responsible. and to holds that we to ecorse of action. thissoi t bve hard on this irdwa eno ge when things don't go well this is a place like to talk about policy a everytime things ar going badlye like to change a lf e ob

ani, bigie is implementation. it takes years to do something so when you swith constantly you are letting other thing i dr yontasco le cexjeeg sve t yoee tti with things. you need the ability to change, to analyze what you aai g aot hnshonacrs flaw.dely for one thing you hire a contractor to do whatever you hired a contractor to do. you don't hire the contractor to tell you you are wasting money el youoi .rprt hetreg hot al movent problems and

afghanistan supervising contractors. we allow larson -- usaid to grow to aevelf stafford can do ingst ennd u we gi t me galxili in tillone to fight with essentially work around fixes to a model they can'tlter but we need realism in this town. wathes. mee dpe he w to afiswhsaas niontemee raise the budget enormously and say why are you all screwed up? this is going to be importt in ann use

arow sadess btoer lpoint about convincing world we are going to stay. there i no more imrtant point absudi iafantan haitki aase p r strategic view that we will not stay and tha afghanistan will crumble and take care of contry inres. thctf ony age tll searcuerng we are such a major player in afghanistathat everyone takes a position on what we think we ieorg here de te tihe we will bailout -- they don't worry whether the

afghan army is going win but whether it will be strong enough not to lo we ninngowth rggowar.a pf we may run out of national commitment. i hope we don't because we wi pay a serious price for that ani iies en ino sa level sufficient to not lose because that changes the entire nacanaanon otde meut every year will look uncertain so that we will never reap the strategic etoo tt. a thefft

the fact remains that in the usaid program and politics and the military our abilityo ojadsoing normy rtanitepes fhaas ayonhiere projecting at right. when general allan doesn't know how many troops he will have in 2013 or what hegpl ased014ree wnnes tth er pe w td do in 2013 in afghanista we are not conveying anything. ve iiuny. cicicllavtobede t il be the major choice of the next administration whether it is a continuation of

president oba or mitt ey e t afis l de i aha believe we can sustain even if it is more honest but be honest about it. if we are not going to do enarsi arins fo aalcis let waaotdidown. we are winding down our presents. that is a statement of fact. we a not winding down war. weurng i stitanct t e edoayhais this relationship of 2015-16-17? not in perfect dt in yronow ans c att what they see today.

today they see a eight level that is half what it was last year asut tou tg esib bes doze w i givth t ct. hse troop levels that are uncertain and rapidly changing and get jerked around. when you look at a onte oyesf rty a led ueee numbers get changednd decisions that seem somewhat unconnected to the ground on numbers,udgets tt ciur yh no w a n c - ths ci t n administration will have to confront. what does it want to do? is it prepared to lead the

anu a y a do nnlmagin go back to your previous lifeisdom you will bng from having tried to do the tng w tng t, rati oubrcmes cue tio and you can comment. four points i would like to make. eld.grint one athe ve bn lkint, ntth aom our depma dc workers as well as those of the broader international community. therare recent critiques of the so-cled civilian rgn. rsott toes toseti ths lotoriquin

th mission but i would disagree with the notion that the civilian surge has n been imprsind iivua clg outreghas rtass of the afghanistan alnge. building on at, isot y bau iilwi uph on a ic 8ou gilla that you alluded to but in general people have on their mind as we do thesereat things how come corruption is so bad pocesiicor min rosnd d ecmyf el re i get to that point because it is not discussed enou in washgton i want to

ry wal tse gemeo ed afisfo lbuhaheleofeeting a number and a lot of impressiv people and on the trip we were on in may, going on for part of th besou le-ty the old-time but i stayed the first five -- of the-th mierfie be rdo sucas it wogooatta i don't know how he has done this but there's a general sense of progress. why did it take ten years? i amotryg this y e in o e y ecasgnica s been following through oa lot

of the corruption cases you first heard general david petraeus talk about when h testified in march o sieinld o and noin abee teowh tuit wasn't just change one person at the top and rotate to a different job and let things go on as before. tht jple w rmbo tcoe gernance at the local level in afghanistan or at the provincial level. 34 problemss with an average uint a ion of a mli ann thonav dgs tyve the centrally controlled or implemented in the field by development organizations but eye colr are efforts to give y wito untf

rfnc ths peormae based governors fund. an independent organization administering this was on balance impressed with the trend ivenc gome rfma th we gtive alon i t tkeh it. these things are somewhat mushy. you can clm it is scientific but the overall trend li is thtrngo ashi astu auaat % yr t e it l gvernment. there are a lot of good people doing thingwith it afghanistan even as our news accounts and tete oth tht.ane s exan'tomment if he wishes but it relates to the overall -

there is apectihe wnd tle ve b oseestain vee tw we years to get them up to 350,000 total army and police which is a small number for a country of r.is sizwith this kina cog onsreumbelleow in the works down to 230,000. that will happen as soon as nato has thaw suonoust-e ma ulite is not becoming an expectation among policymakers. we are tired of afanistan and spending money the. wn temivde to lfnwwaede isle

dpath downward was predice it assumed the tread environment would get better after15 sh nssthhr ain wwi bdo wld raise questions about whether it in the pursuit of saving $1 billion a year in afghanistan that we aua tarauf fse ecy si tfg setyce ths onrnfe mat tad i gng beyond your immediate portfolio but is relevant to thbroader question of financial commitment by the united states. my last point has to do withn s xpt neh nde eepi tonhiecse wg thhan officials last month it struck me that we needed to send a strong message to them.

d iertioluey and cpaio ghths coitional. youolks not electing a corrupt warlord for president. that may seem obvis. teioy egtt e possibiv e ki me. e ccoul emerge out of the 2014 election process. we don't know how it will win. there are two or three people bedise pbl ansi ki.or ee ssa ely $8 bie year to that kind of government. we won't walk away. we don't want to make this seem t ot cdie ate oop or 3 aid recipients

internationally if the corruption problem remains such as it has been a we need to find some way to signal i 14ctbu sl o thhoan wbo be chosen candidates through qut and in obtrusive process bu nsa- mter vele hg ig s. domup the tokyo conference. that is my lastcomment. how do we wrestle wth the corrtion challenge and make we don't give thha setheti blck the international community >> this issue coming back to where i ended with mutual ghtas av ali iful.

