MS. SUSAN PAGEThanks for joining us. I'm Susan Page of USA Today sitting in for Diane Rehm. She'll be back on Monday. After stops in India and Indonesia, President Obama attends the G20 summit in South Korea. At a news conference in Seoul, the President urges China to act responsibly in the global economy and calls its currency policy an irritant to the U.S. and China's trading partners.

MS. SUSAN PAGEIn Iraq, political leaders seek to salvage a power sharing agreement after Sunni lawmakers protest the deal and Israel defends its plan to build new homes in east Jerusalem. Joining me in the studio to discuss the week's top international stories on our Friday news roundup, Rajiv Chandrasekaran of the Washington Post, Nancy Youssef of McClatchy newspapers and David Sanger of the New York Times. Welcome to "The Diane Rehm Show."

MR. DAVID SANGERGood to be here.

MR. RAJIV CHANDRASEKARANGood to be here.

MS. NANCY YOUSSEFThank you.

PAGEWe invite our listeners to also join our conversation. Our toll free number, 1-800-433-8850. You can send us an e-mail at drshow@wamu.org or find us on Facebook or Twitter. Well, David Sanger, the lead story in this morning's New York Times, you are the co-author, the headline "Obama's Economic View is Rejected on World Stage." Doesn't sound like a successful trip.

SANGERWell, you know, the beginning part of this trip wasn't bad. India looked really good and I think he did a lot to solidify the relationship there. Indonesia was this incredibly warm homecoming to a president who had spent four years of his youth on the – in the back neighborhoods of Jakarta and then he hit Seoul. And we knew this was going to be ugly and it was.

SANGERA few things were going on here, Susan. The first is that the U.S. continues in a pattern of trying to deficit-spend its way out of this economic downturn. During the past G20 meetings, and there have been three previous ones under President Obama's time and one our leader's meeting at the end of the Bush Administration, the U.S. was pretty much able to corral all of the other countries into a common strategy. This time it fell apart. And it fell apart because you now have a British government that's cutting its budgets like mad, a French government and German government that are doing the same. And so our economic strategy is differing from our European allies.

SANGEROur currency conflicts have grown with the Chinese, who have not let the currency appreciate, as you heard at the beginning of the news hours. And then, the Federal Reserve stepped in a week ago and took an action that the rest of the world saw as an effort to depreciate the dollar and find that as a way out of our problem, putting the burden really on the other countries. And so we're all off in different directions and it was a pretty contentious meeting.

PAGEDo other countries have a point, Rajiv, that the fed's action is akin to what we've complained to the Chinese doing with their currency?

CHANDRASEKARANCertainly in the view of the Germans and some other European allies, yes, they see it that way. And they see the U.S. government, as David pointed out, as not taking the necessary steps to bring our own fiscal house in order -- at a time when they are making those moves. And this is particularly riled nations with large trade surpluses, China and Germany, and so that's where the tension was most palpable at Seoul with Hu Jintao of China and Angela Merkel of Germany.

PAGEThere would have been every expectation by the administration that they were gonna have a prize to deliver, a long awaited, long sought trade deal with South Korea and it just didn't come together. Tell us what happened, Nancy.

YOUSSEFThat's right. There was hope that there would be a trade agreement that dealt primarily with American autos and beef being exported to South Korea and it -- as David mentioned, he went into Seoul and the trade agreement was precarious. And then, they came out and didn't have anything to show for it. President Obama said it would be weeks before that agreement would be worked, but you had a lot of U.S. companies objecting. Ford put out a full-page age saying for every one Ford product that is sold in Korea, 52 are sold here. That it was an unfair deal.

PAGESo the president was trying to sell a trade agreement that wasn't popular domestically, only one week after he had suffered a pretty tough election defeat.

SANGERYou know what, two things to remember about this trade agreement. First, it got negotiated once already in the Bush Administration and the Obama -- President Bush never sent it to Congress for fear it would get defeated. President Obama went back to the Koreans and said, we really have to fix this up and get it renegotiated if we're gonna make this work. This was supposed to be the deadline for having it done because when you have the presidents of the two countries sitting next to each other, the usual theory among trade negotiators is that anybody who can't get an agreement under that or those conditions, probably should be in a different line of work, okay.

SANGERSo now, we have the president of the United States saying, don't worry, we'll have this in a few weeks. Well, if you couldn't do it under the pressure of a summit, how are you gonna get it in a few weeks is a bit beyond me.

PAGEYou know, Nancy mentioned the mid-term elections. President Obama left in the wake of suffering historic losses in the house. And Rajiv, I wonder, is that a factor, that political weakness at home when he goes to South Korea to try to negotiate a deal or he tries to make his case when it comes to U.S. currency?

