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FAREED ZAKARIA GPS
Looking at the Life and Legacy of the Late Nelson Mandela; Interview with Tom Donilon; Interview with Alan Greenspan
Aired December 8, 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 live today from New York. We'll start today's show with Nelson Mandela, and we will ask, what happened to his legacy in Africa and beyond? I have a great panel, including one of Mandela's close confidants. Then, the man who until this summer, was President Obama's top adviser on national security, Tom Donilon, on the Iran deal and on why he says the U.S. does not need to cut a deal with Hamid Karzai of Afghanistan. Next, how to understand the booming American economy? I'll ask the man who presided over great growth, and some critics charge also helped create many bubbles. Former Fed Chair Alan Greenspan.
And as we approach the first anniversary of the Newtown massacre, what can the U.S. learn from other nations about gun policy? I'll take you to Japan for a fascinating look at a nation that loves violent video games, but has a gun death rate that is very different from America's. It's a preview of a GPS special airing tonight at 7:00 p.m. Eastern.
But, first, here's my take. When Nelson Mandela was released from prison in 1990, I remember being struck by how old-fashioned he seemed. He spoke with the language, cadence and manner of figures from the 1940s and 1950s.
As someone who grew up in India, he reminded me of the videos I had seen of Mahatma Gandhi and Nehru and the other great national leaders form the post-colonial who had lead their countries to freedom.
He had the same formal way of speaking and dressing, the same dignity of bearing, the same sense of history. And Mandela really was a throwback to an older time of great leaders, who through courage and sheer willpower, changed the course of history.
Twenty-seven years in prison had kept intact his manners, but also his morals. His most important act, of course, was forgiveness, but he didn't just talk about reconciliation, he took painful actions to make it real.
He learned the language of his oppressors and studied their culture. Even after the election of a new government with a new constitution, Mandela made sure that the old Afrikaans establishment, the civil service, the army, even the hated police was largely kept in place.
The white business class was encouraged to participate actively in the new South Africa. Compare that to so many transitions, for example, Iraq, where the new regime came in, fired or jailed or killed everyone from the old and a 10-year civil war followed.
Instead of vengeance, Mandela sought truth and reconciliation. He was not a saint, but rather a political genius. He did what he did because it saved his country.
When he came to power, many wondered how he would steer the new country's foreign policy. After all, the African National Congress, which he headed, had been supported by the revolutionaries of the world, Gadhafi, Arafat, Castro.
But Mandela knew what was in his country's best interest. He steered it in a pro-Western, pro-democratic, pro-market direction. And, yet, he kept faith with his old comrades, honoring them, never forgetting their support when he and his movement were in the wilderness.
His final act of greatness was leaving office. Very few black, African leaders had ever left office voluntarily in 1999 when Nelson Mandela did, after just one term.
He wanted to make sure that South African democracy did not descend into a cult of personality or dynasty. He was, in this sense, South Africa's George Washington.
As much as one man can shape a country's future, Nelson Mandela did it for South Africa. And, in doing so, he also shaped the conscious of the entire world.
Let's get started.
Let's go live to Johannesburg to CNN's Robyn Curnow. She's been reporting on Mandela for almost 20 years. She joins us from outside his home in Johannesburg.
Robyn, there's a lot of talk about prayer and reflection. Today's the day of prayer and reflection, lots of religious ceremonies planned. What was I wondering, I wanted to ask you, was Mandela a man of deep faith?
ROBYN CURNOW, CNN INTERNATIONAL CORRESPONDENT: No, he wasn't a man of faith. His family have told me that he believed in infinity. He got his strength, and I saw it over the years, from this real sense of self-confidence, his inner discipline.
He drew himself from his himself and I think he was a very contained character, very introverted and that's where he seemed to get his strength from, his spirituality, rather than from a god.
He was born Methodist and what you will see though over the coming days, particularly at his funeral, there's going to be an interesting mix of African tradition, Xhosa tradition and Western traditions.
