Share

THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: MORT ZUCKERMAN, U.S. NEWS & WORLD REPORT; ELEANOR CLIFT, NEWSWEEK; MONICA CROWLEY, SYNDICATED RADIO COMMENTATOR; CHRYSTIA FREELAND, FINANCIAL TIMES TAPED: FRIDAY, APRIL 3, 2009 BROADCAST: WEEKEND OF APRIL 4-5, 2009

-----------------------------------------------------------------
Copyright (c) 2009 by Federal News Service, Inc., Ste. 500 1000 Vermont Avenue, NW, Washington, DC 20005, USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service, please visit http://www.fednews.com or call(202)347-1400
-----------------------------------------------------------------


DR. MCLAUGHLIN: Issue One: Pick Up the Pace.

PRESIDENT BARACK OBAMA: (From videotape.) If there's going to be renewed growth, it can't just be the United States as the engine. Everybody's going to have to pick up the pace.

DR. MCLAUGHLIN: This may sound like President Obama is scolding the G-20 summit leaders that convened in London this week. Actually, it was an appeal to help underwrite national economic measures, as the U.S. is doing, to relieve the effects of the global meltdown in the order of magnitude estimated by UK Prime Minister Gordon Brown as collectively $2 trillion. But German Chancellor Angela Merkel apparently read it as Obama chastising Europe, and that interpretation led her to say, quote, "I will not let anyone tell me we must spend more money. This crisis did not come about because we issued too little money but because we created economic growth with too much money, and it was not sustainable growth," unquote.

French President Nicolas Sarkozy appeared to go further than Merkel, condemning summits that have no regulatory results. Quote: "The time for pointless summits is behind us," unquote.

Specifically, both leaders demanded that any G-20 deal include greater regulation of hedge funds and tax havens and bankers' pay, all in abundance in the USA. Merkel and Sarkozy warned that if the summit failed to regulate, they would block an agreement.

Question: What is to blame for the current world recession, Mort?

MR. ZUCKERMAN: Well, the current world recession was really started in the United States because of a huge collapse in the financial world because of excess debt. And what you had there was a different attitude in terms of how you respond to it. We felt, because of what happened here -- the collapse of the financial world -- that you need fiscal stimulus. That's the program of the United States.

The Europeans feel regulation is what allowed the financial world to collapse. They have enough fiscal stimulus from their social welfare programs. They want regulation. They want what you said there on the screen, including, I might add, to regulate the credit rating agencies. When they want to regulate pay, they said the way people were paid inspired them to deal with short-term gain rather than be concerned with long-term value. And so they focus on that and we focus on something different. And basically the two of them really never met, but they always cover up these differences.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Well, the different countries have their own individual agendas, and the Germans understandably worry about hyperinflation. And as you point out, they have a different social system, so they're not interested in pouring more money into fiscal stimulus.

But the president did win commitments to give more money, to pledge more money to the IMF and -- to help underdeveloped countries and with poverty. And any spending helps. And he did blunt the very snarky, really, effort to pin the United States down on regulations that really would go beyond individual sovereignties of various nations. And it turned out to be an absolute lovefest. Angela Merkel and Sarkozy both came away pleased. And you could argue that it was more about public relations than it is about substance, but the hurt feelings that you portrayed in the set-up did not exist by the time the summit concluded.

DR. MCLAUGHLIN: Okay, let's move this a little bit forward -- the G-20 deal, $1.1 trillion, which includes $500 billion for the IMF. Could you speak to that, Monica?

MS. CROWLEY: The money going into the IMF and the balance of it going to the World Bank. What they didn't really say is that this $1.1 trillion commitment is a lot of re-announcements of existing deals, and it's also sort of half-baked deals that they talked about during the summit but didn't quite bring to fruition. So we're not talking about a lot of new expenditures here in this particular commitment.

DR. MCLAUGHLIN: A second element --

MS. FREELAND: (Inaudible.)

DR. MCLAUGHLIN: Hold on, Chrystia, for one moment. Two: No international regulator to oversee the global economy. France and Germany both wanted it. The U.S. did not. Could you speak to that?

MS. FREELAND: Sure. I mean, I think that no one realistically expected that this summit would produce a new global regulatory framework with a new super-regulator that had the authority to supersede national regulators. That's, first of all, a surrender --

DR. MCLAUGHLIN: Were they serious in advancing that?

MS. FREELAND: Well, I think it's a negotiating point, isn't it? If you have the Americans ahead of time coming in and saying, "You guys are falling behind the program; you are not stimulating the global economy sufficiently," it's quite a strong talking point to come in and say, "What really needs to happen is regulation."

And it's also true that the European point of view is lack of American regulation is at the heart of this crisis, whereas the American point of view in part tends to be it's about global financial imbalances.

DR. MCLAUGHLIN: Can you imagine a world regulatory czar?

Three: No fresh stimulus, no dollar commitment to invest in the country's economy. The U.S. wanted it. France and Germany did not.

What about that, Mort? Obama didn't get his way?

