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Fareed Zakaria GPS

Interview with Jon Hunstman; What Happens Next in Egypt?; Interview With Daniel Yergin

Aired December 11, 2011 - 10:00   ET


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

We've got a great show for you today. First up, the candidate for the GOP nomination with the most extensive foreign policy experience, Jon Huntsman. I'll talk to the former U.S. ambassador to China about his world view and his domestic policy plans.

Then what if the Americas throw a party but they didn't invite us? It happened, and I'll explain.

Next, more than 60 percent of the vote in Egypt this week went to Islamists. How worried should we be?

Then, is shale gas the answer to all America's troubles, or at least many of them? You've heard about fracking. What is it? Is it safe? Find out.

But first, here's my take. President Obama gave an important speech in Kansas last week. Whether you agree with all of it or not, he has begun a national conversation about the economy and the role of government. That's what this election should be about. And, in presenting his view, Obama shifted the economic conversation from deficits alone to the crucial issue of growth. After all, deficits matter because they could have a harmful effect on growth.

So, the question we should all ask is, what would make this economy grow? What has stopped it from growing over the last few years, indeed over much of the last decade?

One theory heard a lot these days is that the economy is burdened by excessive government regulation, interference, and taxes. Cut them, the Republican candidates all say, and the economy will be unleashed. It's a compelling picture, but the data simply do not support it.

The organization of economic cooperation and development, the OECD, released a study last week measuring tax revenues as a percentage of GDP. Of the 30 countries studied, the United States came in 28th. Taxes are low in historical terms, as well, the lowest since the early 1950s.

Or look at competitiveness - the World Bank publishes a report that looks at doing business across the globe. The U.S. ranks fourth in the world. The World Economic Forum does an annual ranking of overall economic competitiveness. The U.S. ranked fifth.

In both these rankings, by the way, the countries that score higher than the United States are tiny places like Singapore and Finland, with populations often five percent that of the United States. And these rankings have not slipped much over the last decade.

So where has there been change? Where have we slipped?

The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now, we're 24th. U.S. air infrastructure has gone from 12th in the world to 31st, roads from eighth to 20th.

The drop in human capital is even greater than the drop in physical capital. The United States used to have the world's largest percentage of college graduates. Now, we're number 14, according to the most recent OECD data. And American students routinely rank toward the bottom of the developed world in international tests.

The situation in science education is even more drastic. The number of engineering degrees conferred annually decreased more than 11 percent between 1989 and 2000.

In other words, the big shift in the United States over the past two decades has not been a rise in regulations and taxation but rather a decline in investment, in physical and human capital. An investment is the crucial locomotive of long-term growth.

On this program, Michael Spence, the Nobel Prize-winning economist, pointed out that the United States got out of the Great Depression because of the spending associated with World War II, but also because during the war it dramatically reduced its consumption and expanded investments. People spent less, they saved more, and they bought war bonds.

That surge in investment by people and government produced a generation of growth after the war. If we want the next generation of growth, we need a similarly serious strategy of investment.

Let's get started.


ZAKARIA: My first guest today wants to be the next president of the United States.

Jon Huntsman is a Republican, but he served as ambassador to China under President Obama. He was previously governor of the state of Utah, and back when George H.W. Bush was president, Huntsman served as deputy assistant secretary of Commerce and also had a stint in Singapore as ambassador. A storied career already, but now he wants the top job.

Jon Huntsman joins me. Pleasure to have you on.

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: Thanks, Fareed. I'm honored to be here.

ZAKARIA: Why is it that most people think of you as the Republican whom independents and moderates are going to love, but Republicans can't really get - get warm and fuzzy about?

HUNTSMAN: Well, Republicans, as a matter of fact, are coming around and taking another look. They might have missed something at the very beginning, and that was a conservative track record as governor.

I delivered the largest tax cut in the history of our state tax reform. We took that state to the number one job creator in America. We reformed education by expanding choice. We created health care reform without a mandate.

But I'm also the kind of leader who believes in bringing people together. I say we have too many levels of divide in this country. We forget that we're Americans first and foremost.

And in order for us to get to the point of problem solving, the underlying issues - and I believe there are two major issues that we must tackle immediately. One is the economic deficit, which is very real, and it's a cancer metastasizing in our country that's going to shipwreck the next generation if we do nothing about it.

And the other is a deficit of trust, Fareed, and that is, the American people no longer trust their institutions of power. They don't trust Congress. They don't trust the executive branch, a president who hasn't led. They don't trust Wall Street.

