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Fareed Zakaria GPS

Hope for Peace Along the Korea's 38th Parallel?; Interview with Ksenia Sobchak; Has the World Reached Peak Growth?; Aired 10-10:30a ET

Aired February 11, 2018 - 10:00   ET

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

[10:00:25] FAREED ZAKARIA, CNN ANCHOR: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria.

On today's show, the Olympics this year are not just about sports but politics. Just how close together will the games bring South and North Korea? How did we get here and where will it lead?

Then a strange crisis that is only getting worse. Saudi Arabia versus Qatar. What's going on and why did Donald Trump get involved?

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The nation of Qatar unfortunately has historically been a funder of terrorism.

(END VIDEO CLIP)

ZAKARIA: I talk to the nation's Foreign minister about whether there is a danger of another Middle Eastern war.

Also the former TV star who may be Vladimir Putin's toughest competition. 36-year-old Ksenia Sobchak is running against former KGB agent in next month's presidential elections. Does she really think she has a chance? I will ask her.

Then a massive outbreak of violence in Afghanistan. The experts agree it's because of something that happened in Washington. Trump's Pakistan gambit and where it will end.

But first, here's my take. I would like to briefly turn your attention away from Donald Trump, briefly, and toward that other thing happening in the world, you know, the Winter Olympics in Pyeongchang?

It's worth focusing not just on the sports happening there, but on this year's host country, South Korea. It is in some senses the most successful nation in the world and its success provides some crucial lessons.

First, the economics. South Korea is in a league of its own. In his 2012 book "Breakout Nations," Ruchir Sharma observed that only two economies had grown at an average annual rate of more than 5 percent for five decades in a row -- South Korea and Taiwan. Sharma noted that South Korea's trajectory is perhaps even more impressive because, unlike Taiwan, which is still rooted in low-cost manufacturing and assembly, South Korea has been able to move into the post-industrial economy with ease, entering industries like consumer electronics, biotech and robotics.

The achievement is all the more impressive when you consider where it started. Half a century ago, South Korea was one of the poorest countries on the planet, and nobody would have predicted that it would conjure up an economic miracle. In 1960, its per capita GDP was $158, slightly less than Ghana's. Today it is more than $27,000, almost 20 times that of Ghana's.

But poverty only begins to describe woes of South Korea as it emerged from the Korean War. The country had no natural resources, no geographic advantages, a largely illiterate population and a physical infrastructure that had been battered during the war. And it faced the menace of North Korea.

In addition to its economic boom, however, South Korea has also undergone a political transformation. It spent its first decades under a series of repressive dictatorships. But by the 1980s that system began to crack as the Korean people demanded change. The transition to liberal democracy was rocky, as it is everywhere, but South Korea pulled it off.

Moreover, in recent years, it has held accountable both its elected president and the owners of its largest company. Impressive actions even when compared to more established democracies in the West.

People might be inclined to conclude from all this that Koreans are simply innately talented. In fact, the case of the Korea Peninsula disproves this notion. Just across the 38th Parallels live millions of North Koreans, ethnically indistinguishable from their neighbors to the south. Yet North Korea is a disaster, one of the world's least successful economies and most repressive political systems.

South Korea's success is about having the right kinds of policies.

I would add one other major factor to explain South Korea's success -- America. The United States shielded and supported South Korea from its infancy, when it was a basket case economy and a fragile company threatened by its neighbors. Americans went to war to defend this small nation halfway across the world and has maintained its defense commitment and troop presence there for six decades.

[10:05:06] Washington lavished financial resources on it as well. According to a South Korean think tank, the U.S. poured $60 billion in aid and loans into South Korea from 1946 to '78 close to the amount it spent on the entire continent of Africa during the same period.

When in times when Americans on both sides of the aisle are weary of engaging with the world, dubious about maintaining troops in foreign countries, and convinced that foreign aid is a waste of money, over the next few weeks, as we watch the glittering games in Pyeongchang, they might want to think about how far South Korea has come and takes some small pride on how we helped it get there.

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

Few could have predicted the current state of affairs between the Koreas even just a few weeks ago. To understand the importance of it all, it helps to understand the history.

