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FAREED ZAKARIA GPS

Interview with Gen. Martin Dempsey

Aired February 19, 2012 - 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.

Today on the show we have the first one-on-one with the president's new top military adviser, General Martin Dempsey. Dempsey is the chairman of the Joint Chiefs of Staff, the highest ranking military officer in the United States. We'll hit all of the hot spots: Syria, Iran, China, Egypt and more.

Later in the show, the U.S. rolled out the red carpet for China's next president, but what is going on behind the scenes between the two rival nations? We have a great panel of China watchers.

Also, believe it or not, the Eurozone crisis is solved. How, what? Stay tuned, we'll explain.

But first, here is my take. We're hearing a new concept these days in discussions about Iran: the zone of immunity. The idea often explained by Ehud Barak, Israel's defense minister, is that soon Iran will have enough nuclear capacity that Israel would not be able to inflict a crippling blow to its program.

Israeli officials explained that we Americans cannot understand their fears that Iran is an existential danger to them. But, in fact, we can understand, because we went through a very similar experience ourselves. After World War II, as the Soviet Union approached a nuclear capability, the United States was seized by a panic that lasted for years.

Everything that Israel says about Iran now, we said then about the Soviet Union. We saw it as a radical, godless, revolutionary regime, opposed to every value we held dear, determined to overthrow the governments of the Western world in order to establish global communism.

We saw Moscow as irrational, aggressive and utterly unconcerned with human life. After all, Stalin had just sacrificed a mind- boggling 26 million Soviet lives in his country's struggle against Nazi Germany.

Just as Israel is openly considering preemptive strikes against Iran, many in the West urged such strikes against Moscow in the late 1940s. The calls came not just from hawks, but even from lifelong pacifists like the public intellectual Bertrand Russell. To get a sense of the mood of the times, consider this entry from the November 29, 1948, diary of Harold Nicholson, one of the coolest and most sober British diplomats of his generation.

Quote, "It is probably true that Russia is preparing for the final battle for world mastery, and that once she has enough bombs, she will destroy Western Europe, occupy Asia, and have a final death struggle with America. If that happens and we are wiped out over here, the survivors in New Zealand may say that we were mad not to have prevented this. There is a chance that the danger may pass and peace can be secured with peace. I admit it is a frail chance, not one in 90."

In a speech at the Boston Navy Yard in August 1950, the Secretary of the Navy, Francis Matthews, argued that the United States needed to become an initiator of war of aggression, and in this sense would become the first aggressor for peace.

In the end, however, the global revolutionaries in Moscow, the mad autocrats in Pyongyang, the terrorists supporting military in Pakistan, all with nukes, have been deterred by mutual fears of destruction. We call it deterrence.

And, remember, Israel has 250 nuclear bombs, many on submarines, to ensure that Tehran realizes it would be mutually assured destruction. And while the Iranian regime is often called crazy, it has done much less to merit that term than did a regime such as Mao's China.

Over the past decade, for example, there have been thousands of suicide bombings around the world by Saudis, Egyptians, Lebanese, Palestinians, Pakistanis, but there has not been a single suicide attack by an Iranian.

Is the Iranian regime really likely to launch the first? The efforts to delay and disrupt Iran's nuclear program are working. But even if one day Tehran manages to build a few crude bombs, a policy of robust containment and deterrence is better to contemplate than a preventive war. Let's get started.

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ZAKARIA: General Martin Dempsey has had a storied career in the U.S. Army. He commanded the first armored division, Old Ironsides, in the Iraq War. He ran CENTCOM, overseeing operations in the Middle East, Persian Gulf and central Asia.

He's been the Army Chief of Staff and he's now the nation's highest ranking military officer and the president's top military adviser, the Chairman of the Joint Chiefs of Staff.

General Dempsey, thank you for joining us.

GEN. MARTIN DEMPSEY, CHAIRMAN OF THE JOINT CHIEFS OF STAFF: Thanks. I'm glad to be here.

ZAKARIA: What would you say to those who argue that the United States should arm the opposition movement in Syria?

DEMPSEY: I think it's premature to take a decision to arm the opposition movement in Syria, because I would challenge anyone to clearly identify for me the opposition movement in Syria at this point.

