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FAREED ZAKARIA GPS

How Muslims Should Respond to Terror; Does Britain Need More Europe, or Less?; The State of the Al-Assad Regime in Syria; Return to the Cold War?

Aired May 26, 2013 - 10:00   ET

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


FAREED ZAKARIA, CNN HOST: This is GPS, the Global Public Square. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria, coming to you this week from London.

We will start with the brutal killing of a soldier here on Wednesday. What was behind it? How should we react? I'll give you my take.

And has austerity in Britain failed? We'll ask the FT's Martin Wolf.

Then, Syria, next month the two warring sides are to come together, but is there a deal to be had? We'll ask one of the world's top Syria experts.

Also, we seem to be back in the Cold War. Russia kicking out an American official, was he really a spy? I'll get the inside story from a real-life James Bond, a former officer of the British Secret Service.

Plus, big data, that's the extraordinary amount of information that's been collected about you and me and all of us every second, every day. Is it a good thing or a bad? We'll ask the guys who wrote the book on it, literally.

But first, here's my take. The sheer barbarism of the attack on a British soldier in Woolwich is really beyond comprehension.

The alleged murderers are said to have hacked the victim to death, waited for the police to arrive, and seemed to encourage people to videotape their brutality.

And yet, we have to search for some way to think about what appears to be our future.

You see, terrorism used to be about something big and dramatic, but perhaps because groups like al-Qaeda are on the run, their people hunted, their money tracked, their hideouts bombed, this, Woolwich, Boston, have become the new faces of terror; a few people, disturbed or fanatical, radicalized by things they have read or watched, who decide to commit evil.

How do you detect this kind of danger? It seems impossible. Now keep in mind, this was the first terrorist killing on British soil since the London bus and subway bombings in 2005.

In fact, since the Madrid and London bombings, there have been just three Islamic terrorist attacks that have killed people in Western Europe; Woolwich, the equally gruesome 2012 murders in France that killed French soldiers and children and a Rabbi, and the killing of U.S. soldiers in Frankfurt.

Europe's governments have been doing a good job with police and counter-terrorism work and that might explain the relative calm of recent years.

They have also done a much better job than in the past at reaching out and helping to integrate their Muslim communities. And the communities have been responding much more strongly against these isolated acts committed by murderers in the name of Islam.

The Muslim Council of Britain issued an unequivocal statement condemning the latest killing, supporting British soldiers, and urging the police to do whatever it needed to, unhindered and unhampered.

That is precisely the kind of statement all leaders of Muslim communities need to make whenever one of these kinds of attacks takes place.

I understand the feeling that some have that they should not be held responsible for the actions of a few perverted madmen. But the trouble is that these madmen claim that they are killing in the name of Islam and someone has to refute their claims as often as they make them.

Now, the alleged murderer in Woolwich claimed that he was retaliating against British soldiers killing Muslims in Afghanistan.

I wish Muslim leaders would make the point that British and American and other allied soldiers are in Afghanistan at the invitation of the democratically elected government of that country.

They are defending that government and Muslims every day from terrorist attacks and insurgent warfare.

If these people want to protest the killing of Muslims, they should direct their wrath at the Taliban and al-Qaeda and other jihadi groups because they are the ones who are killing Muslims and many others.

We need to hear this message more often and more loudly.

Let's get started.

Let's get right to it with my panel here in London today. We'll talk about terrorism, economics, politics, much more.

Anne Applebaum is columnist for the Washington Post and a Pulitzer Prize-winning historian. Martin Wolf is, of course, the chief economics commentator at the Financial Times.

Welcome, both. Anne, what do you make of the Woolwich attack?

ANNE APPLEBAUM, PULITZER PRIZE-WINNING HISTORIAN AND COLUMNIST, WASHINGTON POST: As you say, it's remarkable how few of these attacks there have been in recent years.

These lone-wolf attacks where people, inspired by the Internet or local imams, use Islamic fundamentalism or Islamic language to convince themselves to do horrible things.

What they do indicate though is they illustrate how difficult it can be to integrate people, immigrants, foreigners, into a society whether like Britain or like America, which has a different set of values.

For whatever reason, these Nigerians, one of whom was born in Britain, attached themselves to this foreign form of Islam and used it as an explanation to carry out a terribly bloody and unnecessary attack much as the Boston bombers also selectively chose -- used a kind of foreign ideology to justify what they did.

