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FAREED ZAKARIA GPS

Interview with David Cohen; Interview with Nabil Fahmy; The Sultan and the Sharia Law

Aired May 4, 2014 - 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. The U.S. seems sure that its sanctions against Russia will work. Few outsiders agree. So what does the U.S. Treasury know that we don't? I will talk with the man charged with making Putin pay a price, the Treasury Department's David Cohen. Plus we will track dangerous developments in two of the most populous countries of the Middle East, Egypt and Iraq.

I will ask Egypt's foreign minister about more than the 1,200 Muslim Brotherhood supporters sentenced to death in his nation. And about the American government's money in arms that may begin to flow again into Egypt.

And Iraq held an election this week, but the "New Yorker's" Dexter Filkin says it's already clear who won -- Iran.

Also, why America's middle class, once the envy of the world, is no longer number one.

But first here's my take. It is now well known that Thomas Piketty, the French economist and author of the 700-page best seller "Capital in the 21st Century", argues that free markets tend to produce inequalities of wealth that then become dynastic and antimeritocratic.

The solution that everyone is talking about is taxing the rich. But reading the book, it's clear that Piketty recognizes that, as he says, over a long period of time, the main force in favor of greater equality has been the diffusion of skills and knowledge. After all, countries like India and Brazil had increasingly high tax rates in the 1970s and '80s without creating broadly shared growth.

He stationed countries by contrast with high literacy rate and an increasingly skilled work force managed to achieve both growth and relative equity. This is not an argument against higher taxes, but rather one emphasizing that for the best long-term results, education remains crucial.

Alas, it's an area in which the United States is failing. If reading Piketty reminds us of the troubling inequalities of wealth, reading the recent path-breaking OSCD report on adult skills in rich countries provides a grim picture of the inequalities of knowledge, one that for the United States, is terrifying.

Thirty-six million American adults have low skills. And these are not just older workers. In two of the three categories tested, numeracy and technological proficiency -- three categories really -- you Americans who are on the cusp of entering the work force ages 16 to 24, rank dead last. Scoring well on these tests turned out to be directly related to all kinds of positive things -- jobs, productivity, good health, even civic participation and political engagement.

Inequality of skills was closely related to inequality of income. The picture the United States painted here is deeply troubling. Despite having among the highest per capita GDPs, the country does poorly along almost every dimension. It is below average in literacy and technological proficiency and third from the bottom in numeracy for the entire group, 16 to 65-year-olds.

Inequalities of skill are also becoming generational and entrenched. If one of your parents is poor in the United States, your scores tend to be low, lower than someone in the same circumstance in other rich countries.

What we learn from this study is really just an extension of what we have discovered in the PISA tests that the OECD conducts for fourth and eighth grade children. Those tests are designed to test problem solving, not road memorization.

Now the single biggest force behind falling American rankings is not that the United States is doing things much worse than before, but that other countries have caught up and are doing better. The American system of secondary education and adult training is clearly inadequate in the new global environment. And things show no signs of improving.

The bipartisan backlash against the Common Core, a set of national standard agreed to by governors, is a tragic example. Parents raised on a culture of low standards and high self-esteem are outraged that the tests show that many, many American schools are not teaching their children enough. The tests must be at fault because their kids are brilliant.

Some left-wing groups and teachers groups are upset with the emphasis on testing. Though Randy Weingarten, the head of the American Federation of Teachers, has actually endorsed the Common Core. And Republicans now oppose it despite having championed it only a few years ago largely because the Obama administration also happens to back this project.

Here's another quote from Piketty's big book. "The principal force for convergence of wealth, the diffusion of knowledge is only partly natural and spontaneous. It also depends in large part on educational policies."

In other words, if America really wants to reduce inequality, it needs to reform the system, spend money where needed, such as early education, and get to work at it now.

For more go to CNN.com/fareed and read my "Washington Post" column this week. And let's get started.

On Friday, President Obama and German Chancellor Angela Merkel stood together in the White House Rose Garden to make the case for sanctions against Russia and argue that coordinated sanctions will make President Putin change course. This came four days after the U.S. announced a third round of Russian sanctions against seven high- ranking Russians all said to be part of Putin's inner circle.

They were hit with asset freezes and travel bans, and 17 Russian countries were also sanctioned. Russia's deputy foreign minister declared the sanctions meaningless, shameful and disgusting. All the while the violence in Ukraine have spiraled.

