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Fareed Zakaria GPS

The Supreme Court's Controversial New Approach; The Weaponization Of The Dollar; Threats To The Dollar's Global Dominance. Aired 10-11a ET

Aired March 31, 2024 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:00:42]

FAREED ZAKARIA, CNN ANCHOR: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria coming to you from New York.

(BEGIN VIDEOTAPE)

ZAKARIA: Today on the program, the state of relations between America and Israel. Early this week, Prime Minister Netanyahu reacted angrily to the U.S. position on a U.N. ceasefire resolution.

UNIDENTIFIED MALE: Abstention.

ZAKARIA: It was the latest in a series of serious disagreements. What to make of the growing rift between the Jewish state and its most important benefactor and protector? Richard Haass has some thoughts.

Then "The Atlantic's" Graeme Wood will help us dig through the rumor and innuendo about what really happened in last week's terror attack in Russia, and who was behind it.

And former Supreme Court justice Stephen Breyer will give us a masterclass on what the high court's job is and what it isn't.

(END VIDEOTAPE)

ZAKARIA: But first, here's "My Take."

The hiring and firing of Ronna McDaniel as an NBC political analyst might seem like a small media tempest, but it does force a reckoning with a much larger issue that will come up again and again in this campaign. How to deal with Donald Trump and his supporters.

To recap, Ronna McDaniel was the chair of the RNC in November 2020 and tried to pressure local Republican officials not to certify the presidential election results. She also denied that the elections had been fair in a television interview.

This is all terrible stuff. We've heard so much about it that we sometimes get numb to its importance. So let me remind us all. Donald Trump is the first president in American history to try to stop the peaceful transfer of power. He incited a crowd to intimidate his own vice president and Republican legislators. And he managed to get a majority of Republican members of the House to vote against certifying the election results of 2020, despite the fact that they had been duly authorized by 50 states and D.C., and affirmed in dozens of court rulings.

This is a big deal. But here's the problem. Ever since then, about one-third of Americans believed that the 2020 election was not free and fair. That is more than 85 million adult Americans. How do we approach them? How do we approach the people who have led them to these beliefs? Do we cancel them all? Should no one who has these views be allowed to speak on NBC News? I think the executives at NBC were trying to find a reasonable way to have the views of 85 million Americans represented on the airwaves.

I understand that dilemma. Ronna McDaniel acted in ways that were not conservative or Republican, but anti-democratic. She assaulted the constitutional foundations of the country. But the nature of liberal democracy is that we allow all kinds of people to express their views. Avowed communists have run for the presidency of the United States. And let's be honest, many Republican leaders are playing a cowardly game here.

It's not likely that they actually agree with Trump's lies. They just know that the base of their party does and to disagree with it is political suicide. Most high-profile elected Republicans who in some way oppose Trump are now former elected Republicans. But some do try to move away from the worst excesses of Trumpism. McDaniel, in a recent NBC interview, affirmed that Biden was the legitimate president of the United States.

Should we encourage this kind of return to normalcy or forever punish those who once espouse crazy conspiracy theories?

Liberal democracies should avoid the temptation of using illiberal means even when they confront views and positions that are forthrightly hostile to liberal democracy itself.

[10:05:06]

I worry about some of the court cases against Trump. While they may be technically legitimate some involve offenses that happened years ago, and for which he was not then charged. Would he have been charged for those were he not the controversial or political figure he is today?

So far these efforts to rule him beyond the pale are not working. Despite 88 felony counts and all the censure of the media elite, he is leading in many polls. After all, his supporters are fueled by the belief that a group of overeducated liberals with no regard for them run the country. So how do you think they'll react when a group of lawyers in big cities come up with clever ways to make Trump ineligible to run for the presidency?

As I write in my new book, "Age of Revolutions," the new populist right's disdain for liberal democracy is frightening. Constituting the gravest threat we face to our political future. But the left also has its excesses in this direction. Many want to dispense with some of liberalism's rules and procedures. They want to ban those who have wrong ideas from speaking. They want to achieve racial equality by quota or decree.

