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Interview With Pakistani Ambassador to U.S.; Should Obama Send Moore Troops to Afghanistan?

Aired October 11, 2009 - 13:00   ET


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

The latest news of the week, of course, was the newest Nobel laureate for peace, Barack Obama. I think of this really as an award for America more than President Obama, to the country for re-engaging with the world.

Yes, it's probably premature, but it does show us that the world is desperate for an America that is more friendly, less bullying, more engaged on the great global issues of the day. There is a sea change in the feelings about America out there.

Now, has Obama succeeded in any of his new approaches? Not yet. But did Mother Teresa end poverty? Did Mohamed ElBaradei end nuclear proliferation? Did Woodrow Wilson end war, for that matter? The prize often goes for vision more than practical accomplishments.

People have often wished that the Nobel committee gave the award to have a practical impact, not just gold medals to good guys. Well, this one is clearly meant to encourage America along the road of international cooperation and multilateralism, which is, of course, what might be causing such heartburn in some quarters in the United States.

Anyway, Obama will get a second Nobel Prize if he can sort out Afghanistan. There is a raging debate over whether to send more troops there.

Let me give you my take. And it's slightly contrarian from the start.

We are not failing in Afghanistan. In fact, in terms of America's core interest -- to prevent al Qaeda from reconstituting and launching terror attacks, we're succeeding. Al Qaeda is on the run, much of its top leadership has been destroyed, and the Pakistani government is more actively engaged in the battle now for the first time.

Security conditions have gotten worse in Afghanistan. Large parts of the country are now a no man's land. Some are under Taliban country.

But creating a stable, secure and prosperous Afghanistan is a secondary goal. It would be great if we could achieve it. But ensuring that it is not a terrorist haven is the real goal.

In this context, to massively expand the American troop presence in Afghanistan, raising foreign forces there to 150,000 troops -- more than the Soviet Union at its peak during the occupation -- strikes me as a mistake.

The key to greater stability in Afghanistan is getting Afghans to do it. They are the permanent solution.

Let's keep the focus where it should be, on al Qaeda. And when asked recently where al Qaeda was, the chairman of the Joint Chiefs of Staff, Admiral Mullen, said flatly, "in Pakistan."

So, that's where our focus should be. We are currently spending 30 times as much in Afghanistan as Pakistan. That strikes me as a mismatch.

So, what to do about Pakistan?

Well, I will speak with the Pakistani ambassador to the U.S., Husain Haqqani, and we will have that debate about more troops right here with Richard Haass and Stephen Biddle.

And finally, the dirty reputation of the diamond business. Is it justified? We will talk with the man who is literally at the top of it all.

Let's get started.


ZAKARIA: Joining me now from Washington, Husain Haqqani, the Pakistani ambassador to the United States. Welcome, ambassador.


ZAKARIA: Last week, Admiral Mullen, the chairman of the Joint Chiefs of Staff, when asked where al Qaeda was in the region, he said very flatly: It is not in Afghanistan. It is in Pakistan.

Is it your contention that the Pakistani government is going to ensure that a year, two years from now, we will no longer have the chairman of the Joint Chiefs of Staff be able to say that al Qaeda is in Pakistan?

HAQQANI: The chairman of the Joint Chiefs, for whom we have tremendous regard in Pakistan, obviously is speaking on the basis of American intelligence. We would really want that intelligence to be shared with us, so that we can also work on eliminating al Qaeda.

Look, when intelligence was being shared between Pakistan and the United States, Abu Zubaydah got arrested in Pakistan, Khalid Sheikh Mohammed got arrested in Pakistan.

Then we descended into a phase of lack of trust. The American intelligence people stopped trusting our people, and our people started complaining about American intrusiveness and not sharing intelligence adequately.

So, we are building that trust. As you and I speak, we are working very hard. But America also has to be Pakistan's partner and give Pakistan the respect we deserve as partners.

ZAKARIA: Ambassador, how do you come out on this debate that is taking place in Washington right now?

Does it matter to Pakistan whether there is a larger American troop presence in Afghanistan to, according to General McChrystal, properly implement a counterinsurgency strategy?

Would you prefer that there were fewer troops in Afghanistan, so that there were less of a sense of American dominance?