MR. ZUCKERMAN: No, he did not. That's, in a sense, the problem with the European financial world. I mean, it's one community, but there's no central fiscal policy. There's more of a central monetary policy through the European central bank, but not a fiscal policy.

Some governments will do it, as Eleanor said, because they think it's in their interest. Some governments won't. But the main countries there felt, "We are not going to do that." They're much more worried about fiscal imbalance hitting them, because they don't have the capacity to borrow that we do to support our fiscal imbalances.

MS. CLIFT: Right. And granted, Obama fell short in terms of getting that stimulus, but I think there were relationships made here at this summit, so that if the economy continues to tank, they can get on the phone and he may -- and they may react.

MS. FREELAND: And one important ally on stimulus that I think did emerge in the summit was Japan on the stimulus point. The Japanese were very forceful in saying, "Look, we know what a financial crisis is like. We have experienced it. And now is the time for government to spend." That's significant, because the Japanese, like the Germans, are a net surplus country.

DR. MCLAUGHLIN: Well, they also want Americans to benefit by it so we'll consume more of their goods, which gets into this -- no protectionism. Can you speak to that? How about you, Monica?

MS. CROWLEY: Well, I think one of the most crucial things that -- the real opportunity to come out of this G-20 was a real solid statement against protectionist tendencies. And we didn't get that. Instead what we got was a very ambiguous, and deliberately so, but a very sort of generic statement that we're not going to engage in this kind of protectionism.

To leave the language that vague allows countries to put up and erect new sets of trade barriers that are going to end up retarding any kind of economic growth.

MS. CLIFT: We also got a recognition that the United States is not the biggest player on the block. The fact that China and India were there -- the British papers were calling it the G-1, because China is the only country with any real money to play around with.

DR. MCLAUGHLIN: Is there not --

MS. CLIFT: And so this is a change in the pecking order.

DR. MCLAUGHLIN: Can I move to this question of the imbalance of trade that exists, and Germany and Japan and China being the principal beneficiaries of it? Listen to these surpluses and deficits. China has a surplus, a trade surplus, of $266 billion. Germany has a trade surplus of $229 billion. Japan has a trade surplus of $24 billion. And we are in major deficit. Our trade deficit is $670 billion.

Does that tell you something about the imbalance of trade and how it's essential that that be rectified and how it's essential that these three offending countries, if I can use that language -- China, Germany and Japan -- should develop more domestic consumer spending in order to counterbalance this trade deficit with us?

MS. FREELAND: And don't forget the oil-producing countries, which are also major surplus countries. I personally wouldn't use that kind of moral language, John, because I think if you're in a surplus country, you would say, "The Americans were extremely happy to consume our goods on credit." So, you know, I think the morality play can go both ways.

DR. MCLAUGHLIN: Why don't they --

MS. FREELAND: But -- no, but John --

DR. MCLAUGHLIN: Instead of --

MS. FREELAND: -- what I think is important, which the president emphasized at the summit -- and this is the important longer-term point -- is we now need a rebalancing of the global economy, with both America learning how to live -- DR. MCLAUGHLIN: Why don't they liberalize their --

MS. FREELAND: -- with lower consumption and the rest of the world getting accustomed to spending more.

DR. MCLAUGHLIN: Why don't -- instead of us contracting our credit, why don't they liberalize their --

MS. CLIFT: Because --

DR. MCLAUGHLIN: Just a moment. Why don't they liberalize their credit for their consumers --

MS. CLIFT: Because --

DR. MCLAUGHLIN: -- so they can buy more?

MS. CLIFT: Because Obama --

DR. MCLAUGHLIN: (Inaudible.)

MS. CLIFT: Because Obama is not the president of the world, and they are acting out of their own self-interest. You know, these questions --

DR. MCLAUGHLIN: But Obama is --

MS. CLIFT: Excuse me -- these questions have to be sorted out by finance ministers. But this summit was really about imagery. And I think the country and the world recognized what they've been missing for the last eight years, and that is diplomatic leadership. There was a rebirth of leadership. And he's using every lever of power he has, especially --

DR. MCLAUGHLIN: Do you take the view, Monica --

MS. CLIFT: -- especially the force of his personality.

DR. MCLAUGHLIN: -- that this was largely public relations? Is that your view?

MS. CROWLEY: The summit was -- yes, it was largely symbolic.

DR. MCLAUGHLIN: So you share Eleanor's view.

MS. CROWLEY: It was about creating an image that these leaders were unified to try to create some sort of recovery plan for the economy.

MS. CLIFT: Confidence-building. MR. ZUCKERMAN: But there's one essential part of the American economy that is a big problem for us and for the rest. We save too little and spend too much. That has to be rebalanced with the rest of the world.

DR. MCLAUGHLIN: By their spending more.

MR. ZUCKERMAN: No, by our saving more and our spending less.

MS. CLIFT: By our saving more.

DR. MCLAUGHLIN: That's one side of the equation. Why don't they encourage domestic consumption and liberalize their credit?

MR. ZUCKERMAN: Oh, I think they have been doing that to a degree.

MS. FREELAND: John, they're working on that, but it's hard to do. I mean, the Chinese actually have engaged in a major domestic stimulus program. But it is hard to turn around the ships of domestic economies.