The American official responsible for sanctions joins me now to talk about existing and future measures. David Cohen is undersecretary for terrorism and financial intelligence at the United States Treasury Department.

David, the United States seems very dedicated to this path, and yet most observers and experts don't think these sanctions will work, that they're too limited, too narrow, just a few people.

Why are they wrong?

DAVID COHEN, DEPUTY SECRETARY, U.S. TREASURY DEPARTMENT: Well, the sanctions path that we are pursuing is, I think, a strong and strategic path. What we have been doing is imposing sanctions on those who are involved in violating the sovereignty and the territorial integrity of Ukraine. We're going to continue to do that, but more broadly also imposing sanctions, as you noted, on some very significant business people in Russia, on some banks in Russia and on some significant energy companies in Russia in part to cause some damage, and President Putin himself has said that the sanctions are causing damage.

But also in part to signal that we are prepared to do more, to create, really frankly, an uncertainty in the marketplace, and that uncertainty is, in fact, punishing the Russian economy. If you look at the numbers, and we can go through this, the GDP numbers, the stock market, the cost of borrowing from the Russian government, it's all having a very significant toll.

ZAKARIA: So explain how these sanctions, particularly the American sanctions, you know, that are really sanctions that do not allow these companies, Russian companies, to in somewhat participate in the American financial system? Why do you think they're so effective?

COHEN: Well, they're very effective because the dollar is the dominant currency in which all international trade occurs. And when we impose a sanction on a company, that means that they cannot have access to U.S. financial institutions, to U.S. businesses or, really, to trade on the dollar. So if they are purchasing a tractor or selling a tractor, it is likely that that transaction will be -- the currency used in that transaction will be the dollar.

And if that company is sanctioned and is frozen out of the U.S. financial system, they won't be able to complete that transaction.

ZAKARIA: And we can do that unilaterally without anybody else involved because the U.S. financial system is really the kind of central nervous system of global commerce?

COHEN: Exactly. The vast majority of global commerce uses the dollar, either directly or because whatever currency is being used, they need to -- they need to change the currency into dollars in the course of a transaction for the transaction to go forward.

ZAKARIA: Is that -- was that your experience with the Iran sanctions, that this was the most powerful piece of the -- you know, because the United States could close off that dollar transaction?

COHEN: Yes. Yes. Absolutely. The sanctions that we've imposed on the Iranian financial system which has largely isolated it from the international financial system has had a dramatic impact on Iran's ability to transact with the world and it has reverberated through the Iranian economy. There are obviously other additional important aspects to our sanctions against Iran but the financial sanctions, which, you know, prevented Iran essentially from being able to trade freely with the world has had a very significant impact.

ZAKARIA: When you talk about ratcheting up the pressure, do you believe -- are you watching on a sort of daily basis? In other words, should we expect that there might be additional sanctions, not in the next several months but in the next several weeks?

COHEN: Yes. Look, we can apply sanctions at the time and place of our choosing and the fashion of our choosing. So I think everyone ought to expect that we will continue to watch the situation carefully and we'll choose our steps in response to what's happening there. And I think it's an important point.

What we're trying to achieve here is to change the calculus of the Russian government. We're trying to create an incentive for the Russian government to recognize that what they need to do is to de- escalate the situation in Ukraine, to take a different path. And we are going to continue to work on creating those conditions in the Russian economy and in the people close to President Putin to try and encourage them to make the right choice there.

ZAKARIA: Do you think Putin cares about economic costs? He's 20 points up in the polls by some measure.

COHEN: I don't think any leader can blindly ignore the fact that their GDP, which was, at the beginning of the year thought to be growing -- the economy growing at about a 2 percent rate. The consensus estimates now is essentially no growth in Russia. The IMF has significantly reduced its projections for growth in Russia.

The fact that they tried to do a bond offering last week in rubles, just tried to raise money in rubles, and there was so limited interest in lending money to the Russian government, they had to pull back the bond offering. The fact the stock market is down 13 percent this year. I don't think any leader can just ignore those sorts of very significant economic weaknesses.

ZAKARIA: You've been very explicit in saying that you're going after Putin's inner circle. You even made a reference once to certain entities in which Putin had investments. So lots of people wonder, do you know where Putin's money is?

COHEN: No, I'm not going to talk about what is an intelligence matter.

ZAKARIA: But you do know?

COHEN: I'm not going to comment one way or the other.