HAQQANI: All I can say is that the United States simply cannot afford -- cannot afford -- to repeat what happened in 1989, giving the message to the people of Afghanistan, and people of Pakistan, that the United States is abandoning the region.

The United States needs to have a plan in which it doesn't have to stay in Afghanistan for a very, very long time, because after all, occupation, does breed anger. But at the same time, it has to leave Afghanistan in a better condition, and more stable, than it took over.

ZAKARIA: Ambassador, Thursday's news, a bomb blast outside the Indian embassy in Kabul. I bring it up, because it raises all the complexities, if you will, of what is going on in the AfPak area, Afghanistan plus Pakistan.

Here you have some Taliban group that is obviously still powerful. It is trying to disrupt the government of Afghanistan, trying to make inroads into Afghanistan.

But they attack India, the Indian embassy. And it raises great suspicions among many people that the Taliban and terrorist elements in Afghanistan are still being aided by Pakistan and by some elements of the Pakistani government.

Why else would they target the Indian embassy? India, of course, being a longstanding adversary of Pakistan's.

HAQQANI: First of all, let me say, Fareed, that the democratically-elected Pakistani government has gone out of its way to try and mend fences with India. That's the platform Benazir Bhutto advocated before her martyrdom, and that's the platform her husband, Asif Zardari, as president, is pursuing.

We were very shaken and upset by the tragedy that happened in Mumbai last year. We also find this a tragedy.

The fact remains that there are many people in the region who are angry with Indian policies. They have in the past been sustained as a result of the blowback from the whole jihadi enterprise that started in 1979 against the Soviet Union. And at that time, if you recall, it was with U.S. and many U.S. allies' participation.

ZAKARIA: But let me ask you, since you talk about the Mumbai attacks, Husain. There is a considerable doubt among most independent analysts as to whether the Pakistani government has, in fact, gone after these terrorist groups, not the individuals who were involved in the Mumbai attack.

As you know, the attack was launched by a group called the LAT, the Lashkar-e-Taibi. Here's a "New York Times" article from just, I think, a few weeks ago.

"Militant group is intact after Mumbai's siege. Ten months after the devastating attacks in Mumbai by Pakistan-based militants, the group behind the assault remains largely intact and determined to strike India again."

And it points out that the group is flourishing with thousands of offices all over Pakistan and no attempt by the Pakistani military or state to shut it down.

HAQQANI: Let me just say that the government of Pakistan has actually taken more steps in the last 14 months to shut down all groups, all groups that have been named by the United Nations or by the United States and the international community as being responsible for terrorist attacks.

Now, "thousands of offices" is a little exaggeration, because you know the size of Pakistan for any organization. I doubt if the Pakistani Ministry of Interior has thousands of offices.

But there are groups. They have their own networks. It takes time to dismantle them.

Look. Israel has not been able to finish off all Palestinian terror cells, despite their sophistication. The United States still complains every now and then of discovering. It's a process of discovery. It's a process of finding people and going after them.

ZAKARIA: But what people are looking for, Ambassador Haqqani, is that there be a focus on those militants, those terrorists, who are trying to plan terrorist attacks outside Pakistan.

I understand the Pakistani...

HAQQANI: Absolutely.

ZAKARIA: ... government is very determined to crush those elements, those terrorists, who are trying to defeat the Pakistani government.

But where is the effort against the so-called Quetta Shura, the core of the Taliban that has been active in Afghanistan? Where is the effort against the Haqqani faction? I should point out, no relation to you, of course.

But where is the effort against those groups that are trying to destabilize Afghanistan, or India, or plan terrorist attacks in the West? That's where people want to see action.

HAQQANI: Fareed, those are all very valid questions. And let me begin by saying that I don't want to venture into areas that are essentially classified.

But let me just say very categorically -- and I don't know if you remember. Last year, just before Pakistan actually went into Swat and started dealing with what you described as the threat to Pakistan, there was a lot of debate, and I came on a lot of talk shows. And I said, we have a plan. We are going to move in that direction.

One year later, people now believe that, yes, the civilian government, whatever people might say sometimes about its level of competence, does have a plan.

ZAKARIA: How much is the civilian government of Pakistan in control? And to what extent does it have the ability to act, is one of the great questions.

And it has come up, because the United States has offered a very generous aid package to Pakistan -- billions and billions of dollars. It has linked, it has placed some conditions on it.

