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Does America Need a Prime Minister?; A GPS Tour of the Economic Crisis; The IMF's Persian Praises

Aired August 21, 2011 - 10:00   ET


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

We have a great show for you today. First up, a tour of the world and the United States with a terrific panel. We'll tackle the euro crisis, Britain, riots, the United States and much more.

Then, "What in the World?" Should the U.S. be taking economic cues from Iran? Maybe. I'll explain.

Next, an inside look at intelligence and the war on terror with John Miller, who has just resigned as one of the nation's top spooks.

Finally, a "Last Look" at how not to be a spy.

But first, here is my take. I wrote a blog post for our GPS website -, for your reference - that has gotten a great deal of reaction so let me talk about it for a moment.

It all started because I read a website that pointed out that after the S&P downgrade of the United States, no country with a presidential system of government had a AAA rating from all three rating agencies. Only countries with parliamentary systems have that honor, with the possible exception of France, which could be characterized as having a parliament, a prime minister, as well as a president.

This brought to mind my years in political science grad school and an essay by a famous Yale scholar, Juan Linz, who said that parliamentary systems are superior to presidential systems because they allow for greater stability and purposeful action. In a parliamentary system, he contended, the legislature and the executive are fused, so there is no contest for national legitimacy and power.

Think of David Cameron in England. He is the head of the coalition that won the election, head of the bloc that has a majority in parliament, and head of the executive branch as prime minister.

Remember the political battle surrounding the debt ceiling? It's actually impossible in a parliamentary system because the executive controls the legislature. There could not be a public spectacle of the two branches of government squabbling or holding the country hostage. In the American presidential system, in contrast, you have a presidency and a legislature, both of which claim to speak for the people. As a result, you always have a contest over basic legitimacy, who is actually speaking for and representing the people.

In America today, we take the struggle to an extreme. We have one party in one House of the legislature claiming to speak for all the people because theirs' was the most recent electoral victory. And, of course, you have a president who claims a broader mandate as the only person elected by all the people. But these are unresolvable claims and they invite constant struggle.

There are, of course, advantages to the American system. The checks and balances have been very useful on occasion. Let me give you an example. In 1945 Britain enacted a quasi socialist economic blend that set the country on a bad, bad path.

But look at the situation we're in today. Western countries have all created welfare states and governmental systems that are cumbersome, sluggish and expensive, especially as the population ages. These need to be reformed, and any of these reforms are fairly obvious in social security, tax policy, energy policy, but the American government has lost the ability to actually implement any policy solutions because of political gridlock.

Look at what the S&P actually said in its downgrade. Quote, "America's governance and policy making is becoming less stable, less effective and less predictable than we previously believed. Despite this year's wide ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge," unquote.

This is not just about the presidential system alone. Recent developments have added to polarization and paralysis. The filibuster, for example, is not in the constitution, but it is now routinely used in the Senate to allow one - a minority of one House to block all legislation.


UNIDENTIFIED MALE: And filibuster after filibuster.


ZAKARIA: In a fast-moving world, where other countries are acting quickly and with foresight, we are paralyzed. It's all very well to keep saying that we have the greatest system in the history of the world, but against the backdrop of dysfunction, it sounds a lot like thoughtless cheerleading.

Let's get started.


ZAKARIA: All right. It's time for our tour of the world, and joining me on the journey are four very distinguished guests. Jeffrey Sachs is professor of Economics at Columbia University. He had been named by "Time" magazine one of the 100 Most Influential People in the World.

From that magazine, Rana Foroohar is the deputy managing editor. She wrote last week's cover story on "The Decline and Fall of Europe."

Richard Haass is the president of the Council on Foreign Relations and has worked for the State Department and the National Security Council and lots of other places.

And we also have the eminent British historian Andrew Roberts. He's the author of "The New York Times" bestseller "The Storm of War."



ZAKARIA: Jeff, let me start with you. The - you talked in the - in the "Financial Times" piece this week about the way in which both Europe and America were fundamentally misreading the economic crisis. I was struck by it because for just somebody who I would regard as a - a man of the left, and you were saying that even the whole conception in America that the Democratic left had of the stimulus program, of another stimulus, is misguided that we are just -

You know, I took you to mean just extending unemployment benefits, et cetera, is not going to jumpstart the economy because you're just trying to jumpstart a consumption-based economy. And what we need are much deeper, longer-term investments, correct?

