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FAREED ZAKARIA GPS

Interview with George Osborne; Interview With Gordon Brown; Remembering Richard Holbrooke

Aired December 19, 2010 - 10:00   ET

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


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

The Obama administration has just completed its Afghanistan review, and the document seems to reflect realities on the ground, as far as we can tell. It says that progress has been made in Afghanistan, though the gains are fragile and reversible.

Now, some experts are actually even more optimistic. Max Boot and Peter Mansoor, two counterinsurgency experts, spent some time in Afghanistan and have just reported that important parts of the country are far more secure than they were a year ago. Taliban strongholds like Kandahar and Helmand have been the site of significant American and Afghan military successes.

The key challenge, the White House and the experts would agree, is whether the Afghan National Army and police can take over where the American army leaves off. In other words, if we clear and hold, can they come in and build, build order and governance in these areas?

Here, as well, there is some good news. The Afghan security forces appear more competent and coordinated than ever before. General Petraeus deserves credit for having achieved significant impact in a surprisingly short period of time.

The reason why we are in Afghanistan, however, is to battle al Qaeda and similar terrorist groups, and most of these bad guys are all in Pakistan these days. Now, the Obama administration has been honest enough about this problem and is honest enough to admit that progress here has not been fast enough or large enough.

Drone attacks certainly have put al Qaeda's leadership on the run in Pakistan, but they have many opportunities to regroup. Other terror organizations like the Haqqani group still operate with impunity inside an area as large as California in Waziristan.

The president says we are on track to have American forces start withdrawing in July, 2011. Good. Waiting for Afghanistan to become perfect would be waiting for decades.

But as long as the enemy in Afghanistan has sanctuaries in a neighboring country and some support in that country, progress in Afghanistan will be temporary. When we leave, the terror groups will come across from the border and undo years of American effort and trillions of dollars of investment.

We'll talk more about Afghanistan when we talk about the life and work of Richard Holbrooke.

But, first on this show, Britain's deep budget cuts have led to rioting that has even enveloped the future king of England. But it has many businessmen and financial experts cheering. We'll talk to the man responsible for Britain's bold and controversial program, the Chancellor of the Exchequer, George Osborne.

Next up, a man who held Osborne's office for a decade and then became prime minister, Gordon Brown, on why he opposes Britain's current path and much more.

Then, "What in the World?" Is the almighty dollar no longer so mighty? China and Russia have become strange bedfellows in an experiment.

Finally, in our "Last Look," if you can't find the video games you want on the store shelves, you might want to ask the Pentagon. We'll explain.

Let's get started.

(BEGIN VIDEOTAPE)

ZAKARIA: We can all remember the pictures of Prince Charles' car being attacked by a mob. Britain in recent weeks has seen some of its worst political violence in years, and it is all about money. The British government is raising fees and slashing its budgets by more than $100 billion over four years, the deepest cuts in 60 years.

The man at the center of this austerity is George Osborne, Britain's Chancellor of the Exchequer, which of course means its finance minister. Some think his plan is going to save Britain. He's going to explain to us why.

Welcome, George Osborne.

GEORGE OSBORNE, BRITISH CHANCELLOE OF THE EXCHEQUER: Good to be here.

ZAKARIA: So what to make of these kind of protests? And the last I can remember these kind of protests, they were Margaret Thatcher taking on the miners. Is this as serious a moment in Britain's history?

OSBORNE: No. I don't think it's the same. There have been protests, there were protests about the Iraq war, very big protests under Tony Blair.

Obviously, some students don't want to pay higher fees. That's what the issue was with this particular disturbance. We're - we're seeking a higher contribution from students for their university education. But we believe not only does it help deal with that budget deficit that you entered the program with, but it's also about making sure British universities have stable sources of funding and are up there, competing with the best American universities and Chinese and Indian universities, and maintaining Britain as a world leader in higher education.

ZAKARIA: But so -

OSBORNE: So, you know, I mean, the point is that it's just one of the examples of the reforms we're doing, which are both about, yes, reducing the government budget. We've got a very big budget deficit in Britain. But also about making the long term reforms that keep the U.K. a competitive place to do business for years ahead.

ZAKARIA: So the heart of the issue is people say - and you have critics in Britain from the Labor Party, economists and scholars like Lord Skidelsky, who say how can you, at a moment of such fragility in the recovery, take all this money out of the economy? If the government is going to withdraw money from the economy, it means there will be - it's going to be buying fewer things, and if it's buying fewer things, there will be fewer people producing them.

