civilians on it-- merry christmas-- it's not clear to me that the chinese themselves think they have a lot of leverage. >> rose: we continue this evening with congresswoman carolyn maloney, one of the authors of the 9/11 first responders bill. >> we're working on all levels. we are all... all cylinders are working. the new york delegation has made this a top priority and we're highly focused on it and all i can say, charlie, is i am so worried. because if we don't get it passed before christmas, i feel that our nine years of work for our heroes and heroines, it will be impossible to pass hit in the next congress. >> rose: we conclude this evening with a look at the business events of 2010 with josh tyrangiel, the editor of bloomberg business week. >> so what you're seeing is opportunity spreading around the world. now it's a testament to the american system. it's a testament to capitalism, but it's a new game now and emerging markets are absolutely competitive and not rising, they are competitive. and i think challenge for wave the and really for the rest of the censure i have what is the american system going to do to company state. >> rose: a program note, our session on "merchant of venice" which is now on broadway with al pacino will be seen later this week. tonight david sanger, ian bremmer, carolyn maloney and josh tyrangiel when we continue. maybe you want school kids to have more exposure to the arts. maybe you want to provide meals for the needy. or maybe you want to help when the unexpected happens. whatever you want to do, members project from american express can help you take the first step. vote, volunteer, or donate for the causes you believe in at membersproject.com. take charge of making a difference. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin this evening with tensions in the korean peninsula. south korea convicted live fire military exercises today in disputed waters off the north korean coast. the drills came in response to a series of provocations from north korea over the past year. last spring, north korea sang a south korean warship, killing 46 crew members. last month, the country samed abartillery barrage at a south korean island, killing two soldiers and two civilians. despite threatening brutal consequences if today's exercises went ahead, north korea did not retaliate. over the weekend, the u.n. security council had a meeting to discussion texs. disagreements teen the united states and china prevented the adoption of a coordinated statement. also this week, new mexico governor bill richardson met with north korean military leaders in pyongyang. he reportedly secured a deal that will allow nuclear inspectors back into the country. joining me now here in new york, ian bremmer. he is president and founder of the eurasia group. from boston, david sanger, he is chief washington correspondent of the "new york times." i am pleased to have both of them back on this program. welcome. david, where are we in this story? >> you know, with north korea, you're always wondering exactly where you are, but if you take the day's events in the spectrum of the year, we're looking better than it was just a few days or weeks ago. the north koreans did not respond the way they had promised to the south korean drills and that may indicate that they are pulling back from the brink a little bit. the offers that they made to governor richardson to allow "eyeopener" inspectors back in would... i.a.e.a. inspectors back in would begin to restore things back to where they were around the time that president obama came into office. the inspectors left north korea i think in april of 2009. but the situation in terms of the nuclear program is a lot more complex. the north koreans announced a new facility at the main i don't think bee i don't think complex and almost every expert who has looked at this believes that there are other facilities around the country. there's no indication they would let the inspectors outside of... >> i certainly agree we look better than we did yesterday but i saw the north korean statement they said they did not need to respond to the childish behavior of the south koreans but they also said there will be a second strike and a third strike, implying there will be more shelling along the lines of what we've seen before and/or other sorts of provocations. there's one thing we can say about the north koreans since 2006 is that despite international pressure and chinese pressure, they are prepared to continue to and we're also seeing the south korean government is considerably more hard line because of domestic pressure that they have to respond. they put a new minister of defense in place. they've stepped up their military presence in an area that's considered contested by the north koreans. they've been engaging in these exercises that would be seen by the north koreans and the chinese as provocative and about half of the south korean population-- believe it or not-- think it is south koreans are as least as much to blame as the north koreans are. a story that's not getting out very much in the united states. >> rose: why do they believe that? >> cbs news the nature of president lee, talking about a reunification tax that could be put this place on south korean citizens to get ready for what happens when north korea inevitably craters and falls apart, there's enormous polarization in korea, in south korea, between the younger and older generations. and if you're under 30 in south korea, you're much less well disposed to the united states. you're much more well dissupposed to a sunshine policy towards north korea. you're more well disposed towards the chinese. in fact, one thing we've seen from wikileaks is the united states doesn't do a great job in getting broad intelligence on the ground. we saw that with president a cash shillly in georgia and we didn't have any sense of what was happening with the entire population. we're seeing that in taiwan and south korea where obama has a great relationship with the president but not necessarily an understanding of what the whole spectrum looks like in south korea. >> rose: david, tell me what you think is going on inside north korea and whether any of this or all of this has to do with succession. >> well, certainly analysis of the u.s. officials i've talked to is that almost all of the acts of aggression we've seen from north korea in the past year have been about succession. and certainly you go back in north korea's history, wherever there has been a time of succession. >> there have been acts that could be attributed to the heir