And what is also important I think is that he felt rooted to his community, to the Xhosa tribe in the Qunu region, more than he did feel rooted perhaps or connected to a god.
So what we are seeing, at the moment, is that tribal leaders are going to be accompanying his body along the way until its buried talking to him all the time in a ceremony called "Closing of the Eyes" where they've been talking to the ancestors, helping him transition to the after-world.
It's more about that than it is about some sort of traditional believe in religion.
ZAKARIA: And Robyn, we can tell, we can see around you people are mourning, but what -- when you talk to them, what is their sense of loss, what are they mourning?
CURNOW: You know, they're of course mourning Nelson Mandela. But just remember Mandela was like a mirror. He reflected back to South Africa what they wanted to be, what this nation imagined itself to be, perhaps an idealistic vision.
Today, 20 years later, this is a very complicated, often divided at times nation. Now, what they also I think are mourning is that very visionary leadership we saw in Mandela.
I mean you spoke about it little bit earlier. He really played the long game, didn't he? He looked ahead. He planned. He was a tactician. He was a pragmatist. He was a man who really thought about being a symbol of reconciliation.
Now compare that with President Zuma whose leadership and whose government seems to lurch from crisis to crisis. There seems to be an overwhelming focus on scandals, over personal enrichment, whether it's linked to President Zuma or all those close to him.
You know, they seem to be have -- according to many South Africans, there's a real focus of this current government on the trappings of power, of using the state to protect the elites or at least to further the interests of the elites and President Zuma.
That is the kind of contradiction and that's what South Africans are seeing now in the current ANC leadership and asking has the ANC, Mandela's Party, lost its way.
So I think there's a lot of inner thinking, a lot of digestion of what South Africa is now, what Mandela wanted it to be and what South Africans wanted it to be 20 years ago.
And I think many people here are not here just to mourn a man. They may be also mourning the vision of a country they hoped for.
But, also, I think there's a lot of talk that there's a responsibility that they have to continue Mandela's vision. There's an invigorated sense of enthusiasm and I think that's what's key. A lot of people saying we cannot betray his vision. We've got to work harder. So let's see if that translates into some sort of political impetus.
ZAKARIA: Thank you, Robyn Curnow. Fascinating.
We will be right back. We will continue this conversation about Mandela's legacy and whether it has been squandered. A great panel coming up, including a man who was with Mandela in prison.
Later on, my conversation with Alan Greenspan. We will be right back.
ZAKARIA: So what has become of Nelson Mandela's legacy, of the promise that Africa seemed to hold in those heady days of the 1990s after his release from prison and his election. I've a great panel to discuss all this.
Khehla Shubane was a political prisoner at Robben Island alongside Nelson Mandela. In later years, he was the CEO of the Nelson Mandela Foundation.
Peter Godwin is a former human rights lawyer in his native Zimbabwe. He then became a distinguished correspondent and author. Mandela wrote the forward for Godwin's book, "Wild at Heart."
Peter Beinart is an associate professor of journalism at the City University of New York and a senior political writer at the Daily Beast Newsweek.
Khehla, if I may start with you. You pointed out that Mandela was always different even in prison. You say everybody else wore rumpled clothes. He took pains to iron his clothes. He stood ramrod straight. He had a kind of imperial bearing.
Your foundation tried to train leaders in Mandela's wake. Do you think the drop-off was inevitable or has South African taken a particularly bad spiral downward after Nelson Mandela?
KHEHLA SHUBANE, FORMER CEO, NELSON MANDELA FOUNDATION: Look, I think of the country we've taken a knock, but I don't think the process has totally and completely derailed.
I think it can be put back on track reasonably easily, but it'll take a huge amount of hard work to do so. And I think we do have the resources -- the personnel resources and the willingness to put it back on track.
ZAKARIA: Let me ask you, Khehla, since I have you, you were in jail for so many years. What does that do to somebody? Just, I think looking at you, looking at Mandela, what does it do to spend those many years in jail?
