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Fareed Zakaria GPS

Egypt's Opposition Leader ElBaradei Speaks; Interview with Egypt's Former Trade Minister

Aired February 06, 2011 - 10:00   ET

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

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

We have a terrific show for you today. First up, the latest from Egypt. We'll talk to reporters stationed in that country. I will also bring you interviews with two important Egyptian voices with different views.

In a disorganized opposition movement, Mohamed ElBaradei might be the closest thing Egypt has to a leader of the opposition. Ever since the crisis started, he's been saying Mubarak has to leave, but Mubarak's still there, so what's the next step?

Then, a unique insight into the mind of the Egyptian government. Rachid Mohamed Rachid was Egypt's trade minister until President Mubarak dissolved his government nine days ago. He'll talk to us about what is going on in his country.

Then, you heard last week what British Prime Minister David Cameron thinks about Egypt. Today you'll hear his thoughts on the crucial question that everyone is watching. Can you cut deficits and get economic growth? He also talks to me about everything from Europe to the royal wedding.

First, my thoughts on Egypt. A specter is haunting the West, and it is the specter of Iran. The analogy everyone has in mind is 1979, the fall of the stalwart American ally, the Shah of Iran, and its replacement with an Islamic Republic. This fear comes from all over the political spectrum, though if you listen to some of the more conservative voices, you'd think that Egypt is about to become the center of a new caliphate, spreading Islamic terror across the world.

Now, there is some danger that events in Egypt could spill out of control, that nasty forces could come to power through the ballot and seize control of the state. But Egypt has many elements within its state and within its society that will check the role of Islamic forces. The Muslim Brotherhood, the leading Islamist party, is thought to have the support of about 25 percent of the population, and most of the other political groups in the country are secular.

Now, the danger of some imagined future has blinded us to the present, and the problem in the present is military dictatorship. Egypt is not run by the Mubarak family, it is a military dictatorship. Since the officers' coup of 1952, all of Egypt's presidents have come from the armed forces. The county is ruled under martial law. Military courts trump civilian ones. Military leaders enjoy huge privileges and a fat budget in the current setup, and they will work very hard to preserve that position.

In fact, right now, what appears to be happening is a consolidation of military power. The civilians and business leaders who are in the cabinet have been fired. The new cabinet is 50 percent military. The governors of Egypt's provinces are now 80 percent military.

The military leadership has fought economic reforms because these reforms threaten the many industries which the army owns. It has also opposed political reform because it fears losing its tight grip on power. And yet, as events unfold, it seems that while having decided to sacrifice Mubarak, the military intends to stay formally in power.

But what Egyptians out on the street are protesting is not just Mubarak personally, but the whole system, the military dictatorship. If the United States is seen as having helped orchestrate a continuation of military rule under a democratic facade, we will deeply disappoint and frustrate the opposition in Egypt, which will inevitably turn more extreme and more religious. And then, some years hence, the Iranian scenario might well come to pass.

You can read much more about what I think about democracy in the region in my cover story in this week's "Time" magazine, also online of course at Time.com.

Up in just seconds, ElBaradei and Rachid Mohamed Rachid and then David Cameron.

Let's get started.

Mohamed ElBaradei is one of the best known Egyptians on the world stage. He's a Nobel Laureate for his work as - at the world's nuclear watch dog, the International Atomic Energy Agency. He is now one of the leading voices of the Egyptian opposition.

(BEGIN VIDEOTAPE)

ZAKARIA: You have been very clear that your demand as a leading figure of the opposition is that President Mubarak has to step down. But Omar Suleiman, the vice president, has said unequivocally that the president is not going to step down. The - President Obama's representative, Frank Wisner, at a conference recently said the president must stay in office in order to steer changes through.

It appears that President Mubarak is going to stay. What happens next?

MOHAMED ELBARADEI, FORMER IAEA DIRECTOR: Well, I think, Fareed, this is - well, it's continuing the standoff. I think the - the people are very clear that Mubarak has to retire in dignity, but he has to go. There's a huge question of credibility, Fareed, that Mubarak is a symbol of an outgoing regime and people have no credibility, that if he hasn't - if he doesn't leave, you know, the regime would retrench and then come back, you know, in - with vengeance. And you hear - you hear different - different voices. I mean, there you asked (ph), it was very clear that he should go.

