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Fareed Zakaria GPS

Interview with Michael Lynton; Falling of Russian Ruble; Restoring U.S.-Cuban Relationships; Unprecedented Attack on Pakistani School

Aired December 21, 2014 - 10:00   ET


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.

We have a terrific show for you today. We will start with an exclusive interview about "The Interview."





ROGEN: For kimchee?



ZAKARIA: That's the movie about North Korea's Kim Jong-Un that has created a firestorm. It involves cyber war and the freedom of expression.

I will talk to the CEO of Sony Entertainment, the man with ultimate responsibility for the film and the company that was hacked.

Then the rest of the world-shaking news from this week. Cuban- American relations on the road to normalization. The collapse of the Russian ruble. The resurgence of the Taliban.

We have a world-class panel to talk about it all.

But first here is my take. This has been a week where big news has been exploding. We will get to all of it, but let me tell you about the thing that most agitated me this week. The response to the cyber attacks on Sony Pictures.

Now that U.S. intelligence officials say they believe North Korea was behind those attacks, the discussion has finally moved away from e- mails about Angelina Jolie to the real story, which is far more troubling. One of the nastiest regimes in the world has effectively threatened to launch terror attacks in America if an artistic work were to be shown publicly, and stunningly, almost everyone involved has caved.

Imagine that the Iranian government had threatened a terror attack on U.S. soil if, say, a book were about to be released that parodied its supreme leader. Would we not regard this as an intolerable surrender to threats of terror and a violation of core principles of freedom of speech? Yet when confronting an almost identical circumstance today with the Sony movie "The Interview," the reaction has been very different.


ROGEN: You want us to kill the leader of North Korea?




ZAKARIA: After the country's largest theater chain said they would delay the film's opening, Sony announced it would officially cancel its December 25th release. Other movie studios did not rally behind Sony. In fact, "Deadline" magazine reported Wednesday that another movie set in North Korea, a thriller starring Steve Carell, has been canceled. The stars of "The Interview" canceled all their media appearances.

It could be said that this movie is just a comedy. But Charlie Chaplin's "The Great Dictator" was also a comedy, satirizing an evil maniac Adolf Hitler.


CHARLIE CHAPLIN, ACTOR, "THE GREAT DICTATOR": Now we'll just fight to fulfill that promise.


ZAKARIA: And it's worth remembering that when Chaplin's movie was being made in the late 1930s according to the documentary "The Tramp and the Dictator," Neville Chamberlin's government wanted to ban its distribution in Britain, all in service of its policy of appeasement towards Nazi Germany. By the time the movie was released in 1940, Britain was at war with Germany and everything had changed.

Why does the terrorist threat from North Korea produce appeasement and indifference where threats from Islamic terrorists produce courage and defiance and resilience?

I suspect that it's because we are fully aware of the barbarism of jihadi terrorists. But we tend to think of North Korea in somewhat comical terms. The odd dictators with their strange haircuts, the weird synchronized mass adulation in stadiums, the retro propaganda and rhetoric. In fact, North Korea is one of the world's most repressive and brutal dictatorships. Estimates are that it allowed one to two million of its own people to

starve in a famine in the 1990s. The U.N. says that North Korea abducted thousands of people from neighboring countries following the Korean War and currently imprisons about 100,000 people in brutal labor camps.

That statistic comes from a U.N. panel commissioned to investigate the human rights situation in North Korea. Its report released in February paints a picture of a regime that really has no parallel in the scale of its cruelty and oppression.

The challenge that movie studios and theaters face is real because they have to balance the issue of freedom of expression with safety and commerce. But they've made a mistake. I understand it well. In 2009 Yale University press published a book on the Danish cartoon controversy but refrained from publishing the actual offending cartoons of Prophet Mohammed because of fears of retaliation and violence.

As a trustee of the university, I was asked to defend the decision, one I would not have made. Swayed by my concerns for an institution I love deeply and a group of administrators I respect greatly, I made a statement supporting the university's actions that I have always deeply regretted. The right response then and now must be to affirm freedom of expression.

The U.S. government has to find a way to respond to this active aggression on American territory. If not, North Korea will have gotten away with the worst cyber attack as well as the most brazen threat of terrorism in recent times. It would be triumphant and emboldened and surely groups like al Qaeda and ISIS will take note that the way to scare countries into submission is to threaten these kinds of attacks.