You know, there's a large question about how to stop them, how to track them, but there's also a question about how people like that can be better integrated into our societies.

ZAKARIA: Should we even think of it as terrorism or is it just, in a sense, some murder by some crazy guy?

MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, FINANCIAL TIMES: It's difficult to know what language to use. Obviously, it has a terrorist purpose. They expressed it very clearly as I understand it in the video.

ZAKARIA: Yes.

WOLF: They've said that's what they want to do, but it doesn't seem to have any really deep politically purposes, no organization here. It seems to me, unfortunately and tragically, something one has to live with.

ZAKARIA: This week, we saw something very unusual, Martin, which is the IMF actually asked the British government to borrow 10 billion pounds. My image of the IMF is the guys with the whip that are always telling countries not to spend too much.

And the IMF is saying please borrow more. Is that -- is this a sign that Britain's austerity experiment really has failed?

WOLF: Well, let's be fair to Britain's austerity experiment, which, of course, I disagree with -- I'm known to disagree with.

But I think that IMF has been very cautious. Basically, what it said is you should do a bit more spending now and a little less spending a year or two from now and it's -- what they've talked about is really small beer.

Above all, I think the government threw away a policy option and it's made it very difficult ...

ZAKARIA: Policy option?

WOLF: Of borrowing more, of saying we're going to postpone it, of doing more public investment. That option was open to them unlike, say, Spain and certainly not Greece.

They had this option. They got rid of it. So when it turned out, to their shock, they didn't expect this, the economy basically flat-lined, just stopped growing, the recovery was aborted.

They had no way of responding expect asking the Bank of England to do a bit more and we discovered the sort of policy the Bank of England had been pursuing is just not effective enough partly because our banking system is not fixed.

ZAKARIA: And how does the austerity debate look to you?

APPLEBAUM: I think it's very important to understand that there are different austerity debates and what's happening in Britain is not the same as what's happening in Greece or what's happening in the United States.

The politics and the economics of austerity or budget-cutting is different. In Greece, for example, the Greeks don't have the option of borrowing because nobody will lend to them.

Their ability to borrow is determined as much by the bond market and by their relationship with Germany as with anything else. So they're forced to undergo a budget-cutting process which probably they should have undergone a decade ago, which is really more of a basic reform process.

That's not quite the same thing as what's the argument of the United States or the argument here so whether austerity works or doesn't work for what -- it depends what is the purpose and what is the goal. And it plays differently in different parts of Europe and the world.

ZAKARIA: The country live in much of the time, Poland, has had pretty strong growth.

APPLEBAUM: Well, it has had strong growth although the Polish economy is very closely linked to the German economy and as the Germany economy -- if it declines, that'll be bad news for Poland.

But Poland has had a very good five years and it didn't have a recession.

ZAKARIA: The Polish Foreign Minister gave an extraordinary speech. This is a (inaudible), you know, conservative who said, "Britain is in danger of becoming irrelevant if it doesn't jump into Europe more fully." Since he is your husband, I was wondering do you agree with him?

APPLEBAUM: I think -- yes, actually, I do agree with him. I think that Britain has the opportunity still to be a leading power inside Europe.

And because of the particular nature of the Tory Party and because of the nature of the argument right now, it is at risk of eliminating itself.

If Britain is going to spend the next two or three years renegotiating its relationship with Europe rather than taking part in the central debates that everybody else cares about, then it will be irrelevant.

It's already -- it's not -- I mean it's certainly not irrelevant now, but it's already close to making itself less important. You know, it's what other Europeans are talking about is not what Britain is talking about and people know it.

And I think the Polish Foreign Minister's speech reflected what a lot of other people think. I don't think that was his view on its own.

WOLF: I think we could end up out of this. I mean I think we should understand ...

(CROSSTALK)

WOLF: There is a possibility if this goes badly wrong, that we will end up ...

ZAKARIA: (inaudible) a referendum and withdraws from Europe entirely.

(CROSSTALK)

WOLF: Yes, tactically brilliant decision by Cameron to get the Tories off his back, as it were, right now ...

ZAKARIA: (inaudible) referendum.

WOLF: Strategically -- but strategically -- after a renegotiation.