The conditions, as far as I can see are, basically, of two kinds -- one, to make sure the money goes to intended recipients, that is, does not get diverted from what is an attempt to build civil society and alleviate poverty in Pakistan, towards the military machine. And the second is to ensure that democratic governance is Pakistan is strengthened, particularly that civilian control of the military is retained.

The Pakistani military, in an unprecedented way, has attacked the bill. Is this not proof that the Pakistani military is not under the control of the civilian government?

HAQQANI: Look, in the United States there is debate right now about troop levels in Afghanistan. During the Iraq war, you might remember the differences between the then-chairman of Joint Chiefs and the then-secretary of defense, et cetera.

The proof of the pudding would be in the eating, so let's just wait and see how this plays out. The matter has gone to parliament.

Pakistanis are very mindful of sovereignty. We are a proud nation. And so, some of the language in the bill has offended a lot of people, because they think it's intrusive.

In the end, the military, for the first time, is very clear that sovereignty of parliament has to be ensured, and the correct place for such a debate is parliament.

Now, are there people in Pakistan who are muddying the water? Are there people who were part of General Musharraf's government and who really think that they can use this as a leverage to try and create circumstances again for civil-military confrontation? Absolutely. But I don't think there are going to be any coups in Pakistan. And I think the Pakistani military respects the political process.

And Pakistan's elected politicians -- President Zardari, Prime Minister Gilani -- and all of their appointees in government respect the Pakistani military and respect their opinions. But the decisions are going to be taken by Pakistan's parliament.

ZAKARIA: Ambassador Haqqani, always a pleasure. We'll have you back in person soon. Thank you so much.

HAQQANI: Thank you.


RICHARD HAASS: Well, there's something bizarre or even preposterous about this entire argument, then, because we have a situation where we are contemplating doing a lot more in Afghanistan, so that Pakistan is not destabilized.



ZAKARIA: There is a great debate going on in the White House right now over Afghanistan, as all of you know. I wanted to bring you the two sides of that debate, from two people who are eminently qualified to argue out the issue.

Richard Haass is the president of the Council on Foreign Relations. He has played key foreign policy roles in three presidential administrations, has authored or edited 11 books. And the most recent one is, of course, "War of Necessity, War of Choice: A Memoir of Two Iraq Wars."

Stephen Biddle is also at the Council on Foreign Relations as a senior fellow for defense policy. He's an expert on military strategy and the author of "Military Power: Explaining Victory and Defeat in Modern Battle."

Gentlemen, thank you both for joining.

ZAKARIA: Richard, so the argument is that, to provide security for the population, which is the key to a counterinsurgency strategy, you need some number, but it's clearly a lot more than we have now. And that's why we need the surge of troops -- 40,000, 50,000 extra troops.

What do you think?

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: I think the bigger question, quite honestly, is whether it's worth it. And then, you've got to ask yourself, is it worth it to the United States to make a commitment on this scale in Afghanistan?

And I don't believe that those who are advocating greater force levels have made a persuasive case. They've not shown, first, that Afghanistan real estate is essential to the effort against terror. If al Qaeda is denied Afghanistan, as they largely are right now, they simply take up residence in other countries and mount their efforts from there.

So, it's not obvious to me that this is vital to the United States as part of our counter-terror effort.

Terrorists don't need to take up sanctuary in Afghanistan in order to destabilize Pakistan. After all, they've already taken up sanctuary in Pakistan itself. That's the real issue here.

ZAKARIA: Steve Biddle, what about this point that the real heart of al Qaeda is in Pakistan, and that the Afghan surge is either irrelevant or potentially counterproductive in Pakistan? What would the effect of a surge of troops in Afghanistan have on terrorists in Pakistan?


The central problem with Pakistan is our limited ability to deal with the issue directly.

I mean, clearly, the much greater threat is on the Pakistani side of the Durand Line. If there were some way to directly mitigate that threat -- through aid, or U.S. assistance, or U.S. counterinsurgency activity in Pakistan -- that would be preferable. The politics in Pakistan make that impossible.

Given that we have limited ability to deal with the major threat directly, I think what we're left with is a situation where, in many ways, the most appropriate U.S. policy is at least don't make a difficult situation any worse than it already is.