SHUBANE: It teaches one a range of things. One, patience, simply waiting. And there's a huge amount of waiting in prison. It's not just waiting for your sentence to be finished.
You can wait, for an example, for a letter that's coming to you for a long, long time and that depends on a whole host of issues. That's one lesson that anyone who goes through prison learns.
The second one is to be amassed with these people who are completely and totally amassed into changing society. I was young when I got there. I don't think I had the ideals and understood as well as I think I understood them at the end of my sentence.
And spending time with all of those people was helpful in that regard and it connected me to a world I would otherwise not have been connected to. So prison was bad, but it was good as well, particularly for a young peasant like I was when I went in.
ZAKARIA: Peter Godwin, you lived through those times, reported on them. Part of this was -- you know, the prisoners could not have known they were going to be released, people like Nelson Mandela, because so much of what happened hinged on 1989 and the collapse of communism worldwide.
The ANC was regarded at this communist front by the South African government, right?
PETER GODWIN, FORMER HUMAN RIGHTS LAWYERS, AUTHOR: Absolutely. And, in some ways, I think that, you know, we sometimes overlook South Africa's great good fortunate at being the first African nation to become independent after the Cold War was over and that Africa stopped being this proxy battleground between communism and capitalism, Moscow and Washington.
I mean sometimes the problem I think, when one looks back at the sort of dead hand of history makes what happened looking inevitable. But I remember covering it at the time and it certainly -- none of it felt inevitable at all.
And remember Mandela himself took enormous risks when he was moved out of Robben Island and was, you know, eventually in Pollsmoor to other prisons where he started talking on his own secretly to the architects of apartheid to see if he could broker a deal.
That was an extraordinary, you know, act of self-confidence and risk-taking that began the unlocking of the whole of apartheid.
ZAKARIA: And, Peter, you pointed out that back in the United States, we regarded Mandela as a communist. The Reagan administration branded the ANC a terrorist group and Dick Cheney voted against a resolution to release Nelson Mandela. So this was all happening around the world.
PETER BEINART, ASSOCIATE PROFESSOR OF JOURNALISM, CITY UNIVERSITY OF NEW YORK AND SENIOR POLITICAL WRITER, DAILY BEAST NEWSWEEK: Right. I think Peter Godwin's point that South Africa's transition was facilitated by the end of the Cold War is extremely important.
But it's also extremely important to remember that in the 1980s a global anti-apartheid movement arose during the Cold War in which people in America and Europe said we're not going to see South Africa in purely Cold War terms.
We're not going to accept Ronald Reagan's basic vision that the apartheid regime is on the side of the free world because it's anti- Communist.
And, the ANC, because we've called it a communist organization, a term that no one really understood in the United States what that really meant in a South African context anyway, therefore they are on the side of unfreedom.
And so I think the willingness to look at South Africa beyond Cold War terms even when the Cold War was raging in the Reagan years was critically important to the transition in South Africa.
ZAKARIA: When you talked with Nelson Mandela, Shubane, did you find that he -- had he forgiven the West for, you know, having mostly -- for the most part sided against the ANC.
SHUBANE: I think in my conversations with him, he forgave the West, yes. And he realized that there's a huge amount of learnings we can pick up from Western leaders. And, indeed, we did pick up a huge amount of learnings.
I think, for example, if you remember quite well, when he came out, he emphasized the question that monopoly kept this enterprise and so it going to be nationalized and that was the policy of the ANC and so forth and so on.
I think it is because of his contacts with major Western leaders that he was able to moderate that viewpoint.
I'm not trying to suggest that Mandela simply -- as some people like to suggest, simply lavishly followed what he was told by Western leaders. I think he succumbed to reason and that reason came from his peers largely in the West.
ZAKARIA: Peter, what do you think explains the drop-off from Mandela to South Africa today? What strikes me when you read about South Africa is inequality has worsened between whites and blacks substantially.
The number of people -- of black children who get educated in integrated schools is something like 10 percent. You know, you look at the leadership, Zuma versus Mandela, and you look around Africa, it doesn't seem as though, you know, this was an upward trend.