So what is the answer to that? You will be withdrawing a lot of money from the economy.

OSBORNE: Well, what I would say is, first of all, it's about confidence. It's about confidence that the government has a plan to deal with what is a very large budget deficit, the highest budget deficit in the G20. And I think we have shown over the last six months, because we're a relatively new government, that we can instill that confidence, we've earned market credibility.

There is at the moment concerns about European sovereigns and their debts. Well, there are not concerns about the U.K., indeed, of anything. Our credit rating has been affirmed.

And you have to ask yourself the counter factual question, if we were not taking these measures, if we were not being decisive in dealing with our deficit, where would Britain be? And I think Britain would be in the firing line at the moment of a sovereign debt crisis.

ZAKARIA: You had this extraordinary pithy quote to the "Spectator" magazine, which I - which I thought it was just wonderful. You say - you're explaining why - and most American conservatives don't realize this - you raised the value added tax, the national sales tax, in Britain from 17.5 percent to 20 percent, and then announced this was not a temporary rise, this was going to be permanent.

And then you said, "Once we can bring some stability to the public finances, we can look at reducing the tax burden on people. But it is a complete mirage to cut taxes one year, then to have to borrow the money and put up the taxes later to pay for that borrowing."

That strikes me as exactly what the Congress of the United States has just done.

OSBORNE: Well, I mean, first of all, I am a fiscal conservative. I want to see lower taxes, I would like to reduce the tax burden. But I think in a country like the U.K., the only way you can do that is once you've got stable public finances, and you are not running a high budget deficit.

Now, look, the U.S. is a different place and I'm not going to intrude into U.S. politics. But, you know, I'd make this observation that even in the U.S. there is a debate about medium term deficit reduction. And, actually, one of the people I hope to meet here in New York the next couple of days is Erskine Bowles and talk to him about the commission.

Now, I - of course that work's not progressing at the moment through the Congress, but I think it's created an interesting debate in America. And I certainly find it interesting that this independent commission came to many of the same conclusions that we came to, which was make sure it's mainly done through expenditure restraint, look at the retirement age, and actually try and reduce your corporate tax rates at the same time.

ZAKARIA: But after all those wonderful recommendations came out and I wrote columns in favor of them, very quickly we decided, oh, this is too tedious. Let's give ourselves a big tax cut and borrow the money from the Chinese instead.

OSBORNE: Well, I think, to be fair to the administration and the Congress, they had this deadline at the end of December of the - of the Bush tax expiring, and I can see why they took the decisions they've taken. And, actually, in the U.K., as well as the increase in the sales tax you referred to, I'm actually also reducing personal income tax next year by expanding the tax-free personal allowance. But you pay - you get tax free before you pay anything.

ZAKARIA: Well, which is great because you're - you're taxing consumption and not taxing income, which is what we should be doing. But - but we're doing the opposite.

OSBORNE: I (INAUDIBLE) - I - you are more of an expert on American politics than I am. But I - but I make the observation that you don't have a national sales tax, and I suspect, with your very good checks and balances, the constitution might be quite difficult to introduce one.

ZAKARIA: Let's talk about Europe. How serious is the crisis right now? Can Europe handle a continuing loss of confidence in the ability of these countries, now substantial countries, to pay their debts?

OSBORNE: Well, Europe shouldn't have to handle that. Europe needs to deal decisively with it, and I've spent much of my last six weeks discussing this issue with fellow European finance ministers.

Now, I mean, I think there are two components to the solution. One is the euro zone, the countries that have the euro as their currency, need to come up with a decisive plan to deal with the imbalances in a single currency area where you don't also have a single political area or single fiscal area.

The second element to the solution is that countries need to resolve their own problems. Ireland's got a major banking problem, and is now, with international support, dealing with it. Portugal's got a long-term productivity problem and needs to address that. Spain has got problems in its regional banks and is addressing that.

So, yes, the euro's got to act, but the individual countries of the euro have also got to do that.

ZAKARIA: But - but when you watch the Chinese, the South Koreans, the Singapore government put massive amounts of money now into education, into research, into new technologies they're funding, and I look at the Western governments, you know, hobbled by budget deficits, starved for cash, are we going to be able to compete in a new world in which there are these massive investments taking place in the East and essentially disinvestment taking place in the Western world?