And one of the more important ways in which the situation in Pakistan could get a good deal worse is if the environment in Afghanistan, on the other side of the Durand Line, collapsed into either chaos or into a Taliban restoration of a form that could create a cross-border threat on the Pakistani side of the line.

The main purpose, in my view, of counterinsurgency in Afghanistan is to prevent Afghanistan from becoming a contributor to a difficult problem of instability in Pakistan.

HAASS: Well, there's something bizarre or even preposterous about this entire argument, then, because we have a situation where we are contemplating doing a lot more in Afghanistan, so that Pakistan is not destabilized. Yet, it's either the inability or the unwillingness of the Pakistani government to crack down on groups like al Qaeda and the Taliban in Pakistan itself.

That's a big part of the problem. So, there's a disconnect in the argument for the strategy.

Can I add one other thing, Fareed? I also think it's important -- we've got to broaden this beyond simply military tools.

Why do we assume that, even if the Taliban were to come back into Afghanistan, that the Taliban of 2009 and '10 would necessarily be exactly what they were a decade ago? Maybe they would think twice this time before allowing al Qaeda to take up shop. Or maybe this time, we could use dollars and other incentives in order to get at least some of the Taliban to act differently.

BIDDLE: I wouldn't say that there's a disconnect between our concern in Afghanistan and our concern in Pakistan. They're very closely related, but they're indirect. And that's not so unusual in U.S. foreign policy.

The threat to U.S. vital national interests in an unstable Pakistan is at least as great as that in Southeastern Europe in an earlier day. I think the notion that we care about areas because they could destabilize their neighbors is not an unreasonable one.

It's clearly indirect. There's no question about it. And that's one of the several reasons why I think, at the end of the day, the case for waging war in Afghanistan is a close call on the merits.

Our interests are important and non-zero, but they're indirect. And they're not unlimited.

If they were direct, existential, clear and unlimited, I think this would be a slam-dunk, and it would be an obvious requirement that we do whatever it takes to succeed in Afghanistan. I actually think there's a closer call on the merits, because our interests, while important, are indeed indirect.

But I think, clearly, the more consequential of the two U.S. interests that have been articulated in Afghanistan has to do with its effect on its neighbor.

ZAKARIA: Richard Haass, your last book was called "War of Necessity, War of Choice." And there's a funny or amusing undercurrent here, which is, President Obama called Afghanistan a war of necessity -- picking up on your phrase. However, you don't make that argument.

People sometimes forget the argument you were making was that the war against Saddam Hussein, after he invaded Kuwait in 1991, was the war of necessity. The war of choice was the second Iraq war, which you were dissenting about.

Where do you come down on that fundamental issue? Is Afghanistan a war of necessity or a war of choice in the Richard Haass lexicon?

HAASS: Fareed, it's clearly a war of choice. The interests at stake are less than vital in Afghanistan, and I think there's something of a consensus here. It's not central to the global struggle against terrorism. Where we may disagree is on how central it is to Pakistan.

But you put your finger on it exactly. Getting involved in Afghanistan because of Pakistan is, at best, second-best. It's an indirect strategy. It would make much more sense to be more involved in Pakistan directly.

Second of all, as this conversation makes clear, we have alternatives. We have options. What makes a war of choice, at the end of the day, a war of choice is the fact that you have options other than emphasizing going to war or, in this case, increasing the size of U.S. combat forces.

This is a classic war of choice.

And I'd simply point out that after President Obama used the phrase "war of necessity" about a month ago, unless I am mistaken, I've not heard him use it again. And I think that's consistent with the fact that the administration is rethinking its policy. Because if this were a war of necessity, there'd be no argument about what General McChrystal wants, and we'd put in 40,000 troops now. And we'd put in another 40,000, if that's what it took.

We are clearly not going to do this. And I would say that's an implicit recognition that Afghanistan, whatever it is, is a war of choice, is not a war of necessity, and the United States has real foreign policy options.

ZAKARIA: So in that event, the question I guess that arises is, should we be there even in the size we are, 100,000 troops, a very large presence by any standards?

And we will discuss that with our two distinguished guests right after this.


HAASS: The idea that, for a decade or two decades, the preponderance of what we do in the world would be about two countries called Iraq and Afghanistan, that is stunning in a world of China, Russia.