ZAKARIA: Right.

WOLF: So he's promised implicitly that all the rest of Europe will be interested in negotiating with Britain ...

APPLEBAUM: Yes ...

WOLF: In the middle of this enormous economic crisis the one thing they want to do is have a complicated negotiation with Britain about fish. You cannot imagine this pursuit going well and he will go to the party and say well, I've renegotiated and it is wonderful now and they will say no. it isn't.

And the Tories will be split in this referendum, completely split, and we don't know what the outcome will be, but his party could be shattered and we might end up, because the British people are pretty grumpy and they're not being well-led on this, we could end up out.

It's strategically a nightmare.

ZAKARIA: So, when you look at ...

APPLEBAUM: Yes. No, I think it was a mistake actually for him to propose the referendum.

ZAKARIA: So a final thought, we look at the United States and it seems glum and gloomy and dysfunctional ...

WOLF: Great ...

ZAKARIA: But ...

(LAUGHTER)

ZAKARIA: But from here it sounds like we should be more cheerful.

APPLEBAUM: Oh, you can find gloom and dysfunction really in almost any part of the world nowadays. That's the beauty of the year 2013.

WOLF: Yes, I agree with that.

(LAUGHTER)

ZAKARIA: Martin Wolf, Anne Applebaum, pleasure to have you on.

Up next, will Syrian President Bashar al-Assad commit to peace as Secretary of State Kerry asked this week? Does he have any incentive to do so? Right back.

(COMMERCIAL BREAK)

ZAKARIA: Next month in Geneva, Syria's warring parties, the government and the opposition, will both take part in a peace conference, but is there really any hope of a negotiated peace?

U.S. Secretary of State John Kerry this week called on President Assad to make a commitment to peace. But is war the only viable option for Assad?

Joining me now to help answer these questions is Fawaz Gerges, professor of Middle Eastern politics and international relations at the London School of Economics. Welcome, Fawaz. So, first answer that first question. Does Assad have an incentive to make peace?

FAWAZ GERGES, PROFESSOR, LONDON SCHOOL OF ECONOMICS: Yes, I think he does, of course, on his own terms. He wants a political solution. He wants, basically, Syria to be in charge of this particular political solution.

He wants the outside opposition to be marginalized. He basically believes that the external powers, particularly Turkey, Qatar and Saudi Arabia, are funding the most extremist elements in the opposition.

ZAKARIA: And obviously he wants to stay in power.

GERGES: Oh, absolutely. I've no doubts in my mind that he and his associates believe that they are winning the fight. They have survived more than two years a very powerful campaign by regional international powers. They have gone on the offensive.

They tell you, if you meet with Assad's people, they tell you they are winning this war. And any political settlement will most likely reflect the balance of power on the ground inside Syria. That's what it means.

ZAKARIA: And do you buy that? You've been there. You know lots of people. On the ground right now, do you think Assad has regrouped and is actually in a stronger position?

GERGES: Well, look, Fareed, Assad is not winning, but the opposition also is not winning. Assad has survived the most two brutal years any particular dictator can face. His military machine remains intact.

In fact, he has gone on the offensive. He has made some major gains on the ground. His allies, Hezbollah and Iran, are deeply committed to his survival.

Iran and Hezbollah have made it very clear, Assad is a red line. The Russians are deeply invested in Syria and he has a social base of support. And the emergence of radical elements within the opposition, I would argue, has consolidated the social base of support for Assad inside Syria.

ZAKARIA: So other minorities in Syria, the Druze, Armenians, are now more committed to the Assad regime because they fear these radical Sunni elements in the opposition, al-Qaeda-type organizations.

GERGES: Fareed, they don't like Assad. They don't like the dictatorship that exists in Syria. But there is no alternative for many of the minorities, including the Alawites, the Kurds, the Druze, the Christians and what have you.

The emergence of a Muslim front, the militant organization, has really basically shifted public opinion on a large scale inside Syria and the Western countries as well. Remember, Fareed, one of the major reasons why the United States is reluctant to basically provide arms for the opposition because they fear not only the arms will fall into the wrong hands, they fear that the militant elements within the opposition have the upper hand within the armed coalition inside Syria itself.