JEFFREY SACHS, PROFESSOR, COLUMBIA UNIVERSITY: The world is in an economic upheaval, clearly, and it's a transatlantic crisis right now. Consumers are exhausted, our economies are not competitive right now. There was a little blip, but it's obviously gone away. We're at stagnation, at best, and maybe entering another recession right now, so we need a different approach.

My view is that we can't have consumption-led growth anymore. We have to rebuild the foundations of our economies, both in the U.S. and Europe. We have to become more competitive with our new competitors. We have to have better skills, technology, infrastructure.

That means an investment-led recovery, quite different from the short-term stimulus.

ZAKARIA: And Rana, in your article, one of the things you pointed out was that the European strategy of responding to these multiple - the serial debt crises has been to keep hoping that growth will bail you out - growth in Europe, in Germany, but, most importantly actually, growth in the U.S.


ZAKARIA: And - and all of that now, we're all beginning to realize - and maybe that's what this - this week's market news is - we're all realizing - I think you put it in another column of yours, that we're now living in a two percent world. In other words, economies are not going to grow at four percent.


ZAKARIA: They're going to grow at two percent.

FOROOHAR: Yes. I wish I could bring better news, but we are definitely in a two percent economy. And I think that that's why you saw the European debt situation really explode in the last couple of weeks. That could have happened six months ago or three months ago or three months from now, but it happened as it did because the numbers from the U.S. started coming in and they were very weak.

You know, earlier in the year we were expecting four percent growth in this country. We're now going to be lucky to hit two.

ZAKARIA: And if you have two percent growth rather than four percent, as projected, all your numbers look worse.

FOROOHAR: Absolutely.

ZAKARIA: Your budget deficit looks worse, your debt to GDP.

FOROOHAR: Consumption - you know - I mean, you have to remember, the U.S. and Europe are each other's largest trading partners and a lot of, you know, stuff flows back and forth across the Atlantic. Americans aren't consuming. That's bad for Europe, and vice versa.

The debt crisis is really bringing this issue home. You know, you see riots in the U.K,, you see - you know, you've already seen that in Athens. I think that you're going to see more, and Europe is going to have to deal with this political problem.

ZAKARIA: Politically, does Europe have the kind of leadership that - that it's going to take? Because they've tried to do a bunch of things and they've kind of kicked the can down the rode every time with a - with a package that has sort of satisfied the market for a month, and then they have to come up with another packet.

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: Actually, markets now only get satisfied for about a day, as we've seen this past week. Half measures aren't working.

And the short answer, Europe doesn't have the leadership because Europe isn't. You know, we talk about Europe. We always put out the fiction of Europe, but let's get real.

Its - nationalism is still powerful. National governments still control many of the decisions. So you have this common currency, which is genuinely European, and monetary policy is genuinely European. Many other of the most important decisions are done nationally.

So who speaks for Europe? Is it someone sitting in Brussels? Is it somebody in - in the Elysee? Is it someone in the - in Bonne (ph) - or Berlin, rather?

You know, Henry Kissinger's old, you know, complaint, what number do I call? I actually think that question is - is still legitimate. There isn't a Europe in a truly integrated sense. And that's the real question for Europeans.

After all these years of talking about it, are they prepared to do it? Are they prepared in some ways to become the United States of Europe? If not, then this crisis is going to linger, and this crisis wouldn't be the last crisis.

ZAKARIA: The - the key to solving this crisis, Andrew, would be for the Germans to agree - when people say centralize Europe's debt, meaning you're going to take all this debt that is difficult for the Italians and the German - and the - the Greeks to pay, and centralize it, which means let - let's - let's all stand behind Germany, which can pay it all.

Are the Germans - you know, it seems to me what's happening is the Germans are - are becoming a normal country. They're saying, well, you know, we don't have to keep bearing this cross of - of Europe. We - we're - you know, World War II was a long time ago and we - we're not going to pay for the Greeks.

ROBERTS: Absolutely. I mean, would you want to? A lot of Germans want to go back to the deutsche mark, and who is to blame them? I mean, as a Brit, of course, I'm thrilled that the sterling is not in the euro zone at the moment.

