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Obama's Afghan Plan

Aired July 25, 2010 - 10:00   ET



Welcome to all of you in the United States and around the world.

I'm Fareed Zakaria.

These days the White House seems battered and surprisingly inept in its handling of political problems. It's been acting, reacting, and overreacting every time it is under momentary attack from the left or the right, from some Web site, from some cable channel. And then on top of all this come new questions about the president's biggest foreign policy problem, the war in Afghanistan. There's greater and greater unease about the present course we are on in that country, with some prominent Republicans now beginning to dissent.

As viewers of this program know, I have long felt that we are spending too much time, effort, resources, and energy on Afghanistan given the realities out there. I pointed out a couple of weeks ago that CIA Director Leon Panetta says that there are only between 60 and 100 al Qaeda left in Afghanistan.

Now, 60 or 100 al Qaeda members surely does not require a 150,000-troop presence in a country at a cost of $200 billion a year. But it's also true that we cannot simply walk away from Afghanistan overnight.

This is a vast mission involving over 50 countries. You don't switch the thing off like a television set. And in truth, the Obama administration has set a reasonable course. It's given the military some time to beat back the insurgency, to train the Afghan army and police, and then, starting in July 2011, one year from now, to begin the process of getting out.

Does anyone think we could responsibly move faster? And what would be gained by a rapid abandonment of the country starting tomorrow? Why not stick to the course we have set, let General Petraeus have a year to stabilize the situation, but make sure that at that point, July 2011, we start the drawdown?

The United States needs to face up to the realities of the situation in Afghanistan. The Taliban cannot be completely vanquished in that country. Why? Because it represents some element of the Pashtun community there.

The Taliban is not going away. The Pashtuns are 50 percent of the country, and some element of the Pashtun community feels represented by the Taliban.

So we've got to make political deals with some elements of the Taliban, probably accommodating them in southern Afghanistan, where they would become part of the new governing coalition in local areas. This is what happened in Iraq, where large groups of Sunni tribes moved from fighting the Baghdad government to being allied with it.

If the United Sates cannot make such deals in Afghanistan, all the troops and all the time will not help. That's the real problem with the president's strategy, not whether the troops draw down now or a year from now.

On the show today we will put all these questions about Afghanistan to the president's high representative to the region, Richard Holbrooke. We also have a super panel on Afghanistan with Richard Haass, who wrote Newsweek's cover story advocating a withdrawal.

We also have a debate on stimulus versus spending with Niall Ferguson and Lord Robert Skidelsky.

And then, new oil spills. Shocking ones, actually.

All on GPS.

Let's get started.

And joining me now from London, Richard Holbrooke, the United States' special representative for Afghanistan and Pakistan.

Richard, thanks for doing this.


ZAKARIA: First, let's talk about Pakistan.

I know you've been everywhere in the region in the last week, but many people believe the central question is, is Pakistan finally cooperating? The CIA director, Leon Panetta's own estimate, is there are three times as many al Qaeda members in Pakistan as there are in Afghanistan, the Afghan Taliban is headquartered in Pakistan.

What can you tell us from having been there about the Pakistani attitude toward the Taliban? Is it changing?

HOLBROOKE: You can't just go after the Pakistanis to do this and do that in the tribal areas. You have to have an entire approach to the country.

This has been lacking for over a decade, as you and I have discussed before. We are approaching the country differently, and we're beginning to see real signs of movement. But nonetheless, we still have problems.

ZAKARIA: But when we look for tangible progress, you know, there are a lot of people who say, actually, what is also happening is the Pakistanis are waiting for the United States to start drawing down, they are building up their relationship with the Taliban, and they're going to -- they're already meeting with Karzai to tell him, look, let's cut a deal once -- in a post-American/Afghan (ph) region, you're going to need us, the Pakistani military, and here are the terms, here's what we want from you.

HOLBROOKE: In fact, General Kayani and President Karzai, as you just said, have begun to have a dialogue. That is a good thing, not a bad thing. As long as they had no dialogue, you couldn't get anywhere. The previous administration in Washington made no successful efforts at this.

Now, in the Kayani-Karzai meeting that you referred to, the American commanding general of ISAF, NATO was there, then General McChrystal. I'm sure General Petraeus will continue to play the same role, if not more so. And I've talked to David about that.