GODWIN: Well, that's true. And, you know, that discrepancy is true, but it's also true that the standard of living of black South Africans has risen considerably since 1993, that the number of black South Africans with electricity and clean drinking water and in the education system has gone up.
I mean South Africa has always been, when you look at it, especially from the outside, a glass half-empty, glass half-full thing, that people tend to project upon South Africa a lot of the prejudices with which they enter into the situation to begin with.
But I think what's really going to be interesting going forward now is, in a sense, a kind of custody battle for brand Mandela, who claims him as their real symbol.
And, for Mandela, symbolism was his stuff and trade. He realized even during his life that he was this astonishingly powerful symbol. And, in a sense, you can see there's this -- across the world, we all want to claim him. All other countries want to claim Mandela. He represents our better selves in that sense.
But within South Africa, you know, it's a question of is he now a national symbol or to what extent do the ANC keep him as their symbol that he is after all -- you know, the ANC is a 100-year-old organization. To what extent can they keep him, you know, as -- what happens when Mandela goes effectively to the ANC majority?
They're still 60 percent -- more than 60 percent of the vote is what they get, but they're being challenged from essentially both left and right. And that's going to be very interesting once we've gone through the next few weeks of memorialization as to how the dust settles on that.
ZAKARIA: Peter, 15 seconds, do you think -- I'm sorry about this, but do you think Mandela's legacy will stay alive or is this one of these moments which seems very, very profound, five years ago will have forgotten him.
BEINART: You know, my fear talking about the brand of Mandela's legacy is that the emphasis in the West and in the U.S. has been so much on his forgiveness that we've forgotten that he only forgave once he had actually overcome an unjust system.
And that the struggle in South Africa continues to create a more just society just as it did in the United States after legal segregation was abolished, but there were still massive economic inequities.
So my hope is that Mandela is not too domesticated and sanitized now in his death.
ZAKARIA: Thank you, all of you, the two Peters, Shehla. Wonderful panel.
Up next, Japan loves violent video games just like America, but they have almost no gun violence. Why? We'll explain on a preview of my new global report: Global Lesson on Guns.
ZAKARIA: Now, for our What in the World segment. This week will mark one year since the horrific shootings in Newtown, Connecticut. I wanted to get beyond what has become a gridlock debate on gun control in America so I decided to take a look at the rest of the world.
My special report, Global Lessons on Guns, premieres tonight at 7:00 p.m. for viewers in North America. Take a look at this preview.
ZAKARIA: In the weeks following the Newtown massacre, a clearer picture of the shooter, Adam Lanza, began to emerge. Alienated and alone, he played military video games in his basement for hours on end, according to reports. With access to a small arsenal, he turned video game fantasies into reality leaving 26 dead at Sandy Hook.
So, in our search for global lessons on guns, we wanted to find a country that could teach us about gaming and gun violence. We decided to visit Japan because few nations on Earth have more avid gamers than the Land of the Rising Sun.
The Japanese play many of the same violent video games that we do. In 2012, consumer spending on video games in Japan was second only to the U.S. But there's another factor to consider here when it comes to gun violence.
Japan has some of the strictest guns laws in the world. The basic premise of those laws, if you want to own a gun, good luck. Japan's Firearm and Swords Control Law states, "No person shall possess a firearm" before listing a few narrow exceptions for hunters and other categories.
For the brave few still willing to apply for one, they face an intricately designed bureaucratic obstacle course. Just ask Rick Saka (ph), a former U.S. Marine living on Mount Fuji. He says he's one of only a handful of foreigners in Japan to legally own a gun.
Back at his house, he showed us the binders full of paperwork he's had to deal with over the years. They were a bit overwhelming even to explain.
(BEGIN VIDEO CLIP)
(UNIDENTIFIED MALE): What all do you have to do?
RICK SAKA (ph): It's -- such a -- initially -- geez, do you want to help me?