And so, yes. I mean, this is something - by the way, the Tories, anti-European Tories like me, have been saying for the last 15 years since the Maastricht (ph) point that we got to, which is basically that every country needs different inflation rates, different rates of interest all the way along, and at different times. And so, of course, you're not going to have a proper nation unless either they do what Richard was saying, which is become a single country, or - which I believe is completely impossible - or then go back to the nationalisms that they had earlier.

HAASS: Can I say one thing about Germany? This is a nightmare. For Germany, Europe was really the central tenet of post-World War II integration. This was normalization in Europe -

ZAKARIA: It was their redemption.

HAASS: Exactly. And this was the way you're not going to repeat the lessons - the errors of the past. So for this to fall apart would psychologically and politically be a - really, it would be a fundamental tremor - tremor. The earthquake - in the history of Europe.

ZAKARIA: Forget what we would like to see happen. Two years from now, will the euro still exist with all its member states? Rana?

FOROOHAR: I think it will exist, but possibly not with all the member states. I think that what you need to see now is Germany and France coming together, really led by Germany, and saying, you know what? We're not going to let Italy and Spain go under. We're going to secure that debt, but that's what going to happen if you are going to save the euro zone.

ZAKARIA: But that means - but that mean you're going to have the euro - I'm just asking predictions. The euro with fewer countries?

FOROOHAR: I think so.

ROBERTS: The trouble is with the Greek having - Greece having its debt in - in euros rather than in drachma, you can't really go back to the drachma.

SACHS: I think the euro will survive, but obviously it's a close call. What I don't think is easy is that one or two countries withdraw and the rest holds together.


SACHS: So once you start to unravel, the - the contagion effect would be severe. So I think that they should fight to hold the whole thing together.

HAASS: They will fight to hold it. I don't know if they'll succeed, but the effort then will be ways of building more of a safety net in Europe - capitalizing banks more; Germans will continue to write checks, even though they're unhappy writing those checks.

We've not yet seen the effort - the end of the effort to have the euro survive in its current form. But I - I actually think the chances of suspensions, maybe not formal leavings, will come up with the - some kind of a figment. But I think the idea of suspensions or temporary -

ZAKARIA: Soft default.

HAASS: Whatever. Something like that has to come. There's - there's got to be some correction.

ZAKARIA: All right. When we come back, we will talk about all the other problems in the world.




ZAKARIA: And we are back on our world tour with Jeff Sachs, Richard Haass, Rana Foroohar and Andrew Roberts.

Let's talk about the Britain riots because I think they're sort of interesting. There's this paper out that - which has been floating around the Internet, a - that - that looks at austerity programs for 100 years and points out that they always seem to have some relationship to rioting, that every time you start cutting budgets, you have - you have riots. Does that seem plausible to you?

SACHS: I think we should see the British riots in the context of a lot of unrest in a lot of countries. This has been a very, very shaky spring all over the world. Of course, it's the Arab spring, so- called, but that's been a tremendous amount of tumult. That spread to Israel with hundreds of thousands of people in the streets.

The British riots are obviously a distinct phenomenon, but I think they're part of this whole, and I wouldn't be surprised if it comes to the United States in one way or another. We already had tens of thousands, hundreds of thousands, of people out in Madison earlier this year.

There's a lot of unhappiness in a lot of parts of the world right now and it can manifest itself in hooliganism, as in the U.K. It can manifest itself in massive political demonstrations. I think we've just in a very shaky period, and it's contagious.

HAASS: Well, sort of it's where what you said at the beginning. Governments are really having trouble performing and meeting expectations. I think it is no different in every place in the world.

In China, you've got problems where the government is now being held to higher levels of accountability. So when 40 people die in a - in a train cash, the - the Internet goes - gets going. People are, what's going on here Why aren't - why isn't the Communist Party doing what -

ZAKARIA: Look at the corruption thing in India.

HAASS: Exactly. Look at India. You talked about Israel, where 250,000 people out of a population of roughly 6 million saying, hey, we're not participating.

I think the thing in the Middle East, though, is fundamentally different, much more there political. So, to me, the commonality in all these places is people - the popular frustration with governments that are not seen to be delivering the deal. And it's only going to get tougher, given that the ability of governments to deliver and in some ways insulate their populations from the - from either globalization or technological innovation, that capacity is diminishing, and I don't think people have essentially taken that on board, and governments haven't been straight with them about it.

