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U.S. and China "Playing with Fire;" "God Save Texas:" A Journey into America's Future. Aired 2-2:30p ET

Aired May 23, 2018 - 14:00   ET

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

CHRISTIANE AMANPOUR, CNN HOST: Tonight, Trump versus China. Who would win a trade war as Beijing's top diplomat arrives in Washington for talks. The

former deputy governor of the Bank of England, Paul Tucker, tells me that both sides are playing with fire.

Plus, he is the Pulitzer Prize winning author behind the book and hit TV series "Looming Tower". Lawrence Wright joins me with his new book, "God

Save Texas", and why minorities in America will change its political future.

Good evening, everyone, and welcome to the program. I'm Christiane Amanpour in London.

Will it happen or won't it? President Trump says today that he will know more next week about the fate of his planned Singapore Summit with North

Korean leader Kim Jong-un.

Secretary of State Mike Pompeo says that planning is going ahead. This as he meets the Chinese foreign minister, Wang Yi, for talks on North Korea,

but also on U.S.-China trade.

The two most powerful economies in the world are playing with fire. That's according to my first guest tonight, one that could spark a full-fledged

trade war, even inadvertently.

Paul Tucker helped steer the U.K. through the worst of the global financial crisis when he was deputy governor of the Bank of England, which is

Britain's version of the Federal Reserve.

He has now written a book called "Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State". In it, he warns

of the current economic dangers and he chronicles the rise of populism.

He tells me that hard times can often turn regular people into proponents of protectionism only to find they are the losers in the end.

Paul Tucker, welcome to the program.

PAUL TUCKER, FORMER DEPUTY GOVERNOR, BANK OF ENGLAND: Thank you for having me.

AMANPOUR: There are a lot of ups and downs between the United States and China when it comes to trade right now. Do you think the ultimate can

happen, and that is a trade war between these two behemoths?

TUCKER: I think they could fall into it by accident. I don't think China wants a trade war. I don't think America wants a trade war. But you can

see a scenario where they do.

And my greatest worry would be that if it gets to that point, to hope and don't think it will, but if it does that China will think they can win.

And in those circumstances, I would expect to see all areas of policy connected.

So, if I were the Chinese and I wanted to tip the president of the United States into making mistakes, I wouldn't do something in the economics

sphere, I would do something in the kind of defense sphere, something in the South China Sea, so as to rally free trade Republicans behind a not so

free trade president.

AMANPOUR: So, you're saying that they could be really provocative in an area that the U.S. is already upset about, and that is the South China Sea,

the disputed islands, the buildup of their military in order to galvanize -

TUCKER: If they reach the point of judging this is the point of no return on trade. I think their hurdle for doing that would be incredibly high,

and I'm not a defense expert, but what I know is that in really hard international negotiations, everything can come into to play.

Now, President Trump values himself and is constantly touting himself as the world's greatest negotiator. His sort of tough speech and then soft

speech, whether it's to President Xi or indeed to the leader of North Korea, are indicative of, I think, how he sees the game of negotiation.

You're sitting in the United States for much of the year at Harvard examining and watching all of this. What do you think is at play? What is

the stake right now in the world order?

TUCKER: First of all, well, he may succeed. I don't want to rule out that he succeeds. And his approach to deal making may work, but it's a - it

will be a high stakes gamble. And it won't be a gamble over a property deal. It will be a gamble over global economic prosperity and, therefore,

American and European economic prosperity. And it will be - could end up being a gamble over the balance of power in the world more generally.

So, the stakes are incredibly high. As I say, I don't think you will get that far, but these aren't two small countries playing tit for tat with

each other. These are the two biggest and most powerful countries in the world.

[14:05:08] AMANPOUR: What do you think is going on between the U.S. and China right now?

TUCKER: Playing with fire.

AMANPOUR: Playing with fire.

TUCKER: Playing with fire. I mean, that's not to say that there will be a fire. They may end up in a good place. And maybe, maybe the only way to

get China to make some concessions is to play with fire, but this could end up in a bad place.

AMANPOUR: Who is playing with fire? Who has lit the match?

