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Turmoil in Egypt over Mubarak's Health. Worries Over Slowing Growth in China. Pakistani Supreme Court Ousts Prime Minister.

Aired June 20, 2012 - 15:00:00   ET


ALI VELSHI, CNN HOST: Good evening. Welcome to the program. I'm Ali Velshi, sitting in for Christiane Amanpour, who is on assignment in Luxor, Egypt, tonight, with the latest on Hosni Mubarak and the volatile political situation in that country.

Christiane, what is the latest on Mubarak now?

CHRISTIANE AMANPOUR, CNN HOST: Well, Ali, thank you for doing the program while we're here on assignment in Egypt. And just to say that there has been fevered speculation about Hosni Mubarak's health for the last 24 hours.

The latest is that his own lawyers are saying that he is no longer on life support and that his health is improving slightly. They say he remains in critical condition, but that they are going to be announcing a formal bulletin; they're going to be giving some kind of statement, public statement to what they say allays what they call the irresponsible media speculation.

That, I must say, is a little unfair, as every time there is a setback in President Mubarak's health, it does, for obvious reasons, create a huge amount of interest, not only in Egypt but around the world. And it certainly seems to be true that his health did take a sharp twist for the worse yesterday.

We do know, however -- and I know from sources -- that none of the family nor President Mubarak was happy at all to be in the Tora Prison, because they did not have the correct medical facilities for his condition. So people who are still supporting him and still concerned about his health hope that he will get the proper medical help that he needs back at the military hospital, Ali.

VELSHI: And we're showing pictures of him from his decades, where he ruled Egypt. He is certainly not robust as he was, and he's certainly not in charge. So what's the significance? What's the impact of whether he's dead or really sick on the current political situation in Egypt?

AMANPOUR: Well, Ali, you can imagine, this man ruled Egypt for 30 years. He was part of this country's life for as long as most people can remember. And the revolution that toppled him more than a year ago was one of really an amazing one throughout the Arab Spring, because, look, we've seen so much upheaval throughout the Arab world.

But Mubarak was the only one who heeded, after 18 days, the word and the demands of his people. He didn't flee like the Tunisian strongman had. He instead stepped down here in Egypt and then he faced trial as demanded by the people. So it is an incredibly interesting and historically important era. And Mubarak also was really larger than life.

He had a very close relationship with the United States. He had a very close and powerful relationship with fellow Arab rulers, but he also had a very close relationship with Israel. And although it was his predecessor, Anwar Sadat, who concluded the peace treaty with Israel, Mubarak was vice president at the time. And when he took over, he maintained that. And he has kept the peace between Israel and the rest of the Arab world for the last 30 years.

So it is a very important moment, and of course, it does come, as you mentioned, amidst quite a lot of political confusion here in Egypt with the Muslim Brotherhood claiming victory from the final round of the presidential election. We're still waiting for the official result. That, we understand, is going to be officially delivered tomorrow, Thursday.

But remember that the opponent, Ahmed Shafiq, was considered somebody in the mold of Hosni Mubarak. So even though he's no longer president, that he has been given a life sentence and that he is in very sick health, even the presidential election revolved so much around him and his influence because of Ahmed Shafiq, who was running and who was considered to be of that mold, having been Mubarak's last prime minister, Ali.

VELSHI: All right. Christiane, thank you for that.

Christiane Amanpour in Luxor, Egypt.

Now turning to China, the second largest economy in the world behind the United States, and a key driver for the global economy. China's economy is slowing down. So my brief tonight is: is China in for a soft landing or a crash landing?

In the great recession, it was China along with other developing countries, like India and Brazil, that kept the global economy growing. China's gross domestic product is cranking at a high rate. Look at that on the left of the screen. But that rate has been slowing recently. Back in 2010, GDP grew at an annual rate of almost 10 percent in China. But that's gradually dropped to about 8 percent now.

The U.S. and Europe would kill for numbers like that. U.S. GDP is hovering around 2 percent. But China is the world's factory floor. And as the world starts to slow down, China's factories seem to be shutting down.

Look at this graph. It's China's power output. That's the blue line. Literally, the juice behind China's economy, that blue line tracks closely with the country's GDP, the lighter colored line. When you look at what's happening, on the extreme right of the chart, the blue line plummets. It shows that production is falling faster and further than we've seen so far.

Now keep in mind that, unlike countries in the West, unlike democracies, China's leaders have the tools to rev up growth and they're not afraid to use them. So our question tonight: has China bottomed out and, if so, what does it mean to the rest of the world?

I want to bring in Ian Bremmer. He knows a lot about this. He's the president of the Eurasia Group. He's an author of "Every Nation for Itself: Winners and Losers in a G-zero World."

