Richard Perle: Pakistan, Iraq, the Economy, and Election '08

By Maria Bartiromo

Brad Trent

In the prologue to the new book Prince of Darkness: Richard Perle; The Kingdom, the Power & the End of Empire in America, author Alan Weisman likens the geopolitical thinker, Washington insider, and sometime-businessman to Woody Allen's Zelig: appearing "in every foreign policy snapshot" for decades. Perhaps because Perle is a man who, Weisman suggests, relishes intellectual confrontation, he elicits passionate feelings from friends and, especially, foes. Critics have pilloried Perle as a leader of the neocons who took America into a disastrous war in Iraq. And as a director and executive of Hollinger International, Perle took a hit to his reputation when a scandal erupted around Hollinger mogul Conrad Black, who starts a 6 1/2-year prison sentence in March. But when I talked with Perle, he was waxing optimistic from his vacation home in Provence.

MARIA BARTIROMO

How big a setback for democracy in the region is the assassination of former Prime Minister Benazir Bhutto?

RICHARD PERLE

Anytime a candidate in a democracy is assassinated, it's a blow to the process. But it's too soon to say whether this will be a lasting blow or whether the Pakistanis will get past this and wind up protecting their democratic institutions.

Is there any danger that Pakistan will spin out of control and threaten economic progress and foreign investment in neighboring India, for example?
The Indian economy is a great success story, and I would be surprised if it were seriously affected by this assassination.

We're seeing increasingly significant investments in the West, particularly in financial institutions, by oil-rich sovereign wealth funds from the Mideast. Do you find this troubling?
You're quite right. They are becoming a formidable factor in international capital flows. It is the most recent version of the recycling of petrodollars, and there are more petrodollars than ever. What it really reflects is the inability of oil-producing countries to develop their own internal economies. Their preference is investing in external economies because they've been so unsuccessful developing their own.

How should the U.S. react to these investments?
I think we would have every reason to be concerned if we thought that the underlying motives behind the investment were not simply economic but included political objectives. I don't see any evidence of that so far. However, I think we want to keep a very close watch.

What are the biggest threats to business in 2008?
The effect of the subprime crisis on liquidity and the behavior that produces among bankers is potentially the most severe problem. The Fed seems to be doing what it can....but we've seen other cases in which zero interest rates have not been a sufficient remedy. Japan, for example. So one can't have complete confidence in the Fed's ability to mitigate the situation. On the other hand, the very weak dollar will likely continue to stimulate a surge in American exports. And innovation and technology remain as vibrant as ever. I'm very bullish on the American economy. If there is a recession, we will make short work of it.

If you were advising the President, what would you say about destabilization in Pakistan, a Taliban resurgence, improvements in Iraq, and the decreased threat of Iran?
The improving situation in Iraq demonstrates how quickly things can change. Now, that may sound strange because it's five years [after the war began], but it's really only a few months since the change in strategy, and it is now clear that a good part of the failure in Iraq was the choice of a poor strategy. With the choice of a better one, we're seeing really quite rapid improvement. We may face some similar questions of strategy in Afghanistan, where there was a period of neglect after the removal of the Taliban that allowed something of a Taliban resurgence. But I don't think it's by any means out of control. It is related to the situation in Pakistan because much of the support that the Taliban relies on comes from Pakistan.