FTN - 9/23/01 - Part 3

SCHIEFFER: Back now with this expanded edition of Face the Nation.

Joining us, former Defense Secretary William Cohen; Tom Friedman of the New York Times, just back from the Middle East; and in New York City, investment strategist Abby Joseph Cohen.

Gentlemen, lady, thank you all for coming.

Tom, you're just back from there. You spent a lot of time in the Middle East, a good part of your life out there. Do we understand what's going on in the Middle East right now, in the Muslim world?

TOM FRIEDMAN, The New York Times: You know, this phenomenon that that we're up against, Bob, is one very unusual. If you put Afghanistan and Osama bin Laden together, I believe it's Pol Pot meets Charles Manson.

That is, you have - I think Osama bin Laden leads a cult-like organization. If you look at the biography and behavior of some of his people, there's almost a cult dimension to it. I think Afghanistan is really the sort of crazy, lunatic regime a la Pol Pot, if you look at how it's dealt with its people.

What that means for us, it's a very delicate balance. You have to be really focused. You have to be really serious, and you have to be just a little bit crazy to deal with these people. Because they are not deterred in normal ways.

You know, there's a concept in strategic theory, Bob, that, if you're playing chicken with another guy in his car, the way you win is, before the race starts, you take out your screwdriver, and you very visibly unscrew your steering wheel and throw it out the window, and just say, "Look, I'd love to get out of the way, OK?" But you're depending on me being not as crazy as you, and I'm afraid you've attacked my country now, and I'm going to be focused, I'm going to be serious, but I'm going to be just a little bit crazy.

SCHIEFFER: Let me ask you this: Do people in the Middle East understand how Americans view what happened?

FRIEDMAN: I don't believe they do. You know, I was interviewed by Egyptian television early in this, and they asked me, "Why are Americans so upset?" And I said, "Look, basically two suicide bombers have just blown up our pyramids. The World Trade Center towers were our pyramids, made of glass and steel and not stone, pyramids to modernity and not a pharaoh, but they are the symbol of our civilization."

And people are kind of treating this as if this is just the Gulf War Round Two, Kosovo Round Two. This is not the Gulf War.

This is about our country. Our civilization and our society has been attacked. And we are going to look at people out there, how they cooperate and whether they cooperate, whether they get this. Because I think you're going to see, before this is over, a level of seriousness in the American response that these people have never experienced.

BORGER: Secretary Cohen, as a former secretary of defense, you have been watching this administration assemble a remarkable coalition here.

WILLIAM COEN, Former Secretary of Defense: Right.

BORGER: But it seems that it's very delicate; it's almost like a 3-D game of chess. Are you worried about, for example, destabilizing Pakistan? They've got a nuclear arsenal. Are you worried that this could all destabilize the entire Middle East?

W. COHEN: Well, I think that's the reason why this administration is proceeding with caution, as well as resolve. We have to be very careful that we do not ask certain things of certain countries that they cannot measure up to. And, frankly, I think the less said about what our plans are and what the contributions are going to be, the better.

I would have a variation on a theme or an expression announced back during the Watergate years of one of our former attorney generals about saying, "Watch what we do, not what we say." In this particular case, watch what we do, and not what goes unasked by us. If we don't make public in detail what we're requiring or asking of other countries, we're going to be a lot better off.

So it does require delicacy, it does require a lot of nuance and diplomacy. And that's what I think is the challenge of the administration, and they, in my judgment, are measuring up right now.

SCHIEFFER: Abby Joseph Cohen, everybody we have talked to this morning, you heard John Kerry, you heard John McCain both say what's important here is to get the economy back on line. The stock market has gone down. Do you expect this downturn to continue? What can we expect from Wall Street next week?

ABBY JOSEPH COHEN, Investment Strategist, Goldman Sachs: I think we can expect, in the coming weeks and months, a performance that is consistent with an economy that will be questionable but looking better.

Keep in mind that the people on Wall Street went to work last week. We walked past the ash, we walked past the smoldering ruins, but our banking system worked extraordinarily well. The financial markets operated smoothly. And that really is the story.