We have a policy here which is to try to reduce the gap between Islamabad and Kabul, a historic gap which goes back to the independence of Pakistan 63 years ago, and to make them work together for a common objective while taking into account the strategic interests of India and other regional neighbors. And that is moving forward. It's a tough, difficult policy, but it is the only one that meets our regional and international, national security interests.

ZAKARIA: Let's talk about the military effort on the ground. There are many reports that suggest that the operation in Marjah was not successful. Another way of putting it would be it was a failure.

What can you tell us about the degree to which the counterinsurgency strategy that General Petraeus and General McChrystal had put in place is working? There are very few signs that suggest that it's working.

HOLBROOKE: What's happening in Marjah is that the U.S. military and NATO went into one of the most difficult areas of the country, one of the bellies of the insurgency, displaced the Taliban, and settled in. The people are pleased with this.

This was an area called "Little America" in the Kennedy and Johnson era. They remember the Americans. We came in with agricultural support and seeds, and we broke up big drug bazaars. So a tremendous amount of gain occurred immediately.

I met with the tribal leaders in the Shura, and they said thank you for coming. But they also said three important things -- we risked our lives to come here today, we must have agricultural assistance, and we must have security. It is not accurate to say Marjah's a failure, and it's premature to say Marjah's a success.

ZAKARIA: That still doesn't answer the question of, are we postponing these offensives because the Taliban have proven to be stronger than we thought?

HOLBROOKE: Well, Marjah was not postponed. It's simply that the transfer of security authority from the Marines to the Afghans is going slower than some of the more optimistic projections at the outset.

This doesn't surprise me. As a general rule in Afghanistan, things go slower than are expected.

ZAKARIA: Tell me about talking to the Taliban. You came to great worldwide fame when you negotiated with Slobodan Milosevic in the Balkans. This was, you know, a war criminal, and yet you found a way to talk to him to create political stability in the region.

Many people believe, myself included, that we need to start actively trying to negotiate with those elements of the Taliban that could be wooed away from the more extreme al Qaeda-associated factions.

Is that effort possible? Is it under way? How should we think about this problem?

HOLBROOKE: Well, first, Fareed, an important historical distinction. Milosevic -- two important ones.

Milosevic was not a war criminal at the time he came to Dayton and we negotiated. The indicted war criminals at that time, Radovan Karadzic and Radko Mladic, were not allowed in the United States. Milosevic was the head of his government.

ZAKARIA: They were bad guys. You talked to them. All I'm saying is, can we talk to these bad guys?

HOLBROOKE: Yes. But, Fareed, there's a huge difference between the head of an established government and some crazed terrorists who are hiding in the tribal areas of Afghanistan.

Among the Taliban leadership, there are some people who are reconcilable, and some are not. The United States has had no direct contact with any of the Taliban leadership, but we read constantly, we hear constantly of other groups in touch. We support a policy in which the Afghan government of President Karzai takes the lead.

ZAKARIA: Why shouldn't we do some of it ourselves? I mean, they're trying to kill us. Why are we waiting for Karzai to go ahead with this? Why can't you start it?

HOLBROOKE: Why the Afghans instead of us? Because they have to reach political arrangements. And that is up to them.

Richard, I want to read you something from a magazine article. This is not the "Rolling Stone" article. This is an article from "The New Yorker" by George Packer, a journalist you know well who profiled you, I would say, rather glowingly.


HOLBROOKE: Not glowingly enough. ZAKARIA: He quotes you as saying not in regard -- I should be clear -- not with regard to this administration and its policy on Afghanistan, but he quotes you in another context as saying, "People in an administration sit in a room. They don't air their real differences. A false and sloppy consensus paper over those underlying differences is written, and then they go back to their offices and continue to work at cross purposes, even actively undermining each other."

That's the end of Holbrooke. Then, says George Packer, "This is becoming a picture of U.S. policymaking in Afghanistan."

Your comment?

HOLBROOKE: Very clever, Fareed.

Well, look, that quote is accurate. It is based on my experience starting as a young diplomat, 25 years old in the Lyndon Johnson White House. It does not apply to this administration.

I worked in several administrations which were pretty chaotic and observed others because there were serious, substantive disagreements over Vietnam in the Johnson administration, over policy towards the Soviet Union in the Carter administration. And we all saw the extraordinary public displays in the previous administration between the vice president and the secretary of defense and the secretary of state.

None of that exists in this administration. The relationships are extraordinarily good at the highest levels. However, there are individuals who have their own agendas and so on. But those games are, mercifully, not present in this administration.