And, I say, as a candidate and then as president, I'm going to talk about a banking system that is too big to fail, which we have.

ZAKARIA: And you want to break the banks, huh?

HUNTSMAN: I do, because I believe that capitalism without failure isn't capitalism. So if you've got banks that combined have assets that are roughly equal to two thirds of our GDP, $9.4 trillion.

If they are too big to fail, then those who believe in a system that ought to be functioning based on free market principles, you can do taxes, you can do regulatory reform, everything else. But if you're left with banks that are too big to fail, you're setting yourself up for disaster.

ZAKARIA: Let's talk about the temperament, though, because it is - at least it seems to me one of your problems, which is that the Republican primary wants people to say incendiary things. I mean, if you watched the rise of Herman Cain, you watched the rise of Rick Perry, you watched the rise of Newt Gingrich, there is a market for people to say slightly outrageous things as a way of proving that you're, I don't know, politically incorrect or willing to - to, you know, kind of not cotton to the mainstream media. So, you just refuse to say those kinds of incendiary things.

HUNTSMAN: Well, it may give you your Warholian 15 minutes of fame, Fareed, but in every case that you've cited, they've all come down. They go up and then they come down because there's no staying power. There's no sustainability there.

And all I'm saying is I've got a track record. I'm a consistent conservative, when you look at my record, and my track record would speak to accomplishments as governor. I've lived overseas four times, three times as a United States ambassador. I've been in business.

So, when we get our Warholian 15 minutes of fame, and I think it's coming this month as we gradually build up. With a sustainable rise in New Hampshire, we'll have the staying power -

ZAKARIA: But you're -


ZAKARIA: You're predicting something about Newt Gingrich, who is still up. You think that that candidacy will fade?

HUNTSMAN: It's hard to know. We'll have to see where the marketplace goes.

But I can tell - I can - all I can tell you is this, Fareed - I'm not going to pander, I'm not going bluster, I'm not going to contort myself into somebody I am not. And I'm not going to sign those silly pledges like everybody else has done. And I'm not going to make that sojourn (ph) into Donald Trump's office.

There are just some things I will not do.

ZAKARIA: Tell me about the - the way you will get this budget deficit under control. As you know, we're spending about 23 percent of GDP. We're taxing at around 14 or 15 percent of GDP. That leaves a very large gap.

Republicans are saying that they will not accept a - a dollar of tax increases for $10 of - of spending cuts. How can you make up that entire difference? We're talking about a seven or eight percent of GDP entirely by spending cuts, and what would the effect on the economy be if you liberally cut - cut what would be roughly $1 trillion out of the economy?

HUNTSMAN: You've got to combine aggressive spending cuts.

I like the Ryan plan. I like what it calls for, $6.2 trillion out of debt and spending. I think it is necessary, such that it will take a standard 19 percent of - of our GDP that's allocated to spending that which is more sustainable.

But we have to be smart enough, Fareed, to couple the - the cutting and the management of the debt part with firing our engines of growth. And I learned as governor that when you can fire your engines of growth in an economy, you can expand your base and revenue will increase, and you can pay the bills.

We've got to start paying the bills as - as an economy. We're not doing that today. And, as you pay the bills and your - your debt to GDP is going to change, then you're going to get back on your feet again.

But I believe we have an opening to re-create a manufacturing miracle in this country, a manufacturing renaissance. You know, when I was born in 1960, the manufacturing as a percentage of our GDP was 25 percent. We exported $3 for every $2 we imported. We owned 36 percent of the world's GDP.

And I look at where we are today, an anemic nine percent is derived from manufacturing.

ZAKARIA: You - you slightly dodged my question on taxes, so I'm going to ask it again. If you got spending cuts of the kind that - that you want to get - let's just take Simpson-Bowles as one example, where the spending cuts are roughly speaking $3 of spending cuts for $1 of tax increases. The increases achieved precisely the way you want to do it, broadening the base and eliminating loopholes.

Would you - would you accept that?

HUNTSMAN: Well, I - I would tell you that we do not need tax increases in today's environment.

Here's what I would do with the revenue. I would phase out the loopholes and the deductions in the tax code, which I know some people don't necessarily agree with but I think it's exactly what this country needs, both on the individual side and on the business side. Out with corporate welfare, out with subsidies.

I would reinvest that revenue back into the tax code, which would allow you to lower the rate, which would be good for everybody.