And let me -- let me broaden the conversation a bit. Syria is a -- it's an arena right now for all of the various interests to play out. And what I mean by that is you've got great power involvement. Turkey clearly has an interest, a very important interest. Russia has a very important interest. Iran has an interest.

And what we see playing out is that not just those countries, in fact, potentially not all of them in any case, but we see the various groups who might think that the -- that at issue is a Sunni-Shia competition for, you know, regional control.

ZAKARIA: You mean the Iranians on the one hand --

DEMPSEY: I do.

ZAKARIA: -- and the Saudis --

DEMPSEY: The Saudis on the other hand. I mean, you saw -- you know, there's indications that Al Qaeda is involved and that they're interested in supporting the opposition.

I mean, there's a -- there's a number of players, all of whom are trying to reinforce their particular side of this -- of this issue. And until we're a lot clearer about, you know, who they are and what they are, I think it would be premature to talk about arming them.

ZAKARIA: Militarily, is Syria very different from Libya in the geography? In the case of Libya, you had an eastern half of the country that the rebels had. They had a city, Benghazi. Or do you believe, if you needed to, you could militarily intervene in Syria in the same way you did in Libya?

DEMPSEY: Not the same way we did in Libya. I mean, Syria is a very different challenge. It's a different challenge, as you described it, geographically. It's a different challenge in terms of the capability of the Syrian military.

They are very capable. They have a very sophisticated, integrated air defense system, for example. They have chemical and biological weapons. Now, they haven't demonstrated any interest or any intent to use those, but it is a very different military problem.

That said, of course, we're looking at all of that. We're trying to, you know, gather the best intelligence we can and take a look at what options we might have, should we be asked to provide those to the national command authority in this country. But we haven't been asked to do that yet.

ZAKARIA: Do you think intervening in Syria would be difficult?

DEMPSEY: I think intervening in Syria would be very difficult.

ZAKARIA: So what would you do? You're watching thousands of people get slaughtered. The regime is isolated, but because it seems willing to be brutal it's surviving.

DEMPSEY: Now that's a fact. And I think that the current path of trying to gain some kind of international consensus is the proper path, rather than take a decision to do anything unilaterally.

And I know that those diplomatic efforts are ongoing, but, you know, I wear the uniform I wear to provide options when asked. And we'll be prepared to do that, but this would not be -- it would be a big mistake to think of this as a another Libya.

ZAKARIA: Another difficult military challenge: do you believe that Israel has the capacity to strike Iran in a way that would significantly retard its nuclear -- its nuclear program?

DEMPSEY: I think that Israel has the capability to strike Iran and to delay the production or the capability of Iran to achieve a nuclear weapons status, probably for a couple of years. But some of the targets are probably beyond their reach and, of course, that's what -- that's what concerns them. That's this notion of a zone of immunity that they discuss.

ZAKARIA: And if that were to happen, do you -- do you believe that Iran would engage in retaliatory measures, not just against Israel, but against United States' interests in Iraq and Afghanistan?

DEMPSEY: That's the -- that's the question with which we all wrestle, and the reason that we think that it's not prudent at this point to decide to attack Iran. I mean, that's been our counsel to our allies, the Israelis, well-known, well-documented.

And we also know -- or believe we know -- that the -- that the Iranian regime has not decided that they will embark on the effort to weaponize their nuclear capability.

ZAKARIA: Do you think that is still unclear, that they're moving on a path for nuclear technology, but whether or not they choose to make a nuclear weapon is unclear?

DEMPSEY: It is. I believe it is unclear, and on that basis I think it would be premature to exclusively decide that the time for a military option was upon us. I mean, I think that the economic sanctions and the international cooperation that we've been able to gather around sanctions is beginning to have an effect. I think our diplomacy is having an effect, and our preparedness.

I mean, fundamentally we have to be prepared, and that includes, for the most part at this point, being prepared defensively. But just as I mentioned in the earlier segment about our preparedness to provide options should the nation decide to do something in Syria, we have to have the same options available should the nation decide to do something in Iran. ZAKARIA: When you observe Iranian behavior, does it strike you as highly irrational? Does it strike you as sort of unpredictable, or do they seem to follow their national interests in a fairly calculating way?

DEMPSEY: That is a great question, and I'll tell you that I've been confronting that question since I commanded Central Command in 2008. And we are of the opinion that the Iranian regime is a rational actor. And it's for that reason, I think, that we think the current path we're on is the most prudent path at this point.

