In the middle east and here in congress. Will we achieve a deal and what are the implications of success or failure . Joining me from washington is suzanne maloney, a senior fellow at the center for middle east policy at brookings. And from massachusetts gary the executive director for research at the Belford Center for science and international heirs at harpers affairs at harvards international school. I am pleased to have them both on this program. Welcome. Let me start with the question of the latest hiccup. It seems to me one issue that has suddenly become very prominent is the question of the removal of this u. N. Arms embargo. I have not seen this much focus until recently. Why has that got in all of the attention over the past couple of days . Could this scuttled the deal as a whole . Guest you are right, this is the interesting wrinkle in this stage. There have been any number of issues that have been seen as obstacles and which both sides have focused on in public statements. Many of the technical discussions about the nuclear capabilities, and the timing and scope. But this week out of nowhere the iranians began talking about their insistence that the arms embargo, which is part of several u. N. Resolutions, but most particularly the comprehensive embargo included in a resolution in 2010. They want that to go and they are insistent. This is something the administration has been consistent in it with its interlocutors. Said to see this arrive at deflategate suggests that either there has been very large issues the two sides have not have not have the time or opportunity or from a more conspiratorial plan view, the iranians are looking for an issue to use or delay or even take the negotiating process in a way that will squarely divide the International Coalition that has been negotiating with them. In particular, align russia and china more directly with iran and the failure or delay of the negotiating process. Ian i left point is important because isaiah statement from the Russian Foreign ministry the foreign minister actually said that these u. N. Arms embargoes have to go and it has to be one of the first things to go. That implies a pretty significant gap between the position of russia and that of the United States and the europeans. Iranian negotiators also saying that the russians and chinese have a different perspective, and there are very different moves from the Different Countries, and that is confusing all of this. Gary, what is your view on this . You think the russians are basically taking a flyer here . I they moving away, looking to stick into the americans at the last moment . Or is this much ado about just one or two statements that dont really matter . Gary i think it does matter a great deal. I can understand on reasons of substance why both the russians and the iranians would like the arms embargo to be lifted. The russians because they want to sell weapons to iran, and the iranians because they need modern military hardware. And they are going to have extra money because of this nuclear deal in order to purchase additional weapons. On the other hand, for the u. S. And the western powers i think it is impossible to imagine we could accept a listing of the arms embargo. I think that would not be politically sustainable. From a runs standpoint, this was a good issue to pick, to wait until the end game when most of the other issues have been resolved. We just dont know whether the iranians will use this as a bargaining chip, and will concede to keep the arms embargo and place for the time being in exchange for getting concessions on other issues relating to inspection, or research and development limits on an enrichment programs, or whether they are serious about taking a stab at trying to get the arms embargo listed lifted if not right away then over a relatively brief. Period of time. It could very easily lead to a delay in the deal coming together. But i dont think it will result in a breakdown of the process. And i think ultimately the negotiators will probably figure out a compromise so the deal comes together. I just dont know whether it will happen over this weekend. Ian fair enough. If there is no deal by monday, do you think we have another extension and we just continue with all the sides in place, moving back and forth to capitals or are we going to take a break and really not come back for a while . Gary it is very hard to make that call if you are not in the room. Obviously kerry will have to make a decision based on whether or not he thinks some additional time will produce a compromise on the remaining issues, in particular the arms embargo, or whether he thinks they have really reached the end in this round of negotiations and there is no room for further progress. In which case, i think both sides would be willing to end this round to extend the interim agreement, because no neither side wants the process to collapse. Ian you really dont see, the russians and chinese breaking and the russians doing so quite publicly, carrie coming out and saying we are not going to have endless negotiations. The level of patience is wearing thin. You dont think theres any real danger this process is going to be derailed at this point, you think it is either continuation of interim agreements or we get a deal . Gary thats correct. Neither side wants the status quo to break down. From our standpoint that would mean iran resuming Nuclear Activities that are currently frozen, and which we