Here's the second half of our all-star panel on the GOP, the economy, Iran, and more with Arianna Huffington, Mort Zuckerman, David Frum, and Steve Rattner.
Here's a transcript of our discussion, which focuses on Europe and Iran:
FAREED ZAKARIA: So we were talking about the United States, but, you know, whenever you get despair, you can look at Europe to cheer yourself up, right? Your country of native origin, again, seems to be teetering on the brink. It is just going to default? What do you think is going to happen in Greece?
HUFFINGTON: Well, in the end, you know, Greece may decide to leave the euro, simply in order to prevent civil unrest and to be able to start growing their economy again.
You know, just cutting, and trying to sort of get out of the crisis simply through austerity measures, isn't going to work for Greece, isn't going to work for everyone. And the civil unrest in Greece is a major factor that more and more politicians, economists are really taking into account in making decisions.
ZAKARIA: Steve, you studied this …
RATTNER: But if Greece were to leave the euro - and I agree that's a real possibility - they would have a completely non-functioning economy.
Their banking system would disappear. They'd be forced to make far more major cuts in their government workers, in the government programs, because they couldn't borrow any money, obviously, and they don't have the tax revenues to cover it. It would a disaster for Greece to leave the euro.
ZAKARIA: Then what happens, because they can't - they can't roll over these - there's a numbers are too big.
RATTNER: The best chance for Greece is to actually do what the rest of Europe is trying to get them to do, which is to agree to an austerity program - and I agree with you totally, Arianna, the limits of how that - of that, and then get the debt holders to agree to take this haircut down to some level that, at least in theory, they can do. Fundamentally, at the end of the day, the Greeks have to decide whether to pull themselves together and get to work, because that's been the fundamental problem.
ZUCKERMAN: - but they also don't pay taxes.
RATTNER: And they don't –
HUFFINGTON: - but you have like 40 percent youth unemployment. I mean, I was in Greece in the summer. I went to Syntagma Square multiple times the day and night. And you know what's happening there is just - cannot be dismissed. You know, these are people who feel they have no hope for the future. And when you have no –
RATTNER: But what's your solution?
HUFFINGTON: Well, what I'm saying is that right now, just look at what has happened so far. Greece has put forward all the cuts that it was asked.
RATTNER: No, it has not.
HUFFINGTON: Yes, it has.
RATTNER: It has not, Arianna. It's done almost nothing.
HUFFINGTON: It has and the results have not led to the revenue prospects that were expected because there is no growth.
ZAKARIA: We've got to go on. I want to change the subject entirely: Iran. Mort, one of the things the president has done over the last few weeks has been to really ratchet up the pressure on Iran. For the first time that I've ever heard Bibi Netanyahu who was saying the pressure is working, the sanctions are working, the Iranians are wobbling. Do you think that, A, this is likely to solve the problem or at least keep the pressure on Iran in a kind of effective way? And, B, will it change the dynamic where people in this country, particularly many Jewish Americans thought that Obama was not doing enough to look after Israel's security?
ZUCKERMAN: I don't know how to assess what the impact is on Iran. It's a very, very radical government. They are very ideologically driven. Nobody can predict what will influence the Iranians, because they do have one thing that works for them. It's called oil. And that keeps them solvent and keeps them reasonably effective. But the political system is a mystery to a lot of people.
ZAKARIA: But they’re having real trouble on oil.
DAVID FRUM: The reason the United States has been acting so forcefully against Iran and so many other people have been joining us is not because of Israel's security, it's because of the security of the Gulf. This is a de facto American-Israeli-Saudi-German alliance in which the stake is not just Israel's security, and that is why, you know, I think if President Obama tries to make this an ethnic point, he will - it will justly backfire on him.
ZAKARIA: The price of oil is now $110 a barrel, with lower demand in the United States, with demand weakening in China, presumably it's that high because everyone's worried.
RATTNER: Yes, and so the numbers are pretty simple. Iran produces, I believe, about 2.8 million barrels a day. There's about 4 million barrels a day of spare capacity in the whole world. So if you take Iran out of the picture, you're operating on a razor-thin margin. And this is our vulnerability as a world to the oil situation.
HUFFINGTON: But that also shows…
RATTNER: Can I just finish? - to the oil situation. I do think it is really remarkable how much cooperation we've been able to get out of places like China and India and all in this effort, and it just shows how scared people are about the nuclear side of Iran.
But we have to - we have to thread the needle. We have to make this work, so that Iran cooperates and we get what we need on the nuclear side, and they keep shipping - are able to resume shipping their oil, because the world cannot - oil prices will go a lot higher if Iranian oil is out of the picture. That's the problem
HUFFINGTON: I think it's important for us to look at how Iran got so powerful, and what our contribution to that was, because we invaded Iraq. You know, we don’t want to go back to the invasion of Iraq, which I consider one of the most disastrous foreign policy decisions America has ever made. But we must, because I think we're going to make worse decisions if we don't understand the unintended consequences of that one. And any time we discuss Iran, and the growing power of Iran, and the growing possibility of dangers from Iran, we need to remember, that we are partly responsible for that.
And we see how Iraq, the Iraqi government is getting closer and closer to Iran. And the dangers of that and –
ZUCKERMAN: The Shia government –
FRUM: In 2011 Iraq produced for the first time more oil than it did before the first Gulf War. Iraq is now back as a producer –
HUFFINGTON: - is that a good enough reason for what we did, given the cost, the incredible cost - and the ongoing costs?
FRUM: You can weigh the costs and benefits, but you can't ignore there is a benefit. Iraq is back as an oil producer.