DR. MCLAUGHLIN: We just pump -- they were pumping up their trade surpluses. That's what we're doing.

Okay, the first lady --

MS. CLIFT: It's been working for them.

DR. MCLAUGHLIN: -- the first lady and the queen.

President Obama and the first lady stopped at Buckingham Palace for a meeting with Queen Elizabeth on their trip to London. Michelle Obama caused a small stir by placing her arm around the queen's shoulder. Some say this was a violation of protocol, but the queen put her arm around the first lady's waist, which signaled, Brits say, reciprocated warmth. And the public loved it. Both ladies were royal in their own way.

Question: What does this mutual embrace show? I ask you, Monica.

MS. CROWLEY: I don't mind one bit that the first lady put her arms around the queen. I thought it was adorable. I don't care about the breach of protocol. And you know what? With that one small embrace, Michelle Obama and the queen did more to solidify the special relationship between the UK and the United States than the husband of Michelle Obama did with the British prime minister, Gordon Brown, when he was here.

DR. MCLAUGHLIN: What about the royals? What does this say about the royals? Does it say the royals have loosened up? Is that because of Princess Diana? MS. CROWLEY: You know what? I'll tell you that the queen, at 82 years old, graciously accepted an iPod from the president of the United States, said she was going to use it and so on. I think that shows that the British sovereign is --

MS. CLIFT: The monarch --

DR. MCLAUGHLIN: Was that a little corny, giving her an iPod of her own self on the iPod?

MS. CLIFT: No. Look, they don't do anything accidentally. I'm sure that was worked out in advance. But what I especially liked about Michelle Obama was the visit to the girls' school. And this wasn't London girls. These were girls in a suburb, mostly ethnic, Muslim immigrants, the children of immigrants. And they could relate to her as somebody who overcame a lot of obstacles. And her message to them was beautiful.

DR. MCLAUGHLIN: Yeah, her message --

MS. CLIFT: And the British papers can't decide whether she's Jackie Kennedy or Princess Di.

MS. FREELAND: Yeah, they ate it up.

MR. ZUCKERMAN: The queen relates to her, too, in a way, because, you know, they both like -- I won't say farming, but they certainly like planting, gardening --

MS. CROWLEY: Gardening.

MR. ZUCKERMAN: -- and that. You know, she also is, shall we say, not over-elegant.

She is elegant as a woman, but not in terms of her style of dress. And neither is the queen over-elegant, I might add. So I think there was an easy comfort between the two of them.

MS. FREELAND: I also think we need to accept that the queen and Michelle Obama both understand that they are actors on the world stage.

MR. ZUCKERMAN: Right.

MS. FREELAND: You know, this is not just about a private conversation.

MS. CLIFT: It's not just girlfriends.

MS. FREELAND: This is about symbolism. And the symbolism was powerful and effective. You know, there was nothing wrong with it.

MR. ZUCKERMAN: That was the way I felt --

DR. MCLAUGHLIN: Why don't you credit the role of Princess Diana in this?

MS. FREELAND: I agree with you.

DR. MCLAUGHLIN: The queen has loosened up.

MR. ZUCKERMAN: That was the way I felt --

MS. FREELAND: The queen has definitely loosened up, and she was happy. But it was also a democratic gesture for Michelle.

MR. ZUCKERMAN: Let me get this in. That is the way I felt when I met the queen. You know, we were both actors on the world stage. (Laughter.) And I met her in the royal yacht, and --

MS. FREELAND: Did you put your arm around her, though, Mort?

MR. ZUCKERMAN: No, I didn't. And I was going to say to her -- it was the only time I met her -- and I was going to say to her, "You know, your majesty, I hate name-droppers." So I could forever say, as I said to the queen, "I hate name-droppers," but I didn't even get the chance to say that before I was pushed on the line. So I had about 10 seconds with her; that was it.

MS. FREELAND: Can I just say that you guys are all Americans and you (shouldn't ?) be so obsessed with the monarchy, because you decided to get rid of it, which was good.

DR. MCLAUGHLIN: Is this a less than subtle solicitation for knighthood? Is that what we're looking for here? (Laughter.)

Exit question. Kindly render a verdict on the G-20 summit. Was it dominantly substantive -- dominantly -- or was it dominantly PR? Mort Zuckerman.

MR. ZUCKERMAN: It was both PR and personal. I think it was an opportunity for the leadership --

DR. MCLAUGHLIN: Equal measure?

MR. ZUCKERMAN: Yes -- not necessarily substantive. They didn't get much on that road; but in terms of personal relationships and an understanding of what they have to deal with. And, of course, the public relations was very, very successful.

DR. MCLAUGHLIN: What do you think, Eleanor -- 20 frightened world leaders there?

MS. CLIFT: (Laughs.) It was substantive enough, considering you had 20 people around the table. And one of the president's best comments was he said this wasn't FDR and Churchill sitting with -- you know, sipping brandy. This is complicated to get that many people to agree. But stylistically it was a wonderful message to the world about the reassertion of America in our standing.

