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Fareed Zakaria GPS

The Death of Saudi Arabia's King Abdullah; Interview with British Finance Minister George Osborne; Interview with Saudi Arabian Movie Director Haifaa al-Mansour

Aired January 25, 2015 - 10:00   ET

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

FAREED ZAKARIA, CNN HOST: This is GPS, the GLOBAL PUBLIC SQUARE.

Welcome to all of you in the United States and around the world. I'm Fareed Zakaria coming to you from Davos, Switzerland, the home this week of the World Economic Forum.

We'll begin today's show with the death of a king. King Abdullah of Saudi Arabia, the custodian of the two holy mosques. Saudi Arabia has been an island of stability in the midst of the fire storms of the Middle East. But it is also home to the most puritanical version of Islam which has shaped radical Islamist ideology.

So is it part of the problem or the solution? I will ask Tony Blair about that and much else.

Also, the price of oil has fallen by more than half in the last six months. And oil revenues make up 90 percent of the Saudi government's income.

Will it weather this storm? I will talk to "Financial Times'" Martin Wolf about Saudi Arabia and its addiction to oil money.

Then all eyes are on the European economy in 2015. Will it descend into deflation? I'll talk with the finance minister of one of Europe's fastest growing countries, George Osborne, the Chancellor of the Exchequer of the United Kingdom.

And inequality was the talk of the week from the U.S. Congress to the Congress center here in Davos. But what is the answer? I'll give you my solutions and I'll show you a place here in Switzerland where the world's privileged traveled in order to begin to understand the lives of the underprivileged.

But first here's my take.

The conversation at Davos is often dominated by economics and this year is no different. But the shock of the Paris terror attacks lingers and discussion has often turned here this week to radical Islam.

The death of King Abdullah has underscored those concerns because of Saudi Arabia's complicated relationship with Islamic fundamentalist ideology. I posited last week that the solution does not lie in more American military interventions in the Middle East.

But what, then, is the answer? The problem is deep and structural, as I wrote a few weeks after 9/11 in "Newsweek" in an essay titled "Why They Hate Us." The Arab world has been ruled for decades by repressive, mostly secular dictatorship. That in turn spawned extreme, mostly religious, opposition movement. The more repressive the regime, the more extreme the opposition.

Islam became the language of opposition because it was the one language that could not be shut down or censored. Now the old Arab order is crumbling, but it has only led to instability and opportunities for jihadi groups to thrive in the new badlands.

Over the last few decades this radical Islamist ideology has been globalized. Initially fueled by Saudi money and Arab dissenters, imams, and intellectuals, it has taken on a life of its own. Today radical Islam is the default ideology of anger, discontent and violent opposition for a small number of alienated young Muslim men around the world. Only Muslims and particularly Arabs can cure this cancer.

That doesn't leave America and the West helpless. Washington and its allies can support Muslim moderates, help these societies modernize and integrate those that do into the world. But that's for the long haul. Meanwhile, they must adopt a strategy that has four elements -- intelligence, counterterrorism, integration, and resilience.

Intelligence is obviously the first line of defense, but also attack. We have to know where jihadis and potential jihadis are and what they are planning. That means using sophisticated technology, yes, to search through various kinds of communications. But it also and crucially means developing good relations with Muslim communities. Because only they can early on identify the potential troublemakers.

Counterterrorism is the natural follow-on to intelligence. When you know where the bad guys are, capture or kill them. It's easier said than done, of course, but the United States and other Western nations have had considerable success with this tactic, not only in war zones like Afghanistan and Pakistan but also in intercepting plots on their way to cities likes Paris and London.

We must always remember, though, counterterrorism has its down sides. For instance, while drone attacks look seamless from the skies, they inevitably produce civilian casualties.

Integration is third. It's something America does well and with which Europe struggles. One of the chief reasons that America has not had as many problems as many predicted after 9/11 is that its Muslim community is well integrated, largely loyal, and believes in American values.