ZAKARIA: Andrew, as a Brit, why did - why are your - your countrymen rioting?

ROBERTS: Well, my countrymen love rioting. They - they've been rioting for 200, 300 years.

But, in this particular case, there are lots of sociological reasons, as well as the fiscal and economic ones. And I think, actually, more important than the political and economic ones, not least because the cuts haven't started to bite there yet in - in Britain. That don't begin until next year. We have had a broken society with regard to parental control, with regard to appalling educational standards, with regard to a cowardice on the part of the police to really crack down on especially young people, and a society, really, that is dominated by fear of the young. It's - it's terrifying on the streets of some of our - even our rural cities on a Friday night.

So I think it's - it's too easy to - to place this in an international context. I think there are lots of very British things that were responsible for this.

ZAKARIA: But, Rana, you see this as economic?

FOROOHAR: I do. I mean, I think that there's certainly some truth in what everyone said. But, really, if you look at the numbers, Britain is the most unequal rich society in Europe. It is also the least socially mobile amongst all the developed countries. It has a large underclass that's been around for many decades.

You know, I wouldn't blame the problems on Cameron necessarily, although I do think it's interesting that in Tottenham and Hackney, which were some of the first areas to riot, they're poor areas of high unemployment in North London. You had an announcement recently of 10 percent budget cuts. They're going to affect youth programs, housing allowances, things like that. I don't think those things are uncorrelated.

SACHS: And, Fareed, I think it's interesting that you could say that on all of those counts the U.S. is even more extreme.

FOROOHAR: Absolutely.

SACHS: More inequality. We have a more broken and serious underclass right now. And so, on all of those dimensions, we have a pressure cooker in the United States. It hasn't exploded that way, but it is a real pressure cooker. And, of course, legitimacy of government is at a historic low ebb right now in the United States. Very dramatic.

ZAKARIA: What do you think happens in the United States?

HAASS: The president has put himself in a very tough position, is hyping this speech in September about jobs. I would be shocked if there's anything he can articulate that could then get politically past by the Congress that would - that would make a significant dent in the American employment picture between now and the election. I just don't think those tools are available to - to put into play.

FOROOHAR: You know, I think it is all about jobs, and it's all about growth. We've been so preoccupied with debt but, really, the solution is growth. How do you get there?

I'd like to see the - the pendulum swing back a little bit to the private sector because they're still sitting on $2.5 trillion of capital in the U.S. I think what Obama could do is get a little closer to business - the right kind of business. Perhaps not the banks this time, but, you know, job-creating companies all around the country and try and come up with some ways to reward these companies for unleashing some of that capital, be it via tax policies or - or whatever. But I think trying to get the private sector engaged is really the only way you're going to create jobs and solve the problem.

SACHS: Businesses are not spending in the United States because we're not competitive in large swaths of industry. The labor force lacks skills, and where skills are demanded, there's often a - a number of unfilled job positions right now. Try to hire a good programmer. There's huge demand, but the - the labor market isn't - isn't supplying that.

We have an education challenge. We have an infrastructure challenge. We have an energy challenge.

I don't think the problem in America as it's usually depicted is - is accurate, but this a - a stalemate between two parties. This is actually a duopoly, we say, two parties that are pretty much aligned (ph) - protect the rich campaign contributors, protect the big businesses. They're both on the side of cutting right now and nobody's on the side of investing for rebuilding the economy because that would actually take sacrifice at the top.

The top doesn't care. They're off in the world markets, they're off in the emerging economies, they're off making money elsewhere. They've left America, at least one - one foot out the door. And that's the real problem that neither party is - is facing, honestly.

ZAKARIA: Andrew, do you think, as somebody who has studied the - the decline of Britain, you're living in America now, does this feel like Britain, I don't know, in the - the '20s and -- ?

ROBERTS: Not yet. No. Because you do have various areas of excellence. You have your - your universities, you have some companies that are world leaders, and you also seem to have a sense of - you don't see a function at the moment, but there is something about American optimism, which means that in - in the past, historically, you have been able to talk about having - being special, being exceptional, being - being an unusual force that can regenerate.

I'm not seeing that right now at the moment, but I can't believe that that's been entirely driven out of the - of the DNA of America.

ZAKARIA: Andrew Roberts, Rana Foroohar, Richard Haass, Jeff Sachs, thank you so much.