ZAKARIA: Do you think that the Israelis understand that the United States is counseling them not to strike, and do you think that they will be deterred from striking in the near future?

DEMPSEY: Well, I'm confident that they understand our concerns, that a strike at this time would be destabilizing and wouldn't achieve their long-term objectives. But, I mean, I also understand that Israel has national interests that are unique to them. And, of course, they consider Iran to be an existential threat in a way that we have not concluded that Iran is an existential threat.

So I don't -- I wouldn't suggest, sitting here today, that we've persuaded them that our view is the correct view and that they are acting in an ill-advised fashion, but we've had a very candid, collaborative conversation. We've shared intelligence. And I was in Israel about three weeks ago and spent two days there with the senior leaders, and so we're -- you know, we are continuing that dialogue.

ZAKARIA: If you were a betting man, would you bet that Israel won't strike?

DEMPSEY: Well, fortunately, I'm not a betting man.

ZAKARIA: When we come back, more with General Dempsey.

(BEGIN VIDEO CLIP)

ZAKARIA: Is it your best judgment, after meeting with Egyptian officials, Egyptian military, that the Americans who are being held there will be released and will be able to come back home?

DEMPSEY: Well, I can't guarantee that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with the Chairman of the Joint Chiefs of Staff, General Dempsey.

Let me ask you about the news this week, which is, of course, about China and Xi Jinping, the soon-to-be president of China. The Chinese military budget is going to double within three years of 2015 -- that is the estimate some people have. Does that worry you? DEMPSEY: Well, let me, you know, raise from the tactical to the strategic issues. You know that in our new strategy we've taken a decision to rebalance ourselves toward the Pacific, and in so doing it's not as though we're flipping a switch. We've never left the Pacific really, but we want to -- we want to become more engaged in the Pacific.

I think this is more opportunity than liability to improve our relationship with China, and I am personally committed to having that as the outcome rather than get into an arms race or into some kind of confrontation with China.

ZAKARIA: You're just back from Egypt.

DEMPSEY: Yes.

ZAKARIA: Is it your best judgment, after meeting with Egyptian officials, Egyptian military, that the Americans who are being held there will be released and will be able to come back home?

DEMPSEY: Well, I can't guarantee that. What I can tell you is that, in my engagement with them -- and I have known Field Marshal Tantawi and General Annan (ph) and General Malafi (ph), those are three key interlocutors that -- with whom I met.

I can tell you that I -- we came to a very clear understanding of how serious this was, and also a clear understanding that we --our relationship would be somewhat stalled until this particular issue is resolved.

Now, that said, we did -- I did reinforce the importance of our relationship with the Egyptian military, and I do believe that Egypt is in many ways a cornerstone of the future of the region, in that if this Arab Spring is to have a positive outcome, I think we'll see it first in Egypt. And so, you know, the stakes are extraordinarily high, and I made that clear.

ZAKARIA: You know that in Egypt many people, including now the largest political party there, the Muslim Brotherhood, believe that the Egyptian military seems very reluctant to yield power, both in terms of giving up some of its -- some of its political power, but also its economic privileges. Do you sense that this is a problem that is an obstacle to Egypt's democratic development?

DEMPSEY: Well, I think that the various parties in Egypt are kind of circling each other, trying to determine just what they intend to do. My personal observation is I think that the military is actually eager to cede power because they have experienced how challenging it can be to -- you know, to manage, as they describe it, to manage the street, manage the media, manage a judiciary.

You know, although the military has been largely running the country for decades, they haven't been under the -- under the unblinking eye of the people and the media in this new world in which they find themselves. So I think they're actually eager to cede power and go back to barracks, but they also have some vested interest in, you know, protecting their budget and protecting their, you know, their authorities that they've become quite accustomed to, and they're going to have to work that out internally.

ZAKARIA: Are you optimistic about Egypt?

DEMPSEY: Well, you know, I am optimistic, because I do think that the Arab Spring could -- can produce a democracy, and I think that, you know, I'd be eager to see a competition of ideas actually play out. But, I'm, you know, I'm concerned because, in some way, I think the competition of ideas may be somewhat stymied.

ZAKARIA: The budget: are you as a military person completely comfortable that the budget cuts proposed by the Obama administration will leave the United States' military with all the capacities it needs to defend its interests, its values, its global role?