benefited from because they have not been able to advance their Program Since it went into force in january 2014. From irans standpoint, a breakdown means resumption of additional sanctions which would hurt the economy. I think both sides are more comfortable with the status quo interim agreement in place and will try to avoid a breakdown especially mse breakdown where fingers are being pointed as to exactly who is at fault here it certainly the country that has been seen as triggering a breakdown will be more vulnerable to diplomatic pressure. Neither side wants to be blamed for causing the process to collapse. Ian if we lose on monday, suzanne, we dont get to a deal who is more likely to be blamed for that at this point in the court of International Public opinion of . Suzanne its hard to say, i think the iranians have been a good job avoiding the fact, it has been washington in terms of devising creative proposals to bridge gaps. The real danger in not getting a deal over the course of the next 4872 hours is what we saw after the last round, came together in late march, negotiated around the clock and came to this political framework in switzerland, it was hailed as a big step forward and then went away. By the time they came back to the negotiating table, there was a lot of work to be done in terms of solidifying the positions they both achieved in that political framework so they effectively had to renegotiate some of what they had already agreed upon. I think one of the dangers, and one of the incentives keeping everyone at the table right now is that we are this close. We know it will take work to get back to this point if we all disappear for a week or two or three. We have got to try to get it across the finish line, that at but at the same time there is a danger in that. That compromises will be made in a way that will be unsustainable to either side once they go back to political capitals and have to debate to this. Ian is there a danger that the sanctions themselves start to erode, especially if americans are blamed for why we have not gone to a deal . Again, i am thinking about the fact that their p5 plus one do not seem to be quietly as aligned as they have been. Suzanne . Suzanne maloney i think they have been durable, and they demonstrate the ability of the u. S. Financial system to sort of persuade the rest of the world that there is a choice to be made about doing business with iran and doing business with the ore in the United States. And that is not really a question for anyone in the world other than maybe belarus, and i think that ability to deter additional business in iran will remain quite strong in all most any scenario. Even if the United States is perceived to be the obstructionist power at the top. In the end, the chinese are more interested in retaining a Good Relationship with washington in having access to the u. S. Financial system, then they are in the potential upside for business with iran. They have already had a lot of opportunities that they have slow rolled in order to assure that they are diplomatically aligned with washington, so i think in the short term, we do not have a lot of fears of sanctions, erosion, or collapse. If the process were really to break down, and we were going to see some sort of and to negotiations, then i think all and today negotiations, then i think all bets are off. Ian gary, what do you think of the principal risks if we dont get to a deal on monday . Gary samore i agree with suzanne, that the iranians walk back on agreements. If the deal is not sealed. It is possible they could open issues that have been resolved during this latest very intense round. There is a little bit of protection against that only in the sense that, as i understand it, the documents are virtually completed, so there may be a few brackets you were there, but in here and there. But in the hundred or so pages of documents that have been agreed upon, it gives you a little bit more confidence that you can take a break and not reopen texts. It is not absolute proof, but at least it gives you some protection, whereas in april in lausanne, there was very little agreed text, or there were a lot of brackets in the text. The other big danger besides backtracking, is some external event could take ways could take place which could , jeopardize the negotiations. The middle east, as we all know, is in the middle of an incredibly turbulent and unstable and conflictual phase with wars going on with iraq and syria and yemen and civil conflict in libya and many other places, so with that kind of boiling stew, there is always a possibility that something could happen that would complicate the politics of reaching an agreement for either tehran or washington or both. Ian it has been a lot of talk in the news of course, this week, that one of the reasons why this last deadline was important was because congress only had 30 days as opposed to 60 to look at and then approve the deal. It needs two thirds of the vote, so you just cannot have the republicans scuttling it, but do you think that in terms of it is dragging on and there is a longer period now, how much danger do we have that you get to yes, and Congress Gets to no . Suzanne maloney it is still a minority danger. I think the administration has done a good job of effectively coopting congress. They want to be out in public with their views on this, but in the end, i think it will be very difficult for republicans and other opponents