And we will be right back.



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

From the White House to London's House of Commons and beyond, few Westerners have anything nice to say about Mahmoud Ahmadinejad. (BEGIN VIDEO CLIP)

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Look, we got a leader in Iran who has announced that he wants to destroy Israel.

TONY BLAIR, FORMER BRITISH PRIME MINISTER: Iran is supporting terrorism.


ZAKARIA: But there's one group has glowing words of praise for Iran's president, and it's not a group based in Tehran but in Washington - the International Monetary Fund.

Yes. The IMF's latest report paints a pretty picture of Iran's economy. It says growth has hit 3.2 percent and will accelerate still further. Inflation has dropped from 25 to 12 percent in the last two years. And Tehran has managed to do what every major oil exporter can only dream of accomplishing - it slashed subsidies on gas and recouped $60 billion in annual revenues. That's 1/6 of Iran's entire GDP.

Why is this happening? And how can it be happening despite years of economic sanctions? What in the world is going on?

Some say the IMF's numbers can't be right, but we have no reason to doubt their work. The Fund reasserted this week that its projections were independent of the Iranian government.

The real story here is that Iran has actually begun implementing some economic reforms. For decades now, Iran's leaders have tried to wean its people off cheap oil, oil that is subsidized by the government. It's not sustainable to have these large subsidies. Iran knows it, and so does every country from Saudi Arabia to Venezuela. But, in the same way that any talk of tax increases here in America is considered heresy, people in oil-rich countries believe as an article of faith that they deserve cheap oil.

So, how did Iran finally cut out the freebies? The back story is a complex game of chess between Ahmadinejad and someone much more powerful - the Supreme Leader Ayatollah Khomeini.

One theory goes like this. The Ayatollah thought cutting subsidies would make Ahmadinejad deeply unpopular, so he OK-ed it. An ensuing revolt would then remove the one man who had come to challenge the Supreme Leader's power.

Another theory is that Ahmadinejad felt confident enough to go ahead with the reforms because he has now crushed the opposition Green Movement.

Either way, he seems to have played a smart hand. He's giving back half of the $60 billion in savings directly to the people in monthly deposits. So every Iranian man, woman and child is eligible to receive the equivalent of $40 a month. That kind of money wouldn't make any difference to Tehran's upper classes, but that's not Ahmadinejad's constituency. On the other hand, if you're poor, if you have many children, and you make sure the whole family signs up for deposits, you will probably be saying, thanks, Mr. President.

The key thing to note here is that President Ahmadinejad had no choice, neither did the Ayatollah. Iran really couldn't afford the subsidies anymore. Its economy is highly dysfunctional, with many massive distortions and subsidies, and Washington's recent targeted sanctions are beginning to bite.

It's now harder than ever before for Iran to do business with the world. Most of the major international traders of refined petroleum have stopped dealing with Iran. Tehran now has to rely on costlier overland shipments for its exports. And now it's become an almost impossible to conduct dollar denominated transactions with Iran. So we were left with the bizarre case last month of China resorting to the barter system to pay Iran for $20 billion worth of oil.

So the IMF has a point. Iran is now implementing some much- needed reforms and as a result its economy is doing better. The irony is it's happening in some part because of American-led sanctions. Talk about unintended consequences.

We'll be right back.


JOHN MILLER, FMR. ASST. DEPUTY DIR. OF NATIONAL INTELLIGENCE: And when we talk to the people who are stopped in these blocks and say, what got you started? If it's here in U.S. soil, inevitably it was a mouse and a computer screen.



CROWLEY: Time for a check of today's top stories.

Libya's government and rebels are offering very different views on what's happening in that country. The son of Moammar Gadhafi today said opposition fighters are losing every battle. He insists the Gadhafis will not leave.

But a leader of Libya's Transitional National Council say rebels have taken their fight to Tripoli and are moving toward Gadhafi's compound.

A United Nations group in Syria today investigating the government's crackdown on protestors. Syrian President Bashar al- Assad is under enormous international pressure to end the violence against anti-government demonstrators and resign. Al-Assad is scheduled to give a televised address today to outline his government's reforms. The families of two U.S. hikers sentenced to eight years in prison in Iran are asking the Iranian government to show compassion and allow them to return home. Josh Fattal and Shane Bauer were sentenced for spying and illegal entry into Iran. Their attorney is planning to appeal the sentence.