Frank Wisner yesterday came with his statement, saying that Mubarak must stay, which created a lot of confusion, a lot of disappointment, I should tell you, here in Egypt. People were very happy with Barack Obama's statements that - that the time for transition is now. Mubarak would be, you know, stubborn but it's not really a personal issue, it's an issue of the future of the country and people want to see a new regime, and Mubarak to - to step down is a - is a clear indication that we are on the throes of - of the second republic, if you like.

And unless he does that, we would continue the standoff, and I can tell you, people are very determined that he should leave. And also, Fareed, that the whole process of transition should not just be managed by the outgoing regime, by the - by his vice president, his prime minister. They are all military people, but there have to be a heavy engagement by (INAUDIBLE) people, by the - by the civilians.

So we are not in the greatest situation right now. It's a very opaque situation, and it's a very tense situation, Fareed.

ZAKARIA: But what leverage do you have? At some point people have to go back to work. You already get a sense that there is some degree of normalcy. The protests are getting smaller. Isn't the regime hoping to outlast you?

ELBARADEI: Well, I think yes. I think that's part of the regime tactics. It's - it's a war of frustration. When people don't have enough, you know, basic of the - basic needs, enough to eat, they don't have the daily wage, that they would then turn against the demonstrators and say enough is enough. Let us - let us go on with - with our daily lives.

But the basic problem, Fareed, as I see it, is it's not just President Mubarak leaving office, it's a question of credibility. While the - Omar Suleiman was talking about freeing all the detainees, all the young people that have been detained. I got nine people detained immediately after meeting with me at my - my home. He - they - they were kept for a couple of days. They were just released yesterday.

So there is - while you get also the feeling that we are - we are extracting a wisdom tooth, you know, they first come and say, we would change one (INAUDIBLE) institution, then they get additional pressure. Then they would say that we'll - we'll do another. But people don't get the feeling that they are really buying into - into change, into democracy. I mean, we haven't heard anything, Fareed, about the ability to establish new parties really, the abolishing of martial law. So a huge part of the problem is people, the young people in particular, do not have any sense of credibility, that these people mean what they say.

ZAKARIA: Isn't another tactic of - of the regime to try to divide the opposition? And is it not succeeding? The Wafd Party has already engaged in negotiations with Suleiman. The Muslim Brotherhood says that they will talk with him.

Are you getting isolated, and is the opposition fracturing?

ELBARADEI: Well, I'm not - I'm not - I don't think I am isolated. I'm one of - I'm one of many, Fareed, who - particularly the people who are camping in - in the - in the Tahrir Square and many other parts of the Egypt. They are determined that they would continue this week for (INAUDIBLE) a week of resistance. And they will have a huge demonstration today, on Wednesday, on Friday.

And so it is - it is a complete standoff, and I hope somebody will send the message, you know, I don't know in which way, to President Mubarak that for the sake of the country, for - for his own dignity, to defuse the - this crisis, he better step down and everybody is ready to give him the dignified out he is entitled to as the former president of Egypt.

But - but he needs to go and you need to engage - you need to engage the civilians. You need to - it should not be just the military. The outgoing regime, running the process of change, people are not - are not believing that, and any feeling people will get, Fareed, that there is an effort to abort the - the revolution, the peaceful revolution, it would turn violent.

ZAKARIA: So you are saying under no circumstances, unless Mubarak resigns, will you negotiate with the regime?

ELBARADEI: Well, I'm ready to express my views, but I am not ready to negotiate with the representative of Mubarak. I mean, the whole idea was to - to move from that regime to a new regime. Mubarak continues to be a symbol of that old regime, and I will not give any legitimacy to the existing regime because the whole idea is that this regime has no legitimacy, has no - has lost whatever credibility.

And, yes, my - my position remains the same, Fareed, that I would not talk with these people until - until Mubarak - Mubarak steps down.

