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Fareed Zakaria GPS

Interview With President of Brazil

Aired March 29, 2009 - 13:00   ET

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

FAREED ZAKARIA, 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.

With the world in crisis, its leaders are mostly under the gun and face rising public anger. The leaders of the G-20 -- the 20 most important economies of the world -- will meet in London in a few days.

They might want to get some advice from the one president who remains astonishingly popular, President Ignacio Lula da Silva of Brazil, currently with an approval rating of 80 percent, making him the most popular leader in the world today.

And he runs one of the most important countries of the world, the fifth most populace country, the giant of Latin America. But more importantly, this is one of the countries that you have heard about as a country of the future.

You've heard about the way in which the world is changing. There are new emerging markets that are coming into power. And Brazil is probably the country that is most important, about which you know least. So, I think this is a rare opportunity.

President Lula is a fascinating character. He started his life as a machine lathe operator in a factory floor and has risen to the ranks of the presidency of Brazil -- an unusual person and a rare opportunity.

Also on GPS, we have a panel with the Frenchman, Dominique Moisi, the "New York Times'" Nick Kristof, and we ask the question, when will China get worried about its investments in the United States -- that, and much else. Stay with us.

(BREAK)

ZAKARIA: President Lula, thank you very much for joining us.

When you're at the G-20 with all these other leaders, do you ever pinch yourself and say it's a long way from the factory?

LUIZ IGNACIO LULA DA SILVA, PRESIDENT OF BRAZIL (voice of interpreter): Yes, I feel that. I don't know if the president of a country should say what I'm going to say now, but I will say it anyway. But when I am sitting in the G-20 meetings with all of those presidents or heads of state, I know I am the only one that definitely went through a lot of misery and hunger. I lived in houses that were flooded by water inside my house, one-and-a-half meters high. Sometimes I had to fight over space with rats and cockroaches. And waste would come in when it flooded.

I know what unemployment means, because I was unemployed for one- and-a-half years, and I know the drama that the worker and unemployed worker faces. I know the world of the labor union better than I think anyone else does. Maybe the prime minister of Australia knows a little bit about the labor movement, because he also was a labor leader.

So, once in a while, I feel like an outsider. I ask myself, "What am I doing here?" See?

But it was democracy that led me to this position. It was the people that led me to this position. So, I feel I am on equal terms with all of them. I don't feel that I am less than anyone.

And 10 years ago, as I would watch those people on television, I could never have imagined that I would get close to them, never.

And suddenly, here I am. I am now in the same group as them, talking with them on equal terms, sometimes learning, sometimes teaching. And this is something that is pleasurable in politics, and it is also the great thing about democracy.

ZAKARIA: You met President Obama, and the meeting went longer than expected. What did you all talk about?

LULA (voice of interpreter): I told Obama that I am praying more for him than I pray for myself, because, although I face many problems, he has much more delicate problems than I. And I think that this will be a great test for him, for a president to be inaugurated during a crisis like the one Obama is facing.

You don't know how happy I was watching Obama's inauguration on Brazilian television. I have never seen an American inauguration before, where you had so many poor people participate on that day. Never.

Inauguration, that touched me a lot. I became emotional, because I know what poverty is from seeing it first hand. I know what it's like for people to suffer from a flood, or to be unemployed.

And Obama has awakened exceptional hope and expectations in the country.

And I told Obama, when I was sworn into office on January 1, 2003, I said in my address to the nation, I do not have the right to make mistakes. I cannot afford to fail, because if a metalworker that was elected for the presidency never works, he would never be elected to the presidency again, because he will be a victim of prejudice.

So, this country here, having elected a black president in the way Obama managed to be elected by overcoming all of the domestic barriers, and later the foreign barriers, I told Obama that he cannot afford to make mistakes.

The high hopes, the high expectations around him are tremendous. And I believe that God didn't put him there for nothing. It's because something important will happen in this country.

ZAKARIA: President Lula, you are probably, currently, the most popular leader in the world. You have an 80 percent approval rating.

Why?

LULA (voice of interpreter): You know Brazil is a country that has rich people, as you have in New York City, as you have in Berlin or in London. But we also have poor people like in Bangladesh or in African suburbs.