apparent. when kim jong il, the current president of north korea was being prepared by his father to take over there were a number of acts, including the bombing of the south korean cabinet when they were visiting burma, now myanmar. attacks on blue house, the south korean president's house so all of these things were at the time-- rightly or wrongly-- attributeed to kim jong il. and rightly or wrongly we are now attributing some of the 6-attacks, including to the sinking of the cheonan, to kim jong yuan, his son. it may that during a time of pran session the north koreans believe they can't look weak. it may be the civilian leadership believes a young leader-- and kim jong unis either 25 or 27 or 28 despending on who you believe-- has to build up credibility with the north korean military. if that's the case ian is exactly right. we're going to see more of this next year and the big question is how the south korean respond. i thought it was interesting in the wikileaks document, certainly when we wrote our north korea story out of wikileaks, we began it with a discussion that took place earlier this year between the american ambassador to seoul-- kathleen stevens-- and the vice foreign minister at the time in south korea and they were spending a lunch talking about how how you would buy off chinese acquiescence to the south taking control of what is now north korean territory once the north imploded. that gives you a pretty good idea of where president lee's government is right now. >> rose: eurasia has sort of said the chinese rationalize north korean's action? >> well, "rationalize" might be more assertive span than i would put on it. but certainly the chinese are doing everything possible in the international community to say that they understand that there are two sides here. so that immediately after the shelling of this island, there were some chinese media sources that came out. i'd be hard pressed to believe the chinese government wasn't involved with this. they actually said well, the south koreans were shelling first. then the government can say "we don't know what's going on in the fog of war, we don't want to blame the north koreans." of course, at the security council emergency meeting this weekend, the chinese response was "we do not want to publicly shame the north koreans." now, that has been the consistent chinese policy for years on north korea. but, of course, while this has been going on, the north koreans have gotten more and more assert and their view is, well, the chinese are going to protect them a degree. they're not going to punish them. the real question is how much do the chinese believe that they have over north korea? and frankly after two two years of two nuclear tests and ballistic missile tests and the sinking of the "cheonan" the south korean corvette and now the shelling of an island with civilians on it-- merry christmas-- it's not clear to me the chinese themselves think they have a lot of leverage. the policies they're putting in place are hurting the chinese in terms of improving their own relations with critical allies in the region of the united states. south korea and japan. and yet the chinese are still sticking with north korea. not because they're buddies but because they think it's hard to reign them in. >> that's right gushgs chinese have not been willing to take the risk of finding out how much rev ledge they have. there was a moment when the north koreans gave them trouble in the nuclear arena a few years ago when the chinese temporarily turned off the oil to north korea saying they were having technical difficulties with the pipeline. it sure got the north koreans attention very quickly. they have not been willing to do that so far and when you ask them why not-- i was in beijing just a few weeks ago and posed this question at some meetings we were at out at the central party school where they train the elite-- that the answer that we got back was that you don't want to risk breaching the relationship with north korea at a time of succession. that china needs to maintain its open conduit as the only country that can really talk to the north koreans. so they're not really willing to take the steps that the u.s. or others in the west would like to see china take to bring north korea under control. >> and it may not be a good idea for china to take those steps. >> that's right. >> david is absolutely right, they are acting cautiously but they're acting cautiously in part because they're trying to game why the north koreans are doing this. the steps the north koreans have taken are not about blackmail. they're not... by shell ago south korean island, they're not likely to get more cash from the americans, the japanese and the south koreans as a consequence of that. so it's probably about succession. we don't have any transparency. but there are two different ways you can play succession. one is the succession in internally in north korea is going find but they want to show the rest of the world "you won't push around kim jong un just because he's not well known." that's possible. it's also possible that internally within north korea, this untested, unknown guy isn't really standing up very well, they're concerned, kim jong sill not going to be around that much longer. is he going to be able to ensure a succession for his son once he's gone. and putting the country on a serious war footing and riling up the population and the elites in the military to make sure that you're focused on a war with south korea and that you have succession, that's a real scenario and one the chinese are worried about. >> what is the scenario that the people figure is most realistic and most fearful. >> the scenario that worries the u.s. the most and the one that they have discussed the most, had the military try to plan for the most is either a nor korean implosion-- that is the state collapses and there is a scramble for both territory by south korea and china and for those nuclear weapons, wherever they're hidden away and the best estimates are the north koreans probably have the fuel for six dozen weapons depending on how good they are at designing them. the other scenario is a north korean explosion. that is that in an effort to protect themselves they lash out as they have done in recent times, with the sinking of the ship and the shelling but that they miscal chrais collate. each of these times they've done a very quick strike and pulled back and counted on the pressure in south korea being against really striking back. and over the history of the west conflicts with north korea since the