ZAKARIA: And what specifically happens then? Because a number of people have pointed out that under Egypt's constitution then the speaker of the - takes over, not the vice president. You have a national - presidential elections triggered in two months. Do you want all of that to happen? Or how do you abort that process?

If Mubarak is to resign, it sets in chain a set of transitions that many people say would be destabilizing.

ELBARADEI: Yes. I - I think - I think what I'm - I'm calling for, Fareed, is a presidential council of three people, with Suleiman or somebody from the army would be one member. The other should be civilian. A year of transition of a government of national unity, of a - of a - of caretaker government that's prepared properly for a free and fair election.

I think any election in the next coming of months before the right people to establish parties and engage, and it will be, again, a fake - a fake democracy. So we need - we need a year of transition. We need a government - a transitional government. We need a presidential council. We need to abolish the - the present constitution. We need to dissolve the current parliament.

These are all instruments of the dictatorship regime, and we should not be - I don't think we will go to democracy through that - the dictatorial constitution. I mean, my - my expert on constitutional law said the easiest way, Fareed, is to start a new era, with an interim constitution, set aside the present parliament, which is rigged, set aside the present constitution, which has nothing to do with democracy, and give our self a year for a peaceful and safe transition.

And then we will get a proper president, a proper parliament and - and then work again a full fledged democratic constitution. That's the way I see it, Fareed.

ZAKARIA: Mohamed ElBaradei, a pleasure to have you on. Thank you so much.

(END VIDEOTAPE)

ZAKARIA: Up next, the latest live from Egypt, major protests in Cairo, Alexandria and more.

(COMMERCIAL BREAK)

ZAKARIA: CNN's Nic Robertson is live in Alexandria, Egypt this morning.

Nic, we've been talking about this issue of dividing the opposition. You've spoken to people on the street who are talking about the very same thing.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: There's a real frustration here, Fareed. There's a frustration at several levels. One of those is that a lot of the young people we talked to feel that their great revolution, as they put it, is being usurped by political parties, Muslim Brotherhood and others, who've been waiting in the wings to sort of ride this wave that they've been able to build up.

They're very frustrated about that and they don't feel that they're being properly represented at the moment. Some of the other political groups that we're talking to on the streets here feel that what the government is trying to do as well at the moment is buy time - buy - sort of through political chicanery and hope that it can outmaneuver this great movement of protest, and they really feel that the government in its way of doing that is to divide them and conquer them.

So by appearing to give some concessions, they feel that the government is - is in effect trying to buy some of them off. And we're actually seeing the effects of that on the streets, people saying, look, there's been too much chaos now, the government has given us a little. There will be elections. He wouldn't stand again. That should be enough.

So it's those kinds of divisions that are now becoming - pulling some real anger on the streets here, Fareed.

ZAKARIA: A fascinating turn in the story.

Up next, a former member of President Mubarak's cabinet. What is going on in the corridors of power in Egypt?

(COMMERCIAL BREAK)

ZAKARIA: Rachid Mohamed Rachid was the first business leader ever in the Egyptian government. He was one of the liberals, the so- called reformers. Nine days ago, he lost his job when Mubarak fired the entire cabinet. Egyptian prosecutors have since banned him from traveling and frozen his assets.

He offers a rare insider's look at the highest levels of the Egyptian government.

(BEGIN VIDEOTAPE)

ZAKARIA: Do you think President Mubarak was deeply disappointed by the fact that President Obama has in the end asked for him to resign?

RACHID MOHAMED RACHID, FORMER EGYPTIAN TRADE MINISTER: Well, I - I can tell you now, not an official person, I can say almost whatever I want to say. I think the position of President Obama and the position of the American government was extremely short sighted. I don't want even to say stupid.

There is so much interference. They shouldn't actually have gotten involved in this. I think, at the end of the day, the record of the United States' interference in many of these events in the past have showed how disastrous it end up to be. I think it is positive for the rest of the world to support Egypt in making the democratic transition, but I think it is not in the right of President Obama or the American government or any other government to dictate on Egypt what to do.

ZAKARIA: If Mubarak leaves, the - the military stays, the regime stays in power, the ones, you know, who oppose the reform stay in power. Does anything change?