OSBORNE: Well, first of all, I think Western governments need to protect the most important capital investments. So, speaking for the U.K., we're protecting science expenditure, we're investing in a new transport systems, both in our capital city, London, but also high speed rail network across the country. So I think you've got to keep the investment coming into the economically most significant infrastructure.

But I would - I'd make a sort of broader point, which is I don't think this is a zero-sum game with the East. And we should be pleased in the West, in America, in Britain, that many millions of families are coming out of grinding poverty for the first time in their family's history in countries like India and China and Indonesia and the like. And I hope that they start to want to buy the things that we are good at making.

Now, speaking of my country, you know, they're going to start to want advanced pharmaceutical products. We've got some great pharma industry in Britain. They're going to want insurance and pensions for the first time in their family's histories. Well, we've got great British financial services. They're going to want to start flying on airplanes, and, you know, we make great airbus planes, we have Rolls Royce engines to power them.

So I think, you know, the U.K. - and this is true of the U.S. - should not be afraid of the rise of the East but rather see it as a cape that's getting bigger, and a world that's getting more prosperous. And - and that's something we should all be optimistic and confident about.

I mean, in the end, if you're like me and you believe in the power of - of free markets and free societies to improve human happiness, what's happening is a good thing.

ZAKARIA: On that optimistic note, George Osborne, pleasure to have you on.

OSBORNE: Thank you.

ZAKARIA: And we will be right back.

(END VIDEOTAPE)

(BEGIN VIDEO CLIP)

GORDON BROWN, FORMER BRITISH FINANCE MINISTER: I think what's happening across Europe, including Britain, is - is a bit like the policies of the 1930s. It's retrenchment. It's retrenchment in the hope that private investment will recover of itself. A normal approach will not - will not work.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: Earlier in the show, you heard from Britain's current Chancellor of the Exchequer, the United Kingdom's fancy title for finance minister. Now, you'll hear from the man who held that job for 10 years, 1997 to 2007. Those are the years leading up to the financial crisis. It was a time of great prosperity for Great Britain, but it was also the period during which the seeds of this financial crisis were sown.

In 2007, Gordon Brown became prime minister, and his time at 10 Downing Street coincided with the worst of the crisis. He was universally applauded for his handling of it, and he's now written a book about it, "Beyond the Crash."

Welcome, Prime Minister Brown.

The first thing I have to ask you is something about your country. Do you think that the Cameron-Osborne plan of fairly significant spending cuts to assure the bond markets, that Britain is going to put its fiscal house in order, are the right way to go?

BROWN: I think what's happening across Europe, including Britain, is - is a bit like the policies of the 1930s. It's retrenchment. It's retrenchment in the hope that private investment will recover of itself. And, if I'm right, that this is quite a unique period where the restructuring of the world economy is taking place, then a normal approach will not - will not work.

In other words, you've got to prepare for the next stage. And so cutting investment in education, universities, research, science, technology, doesn't make any sense to me. Protectionist sentiment doesn't make any sense to me.

You've got to be looking out to the rest of the world, and I - I think we're not seeing the whole global picture in what we're doing in Europe as a whole. ZAKARIA: But what you're describing is a very pessimistic take on what - what is happening, because it's - as you said, it's happening all over Europe. Money is coming out of the economy in that sense. And do you think that this means we're in for a decade like the '30s?

BROWN: I think, at the moment, it looks like a decade of low growth and high unemployment for Europe and for America. And we're both experiencing the same problem, that production has moved to a large extent to - to Asia. Consumer demand in America and Europe has got to be held - held back. The banks are deleveraging. They're not really lending enough to small businesses.

Now, if that was the only story in town, I would see this decade as being one that you might write up later as one of - of national decline or a decline for the West. But I think there's another force at work, and that is the massive expansion of Asian consumer demand.

Now, that is the hope for the British, the European, and the American economies. You're going to have a billion consumers. You're going to have a consumer market twice the size of today's American market, at some point, quite soon in the East. And that is the opportunity for British, American, European exports, British technology, European technology, particularly American innovative genius.

So I'm looking at the future trends, and it's a very difficult picture to present, because people are pessimistic in looking at things and - and retreating into national shells at the moment. But if we see the bigger picture, then the real exits strategy from this set of crisis years is - is going to be the expansion of Asian consumer demand.

ZAKARIA: A lot of people look at your tenure as Chancellor of the Exchequer and say you've presided over a golden decade. But, in retrospect, there were many of the problems that - that morphed into the financial crisis were being built up during your - your decade.