TUCKER: I think the United States. It looks as though the United States, but after years of some provocation. The need to fix global trade, the

imbalances in the international economy that's 25 years old and eventually the United States is being provoked, but in a rather dramatic way.

AMANPOUR: What should the reaction be? How does one fix this imbalance without lighting a fire?

TUCKER: So, the worst consequences would be almost a collapse in world trade. And I think that would hurt the American people more than it would

hurt the Chinese people. You've got some egos on both sides.

AMANPOUR: You mean Presidents Xi and Trump?

TUCKER: Yes.

AMANPOUR: Sort of vying for economic supremacy.

TUCKER: Yes, yes. And whatever one thinks of the two individuals, they are human. And you know humans can suffer pride and make mistakes. And

neither of them is probably terribly constrained.

AMANPOUR: And many sitting in your positions and others believe that this president is about to break the world order that has governed this world

and was created by the United States after World War II. Do you think that's true?

TUCKER: I think it's been fractured a bit already. Not fatally. It can be put back together. And actually, most of me believes that as the new

administration confronts these situations, they will find value in the world older, that they will understand the importance to America and the

world of the way America keeps the sea lanes open.

The lore of the sea is something that they underpin. That Europe is not some irrelevance, but actually the most important partner in the world that

they could have.

AMANPOUR: Just move on to the Iran Nuclear Deal because now we have the U.S. in conflict really, economic conflict, political conflict with its

biggest ally and trading partner, Europe, which wants to continue the business with Iran as set out under the 2015 deal, but which is being

threatened by the United States.

We've had the secretary of state threaten, we've had the president himself threaten Europeans if they continue doing business with Iran.

TUCKER: Well, first of all, this is a big problem for Europe and for European companies. They are at risk if they follow their government's

lead of continuing to trade with Iran and finding themselves, to put it at its lightest, persona non grata in the United States. Breaching U.S.

sanctions or being accused of breaching U.S. sanctions is a very big deal.

AMANPOUR: I see analysts and experts saying Europe needs not to act like America's patsy. It needs to stand up and understand that it is a big,

powerful economic bloc. And if it's being threatened by the United States, it needs to stand up and refuse to take that. Do they have the methods to

do it?

TUCKER: I mean, yes, but they are all harsh and risky methods. But behind that, yes, Europe is a big economic bloc, but one that chose and had to

outsource its defense after the Second World War.

And that's why this is so serious. Deep down, there is a risk of fracturing what has been the key axis in the post Second World War world

and the stakes couldn't be higher really.

AMANPOUR: So, how do you see it then from your previous perch as deputy governor of the Bank of England, given what you've just written, the book

about unelected power that these central bankers have. How much of a problem was that and how much of a sort of a follow on are we seeing from

the 2008 financial crisis?

TUCKER: I think we need to get away from a world where our solution for everything is, hey, let's give more responsibility to the unelected people.

They seem quite good. And it shifts blame. It's very tempting for elected politicians to look to my tribe and say you do more and my tribe needs to

learn to say, no, no, sometimes you do more.

AMANPOUR: What might have been the result had that attitude been around in 2008?

TUCKER: I think that elected politicians might have done more to help restore economic growth. And Congress could have done more if they have

provided more stimulus to the economy and made the investment in American infrastructure that is, any visitor could tell you, it's badly needed.

[14:10:09] AMANPOUR: Well, which is what many liberal commentators say. People like Paul Krugman are always saying that, that it should have been

more stimulus and less austerity. Are you saying that from your vantage point?

TUCKER: Not just - t's not just left commentators. On the right, there were people like Marty Feldstein calling for more infrastructure

expenditure, but probably not paid for by debt, not debt financed. But, nevertheless, the underlying impulse was the same.

This was a missed opportunity five, six years ago and it was a missed opportunity because it's convenient, in the short run, for politicians to

sit on their hands because they know that the Central Banks, the Fed, the ECB - and my goodness, it was true in Europe - will have to reinvent

themselves as the U.S. Cavalry.

AMANPOUR: So, I'm fascinated because President Trump is constantly touting the stock market, the Dow Jones and it's been doing really well, the entire

time he has been in office with some ups and downs. In fact, today, there's a bit of down with global stocks and shares.