RACHID: Well, I personally believe that the best scenario for Egypt is for President Mubarak to stay, finish his term. I think what President Mubarak have said four days ago is a very - a clear and a very strong message for the transition. Since his speech, action have been taken on the ground.

I believe that Egypt needs that transition. I believe that Mubarak can do that transition. I personally believe that he will push towards these changes to be done. And it's not easy. We all know it's not easy, but I believe that the - the alternative is chaos and the alternative is just jumping into the unknown. And I believe that he has the will to do that.

There is a lot of people that have changed in the last few days. There are so many faces that have been removed. We - we have some promising faces, but we still, of course, have a lot of resistance. We still have people who assume that things will go back to normal, but they will not.

Egypt is a great country. It has a great young population. It has a great future and I think it is time now to let the future happen by the young people, not by history.

ZAKARIA: Why did you not join the government that was created about a week ago? The - the old government was fired, but you were invited to - to join - join the new one. You chose not to. Why?

RACHID: Well, the reality, of course, was that we had to resign the old government on Saturday. On Sunday, the new prime minister asked me, invited me to join the government. I personally felt that what is happening in Egypt now and the consequences of the events of the last few days will probably need a new direction.

The prime minister has his own views about what he would like to do. He has a right to choose new faces. He has a right maybe to change some of the policies. And that was the reason why I presented to him my apology, and he gracefully accepted that.

But even after that discussion, we had a lot of discussion about how to help him to set up the succession. But I was very clear that what we are going to face in the next few weeks is going to be different from what we had in the past.

ZAKARIA: But then you face these prosecutors' investigations. Do you have any sense as to - are these an attempt to in some way keep you quiet? Or what do you think is - is behind these prosecutor's charges?

RACHID: Well, I don't know. I - I have all respect to our prosecutor, but I only know one thing, that if I was a minister in Egypt on Sunday or Monday morning, I would not have had that situation today. But I believe that this thing will be cleared and I know that the general - the general prosecutor will be dealing fairly with all the issues here.

ZAKARIA: Do you worry about the people out on the streets? Do you worry that they - this is - this is a Muslim Brotherhood movement that will take over the country and turn it into a kind of Islamic state?

RACHID: Well, we have many challenges. It is - it is well known that there is, of course, a strong Muslim Brotherhood movement. We are all aware what is the agenda that they have. But I generally believe that what we have seen in the last 10 days have been initiated by the young people of Egypt, that we're probably, as I said, were restricted despite the political reform that have been happening of having a voice and a share.

The system were not allowing them enough - although that we have made so many political changes in opening up, everybody knows that the Facebook have been really one of many important factors that made this happen. But Facebook was an outcome of the political reform.

Egypt have never restricted Internet. Egypt have opened up freedom of speech. I think we need to trust now in the young people of Egypt and we need to trust in that positive spirit that have been created.

ZAKARIA: You said a few days ago that these events have taken Egypt's economy back 10 years. That's a pretty grim prognosis. Do you really think that it will take that long to get back to - to where you were?

RACHID: Well, Fareed, you know, I mean, business needs stability. Business needs clarity of direction and they need definitely a positive environment. Today, unfortunately, we don't have any of those.

I - I believe Egypt has a huge potential. We have worked very hard in the last six years to develop the economy. Many, many people around the world have seen the proof that Egypt can deliver, and today the challenge is first to - to resume law and order. We need to bring law and order back into the country. We need to bring back security into the country. We need to give the right messages to the business in terms of business environment, and that is probably one of the challenges now, especially when many - many business people are under attack.

But also, more important than that, we need also to prove that the transition will be smooth, and that's why I believe President Mubarak is key to that. And we - we need to ensure the business community that at the end of this transition, Egypt will be a stable, democratic and economically business friendly society.

ZAKARIA: Rachid Mohamed Rachid, pleasure to have you on.

RACHID: Thank you very much.

(END VIDEOTAPE)

ZAKARIA: Next up, we'll take you to Tahrir Square in Cairo, where demonstrators have vowed to stay until Mubarak leaves.

(COMMERCIAL BREAK)

ZAKARIA: Demonstrators in Cairo are still out in force today.