ZAKARIA: You have been very prescient, accurate about forecasting what is going to happen in Syria. Two years ago, you said on this program Assad will not fall when everyone thought it was going to be a matter of weeks. Even the White House was predicting it.

Yet, you've been adamantly opposed to U.S. intervention because you argue that U.S. intervention will actually make things worse. Why?

GERGES: Fareed, it started as a political uprising. It mutated into an armed internal conflict. It now has become an open-ended war by proxies -- wars by proxies.

On the one hand, you have Israel, you have Turkey, Qatar and Saudi Arabia. On the other hand, you have Iran and you have Hezbollah. Not to mention the basic disagreements between the United States and Russia.

It's open-ended war by proxy. One of the major reasons why the United States and Russia now have intensified their effort to find a diplomatic solution is because of the fear not only the potential of seeing it breaking out, but the extension of the conflict into a region-wide conflict.

Almost you need -- I mean there is a real risk. It would take a spark to ignite a bigger clash, a bigger fire that basically will most likely devour not only Syria, neighboring countries, Lebanon, Jordan, Iraq and, of course, Israel would become involved in this conflict.

ZAKARIA: So American intervention will probably mean, from your point of view, a wider war and a much more bitter one.

GERGES: Well, I'm suggesting that America's direct military intervention inside Syria. I have been arguing that the United States should become much more politically engaged.

And I think what we are seeing in the last months, Fareed, is the United States now has intensified diplomacy with Russia. It's trying to convince its regional allies to give the proposed peace conference in Geneva a chance.

I'm not suggesting the Russian's will play games on this particular score. There is a light at the end of the tunnel. There is no military solution. That's the question.

I mean, of course, the United States can destroy Syria, but, at the end of the day, you want to preserve a unified Syria. You want to preserve the social fabric inside Syria itself.

So even though the odds are against a diplomatic breakthrough, the alternative is the potential break-up of Syria and region-wide conflict. And that's why it's the only light at the end of the tunnel in more than two years.

ZAKARIA: Is there any way you could have a diplomatic solution, a political settlement which does not keep Assad in power? Because I think it would be very difficult for the United States to accept any deal where Assad stays in power.

GERGES: I doubt it very much. I would like Assad to go today not tomorrow. Assad is not going to go anywhere because the reality on the ground favors Assad today.

In fact, the opposition, Fareed, is in a bind. The political and the armed position inside Syria is in a terrible bind, pressed between a rock of high expectation.

We will not talk to Assad unless Assad steps down and the reality on the ground, the balance of power, which neither side has the means to deliver a decisive blow and also the regional and international balance of power.

Iran and Hezbollah are deeply involved in Syria's killing field, Turkey and Saudi Arabia and Qatar, and that's why it's becoming more complex.

And that's why despite the painful reality that the opposition has to sit down with the Syrian government, there is no other alternative because there is no military solution to this raging conflict inside Syria.

ZAKARIA: Sobering though. Fawaz Gerges, as always, pleasure to have you on.

Up next, What in the World. What America needs to do to ensure the next generation of growth. My answer, next.

(COMMERCIAL BREAK)

ZAKARIA: Now, for our What in the World segment. In Britain, as in much of Europe, the debate about austerity rages on. This week, the IMF actually urged the British government to delay its plans to cut spending and raise taxes and instead to borrow and spend money on infrastructure.

I think the data now is increasingly convincing that the Keynesians have been right, cutting spending in the kind of recession we have gone through will only hurt growth not help it.

Since I've been long advocating large investments in areas like infrastructure, job training and science, I'm delighted. And, yet, it's too soon to celebrate because spending on its own is not enough either.

In order to ensure sustained growth in the long-run, countries also need to engage in what economics call structural reforms; lowering tariffs, opening up protected industries, making it easier for new business to start-up, streamlining regulations.

In Japan, for example, agriculture is so inefficient because its rice farmers are protected by a nearly 800 percent tariff on imported rice.

In Greece, before the crisis began, workers in its vast state- owned industries worked 35 hours a week, were paid for 14 months a year and could retire with full pensions in their 50s.

Some of the best anti-austerity voices, including Paul Krugman in his influential blog, are now dismissing the idea that there is really need for structural reforms, that these are simply plans to hurt workers and help greedy capitalists.