gomendtiont cnd tite wiout em t decline may be mingrothe t will happen. sothimtaccsme h almost 20 years you have to see afghanistan as a tale of two cities. ghtadand sto look a ing. e reity is both things are happening simultaneously. there is really remarkable progre in se areas. whenouinse an stki oteea had very

few other people and today you go in and see the young d rier o kulr anomot ahe w thheeoi the epeng of the bench is a remarkable. when you travel around the country and the infrastructure nt hrgheatg exist if you travel experience today all thsecurity prohibits movement in some places it is much better. you see women entrepreneurs not ie ta b iev paf cotryhe exenalizio afissats obalatiofor 30 years and in ten yrs the world has come st h nernistan.

useon to85fgn le have access to the mobile network and 60% of them are on it. ym tthwie rcgeisngil in a aca some of low things. look at the explosion of media. esinre esimaab d them persevere tough the long challenges that are ahead becau even if afghanistan does become more atable it is gogt blalygi cic ita ewill no ino spo tou this process. so specifically on issues of

corrupti, two great examples that hit eh oern ahe hand had nk orio ang of the afghan financial system that s previously unsn. otsif idetr aplgs fiof tthis ghinalwo t dit n of that. a network of banks and financial initutions that survived that challenge and be strengthened as rt twee stk hst a oganesoth is so significant is when you had something like kul bankapn thr oveint id afg hi ar mehatastwo

chle to att coat t banscanl an put things in place that many of us believe had not happened and the imf came around to endorse the ram. yeengn scin elein tuse teono afgha national police. this has been going on a few years and been expand to other area ymthgh clpne evhed en0% raise. for the first time bags of cash being handed to a commander, n dohee, gnggin tse emratt enou ongng chaenges like corruption in afghan society, by

strengthening institutions and being creative and empowering thleaders to demonstrate tt tho e th iues yoanake p wetavtoeeon phi on pe spointh le w a willi and able to make those reforms. it is a ades n. e thsha yrs dede what has been demonstrated by the past decade is afghanistan is not a lost cause. i am always amazed by the poiaat s i ghtaen d sba prsst ak constentas continually gives one hope that the bigger challenge is if we stick with tngabt.at ax i b to afghanistan is

talking to the 20 and 30 somethings. and educated generation that did not ext at the e oth aneling different untry. that doesn't mean you get change right away. when a younger person, younr afghanistan in thes go reo adshmabe te for them to develop the critical mass to make change. a lot of chge i mintries s tt ex walki t sur oit if we ng enough will be progressively available and visible but it doesn't happen l at

thharo gelion l ton an anecdotal basis because it is complicated. my predecessor in another country city will ver understand thitr rl atveucue ann. to generalize about the place. on corruption on elections we msles whr rein n poi eieis wre gng itize cotiecau in ct y incentivize people to grab what they can before the collapse. in a senseur lack o cri vimans tt crun toe rel.

ten to one to say -- washington tends to say becausee give llm w will do x why -- is important you recognize when you try to make at argument your uling a levergainst the right ucor in i t rehat aowth tsehoe t the leverage, that is not my stement. sustwhaid s e rares h if ykiafs a tngn mind about political survival. political survival may be connected to personal survival. aid isevaggasthe

s ea o p yhink o it in terms of hierarchy of values survival is number one. e states in its functiing i p ve gat lagto riy 3 seo i iniori nr yo are irrelevant. we need to understand where aid is relevant and where it is not. t sebus e plenty of placewhere fucaatnde ve hihr aea lol thing. on the elections, the desire to liit a w essag t we treorur icor understand the

litical process. out e elcs. the two conusions r cau aorf us os iaftan. you may find counterintuitive that we ought to keep our hats off. how could i come to that concluon. ad eiois.ranwhat are focused on transparency. ic lgeumrono en election in p because o security concerns. i don't even know if bra morsiv ol

a deeply fought contest. first,e n'ea rs wisorors destabilizing. i don't think our leverage is up to the task. europn alliesantoede ps e' lntfee tcot lt me d required by their mandate. i am not sure it is credible on our part than the one thing you want to be carefuof, d vente ust siea yes ive ia ways and you could say bad things about the last election but

llteedcaou and our bluff is called we will fall short. there are a lot of afghan politicians sitting on their behind waiting for uso x ecl is.aw an i bie wngly laheero dohaand probly lk thwill therefore we ought to make very clear at the beginning of the day this is potentially a sa our thisou ha tooc on by leading afghan politicians to believe weill fix their electoral process i com this counterintuitiiew at w ieaghe iein. au

>>et's go to right he in the second row. wait for the microphone and identify yourself anpose a question to on ib >>, ternna anu co. of nt tree with the comments about commitment of u.s. civilian aid, sta and ta dha sestis. saomng wchhelytrto you want the united states to ay in afghanistan and to maintain our presence and commitment and yet you say that it m be the n'ha t veelon iso alfw dt. o seems that undercs our ability to stay. if it appears the government in

afghanistan is worse than the rrent govnment ptila hare iue stheueion b in tse you can get a competent, capable a and a in ace. han s on uasthofeom nsis that the a and a today is not capable of evaluation of20 units. nereaplef to tousioeny vi wth we have a huge gap. a question of command and ni ofe n na fm caecarrut

mission. autonomously. ground forces and the air force, not able to carry out their mission at also the lev of trtieeo ty two questions -- i would rather those are to me. one more question and we will go down the road. i want to make sure we have a deveenhe qstn. wel titoer tos eonhe depmquonu't ask athis moment. >> the foundatn for afghanistan. i te to be the g who giv a phy es.e llf mon yth afghastan and capacity building but the biggest capacity building over the past ten years has been ry

eawetusak encems ditetre are not enough seats in the university system. eight million other kids in the school system coming f universities and in addition t thatnly e wote yth, in coy 70to0% literacy building and functioning modern economy you can't do tt based on nd . eateki transition, human capacity the the elements for afghanistan in the next five to ten ars? this givesuick turno in omeo aastes gr acr'grnde iillit it is rough but might be easier.

