Transcripts For KQED Charlie Rose 20140722

Offers to buy time. We talk with Henry Blodget and andrew edgecliffejohnson and mario gabelli. When we look back on the dow jones deal, a lot of people said this is ruperts deal. He wants to go to his grave with wall street journal written on his tombstone. Now we look back that and laugh. This is the tenth of the size of the likely price of a time warner deal. So this is something of enormous ambition. Charlie concluding with ian bremmer, the founder and c. E. O. Of Eurasia Group and talk about American Foreign policy and the obama doctrine. In the world cup when the United States was playing germany, the u. S. Was yelling u. S. A. , u. S. A. , u. S. A. , the germans were screaming n. S. A. , n. S. A. In the german newspapers, this is continual headlines, front page, every single day, it matters a lot. But they had a problem with iraq. They had a problem with libya. They have issues generally speaking with the way the United States projects power around the world and the way the french and brits are more comfortable. Charlie Vladimir Putins russia, Rupert Murdochs offer, and ian bremmers look at American Foreign policy when we continue. And by bloomberg. A provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Charlie we turn to ukraine, the fallout from the downing of Malaysia Airlines flight 17 over east ukraine continues. The International Community is hardening in the belief that the plane was shot down by russianbacked separatists using a russian antiaircraft weapon. Russian military officials continue to deny any involvement. Earlier today the rebels allowed dutch Forensic Experts to search the wreckage after days of destruction. New reports of fighting. President obama spoke earlier today. My preference is finding a diplomatic resolution within ukraine. I believe that can still happen. That is my preference today and it will continue to be my frerches, but if russia continues to violate ukraines sovereignty and back the separatists and they become more and more dangerous and now are risks not simple only to the people inside ukraine but the brord International Community, then russia will only further isolate itself from the International Community and the costs for russias behavior will only continue to increase. Nows the time for president putin and russia to pivot away from the strategy that they have been taking and get serious about trying to resolve hostilities within ukraine in a way that respects ukraines sovereignty and respects the right of the ukrainian people to make their own decisions about their own lives. And time is of the essence. Charlie David Remnick knows russia well, editor of the new yorker magazine, i am pleased to have him back at this table. He returned from moscow several weeks ago. Welcome. Good to be here. Charlie you know lots of people over there. Yeah. Charlie what are they saying about Vladimir Putin . This was before well, its interesting. Foreign correspondents tend to in their daily lives, anyway see people a little bit like them. A lot of liberal intellectuals, people who are good sources and so on. I really made it my business a couple of weeks ago to spend day after day after day speaking with what i think is the new class, the putin 2. 0 class of neoimperialists, russian nationalists, because you are seeing a new wave of putin conservatives and it has to do with social conservatism at home and a kind of aggressive rhetoric abroad, particularly antiamericanism that outstrips anything you may have seen eight, nine, ten years ago. Charlie as reflected in the views of these 2. 0 people . Absolutely. Some of the people began in the 90s as outright liberals and either because they became disgusted or because theyre outright opportunists and smelled a paycheck and rise in power, they changed. The key is information. The vast majority of people in russia get their information, their sense of whats going on in the world, whether its this incident with the malaysian plane or ukraine in general or the United States through staterun television. It is almost orwellian in its reach and in recent years since putin came back is far, far more sophisticated, strict and all encompassing in its propaganda. If you were to turn on Russian Television tonight to get a sense of whats going on in the world, whats going on in Eastern Ukraine, who did what to whom, whos to blame, you would be appalled. You would be shocked. You would be disoriented. Charlie theres no Free Television in terms of independent of the kremlin . Theres very, very little. Theres an internet channel called rain but its being pressured vastly. I was there to see people and their headquarters was being moved to the far fringes of town. Their access to the air waves is getting more and more limited. So even the liberal outputs, the liberal outlets are feeling the pressure and there are far fewer of them. The main way information comes is from channel 1 from russian tv, and everybody watches it. Charlie the essential question about this incident its not an incident its what happened in the tragic destruction of 280plus lives, the central question is in what way is russia complicit . I want to be careful