of the deal to pull together a coalition of 66 or 67 senators who are prepared to override a president ial veto, a vote of disapproval, of any kind of agreement with iran. There is a danger that the 60day period provides for more public antics on the part of congress, as well as some sense of dissatisfaction on the iranian side that the agreement they may have committed to one of take that much longer to see a fresh phase of implementation. Ian do you accept that, gary . That is interesting. A majority of americans say they want to deal with this point. Gary samore i think the outcome of the congressional review has to deal with the substance. The substance of the agreement. If the agreement includes strong provisions for inspection and monitoring strong limits , verifiable limits on irans ability to produce fissile material and graduated sanctions relief, in response to steps that iran has taken, then i think the administration is in a good position to sustain the agreement, and whether it is 30 days or 60 days, it does not matter. If the administration makes additional significant concessions and has loopholes on any of those key issues that have not really been resolved yet, then i think it becomes more difficult, and it is conceivable they would lose enough support that they would not be able to sustain the agreement, even in terms of sustaining a president ial veto so i think it is premature at this point to predict what the congressional review will look like. In general, i agree with suzanne that the most likely outcome will be that there will be strong congressional opposition, maybe even majority support for a resolution of disapproval, but unlikely that congress would at the end of the day be able to muster enough votes to override a president ial veto, but i do nothing think you can really i dont think you can make that judgment until you see the actual details of the agreement. Ian how do you respond to those who say irrespective of whether or not we have a deal that this is a regime that is going to get a lot more powerful and a lot wealthier, and they are going to use that wealth in ways that clearly is antithetical to american interests in the region and beyond question mark how do you respond to that, suzanne . . How do you respond to that suzanne . Suzanne maloney i think irans bad behavior has never been a function of its resources. The Islamic Republic. Some of the worst occurred during the 1980s, at a time of tremendous resource constraint with iraq and other issues, so i am not particularly concerned that the influx of resources as a result of sanctions relief is going to alter what we know is a very problematic Foreign Policy. We have to confront it. We have to deal with that Foreign Policy irrespective of sanctions or resources available. I do think that, you know, there is an argument to be made that iran will have other interests as a result of reengagement with the world, that there will be some constraint on its willingness to go rogue and to cause trouble, particularly in the gulf, because of its investment in ensuring that it sustains its economy, but fundamentally, this is a country with which we have deep and longstanding divisions. Those will not be resolved by a nuclear deal, and we are going to have to ensure that we have a policy that is well devised for confronting it. Ian and in addition to that, of course, we see a lot of folks, and in the region, netanyahu the saudi leadership very strongly opposed to a deal, do you think that is an accurate read by them of their national interests, that they should oppose a deal from their perspective, or is that mostly posturing to get the americans to do more for them . Suzanne maloney i think whenever we are talking about allies, their fundamental concern is not the nuclear issue, even though that is part of the threat and part of the underlying worry about what iran is up to. Fundamentally what they are concerned about is support to terrorists, to subversive groups, fraud, and its role in destabilizing some of its subversive groups ofabroad and its role in destabilizing some of its neighbors, but at the same time, we have to recognize that some of our own allies, particularly the saudis and others in the gulf, have either been asleep at the wheel or engaged in a way that has not been productive in terms of addressing some of the longstanding issues, so i think we have to be careful to avoid accepting the narrative of the gulf states. In particular about how to handle iran. I think the administration has been right to try to craft a diplomatic resolution to the Nuclear Crisis and right to try to address the issues of the Islamic State, in the levant corresponding to what the iranians are doing on the ground. Ian gary, do we have our priorities right . We are focusing relentlessly on the technical side of the nuclear deal. We are not focusing on these other issues that many in the gulf states, the israelis think are more important. We are not focusing on cyber. We are not focusing on ballistic missiles. We are not focusing on hezbollah support or proxy fights with our people in the region. Is that a use of american sources . An appropriate use and the view on iran . Gary samore i think it is. I think if iran were to get Nuclear Weapons, it would pose such a threat to the National Security interests of our allies and partners in the region that it is right to try to address that issue as a separate isolated matter, but we should also