And yet, you've written correctly in the book that actually most people, most ordinary people don't have shares. So, what's the disconnect there

done to the ordinary people?

TUCKER: In this country, we're speaking in the United Kingdom, they don't. And in continental Europe, a few do. But in the United States, many, many

more do including through their pension plans.

And something I've observed over many years is that American policymakers, elected or unelected, they are very sensitive to falls in the stock market.

I used to teach them that you'll respond when the stock market falls.

And going back to where we began, I mean, the first sign, the first real hard sign of a trade war getting out of control will be a fall in the stock

markets and that will take the gloss of one of the things that has helped make the current administration popular with its base.

AMANPOUR: And that is what we're seeing today anyway, a little bit of today. It'll probably recover and rebound and go up and down.

But, again, then let's talk about Great Britain where not many people actually are in the stock market, don't have shares.

TUCKER: The people in the middle, the people who rely on a modest income from modest savings, they haven't done brilliantly out of the policies that

people like me pursued.

People lower down the income scale, many of them were saved from unemployment. And, of course, the rich have done well.

I don't think that means that quantitative easing, as Central Bank call it, was a mistake. I think it frankly helped avoid the vortex of the 1930s

depression. That is no small thing.

But wouldn't it have been better everywhere if parliaments, Congress had stepped up and say, well, we're going to do a bit of redistribution, so

that people don't - so that we select the losers and the winners rather than the people down in the central banks.

AMANPOUR: It's fascinating because I don't think this story is over. I mean, I was told in France, for instance, that even though President Macron

won in this economic climate, in this anti-globalization climate, in this climate of the rise of populism that unless he delivers economically, his

own people are saying these populists like Marine Le Pen and the others are waiting in ambush. That's their quote.

TUCKER: He has to succeed. He has to succeed. And it's the same in the United States. There are many people like kind of disenchanted with

President Trump. If he fails, the next round may be even worse on either the right or the left.

We don't really know how to operate full franchised democracy successfully in a world with very low growth. And the reason for that is, if you have

zero growth, it's a zero-sum game. You are only better off if I am worse off.

We, in this room, in the studio are only better off if everybody outside it is worse off. This country is only better off if the rest of the world is

worse off.

Zero growth is toxic. And the biggest problem we all face is reviving dynamism and productivity growth. And no one has a magic wand for doing

that, but least of all my tribe. The tribe of central bankers, they can deliver stability, but they can't deliver prosperity.

AMANPOUR: So, Paul Tucker, thank you very much indeed.

TUCKER: Thank you.

AMANPOUR: And indeed, we can never predict how these global economic trends or geostrategy will play out actually on the ground, but last

night's primary election hints that a change may be rippling through Texas.

For the very first time, Democrats there chose a Latina, the former Dallas County Sheriff Lupe Valdez to run against the state's deeply conservative

and highly popular Republican Governor Greg Abbott.

Valdez is also Texas' first openly gay nominee for governor. And while it may seem like political suicide, consider this. Texas, like California, is

a majority minority state with a booming Hispanic population. America's largest red state could soon flip blue.

[14:15:15] That is according to my next guest, Lawrence Wright. He is the award-winning writer and reporter. His 2006 book "The Looming Tower" is

widely considered the definitive account of events leading up to 9/11. And it's now a popular TV drama on Hulu.

In his new book, "God Save Texas", Wright sees America's future taking shape in his home state. And I spoke with him when he was here in London

recently for the book's U.K. release.

Welcome to the program.

LAWRENCE WRIGHT, AUTHOR, "GOD SAVE TEXAS": Thank you, Christiane.

AMANPOUR: Now, listen, your book, "God Save Texas: A Journey Into the Soul of the Lonestar State" purports to say that Texas is the center of the

universe.

WRIGHT: Well, not of the universe perhaps, but of America for sure.

AMANPOUR: How so?

WRIGHT: Well, Texas is the future. It is growing faster than any other state. By 2050, it's projected to double in size at which time it will be

about the size of California and New York combined.