CHANDRASEKARANI think without a doubt. And in fact, the South Korean president even noted it at one of the G20 press conferences. I mean, this is all now playing against the back drop of significant gains by Tea Party candidates, who some of them are very skeptical of this sort of trade deal. You've got members of his own party that are concerned about the impact on American jobs, even though the U.S. Chamber of Commerce has been very supportive of it. As Nancy mentioned, Ford Motor Company and some other large U.S. companies have expressed a degree of opposition to it.

CHANDRASEKARANAnd so the president came in with a much weaker hand and that was known to the South Koreans and I think that had an impact on the negotiations. And what the White House had hoped for, let's notch a deal here. Let's take some of the attention away from the shellacking that they got last week. And in fact, what we see here is that the American domestic political shift follows the president overseas, at least in the case of the G20.

PAGEWe talk a lot about the politics of these deals and the disappointments. David Sanger, tell us about the substantive impact. We're in the midst of this long, sad, tepid recovery here in the United States. Unemployment is still so high. Does what happened this week on this Asia trip, does it impact what's gonna happen with the U.S. economy?

SANGERWell, the Korean trade deal only marginally. We were talking about a deal that might increase exports by $10 billion. That's a lot of money, but in the overall world of U.S. exports, it's not a huge amount, but certainly would be important because other countries have been reaching free trade agreements with South Korea, both Asian countries and European countries.

SANGERThe currency issue, there's a real issue because that affects every transaction that goes on. And since the day the president has come in, he has been in this arm wrestle with the Chinese about how quickly they would allow their currency to appreciate. That has a huge amount to do with Chinese imports coming here. That has a huge amount to do with our exports to the world's biggest, fastest growing economy and now the world's second largest economy. What you're really seeing happen here, though, Susan, is something much bigger.

SANGERIt is the gradual collapse of the currency system and, to some degree, the trade system, but more the currency system that was established between the United States and all of its trading partners right after WWII, the so-called Britain Woods Agreement. At that time, China was a non-player. All of the significant economies with the United States, Britain, the Europeans were coming back after WWII. And now, all of a sudden, you have a system in which the Chinese and many other players have said, you know, guys, we get a vote, too. And your system hasn't changed fast enough to make that clear. And that's what's happening.

PAGERajiv.

CHANDRASEKARANAnd they get a very significant vote when they own one out of ten dollars in American public debt and so the whole domestic issue of deficit spending and trying to bring the budget in order here plays out on these discussions. Our leverage in dealing with the Chinese over this issue is fundamentally impacted by the debt issue.

PAGEWell, if, though, the Britain Woods kind of agreement that's been in place for decades starts to collapse, what replaces it?

SANGERWell, that's why this meeting ended so inconclusively because no one can tell you what replaces it. No one is quite certain whether -- you know, once we got off the gold standard, the replacement system was that the U.S. dollar became the world's reserve currency and basically played the role that gold played before. Now, what you heard were trading partners led by the Chinese, but also the Germans, saying, hey, that means that whenever you devalue your currency, you have to worry not only about what its domestic impact is, but what its international impact is. And their accusation was that the fed's acted completely for domestic, U.S. purposes, not to act as the guarantor of the world's most important currency.

PAGEWell, are they right when they say that?

SANGERWell, it's certainly had Chinese-like characteristics to the activity. And, you know, the real evidence that there was something interesting going on here is that it wasn't only the Europeans saying, you effectively devalued your currency. You know, you had the Treasury Secretary saying, there was no devaluation here. And, all of a sudden, his mentor and former boss, Alan Greenspan, writes a column in the FT basically saying, you know, the Europeans are right. This was a devaluation. That didn’t put Tim Geightner in a great spot. He ended up in a transpacific argument with the man who trained him.

PAGENancy.

YOUSSEFBut there is a real domestic problem. Unemployment is at 9.6 percent. Short-term interest rates are near zero anyway. They're sort of traditional means that the United States has used to sort of deal with its economic problems. This was sort of the last alternative, other than dealing with -- in a very serious way the deficit problem.

PAGEThat's Nancy Youssef. She's Pentagon correspondent for McClatchy newspapers. We're also joined this hour by David Sanger, chief Washington correspondent for the New York Times. He's author of, "The Inheritance: The World Obama Confronts and The Challenges To American Power." And Rajiv Chandrasekaran, senior correspondent and associate editor at the Washington Post. Our phone lines are open. You can reach us by calling 1-800-433-8850, that's our toll-free number or send us an e-mail at drshow@wamu.org.

