qualify. ♪ this is al jazeera and these are the top stories. voting resume on wednesday for a new speaker in the u.s. congress after three failed attempts. kevin mccarthy has become the first nominee in 100 years not to get enough votes from his own party in the first round. he has been blocked by handful of hardline republican conservatives. we have this report from capitol hill in washington dc. they went to ballot one, two,

three. he had four boats he could afford to lose among republicans. on the first two he lost 19, on the 30 lost 20. so the trend was not going well for him. the republicans decided to adjourn and regroup. there were likely be some arm twisting and inducements offered. the opposition came from members of the freedom caucus, a coat -- fiscally conservative and pro-donald trump wing of the party. cary: the israeli far right national security minister said the intrusion into the mosque compound has been called deeply provocative. football legend pele has been laid to rest in brazil. the three-time world cup winner died last week at the age of 82. soldiers using mobile phones have been blamed for the biggest

attack on russian troops since the start of the ukraine war. in a rare disclosure, russia's defense minister says 89 soldiers were killed in the new year's eve attack on barracks and eastern city. memorials have been held for the three kurdish victims killed in an attack in paris on december 23. a 69-year-old frenchman has been charged with murder for the shootings at the kurdish cultural center. medical workers in the uk's national health service say they are under pressure, described as being intolerable and unsustainable. the royal college of emergency medicine said delays could account for up to 500 deaths each week. those are the headlines. the news continues here on al jazeera after inside story.

>> croatia celebrated the new year by adopting the euro. it is joining at a time when the imf's warning of recession. so what is ahead for the european economy and the eurozone's newest member? this is "inside story". ♪ hello and welcome to the program. croatia has finally adopted the euro, some 10 years after joining the european union. it's another step in the rapid transformation of estate once called communist yugoslavia. celebrations minor brought some

brief distraction away from the troubles affecting the eurozone and for a while facing deep economic uncertainty. croatia's government expressed pride in its adoption of the new currency but reaction on the streets of the capital was mixed. >> this is the future. things might not get better overnight, but this is the future, especially because of tourism and people coming here from the rest of europe. >> i think people should not get hung up on the negatives. one needs to keep thinking positive thoughts. i'm happy about it all because we will turn into a metropolitan city. >> definitely, as things are getting more expensive all over the world, it would also happen here too. we cannot escape this, unfortunately. >> let's bring you a closer look at what the eurozone is.

it is the currency created in 1999, but physical coins and notes only entered circulation three years later. the euro replaced national currencies but not all e.u. members along to it. eurozone began with 11 member states and has now grown to 20 with croatia adopting the currency. the ecb is responsible for monetary policy but it is limited in its flexibility to consider individual country needs. now the imf's warning half of the european union's economies are at risk of a recession. let's bring in our guest now, head of analysis at the center for european policy network, in berlin, the founder of bne and tele-news, and the chief economic advisor in the center

for business research. a warm welcome to all of you. it doesn't feel like a very good time for croatia to be joining the eurozone, but how much is its economy coat -- going to be affected by the switch to the euro? >> it certainly is not the best time but i think they will benefit. since its economy is very much linked to our government, i think not much will change on the negative side. it will allow more trade and more tourism into croatia and it will make the country's life easier because its partners are part of the european union.

croatia was ready -- was already somehow linked to european economic traffic. >> do you think this is a good time for the eurozone to have a country like croatia join in? >> i think from croatia's point of view it is a good time to join, simply by getting euro will benefit greatly economically. the ecb is in charge of monetary policy, it gives access to more liquidity and that liquidity will come in and be available to the banks, buying more government bonds with it which gives the government more money to spend. we can expect a real estate boom , but even europe as a whole is in a horrible economic position. by adopting the euro and having

access to those funds, that's exactly what you need to stimulate the economy and promote growth at the time of slowdowns. so i think it will be a big benefit for croatia to join now. >> weird is that money for croatia come from? who is providing it within the euro zone? >> the first thing to bear in mind is that the and the european commission have quite active in ensuring that there is sufficient support to countries that have gone through the whole covid period and now the energy crisis with special funds that have been raised and put aside for all the countries in europe. the southern european countries and possibly now the eastern european countries are getting a share of this next generation of funding and support that is needed because we now also have issues relating to russia and

the war in ukraine and the cutting off of gas and other supplies. so there is a lot of cooperation going across. that was happening anyway as far as the wider e.u. is concerned. therefore croatia itself, the money that ben was referring to in relation to quantitative easing all these years. in other words buying bonds in the secondary market of various countries in ensuring there is enough liquidity in the system to keep them going, if you like. and there are special money being put aside again, even though they finished the overall package of quantitative easing recently, there is extra money put aside for those countries that find themselves in difficulty. so there will be support going to countries like croatia but also countries like italy and spain and greece, which may need that in the short term.