But looking over the last several decades, reforms have been a crucial path to growth. Just look around the world. After the Asian economic crisis, the countries that opened up their economies grew strongly.

Chile's free market reforms in the 1980s and 1990s set the stage for its long boom. Mexico's deregulation over the last decade has been paying off.

One of the reasons that rich countries like Canada, Germany and Sweden are doing so well these days is that, in the wake of their own economic crises in the 1990s, they undertook major, market-friendly reforms and made their welfare states more sustainable.

Were all these changes in policy irrelevant to the countries' subsequent success?

In Europe, countries like Greece and Italy will not get sustained growth simply from stimulus spending and easy money. Most have rigid labor markets, high labor costs and inefficient and protected industries and guilds.

Without change, these economies might get a temporary boost, but they'll remain uncompetitive in the long-run.. Italy ranks 73rd overall on the "Doing Business" survey from the World Bank, behind many emerging markets.

These countries have to shape-up their economies to make goods and services the world wants at competitive prices.

The story of Japan's stagnation over the last two decades is complicated, but some part of Japan's failure to get sustain growth was that it never engaged in reforms of agriculture, retail and other protected industries.

Keep in mind that between 1991 and 2008, the Japanese government spent $6.3 trillion on construction alone, larger than the total size of its economy.

That's why Prime Minister Abe has been clear that to enable Japan to sustain its current revival, it must enact the changes that the country was unwilling to make in the last decade. It is true that many of the people urging austerity programs were also urging countries to engage in structural reforms. But the two are not connected. It is possible to be in favor of investment and reform.

In fact, that's what Europe and America need to ensure the next generation of growth.

For more on this, read my Washington Post column this week. you'll find a link to it on cnn.com/fareed.

Up next, is the Cold War back on? Inside the story of an alleged U.S. spy who tried to recruit a Russian intelligence officer. Right back.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: I'm Candy Crowley in Washington with the check of the headlines. President Obama is headed to Oklahoma. He will tour the tornado-damaged city of Moore and meet with residents affected by the storm. Earlier on CNN's "State of the Union," Oklahoma Governor Mary Fallin said she's pleased with the federal response so far, but is worried about running into bureaucratic red tape. The president is expected to make remarks shortly after 2:00 P.M. Eastern. CNN, of course, will bring you his comments live.

Flash floods in San Antonio, Texas, have killed two women, including one who was swept away as rescue workers nearly reached her. Heavy rain also forced the evacuation of dozens of San Antonio residents and knocked out power to about 12,000 customers. The National Weather Service says the worst of the rainfall in the area is over and river levels are expected to make a quick retreat.

One of the senators that helped craft immigration reform legislation warns that the bill is not filibuster-proof. New Jersey Democrat Senator Robert Menendez says the measure still doesn't have the 60 votes needed to put the bill on the floor. Last week the Senate Judiciary Committee approved a bipartisan immigration bill that creates a 13-year path to citizenship and tightens border security.

And those are your top stories. "Reliable Sources" is at the top of the hour. Now back to "Fareed Zakaria GPS."

ZAKARIA: With all of the spy stories in the news of late, you would be forgiven if you thought we were still in the middle of the Cold War. First was Russia's recent expulsion of a U.S. diplomat on allegations that he had tried to recruit our Russian intelligence officer. Reading like something out of fiction, the alleged effort by American Ryan Fogle involved a wig, clandestine email addresses, and large sums of cash. And a major London spy story has reared its head again. In 2006 a former KGB officer named Alexander Litvinenko was killed here by plutonium poisoning. He had upset his former bosses in Moscow, so many fingers pointed in that direction. But last week a judge presiding over the inquiry agreed to a British government request to exclude evidence relating to the possible involvement of Russian state agencies. What is going on? To talk about all of this, a former spy, Matthew Dunn who was a field operative in MI6, just like James Bond. He's now the author of "The Spy Catcher" series of novels. And Edward Lucas is by day the international editor of "The Economist", but he's also an author of "Deception: The Untold Story of East-West Espionage Today." Thanks for joining me.

MATTHEW DUNN, FORMER MI6 OPERATIVE: My pleasure.

ZAKARIA: So, Matthew, the wigs, the cash, do spies really move around like this? The whole thing seemed unbelievable.