At that point the story will be about much more than a Hollywood comedy.

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

So let us get straight to Sony's side of the story. Joining me now is Michael Lynton, the CEO of Sony Entertainment as well as the chairman and CEO of Sony Pictures Entertainment. In other words, he is the boss at the company behind "The Interview," the movie that provoked the North Korean cyber attack and threat.

The president says Sony made a mistake in pulling the film. Did you make a mistake?

MICHAEL LYNTON, CEO, SONY ENTERTAINMENT: No. I think actually the unfortunate part is in this instance the president, the press, and the public are mistaken as to what actually happened.

We do not own movie theaters. We cannot determine whether or not a movie will be played in movie theaters. So to sort of rehearse for a moment the sequence of events, we experienced the worst cyber attack in American history and persevered for three and a half weeks under enormous stress and enormous difficulty and all in the effort of trying to keep our business up and running and get this movie out into the public.

When it came to the crucial moment when a threat came out from what was called the GOP at the time, threatening audiences who would go to the movie theaters, the movie theaters came to us one by one over the course of a very short period of time, we were completely surprised by it, and announced that they would not carry the movie. At that point in time, we had no alternative but to not proceed with the theatrical release on the 25th of December.

ZAKARIA: So you don't --

LYNTON: And that's all we did.

ZAKARIA: So you have not caved in your view.

LYNTON: We have not caved. We have not given in. We have persevered and we have not backed down. We have always had every desire to have the American public see this movie.

ZAKARIA: Why not release it online in some form or the other, video on demand?

LYNTON: There are a number of options open to us, and we have considered those and are considering them. As it stands right now, while there have been a number of suggestions that we go out there and deliver this movie digitally or through VOD, there has not been one major VOD, video on demand, distributor, one major e-commerce site that has stepped forward and said they are willing to distribute this movie for us.

Again, we don't have that direct interface with the American public, so we need to go through an intermediary to do that.

ZAKARIA: Mitt Romney says why not just put it on YouTube and let -- let the whole world see it?

LYNTON: That's certainly an option, and that's certainly one thing that we will consider, but, again, all of this has transpired so quickly that we're trying to weigh the options as to how we can get this -- how to go forward with all of this.

We were taken by surprise by the theaters, which is what we wanted to do first, and now we're trying to proceed and figure out what the next step should be.

ZAKARIA: The president says he wishes -- I wish they had talked to me. What is your response?

LYNTON: My response is that a few days ago I personally did reach out and speak to senior folks in the White House and talked to them about the situation and actually informed them we needed help. The FBI has been with us now for several weeks and has been great, but I did reach out and explain the situation to them at that time. ZAKARIA: So the president is wrong when he says that you did not

reach out to him?

LYNTON: Well, I don't -- when he's asking about reaching out --

ZAKARIA: I wish they had talked to me first is the --

LYNTON: Right. So we definitely spoke to senior advisers or senior adviser in the White House to talk about the situation. The fact is did we talk to the president himself and talk to him about what was transpiring as the theaters started pulling back and not -- and being unwilling to distribute the movie? No, but the White House was certainly aware of the situation.

ZAKARIA: Not only did the theaters all pull out, but you couldn't get any of the major Hollywood studios to support you. George Clooney writes that he put out a petition and tried to get support. He couldn't get a single person to sign it. Have you been surprised at the fact that nobody has been willing to rally around you?

LYNTON: I am surprised, frankly. I mean, I understand on the one hand that my fellow studios and everybody else has their own commercial concerns and they, themselves, are worried about becoming a target, and it did make this entire enterprise to be a very, very lonely affair, but on the other hand, you know, this is a moment where you would expect the industry to rally around and support you.

ZAKARIA: Is it fair to say or is it your estimation that the theater owners panicked because the North Koreans do not appear to have the capacity to launch some kind of major simultaneous or really any significant terrorist attack in the United States. Why do you think they panicked?

LYNTON: Well, what I can only imagine is homeland security came out that day, that there was not a viable threat, and my sense of it having had the conversations was there was enormous pressure put on them by the malls, by the shops in the malls, by the surrounding neighborhoods who were also threatened in those e-mails to say they shouldn't show the picture, and they basically on the basis of looking at that, they decided they wouldn't take the picture.

