A quick quote I pulled from Wikipedia about Cohen.. Not that it answers any questions, but this is his defense of the whole thing:
Baron Cohen has had some trouble because of racist or prejudiced comments his characters have made (see Da Ali G Show). HBO spokesman Quentin Schaffer has replied to criticism concerning Baron Cohen's characters: 'Through his alter-egos, he delivers an obvious satire that exposes people's ignorance and prejudice in much the same way All in the Family did years ago.'[26] Regarding his portrayal as the anti-Semitic Borat, Baron Cohen says the segments are a "dramatic demonstration of how racism feeds on dumb conformity, as much as rabid bigotry", rather than a display of racism by Baron Cohen himself.[27] "Borat essentially works as a tool. By himself being anti-Semitic, he lets people lower their guard and expose their own prejudice", Baron Cohen explains.[9] Addressing the same topic in an NPR interview with Robert Siegel, Baron Cohen says "...and I think that's quite an interesting thing with Borat, which is people really let down their guard with him because they're in a room with somebody who seems to have these outrageous opinions. They sometimes feel much more relaxed about letting their own outrageous, politically incorrect, prejudiced opinions come out."[28]
Baron Cohen, the grandson of a Holocaust survivor, says he also wishes in particular to expose the role of indifference in that genocide. "When I was in university, there was this major historian of the Third Reich, Ian Kershaw, who said, 'The path to Auschwitz was paved with indifference.' I know it's not very funny being a comedian talking about the Holocaust, but it's an interesting idea that not everyone in Germany had to be a raving anti-Semite. They just had to be apathetic."[9] Regarding the enthusiastic response to his song, "Throw The Jew Down The Well", he says, "Did it reveal that they were anti-Semitic? Perhaps. But maybe it just revealed that they were indifferent to anti-Semitism."[9