So, what we tried to do was develop a very strong policy to prove to the theoreticians that it was possible to do the two things at the same time in Brazil, that is to say, to develop our policy for economic growth on one hand, while simultaneously improving income distribution.

What the theoretician says is that, first, the economy has to grow, and then you can distribute income. We said that it's now necessary to do both things together, because if we make sure that the poor receive a small increase in income, they become consumers. And as consumers, they will help grow the economy.

The fact is that in six years we have lifted 20 million people out of poverty into the middle class. The fact is that in six years we brought electricity into 10 million Brazilian households. The fact is that we have increased the minimum wage in the country every year.

ZAKARIA: Mr. President, do you believe that the Brazilian economy will grow this year, in other words, it will grow more than zero percent? Because industrial production in January has fallen off a cliff.

Are you still confident, what you have been saying for a few months now will be borne out, and the Brazilian economy will actually show positive growth?

LULA (voice of interpreter): At the beginning of January and February of this year, we started to feel that, in relation to December and October, they were the worst months, that the economy started to recover a little bit.

I'm convinced that in the second trimester of this year it will recover even a little bit more, and that we'll reach the end of the year with a positive growth rate. It will not be the same growth rate that we wished for, a growth we foresaw of more than 5 percent a year. No one imagined that a bank like Lehman Brothers would go bankrupt as it did.

So, now we need new political decisions that depend very much on the U.S. government, that will depend very much on the rich countries' governments. So, how are we going to reestablish credit in the world? How are we going to reestablish reliability in the American consumer and the European consumer? How can we establish the credit, so that we can bear the changes in the trade balances of these countries?

This is a problem that we cannot bypass in the next G-20 leaders summit meeting in London. We'll have to confront this issue with great responsibility, because, as I say, now it is time for us to make political decisions.

As a matter of fact, I told President Obama it's important, Mr. President, that the president read thoroughly about what happened in the Japanese crisis in the '90s. It lasted 10 years that crisis, because Japan did not take bold action in terms of its banks.

Now here, in the U.S., if we don't fix the banks that went broke, I ask myself, how much longer can you pour money into the banks, if the credit doesn't begin to return?

I read in the American newspapers that a major insurance company, AIG, if I'm not mistaken, received money from the government and paid bonuses to executives.

ZAKARIA: What did you think of that?

LULA (voice of interpreter): I believe it is a scandal. I think it's a scandal. The poor people are waiting for us to fix these things. I can't imagine that all around the world we see people bailing out banks, and they're not resolving our problems.

So what we need is to make investments that create jobs. And I am convinced -- I don't know why, but it may be God sending me a message, saying that Obama will do the things that he needs to do.

ZAKARIA: You know there are many people who say, actually, it is because of high oil prices, high natural gas prices, high agriculture prices. Brazil has ridden what people call the commodity boom. When there was an offshore discovery of oil, you said God is Brazilian.

Now, with oil at $40 a barrel, is God still Brazilian? Will you be able to manage all the things you're describing with commodity prices going down rather than up?

LULA (voice of interpreter): Brazil does not want to become an exporter of crude oil. No. We want to be a country that exports oil byproducts -- more gasoline, high-quality oil -- and to strengthen the petrochemical industry.

And, of course, I am very happy about the fact that we've managed to find oil. Now, next May 1st we will extract the first barrel of oil from 6,000 meters in deep waters, which is an extraordinary technological conquest for Petrobras and for Brazil.

It's this, a (ph) sign (ph) that the economy should be intimately linked to the productive sector. A country has to grow. A bank has to grow. And a person has to grow while producing something concrete, not speculating with something.

And so, that's why I am convinced that Brazil will continue to be a major agricultural commodity producer in the world, and, with God's help, a great producer of oil.

But we are going to work so that the prices are as fair as possible, because, after all, we need to lift millions of people in India, millions of people from Africa, millions of people from Latin America out of poverty.

They want to have breakfast in the morning. They want to have lunch. They want to have dinner, study, have access to culture. They want barely anything.

ZAKARIA: And we will be back with President Lula of Brazil.

(BEGIN VIDEO CLIP)

ZAKARIA: Did you tell President Obama that he should lift the embargo on Cuba?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with the president of Brazil.