ZAKARIA: Does that mean that DVD release also becomes difficult because you would face the same challenge, which is the Wal-Marts and the Costcos of the world would have to agree to stock the DVD?

LYNTON: Again, we don't have a direct interface with the American public, so we would require either through online or in a retail situation, we would need distribution, and, yes, it's fair to say if we can't find one of those large retailers or many of those large retailers to sell our DVDs, we wouldn't be able to provide them with "The Interview."

ZAKARIA: But it feels to me like -- is it fair to say, Michael, that it's your hope and expectation is that the movie will be seen --

LYNTON: We have always wanted the American public to see this movie. We have worked tirelessly to do so. So absolutely we would -- that's been the primary objective throughout.

ZAKARIA: When we come back, I will ask Sony's Michael Lynton when he knew exactly he had a problem.


ZAKARIA: And we are back with my exclusive interview with the CEO of Sony Pictures, Michael Lynton, about the North Korean hack attack against his company and the threat of terrorism.

Michael, let me ask you to go through the sequence of what happened. When did you first realize that you had a problem?

LYNTON: The first time we understood that there was an issue with the North Koreans was back in June of last summer when they came forward with various e-mails and statements and actually I think they were in touch with the White House itself and described their disfavor with the movie.

At that point in time we actually reached out to experts at various -- at think tanks, within the State Department, to try and get a proper understanding of whether or not there was a problem here and whether or not we were providing a security risk, and we were told that there wasn't a problem here, and so we continued to proceed.

ZAKARIA: Including the U.S. government told you there wasn't a problem.

LYNTON: The U.S. government told us there wasn't a problem, that's correct.

ZAKARIA: So when you -- when people ask the North Koreans threatened you, why didn't you take this seriously?

LYNTON: We did take it seriously. We went to the people who we thought were most expert in the area, people in the U.S. government, people in various think tanks, and inquired as to whether or not this would be a problem and they told us that it wasn't. And that actually is for the world to see as my stolen e-mails have been presented in public.

ZAKARIA: There was an e-mail between you and somebody at the Rand Corporation --

LYNTON: And somebody between me and the State Department, correct.

ZAKARIA: The State -- right. When you began to experience the cyber attack, what was your response? Because there are a number of people who wonder why did this happen? Did you have weak malware? Did you not have the kind of cyber security you needed?

LYNTON: No, we had absolutely sufficient cyber security. I mean, both the FBI and Mandiant, the experts who we brought in, basically said that the malware was so sophisticated that 90 percent of American businesses would have fallen prey to what happened to us. So, no, I don't think we were inadequate at all in our cyber security. ZAKARIA: So what that means is that this is at a level that the --

that the attack is at a level of sophistication that very few companies, perhaps no company would be able to withstand.

LYNTON: That's what I have been given to understand, and as a result, they stole all of our data, wiped it -- wiped our computers clean, and then destroyed the computers and the servers, all of which is in the FBI report that came out today.

ZAKARIA: What is your estimate of the damage of that cyber attack to Sony?

LYNTON: We haven't come to an estimate as of yet.

ZAKARIA: But certainly in the tens of millions.

LYNTON: It's very, very significant. It's very significant, yes.

ZAKARIA: Variety of reports that you will lose $75 million on this movie. Is that accurate?

LYNTON: You know, we don't get into the exact numbers of it, and by the way, it still remains to be seen as to how we and if we can get the movie out at which point that, you know, whatever the loss is or the gains might be are still to be realized. So it's too early to determine.

ZAKARIA: Could you collect insurance on this?

LYNTON: There is insurance as it remember pertains to the cyber attack itself and so we may be able to find ourselves in a situation where we could collect some insurance, yes.

ZAKARIA: You know, there are some people who feel this movie should have never been made. That you're -- it's a movie about the assassination of a sitting world leader, a country that has nuclear weapons, that it was in poor taste, that you should not have made this movie and risked Sony's credibility.

LYNTON: Well, a couple of things. First of all, we made the movie because we thought it was a funny comedy. Secondly, there is a long history of political satire in film, and this clearly falls into that realm. But I would also say that fundamentally isn't the issue here. The issue here is that having made the movie, we feel very strongly that it should have been in theaters for the American public to have seen.