(LAUGHTER)

ZAKARIA: David Cohen, a pleasure to have you on.

COHEN: Thank you. Good to be here.

ZAKARIA: Up next I will ask Egypt's foreign minister why more than 1,200 people have been sentenced to death in his country.

(COMMERCIAL BREAK)

ZAKARIA: This week an Egyptian judge sometimes, described as the butcher, sentenced 683 supporters of the Muslim Brotherhood to death in connection with the murder of a single police officer. On the same day he confirmed 37 of 529 death sentences he gave out last month, also to Muslim Brothers.

The Obama administration says it was deeply troubled by the trial which reportedly lasted eight minutes. This comes a week after the White House announced it would resume aid to Egypt and planned to deliver $650 million of military aid along with 10 Apache helicopters. The aid had stopped after President Mohamed Morsi was ousted by the military in July of last year. Since then Morsi's Muslim Brotherhood has been outlawed and more than 16,000 people have been arrested and 2,500 people killed in the ensuing unrest.

Joining me now to talk about all this is Egypt's Foreign Minister Nabil Fahmy.

Nabil, welcome. Good to have you on.

NABIL FAHMY, EGYPTIAN FOREIGN MINISTER: Thank you for having me.

ZAKARIA: Now I know that some of those rulings are going to be appealed. This goes to the Grand Mufti. There is a real legal process, but the atmosphere that Egypt has created around these prosecutions, what seems to be these incredible penalties being placed on people for what is largely being seen as political activity, political opposition, seems to be very different from the kind of transformation of the country that you've been talking about. The first case has already been appealed. And the only verdict that came out was 37 people, not 520.

ZAKARIA: Right.

FAHMY: Nevertheless, the attorney general appealed that the next minute on issues of due process. So the legal process will in itself look at this.

In the second case, it's still going to the Mufti. It has not been -- there's no conviction yet.

ZAKARIA: That's usually a formality under Egyptian law, but let's see how it goes.

FAHMY: We'll see. I'm not going to convict anybody or announce anybody innocent. That's for the court to do. Your point is valid. The imagery is tough. And it leaves question marks. And I've been addressing them. I address them the only way I can by saying we will ensure due process.

ZAKARIA: But how do we get to a democracy and do you get to inclusion when what is happening seems to me to be systematically excluding millions of Egyptians who supported the Morsi government?

Look, the Morsi government won three elections in one year. Won the parliamentary elections, it won the constitutional elections, it won the presidential elections. Let's assume half of all those people were deeply disappointed. That still leaves millions and millions of Egyptians who felt these people represented them and now these parties are illegal, these people are jailed. How are you going to include those Egyptians in this new Egypt?

FAHMY: The Brotherhood was not considered to be a terrorist organization. From June last year until November-December they were legal. And all we saw was every day more violence. There is a point when you can't accept violence. If you pursue violence for political purposes, you are a terrorist organization.

If you are an Egyptian and you want to -- accept the constitution as your charter and act peacefully, you will have your role in society. That's clear.

ZAKARIA: The constitution is good but it -- but I notice what you have now is another general who is going to run for president. Isn't this sort of a return to the past of Egypt that people were trying to move beyond?

FAHMY: No, it's not a return to the past because three things. I should say two, but actually three. 2011 revolution, 2013 revolution and this new constitution. The new president cannot appoint a prime minister without consulting with the power -- with the party that has the majority in part. The new president has a two-terminants. He has 35 percent less power than the present president. And he has a people who have revolted twice against two presidents for exactly the same reason. Exactly the same reason. Let me say something which I shouldn't say. But you have a tendency to push me in those directions. We need to keep our feet to the fire. Egyptians have to keep me as a government official and I will have to keep myself on target. As difficult as the issues are on violence or regional volatility, I have to deal with that and provide political tolerance as we go along. The country is going through a transformation.

ZAKARIA: But you -- you know, the government has persecuted and prosecuted Al Jazeera. You know, for essentially, they argue, for practicing journalism.

FAHMY: Let me ask you a question. Are there any other cases?

ZAKARIA: The reports I've seen do say that 17 journalists are in prison in --

FAHMY: Same case, though. Same case. If I'm not mistaken it's the same case. If they are not the same case they're not any new case after that case.

ZAKARIA: The general point is it does not feel like a new democratic -- a new birth of democracy and there will be an Egypt that feels like a state that is targeting people.