ZAKARIA: One more quote from that article. It says, "Richard Holbrooke has lost Karzai's confidence a while ago, and is not clear that he still has Obama's."

The president returns your calls?

HOLBROOKE: And your question, sir?

ZAKARIA: The president returns your calls, Mr. Ambassador?

HOLBROOKE: The president returns my calls? I don't believe in my whole life I've actually placed a call to a president. But the president and I -- I participate in his whole policy review. I was privileged to be part of the last one. I look forward to the next one.

He has sought me out individually for my private views. My direct line of command is to the secretary of state, and Hillary and I speak with each other almost every day. And she and I work closely together with the White House. So I don't know what that's about.

ZAKARIA: Richard Holbrooke, thank you very much for joining us.

HOLBROOKE: It's my pleasure, Fareed. It's good to be with you.

ZAKARIA: And we will be right back.


UNIDENTIFIED MALE: Nation-building and counterinsurgency are manifestly not succeeding. And how long do we go before we admit that? How much life do we just plow into it before we tell someone you're the last man who's going to die for this mistake?



ZAKARIA: Now I want to continue the discussion of Afghanistan with three people who have a deep understanding of American efforts in the region, yet have come away with somewhat contrasting or different views on what America should be doing there.


Joining me now, Richard Haass, the president of the Council on Foreign Relations, a frequent guest on this program, and whose cover story in "Newsweek" magazine this week is causing a lot of talk in policy circles; George Packer of "The New Yorker" magazine, who recently wrote about the fallout from the McChrystal affair; and Bret Stephens of "The Wall Street Journal," another frequent GPS guest who writes about this stuff all the time.


Richard, why did you decide to write the cover story you wrote, which was basically an argument for a fairly radical drawdown pretty soon?

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: Well, the short answer is I don't think our current policy is worth it. I don't think the stakes justify anything like the investment in dollars and lives and time we are making. I also don't believe we're on a trajectory that can succeed.

What we're trying to do in Afghanistan goes against the grain of Afghanistan, to build up a large, effective state apparatus. I simply think it is not going to work.

Also, timing-wise, this administration is now exactly one year away from when it said it would begin to withdraw American troops. They're several months away from the third major Afghan policy review of Barack Obama's presidency. So it's my hope, always risky as an outsider, to essentially throw a rock in the policy pond and hope that some of the ripples would have an effect on the debate.

ZAKARIA: But if you read the article carefully, as of course all of us have done --

HAASS: Of course. ZAKARIA: -- you're not arguing that we should leave tomorrow. You're not arguing for a kind of immediate abandonment.

So then I look at it and say, well, wait a minute, the president has actually articulated a policy that says in a year we will begin the process of drawing down. It seems to me a fairly -- if you hold the views you do, and you want to do this in a responsible way, you know, why is the president's course not the right one as long as he does adhere to the July 11th date?

HAASS: There's drawdowns and there's drawdowns. And Vice President Biden, a week ago, said maybe it will just be a couple of thousand. And that, to me, would meet the letter of the president's commitment, but not the spirit.

I would like to see significant drawdowns. I think we should have under 50,000 American troops, less than half the troops we now have. I also believe we should not be on regular combat missions against the Taliban unless the Taliban are specifically associating themselves with al Qaeda.

Plus, I want to introduce two other things. I want the United States to begin direct talks with the Taliban to see if we can't work out some sort of a modus operandi. And I want the United States to stop putting so much of what it does through the central government.

I do not believe -- in this case, I agree with the ambassador. I do not believe Mr. Karzai's government is an effective partner. Instead, we ought to be working much more directly with locals around the periphery of Afghanistan.

Again, that's consistent with the nature of the country. State- building in a country like Afghanistan I think is a fool's errand.

ZAKARIA: Bret, you regard this all as defeatism, appeasement, we're cutting and running.

BRET STEPHENS, "WALL STREET JOURNAL": No, not at all. I actually thought that a lot of the analysis in the article -- which I did read carefully -- was very sharp, very perceptive. But I have a memory that around 2006, people were saying about a certain prime minister in Iraq, that he was utterly incompetent, that we were pursuing a fool's errand in the country, that there was hope for it to come together in any meaningful way, that the insurgency was far too powerful, and we saw what happened in Iraq.

So we're now at -- still at the early stages of a counterinsurgency program there. We have a new general who had considerable success the last time around. And I think that it's a little too early to start pushing panic buttons.