MS. CROWLEY: I thought it was largely symbolic, but the one point of substance that I took issue with was at the end, when they issued this communique, they agreed -- and President Obama signed on to this -- to the creation of something called a financial stability board, which I view as the first step to abrogating American sovereignty --

DR. MCLAUGHLIN: What did they -- how did they --

MS. CROWLEY: -- because it is going to allow European bureaucrats to step in, not just on the hedge fund regulation and the other explicit things that they agreed to, but very deep down in this communique was the ability for European bureaucrats sitting in Brussels to decide what kind of executive compensation American executives should --

(Cross-talk.)

MS. FREELAND: No, there was no authority like that there, Monica. MS. CROWLEY: Yes. No, I read it in the communique this morning.

MS. FREELAND: No. So did I, and there was no such authority. Had there actually been such authority, the Europeans would be cheering and the hedge fund guys would be beating down the doors of the White House right now.

To your initial question, John, I think there wasn't a lot of new substance and there never is at these summits. But I think the symbolism was important. And the one big surprise was this is the first time we've seen Barack Obama on the world stage as a statesman, and I think he did very well.

DR. MCLAUGHLIN: Why don't you pick up the point made by your own columnist, Stephens, in Friday's Financial Times, where he spoke about -- what shall I say -- the mood, the feel, the interaction, almost the camaraderie? I mean, that photograph you put on the front page of the Financial Times with Berlusconi and Medvedev and Putin --

MS. FREELAND: And Obama --

DR. MCLAUGHLIN: Not Putin but --

MS. FREELAND: Medvedev, Obama and Berlusconi.

DR. MCLAUGHLIN: And Obama, right.

MS. FREELAND: And Obama has his arm around Berlusconi and he has his thumbs up.

DR. MCLAUGHLIN: And, you know, there are smiles, and the bon ami is there. Now, does that mean anything when these leaders meet? I think it does.

MS. FREELAND: No, I think it means a lot. And one thing that we heard actually off the record from a lot of the European diplomats was, "This is a president who can listen." I think the other G-20 leaders really appreciated a different American approach, an approach that was more multilateral.

DR. MCLAUGHLIN: I would have liked to have seen more emphasis on no protectionism, because I think there's still a lot of protectionism, and it's very worrisome.

MS. CROWLEY: Right.

DR. MCLAUGHLIN: Read the issue of -- what's that magazine you guys put out, which is --

MS. FREELAND: FT Magazine?

DR. MCLAUGHLIN: No, not the FT Magazine. MR. ZUCKERMAN: The Economist?

DR. MCLAUGHLIN: Yeah, The Economist Magazine has a great treatment on it -- of the subtlety of protectionism and how a thousand cuts can add up to a killing.

MR. ZUCKERMAN: Nobody wants --

MS. FREELAND: And I think we were inevitably --

MR. ZUCKERMAN: Nobody wants stimulus programs to be spent on foreign goods.

MS. FREELAND: Exactly.

MR. ZUCKERMAN: They don't want their stimulus --

DR. MCLAUGHLIN: But there's a lot more protectionism that goes on that is unobserved and undercurrent.

MR. ZUCKERMAN: That's exactly right.

DR. MCLAUGHLIN: Issue Two: NATO Turns 60.

PRESIDENT OBAMA: (From videotape.

) Exactly 60 years ago tomorrow, we ensured our shared security when 12 of our nations signed a treaty in Washington. With 28 member nations that stretched from the Baltic to the Mediterranean, NATO remains the strongest alliance that the world has ever known.

DR. MCLAUGHLIN: NATO, the North Atlantic Treaty Organization, this year is celebrating its 60th birthday. The alliance was created four years after World War II, during the Truman administration, as a counterweight to the Soviet Union. NATO structurally and operationally is a collective defense alliance. The parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.

NATO in the beginning had 12 members: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, Netherlands, Norway, Portugal, Britain and the United States. Today there are 28 members. The 16 add-ons include Albania, Bulgaria, Croatia, Czech Republic, Estonia, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Spain, Turkey.

But NATO enters its 60th with more problems regarding itself than solutions for the world.

Item: Alliance without a mission. NATO's purpose was to counter expanding Soviet aggression. Without that, what is NATO's role?

RICHARD BURT (Managing director, McLarty Associates): (From videotape.) NATO is, at this point, an organization either in search of a mission or an organization with too many missions. I think NATO needs to kind of fundamentally go through a pretty deep review of what its core mission is.

DR. MCLAUGHLIN: Question. Richard Burt may be right. NATO's mission is now seen to be ill-defined. But is NATO justified? And here would be a reason why it is justified. It serves as a European fig leaf for the United States in the projection of our U.S. military power, as we are now doing in Afghanistan, correct? Is that the only justification NATO has?

MS. CLIFT: Well, actually, the U.S. would prefer it if the NATO countries would join in in the fighting in Afghanistan. The Canadians have been good, the Brits and Netherlands. But the other countries have so many caveats that they're not really fighting. And I think the expectation was, since everybody loves Obama, they would now cede to his demands. But they do not see Afghanistan as their war. They see it as a U.S. war.

But we still need NATO, especially with Russia saber-rattling.