ZAKARIA: And we are back with Richard Haass and Stephen Biddle, both of the Council on Foreign Relations -- one the president, another a senior fellow.

Richard, what about the Iraq surge? Doesn't the surge in Iraq suggest that Stephen is right, that, you know, if you put more troops in, you change the nature of the environment? People who were nervous about being there start supporting you, you're providing benefits to the local population, you get better intelligence, et cetera, et cetera.

HAASS: One of the reasons I don't like the shorthand word "surge" is, the centerpiece of what turned things around to some extent in Iraq was never the absolute number of U.S. forces. It was what they did. And even more, it was their partnering with the Sunni tribes.

I think that has real consequences for Afghanistan. It suggests that what we need is not so much more U.S. troops, which inevitably will provoke a nationalist reaction, as Steve just suggested.

What we really want to do is get the Afghans to bear a larger part of the burden. And that means accelerating the building up of the central police and army forces and, even more, accelerating the building up of regional forces, so-called warlords, or what have you. There are some pilot projects along those lines. I would really make that work.

And there's one other reason, Fareed, the United States does not want to pour more forces into Iraq, besides the human one. We've got an entire foreign policy chessboard to think about.

My hunch is, we're going to have to keep tens of thousands of forces in Iraq much longer than people now expect. We want to keep some forces in reserve to deal with the Iranian scenario.

We have to think about North Korea. We've also got to allow our military to rest.

I simply don't believe, given the actual and potential challenges that are going to come the way of the United States militarily over the next couple of years, that we have the luxury of allowing such a high percentage of our forces to be in Afghanistan. Again, the interests simply don't warrant it.

ZAKARIA: Steve, what about the point Richard Haass is making? A lot of what made the surge work was the so-called Sunni awakening -- the switching of sides of tribal chiefs across the Anbar Province and beyond -- and that a lot of that was gotten because of, you know, bribing them, buying them, renting them, as people said, some of which surely was gotten by the change in the military dynamic.

Why isn't that happening in Afghanistan?

BIDDLE: What brought the violence down in Iraq was a series of, in fact, very decentralized, negotiated deals between former militias and insurgents and most of the U.S. military.

I think the likely endgame in Afghanistan, if it comes out in a way that looks relatively successful for us, is some sort of collection of negotiated deals. But the trouble is, right now, the conditions are not -- to use a term that Richard Haass coined -- particularly ripe for that negotiation process.

Right now, the Quetta Shura Taliban, and the various factions that they're aligned with on the other side of the conflict in Afghanistan, mostly believe that they're on the brink of victory outright in the war in the relatively near term, in the next couple of years.

In a situation where they think they're about to win, they are apparently unwilling to make concessions. They're not willing to settle for half a loaf when they think they can get the whole bakery pretty soon, if they simply hold out and don't do a deal.

The going-in demand of the other side has been that they'll start talking once all foreign forces are removed from Afghanistan. That's the kind of position you take only if you don't think that this negotiation is going to proceed. It's an obvious deal breaker.

ZAKARIA: What about that, Richard? You can't get a negotiated settlement right now, because the other side, the bad guys, think they're going to win.

HAASS: Well, they may, in fact, think that. That's one of the reasons that we need to accelerate our training-up of the Afghans, both in Kabul and beyond.

Let me just make it clear, Fareed. I'm not sitting here arguing the United States should abandon Afghanistan. And to the best of my knowledge, no one in the room with President Obama is advocating that, either.

The real choice is whether we increase the American investment or essentially keep it roughly the same size or slightly lower, and more importantly, change the mix of it. And that's what I'm advocating, that we change the mix, we change the orientation, put less of an emphasis on increasing U.S. force levels in Afghanistan, but increase our training, increase our working with the warlords, do more in Pakistan itself, and use other means to try to persuade the Taliban to gradually stop opposing us.

I don't think you'll get a quick turnaround. I think you can get a gradual improvement in the situation that way. And it's an improvement that's commensurate with our interests, which again, are not vital.

It doesn't make sense, when you're designing a national strategy for the United States, to invest more in the way of money or lives or our military might in one area where the stakes essentially don't warrant it. We have to be careful not to distort our foreign policy. And too great of an investment in Afghanistan, I fear, at this time, coming on the heels of Iraq, which itself was a distortion, would simply compound it.