It's clear that the economy has had some very significant short-term disruptions, but at the end of the day, what matters is that we have the world's most productive workers, we have indeed the most capable managements of companies. And we think in 2002 this is an economy that will be looking much better.

This will be a consequence of the monetary policy ease that we've already seen, and we may see more of it. It's a consequence of the fiscal policy ease, the extra spending from the government. And then of course there is the rebuilding effort. And that has already begun, even here in the city of New York.

SCHIEFFER: Well, is a recession in the short term inevitable, do you think?

A. COHEN: Economists by and large do believe that economic growth will disappear over the next several weeks and perhaps months. GDP, for example, may be slightly negative.

However, we believe that the measures that will get te economy moving again are already in place. And so, the consensus of economists believe that the third and fourth quarters of this year are already, if you will, history, and what matters is 2002. Most at this point do expect the economy to grow.

BORGER: Tom, we have talked an awful lot this morning about the role of Pakistan in all of this. I want to ask you about the role of Saudi Arabia.

There was some news over the weekend that there are some airbases that we might have wanted to have used, that the Saudis are balking at that. Are they our friends in this?

FRIEDMAN: The Saudis are part of the solution, Gloria, and they're part of the problem.

They're part of the problem in that Osama bin Laden was basically evicted from Saudi Arabia. The reason these fundamentalists are all in Afghanistan is because the Arab states have all pushed them out into the wilds of the region.

But having pushed them out, these regimes all feel just a little bit guilty cracking down on Muslims. And, as a result, what they've allowed, as Secretary Rumsfeld said, they've allowed these Muslim welfare organizations to raise a lot of money for these people, funnel it out to the Osama bin Ladens and others, and basically make a devil's bargain, "You can have the money, just don't spend it here, and don't attack us."

Having said that, as Secretary Cohen and others have said, the Saudis have bases, they have intelligence, and they have the money, they're the main funders of the Taliban. To say to the Taliban, "Look, buddy, what we need from you now is to arrange a traffic accident for Osama bin Laden. How much will it cost?"

SCHIEFFER: How difficult is it for the United States, for Pakistan, for all of these forces to find Osama bin Laden?

W. COHEN: I don't think it's difficult at all. Osama bin Laden can't...

SCHIEFFER: Really?

W. COHEN: No. It's really interesting. Last week they were saying, "Give us the proof, and we'll turn him over to you." Now that the forces are moving into the region in large numbers, and basically President Bush has indicated by his declaration, either you turn him over, either you let us into your country to examine all bases and exterminate all bases as such, or else you are the enemy. And they've said, we're not turning him over.

And so they've moved from saying, show us the money, so to speak or show us the evidence, and now they're saying, we don't know where he is, he must have left. I don't accept that for a moment. I think that they have a connection with him in terms of helping him to continue to thrive and succeed in Afghanistan, which they know where his location is.

SCHIEFFER: Well, Secretary Rumsfeld seemed quite certain that they know where he is. How can he be so certain?

W. COHEN: Well, for the reasons that bin Laden can't simply move around Afghanistan. He's not a solitary, ghost-like figure that moves from ave to cave without large elements that support him and protect him. There are also his enemies in the region who are looking for him, as well, from the northern alliance.

And so it's pretty clear that he has the support of some of the elements from within Pakistan. And that intelligence service has some elements in it that also provides him with intelligence. So, they basically know where he is and support him.

And so I think it's very clear that, if called upon, they could produce him. They probably won't.

BORGER: Abby Joseph Cohen, you've heard this morning Senator Kerry call for an immediate stimulus package to the economy. Federal Reserve Chairman Alan Greenspan has said sort of hold off, at least temporarily. Where do you come out on this?

A. COHEN: We've already seen a great deal happening. For example, the Federal Reserve itself was among the first to step in. The day of the crisis, the Fed made sure that the banking system had ample liquidity and has continued to do so. The financial markets have worked very, very smoothly. And I think we do need to take some steps to bolster consumer confidence. That is really what it's all about.