Ivan Watson is in Cairo this morning. Ivan, the mood appears to be more upbeat. But you were telling me there were reports of growing concerns about the role of the military?

IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: That's right. The mood here is absolutely festive, Fareed, it's - it's really remarkable. We had a show of solidarity between Christians and Muslims earlier of one of the main stages here, where men held up crosses and copies of the Koran at the same time in clasped hands. And that's remarkable in a country where tensions exploded between Muslims and the Coptic Christian minority within the last month.

We have people who have been putting out calligraphy using the same stones that have been used for battle to protect this opposition, anti-Mubarak, pro-democracy (INAUDIBLE) in recent days, using those stones to make street art instead. Another remarkable development.

But there are serious concerns here too about the role exactly of the military, the pro-Mubarak demonstrators who have been clashing here have -

ZAKARIA: Wait, wait, wait.

WATSON: -- seem to have withdrawn. Instead the demonstrators have directed themselves against the army. They have built a human chain outside the barricades to prevent the Egyptian military, to prevent the tanks from being able to roll in and take down the barricades as generals have requested here in the past several days.

And I asked them, you know, the army is supposed to be neutral here. You frequently tell me that the army and people are one hand. That's a common catch phrase in Egypt. Well, the demonstrators say yes, but the army takes orders from President Mubarak and we do not trust him if he tries to open the way here, it will end our bubble or enclave here.

And another sign of suspicion here, amid talk of dialogue and opening up the media and removing censorship here, I've just heard word that Ayman Mohyeldin, a correspondent for Al-Jazeera English, has been detained by military intelligence, one of dozens who have been detained that way in recent days here - Fareed.

ZAKARIA: Fascinating reporting. Thank you so much.

Back in just a moment with the British Prime Minister David Cameron.

(BEGIN VIDEO CLIP)

ZAKARIA: When Winston Churchill was prime minister, he famously said I have not become the king's prime minister to preside over the liquidation of the British Empire. Are you the prime minister who will preside over the liquidation of Britain's world role?

DAVID CAMERON, BRITISH PRIME MINISTER: I'd like to take this opportunity, on a U.S. television station to say very clearly, Britain is maintaining its world role and Britain is an absolutely front ranked - front ranked player and will remain so.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: Shortly after moving into 10 Downing Street less than a year ago, British Prime Minister David Cameron and his coalition government began a bold experiment. Cameron's government set out to prove that the way to dig Britain out of its economic problems was to slash budgets, cut spending, raise taxes. That is, of course, in contrast to what is being done in the U.S. So will it save Britain?

Recent economic growth numbers have been bad. I sat down with British Prime Minister David Cameron last week in Davos to ask him about his efforts.

(BEGIN VIDEOTAPE)

ZAKARIA: Prime Minister, thank you for joining us.

CAMERON: Good to be here.

ZAKARIA: When Winston Churchill was prime minister, he famously said, I have not become the king's first minister to preside over the liquidation of the British Empire. Are you the prime minister who will preside over the liquidation of Britain's world role?

If I look at your defense budget, it's get - getting hollowed out. Your foreign policy budget is being cut. Understandably you have all these cuts. But you wouldn't be able to do Afghanistan again. You wouldn't be able to do Iraq again. You wouldn't able to do the Falklands again if -

CAMERON: I don't - I don't accept that for one single moment. And I'd like to take this opportunity on a U.S. television station to say very clearly, Britain is maintaining its world role. We're actually maintaining it in cash terms. Our defense budget, 35 billion a year is maintained throughout this parliament. That's a small real terms cut. But we will remain one of the five biggest spenders on defense anywhere in the world.

We have one of the best resource networks of embassies, ambassadors and the British Council anywhere in the world. We have huge reserves of hard power and soft power. We're actually spending more in terms of combating cyber security problems, which I think is one of the growing threats in our world.

We have one of the most powerful and respected aid budgets in the world. And don't underestimate that as a force for good and a force for change in the world. So often the problems we're confronting, whether it's floods in Bangladesh or problems in Haiti, actually require aid as well as hard military power. So Britain is a front ranked power where a member of every single one of the key organizations whether it's the EU, whether it's NATO and the Commonwealth, our relationship with America I believe is as strong as ever.