MS. CROWLEY: Absolutely.

MS. CLIFT: So if we didn't have NATO, we'd have to create it.

MS. CROWLEY: Absolutely. I agree with that. And I think Obama's challenge here is to prevent NATO from fracturing into a two- tiered alliance where you do have those countries that are willing and able to fight -- the United States, Canada, Great Britain, France and Poland. And then you have another batch of countries that aren't willing to do that.

Afghanistan presents a providential opportunity for him to try to appeal to those nations so that they'll commit actual combat troops on the ground.

DR. MCLAUGHLIN: We have to get out. Exit question: Will NATO make it to see its 70th anniversary? Yes or no, Mort.

MR. ZUCKERMAN: Oh, yes, absolutely.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Absolutely.

MS. CROWLEY: Yes, without a doubt.

MS. FREELAND: Definitely. And we should bear in mind that, as Eleanor pointed out, Russia isn't just saber-rattling. Russia invaded Georgia. That's less than a year ago.

MS. CROWLEY: And the troops are still there.

MS. FREELAND: That's a very real threat. And for a lot of the new NATO member states, that's a very important reason for NATO to exist.

DR. MCLAUGHLIN: You know what? Russia may become a member of NATO before the 70th anniversary.

Issue Three: Autocalypse Now. That's "autocalypse."

PRESIDENT OBAMA: (From videotape.) I'm announcing that my administration will offer GM and Chrysler a limited additional period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional taxpayer dollars. DR. MCLAUGHLIN: GM and Chrysler are back in town with hat in hand. The president says, "Hold on." To get another bailout, GM must first restructure, and do so without CEO Rick Wagoner. So Wagoner is gone, and Barack holds the smoking gun.

As for Chrysler, it has 30 days, and its options are gone except for partnering with Fiat, the Italian carmaker. So the Detroit solution for the U.S. government at the presidential level is to give orders to American carmakers: "Shape up or ship out, and your CEO is fired."

Political figures see this as a massive and lethal intrusion by the feds into the private sector, with our cherished capitalism taking the shiv.

SEN. BOB CORKER (R-TN): (From videotape.) They're going to be very involved in what I consider to be industrial policy, which is a very bright line that this country has not passed in the past. And we did it today, and I think it's something that all of us need to stop.

DR. MCLAUGHLIN: Senator Corker elaborated on the deadly scale of the Obama penetration.

SEN. CORKER: (From videotape.) Instead this administration has taken over the company. They are directing the company. They're deciding who's going to be on the board of this company. And furthermore, they're going to be deciding the products, the plans that this company will make into the future; and again, a very bright line that we passed today.

DR. MCLAUGHLIN: Is Corker right? Is this a bright line that's been passed? And is it regrettable? I ask you.

MS. FREELAND: Absolutely not. I think actually what we're seeing is the Obama administration finally behaving in a proper capitalist manner. They didn't say by fiat. This wasn't -- (speaks foreign phrase). This wasn't the White House saying, "Wagoner has to go because we don't like him." They were saying to GM, "You guys need our money to survive. Without our money, you would be bankrupt. And if you want our money, certain conditions must apply."

Warren Buffett did exactly the same thing when he lent money to Goldman Sachs and to General Electric. In fact, did you know that the senior executives of Goldman Sachs and GE cannot sell their stock in those companies until Buffett has been paid back? So I think, for the first time, really, the U.S. government is starting to behave like a reasonable lender of money and buyer of equity.

DR. MCLAUGHLIN: By the way, off-subject, you were in Russia. And what about Khodorkovsky? He's still in prison, right?

MR. ZUCKERMAN: Yeah. DR. MCLAUGHLIN: How long is he going to be there -- the rest of his life?

MS. FREELAND: Well, they're --

DR. MCLAUGHLIN: A consequence of Putin's management style?

MS. FREELAND: No, it's very interesting, because they're retrying Khodorkovsky on some new charges this summer in Moscow. And that's actually quite politically dangerous for the Kremlin, because an interesting thing has happened to Khodorkovsky while he's been in jail. When he went into jail, he was a hated oligarch.

MR. ZUCKERMAN: Yes.

MS. FREELAND: But the time he has spent in jail has rehabilitated him, and he's one of the most popular figures in Russia right now.

DR. MCLAUGHLIN: What do you think of Corker, Mort?

MR. ZUCKERMAN: I think what he's saying is nonsense, to be honest with you. (Laughter.)

DR. MCLAUGHLIN: Don't hold back.

MS. CLIFT: I agree. (Laughs.

)

MR. ZUCKERMAN: Other than that -- I can't believe it. Wagoner, who's a very nice man, had plenty of time to try and do what he had to do. He came up to a deadline. He didn't accomplish the renegotiation of either the deals with the unions or the deals with the bond- holders. Somebody's got to do it. So they said, "Bring in somebody else. Otherwise we're not going to put up the money."

DR. MCLAUGHLIN: Will you restore the wisdom of this panel?

MS. CROWLEY: Can I please defend Senator Corker here? There are constitutional questions raised when the president of the United States goes in and takes out the CEO of a major American company; and not just that. Now he wants to stack the board of directors for General Motors. I mean, the vampire has been let into the house now, and there's no way to get him out. This is a stunning move.