You have talked about how you hoped that this crisis will change the geography of the world, the politics of the world. You want a world that is different, in which countries like Brazil and India and China have a greater say.

What do you want to see happen? What specifically, what power do you want that you don't have now, for Brazil?

LULA (voice of interpreter): China has been a great partner for Brazil. India has been a great partner. We have a strategic partnership commitment with India. We have a strategic partnership commitment with South Africa.

So, what we want -- well, we want to have much more influence in world politics. That's what we want.

For example, we want that the multilateral institutions, financial institutions, not to be open only to the Americans and Europeans, or institutions like the IMF and World Bank. We want to open these institutions. Then other countries could participate, and participate in the center of the decision-making process.

We want to change the concept of the U.N. Security Council in terms of their permanent members. The geography of 2009 is different from the geography of 1948, when the U.N. was created. And because of this, we want more continents to participate in the U.N. Security Council.

I also advocate the participation, that Brazil should have a seat, that the African continent should have one or two members in the U.N. Security Council. There's opposition from Italy, that doesn't want Germany to come in. There's China, that doesn't want the Japanese to participate.

I think this is foolish. I think that the more that important countries from the respective continents participate in the U.N. Security Council, the more possibilities we'll have for the U.N. Security Council to become more representative and to make more moral and political authority when it is time to make decisions.

ZAKARIA: Do you think that the G-20 should be the new forum of decision-making -- not just for this financial crisis, but more broadly -- because it gathers together the traditional G-7, G-8 countries, but also the emerging market countries? Why not use this as a place to discuss energy, to discuss climate change, to discuss all kinds of international cooperation?

LULA (voice of interpreter): I agree. I agree. I believe that a G-8 meeting today without the BRICs, a G-8 meeting without China today and without India, without Russia, without Brazil, without South Africa, without Mexico, I think that is something that has a certain defect, because we have emerging countries that have much more importance than other countries that participate in G-8 -- from the viewpoint of political representation, I mean.

Many political leaders have already advocated for the idea that we should have the G-8 plus the G-5. They will be the G-13.

But if I could give my sincere opinion, I would say the following. I believe that the G-20 should become the major forum, so that we can discuss economics, we can discuss climate issues, peace in the world, and so on, because the G-20 is much more representative, is much more heterogeneous and represents in a much more faithful way the world's economic and political geography.

ZAKARIA: The new U.N. Security Council?

LULA (voice of interpreter): Well, let's see if it's going to happen. I am convinced that -- I discussed with President Bush, and I talked Saturday with President Obama. There is agreement on the part of India. There is agreement on the part of South Africa, with Germany and Japan, France, the United Kingdom and with China. There will still be some disagreement. And the U.S., as well.

But I believe that, as time goes by, the U.S. and China should start to understand that it would be a good thing for the U.N. if we could manage to have a broader range of countries and their continents represented in the U.N. Security Council.

ZAKARIA: Let me ask you about a couple of countries in the Western Hemisphere.

You are regarded as a great symbol of democracy in the Americas. You're a great democratic success story yourself, like President Obama, a man who came from very humble origins. And yet, some people say you have been quiet as Hugo Chavez has hollowed out and destroyed democracy in Venezuela. You have greeted him as a friend. You have not really criticized the complete reversal of democracy in Venezuela.

Why not speak out about it? If Brazil wants to take a greater role in the world, wouldn't that be one part of it, to stand for certain values?

LULA (voice of interpreter): Well, maybe we cannot agree with Venezuelan democracy, but no one can say that there is no democracy in Venezuela. I have two years less than -- four years less than Chavez. He has been through five, six elections. I have only had two elections that I have participated in.

ZAKARIA: Well, wouldn't you like to have the advantages he has when running, in which the opposition are muzzled? He has gangs out on the street. This is not real democracy.

LULA (voice of interpreter): Look. We have to respect the local cultures of each country, the political traditions of each country, the political culture of each country. Brazil has made a lot of investments in Venezuela.

And I believe that the U.S. needs to get closer to Venezuela. Why so? Because I think that it would be beneficial to the U.S. and to Venezuela.

ZAKARIA: How would we do that? The president of Venezuela denounces us all the time. He talks about the U.S. president as reminding him of Satan.