and i dont want to say that we know or dont know. Charlie you made that point in your piece. And i think we should, even now. But when we put the pieces together, when you see the way first of all, who had the weapons to do this, what is the geography, what are the motives, are other planes shot down by the socalled separatists . Yes. Charlie military planes. Are they done with russian collusion, yes. Is there at least minimum communication between moscow and these groups. Yes. Were there phone calls and so forth and what about the behavior at the crime scene . It was disgusting. And i think whats happened overall is putin unleashed you could say the dogs of war, but unleashed something very ugly not only in the military sense but in a societal sense since the opening of this terribly complicated crisis with ukraine and the west. Hes done it through charlie which began with crimea. It began before that, obviously. It centered on the drama having to do with victorria yanukovichd a conflict with the west, and its rooted in a sense of resentment against the west thats developed over a decades time. Its developed with some western errors as well, but really the singular actor here is Vladimir Putin. Charlie but it may be out of control, youre suggesting . I think that putin, if we consider putin a rational actor, and i do. Sometimes you hear about him being delusional. No, i think he is a rational actor. But he has used old tools, and it has unleashed very ugly things in the russian society. People are starting to recognize that i had a meeting with poove povlovski, one of his political advisors for many years and he thinks tv became so ugly at the kremlins initiative that its unleashed forces and sentiments that have really gone even beyond putins grasp. I went to see people who now have regular access to the air waves who would make linden larushes people look like moderates. Charlie not just the separatists, but in russia. Theres a connection. There are people like alexander who runs a newspaper and has for years called tomorrow filled with antisemitic and neoimperialist rhetoric, and he used to be a marginal figure, now hes on National Television all the time. This has aroused peoples resentments, their anger at the west, their fury. I think we have to remember what happened 25 years ago. People woke up in a country where an empire had suddenly become one country. Charlie the collapse of the soviet union. The collapse of the soviet union. Everything people taught was black was white, and vice versa, our friends are enemies and enemies are friends. The amount of disorientation and anger and resentment and feeling that the west is being triumphant, all of these feelings have percolated. You see it in the rhetoric of putin today, and it wants much stronger in its rhetoric now than a decade ago. Charlie and popular at home. It is, partly because hes made it popular. Charlie he controls the media. Its more sophisticated than soviet times, the way this is done. Its less bland and boring than the old soviet propaganda. Theres no department of ideology in the kremlin that there was in the communist party but there is an ideology thats developed. Charlie these people who may know him, how far do they think he will go . First of all, he changed the people around him. There used to be a dynamic in the kremlin. It was never a pleasantly democratic place, but there were people especially on the economic side, for example, who were very interested in the development of a proper market economy, but, yo you know, the interest in russia is so powerful that some of them are out of a job, living in paris or gone. The people who surround putin immediately are the people with kgb backgrounds, people who are like him. Theres not a lot of diversity of opinion in the kremlin. Charlie how far will he go . What does he want . Well whats he want. You know, sitting in the olympics in s so s so sochi, ans with the ukraine had already started to perk late, if you told me he would move in next to crimea, i would be shocked, and the idea that he would then destabilize so much of Eastern Ukraine charlie and get away with it in terms of crime yanchts absolutely. In fact, when were talking about all this on the international stage, crimea is now a given. Charlie exactly. A given. Charlie so when you look at where we are. And the russians, by the way, the russian leadership, at least pretends to laugh off economic sanctions, and sanctions really work, and in the immediate way charlie and focusing on your experience in russia, you were recently there and had conversation with people, is there any real oppositiono to him or does it have high visibility . Two years ago, there were tens of thousands of people on the street angry principally that putin highhandedly decided to come back and win the presidency in what can only be described as a nontransparent process. A lot of angry people. Who were these people . Well, they werent all liberals, but they were all of what you could call the new class, the new middle class, the creative class, the office class, and these people were enjoying prosperity and freedom to travel and freedom from political assault on their private lives