And those are your top stories. Now back to "FAREED ZAKARKA GPS."


ZAKARIA: My next guest has had a fascinating career weaving between media, law enforcement and intelligence. You probably remember John Miller from his ABC News interview with Osama Bin Laden or his seat in the anchor chair next to Barbara Walters.

What you probably don't know is he just left the post at the pinnacle of the United States Intelligence Community. Until earlier this month, Miller was overseeing Intelligence Analysis in the office of the Director of National Intelligence. That's the president's principal intelligence adviser.

He joins me now to offer his insights first time since he's left the job. Welcome.

MILLER: Good to be here. Thanks, Fareed.

ZAKARIA: So the DNI, the Office - the Director of the National Intelligence is the guy who every morning gives the president his daily intelligence briefing. This is the things tells you all about the threats to the United States, the intelligence chatter. So what is that document like?

MILLER: Well, it's fascinating book. You know, when you open the president's daily briefing for the first time, one, you realize if you're seeing it for the first time, what a scary document it can be. The interesting thing about that is after you've read it and the - and the components that make it every day for a period of months, the senses are a little bit dulled because it's scary every day so you get used to it.

But it's - it is the best intelligence from the best collection apparatus on the planet, which is the U.S. Intelligence Community. Not just raw intelligence, there are pieces of that. But there's also analysis that really puts together, probably better than any other document on earth, what it all means, what the future implications could be and what the strategic concerns are.

ZAKARIA: But why is it - you know, it does sound so scary day after day. Most of it goes nowhere, amounts to nothing. Most of the threats don't materialize.

MILLER: But it's not because - it's not an accident. The idea is when you've got that type of collection, you've got that kind of indicators and warning, you're able to influence those events, either by stopping the threat, shutting it down, capturing the people, arresting them or otherwise making it not happen.

And if you look at a decade after 9/11 without a significant 9/11-style or a level attack on U.s. soil, that has been because of a lot of very effective work. But - and I have to underline there, there's a couple of places where we've just plain lucky and should have done better.

ZAKARIA: So let's talk about al Qaeda in particular. What is your judgment on the state of al Qaeda after the death of Bin Laden, after the Arab spring?

MILLER: I think those are connected. Those who say the death of Bin Laden breaks al Qaeda don't understand how al Qaeda was built and designed. Al Qaeda will go on without Bin Laden.

Those who say the opposite of that, which is Bin Laden's death means nothing are also wrong. What you have is an organization that's suffered a terrible blow because they lost their charismatic leader. And when you're operating on a global forum using the tools of globalization, the web and modern communications, charismatic leader matters.

Ayman al-Zawahiri, who I have sat with personally and spoken with is not charismatic leader. He's all business. He's not terribly popular within the organization. But more than that -

ZAKARIA: And I got to stop you there. Because you're one of the few people who actually met personally with both -


ZAKARIA: Do you - do you think Zawahiri, though, was smarter than Bin Laden? A lot of people say he was the brains and Bin Laden was the charismatic face.

MILLER: I would say based on my personal experience when I was in al Qaeda camps as a reporter, Zawahiri was running the show. And what I mean by that was he was calling the shots. He was the person moving behind the scenes making things happen.

And Bin Laden was produced, if you will, as the messenger. And I'm not sure that wasn't pretty close to the business model. And I think - I think that matters.

But when you look at him now as the head of al Qaeda -

ZAKARIA: Right, right.

MILLER: I have yet to see a debriefing of a suspect in a significant terrorism plot, who said I was inspired by the videotapes of Ayman al-Zawahari. That is - that is telling.

On the other hand, you have people who have transcended this model. If you want to look at the idea that the messenger is actually more important than the message, Zawahiri doesn't matter when you have an Anwar al-Awlaki, charismatic, compelling and able to form his own messages in perfect unaccented English with a western vent.

And if you look at many of the most serious plots over the last two years, the majority of them targeting U.S. soil were inspired by Anwar al-Awlaki. That matters.

ZAKARIA: Do you think, though, that the Arab spring discredits al Qaeda's core with the kind of premise of al Qaeda, which is through all these dictatorships in the Muslim world, Arab world in particularly -


ZAKARIA: -- what you need - the only way you can get rid of them is through violence, through terrorism. And what - what people want to replace them are Islamic governments.