Finally, resilience. Terrorism is an unusual tactic. It doesn't work if we are not terrorized. Bouncing back, returning to normalcy, these are all ways of ensuring that terrorism does not have its desired effect. We've not always managed to do this. In recent months, we have massively overreacted to the ISIS execution videos, which is why they were produced in the first place. The Paris attacks were barbaric, as were those in Ottawa, Sydney,

London, Madrid and Ft. Hood. But one way to gain perspective might be to keep in mind the numbers. According to the global terrorism database, in the 12 years between September 12th, 2001 and 2013, the number of Americans who have died on U.S. soil due to terrorism is 42.

Meanwhile in one year alone, 2011, the CDC reports that 32,351 Americans died because of firearms in one year. The number who died in car and truck accidents in that same year was 33,783. So keep calm and carry on is more than a slogan to wear on a T-shirt.

For more on this go to CNN.com/fareed and read my column this week in the "Washington Post." And let's get started.

The death of King Abdullah of Saudi Arabia while not unexpected has nonetheless sent shivers across the world. Any leadership change in such a crucial country is apt to cause concern.

Will the new king change course on oil, Syria, relations with the West?

Let's start with the political. To talk about that, I asked Tony Blair, the former prime minister of the United Kingdom, to join me.

(BEGIN VIDEOTAPE)

ZAKARIA: Tony Blair, pleasure to have you on.

TONY BLAIR, FORMER U.K. PRIME MINISTER: Thanks, Fareed.

ZAKARIA: You knew King Abdullah well. His reputation and certainly some of his talk and the few times I had an opportunity to talk to him were about reform and about change. But if you look at how much has changed in Saudi Arabia, it isn't that much. I mean, women still can't drive, there still is segregation by sexes, the religious establishment is still very powerful, and they still adhere to a very puritanical version of Islam.

BLAIR: I think if you -- if you talk about it relative to, say, a country like the USA or Britain, then that may be accurate. But if you look at it relative to where Saudi was, you know have more young women in university than men. You have a situation where King Abdullah was an author of the interfaith dialogue and actually would meet both Jews and Christians to talk about interfaith issues.

He was really the architect of the Arab peace initiative back in 2002, which offered a two-state solution for the Arab-Israeli conflict. And you know, you take a company like Saudi Aramco, it's probably one of the best run countries in the world.

So I think there was a real process of modernization. I think he was a genuine reformer and modernizer. And I hope, expect, that that process will continue. But obviously there's a long way to go.

I think the evolution for him and actually for Saudi Arabia is infinitely preferable to revolution. ZAKARIA: You've spent a lot of time trying to deal with the issue of

radical Islam and Ideology, that you believe, you know, is a bit pernicious and spreading. What is -- how should we think of Saudi Arabia then? Because certainly in its origins it was very much Saudi money and Saudi priests and Saudi donations and in some ways again the Saudi version of Islam that was globalized in the 1980s and '90s.

Is Saudi Arabia part of the problem or part of the solution?

BLAIR: I think today it's genuinely part of the solution in the sense that it's important both because you've got the two holy mosques there in Saudi Arabia and because in recent years, really under the leadership, to be fair of King Abdullah, it's pursued an attempt to reach out across the faith divide and also taking a very strong position against extremism and post 9/11, which is the big shock to the kingdom. Not only to us.

They didn't really take a lot of security measures but they also looked very carefully at what was happening within their own society as well. And so I think now as we speak Saudi Arabia is and has got to be, indeed, an ally in this fight.

ZAKARIA: But one thing I wonder, did he confront religious establishment enough? I mean, Saudi Arabia you have this very hard line religious establishment. The theory is that the regime that the royal family gets its legitimacy by its alliance with these people and as a result doesn't really object to their very retrograded views of religion. Do you think that the -- you know, is that -- does that need to happen?

Does there need to be a head-on, you know, taking to task of the religious establishment in Saudi Arabia?

BLAIR: Well, I think -- and this is a discussion I used to have with King Abdullah. And his attitude was, look, this is in some ways a very conservative country. We're doing the change. But let us do it at our own pace. And you could always have a debate as to whether you should accelerate or -- and go faster and so on. But what he was really trying to do, I think, was create these vehicles of change in the country.