Ian, thanks for being with us. You know, we turn to speculation in the last, you know, maybe or year or two as we've seen how China can engage in infrastructure projects and move people around at will. And we wonder, would it have been easier if America could make decisions like that, because we're paralyzed in terms of decision-making. You argue that we don't want to be anything like China.

IAN BREMMER, PRESIDENT, EURASIA GROUP: Well, yes, you said that the United States and Europe would kill for numbers like that. But of course, the reality is they won't. And the Chinese will and can. And I'm being a bit flippant, but I also mean that somewhat literally because the Chinese have extraordinary capacity to move assets around.

They don't have a banking system so you can't have a run on Chinese banks. They can move people around. They can extract labor. They can do things that are utterly implausible for democratically elected state that will allow them to maintain the kind of growth that they know they have to have if they want to ensure their own political sustainability as (inaudible).

(Inaudible) I see a hard landing in the near term? Absolutely not. But the things that they will do to ensure they don't have a hard landing are going to be much more unsustainable over the long term, and that does have to worry us.

VELSHI: Well, it -- but on the other hand, Ian, aren't we glad that we know that China, particularly in a year where its leadership is changing, does not want to be seen as a country that's failing or slowing down, that they will sustain our growth in the rest of the world by forcing their growth higher?

BREMMER: Sure. And aren't we glad in the United States that we're not dealing with our deficits, so that we don't have to pay any more right now and we can still enjoy services that we won't be able to afford in 20- 30 years? Yes, of course we're glad for that as well. In other words, you know, short-term capacity to avoid difficult decisions is something that most Americans are generally quite comfortable with.

But, again, in China, what they have to do to forestall the -- this slowdown is they have to put enormous amounts of bets (ph) on domestic infrastructure that they don't need.

They have to bet on state-owned enterprises that are very inefficient and they have to take the kind of steps that will -- that will make it more difficult for them to ultimately change their system towards being a consumer-led rule of law driven open economy as opposed to a state capitalist one.

VELSHI: You do make it --

BREMMER: That's the problem.

VELSHI: You make a really interesting point, where we see the ability to have centralized decisions and quick decision-making in stark contrast to America's inability and Europe's inability to do that, but you point out that it is, in fact, not -- it's not really capitalism at all. So we think of state capitalism as efficient if not fair. You're saying it's not even real.

BREMMER: We think of capitalism as certainly efficient, though not always proper in terms of the distribution effects. But in terms of state capitalism, they're taking advantage of low-cost labor and low-cost capital and they plow (ph) the state is the principal actor in the economy. And they're doubling down on that system of state capitalism because they know that they can't export manufactured goods to the developed economies the way they used to.

Now they are building consumption out, and that's very important. But that doesn't come close to meeting the gap of the slowdown that you pointed out, not only in terms of the economy as a whole, but power generation and the rest. And so as a consequence, what are they doing?

As a consequence, they're taking steps that are going to make the United States and China more at loggerheads with each other, and they're also -- the kicking of the can down the road that the Americans and the Europeans are doing, no one is kicking a bigger can farther down the road than the Chinese government, soon to be the world's largest economy. That should concern us.

VELSHI: You know, you wrote something very interesting in March, where you said, "Here in the United States, we don't know what the next huge industry will be," And it's something we wring our hands over. What will get us out of this morass? What will it be?

Your next three words are the interesting ones: "and that's great." "We don't know what the next huge industry will be and that's great." Tell me why that's great.

BREMMER: Well, the part of the American economy that we're still very excited about, of course, is the fact that we dominate entrepreneurship in all of the cutting-edge technologies around the world. And to the extent that we don't, it's our allies, other advanced industrial economies . It's Japan, it's Germany, China nowhere close.

And you know, right now we're in the middle of an energy revolution that's making us much less dependent over the medium term on the Middle East. Ten years ago, no one had any idea that was coming, unconventional oil and gas. American corporations dominate that field. The next big thing might be something on the Internet. It might be --


VELSHI: Let me just ask you something, Ian. Here's one place where, in energy, we don't dominate in the West -- and America certainly doesn't. Solar energy, because the Chinese government decided they're going to dominate. So they back companies to get involved in solar energy in China and elsewhere. America doesn't. In fact, the American government tried to with Solyndra and never again will an American company try and -- American government try and back a solar energy company. China wins that battle, don't they?

BREMMER: China's winning a lot of battles, but the battles they're winning, not the high-edge, high-tech, entrepreneurial driven models. They're places where they're getting more advanced in basic manufacturing. When you look at solar cell production, it's actually not enormously advanced. But it is true that the Chinese are getting better at automation and they're getting better at manufacturing.