And we did everything in our power to make that happen. We did not cave. We did not back down, and we continued in that pursuit right up until the end.

ZAKARIA: How damaging has it been that your e-mails, your personnel records, are out there in the open?

LYNTON: You know, it's hurtful to everybody at Sony Pictures. Everybody, and by the way many of the folks who work with that outside of Sony Pictures. That part has been damaging and hurtful. It's not nice to have your e-mails exposed to the general public. It has had a real effect on the morale of the company and many people are frightened because of it. We'll recover. We've worked very, very hard to do so and we're in the process now.

ZAKARIA: When you look at this, this is one of the great episodes of crisis management in really management history. What is the lesson you take from it?

LYNTON: I take a couple of lessons. You know, first of all, I take the lesson because it's gone on now for about a month, you need to keep a cool and clear and sober mind throughout the process because everyone in the organization is looking to you to have that attitude and to have that point of view and to be a clear thinker.

You also need to make sure that you keep your eye on what the objective is going forward, and the objective for us has always been and will always be to make sure that the creative artists who work with us can continue in their endeavor whether that be making television shows or films, and that we be able to the best of our ability distribute those out to the public. And I think we have continued to pursue that objective throughout this period.

Yes, we were thwarted at the end when the theaters chose not to show the movie, but the objective remained very clear in everyone's mind throughout the process.

ZAKARIA: When we come back, I will ask Michael Lynton whether as a supporter of the president he was disappointed by what he heard from him.


ZAKARIA: We are back with the CEO of Sony Entertainment to get Sony's side of the story and to hear from Michael Lynton, the head of the studio.

You are well known as somebody who supported President Obama.


ZAKARIA: Were you disappointed in what you heard today?

LYNTON: I would be fibbing to say I wasn't disappointed. I -- you know, the president and I haven't spoken. I don't know exactly whether he understands the sequence of events that led up to the movie not being shown in the movie theaters, and, therefore, I would disagree with the notion that it was a mistake. It's a generally held view by the public and the press that that's what happened, and maybe that's how that view was held by him.

But knowing as I do the facts and how they have the unfolded, you know, we stood extremely firm in terms of making certain that this movie would appear in movie theaters.

ZAKARIA: Do you feel that the U.S. government, the FBI in particular, and I gather you have been in touch with other agencies, the CIA, the NSA, have they been helpful? Are you happy with the kind of cooperation you've gotten?

LYNTON: The vast majority of the interaction has been with the FBI, and they have been absolutely spectacular throughout. They came and stayed with us for the entire period. They came to a resolution as to who was responsible for this in a record amount of time. I can't speak more highly of the agency than that. They were really the folks who we were in touch with in this process.

ZAKARIA: Would you make the movie again?

LYNTON: Yes, I would make the movie again. I think, you know, for the same reasons we made it in the first place, it was a funny comedy. It was -- it served as political satire. I think we would have made the movie again. Knowing what I know now, we might have done some things slightly differently, but I think a lot of events have overtaken us in a way that we had no control over the facts.

ZAKARIA: And you're saying you still want the public to see this movie.

LYNTON: We would still like the public to see this movie, absolutely. We have to explore options as to how that might happen because while everybody comes forward and says, release it digitally, do it on VOD, do this, do that, all of these things are in their own way complicated. Many people don't want to come near the movie because they fear that in some way, shape, or form their systems, their servers, might be infected with a malware that came to us.

So, you know, it's not -- it's not for -- what we really need to do now is evaluate the best way forward for all of us, and that's what we're in the process of doing.

ZAKARIA: You've been at Sony Pictures for while. You ran Penguin Press. Is this a very dangerous blow against freedom of expression?

LYNTON: It is. You know, I came to Penguin a few years after the publication of Salmon Rushdie's book, and which the book that Penguin published. And in that instance it was a very -- for one thing it was pre-9/11 obviously, but even there with the fatwa and actually some people were killed in that instance, there were -- the entire industry came together around Penguin. The publishers, the book sellers always stocked the book, and the authors all came out and supported the book.