We'll get that from my terrific guests. Sue Mi Terry is a senior fellow for Korea at the Center for Strategic and International Studies. She was a senior analyst on Korean issues at the CIA last decade. And Gordon Chang is the author of "Nuclear Showdown: North Korea Takes on the World."

Sue Mi Terry, let me start by asking, where we are now seems where South Korea wanted to be. The South Korean President Moon came in, made a series of overtures, worked with the International Olympic Committee, kept trying to get the North Koreans to agree to do this, the Trump administration was not cooperative, did not seem to want this. And here we are, you have this extraordinarily high level delegation, you have the Koreas marching together. He must be pleased, President Moon.

SUE MI TERRY, SENIOR FELLOW FOR KOREA, CENTER FOR STRATEGIST AND INTERNATIONAL STUDIES: Yes. I'm sure President Moon is very pleased. As you know, since he came into office, he and his advisers really wanted to engage with North Korea and they haven't really talked to each other for over two years. So President Moon made multiple overtures and now he must be very happy, not only the North Koreans are participating in the Olympics but they are now talking to each other and I think President Moon is very eager to turn this thaw into Korea relations, into a greater engagement between Washington and Pyongyang to make progress on the nuclear front.

ZAKARIA: Does this mean that war is off the table? I mean it's tough with the South Koreans being so chummy, or the two Koreas seem to be together. Does the Trump administration become the odd man out?

GORDON CHANG, AUTHOR, "NUCLEAR SHOWDOWN: NORTH KOREA TAKES ON THE WORLD": Well, it is the odd man out now. And war is off the table at least through the end of the Olympics or the Paralympics. The issue, though, is that South Korea has had a playbook and that is of course, as Sue Mi Terry has talked about, is to try to get the North Koreans in.

But the North Koreans also have a playbook, and that is, first of all, you ignore South Korea. Then you make this bold overture, which is what Kim Jong-un did in his New Year's address. Then you demand concessions, which is where we are right now. And if you don't get what you want, you then throw tantrums. And the problem is after the end of the Olympics, Moon Jae-in is not going to be able to give Kim Jong-un what he wants because of U.N. sanctions, U.S. pressure. That's when things really get nasty.

ZAKARIA: We all miss, it seems to me, the overture. I noticed in the region, it was taken much more seriously. This is the North Korean overture, Kim Jong-un's overture. Does this suggest to you that, you know, the North Koreans are a lot more rational than you think. They make threats, then they make offers, if you take them up on their offer, they do deliver. I mean, it seems much less crazy than people think.

TERRY: Well, I don't think any Korea watcher actually thinks Kim Jong-un is crazy. He's very rational. He's very calculating. I think North Koreans are very shrewd. And they're playing this tactics -- technically they're playing a beautiful game right now. It's a win-win for North Koreans, too. They get to have an image makeover by sending this delegation. I mean, there are 22 athletes and 200 handpicked vetted cheerleaders.

So you -- so they get to have an image make-over. They get to put a wedge between Seoul and Washington in terms of alliance. And they get to properly use this as an insurance for future provocation and how U.S. is going to respond to North Korea's future provocations.

ZAKARIA: Do you agree about -- on Kim Jong-un in that respect because it does seem to me, to add to what Sue Mi Terry said, and with this handful of athletes, they've totally dominated the media landscape and coverage. I mean, Donald Trump must be at some level envious of their ability to dominate the media.

CHANG: Well, they certainly have, and people call it the Pyongyang Olympics.

TERRY: Right.

CHANG: So clearly it is -- the North Korea's gotten the advantage for now. The problem, though, is the South Korean electorate is not buying it. because first of all you have the conservatives who would never buy this, but you also have a big constituent element of Moon Jae-in, the South Korean president.

[10:10:03] His constituency is a little bit divided on this, especially with younger people who I believe they're South Korean nationals. They see those society separate and apart from North Korea, whereas Moon, from a very different generation, he's 65, sort of sees himself as a Korean nationalist of one Korean state. And so a lot of young South Koreans are upset right now, and we've seen in Moon's approval ratings drop 10 percent within the space of a week. That's not good for the South Korean president.