The lesson of our involvement and then disengagement from Afghanistan in the 1980s was not a particularly happy one. And I'm not saying we're living -- we're replaying that decade exactly, but there has been a price for a policy of the United States in this area which is one of sudden involvement and then sudden disengagement. And that's what -- I think that's the scenario that I fear the most, that we're going to be replaying precisely, or close to what we did in the early 1990s.

We won -- we beat the Soviets with the Mujahideen. We withdrew precipitously. And then we were left to suffer consequences a decade later.

ZAKARIA: George, you've talked a lot about this issue of realism versus idealism in foreign policy, narrowly defined interests. And it does strike me that if you think about it, the last 10 years, we've spent a lot of time and a lot of money in places that by narrow definitions of national security, it would be very tough to imagine, in both Iraq and Afghanistan. A lot of it has to do with the hope of transforming the region, the hope of these places being symbols, the fear of credibility. You know, these are all intangibles when you come down to it.

GEORGE PACKER, "THE NEW YORKER": I would add that there have been fairly strong security concerns that have driven the policy in Afghanistan. And I think Richard's plan may well be the best of truly bad options. And I think he's right, that nation-building and counterinsurgency are manifestly not succeeding.

And how long do we go before we admit that? How much life do we just plow into it before we tell someone you're the last man who's going to die for this mistake?

But I think it may be an illusion to think that we can, as Richard says, manage the situation any better with 25,000 or 30,000 than we can with 100,000. And in fact, what he's asking -- what he would really be asking of Obama is something -- it's almost impossible for a president to do, which is to tell the country we have to live with a heightened risk by moving our troops out of Afghanistan. We are heightening the risk because we really don't know whether --

ZAKARIA: We lose control over that area.

PACKER: We lose control. We don't know what the Taliban will do as they begin to push into non-Taliban parts of the country, as they surely would. We don't know what the consequences of the civil war would be for the region. And we don't know, above all, whether al Qaeda and the Taliban networks with which in the mountains of Pakistan, at least, they are deeply intertwined, whether they would then have again a pretty large safe haven.

We don't know. And the president would have to say these are risks that we have to take because the alternative isn't working. It's very hard to imagine a president telling the public that.

HAASS: We're not going to know for sure the answer to those questions two, three, four, five years from now, so long as the Taliban enjoy a sanctuary in Pakistan, so long as the Taliban continue to be the Taliban. The challenge of making enduring improvements in Afghanistan I actually think is a bridge too far.

And again, I'm not talking about withdrawal. Essentially, we would be doing things in Afghanistan not that different than the way we're fighting a counterterrorism struggle in Yemen, Somalia, and who knows what other places -- or even Pakistan.

PACKER: But you said in your article there's only 60 or 100 al Qaeda in Afghanistan, therefore it's once again proof that we have way -- we've gotten the proportion all wrong. Isn't that partly because we're there, and once combat troops are off that border and are out of eastern and southern Afghanistan, the chances of them moving in are pretty good?

STEPHENS: I think you have to think very carefully about the scenarios that play out in the event of an American withdrawal either to a kind of counterterrorist posture or a full withdrawal. And, you know, not a few months ago the foreign minister of Pakistan, I asked him, "How would you feel about an American withdrawal?" And he was absolutely incredulous.

He was incredulous, first of all, that we would make this investment and then leave just like that. He was incredulous in terms of what it would do to American prestige in the region. And he also pointed out that Pakistan would have to reassess its own options.

You know, in the last year or 18 months, Pakistan has actually made something of a genuine effort to turn back the Talibanization of much of its northwest frontier provinces. Those gains have not been total, but those gains have been real.

What happens if you get a kind of Pashtunistan or an Afghanistan back in the hands of the Taliban, and then Pakistan is forced to reassess its outlook toward its back yard (ph)?

ZAKARIA: And we will be back to discuss Afghanistan, Pakistan, and the United States right after this.



STEPHENS: Look, one thing that we should not leave unsaid at this conversation is that if we withdraw from Afghanistan, and Afghanistan or large portions of it come back under the domain of the Taliban, there will be human rights abuses there that will shame us.




ZAKARIA: And we are back with Richard Haass, Bret Stephens, and George Packer to discuss Afghanistan and the United States.