That did not happen in this instance. In this instance, we stood alone in trying to get a movie out. I think now part of the reason for that I suspect is because the conversation got caught up in all of these e-mails, many of them were deeply unfortunate, a lot of them involved celebrities and people didn't understand what the real issue at stake was, and the real issue at stake was we now discover it's North Korea, but we had a group of individuals who were hell bent on making certain that this movie not show up in movie theaters and we were hell-bent on making certain that this movie not show up in movie theaters, and we were hell bent on making certain that it did show up in movie theaters. And the problem was in part that that support that I sort of saw at

the very end that was there for "Satanic Verses," and I wasn't at Penguin at the time but came there right after my predecessor as the publisher, that kind of support was not there for this movie and I think part of the reason as I mention is because everybody got caught up in all of this - on all of their attention being spent on these other things which frankly are a side show in the whole affair.

ZAKARIA: Do you worry what this has done to Sony's brand? You're one of the great electronics companies in the world.

LYNTON: Yeah. No, I recognize that. I think we can recover as a brand or, you know, we have to assess what it means to the brand. I certainly think that we can recover from this, yes. I think we have, you know, strong relations within the creative community. I think many of them now understand what it is that happened and are sympathetic to what it is we've had to go through through this process.

ZAKARIA: Somebody asked the president at his news conference, would he watch the movie? If the president - Are you going to send it to him? Are you going to send it --

LYNTON: If the president wants to see the movie, I would be more than delighted to send it to him. It would be my pleasure.

ZAKARIA: Michael Lynton, pleasure to have you on.

LYNTON: Thank you very much.

ZAKARIA: When we come back, the rest of all the news this week. I have got a great panel to talk about it. Cuba coming in from the cold. Russia's ruble collapses, and the Taliban's cowardly attack on a school in Pakistan.


ZAKARIA: It was a wild week in world affairs between the unexpected news about Cuban-American relations, the ruin of the Russian ruble, and Putin's robust defense of it, the dastardly attacks in Pakistan and much more. Let us get straight to it with a true all-star panel. Anne-Marie Slaughter and Richard Haass were both directors of policy planning at the State Department. Slaughter under Obama and Haass under George W. Bush. Anne-Marie now runs the think tank New America and Richard runs the Council on Foreign Relations. Rana Foroohar is "Times" assistant managing editor for economics and business. And CNN's global economics analyst. And Bret Stephens, of course, is the Pulitzer Prize winning columnist for "The Wall Street Journal."

So, Bret, let me start with you because what struck me as odd with regard to Obama's opening to Cuba and the call for the relaxation of the embargo is that "The Wall Street Journal" for 20 years has been calling for the end to the Cuban embargo, but when Obama did it, of course it turns out he's done it all wrong and the journal has a robust editorial explaining how this was all the wrong way to do it. It does feel as though if Obama were to say the sky were blue, the journal would say that there was something wrong with that.

BRET STEPHENS, "GLOBAL VIEW" COLUMNIST, WALL STREET JOURNAL: I think it was a subtle editorial that made the point that 20 years ago what we called for was lifting the embargo for the sake of helping the Cuban people at the expense of the Cuban government. And I don't want to come out and simply flatly oppose what Obama has done. What my concern is, is that after this flurry of engagement, of an opening, good headlines for the president, we are going to find that the Castro regime or its successor is going to be much more obstreperous than we had imagined. That the liberalization that we seek won't materialize.

So, how do we go about constructing a step-by-step process that consistently gives us the leverage we need to move the regime in the right direction to end its police state controls? The model here or rather the cautionary tale here is Burma. Opening Burma was the achievement, was one of the great achievements of the Obama administration in the first term, and what we discovered was simply setting up an embassy, opening commercial relations wasn't enough. The regime was keen on maintaining its power. It's been more and more difficult problem for us ever since. Let's not repeat - let's not give up our -- too much of our leverage at the start.

ANNE-MARIE SLAUGHTER, PRESIDENT & CEO, NEW AMERICA FOUNDATION: You can say the same thing of China, right? We opened to China in the '70s. We have robust economic relations. It hasn't changed the regime's hold on the society. So I think Colin Powell said this morning, look, of course, we should have relations was Cuba. We have relations with many countries that are equally oppressive. It's still better, it's better for the Cubans, it's better for us, and it's very important part that we are not talking about so much. It's very important for our relations with the rest of Latin America. This has been a steady thorn in our side in working with other Latin American countries, and they are overjoyed, and this is going to allow us to do more in Latin American politics overall.