DEMPSEY: Any strategy and any budget that supports any strategy has risks. I think the risks to this -- to our strategy and the -- and the risk that this budget may not deliver what we intend are manageable.

So I am confident that our -- the revised strategy, the process we went through, that did precede the budget and the budget that supports it, I am confident it will -- it will protect our national interests and allow us to provide options to the nation when, by the way, we confront things that we didn't predict.

ZAKARIA: "The New York Times" had a report on the fact that the United States is going to build up its Special Forces, sort of things like the Navy SEALs, commando forces as it were, and that this is going to become a core part of U.S. military capacity. Is that the way of the future?

DEMPSEY: Let me state it a little differently. I think that among the lessons of the last 10 years of war, two capabilities are prominent, and we have to better understand how to utilize them. One is Special Operating Forces, which have quadrupled in size, and which will grow by about another 3,000 or so in this budget just submitted.

And the other one is cyber. I mean, Special Forces have clearly demonstrated their capability. I think it's a matter of integrating all three of these, you know, the conventional, the cyber and the Special Forces in ways we haven't thought of before, and I think -- I think we're going to be fine.

ZAKARIA: Do you worry about the moral-ethical dilemma of sending a drone into some country that we are not technically at war with and eliminating some foreigner?

DEMPSEY: I will tell you, I am very confident that we have the legal basis for those activities in which we're engaged, and I think it's a healthy thing to actually continue to assess the ethical basis. And to this point in time I'm quite comfortable with where we are, but it bears, you know, it bears scrutiny as we go forward.

ZAKARIA: You're an Army general who's been recently elevated into this job. What's the biggest difference in doing this job than your previous long, distinguished career in the Army?

DEMPSEY: Well, the pace is certainly different. You know, I guess it's safe to say that they -- you know, by the time issues come to me, there's no easy issues, you know, to deal with. They're all rather complex problems. So the pace is different.

I think, you know, the responsibility, I mean, it does weigh on me that it's not only the roughly 2.2 million men and women in uniform, but their families, and also the nation's security. You know, and I'm not talking about security today. I'm talking about not only prevailing in our current conflicts and challenges, but also preparing the force and the nation for the future.

And so I think it's some combination of pace and level of responsibility. But I'm honored to do it.

ZAKARIA: In this job you're part soldier, part diplomat, and in the diplomat role, I'm wondering whether you're going to use what has now become, at least on YouTube, a famous singing voice.

(BEGIN VIDEO CLIP, "NEW YORK, NEW YORK.")

(END VIDEO CLIP, "NEW YORK, NEW YORK.")

ZAKARIA: Are you going to try and unleash that with your Chinese counterparts one of these days?

DEMPSEY: You know, I did actually challenge my Chinese counterpart during that visit of their bands to a sing-off. He hasn't taken me up on it yet, but if I thought it would get us in a better place with China, I'd do it.

ZAKARIA: General Dempsey, pleasure to have you on.

DEMPSEY: Thank you, sir.

ZAKARIA: Lots more ahead of the show. We have a great panel of experts on China. But up next, Europe. Amidst all of the talk of the Eurozone's demise, a quiet bit of magic has actually solved the problem for now. What in the world do I mean? Stay with us.

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ZAKARIA: Imagine a region of the world where stocks have had their best January in nearly 15 years. Bank shares are up 20 percent, the rates at which governments borrow money has fallen sharply. Investor sentiment is at its best in months.

You think I'm talking about Asia, maybe the BRIC nations. Nope. The region is actually sclerotic, struggling Europe. What in the world, right? The story is actually quite simple and was pointed out to me by Sebastian Mallaby of the Council on Foreign Relations. After months of endless handwringing, innumerable talks and considerable pain, it seems that the Eurozone has actually been saved, quietly but effectively. The savior is this man, Mario Draghi, the new head of the European Central Bank, an institution that had been seen as powerless and obscure until now.

For much of the last couple of years it had taken a backseat amid the crisis around it. You see, its original mandate was almost solely to keep inflation low and stable, but now under Draghi, it has become Europe's deus ex machina.

Last December the ECB did the equivalent of printing nearly 500 billion euros worth of cash. Essentially the Central Bank lent money to more than 500 European banks at just 1 percent interest.