How do you have a rapprochement under those circumstances?

LULA (voice of interpreter): I told Chavez when I was at a rally just now in Venezuela, when they opened a new low-income housing project, that it was necessary that he become closer to President Obama, because now there is an opportunity to establish new ties of friendship with the United States.

ZAKARIA: And what did he say?

LULA (voice of interpreter): He said he would like to do that. No one has to agree with everything that someone else says. But in state-to-state relations, we have to understand that we can help each other much more doing it that way.

We have to be more generous. And we have to -- I learned that through boxing. When a boxer, when he knocks down the other, it's not the one that's fallen that should hug the one standing up. It's the one standing up who should hug the one on the ground.

And the U.S. economy, a large economy like the U.S., has to make gestures of generosity to its neighbors.

With an economy the size of Brazil's, we have to make gestures of generosity to our neighbors, because otherwise it will have the right to think that Brazil is an imperialist power, that the U.S. is an imperialist power, because there is development in our countries and there is underdevelopment in their countries.

That's how I work. That's how my mind works. And I believe that the results that we've managed to achieve are very good ones, I would say -- for Brazil, for Latin America and for the rest of the world.

ZAKARIA: Did you tell President Obama that he should lift the embargo on Cuba, which is something you publicly say often, that the United States should lift the embargo on Cuba?

LULA (voice of interpreter): I didn't ask him to end the embargo against Cuba.

The only thing that I believe as a citizen, as the president of my country, is that there is no reason -- not from a sociological viewpoint, a military viewpoint, a political viewpoint, an electoral viewpoint, and much less from an economic viewpoint -- to maintain such a blockade as it exists since 1960, 1961, whatever it was. It is not possible. The U.S. is so big.

Obviously, this will depend on the goodwill of our brothers in Cuba, and also on the United States. But since I think that Obama is a special figure, and that he won the election where the majority of the children of Cuban descent are in Florida, I think that he should make a gesture.

If you ask me what is the gesture that he should make, I don't know. I can't say. But it's meaningless today for us to, because of a revolution in 1959, continue with this absurd embargo.

ZAKARIA: And we will be back with President Lula of Brazil.

(BEGIN VIDEO CLIP)

ZAKARIA: What does having been a lathe operator bring to your perspective? You've gone a long way from those days as a machine lathe operator.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And we are back with President Lula of Brazil.

When you were elected president of Brazil, you had a background that was Workers' Party, a socialist background of sorts. And the Brazilian press asked you, "Are you a Marxist-Leninist?"

And you said, "I am a lathe operator."

What did you mean by that? What does having been a lathe operator bring to your perspective? I mean, you've gone a long way from those days as a machine lathe operator. LULA (voice of interpreter): Well, I have learned a lot in the world of the factory. I learned a lot in the labor movement. And I'm very proud of being a lathe operator, because I am the son, I am the eighth child of a large family.

I was the first one to have a primary degree, an elementary school degree. I also was the first one to get a vocational training degree. That's where I became a lathe operator.

And so, I was the first one to get a car, to have a TV set, to have a refrigerator, the first one to have my own home and to have a job that earned a little bit more. And I became the president of my local trade union, and I became the president of Brazil. So, I've been very proud to have been a lathe operator.

But the answer that I gave was that, in those days in Brazil, everybody was stamped or labeled. You're a communist. You're a socialist, right wing, left wing. You were labeled.

So, when the journalist asked this question, I said, "No. I am not Marxist-Leninist, I'm just a lathe operator," just to go against labels.

But I consider myself a socialist. I consider that I have a world vision that is, I would say, more just. I want a world with more social fairness, where the state should fulfill the role to encourage development, to regulate society so that the poor are not victims of the speculators or exploitation.

But these things have to be built day by day. You have to build these things as you consolidate democracy, because democracy is not a minor issue. Only because of democracy did I manage to reach the presidency of Brazil.

It was only through the democratic process that Obama reached the presidency of the United States, only because of democracy that a representative of the indigenous people rules Bolivia. So, I value democracy.

ZAKARIA: President Lula, thank you so much.