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: Look, either this works and by having this limited relationship, getting more Internet in, more telecommunications in, a bit of economic engagement, it sets in motion the kinds of trends we want to see. And this is the Trojan horse model that essentially we set Cuba on a trajectory we want. If it doesn't, Bret can relax because we still have the embargo in place. And what we can do is essentially have a three-way negotiation among Congress, the administration, and Cuba and say we will only relieve - relax these elements of the embargo if you undertake these explicit reforms.

So, this is not unconditional engagement. We haven't reserved quite a lot of tools that can only be released if Cuba passes or clears certain hurdles. I think it's well designed.

RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: I think also, you know, just picking up on what you said about China and technology. A great first step would be to help Cuba build a more robust Internet. That would help foster civil society. That's what happened in China, so that would be a great first step. ZAKARIA: Well, and in general China is a much more open place today

than it was in the 1970s. The idea that economic freedom is not real freedom it sometimes puzzles me that conservatives have to be --


ZAKARIA: You understand, economic freedom is freedom.

STEPHENS: You're acting as if I'm inalterably opposed to this move. But I simply want to strike a cautionary note about is the execution going six months forward. Because it's going to be very easy to forget a year from now if there isn't the kind of follow through we need. Look, this is not China. Cuba is frankly not an important country. There's not going to be an economic bonanza coming our way even if Cuba liberalizes as much as possible. Above all --

ZAKARIA: But it does help the U.S. a lot more than Cuba because we have many more companies that can do business in Cuba than Cuba has companies that can do business --

STEPHENS: Yes, but even then the scale, let's face it, is relatively minuscule. Cuba is a small island in a relatively small island in the Caribbean. Above all this, our concern should be the human rights and civil liberties of the Cuban people which continue to be repressed under the Castro regime and its minions. Let's focus on --

ZAKARIA: And this probably empowers civil society more than almost anything else we could do.

SLAUGHTER: And I actually - just, I mean, Cuba itself might be a small island, but if you think about the Mediterranean as a whole, I'm sorry, the Caribbean as a whole and you think about our Hispanic population and you think then of a growing economic area, the Caribbean is an area of a lot of investment and Cuba is a key player there. I think it's important.

ZAKARIA: Is it fair to say that this is the kind of thing Obama supporters would say, this is the kind of stuff he does. You know, he's willing to be bold. He's willing to work outside of conventional wisdom. That, you know, Hillary Clinton for a long time supported the Cuban -- the embargo. Only last year, you know, switched her position. That, you know, he has been more bold on things like this and Burma than even another Democrat would have been?

HAASS: I won't get into the Democratic politics of it. What I simply say, this is an area under our Constitution, our political system, he has tremendous latitude. Diplomatic relations and the like. He doesn't need Congress essentially to sign onto this. He also has the advantage that the Cold War has been over for 25 years. Cuba is no longer a soviet or Russian strategic outpost. The existing policy hasn't worked for 50 years. The administration is making a bet that interacting with Cuba is more likely to bring about a more open Cuba than isolating it. It's not a bad bet. If it works, it's a success. If it doesn't work, again, we still have the safety valve of the embargo in place. I think it's a justifiable move, and there's a decent chance it

actually will set in motion a dynamic that the Cuban government won't be able to stop. It's one of the positive effects, by the way, of lower oil prices. The fact that Venezuela is not going to be able to sustain the kind of subsidy -- I think the Cubans understand that the era, on which the state could control things to the degree it has is over, so they are accommodating that reality.

ZAKARIA: Right. The falling prices I think in Cuba has been crucial because they would replace the Soviet Union, which used to give them subsidies in the Cold War, with Venezuela. And Venezuela needs a very high oil price to break even. I think Iran needs it at $130 or so dollars a barrel. Venezuela may be next is $120 a barrel.

HAASS: Virtually no dollar reserves. They're stretched.

ZAKARIA: What do you think -- you know, what is going to happen with these low oil prices, in general? This seems to me that one of the follow on effects, we're going to talk about Russia in a second, but what happens in a world with oil prices at $60? FOROOHAR: Well, there are economic consequences and political

consequences. The economic consequences are, first, in the U.S. and in a lot of countries it's good news. In the U.S. it's like a $100 billion tax rebate essentially for consumers. That's going to help the recovery here. It's very bad news for petro autocrats, right? You see Putin under pressure. You see the fact that the Saudis are willing to pump more and keep the prices low puts Iran under pressure. So, there's a lot of fallout for those countries that's negative, and the negative fallout tends to be more intense than the positive effect.