What was the effect? Look at this chart. It shows what we call bond yields, the rate of interest governments pay to raise money from bonds. Both Italy and Spain's rates have fallen sharply in the last three months, so they pay less to borrow money. That means they can get their financial houses in order without as much pain.

At a more micro level, Barclay's estimates that the cheap source of cash from within the ECB will boost the earnings of Eurozone banks by 4 percent this year. That is going to trickle into the rest of the economy, but most importantly it means that a run on Europe's banks, the great fear, is now highly unlikely.

Remember that moment in "It's a Wonderful Life" when everyone runs to the bank to get their money out and Bailey's Savings & Loan just doesn't have enough cash, as didn't most banks during the Great Depression?

(BEGIN VIDEO CLIP, "IT'S A WONDERFUL LIFE")

GEORGE BAILEY: Just remember that this thing isn't as black as it appears.

(END VIDEO CLIP, "IT'S A WONDERFUL LIFE")

ZAKARIA: Well, thanks to the ECB, Europe's banks now have access to plenty of cash. The ECB is now said to be preparing another auction worth $1 trillion this month. You can expect that to further declog the financial system.

The magic of its work is in the perception of what it does. It doesn't want to directly bail out any one country -- that sets a dangerous precedent -- and yet by demonstrating its ability to inject liquidity into the system, it has convinced investors that it is the ultimate lender of last resort.

Now, this does not fix Europe's longer term or medium-term problems. Greece might well still have to default, but there's unlikely to be a Lehman-like crisis in Europe now. The irony here is that the ECB's activism is not some new theory of what a central bank can do. Here in America the Federal Reserve did exactly that four years ago. The story goes that at the height of the financial crisis in 2008, Congressman Barney Frank asked the Fed Chairman Ben Bernanke if he had $80 billion to help bail out AIG.

Bernanke replied, well, we have $800 billion.

For all the criticism heaped on our central bank here in America by the Tea Party and others, it is instructive to look back and see how the Fed's prompt and massive action prevented our crisis from turning into a great depression. And it's happening once again in Europe, and in an even trickier situation.

The moral of the story, don't bet against a central bank. And we'll be right back. Up next, the man expected to become China's next leader visits Washington. We have a smart panel to examine relations between the world's two biggest economies.

(COMMERCIAL BREAK)

CROWLEY: I'm Candy Crowley in Washington. FAREED ZAKARIA GPS will be back in 90 seconds. But, first, a check of the top stories.

At least 15 people were killed and 21 others injured in a suicide bombing outside a police academy in Baghdad. Today's attack comes as Iraq struggles with a political crisis that's raising fears about a return to the level of violence that nearly tore the country apart in 2005 and 2006.

Finance ministers in the European Union appear set to approve a bailout package for Greece. The deal is expected to be finalized tomorrow after more negotiations. The agreement would make paying down Greece's crippling debt the number one priority.

A manhunt is under way in Greece for two suspects who broke into the country's Archaeological Museum Of Olympia, tied up a guard and stole dozens of small statues. According to Greece's state media, the robbers took as many as 69 statues and a gold ring. It is the second theft of its kind in Greece this year.

Parts of the southern U.S. are bracing for severe weather. Rain and possible tornadoes are expected in southern Georgia and northern Florida. Portions of Appalachia could get snow.

Those are your top stories. "RELIABLE SOURCES" is at the top of the hour, but now back to FAREED ZAKARIA GPS.

ZAKARIA: This past week the man expected to be China's next president paid a visit to the White House. No other meeting of leaders is as important -- the world's two biggest economies, the two biggest defense spenders, the two most powerful foreign policy actors in the world. How will Xi Jinping's visit change relations?

I am joined now by an expert panel. Gordon Chang is a Forbes columnist and the author of "The Coming Collapse of China."

James Fallows is a former speechwriter for President Carter and a journalist for many, many years now for "The Atlantic" magazine. He has a new book on China coming out this May, "China Airborne."

And Roderick MacFarquhar is a professor at Harvard University. He has written more than a dozen books on China.

Jim, you were at the lunch for Xi Jinping. People who meet him say that he strikes you even immediately as a different kind of Chinese leader, warmer, more personable. Did you feel that way?