They want to use education or art to achieve political goals rather than educational or artistic ones. Convinced of the virtue of their ideas in theory, say the rights of asylum seekers, they're comfortable pushing this abstract notion of virtue onto a reluctant society. But top-down revolutionary actions from the uncompromising left or the reactionary right often cause more turmoil than progress.

Donald Trump's brand of right-wing populism is illiberal, xenophobic, often racist, and takes America into dark dead ends. But the way to defeat it in a liberal democracy is not by using legal mechanisms that take him off the political playing field and canceling those who support him. Rather, it is to debate his allies, put forward powerful and persuasive positions that show Americans that you can also address their concerns, and to confront Trump on the political battlefield and beaten.

Go to CNN.com/Fareed for a link to my "Washington Post" column this week. There is also a link there to buy my new book, which I hope you do. And let's get started.

On Monday, the U.S. abstained from a U.N. Security Council resolution calling for an immediate ceasefire in Gaza. In past votes, it had used its veto power to block such a resolution. In response, Prime Minister Netanyahu called often Israeli delegation that was set to visit Washington at President Biden's request. Netanyahu later moved to reschedule the meeting. But it all adds up to a low point in U.S.- Israel relations.

Joining me now to discuss the broader implications is Richard Haass, a former director of policy planning at the State Department. He now writes a weekly newsletter on Substack called "Home and Away."

Richard, pleasure to have you on. You think this is a watershed moment for Israeli-U.S. relations. Explain why.

RICHARD HAASS, PRESIDENT EMERITUS, COUNCIL ON FOREIGN RELATIONS: Fareed, every previous Israeli prime minister protected this relationship between Israel and the United States, understanding just how basic it is to Israel's economic and strategic security well- being. Bibi Netanyahu may be the first Israeli prime minister certainly in recent decades who doesn't seem to hold that position.

Indeed, he's essentially rejected virtually all the advice coming from President Biden and the administration and most recently blame the United States for something it didn't do and seems prepared to face the Israeli people if that's what it comes to politically. Standing up, somehow representing the idea that he, Bibi Netanyahu, is all that protects Israel from ill-advised American pressure. And that would truly be a watershed in this relationship.

ZAKARIA: And it's not just words, it's also the kind of things that the Netanyahu government is doing. I mean, just recent, a few days ago, they announced that they're going to give 2,000 acres of land in the West Bank to settlement. That the United States government has just called against international law.

HAASS: Exactly. It wasn't a coincidence that Secretary of State Tony Blinken happened to be there right around that was happening. Talk about something in your face. Every inch of the way they've been using more military force than the United States thought was wise. Lots of civilians, tens of thousands of civilians have been killed in addition to Hamas fighters. They had been resisting to do what the United States wanted in the way of making sure enough humanitarian aid got in there.

[10:10:01]

What I just don't see is an effort to bridge the differences. I'm not saying, Fareed, look, I was in government, you know, several times working on these issues. The United States and Israel often disagree. But for the most part, there is a good faith effort to bridge the disagreements. That's what I don't see here.

ZAKARIA: And you think the Bibi Netanyahu's strategy is fundamentally wrong. You laid out, you had a wonderful "Wall Street Journal" essay where you explained it. You know, you talked about how there could have been a much more targeted approach, one that took into account humanitarian conditions. Why do you think they didn't at some -- some of it is Bibi, but is there -- there is a broader I think emotional response that the horrible terrorist attack provoked.

HAASS: Absolutely. And a lot of people defend what Bibi Netanyahu has done, saying that's where the Israeli body public is. And I go, yes, but the last I checked leaders lead. They don't follow. And just because something may be popular in the short term, trust me, it won't be popular in the long term if Israel has a second unsuccessful occupation of Gaza.

But even more, Fareed, what's missing here is a political dimension. I understand the desire to sideline Hamas obviously. It's not a partner. But you can't sideline a political force just with military force. You can't beat something with nothing. Where is the missing component to basically tell Palestinians, this is a dead end, Hamas will not get any of what you want politically, but here's another path, here's a political path?