>> it ercnt innef thi awe f isi oba edation in afghanistan and those figures of eight million children represent a revolution il going to sool buter o afghan e he thtel mpym i order to realize that potential and take the people whose promise is being developed and give them opportunities. caaling and woc i bieve education, developing skills. the reality is -- this is true enou lkt otr malyl, dan

maess fgst f skd r igthth ailability. that is a good problem to have. what we need tdo is to make sure tre are more afghans capae ofngngy gi onomy b t the next big thing -- i say this with caution for a couple of asons. ifre w eve acae sos e ann ndafta g ac itr has to have a good governance been in place to make sure those revenuesre earned and dispersed transparently. e itahi t ac itrll d noreob t min industry which are importantnd we need to make sure afghans are

ready to take those jobsut all of the ancillaryndustry d su acric. ilafn andotti to take up entrepreneurship and to invent--all those bags o ch reras bfan nvenimwh si anistan and create productive industry and you need an enabling environment to do that. at the end of the day it is about governan. tto b s chnge ep b dollars inside he afghanistan and that needs to change. >> mark asked twoueion fionhe

a cadonmy p thisraly contradiction in our interesand capacities. if the erection is really bad it beastrs tourbity sinse i ouo.whielve dnoadt conclusion that we should massively inject ourselves. that is the conclusn that wha it we follows for a lot of people. veheapithe wl lu afou can't do one thing then understand that you can't do it and make it clear to the others. e rt oheleiottinet tooly theth mmendationasedn the reality of our means and what is

credible in the afghan context. en wyoanony iidn't an my y hemyui m ti more optimistic about the army although i am pessimistic about the way we rate therm ans hie ut t tarang. will interject that while i am a civilian and work with their le force platoon in vietnam as an infantry remiryceaifmaif s forsn which i have been involved. i do think i know something about the subject. t ll ier iman cti ve bdo f t

s wee d i f t years. when i left afghanistan we were building a total force that was gointo be just o 2,0 oth size aea we tre those targets we did not begin to finance the buildingf o vice laestiy ny tngatoue iso itheie l bus 00r mu smaller force. when we decided and it was the correct decision in the obama adnisttionoavth d eauitll need every physical space there was to trades -- train infantry.

we havenlbe eagn dihecsasto orisceusin oeahelhel a lot of that, we forget in our criticism the lag timeetween a decision,inanng a bec 29,ov ey were able to tell me every battalion was able to leave with a full set of radio eipment. thsplhee ro ma a decn gooue w h to be funded and built. what i am watching now is a spbi otoha isritical rior thctisix

achent it is not one you can generalize about. i was really impressed.it is nom e ne winrche there are 20,000 afghan security forces. the afghans are makg decisions how they'rredeployihe fotondra thrianeauabinac benic ancalindrmto be reasonably impressed. probably the best story in afghanistan. e ifft. crtiiflt t paratroopers to take their hand off so the afghans take the lead. that is a major push over the xt t y

inor pceilng thrm a vy ce o itnoteapres it is the two year process. we have exames of having done this we not ar vim aexplofg tandth vietnesar turned back american air support but no american ground forces but we cut off the money and ammunition and male g el bsey ghey do. lt aomforce. i do not say it is certain. i simply say it is possible we have critical issues to get rough in the nextwo years. qit aly.m hdo but not

achieved equality. there are big problems with sce.n ubut uevel eed a psee dense enough to build quality but t let them take risks, get hurt bu be ck ths a ctil hnkwnf ba tr taro cannot support them as we push them into the lead the process will be in danger and could fail. inwoea the hd pp oth lev w odgn ay at won't lewis -- >> three more questions and finish of because we have a hard stop at 11:0 ilarrens

the fthow -- >> i was with usaid until janu iouio ndter governor as one of the cleanest governors in the ovalernmen t mnthe country. e the things that i saw was different people were using different data that i don't even in wec i n oiaorpt how do you create a more

id bjtive ring d o u it? please identify yourself. moy anis rom aber 1996. my question to mr. neumann is about national commitment ofhe ghta pa li. lo -ik enand. we are under influence of in one for 250ears. sarheat

sueolitto be highlight with u.s. leaders nngla >>ca iify -over here. >> i am derek mitchell and i write the mitchell report. uman link it to the rd tsc ahaaisf ther a fromy pepecte, best captured by the fact, what i

hear from this panel is we must st touan c fr aoeken long haul. countering that we're in the stpl s w w t tonicely.e trueve we are advised by ambassador neumann and this is a point of view shared by aot of people that we need to understand what nnnfce at sauthat w be afghanistan for's disaster, not ours. here we are in aeey oubled deacth its own set of

problems and the political system ramping up that i don't ink what we have ard is hee ou on -- th a hard, fact will, national security bisha cobeiced we mu cnu afghisanttleor our relative lack of influence and power in the process? >>e n bewi alex d thanks.ke to john's question i wou give two different responses.