And seven - actually, sorry - nine months into this job, I believe that relationship is at heart incredibly strong, not just because of what our forces do fighting and sometimes dying together, but also the security relationship where our assets and your assets work absolutely in harmony. The information is shared. President Obama and I are on the telephone talking about the threats we face and how we're going to combat them together.

The Britain is absolutely a front ranked - front ranked player and will remain so. And I would argue our defense review - that, yes, it took some difficult decisions and said there are some legacy assets that we don't need. We don't need quite so many tanks when you're not facing a Soviet Army that's going to roll across Europe. It's right to make change. Change makes you stronger, more relevant and more powerful in the world, and that's what we've done.

ZAKARIA: Do you think the military tide is turning in Afghanistan?

CAMERON: I do think we've made progress. I mean, one of the most important parts of that is in Helmand Province where we are, the hardest part. And remember, after America, we are the second largest contributor of troops in the toughest part of the country by a very, very long way. We are making progress and that is, again, U.S. Marines and British Forces working together, far better balance of forces and much more the right number of forces and I think demonstrating that security is improving.

But the - the ticket for President Obama and for me to bring our troops home is the training of the Afghan Army and Police which is going well. We need to keep that progress growing and we need a strong government in Afghanistan to help deliver that change. I believe those things can be done. And we will be able to do to, as I say, to meet our deadline of not having combat troops or troops (INAUDIBLE) by 2015.

ZAKARIA: George Soros says that the British economy is going to enter into a recession, that the contraction policies, the policies of taking money out of the economy by cutting spending, raising taxes that your government has done are going to have to be reversed.

Soros has a pretty good track record of betting for and against governments. Does it worry you that he feels this way?

CAMERON: I think we have an important task to carry out, which is to get the U.K. economy from recession through recovery and into growth. We're making good progress with that, but we can't ignore what is in front of us, which is, you know, the biggest budget deficit of any advanced country.

And, you know, we're borrowing more than 10 percent of our GDP this year. Like the rest of Europe, the ratio debt to GDP is growing very fast and you can't put that problem off. I want to say (ph) when you look at forecasts for the U.K. economy, including our own forecast, which is now totally independent of government, those forecasts are for continued growth.

Now, obviously, we need to get behind that growth, help business cut regulation, make it easier to do business, all those things that we're doing. But really, part one, line one of any growth strategy in our situation has got to be dealing with the deficit, not putting it off.

ZAKARIA: But a number of economists say nobody questions that you needed to cut spending. The question is when. And that you were not having any trouble raising money from the bond markets. I know the Britain was finding it easy to borrow and yet you preemptively made this decision. Could it be that it was too fast?

CAMERON: Well, I'll make two points of that. First of all, if we go back to May when my government - coalition government came in, at that point actually people were suggesting that our credit rating could be downgraded. There were potential problems of rises in market interest rates. And actually since we announced our deficit reduction plan, those market interest rates have actually come down and our credit rating has been reassured at AAA. So I don't accept that.

The second point I'll make, is if you look at what our program actually is, it is about reducing the deficit, taking some steps as we did in 2010, further steps in 2011, more in 2012. It is a multiyear program. You obviously can't get rid of a 10 percent budget deficit in one go. It is a multi-year program and it's accompanied by a government that is really looking at everything it can do to encourage growth.

I'm - I'm convinced that's the right answer. It's an answer we have to stick to and deliver. And it's an answer that also has widespread support, and at least most recently from the OCD and the Bank of England, who say, look, this is a difficult task to engage in because you've got to rebalance an economy that was, you know, the most indebted with the worse affected banks, the most indebted households, the biggest government deficit, you've got to take that economy and rebalance it to be more dependent on exports and manufacturing and trade and a more balanced economy.

So it's not an easy task and it will take time, but we're doing it, I think, in the right way.

ZAKARIA: President Obama seems to be going in a different direction. In his State of the Union, he laid out a plan for America, which stressed the importance of growth and growth through innovation and investments to get that growth in science and research and technology and infrastructure. And then he got to deficit reduction.