ZAKARIA: I want to ask you about one aspect of this that you must encounter because I have encountered it. You're a longtime supporter of Israel who are Jewish American. A lot of American Jews I find are kind of confused about how to think about this. On the one hand, they -- you know, they were horrified by the terror attack by Hamas as they should be. There's this crazy rise in antisemitism around the world and in the United States.

So I find a lot of them supporting Bibi Netanyahu just because they -- you know, they feel threatened. There is a sense of being under siege and maybe this guy is, you know, at least defending Israel.

HAASS: They feel threatened. Also American Jews, a lot of Americans even beyond American Jews are uncomfortable disagreeing with Israel. It's very hard at times to parse the difference between disagreeing with Israel and not being anti-Zionist or even worse yet antisemitic. It's a hard argument to sustain. In some ways similar to this country when people like you and I would disagree, say, with Iraq or earlier with Vietnam.

How is it you criticize the government and policy without seeming not to support the troops or the country? It is a really, really uncomfortable road to go down. But that is the road --

ZAKARIA: Are you getting blowback on this?

HAASS: Oh, absolutely. When I wrote the piece recently in the "Wall Street Journal" about what Israel could and should have done rather than what they did, a lot of people are just very uncomfortable. My e- mail shall we say is rich in criticism. It's not easy, and these are not just -- how do I put it? These are not antiseptic intellectual issues? These are emotional issues. These are personal issues. A lot is at stake.

For someone like me who cares passionately about Israel, it's very hard to watch when I see Israel doing things that I really believe are counter, are contrary to its own self-interests. And yes, I worry about the antisemitism that it's provoking here in the United States, and I can say all that without admitting in many ways that the people who are out there in the marches, I don't like their agendas.

A lot of them don't know the basics of this. When I hear them chanting from the river to the sea I want no part of their agenda. This is a hard argument to have in private. This is a really hard argument to sustain in public. That's why I think President Biden has had some problems with it, trying to be sympathetic to Israel, yet distancing himself from Israeli policy. He's been reluctant to confront Bibi Netanyahu.

But what we've learned over the last, what, five, six months is gentle persuasion, isn't working. The United States needs to carve out an independent path and is at times going to have to -- if it wants to stop settlements or wants to prevent Israel from using force indiscriminately, the United States may have to think about limits on economic aid of sorts or military aid. It's an uncomfortable place to be, but I would argue that is where Israeli policy has brought us.

ZAKARIA: Thank you for having this discussion in public. Richard Haass, pleasure to have you on.

HAASS: Always.

ZAKARIA: Next on GPS, last week's terror attack in Moscow has unleashed a barrage of theories about who was actually behind it and why they did it. We'll dig through all of that when we come back.

(COMMERCIAL BREAK)

[10:19:16]

ZAKARIA: Last Friday, a group of gunmen went on a shooting rampage at a Moscow concert hall, setting it ablaze and killing more than 140 people. Within hours, the terror group ISIS claimed responsibility and the U.S. pointed its finger specifically at ISIS' Central and Southern Asian branch ISIS-K. Soon a wild rumor mill of other theories began spreading with Moscow pointing the finger at Ukraine, some suggesting a so-called False Flag operation by the Russian government itself, and on and on.

Joining me to separate fact from fiction in all of this is Graeme Wood. He is a staff writer for "The Atlantic," also a lecturer and political science at Yale University.

Graeme, welcome.

[10:20:01]

Let me ask you first, why -- do you think it's absolutely clear why ISIS-K targeted Moscow? Is this payback for Moscow's involvement in the Syrian civil war?

GRAEME WOOD, STAFF WRITER, THE ATLANTIC: If we listen to ISIS-K itself, yes, that's what they say. There have been official pronouncements by the group that have singled out Russians' involvement in Syria and its fight against the Islamic State in Syria as the reason for -- why they did what they did. They also have the usual ISIS reason of wanting to fight the infidel, wanting to fight pretty much everyone who's not ISIS. And so I think the reasons for ISIS to want to attack Moscow are really over-determined.

ZAKARIA: Why now and isn't it hard to do terrorism in a police state as one -- as tightly controlled as Russia?