So, for example, Saudi Aramco is the oil company. Not run like many oil companies around the world but actually a really top well-run company. The university he established, the King Abdullah University of Science and Technology, men and women treated equally, educated equally. And the term science and technology was chosen for a reason. So I think, you know, his view would be that he was moving as fast as he could.

I think it was only maybe in the '60s or '70s that the Saudi television was successful.

ZAKARIA: That's right.

BLAIR: So, you know, you can have that debate. I think provided the direction continues in -- you know, along the path of modernization then I think it will be good for Saudi Arabia. We -- and we need Saudi Arabia to be successful. As you can see not just in terms of the oil price but Saudi Arabia's key country, two holy mosques there, there are many ways the heart of Islam. It's important for us and for them that they continue to make progress.

ZAKARIA: But when you look at this phenomenon, you're looking at the Paris attacks and you're looking at what's happening in the Middle East, is the wave of radical Islamist ideology waning? Is it going down or is it going up?

BLAIR: I'm afraid right now, I think the -- this Islamist ideology is growing. I think it's global. I think there are many lessons in how we try to deal with it post 9/11. Lessons from my time in office and lessons from now. But I think we've got to learn those lessons and apply them. And we can apply them in alliance with the modernizing Muslim countries, those who believe in an Islam that is -- that is peaceful and reaches out to the rest of the world.

We've got to ally ourselves with those. And we've got to create both the force capability to fight them where they need to be fought and the education systems that educate our young people to respect each other and respect difference, not view it as a reason for violence or sectarianism. And I think that that's the task. It's a huge task. It's the single biggest security issue I think that we -- that we face. And I think there's an urgency about it frankly.

There are thousands of -- thousands of these people now being trained in terrorist camps along North Africa and in the Middle East and we can't afford to have that happen. We know what happened when Afghanistan became a training ground for terror. We're at risk of several Afghanistans at the moment.

ZAKARIA: Tony Blair, pleasure having you on.

BLAIR: Thank you.

(END VIDEOTAPE)

ZAKARIA: That was Tony Blair on the political implications of the death of Saudi King Abdullah. In a moment, we will look at the economic implications.

Will Saudi change course on oil? We will ask.

(COMMERCIAL BREAK)

ZAKARIA: In 2010 Venezuela passed Saudi Arabia as the country with the world's biggest proven reserves of crude oil according to OPEC. Since then the United States has passed Saudi as the top oil producer. To add insult to injury the price of oil has now collapsed, fallen in half in the last six months. And now Saudi Arabia is enmeshed in a transition at the very pinnacle of power.

What will it mean for the price of oil, for the world economy and for Saudi Arabia?

I asked Martin Wolf to join me. He is chief economics commentator for the "Financial Times."

(BEGIN VIDEOTAPE)

ZAKARIA: Martin Wolf, pleasure to have you on.

MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, THE FINANCIAL TIMES: Great pleasure as always.

ZAKARIA: First question, how central does Saudi Arabia remain in the world of oil? Because at this point, the U.S. has surpassed it in production. OPEC production is not even as great as non-OPEC production but yet Saudi Arabia does seem to play somewhat of a central role.

WOLF: Well, it is the central producer. It remains the biggest exporter. And of course it has enormous reserves and it's the cheapest producer. And ultimately because of the sheer scale of its production, it's also the swing producer. And that it remains --

ZAKARIA: Which means it can turn it on or off at will.

WOLF: In the past it has been able to reduce output if necessary or increase output, which is overly demanded, very substantially in a way that nobody else has been able to do. It has the flexibility. So if you want a producer to balance supply and demand in the world, it's the only one.

ZAKARIA: Now the price of oil has fallen by half, more than half in three or four months. What is -- how long can it stay this low? What does history tell us?

WOLF: Well, history tells us it can remain quite low in this (INAUDIBLE) for a long time. There have been several big price falls in the past, dramatically so in '86 in the late '90s. And in both cases prices remained low or it went lower for a long time after five years or even more.