Well, what you've seen are democratic movements that topple these governments, some of these governments and no great demand for a caliphate, instead a demand for democracy.

MILLER: So I think the answer to that question, which is a really interesting question because we're at the beginning of that story is, Ayman al-Zawahari, al Qaeda's current leader, personally spent 23 years of his life trying to overturn that very regime in Egypt - Hosni Mubarak.

And a bunch of kids with smartphones and good understanding of social media did it in 3-1/2 weeks. One would say that that rather than blowing up a building blows up al Qaeda's business model. Because every young person who was thinking maybe I'll follow the word of the terrorist because that's the only way to achieve change through violence had to second-guess that and say, wait a minute, this other thing may work better, much better, with less bloodshed and faster.

ZAKARIA: Net-net, where does al Qaeda stand as a kind of threat to the United States, to western governments?

MILLER: Al Qaeda is not going away this year with the death of Bin Laden. Not going away next year. And it will try to capitalize on events and hone communications.

So, net-net, does al Qaeda have the capability today to launch another attack on the scale of 9/11? That is very unlikely.

Will al Qaeda lower the bar as I believe they have and accept a larger number of lesser attacks if they can do that? I think the answer to that is yes. And I think the evidence of that is, if they can get one guy on one plane to blow it up over Detroit, that was acceptable to them. If they could get an affiliate to put one guy with a truck bomb in Times Square, they were willing to accept that. If they can get one group of guys with guns to attack European cities in a Mumbai-style attack, they were willing to go forward with that.

And I think that's going to be a continuing concern. And I believe they will continue to target things that will not just kill people, but attempt to harm the economy, which is in enough trouble all by itself.

ZAKARIA: Stay with me, John.

When we come back, we're going to drill down and ask about specific threats to the United States from al Qaeda, from other organizations right when we come back.




ZAKARIA: And we are back with John Miller, who has just left a post at the top of the U.S. Intelligence Community in the Office of the Director of National Intelligence.

So let - let me understand what are the threats to the United States. What keeps you up at night?

MILLER: Well, the stock answer to that, because, you know, I've heard that question of Bob Muller and the Director of the CIA and everybody else is the threat of al Qaeda or another terrorist group obtaining a nuclear weapon.

I think what actually keeps me up more at night is the much more likely scenario, perhaps less devastating of the effect of lowering the bar. Having effective communicators using social media and the web to reach out to the lone wolfs and to say you can be alone or you can have the force of - the force of personality to gather just three or four people around you and you can do something that's low-tech and low-cost, but high-yield and be a big hero at it.

This is something that they have honed almost to an art. And when we talk to the people who are stopped in these plots and say what got you started, if it's here on U.S. soil inevitably it was a mouse and a computer screen and a chat or a video from somebody very far away.

ZAKARIA: And this comes from any one place in terms of al Qaeda's operations?

MILLER: Particularly from Anwar al-Awlaki -

ZAKARIA: In Yemen.

MILLER: -- in Yemen, and that has been very interesting. Because Anwar al-Awlaki was not a big operator for al Qaeda. He was a propagandist off to the side. And I think there became a moment in time when they realized here is a guy who is reaching western recruits in Europe and the United States and we need to move him up in prominence within the organization, give him his operational command, allow his voice to have more resonance, and it's certainly having resonance.

If you look at, you know, the string of cases where the people said - whether it was the Times Square bomber, Faisal Shahzad who said nobody ever sorted it out for me the way Anwar al-Awlaki did by watching his videos on YouTube. And when I listened to his videos, I felt he was talking to me. That's a powerful communicator.

ZAKARIA: One reads in the paper about Yemen, Somalia, Nigeria. Where do you see the place that worries you the most?

MILLER: Well, let's take the - the triangle. Pakistan which has the center of those networks and a large number of people who cross over regularly between Pakistan and Europe, particularly Great Britain. Yemen, where you have Anwar al-Awlaki as a key communicator reaching directly out to the west and then Yemen - I mean, Somalia. And really Somalia that's the odd duck there because you're thinking, well, Somalia, where is the threat from there?