WOOD: Yes, that's a great question there. I mean, one reason why now is because there's capability now. So ISIS had been fighting the Taliban in Afghanistan and actually not doing very well. Taliban had been pushing them out. And so ISIS in Khorasan, the Central Asian and South Asian province of ISIS have become much more interested in the last few years in becoming an external operator, that is perpetrating terror attacks outside of its territory.

So as it has ramped up its (INAUDIBLE) capability, it's been looking for places where it can do these things and it happens to have a kind of demographic foothold in Russia because Russia has a fairly large Central Asian Muslim population that is quite downtrodden, oppressed, and where you can find a lot of unsatisfied people who might want to be part of a terror attack.

Now, whether you can attack an authoritarian state, you know, many ISIS attacks are suicidal. This one, the four attackers seemed to have gotten away at least for a little while. So I don't think ISIS is to deterred by the idea that they might be caught on camera.

ZAKARIA: You know, it sounds to me like what you're saying is that it is ISIS' failures in Syria and in Afghanistan that ironically made this possible because I assume Tajik fighters, Tajik Islamic militants would ordinarily have gone and fought in Syria, or they would have gone and fought in Afghanistan. But since both those are essentially -- you know, they've been defeated, they now turn their attention to Russia.

WOOD: Yes, that's kind of right. You know, ISIS had this big project in Syria. That didn't turn out so well. The caliphate there was kind of extinguished as a state. And it being pushed out of Afghanistan you see it fighting war in Pakistan. And of course, looking for further field enemies, too.

ZAKARIA: And now what do you make of Garry Kasparov's theory? Because there is something odd. He points out that Russia, Moscow is one of the most policed cities in the world where you can get arrested for muttering anti-Putin slogans in a public square. And here you have these terrorists for one hour doing their rampage uninterrupted, managing to get away as you point out, going all the way across apparently toward Ukraine according to the Russian government.

But at the same time, the president of Belarus claims that they were apprehended on the Belarus border, which suggests that there's some kind of cover-up. You know, that there are two stories out there, somebody didn't tell the president of Belarus, this is our official line that they were at the Ukrainian border. What do you make of all that?

WOOD: Yes, I think there's a couple of things that need to be said. The first is that, in authoritarian states, rumors are poisonous. They really run rampant as soon as there's any confusion. It's just a conspiratorial culture and that's something you see across authoritarian culture, authoritarian political cultures.

The other thing that just has to be said is that yes, you will often see a state like Russia making the most of an attack like this. So they will, of course, if they can use it to political advantage. At the moment, political advantage means turning the wrath during the anger toward Ukraine. Ukraine is of course the most important foreign policy issue in Russia by far right now.

What happens all the time, though, ultimately, when there's an attack like this, is that people are just shocked. They're astonished that these things can happen, that humans can do this kind of thing. So people are going to be grasping at straws for all sorts of reasons. I understand why Garry Kasparov might suggest that this is some kind of false flag. But really we see ISIS here with motive and opportunity, and then subsequently taking full credit for the attack. So I don't think we need to resort to conspiracy to have a pretty good guess of what happened.

[10:25:04]

ZAKARIA: Graeme, that was incredibly helpful. Thank you for shedding light on a complicated situation.

WOOD: Thanks, Fareed.

ZAKARIA: Next on GPS, polls show confidence in the United States Supreme Court remains near record lows. How can it regain the public trust? Stephen Breyer who served on the court for 27 years has some ideas about that and the court's current jurisprudence. When we come back.

(COMMERCIAL BREAK)

ZAKARIA: In 2022 when the Supreme Court overturned the historic right to abortion enshrined in the 1973 judgment, Roe v. Wade, Justice Samuel Alito wrote, "The Constitution makes no reference to abortion and no such right is implicitly protected by any constitutional provision."

[10:30:00]

The argument reflects the dominant intellectual approach of the current court's conservative majority. It's an approach my next guest is quite critical of in his latest book. Stephen Breyer was and associate justice of the Supreme Court for almost 28 years. Before retiring, he co-authored a searing dissent to that 2022 abortion decision, known as Dobbs v. Jackson.

His new book is "Reading the Constitution: Why I Chose Pragmatism, Not Textualism." We spoke earlier this week.

