This is a rush transcript from "Special Report," November 29, 2013. This copy may not be in its final form and may be updated.
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RET. LT. COL. TONY SHAFFER, FORMER SENIOR INTELLIGENCE OFFICER: I would argue this is not so much about the U.S. and China. This is more about the Chinese and Japanese, and, frankly, the other regional players. The Philippines, Indonesia, Vietnam, all are now contending that some of the sea areas, some of the islands are theirs. So, therefore, the South China Sea and everything in it is at play according to the Chinese. The Chinese want these islands back and they're starting to move down that path.
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DOUG MCKELWAY, ANCHOR: Lieutenant Colonel Tony Shaffer talking about the dramatic increase in tensions in the East China Sea after China in just recent weeks declared a new air defense zone over these disputed islands which they refer as the Daioyu islands, which the Japanese also claim to have possession of. They refer to them as the Senkaku Islands. Tensions further heightened today after China scrambled jet fighters in response to over-flights by Japanese F-15 fighters and also over-flights by the South Korean Air Force and also by the United States. Where is all of this leading, A.B.?
A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Well, I don't think the Chinese have entirely figured out what they are doing, because they took over an air space that belongs to other people in addition to territory that belongs to them. But they said that defensive emergency measures be taken as a result of any crossing. But now they are saying it's not a territorial airspace. And so, I agree that it is more of an aggressive step towards Japan and a confrontation with Japan. But I think the U.S. is correct to treat it like it's a big aggressive confrontation and to keep a coordinated and firm response because, without that, they will take more.
MCKELWAY: We are bound by treaty to support Japan.
BILL KRISTOL, EDITOR, THE WEEKLY STANDARD: Yeah, I don't quite agree with Tony Shaffer that it's not about the U.S. I happened to be in Japan last week and met with a lot of senior officials, and I asked what worries you the most. And they said that the Chinese correctly or incorrectly will interpret U.S. action elsewhere in the world as a sign of weakness and withdrawal and will become provocative in this part of the world. And they said President Obama didn't act on Syria on Iran and he seems to desperately want to deal. Do people take the U.S.-Japan treaty the way seriously the way as they used to? And I actually said yes, I do think so. I think the U.S.-Japan treaty is a bedrock of civility in east Asia. Even the Obama administration understands that. And I think they do probably.
But it is a good example of how weakness in one part of the world is interpreted by adversaries thousands of miles away in a way that creates a dangerous situation.
MCKELWAY: Charles, often times the great fear in these kinds of situations is that somebody takes a misstep that leads to conflagration.
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think the Chinese approach, the Chinese are not reckless. They want to push – they want to push and test American resolve, and they'll do it continually. They will withdraw or they will wait if they get a response, which is probably what's going to happen this time.
But it's wrong for anybody to say that a dispute within China on the one hand and Japan and the Philippines, Indonesia and others on the other, is not a U.S. affair. Of course it's a U.S. affair. The United States is the guarantor of these allies against the obvious hegemon in the area, which is China. And we control the seas around China. And everybody is watching to see whether American resolve at least is going to be strong and steady in the Pacific the way it is not strong and steady in the Persian Gulf, in the Mediterranean.
Look, just last week, Russia essentially reclaimed Ukraine and nobody here even noticed. So, they have a right to be worried about the resolve of this administration. And I think they did the right thing in sending our bombers over that air space as a way to say we're not going to allow you to unilaterally alter the balance of power.
MCKELWAY: Topic number two in the Lightning Round, today is Black Friday, the day where traditionally retailers hope to turn from red into black, in other words, hope to turn a profit, an especially difficult thing to do given the mediocre economy, Bill.
KRISTOL: I guess so. Thanksgiving has been associated with turning a profit for a long time. I can vaguely remember this. And I looked it up. Franklin Roosevelt moved the date of Thanksgiving from the last Thursday in November to the fourth Thursday in November 1939, because American retailers came to him and said that's too short. I think it's supposed to November 30th. That's too short a shopping season, move it up. So he moved it to November 23rd to try to help the economy out of the depression, which actually didn't work particularly well until we really rearmed for World War II. So I don't know if talking about how people should go out and buy more really helps the economy that much.
MCKELWAY: I wondered if we would see these kinds of frenzies that always accompany Black Friday if shoppers really knew what retailers were doing. Wall Street Journal had an interesting piece quoting "Retailers work backwards with their suppliers to set starting prices that after all the markdowns will yield the profit margins they want. The red cardigan sweater with the ruffled neck on sale for more than 40 percent off at $39.99 was never meant to sell at its $68 starting price. It was designed with the discount built in. I bet you knew that, A.B.
KRISTOL: You dashed her dream. She just bought that sweater and thought what a great deal, you know.
STODDARD: Black Friday makes me chuckle because I do my fair share of online shopping, but I don't go to places at 4:00 in the morning in the cold to get in line.
MCKELWAY: Why does that not surprise me?
STODDARD: But I think the fact that they started early is a result of the fact that Hanukkah was early and the season is shorter, and there is a very difficult recovery underway that doesn't seem to have begun. And I actually wonder, and I hope this year's sales are robust, but I really wonder if because of the fear of the anecdotal stories about ObamaCare people are not cutting back on their spending and whether or not that's going to have an impact nationally on how much spending is done.
MCKELWAY: Charles, were you out at the mall at 4:00 in the morning?
KRAUTHAMMER: No, did but I do enjoy watching the mayhem.
KRAUTHAMMER: I'm ready to blame Obama for almost everything, but I will give him a pass on Black Friday. One thing I will say its encroachment into Thursday I think is scandalous, except bookstores.
MCKELWAY: What's the name of your book again?
MCKELWAY: That's it for the panel. But stay tuned for some Santas that may have a little bit too much Christmas spirit. Plus SR Bing Pulse highlights when we come back.
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