FAHMY: Just so that we don't mislead anybody, there is a determined government effort to ensure that journalists have full access, and we made a public statement saying this. You want to go out and commit a crime? I will arrest you. But if it's just trying to be asking difficult questions making my life difficult, that's part of your profession.

ZAKARIA: All right. Let me ask you about the U.S. relationship. Did you feel that things are now back on track between the United States and Egypt, that the Obama administration is giving you the support you want?

I think the desire is there. I don't think it's there yet. I think definitely in this visit, everybody I talked to started off by saying, look, we want to move on together. Why we will do our thing ourselves, we will do it consistent with international laws. We're not trying to create an isolated state here.

And, yes, are there different opinions within the Egyptian government? There are in your government, believe me, and there are in mine, not because we're against each other but that's the nature of the political beast.

ZAKARIA: But the hard liners of the military seem to be winning.

FAHMY: Not really. Not really. In fact, I mean, I'd love if you would come and witness our cabinet meetings. The idea that the military or the interior minister are the ones who always have -- are angry at the violence is simply not true.

ZAKARIA: Nabil Fahmy. Pleasure to have you on. FAHMY: Nice being here.

ANNOUNCER: Next up, I will tell you what the United States has in common with a country that some say is reverting back to the dark ages.

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World" segment. One of the richest nations in the world this week put in place policies that Amnesty International says will take the country back to the dark ages.

Where in the world are we? Brunei. The tiny oil rich sultanate on the island of Borneo in the southern regions of the South China Sea. At a ceremony on Wednesday morning, the sultan announced that Brunei's experiment with Sharia law had begun making it the first East Asian country ever to adopt the Islamic penal code.

This first phase also fines of jail time if you failed to perform Friday prayers or get pregnant out of marriage among other offenses. In about a year those guilty of theft or consuming alcohol will be punished with a whipping or even amputations. And in two years the death penalty will be implemented for crimes like blasphemy, sodomy or insulting the Quran. Some of the laws would not apply just to Muslims who constitute about 70 percent of the population but also to non- Muslims.

The United Nations condemn Brunei's new edict and a spokesman for the High Commission for Human Rights said it contravenes international law.

So what is going on? The move towards Sharia comes at a time when energy reserves, the lifeline of the country's wealth, are dwindling. The sultan who also serves as prime minister and minister of defense and finance has stayed in power the usual petro-state way -- bribing his population with subsidies.

Bruneians enjoy a lush lifestyle which includes free education and medicine, but over the last few years, Brunei's economy has started to shrink for the first time in decades, according to the Asian Development Bank. And by 2035, net exports of oil and gas will be reduced by almost half, so there are obvious and non-religious forces at work here.

Now to be fair, it remains to be seen how the new laws will be implemented and what role the British-based civil legal system will play going forward.

To me still, it seems a step or several big steps backwards. But Brunei is certainly not alone in its interesting of Sharia. A handful of countries currently impose the strict Islamic punishments for some crimes including Pakistan and the Maldives. As Noah Feldman pointed out in a terrific "New York Times" magazine article in 2008, the word Sharia is radioactive in many circles especially in the West, but he notes Sharia is extremely popular in parts of the Muslim world. I would argue that this is because it is seen as indigenous to Muslim countries, not an imposition of the West, and was historically associated with high morals and values, as opposed to the brutality of the Arabian desert.

ZAKARIA: It is also seen as an improvement over the arbitrary rule of dictators. So when Arabs lived under Western-style military despots like Mubarak and Assad, they would imagine an alternative to it, rooted in their own past, shaped by their own morals and religion."

Feldman makes an interesting point. We often ignore the high standards that Sharia law sets. For an adultery conviction to be obtained under Sharia, for example, he says the suspect must confess four times, or four adult men of good character must testify that they witnessed the act in question.

Feldman says we also ignore the extremes of our own systems, such as the life sentences that are routinely doled out for relatively minor drug crimes. As he puts it, "It sometimes seems as if we need Sharia as Westerners have long needed Islam as a canvas on which to project our ideas of the horrible and as a foil to make us look good."

By the way, one place where American law and Sharia meet is the death penalty, something we were reminded of this week. On Tuesday the cruelest of scenes unfolded at the Oklahoma State Penitentiary, where a botched execution left an inmate writhing in agony 43 minutes after receiving what was meant to be a lethal injection. Remember, the United States is the only Western country that retains the death penalty.