ZAKARIA: OK, this always sounds good in theory, so let me ask you about -

HUNTSMAN: It's what I did as governor.

ZAKARIA: No, no, no -

HUNTSMAN: It's what I did as governor, so I'm not speaking from an economic theory.

ZAKARIA: I know, but what I mean is -


HUNTSMAN: -- as a practitioner.

ZAKARIA: -- people don't like tax loopholes in theory, but then when you tell them that the deduction on interest for mortgages is effectively a loophole, they - they recoil, and of course that's the one that costs the most money. HUNTSMAN: Of course.

ZAKARIA: $100 billion. Would you be willing to phase out that deduction?

HUNTSMAN: Of course. It's what I fought for when I was governor. I did the same thing as governor. So, again, I'm not speaking as a - as a theorist here, I was speaking as a practitioner.

And I've talked to people in the mortgage industry, and I've said, tell me you wouldn't be willing to trade off a deduction that first and foremost focuses more on debt than it does equity, which is not a good place for us to be prioritizing tax cuts or - or loopholes, if you had in exchange a lowering of the rate? And the answer was, so long as you treat everybody fairly and - and don't just pick on our industry, that would probably be fine.

So all I want to do is pick on everyone equally. I just want to phase out all of the loopholes in total, because I believe that we have a tax code that is like a 1955 Chevy trying to travel on the superhighway of the 21st century. It's just - we're wondering why we can't stay competitive, and it's that way on the - at the individual income side, and on the business side.

ZAKARIA: When we come back, we will talk with the former ambassador, Jon Huntsman, about China and the rest of the world. Stay with us.



ZAKARIA: It seems to me, given the - your poll numbers, it is - it is possible for someone to look at your candidacy and say this man is running for Secretary of State.




ZAKARIA: And we are back with Jon Huntsman, candidate for the presidency of the United States by the Republican nomination.

Let me start now with China, about which obviously you have a particular and deep expertise. But Iran, because you have said essentially that you would use American military force to take out Iran's nuclear program. Is that a fair characterization of your position?

HUNTSMAN: It - it's fair in the sense that I would have all options on the table, because you have to ask yourself the fundamental question, can you live with a nuclear Iran, understanding the proliferation implications in the region, Saudi Arabia, Turkey, probably Egypt following up with their own weapons programs. And I think in that case, you have - you have the elements of disaster longer term.

So, if you can't live with a nuclear Iran, then you must keep all options on the table, and that's where I am.

ZAKARIA: We live with a nuclear North Korea. We live with a nuclear Pakistan. Iran right now is fairly effectively contained, as far as we can tell. There has been Saudi Arabia. The Egyptians are publicly opposed to them. The Israelis, of course, are both opposed to them and have a very large nuclear arsenal of their own that - that acts in some deterrent form.

The regime is having economic difficulties. It's having political difficulties. Doesn't it feel as though they are cordoned and contained in a way that - that should be enough? Or do you really feel you need that - that fairly large leap of military action?

HUNTSMAN: Well, you - you have to keep an eye on them. I don't know that the containment theory is necessarily as it was a generation ago with a much different Iraq, for example.

But I think the regime in Tehran, I think they've already decided for themselves that they want nuclear status. I think they've looked at North Korea - you mentioned North Korea - and they have said, North Korea, nobody's touching North Korea. They have, you know, a few crude devices. And compare and contrast it with Libya, and say Libya had a program. They gave it up for friendship internationally.

And I think they've decided they want whatever credibility comes with - with nuclear status. And I do believe that that runs the risk then of proliferation problems that would then be unmanageable in the region.

So, I say, as long as the centrifuges are spinning and as long as they're moving toward what could very well be enough to sound (ph) material for a weapon, I say we have a problem. And that means we've got to keep an eye on them. It means we've got to get inspectors in there. It means we've got to have openness and transparency, which never has been part of the regime. And I'm not at all optimistic about where this is taking us over the next one year to three-year time horizon.

ZAKARIA: Let's talk about China. You think China is going through a transition, and a transition not just economically but politically. You see an economy that has grown at 9.5 percent for 30 years, but that can't continue to grow at that pace and is going to start deescalating.

You see a political system that is going to go through a transition of its own to a new generation of leaders, presumably, as you know, not hand picked by Deng Xiaoping, the father of modern China. And you said that you think this will cause enough uncertainty that it will actually result in a drop in foreign investment in China.