like never before in russia and, yet, they were politically angry. Putin resented these demonstrations like you couldnt believe, and as soon as he was elected president , he crushed them and, instead of making common cause with these people anymore, he moved his focus and his politics and i think his ideology to the far more conservative majority of the country. Thats the shift thats taken place in the last two years. Ideologically that putin, through the use of certain rhetoric and touch stones and resentments has changed his emphasis and moved with the far more conservative. Charlie is it possible in terms of people you talked to that this is a turning point against him, one, europe, in terms of the use of sanctions which he might respond to, sanctions with europe, a much stronger than things without europe, because of germany and people who have a powerful trading relationship . In order for that to be true and i hope it is and it could be, it demands that one set of priorities overwhelm another set. It demands putin recognize that, in order to be a member in Good Standing of the International Community, in order for russia to knit itself into the International Economic system at a time when remember, his popularity in the early days was built on the fact that he was presiding over a country with 57an7 or 8 growth rate. Pensions paid, debts were being paid down. Charlie food. Middle class was accumulating. Food forget food, cars people were traveling abroad, a real midding class, thats where the popularity was centered. Now with near zero growth rate, he near zero percent growth rate, he has fanned up nationalist emotion to paper it over. Thats where the 85 popularity is now based on that kind of stuff and that has no great horizon. It might for a while. Thats why i think he is, for all his vaunted intelligence, is a very poor strategist and tactics. I think this adventure in ukraine has been one improvisation after another. The plans for such a move, as they were in georgia, long been there as a contingency, but to do one thing after another, forget about this final catastrophe, was a series of tactics, because the strategy, where does it bring them . Charlie would vit made a difference in would it have made a difference if europe would have acted strongly and come forward with a deal that would have let ukraine have a connection to europe as well as russia theres no question ukraine itself is a deeply divided society. We have to remember what terrible shape ukraine is in economically. Poland after the end of communist has tripled the size of its economy, ukraine has not grown one bit, which is quite an achievement with the communist collapses. The Political Class of ukraine has raped that country, has bled it dry. Everyone. Theres not a great hero to be found on the ukrainian economic and Political Landscape anymore than in the kremlin. Charlie they were all corrupt . Which makes the west or made the west very wary of sending more aid because you might as well mail it straight to a swiss bank account. Charlie right. And theyre really unlike, say, poland in the 80s. Theres no great mass political accounting and movement in ukraine. There hadnt been for many years. The orange revolution was a failure, in the end was a failure. We can only hope for the best now. The man whos the president , poroshenko, i have to think his fortune was not accumulated in the most gorgeous way possible either. Charlie but he has a certain boldness as president. He has. Charlie theres also this question with respect to putin, do they have any sense of where he is responding to his own judgment about whether president obama will respond . It depends on what responding means. In other words, when i watch Lindsey Graham and john mccain get up on television and demand, this is the result of feckless American Foreign policy, what are they asking for . Tanks into ukraine . Charlie well, they say no. Then what . Charlie i assume they want more support for the ukrainians so they can fight, thats what theyd argue. More arms . Charlie yes, but not american boots on the ground. But thats always theres no calling for boots on the ground. But we have been to this movie before. Charlie no, in places where it turned bad, we put boots on the ground. We are looking to step back for more armed conflict. Charlie clearly, americans are saying, look but theyre looking at afghanistan and also theyre looking at iraq and theyre saying, you know, weve spent and a reluctance to do anything militarily about syria charlie and pressing needs at home as well, so put those things together. Heres the question, though, regardless of all that, if you look at, say, crimea, we just did nothing. Is it possible he has a calculated judgment about what president obama might do and has a calculated judgment he could, a, split the west and withstand the sanctions . And you combine that with the messianic instincts he has to restore russia to greatness. Complicated no doubt in. One of the complications, the europeans are much more reluctant t about even sanction, why because europe is more knit into russia in energy. Charlie in a way, dependent on russian energy. Exactly. I dont see, beyond the kind of