Up next on "GPS," we will look at another death in America. It is the death of the American middle class. What happened to this once great part of the United States?

(COMMERCIAL BREAK)

ZAKARIA: America's middle class has been the envy of the world for decades with its idyllic suburban homes, fancy cars and white picket fences. But a comprehensive new study shows that America has lost yet another number one ranking. America's middle class is no longer the richest in the world.

David Leonard is the editor of "The Upshot," the Times' data-crunching website and column. And he and his team analyzed over three decades' worth of income data and came to this and other startling conclusions. He joins me now.

It's a fabulous project.

LEONARD: Thank you.

ZAKARIA: The most startling piece of data was this shift that has taken place in the American middle class. And the way you look -- one way of looking at it, which you presented, was, if you look at the median income of an American -- and that's not the richest person, not the poorest person -- the person smack in the middle, and I think the Census Bureau does -- defines it at about $50,000 a year, someone earning $50,000 a year.

Look at this chart. Since 1981, that's what's happened.

LEONARD: It's not a good story, is it? Since -- in 1981, we had by far the richest middle class in the world. And what has happened since then is that income growth in these other countries has been substantially faster for the middle class and the poor.

Now, this is after-tax income. That's a question a lot of people have. It's after-tax income. It includes direct government benefits, things like Social Security. So this is really what people have to spend. And it's really worrisome. And it's not just a 30-year trend. You also see it if you look since 2000. In some ways it's more pronounced in the last 15 years.

ZAKARIA: Right. This is the stunning one. So you see that all those other countries had much stronger income growth at the median level, but then, since 2000, I mean, the United States barely grew at all.

LEONARD: Zero, yeah.

And so the obvious question is "What's going on here?" And there are a few things going on here.

One, we have had economic growth that is quite similar to many of these other countries. Obviously, we've had faster growth...

ZAKARIA: Overall economic growth?

LEONARD: Yes, faster growth than Spain, particularly recently. But it's not as if the U.S. is growing a lot faster than Sweden or than Canada. It's quite similar. But more of the bounty of our growth goes to a smaller group of people. So our economy gives more money to the executives at the top.

And since the bounty as a whole, the pie as a whole is growing similarly, if you give more of that to fewer people, there is less left over for everybody else.

Not only do we have more pre-tax inequality, but those other countries then do more to -- and it's a dirty word here, right -- redistribute income. They do. Canada, these Northern European countries do more, after -- after people get it, to say, we're going to take money from people at the top and give it to people at the bottom.

But three, I think, is really important. It's an issue I know you've talked a lot about, which is education. I know there is this whole notion out there, oh, is education overrated? And to be self-critical of the media for a minute, sometimes we fan that in a way that's not healthy.

Education is not overrated. These other countries have done a much better job educating their population. If you look at how many college graduates they're producing; if you look at their skills on technology or literacy or numeracy, that makes it easier to create good-paying jobs. And one of the reasons we're falling behind is because we're falling behind in education. We used to lead the world in education and in income. We don't any more in either.

ZAKARIA: Now, let's get to some of the other great stuff that "Upshot" has. One of the things you talk about, which is going to be, of course, every kid in America's nightmare, which is that getting into the Ivy Leagues, or the most selective colleges in America, has gotten much harder because they're just taking in -- it's now a global competition.

LEONARD: That's right, It's now a global competition. So a couple different things have happened. Since you and I were applying for college, the population has grown. We had it easy. There are now more U.S. teenagers than there were -- not so many more, actually, than in the '80s when the baby boomers were still teenagers -- I mean 1980 -- but in the late '80s and '90s.

The second thing, as you note, is these colleges have globalized, and so they have admitted many more kids from around the world without, in most, expanding. And what that means practically is that they've shrunk the number of seats for American kids.

And so when you combine the population growth with the fact that they've shrunk the number of seats, you see and these numbers show that, at a places like, say, Dartmouth, there are 24 percent fewer seats per college-age American than there used to be.

ZAKARIA: Another thing that you had on which I thought was fascinating -- when you look at early childhood education -- now, we're used to imagining there are big disparities in -- in the, kind of, attainment in the levels of skills and how people do at school.

And I always thought that race was probably the biggest one, maybe socio-economic background. But what you point out is that the data now shows that, even at kindergarten level, the single biggest difference in terms of how people do in school, how kids do in school, is gender, that you see that with girls and boys.

LEONARD: Yeah.

ZAKARIA: Why?