DUNN: Yes, they do. I mean when I was deployed overseas, I used wigs. Some of the props that were found admittedly in the case of Fogle when they're laid out on his table, it can look quite amateurish and somewhat bizarre, but they are the props of the trade. And typically, they work 99.9 percent of the time.

ZAKARIA: You have also written a book on Russia, so is there something interesting about this story, about it being Russia? I mean are we just playing out the Cold War or is that particular reason this is happening in Russia?

EDWARD LUCAS, INTERNATIONAL EDITOR, THE ECONOMIST: I think the really interesting thing about this is not that America spies on Russia. It's not that the CIA has officers at the American embassy in Moscow. It's not that they try and recruit Russians. That's their job. The -- it's not even that surprising they get caught because espionage is about taking risks, and when something works, it looks brilliant. When it goes wrong, it always looks like a terrible bungle. What's really surprising about this is the fuss the Russians made about it. They didn't need to go down this public humiliation route. They named the CIA station chief in Moscow, and that's a really big breach of diplomatic protocol. They had this public humiliation on television, which looked like something out of the Cold War. I remember when Michael Sellers, the CIA guy in Moscow in 1986 was caught and he was paraded in just the same way, also with a wig as it happens. This shows to me that the temperature is dropping sharply in American-Russian relations and it's dropping shortly because Russia wants it to drop. They need this anti-Western narrative to something they feed to their own people.

ZAKARIA: Do you feel as though it is true that ordinarily when spies are found out by governments, particularly major governments, there is a kind of agreed upon set of rules about how you handle it and, you know ...

DUNN: Yes. I mean, I completely agree with Edward. Only I think that we spy, they spy, that's what we do. It seems very bizarre and clearly at a time where relations between Russia and the West in general are quite fraught at the moment with different issues, not the least concerns about Syria, et cetera, it seems quite a bizarre thing to do, to make such a public spectacle of this operation. We all know Russia operates in the United Kingdom, in the United States. We have not done similar to them. So it is an unusual situation.

ZAKARIA: So let's talk about the most interesting case of the Russians operating in the United Kingdom. It seems, that is the Litvinenko case, what do you make -- first of all, what do you make of the case?

LUCAS: Litvinenko was a former security official. He was not a spy, as some people say. He was more like a kind of -- more like an FBI agent in a way. And he annoyed the Kremlin in lots of ways. He had been involved in domestic power battles in the Kremlin, where he complained about the role of organized crime inside the Russian security service. He then defected very publicly. He was coming out with very caustic criticism of Putin. He called Putin a pedophile, for example. So there were lots of reasons the Russians didn't like him, but none of them to me quite justified this extraordinary use of polonium, a very expensive, very rare, very painful poison. In effect they used a radioactive -- radioactive weapon, a weapon of terror against a British citizen in broad daylight in the streets of London endangering lots of other people. That was an extraordinary thing. And I think we still don't quite understand what the Russian motivation was. What we do know is that the British government doesn't want to get into detail about how they know about it, and that to me suggests that they were tapping Russian phones, reading Russian diplomatic communications, bugging Russian officers. They have some information which gives them the certainty that Russia was involved and they don't want to expose the sources and methods that got them that information.

ZAKARIA: Do you think that the nature of espionage in a post- Cold War world is different? I mean I should ask you this, Matthew, in the sense of when you're trying to recruit people and during the Cold War there was sort of established idea that the, you know, the Westerners who were recruited, it was usually a mixture of ideology. It was radical left wing types, it would -- and there was always a certain amount of cash. What's going, what's the game now?

DUNN: Well, a sort of reasons you have just outlined, it's become far more complex. So, as a case officer when you're looking to recruit somebody, the term we use is motivation. You know, what potentially could make that person work for us. And, of course, an individual's motivation these days can vary enormously. It can be ideological. It can also be financial. It can be a grudge held against their employer, personal problems, a range of different issues, and trying to establish what their motivation is one of the key things one does prior to making what we call an approach to a potential recruit.

ZAKARIA: What do you think?