What do you say to those who - and this - the parallel criticism is made about Alan Greenspan and Larry Summers that you allowed the lax regulation, the deregulation of these - of these financial industry that caused the problem?

BROWN: Well, I hold my hands up for saying, look, we did not understand that these financial institutions were not diversifying the risk right across the system. And yet all these new instruments and new - all these new institutions, and to - to be honest, the risk was being concentrated rather than diversified, but we had no means of discovering what was actually going on in this shadow banking system.

But I myself was saying from 1997 onwards that we really had to have a proper global regulatory system. And, to be honest, I couldn't persuade other countries, and that - that is really - we knew from the Asian crisis that a global system had to emerge, that was an early warning system, that was transparent, that give us more information about what was happening. Now, we've learned the lesson. I've learned a lot of lessons, but I think we acted very quickly once we saw what the problem was.

ZAKARIA: You have a unique perspective in that you have dealt with both the Bush administration and the Obama administration at the highest levels. What would you say is the difference?

BROWN: I think the Obama administration is trying to deal with the fundamental problem that faces America. I think now that it's been diagnosed that you've really got to rebalance your consumption and your production, the Obama administration is - is seeking to deal with that problem.

I think - I think the Washington consensus before was that these problems took care of themselves. Now you know that you've got to act.

Now, the question is can the American administration formulate what is the equivalent of a modern marshal plan where you can persuade the rest of the world that it's in their interest to work together with America and with Europe to formulate a growth plan for the world economy?

Now, I think that's possible. See, I think you could persuade - I - I don't see the merit in attacking China on currency, but I think you could persuade the Chinese that they should raise their consumption. Their -- their own citizens, 35 percent of their national income is consumption. In America it's 70 percent. Their own citizens need the boost of more consumer spending, raise - raise themselves out of poverty, bigger middle class in China.

And I think the Obama administration see that - that the root to American prosperity lies not just in what happens within America, but in exporting to the rest of the world. But I think they should go a bit further and see this as a modern marshal plan where you bring in the rest of the world to avoid what I still think could be, if we don't act, a low growth and high unemployment decade.

ZAKARIA: What do you think about the Obama administration's deal with Congress, which is effectively a second stimulus, using tax cuts rather than direct government employment?

BROWN: Well, you see, I wouldn't get into the detail because that's national policy. But I would say that anything at the moment that helps stimulate the economy and move it forward is - is a good thing. And, you know, I think the American dream can be reinvented for the coming generation. And I would be very optimistic about the ability of America to survive and surmount these problems.

I still think American - and, to some extent, European innovation - will lead the world for many time - for many years to come.

ZAKARIA: Gordon Brown, pleasure to have you on.

BROWN: Thank you very much.

ZAKARIA: And we will be back.

(COMMERCIAL BREAK)

ZAKARIA: Now, for our "What in the World" segment. The dollar is the currency of choice around most of the world. Drug dealers use it, so do arms smugglers, money launderers and tinpot dictators. But that's all because it is the ultimate, unquestioned reservoir of value in the complex global economy. Everyone, everyone accepts the dollar.

Now, in the aftermath of World War II, the dollar became the currency of choice for most trade between nations, the so-called dollar standard. When China buys iron ore from Australia, the transaction doesn't take place in yuan or Australian dollars, it's in U.S. dollars. When China sells widgets to Russia in the past, it hasn't been settled in yuan or rubles, it's usually been in dollars.

That is changing. The almighty dollar is looking a little less almighty.

On Wednesday, marked by bell ringing and confetti, the Moscow Interbank Currency Exchange started trading between the Russian ruble and the Chinese yuan. So now, instead of settling trades in dollars, a Russian buyer can pay his own currency for those Chinese widgets. The Chinese seller gets paid in his own currency.

Now, why should you care what an exchange in Moscow has decided to trade in? Because it's symbolic of something much bigger. The Russians and Chinese have essentially declared war on the dollar. President Putin and Premier Wen were pleased to announce in St. Petersburg last month that they were renouncing the dollar trade between their two nations.

The Chinese, of course, hold about $900 billion of U.S. debt. But Beijing has been very clear that it wants to reduce its reliance on the dollar. Putin, for his part, has been pushing for the euro to replace the dollar as the world's reserve currency.

All this comes just a few months after the United Nations released a controversial report saying that the dollar was an unreliable international currency and needed to be replaced by something more stable.