(BEGIN VIDEOTAPE)

ZAKARIA: Welcome Stephen Breyer.

STEPHEN BREYER, SUPREME COURT JUSTICE (RET.): Thank you very much.

ZAKARIA: You begin your book with a wonderful story explaining what it is that judges like you, who are called appellate judges, do. Explain. Tell that story.

BREYER: The kind of thing we do is this. I tried to explain it to the fifth grade. A biology professor, a true story, on the train, and he has in a basket next to his seat 20 live snails.

What is in that basket? Says the conductor. Oh, snails. Yes. Do you have a ticket for the snails? What are you talking about? Says the biology.

He said, look at the fare book. It says no animals on the train unless they're in a basket and you've paid half fare.

They're talking about dogs and cats, maybe rabbits. They're not talking about snails. Is a snail an animal?

Now at that point, the students are sort of interested, the fifth graders. It's hard to keep them interested, but they are, and they say -- some say, yes, of course a snail is an animal. And the other say, what about mosquitoes? What about horse flies? What about scorpions?

Well, I mean are they all animals? They have to pay fares for mosquitoes? This is ridiculous.

And then they get into an argument. I need to say nothing more. Except at the end I say, now, you're ready to be appellate judges. They don't talk about snails. They may talk about right to bear arms or law of freedom of speech but that's the nature of the interpretive job.

ZAKARIA: And the court's conservative majority would look at that and say, the way we decide whether this is a snail -- the snail is an animal or not is we go back to the original intent of the people who wrote this and stay very close to the literal language that was used. And that is how they decide, you know, abortion, gun rights, all kinds of things.

You make the case very eloquently in the book as to why that is a very limited and cramped approach to reading the constitution or making law. Explain why.

BREYER: If you want to use that approach, you may need some promises. Promise one, it's a simple, clear approach that will give us one answer and all you have to do is read the words and a few other things. Or you could say, I found a method. You may be saying this, I have found a method that will stop judges from substituting what they think is good for the law.

And I reply, the way I decide cases like snails, we haven't actually had a snail case. But the way I would decide this kind of thing is not stopping at the words. Of course, I'll read the words. If the word is turkey, that is not a carrot. OK? I agree with that.

But there's more to look at because these cases are often very difficult. I just read a case last week where they had 63 pages, I think, 30 and 30 opinion, descent on what is the meaning of the word and. I said, that is not -- that is not my way. That is not a method that I've followed for 40 years as a judge.

ZAKARIA: And you say one of the reasons is you're forcing the Supreme Court justices to become historians, which they are not trained to do. You're -- you're -- you're saying as you just said, that there is one answer. Very often with the constitution there were very different meanings. Madison meant one thing. The anti-federalists who put the amendments in said -- meant one thing. So, how do you pick which is the real meaning?

BREYER: So, I say really, this isn't the way. You look to purposes. Someone wrote the words in the statute. Someone wrote the words here and we know who in this constitution and they had in mind certain values, democracy, human rights, equality, rule of law, separation of powers, certain values that they hope would maintain this document for several hundred years.

All right. You look at those. Which are appropriate? It depends on the case. That's the skill of being a judge. And you can be an honest judge and you're not substituting your own views. And so that's what I've tried to show here.

[10:35:01]

I've tried to show -- it's not a scholarly book. This is not a book written by a law professor, though I was one once. This is not for law review articles. What it is is to tell you and to tell many others what lawyers do and have done. Lawyers other than me. Holmes, Marshall, for hundreds of years interpreting the snail-like words.

ZAKARIA: To me, it feels, and I have to confess, I'm very sympathetic to your view. To me it seems like there are -- there are two problems with the way in which the court's majority seems to look at these things. One is that, you know, it's so arbitrary how you use history and such.

So, for example, Justice Thomas, when he writes the majority and the gun-control case, which he says, the reason I'm overturning this law is because you have to look at the history of gun regulation in America. But he's overturning laws that have been in place for 100 years. So, isn't that history?

So, he's choosing to privilege one hundred-year period over another hundred-year period. But America's history is all of it.