LEONARD: We have a big gender problem. We don't completely know why. So girls have long done better in school than boys. Boys still used to do better because of just how much terrible sexism there was. There's still sexism, but there's less.

ZAKARIA: But people often assume that that was, when you get into the 10, 11, 12 range, that the boys start getting adolescent and girls -- what you're showing is that this is happening in kindergarten.

LEONARD: In kindergarten. Right, so it's when kids arrive in school, girls are already way ahead of boys. And I think -- I don't think we know exactly. I think the rise of single-parent families has something to do with it. The research suggest that has a bigger and worse effect on boys in those families than on girls.

ZAKARIA: And you see it throughout the economy later in life, which is one way to tell the story that you've been telling about the American economy is girls have done fine. Women's wages have gone up, like, 35 percent or something. Men's wages have gone down almost 20 percent. So if you look at unemployment, you see that male unemployment is much worse than female unemployment. The story plays itself out.

LEONARD: Yeah, and that's why we should think of these numbers as real. You can say, well, wait, these are behavior measures. They're five-year-olds. How do we know they're leading to anything?

Well, we know they're leading to anything because girls then get better grades in fifth grade and better grades in eighth grade, and they're more likely to go to graduate high school and college. And while women's pay is still below men's, as you said, women have gotten a 35 percent inflation-adjusted increase in pay over the last 25 years. Men's inflation-adjusted increase is zero. And a lot that has to do with the education.

ZAKARIA: David Leonard, we've got to have you back when you have another big slew of data, so come back soon.

LEONARD: Thank you so much for having me.

ZAKARIA: Up next, why is Iraq such a basket case? Just ask its neighbors in Iran. I will talk to Dexter Filkins of The New Yorker, who is just back from a month in country and has some fascinating insights.

(COMMERCIAL BREAK)

ZAKARIA: Nearly two and a half years ago on December 15, 2011, the United States declared an end to the war in Iraq. On Wednesday that country held its first parliamentary election since U.S. troops left. And regardless of who was declared the victor after all of the votes are counted and coalitions are formed, the real victor will be Iran.

That is what my next guest, Dexter Filkins says. Filkins is a staff writer for The New Yorker and is just back from a month in Iraq. It's an experience he documents in his article "What We Left Behind."

You didn't want to go there?

(LAUGHTER)

FILKINS: No, I really didn't.

ZAKARIA: Why?

FILKINS: It's a tough place. It's hard. I just -- you know, I rented a -- I checked into a hotel in the middle of Baghdad, you know, and every morning there were five or six bombs going off. I had to be really careful. It's not a happy place, you know. ZAKARIA: And there must be also a sense of disappointment. You saw so much American investment in lives, in treasure, in effort. And it really looks like the place has spiraled downwards and downwards.

FILKINS: You know, if you didn't know it -- if you didn't know it, walking around that city and driving around that city, I'm not sure you'd ever know that the Americans had ever been there.

I mean, obviously there's a parliament and they have elections, and that's -- that's the biggest legacy, but it looks like the same city it was 10 years ago in the middle of the civil war. There hasn't been that much investment at all. The Iraqis -- you know, this is a deeply divided country. It's still at war with itself. In fact, I mean, it's worse than ever. The civil war is roaring back. It's pretty sobering.

ZAKARIA: And the reason I say that you say Iran won in your piece is that it's pretty clear that Malaki and the party that he represents, which seems likely to win, is essentially in its core nature an ethnic party, a Shia party, and that it sees itself as affiliated in some way with the Shias of Iran, that that is it's principal driving imperative.

FILKINS: I think so. I mean, I think, you know, through most of the war, most of the American war, when we were there -- and Maliki has been the prime minister since 2006 -- he was playing one against the other, us against them. You know, he's got -- you had the United States, the big power with all the troops in the country, but then he's got to deal with Iran because they live there and they're never going away and they're his neighbor.

And then we left -- all gone. And so -- but the Iranians are still there and so he's got to deal with them, whether he wants to or not. And they're very, very powerful.

ZAKARIA: Paint a picture of Iraq today because, as you say, Baghdad looks pretty awful, bombs going off everywhere. You would never know, right, that this is one of the richest oil countries in the world.

FILKINS: It's bizarre.

ZAKARIA: But then you have the southern part of Iraq, Basra, one of the -- that's turning into a big oil center. Then you have the north. What's your sense of the country?