HUNTSMAN: I - I do believe that will be the case. And so, economically, they're making a transition from being the largest export machine ever created in the history of humankind to a consumption model. And, as they do, they're going to have to bring their currency more into market valuation.

They want more consumers. Their - their entrepreneurs in China are demanding that they expand their consumer market. And, indeed, if they want to bring their population up the economic ladder, they have no choice. They have to begin moving more toward a consumption-based model. So that, all by itself, is going to result in some diminution of growth.

The rest of the international markets, on which they've grown to rely, are throttling back and their export performance will lessen, which of course will bring - will cause unemployment to - to move upward.

The political dynamic is a very interesting one, and that is, the 18th Party Congress is around the corner. We forgot sometimes, we have elections here next year. They have leadership changes.

You'll hear politics play out because of those elections. You'll hear politics play out in China because of those leadership changes. They are sweeping, and they are significant.

If you stop to ponder that 70 percent of the top 200 leaders are turning over in China, including seven of the nine members of the Standing Committee of the Politburo, I can't remember a time since 1949 when this significant, this comprehensive a change has occurred in - in senior leadership in China.

The Fifth Generation is coming to the forefront. I know many members of the Fifth Generation, as I did the Fourth and some in the Third. They have a different view of the world. It's based more on a nationalistic set of impulses.

They don't necessarily remember the Great Leap Forward, '60 to '64. They barely remember the Cultural Revolution, '66 to '76. They do remember 30 years of blue sky, eight, nine, 10 percent economic growth. That has informed their view of the world. They think their time has arrived.

ZAKARIA: Mitt Romney says the Chinese artificially keep their currency low. That makes their goods cheap on world markets. He says that when negotiating with them, they try to unfairly get the best deal.

They don't protect the intellectual property - property rights of Western companies, and that they have all kinds of advantages for national champions, that they basically don't play fair. They cheat. Isn't that true?

HUNTSMAN: In - in every category, you can cite major challenges in the relationship. So we're celebrating 40 years since Richard Nixon visited next February. It's gone from zero trade to $400 billion in trade, soon to be the largest trading relationship this world has ever seen. And there will be nothing like it for as far as you can see into the 21st century. So of course we have problems and challenges. Are we dealing with them in ways that would allow at least some advancement of the marketplace? Of course. It is slow going, it is painful, and it's the nature of the relationship. It's large and it's terribly complicated.

ZAKARIA: But it sounds like you're not willing to - to be tough on them, and Romney would argue that you're - I would - I would imagine, that you've kind of gone native. You spent time there as ambassador -



ZAKARIA: -- things too much from the Chinese point of view.

HUNTSMAN: And - and you can talk to them about how native I went. You know, I was locked out of travel to many parts of the country because of the way I - I dealt with dissidents and promoting human rights -

ZAKARIA: But why wouldn't you publicly criticize them for all these things which are - first of all, they're wrong -


HUNTSMAN: I used to publicly (ph) criticize them all the time.

ZAKARIA: -- of violations of WTO -

HUNTSMAN: Listen, as a trade negotiator, I used - I was on the front line of those issues. I've criticized them for a long time.

I disagree with the idea as - as promoted by Romney that you would slap a tariff on them the first day that he's in office for currency manipulation, because I know what lies ahead. They're going to slap a tariff on us, saying that we've manipulated our currency because of QE1 and QE2. And I say, all right, that - that sounds great in front of certain audiences, but in practice, you start a trade war.

ZAKARIA: Was President Obama a good executive to report to as ambassador of China?

HUNTSMAN: I didn't report a whole lot to him. It was more of State Department working with a lot of the other elements of government, whether that was on the intelligence side or the defense side, or with members of Congress.

I would argue that we didn't pull our levers of power in terms of promoting our values like - like we could have. We ought to be speaking out on human rights, like I did as ambassador. I had to pay a price for that, but that's important.

Speaking out on the issues regarding political dissidents, speaking out on the issues of the day regarding political reform. We're the only nation left in the world, Fareed, that does that effectively, and that can move people and move history when we stand up and speak.

ZAKARIA: But you're willing to - you say we should speak out more on political reform in China, but not call them to task on their currency manipulation or -

HUNTSMAN: Oh, I'm not saying don't call them to task. You - you have to do that, while recognizing you've got 15 other issues that - that are equally distressing in the relationship. And, at some point, you've got to sit down and negotiate a - a way forward. That's the way that it works.