a number countries will need an extra boost because the capital markets may decide the debt levels are bit too high for them to do it without support. >> one of my questions was is it going to happen, because we need to talk first about inflation, don't we? it is soaring across much of the world. just bring it back to the basics for us, in the euro zone, why is inflation the buzzword of the moment, and how is the central bank intending to address it? >> it's a complicated question. there is a lot that goes into it. the obvious factors contributing to inflation before the war in ukraine, food prices have been inflated, supply chains have been disrupted by the pandemic which is made things more expensive like food and fuel.

the war in russia has only exacerbated that. commodity prices are up even higher. they were already high before the end of the pandemic. another factor is the demobilization that is been going on. all of these things have led to much higher and more persistent inflation than anyone was expecting. for the ecb or any bank tackling this it is extremely difficult. there have been record high rate hikes in order to bring it under control. those rate hikes are normally designed to deal with inflation caused by monetary problems, too much cash chasing too few goods. that is not the problem here. russia has pumped up oil and gas

prices. commodities have gone very high. these are things that monetary policy do not affect. inflation is high and will stay high. the only thing you can do is hike rates and as i say, it's a very nasty problem. everybody is suffering from it. >> this brings us back to perhaps what some might say is the problem of the eurozone, the fact that it is run by a central bank that has to control vastly different economies across a huge region facing many different challenges. analyst said that italy is likely to be the weakest link, that it is the most at risk from the ecb raising interest rates. can you give us an expo nation as to what the impact is going to be?

as far as the monetary policy is concerned, when it comes to the european economic policy, there is a caution to intervene, the fact that the policy is inconsistent, it has an effect. on the other hand, it takes months for european countries and governments to find a compromise. let's look at the energy package, for instance, discussing phasing out the u.s. inflation reduction act. it takes a long time to make a decision.

italy is in a weaker position. we have been impacted by low interest rates in recent years. the fact is that italy is still one of the biggest economies within the european union. it is a big economy within the new -- within the e.u. >> who mount the winners of a raised interest rate be? >> there has been speculating in the bond markets. some have done rather well as we've seen in recent months. otherwise, obviously if you have assets of any sort and you are able to get any reasonable

return on those assets, then maybe you might do slightly better. but in general, it is not good news for anyone who wants to borrow, is not good news for households that depend a lot on their credit cards and it is not good for businesses which have to pay more. the focus needs to be considerably on the yields in the bond market which determine interest rates. those have gone up significantly mainly because of support for the european central bank is gone from the market. the long-term rates that you have to pay to invest if they want to borrow money and invest, those have gone up quite significantly which suggests also that we will be entering a period when business investment is reduced. it means that growth will be affected, not just in the

short-term but also in the longer term. that's why the european commission, alongside the big countries, is trying to ensure that investment continues with support from funding, perhaps with some lower interest rates in a combined way across europe. projects such as a lot more on climate change, innovation, and getting itself perhaps more resilient to the types of crisis we have faced by establishing centers of excellence for semiconductors, electronic vehicles and all that that will be required for the future and the challenges that are out there. >> inflation is being linked to the energy crisis? , isn't it? hasn't been as bad as was expected, or has a milder automated other factors being brought into it mitigated that

crisis somewhat? >> at the moment, yes. gas prices are down dramatically in the last few weeks. that is a function of the extremely warm weather. i'm sitting here in berlin and it is like spring outside. at the same time, russian gas is not coming in. that has meant that storage levels are very high. and gas prices have been brought down because there is plenty of gas in the tanks and the weather is very mild. the way the energy crisis works, we are heading to the end of the heating season for gas and because the weather has been mile, the fear is for some analysts at the engine crisis will start up again in the summer or late summer as the tanks need to be refilled.