And if you look at the forces that seem to be driving prices down now, unless something dramatic happens on the supply side, some war, unpredictable war, who knows, as has happened, for example, in the '70s. Twice it was war. Or some huge recovery in China, something like that, one has to say that it looks as though there's going to be a glut for quite a while. So quite a few years in this sort of ballpark, but, of course, volatile.

ZAKARIA: So the last time you saw a drop like this, as you said, it was 1986. And what happened was Soviet Union collapsed because it was a large oil producer. It had relied on those revenues to finance the Soviet empire.

What happens to -- let's start with Saudi Arabia. Saudi Arabia, the reports are that needs oil at $80, $85 a barrel to balance its books, to not run a deficit. So what happens now?

WOLF: Well, first of all, it did also happen in the late '90s. Do you remember $10 oil? So it has happened before. It doesn't always bring empires down.

Saudi Arabia, as I understand it, should be good with the reserves it has for quite a few years. It has reserves, I think, of about $800 million. So it ought to be able to keep going. And of course it can cut spending. I mean, remember, it supports its people pretty generously. And they don't really have anywhere else to turn. As long as the regime is stable and they've done it in the past in tough times, they can cut back on their generous spending on the population.

So I would expect, and this is ultimately a political judgment, that if the regime is stable enough, they can survive at this price level more satisfactorily than most other large producers which have reasonably substantial populations than in a relatively robust position compared to, say, with Russia or Nigeria.

ZAKARIA: In Saudi Arabia, oil revenues, as I understand it, make up 90 percent of government revenue. So even if, you know, they have reserves, and this is a big hit to the purse.

WOLF: Yes. I mean, the -- their -- well, their ability to fund the madrazas all over the world would be reduced. I would regard that as unambiguously good. The consequences of that have been pretty diabolical. The foreign policy adventuring may be diminished a little. The internal politics are clearly ones in which if this were to continue for five, six, seven, eight years, then they would have to cut sharply.

But the Saudis have another possible choice, which is for them a very complicated one. Into what page do they start cutting production, it might raise oil prices but of course they would then bear a disproportional part of the losses. It would depend on how they think that would affect other country's output and what they think the response of the price would be for a reduction. They would have to suppose for it to be good for them that a modest reduction in output would bring back prices very sharply.

They might not think that's the case. But they have that option. They could actually decide not just a cut in spending on the people, they could decide to cut production of oil and try and get prices back up. So far they've clearly been unwilling to do so. And I believe they can survive, from what I see of the regime, with the resources they have for many, many years. They can probably outlast pretty well everybody else in this game.

ZAKARIA: Martin Wolf, pleasure to have you on.

WOLF: Pleasure.

(END VIDEOTAPE)

ZAKARIA: Up next, inequality was a top buzzword again this week. The president talked about it in Washington. Other world leaders and CEOs were discussing it here at Davos, but can we do more than talk about it?

Coming up next. (COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World" segment. Over the last few years the subject of inequality has gained greater and greater attention with best-selling books and speeches and remarks by everyone from the Pope to Mitt Romney. This week it featured prominently in President Obama's State of the Union address.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Will we accept an economy where only a few of us do spectacularly well or will we commit ourselves to an economy that generates rising income and chances for everyone who makes the effort.

(END VIDEO CLIP)

ZAKARIA: But the report that stunned me came also this week from Oxfam which showed us that the problem has gotten dramatically worse in just the last four years.

In 2010 Oxfam said the 80 wealthiest people in the world were worth $1.3 trillion while the poorest half of the world had $2.6 trillion. In 2014, the 80 richest had $1.9 trillion up 47 percent while the poorest half had just $1.8 trillion, a decrease of 29 percent.

Oxfam showed that in 2010 the wealthiest 1 percent of the population enjoyed 44 percent of the world's wealth while the remaining 99 percent of the world's population had only 56 percent of the pie. By 2014, the richest 1 percent had 48 percent of global wealth leaving the rest with 52 percent.

If that trend continues, the top 1 percent will own half the world's wealth in 2016 and 54 percent of global wealth in 2020, leaving the rest with just 46 percent.