The United States has vast interests around the world. And the idea that, for a decade or two decades, the preponderance of what we do in the world would be about two countries called Iraq and Afghanistan, that is stunning in a world of China, Russia, what's going on in Asia, Latin America and Africa.

It would be hard to design a foreign policy that was more distorted, more of a mismatch between our interests and our capacities.

ZAKARIA: Steve Biddle, finally, what about that? It's entirely appropriate for General McChrystal to ask for more troops. If I were there, I would, of course, say I'd love to have more troops, more money, more of everything, but that the president has to look at the global chess board, and that this just doesn't warrant it when you take that broader view.

BIDDLE: In an ideal world, we wouldn't have made mistakes like the invasion of Iraq that have put us in the position that we're in in Afghanistan now, where we're deeply engaged. And the U.S. interest is now embedded there in ways that it wouldn't have been, I suspect, if we had invested properly, and funded and resourced properly, the situation in Afghanistan while we were deeply involved in Iraq.

Nonetheless, we are where we are.

One of the more consequential effects for the broader chessboard of U.S. national interests, however, is if, in fact, the situation in Afghanistan declines dramatically and is substantially viewed as a failure within the U.S. military, the moral effects on the military instrument that we would seek to use elsewhere -- whether in great power competition, or elsewhere in the Middle East -- would be potentially quite serious. It took quite a long time for the U.S. military to recover from perceived defeat in Vietnam.

The U.S. military now, for better or worse, believes that it is decisively engaged in Afghanistan.

ZAKARIA: And we have to end on this note. I want to thank both of you.

And I want to say, it is a sign of a very healthy and well- managed organization that we can have the president of a think tank and one of his senior fellows publicly disagree on substance.

Steve, I've cleared it with Richard Haass. This will not affect your end-of-year bonus.


Thank you both for joining us.

BIDDLE: Thank you, Fareed.

HAASS: Thanks for having me.

ZAKARIA: And we will be back.


ZAKARIA: Now for our "What in the World" segment. Here's what got my attention this week.

It was a vote in Ireland that brings the world closer to having a powerful president of Europe, somebody who could throw around the weight of combined Europe, negotiate on level with the likes of President Obama and President Hu of China, somebody who could be part of the so-called G-3 -- America, China and Europe.

Many people don't realize it, but collectively, Europe is the world's largest economy, its GDP surpassing that of the U.S. Together, it has the second-largest standing army in the world -- larger than the United States, losing the top spot only by a bit to China's.

So, it should be a major world player. But until now, the 27 nations of the European Union have had nobody to press their collective case.

But this vote in Ireland could change all that. It fell the final stumbling block to the reorganization of the European Union, and with it, led the way to a permanent presidency.

It's nothing for the U.S. to be worried about. Europe isn't going to usurp America's power. And besides, the two sides of the Atlantic actually tend to see eye-to-eye on most issues.

But the idea of a real president of Europe has many people within the E.U. worried. And they've been worried for quite a while, particularly conservatives in the U.K., who think it will become a powerful office that will usurp the role of national governments.

So, listen to what William Hague -- a Tory, who may be the finest parliamentarian of his generation -- had to say on the subject last year.

Let me, as they say in Hollywood, set up the clip. Hague is making an important substantive point. But throughout, he refers jokingly to the rivalry between the current prime minister, Gordon Brown, and his predecessor, Tony Blair.

Among other reported grievances, Brown always felt that Blair should have handed over 10 Downing Street to him much sooner than he did.


WILLIAM HAGUE, BRITISH SHADOW FOREIGN MINISTER: We are all conscious in this Parliament -- or we should be -- of how the job of first lord of the treasury evolved in Britain, steadily developing a grip over other cabinet departments previously independent of it, and developing into the post of prime minister.

The creation of that job took many years. And the prime minister probably feels that it took almost as long to great round to his turn to hold it.


But to see how the post -- to see how the post of a permanent president of the European Council could also evolve is not difficult, even for the humblest students of politics.

And it is, of course, rumored that one Tony Blair may now be interested in the job. And we can all picture the scene at the European Council sometime next year. Picture the face of our poor prime minister as the name of Blair is placed in nomination by one president and prime minister after another.