A number of the statements that have already been made, a number of the decisions already made - financial packages for the airlines, for example, financial packages to help the rebuilding process, will be very significant. There are a number of other items which are on the table. I think we should think about them slowly and deliberately.

But one thing that I personally think might be helpful might be to ensure the consumer confidence of our working families, making sure that they do have the income that they need.

SCHIEFFER: Tom Friedman, you're kind of an expert on globalization, as it were. Could this have an effect on the world economy?

FRIEDMAN: I think definitely. Basically, you know, what's happened in the last decade or so, Bob, is the world has shrunk from a size medium to a size small. And you know, when things are going well, we have been the beneficiaries of that. But when things are going badly, we and others get hit by that.

And you know, what we've seen here, we live in this world of networks now, Bob, and I like to compare it really to Rome. And in Rome, all roads led to Rome, and they were great roads. But when the Visigoths and the Vandals wanted to sack Rome, they came right up the roads.

And that's what these terrorists did. They used Travelocity to make their reservations. They used the Internet to communicate. They used the global financial system that Abby is talking about in order to transfer money.

They used the network against the network. And now we've got to re-energize and re-empower the network to use it against them.

SCHIEFFER: I thought the Pakistani ambassador made a good point when she said we have to be very careful here that we don't, in responding to this, create someting that'll be worse than what we started with. And I think the point she was driving at is that these countries in much of the Muslim world are so fragile, their governments, that they could be toppled and taken over by fundamentalists there.

W. COHEN: I agree completely with her in that, and that's why the administration has been very careful in selecting its targets and moving against those targets and not creating a situation in which the rest of the Muslim world sees this as an onslaught against innocent civilians, and thereby reducing us to the same level that we have seen Osama bin Laden carry out his execution of mass numbers of Americans.

So, I think that the Muslim world under the leadership of Musharraf, President Musharraf in Pakistan, and others, if they see that we are determined, we are resolved, we're angry, we're full of rage but it's a controlled rage, that we are going after the people who are trying to kill us and to take that ability down.

SCHIEFFER: Abby Joseph Cohen, you were out of the country, as I understand it, when the twin towers were hit?

A. COHEN: No, Bob, I was in the financial center.

SCHIEFFER: Were you?

A. COHEN: I was a few blocks away from the World Trade Center, and my daughter was within yards of it. So this was a very personal thing for me, as it was for many of my colleagues.

Let us recognize that this is a community that has been very hard hit. The financial community has felt it most significantly, most severely. And the fact that we were all able to go back to work and get the markets functioning, I think is an extraordinary testament to our financial system.

And let's keep in mind, too, that those amber waves of grain are still growing, and consumers and businesses outside New York are resuming more normal operations. I think that's fabulous.

SCHIEFFER: Absolutely. Thank you very much, Abby.

We'll be back with a final word after this short break.

(COMMERCIAL BREAK)

SCHIEFFER: Finally, today, only now are we coming to understand all of the ways this has affected us. Only now have the survivors realized the deep, psychological impact it is having on them. Young people returned to their offices and cry. Work no longer seems important. Parents worry their children will not know the kind of world they have known.

We give thanks that we were not at ground zero when it happened, and we feel guilty and tell ourselves we didn't mean that we were glad someone else was there instead of us, and then we don't know what we mean.

I spend most of my working days on Capitol Hill. If the plane that went down in Pennsylvania was headed to the capitol, as many now believe, perhaps I owe my life to the brave passengers who forced it to crash.

The questions we ask at times like these are those that have been asked from the beginning of time: Where does evil come from? Why do some live and others de? But we can never know.

What we do recognize is that grief is a part of healing. Yet, we must not succumb to despair, nor is there reason to.

When we saw Congress cheering the president, it reflected an America united, something we have not seen in a long time, something younger generations have never seen. And American resolve is still the most powerful force on earth.

In no way does it diminish the horror we have just experienced to say that those of us of a certain age saw an America united rid the world of a far greater and more dastardly evil. This is different, but it is doable. Together, we can find a way to do it.

That's it for us here at Face the Nation. We'll see you next week, and, of course, we'll break in to any programming in the next week whenever developments warrant. Thanks for joining us.

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