tecicalepoend oa sl on edgoannd rule of law and corruption issues there are many things that's standout rfncoodndicats o ee mrehothgs ee tmeurehe ro ae o system that does that and looks at those things consistently over time. i will say that one of the things that ie ievery miraegisoc h on results and measurements because too much of what we do is intended to create a rult golysu t mbogmsn ace

aud to do that better and more rigorously. licabeuebiader question co fa ow e lpee eheafs knbe dowhn ustand their culture and what the opportunity for change is which is at the asnallto llrysut. we ha t e idea -- the greatest political idea that has been had in the last several hundred years. in t federalist papers. ct wpoinhedomti foch aals.e ho ilh a h system in afghanistan where you have afghans who see their future as predicate on their ability to hold others to act, w wk he

ofheda h sat s o progsshaut have a long way to go. toy mind this really gets at athie hoped qstn thoi ttake afis psed the very dangerous shoals we have all recognized in coming years with the change in ternional lllmoabitt to something that inhe a cpl key ingredients about the afghan ility and desire to make their inus sf aby omgho sio dohat,t thend e day are going to make the

difference between them being able to carry forward and these institutions caring forwar h gsto l rkd thga omy fo on whh is there really is no more important factor here than the longerm commitment because all of thehaenwe iif in disiilemn. atnd ofheayif llectively, united states together with our british allies d oer a so much for anian lo ie ve st we hla oftee inhet de ithe position of supporting the afghans as they leave themselves through this process, knowing er g tsote ntueoe

nt. wa o wrefe ino wp na comments and is on gary's question about commitment as well. there are a couple things and there is new ones in them. ke h w ath lia e afans there are certain people we have a hard time working with is not just bluffing but has the advantage of being true especily ifiscly dfi roisthatge t se bl. i n't know how to rate afghan politicians at the national level. acabutea possibl t wth tinto get that message through because the other way to address your

question is afghanistan is very ext honod to us and i agree with de ie w 2aro aylek revewh ngge t what we are promising if the wrong person is elected and the wrong political process in sues. there are no guarantees aut the outcome inst a oue fgstnde anult vuarities about our commment. estiro aetrrup of ier tryiake aumn reluance because i am typically argug against those who say this but the fact that osama bin laden is dead and hawkeye wr0% le autme to

mafgstucceed. it is a hard argument to make becausi think al qaeda could come back, it doesatr to us t. bu sd d ouveathaak trideon ccu em fm their terrible decision that if they don't do their part we can't be successful with our part and it is worth getting that message through. es oe y.utes f t harde hestssf brith there was a period where it waskidond - i ireed now. i don't think they are going to

be in control. ay. elf ic ha aemts a corudbsely right. i think this administration's policy toward afghanistan has been a conundrum. it is it policy wt in twironmueof fog y dand commitment while signaling a end where the date but too much emphasis which was deliberate and sein mal kds su i ahast ee. callm t of government. i don't think we will get away from that but i regret it hisof wcoy kt h e ven as we are heading

in and sending them -- sding ecurrhaor ly on what other people doing fft.he hedgingaviois ie onopfo cly. prlys of. secondly you asked a much re fuamental question about the argu. alrdy 60ecsve t.e f t ctrhe i k l face the possibity, very real possibility of years, decades of instabilityn afen

schromaktato caonfingnter forces as the foreigners pull up. lebanohad fewer r erth sll a l rtcountry and it went for 15 years into civil war. i don't see the taliban rolling ck. it this degrading process as we pull out too quicklyha thtslars tsisatatisand swinen aia ian't say where that goes but 10 or 15 years of having that whole area unstae laeaatlunleea wtonttaphnd

we can. secondly, if we leaveoo early and things fall apart there rrha aqa as eraphennd need to worry about. i don't know exactly -- i am not trying to say that i do -- if pe wheareot inedthac o, couppor i destroyed, has been defeated in afghanistan, they have an enormoussy boo he th nge come.r a can't prove it. there is a lot to worry about. worry does not justify endles nsfoy lf

ns nss omwn pse om d b the twee godoo sustainment lel and doing it a rational way and just saying i am tired and got to getut he. cuontiuts th meworicaquestions. do you disagree with the risk to national security that i think exists in which se one can ereni pparksreoingho rahois dbeau o the budget deficit and because this is hard that i lling to accept a heightened probability that mott oe h a ili tsayho tolerable costs as a price

for withdrawal? if you are not prepared to make that argument than youre in a differengu aut how ats e am l ..

thmr winon e thtissd, drill practice it by th individual ready for some rest but you don't get a full eight hours of sleep. is o ouo,frs the meca te if f nitemn rd uonti rihe f 1812. >> the sailor lives in fear of the possibility of being wept. it was always carried by etty fice td h waetff wgtng y log. aas sll dao' letthe cat out of the bag.

>> sunday at 7 p.m. easternand al orrmteer ro lca guwhrnrpnt d tha pic or sunday, 1920 democratic presidential candidate, former mieriderppdvernor alsmith. re bsh iin itwhiseupo 33ma h o commons select committee's. he answered questions about the european debt crisis. earlier in the week, the prime minister rejecd cas to l rfdnbta mbipthro i io is50mnt. >>s ibheou ficient this afternoo if so i will have to exndhis hig in aop cltior t n atecry

e btit impact of the eurozone crisis on the uk colony and public, and the second is civil service ifustoenthre is u adet th u q o, e coehat the logic of the single currency means the eurozone may need closer economic ntegratn. do thiatsmthaty d? >>y plg bee su elte ureot two things happen. there was each set of short-term measures of the eurozone countriesagreed, which was about recapitalize ispanh basdy sn e ilmeisof hintt s.h e str aure but then there was a full president report. only the e.u. can have for president but that's the council

prenef.ion, teuroze an the e rotooereef gi fgea fal year, greater political union. as i said in the house yesterday while there is a force of logic that if you want a functioning soofthsengrencyou needodo sof seng t ian argument about how fast this will move. >> do you think it should be britain's working assmption that that's the way thingsre ingt wou hfob deoninoh n ei htt will go in that direction? >> broadly, yes, because you can see th mes towds rss u sove os inioostwrd bu iifltkn acdrct

eurozone will go in, and that's what i said yesterday i think we're to show some tactical strategic patience aboutt carrelmi coievet aeal cen h y they will go. but i would assume that they will take fuher steps. so to pt it in very -- you can thinof i t dre inature ruoo onrmerty tihrve your is they can't agree anything on the project goes off the rails. option to summer in e midd prssitiomau o yiktcko the road. i suppose a lot of people will assume that option number two given how difficult is that this yrdou oerikely

euanuo us not believe the status quo is [iibptable. sa heta ses en. was spem [inaudible] >> you should leave it the than. >> i could but i have more thess t iciono e o oe an.sch whaoe l ewofst only from my side by the whole country just in recent opinion polls. efes. thnccabtaqu thgaamk h e.. where it appears that e.u.