ZAKARIA: A lot of Koreans look at the two Koreas, and they think to themselves, my god, if we were to unify the cost for South Korea would be astronomic. There is 40 to 1 difference in the per capital GDP of South versus North Korea.

Let me ask you about the American strategies, Sue Mi Terry. Watching all this, we talk about the South Korean president getting what he wanted. The North Koreans being very rational, achieving what they want.

I can't figure out what the Trump administration's strategy on North Korea is. Can you?

TERRY: Well, I think that right now is just to continue with this maximum pressure of policy. So you saw President Trump give the State of the Union address where he spent most of the time talking about -- focusing on the depravity of the Kim Jong-un regime on the human rights issues, invited Otto Warmbier's family and the defector.

And then he held an Oval Office meeting with eight defectors. And then Vice President Pence invited as his special guest Otto Warmbier's father. And then they talked about continuing sanctions. I think the strategy right now is to continue to squeeze Kim John-un regime financially, diplomatically, and all options are on the table. Trump has not decided on the use of military strike, but I think that's also on the table, too.

ZAKARIA: Do you think that the Trump administration is waiting for the right moment to negotiate? Or do you think Donald Trump fundamentally hasn't decided whether he wants to negotiate?

TERRY: I think he has not decided. But it's really hard to get back to negotiations right now. Sanctions need to take time. I mean, in Iran's case, it took about three years of hard sanctions. So sanctions need to take time. And it's just fighting, so I think premature negotiation is not what the Trump administration is looking for right now.

ZAKARIA: Thank you both. Fascinating. We will of course be following this issue.

Next up, the woman who wants to take Vladimir Putin's job. Ksenia Sobchak is running against Putin for the presidency of Russia in next month's election. Does she have a chance to win? I'll ask her.

(COMMERCIAL BREAK)

[10:16:29] ZAKARIA: But for a four-year respite as prime minister, Vladimir Putin has been president of Russia since May 7th of 2000. Almost 18 years ago. His approval rating, measured by an independent Russian polling company, today hovers around 80 percent. Next month Putin is up for re-election, but he does not run unopposed. Perhaps his toughest would-be competitor for the presidency, anti-corruption activist Alexi Navalny, has been banned from running. But there are seven names other than Putin on the approved list of candidates.

That list was finalized on Thursday. My next guest is the only woman in the group. Ksenia Sobchak is just 36 years old. As such she barely squeaks by the minimum age requirement. As a former reality TV star and a magazine editor, she does not have a traditional political resume by any means, but her father ironically was once Vladimir Putin's mentor, the candidate of Russia's Civil Initiative Party, Sobchak was on a U.S. tour this week including a trip to Washington where she was invited to Trump's prayer breakfast.

Ksenia, pleasure to have you on.

KSENIA SOBCHAK, RUSSIAN PRESIDENTIAL CANDIDATE: Thank you for inviting me.

ZAKARIA: So, you know, the big question people have is, can you conceivably win? Is the -- is this a real election that is going to take place? SOBCHAK: No, in Russia, unfortunately we have a joke that you cannot

choose your parents, you cannot choose your gender and you cannot choose your president. So on the elections where Putin takes part, Putin always wins, like in a casino. You know, it's always -- the win is always on the house.

But it doesn't mean we sit home and do nothing. Even though Alexei Navalny, as he said, was not allowed to those elections, which I think is totally unfair, still, like in football, if you know someone from a football team, who's been the best player, goes off the match, the next one has to come into play.

So -- and that's me. And I hope that around me I can unite protestants and people with a position views to show some results and to show that we're against Putin, and Russia is not Putin. There are many people who disagree with him.

ZAKARIA: So what do you disagree with Putin on? Politically, in policy terms, what are your differences?

SOBCHAK: Well, first of all, I think that Russia has to have free democratic elections, that means everyone who wants to take part in it should be admitted. Next there should be full media coverage of the campaign on the same level for all the candidates which is not now the case. And thirdly, debates with the candidates should be there.

Can you imagine that Putin just denies debates? He says he won't take part in the debates of the candidates. So you do your jobs, guys, and I will stay still in the Kremlin.