(BEGIN VIDEO CLIP)

NICHOLAS KRISTOF: If I were the Chinese leaders, I'd be worried. And I think that they are, indeed, worried.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: Unrest in Pakistan, unrest in the Middle East, unrest in the world's markets. When will all this end? Probably not any time soon.

And to talk about it we have a terrific panel. Bret Stephens was the youngest person to hold the title of editor-in-chief at the "Jerusalem Post." He is now the foreign affairs columnist for the "Wall Street Journal."

Dominique Moisi is France's big thinker, whose latest book says the Western world is ruled by a culture of fear; the Islamic world, humiliation; and the Asian world, hope.

Nicholas Kristof is the "New York Times" columnist who lived in Asia for almost 13 years, reporting for the paper. In those years, he visited every Chinese province and every main Japanese island.

Rashid Khalidi is a New York-born Palestinian-American, who is now a distinguished professor at Columbia University, and has advised the Palestinian side on peace talks with Israel.

Welcome, gentlemen.

Let me ask you, Rashid, about the collapse in oil prices. It has got to be hurting Iran, Venezuela, Russia. But it's also got to be hurting the Arab world. I mean, the Arab world -- Saudi Arabia, the Gulf -- these are small countries with smaller populations. So, you know, instead of getting enormous amounts of money, they will merely get large amounts of money.

But still, they've banked on fairly large -- they've always used money as a lubricator of everything.

RASHID KHALIDI, PROFESSOR, COLUMBIA UNIVERSITY: I think the place to look is not the people-poor, oil-rich countries like Saudi Arabia and the small Gulf countries. It's the labor-exporting countries that depend on remittances from the Gulf countries -- Egypt...

ZAKARIA: So, that's Syria, Egypt...

KHALIDI: ... Syria, Lebanon, the occupied Palestinian territories, Jordan, and so on, Sudan -- well, Sudan is an oil producer now -- those countries, or countries with large populations and oil like Algeria and Iraq -- are the places I look to for possible after-effects.

ZAKARIA: So, Bret, Syria is pressured. This might well be the time to explore some possible play where we could wean the Syrians off, away from Iran, except that I read Commentary Magazine and see the cover story by Bret Stephens telling us that this would be a disastrous move.

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST, "WALL STREET JOURNAL": Well, look. There's the difference between theory and practice. In theory it's a wonderful idea that Syria ought to behave like an Arab country, but typically -- that is to say that its alliances should be with...

ZAKARIA: Anti-Iranian, because it is -- because the Iranians are Persian and not Arab. STEPHENS: But we have a 30-year history now of growing, stronger ties between the Assad clan -- Hafez the father, Bashar the son -- and the Iranian regime. And we also have an 18-year history going back to the first Madrid peace conference in late 1991, of efforts between Israel and Syria to have some kind of rapprochement.

You saw it again just last year with Ehud Olmert talking about opening negotiations with Syria. They did so under Turkish auspices.

But the history is not particularly encouraging, because it has never seemed that the Syrians are seriously willing -- as, say, Anwar Sadat was -- to reciprocate territorial concessions or the return of the Golan Heights for a real peace. And it doesn't seem to me they're really willing to truly disentangle themselves from their position in Lebanon. And that's the other piece of this.

ZAKARIA: Rashid, what do you think?

KHALIDI: I think everything that Bret said is completely wrong, of course.

Firstly, the Syrians and Israelis were close at least twice. And I would blame both the Israeli, the Syrian and the American participants in those efforts for not pushing the thing through.

Secondly, Syria's connection with Iran, you're right -- here you were right -- is a longstanding one. And I don't think they're going to give it up easily. And I think that those in Washington who dream this will be a cheap and easy separation of Syria from Iran are wrong.

I think, if you want to get the Syrians, you have to at least begin both a package deal with the Iranians, and you have to deal with the Palestinians. Bashar Assad said it very bluntly. You want a cold peace? You can have a cold peace -- easy. They were a few acres of stinking mud away from a deal twice. Assad the father, Prime Minister Rabin, Netanyahu and...

STEPHENS: So, why do you think it failed? It was just bad luck?

KHALIDI: Well, I don't think it was pushed as hard as it should have been by the, for one thing, by either the Clinton administration or by President Bush the first.