The world over 80 billionaires in 2014 had about the same amount of wealth as the poorest 3.5 billion people Oxfam said.

In the United States income inequality is especially bad thanks in part to what David Leonard of the "New York Times" calls the great wage slowdown of the 21st century. He notes that wages and incomes have been going virtually nowhere in the U.S. for the last 15 years, pointing out that the typical American household makes no more than the typical household did in the final years of the 20th century. We haven't seen anything like that since perhaps the Great Depression, Leonard says.

So what to do? There are no easy solutions. Some of the causes of the problem, like machines replacing humans in the workforce, are 21st century facts of life. And it's worth noting that the policies of central banks -- low interest rates and quantitative easing -- might be necessary to avoid deflation but they have the predictable effect of sending the assets of the wealthy, stocks and real estate soaring while doing relatively little to boost wages. But it's interesting to note that income inequality varies widely

among rich countries. A report this month from the Center for American Progress compared the middle class in nations around the world. The bottom 90 percent of earners in Canada, for example, averaged over 1 percent annual income growth in the 2000s. In Australia they averaged 2.5 percent. But in the U.S. their average annual income declined by one percent over that time.

So it seems like something can be done about income inequality. How about taxing the super-rich? That's one possibility, though the top 20 percent already pay 69 percent of federal taxes in America according to the CBO. The key is to make major investments to help push people up the economic ladder. And that's something that other countries in Northern Europe and Canada, for example, are doing much better than the United States. President Obama's State of the Union proposal, such as free community college and improved access to child care are on the right track.

He has at other times proposed expanded preschool, nutritional assistance and other early interventions. All are effective in helping get people out of poverty. If we don't act now, and the gap keeps widening, soon someone will start suggesting some very radical solutions.

Next on GPS, the chancellor of the Exchequer George Osborn, finance minister of the U.K. on the fears over the euro, worries about terror and the ever closer relationship between his country and the United States.

(COMMERCIAL BREAK)

ZAKARIA: My next guest George Osborne, is her majesty's Chancellor of the Exchequer, in less fancy terms, he's the finance minister of the United Kingdom. As such, he oversees the kingdom's economy and every year carries the red briefcase with the budget in it from Downing Street to parliament. We talked about the number economic issue that was on everyone's mind at Davos, the fear of a deepening crisis in Europe, perhaps a downward spiral of deflation. We also discussed the terror attacks in France and why it is that his boss, the conservative David Cameron is so similar to the liberal U.S. President Barack Obama.

George Osborne, thank you for joining me. The great worry about the global economy right now is Europe. The IMF is pointing it out. Really, everyone is worried that Europe is on the verge of some kind of a deflationary spiral. How serious do you think it is?

GEORGE OSBORNE, CHANCELLOR OF THE EXCHEQUER: Well, there's no doubt that stagnation in the Eurozone is one of the biggest problems for the global economy for the moment, alone for the citizens of Europe. And we need to have a multi-pronged approach to this. We need to make sure that Europe and Central Bank is supporting the economy. And it's important that they have the political space to do that which they have not been given in the past. But that by itself is not going to be enough. You need to also have these structural reforms to make these economies competitive again, make them places where jobs are created. And then I think those two things with the falling oil price will potentially lift the Eurozone economy off the rocks.

ZAKARIA: When you talk about political constraints on the Central Bank, these political constraints are being imposed by Germany. Do you think that Germany is not exercising wise leadership on the continent?

OSBORNE: Well, look, first of all, the German economy is a real source of strength for Europe. And to suggest that Europe's problems are German, frankly I don't think is fair to the Germans. Because I think they have been a really powerful motor for European growth. What I would say - and again, I don't want to point things at any one country, or one set of policy makers. I make the more general observation, which is - the fiscal responsibility. But alongside it, active monetary policy. Give the Central Bank the tools it needs to do the job.

ZAKARIA: What did you make when you heard the reports on Fox News in America that were parts of Britain that were no-go zones, where sharia law had been imposed and prayer rugs in hotel rooms?