ZAKARIA: It seems to me, given your poll numbers, it is - it is possible for someone to look at your candidacy and say, this man is running for Secretary of State. So, I'll ask you, if a Republican candidate becomes president and now offers you the job, will you be Secretary of State of the United States?

HUNTSMAN: Nice try, Fareed, but we're - we're in this to win the race. We're moving in the right direction in - in New Hampshire. And that's always the marketplace that upends conventional wisdom. Make no mistake about that.

And we're doing just fine in - in New Hampshire. We're going to win New Hampshire. We're going to exceed market expectations there.

So I don't think about anything other than keeping our eye focused on the ball, and that is dealing with the two deficits that we have in this country - one an economic deficit, the other a deficit of trust.

ZAKARIA: Jon Huntsman, pleasure.

HUNTSMAN: Thanks, Fareed.

ZAKARIA: Thank you so much.

And we will be back.




ZAKARIA: Last week saw the debut of a big new regional alliance. Thirty-three countries came together to promote relations across the Americas. But, guess what. America itself - the United States of America, that is - was missing, and that was the point.

"What in the World?" is going on? To explain, let me tell you a bit more about the summit.

(voice-over): It's called CELAC, a Spanish acronym for the community of Latin American and Caribbean states. It was held in Caracas, Venezuela, and the organizer was none other than that perennial America basher, President Hugo Chavez.

With great fanfare, Chavez proclaimed the summit to be the region's most important political event in more than a century. There would now be complete independence from American interference.

Chavez made a point of hosting Cuba, a country he subsidizes and one which Washington has no formal relations with. He also read out a letter of congratulation for creating the new regional block. The letter was from Hu Jintao, China's president.

(on camera): Venezuela's attempts to irk Washington are not surprising, but don't expect too many countries to actually follow his lead.

(voice-over): What the CELAC summit has really highlighted is how divided Latin America is. Haiti and Honduras have very little in common with Argentina and Brazil; Venezuela and Cuba have a completely different set of foreign policy goals from that of, say, Mexico and Colombia; there is little sense of a shared political or economic agenda.

And, in any case, there already exists a number of regional groups. Brazil heads up the Union of South American Nations, or UNASUR. Then there's the OAS, or the Organization of American States, but that's led by Washington, and it excludes Cuba.

(on camera): What struck me as odd, though, is why the leaders of strong emerging markets like Brazil and Mexico are giving Mr. Chavez a platform to peddle his failed ideas, ideas that none of them are following.

(voice-over): Remember, this is a man who has somehow managed to lead his oil-rich country to 30 percent inflation, a contracting economy, and mass poverty. Quite a feat.

Meanwhile, his neighbors have turned South America into a rising economic force. The continent grew six percent last year, and is on course to grow five percent this year. Its countries have low ratios of public debt and its growth is increasingly driven by the consumption of the millions of new South Americans entering the middle class.

These are the factors that give its leaders the confidence and swagger that you now see at regional summits. There are worrying signs about speed bumps ahead. By some estimates, regional growth will slow to 3.2 percent in 2012.

(on camera): There are real challenges that have to be met. The region has high inflation, low labor productivity, and still too many subsidies to various inefficient sectors of the economy.

The slowdown is best evidenced by the performance of its biggest star, Brazil.

(voice-over): Last week, it reported its economy actually contracted in the last quarter. One more such quarter, and it technically enters a recession.

The good news is that Brazil has the means to come out of its struggles. But to do that, it needs to enact a new set of reforms, opening up its economy to boost productivity.

(on camera): In other words, to do the opposite of what Hugo Chavez's model represents.

Perhaps that's why the presidents of -

(voice-over): Brazil and Argentina didn't even stick around for the second day of the Chavez show. They took an early flight out.

(on camera): We'll be right back with a story that is terrifying liberals in Egypt and the West - the unexpected success of a hard line Islamist group in Egypt's elections. What does it mean? When we return.



CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Time for a check of today's top stories. A 6.5-magnitude earthquake rattled Southern Mexico last night, killing two people. The quake was felt 100 miles away in Mexico City where the mayor says there are some blackouts but no major damage.

The Head of U.S. Special Forces in Afghanistan has unveiled a plan to triple the number of armed Afghans paid by NATO to protect local villages. Admiral William McRaven says the proposal described as a "Community Watch with AK-47s" could go into effect over the next two years.