somewhat hysterical rhetoric from the obvious corners, and i think its a tiny minority, i dont see anyone of reason anything that greater military either militariestic rhetoric or action has any place in this conflict. The history of crimea is well known. Most russians, even a lot of liberals, by the way a lot of liberal friends i know in russia are very happy about crimea. Charlie sho khrushchev gavet away. Eastern ukraine is another matter. This notion of a russian world in which russia should control every place with russian speakers, that edges into Something Else and its memorable from history in germany and elsewhere. Charlie one more question. Close your piece with this question what is Vladimir Putins next move . Do you have an answer . Well, i can hope what the answer is, and that is a murky retreat. Thats the best that can be hoped for because, see, he cant throw up his arms and say, you know, considering his home audience which he has whipped up into a frenzy, he cant suddenly or he feels he cant suddenly get all nice about this and say, you know what . My bad. You know, i dont know what i was thinking here. Empowering a guy like i gor igor strelvkov, a kind of murky semidiplomatic language, withdraw is the best we can hope for. Charlie in the interest of peace at home. Charlie peace at home. Changing the subject, Everybody Knows magazines are also part of the digital revolution, having to relate to find opportunity in the digital revolution, you just created a new within site. What did you try to accomplish and where does a magazine find itself today . For us, it was very different than the experience of the new york times. Charlie okay, thats a newspaper. For the new york times, and its an enormous thing to try anyway and you had to do it. Charlie right. You took what was in the paper and transferred it to digital. Charlie that was the first thing they did. And then there are bells andc thing they did. And then there are bells andc things. Th first thing we did was, okay, we put that stuff online but, on the other hand, i didnt want to away for free for obvious reasons. The newspapers made that mistake, we dont want to repeat it. For us, it wasnt the same thing. We had to figure out what would be the proper way for the new yorker and its writers to, given this way to more quickly respond to the world, how can we do this, in what measure . Because i dont want to be a blevel new york times. I want to be the best we can be both in print and online. So what youve got today when you go on newyorker. Com which is completely and beautifully designed and more fluid and all the rest is you have everything available to you. Everything that was in print, archives, everything beautifully done since 2007 in the best way possible. Right now for the beaks little while, you can have it for nothing. This is a time for you to see what this is. Charlie sample it and if you like it a lot, you will have to pay for it. Someone on twitter compared it to how drug dealers behaved. This is isnt drugs, this is something much more interesting and edifying and will help your life. It has to do with you know, people online are rightly very demanding. They want to surf things quickly and easily. Charlie what do you expect newsstand sales to do for you . It is the aspect of newspapers which is a challenge. Charlie subscription. Subscription, this is the great peat part of whats aping at the new yorker is subscriptions in print continue to go up not astronomically, but they continue to go up. Online, its taken off, and amazingly people are reading the new yorker. Whats the faster way to read it . On your phone. Who would have thunk it . Charlie is that right . Fastest growing. So many things about the web, so many things youre told 15 years ago turned out to be opposite to be true. One of the most evangelical principles, when i would be invited to some web event as the tyrannosaurus rex, you know, im the old guy, i was told over and over again, especially visavis the new yorker, no one would read anything of length. That turned out to be completely nonsense. One of the most popular pieces weve ever had online is larry wrights 25,000 word piece on scientology. This happens over and over again. Whats the most popular piece online today . Other than our little note to the reader about what were doing, is the long profile of joe biden. I find inevitably the readers want the best of what we do. Charlie its always about the writers. Absolutely. Charlie in the end, its about the writers. Its the wine, not the bottle. Charlie thank you. Thank you. Charlie back in a moment. Stay with us. Charlie it is a huge business story revealed last week 21st century fox run by Rupert Murdoch is mount ago takeover bid for time. If successful the combine nation would bring under one roof content. The initial 80 billion offer was rejected by time warner after lengthy discussions. It decided it was not in its best interest or those of the shareholders to accept the proposal. Where it goes next is yet to be determined. Mario gabelli, Henry Blodget, andrew edgecliffejohnson, i am pleased to have each of you here. Why does rupert want time warner . And its easy for him to afford