OSBORNE: You invited me to engage in a bit of network rivalry.

(LAUGHTER)

OSBORNE: I didn't actually see the original remarks. But I think to be fair, the commentator then corrected himself. You know, we have a challenge in our country like many, many Western countries have of integration and making sure that all communities feel part of a shared future. And we have got a big job to do to combat poisonous Islamic extremism. And that's part of the solution to the security challenge we face.

ZAKARIA: What did you learn? What do you think Britain has learned since the London bombings? Because they had some similarity with the Paris ones, in the sense that this were locals. These were - in the London case people who seemed remarkably well integrated and then got radicalized.

OSBORNE: Well, it led to a lot of soul searching in the U.K., and I think it led to an understanding that the idea of you can allow everyone to liver in separate communities and to have a completely different view of British identity was a mistake, the term used in Britain for that was multiculturalism. And that we needed a different approach where people were brought into collective British values. So as a result of those tragic deaths in London, I think we've got a much more active policy of combatting this Islamist extremism. I think we need to go further, we need to reach it out to our colleges and universities, and you know. We shouldn't tolerate the intolerance that you find in some communities.

But that said it has got to go alongside a strong and tough security response. You know, it's not enough to have better community relations, you also need to make sure you are catching the bad guys. And if necessary, intercepting their conversations to prevent them carrying out murderous attacks. ZAKARIA: What did you make of President Obama's State of the Union,

and particularly the proposals which really are the center of the speech to combat rising inequality? If I look at - what Obama's proposing it's community college education, he supports education reform, it's taxing the rich, it's some taxes on financial firms. It seems a lot like a British story.

OSBORNE: Well, Barack Obama is a Democrat and David Cameron is a conservative. But interestingly enough when they met the other week in Washington, they found common cause both in pointing out that the U.S. and U.K. economies have pulled ahead of many other Western economies. Britain had the fastest growing of any of the major economies last year and that the solution to some of these challenges of inequality and lack of opportunity are lay in yes, fair systems, good minimum wages and the like, but also education reform.

So yes there was a common view, as I think the president put it. We must be doing something right if we've got both job creating economies. But there's a lot more to do and as a huge challenge to stay competitive in the world. And I don't think there's any reason why Britain can't be the most prosperous major economy in the world and the coming generation. You know, we've got great universities, four of the top six universities in the world are located in the U.K. We've got the lowest, most competitive taxes of the G-20. We're investing massively in our infrastructure and we are retracting a huge amount of investment, more Chinese investment into the U.K. than actually France, Germany and Italy put together. So we've got the right ingredients. We've now just got to deliver on that. I'm an optimist about the future. Lots of risks out there but there are rewards for strong leadership, clear economic plans, open economies and reformed education systems.

ZAKARIA: George Osborne, always a pleasure.

OSBORNE: Thank you.

ZAKARIA: That was George Osborne, the chancellor of the exchequer of Great Britain.

Next on GPS, we will return to Saudi Arabia in the wake of the death of King Abdullah. This time a focus on Saudi culture. How do you make a movie in a country that barely has movie theaters? How do women work in a country where they are not even allowed to drive? I'll talk to Haifaa al Mansur, the director of that country's first ever film submitted for Oscar consideration.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Bismillahi Rahmani Rahim (ph)

(END VIDEO CLIP)

ZAKARIA: Early Friday morning, the Kingdom of Saudi Arabia announced the death of its king. The succession could bring about big change. We've talked about the political and economic realities of Saudi Arabia earlier in the show, but we also wanted to take a look at that nation's culture. As I'm sure you're aware, it's Oscar season again, but some critics are still smarting over a snub from last year's Oscars. Left off the list of foreign language nominees was Saudi Arabia's first ever submission to the Academy Awards. Indeed, the first feature film made in Saudi, a film called "Wadjda." It's a delightful film about a little Saudi girl named Wadjda who wants to buy a bike and enters a Koran competition in the hopes that she'll win enough money to do so. Spoiler alert, she wins. But then she has even bigger problems in a world where girls and bicycles aren't supposed to mix.