ZAKARIA: Let me ask you. Are you also in favor of gay rights in a way that Putin is not? Does Putin take these positions, this social conservatism, this kind of nationalism regarding Ukraine and the Crimea? Does he take these positions because he knows they appeal to the kind of heartland of Russia? And he can paint your positions as being kind of western, cosmopolitan and liberal. Is that his strategy?

SOBCHAK: Well, like in Orwell books, whom I cherish very much as an author, in classical totalitarian regimes, you always have to make people hate someone.

[10:25:09] And this hatred is all around the Russian politics. What they do, they make one people hate another. Doesn't matter. Minorities, people from Ukraine, Americans, just, you know, the epidemia of hatred which they pour on people from federal TVs. I'm against it.

ZAKARIA: You know, there are theories -- Russia is a full of theories. One of them is that Putin has chosen you as the approved opposition candidate because you're a reality TV star. Obviously you're going to be very liberal. And he's going to say to the Russian people, look, that's the glittering, superficial cosmopolitan urban world that hates me, and, you know, benefit in a way from the anti- elitism, from the class warfare. You know in --

SOBCHAK: Yes, yes.

ZAKARIA: In many ways it's a little bit like Trump reminding people of the urban elites who hate him, of the media that hates him, of political correctness. Are you falling into that trap?

SOBCHAK: My burden is my past as a TV star. But, you know, pasts cannot be a life sentence. I've made my lessons and I'm a different person, I'm a political journalist for more than 10 years in Russia. But of course in a totalitarian regime, only one person, a brave person, can try to break the system with the little tools, with some burdens. It's unfortunately the realistic picture of what we have, and I realize that, but still I want to use it until the end, and being underestimated is something a good thing in a totalitarian regime.

ZAKARIA: Many of Vladimir Putin's opponents politically are now dead. Do you worry about your safety?

SOBCHAK: Yes, but not now. After 18th of March, when I will not be in the spotlight and I will not be an official candidate. I think there are a lot of problems to face, but what I'm doing now is worth it because I think it's very important and I want to really prolong the story of my father and the things that he found important. So for me it's the thing of a lifetime I do.

ZAKARIA: Ksenia Sobchak, pleasure to have you on.

SOBCHAK: Thank you so much.

ZAKARIA: Next on GPS, what in the world is going on in stock markets in America and around the globe? My next guest will tell you the volatility is perfectly normal. In fact he predicted it on this show just a few weeks ago. Back in a moment.

(COMMERCIAL BREAK)

[10:26:37] ZAKARIA: Markets around the world swung wildly this week. The Dow Jones Industrial Average was driven to its largest single-day point drop in history on Monday, sending global markets spinning. That day the market ended down more 1,000 points. And it wasn't only the 1,000 point drop of the week.

For many these developments seemed to have come as a complete surprise. The global economy for some time has been a reliable good news story. Growth everywhere. Markets up. Consumer confidence surging. And we've been hard to miss Donald Trump praying about his policies' supposed effects on the economy and stock market last month.

(BEGIN VIDEO CLIP)

TRUMP: The stock market has smashed one record after another, gaining $8 trillion and more in value in just this short period of time.

(END VIDEO CLIP)

ZAKARIA: So why are the markets now swinging and so down? What's going to happen over the coming year? And what does it mean for the broader economy?

Here to explain all this is Ruchir Sharma, the head of Emerging Markets and chief global strategist at Morgan Stanley, who warned about a bubble right here on GPS in December.

So Ruchir, your basic thesis has been -- and you put this terrific presentation together in January called "Peak Everything." And the first point you make is that we should have expected this volatility because we had gone through a period of what you call peak calm. What does that mean?

RUCHIR SHARMA, CHIEF GLOBAL STRATEGIST, MORGAN STANLEY INVESTMENT MANAGEMENT: Right. That's the nature of markets, and like this is a really moody beast and yet it was behaving in this amazing Zen-like character for the last couple of years, which is that the American stock market, for example, every year, going back decades, typically has a 10 percent correction. Last year the maximum correction was barely 3 percent. And this is very unprecedented.