But a decent number of the recruits from Al-Shabaab have been American citizens, two of whom have become suicide bombers, the first Americans to ever be suicide bombers for a terrorist group and a large number of those recruits - I mean, more than a dozen or so, have been American citizens from places like Minneapolis and Portland and others, where they have large Somali communities.

I flag that because the ability of Al-Shabaab as a terrorist group to take someone who came from United States who may have traveled a long route, to turn them around and say the way al Qaeda does when they get a U.S. recruit in Pakistan, go back to United States, fly under the radar and do something there, is a significant factor.

We haven't seen it yet, but it is something that definitely has occurred to them.

ZAKARIA: When you hear the story, I mean, you must have heard it - heard about it in government, of the Nigerian underwear bomber -


ZAKARIA: -- whose father alerts the U.S. Embassy that this guy is turning to radical Islam, who exhibits other signs of dangerous behavior, and the U.S. Intelligence Community somehow doesn't pick up that. Doesn't that worry you because these people are so random, they will often not have a background, and yet, you know, the few signs you get are lost in the sea of intelligence gathering.

MILLER: The one you're referring to, Umar Farouk Abdulmutallab, the only reason that that plane didn't blow up over Detroit is, in attempting to make his bomb function, he broke it. So we weren't good there. We were lucky.

Yet, it was not an intelligence failure. We had all the intelligence information we need in pieces to give us a strong likelihood of detecting that plot. There were pieces over at this agency and pieces over at that agency and pieces from foreign partners, which strung together would have made that relatively clear. That was a problem of we operate in massive sets of data, in systems that don't touch each other and that data doesn't necessary - it doesn't necessarily correlate until some smart analyst or someone else takes it and says, I'm going to run it through these outside systems if they have the access.

Ten years after 9/11 that is a problem that still needs fixing.

ZAKARIA: How much of the world of intelligence that you've now spent time deep inside, how much of it resembled what you thought it was going to look like when you were studying it, reporting on it? How different is it from the James Bond movies?

MILLER: Well, there's been an arc there. You know, I used to go to those movies and they would walk into the darkened room and there would be all the screens and computers and they can pull up any data and they could zoom right into the secret team moving in on the bad guy base, and you could watch it all in real time.

And at the time, you know, that I used to go to those movies, that was all nonsense. Today that's all true. And the technology is amazing. The capabilities to collect information are stunning. As you learn about programs that are closed off to most of the intelligence community and you realize the capabilities and how deep and sophisticated they are, it is amazing. And it's a - it's real eye opener.

ZAKARIA: John Miller, pleasure to have you.

MILLER: Good to be here. Thanks, Fareed.

ZAKARIA: And we will be right back.



ZAKARIA: This week, Moammar Gadhafi's forces launched a scud missile against the opposition. The first time they've used that weapon. It got me thinking about the history - infamous history of scuds, often used by tyrannical regimes.

That brings us to the "Question of the Week." During what conflict were scud missiles first used? Was it A) The Vietnam War; B) The Iran-Iraq War; C) The Yom Kippur War; or D) the first Gulf War?

Stay tuned and we'll tell you the correct answer. Make sure you go to for 10 more questions. While you're there, check out our website, the Global Public Square. We always have fresh interesting contents, smart takes from our favorite experts, including me. And don't forget, you can follow us on Twitter and Facebook.

This week's "Book of the Week" is by Rory Stewart, a British Member of Parliament and author who famously walked across Afghanistan in the winter of 2001. He's also a frequent GPS guest.

Roy Stewart and co-author Gerald Knaus have written a book called "Can Intervention Work," they look at the lessons learned in Bosnia and how those lessons were applied or misapplied in Iraq and Afghanistan. Both countries that Rory should know very well. A very interesting and timely book.

Now for "The Last Look," if you're an impressionable young person with dreams of becoming a spy, I have one piece of advice, don't take your cues from the Former East German Secret Police, the Stasi. A Berlin gallery has an exhibit up of photographs found in the Stasi archives after the fall of the Berlin Wall. And what you're about to see are all from a course the State Security Service taught on the art of disguising.

This was considered an inconspicuous appearance.

No wonder our side won the Cold War.

The correct answer to our "GPS Challenge Question" is C, the Soviet designed scud missile was first used in combat during the 1973 Yom Kippur War when Mubarak's forces fired them against Israel.

Go to our website for more.

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

Stay tuned for "RELIABLE SOURCES."