Do you think he's - he's handling it wrong?

CAMERON: Well, again, I'll make two points. First of all, America is different. I mean, America has a reserve currency. Britain is not in that situation. The first one.

The second point is that America is looking at reducing its deficit and obviously has to - to do that. I was just talking with Tim Geithner on the way to this interview and made exactly that point.

So there are differences but similarities. The real similarities I would say is both countries recognize they have to clean up their banks and deal with that. They have to pursue innovation, growth, make sure we're investing in science. Even as we're making cuts in Britain, we're protecting the science budget. We're boosting the number or apprenticeships. We're cutting welfare roles so actually we can put money into transport, infrastructure and improving their productive capacity of the economy.

So even while we're making cuts, we're doing it in a way that supports growth.

ZAKARIA: Bob Diamond, the head of Barclays, says that the British government is still too tough on bankers that you are adopting a kind of a punitive attitude towards bankers and you - you need to give - to cut this out. What do you -

CAMERON: Well, I would say we're taking a common sense attitude. And, first of all, everyone involved in the banking industry has to understand the very real anger that still is amongst the public, that the banks were partly responsible for the mess that we are in. And when they see money that's gone from the taxpayer into the banks going into large bonuses, that naturally makes people very angry.

But I'll tell the common sense approach we're taking is to say that I do not want to have an endless battle with banks and bankers when I'm trying to get the economy to grow. Let us have a settlement where we actually see what we want to see in Britain. Let's see the banks pay more in taxes and they will. Let's see the banks do more in lending and they should and let's see the bonus pools come down as I think they ought to.

I think there is actually a settlement we can reach that says we're going to stop this endless war of attrition, but it's got to be done on the basis of banks being good, socially responsible citizens in our country, lending to the businesses that need the money, being responsible in terms of pay and making that contribution to the (INAUDIBLE).

I'm much more interested in the amount of tax the banks pay to help support the government, the economy and growth than I am in having sort of phony arguments about endlessly building up new tax regimes.

ZAKARIA: But it sounds like you don't think the banks are yet doing what you want, which is curbing compensation and lending to businesses.

CAMERON: Well, I think we're making some progress. I mean, we're having discussions with the banks in the U.K. We're actually sitting around a table with the main clearing banks and talking with them about our ambitions on bank lending, particularly to small businesses about what we think needs to happen in terms of bonus pools, and also this issue of the total amount of tax the banks are going to pay.

And I'd say to people on the left in British politics who think the only answer is just keep hammering a new tax - bankers with a new tax. Actually, if you look at the tax they're paying this year, it will be more than last year and we're looking at something like 120 billion of tax from the banks over this parliament. That's what I want to see it contributes - it's the contribution they make that actually is going to be how I think we should judge whether we have a successful approach.

(END VIDEOTAPE)

ZAKARIA: Back in a moment. More with British Prime Minister David Cameron. I ask him about the royal wedding.

(BEGIN VIDEO CLIP)

ZAKARIA: But you don't have to approve the budget?

CAMERON: We'll discuss these issues, but, I mean, they're all family -

ZAKARIA: With -

CAMERON: I obviously have weekly meetings with the - with her Majesty, the Queen. They are absolutely secret, so I would have to kill you if I told you anything we discussed.

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ZAKARIA: We are back with more of my interview with British Prime Minister, David Cameron.

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ZAKARIA: Is Britain prepared to play its part in rescuing Europe if you end up in the next few months and there's likely to be bond auctions in a situation where the vulnerable countries from Greece, Ireland, Portugal, perhaps Spain need some kind of package of support? Germany, of course, would be the critical country, but many people think Britain needs to step up as well.

CAMERON: Well, first of all, I don't want to speculate about other countries in Europe that are doing their best to deal with their problems. I mean, obviously, Britain is not a member of the Euro. I think we were right not to join and while I'm prime minister we will not join. I think having our own currency and a more flexible monetary policy that can respond to our needs is right.

Clearly in the case of Ireland, they are an old friend and a very strong partner of the United Kingdom and it was right for us to make that bilateral loan to help them. We are involved in one of the funds in Europe, the so-called financial mechanism, that was set up before I became prime minister. So there's a liability we have under that.