And the film is also a winner garnering awards from around the world. Even more ground breaking than the film, perhaps, is the film's director Haifaa al-Mansour, a woman working in an ultraconservative country where women need a male relative's permission to work, where, of course, women are not allowed to drive. I sat down with Miss al- Mansour to talk about her film, her experience making it, and her country, a place which, by the way, has no movie theaters in which one could watch the film.

Haifaa, a pleasure to have you on. Why has Saudi Arabia remained so conservative? I'm struck when I travel around even the Arab world, there's much more modernization taking place in other places. Why is it so conservative?

HAIFAA AL-MANSOUR, DIRECTOR, "WADJDA": Absolutely it's very conservative. I think we are very tribal. We grew up like being conservative to start up with. But there are a lot of liberal voices that call for change, Prince Waleed, for example, he's very much proactive and empowering women. And it is exciting now that we see change in Saudi. And I see - I come from a very small town. So, I see the change happening in my family. People around me are very conservative and now they are moving away from those ideologies and enjoying a different perspective of the world.

ZAKARIA: And yet you have this blogger who has been sentenced to 1,000 lashes.

AL-MANSOUR: Yeah.

ZAKARIA: You know, when people see that in the West, they can't understand it.

AL-MANSOUR: That is very unfortunate. I mean I think in his case of - in that case, he angered a lot of people and a lot of people complained. And you don't want to be in that position. But that is - it is really nice that the king is reviewing the sentence and hopefully no more lashes in Saudi Arabia. I think we need to stop and reflect on the laws that we have to be in this age. And we're entering modern globalization and Saudi is such an important country in the world. And it's very important to modernize.

ZAKARIA: But one of the areas which hasn't changed much is the segregation of men and women almost everywhere. And when you directed your film, I remember you saying that you had to direct it from sitting in a truck using a walkie-talkie ...

AL-MANSOUR: Yes.

ZAKARIA: ... telling the cameramen what to do because you could not be out there actually with the cameramen describing -- leave alone giving directions to men, you couldn't even be seen with men.

AL-MANSOUR: Yes, absolutely. It's very difficult, especially for a director because you need to see the space blocking and be for the actors, to be - so their performance - witness their performance firsthand. But Saudi is changing even in that. People don't like - people themselves are conservative and they don't want their women to work in the mixed environment, but it's changing. There is a lot of women I'm very proud of them that are taking the challenge and standing up for themselves and they want to make a change and it's really nice to see that.

ZAKARIA: You're married to a Californian. How did that go down in your small town with your conservative relatives?

AL-MANSOUR: Yes, I come -- he's a very nice guy. And yeah, it's difficult for them to accept marrying from out of - side of your tribe, let alone a Californian, but he won everybody else in my family, so that's good.

ZAKARIA: You seem very patient and understanding of a system that must cause you at times to just get very angry?

AL-MANSOUR: Well, absolutely. When you go to an all men restaurant and you're not allowed as a woman, you feel angry. But I think it is - it's very important to relax. And to - to not to be - it is not about confrontation, it's about dialect. It's about moving forward and making changes effective. Sometimes it is more daunting and exhausting to go with the system and make the margins a little bit wider, but I think it is more effective in a place like Saudi Arabia where it's very conservative and people shun from change. You need to make them respect you and you need to show respect to that culture. So you move away from just confrontation and fighting and complaining.

ZAKARIA: What's your next movie?

AL-MANSOUR: My next movie hopefully will be about Mary Shelly. And it is my first English speaking and my first attempt to be in Hollywood. And we have fanning attached. I'm really excited to work with her. I'm very excited to work with her. I'm very excited not to be in the van anymore.

(LAUGHTER)

ZAKARIA: So, you won't be in a van. You'd be able to actually direct the actors?

AL-MANSOUR: Yes, actually like I'll be on the ground and - I'm very excited about - excited about the story, because like she grew up in England, but it's - she grew up in the same - in a very similar environment I grew up in Saudi. Like as a woman, sometimes very conservative and people expect you to act and say and be in a certain way. And when I read her story it was amazing how she owned her own voice and how she created this book that is an amazing legacy. And it is very like - cool.