STEPHENS: That view, I just think that's mistaken. You have this 900-page monument called "The Missing Peace," by Dennis Ross, testifying to incredible efforts by the Clinton administration to bridge the differences. You had two long sets of negotiations in Maryland and West Virginia that came a cropper.

And that wasn't simply because the candlelight wasn't -- the mood wasn't right there.

NICHOLAS KRISTOF, "NEW YORK TIMES": Isn't that precisely a reason, then, to push the Syria buttons? I mean, I take your point about there are plenty of signs that there are discouraging reasons for hoping that it'll work. But I don't see any reason not to try. I think the administration is right to at least attempt to see if something's (ph) there (ph) -- to test Bashar. And, you know, maybe it won't work. But...

KHALIDI: Well, one thing to do is to go back and look at the reasons that it didn't work under President Clinton and under President Bush, the senior. And one of them is, frankly, Dennis Ross, who, unfortunately, is back in this administration.

But I think there have been a whole series of mistakes in the way the United States has approached this issue in the times when there were American presidents who actually tried, unlike the last president.

And if this president decides he wants to try, I really think he should look seriously at the mistakes that were made in the past.

ZAKARIA: One of the most startling developments that has happened recently is that the Chinese have actually started worrying about the safety of the $1 trillion that they have lent the United States. And for the first time ever, Wen Jiabao, the premier of China, made a statement saying, we hope you're going to look after this money, and we hope you're going to act responsibly.

Is this some kind of shot across the bow? You know, what does that say?

KRISTOF: I think the Chinese have been worrying about this for a while. What's different is that now they're worrying about it aloud.

And I think that, essentially, they felt taken for granted. They felt they weren't being consulted adequately in the run-up to the G- 20, and they wanted to be heard from.

And also, I think, for domestic political purposes, the regime wants to show that it is standing up, that it is looking after Chinese interests. And it does, indeed, feel deeply insecure now, partly because of the economic crisis and how it's hugely increasing unemployment around the country.

If I were the Chinese leaders, I'd be worried. And I think that they are indeed worried. Essentially, the Chinese leaders have been in power as par of a pact, that they will look after the political scene. People won't have political rights, but they will -- their standard of living will increase dramatically.

And that pact -- I mean, they're not going to be able to fulfill their part of that pact when you have a lot of urban workers losing their jobs and going back to the countryside. People are much better connected than they ever were before.

And maybe most importantly, they're less afraid than they were.

And so, I think you do see the regime being really nervous about where this goes. DOMINIQUE MOISI, FRENCH INSTITUTE FOR INTERNATIONAL RELATIONS: I think the stability in China is based on a kind of social contract which reminds me very much of 19th century France, when the prime minister of Louis-Philippe, the king, was Guizot. And that social contract was based on, "get rich and let me govern."

And the Chinese have said to their people, "get rich and let power to us."

The problem is that that principle is a continuation of growth. What happens when growth no longer continues? At that time, the Chinese may say, well, we let you govern, and you promised us something which is not coming any longer. So, that's the end, in a way, of the social contract on which stability was based.

ZAKARIA: And we have to take a break. We will be right back.

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Bret Stephens of the "Wall Street Journal," Nick Kristof of the "New York Times," Rashid Khalidi of Columbia University, and Dominique Moisi representing all of France.

(LAUGHTER)

Dominique, let me ask you. We've heard a lot about American competence in terms of dealing with this global economic crisis. But a lot of people have begun to worry about European competence.

I mean, Paul Krugman, Martin Wolf, these people now write, the real problem is not really whether America has the exact right stimulus package or the exact right bank bailout, but that Europe just does not have the tools to deal in a coordinated way with this massive problem.

And, just so that our viewers understand, this is a huge problem, because the European economy is the same size as the American economy. Both occupy about a quarter of global GDP. So, if Europe doesn't respond to this crisis right, even if America gets its act together, it's not going to help.

So, is Europe guilty of inaction, incompetence, paralysis?

MOISI: Let me speak in the name of all of Europe...

(LAUGHTER)

... since I represent all of France.

Today, Europe, to a majority of Europeans, looks irrelevant. There is on the one hand the United States. And you expect Obama to succeed and to take us all out of the morass in which the Americans have placed the world, at least in large part.