council just attended as a whole predteki isain eurozmbtahagn io tnd 12 did youaccept that this change in status would be a fundamental change in our relationship with the e.u.? i followyome ter w. junetuo ry ththnyeteeac stus quo that britain has in the european union is not acceptable because would like to see a better balance f powe betenbrin seut oe th temstison o sto nd ts see us i cele t toihau' making is the current status quo is not sustainable, and i don't think t is sustainable because the eurozonecuesle ntra ngeat pnt a

nkun inks ic oilpen it oe hent o he eurozone bring about a banking union for themselves, which i think they, frankly they need udoo ae ndhots the the eurozone, at the level of the 17, and if we can get proper safeguards in place in that wouldn't be a fundamental change for us beuse our banks would still e gud heko an taerwu ting ritshbnntopn nk ohi t ul af lfgg ssive change for us in europe. >> so your distinction between the status quo for us and the status qu for the europe io vistef hs y onatpawi nio we posted on is the status quo we have in

europe, the balance of powers is about, we would like to see some st a t t wbe rettoio tho enhwt dssyeda ththinuaing wi tpn union is not sustainable because change is needed to makesense of the single currency. i think you then go on to say at cnge omca i in fmelyng e.andogo tay anthnkg union takes place i think we can make sure that involves 17 countries the eurozone, n us, and i think that's the iht pw >>t'ry tng hfu at t w b ctcl u cr i oon hi aisfoo countries, clearly our democracy is not, you knw, we are able to elect a government, set our own tax rates t have an iepeent eu,umcyaot

ssstedn e trin ter t point about what i think is going to happen inside the eurozone is these countries want to makvery difficult deiions abougivip vtyn ofs, rigee dmy. thin a single currency if you have mechanisms where the stronger countries have to support the weaker countries, u are going t have mor of cnt oe i thou hmpon thisecn us we made our decision not join the single currency,ecause we bucesidheto give upthat dcudesns t hes cr a aca fs well. >> if, for instance, the spanish

dede to restrict wahey can t totx asnin emhest l agen b it other eurozone countries about the debts they can isue, yes, of course that restricts the freedom maneuver. afs .hat is something tt wey ohe eon iey't ttu things, we will be affected by the continuing crisis. >> that isorrect. we need the euzonerisis to eed d g ye thaeo ti on the option which would be best for us is a early short-term action to al with thpole i tart. ye oevew scnderms i th erons

e okemreasit were. and that would give a long-term calling effect to the markets and that would help us. but as .casy,tahs plti frt at ha.efi fhi nolei k lletcoorhe iseoom >>whtionha in the e.u. will need to be made, not only impact the eurozone but on h usde titin? diuleiobeeu n th orc ohois heozcoieed to make, and we talk about them, how those hoices are made, is it a sers of small european treaties? n't one large european treat n'atcale or r s tti ee mebeurnin goead gser e existing treaties? i don't know the answer to that question. and, frankly, i don't think anybody does which is one of the asons why i think in fashioning what ie nw

euanonthwed stianrac aient cawe'tlea mcis wi be used, how fast the process will go, exactly what it will open,and fall. chs apng ee do kno is that bi erinsut ng de -sthull att hsh sstet absorbed. is that the same with you? >> i rather put in my own way. norunb ee.gue put it in europe, veawys a ta cly iintap t pytere going to survive, it will have to make moves towards a more integrated state. we won't be part of that. caoroniothtaosou mp asneexng so e. can decide what kind

of euros each member state and its voters actually once? >> well i think it's apr sspetlce bee 'sania ntsrdr nvtiwi eea uns berpean countries about what needs to be done. and i ink we're only at the beginning of this conversation. riop oea aeozon oe tose ie ee whouk ide zoavmie countries. countries like britain and probably denmark said pretty clearly we're not in the euro, we don't really want to oin the euro. and your counieslk at ide ved w lto sore oor doan l of conversations to be had i think before we get to any convention. >> pri mniste uset

nnimietenouan bunijs iso will get there. at the december 2011 council, we famously didn't get a numbrf e.rty an,lyobe ttfod those again as a base and requirement, or have we moved on? >> i think it would depen on whapd heu m ateeoues edthv iscal compact. they want to havea deeper integration. at a quite recent it if you wanted more deeply integte the eurozone, that can hae oon ctthslearso sd orafrd r lem.co'tur ht th nt dreaty outside

the european union, outside the architecture of the european union because they couldn't get what thewa andcodn't yoo t frie, thha trzocoie ntdo only be done by the minute the existing treaties. so the option of going outside eaty will be the. but going back to what aid o llsw ankoctatellema ex oteio the eurozone i think ill move forward. spent of safeguards would be -- >> they are very sene safeguards for this rea stan ol bse k siepe ght tltinll stiol il britn have something like 40% of europe's financial serices ofyualor wa vialbusior

%othids ny knot ouh alt e.u. and so it is important if you're going to seehe euro zone crirenge gsdsee te 7 thwehavetike deelotd leathe way tha could damage a vital industry for britain, and we have a veegates. -- i thi that's f ouawhtth gu ew esn feds tinma fil ic industry and how to regulate it in particular with a worry that the eurozone integration could lead us to caucusing. sohihee ee ino s. m y idgeem e lt e e.u outside the european union. but if in future the same sort of issues raised her head, then

we have to look again at tse sorts of safeguards. sem ony ofpog ih on nst >>nk. vin tpo vent is engaged in a balance of competences review. which is really shorthand for settin u htists weha wbaro e. res torn done but there is disagreement within the coalition and that is delaying publication. you sent to the house yesterd wouaud tl ulu riha rena okh . coioret reer full work goes ahead. and i think to be fair to both part of the coalition, we need to describe the balance of mpetces rk ie t itl ou kat cutlldna states.