PAGEWe were talking about the long awaited South Korean trade deal. When we come back, we'll talk about another long awaited deal that was the power sharing arrangement in Iraq, which has -- on the verge of perhaps falling apart. We'll talk about that. Stay with us.

PAGEEight months after their parliamentary elections, there's finally an agreement in Iraq for a power sharing arrangement, but it fell apart almost immediately. Nancy, tell us what happened.

YOUSSEFThat's right. They went to -- the parliament went to meet to start putting together this government that, so far, has Maliki still as prime minister, Jalal Talibani still as president, the Sunni's still parliament speaker. And within hours, the Sunnis walked out. And it really exposed how -- not only how fragile this agreement was, but how much sectarianism still dominates Iraqi politics. One of the reasons the Sunnis walked out is they felt that the Shia partners were holding them liable or punishing them for maybe being Ba'ath party members of some level during Saddam Hussein's regime, that they were still being ostracized, if you will.

YOUSSEFAnd so it now remains precarious once again. It's hard to celebrate this right now because sectarian-based politics appears to still dominate Iraq and that's dangerous at a time when we're starting to see rising levels of violence, most notably 150 people killed in the last week.

PAGERajiv, was this a surprise to U.S. officials?

CHANDRASEKARANNo. You know, this was sort of the deal that the Obama Administration had been pushing for. You know, they did want Iyad Allawi, who is a secular Shiite, but who commanded large numbers of Sunni followers in sort of a more secular nationalistic slate and who had actually won a narrow majority of seats in the parliamentary elections low these many months ago.

CHANDRASEKARANThere was a desire to have him assume the presidency, a largely symbolic role, but would've shown that a Sunni Arab could be president while Maliki, the Shiite, incumbent prime minister would've kept that job. The minority Kurdish population, largely in the northern part of the country, did not want to seed that post. And this was one of the principal reasons for these months of gridlock.

CHANDRASEKARANSo then, the compromise position out of the administration was, all right, let's try to get Allawi to chair a new kind of committee on national security and economic policy, a very undefined, vague type role and the powers of which still have not been clearly spelled out. And this is at -- partly at the root of a lot of the angst on the part of the members of his coalition.

CHANDRASEKARANAnd so what had happened here was that the, you know, the Obama Administration was unable to sort of force that change. Maliki, of course, has a great deal of support from Iran. And the -- it was essentially sort of a continuation of the status quo, showing yet again how American leverage is diminished over there, how Iranian influence is ascendant and that even though you had a party, a largely secular party, that commanded a slim majority in the elections, they were unable to bring together enough support to form a government.

CHANDRASEKARANAnd that the hope that everybody had months ago that maybe we were seeing the first sort of indications of a more unified nationalistic secular government starting to take shape has been completely shattered. And what we see is the continuation, and if not rise, of more sectarian divisive politics that will play out, perhaps, for the next several years.

YOUSSEFYou know, Rajiv mentioned diminished U.S. influence in the country and that's right, but this -- I call it sort of census-based politics because it really breaks down proportionate to the population is something that the United States introduced in 2003 and Iraq still hasn't been able to let go of. I couldn't help in watching the results come out, at what point does Maliki relinquish control of the presidency and is there legitimate concerns about a sort of new kind of strong-man set up that's emerging in Iraq?

PAGEDavid?

SANGERYou know, Susan, in the first hour you were talking a little bit about President Bush's autobiography or decision points and, you know, you read a book like that, not only for what it includes, but for what it omits. And thinking about this conversation, you go through that book without any discussion or even recollection of discussions of making Iraq a place safe for Iranian influence.

SANGERAnd yet, when you are -- through the region, as Nancy and Rajiv know better than I, what you hear more than anything else is you just destroyed Iran's greatest enemy and now you're leaving and you're allowing Iran to spread its influence throughout the region. What's your plan for this? And I think what we're hearing in this process is we didn't have a plan for this.

PAGEWell, we don't have a plan and this is happening, they still don't have -- eight months after elections, still don't have a real functioning government. Does that have the possibility of effecting U.S. commitment to withdraw combat troops from Iraq by the end of next year, Rajiv?

CHANDRASEKARANWell, certainly if violence continues picking up -- and the last few weeks have been particularly ugly if Baghdad, the seize of church, which more than 50 people were killed, another string of bombings, further attacks on Iraq's minority Christian community. If that violence continues to rise, it's certainly going to put the Obama Administration in a much more difficult spot in terms of trying to fulfill that commitment to get all the troops out by the end of 2011. And that is, I think, directly tied to what sort of government they have.