But this is not just the U.S. across the world, the volatility that we saw in stock markets over the last 12 months, before this outbreak over the last few days, was the lowest in recorded history. So this is like an unusual period of calm that the markets went through, and as always, people begin to feel that this time is different and this can run for a while longer.

ZAKARIA: You also talk about peak growth. What do you mean by that? You say that there's a sense in which we have reached the maximum growth potential in a way of particularly the developed world.

SHARMA: Right. Your unemployment rates are at a 40-year low. That just tells you the number of new people we can find to get to work is a lot lower than imagined. This is very counter to the conventional wisdom about robots coming and stealing your job and automation and stuff like that. But I think the importance of demographics has still not been internalized by people.

The global economy grew at a pace of nearly 4 percent between 1950 and 2008. And most people use that as a sort of reference number. That's the sort of anchoring biased. That's what the global economy should be growing at. The U.S. economy should be growing at 3 percent to 4 percent.

What we're forgetting is that that was the only time in history that the global economy grew at such a robust pace, and the single most important reason for that was we had a massive surge in population across the world like never before. So there are two drivers of economic growth. One is increase in productivity, and two is the increase in world's labor force. The increase in the world's labor force between 1950 and 2005 was exceptional and that has come to an end. So that big demographic surge has come to an end and yet we want to keep harking back to the sort of growth rates that we had in that golden era, not realizing the world's working age population today including the --

HERE

[10:30:00] RUCHIR SHARMA, HEAD OF EMERGING MARKETS AND CHIEF GLOBAL STRATEGIST, MORGAN STANLEY INVESTMENT MANAGEMENT: -- and that has come to an end. So that big demographic surge has come to an end, and yet we want to keep harking back to the sort of growth rates that we had in that golden era, not realizing that the world's working its population today, including the U.S., is growing at half the pace as what it was in that golden era for economic growth.

FAREED ZAKARIA, CNN HOST: One other thing you point out, which is very interesting, is -- just to show how out of whack things are right now, is we're also at peak tech.

SHARMA: Right.

ZAKARIA: That the valuations of tech companies are just staggering. You point out that Apple's valuation and market capitalization is larger than the entire country of Italy.

SHARMA: Right. There are lots of such anomalies going on out there. The market cap of Mexico is now smaller than the market cap of, let's say, Google or even some of the other companies, like Amazon.

So I think what that is telling you is this, that the valuation of these tech companies has really become, like, out of whack, and the valuations of these companies are very stretched.

And a lot of the other countries in the world, especially like in Europe and Asia, have really been neglected. So that's where the opportunity could lie over the next few years.

ZAKARIA: So if you look at the circumstances, the economic structural realities you point out, lowest unemployment rate in a long time across the world, lowest unemployment rate in the United States for a long time, economy in its ninth year of expansion, was this a time to do a $1.5 trillion tax cut?

Are you -- was the administration goosing the economy at a time where it was already in danger of overheating?

SHARMA: What I think is irresponsible is that in the ninth year of an economic expansion, you should be running such a large budget deficit. I think that, I think, is the real problem, which is the fact that if you will not run a budget surplus now, then when will you ever run a budget surplus?

And this may sort of come back to bite the economy here because interest rates are now beginning to rise and everyone's really comfortable that, as long as interest rates are low, we can afford all this kind of spending. But I think, to me, this is really a fault line and it's, I think, across the aisles.

ZAKARIA: Right. Keynes would have said in good times you run surpluses and in bad times you run deficits, not that you run deficits permanently. SHARMA: Exactly. And this is when I think that a country like

Germany, you know, which have a sort of a constitutional provision that they have to balance their budget, I think that model is going to possibly shine more in the years ahead.

ZAKARIA: Ruchir Sharma, always a pleasure. Thank you.

SHARMA: Great. Thanks, Fareed.

ZAKARIA: Up next, an ambulance used as a bomb, an attack on a Save the Children headquarters. Just what is going on in Afghanistan?

Washington has something to do with it. I'll tell you when we come back.