So, for all these reasons, Richard, it does strike me -- again, I come back to, I'm not quite sure why you are -- given your views, why you are opposed to what the administration is doing, because this allows them to manage the situation, see whether or not some of George's fears come into place. You know, that way you can kind of draw down faster if you need to, draw down slower if you need to.

HAASS: Because it's an extraordinary sacrifice we're asking of people in uniform, because it's an extraordinary economic commitment. And I simply have very little, if any, confidence that at the end of the day we're going to have results that in any way are going to be commensurate with those commitments so long as Afghanistan is Afghanistan, so long as those same incredulous Pakistanis are supporting the Taliban operations and allowing al Qaeda to roam freely in Pakistan.

Pakistan is not a serious partner of the United States. They're not a strategic partner.

STEPHENS: Well, more so as we waver. I mean, one of the interesting --

HAASS: Well, they were playing double and triple games long before the United States showed any signs of questioning its policy. That's Pakistan.

Pakistan sees Afghanistan as a strategic space for it to manipulate as part of its larger struggle against India. We are not strategic partners with Afghanistan. We've got to recognize that. That's a fact of life here.

STEPHENS: Look, one thing that we should not leave unsaid at this conversation is that if we withdraw from Afghanistan, and Afghanistan or large portions of it come back under the domain of the Taliban, there will be human rights abuses there that will shame us. And we should put that squarely on the table.

We can talk about strategic interests, and they are real, and we can debate those. But we also have to be mindful that for better or worse, we have taken responsibility for the safety and security of millions of Afghans who have lived through 30 years of terror, and to abandon them, if we were to abandon them, we would pay a moral price.

PACKER: You know, six years ago I interviewed Joe Biden when he was a senator, and the whole thrust of his remarks was we have not done nearly enough for this country. We promised nation-building, we haven't done it. We promised security, we haven't done it, all of which you lay out in your article.

And he told a story of going into a school that was unheated. It was mid-winter. There was one naked light bulb, and a 12-year-old girl got up and said, you cannot leave us. You cannot leave us. I want to be a doctor when I grow up. You cannot leave us.

And, for Biden, this was like a - a dagger to the heart. We can't leave them. And he went back to the White House and told President Bush we need a marshal plan for Afghanistan.

The same Joe Biden today is the leading advocate for a minimalist strategy, and, you have to ask yourself, well, what happened to that 12-year-old girl in Biden's mind? What - what is his sense of where that commitment went in the six years since then (ph)? ZAKARIA: I would have to think that some of it, though, is a heightened - a sense of realism in the sense that, look, you're absolutely right. But if the cost of keeping girls' schools open in every Afghan province is 100,000 American troops and 50,000 more foreign troops, at the cost of somewhere between $100 billion and $200 billion a year depending how you account for it, that's - that's a lot, to - you know?

I mean, and - and the question is can you sell that in - you know, in a democratic society, where you're cutting school - you know, back on schools in the United States? Can you - can we - and can you sustain that indefinitely? Because there is very little prospect that you can fast-forward the process of modernization in Afghanistan, that you can say just four more years of this and then, you know, Afghanistan will actually embrace the - the declaration of independence and the constitution with its first 10 amendments.

STEPHENS: Look, what you can sell, hopefully, with political leadership, is you can say that to withdraw - to leave Afghanistan to its fate would be to leave it to destitution, murder and repression, and that to leave Afghanistan would also leave us in a situation of considerably heightened peril and diminished prestige in a region where prestige matters. And I think that is a - it's - I don't know how well that - that polls, but I think that's a defensible and moral position.

And, finally, to come back to the first point, we are pressing the panic button now, just as we were with Iraq. We underestimate - us commentators and political scientists - the effects that military action and intelligent counterinsurgency strategy can have. We ought to at least be mindful of recent history and - and give General Petraeus a chance to succeed.

ZAKARIA: There I agree with you. I don't understand what is gained by - with beginning the withdrawal now as opposed to July -

PACKER: But I really am skeptical about counterinsurgency in Afghanistan. I mean, I think in the mind of Petraeus and his whole staff is exactly your point - Iraq. Iraq. That's where Petraeus had his great success with the surge.

You - it's become a cliche that Afghanistan is not Iraq, but somehow it's a cliche that no one seems to absorb and - and take the meaning of. They're completely different countries.

In Iraq, it wasn't just counterinsurgency with combat outposts all over Baghdad, and the concentration of forces in Baghdad, 30,000 troops in that city, really has a very quick security effect. A hundred thousand troops in this huge country of 25 million, they just disappear. The soldiers just go out into the Helmand River Valley, into Kandahar, and you - you can't see them.