If we put the new financial arrangements put in place in Europe for the future don't involve Britain and the arrangements will be put in place through a treaty change also don't involve Britain, and that's right because we're not in the Euro, so we don't have a say over the policy that is pursued in Portugal or in Spain or another countries.

And so, I think, it's right. If you're not in the Euro, you shouldn't have to make contributions to those funds in the future. And I think that's a very clear, right way of going about things.

ZAKARIA: So you're ruling out the prospect of Britain making contributions to rescue some of the European countries that need help.

CAMERON: As I say, we already have a liability under the existing mechanism that was set up under that last government.

ZAKARIA: But beyond that?

CAMERON: But beyond that, I don't believe if you're not in the Euro, you should not be compelled to go to the aid of other countries when, you know, that might be connected to their membership of the Euro. I think it's a pretty simple rule in life, if you're not a member of a particular club, you don't have the same liabilities to other members of that club.

We took a very clear decision. We want the Euro to succeed. I wouldn't stand in the way of Euro action to help Euro members to sort out the problems they have because Britain will benefit from that. But we chose not to go into the Euro for good reasons. I'm glad we're not in it. I think we have greater flexibility outside it to respond to the problems that we have right now in our economy. But I want the Euro to succeed. That's why many of our exports go and I wouldn't stand in the way of the changes that they'll need to make.

ZAKARIA: Prime Minister, you're - you're pushing this austerity measures on everyone. You yourself, the Chancellor of the Exchequer, everyone is being very frugal. You face an upcoming royal wedding. Is it going to be a budget wedding?

CAMERON: Well, it's - no. It will be - it will be a royal wedding that the whole country can celebrate. Obviously, the government will make its own contribution in terms of policing and security and the rest of it, but the royal family will be in charge of the plans. I think it will be -

ZAKARIA: So you're not paying for it?

CAMERON: Well, we pay for certain parts of it and the royal family pay for other - other parts. And I think it's going to be great moment for Britain. They are a wonderful couple.

ZAKARIA: But you don't have approve the budget?

CAMERON: We'll discuss these issues, but, I mean, the royal family - I obviously have weekly meetings with the - with Her Majesty, the Queen. They are absolutely secret. So I would have to kill you if I told you anything we discussed.

But I know it will be a huge success not just for the country and I think the world looking at Britain and how we have this wonderful royal family with this Prince William who I've spent time with recently, is a remarkable young man, great balance, poise. I think he'll make a - I'm sure a fantastic husband and one day will make a wonderful king.

I think the world will be looking at this royal wedding, but I think we'll be very proud of it in the U.K. But above all, it's two young people who love each other very much who are getting married and we should be happy for them.

ZAKARIA: Have you met the - have you seen the couple since they have announced their engagement?

CAMERON: Well, I spent some time with William in Zurich actually here in Switzerland when we were trying to bring the World Cup home for England. I'm afraid we were as unsuccessful as the U.S. was in bringing the World Cup home for the U.S. But we spent some time together and talked about his plans. And it was great to hear, you know, when - when someone is getting married, their enthusiasm, their excitement. I could - I could very much feel that.

ZAKARIA: Did you give any words of advice as a - as a married man with some experience in this matter?

CAMERON: If I did, I certainly wouldn't tell you what it is.

ZAKARIA: Prime Minister, a pleasure to have you on.

CAMERON: Pleasure.

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ZAKARIA: We're back.

If there's one book you need to read to understand what's going on in Egypt, it is "Egypt After Mubarak: Liberalism, Islam, and Democracy in the Arab World" by Bruce Rutherford. It's prescient. It's a great look at the political forces now at work in Egypt, the Mubarak regime, the opposition, both secular and Islamic. It's an academic book, but it's very cleanly written.

Now, a few of my final thoughts, the story in Egypt is moving into a fascinating phase. The regime clearly recognizes that things will have to change, but it now wants to manage that change as carefully as it can. The protesters see this but it's not clear that they have the resources, organization or leadership to win. The United States is, of course, watching this closely as are we.

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