(COMMERCIAL BREAK)

[10:36:59] ZAKARIA: An ambulance packed with explosives detonates on a crowded cobble street killing more than a hundred people. A military base in Kabul is attacked leaving almost a dozen dead.

An international hotel under siege for 12 hours, more than 20 people gone. And then an office of the NGO, Save the Children, is brazenly attacked. Another long battle ensues, ending with multiple deaths.

These are just some of the attacks in Afghanistan in recent weeks, and they all came after President Trump announced he was withholding security aid from neighboring Pakistan for giving safe haven to terrorists. Is there a connection?

Joining me now from Kabul is Mujib Mashal, the "New York Times'" senior correspondent in Afghanistan.

And Husain Haqqani joins us as well. He was formerly Pakistan's ambassador to the U.S.

Mujib, so let me first start by just asking you, is it fair to say that this increase in pressure seems pretty directly related to Trump's policy of getting tough with Pakistan? Is this Pakistan's policy, in a way, of getting tough with Trump?

MUJIB MASHAL, SENIOR CORRESPONDENT IN AFGHANISTAN, THE NEW YORK TIMES: I think so, I think so. I think when the policy was announced, everyone was expecting an escalation. That if you squeeze Pakistan, there's definitely going to be a backlash immediately.

But you always expect an uptick in urban fighting, in urban -- in explosions during the winter season. So that coincided with the blowback of the Trump squeeze of Pakistan.

The escalation is very clearly felt particularly in Kabul where, as you describe, there's been a series of attacks. Not only that affected civilians but also has increased the pressure on the government that is already politically very weak.

And it's just been deadlier -- the attacks -- maybe the frequency of attacks is not unprecedented. It has happened in previous years. It's just that the attacks are much deadlier than before.

ZAKARIA: Husain Haqqani, I think, you know, many Americans and people around the world must be wondering, for 16 years, 17 years, the most powerful military in the world, why is the Taliban so strong? Why is it so resilient?

HUSAIN HAQQANI, FORMER AMBASSADOR OF PAKISTAN TO SRI LANKA AND THE UNITED STATES: The Taliban are not strong. The fact remains that the Taliban offered Pakistan nothing while they ruled except daily executions.

Basically, they have a safe haven and they have retained their core fighting force. And America has not really fought them effectively.

President Bush got distracted with Iraq.

President Obama announced a surge but also announced the date that the surge would end which basically meant telling the Taliban, who already believed that the Americans have the watches and we have the time, that there is a limit to which you have to wait. And after that, you can have success.

Now that President Trump has said what he has said, I think the Taliban want to prove that they will continue to be a nuisance. They can continue to attack. And their backers in Pakistan want to demonstrate that there is no solution to the Afghan quagmire except talking to them and talking to the Taliban through them.

[10:40:04] I think that President Trump has essentially shown that America can try to fight to win which hasn't been done so far.

ZAKARIA: Would you -- what about this issue of the legitimacy of the Afghan government? Because at the end of the day, if America is, at some point, to leave Afghanistan, it can only leave if that government is seen as legitimate. What is your sense?

MASHAL: Sadly, right now, the government is not in that position. It is a weak -- politically weak government. It is struggling with it -- the periphery. Its space of control has shrunk over the years.

President Ashraf Ghani, he came with a vision. He is, you know, Western-educated. He lived in the West for a long time. He has a very clear vision, economically driven vision, but he has struggled to connect with his own people.

He has struggled to work with the political elites that have gotten used to, you know, 14, 15 years of a certain way of being stakeholders in this state while continuing to do their dirty business.

So it's not just the legitimacy, but it's also the fragility of the political set up that is in question right now.

ZAKARIA: Husain, you outlined the Donald Trump pursuing a kind of very aggressive new strategy, more bombing, more troops involved, and, of course, this very tough talking action against Pakistan. It feels like you almost need a kind of Henry Kissinger to pull off

this kind of very complex diplomacy. Do you think they're up to -- the Trump administration is up to it or will the Pakistani military ultimately outwit and outlast them?

HAQQANI: Well, very simply stated, Pakistan is not going to change any of its policies just based on the threats and because of statements. It will all depend on whether all the various instruments of American national par are brought to bear.