recognize that this is a transactional agreements that is agreement that is being negotiated. We are getting restraints on Irans Nuclear program in exchange for sanctions relief. It does not fundamentally change the nature of the iranian regime, nor the various areas of conflict between the u. S. And iran, as well as u. S. Allies in the region and iran, so to be sustainable, any Nuclear Agreement has to be part of a broader regional context. That will try to take advantage of the time we buy under the Nuclear Agreement, in order to encourage critical change in iran, and to contain irans influence. Political change in iran and contain irans influence in areas where we oppose what they are trying to do. My guess is after a nuclear deal, you will see the administration be much more active in terms of trying to craft policies on iraq and syria and so forth that will both be an effort to assure our allies who are very nervous about this agreement, as well as an effort to try to contain iranian influence. Whether that will be successful or not in the short time remaining for the Obama Administration, i think this is going to be an exercise that is going to continue well into the next administration, because there does not appear to be any nearterm and to the various civil wars and conflicts that nearterm end to the various civil wars and conflicts that are taking place in the region. Ian so with syrian policy very much in disarray, and with the Obama Administration or any of the republicans running for president , if we have an iran deal, do you see the United States working more closely with the armenians to try to bring about resolution or at least iranians at least to try to bring about resolution or at least improvement and those two areas, and how do you think that would be articulated, suzanne . Suzanne maloney i do not think we will see some sort of quick condominium between the two countries. As gary said, this is very much a transactional deal. For the iranians, they want to get out from under the sanctions. But their interests in iraq and syria and elsewhere in the region remain very much as they have seen them. Their perception of those interests has not changed and probably will not change, so i do not expect to see any sort of cooperation in the short term. Also, there are any number of logistical issues, including that the key aspects of the iranian fighting force in iraq are under u. S. Sanctions, so there really is no opportunity for direct coordination. Ian and yet, on many items, the u. S. And iran are on the same side in iraq right now. So the question i guess, would be, do you think there will be more highlevel strategic coordination, military discussions . If everyone is trying to defeat isis, and that is a top priority, are you going to see the americans and the iranians seeing themselves as more cooperative strategically in an area that is clearly a great National Security concern to the americans and also to the saudis, the things going in a direction geopolitically that is not in their favor . Gary samore that the u. S. And iran can cooperate openly against the Islamic State in the case of iraq i mean obviously, there is some tacit cooperation going on. We are training the sunni tribal fighters to do the house to house fighting in ramadi. The shia militia have been dispatched to the outskirts of town, but to a sense that were trying to cobble together a Sunni Arab Coalition to defeat isis, that would be severely undercut if we were to be operating overtly with the iranians in a way that would cement iranian influence in iraq, so i think the limits on our ability to cooperate with the iranians in the battle against i. S. Is going to continue, even after a nuclear deal. Ian thus far, it has been a long slog, but if we come out of monday with a deal, what does this mean for the region, and what does this mean for the Obama Administration, more broadly . Gary samore again, it really depends on the details of the agreement. If the detail is sound, and, in particular, has strong provisions for verification and monitoring, then it occurred curbs irans ability to produce Nuclear Weapons for some period of time, 15 years, maybe more. The question is, having neutralized that issue whether we can take advantage of the hiatus in order to deal with more structural, underlying problems in the region, and it is going to take a long time. I mean, the middle east is fundamentally broken in the wake of the arab spring, and the u. S. Appetite for deploying Major Military assets and Ground Forces to deal with that instability is very limited. That is going to continue for the next president , and i think were going to have our hands full, trying to deal with structural things in the region. Ian gary, i have a sense that you are concerned that in the 11th hour, you think we are going to cave, and you have said this a couple of times, if it does not look great. Where are your concerns there . If the deal is lousy, how will it be lousy in your view . Gary samore well, i think there were a couple of issues that were not fully resolved in april, if you look at the lausanne parameters, and the most important has to do with the verification and enforcement mechanism. We, i think, have a very robust proposal that the p5 plus one have agreed to, the iranians naturally are contesting that. They are trying to weaken the challenge inspection mechanism in particular. They may have agreed to the overall structure, but there