CHARLIE ROSE:  We continue the conversation about Egypt here in Washington with two people who have been watching this week`s historic events very closely, David Ignatius of "The Washington Post," Michele Dunne of the Carnegie Endowment for International Peace.  I`m pleased to have both of them here.  Welcome.

MICHELE DUNNE:  Thank you.
CHARLIE ROSE:  People are asking should Tunisia, should Egypt, should Mubarak, should Ben Ali known this was coming?
MICHELE DUNNE:  Well look, the calls for reform and change in these countries have been building for years.  They were certainly aware that they had a youth bulge, and that youth bulge is a very important part of what happened here.  They have a very large part of the population under 25.  People, young people growing up with satellite television and the Internet, who saw what was going on elsewhere in the world and were growing increasingly dissatisfied with the way things were going in their own countries.  Both countries had a youth unemployment problem.
Government corruption, leaders staying in office for not years but decades.  Lack of political participation.  You know, I think these leaders who stayed in for a very, very long time just weren`t listening any more.  They just -- were not understanding the gap that was growing between them and their populations.
CHARLIE ROSE:  The United States had to know as well.  But did we do anything about it in terms of the encouragement? We all know of the famous speech that Condoleezza Rice made in 2004.  But did it stop there in terms of trying to get a president of Egypt to respond to what many saw as a threat to his ...
MICHELE DUNNE:  Well, look, this was really hard to do, OK.  I think there was some recognition in the U.S. government that it would be best if leaders like Mubarak would be carrying out sort of top-down, managed, gradual political reforms.  And so, you know, the Bush administration tried from 2002 to 2005.  I think they made a pretty credible effort to put some pressure on Mubarak.  They backed off after the Hamas election among the Palestinians, and then the Obama administration I think was quite timid about this in the beginning.  They didn`t want to be associated with the Bush freedom agenda.  Increasingly in the last year, year and a half or so, they did start to raise some things with Mubarak.  I mean, President Obama raised with Mubarak lifting the state of emergency, holding free and fair parliamentary elections, but Mubarak really resisted.  This stuff is really hard.  
What the Obama administration didn`t do was formulate any kind of a strategy or put anything on the table in terms of incentives or disincentives.  It really remained at the level of talks, some private talk and some public statements.
CHARLIE ROSE:  Some also say the president was preoccupied with wars and lots of other issues at the time in his first two years, and Egypt was not on the front burner.
MICHELE DUNNE:  Absolutely, this was not high on the agenda.
CHARLIE ROSE:  All right.  You wrote a column this morning in "The Washington Post."  I`ll read you the first paragraph.  "As President Obama watched events unfold this past week in Egypt and the surrounding Arab world, he is said to have reflected on his own boyhood experiences in Indonesia, where the country was ruled by a corrupt authoritarian leader who was later toppled by a reform movement.  Obama looks at the Egyptian drama through an unusual lens." Tell me more.
DAVID IGNATIUS:  He looks at it through the lens of that very personal, almost visceral experience as a boy living in a household under a corrupt dictator, President Suharto.  If you look at Obama`s first memoir, there`s some quite searing accounts of his stepfather talking to him about this being a land of cruelty where weak people are killed by strong people.  And you can only imagine the young Obama listening to this.  
I`m told that when Obama meets with human rights activists from around the world, he privately -- he will sometimes describe his own experiences as a boy.  I know what it`s like to live in a kind of society you live in, I do -- I lived there myself.  I think that has come up this week.  
I think another feeling that Obama has, having lived through this, is that once the process of change really begins to roll, you can`t put it back in the box.  You can`t stop it.  I think Obama with his natural reticence was reluctant to jump on this, to clamor for Mubarak`s departure.  I also think he believes deeply that America has been part of the problem in that part of the world, and one sure way to undermine a reform movement is to embrace it with the American flag, for us to be calling the shots.  I think he didn`t want to do that.  
I`m told that at the end of the situation room meetings over the last week, the president has turned to his aides and said, "we need to think about this in the larger context.  What is really going on here?  What is this broad movement for change sweeping the Arab world all about?  How do we align the United States with that process rather than against it?"  And I don`t know that he`s gotten answers back yet.  Those are big questions (inaudible) that he is thinking about in those terms.
CHARLIE ROSE:  Well, some have speculated that he wants to get this country ahead of that movement.  He wants to get in the parade and even lead the parade.
DAVID IGNATIUS:  He, well, I think if you go back to the Cairo speech of June 2009, which was a seminal document for the president, he went to Cairo to say the United States` relationship with the Muslim world is broken.  It`s been broken.  It`s been getting worse since September 11, 2001.  And it was Obama`s ambition to try to fix it, to try to put it on a different trajectory.  