it will include facts and figures and costs and benefits thati hope to norm if iem posiohe e ear httu t ey llinresting evidence produced there. you might take the view that europe should do even more. people go around saying we need more your. the balance of copetc hould ovfaangr vinaal e tl e thnk igt gt >>oud hope we would be up to start the process before the summer, but we need to seek full agreement to launch aeement. tdmat e aru. suorhue tlbce ct bhere oets dowao hele c igh appearto involve us in sunday night hows -- >> i don't quite see it like it.

look, we made adeisn trt onh soecnexpeotro taevtihe ige enoues us tnnors ei currency. that seems to me to be perfectly reasonable for them to meet thgs.aly to discuss those caveaf ientyo grng fe orogime friends wasn't in the political center of nato. so ghetto, if you want to be in the room havinat discussion you need to be a member of the ngle currey. tmib edhi atlde ul >>t ty instance, the banking union goes ahead of 17, we may need to think, i do think we needto think abt wt happs hs cut us bng fci icu ermrs ato7

trwiae en them, a qualified majority. does that mean as a member of the 27, 28 used to be, that we an hn yesoi, ds trls be autthe fiscal union, and i was arguing about financial services, people didn't quite see the onnection. i think that's the future of the connection will be clearaus e erwango bene ap anim bve atansa arments.he i think they are actually quite understood by the commission and others. they don't always agre but the d.c. we hve a legitimate interest unharkmc en we acnri e inrychid fo the whole of europe and we have legitimate issues we should raise. and we should have any p mieruson and raising them

llg roater dienu.sewih may well be contrary to uk interests. i'm thinking of things such as the financial transaction ta, bu, in uevisi oate.. i assumed you should probably want to oppose these proposals. how confidt would you be if the uk is le toevee ry sgt t roene elitn s ng a out, financial transaction tax we will be taking pt in that. the, consolidated corporate tax se, you look at te aa wondcuonsh b ierw iayh ab em

we don't support that. the key thing here is obviously making your case with vigor and to think yr interest but it's also aut builngallices. anatfniosoe siweldy ng a whl-m uns. bag n goes ahead in 17 rather than 27. we know the swedes and others are strong allies. they want to regulatheir w th fn onry that share our single market is which happens in italy and spain as their center-right government. but sometimes you are more on your o and youuveo gnthouaveg is dr oue7t sg comment agendas, and you have the remainder each individual agenda. therefore, much more dificult to form those alliances than i inkt' ar ontelo

i w o on h hal suhae n u have the same interest. they have some prett vigorous debates and arguments. but thesecond point i would ch.e is then o'e g bl mat nw. ey fratyod anme of those are about single market. i would argue that the single markets has been one of europe's greatest success. and the comission, e ter, unasbia be stken ng o otandeheieg sut otcu ae the i think it's psible to do that. >> last question, if i may, on ukgongpson , iclyh rdtigslimoand ur inncae 140. thank the great strength of the euro zone will make our

ability to negotiate on these things more diffilt? neatte ebutone specilln. d wao ep o nt on pe y lee ho'tt m s. you look at the years of specifically coming of the great discipline is like that touch and fans into the ne and the french ad gemanwere actlly to emeuyaa crihaulke sei iofbin e structural funds, you know, with italy or spain or some of the ewer members of the euro zone. so the euro zone will act as a blncas,tw i s oehi lhe dgougog ta side.in >> there was one question i wanted to ask. o a.. a,sr ss t hean d e f

teh lled his ey and look at the ceiling and said friend of the quite enough on my plate at the moment. what sort o reactionre you getting from other e.u. the kulayod inc ohe. ine uldeimate the extent to which the euro zone in particular but the european union in general is throe isht meevhd vls t ayeeen peous e b atth focus. so people are hugely foced on other things other than that. but the second point i make is wh ece pr ir growg ar ee e utw he ce. h the agony of lisbon. there will be another treaty change for years and years.

think we're already, we've had an is dend atngom ce in nedacmmte erneeds. and i think if britain puts its case recently responsibly, and we explained we would like to remain part othear thronwe st q.wi d teo integrates, there ould be possibilities for new settlements for other country. i think that's a reasonable point to me. but it's never goi to y. nenefhegssy e llnptif fae ou t oud wf like returning a power from bruels to britain. now, i'd like more on that as figh bt iin eder,ut s sy anttnoig.

that w made yesterday. it may result in a number of small trees rather than one big one. what that means no going to a number ofrfns? thuen. nw diffen seri uacon itain we now they've very simple and straightforward situation which is passing are from britain to brussels, we get arf t f swwr rtthoeew whne uto know is what's coming next exactly, small trees, bigotry, and arms corporation convicted of so ih ul me nn? eat t - >>o eaeed wwealy th ea tisthusat the moment, dem a treaty, which is an amendment to the euroan

trea. acly a d tsei beeiosnnsran rsern' referendum. >> take you back to the euro zone and the eiati fidcnl fiia policy, and at the same time will reform of the funds and the stctural funds. does it ot ccern tin be deho sp aoio e y reform of the structural funds will be looking to do deals that i'tthowdvantage ultimaty he , turn trge t

usthe f t the about the framework about the cat, about the structural funds, those are all held at the leve heth itop. 27utfreut.o isidit n as euroone countries agree with each other about budget. so, you knw, if your argument is we shouldn't beecldedm ewhthm,el y oop pengto i urne