only 100 in 2022, and you cannot be expected to send more than 50 in this season. so the prices are likely to spike again. the energy crisis has not gone away. because it is so intimately tied to the weather, it is seasonal. that's not necessarily the end of it. last time in the summer it went up 20 fold. this year you can expect maybe the same thing to happen again and maybe even worse. >> germany for example reporting inflation in december being lower than was expected. that is not reason for hope yet. >> no, it is hopeful. low prices and warm weather,

what it does will be reduce the pressure in the next season and the next cycle that will start again in march. it is definitely good news, but if you look across the board, everyone is reporting double-digit inflation which is incredibly painful. we are sort of getting immune to it now. we are an extremely difficult economic position. people like the ecb don't really have the tools to solve it. it has been shot aftershock with pandemic and now the war coming, and looking forward the crises are going to continue. this crisis with russia has hit commodity markets and that has rippled out across the entire world. the world bank was predicting 4% global growth and now it is pretend -- addicting lack growth

or a global recession. >> does the ecb not have the tools to address this? it is governed by strict rules, it is not allowed to buy government debt boat we have seen that it does by government debt and it does help countries in the so-called south of the eurozone time and time again. can it not be more flexible in its approach, differing the approach from the bigger countries to the smaller countries? >> the ecb is trying to do its best, being one of the last banks to raise interest rates, the fact is the ecb has to look at the european economy as a whole. it cannot just concentrate on single countries. the problem is that there are

two different visions across the euro, the northern is in favor of liberal economic policies. on the other hand you have france which has been pushing for softer approach. also having more lenient approach on regulations. france and germany are not on the same line when it comes to policy. i think at the moment there is a difference between france and his borders and germany and its borders. on the other hand i think the

european central bank will continue with rising interest rates and i think the consequences for especially southern european countries will be critical. at the same time, you cannot allow countries like italy or other countries to fail because they are too big and this would have a major economic impact on the eurozone stability. >> so how do you stop them from failing? >> you keep supporting them, i'm afraid that is all you can do. the ecb as a whole has been flexible over the past few years. they have basically given up on some of the rules are at least suspended some of the rules. the european stability growth pact has been abandoned for the time being. that is all gone for the time

being. they have been buying so-called junk bonds from various governments. the greek bonds were junk for a while but seem to have proved -- improved a little bit. a lot of flexibility there. there is no doubt in my mind that this flexibility needs to continue. if we were to revert back to any tightening of rules again, what will replace it will be very important. talking about croatia, they are having inflation over 13% right now. the baltic states, over 20%. a single interest rate does not work when you have countries like you mentioned seeing a reduction in inflation rate in

germany and information tells you that in some countries, inflation is three times as high as it is in france or germany. therefore continued support is what is going to be needed. >> that leads us to the question of whether the ecb, the eurozone needs a more permanent monetary policy to support the different nations in the way their own economies need it. >> that's a very good question. it works extremely well when things are prosperous and steady , then it works very well. even within that there have always been distortions. the size of germany and the power of its economy is not the same regulatory environment as the balkans. for germany, what that means in effect is that the euro is much cheaper than it would be if the moon to spank was regulate -- if

the bone this bank -- bundesbank is regulating it. it's an acknowledgment of the crisis at the moment in the planning europe is to wait for the crisis to go away and then go back to it. at the moment there's not a federated europe. it in sup being -- we've been talking about monetary policy and boosting growth by cutting rates or having growth by increasing rates. they get around that by -- the money beings and on support at the moment is phenomenal. some 700 billion euros in terms of support and relieve at the

moment. you don't have to cut rates in order to promote growth by creating more money within the financial system, just give it to countries and cash with all these programs. at the moment that seems to be the plan. the third one, they are just hitting it with money. the question is, how long is this going to go on? up until recently, the view has been that it will last until the winter and maybe the spring. i think people are readjusting and talking about a long war in ukraine which will continue to struggle with the energy markets for at least another year. you are right that we have to revisit economic policies.

none of the big structural changes like we were talking about. >> do you rate the survival? of the euro? >> i think there is enough commitment that has been demonstrated during the crisis. they're still in and doing quite well. one of the fastest growing countries in europe right now so i think it will survive. some of the rules have been too strict i need to be resolved. >> that's where we believe our discussion today. thank you all very much for joining us. and thank you for watching. you can see the program again any time by visiting our website, al jazeera.com. for further discussion, go to our facebook page. you can also join the conversation on twitter. from me and the whole team here, it is goodbye for now.

♪

kxq#qqqcccwgcg/g'■

- hey, i'm valerie june. coming up onreel south... [soft vocal harmony] america's complicated history is brought to life in photographs. one southern photographer captured seminal moments. - [burk] the are e contacsheets. th is main lutr king's body n d being own to atlanta be buried. ese are e folks tside of the lraine motel, where was killed. to reckon with deepeated prejudices. - [burk] you start out, perhaps with the mind, and an idea. if you'rlucky, tt tranates to e hear and en all tt filter out rough theye.