shawn tully is just over. six years so special as a truck for many. in the slums of. extradition to the bottom of your hearts he. welcome back to what you are t. here is a look at the top stories japanese authorities are launching massive radiation check ups in the fukushima area three months after the nuclear disaster that's made public anger over the government's late response to the leaks and lack of transparency. germany is under pressure to lock up in a tourist nazi officer who's been convicted of war crimes but remains a large cause karo father escaped from a dutch prison over half a century ago and found shelter in germany there's legislation prevented his

extradition. and a russian intelligence chief has been found guilty of treason for exposing a group of russian sleeper agents and the u.s. last year of her good bye moscow court is being delivered in absentia as colonel alexander fled with his family just before him the news of the scandal emerged. as we had lines here until you're back at the top of the hour with more updates for you in the meantime though we'll bring you the cross talk with peter lovel. keep. a low and welcome the crosstalk i'm peter lavelle the euro and it's meeting with destiny the greek government survives a vote of confidence as its crushing debt ordeal continues unabated but this appears to settle little if anything the u. still has to decide whether it will continue to rescue greece from crisis has

doubts mount whether the euro project has a future. king. cross-talk the prospects for the euro i'm joined by vanessa rossi in london she's an associate fellow in international economics at chapman house also in london we have robert oulds he is director of the bruges group and in washington we go to gary jones he's an economics professor with americathis center at george mason university all right this is crosstalk and that means crosstalk rules in effect that means you can jump in anytime you want but before let's look at a report about a country that may bring the eurozone to the brink of collapse. the euro zone is facing a crisis in which few can predict that south as financial markets and leading banks grapple with the greek debt debacle there are serious questions about the viability of the euro as a currency and whether greek default will strike a critical blow to this monitor terry experiment. overburdened with crushing debts

greece is fighting for its financial and political life as lawmakers defend unpopular us terribly measures meanwhile the european union the european central bank and the i.m.f. say these measures are the only way to revive the sick and the commie your country is undergoing a crucial moment we're obligated to ensure the future the future of our country with a sense of national unity a single present difficult and multi-faceted crisis in a decisive way the upcoming meeting in luxembourg will determine whether european officials are ready to issue a second bailout package worth an estimated one hundred twenty billion euros this will extend greece's year old one hundred ten billion euro deal and funded into the year two thousand and fourteen the package will however entails those yet another round of sweeping austerity to finish condition to have success if we speak about shipping to greece is it

a response that you paul. and that greece is able to deliver on its spot and if greece this its part i think you can you know olsen has to do its part because it is in our joint has no a common interest or greece's financial woes overblown after all many policy makers claim greece is too small to cross the kind of economic impact that would change the course of the euro and the health of the global economy and during their last meeting in berlin german chancellor angela merkel and french president nicolas sarkozy assure that a compromise agreement will divert a meltdown and propose a strategy to the vienna initiative of two thousand and nine which type of melting eastern european debts and if we have to move forward on this and i think it makes sense to improve the private sector and this is important durance though the vienna initiative may have had its advantages it was implemented with countries that were outside of the euro zone and did not pose a threat of internal consumption and so many experts may be rightfully concerned

that if greece were to go bankrupt it would soon be entire eurozone originally conceived as a geopolitical theory the very concept of the european union would also face a serious threat a threat of that your founders could have anticipated also turn a for crosstalk r.t. . ok vanessa if i go to you first in london oh i saw her on the july third meeting does the bailout for greece is really a done deal because they have to bail out greece don't they or the eurozone itself faces a i crisis that none of us can predict. well i think there's certainly concern about what unpredictable effects may arise if greece goes into a disorderly default but on the other hand we've now been facing this greek crisis for almost two years and this means that many of the players many of for example the banks the derivatives contracts the other private investors have had ample time

to review and understands their portfolios and their risks involved and to some extent those have been reduced because of the official intervention more of this debt is now with the e.c.b. and effectively with the e.u. i.m.f. than was true before so i think we have to be careful about talking ourselves into a global crisis from this i think the potential to ringfence greece is much better this year than it was last year and you can see that confidence in my view is borne out by the way in which the euro has reacted this year last year if greece would move to a disorderly default we would have been through parity against the dollar very quickly now we're talking about that possibility and yet the euro is holding much higher than it was last year so i think greece alone is not such a problem the difficulties are that we will have to be very quick at containing any problems that arise in greece visa v.z. other debtor countries and that i think is something that the e.u.