are a lot of details in terms of time light and decision process timeline in decision process and so forth. My impression is that some of those issues have not been addressed yet, and i hope the administration feels comfortable keeping the process in place not making further concessions agreeing to continue the negotiations, because i do think that at the end of the day, the iranians want this agreement. I think they needed for immediate for sanctions relief, and the administration would be wise not to feel under any particular pressure to get a deal in the next 48 hours. Ian how confident are either of you that this country, that this regime can stay together, and if it doesnt, are we looking necessarily at a very messy transition . Suzanne, do you want to get a shot at this one . Suzanne i would almost never tried to predict political change in iran. If you think about it, this is a regime that has survived everything sort of the plague. War civil instruction at home tribal insurrection, earthquake drought, just about everything else, so i think that, in fact, it is a fairly stable regime at this point, despite the upheaval that we saw only back in 2009. We have seen a real reconsolidation since the election of president rouhani, of the Islamic Republic, and i think that they are well prepared to handle the influx of capital, of contact with the wider world. In effect, in part because their population is already exposed to so much of this as a result of connections through the internet and other ways. That is not to say that iran will never change or the Islamic Republic is going to be around forever, but i think that, in effect, we can expect that were going to be dealing with some iteration of the current leadership for some time to come, and we should make our plans around that. I ran can grow a great deal. Iran can grow a great deal. It has got an incredibly, it is an incredibly wealthy country with a welleducated population and a really diverse resources base, so i think were going to see are a lot of opportunity. But at the same time, i read iran is not china. It does not have the same ability to impact the international marketplace. And it will not draw the same kind of demand, irrespective of the Political Risk climate there. So it is going to be an interesting time but i think one that is relatively stable. Ian a lot of governments in the middle east would have thought they were relatively stable and found out they were less so in the recent years. I guess that is the question. Gary, do you want to respond to that . Gary samore i agree with suzanne. I think it is unlikely we will see a change. Political change in the near term. The Islamic Republic seems to be pretty firmly entrenched. There survived they survived well is a fairly serious spontaneous internal threat in the green revolution in 2009. In the longerterm term, i think it is very hard to predict. Once he dies, it is unclear who the successor would be. There is a very large group of younger people that have suspect loyalties to the theocratic state, and how that develops in the future, i think it is very hard to say. Ian gary samore, suzanne maloney, thank you for joining me today. Gary samore thank you, ian. Ian we now turn to china. A massive correction wiped out more than 3 trillion in wealth. Beijing is working to turn it around, but with Government Intervention that many argue was a large step backward in the government plans for reform. The recent drama in the u. S. China relationship, the u. S. Office of Personnel Management revealed details of one of the worst hacking scandals in u. S. History, with beijing allegedly stealing information on 21. 5 million people. The opm director Katherine Archuleta resigned today over the breach. Joining me is kevin rudd president of the Asia Policy Institute and former Prime Minister of australia. Welcome kevin. Kevin rudd good to be on the program. Ian xi jinping is doing his best and propping up the markets. We have got 30 down, and the last couple of days have been almost as dramatic going back up, but intervention, and how does that look for a government that is trying to actually open up the Financial Sector . Kevin rudd i think it is important to that back from it a little bit and put it in a little context. 30 down from june, if you bought these stocks last june, youd probably be about 85 up so lets understand that this is a significant correction in the market. You have got chinese assets, which have been overpriced, even against a basic analysis with the standard pricetoearnings ratios, but to drive too much of an implication from this in terms of, number one, the overall performance of the market in recent times and two what it means for the economy in general, and three, the direction of reform, i think we need to take a calmer perspective, and lets face it, the Chinese Government is not the first to intervene in markets. The United States did, and i think the japanese did so in the early 1990s, and the Hong Kong Government did so in the late 1990s. By larger orders of magnitude than this. This is a significant intervention by the Chinese Government, but it is not unprecedented. Ian but as you say, the Chinese Market was essentially in bubble territory, and yet, the statements made by the chinese leadership, by the state media the interventions made certainly seemed both significant, a little bit alarmist domestically. Are they just acting too conservatively . Is the issue not that investors are taking a hit but rather they are being protected from markets actually becoming markets . Kevin rudd well, again, if we step back from it at all, china is in transition. The economy is in transition. Years or so ago, this was a socialist economy, where there was no market. 