AMANPOUR: That's huge.

WRIGHT: Already 10 percent of all the school children in America are Texans.

AMANPOUR: So, look, it is a controversial state. You yourself refer to that. Is that a good thing for America that it's going to dominate the

United States?

WRIGHT: It's good and bad. On the good side, Texas is a great job creator. In the last quarter of last year, Texas grew 5.2 percent. There

wasn't a single other state except for Idaho that got into 4 percent.

So, people come to Texas for the jobs.

AMANPOUR: And what about politically? I mean, you've written and many have written, once the South, including Texas, was Democrat and then it

went very Republican. In some cases, very sort of back to the future, so to speak, quite right wing, quite conservative and dragging the rest of the

country with it when it comes to big elections.

But you say it should actually be a blue state. In other words, Democrat.

WRIGHT: Well, Texas is a majority minority state. It has that in common with California. And, of course, California is the largest state and also

the largest blue state, largest Democratic state. And Texas is the largest Republican state.

They're very similar demographically, but totally opposite. And what's the difference, Hispanics vote in California and they don't see in Texas.

AMANPOUR: Is that what the difference is? In other words, if they all came out, would it be a blue state? Because it's hard to figure out why

it's a majority minority state and still is very conservative Republican.

WRIGHT: I've wondered about this and here's my analysis. There are 29 million Texans and 19 million of them were registered to vote in the

presidential election. Only 9 million did vote. So, they took the trouble to register, but not to actually go cast their ballot.

And, of course, Donald Trump and Hillary Clinton were the least popular candidates in the history of American presidential election. So there was

that.

But I think in the whole modern history of Texas, there has not been a compelling candidate who spoke to the disenfranchised, especially Hispanic

voters who would go have a reason to go out and vote. And when that day arrives, Texas could turn blue really quickly.

And, demographically, it already should be.

AMANPOUR: You grew up in Texas.

WRIGHT: Yes.

AMANPOUR: Was it always a source of pride for you growing up in Texas?

WRIGHT: Not at all. I was in Dallas when Kennedy was killed. And there was a tremendous stigma and one of the reasons I fled the state shortly

after that because having - even being from Texas at large, but especially being from Dallas, Dallas was taken down like no other American city in our

history.

AMANPOUR: After the assassination.

WRIGHT: Yes. I mean, the idea - I really felt alienated from the political scene in Dallas, which was extremely right wing, but it was not a

right winger they killed. Kennedy was a Marxist. And I had no idea we had a Marxist in Dallas. I hardly knew any Democrats.

But it was awful being from Dallas and being from Texas then. And then, when Lyndon Johnson was president, there was such a lot of sneering that

went on because of his accent. And I know how self-conscious I felt.

The first time I heard myself trying to speak Spanish in language lab and talking through my nose like a real Teas, I always thought I'm done with

that accent.

AMANPOUR: And you still have the accent.

WRIGHT: I can acquire it when needed.

AMANPOUR: You're talking it now. I mean, did you once banish it and bring it back?

WRIGHT: Listen, the way I'm speaking now, there's not nearly - when you're in North Texas in Dallas, you talk through your nose and you talk a little

bit like that. And I've decided that was not going to be me.

[14:20:01] AMANPOUR: In the book, you do talk about your history. You had ancestors that fought in the Confederacy. They fought for that. You kept

a portrait when you were young of General Robert Lee on your bedroom wall.

And then, you went on to cover the Civil Rights Movement and all the rest. And you said, I still feel ashamed of the prejudices that I struggled to

shed.

WRIGHT: Yes.

AMANPOUR: What was the biggest prejudice that you had to shed?

WRIGHT: I think that this - I thought people of other races were strange, that I couldn't relate to them and they were exotic.

I mean, the only black person that I knew at all was our weekly maid. I went through the entire public education in Texas without ever having a

single black classmate and this was years after Brown v. Board of Education. Texas, the whole South, fought integration and successfully for

so many years.

So, people of color were kind of frightening to me in their exoticness.

AMANPOUR: And what switched you to a more rational view of your fellow human beings?

