Joining us now from New York is one of America's most influential journalists and commentators, the editor of Newsweek International, Fareed Zakaria.

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Compere: Tony Jones
Reporter: Tony Jones

TONY JONES: Well joining us now from New York is one of America's most influential journalists and commentators, the editor of Newsweek International, Fareed Zakaria.

Thanks for joining us Mr Zakaria.

FAREED ZAKARIA, 'NEWSWEEK INTERNATIONAL': My pleasure, Tony.

TONY JONES: Despite all the blows against it in the so-called war on terrorism, Al Qaeda's key leadership still appears to be functioning.

Indeed in the latest tape message from Al-Zawahiri we hear him say what you've seen so far are just the first skirmishes.

How do you interpret what he's saying there?

FAREED ZAKARIA: There are two very interesting things.

First, let's remember they're functioning well enough after one year provide a videotape with an audio track dubbed on to it.

That does not strike me as evidence of a deadly organisation.

I think there's no question they're on the run.

Yes, they can produce videos and audio tapes but they are not producing major terror attacks and that's something to be grateful for.

I don't doubt there is significant difficulty in tracking them down and they do exist and are trying things.

But let's look at it objectively and point out there hasn't been another big attack in a long while, really since Bali.

Secondly, from those who are --

TONY JONES: Can I interrupt you there, that is if you discount any possibility they may have had any involvement in some of the large-scale bombings recently in Iraq.

FAREED ZAKARIA: True, which we can get to talk about later.

But my own sense and the reporting we've got on the ground is a lot of that is actually the former Baathist-Sunni extremists, by and large it's very difficult to imagine that Saudi radicals, Al Qaeda recruits, come into Iraq and in one day or two days figure out where the home of some governing council member's brother is or which is the main water pipeline in Baghdad.

In other words, these are attacks that required enormous specific knowledge.

So my sense is that those are not Al Qaeda.

The administration is in my view irresponsibly exaggerating the degree of Al Qaeda involvement because they're trying to turn Iraq into the central front in the war on terror.

TONY JONES: Let's stick with Al Qaeda for a minute.

You've written that were it not for weapons of mass destruction in a past age movements like Al Qaeda would simply be an irritant.

Of course, that is the key to this, isn't it?

FAREED ZAKARIA: Absolutely. The real fear here, which the administration has very rightly pointed to from the start, is that you have these extremist radicals who are existentially opposed to the West and the United States in particular.

If they get some kind of weapons of mass destruction, you have a cataclysmic possibility and the race is on, if you will, is to stop that from happening.

One more thing about the message, you remember the original footway of Osama bin Laden was about America getting out of Saudi Arabia, American troops in Saudi Arabia.

That was the number one cause for his campaign against the United States.

He doesn't seem to have noticed the United States is not in Saudi Arabia anymore.

American troops have withdrawn.

Now he says Iraq is the central front in the war on terror.

In a strange sense he and President Bush agree.

I just want to remind viewers that people who say this is all a product of American foreign policy should note that people like Bin Laden will always find some great cause that makes them opposed to Australia, the West, and the United States of course centrally.

TONY JONES: Let's talk about Iraq, then.

Many people before that war suggested that it could become a self-fulfilling prophecy, that it could create the very terrorism that George W Bush - and terrorists themselves - that George W Bush is trying to end.

So is that how you now see it because you didn't, I think, before the war?

FAREED ZAKARIA: I always argued that the postwar was more important than the war, that the war would be relatively easy and the postwar would be very difficult.

That part of it, sadly, has been vindicated but I don't think things are as bad as many of news the media have portrayed it.

Two-thirds of Iraq is very stable, doing pretty well.

There is a third of it, the Sunni heartland, which has a lot of the former Baathist which does not have any real security and is proving to be difficult and has attracted some of these terrorist elements.

But I think fundamentally Iraq is much better off than it was before the people there are -- it's not just that they have political freedom, which is no small thing, they have stability, they have order, they have the beginning of the reconstruction of Iraq.