JAMES FALLOWS, "THE ATLANTIC": It's hard to judge, of course, seeing a person in a ceremonial event like that, but certainly I have seen Hu Jintao in a similar setting, the current president. And he seems -- Hu Jintao seemed a more stolid, expressionless character than Mr. Xi did. And he -- Mr. Xi, at this lunch, was telling about his adventures in Iowa, how much that meant to him.

But what was striking is that just before he spoke, Vice President Biden gave what was a very, very tough toast by the standards of these kind of events, talking about currency valuation, human rights and all the rest. So that was a -- that made it for a different sort of diplomatic encounter than normal.

ZAKARIA: People tell -- who were there tell me that it seemed almost rude, what Biden did, in the context of a ceremonial state occasion. One of the observers said, "We seemed like the yahoos and they seemed like the sophisticated war power," you know, kind of --

(CROSSTALK)

FALLOWS: It certainly was startling to me. And we've all seen events like this before, and usually there's a kind of anodyne quality to the greetings. Our two nations are celebrating their 40th anniversary together and things like that.

And Vice President Biden said all those things and then he said, "Turning now to our areas of disagreement," and went through a very, very detailed and very tough laundry list. One doesn't know whether this was purely for domestic U.S. consumption or it was what they'd been saying earlier in the meeting in the White House.

ZAKARIA: When you look at Xi Jinping -- you have studied China's leaders -- does he strike you and does this new generation strike you -- is this anything important or different about these guys? They're coming to power after 30 years of peace and prosperity.

RODERICK MACFARQUHAR, PROFESSOR, HARVARD UNIVERSITY: Hu Jintao -- you mentioned the current president -- has always seemed to any rather opaque in terms of personality. Xi Jinping and some of his cohorts, I think, are more translucent.

And I think the point about Xi Jinping and perhaps one or two others like him is that they are children of high officials of the Maoist era. And so they have a certain self-confidence, a feeling that they're born to do this, and hopefully that will give them more flexibility when they actually take power. We'll have to see.

ZAKARIA: How does this leadership strike you, this new leadership in China?

The Maoist era. They have a certain self-confidence, a feeling they're born to do this, and hopefully that will give them more flexibility when they actually take power. We'll have to see.

How does this leadership strike you, this new leadership in China?

GORDON CHANG, AUTHOR, "THE COMING COLLAPSE OF CHINA": Well, I think the problem, though, is that the Communist Party is splintering, and we've seen dramatic evidence of this in the last couple weeks. So I'm not so sure that it really matter who the leaders are.

You know, when you're the leader of the Communist Party of China, you act under certain institutional constraints, which are very important. And right now the hard-liners are in control in China, and that means that Xi Jinping, whether he's a liberal, a democrat or a hard-liner, has got to act with the prevailing views in Beijing, and that's really the most important thing.

ZAKARIA: How is the Communist Party changing? Let's just start with this fascinating thing that seems to have happened last week, which is Bo Xilai, the party secretary in Chongqing, sort of China's Chicago, if you will, very popular guy, had been cracking down on crime, had got into a spat with the chief of police, who then went to the U.S. consulate, asked for asylum, was turned down. What is going on?

CHANG: We'd love to know. I mean, what happened is that essentially we had the top cop go to another province and try to defect to the United States, probably with documents, maybe with documents relating to Bo Xilai's wife. This is really fascinating.

And what is even more interesting is that Bo Xilai sends security troops, who are armed, across provincial lines. He invades another province, Szechuan, in order to try to get this top cop, Wang Lijun, back. This really, you know, we talked about our politics being corrosive and dysfunctional? I mean, this -- we don't have a candle -- light a candle to China's, in terms of really what's going on there.

This probably will be controllable, but we don't know, because this is the first transition in the history of the People's Republic that has not been masterminded by Deng Xiaoping. And that means that there's no real elder behind all of this to be -- keep the kids in line.

FALLOWS: I'd make a point -- I agree the Communist Party is in considerable turmoil, and that its nature matters more than the individual. There's one thing that Xi Jinping said at the lunch that I attended that I thought was significant and different from his predecessors. He talked at some length about his own personal experience in Iowa.

And these couple days he spent there in the 1980s seemed to have made a huge impression on him. And one doesn't want to romanticize this too much, but I was impressed in living in China how much it mattered that rising generations of Chinese financial and increasingly governmental people had experience here. It doesn't change the nature of the Communist state, but it's very different from Hu Jintao and Wen Jiabao.