(END VIDEO CLIP)
ZAKARIA: Saka (ph) took over 20 hours of lectures, a written test, a shooting range class and he passed a criminal background check. A doctor gave him a full physical and psychological exam.
He also visited the police station more than five times where he was interviewed in an interrogation room.
(BEGIN VIDEO CLIP)
RICK SAKA (ph): Are you having any problems with alcohol? Are you having any problems with drugs? Are you having problems with relationships, family, work money?
(END VIDEO CLIP)
ZAKARIA: The police also questioned Saka's (ph) family, his co- workers, even his neighbors and, to top it off, he had to give them a detailed map of his home.
(BEGIN VIDEO CLIP)
RICK SAKA (ph): To produce a floor map of where your firearm will be stored in your home is kind of unusual and photos that actually detail all of the locks that we have to have in there and show that it's done properly.
(END VIDEO CLIP)
ZAKARIA: It took Saka (ph) over a year to get approved.
(BEGIN VIDEO CLIP)
RICK SAKA (ph): And that's our actual firearms license.
(END VIDEO CLIP)
ZAKARIA: And he must resume his various licenses regularly.
(BEGIN VIDEO CLIP)
RICK SAKA (ph): The intrusion that occurs with the process regularly would never ever be tolerated in the U.S.
(END VIDEO CLIP)
ZAKARIA: It's a process meant to discourage people from even trying to get a gun and it works. Japan has fewer guns per person than almost any other country. Less than one firearm per 100 people, according to one estimate.
And the country's gun murder rate, it's astonishing low. In 2012, this nation of 130 million counted only four gun murders. That's right, four. By comparison, the United States had 4,600 gun murder per 130 million people in 2010.
ZAKARIA: Of course, the United States cannot be Japan, but if you really want to understand the gun debate, it helps a lot to get facts from the rest of the world. Japan's example shows that violent video games do not necessarily lead to gun violence, but barring access to guns does make a difference.
Watch "Global Lessons on Guns." We travel not only to Japan, but to Switzerland, Australia, Colombia, looking for answers to America's gun problem. Watch it tonight at 7:00 P.M. Eastern on CNN in North America. Up next on today's show, the man who until this summer was President Obama's top national security advisor. My conversation with Tom Donilon.
CANDY CROWLEY, CNN CORRESPONDENT: I'm Candy Crowley in Washington with a check of the headlines. A wintry storm that has already caused havoc from Texas to Kentucky is on the East Coast now. Washington, D.C., Philadelphia, New York and Boston are expected to get hit by ice and snow.
U.N. weapons inspectors are in Iran. President Obama told an international forum Saturday that he could accept a final comprehensive agreement that would allow Iran to enrich uranium for peaceful purposes.
Evangelist Billy Graham is in frail health. His son, Franklin Graham says his father's condition has declined quite a bit in the last few days.
Those are your top stories. "Reliable Sources" and its new host Brian Stelter at the top of the hour. Now back to Fareed Zakaria GPS.
ZAKARIA: Until June 30th, Tom Donilon had the president's ear quite literally. That day was Donilon's last as Mr. Obama's national security advisor. He is now a distinguished fellow at the Council on Foreign Relations. He joins me to talk about recent developments and the issues he was deeply involved in at the White House from Iran to winding down the war in Afghanistan to mitigating tensions between China and Japan. Welcome back to the show time.
TOM DONILON, FORMER NATIONAL SECURITY ADVISOR TO PRES. OBAMA: Great to see you.
ZAKARIA: So, let's first talk about Iran. You were deeply involved in this whole policy, it seems we're at two positions that cannot be breached. It appears that what we're saying is we need Iran to essentially shut down parts of its nuclear program to ensure that it cannot have a kind of breakout capacity that would allow it to have weaponize its program. Iran - the president gave an interview to the financial times where he says we are not going to dismantle a single thing, we're willing to freeze, we're willing to have everything monitored, but no dismantling. Isn't that - how do you bridge those two positions?