it. Charlie, thats interesting. Back in the early 80s, rupert came after time. It was called warner. Herb stegall bailed him out. Rupert was not an american citizen then so he couldnt on control of television stations so they cut a deal in central park. Thats kind of an easy way to do it. A year ago on august 8, an analysts meeting, portfolio meeting in l. A. Where fox got up and shared their vision after they spun off news corp and they said, look, were going to do the following over the next ten years, you have a rising middle class in india and china. Second, the smartphone gives you mobility and need for content and thats growing exponentially. So content is king. Then ruperts timing, i think, he also at that time talked about the satellite business sky, deutsch tv and italia and india and merging those together. There was a discussion that it would happen, and the question was when. The Media Conference to take place a month later, a proposal. A lot of these proposals come in with a price that is open for discussion, and that was the dynamics, as far as we could with tell. Charlie is it always true with rupert because some suggest that he really makes his final offer at the beginning, as he did in some other transas transactions. Yeah, you look at the dow jones but nobody else came to the table. Nobody else wanted a newspaper then. Charlie give me the personal dynamics of this in terms of Rupert Murdoch. 83 years old. When we look back on that dow jones deal he just mentioned, a lot of people said this is ruperts legacy deal. He wants to go to his grave with proprietier of the wall street journal written on his tombstone. He has ink in his veins, this is the ultimate achievement. Now we look back and laugh. This was the tenth of the size of the likely price of the time warner deal. So this is something of enormous ambition. But there are two mote varieties for m a as well. Besides ambition and aggression and confidence or theres anxiety. The point about content is king, were actually seeing the new kings merging in distribution. Comcast is already neck and neck in disney for the Worlds Largest Media Company is on the distribution side. Weve seen Cable Networks being mopped up in europe. So rupert is selling to moguls for pennies to pump out content and could get more powerful. If you are the owner of great content on the internet now, suddenly you have the option of not only selling to Cable Companies and Satellite Companies but going to internet distributors, so you get another huge check for your content and that will only grow for the next several years. Charlie when will we see a higher price from Rupert Murdoch . Likely weeks. Probably not months or days. Theyll call to figure out what it would take to get a deal done. Is there a cash component, more voting at the table, a higher number, which seems to be uniform . Charlie seats on the board might be an issue as well . I dont think theres any probable. Conversable with ten year life exchangeable into the bond which is an idea i picked up from steve ross about 25 years ago or a contingent value right which allows a shareholder we think the fox stock will go to 65 in three or four years if they get this deal done and with rupert having confidence in doing that and laid out the numbers like anybody else and knows them better than we do that he could offer it. That option or a convertible preferred and i get 6. 60 of 100 preferred, no cash laid out 3, cue upon, thats 140 a share in cash and well sing and dance and there are some taxable dynamics to it but thats okay. Charlie whats in the mind of time warner . First of all, i think hes a rational c. E. O. Charlie a man who became a c. E. O. Of spunoff property. Its the cow that keeps giving. Its been phenomenal in terms of what hes given back. Hes one of the ware c. E. O. s who made his company smaller. He spun off time warner cable, aol and hes made it a more edible target. The first thing in their mind is putting to their shareholders why theyre worth more than the current offer and maybe future offer from fox. So well see probably around the time of earnings in early august is them laying out a case which says weve now done the hard a work of cleaning out the businesses we didnt feel belonged in this business. We now have a video focus company, Warner Brothers movies and importantly this massive Television Empire h. B. O. And turner and this is where the profits come from. Not only did he give value to the share holds. 1. 