So I don't really think that in the long run, I mean even a few months from now, the critics of the Iraq occupation are going to be right because I think things will stabilise.

Then we have a much more difficult task, which is the political restructuring of Iraq, the reordering of it and all that kind of thing.

TONY JONES: Let's talk, if we can, because we're reflecting back on September 11 and of course Iraq stemmed, in the end, out of September 11.

That's what George W Bush told the world -- this is all about getting weapons of mass destruction in Iraq, stopping them from getting into the hands of terrorists, the very thing we spoke about at the beginning of the interview.

Were we misled by the US administration?

FAREED ZAKARIA: Yes.

I think either consciously or unconsciously -- I would get a combination of the two.

The administration vastly exaggerated the evidence it had.

It shaded every colour dark grey or black when it was not right to do that.

It forced the CIA to shade its own intelligence.

I think part of what happened here was that the administration had a group of people in it, the so-called neo-conservatives, who were hell-bent on the invasion of Iraq, that they used any argument that was available.

I always believed that Iraq was a serious security concern but I always thought it could wait until you could build an international coalition and that would have given it greater legitimacy and support.

If we waited six or eight months, it is now clear there would have been no difference.

Iraq did not pose an imminent threat and very likely we would have had the French and Germans onboard and that would have changed very much the character of the post-war problems we're facing.

TONY JONES: It's intriguing, though, to find such an influential writer and thinker such as yourself having second thoughts: You wrote in April the threat from Iraq is real.

FAREED ZAKARIA: It was real.

I think that --

TONY JONES: The threat of weapons of mass destruction do you mean?

FAREED ZAKARIA: Well, here's what I meant by it.

The containment policy toward Iraq -- which was essentially a policy of highly punitive sanctions, coupled with export embargoes which ensured it didn't get any kind of weapons of mass destruction -- was crumbling.

If in 1996 or '97, Saddam Hussein had access to $200 million of revenues because of skimming off the embargo, cheating, smuggling, by 2002 the CIA was estimating he had access to $2.5 billion of revenue.

The sanctions had broken down.

Everyone knew that.

Washington had been trying to patch it back together and it wasn't possible.

Secondly, you were having an enormous human tragedy taking place because of it -- you had about 65,000 Iraqis dying every year because of the sanctions.

It seemed to me that containment was unsustainable.

You had to move to something else.

I very much wanted it to be a broad international effort that did so.

But to be honest with you and answer your question, I am having second thoughts for two reasons.

One, I think we were misled about the degree of weaponisation of Iraq's arm programs, chemical, biological -- I never believed the nuclear, if you recall.

And secondly, the incredibly poor post-war planning process, where we do not have enough troops on the ground or money initially.

That's led me to think is it worth it at the end of the day?

I still think it is.

I still think six months from now this will look like a bad phase that will have gone through and Iraq will be in a much better place than.

One example --

TONY JONES: Go ahead.

FAREED ZAKARIA: The Arab League yesterday agreed to seat the Iraqi representative, the Foreign Minister of Iraq, who is a Kurd.

This is the first time the Arab League has ever recognised an ethnic minority in such a position of prominence.

It says something about the possibilities for a new Middle East if a Kurd can be seated at the tables of the Arab League.

TONY JONES: It doesn't, however, tell us a lot about whether we should or should not trust the Bush Administration that even you now are having such profound second thoughts about the question, the key question on which they brought us into this war.

So I guess what I'm asking you here is have they squandered the capital, the political capital that they had after September 11?

FAREED ZAKARIA: Without question, and I've written that repeatedly.

What the Bush Administration has failed to recognise is there's enormous goodwill for the United States around the world, particularly after September 11.

People want the United States to lead, they know the problems of the world won't be solved by less American leadership.

But they want us to lead and not be the schoolyard bully.

I fear that's what's happened in the last few years.

TONY JONES: We thank you very much for taking the time, this September 11, to join us.

FAREED ZAKARIA: My pleasure, thank you, Tony