There is, of course, a serious point here... (LAUGHTER)

... (UNINTELLIGIBLE) occupied by someone with the political skill of our former prime minister. This job would become, in not so many years, a far more substantial one than the government now pretend -- seen as the president of Europe by the rest of the world, with the role of national governments steadily reduced and the role of national democracy and accountability steadily weakened.


ZAKARIA: Public speakers and parliamentarians around the world should take lessons from Mr. Hague, who, if the Tories win in the upcoming election, is in line to be the next foreign minister.

But the larger point, because of fears like Mr. Hague's, the presidency could remain just a figurehead position. In any event, his specific prediction might well prove correct. Reports are that the frontrunner for the presidency right now is one Tony Blair.

And we will be right back.


ZAKARIA: Now, some people still say, though, that you operate as a cartel in the sense that, when there are surplus diamonds out there, you swoop in and buy them.



ZAKARIA: He and his family are 98th on Forbes' list of the world's billionaires. His family business had almost $6 billion in sales last year. That family business owns the phrase, "a diamond is forever," which Advertising Age called the best slogan of the entire 20th century.

That family business, if you haven't already figured it out, is De Beers.

The chances are good that De Beers had a role in putting that diamond on your wife or your sister or your mother's ring finger. The company still produces and sells close to one-half of the world's supply of rough diamonds.

In 1945, the United States Department of Justice filed an antitrust suit against De Beers. Almost 60 years later, in 2004, the company pled guilty to price-fixing, paid a fine and paved the way for De Beers and its officers to re-enter the United States.

So, here, on U.S. soil, to talk about all of this, Nicky Oppenheimer. Thank you for being here.

NICKY OPPENHEIMER, CHAIRMAN, DE BEERS: No, it's a great pleasure. And really nice to be in America, because as you rightly say, the executives for De Beers weren't able to come to America for a very long time. And we certainly missed out. So, it's really nice to be able to be here.

ZAKARIA: Did you feel that the suit was unjust, was improperly handled?

OPPENHEIMER: No. But it was -- as you say, it started a very, very long time ago. And that's a time when De Beers certainly produced and marketed the substantial portion of diamonds produced in the world. That's changed over time. And the world has changed, and De Beers has changed.

So, it's right and appropriate that we should have put this behind us and now be able to come here, because America, the United States is half the diamond retail market. So, it's absolutely vital we're able to come and visit here and be here, and to be judged by people here.

ZAKARIA: Now, some people still say, though, that you operate as a cartel in the sense that, when there are surplus diamonds out there, you swoop in and buy them. There are stories about whether it's Israel or Russia.

Talk about that.

OPPENHEIMER: Well, it's a nice thought. And maybe life would be easier if it were true, but it's certainly not.

What one is seeing at the moment is that everything shows that the demand for diamonds is probably outstripping supply. And so, as a diamond producer, we want to produce as many diamonds as possible. There's no question of putting them in a safe anywhere.

ZAKARIA: One of the things that people say, though, about these things you dig up out of the earth is that they screw up the economies of the countries that you get them out of. If you look at countries around the world that have oil or other kinds of natural resources, very often the economies get perverted, the politics gets perverted.

Harvard historian, Niall Ferguson, calls this the "resource curse," as have many others.

You operate in all these countries. Do you feel that there is a link between these natural resources and bad governance?

OPPENHEIMER: No, actually, I don't. And I'm a great -- I don't like the word, "the resource curse," because it sort of implies that the countries would have been better off without natural resources, and that must be patently untrue.

Whether they've been used properly by the people involved, by man, is quite another story.

ZAKARIA: But a lot of people don't know the background of what goes on with diamonds. So, you see a movie like "Blood Diamond." And let's say it's, you know, somewhat dramatized and such. But there has been a connection with a lot of violence, civil wars, predatory practices by states, because there was this easy route to money for the governments, for the militias, for the gangs involved.

OPPENHEIMER: Actually, I went and saw the movie. I rather liked it. I thought it was a good adventure story.

And there certainly were diamonds -- particularly in somewhere like Sierra Leone and Angola, too -- which were used to partially fund civil war. But they were always a very small portion of the diamonds produced in the world -- at their greatest moment, 4 percent, maybe, 5 percent at the very most.

And what was, I thought, really good was the reaction of the diamond industry to this threat to people's emotional attachment to the diamond. And the outcome was the Kimberley Process, a process of getting certificates to travel with rough diamonds. And that means that, when you buy a diamond in the retail, on the High Street, you can be certain that that diamond hasn't funded conflict.