30 years later, it is a mixed economy. And then a central organizing principle for economic behavior, so this is the transition period, and i think what you see in as far as these actions by the Chinese Government on the stock market is a government which is learning the difficulties of handling a market in very turbulent circumstances. I think this institution, the shanghai exchange, aint as old as the New York Stock Exchange and if you look at the new york stock range over a longer period of time, we will find that interesting gyrations, as well. My real point is that this is a market in transition. It will take time. This has been a significant intervention, and, yes, they have acted to seek to protect individual investors. Ian xi jinping has been lauded around the world were such strong leadership. Is this the biggest knock on him as president that we have seen or would you point to Something Else . Kevin rudd there is a great danger as we look at china that we are captured by the instantaneous rather than looking at where the country and the economy is going in the longer term. I am much less concerned, to be blunt, about what is happening in china with the stock market than i am about how sustainable the chinese growth rate is over time. That i think is a much more legitimate basis for lengthy Public Policy debate around the world than the stock market. Rightly, i feel the real challenge they face, and if i were xi jinping, the thing i would be most engaged on would be the sustainability of the growth rate at 7 . I think they can keep it north of 6 over time. It is going to it harder. Europe is bumping along the bottom, america a bit better and then chinese consumers are not consuming as much as the Chinese Government would want. They are still saving like a frenzy. These are the Big Questions on the mind of the chinese policymakers, the transition and the growth model. The stock market, frankly, is a smaller concern. Ian why note let the markets slip farther . Again, a small piece of the economy, 90 million investors, shortterm, and people would have taken Massive Gains in the runup. They had been told to do that. In other words, is the danger here not that they have left it alone and that this is not a problem but intervening too much . This requires opening the economy. Does that mean that you do not want to see these kinds of interventions . Kevin rudd you do not want to see Government Interventions in this order of magnitude, but again, the chinese actions are not unprecedented. It has been done elsewhere. A decade or so ago, it was done in hong kong, not far from beijing, but the overall point is this, that this is a government dealing with a regulation of Financial Instruments and financial markets, which historically they have not had to do, because they had a Central Plant economy, and secondly, sure, they are can learn about the impact on individual investors, and while they are not voters in the chinese system, they are concerned about public support for the government. They are not unique in that sense, so i think this is, frankly, a stock market which is not mature. It is a stock market which only barely has 20, 20 five years of history, and as a consequence, it is learning on the way through. American investors and investors in my country, australia, they have seen ups and downs and ups and downs over decades, and you are accustomed to swings and roundabouts it comes to the stock exchange. Chinese investors do not have that experience. So they have acted to stabilize the market. Remember this. This is a oneparty state. It is a country which says we are not about to become a liberal democracy. We are an authoritarian state. In my judgment, what can be best described as a state capitalist model, so it is always going to be different than what we anticipate in our own country. Ian so we should not worry about it in the short term this will be gone in a week. But increasingly not democratic but nonetheless increasingly caught up with the demand of chinese constituents, a component here, a component there, that is going to make them take their eye off the ball for these longterm structural changes which are so hard to implement. Kevin rudd remember, our chinese friends are dealing with something in history. They are seeking to execute market reforms in the economy, which, as you know, has the ability of disseminating information right across society, as well, while maintaining a fabric of a oneparty state, and we looking across the collective west would say that is not actually sustainable longterm. Xi jinpings determination out of the communist party is that he can ride against what we described as the inevitable forces of history, so they have embarked on what i consider a unique experience. Were going to have this consistent, difficult interrelationship between a state apparatus, which wishes to maintain political control, and on the other hand realizing that the optimal use of the resources of the chinese economy lie in letting the market rip, so that is the dilemma. It is large. How it is going to turn out in the next decade, difficult to tell, but i do know what xi jinpings idea is, and that is that he thinks he can reconcile these forces. Ian as a consequence of where the chinese and the americans are, challenges also in the bilateral relationship. Let me shift you. 21. 