CHOUDARY: Or the prime minister of - of Britain? Yes. ZAKARIA: Are you going to let me answer? What you're saying is because ordinary Americans and ordinary Brits elected their government, they are fair target to be killed randomly -

CHOUDARY: Yes. That's fine (ph). What about their support for the - for the Jewish state of Israel? Were they not doing that?

ZAKARIA: Is that American military force bombing anyone?

CHOUDARY: Who was giving them billions of dollars over the last 50 years? Let me ask you. Who was behind Sabra and Shatila?

ZAKARIA: Let me ask you something very simple.

CHOUDARY: Let me ask you that though, Sabra and Shatila? Who was behind Sabra and Shatila?

ZAKARIA: You know what, we're either going to end this program or you're going to answer my question.

CHOUDARY: Who were they funded by? No, but we're having a conversation.

ZAKARIA: You're either going to - No, we're not.

CHOUDARY: We're having a conversation.

ZAKARIA: We're not. We're having an interview where I'm interviewing you.

You claim to be a man of religion. You claim to be a holy man. I want to return to this. Are you comfortable with the fact that what you're advocating is going to mean the death of innocent men, women and children?

CHOUDARY: No, what I'm advocating is for the British -

ZAKARIA: No, it is because it's already happened. So I just wanted to know -

CHOUDARY: Can I answer the question?

ZAKARIA: Can you live with that?

CHOUDARY: Can I answer the question? OK. I'm advocating the removal of Armed Forces from western countries, stopping the support for the parasite of Israel. In return there can be some kind of normalization between the relations.

ZAKARIA: How can there be normalization?

CHOUDARY: But as long - but as long as Muslim land is occupied and innocent men, women, and children are killed by the American British foreign policy, of course, there will be repercussions.

ZAKARIA: But there was no occupation of Afghanistan or Iraq when 9/11 was being planned and you were still advocating (INAUDIBLE).

CHOUDARY: No, no. No, no. Before that - before that they were killing innocent Muslims.

ZAKARIA: Where?

CHOUDARY: They were killing them in - in Israel, for example.

ZAKARIA: American forces?

CHOUDARY: Of course, they were. Look -

ZAKARIA: You've got to get your history right.

CHOUDARY: Wait a second. Wait a second.

ZAKARIA: I'm afraid we're going to have to go.

CHOUDARY: My history - my history is correct. I'm afraid that you're living in the world of CNN.

ZAKARIA: I am living in the world of CNN, as are you right this minute. We will be right back.

(COMMERCIAL BREAK)

ZAKARIA: And now for our "What in the World?" segment.

What got my attention this week was a speech made by Britain's Foreign Secretary. In it, the new man on the job, William Hague, laid out his vision for the future.

(BEGIN VIDEO CLIP)

WILLIAM HAGUE, U.K. FOREIGN SECRETARY: Although the next 20 years is likely to be a time of increased danger in foreign affairs, it is also a time of extraordinary opportunity for a country that sets out to make the most of the still great advantages that the United Kingdom certainly possesses.

Thank you very much indeed for listening.

(END VIDEO CLIP)

ZAKARIA: Now, Mr. Hague is a great speaker and a great Parliamentarian. But a good speech can't change reality, and the reality is Britain is shrinking as a world power. It cannot anymore afford the legacies of its glorious past.

Take one striking example. The British Navy, of course, once literally ruled the Seven Seas. It was the Navy of Sir Francis Drake and Viscount Nelson. It defeated the Spanish Armada in 1588. It beat Napoleon and the Spanish again at Trafalgar in 1805, one of the greatest naval victories of all time. And if you go to Trafalgar Square, you'll see a column of Lord Nelson in the middle of it. More recently, the Royal Navy prevailed over the Argentines off the South American Coast in the Falkland Islands in 1982. But many experts say the British Navy couldn't even win another Falklands War today, let alone win another Trafalgar.