CHANDRASEKARANAnd if -- there is a perception and actual reality, in part, seen by the Sunni population that the government doesn't represent them. And this government continues to further marginalize the Sunni population, which we've already sort of seen over the past couple of years with Prime Minister Maliki's efforts to disband these sons of Iraq type programs, which were seen as instrumental in bringing down the violence a few years ago. You could see potentially some of those individuals rejoining some sort of insurgency against the government. So there's a very real path that could occur between the political tension that exists in Baghdad and resumption of violence.

PAGENancy?

YOUSSEFSecretary of Defense, Robert Gates, this week for the first time introduced the idea of troops potentially staying. It was a very tepid introduction. Someone asked him and he said if the Iraqis asked us, we would consider it. But there are two things that are in the way of that. Number one is the cost of it. United States oversees contingency budget for Iraq and Afghanistan is 159 billion for those wars. It goes down to 50 billion in just a couple of years. You've got a military that's physically exhausted and planned on those troops coming out for its operations in Afghanistan.

YOUSSEFAnd then the question becomes even if those troops stayed, what could they do? What effect could they have? How much could they stop this ongoing sectarian violence? Rajiv brought up a great point about the Sunnis maybe joining insurgence groups. What's interesting is the sons of Iraq, who the United States helped pay for have now lost the trust of Al Qaeda, who says, we don't know who -- if we can count on you or not, and they're not being welcomed by the government. So they're really stuck in the middle. So it's interesting who Al Qaeda would go to if they decide to try to reconstitute themselves, again, in Iraq.

PAGEBut I wonder, David Sanger, what would happen in this country if the administration said, look, we wanted to be out of Iraq by the end of 2011, but lots of violence there, the government wants us to stay so we're going to maintain a bigger presence than we had had expected?

SANGERWell, I think we have two big issues. In the first hour, you talked about the deficit commission, which, among other things, discussed closing a number of foreign bases. I don't think keeping a permanent one in Iraq was part of the deficit commissions planning process. On the question of overseas bases, they have always been cost-free politically, if you're taking no casualties. So, you know, we've had 50,000 now down to 25,000 troops in South Korea.

SANGERPresident's just been in South Korea for three days, you never heard the subject discussed. Why? Because apart from, you know, some traffic accidents and other small tragedies, this is not a group that takes casualties and they are performing a kind of peace stability role versus North Korea.

SANGERThat might be justifiable in Iraq if the concern was, say, Iran. You know, helping protect Iraq against an outside force. I'm not sure it's politically viable if you're trying to prevent a civil war from breaking out.

PAGENancy, you wrote this week that the administration also has sent some signals that the withdrawal of troops from Afghanistan might be up for change. What did you find?

YOUSSEFWell, I found that at the Pentagon and in some parts of the White House there's an effort to de-emphasize July, 2011, as this -- not just July, 2011, but the December review that was supposed to happen or is still happening, a real pushing back from hard, fast public deadlines on the war on Afghanistan, that things need to play out a little bit more. And that rather than looking at those deadlines, to let the war play out and let the U.S. troops train their Afghan counterparts through 2014, when Hamid Karzai, several months ago, the President of Afghanistan, said that he believed his army could defend its nation.

YOUSSEFI think there was a hesitancy to keep having these public debates, if you will, on the status of the war in Afghanistan. And I think we're going to start to see less and less emphasis. That said, that doesn't mean that troops aren't leaving in July of 2011, but the number and the pace, it looks like, is going to be a little bit slower than, I think, many people had anticipated.

PAGERajiv?

CHANDRASEKARANI think what's going on here is that the administration is trying to have it both ways. There is a growing recognition that the President's July, 2011, date that he stated almost a year ago at West Point, where -- the date at which U.S. troops would begin withdrawing from Afghanistan, that that sent some mixed signals to folks out in the region. It confused President Hamid Karzai. It led him potentially to then say, some months later, he was thinking of joining the Taliban and other sort of erratic statements like that. It certainly sent mixed messages to the Pakistanis and others in the region.

CHANDRASEKARANSo I think what you have here, and particularly with some prodding from General Petraeus and others at the Pentagon is to say, look, we need to de-emphasize July, 2011. Let's accept Karzai's stated goal of a 2014 transition. We'll hear more about this at a big NATO ministerial in Lisbon later this month. And so it's an effort to sort of take a longer horizon, but I don't think this means that the White House has fundamentally backed away from some troop draw downs that will begin next summer. The President's always said it's going to be conditions-based. It will be, but I don't see the White House fundamentally stepping back from that.