STEPHENS: Yes, but you could have - you could have just as easily flipped it a few years ago and - and - to say, you know, Iraq is not Afghanistan. I mean, we're talking about combat in dense urban environments where it's impossible to distinguish, you know, friend from foe, where - where collateral damage is - is that much easier -

PACKER: But you're - that's just - but all you're doing is saying we can hope that like in Iraq, in Afghanistan we'll have some success.


PACKER: Well, there's no other - there's no analytical basis for what you're saying -


HAASS: And Iraq, by the way, is not a done deal. Let's not kid ourselves. Iraq - before we all hold Iraq out as this template of foreign policy success, let's remember the potential for unraveling is significant. Iraq is still fraying at the edges. You still have major questions about the ability not just to form a government but to sustain anything like a normal society.

And, you know, David Petraeus is the same guy who used to say our goal in Iraq shouldn't be perfection. It should be Iraq good enough. What I'm suggesting in Afghanistan is, like a lot of things in foreign policy, it's not just what you can try to achieve, it's also what you try to prevent. c

All I'm suggesting is not withdrawing. I don't buy the salt and peanut analogies. Not everything in life is a slippery slope. And we should just basically set a policy that's, one, sustainable and, two, the level of effort, I believe, is commensurate with our interests, which are limited and with - with - and keeps in reserve our forces for other things we got to think about.

STEPHEN: So what is Afghanistan good enough?

HAASS: For me?


HAASS: That al Qaeda does not come back - the Taliban does not bring back al Qaeda, and that Afghanistan is not used as a base from which to destabilize Pakistan. That, to me, is Afghanistan good enough.

And you're right. To be intellectually honest, if - if people were to adopt my policy, it's likely that in parts of the country you would have regression, serious regression on human rights, and I simply have to say that, you know, that is not something, though, I believe, we can ask young men and women in uniform right now to sacrifice or jeopardize their lives for.

ZAKARIA: Thank you all very much. We would be right back.


(COMMERCIAL BREAK) ZAKARIA: Now for our "What in the World" segment, if you thought the earth could perhaps breathe a little easier last week after BP finally got its massive leak under control, think again. While crude oil might no longer have been flooding into the Gulf of Mexico, chances are quite good that at that very moment oil was spilling on the other side of the Atlantic Ocean.

Oil spills occur in Nigeria just about every day - literally. Over 300 spills every year, and we're not talking about small spills. Environmental groups estimate that almost 600 million gallons of oil have spilled into the Niger River delta in the last 50 years since oil was first struck there.

Now, I want you to think for a minute. Before the BP oil spill, what was the biggest oil spill you'd ever heard of? I'm guessing that what comes to your mind was the Exxon Valdez. Well, Amnesty International estimates that the equivalent of an Exxon Valdez-sized oil spill has occurred in the Niger Delta every year for the last 50 years, and much of that spilled oil has never been cleaned up, leaving undrinkable water and dying wildlife in its wake.

Now, BP has set up a $20 billion compensation fund for fishermen and others affected in the Gulf of Mexico, but there are no comparable funds in Nigeria. What Nigeria does have is a generous profit- splitting agreement where the government of Nigeria gets about 60 percent of the oil profits and the oil companies get about 40 percent, and the government's money is supposed to get invested back in the delta. But, according to residents, the only thing trickling back to them is the leaking oil.

So where has all that money gone? Well, the World Bank says that over the last 30 years $300 billion of Nigeria's oil revenue has virtually disappeared, probably to some Swiss bank accounts. The trickle down to the Niger delta is so small and the damage to the area so great that it has literally started a war.

Local gangs, angry with the big oil companies, have been kidnapping and killing oil company executives and blowing up their pipes for years now. Shell, one of the biggest targets, says that 90 percent of their oil that was spilled in 2009 was due to sabotage or attempted theft, only 10 percent because of operational problems.

A world away from the Gulf of Mexico, Nigeria and its spills might seem like someone else's problem. But, keep in mind, nearly half of Nigeria's daily oil production goes to the United States.

And we will be right back.


NIALL FERGUSON, HARVARD UNIVERSITY: Why is it that small and medium-size businesses in the United States today are not hiring? Why is it that they're not expanding? Why is it, therefore, that unemployment's stubbornly high? It's because they see the tax hikes coming.



CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I'm Candy Crowley, and here are today's top stories.

The Taliban is acknowledging it is holding one injured member of the U.S. Navy and the remains of another killed Friday. Local Afghan government officials and a Taliban spokesman tell CNN the group is still deciding what their demands are for the return of the Americans.

On day 97 of the gulf oil disaster, vessels being used to drill a relief well are back on site and preparing to resume work. Now that the storm has passed, crews are expected to start the static kill in the next few days, pumping drilling mud into the well. A cap installed earlier this month to stop the flow of oil remains in place.

Those are your top stories. Up next, more "FAREED ZAKARIA GPS". And then, on "RELIABLE SOURCES", Howard Kurtz looks at how the media handled the Shirley Sherrod story.


ZAKARIA: Britain's prime minister was in the U.S. this week, explaining why he had to dramatically cut his budget deficit. But, in England, as in America, this has been a controversial move, part of the great debate whether to cut or spend that has really been going on since the times of John Maynard Keynes, the great economist of the 1930s.

When I was in London, I sat down to have this debate with two leading voices. In favor of spending is Lord Skidelsky, the greatest living authority on Keynes and the author of a three-volume biography of him. Opposed is Niall Ferguson, economic historian and business school professor at Harvard University.


ZAKARIA: Gentlemen, thank you both for coming.

Robert Skidelsky, when - when Keynes began writing and wrote his famous book, the conventional wisdom at the time was that in the face of an economic crisis what you would do was cut your budgets, raise taxes, balance your books, and let the market take care of, you know - liquidate all the unprofitable enterprises. You'll have a few painful months or quarters, and then things will go back.

Why did Keynes think that wasn't going to work in the 1930s?

ROBERT SKIDELSKY, AUTHOR, "JOHN MAYNARD KEYNES: In that situation, there were no natural forces of recovery, at least not very quick ones. Government has to come in and replace the vanished private spending power, and that was the big argument for the stimulus, and I think it's equally valid today.

I mean, it's been - it's been - it's true today. I've never been able to understand why people think that cutting - cutting a budget deficit is going to bring us prosperity.

FERGUSON: I sometimes think that there's a sort of false dichotomy at this stage in our debate between those who argue for yet more Keynesian stimulus and those who - who argue for austerity. I don't think that's the right debate at all.

For one thing, many countries don't have the option of carrying on with Keynesian-style stimulus. I'm not even sure the United States will be able to do it for much longer. Indeed, I wonder, if John Maynard Keynes were alive today, if he would approve of fiscal policies that imply trillion-dollar deficits, essentially for the rest of time.

The Congressional Budget Office just published a report which is really very scary because if the alternative fiscal scenario - they have two scenarios. If the alternative - and they - and they say more probable - scenario comes about, then the debt of the federal government explodes in ways that imply that all federal revenues will be consumed by interest payments within a few decades. So I don't think Keynes would have said that that was a good idea.

According to the International Monetary Fund, even if you allow for the fact that - that we're in the midst of a very big recession, and even if you take out the interest payments that you're making on past debt, you're still in the United States, running a deficit of the order of seven percent of gross domestic product, which, incidentally, is more than Greece. In fact, it's more than any developed country.

I don't think Keynes -

ZAKARIA: (INAUDIBLE) because structurally, as a matter of course, the United States is spending more money than the tax revenues it collects. That's the basis -

FERGUSON: For years, there's been a consensus in Washington, Republicans are against increasing taxes and Democrats are in favor of spending public money, and the net result is that the United States always runs a deficit. It's a structural deficit. It's nothing to do with the recession.

And then you add on to that a big recession, a collapse in tax revenues, and you do end up with deficits that are actually much more reminiscent of World War II than of the 1930s. We have this debate as if it's about the 1930s. It's - it's more like World War finance that we've got right now.

ZAKARIA: But address - but address Robert Skidelsky's point that, look, if you're trying to help close the budget deficit, at the end of the day, the biggest impact that you can have is to boost growth, because if you can grow a $14 trillion economy, in the case of the United States, by half a percent more or one percent more, that's going to give you more tax revenues than all the little tax increases and spending cuts you do.

FERGUSON: But why is it that small- and medium-sized businesses in the United States today are not hiring? Why is it that they're not expanding? Why is it, therefore, that unemployment's stubbornly high? It's because they see the tax hikes coming that are implied by this fiscal policy, and I think that's a really critical point.