2 billion shares outstanding when he spun off the cable business only 888 million. Its a simple concept. I dont know who the lead horses are on the board, but theyll say give us our present value today. Charlie 135 . Thats three or four years out. Charlie what do you think the present value is today . You know, the old story is you need a stalking horse to get the higher bid but i think if you want to cut a deal youve got to talk and if you want to talk, i want seats ton board, currency and more money. Seems to be folks are coal coalescing around 100 a share. Charlie what does that get you in terms of about 88 billion. Charlie i the spinoff of crn cnn, part of the deal rupert is offering because he has fox and digital cable and doesnt want to look at the antitrust possibilities, is it worth 10, 15 8 billion to 10 billion. It will ultimately be worth what a buyer is willing to pay. Charlie cbs interested . He said he would look at it if it came up for grabs. I think it is one of the great franchises. Obviously its had a lot of trouble in the ratings. Produced an awful lot of cash so it has a lot of value. Charlie there is this argument by jeff whether he makes it inhouse or public i dont know but its the idea that he thinks if they wait two or three years comcast would have done all the spinoff they want and be ready to make a bigger offer for something that adds to its that is a nonstartable deal given because they already own a major studio, they already own a lot of content and own distribution. Charlie so theyd not be interested. No, it means john malone has more interest and others may have more interest in content but i dont think comcast is a player for this asset down the road. But cnn is global, and if you think global you think about sports, news, entertainment and news is cnn in the world and aljazeera paid 10 million for a little asset base. Charlie blockburg dont exclude bloomberg from the cue on cnn or anyone else you want. I mean, this is chump change. Time warner looks ahead at two to three years and says at that point well be in a great position to put ourselves on the block to many potential takers. Theyre viewing apple and google as potential buyers. I think there is a chasm in terms of the dna of the Silicon Technology valley and big media companies. But jeff yo bukus has gotten ito where he wants and in a few years may want to be c. E. O. Of the company and not ready to sell. I think there is a question about whether a potential white knight two or three years down the road. Weve talked for years will apple buy or google buy movies. The problem with the theory is you buy one and the others dont want to work with you in hollywood because they dont trust you because they think you favor. So the question of whether apple or google could run a movie studio or television is a real hurdle. Charlie this is likely to happen, in your judgment . Yes. Charlie because theres no reason not to . If they can get close to the market value four years out, what would this company be worth to somebody, yes. Charlie is it possible theyd say to jeff, we want you to make this acquisition, be for the acquisition and run it three or four years till my kids are ready . I dont know. Chase carrys done a great job and jeff bukus has done a great job. Charlie they both have but rupert made it clear he wants his kids to run the company. And james will play a central role thats not a problem. Ive owned fox voting stocks and time warner, i understand that, owned it a lott long period of time. Time. Charlie why is fox stock going down . People are worried murdoch will overpay and write it down. So the concern is hell have to pay a very big number to win it and the fox side is doing a very good job of saying, no, its not happening in this case. And you can take away more debt if you offer more cash. And his bigger deals havent paid back so well. Dow jones, he bought at the top of the market for charlie but he doesnt regret it one moment. Hes enjoying it hugely. Charlie made ate better newspaper. But wrote off half the value in 18 months. Based on the formia, you would have 10 billion debt in four years, 3. 3 billion shares outstanding fully diluted and the family would control it and everybody would be happy. Charlie who is the largest stockholder of time warner . That is a public company, we have unfortunately i have the list and i dont have it. August 15, everybody has to file, charlie, that has 100 million under management and that time you will know, the etfs are the big holders, the state streets, the one black rock owns. I think the last time i looked it was capsule group. Selling the big piece. Very diverse. Charlie why . I dont know. Theyre not my client. Charlie you have opinions even when its not your client. Thats what i get paid for. Charlie are we looking at the beginning of a connell sol days or a continuation of a consolidation or end up with disney and comcast and fox . Continued consolidation, absolutely. I think to Andrews Point earlier, there has been real consolidation on the distribution side and now youre seeing the content side do the same thing. Charlie time warner spun off, fox separated into two, viacom separated into two. Everybody tries to put what the low p. E. Companies are in one pile so they dont detract from the value of the i. P. E. Firms. Thats interesting. The question, did the comcast team taking distribution buying content from g. E. , was that the right strategy or time warner selling distribution and focusing on content and buying back stock . Which is the better strategy . Going back to the point about malone, hes the global fingerprint thats out there everywhere in europe and the United States in terms of distribution and trying to get to it content. Charlie he says he buys all the Cable Companies, only for him broadband, thats where speed, of course. Charlie its not cable, its broadband companies. We agree on that. Through