Iran says it will not return an alleged U.S. drone that it claims to have brought down. American officials have not confirmed that the stealth plane shown in a video released by Iran this week is actually a U.S. aircraft, but a Pentagon spokesman says a missing American drone has not yet been recovered.

Former dictator Manuel Noriega was flown home to Panama from France today. Noriega's return comes after more than 20 years in U.S. and French prisons for drug trafficking and money laundering. Panama convicted him during his captivity overseas for the slayings of two political opponents in the 1980s.

And those are your top stories. Now back to FAREED ZAKARIA GPS.


ZAKARIA (voice-over): When Egypt first set down the path to democracy earlier this year, you will remember there will lots of worries in the West that a group called the Muslim Brotherhood would win the most votes. Well, last week they did just that.

But that's not what is terrifying liberals in both Egypt and the West. Instead, it is the unexpected success of a more hard line Islamic group, the Salafis, that people worry about. They reportedly won about a quarter of the vote in the first round of the elections.

(on camera): So what do we know about them? What happens next in Egypt?

I'm joined by a top academic who has just returned from Cairo. Tarek Masoud teaches Middle Eastern politics at Harvard University. Welcome.


ZAKARIA: So first, give us the lay of the land. Egypt's first elections really in 40-odd years, right? What did it look like?

MASOUD: So these are not just the first free elections in 40-odd years. I'd be willing to wager that these are the first free parliamentary elections in Egypt that any living Egyptian has ever voted in. And they were quite remarkable on one level because they were really free and fair by all accounts, and turnout was quite high between 50 percent and 60 percent.

So what we had the last week was the - the first phase of elections which happened in nine governments - kind of like states. And in those - in those nine governments we found as you noted that the Muslim Brotherhood, won of plurality, about 35 to 37 percent of the vote, and the Salafi Group won about - called the Newer Party or the Party of Light, won about a quarter of the vote. And the liberal groups didn't do as well.

ZAKARIA: So tell us about the Salafis. Because they were not on anyone's radar screen at the start of this whole process.

MASOUD: Yes. It's quite a remarkable thing because the Salafis really are sort of ultra-orthodox, where the Muslim brothers might be more flexible, more willing to kind of reinterpret the strictures of Islam to kind of more correspond to modern life, the Salafis are much more purists.

ZAKARIA: So give an example of the difference between the Muslim Brotherhood and the Salafis.

MASOUD: So one really cool example from the recent elections is, if you look at their kind of campaign materials - so these parties, they pass out flyers to voters telling them these are the people that are on our party list. And, you know, how to go and vote for them. And they'll put photographs of all of their candidates on the list.

And so if you look at a Salafi flyer, you'll see that it has the eight candidates in the particular district, you know, all bearded men. And the last candidate on the list is a woman because the - the law requires you to have a woman on your list. So they put her last so she'll never get elected and they don't show her picture. They just have the logo of the party. The Muslim Brotherhood in contrast put their women in - at least one case, up front, in other cases sort of in the middle of the list and they show their photographs and they brag about their qualifications. So it's a really different model when it comes to women.

ZAKARIA: But the Salafis jihadist? Do they advocate violence in any way?

MASOUD: No. I mean, so are the Salafi - do they advocate violence? If you ask them about the legitimacy of violence in places like Israel or the legitimacy of violence against the United States and Iraq, they might actually tell you it's legitimate.

But are they advocating violence in the context of Egypt? No. They're participating in elections, and that's - that's what they think you need to do in the context of Egypt.

ZAKARIA: What do you think - when people think about, you know, these - these parties, what is their appeal? What is it that people think they're getting?

MASOUD: So the last time we talked sometime in February and we talked a little about the Muslim Brotherhood. And you asked me, so it's safe to say if you're an Egyptian, you know, you wouldn't be afraid of the Muslim Brotherhood but you wouldn't vote for them. And I said, yes, of course, I'd vote for a liberal group, et cetera.

But being in Egypt over the past few months, and you see the kind of decay in public order in Egypt. And then you see organizations like the Muslim Brotherhood or like the Salafis who really do appear to be the only people in Egypt who know what they're doing or what they're trying to do.

And there is probably something attractive about that to people in this kind of moment of chaos. Particularly since we know that on the Egyptian political calendar, and this is the same thing in Tunisia, there is this big date which is the writing of a new constitution. That's going to happen. The new parliament is supposed to select the people who are going to write the constitution, although there's a huge fight about this now.