DONILON: Well, the reason we're here, of course, is because of the tremendous pressure that was put on the Iranian economy through that U.S. -led sanctions, effort and other forms of political pressure. President Rouhani took a maximalist stand in the article that you referenced. But at the end of the day, this is going to have to be a rollback here of the program. They're going to have to assure the international community in very concrete, verifiable and solid ways that they're not pursuing a nuclear weapon as part of this program and that it's peaceful. And it's going to require a rollback.
ZAKARIA: That means rolling back centrifuges?
DONILON: I think that would mean - I think that would mean rolling back portions of the program including centrifuges. It's going to have to be a comprehensive solution addressing all the aspects of the program in order to kind of to provide the reassurance that the world community is going to demand here. And absent that it's going to be very difficult, if not impossible to get a comprehensive agreement. I think we have in place right now in the interim agreement a solid basis on which we can proceed for the next six months. Because the program is frozen. It's rolled back in certain aspects with respect to the 20 percent enriched uranium. And we're having a very aggressive and unprecedented monitoring machine. So we have the basis on which to have a negotiation, but at the end of the day, there's going to have to be roll back of this program, no doubt.
ZAKARIA: The one monkey wrench here could be Prime Minister Netanyahu who has laid out an even more maximalist position than the United States. What is going on there? Why do you think Prime Minister Netanyahu who is setting up such a maximalist position would - if we were to come up with a deal that was acceptable to the administration, are you confident that you can sell it to the Israelis, that the administration would be able to sell it to the Israelis?
DONILON: Well, we certainly would only present a deal here and a settlement that we thought actually achieved the goal of preventing Iran from acquiring nuclear weapons, and preventing it from being able to break out in any short time frame, which again, would require a really substantial roll back of the program. I think the Prime Minister Netanyahu is driven by a strong sense of Israeli security. Until you spend time with him, there is a really - a conviction here, understandable, that this program is an existential threat potentially to Israel and so, he's driven by that as the prime minister of Israel, as the person responsible for the security of Israel. So, I think he's obviously driven by conviction, but I also think that the Israelis are trying to drive as comprehensive and tough a bargain here as is possible. In order to get ...
ZAKARIA: So, they are just setting out - they are setting a position to hope to move the deal toward them, you think they would accept something short of all of this.
DONILON: Well, it' been very clear that in fact that they're trying to better the deal from their perspective and make it a tougher deal. Indeed, they raised issues around, for example, the problem of the Arak heavy water nuclear reactor, A, R, A, K - reactor that's being built at Arak, Iran, which presents another possible source of nuclear material, plutonium in that case, and indeed the deal is - the interim deal is quite strong on them, putting on hold all the nuclear components development, at least (inaudible) to the Arak episode. And so, they are trying - and they have been very straightforward about this, trying to drive and push for as tough a deal here as is possible. In order to get the kind of maximum kind of assurance here, the really solid kind of assurance here that, in fact, the program is being used for - or it can only be used for peaceful purposes.
ZAKARIA: Afghanistan, do you think that it is possible that we could end up in a situation where because Hamid Karzai will not sign off on the deal that would allow America to have troops in Afghanistan, the United States goes down to zero in Afghanistan. Can we fight al Qaeda with no troops in Afghanistan? Is the zero option viable?
DONILON: Well, if there's not a bilateral security agreement signed between the United States and Afghanistan, there won't be a troop presence in Afghanistan after December 31, 2014. As we sit here today, there are around 50,000 troops. That's not on the front page of newspaper every day, Fareed, that there are 50,000 American troops in Afghanistan today, we're on track to finish this mission by December 31, 2014 and we will finish the mission by then. The question on the table is what kind of presence and what kind of support will the United States and the international community provide Afghanistan after that date? We will require and we have negotiated with the Afghan government certain protections, right, and understandings with the Afghan government. It's as we do all over the world when he have troop presence. If we don't have the kind of assurances we need, the kind of elements of an understanding that we need, it's not possible for us to do this.