This is certainly a trend to keep an eye on, but we have a long way to go before the dollar falls by the wayside. Every day, $4 trillion goes through the foreign exchange system, most of those trades in U.S. dollars. On Wednesday, trades between rubles and yuan totaled just $730,000.

Now, why does all this matter? Well, having the dollar as the world's reserve currency gives America enormous economic and political advantages. If we owed the world as much money as we do and we didn't have the reserve currency, in a crisis our debts could become much, much worse.

So, first let's start sorting out our debts, but, in the meantime, let's pray that the Sino-Russian experiment remains just that - an experiment.

And we'll be right back.

(BEGIN VIDEO CLIP)

ZAKARIA: You brought peace to the Balkans by ending the war there. Does this seem a lot harder than what you did in - at Dayton, Ohio?

RICHARD HOLBROOKE, LATE VETERAN DIPLOMAT: Yes, it does. It does, Fareed. It's almost as difficult as enduring an interview with you, actually.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HOLBROOKE: It is hard. I mean, the truth is it is the hardest thing I've ever attempted, but I see no alternative for the United States and its own national security interests but to continue to try to do the best we can in this extremely difficult situation.

(END VIDEO CLIP)

(BEGIN VIDEOTAPE)

ZAKARIA: President Obama called him one of the giants of American foreign policy. I would say Richard Holbrooke was the most important American diplomat of the last two decades. And I want to take some time this week to talk about Richard, who was a friend, but also to use his life and career as a way of talking about diplomacy, American foreign policy, and his last assignment, the war in Afghanistan.

The world should be thankful that "The New York Times" did not hire the young Richard Holbrooke after he graduated from Brown University. Turned down by the Times, Holbrooke joined the Foreign Service. His first big assignment - Vietnam in the early 1960s.

He then spent time in the White House under Lyndon Johnson, attended the Paris peace talks aimed at ending the Vietnam War as a junior member of the American team, wrote a volume of the Pentagon papers, ran the Peace Corps in morocco, became managing editor of "Foreign Policy" magazine, and was then appointed Assistant Secretary of State for all of East Asia. And he is at this point 35 years old, the youngest Assistant Secretary of State in American history.

When the Republican Party rode to power under Ronald Reagan, Holbrooke went to Wall Street and succeeded there, as well. But his heart was always in foreign affairs. When the Democrats returned to the White House, he became ambassador to Germany, Assistant Secretary of State for Europe, and then ambassador to the United Nations.

But it was as Bill Clinton's Assistant Secretary of State for Europe that the world will best remembered Holbrooke, as the architect of the Dayton Accords that ended the war in Bosnia. His final assignment was as President Obama's special representative to Afghanistan and Pakistan. The most difficult and pressing challenge in American foreign policy today.

Joining me to talk about Richard Holbrooke and much more, Les Gelb, Holbrooke's friend and colleague for 44 years, formerly the president of the Council on Foreign Relations and before that "The New York Times'" foreign affairs columnist; Vali Nasr, distinguished scholar from Tufts who was hand-picked by Richard Holbrooke to be part of his Af-Pak team at the state department; and Joe Klein, the "Time" columnist who first covered Holbrooke as a journalist more than 25 years ago. Welcome.

Les, at a personal level, you've known - you knew him for 44 years. What was your first reaction when you heard the news? You had - had dinner with him the night before.

LESLIE GELB, COUNCIL ON FOREIGN RELATIONS: Just idly devastated. Inconceivable to me that Dick Holbrooke would ever die, thought he'd bury us all. He had a life force the likes of which I've never seen, to accomplish things. Dick really wanted to do great things, to be in history. And it was the ambition I think all of us have but always harnessed to some great cause.

ZAKARIA: Let me ask you, though, there was one aspects of him that everybody agrees about and that we would, I think, all agree with, having known him personally. He was not diplomatic. It's odd that this is, you know, somebody we regard as the greatest diplomat of his generation, as I do. Does that tell us that actually it's not a good idea for diplomats to be diplomatic?

GELB: Well, I don't know if Henry Kissinger was diplomatic, and he was a great diplomat. Dick Holbrooke was relentless and charming and manipulative and brilliant and strategic. I think those are the qualities of a great diplomat.

ZAKARIA: Well, you watched him - I mean, it's fair to say he could - he could be a bulldozer.