ZAKARIA: Well, best of luck.

AL-MANSOUR: Thank you. Talk to you, Fareed, thanks, for having me.

ZAKARIA: Pleasure.

Next on GPS, we'll visit a place where the world's wealthiest walk a mile or meter in their neighbor's shoes.

(COMMERCIAL BREAK)

ZAKARIA: The Swiss National Bank sent shockwaves throughout economic markets last week when it abandoned the franc to the euro. The frank's value rose dramatically at one point by more than 30 percent. Meanwhile the United States dollar continues to rise against the euro. It currently takes about $1.15 to buy a euro. That is similar to the exchange rate at the euro's introduction 16 years ago. It brings me to my question. At the dollar's strongest exchange rate since the introduction of the euro, how many dollars did it take to buy a euro? $0.75, $0.83, $1.05 or $1.13? Stay tuned and we'll tell you the correct answer.

This week's book of the week has been a perfect antidote to the business and craziness of Davos. Arianna Huffington's "Thrive: the Third Metric to Redefining Success and Creating a Life of Well-being, Wisdom and Wonder." It's a wonderful, wise and supremely practical guide to living a fuller, richer and more meaningful life. She tells stories, offers suggestions and acknowledges her own mistakes in a way that makes it so much easier for all of us to make the effort. One of her suggestions is to unplug from technology, which you can do after you order this book online.

And now for the last look. You never know who you'll run into at the world economic forum from presidents to policymakers, from CEOs to singers. This week we bumped into Gene Sperling, the former director of the National Economic Council at the White House in an unlikely place. We found him in the slums of Davos. Now, a slum is not what you'd expect to find in the land of ski chalets and private planes.

So, let me explain. A nonprofit organization, Crossroads Foundation, set up a slum simulation not far from where the forum is held. Participants can experience, to a certain degree, what it is like to live on $2 a day or less, something more than 2 billion people around the world do every day. Men and women clad in suits are told they need to make bags out of newspapers to earn their living. They must sell their bags to make enough for food, water, and rent. When they don't earn enough, participants resort to other means of supplementing their income, like selling the clothes off their back. They face additional obstacles like health emergencies, sanitation problems and having to pay school fees. Some get on their knees and plead, some resort to loan sharks or worse. Sperling, a participant in the simulation, bartered using massages and

hugs, which are code for prostitution. The simulation doesn't trivialize the realities of living in such abject poverty.

(BEGIN VIDEO CLIP)

GENE SPERLIN: You'll do anything to protect your children. And that means anything. You'll sell anything. You'll prostitute yourself. And you feel that pressure in that simulation and it really does give you the sense of what I think this is about, struggle for survival.

(END VIDEO CLIP)

ZAKARIA: It aims, in part, to help policymakers and business leaders understand the impact of their decisions. Sperling, who told us about his work in education in work in developing countries, experienced the difficult decision of choosing to feed his family instead of sending his children to school.

(BEGIN VIDEO CLIP)

SPERLING: I think it's just reestablished, I mean one thing I think many of us believe on the policy side, which is that there needs to be a complete focus on education being free. And not just free in the means of no tuition, but in terms of transportation cost, books. If it's not totally free, then it puts these extremely poor parents in too difficult of a situation.

(END VIDEO CLIP)

ZAKARIA: Perhaps more policymakers could benefit from this kind of simulation. Walking a mile or a meter in someone else's shoes. Of course if they are anything like Gene Sperling, they will soon find they have sold their shoes to feed their family.

The correct answer to the GPS challenge question was B. According to the European Central Bank, in October of 2000, the exchange rate was $0.83 to the euro. That would have been a great time for Americans to take a European vacation. But it is also looking pretty affordable right now. That is, of course, if you're going to a country that uses the euro. If you come to the beautiful country of Switzerland, of course, just be prepared for a tourist the price of chocolate at the moment is outrageous. Thanks to all of you for being part of my program this week. From Davos, I will see you next week.