5 million americans with their records taken. A belief or an allegation from circles, including the u. S. Government, that this originally emanated from china. Not a great deal of response from the Chinese Government on this front. What does the u. S. China relationship look like to you, and how much of a problem is this . Kevin rudd well, cyber is a real problem, not just in the u. S. China relationship but in the u. S. Russia relationship, as well. It does point to an absolute need for what is called in the business now as rules of the road, but in terms of state to state cyber activity, and also state and corporation cyber activity. At present, it is a bit like the wild, wild west out there without a sheriff. That is what cyber land looks like right now in terms of protocols for how actors should behave, so in the overall spectrum of the u. S. China relationship, this is one of about three or four big ones at the moment, but it would be wrong to conclude that this is the only one. And putting it all together, i think the recent develop its in the South China Sea have been obviously watched acutely by the United States, not just the country and the region. The photographs posted by i think it was cnn, coming off the back of aerial surveillance by the United States of the china Land Reclamation activities in the South China Sea i think cap taken the debate about china here in the u. S. And americas relationship with china out of the think tanks and much more to the main street, as people see things which they believe and are concluding will impact the overall direction of the relationship. My argument is you need a framework for this relationship which can manage these sorts of very large differences and incrementally resolve them over time and at the same time place primary emphasis, primary emphasis on what you can do together in the world, and let me tell you, there is a lot of those, starting with the korean peninsula. Ian i will start with that, but before we get to korea, with the United States, it seems to me that you can look at a lot of what the chinese are doing whether it is cyber, the South China Sea, antimonopoly issues and frame it as things the chinese are doing to americans we dont like. Is that an appropriate way to think about the challenges in the u. S. China relationship, or should we be a little bit more balanced . Kevin rudd well, as a former Prime Minister of australia, i never come to another country and say this is what you should be doing. I cannot think that is polite or helpful, and how america constructs is responses for the peoples republic as a matter for the u. S. Party politics, but it is the beginning of wisdom to understand how the other person thinks. The american view of the chinese behavior in the South China Sea is clear. If we are sitting in a tv studio in beijing with a similar question, it would be wise if the United States fly spy planes up and down every day and every day of the year and sometimes day in and day out, collecting data on us . Why is it that the United States through its conflict has in the west pacific . Why are they seeking to contain chinas freedom from policy movement and freedom of policy action . Surely, this is all part from the United States perspective of keeping china contained within its boundaries and, in fact, hopefully at the end of the day seeing the Chinese Communist party fall, and having just spent 12 days in china myself, frankly that is pretty much the internal narrative in so many parts of the chinese think tanks about what motivates u. S. Policy. It is negative about what the u. S. Is doing, as i fear the reaction to china is in this country, so if those two realities exist, the real challenge for the future is is it a good thing that this relationship just continues to deteriorate in the future and live, or should we begin constructing a different way in which such radically Different Countries with different political system can construct some Common Ground for the future, and i have always been in the latter camp. Ian you just mentioned one of the areas for Common Ground is in korea. Do you want to give us a sense of that . Kevin rudd yes. Here in the United States, we are focusing on the nuclear negotiations, but let me tell you, if they are resolved and resolved successfully, i believe the lens will increasingly go to what is happening with the north Korean Nuclear program. This is a state which already has significant Nuclear Materials to manufacture up to five or 10 bombs. Secondly, it has quite vividly advanced rocketry, and thirdly it is in the business of trying to move it to rise weapons to put them on the ends of rockets, and if you were sitting in south korea, japan, or in a larger radius of the United States, if they manage to perfect icbm technologies, then friendly, that lives as a much more acute and strategic threat for the wider region that perhaps even those of iran, so as this unfolds over time, i believe theres going to be an increase in cooperation between United States and china on how you achieve the denuclearization of north korea. 