Now, you asked an important question about U.S. interests, the United States has a lot of options in terms of pursuing its interests. This would be, I think, optimal certainly from the Afghan perspective, which is why I at another interview called it reckless. And I think really, the big risks here, by the way, is that President Karzai risks undermining support among the American people for a continued effort in Afghanistan. That what really is a major risk here. There are practical risks, there are risks that we won't in effect be able as a practical matter in terms of - and do the planning and execution necessary to have an ongoing presence ...
ZAKARIA: You're saying we could protect our interests and fight al Qaeda even if there were zero troops in Afghanistan?
DONILON: The United States has - The United States has options available to it to protect its interests and it would undertake those options, if it had to. Again, that wouldn't be the optimal way to go for it, but the United States is perfectly capable of doing that, we're going to finish this current mission.
ZAKARIA: There are people in government who have been arguing for that option, zero option internally anyway, right?
DONILON: Well, there are a variety - I don't want to get into it. There's a variety of options being argued for in the government. I'm not going to have them in the past and I won't today get into internal discussions. But what I can say quite directly is we'll finish this mission on December 31, 2014, the Afghan government, by the way, other than President Karzai, is in favor of this ongoing mission, as by the way is the council of elders, this 2500 person council that President Karzai called together, to recommend it to him to go ahead with this. He should sign this, if we don't have an understanding here, we won't be able to go forward with the U.S. presence there. And there's a cascading effect here that's really important to understand, I think. And which is why that there is so (ph) interest, the Afghans. If the United States isn't there, those capabilities aren't there to support NATO and the other nations who want to provide support and it will impair our ability to continue to support the way we want to the Afghan national forces. I think ultimately it will also affect the non-security assistance.
ZAKARIA: Tom Donilon, pleasure to have you on. We have to have you back. There is so much more to discuss.
DONILON: Thanks, Fareed.
ZAKARIA: Up next, is the Federal Reserve putting America on the wrong track? I will ask somebody who has some ideas. Alan Greenspan, the former chairman of the Fed. Right back.
ZAKARIA: For almost 20 years, my next guest presided over America's economic well-being, from 1987 to 2006, Alan Greenspan was the chairman of the Federal Reserve board. Shortly after his tenure began, Black Monday hit, then came the stock market boom, the dotcom bubble, 9/11, the wars in Iraq and Afghanistan. Two and a half years after he left office, the world was plunged into a deep financial crisis. I wanted to talk to him about the state of the U.S. economy, the actions and duties of the Fed, and much, much more. He has a new book out called "The Map and The Territory." Welcome.
ALAN GREENSPAN: Thank you very much. Delighted to be with you.
ZAKARIA: So, the day - news that we have now is that the U.S. economy grew the last quarter 3.6 percent, faster than people, than anyone really expected. And the question I have for you, is so we now have a kind of experiment of sorts which is the United States has pursued ever since the financial crisis, a very expansionary monetary policy. You seem, though, you're uncomfortable with this - with this level of monetary expansion that the Fed is doing.
GREENSPAN: There's no doubt that the very low long-term interest rates has had some buoying elements in the economy. The issue however, goes beyond that, because even though we have very major expansion of the balance sheets, it has not essentially spilled over in lending by commercial banks. Into the usual pattern that one sees when Reserves go up.
ZAKARIA: So why aren't banks lending more? Because, you know, people I think who favor the big - what the government is doing would say, well, they would lend even less if the rates were higher, but what do you think fundamentally is at work here that companies in America are doing very well, they're not investing much. Banks are doing very well now, they have recovered, they're not lending.
GREENSPAN: First and most important issue to recognize in the United States and it's a problem to the extent in other countries as well, is that the level of uncertainty about the very long-term future is far greater than at any time I particularly remember and indeed ...
ZAKARIA: Why is there more uncertainty now than there was in 1985 at the height of the Cold War, 1995, you know, enormous changes in technology that were taking place. It doesn't -- when I look at it today, it doesn't seem like it's more uncertain than those times.
GREENSPAN: It is.