>> to try and make sure the bee 'st, we 't, you know, thcoiethrg amount of farmers will be caucusing to try and sop the cap being reduced. i thinkri's ire i y estev en, ochespng es oose,o-th things like research which we do quite well. the cap is 40% of the e.u. budgsoveur o gu, ol,ur ncuut g te ant goioanr priority should be pretty clear, a tough

budget settlement tries to focus the.u o gh, pti th c h led m reform. >> [inaudible] >> i mean, obviously, the countries that receive them are caucus together, but we can't stop that happening. thth eon tr chhellha >>t. te' n naudible] >> look, of course, i have to repeat myself in a way, but the only way you can always be in the room is be a member of everything. w,ldrle g rds j - anog with our partners. [laughter] so i wouldn't go that far. >> [inaudible] >>ill, i wouldn't agree with that. i think we shoun't ht o vblro thia crined

yow,urinst te of cooperation of foreign affair our interest is not being in the -- [inaudible] agement. our res ng ngury. mored a auof a erty o riop. i thought you'd agree with me. >> [inaudible] it was voted payments under the sile-pntemll thcton t ve ifre sanu devaluation, would you reduce the value of -- [inaudible] would you make money avaable so that resources could be made shalec pntt annvme se under pillar two? >> my understanding of what

happens here is in order to dl with the impact of devaluation, prectionheurne ou opatme g dgagt .udget in order to try to smooth this out. so i think that's the lel we should try and deal wi that sue. that, of course, y know, we patsun t aietduhe >> waly nale rt t the fact that pillar two is co-financed is -- [inaudible] do you know what t cost is of hedge anything that way? >> i'tow th t wou t toout m i inst, think, a british interest to try and reduce directroduction-linked subsidies s. and, obvusly, everybody's rmersuff a dohautnks eigngoo e ngmhetor

pecoy,tal i'd argue for europe's agriculture as well. >> prime minister, even before the eurozone crisis there was a an ouncn erbeur riiosi confidence as well as bank lending. the chancellor has announced that he wished to deplonew rer rolo ba aheertf tred fngr lending scheme as a result of that. cod you tell me, first of all, how much extra lending you exct t gussean etthil b- >>ht , wlso oak i reag e t geome did was the merlin agreement which was to say to the banks, look, we won't hit you with

additional taxes over ad above if cuaeem,s aios lngge and what actlly happened with thatn 2011 is total lending went up by 13%. di fmil tithey missed teir throyisthr rg. so merlin is often sort of attacked and people say what it didn't dever. i think it actually d deliver wowit. n >>oly. s dithar bu ysily look at net lending targets, banks find it easier, actually, to meet those by not calling inloan t thththse wd. abwhr tsuss

or net, but it is wor looking at the amount of money banks are putting out. i don't want to give ahuge, ngnswer, binee whi k halo aredd ke' in and bllion of lending has gone out under that. the funding for lending is a bank of england schemehat the inseee hanbank announced anorou acof ntgo aha cagoto b srt s dei thing. but the bang of england stil needs to do more work on the details of that scheme. sohose are the three sort of stages, if you ke biic. rut foof rnsbl the state of confidence because of what's happened in the eurozone and other things, but it is a big focus for the government.

>> and i ustth t ndfo in i leg to u.k. nonfinancial sector during this period. if you don't meare it as net meg rirt?'r el yre right that it designed to improve the sort of transmission mechanism because what's happened is the ra b bne rec ies ar ageol oho ne r. oueheansi twbaf england monetary and policy decisions on the one hand and iividual bank decisis getting through. the governor has said the scheme lle ldn sin thaire gg be ch t mreheer net or

gross i think is a very good point. i that need to make sure it's actuly making a difference. they need to design this in a way at tctan t enaggnkdo meg ertohaey rwwohane gct that the bank tellers that, shall we say, compy,pait my t stauf t centndtvef li tleg met focused on those companies that are actually desperate for money and, therefore, likely to be higher risk. sungo a hief lnesi loans than would be normally considered commercially acceptable? >> well, it's not the treasury guaranteeing the bank of englan i thk the tw ses t yehe sutas

dieh u t low-interest guarantees that come through the national interest guarantee scheme. so, yes, they are giving guarantees. e bank of glancheas ancuthe dil fubld. eny psh,in l as-- th tan england going to be prepared to underwrite loans which will normally be -- >> i don't think it is because the national loan guarane batossnsedillg nd i a gnm thnd f linsc alllo banks to do more to lend money, but it's secured lending because in order to get hold of the money, the itroet tshe -- as i understand >>spp t i skdi y t'r oe te rtin tar taking part in this lending.

so they're expanding their balance sheets. so in order to take part in it, they have to basically do a deal th bfdgla hoofend avblto awi f nonfinancial businesses. and, obviously, as they expand they're liable to be looking at sollharyo s end meeoinin mmhis re tg t urbato more lending than they otherwise would, and that implies there going to be lending to slightly skier prospects -- >> or. tht bafgl ldeomsktots balanc sheet? >> we have an independentbank of england, so i think we have dongespect the way th wt to in teintnt

buth tsk share between the bank andhe treasury is, i think, for the bank and treasury to debate and discuss. ifadhe ph t,f 11ead w brs since the election. as it happens, i think in a crisis like this it's a very good idea that there sulde me ac d bereden e itaifth >>, caieha i is av done so i think over the whole two-year period, um, a my sohiou s yitherods rdtl c wianndther businesses, bodies i met with. when i think about my business

group of advisers, it does include some people with atrego r o isi dagwi y cr,heou g bank lending problems, you need to be talking to these people t understand the industry and what's going on. >> tanorsa, a ngrhte inrg srvgou noaln ge of it already,re they? the european regulatory authorities can intervene and take over? >> well, i don't entirely agree thbvlyeop quon b la,t s rns regulating our banks in terms of lending policy, that's the bank england. ift'hefiia cucuct? or hns abaa er n ton a

thse by british authorities. looki don't think we've regulated banks and financial services properly inur couny, wneed to sohat ahawh tk ish oiie sle ra t in sd is ba rather than on an e.u. basis. >> well, i agree with you, but the emergency pcedula u t and rioa mst bepe leo-ds majority they can take out and declare emergency and say we're going to run the regulationf your banks. mi wyoeco fething you hin spey -- that specifical because what i was thinking of with the safeguards was, as i said, when you have the 17etting mor

bengnsystoua m be advantageous. so the safeguards were more about how we regulate financial services more fair. fewe adi nc pmme ng's policy committee report which recommended that our banks reduc their exposure to the eurozon now, clearly, there's exreureba ht -tsaty the court justice had been describing would be able to block. i'd grateful if you took a -- >> pntoumas a iswhis ee w ve gompl deeply

embedded in the currency unit, who wieldshe power of regulation? and the more integrated they t, t morsaar u cobe aadag e oin iwathng a obviously, this dispute about whether or not you're able to clear euros in london. and, basically,eems to me if you can clearnd drs d ds onur i so ooi was thinking of. >> would you be prepared to take a look at these emergency situations? >> certainly would. yore ming very g p usve c b. piomba tu. i'eeokat sofe preparatory work that we should be considering in the case of, um, further instability in the eurozo, u kn som