And diamonds have done good. I mean, there are -- as you say, Sierra Leone and Angola -- bad examples.

Botswana, an unbelievable example of what diamonds have done for a country. There was a country which, when I was young, its only export was people, who came to work in South Africa. Then diamonds were discovered.

Now there are roads, universities. The country is developing and growing. There's a burgeoning middle class. And that's been built on diamonds by people who use their natural resource properly.

ZAKARIA: But that's a fascinating example, partly because it is unusual. It's somewhat exceptional. And you'd done a lot of business with Botswana.

What is it about Botswana that made its leadership -- and it's now had four presidents, I think, in a row, were honest, you know, interested in development. Is it a fluke? Is there something that one can learn as a lesson for the rest of Africa?

OPPENHEIMER: I think it is a lesson for the rest of Africa.

I once sat at a conference with President Mogae from Botswana, and somebody asked him exactly the question. Why is Botswana honest? Why is there little corruption there?

And he said, you know, when the country became independent in the '60s, it was extraordinarily poor, so there was no point in being corrupt, because there was nothing to steal. And then they got in the habit of being honest. And then they found diamonds, and the habit remains.

Elsewhere, I think you are seeing tremendous progress in Africa. Botswana is not the only example of African countries which are growing, and which are becoming more transparent and more democratic.

ZAKARIA: De Beers is a vast company. It operates all over the world.

What has it been like operating in all these different countries, different economic and political levels? You've had to deal with Russia, China.

Where do you see -- are you as excited about Asia as many people are?

OPPENHEIMER: Yes, absolutely. China and India are the very exciting places. And what's encouraging for us in the diamond business is that people really want to own diamonds.

China and India, I think, will be tremendously important in the future -- from De Beers' point of view at the moment, still offer a fairly small base.

ZAKARIA: And as the world turns, and as these countries like India and China have new middle classes and upper middle classes, you expect that you will be able to sell them the dream of a diamond is forever all over again?

OPPENHEIMER: I think that they show a tremendous desire to own a diamond. And we say it's a dream. But it obviously does something deeply important to people's psyche, as you rightly say. Maybe it makes no difference in a material sense, but in emotional wellbeing, when you give your wife, your girlfriend or friend a gift of a diamond, their reaction is extraordinary. And that's a special business.

ZAKARIA: Nicky Oppenheimer, thank you very much.


ZAKARIA: And we will be right back.


ZAKARIA: Now, to the "Question of the Week."

Last Sunday, my guest was Justice Richard Goldstone, the chair of that controversial report on war crimes by Israel and Hamas. And I asked you whether you thought the Goldstone Report was fair and impartial.

By more than a two-to-one ratio, you thought it was. But there certainly were dissenters. Some said the report was too easy on Israel, while others thought it was too tough.

Judy Morrell from Buffalo Grove, Illinois, said, "The Goldstone Report was just another form of Israel-bashing, the sport of choice at the United Nations."

Interestingly, more than 2,000 of you clicked on the link we gave you to read the Goldstone Report. It's a long report. We'll never know how many of you read all 574 pages of the report, and we are not going to have a quiz on it.

Now, for this week's question.

The White House situation room has been busy this week, filled with meetings about what to do about Afghanistan.

If you were in there advising President Obama, what would you tell him to do? Stay the course, increase troops, as General McChrystal wants, or begin a pull-out process?

Let me know what you think, and why.

As always, I'd like to recommend a book. We spend a lot of time on this program worried about the world economic crisis. The name Keynes gets tossed around a lot in these discussions -- John Maynard Keynes, the father of macroeconomics, and, more importantly right now, the father of the stimulus.

Greg Mankiw, once the chief economic advisor in the George Bush administration, says that, if there is one economist whose ideas you want to understand in this crisis, it is John Maynard Keynes.

And a new book by Robert Skidelsky, Keynes' great biographer, will bring this all to life. It is called, "Keynes: Return of the Master."

Even if economics scares you, this is a very interesting, very important to read, beautifully written, really worth getting. If any of you are involved in business, you really want this book.

Also, don't forget, you can follow all things GPS on both Facebook and Twitter. Go to our Web site,, to find out how.

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