ZAKARIA: Fascinating. When we come back, we're going it talk more about China and the U.S. And also China's own domestic future, when we come back.

(COMMERCIAL BREAK)

ZAKARIA: Welcome back. We're discussing China with Gordon Chang, James Fallows and Roderick MacFarquhar.

Gordon, you wrote a book called "The Coming Collapse of China." And, you know, they say about predictions, never make predictions with a specific date.

And you had a specific date and said China was going to collapse in 2011; 2011 came, it didn't happen, you doubled down and you said it's going to happen in 2012. I guess the simplest question is why were you wrong? Is there something you've learned about it?

CHANG: Well, I think there were a couple reasons. First of all, I focused in on China's accession to the World Trade Organization. And I thought that foreign businesses and foreign governments would be tougher on compliance.

And then they weren't, because they wanted the -- saw the opportunities in the China market. And so they allowed China really to continue with some very predatory trade practices.

ZAKARIA: What is the fundamental weakness you saw in China that led you to this, and do you think it still exists?

CHANG: Well, I think the fundamental weakness is that the Communist Party has lost the conversation in China. It can no longer persuade people, and that's why it's become much more repressive over the last three or four years, maybe even over the last seven, because I think most Chinese people don't believe that a one-party system is really appropriate for a modernizing society.

And that's why we've seen increasing number of protests, perhaps as many as 300,000 a year, and we've seen the protests become more violent. So it's no longer just strikes or demonstrations. It's become riots, insurrections, bombings. This is a sign of social disintegration. The Communist Party can only deal with it with force, and really that's not an answer in the long term.

ZAKARIA: Jim, you lived there for the last --

FALLOWS: I have been there like four of the last five years basically, and I guess what strikes me as being so important and so fascinating about China is, at least to me, it is genuinely unknowable what's going to happen there. You see on the one hand it's a 30-year period in which, for most Chinese people, most of life has gotten dramatically better in those 30 years, but all the tensions that Gordon and Roderick have talked about are certainly there.

The environment is a disaster. The social and economic inequalities are more extreme than any place else on Earth. The corruption is extreme. My impression -- I would disagree with Gordon that the Communist Party has entirely lost the narrative. My sense is that most people feel the system they know is still delivering more than any visible alternative.

But you can imagine the things that are wrong in China getting uncontrollably beyond any of the government's ability to cope with, or you can imagine them muddling along more and less the same way for another generation.

MACFARQUHAR: I think I would agree, though, with Gordon, Jim, because -- about losing the narrative, because the Communist Party, above all, no one respects it any longer because of its deep, deep corruption.

And Hu Jintao himself said we can't talk to the people, and the reason is that there is no ideology. No one looks to Marxism and Leninism any longer. It's a Leninist party, but no one goes to the good books in order to find out what to do.

And so they've got no glue that keeps the system together. What keeps the party in power -- and this is why I think it's rash, perhaps, to predict dates, what keeps the party in power is inertia, the most powerful force in politics.

FALLOWS: And just to come back, I think that the Communist Party in China would have a higher popularity rating than the U.S. Congress in the U.S.

And so in both cases, what keeps American government in place is that people think, on the whole, it's delivering. And I think most people in China, as of this moment, would think that, on the whole, it's moving in the right direction rather than the wrong direction.

CHANG: But we're seeing, you know, the last six months is that China's economy is faltering, after the conditions that created 35 years of virtually uninterrupted growth are ending. We're seeing capital flight at the rate of maybe $50 billion a month.

And, you know, essentially this is a problem because the conditions that are there don't really help the Communist Party. You know, they're in a super cycle downwards now.

ZAKARIA: Is there a danger that if there is some faltering and if there is this problem of legitimacy, that they move toward a kind of nationalism and particularly blaming America? I was struck by Hu Jintao's recent essay, in which he basically calls for and then executes a mass censorship of television shows (inaudible). And all of it is about preventing westernization of China. But this is the Communist Party that radically embraced westernization, by which I mean market economics and things like that. And now they're worried about it.

FALLOWS: I think much as Americans might fear a superbly successful China, they have much, much more to fear from an unsuccessful China, because I think all the things you can imagine happening internally and from the government, at least in the short and medium term, would be to our disadvantage.