And I think everyone, including people in the White House, would say that he hasn`t delivered on the expectations that he raised with that speech, where he really indicated that he was going to -- going to have a whole new start on the Palestinian issue, which people care about deeply.  
I actually would argue that part of what we are seeing, you know, relatively small part, but part of this revolution of rising expectations, which has flown from Tunisia across the Arab world, began with Obama`s raising expectations, telling people this world that you`re living in is -- needs to change.  We need to watch over the next few weeks to see whether President Obama can articulate publicly what people close to him tell me he`s thinking as he looks at these events, and whether he can, as I said, align the United States with the way the world is now moving.  If he can do that, it will be an absolutely signal achievement of his presidency.  But as we see it, it`s really hard.
CHARLIE ROSE:  Do you -- you don`t think that he`s done enough in this particular crisis so far to signal what he should signal?
MICHELE DUNNE:  No, and I have to say, I disagree a little bit with what David said about the impact of President Obama`s speech in Cairo in June 2009.  I think it was a great speech and it was a great story.  And people were enthusiastic about it for a couple of weeks, you know.  But then I don`t -- I see the demands that are being articulated by Egyptians now as being the very same things I heard five years ago, six years ago.  I don`t think Obama made them think it was possible, you know, in some way.  
What I do think is that over the last five years these youth movements in Egypt, which -- let`s not forget, in Tunisia and in Egypt it was movements of young people that started these demonstrations, that got people out in the street in large numbers.  Those movements have been maturing.  You know, the youth bulge is getting a little older and these people now are getting into their mid -- early 20s, mid 20s, very active on the Internet, extensively using social media to network with each other.  That I think was a critical factor.  Plus these governments, you know, continue to carry out abuses.  The Egyptian government carried out very, very corrupt elections just a couple of months ago that were really like the final straw I think for the Egyptians, and then when they saw what happened in Tunisia, you know, they were ready to move.  When they saw hey, maybe it is possible just by getting a lot of people out in the streets.
CHARLIE ROSE:  But what is it you would like to see the president do today that he has not done?
MICHELE DUNNE:  Look, I think the president has been doing a good job of kind of gradually turning up the temperature on the rhetoric and saying, you know, that it`s real change is needed here.  Change now, articulating a little bit more that we`re looking for a transition here to real democracy and so forth.  I understand that the president is reluctant to say President Mubarak must leave now.  He`s done everything but.  Every word sort of -- every day a new word is added.
CHARLIE ROSE:  He (inaudible) the question, should he leave now.
MICHELE DUNNE:  That -- but every day something happens that sort of signals it.  There`s a compromise proposal that`s being discussed in Egypt right now that would allow Mubarak to sort of remain in a ceremonial capacity, but actually formally transfer all his powers.
MICHELE DUNNE:  To Vice President Omar Suleiman.
CHARLIE ROSE:  Now, there`s some sense has been expressed earlier among those people that he should leave with a certain amount of ...
MICHELE DUNNE:  ... is the word being used, yes.  And we see opposition figures starting to use this slightly more conciliatory language.  We want him to leave, but we don`t want to humiliate him.  I mean, there are other, there are, you know, some of the activists are saying try him, you know, they are hanging him an effigy and that kind of stuff.  
But I think one of the reasons why the Obama administration won`t -- doesn`t want to sort of cross that threshold to say he absolutely must step down right now is if there is a compromise that is acceptable to the opposition that allows him to stay in the ceremonial capacity, why should they block that?  They are probably just, you know, waiting a little bit to see how this plays out before the U.S. gets out in front of the opposition in Egypt.
CHARLIE ROSE:  The army will have something to say about that in Egypt.
DAVID IGNATIUS:  Well, I think the army has the balance of power now in Egypt.  I think the protesters did something really smart a week ago when this began, which was to embrace the army, to treat the army as our army, as Egypt`s army, not Mubarak`s army, to hug the soldiers, to get up on tanks.  And I think that that has paid off in the sense that the army, we could see today really has tried to separate itself from Mubarak and be part of this process of transition.  
You know, it`s interesting that strong armies, if they stay out of politics directly, can be a platform, a bridge to, I think, to the kinds of reforms that we like to see.  Countries that have very weak armies, Lebanon is a classic example are just -- are just sunk.  They can -- they can never quite get ahead of their problems because there`s just not a sense of order.  
The useful thing that the United States has done in many of these Arab countries, but especially Egypt, is develop military-to-military contacts.  Thousands of Egyptian officers have been trained in the United States. They have American friends.  Their wives and children have spent time in the U.S.  So I think, you know, Secretary Gates, Admiral Mullen, people up and down the line have been on the phone talking to their Egyptian counterparts and friends.  
It was telling that the defense minister, Field Marshal Tantawi was out today in Tahrir Square among the crowd, reassuring them on precisely the issue that Michele is talking about, that the army is not trying to bring in these pro-Mubarak thugs to beat you up.  That we are here as protectors of the nation.  They were forming a kind of security cordon.  And I think that is the moment in which a lot of people breathed the sigh of relief.