GREENSPAN: It is, well, depending upon how you look at it, everyone agrees that it exists. There is a political difference of significant dimensions between people who believe that the extent of government intervention has been so horrendous, that businesses cannot basically decide what to do about their future. For example, the percent of cash flow of business that is invested in any form of capital asset, is that ratio two years ago was at the lowest level since 1938. This improved somewhat, but it is still extraordinarily low. And what we're observing there is with all this money coming in, all the profit, the cash flow, it cannot find adequate investments to use.
ZAKARIA: And, of course, you believe that if the Federal Reserve does not unwind these measures pretty soon, we're in for trouble?
GREENSPAN: Eventually, yes. I think it will and that's the reason why there's a very obvious focus at the Federal Reserve of the timing of when they restore themselves to an earlier policy. Right at this moment, if it weren't for psychological factors affecting the market, the Federal Reserve over a weekend can swap with the U.S. Treasury, billions and billions of dollars to contract the Federal Reserve balance sheet and reverse a goodly part of what they have already done with no consequence, it's strictly a bookkeeping entry. The problem is the markets will probably go berserk if they were to do that and that's outside the limits. But the Federal Reserve is working on all sorts of measures to decide how they can pull back before the actual money multiplier as they call it begins to really take hold. But there's no evidence at this stage that it's about to happen, so the Federal Reserve does have time and the question is, how do you handle psychology?
ZAKARIA: We've got to go, but I've got to ask you one final question, I know you're not going to tell me what you think of Janet Yellen as a potential Fed chairman. But I'm going to ask you a different - slightly different question. Do you think it makes a difference in your long experience that she's a woman? You happen to be married to a very strong, professional working woman. Do you think men and women approach something like economic policy differently?
GREENSPAN: Not that I can determine. I, in fact, and Janet Yellen is a very good, an excellent economist, very intelligent. She knows exactly what is going on. I -- I've worked with her for years. I learned a lot from her. Actually. She know what's going on. She will do as well as anyone I can think can handle it. But there's a different type of problem that's going to be occurring, none of us has handled this before. She's as qualified as anyone I know to deal with it and sufficiently knowledgeable with that extraordinary staff at the Federal Reserve to handle it.
ZAKARIA: Alan Greenspan, pleasure to have you.
GREENSPAN: My pleasure.
ZAKARIA: This week will mark the first anniversary of the Newtown massacre. That brings me to my question of the week. After the United States and Yemen, the top two, what country is estimated to have the highest rate of civilian gun ownership? Is it A, Mexico? B, Canada? C, Saudi Arabia or D, Switzerland? Stay tuned and we'll tell you the correct answer.
This week's book of the week is Ari Shavit's "My Promised Land: the Triumph and Tragedy of Israel." It's part memoir, part history, part analysis and a on the whole - the most thoughtful book written about modern day Israel with its triumphs and tragedies.
Now for the last look. Keeping with Nelson Mandela's generosity of spirit - we thought we'd bring you good news about the world's capacity to give. The Charities Aid Foundation in London published its annual world giving index this week. And it turns out that the world was more generous in 2012 than it was in the previous year. The Foundation crowned the United States the world's most generous nation, up from fifth place last year. The report is based on Gallup polls involving 135 countries and measures three factors. Who said they donated the most money to charity, who said they volunteered the most time, and who said they helped out strangers most often. The U.S. was only 13th when it came to donating money, but third place in giving time and first place when it came to helping out someone in need.
So what country is the least charitable? Well, according to the report, that distinction goes to Greece, and while economic troubles in Greece were rampant in 2012, this report proves it's not always about the money. Even Syria made the top ten list for helping out a stranger.
The correct answer to our GPS challenge question, was D, Switzerland has one of the highest rates of gun ownership in the world, but its gun homicide rates are very different from those of the United States. How is this possible? I'll explain that and much more in my special "Global Lessons on Guns" tonight at 7:00 P.M. Eastern for viewers in North America, don't miss it.
Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "Reliable Sources."