And so you can imagine that this creates a great opportunity for Islamists because they can go to voters and say, look, there is a foundational moment coming in - in our lives. And we're going to set the course of this country for the next 100 years. And are we going to have a constitution that reflects our traditions and our Islamic values, or are we going to have a liberal, secular constitution that will bring in all kinds of terrible things that - that are alien to us?

ZAKARIA: And what are the terrible things that they - they can - they talk about when they talk about the western model?

MASOUD: Yes. So particularly if we think about the Salafis, you know, when they talk about the kinds of bad things that could happen, they talk about things that I think are implausible in the context of Egypt. Like, you know, sort of - sort of free love or homosexual marriage. Things that, you know, the vast majority of Egyptians don't want, including Egyptian liberals who would never propose.

But these kinds of fears are - we know that fear is a good sort of campaign tactic. And I think the Salafi used a little bit of that.

ZAKARIA: Do you think that the United States should welcome this development? Should it resist it? How should it handle it?

MASOUD: I think, you know, it's been said by a lot of people that what's happening now in the Middle East and particularly in Egypt isn't really about us. And in any case, there's nothing really we can do. So I think we should just accept these developments.

You know, when we talked in the sort of throes of the Egyptian revolution, the question that was always asked was - should the United States be supporting this move away from Mubarak? Should we jettison Mubarak? And my feeling was always that it really - that's a wrong question. It wasn't out choice, you know? We just had to figure out where history was going and - and accept it. And I think that's, again, the case - the case here.

ZAKARIA: Do you think that when you - when you look back this will be the first wave of elections that threw a lot of Islamists to power because they were the kind of forbidden fruit, or there was an identification with Islam? But that over time Egyptian liberals will also gain strength? What is your sense of the - the staying power of Egyptian liberals?

MASOUD: So this is a really great question. For me, the contest in Egypt was never really between Islamists and liberals - at least in this election, because the liberals are still nascent. They're going to need a - they're going to need a lot of time to get their act together.

To me, the contest was always between the Islamists and the kind of pillars of the old social order, kind of rural landowners, local notables. These kinds of people who had previously been co-opted by the ruling party. They used to run on the ruling party's banner. They haven't gone anywhere. The Egyptian social structure hasn't changed.

And though in this first round of elections those people haven't done very well, we don't know how they'll do in later rounds. And even if for whatever reason they don't do well in this election, maybe people don't want to vote for anybody that has any taint of the old regime on them. In five, six years, it could be a completely different game.

So that - those are the forces that I would see coming back and I wouldn't call them liberal. I wouldn't call them Islamist. I would just call them sort of, you know, pragmatic, opportunistic people, variety of ideological stripes. And that's the kind of thing we should be seeing soon.

ZAKARIA: Tarek Masoud, thank you very much.

MASOUD: Thank you.

ZAKARIA: And we will be back.




ZAKARIA: Some say that in 20 years, America could be one of the world's largest energy producers. In fact, it could even be the largest. We might even be supplying more energy than Saudi Arabia.

Is this possible? It is because of one word - shale. You might know it by its other name, fracking. Whatever you call it, it's controversial.

So what is the truth about it? Will it save us? Is it dangerous?

My next guest is Pulitzer Prize-winning author Daniel Yergin, whose most book "The Quest" is all about the global energy world. Welcome, Dan.


ZAKARIA: What I'm struck by is you've had all this investment in alternate energy and wind and solar. But the real technological revolution that's taken place in energy - and you talk about this in your book - has been the technology to extract hydrocarbons, oil, natural gas. Is that - was that something that - that people were predicting? I mean, I'm sure by how odd it is.

YERGIN: No. I think certainly there's been a rebirth of renewables in terms of becoming a significant business. But this emergence of shale gas really took even most of the energy industry by surprise. And it really only happened in 2008, although it had been 25 years in the brewing that then it broke out on the scene. And now, of course, everybody talks about fracking like they've heard the word all their lives.

ZAKARIA: And now we've created half a million jobs in this sector. Tell us the scale of what - what this does, I mean, in terms of our dependence on foreign oil and natural gas.

YERGIN: It doesn't affect oil because really gas is used primarily electric generation or home heating and so forth. But it does mean that we were headed to be as dependent on gas imports as we are on oil, and that's changed. And the numbers are quite extraordinary. This shale gas was really like two percent of our supply in 2000. Now it's about 35 percent of our production. So it's happened very fast.