And to primarily to win the argument, to convince Pakistan's generals, that just as they haven't succeeded in 16 years, and America hasn't succeeded in 16 years, can there be a solution in which Pakistan's genuine concerns about an Indian military presence in Afghanistan can be addressed.

India is not interested in sending troops from what we have gathered so far, but convince them that their imaginary fears should not be the reason why Afghanistan and Pakistan should continue to suffer the war.

I don't know if anybody in this administration at the moment is making that argument to the Pakistanis effectively.

ZAKARIA: Mujib Mashal, Husain Haqqani, fascinating conversation. Thank you, both.

Next on GPS, we'll move a little further West to another foreign policy trouble spot for the Trump administration, Qatar.

President Trump tweeted support for Saudi Arabia's tough actions against its neighbor Qatar. It's unclear whether he knew that the United States has a key military base in Qatar and a defense agreement with that nation.

I'll talk to Qatar's Foreign Minister about the ongoing crisis when we come back.

(COMMERCIAL BREAK)

[10:46:56] ZAKARIA: Donald Trump took his first trip abroad as president last May and the first stop was Saudi Arabia. He was welcomed to Riyadh by the king, a fighter jet flyover, and a brass band.

The troop left a big impression on him because he tweeted about it two weeks later saying: so good to see the Saudi Arabia visit with the king and 50 countries already paying off. They said they would take a hard line on funding extremism and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism.

What was he referring to? Well, days earlier, Saudi Arabia, the UAE, Egypt, Bahrain, and some other Arab states had cut ties with Qatar, saying the small nation was a supporter of terrorism and had grown too close to Iran.

As you'll hear in a moment, Qatar denies all this, but the crisis goes on with no real end in sight.

I had the opportunity to sit down with Sheikh Mohammed bin Abdulrahman Al Thani when he was in Washington. He is Qatar's foreign minister and deputy prime minister.

(BEGIN VIDEOTAPE)

ZAKARIA: Mr. Minister, pleasure to have you on.

SHEIKH MOHAMMED BIN ABDULRAHMAN BIN JASSIM AL THANI, DEPUTY PRIME MINISTER OF QATAR: Thank you very much for hosting me, Fareed.

ZAKARIA: So for much of the world, this situation between Qatar and Saudi Arabia largely, but some of the other Gulf States, is very perplexing. They would argue, principally Saudi Arabia, that Qatar is too friendly to Iran. What do you say about that?

AL THANI: We are not too friendly with Iran. We want a peaceful neighborhood. We are sharing borders with Iran as we are sharing borders with Saudi. We have differences in the Iran -- with Iran in their policies and we are sharing with them an energy field, a very large --

ZAKARIA: The largest natural gas field.

AL THANI: The largest and natural gas field, so -- but those differences and those conflicts between us and the region, they won't be solved on a battlefield. They will be solved by dialogue.

ZAKARIA: So they then say that Qatar has ties to terrorism. In fact, they were able to convince even President Trump of this. What do you -- how do you respond to that?

AL THANI: The United States knows very well and recognized the partnership it has with Qatar in countering terrorism. And in fact, yesterday, we were holding a strategic dialogue which states very clearly that Qatar is an important part in the countering terrorism and the United States recognized its role.

There is no any argument behind this -- behind terrorism accusation. They never supported anything, and they failed to support with any evidence that Qatar is supporting terrorism. And in fact, Qatar is a frontrunner when it comes to the fight against terror.

ZAKARIA: When the crisis began, Donald Trump tweeted out something that supported the Saudi position and said Qatar has been financing terrorism, and now they are being called to account. What was that about?

AL THANI: Those tweets, you know, no country builds its policy based on the tweets. We have this government -- very close government exchange between our two countries and also the President.

[10:50:00] He is determined to solve this crisis, and he highlighted this in several phone calls with His Highness, the Emir. And we appreciate the role he is playing in this. ZAKARIA: So you feel that the relations between President Trump and

the Emir are strong and close and President Trump understands the Emir's position?

AL THANI: We have a very strong relationship with the United States, and the President expressed his understanding to the situation and expressed his willingness to address the situation.