And I'd also like to see -- if the president is going to lean on the CEO and lean on the board of directors, how about leaning on the unions? How about leaning on the UAW --

DR. MCLAUGHLIN: Right. Right.

MS. CROWLEY: -- and extracting some real concessions so that GM could actually get back --

(Cross talk.)

DR. MCLAUGHLIN: Then why doesn't President Obama do that? This is obviously a matter of union salaries.

MS. CLIFT: I guess --

(Cross talk.)

DR. MCLAUGHLIN: Eleanor -- let her in.

MS. CLIFT: I guess this is what passes for populist anger. If you want to defend Mr. Wagoner, who's been at the helm for 30 years --

MS. CROWLEY: I wasn't defending him. MS. CLIFT: -- through all of the bad mistakes --

MS. CROWLEY: I was (attacking ?) the president going in, taking out --

MS. CLIFT: The president -- this is no more Mr. Nice Guy. He's showing the same kind of muscle that President Reagan did when he fired all those air controllers.

DR. MCLAUGHLIN: Chrystia, quickly, then Mort.

MS. FREELAND: No, I think the Republicans have to be very careful. Having said that welfare recipients have to abide by strict conditionality when they get government money, when big business goes on government welfare, it has to abide by strict conditions also.

DR. MCLAUGHLIN: Out of time. Sorry. Bye-bye.



END.

t you credit the role of Princess Diana in this?

MS. FREELAND: I agree with you.

DR. MCLAUGHLIN: The queen has loosened up.

MR. ZUCKERMAN: That was the way I felt --

MS. FREELAND: The queen has definitely loosened up, and she was happy. But it was also a democratic gesture for Michelle.

MR. ZUCKERMAN: Let me get this in. That is the way I felt when I met the queen. You know, we were both actors on the world stage. (Laughter.) And I met her in the royal yacht, and --

MS. FREELAND: Did you put your arm around her, though, Mort?

MR. ZUCKERMAN: No, I didn't. And I was going to say to her -- it was the only time I met her -- and I was going to say to her, "You know, your majesty, I hate name-droppers." So I could forever say, as I said to the queen, "I hate name-droppers," but I didn't even get the chance to say that before I was pushed on the line. So I had about 10 seconds with her; that was it.

MS. FREELAND: Can I just say that you guys are all Americans and you (shouldn't ?) be so obsessed with the monarchy, because you decided to get rid of it, which was good.

DR. MCLAUGHLIN: Is this a less than subtle solicitation for knighthood? Is that what we're looking for here? (Laughter.)

Exit question. Kindly render a verdict on the G-20 summit. Was it dominantly substantive -- dominantly -- or was it dominantly PR? Mort Zuckerman.

MR. ZUCKERMAN: It was both PR and personal. I think it was an opportunity for the leadership --

DR. MCLAUGHLIN: Equal measure?

MR. ZUCKERMAN: Yes -- not necessarily substantive. They didn't get much on that road; but in terms of personal relationships and an understanding of what they have to deal with. And, of course, the public relations was very, very successful.

DR. MCLAUGHLIN: What do you think, Eleanor -- 20 frightened world leaders there?

MS. CLIFT: (Laughs.) It was substantive enough, considering you had 20 people around the table. And one of the president's best comments was he said this wasn't FDR and Churchill sitting with -- you know, sipping brandy. This is complicated to get that many people to agree. But stylistically it was a wonderful message to the world about the reassertion of America in our standing.

MS. CROWLEY: I thought it was largely symbolic, but the one point of substance that I took issue with was at the end, when they issued this communique, they agreed -- and President Obama signed on to this -- to the creation of something called a financial stability board, which I view as the first step to abrogating American sovereignty --

DR. MCLAUGHLIN: What did they -- how did they --

MS. CROWLEY: -- because it is going to allow European bureaucrats to step in, not just on the hedge fund regulation and the other explicit things that they agreed to, but very deep down in this communique was the ability for European bureaucrats sitting in Brussels to decide what kind of executive compensation American executives should --

(Cross-talk.)

MS. FREELAND: No, there was no authority like that there, Monica. MS. CROWLEY: Yes. No, I read it in the communique this morning.

MS. FREELAND: No. So did I, and there was no such authority. Had there actually been such authority, the Europeans would be cheering and the hedge fund guys would be beating down the doors of the White House right now.

To your initial question, John, I think there wasn't a lot of new substance and there never is at these summits. But I think the symbolism was important. And the one big surprise was this is the first time we've seen Barack Obama on the world stage as a statesman, and I think he did very well.

DR. MCLAUGHLIN: Why don't you pick up the point made by your own columnist, Stephens, in Friday's Financial Times, where he spoke about -- what shall I say -- the mood, the feel, the interaction, almost the camaraderie? I mean, that photograph you put on the front page of the Financial Times with Berlusconi and Medvedev and Putin --

MS. FREELAND: And Obama --

DR. MCLAUGHLIN: Not Putin but --

MS. FREELAND: Medvedev, Obama and Berlusconi.