And that does put a lot of Chinese firms directly in competition with American manufacturing firms. And when you look at 15 percent real unemployment in the U.S. right now, China is absolutely a piece of that. That also is going to make our relationship more constrained (ph) going forwards.

VELSHI: Ian, you're raining on our parade, but thanks for a lot of good information.

Ian Bremmer of the Eurasia Group, thanks for joining us.

And to see where the world's biggest economies are heading over the next five years, check out our interactive projection at, or get the link on Twitter, @AliVelshi. And if China is a driver of the world's economy, in Pakistan it looks like nobody's behind the wheel. A political pileup, when we return.

But first, speaking of pileups, take a look at this picture. Pakistan refused to let these NATO supply trucks cross the Afghan border to protest the deaths of 24 Pakistani soldiers by U.S.-led airstrikes. The border crossing remains closed, but NATO found a costlier northern route. Many of these trucks are rolling again. We'll be back with more on that.



VELSHI: Welcome back to the program. I'm Ali Velshi sitting in for Christiane Amanpour. Now to political turmoil in Pakistan, a country with plenty of nukes and plenty of problems.

Pakistan is without a prime minister today after the Supreme Court ousted Yousuf Raza Gilani for refusing to call a reopening for a reopening of corruption charges against his boss, President Asif Ali Zardari. Now Reza Sayah is in Islamabad. Reza, tell us what's going on here. Some say this is a good move and others say it's a political grudge match.

REZA SAYAH, CNN CORRESPONDENT: Yes, we might not have enough time in this show to untangle everything, but we'll try. Pakistan was without a prime minister. If you ask Mr. Gilani what happened, he'll tell you there was absolutely no good reason that he should have been ousted. He said he only protected the constitution and the law.

But many say he was tossed out because he stood up to protect his political party and the senior leader of the party and his president, Asif Ali Zardari. All of this drama stems from the fact that Pakistan's Supreme Court in 2009 pushed the civilian government and then Prime Minister Yousuf Raza Gilani to write a letter to Swiss authorities to open old corruption charges against Mr. Zardari.

Mr. Gilani was in a tough spot. That was his boss, Mr. Zardari. He decided to defy the orders. This year, the Supreme Court, out of patience, convicted him on contempt charges. He insisted for the past couple of months that he was eligible to serve.

But this work, the Supreme Court ended the debate. It ordered the prime minister to pack up and leave the prime minister's house here in Islamabad, and that's where we are today, Ali.

VELSHI: What do people in Pakistan feel about this? Are they -- do they think that the court's doing the right thing? Do they think this is political?

SAYAH: Well, it depends who you ask and how you digest this. Many observers say, look, this is Pakistan's version of democracy in action, that this was an independent judiciary that's serving as a watchdog for the government. They saw a prime minister that didn't follow the law and the orders, and they tossed him out.

But others accuse this judiciary of activism, of stretching beyond its bounds and targeting the civilian government. There's no love lost between the judiciary and the civilian government. The chief justice a couple of years ago was sacked by then-President Pervez Musharraf. When Mr. Zardari and his party came to power, they promised to reinstate him, but they dragged their feet. So many say there's a grudge there.

Also, many suspect that the chief justice made this ruling this week to shift focus away from his own troubles. This month, a business man here in Pakistan claimed that he paid millions to the judge's son to win favorable decisions in the court. So a lot of backstories to this political drama.

VELSHI: It is a complex story.

Reza, thanks very much for putting some light on it for us.

Reza Sayah in Islamabad.

I want to turn to Hassan Abbas. He's a former Pakistani government officials and a senior adviser for the Asia Society.

Hassan, thank you for being with us. Hassan, what do you make of this thing? As Reza said, it's very complicated in Pakistani politics to discern right from wrong and everything seems to exist in a bit of a gray area. Tell me what your sense is of this.

HASSAN ABBAS, SENIOR ADVISER TO THE ASIA SOCIETY: I think indeed it is complicated, but also this is in some ways a positive development. I say positive because Supreme Court took a very clear decision, a very important decision, took on the executive authority and then the political side, the president, the prime minister, they accepted this decision.

This, in some ways, will help judiciary regain some of the lost prestige. It will help the political side as well, that they are listening to the dictates of the rule of law. So in that sense, it is positive. Yes, complicating as well, but overall, I have a sense that it is positive.

VELSHI: All right. Hassan, some have called it a soft coup. They have used the word soft coup, the judiciary becoming activist and taking control of things that are not theirs to take.

In fact, there have been some criticisms that it's not within the scope of the Supreme Court to get rid of the prime minister. That's got to be a parliamentary decision. As you said, the party has not fought back on this, but do you think there's anything of a soft coup here?