At the beginning of the crisis, it was different. Then, the government agencies, they know very well what's the nature of the relationship between Qatar and the United States and the behavior of Qatar in the region. That's nothing to do with terrorism. We are always a supporter for all the -- for the global efforts anti- terrorism.

ZAKARIA: What is the solution here? What is it that Qatar could do that would allow for a kind of exit from this crisis?

AL THANI: We see that there is no winner out of this crisis. Everybody loses, and the biggest loser is the GCC people.

The GCC used to be a framework which brings everybody together. We are sharing the same ethnicity, the same tribes, families together. We are interconnected as a people. There are no differences between the people themselves.

Now, for -- in order to have a solution or steps toward a solution, Qatar is always willing to engage in dialogue and to understand what's behind all this, what's behind this blockade.

But from their side, there is no winning in this. And you cannot solve a problem with the willingness of one party. You have to get the two parties aboard.

ZAKARIA: Do you worry that there is a possibility of a Saudi invasion of Qatar?

AL THANI: No, there is no worry of Saudi invasion or any country invasion. Our country is well protected. Our partnerships with our international allies, like United States, is also there. And they are -- we have all the means to protect our country against any external aggression.

ZAKARIA: So you feel secure?

AL THANI: We are feeling secure.

ZAKARIA: Mr. Foreign Minister, a pleasure to have you on.

AL THANI: Thank you, Fareed.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

[10:56:31] ZAKARIA: Switzerland's financial system is famously opaque, so it may not surprise you to learn that the country topped the Tax Justice Network's 2018 financial secrecy index. But this year's runner-up in the rankings might not be what you'd expect.

It brings me to my question: what country or territory ranks second in secrecy and offshore financial activity according to the Tax Justice Network? The United Arab Emirates, the United States, the British Virgin Islands, or Singapore? Stay tuned and we'll tell you the correct answer.

My book of the week is "How Democracies Die" by Steven Levitsky and Daniel Ziblatt. This is not another diatribe against Donald Trump though there is some of that. It's mainly a smart and deeply informed book about the ways in which democracy is being undermined in dozens of countries around the world and in ways that are perfectly legal.

The authors remind us that what sustains democracy is not just constitutions and laws but norms and behavior. If leaders act in thoroughly undemocratic ways, democracy, over time, will collapse.

And now for the last look. Conservation, environment, preservation, climate -- these words were all absent from President Trump's first State of the Union address last week. But 6,000 miles south of Washington, one country's president was spotlighting them in a historic way.

Outgoing Chilean President Michelle Bachelet signed a decree creating more than 10 million acres of new national parks in her country.

This is not simply a tale of a nation taking impressive steps to preserve and protect its treasured terrain. Roughly one-tenth of the land was donated to the Chilean government in what is being the called the world's largest donation of privately held land to a country in history.

So who are the generous benefactors? Well, two Americans, Kristine Tompkins, a former CEO of Patagonia, and her late husband, a co- founder of the North Face. The couple had reportedly been purchasing land in Chile since the early 1990s.

Their foundation, The Tompkins Conservation, donated more than a million acres. And combined with additional government land, President Bachelet announced that national parks will increase by nearly 40 percent.

Stories of private individuals buying up public lands often end in development. Like the song goes, paving paradise to put up a parking lot. At a time when America's public parks are facing severe cutbacks and public lands are being opened for private use, here is a shining example of a developing country preserving its heritage.

The answer to the GPS Challenge question is B.

Although offshore finance hot spots like Switzerland or the Cayman Islands are generally less transparent, the Tax Justice Network says the United States now provides more offshore financial services, including secrecy and tax-free facilities for nonresidents, than any other jurisdiction, accounting for over 22 percent of the global market.

The ranking was released as Switzerland is set to start divulging financial information to foreign tax agencies after years of pressure from Washington.

If you like the GPS Challenge, don't forget we have launched the GPS Challenge online. Every Sunday, we will post on our website 10 questions that will test your knowledge of the world. See how well you do. Go to cnn.com/FareedQuiz and try your hand.

[11:00:01] Thank you to all of you for being part of this program. I will see you next week.