But the - the key issue here is not Keynes versus austerity. The key issue here is can you get back to fiscal equilibrium in the same way that encourages business confidence, encourages the private sector, or are you going to do it in a crazy way, like the Greeks currently are, by punishing tax - business with higher taxation?

I - that's the real choice that all western governments face. Even the United States has to get serious about its fiscal balance, at least over a 10-year time frame, and what I've been saying now for over a year has nothing to do with what we do right now. I wouldn't advocate a cranking up of taxes in 2010 or a slashing of - of expenditure now. But we have to have some credible path back to fiscal equilibrium over the next five to 10 years, and that's been conspicuously lacking since the Obama administration came into office.

ZAKARIA: Confidence. Keynes talked a lot about the animal spirits of capitalism needing to be revived. And - and what Niall is saying is, look, you can spend a lot of money, but that's actually scaring businesses because they're looking at - at the future bills that that will - and -

SKIDELSKY: Yes, well, see I think confidence is the last refuge of someone who's run out of economic theory.

FERGUSON: Actually, that - Robert, that's - that's actually completely reckless of you, because the - the big shift in economic theory that's happening in this crisis is away from the rather tired models of Keynes and the neo-classicals towards behavioral economics, which is all about animal spirits, to use Keynes's phrase.

It's all about confidence. And you can't pretend confidence is irrelevant here. The psychology of consumers, the psychology of businessmen is the key to economic growth, and, right now, fiscal policy is making that - is having a negative impact on it.

SKIDELSKY: Yes, but you don't accept - I mean, you don't accept as binding on you whatever markets believe. Markets may be wrong about things. After all, they got things desperately wrong in the one - in the run-up to the economic recession. They under priced debt worldwide. I mean, that's Greenspan's own summary of things.

Now, we think they are - they are correctly pricing the risk of default. I don't believe that's true. And I think that it's not the case that the reason businesses are not - are not borrowing is because they're looking for - they're expecting tax increases further down the line. I think they're not borrowing because they don't see the demand in the economy for the - for the products they will - the might be producing.

ZAKARIA: Finally, is Britain going to go into a - a double dip?

SKIDELSKY: I think there's a very strong chance that it will. Yes. ZAKARIA: What do you think?

FERGUSON: I think it may - may dip, but I think it may also bounce back, and we should all - the world should watch very closely if this experiment comes off, because, if it works, then Britain will be the role model, the poster child.

ZAKARIA: On that note, we will certainly be watching. Niall Ferguson, Robert Skidelsky, thank you very much.

And we will be right back.


ZAKARIA: Now for our "Question of the Week". Here's what I want to know - who do you think won the economic debate you just saw? Niall Ferguson, who says we need to slash budgets, or Robert Skidelsky, who says what's needed is more stimulus spending? Let me know what you think.

And don't forget, we now have both a video and an audio podcast. To subscribe, go to iTunes or to our website, And, once you subscribe, you will never miss a show. And please remember, it's free.

Now, as I do every week, I want to recommend a book. We're all in such a funk these days. If you want to get out of it, pick up Matt Ridley's book "The Rational Optimist". Amongst all the bad news about the economy, Afghanistan, terrorism, the environment, Ridley's here to tell us that we will endure and prosper.

This is a book that tells the good news about humankind, that despite war, pestilence, disease, we keep living longer and doing better in most ways.

And now, for "The Last Look", Prime Minister David Cameron has been talking a lot about austerity, as I've mentioned, and so have we on this show. But Mr. Cameron is not just talking the talk, he's also walking the walk. He flew commercial from London to D.C.

Now, according to Downing Street, that saved the British taxpayers about $300,000 because, ordinarily, the prime minister would, of course, go on a private or chartered plane. He had a hot dog in New York with Mayor Bloomberg instead of lunch, say, at the Four Seasons.

And to get from D.C. to New York City, he took the train. So that's an Amtrak ride, and contrast that with the way the U.S. president usually travels to New York. He starts out on Marine One from the White House to Andrews Air Force Base. Then, they fire up Air Force One to fly the 200 miles between the two cities. Then, it's another marine chopper ride from the airport to a heliport in the city, and then, of course, the huge motorcade to take the chief executive around town.

I would guess that a bunch of Amtrak tickets, first-class, would save the government at least $300,000 per trip. Maybe we can learn something from the Brits.

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