Why? At the time of the battle of Trafalgar, the British Navy had almost 950 vessels and 150,000 men. Thirty years ago, in the Falklands era, the Brits had 194 vessels and 79,000 men. Today, the British Navy, the Royal Navy, has 56 ships and 39,000 sailors and marines.

In other words, the British Navy has half the number of people and one-quarter the number of ships in its fleet as it had at the time of the Falklands War. And it's not just the Navy, the entire British Armed Forces has essentially been cut in half in those 28 years.

If you look into the crystal ball, it's only going to get worse. Prime Minister David Cameron recently announced what amounted to 25 percent cuts across the board in government. The Defense Department will be spared a few percentage points, but its budget is expected to shrink by 15 percent over the next four years.

William Hague's Foreign Office has taken great hits too. Its budget has shrunk, and its global - global reach right along with it. In the past three years alone, more than 30 embassies and consulates have reportedly been closed around the world, and about 1,000 jobs have been cut. This is not a trend I take any pleasure in.

On the whole, a powerful, engaged Britain has been a force for good in the world, opening up trade routes, ending slavery, promoting liberty. But facts are facts. Britain is surely going to have a smaller voice in the future, no matter how eloquent its foreign minister.

And we will be right back.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: I'm Candy Crowley, and here are today's top stories.

So far, so good in the Gulf Coast. BP said earlier today that efforts to place a new cap on a leaking underwater oil well is proceeding as planned. However, with the old cap removed yesterday, crude oil is now flowing freely into the gulf. The new cap is expected to be in place in four to seven days. Favorable weather conditions are also helping the process. If successful, officials say the cap could collect all of the oil gushing from the well.

Palestinian President Mahmoud Abbas said yesterday he doesn't see a point in holding direct talks with Israel right now. Abbas says he won't negotiate with Israeli Prime Minister Benjamin Netanyahu until Israel commits to a settlement freeze and agrees to resume talks where they left off in 2008. Netanyahu has refused both of those demands. Abbas says it would be, quote, "futile and pointless" to start negotiations from scratch.

Those are your top stories. Up next, much more FAREED ZAKARIA GPS, and then "RELIABLE SOURCES" at the top of the hour.

(COMMERCIAL BREAK)

ZAKARIA: Now for our "Question of the Week". Here's what I want to know. The new British government has started an effort to, quote, "free the society of unnecessary laws", encouraging citizens to write in and suggest laws that need to be abolished.

So my question to you, what is the single stupidest law in your part of the world, in your country? What do you want repealed where you live? Let me know.

And don't forget to subscribe to our podcast on iTunes. We've always had a video podcast. Now, we have an audio one too. It's doing very well on iTunes. Thank you. More of you need to subscribe to it. You will never miss a show, and it's free.

Now, as I do every week, a book recommendation. I've been traveling and haven't been reading at my usual pace, but Daniel Finkelstein of the "London Times" sings the praisesof a book called, quote, "Nothing To Envy: Ordinary Lives In North Korea". It's by American journalist Barbara Demick, who paints a picture of a nation where George Orwell's vision of the future in his book "1984" has come alive. You really should read it. It got an award, and Daniel Finkelstein thought it was just absolutely riveting.

And we will be right back.

(COMMERCIAL BREAK)

ZAKARIA: Now, for "The Last Look". Today, our "Last Look" for four years at the World Cup and we wanted to show you some of the 32 billion viewers who tuned in to watch.

I know, I know, there are only - only 6.8 billion people on the planet. But each man, woman and child is thought to have watched an average of four or five games. The games showcase South Africa's potential. This once outcast nation is now a real emerging power. It still has many problems, but it also has great potential, which was on display for all to see during this World Cup.

Something else we saw was a healthy nationalism, one you don't have to be scared by. As long as you are not standing next to an England fan, who has just watched America score a goal against his team.

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

Stay tuned for "RELIABLE SOURCES".