ZAKARIA: Oh, the European banks have done their fair share of...

(CROSSTALK)

MOISI: That was a little bit -- let's say that America has played a certain role...

(LAUGHTER)

UNIDENTIFIED MALE: A leading role.

MOISI: ... in that crisis.

And not only they don't find in Europe the sense of protection, but they don't feel Europeans. And so, to a large extent, they turn towards their nation-state. It's not only the return of the state that is one of the results of the crisis. It's the return of the nation.

And so, each country is, in a way, finding its own solution, trying to reassure its citizens, and playing on the natural populism of the public opinion.

KHALIDI: Yes, talking about the return of the nation, what this points up, I think, is the absence of real mechanisms for Europe to have a foreign policy. We see this in the Middle East, and now we're seeing it in a much bigger crisis.

Europe is not -- there is no Europe, except on a few economic issues where there clearly is a unified...

ZAKARIA: But even now on these economic issues...

KHALIDI: On the biggest one, it's not working.

KRISTOF: It just strikes me that, aside from the issues of institutions to address this, that -- I was in Japan during the lost decade there. And it sure seems to me that Europe today is parallel to Japan in terms of just its failure to appreciate how severe this is and the price that it's going to have pay, unless it addresses it much, much more aggressively.

STEPHENS: Well, I mean, I'm somewhat amused about being in the position that I should come to the defense of the European finance ministers.

(LAUGHTER)

And also to your point about Japan. I mean, the lesson I draw from Japan's lost decade is massive, repeated fiscal, Keynesian fiscal stimuli into an economy that failed to restart the economy until they finally decided they had to do something about these zombie banks.

We have a very similar situation now, in which we're trying to prop up, in the United States, these huge banks.

I think the Europeans...

ZAKARIA: But, Bret, to be fair, the Europeans are doing neither. They're not going to do a big fiscal stimulus, and they're still keeping alive their zombie banks.

STEPHENS: Yes, well, they have half...

ZAKARIA: So, they're the worst of both worlds.

STEPHENS: No, fair enough. They have half of it right.

ZAKARIA: All right, let me ask you a more general question about Obama's, you know, 50, 50-odd days, first 50-odd days in office.

How is he doing in foreign policy in general? And let me ask you, Rashid, because he starts out very unusually by giving an interview, the first interview, to an Arab satellite network, Al Arabiya.

Is he being perceived well? Is this charm offensive working?

KHALIDI: I think three things that he's done have had a positive effect in the Arab world. The first would be that interview. The second would be the new policies on detention. And the third would be the intention to withdraw from Iraq.

I think on those three scores, he's probably done well with public opinion in the Arab world. The nail on which it will all hang will be Palestine, of course.

Everybody in this country -- there's a whole legion of people who will spend the rest of their lives trying to say Palestine is not really important, ignore it, the Arabs don't really care. And that's because the Arab governments that are beholden to the United States and are not in any way representative of their people, will tell their American friends what they want to hear. It's not true.

Public opinion in this part of the world is going to wait to see what the United States does on this issue. And if he does something, if he moves -- not just a process -- but moves us towards peace, then I think he really will win serious admiration in the Arab world.

The other thing would be to stop supporting horrible dictatorships, which the United States has done.

ZAKARIA: You must agree entirely, Bret.

STEPHENS: Well, I didn't (ph) know he was a neoconservative pushing the democracy agenda in the Middle East, so we do have some areas of agreement.

(LAUGHTER)

Look, it'd be wonderful if Obama helps improve America's image in the Arab world. Terrific. That's wonderful. The main issue is, what is he going to do to promote American interests in that part of the world?

And here I think his -- you know, it's been a sort of mixed picture in the last, or the first 50 days of his administration. I think he gave a very good speech on Iraq, for instance, a very careful, reasonable withdrawal that leaves a substantial number of troops and is in accord with the SOFA, the Status of Forces Agreement.

The great question, of course, is what is going to happen with Iran. That, to me -- not Palestine -- is the central issue, because as Iran goes nuclear, all kinds of dominoes fall, the psychology changes, the situation changes dramatically.

ZAKARIA: The Obama people seem to be taking it pretty seriously, and seriously enough to talk seriously to the Russians about whether they can get some pressure placed on them. But then all of a sudden, the right starts...