PAGEAnd the President may have been careful when he laid out that timetable, but I think Americans -- what Americans heard was that they can expect our troops coming back then.

SANGERThat's right. They did hear 2011 and they didn't hear the rest. The rest was most important. I'm with Rajiv. I think this is the rhetoric now catching up with the reality. I mean, if you talk to the military, they'll tell you that if you're really doing counter insurgency, there's no way you can do it in a year. There's no way you can do it in five years. It might take ten. I think 2014 is probably a fantasy if our real goal is to keep Afghanistan from ever again becoming a safe haven for Al Qaeda and the Taliban.

SANGERYou know, I remember a year or two ago writing at one point -- quoting somebody in the U.S. military during the Bush Administration as saying, we'll be there for 30 years and a General calling me up and saying, boy, are you an optimist.

PAGEI'm Susan Page and you're listening to "The Diane Rehm Show." We're going to take some calls. We have some lines open, 1-800-433-8850. We'll go first to Rom, he's calling us from Richland, Wa. Hi, Rom.

ROMGood morning. That's a nice segue. My question has got to do with the region you've just been talking about. President Obama, during his travels, visited India, where, among other things, he endorsed India's permanent membership to the U.N. Security Council. He also said Pakistan must crack down on terrorists, including those targeting India, like the last (unintelligible) responsible for the Mumbai attacks.

ROMSo my question is this, you know, this announcement and his visit in general is being dissected in minute detail in the Indian media, but I hardly see any coverage in the U.S. media, including on your show, for example. So what does one make of this? Was Obama's visit to India just a waste of time, like thumbing the American right, like Glenn Beck alleged that it was a colossal waste of taxpayer money?

PAGEAll right, Rom, thanks for your call.

CHANDRASEKARANWell...

PAGEWho on our panel would like this one? Rajiv?

CHANDRASEKARANWell, you know, I think this was a very important visit, helping to solidify relations with a very important ally, the world's largest democracy. And certainly it -- there was not as much, perhaps, substance to come out of it as obviously the Korean stop. But the statement he made about supporting India's ascension to the U.N. was something that played very well in India. You know, he had to walk a fine line with regard to Pakistan.

CHANDRASEKARANObviously, the Indians would like to see the United States take a much stronger line on the Pakistani intelligence service's support for extremist groups, including some that have committed horrific acts in India, as well as in Afghanistan. And the President was forced to sort of balance all of that. There'll be some interesting tests coming up. For instance, you know, what does the administration sort of do with regard to Pakistan? With regard to, for instance, senior Lashkar (sp?) type of leaders who -- you know, that was the group that was behind the Mumbai attacks in which American citizens were killed.

CHANDRASEKARANAnd so how his administration sort of plays that, vis-à-vis trying to prod the Pakistani government to do more, to crack down on insurgence sanctuaries in the tribal parts of that country, which have a direct bearing on the war in Afghanistan. Again, the visit sort of brought into relief some of the real challenges the United States faces with Pakistan. And, of course, the Indians see this very much as a zero sum game. And what President Obama was trying to do was say, hey, look, the partnership here goes beyond that.

CHANDRASEKARANThe other thing to mention here is that the India visit was also incredibly important with regard to China. And to show the Chinese, hey, look, the United States is committed to a deep and extensive friendship with India and one that -- the intention was to be seen by Beijing, in part, as, hey, look, this is a degree of a counterweight in the region.

PAGENancy?

YOUSSEFYeah. I just wanted to add to that. I thought the trip really showed where economic interest and the war on terror, if you will, kind of collide. Because on one hand, the United States wants to build a relationship with the world's largest democracy and an economic one and yet, just a couple of months ago, we were watching tankers on fire in Pakistan as they were trying to come through.

YOUSSEFThe United States is depending on Pakistan in a very real way to get supplies into Afghanistan and this trip really irked the Pakistanis. And so I think you saw a real dance going on, vis-à-vis the very media security issues that the United States is dealing with, vis-à-vis Pakistan, its needs in Pakistan and its ongoing economic needs in India.

PAGENancy Youssef of McClatchy and we're also talking this hour with Rajiv Chandrasekaran from the Washington Post and David Sanger from the New York Times. When we come back, we'll talk about the situation in Israel and about European Union negotiations with Iran. We just have an update from the AP on that so stay with us.

PAGEThe Associated Press reports from Brussels that the European Union has agreed to meet with Iran on December 5, to discuss Tehran's nuclear program. Tehran wanted to meet in Istanbul. The EU is suggesting Vienna or Switzerland. David Sanger, tell us what's happening here.