BREYER: Yes, that's true. And what is it I found, you know, so unfortunate about the textualism and originalism? What is it I found that led me not just to put my own views in here or how many judges have interpreted the constitution but to do more than that, to say this is not a good way to go about it?

First, I think in a lot of cases, it will lead to interpretations that are very different from what the legislature or the founders wanted. Remember when this document was written, 1788, 1787, 1789, or after the Civil War there were an awful lot of people who weren't represented in the political process.

Women weren't there. Much of the time, slaves weren't there. And so, they are not being spoken for though these are ideals that should apply to them. They weren't part of it. And we're just going to look at that period? No, that's a big mistake.

And if you look at law, biggest picture, biggest, it is an institution created by human beings, in large part, to allow human beings, in large part, to live together more peacefully and productively. All right? I've always thought that.

And now if all you're looking at is words, when you have a statute, there's a risk you'll move away from that. And if you have the Constitution, there is a risk you will move away from those words that allow us to have that democratic society, the John Marshall and Madison and Hamilton and the others thought would last. OK?

Now, if we move too far away, people will say, why should I do this? Well, if you would have -- if you have a system where people are not willing to follow opinions they disagree with, by and large, you will have a system that moves away from the rule of law.

(END VIDEOTAPE)

ZAKARIA: Next on GPS, I'll ask Justice Breyer about the Supreme Court deciding the outcome of a presidential election in Bush v. Gore more than two decades ago.

(COMMERCIAL BREAK)

[10:43:04]

ZAKARIA: More now with former associate justice of the Supreme Court, Stephen Breyer, the author of a new book, "Reading the Constitution: Why I Chose Pragmatism, Not Textualism."

(BEGIN VIDEOTAPE)

ZAKARIA: One of the things that I often wonder about when I hear about the conservative majority and originalism and stuff is there -- they say all that and they say, you're going to smuggle your views in if you don't have these constraints. But it feels like they are smuggling their views in as well and they somehow get to the view they want to get to.

And I realized that there was a shock of realization that the court was very political with Bush v. Gore. Because it seemed to me in Bush v. Gore, this was the case where the Supreme Court was being asked to decide something, that if you read the Constitution clearly was a state function how the electors are chosen in an -- in an election is a function of the state.

And the Supreme Court in that case, conservative judges like Scalia, who had always said, states' rights and the federal -- you know, federal government shouldn't get involved, suddenly decided in this case, no, the Feds are going to get involved and we're going to get involved. Don't you think that undermines the credibility of the court?

BREYER: That's for you to say. That's not for me to say. I worked with many of the people there for many years. And what I say, it's a kind of bad faith. And what I say about this in bad faith is nothing, nothing.

I don't want to say anyone is using bad faith. I say they're using the wrong approach. And that's a different thing. And the reason I think it's important is because I believe many people today seeing decisions they don't like and that they think are wrong, are very ready to say, oh, it's all politics. Or, its all what you like or don't like.

And I say, well, I can't prove zero. I can't prove zero. It's not ordinary politics. And I do think the groups that try to get somebody appointed X -- they're political, believe me, but X isn't.

[10:45:03]

I mean, maybe he's a little, but you can't prove it. But he's thinking this is the right way to go about it. And so, I'm trying to say, Mr. X, no, it isn't. The promises that you're making in this document you can't keep. You think -- you think that your doctrine will stop people from -- people in bad faith who wanted to say what they like politically. No, it won't. Let's try why you overruled, Roe v. Wade. What other cases are you going to overrule? What other cases? All those cases that didn't use originalism, all those cases that didn't use textualism, hey, that's every case. Are you going to overrule them all?

I mean, we'll be left with no law. Oh, no. You are not going to say that. Of course, you don't. You say just the runs that are wrong, ones that are really wrong. Oh, the ones that are really wrong.

ZAKARIA: And who decides that.

BREYER: And who decides that. Exactly. And now we are at exactly the same place you claim I'm at, which I'm not. And so, you shouldn't be either.

ZAKARIA: What's interesting in your answers, you clearly care about the institutional integrity of the court. And you are not only a great justice but a great diplomat. Stephen Breyer, pleasure to have you on.