I think that nationalism is the main tool of government in disarray any place. And so I don't think the U.S. should welcome these signs of a fracture within China.

MACFARQUHAR: Nationalism, of course, is a two-edged weapon for the Chinese, because if -- take, for instance, Japan, which is the favorite whipping boy of the Chinese blogosphere, if the Chinese reprimand Japan, the blogosphere gets whipped up, and you the nationalists are talking loudly and the government doesn't deliver anything more because it doesn't want to damage trade and relations with Japan too much.

So the government is then under threat from the nationalists. So they have -- the party has to play nationalism very carefully.

CHANG: You know, and really when you have the military in China becoming more independent, starting to execute its own policies, becoming power brokers inside the Communist Party, as we saw with Bo Xilai running to the generals, Xi Jinping himself has a power base inside the military, this is a very dangerous trend for all of us.

ZAKARIA: And do you think that there's the possibility of greater conflict with the United States?

CHANG: Oh, there's always the possibility of that because China, for instance, claims the entire South China Sea as an internal Chinese lake. And if there's been any consistent foreign policy in the U.S. for over two centuries it's to defend freedom of navigation. This is a zero-sum issue for us.

FALLOWS: And I agree, Roderick, in the last year and a half, the U.S. has sort of reasserted its interest and its presence in the Pacific and this announcement in Australia of the Marine presence there was part of a -- I thought, a very skillful, coordinated diplomatic act by the Obama administration to say we're still there and the balance of power with China will remain.

MACFARQUHAR: I think Obama came into power thinking that he could deal with the Chinese, he would have a new approach to the Chinese, and they would actually develop a partnership of some kind across ideological boundaries. He proved wrong. They thought he was weak. They took advantage.

And what we've seen over the last year with Secretary of State Clinton and with Biden this last few days is a reassertion of American determination, that it is going to have its allies protected in the South China Seas, in Southeast Asia and freedom of navigation will be something they will protect.

ZAKARIA: And the Chinese, you think, will respect that?

MACFARQUHAR: Well, the Chinese don't want a conflict. The last thing they want is a war, because then everything is up for grabs. So I don't think they're going to challenge.

ZAKARIA: On that note, Gordon Chang, Roderick MacFarquhar, James Fallows, thank you so much, fascinating conversation.

Up next, the last look, how Switzerland is taking cleanliness to otherworldly levels. Stay with us.

(COMMERCIAL BREAK)

ZAKARIA: Somewhat overlooked in President Obama's budget proposal this week was a section about saving money on money. Turns out it costs 2.4 cents to make every American penny. If they change the mix of metals used, the cost will go down.

That brings me to my question of the week -- how many pennies does the U.S. Mint make every year? Is it, A, 43 million; B, 430 million; C, 4.3 billion or D, 43 billion? Stay tuned, we'll tell you the correct answer. Make sure you go to cnn.com/fareed for 10 more questions.

While you're there, check out the rest of our offerings on our Global Public Square website, and you can follow me on Facebook and Twitter as well. And if you ever miss a show, you can now find full video episodes of GPS on the iTunes TV store. Go directly there by typing itunes.com/fareed into your browser.

This week's book is "Coming Apart" by Charles Murray. It is the hot policy book now. In it Murray explains that white America is now essentially divided into two groups that live, work, marry and fraternize together, cannot comprehend each other's lives.

On the one hand an upper class elite, and then there is the white working class. This is serious social science research, very well written. I don't agree with some of its conclusions. You might want to argue with the book or you will want to read contrary perspectives, but this book will make you think.

And now for the last look. When you think of Switzerland, the image that comes to mind is pristine, clean, unlittered. In fact, no one dares litter in Switzerland for fear of a huge fine. Well, now they've taken their cleanliness to a new level, out of this world, you might say. The Swiss have decided they are going to clean up outer space.

Clean Space One announced this week by the Swiss Space Center will be a, quote, "janitor satellite," unquote, whose mission will be to tidy up the upper atmosphere. There are said to be more than 500,000 pieces of space junk up there. When they're done with space, I'd love for them to pay a visit to my office.

The correct answer to our GPS challenge question was C, the U.S. Mint mints 4.3 billion pennies each year. And they aren't made of much copper anymore: 97.5 percent of a penny is zinc.

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