DR. MCLAUGHLIN: And Obama, right.

MS. FREELAND: And Obama has his arm around Berlusconi and he has his thumbs up.

DR. MCLAUGHLIN: And, you know, there are smiles, and the bon ami is there. Now, does that mean anything when these leaders meet? I think it does.

MS. FREELAND: No, I think it means a lot. And one thing that we heard actually off the record from a lot of the European diplomats was, "This is a president who can listen." I think the other G-20 leaders really appreciated a different American approach, an approach that was more multilateral.

DR. MCLAUGHLIN: I would have liked to have seen more emphasis on no protectionism, because I think there's still a lot of protectionism, and it's very worrisome.

MS. CROWLEY: Right.

DR. MCLAUGHLIN: Read the issue of -- what's that magazine you guys put out, which is --

MS. FREELAND: FT Magazine?

DR. MCLAUGHLIN: No, not the FT Magazine. MR. ZUCKERMAN: The Economist?

DR. MCLAUGHLIN: Yeah, The Economist Magazine has a great treatment on it -- of the subtlety of protectionism and how a thousand cuts can add up to a killing.

MR. ZUCKERMAN: Nobody wants --

MS. FREELAND: And I think we were inevitably --

MR. ZUCKERMAN: Nobody wants stimulus programs to be spent on foreign goods.

MS. FREELAND: Exactly.

MR. ZUCKERMAN: They don't want their stimulus --

DR. MCLAUGHLIN: But there's a lot more protectionism that goes on that is unobserved and undercurrent.

MR. ZUCKERMAN: That's exactly right.

DR. MCLAUGHLIN: Issue Two: NATO Turns 60.

PRESIDENT OBAMA: (From videotape.

) Exactly 60 years ago tomorrow, we ensured our shared security when 12 of our nations signed a treaty in Washington. With 28 member nations that stretched from the Baltic to the Mediterranean, NATO remains the strongest alliance that the world has ever known.

DR. MCLAUGHLIN: NATO, the North Atlantic Treaty Organization, this year is celebrating its 60th birthday. The alliance was created four years after World War II, during the Truman administration, as a counterweight to the Soviet Union. NATO structurally and operationally is a collective defense alliance. The parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.

NATO in the beginning had 12 members: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, Netherlands, Norway, Portugal, Britain and the United States. Today there are 28 members. The 16 add-ons include Albania, Bulgaria, Croatia, Czech Republic, Estonia, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Spain, Turkey.

But NATO enters its 60th with more problems regarding itself than solutions for the world.

Item: Alliance without a mission. NATO's purpose was to counter expanding Soviet aggression. Without that, what is NATO's role?

RICHARD BURT (Managing director, McLarty Associates): (From videotape.) NATO is, at this point, an organization either in search of a mission or an organization with too many missions. I think NATO needs to kind of fundamentally go through a pretty deep review of what its core mission is.

DR. MCLAUGHLIN: Question. Richard Burt may be right. NATO's mission is now seen to be ill-defined. But is NATO justified? And here would be a reason why it is justified. It serves as a European fig leaf for the United States in the projection of our U.S. military power, as we are now doing in Afghanistan, correct? Is that the only justification NATO has?

MS. CLIFT: Well, actually, the U.S. would prefer it if the NATO countries would join in in the fighting in Afghanistan. The Canadians have been good, the Brits and Netherlands. But the other countries have so many caveats that they're not really fighting. And I think the expectation was, since everybody loves Obama, they would now cede to his demands. But they do not see Afghanistan as their war. They see it as a U.S. war.

But we still need NATO, especially with Russia saber-rattling.

MS. CROWLEY: Absolutely.

MS. CLIFT: So if we didn't have NATO, we'd have to create it.

MS. CROWLEY: Absolutely. I agree with that. And I think Obama's challenge here is to prevent NATO from fracturing into a two- tiered alliance where you do have those countries that are willing and able to fight -- the United States, Canada, Great Britain, France and Poland. And then you have another batch of countries that aren't willing to do that.

Afghanistan presents a providential opportunity for him to try to appeal to those nations so that they'll commit actual combat troops on the ground.

DR. MCLAUGHLIN: We have to get out. Exit question: Will NATO make it to see its 70th anniversary? Yes or no, Mort.

MR. ZUCKERMAN: Oh, yes, absolutely.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Absolutely.

MS. CROWLEY: Yes, without a doubt.

MS. FREELAND: Definitely. And we should bear in mind that, as Eleanor pointed out, Russia isn't just saber-rattling. Russia invaded Georgia. That's less than a year ago.

MS. CROWLEY: And the troops are still there.

MS. FREELAND: That's a very real threat. And for a lot of the new NATO member states, that's a very important reason for NATO to exist.

DR. MCLAUGHLIN: You know what? Russia may become a member of NATO before the 70th anniversary.

Issue Three: Autocalypse Now. That's "autocalypse."