the internet, you look at the big opportunities in china, india and other emerging markets, theyre not going to build out cable in many cases. Theyll build out internet, mobile distribution, tremendously powerful position. Charlie its such a great story because of Rupert Murdoch. I mean, the whole dynamic of a man at 83 whos had a remarkably successful year, built a great company, had a difficult time in london because of the hacking scandal, has emerged from that and now making what some might believe is his last great offer but others would say i never say its his last great offer. When you come back on warren buffett, hes elephant hunting all the time. He hasnt gone up to a 100 billion deal, but clearly the same context. Charlie warren is the same age. When i was visiting the shah in china ten years ago, it was 93, i think he lived to 110. We dont need to win the british open in money management, you need judgment and hes got judgment. Charlie thank you, great to see you. Always a privilege. Glad to be here. Charlie it has been a summer of turmoil around the world. Islamic state of iraq and syria threaten regional and global security. Eric holder u. S. Attorney general called the terrorist groups partnership with the yemeni bombmakers more frightening than anything hes seen as attorney general. Wall street journal wrote the breadth of instability hasnt been seen since the late 1970s. Ian bremmer, president and founder of yiewtio eurasia grou, political firm. You tend to agree with the wall street journal . I do. Theyre connected. Charlie how are they connected . Because the United States does not want to be the worlds policeman theres no one else to play that real, there are lots of countries in eurasia, in the middle east, in asia that believe they would love to be the local sheriff and theyre acting that way, but they have very different views than other neighboring countries, so were experiencing a level of geopolitical Creative Destruction in between orders, and were going to see a lot more conflict as a consequence, just one little thing. When the chinese look at the u. S. And the lack of u. S. European response on ukraine to Russian Military action, that absolutely informs the way they think about, say, vietnam, which is not an american ally. Charlie they can take aggressive actions against japan or vietnam or the United States would not respond . Less so japan but certainly vietnam. I think the chinese think the ability to take relatively risk free military steps to test the status quo is an interesting idea for them strategically now in a way a few years ago it wouldnt have been. Charlie how did it come to this, if you accept the presently snies. If you accept the premise, there are a lot of things that happened at the same time. One, the idea that americans across the board, ideologically, democrat, republican, a hangover from iraq and afghanistan, a president who is not elected to do Foreign Policy, quite to the contrary, and really believes charlie and he perceived was elected to take us out of war. And he would say his biggest success to date on the Foreign Policy front has been iraq and afghanistan. We have a europe led by germany much more than france and britain, distracted immensely by all the internal challenges theyve had and continue to have these days, and germanys International Orientation is much less geopolitical. Its much more economic and bilateral. Charlie does it look east or west . Well, when merkel, last week, is in beijing and right in the middle of that trip is talking about u. S. Surveillance and espionage on the ground while shes standing there, i wouldnt say shes looking east but i would say shes engaging in vastly more hedging and balancing behavior than weve seen from the germans in a long time. Charlie how much da damage did the spy story do after trying to smooth over edward snowedden . I dont think much in asia. But in germany. Charlie what you had in germany is snowden, addressing that, the president calling and saying were not doing that anymore. Then the germans kick out a c. I. A. Director and station chief and they also, you know, accuse german nationals of spying on the United States. Well, in the world cup with when the United States was playing germany, the u. S. Was yelling u. S. A. , u. S. A. , u. S. A. , the germans before screaming n. S. A. , n. S. A. In the german newspapers, this is continual headlines, front page, every single day. It matters a lot. But they had a problem with iraq. They had a problem with libya. They have issues generally speaking with the way the United States projects power around the world and the way the french and the brits are more comfortable. Charlie they have a problem the way the u. S. Projected, meaning germany wants the u. S. To do what . Project less or more power . Germany wants us to be much more multilateral. They want us to be much more willing to accept constraints on u. S. Military power when other countries arent as comfortable with them. They want us to be more qualified in what we do and dont do not just surveillance but drones, boots on the ground, projection, navel force naval fl these things. With the middle east, its bilateral. They dont talk