SANGERWell, what's happening here is an effort to try to restart a set of talks that have not gathered since last October in Vienna. And so, you know, President Obama came in promising to engage the Iranians. The first year of engagement failed. He moved to sanctions. The sanctions have now gotten fairly severe. The question is, are they severe enough to bring about a change in strategic direction on the part of the Iranians?

SANGERSo far, we have spent the past three months arguing on a date for this meeting, a locale for this meeting. Turkey has been more open to the Iranians and came up with a proposal that went nowhere a few months ago. So the Iranians wanted it in Turkey where they could have Turkey at the table. And the Europeans have been saying, no, we're going to do it where we've always done it.

SANGERSo we've been arguing about the shape of the table. Oh, by the way, the Iranians say that when they show up, they're not there to discuss the termination of the Iranian nuclear program, which would seem to be an argument for picking whatever negotiating city has got the best restaurants. Because it's not clear what it is that the discussions would be about.

SANGERBut the President has got to test the proposition now, President Obama, that these sanctions have actually made a significant difference. And it's not at all clear yet that they have. Of course, lurking over this, especially in a week that Prime Minister Netanyahu has been in the U.S. talking about Iran, is how long will the Israeli government let this go on before they began to make good on their -- on their perpetual, but never full stated, threat that they would take military action if Iran got too close.

PAGEWell, of course, the disputes with Israel and Iran, also some very public words of dispute this week between Israel and the United States between the President and Prime Minister Netanyahu. Nancy, tell us what happened.

YOUSSEFWell, while President Obama was in the largest Muslim country in the world, Indonesia, he made comments about Israel's plan to restart settlements, 1300 of them, in east Jerusalem, which the Palestinians consider their capital. He called the effort by the Israelis never helpful and this lead to Netanyahu reminding him that all of Jerusalem is Israel's capital, not part of it.

YOUSSEFAnd from there, we had Hillary Clinton meeting for several hours with Netanyahu yesterday. It's not clear that it's led to anything substantive and so the hopes of restarting the peace negotiations don't seem very hopeful right now. And it's all hinging on these settlements. This is becoming the divisive issue of the day. At one point, the Palestinian negotiator, Saeb Erekat, said that he wanted to declare a Palestinian stay and, of course, this was met with a rebuke by the secretary of state.

YOUSSEFAnd so there was a lot of visceral language being thrown around this week and no real settlement on the settlements.

PAGEYou know, I think some people would say, well, okay, President Obama said this kind of action is quote "never helpful." That doesn't seem so bad. Are those, in fact, fighting words when it comes from the President of the United States to the Israeli government?

YOUSSEFI think they're being taken that way because -- not just because of those words, but what the President has been saying since he took office. I think the Israeli's feel that there's been a very adversarial relationship between it and the Obama administration, which sort of reached its apex when Joe Biden, the vice president, went to Israel and the settlements were promptly announced. And so I think they're being interpreted that way and that's -- and that's enough.

PAGESo David Sanger, what are the chances that peace talks are going to get resumed any time soon?

SANGERWell, I suspect that they will get resumed. The question is could you find a formula, as Senator Kerry suggested during a trip to the Middle East this week, could be found in which settlement activity would not be completely frozen, but the talks would go on anyway. The issue here is how long does Prime Minister Abbas have negotiating room and whether Prime Minister Netanyahu in Israel can get out from underneath this internal battle within his own coalition.

SANGERI mean, he is greatly constrained by the fact that many of his coalition members are among the biggest enthusiasts for these settlements. And so while the U.S. has one vision of how you get to a final agreement, which would be crack this coalition and form another one with moderates, that so far there's no indication that Prime Minister Netanyahu is willing to take that risk.

PAGELet's go to the phones and invite our listeners to join our conversation again. We'll go first to Jeff. He's calling us from Durham, N.C. Jeff, thanks for holding on.

JEFFHey, good morning all. Thanks for taking my call. My quick question is back to the Afghanistan issue. I'm not a supporter of this president in the sense that I voted for him. However, I'm recognizing the challenges that are facing him politically and I'm wondering if, given the huge defeat that he had last week with his own party and Congress, is ultimately pulling the truth out and essentially de facto admitting defeat against what they're trying to accomplish in Afghanistan. Is that too big of a political price as we head towards 2012?

PAGEAll right, Jeff. Thanks for your call. Nancy, what do you think?

YOUSSEFJeff raises a great point and that is that politics are certainly entering into the Afghanistan debate. And, in fact, the Republican win gave the President a lot of room because a lot of Republicans are saying we shouldn't pull troops out. Even as we talk about cutting back on the budget, that those troops need to stay until the mission is complete, however you define a complete mission.