WRIGHT: Well, of course, I spent a couple of years living in Cairo and I got to the point where I learned something about foreign cultures. And I

love my students so much.

And then, after that, I went to work for a race relations reporter covering the Civil Rights Movement. And seeing the nobility of that cause, it was

so stirring to me.

I think since the revolution, the American Revolution, it's the greatest accomplishment in our history.

AMANPOUR: Everybody is trying to grapple with what's happened to our political system, whether it's terrible polarization and just this real

sort of stress that's around. I wonder what you make again - this is talking about your book.

This was Cecile Richards of Planned Parenthood. And she's quoting Evan Smith, who in your book says "White people are scared of change, believing

that what they have is being taken away from them. In 2000, the Anglo population of Texas became a minority," which you just said, "and it's no

coincidence that social conservatives who ruled the state for two decades have continued to look backward."

WRIGHT: Well, they would like to have gays back in the closet. Not just no gay marriage. They just want to eliminate the identity of homosexuals.

It's nuts, to some extent.

There's one character I write about in the book. He's talking about how they're propagating sodomy in the kindergarten. Well, it's nonsense. But

he's one of the main funders of the Republican Party.

They aim to eliminate abortion entirely. Remove government from almost all walks of life, even down to the security cameras on the traffic lights.

Get out of the UN. I mean, these are things that I heard about as a child in the 50s. And now, this agenda has come back.in

In my opinion, the Republican Party at large has been ripped apart and, essentially, Donald Trump has run away with it. And the Republican Party

in Texas has taken an overdose of some kind of hallucinogen that makes them think that they can antagonize 40 percent of the population, the Hispanics,

with this show me your papers revision and then alienate young people who were so much more tolerant and so past the whole thing about homosexuals.

At a recent state convention of the Republican Party, they refused to seat the log cabin Republicans, the gay Republicans. We're in another

millennium, and yet that's what Evan was talking about.

AMANPOUR: Exactly. And I wonder if you can reflect then that it's having potentially an equal, but opposite effect on the Democratic Party.

The moderate Democrats lost in their primaries and the very left wing Democrats won. So, you're having, again, in both parties, this massive

polarization. When is there any hope? How does one ever get back to what we're told the majority prefers, which is somewhere in the middle?

WRIGHT: You have to have the candidates that speak to that. And I can only say about Texas where you haven't had those people.

There's an interesting race going on right now. Ted Cruz is facing a really quite powerful challenger in Beto O'Rourke who has outraised him in

terms of money, which is really surprising, and is within the margin of error right now in terms of the polling.

He's a Democrat. He's from El Paso. We haven't an elected a Democrat statewide office in more than 20 years and we've never elected anybody from

El Paso. I don't know why that is. But he's a very appealing candidate and quite talented. Just the kind of candidate that we need more of in

both parties who are willing to speak to the center, which feels so hollowed out right now.

[14:25:10] AMANPOUR: What do you make of the latest study that came out that basically scientifically showed that it's a bit of a "whitelash", this

election of Donald Trump, which is Van Jones, a political commentator said on CNN the night of the election.

That they're seeing that actually it wasn't about a fear of losing jobs or being unemployed or economic - their salary or anything. It was mostly

white Christian America didn't want things to change.

WRIGHT: I think it's true. Throughout American history, the politics of resentment has always played a big role. And I certainly understood it as

a child in Dallas, the idea that the eastern establishment, as we called it, sneered at us, looked down at us and was fighting our values. And so,

we reacted against it.

And it's still a feature of politics all over the country. And who feels that resentment, who feels marginalized? Well, it's the people who are in

favor - who oppose abortion, the people who are evangelical Christians, the white men who have lost their jobs.

This is a broad swath of America and they feel despised. And Trump gives voice to their complaints. And that's why they've turned to him.

AMANPOUR: On that note, Lawrence Wright, thank you very much indeed.

WRIGHT: My pleasure, Christiane.

AMANPOUR: Remarkable insight.

And that is it for our program tonight. Remember, you can always listen to our podcast and see us online at Amanpour.com. And you can follow me on

Facebook and Twitter.

Thanks for watching. And goodbye from London.

END