10 years ago, very little Common Ground. Now, i think xi jinping will see the north Korean Program as derailing so much of what he is trying to achieve for his country. Ian and now, a willingness, do you believe, on the part of china to talk about the peninsula if that was on the table . Kevin rudd i believe so, and very much so, and the sense of dialogue is very important. Bear in mind, if you are looking at the world through the lens of beijing, youre trying to develop your economy, managing the market transition with all of the funds and twist in the road, like the stock market, which goes out of control for a few weeks, and with the object of raising Living Standards elsewhere in china, where you still have hundreds of millions of people still in poverty, and the main game is to complete the development of your economy, and over here, you have got this lock in pyongyang, who have not exhibited the most stable of statecraft, and the attitude towards Nuclear Nonproliferation through his consistent underground testing program. From xi jinpings point of view, this is bad. Therefore, the commonality of interest i think is becoming sharper. Having the chinese and the u. S. Engaged in this kind of dialogue is, i know come in both countries interest, and then large constituents think the same, so when i point to the future, yes, we can talk about the marketplace reform and the economy and its implications for chinese growth into the future and its impact on the global economy. That is important. Cyber, critically important. But when i look at the north korean Nuclear Weapons program this is an area where the two countries, u. S. And china, have so much in common. Ian thank you. Kevin rudd thank you for having me on the program, ian. Charlie is there a possibility that democracy could arrive in saudi arabia . Prince Saud Alfaisal i made a bet with somebody that even with the presence of iraqi forces forces in iraq, presumably to bring democracy, that saudi arabia would be democratized before iraq. We will see whether that bet charlie do you still believe it is true . Saudi arabia will democratize before iraq . Prince Saud Alfaisal i believe that saudi arabia is undergoing a program of reform that is not only seriously pursued but adamantly pursued by the government, in spite of the conservatives inside saudi arabia against modernism and in spite of efforts from the outside to influence it to move in ways it is not going to move. Charlie how will it manifest itself . Prince Saud Alfaisal our democracy will be charlie how what will it look like . Prince Saud Alfaisal the institutions will be our institutions. Charlie what will they look like . Prince Saud Alfaisal they will look like the institutions that will emerge from the dialog we are having in saudi arabia. Charlie and what happens to the royal family . Prince Saud Alfaisal the royal family did not come from syberia. Charlie your grandfather bought it together. Prince Saud Alfaisal not just my grandfather and his grandfather and his great, great grandfather. This is a family that has come back again three times the kingdom of saudi arabia was established in saudi arabia, if you read the history of the county. Charlie i think you know i have read it, but prince Saud Alfaisal that means that there is a connection between the people of the country and this family. If the family did not serve a purpose for the saudis, they would be like any other family. They would disappear from the scene, but we are serving the people of saudi arabia, and that is why, and the service we are going to do now is the service of bringing modernization to saudi arabia. Charlie the reforms coming from the crown prince. Prince Saud Alfaisal yes, he has started the reform by establishing the basic law with the rights of the citizens and responsibilities of government and establishing the council said his reforms started the ball rolling in saudi arabia and the crown prince is pursuing it with vigor. Charlie it is said that saudi arabia is, regardless of how fast or the reality of a move to democracy, it is a society that is in change, having to do with some of the things youre talking about. Prince Saud Alfaisal this is absolutely right. This is a society in change, but we have two aces in the deck that will work for us, and i hate to use a gamblers simile in this. It is a family that has its ears to the ground, that works for the interests of the people, that has the judgment to know if a bad decision is made to go back and correct it, to move with the people, for the people, and not in spite of the people and the other aspect of that is the fate of the saudi citizens in the region, which will be the binding force that allows this great transformation to happen in the country and keep the social cohesion of the country together and the unity of the country together. Rishaad salamat it is the 14th of july, tuesday. This is trending business. Well, were headed to cindy, and tokyo this sit the and tokyo. The best fourday run in 18 months. The route is over, at least for now. A hard sell the greek Prime Minister making the case for his controversial deal. Hardliners say they will not support him and accuse him of caving in to german pressure. Rumors of a breakthrough in the talks in vienna. Organizers say it w would have been a triumph of diplomacy. Follow me on twitter. Use that as well. Here is a von having a look at what is happening in markets. Evon that is right. Asia, overall, the best fourday gain we have seen in 18 months. Things looking reasonably well. There is some possible relief from the greek debt crisis now that there is a greek bailout deal. We have seen the nikkei 225 leading some of the