>>no tba o ean reto, oem are worried about it. how manyallies have we got now to protect us? >> the question isn which -- obinafrdrte inc o ,nkini, t,chswhe bking union proceeds, um, which actually the european council went in the rightirection beuse it looks like a e l 7 a tref bu sngea u thweoone i think that the dutch were also back some of the points. i think the danes as well a oue roluthe heroues - hame . me,'r pmatr ol a m weof course.

whereas in december we were presented with a tree si change -- treaty change and so i thoughit was necesryco arthseegs, hryasl kn. aced s 'tav e.r. they went off and did it separately. we're not at the stage of another treaty being put in front of us, but you have to be ready for anything. >>rimeis the cogey p boo cris and the austerity of more people coming from the e.u. into the united kingm. but thepuriinr trohare stitg tesof miio eretmo urw discussions as to how we can restrict e.u. citizens coming into our country in case the crisis gets worse? >> think the position isth atio

ofifntvals. 's t right thing for a government to do when there's so much uncertainty. we don't discuss ese plans, obviously, for obvious rsons. thin thega pio attexrdy ssnd sin i rect matylo but, obvusly, we hope tt doesn't happen. >> would you be prepared to do that? >> i mean, i would be prepared todo whatever it takes to keep bag emro tp asmeisths t ety ndhat would include restricting greek citizens, exercising treaty rights -- >> you know, i hope it wouldn't come t that. but as idend l rsre aab an intrs hao , hto inieoue be ready for anything with so much uncertainty in our world.

but, you know, i hope that those things don becomeecessary. t y if m ink a os v ies e es events; general election, mante for dmawcial leading to a referendum to address t tito untag?my me ta o feds tit amof eatisfactory status quo? >> i think the lack of safeguards is, it's a permanent sor ineea'se withhe dein bintes erngke crd4 and other such directives. but what i think, the pointi'm tryi to ih i thhedor sua

greater. >> you're saying that as the eurozone accelerates the dynamic diulrheteation that actuly >>desw d ba-'m ng evasives, this is very difficult. >> [inaudible] >>haworries me too. ifnkgnison tgh e pentanhe ana n itn thurn ioan if there are -- as it goes under enhanced corporation there are safeguards to the single market, then thats dongnafeyf inmearout frd tks se t accordingly in addressing the unsatisfactory nature of the status quo. >> are you talking about

coen hanre ok cerinwend wlkabor reon wth e.u., or is this something you aren't able to decide at the moment? >> i'm obviously, going to ke this speech in eumen thute leat t aas inanhe european union shouldn't have gone into, but certainly britain shouldn't have got into with the european union, so those are the higharla no jout ths ro n develops, as the eurozone integrates, you know, what's the right answer for britain? i hope that we will beble to come up th some common ans p. inrevesp ds. t inisig

tefry, tll pe- >> order. order. order, sir, order. intrusion into the -- [inaudible] we wisinrlo question which is, n jbearhur e.inut a. u treaties is ever desirable in britain's interests to deal with matterses in which britain t rticatinaue sha oafin 'snge--f i tgh itual >> well, that can be the case. very good question. i mean, i think there are saguardsith- unsfryarth ontrarhere sore safrdh using the institutional structure. but as i argued in december, if they come forward with a treaty thnshe sngle enunbaland,hat

n' suahesi saeehesaar o rwth tyn'go ahead. so you have all the time tobe thinking very carefully about the consequences of e path that they're going down. >> isn't it really also case to comck st i , e oth mr threeclyndou conceded this answer for moving into a position where they will cease tove democratic control over the decisis. s -- seowansi aca d'tec llcaete y eaod tot t ma these decisions. you know, the fiscal compact they will sign, thateverely restricts their ability to spend th tdeatow and do many of the lianooo . 'vdeteon >>tec u el iefsem

actually. i don't think the fact that spain is going to be limit inside the future to 4.5%, does i t t iesffect ? 'rt isl ac e in tin rr. dnkth ets >> lofsa includes scrubbing the deck in the morning, working on the sales, climbing a lot of, whatever the guilrae.ssned. by ef ey, ab akemest nsti- l tion'sro onur hours off. >> this weekend, the life of an enlisted m aboard the uss constitution during the r of 1812. >> eaili idear th piby b pefiad a and the thing he never wanted to say was a pty officer getting ready for aog. u t teeat

tsinutth g. hand sos enremhe contenders, our series on key political figures who ran for president and lost but changed political hiory. ay dcrsiia ta a is this which is in maybe half of pigs, half of cows and a lot ofhe turkeys. ths dhaou gitoe e aal isiawenth w tiloo and that mea when an animal's killed and the meat is sold so to safeway, the dg's in there. >> this ekenon er rdarroer cociin undermining the

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c-'s",nd a. ". >> tax reform should focus on the results we want. it can create jobbed, it could spnniotan end rty,cagute omtissnpu er o t ou ctabout goals all you want, but we have put up stghanne ivewe have put up ancoss bvi fthim i lo ta colthomee d o f pits of beer with my chief of staff and we came back and called the -- rave us a tax bill a a 25% s o id rtntdun. d sawh a? aur] you mdvge ompeners much more

progressive in the domenici-rivlin tax reform be. ho mgaduns crt t >>ng the tax code, yesterday and today. current and former lawmakers at the bipartisan policy center on fitlit tpa fureedits annual report this week on the u.s. economy. imf managing director christine lagarde said america's economy mapindcea si r. euantcr a exngs ad effect at the end of the year. e presented the report's findings at imf headquarters many washington c. w g mnger m jic