about concerns of industrial espionage from china. They dont talk to us much about the concerns of chinas increased security footprint and the threat it causes to the east china sea, the allies in japan, south china sea, the allies in the philippines. The germans dont have much interest in that. The transatlantic partnership, the germans have been lukewarm. They see americans using the dollar to put sanctions against largely european banks most recently b. N. P. At the tune of 10 billion, and the germans dont like that either. Charlie nor the french. Nor the french but the french kind of know this game and they were caught red handed. But if you ask looking around the world of all the relationships that have been damaged with the United States and weve taken hits over the last few years and you and i talked about brazil but germany is the most important taking the biggest hit no question and the ability of the germans to look elsewhere both not coordinating with us the way we might like on ukraine and also specifically in being able to work much more closely with china charlie the point is we need the germans most. Just more than anybody. We like the brits but the germans are much more important. Charlie there have been gains against i. S. I. S. Yeah. Charlie the germans are saying to the sunnis dont be disengaged with these guys. You know, how much influence they have with the old line sunnis who tried to disengage it before and came back because they were treated badly by maliki is a whole other story, but you see that and they have funds and resources. Oh, they have funds. They have to be the most wellfinanced terrorist group in the history of the world and that has to concern us very greatly. Charlie because when they take them down, they take the banks. And you have hard currency and gold sitting there. Charlie but at the same time, you know, you do have the saudis saying to their sunni friends, dont get involved with and they werent saying that in the beginning because all those people were saying i would rather be with i. S. I. S. Than maliki. That was the tradeoff, right . Yeah, and i think the saudis have been surprised themselves with just how far i. S. I. S. Has been able to move in a relatively short period of time. Charlie whats going to happen in iraq . Well, the kurds are in a very good position now. Theyve taken probably 40 additional terrorist in the course of the last several weeks on the back of i. S. I. S. Fighting with maliki and the shia. In addition to kirkuk, theyve taken oilfield and kicked out the Iraqi National operators of the fields and you have kurds doing it. So the kurds look good, talking about declaring independence. Frankly, they dont need to. They need to sit with what they have. Charlie the United States would like to have some kind of government in baghdad that they could support. Right. Charlie as a force against i. S. I. S. A government that would allow sunnis to be part of it and shia and kurds so that, you know, partition would not be the only way to find a solution. Yeah, i think we can get a government that certainly will oppose i. S. I. S. Getting a government that opposes i. S. I. S. That is sufficiently, you know, oriented towards the rest of the country that we can support them, given how little reason the kurds would have to join such a group and how hard it will be charlie what do you think the kurds will do . I think the kurds, theyve already boycotted cabinet. I think theyre going to make pretty significant demands on changing the nature on how the money is accrued to them as the oil is pumped, and theyre going to sit and eventually i think kurdistan becomes a state, i really do. Charlie eventually is how many years . Oh, certainly within five. Charlie what are the turks do . I think ill be okay with it. Certainly now a lot of the fighters inside eastern anatolia are back in iraq. Its also a relatively stable place the turks can make money. Charlie got a lot of kurd support the last time he ran. I think the United States will engage in some form of military action on the ground. Charlie if they can get support. Even without it i can we will. We have 700 folks on the ground right announcement we say theyre military advisors. Theyre special forces. Theyre trying to understand how strong i. S. I. S. Is and where the vulnerabilities are. At some point if we consider i. S. I. S. To be a proximate terrorist threat that is growing not just against iraqs Central Government but against us, were going to sit there. I think if the u. S. Doesnt take a lead observ on that issue, thl effect more in the gulf. We dont want to see that. Charlie thank you for joining us. See you next time. Captioning sponsored by Rose Communications captioned by Media Access Group at wgbh access. Wgbh. Org man its like holy mother of comfort food. Ion. Woman throw it down. Its noodle crack. Patel you have to be ready for the heart attack on a platter. Crowell okay, im the bacon guy. Man oh, i just did a jig every time i dipped into it. Man 2 it just completely blew my mind. Woman it felt like i had a mouthful of raw vegetables and dry dough. Sbrocco oh, please. I want the Dessert First [ laughs ] i told him he had to wait