FILKINS: It's a -- it's a country that's sliding again into civil war, sectarian war. And so you have, you know, Al Qaida militants, basically, whatever they're calling themselves this week, in the middle of Fallujah, sometimes in the middle of Ramadi. So the...

ZAKARIA: These are the Sunni militias who feel totally cut out of the government and so are in a sense waging a war against it?

FILKINS: Yeah, it's basically...

ZAKARIA: So you're back to the old Sunni-Shia...

FILKINS: Yeah, it's back to 2006.

But there's these weird pockets. Like, if you go to the north in Kurdistan -- say, I went to Erbil. Erbil is booming. I mean, there's -- the entire horizon is taken up by construction cranes. They're pumping oil there. There's a Jaguar dealership in the middle of the city. In Basra, there's oil flowing in. The Iraqis are pumping 3.5 million barrels of oil a day.

You don't see a lot of evidence for that oil money in places like Baghdad and thereabouts, but -- so it's -- there are pockets in the country that are in pretty good shape, but I think, you know, overall it's a pretty bleak picture.

But I think the really terrifying thing there is that the border between Syria and Iraq, it's basically gone, it's just open territory. Somebody in the White House said to me, my gosh, that stretch of territory between Aleppo in Syria and Anbar in Iraq must be the scariest place in the world, and I think it is. It's desert, it's open, it's the corridor that runs along the Euphrates River.

ZAKARIA: And historically, there was no real border. These tribes actually occupied both sides of the border. So in a sense if one tribe is being killed in Syria, they have compatriots in Iraq who will take...

FILKINS: Absolutely. And that's the thing, they're feeding each other, you know, al Qaeda in Syria, as it's -- you know, again, they call it ISIS there, but that was basically an Iraqi creation. They crossed the border and went into Syria when the civil war started there and they got it going, so it's all cross-pollinated, which is remarkable.

But I think the really scary thing, just to look at Syria, is you've got this terrible civil war that's going on, but the waves are just going outward. So, it's spilling into Iraq, as we've seen, where the civil war has started again, it's spilling into Lebanon where every fifth person in Lebanon is a refugee. I think in Jordan the fourth largest city in Jordan is a refugee camp.

So Syria is just -- you know, you have in middle -- in the heart of the Middle East is coming apart. And I think the really scary thing is the whole Middle East was created in 1919 with a few pen strokes by the British and the French. Those are artificial states cobbled together. It's all coming apart and that's the real danger.

ZAKARIA: Next time go somewhere cheery next year.

FILKINS: Thank you.

ZAKARIA: Up next, why you must pay your electricity bill even if you are a prime minister. I will explain.

(COMMERCIAL BREAK)

ZAKARIA: Countries around the world this week celebrated international workers day. For the first time since the fall of the Soviet Union in 1991, Russia held a huge May 1st parade in Red Square. It brings me to my question of the week, Mayday was established in 1889 as a day of protest following riots that took place in which country? A. Russia, B. Italy, C. The United States or D. Germany?

Stay tuned and we'll tell you the correct answer.

This week's book of the week is Thomas Piketty's "Capital in the 2st Century." It is the book everyone is talking about. It is in fact very long, at times dense, but highly intelligent, copiously documented, and whether you agree with it or not, you must read it or at least read about it.

If you want to cheat, we have links to The Guardian's review of it which is the best crib sheet you'll be able to find.

And now for The Last Look. This week, Pakistan's Prime Minister Nawaz Sharif found out what happens when you don't pay your electricity bills the hard way. Electricity is often stolen or unpaid for in Pakistan, as it is in many developing nations, and this week Sharif directed his ministry of water and power to begin a zero tolerance policy toward theft and to crack down on the failure to pay bills.

Well, the minister of state for water and power agreed, and he shut off power to more than 18 government buildings, including the offices of the prime minister himself. The reason? Failure to pay large bills.

The lights were turned off for 48 hours in the prime minister's offices, but they were restored once the bills were paid.

Hats off to Mr. Sharif for trying and for finally paying his bills.

The correct answer is C, the United States. A coalition of socialist parties and unions established Mayday to further the cause of labor rights after the 1886 Hay Market Riots in Chicago. Ironically, Mayday is not officially celebrated in the United States. In 1884, President Grover Cleveland established a holiday to celebrate workers called Labor Day. Some say the date was chosen in September instead of May due to a fear of Mayday's connection to socialism and those riots.

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