BREYER: Thank you.

(END VIDEOTAPE)

ZAKARIA: Next on GPS, despite draconian sanctions, the Russian economy seems to be doing fine. Are sanctions the wrong tool and do they put the U.S. dollar at risk? I will ask an expert when we come back.

(COMMERCIAL BREAK)

[10:51:13]

ZAKARIA: Economic sanctions have become one of Washington's favorite foreign policy tools, only more so over the last two years as the U.S. has targeted Russia for invading Ukraine. Sanctions are seen as a light footprint, low-cost way to strike at adversaries. But do they work? And is there a real cost to the U.S.?

My next guest has written all about it in her new book, "Paper Soldiers: How the Weaponization of the Dollar Changed the World Order." It's a really wonderful read. Saleha Mohsin is the senior Washington correspondent for "Bloomberg News."

Saleha, welcome. So, explain why the dollar -- the dollar is the reserve currency of the world. It's the most widely used one. Why does this give the U.S. this power of sanctions?

SALEHA MOHSIN, AUTHOR, "PAPER SOLDIERS": The world literally runs on American dollars. If you are a business tycoon in China, Russia, if you are a multinational company, or if you are someone in Ghana who is selling cocoa beans to export them, you need the dollar to make those transactions. Anytime you are engaging in global commerce, the global financial system is centered around the dollar. All those financial transactions are settled in dollars.

ZAKARIA: So, to understand why the U.S. has this unique power, let's take an example of sanctions against Iran. So, U.S. pulls out of the Iran nuclear deal. Everyone else continues to want to trade with Iran but they cannot because it turns out that if the U.S. says no nobody can transact with Iran. Explain why.

MOHSIN: When the U.S. says, you can't touch our dollar, and then countries try to work outside of the dollar and they try to trade in euros or cryptos, occasionally, or any other asset bilaterally, they find that there is not enough liquidity. There's not enough of those euros or yuan or rubles or riyals out there to make the exchange.

And then let's see the exchange happen. Right now, there's an example of Russia having done more trade with India using rupees to trade oil. But they have all these rupees. They can't spend them because not everyone wants to accept those rupees.

Everyone will always accept the dollar. And so, even if you have made it as far as creating that transaction, you can't do as much with that money.

ZAKARIA: Let's talk about the sanctions against Russia. Have they worked?

MOHSIN: That is such a complicated question. It is -- that's a debate that's raging in political and economic circles in every capital of the world right now. The way I will explain it is that sanctions are a tool of foreign policy.

You can say foreign policy has failed or succeeded. You can talk about the spectrum of success that sanctions, a tool, offered to do that. But to say sanctions have failed is kind of like saying, my house fell apart, the hammer failed me. When really the architect or the contractor on that house, who had the strategy and the plan for the whole house, maybe that's what failed, not the hammer.

ZAKARIA: So, when you look at this issue of the dollar's future and the degree to which as you pointed out in the book, a lot of it is sort of -- it's very fragile. It's -- it's reputation. It's credibility. It's -- you know, it's ephemera. It's all based on what people's view of America is.

Do you worry that as we get -- our politics get more crazy, and turbulent and, you know, chaotic we could lose this privilege?

MOHSIN: I do worry. Fareed, this book for me was a small act of patriotism.

[10:55:00]

I end on a positive note because I have that American hopefulness. But if the country remains divided, we can't get our fiscal house in order. We can't reign in the deficit. You need to make difficult decisions in Congress and with the White House.

You have to get along. You have to agree on what color is the sky first before you can do this. Until we can align on some of these issues, we are going to continue to look uncertain to the rest of the world. ZAKARIA: And then if somehow we did face a reckoning, as you point out with the debt we have and the interest rate payments on that debt, it could be pretty dramatic.

MOHSIN: Absolutely. If you look at the last several empires, and I'm not saying America is an empire in the historic sense the way they've been traditionally, but if you just look at how big countries and reigns end, it often ends with debt having overtaken things.

ZAKARIA: Saleha, real pleasure to have you on. Thank you.

MOHSIN: Thank you so much.

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

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