PRESIDENT OBAMA: (From videotape.) I'm announcing that my administration will offer GM and Chrysler a limited additional period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional taxpayer dollars. DR. MCLAUGHLIN: GM and Chrysler are back in town with hat in hand. The president says, "Hold on." To get another bailout, GM must first restructure, and do so without CEO Rick Wagoner. So Wagoner is gone, and Barack holds the smoking gun.

As for Chrysler, it has 30 days, and its options are gone except for partnering with Fiat, the Italian carmaker. So the Detroit solution for the U.S. government at the presidential level is to give orders to American carmakers: "Shape up or ship out, and your CEO is fired."

Political figures see this as a massive and lethal intrusion by the feds into the private sector, with our cherished capitalism taking the shiv.

SEN. BOB CORKER (R-TN): (From videotape.) They're going to be very involved in what I consider to be industrial policy, which is a very bright line that this country has not passed in the past. And we did it today, and I think it's something that all of us need to stop.

DR. MCLAUGHLIN: Senator Corker elaborated on the deadly scale of the Obama penetration.

SEN. CORKER: (From videotape.) Instead this administration has taken over the company. They are directing the company. They're deciding who's going to be on the board of this company. And furthermore, they're going to be deciding the products, the plans that this company will make into the future; and again, a very bright line that we passed today.

DR. MCLAUGHLIN: Is Corker right? Is this a bright line that's been passed? And is it regrettable? I ask you.

MS. FREELAND: Absolutely not. I think actually what we're seeing is the Obama administration finally behaving in a proper capitalist manner. They didn't say by fiat. This wasn't -- (speaks foreign phrase). This wasn't the White House saying, "Wagoner has to go because we don't like him." They were saying to GM, "You guys need our money to survive. Without our money, you would be bankrupt. And if you want our money, certain conditions must apply."

Warren Buffett did exactly the same thing when he lent money to Goldman Sachs and to General Electric. In fact, did you know that the senior executives of Goldman Sachs and GE cannot sell their stock in those companies until Buffett has been paid back? So I think, for the first time, really, the U.S. government is starting to behave like a reasonable lender of money and buyer of equity.

DR. MCLAUGHLIN: By the way, off-subject, you were in Russia. And what about Khodorkovsky? He's still in prison, right?

MR. ZUCKERMAN: Yeah. DR. MCLAUGHLIN: How long is he going to be there -- the rest of his life?

MS. FREELAND: Well, they're --

DR. MCLAUGHLIN: A consequence of Putin's management style?

MS. FREELAND: No, it's very interesting, because they're retrying Khodorkovsky on some new charges this summer in Moscow. And that's actually quite politically dangerous for the Kremlin, because an interesting thing has happened to Khodorkovsky while he's been in jail. When he went into jail, he was a hated oligarch.

MR. ZUCKERMAN: Yes.

MS. FREELAND: But the time he has spent in jail has rehabilitated him, and he's one of the most popular figures in Russia right now.

DR. MCLAUGHLIN: What do you think of Corker, Mort?

MR. ZUCKERMAN: I think what he's saying is nonsense, to be honest with you. (Laughter.)

DR. MCLAUGHLIN: Don't hold back.

MS. CLIFT: I agree. (Laughs.

)

MR. ZUCKERMAN: Other than that -- I can't believe it. Wagoner, who's a very nice man, had plenty of time to try and do what he had to do. He came up to a deadline. He didn't accomplish the renegotiation of either the deals with the unions or the deals with the bond- holders. Somebody's got to do it. So they said, "Bring in somebody else. Otherwise we're not going to put up the money."

DR. MCLAUGHLIN: Will you restore the wisdom of this panel?

MS. CROWLEY: Can I please defend Senator Corker here? There are constitutional questions raised when the president of the United States goes in and takes out the CEO of a major American company; and not just that. Now he wants to stack the board of directors for General Motors. I mean, the vampire has been let into the house now, and there's no way to get him out. This is a stunning move.

And I'd also like to see -- if the president is going to lean on the CEO and lean on the board of directors, how about leaning on the unions? How about leaning on the UAW --

DR. MCLAUGHLIN: Right. Right.

MS. CROWLEY: -- and extracting some real concessions so that GM could actually get back --

(Cross talk.)

DR. MCLAUGHLIN: Then why doesn't President Obama do that? This is obviously a matter of union salaries.

MS. CLIFT: I guess --

(Cross talk.)

DR. MCLAUGHLIN: Eleanor -- let her in.

MS. CLIFT: I guess this is what passes for populist anger. If you want to defend Mr. Wagoner, who's been at the helm for 30 years --

MS. CROWLEY: I wasn't defending him. MS. CLIFT: -- through all of the bad mistakes --

MS. CROWLEY: I was (attacking ?) the president going in, taking out --

MS. CLIFT: The president -- this is no more Mr. Nice Guy. He's showing the same kind of muscle that President Reagan did when he fired all those air controllers.

DR. MCLAUGHLIN: Chrystia, quickly, then Mort.

MS. FREELAND: No, I think the Republicans have to be very careful. Having said that welfare recipients have to abide by strict conditionality when they get government money, when big business goes on government welfare, it has to abide by strict conditions also.

DR. MCLAUGHLIN: Out of time. Sorry. Bye-bye.



END.