LUCAS: I think that money is a huge motivator. Money and ego will get through to most people. There's also the kind of vulnerabilities when people have personal misconduct, sometimes it's a drug habit or these -- other sort of worries in their private life, although blackmail tends not to work so well as a way of approaching people, because it makes them resentful. But I have written about lots of spies that the Russians have run in the West, and quite often it's something as simple as people who have been passed over for promotion, have a grudge against their employer. So the Russians are very good at recruiting spies. And they're actually better at this than we are, and although we won the Cold War we tend to think that we won it on all fronts. And I think actually we had a couple of spectacular successes during the Cold War like recruiting the head of the British department of the KGB, Oleg Gordievsky, but a lot of the time they were spying on us and they have continued to have huge victories even after the end of the Cold War, including running the top guy dealing with Russian and the FBI and a top guy dealing with Russia and the CIA. So, two huge defeats to the West. And I'm not sure we've really got to the bottom of why they're so much better at it than we are.

ZAKARIA: Matthew Dunn, Edward Lucas, thank you so much for joining us. Up next, big data or Big Brother? How information about you is changing the way the world works. Right back.

(COMMERCIAL BREAK)

ZAKARIA: More than 98 percent of the entire world's stored data is stored digitally. According to my next guest, if that data were recorded on CDs and stacked in five piles, each of those piles would reach all the way to the Moon. All of this information is floating around and now being used in extraordinary ways. It's being called big data and my guests are experts on it. Kenneth Cukier is data editor of "The Economist", and Victor Mayer-Schoenberger is a professor at Oxford's Internet Institute. Together they are authors of "Big Data: A Revolution That Will Transform How We Live, Work, and Think."

Welcome. So, what's the big story here? I mean we've always had data. Why -- why is big data a quantum leap?

KENNETH CUKIER, DATA EDITOR, THE ECONOMIST: Sure. Well, first, we have vastly more data than we ever had before. That's new. But secondly, we have more data on things that we never had rendered into a data format before. It was always informational, but not data. So you can take where you are, location, as one example. Words in books that are now digitized and also datafied is another When you think about social media platforms like Facebook, it datafies our friendships. LinkedIn datafies our professional contacts. And we can do new things with that.

ZAKARIA: You have an example about the flu, which I thought was fascinating where you talked about how Google and big data allowed you to actually figure out -- allowed people to figure out where flus were breaking.

VIKTOR MAYER-SCHONBERGER, PROFESSOR, OXFORD INTERNET INSTITUTE: Yes, indeed. Think back at the H1N1 flu crisis that we had and the Centers for Disease Control in Atlanta in the United States wanted to find out where the flu was and they asked doctors to report every flu case, but by the time they had collected all the information, calculated it, two weeks went by and that's an eternity if you have a pandemic at hand. Google at that time thought that they could do better. Just by looking at what people searched for online.

ZAKARIA: So what do the code -- words would be something like ...

MAYER-SCHONBERGER: What the search terms would be, yes, and so they took 50 million search terms and correlated it, looked for correlations with historic flu data, and discovered that if you put 45 of those terms together and look for when and where they are being searched for, you can actually predict where the flu has been and is spreading almost in real time. A two-week advance to the Centers for Disease Control.

ZAKARIA: Just so I understand it, so the idea would be that they would look and see, let's say, the words are things like cough, flu, the search terms, they could figure out if there are lots of people asking -- searching for these terms, it must mean that that area has, you know, has an outbreak of flu.

MAYER-SCHONBERGER: You're absolutely right, but going into it, Google didn't know which terms were the one that signified that the flu was in a particular region at a particular time. So they tested 50 million different words, and with big data filtered out the 45 ones that were the best predictors when combined together in a mathematical model. And that's the beauty of big data.

ZAKARIA: The thing I was struck by was you talk about how big data has completely transformed the way you know, you even think about computers, that language, artificial intelligence, was always, the ideal translation was if you are trying to translate something from English to German, the computer would be trying to mimic the language of the -- the logical structure of German, but now it's all correlation.

CUKIER: Well, that's exactly right. So, in the past we tried to teach the computer how language worked and tried to enshrine all of these things in software code is really hard whether it's a self- tracking code or language. The new approach is to simply rely on data and statistics and turn the problem into a math problem. It's probability. What is the likelihood that a word in one language is the best alternative to a word in another language? And to do that you need to pour in lots of data, lots of different translations of high quality ...

ZAKARIA: ... with every document you can find that has been translated, both in English and German and the computer just keeps looking at those and correlating.