ZAKARIA: When we come back, we're going to talk about one petro dictator in particular, Vladimir Putin, when we come back.


ZAKARIA: And we are back with Anne-Marie Slaughter, Richard Haass, Rana Foroohar and Bret Stephens. Bret, Iet me ask you again, it feels as though, you know, I'm only slightly teasing because you have this book out about America in retreat and how terrible Obama has been. Obama set in place a policy toward Russia which was we are going to put sanctions on them, three rounds of sanctions, got the Europeans to do it, got the Europeans to finally talk seriously about diversifying from energy. Clearly all of this is part of the reason, just part of the reason Russia is under pressure. Because sure, the price of oil has dropped, but the ruble has also dropped and the price of your currency is a sign of people's confidence in the regime. Isn't it fair to say that the Obama strategy of pressuring Russia and making it pay some price has worked?

STEPHENS: I think it's fair to say that sanctions, which came -- tougher sanctions which came a bit too late certainly for the people of Donetsk and Luhansk are effective as part of a larger reality which is the extraordinary transition in the world oil markets, the rise of the United States to its place as the premiere producer, and the decision by Saudi Arabia for really unrelated causes not to put a floor on the price of oil. And this combination of factors is creating a happy -- sort of a happy confluence of events which is putting great pressure on Putin. How he reacts to that I'm a little bit concerned about his way of getting out of this.

ZAKARIA: So that's a very important question, Richard. If you look over the last ten years, as the price of oil went up, Putin got bolder and bolder. When you were in government and, you know, George W. Bush now explains, I have seen this in a couple of places of Ruchir Sharma's book that he thought when he met Putin he could trust him. He thought - looked into his eyes and saw his soul. Because the price of oil was I think something like $30 a barrel. Putin was two years out of the Russian default and was being very accommodating. That as the price of oil went up, he became less and less accommodating. So would the reverse be true?

HAASS: Short answer is we don't know. Harold Brown once said about nuclear weapons, when we build, they build, when we don't build, they build. There was a certain constant, shall we say, in Soviet policy. Now, it's possible Putin will use the current economic problems, he'll get uneasy with it, and he'll do a wag the dog scenario. He'll create some kind of an international distraction, do worse things in Ukraine, possible, I think, unlikely. The more likely thing I think is he slightly pulls in his horns, at least tactically.

ZAKARIA: How bad is the Russian economy right now?

FOROOHAR: I think it's disastrous. I think Russia is really a failed state economically. If you look at it, it's a petro state. 75 percent of the exports come from oil. So when you have oil prices like this and you don't have diversification which is really one of the tragedies of Russia. There's great human talent there, human capital. It's like Cuba in that respect. There's a lot of wealth of experience in science and technology, but there was no effort made governmentally to diversify.

ZAKARIA: What do you think about Putin?

SLAUGHTER: So I think Putin's very weak, and I think, indeed, he was weak before. I really see his move into Crimea and into Ukraine as the result of weakness, not just economic weakness, but political weakness. Again, if you go back to 2011, he was really shaken at the amount -- the number of people who came into the streets in Moscow, and he has been feeling --

ZAKARIA: Protesting --

SLAUGHTER: Protesting - protesting the election and really opposing him. So I think he's weak. This makes him weaker. I think the Saudi point, the Saudi Arabians are not just lowering oil prices for Iran. They're also doing this against Russia. You have to remember that Saudi Arabia is fighting Russia on Syria, and this is a very deliberate effort there, too. So I actually see them as being diplomatically attacked in the Middle East as well as in Europe. I see Putin as weak. The real question is at what point if he doubles down, I don't think he will but if he doubles down and becomes more aggressive, at what point does his own party decide they've had enough.

STEPHENS: The issue is there's one area where he is strong. He retains major public support in Russia, and going forward --

ZAKARIA: That's right. We were talking in the break, he's not really a dictator. He's an illiberal Democrat.