VALI NASR, U.S. STATE DEPARTMENT: He could be a bulldozer, but what was very clear was his - the candor of his ideas and values. So when he was pushing people, they knew that it is about an issue. He cared about corruption or he cared about dying of innocent people, or he was extremely disturbed when assistance was not given to flood victims or things were not done in the right way. And he was unforgiving in insisting on - on right be done.

ZAKARIA: So he'd throw a fit in a good cause?

NASR: He'd throw a fit or he would - he would just be relentless. I mean, he was always polite. I never once saw him, you know, raise his voice at anyone, and whether it was -

JOE KLEIN, TIME MAGAZINE: Oh, I did. NASR: Well, maybe he mellowed by the time I saw him. Or that he was never intemperate, at least, in my presence with any leader that he dealt with. But they knew that he was unmovable in what he believed in and what he believed to be in the interest of the United States.

KLEIN: I saw him lose his temper in Sarajevo once. He had just negotiated the cease-fire, and he met with these two European generals. They were gorgeous, gorgeous-looking generals, straight out of Hollywood central casting. And for the cease-fire to actually be real, they had to have opened the one road into Sarajevo that had been negotiated. And he braced them and said, "Is the road open," and they started to hem and haw, and he said, "You haven't opened the road, have you?" And they said, "well, you know, it's kind of" - and he'd just let loose with a full - a full New York on him.

I mean, one thing you have to remember is that Richard was an inveterate New Yorker. And he just unloaded on them and they opened the road.

ZAKARIA: You know, he was - he was a real New Yorker, but there was also something about him that I think is sometimes lost in foreign policy, which is we have in Washington today at the highest levels of government lots of people who are very skilled in Washington, in the policy debates, the corridors of power. But Richard was rooted in knowing the world.

UNIDENTIFIED MALE: He was.

ZAKARIA: He'd spent time in Vietnam. He'd spent time in Morocco. He lived in Germany. And that kind of organic inductive knowledge about the world, I mean, he always -

KLEIN: He was in Afghanistan as a private citizen for years -

ZAKARIA: Right.

KLEIN: -- before he got this, you know, this last job.

ZAKARIA: Right.

GELB: I think that's the - that's the key to understanding his incredible success. He actually knew about the countries he was dealing with, it's very rare for American foreign policymakers to know anything about the countries they're dealing with. So he knew foreign policy and diplomacy.

He knew bureaucratic politics back home. He could maneuver with the best of them to get the kind of policy he wanted, and critically he understood American politics per se. And that's the sort of ground basis for being able to do things.

KLEIN: Fourth dimension, though, he also understood history. I mean, this is a guy who lived in history, which is why he was such a great source. He would always give you a historic analogy or give you the history of the situation. That was part of it. But when you asked before about what made him a great diplomat, I had the incredible privilege that he gave me of traveling with him on the shuttle diplomacy. On a very small plane where they - you know, I had to be part of every conversation.

ZAKARIA: This is when?

KLEIN: This was during Bosnia. And each day we would - we would either start in Croatia or in Serbia and hit all three countries every day. And the remarkable thing to me about that was that there was no formal prep for him going into any given session. He was - he did most of this just out of his head.

His military aide at the time, General Wes Clark, said to me, "He's a jazz musician. He improvises. I don't think how this happens, but he makes it work." And the reason why he could make it work was because he had all of the dimensions that Les just mentioned, and the historic dimension very much in his mind and in his grasp.

ZAKARIA: What is the significance of the Bosnian Peace, of the Dayton Accords? When people listening to you didn't live through it, was it important? Why was it important?

GELB: It really was important. Cold War was over, and to a lot of Americans, that meant foreign policy was over. We didn't have to bother with the world anymore. And then very quickly the world figured out a new way of killing people, the cleansing business. And I think it would have become an epidemic.

At first, the Europeans turned away from it completely. They didn't want to have any part of it. And the Clinton administration turned away from it, as well. And Dick fought very hard to make them see that this was kind of a turning point. You have to take a stand, and only the United States could lead on this. The Europeans would never get themselves together to do it.

NASR: I also would say that I think in his mind, it was an example when American power was a force for good. And we exerted our global influence to do something right. And I think in dealing with Afghanistan and Pakistan, people often think he's driven by the memory of Vietnam. But I think when he began, it was with this belief, that -

GELB: That's exactly right.

NASR: -- that American power can have the same kind of an outcome.

ZAKARIA: We have - we have -

GELB: But the Vietnam - the Vietnam analogy, Fareed, was absolutely critical in all this, and it is to our generation. But to Dick, it was in his head all the time.