ABBAS: Soft coup, no. The reason is that Pakistan is used to these coups by the military dictators. And thank God that things have not going to the stage where anyone is even thinking seriously that military can come in.

So, soft coup, in some ways we can argue that this is a soft coup. If it is called that, it is in support of the judiciary. The judiciary is the new institution that is emerging as a powerful center. So as we know executive, judiciary, legislature, the balance between these three create democracy.

So in that sense, coup by a new institution, which is gaining strength and which will have a say in the future of the country. So in that sense, yes, but it's neither unconstitutional. It is problematic partly because judiciary also is controversial. It is learning. It is going through a learning curve, emerging to understand how they can use this power in support of democracy.

VELSHI: All right. And then, of course, that's where it becomes a larger concern, because the world has to deal with Pakistan on a number of levels. So instability in Pakistan, often the West has chosen stability without democracy over instability and democracy. So where does this put Pakistan on the world stage in terms of dealing with the West, where relationships have deteriorated between Pakistan and the United States, Pakistan and NATO?

ABBAS: It should not be seen as a problematic development by the U.S. or the West in general because this government completed almost about 41/2 years, Mr. Gilani was prime minister for about four years, a little unprecedented. There are hardly a couple of people who were able to have this feat. So six months are remaining in the completion of this term.

There will be elections again. Democracy has its ups and downs and it takes time for any country to establish these institutions. Pakistan, in the last 60 years, has proved, the people of Pakistan have proved that every time there was a military dictator, they went against him. They pushed the military dictatorship out and struggled to get democracy back on its feet. It is going to take some time, and the West should show some patience.

VELSHI: But at what point does everybody, including Pakistanis say we can't exist on the basis that we fight back so that there can be some measure of democracy, but most of Pakistan's history has been under military rule or dictatorship. At some point, this holds Pakistan back from being a full participant in the world's economy.

ABBAS: It has. Pakistan's economy is going through a terrible phase. There is no doubt. There are demographic issues. There are extremism issues. There are terrorism issues, lack of investment in education and health care and those issues are also there.

But the belief is, or the hope is that if democratic processes are allowed to continue and if this gains some kind of -- gets into a process, that will stabilize things, because we have seen military dictators coming in on one pretext or the other, saying we'll bring stability and but that has not helped.

So this is the only viable option to continue to look towards democratic process and hope that people will choose the right -- go for the right options next time. History of world tells us that all those countries who went through this democratic process ultimately started choosing the right people.

VELSHI: Yes. It just seems to be hitting a lot of fits and starts in Pakistan. Obviously, Pakistan's issues are dealing with these civil society structures and building them up. The rest of the world looks in and says Pakistan needs to be doing a little bit more on the fighting terrorism side of things, and these end up being distractions to that larger goal for those outside of Pakistan.

ABBAS: That is true. I would agree to that, because in this political government, they also fail to come up with a comprehensive counterterrorism strategy. There was not enough focus on the law enforcement.

But people must realize that military is still sitting there. They don't like the politicians to grab all the power. They don't want politicians to start decided about Pakistan's policy on India or Afghanistan. So this, you're right. There are serious concerns, but I think at the end of the day, military is also realizing that judiciary is now a powerful institution.

They're realizing that people want democracy and ultimately these three parts, the stakeholders, military, judiciary, political elite, they'll have to come to some kind of arrangement. I understand the concern, and there are serious and legitimate concerns of the outside world, and Pakistan has not been taking the political leadership, has not been taking the right decisions. But this is perhaps the only option. Stick to the idea of democracy for some more time.

VELSHI: You're a patient man, Hassan. Thank you very much for being with us and giving us some context on this.

Hassan Abbas joining us on Pakistan.

I want to bring you up to speed. This just in, turning back to our lead story, Egypt's state-run Nile TV is reporting that Egypt's presidential election commission will delay the release of the presidential election results until a date that is still to be announced. Results will not be delivered tomorrow as we had expected. We'll be right back.



VELSHI: Welcome back. I'm Ali Velshi, sitting in for Christiane Amanpour. A final thought: imagine a world where freedom is a three- bedroom apartment with a view. Remember Chen Guangcheng? He's the blind Chinese dissident who escaped house arrest, created a diplomatic firestorm and was eventually granted his freedom.

One month after arriving in America, Chen and his family have traded their rural farmhouse for university housing in New York's Greenwich Village. As a law student at New York University, he spends two hours a day learning English, often using the Declaration of Independence as his textbook. And he uses his freedom to call for better treatment of his family back in China, where he hopes to return.

Chen may not enjoy the view from his window, but he sees something the Chinese government fails to see. It's there in his textbook: life, liberty and the pursuit of happiness.

That's it for tonight's program. Meantime, the Amanpour box is always open, Thank you and goodbye from New York.