ZAKARIA: He's elected and often quite popular --

STEPHENS: And I guess the challenge for American policy makers is how do you go by constructing a policy that disenchants some sizable number of Russian people from Putin, from that mystique of the strong man? You know, confident tigers are dangerous. Wounded tigers are also dangerous. How do you persuade Russia that the source of their problems is not the West? It's not some conspiracy. It's coming from the Kremlin?

FOROOHAR: That's very tough, too, because in Russia and in many other emerging market countries, I think that there's a younger generation that's quite nationalistic that is -- he has popular support for that reason.

HAASS: He controls television dramatically which makes it very hard to break through. The only other thing that's about Putin, is at the height of the Cold War, when there was Khrushchev, Brezhnev, Kosygin, there was a bit of collective leadership. The hardest thing to figure with Putin is he's now consolidated power to a degree around his own person that's really without precedent in the history of not just Russia, but the Soviet Union, in some ways since Stalin. And that's what makes it so hard to predict how he's going to react to this pressure.

SLAUGHTER: His popularity though has been tied to the fact he's increased the standard of living for the majority of Russians four- fold. So, that's not happening. Right? Russia is in recession. You're already hearing some leading economic figures speak out against him in ways they weren't before, local governors. So I think we have got to watch the economics there.

ZAKARIA: Is there anything to say other than just, you know, the marvel of the complete brutality of the Taliban's attack on the school children?

STEPHENS: Well, I mean, it's a reminder - it is, as they say, the enemy in plain sight. I mean what happened at Peshawar, even by the standards of terrorism in Pakistan, is just astonishing. Look, the main point is this, I think this is a wake-up call to the Pakistani intelligence and the Pakistani military that they can't continue to play this game that the Pakistan Taliban is bad, but the Afghan Taliban is good, that they can continue to support the so-called resistance fighters in Kashmir. They just released on bail one of the masterminds of the horrific attacks in Mumbai, just a few years ago. They have to understand terrorism is a unitary threat and join forces with Ashraf Ghani, with President Modi, Prime Minister Modi in India and really go after this as if they're all pieces of the same puzzle.

ZAKARIA: Haven't they gotten like 20 wake-up calls?

HAASS: I hope you're right but I see no historical evidence to support the thesis. You have got a weak, divided state. It's not a failed state, but it's a failing - almost an endlessly failing state. It's a weak state. They have had endless opportunities to do this. It's the reason, quite honestly, that Pakistan remains in many ways the most frightening country in the world. It's nearly 200 million people, you've got a nuke - what - 150, 200 nuclear weapons. Many of the world's most dangerous terrorists, again, all within a state that's unable or unwilling to exert its authority in large chunks of its territory. This is the nightmare country in many ways in the world.

ZAKARIA: Pakistan is another one of these failed economies. Right, I mean - It's a tragedy because actually in many ways it's the same human capital as India.

FOROOHAR: Absolutely. Huge strengths in technology and science. And, again, I think that there needs to actually be a popular wake-up call that this isn't about isolated incidents of terror. You know, that's what -- when Malala was shot in 2012, it was about a brazen school girl. You know, in 2013 it was Shiites are a separate group. It is a deep terrorist threat in the middle of this country.

STEPHENS: It's like Russia. Pakistan, part of the tragedy of Pakistan, is that they have chased their best people away. You find the most erudite Pakistanis in the broad Pakistani diaspora. And they have left the country, and that - they have to find a way to bring them back.

ZAKARIA: As often happens in these situations, the beneficiary of that flight is the United States. Thank you all very much. Wonderful conversation.


ZAKARIA: NASA put five people together in this small dome on a volcano in Hawaii for four months to see how they got along. Not for the benefit of reality TV viewers, but to learn what they could about what life on the isolated red planet will be like for the astronauts. You learn about that in our special airing next Sunday in this time slot. It's called "Moonshots for the 21st Century."

And besides tomorrow's mission, we'll tell you about doctors who are trying to 3-D print a human heart, physicists who are trying to build a star right here on Earth to power the planet, aeronautical engineers and how their work in hyper sonics could someday get you from New York to London in one hour. And neuroscientists who are trying to map the human brain. Don't miss it. For viewers in North America, that's 10:00 a.m. and 1:00 p.m. Eastern Time next Sunday, December 28TH.

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