end of the korean war, all countries have restrained themselves from striking back against north korean provocation. if they miscalculated and if this new more assertive policy by the new south korean defense minister and the new south korean government takes hold, then it's possible there could be a retaliation and escalation. and that's what has so many in washington and in asia worried. >> i think they're the worst-case nerios. david articulated them very well. and they're also the likely scenarios that are down side over the next month because this clearly... the reason we're talking about this is because this is just continuing to escalate and has been. now, it seems to me that the red lines... one of the things we expect... david and i, i think, fully expect further provocations from this north korean government. the response you just got from south korea, china, the united states taken together is not going to stop the north koreans from doing more. there are two escalations that would create red lines in my view stepped over there would be a serious response. number one is a direct attack, artillery attack or otherwise on peninsula south korea, not the island. the second would be going after an american base somewhere in the region, an american ship and all the rest. either of those would lead to in my view direct strikes on the north. and that's where you can seriously miscalculate. that's where you can end up with conflict that will first of all drive the markets in south korea down like crazy, it's an important economy, lead to a great deal of panic and also drive a massive wedge between the united states and china. in greater asia and that, of course, has big implications as well. >> rose: bill richardson's trip. what is it about? what did he sflish >> he was timing a trip back. his governor's tenure, i think, ends at the end of this month but he wanted to time a trip back at a time of maximum tension and he certainly timed it well. i thought it was interesting, though, that they did not let him so kim jong il or kim jong-un. he ended up meeting sort of the top tier of the foreign ministry and the military but did not see the nation's leaders. and when president carder went to visit just a few months ago kim jong-ill was out of town. he was in china. so he also didn't see the leadership. and i thought that was striking because if the north koreans wanted to send a message back to president obama i would have thought that they would have had governor richardson meet kim jong il. so whatever message was sent was sent at a lower level. in the end i suspect governor richardson probably accomplished something significant by bringing the inspectors back in if they actually get back in. how long-lasting it is is the big question and i think ian is exactly right when he says, you know, we can expect there's going to be another strike at a time and place at the north koreans choosing. >> we probably is a bit of a recipes here. look, lord knows i don't want to be on record as saying i know what the north koreans are going to do. having said that... >> (laughs) >> given the fact that the chinese have pushed them very hard privately as opposed to publicly and they did not respond to the shelling, you have hu jintao coming to the united states in january. i have to believe that the north koreans are not going to take any unilaterally escalatory step right before the trip of hu jintao's state visit to washington. so i think the next few weeks things should be quieter. >> rose: does the u.s. have any options that are not simply coordination with the chinese? >> well, sure. the united states has the ability to really ramp up direct military pressure with the south koreans and show that deterrence is in serious... >> rose: and is prepared to do that, you think? >> well, they're showing some of that, certainly. though it was very interesting in terms of the american role in the military exercises that the south koreans just had in the past 24 hours, the americans were not up front. they were sort of, you know, in the background. they weren't trying to do anything that would lead the north koreans to hit an american ship, god forbid. so i think the americans are... they certainly need to show the sanctity of the u.s./south korean alliance. they're going to show that they are going to be there militarily for the south koreans going forward. they've sent more military materiel in the region. they'll be engaged in more exercises with the south koreans but the united states does not want to lend its chips to provocation. >> just on that point. i thought it was interesting if you compared the obama administration's decision to keep a very low profile in recent days to say bill clinton's effort to begin to reinforce during the... on the peninsula during the 1994 nuclear crisis or even president obama's decision to send bombers to guam during a crisis in 2003, the obama administration is trying to play it very cool and i think trying not to give the north koreans an excuse by putting american forces up front. >> rose: thank you, david, pleasure to have you on. >> thank you, charlie, great to be back. >> rose: back in a moment. congresswoman carolyn maloney. stay with us. >> rose: in 2006, new york police officer james zadroga died of respiratory disease contributed to his work at ground zero. federal legislation to provide health to first responders, known as the zadroga 9/11 compensation bill failed to pass. in september, the house cleared a $7.4 billion aid package but earlier this month the republican filibuster held up the bill's passage in the senate. the senate is expected to vote this week on a new version of the bill that brings the cost down. at city hall today, new york's mayor bloomberg spoke about the importance of passing the bill. >> this is not a vote on whether we should increase the deficit. it's a vote on whether we should stand by those who stood by america in its hour of greatest need. >> rose: last week, jon stewart of "the daily show" dedicated his final episode of the year to the legislation. >> there was one network that gave the 9/11 responders story the full 22 minutes of intense coverage that it deserved. but that network, unfortunately, was al jazeera. (laughter) our networks were scooped with a sympathetic zadroga bill story by the same network that osama bin laden sends his mix tapes to! (laughter) this is insane! (applause) >> rose: joining me now is congresswoman carolyn maloney. she is one of the original sponsors of the zadroga 9/11 bill. i'm pleased to have her back at this table to tell us whe