STEPHENS: This is the great Holy Grail of the Russians will come to our aid. That's not going to happen.

ZAKARIA: Well, but they're the only outside power -- if you're looking diplomatically to get pressure put on Iran, who else has pressure to put on Iran than the Russians?

KHALIDI: I think this whole debate misses the point. Iranians have reasons for wanting to develop nuclear weapons, if, indeed, they are doing that.

What the president said in answer to Helen Thomas' question in his first press conference, talking about nuclear nonproliferation, is in fact the only way you may prevent Iran from having nuclear weapons, if, in fact, they intend to do that.

If you go to war with...

ZAKARIA: Which is a more general...

KHALIDI: If you go to war with them, they will have them anyway. They'll be angrier. They'll be infinitely more nasty. But they're probably going to have them anyway.

ZAKARIA: But to be fair, I don't think Bret was saying we're going (ph) to (ph) war (ph)...

KHALIDI: No, I'm not suggesting he is suggesting that, but...

STEPHENS: Our options...

ZAKARIA: He might well be. I don't...

STEPHENS: No, our options...

(CROSSTALK)

ZAKARIA: ... preclude that option for you.

STEPHENS: I think war is the second worst option here.

(CROSSTALK) KHALIDI: The options are very limited. But one of them should be trying to figure out a way to denuclearize the Middle East, which means you prevent them from having weapons, and you somehow build down that Israeli nuclear arsenal.

ZAKARIA: Dominique, you have the last word.

MOISI: Well, I think, seen from Europe, Europeans are expecting America to save the world economy, and they are not desiring to see America bring them in more in Afghanistan or somewhere else.

And there is that same dichotomy in Europe as in the United States. We like very much what Obama is. We do not necessarily appreciate all the time what Obama does. And from that point of view, this distinction between essence and performance unites Europe and the United States.

ZAKARIA: On that rare moment of trans-Atlantic unity, Dominique Moisi, Rashid Khalidi, Nick Kristof, Bret Stephens, thank you all very much.

And we will be right back.

(COMMERCIAL BREAK)

ZAKARIA: Now for our feature, "What In The World?" It's the week's biggest outrage, gaff or amazing act of statesmanship or smarts -- anything that catches my attention.

And with the G-20 meeting coming this week in London, I've been looking at the various countries' responses to the crisis.

Remember when everyone was up in arms over the "buy America" provision in the stimulus package? Well, it turned out to be a tempest in a teapot. The provision didn't last.

But many of the countries that were pointing the protectionist finger at the U.S. turned out to be just as guilty themselves. According to the World Bank, in December, China banned Irish pork, Italian brandy, British sauce, Dutch eggs and Spanish dairy products -- and some, but not all types, of Belgian chocolates.

As if in retaliation, the same month, the E.U. started imposing duties on preserved fruit from China, along with some metal goods from China, Belarus and Russia. And in January, India banned Chinese toys.

In other words, protectionism around the globe should be one of the first things on the agenda of the G-20. Stop doing this stuff. It's bad for trade.

Now, this week's question. We want to know what you think is the most important thing for the G-20 nations to hammer out. I'll give you three options.

Should they, A, spend lots and lots of money in stimulus in their respective countries; two, stop the protectionism and expand global trade; C, reform the financial institutions in their country and create a kind of mechanism, so that there are common global rules?

Tell us what you think and why.

We didn't have a question of the week last week, because I wanted to put your great minds on a different challenge, called "the Fareed Challenge." It's a weekly quiz on our Web site, cnn.com/gps. It has questions that will test if you were watching closely during the show, or following world events this week. There's a new one on every week. It's great fun. Please try your hand at it.

Also, I'd like to recommend a book. It's by Les Gelb, the former foreign affairs columnist for the "New York Times." It's called "Power Rules." It's a kind of update or modern version of Machiavelli. It tells us how we should allow common sense to help us make foreign policy. It's a fascinating, interesting read. I think you'll like it.

As always, don't forget to check out our Web site, cnn.com/gps, for highlights from this program and our weekly podcast. You can e- mail me at fareedzakariagps@cnn.com.

Thank you for watching. Have a great week.