ZAKARIA: We're going to talk about all that when we come back. And most particularly, we're going to talk about Richard Holbrooke's last assignment, the war in Afghanistan, the problem in Pakistan, how to solve it, when we come back.

(END VIDEOTAPE)

(BEGIN VIDEO CLIP)

HOLBROOKE: A peace deal requires agreements, and you don't make agreements with your friends. You make agreements with your enemies. But in this particular case, there is no clear, single address that you go to.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I'm Candy Crowley, and here's today's top story.

The United Nations Security Council is scheduled to hold an emergency meeting later this morning to address the crisis on the Korean Peninsula. CNN's Wolf Blitzer, who's traveling in North Korea with Governor Bill Richardson, he joins us from Pyongyang - Wolf.

WOLF BLITZER, CNN CORRESPONDENT: Candy, I'm here with Governor Bill Richardson. He's doing his best to try to calm the situation, although I have to tell you it's very, very tense right now. Everybody's waiting to see what happens at the United Nations Security Council, to see if they can come up with some sort of resolution that will calm - calm the situation. But it's by no means a done deal.

The North Koreans are making it abundantly clear in every possible way they can that if the South Koreans go ahead with this live fire exercise, they will see this as a violation of what they regard as their territorial waters, and they'll respond. They'll probably respond militarily - Candy.

CROWLEY: Thanks, Wolf.

Up next, more "FAREED ZAKARIA GPS" and then "RELIABLE SOURCES" at the top of the hour.

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(BEGIN VIDEO CLIP)

HOLBROOKE: Well, you know, Fareed, you and I have known each other a long time and I tend not to fall in either the optimistic or the pessimistic camp on issues on which I'm a participant. We have our goals, we have our strategy, and we are determined to see it through.

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(BEGIN VIDEOTAPE)

ZAKARIA: And we are back talking about Richard Holbrooke and his last problem, the war in Afghanistan and Pakistan, what to do about it.

I'm joined by Les Gelb, former president of the Council on Foreign Relations; Joe Klein, "Time" magazine's columnist; and Vali Nasr, who worked for Holbrooke, before that a very distinguished scholar.

There was one point in which during the - during his involvement in Afghanistan where his being tough seems to have backfired, but in a strange way. He was very tough with Karzai on corruption. And this led to a problem, Karzai refused to see him. But the administration allowed that to stand. Explain what happened.

GELB: To me, that was a turning point very early on for the administration policy in Afghanistan and for Dick Holbrooke. Dick understands what it's like to deal with people even more impossible than himself. He dealt with them in the Balkans, and he knew what Karzai was like long before he went - he stepped into the room to meet him. And he knew this wasn't a man you said you have to really work hard to end the corruption in your government and to develop your - he knew that all that would flow off Karzai's back like water. So he was prepared to talk tough to him. And he did, right off the bat, about ending corruption, about delivering on the efficiency of government, about making justice the judicial system.

And, of course, Karzai didn't like it at all, and he was going to test Dick and the American system. So he said, "I'm not seeing this guy anymore." Here was the critical decision, and basically the White House said, well, have Ambassador Holbrooke stay away from him for a while. When they should have said to Karzai, "If you don't see him, you don't see anybody." And it was, I think, a turning point in Karzai's mind as to whether or not he could control the relationship or Washington would.

ZAKARIA: Do you think that the White House showed itself to be weak at that moment?

GELB: I think it showed itself to be very inexperienced.

ZAKARIA: Vali, when Holbrooke framed the problem in Afghanistan and Pakistan, what did he see as the central challenge?

NASR: Well, he - he saw the security challenge, the Taliban, the safe havens, the threat to the United States homeland that could potentially come from there. But he saw this as a very complex picture in which the military played an important role. But that you had to get all the pieces right, and all the pieces had to work together in order for this problem to be solved.

So Afghanistan would have to have a viable government. It would have to have a viable economy. Pakistan would have to be a stable country, and relations between Pakistan and the United States had to improve. And he was constantly trying to make all of these happen at the same time, to put the pieces together and use American power and influence to change essentially the dynamic.

And as Joe said, he delved into the history of this region, he read about the creation of Pakistan, he read extensively on U.S.- Pakistan relations he - on Afghanistan's history. He consulted experts. There was not a scholar on Afghanistan and Pakistan that passed through Washington that didn't come to his office for an hour of - of discussion. And he brought all of these elements, you know, in order to - tried to figure out what is the sequence and way to solve this.