YOUSSEFThe reality is that July, 2011, was added into that December 1st, West Point speech to appease Obama's base. And right now, he is not as concerned with that base, but he is with working with his Republican counterparts. So I don't think he needs to hang on July, 2011, the way he did a year ago. So I think that's part of the reason you're seeing this back way.

YOUSSEFBut as Rajiv said, I think what's dominating it is the Pentagon really didn't like that day. You know, they would argue what counterinsurgency has won with a deadline hanging over it. They need the maneuvering room to fight this as they see fit.

PAGEAll right. Go ahead, Rajiv.

CHANDRASEKARANSo yesterday, I walked into the office of our polling director and I asked him, you know, look, if the -- that the crucial crowd that Obama has to reach out to are independents who voted for him two years ago, but voted for Republican candidates last week. Where do they fall on the Afghanistan issue? And so we ran the numbers through the exit poll software and found a pretty even split. And the other thing that's worth noting...

PAGEAn even split between what?

CHANDRASEKARANBetween we think the war is a good idea, stay -- stay the course and let's pull out, this is -- this is, you know -- I'm oversimplifying here, but essentially between stay or go. It's also worth noting that in the exit polling that was done for the midterm elections last week, I think it was something like, you know, one or two percent of people put the war as the top issue. I mean, the economy crowds out everything else.

CHANDRASEKARANWhat's, I think, really interesting here is that while there are very strong views among Americans on Afghanistan, it doesn't really, you know, ping to the top of the list. And so while, yes, it would stand to reason that a more aggressive drawdown would help solidify his base and energize the Democratic base, it's not at all clear that one course of action over the other has a very clear political impact here for him going forward.

CHANDRASEKARANAnd it may mean that the White House sees some greater running room to sort of do what it feels is right and that doesn't necessarily mean that they're going to stay the course. I mean, I think there's still some very grave doubts in the White House about the counterinsurgency strategy is working. But I think it may mean -- they may read this as, all right. We're going to do what we think is right as opposed to what we feel like we have to do to win votes in 2012.

SANGERI think Rajiv is right and he -- there is no indication that the war was anything of an issue in this mid-term election, presumably it will be more in the presidential election. What does that mean the choice is for President Obama? If the pressure right now comes from those who say this is an unwinnable war so don't do this slowly, pull out all of a sudden, and those, including as Nancy pointed out, in the military who say, you've got to do this on a gradual rational basis.

SANGERThen the question is what marginal gain do you get over controlling Afghanistan, events there, the possibility it could become a safe haven for terrorists again, by keeping a big troop presence longer? And I think that's the calculation. That delta is what's going on in this midterm debate in December and what will really be debated come next summer.

PAGEWell, it's certainly true that no foreign policy issue played a role -- a significant role in the midterm elections, except the degree to which the economy is a global concern. But you go back just four years, and the war in Iraq played a big role in the political debate that year. So how can you be certain that this remains not on the front burner for Americans?

YOUSSEFI agree. I mean, I think rising troop deaths could affect that. Also, as we talk about where cuts need to be made and the -- and Pentagon keeps coming back and saying we need however many billion dollars to keep fighting this war, how much room they'll have to do that. We saw the commission that the President put -- the 14-member commission recommended budget cuts.

YOUSSEFSo I think Rajiv and David are absolutely right. But I also think the war is a fickle issue and can crop up again in domestic politics quickly.

SANGERAnother terror attack would...

YOUSSEFThat's right.

SANGER...certainly change the politics of that.

PAGEAll right. Yeah. Let's talk to Alex calling us from Gainesville, Fla. Hi, Alex. You're on the air.

ALEXHi. I was just listening to what you all were talking about. It's kind of on the same -- what I have to say is kind of on the same vein of what you were saying.

ALEXAs our troops get to be spread more thin and possibly looking into a war in Iran and possibly looking into backing Israel in another war, is there any possibility that this could go to kind of a revolutionary war referendum kind of thing where we end up voting levies or taxes ourselves, on whether or not we want to support this, or whether we want to go back to a draft instead of letting this fall directly on the President and House and then going into a Vietnam-like scenario where have lots and lots of protests and other things and everyone wants to stay safe and nothing ends up happening?

PAGEAll right, Alex. Thanks for your call. David?

SANGERInteresting question, Alex. But I don't think we've had a referendum on a war issue, not the way the Constitution lays it out. Certainly not the way the practice has been in the -- the wars that have gone on since World War II, whether it was Korea or Vietnam, or the first gulf war or Afghanistan and Iraq. So I can't imagine a situation in which this would be referendum issue.