ZAKARIA: And is it likely to go, you know, from 2 percent to 35 percent in a decade? What's the next decade?

YERGIN: Well, I think it's certainly likely to grow because the volumes are there. The resource is there, and the price of natural gas because of the growth of supply is half of what it was a few years ago. And so you have this abundance of this relatively inexpensive fuel that just wasn't on anybody's - most anybody's agenda.

ZAKARIA: And what it's doing mostly is replacing coal which is why its advocates say look at the end of the day, this is a net plus for the environment because what it's replacing is the dirtiest of all hydrocarbons.

YERGIN: Right. Exactly, Fareed. You pointed to what's really the - the issue, is that the natural gas is about half the carbon content of coal. So its significance in the United States is to back out coal which is what its environmental advocates want. And that is, you know, in the process of happening. And for other countries around the world, including China, it's a question of whether they'll have the gas to be able to do the same thing.

ZAKARIA: What about replacing oil? What is the use of liquefied natural gas in terms of cars, in terms of transport? What is the future for that?

YERGIN: There are some who say that natural gas should also be used as a motor transportation fuel. And, you know, if you go to the Southwest United States, you'll see people and talk to people whose pickup truck runs on natural gas.

It's also being used in industry. You have companies who were saying we're not going to invest in the United States anymore. We're going to go to the Middle East to get cheap natural gas. Suddenly literally they're investing billions of dollars now back in the United States. So that's another big market for gas.

ZAKARIA: How should we think about the dangers of fracking? There's concern - the principal concern is contamination of water supply, correct?

YERGIN: Right. Well, I was on this commission for President Obama. Really he charged us last March to report on the environmental aspects of shale gas. Now, we just delivered the final report to the Secretary of Energy.

And the conclusion is that the risk from fracking itself, from the hydraulic fracturing to the water supply is very, very tiny because you have this vast amount of very dense rock.

So there are three big environmental issues or concerns that need to be addressed. One is what do you do with the produced water that comes out of the well after you drill. Secondly is air quality. And thirdly is just the community impact. Suddenly rural community may have - may get jobs out of this. It's also going to get trucks on its roads.

And I think as a result, what we did in our report is kind of pointed to about 20 pragmatic things to do that would get the best practices that would assure that the states have the kind of regulatory skill set that they need, that there's - that the environmental issues are being addressed.

And so the answer we have is generally the conclusion that this resource as the president said, 100 years of supply, and the environmental questions can be managed.

ZAKARIA: Dan Yergin, always a pleasure.

YERGIN: Thank you.

ZAKARIA: And we will be back.




ZAKARIA: You probably haven't thought about blood diamonds since the DiCaprio movie of that name came out five years ago. But this week they were in the news again.

One of the partners of the so-called Kimberley Process to combat diamond money going to bad guys pulled out. That brings me to my "Question of the Week" from the "GPS Challenge" - what nation is the world's biggest source of rough diamonds?

Is it, A) Russia; B) Canada; C) South Africa; or D) Botswana?

Stay tuned, and we'll tell you the correct answer. Make sure you go to for 10 more questions. While you're there, check out our web site, the Global Public Square. You'll find smart interviews and takes by some of our favorite experts, new stuff every day. And don't forget, you can also follow us on Twitter and Facebook.

This week's "Book of the Week" is "The Ayatollah's Democracy." It's by a Hooman Majd, a past GPS guest. As we think about what to do about Iran, I would encourage people to take the time to read this book. The most vivid insider's account of the country. Beautifully written and intelligently argued, let's know something about Iran before we decide that we're going to bomb it.

And now for "The Last Look." This week there was a gala event held at the Finnish Presidential Palace to celebrate the anniversary of the nation's independence. Guests were dressed to the nines, proud as peacocks, of what they were wearing. But this woman was interested in a different kind of bird. Look closely at her dress. What do you see? It's an Angry Birds dress.

Yes, that addictive smartphone game. So is she the biggest fan ever of the game? No. Turns out she's married to a company executive. Now, if you think I've just wasted 30 seconds of your time telling you about this, think about this - the world has wasted a total of 200,000 years playing the game. Much of that in the last 12 months alone. Just imagine what we could have accomplished if that time was spent productively.

The correct answer to our "GPS Challenge" question was, A, Russia, is somewhat surprisingly the world's top diamond producer by volume. If you answered Botswana, by the way, you're not entirely wrong. It produces the most diamonds by value. Go to our website for more.

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