DAVID IGNATIUS:  That the army was now going to be the guarantor of some process.  And we`re still trying to see what exactly what it looks like.
CHARLIE ROSE:  Do you think this stops at Egypt or does it go somewhere else?
MICHELE DUNNE:  Look, I do think a process of change is under way in the Arab world.  I`m not necessarily predicting that domino effect of revolutions, but these grievances that we saw in Tunisia spark off -- in Tunisia and Egypt, these uprisings are widely shared.  There were big demonstrations in Yemen just today.  There have been demonstrations in Algeria, in Jordan.  
Now some of these leaders are trying to kind of step out smartly.  The Yemeni president, the Jordanian king, the Algerian president are trying to step out and announce reform measures to try to get ahead of this and head this off.  And we`ll see.  I hope they`ll succeed in that.  I mean, if they would now start taking seriously, you know, managed reforms, but you know, with some seriousness, then maybe they can avoid it.  Some of the governments in the region, though, I just don`t think are going to be capable of doing that.  They are not going to be capable of reforming and they are going to be vulnerable to explosions.  That doesn`t mean that will happen next week, but, you know, it could very well happen eventually.
CHARLIE ROSE:  Can you imagine circumstances that would -- we would see an enhancement, an extension of the kind of protests you had in Tehran that would ...
DAVID IGNATIUS:  Oh, I can -- yes.  I mean, the Iranian revolution rocked all of the Middle East.  You can argue that the tremors are still shuddering.  It was like the ...-- .
CHARLIE ROSE:  The power of reform.
DAVID IGNATIUS:  French revolution in 1789 -- how many decades did it take for Europe really to absorb the shock effect of the French revolution? The Iranian revolution was the same way.  What`s happening now, I think, is, you know, maybe not quite as big, but I can see Jordan as a perfect example.  The king in Jordan has known that he has to reform.  He`s been -- he has to get ahead of this rising population.  He had a very ambitious reform agenda.  He called it the national agenda.  He went down that road and then he just abandoned it.  He chickened out because of pressure from his domestic elites.  And -- all these countries have particular problems.  In Jordan, you say, OK, we`re going to have democracy.  Well, who is going to vote? What about the Palestinian majority?  Many people think in Jordan if they are fully enfranchised, the east bankers, the traditional Jordanians feel they will lose all of their power and privilege.  So they will resist it.  And that`s the kind of trap that he`s caught in, everyone in these countries you find particular circumstances that make reforms very, very difficult.
CHARLIE ROSE:  Israel, what are the option for Israel here?
MICHELE DUNNE:  Well, I mean, there isn`t a lot Israel can do in this situation.  I mean, you know, I think that and the Israelis have been sort of buffeted, you know, different ways by this crisis.  I mean, Egyptian television has been reporting ridiculously that this is an American slash Zionist slash Iranian plot against the Egyptian regime.  And at the same time, you know, the Israelis were announcing, you know, a week ago that they are -- not announcing but leaking that they were asking people to save Mubarak.  So they are kind of suffering, whether they seem to be for this or against this they are kind of taking the brunt of it.  But I mean they obviously, you know, they want to maintain the peace treaty with Egypt.
CHARLIE ROSE:  Of course they do.
MICHELE DUNNE:  And you know, there isn`t a lot they can do except try to maintain good relations and maybe, you know, look more seriously at resolving the Palestinian issue.  Although I don`t think that is their instinct.
CHARLIE ROSE:  No, it may not be.  But if that is the opportunity to look at what happened to Mubarak and say don`t miss an opportunity to take an opportunity -- to make change when you have it, when you have all the things working for you.  And Israel is in a...
DAVID IGNATIUS:  The things that you know, the things that you know you have to deal with and you try I to put off, and reform in the Arab world is an example we have been talking about, but resolving the Palestinian issue for the Israelis is another example.  You just have to do them.  You can`t keep suppressing these issues forever.  And I hope Israelis as they look at this will kind of say, we have to, somehow we have to think how in five or ten years we are going to be in a better place than we are now on these issues.  Even with all the things that make us nervous.  And if, you know, if President Mubarak had done that five years ago, he wouldn`t have this humiliating end of his career.
MICHELE DUNNE:  But those are not going to be the instincts of the current Israeli government.  There is ...
DAVID IGNATIUS:  No, but that`s -- that`s where American power ...
MICHELE DUNNE:  I think there could be uncertainty ...
DAVID IGNATIUS:  ... and leadership is really important, to brace this and say to people, we`re strong, we`re here to help you, but you`ve got to move.  You have got to take action on the things that you know and we know have to be resolved.
CHARLIE ROSE:  Thank you for coming.