CUKIER: That's right. So every E.U. document would go in, and Google -- and for every book scan translation from the libraries, they put that in as well. And suddenly, where in the past when we tried to do that with millions of pages of documents, it worked well but not great. Google avails itself of billions of pages of documents and now it works very well indeed.

ZAKARIA: So, when you these computers that are beating contestants at quiz shows like "Jeopardy!" or even chess, is that the approach being used?

MAYER-SCHONBERGER: Yes, indeed. Statistical approaches to solving problems are very, very promising because now we have the ability to collect, gather, store, and then process much more data than ever before. We're not talking about thousands of data points. We're talking about billions of data points, and if we do that right, there's so much value, there's so much hidden insight in those data points that we can now reap.

ZAKARIA: What is the -- the thing that's going to surprise us most about this big data revolution?

MAYER-SCHONBERGER: I think there's two sectors, health and education. Health is quite obvious because right now when we take medication, it's designed for the average human being. But we are not the average human being. You are different from me. And so it would be much better to get the exact dosage right and get the medication that works best for our metabolism, for our bodies, but that requires a lot of data and that requires a lot of analysis. We're now getting closer to what we call personalized health care. Similarly with education, we simply didn't know when pupils read textbooks, what part of the textbooks they liked most, what made most sense for them and with which parts they struggled. Now with ebooks like the Kindle or the iPad or other tablets, we can gather that data and then analyze it. So for the first time textbook authors, educators, teachers, and schools will find out what educational materials really work and what don't.

ZAKARIA: How do you know when somebody is reading a book on a Kindle what they struggle with?

MAYER-SCHONBERGER: So, the -- for example, in our book that we just did, Amazon tells us what people underline most in our book, and I would never have guessed the sentences that people underline most. So it is a unique lens into how readers understand our books and it's phenomenally helpful for the authors, but also for those who have to choose which book to use.

ZAKARIA: This is a fascinating revolution and we're just at the beginning of it. Thank you both very much.

Up next, a mote (ph) to get from London to America. I'm not talking about the Atlantic Ocean. I will explain.

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ZAKARIA: The damage left in the wake of the tornado in Oklahoma is nothing short of stunning. Now, the United States is home to some of the most violent tornadoes in the world, but by no means does it hold a monopoly on tornadoes. This map shows you they occur all over the world from the Pacific Rim in Asia to Western Europe, South Africa, and Argentina, and that brings me to my question of the week. Which nation has the most tornadoes relative to its land area? Is it, a, Britain? B, Bangladesh. C, Belgium, or D, the United States. Stay tuned and we will tell you the correct answer. Go to CNN.com/Fareed for more of the "GPS Challenge." One day you will find fresh insights from yours truly and lots of others. You can also follow us on Twitter and Facebook and all that other stuff. Also, remember, you can go to itunes.com/fareed if you miss a show or a special.

This week's book of the week is Ed Epstein's new book, "The Annals of Unsolved Crime." Epstein takes the accepted version of events from Lincoln and Kennedy's assassinations to Daniel Strauss - Kahn's sexual encounter in that New York hotel and he then undermines the accepted version with careful research and close reasoning. It's really good fun whether or not you end up convinced, but if you like conspiracy theories, read this book.

Now for the last look. Grosvenor Square's history as America's home here in London goes back to, well, ever since there's been a United States of America. John Adams was the first representative of the United States to the court of St. James, and he lived back then at this house still standing in Grosvenor Square. Flash forward to 938 when the U.S. embassy moved into 1 Grosvenor Square and then in 1960 to its current home. But soon the Americans will exit the area London cabbies have been calling Little America. 9 Elms will be the new home of the U.S. embassy. Never heard of it? It's across the Thames from central London, in an area currently chockablock with warehouses, garbage transfer stations, and a derelict old power station, and as is the trend these days, security concerns were behind the move. The new embassy, which won't be ready for four more years will be a veritable fortress complete with a moat. Yes, a literal moat. So welcome to America, don't mind the alligators.

The correct answer to our GPS challenge question was, A, Britain has more tornadoes per square mile than any other nation in the world, including the U.S., but most tornadoes here are relatively weak. And perhaps the earliest recorded tornado in history struck here in 1091. That storm is said to have made London Bridge fall down, not for the first time or the last time. Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "Reliable Sources."