PAGEAlex, thanks very much for your call. Let's go to James calling us from Charlottesville, Va. Hi, James.

JAMESHey. I actually made it. Thank you for taking my call.

PAGEAbsolutely.

JAMESMy question actually went back to the -- the issue of perhaps us entering a currency war as to who can de-valuate their currency the fastest. But yet, it would seem to me our real problem does not lie with either Europe or, for example, some of Southeast Asia. But rather, it seems focus directly on China and China's tremendous manipulation of their currency on every level and massive numbers of unfair trade practices.

JAMESAnd this pumping of the 600 billion, I don't think is going to really direct anything towards changing that imbalance. The Chinese will not buy American products. So I think it needs to be addressed differently. What is your panels' thoughts on this?

PAGEAll right, James. Thanks for your call. Nancy?

YOUSSEFWell, James brings up a lot of interesting points. But at the end of the day, I think we saw on the summit a real backlash against the U.S. effort to tackle its economic problems from allies. I mean, just a few years ago when these meetings would get together, you saw some sense of consensus. But this time you're seeing countries like Germany and Great Britain really tackle their economic problems differently and that there doesn't seem to be a real agreement or consensus or support for how the U.S. is going about it.

PAGEI'm Susan Page and you're listening to "The Diane Rehm Show." David?

SANGERYou know, the caller made the point that the Chinese wouldn't -- made the point that the Chinese wouldn't buy American products. That certainly has not been my experience when I have been in China. I was in China when the iPhone was first coming out and there were -- it had not yet been distributed in China and Chinese were paying their friends to bring iPhones over and resell them on the markets, you know, in Beijing.

SANGERThere's a fascination with American products. And I lived in Japan for many years as a foreign correspondent for the Times and I would say the Chinese were probably even more interested in American products, American technology, American cars, than the Japanese ever were. So the issue of currency is partly a way in which the Chinese government tries to keep their economy from overheating and also tries to recycle their money and actually it's an issue of control.

SANGERMy guess is if they really let the Chinese Yuan appreciate, you would see a flood of American products into middle class Chinese who are fascinated by all things U.S.

PAGEJames, thanks very much for your call. Rajiv, we had some disturbing news this week. More information about those failed cargo bombs that originated in Yemen. What did we learn?

CHANDRASEKARANWell, we learned that those bombs could have detonated -- could have been triggered to detonate as the planes were in flight over the United States, over American cities, potentially causing some pretty significant damage and casualties. The upshot of this is that this was perhaps a far more serious incident that originally envisaged, demonstrating some fairly significant holes in air cargo security.

CHANDRASEKARANThe Obama administration is taking steps to try to try to tighten all of that, but we continue to see a significant risk in port and border security, and it shows yet again, that Al Qaeda and Al Qaeda's principal affiliate in Yemen remains obsessed with attacks to the transportation infrastructure, particularly aviation.

PAGENancy?

YOUSSEFWhat I thought was interesting is we had heard although these packages were addressed to a synagogue in Chicago and that was originally the assumed target of all this, that in fact it was the target may have been hitting the United States. Because had this gone off, it would have been around 5:30 p.m. over the eastern side of the United States.

YOUSSEFAnd it wasn't until Scotland Yard kind of put out the statement with that time that we had some sense of perhaps they were aiming for hitting the United States and not those synagogues. We don't really know. This Al Qaeda of the air peninsula is taking responsibility for these attacks. What I found most interesting was, you know, they had had a dry run of this, and they were actually using tracking systems that you and I would use to track a package, that they can get hourly updates.

YOUSSEFSo the question became did they use that to try to determine a way for that attack to go off when that plane was over the United States.

PAGEHow do we know that they did a dry run?

YOUSSEFWell, that's what been -- the reports that they were receiving packages and there was some explanations -- or excuse me, there was some discussions of a potential package arriving in the United States in an effort to try to see where things would at what time.

PAGEDavid?

SANGERThe attack, or the potential attack raises the question here, can you design a system that would allow ordinary commerce to go forward and still work these out? And I think that since the answer to that is pretty clearly no, what you're going to see now is a huge crack down on, you already have, on any shipments coming out of Yemen.

PAGEDavid Sanger of the New York Times. Nancy Youssef of McClatchy newspapers and Rajiv Chandrasekaran of the Washington Post. Thanks so much for being with us this hour.

SANGERThank you.

YOUSSEFThank you.

CHANDRASEKARANThank you.

PAGEI'm Susan Page of USA Today sitting in for Diane Rehm. She'll be back on Monday. Thanks for listening.