GELB: I think Dick was very pessimistic about Afghanistan and our ability to do anything in Afghanistan. He was before he took the job. He was in the job. But what he had in him was the notion that he still had to bang away at it, he still have to try to solve the problem. We were there. We weren't going to disappear. We weren't going to get out the next day.

So his job, as he saw it, was to try to do - I hate to put it this way - the near impossible.

KLEIN: That was why - that was why the kerfuffle this week about his last words, "Stop the War in Afghanistan," was so kind of hilarious to those of us who knew him. He knew that you couldn't just stop the war. You know, he wanted to see it drawn down. He - he understood that -- it had to have a diplomatic solution and a regional solution rather than a military one.

ZAKARIA: He was to your sense, though, of his general feeling about the Afghanistan War and of Petraeus' counterinsurgency? You spent a lot of time with both Holbrooke and Petraeus.

KLEIN: He was very skeptical about - about the military part of it. He backed the additional 30,000 troops because he was going to stick with his boss, Hillary Clinton. But he was - he didn't think that the military solution could provide a long-term solution.

You know, I had - I have just come back from Afghanistan the day that Richard collapsed. In fact, my first phone call as it often was to him because he was interested in what I had seen down in the south where a lot of the most intense fighting was. And what I had seen was this - that Petraeus' military strategy had succeeded. The Taliban had been removed from their heartland.

But the big test now, right now and for the next six months, is to see whether local Afghan governance can win over this - the people there.

GELB: And did you think they could?

KLEIN: I don't know.

ZAKARIA: And nobody does. The Afghan Army is better today than it was two years ago.

But let me ask you - we have to close. Do you think ultimately the pessimism that Holbrooke had about Afghanistan was rooted in Afghanistan, or is it still the ghosts of Vietnam?

GELB: Well, sure it's the ghosts of Vietnam because here we put everything we had into Vietnam, the South Vietnamese had every incentive to fight for their own freedom, to fix themselves up because they didn't want to be taken over by the North. But they didn't do it.

And I think what Dick understood from that war, what our generation understood from it, was that as soon as you start explaining everything about that country in terms of what we're going to do, we, we, we, it means the war is lost. And almost every conversation you have about Afghanistan, it's what we're going to do, are we going to make the Afghan army stronger, are we going to fix their judicial system? The discussion has to be about they. And if it isn't, it means we've got a fundamental problem.

ZAKARIA: On that fundamental problem, we will - we will close. We will doubtless reconvene to talk about Afghanistan, but not ever again with Richard Holbrooke.

Les Gelb, Joe Klein, Vali Nasr, thank you all. And we will be right back.

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ZAKARIA: Our question from the "GPS Challenge" is, what nation joined an exclusive if not necessarily elite club and became an oil- producing nation this week? A, Ghana; B, Gabon; C, Georgia; and D, Guyana. Stay tuned and we'll tell you the correct answer.

Make sure you go to CNN.com/GPS for 10 more challenging questions. While you're there, don't forget to check out our podcast. You can also subscribe to it on iTunes. That way you will never miss a show, and it is free.

Our book this week is Richard Holbrooke's "To End a War". It's his memoir of what it took to bring peace to the Balkans. It's a fascinating account from the ultimate insider, and it's actually beautifully written. Unfortunately, there will never be a general memoir from Richard Holbrooke that takes us from his career in the rice paddies of Vietnam to the mountains of Afghanistan and Pakistan, but this is treasure enough.

Now for the "Last Look." If there are children in your life, chances are good that there is a Wii, an Xbox, a Nintendo, or a PlayStation on their holiday wish list. If you're looking for a PlayStation 3 this late in the shopping season, I can tell you where you can find 1,760 of them. Unfortunately, they're not for sale.

That's because all of these PlayStation 3s are now the guts of the Defense Department's fastest interactive supercomputer. The Air Force Research Lab wired the video game consoles together, and the result is a mega machine capable of processing 500 trillion operations per second and able to store the equivalent of 40 libraries of Congress in PlayStations. The Air Force is teaching the supercomputer how to think and how to read. Pretty impressive for a bunch of toys, though pretty scary. The correct answer to our challenge was, A, the African nation of Ghana became the latest oil-producing nation this week. Go to our web site for more questions and answers.

Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "RELIABLE SOURCES".