should be in hopefully house been working on to be able to prevent the spillover of this crisis ok robert if i go to you in london as well i mean why all the gloom we hear about the euro i mean the former from of foreign secretary jack straw said a few days ago the euro can survive and it should just be given instead of a slow death it should action should be taken to start dealing with going beyond the euro in this way and nothing has really been settled with greece is just throwing more money at it. absolutely you know greece is effectively passed an interest in laying the inevitable what needs to be recognized is that the euro has been a political project which has caused massive economic disaster not just in greece but in italy portugal spain arland benefits germany at the expense of other nations within the eurozone it was a mistake for those countries to join the euro is a mistaken project and we should be wound up and then only then will their colonies

in the mediterranean and in ireland starts to grow and get their way out of the debt that they're in the euro is the root cause of the problems they're facing ok gary where do you stand on this we have two polar different point of points of view here where you stand. well i think they're both but as said robert make a good point of it is right having two years to get ready for this means that they're in a better position but if they are in a better position why are they so absolutely terrified of what they call a credit event and why are they so obsessed with having what they call an orderly default as opposed to a disorderly one. with robert where the questions always for europe has always been what will happen when one part of europe wants to cut rates another part wants to raise it economists across the board knew this would be a problem ten years ago and now we're facing it right now even if so what is it if it is really you know what is the difference between an orderly and disorderly i mean it's still defaults it's still bankruptcy what's the difference between the two well this is the problem we first need to tackle the immediate problem we have

which is there may or may not be a long time they should know how the euro zone management can change whether it can change i will ultimately the question is whether it delivers growth or not for its member states but those questions have been around a long time it's not clear that europe is delivering growth with or without the euro there's a big problem with that but we have to talk about the uses delivering and you need it where you can make the point here you know this was a greek crisis. he's not necessarily to you or we have a crisis in we actually we have. no we have we have a crisis in greece which probably wouldn't be the crisis before anyway greece was in and out of crises before it. but we know it was made worse by the you this is the boy do you worry so massively when they join you on the day to day for he had all the depression if you don't use call right. here is carrying a carrot i'm going to go to you what is the euro zone learn from all of this here

and you know i'm not going to pretend to be an expert in international economics all i see is more money being poured into something i don't see real structural changes in the eurozone you know of course greece is this is going to mean why you need to miles have to be. the question our international going to this is killing me around read your head of course first thing that we come back because you asked me that question before and it's disorderly versus orderly we're now in a problem with greece never mind the other debate what is the difference here the part of the problem and it's true is that within the euro if greece defaults then there is technically an immediate problem for the solvency of all this banking system and that party depends on how the e.c.p.a. reacts the e.c.b. has already been beyond almost the pale in terms of accepting poor collateral in exchange for liquidity cheering all the crisis now if greece does default and that's made quite clear the e.c.b. it's all going to resume forcible situation of having to ask well what are the

plans what is orderly or not this sort of means they're immediately having to ask but for this money and this means that the greek banking system has an immediate problem as well now that could push greece to a very quick decision about leaving the euro but i think that part of the reason we're trying to buy time now and we're still trying to i time is to allow greece to more carefully consider what exactly does it want to do because greece's resumed their lives and those are probably trying to suggest to avoid egg being on the politicians faces that's the key issue here they don't want to admit that the euro has been a mistake so they're doing anything that they can to try and paper over the cracks and try and hope the problem will go away i think that if you if you say you know when the euro you. know you know. you hear one injured garrick jump in there. well the big to me the big lesson of this is not just the economic class and the political worsen which is that the periphery of europe has now learned that they

can milk the european court for money for years and years and years and we can expect that to continue happening as long as the voters of germany and france allow it ok so do you want to go there and do you like mondays leave a message saying on the nasa first affectively time has been called i mean this is what the latest statements from the e.u. are about they're saying greece we're going to give you a last chance do you want to take it yes or no they're calling time on this but my only point first is that is but it should really be a time out because greece itself you can see this from the demonstrations and the problems in greece there is a democratic deficit in greece itself there's a lack of explanation where the increase itself and it's greece that should have to face up to what really it wants to do is the solution does it saying that it would like to leave your is a measure of the e.u. all of the e.u. policy is being dictated to rather you not have power over greece yes it does you

mean you know how over greece is it because the policies the greece must follow to deal with. its they're the ones that are imposing the also information on gracey not dictating what greece has to do what they're saying is they are because they say they have the money and you say to terms are you. really short break we'll continue our discussion on greece and the euro stay with arkie. ok. if you. twenty years ago the largest country. so to.

speak and enjoy. where did it take the. wealthy british science. markets. can find out what's really happening to the global economy for no holds barred look at the global financial headlines tune in to cause a report on our g. q. welcome back and rostock i'm futile about your mind you were talking about the euro and its future.

ok gary i'd like to go to you in washington and a lot of the dissenters of what's going on in decision making with the euro and with greece is that they claim that bailouts are not for great greece and not for its but federal budgets and whatnot it's to bail out banks in greece that have a lot of exposure are arms are german banks have a lot of exposure french banks etc in greece this is what the bailout is all about to save banks not necessarily a country's economy how do you sir how do you see that. there's something to that but it's greek banks that are most on the hook here and i think greek depositors would be very disappointed if the e.u. just shot up a speaker tomorrow because they'd find out that all of their breaks have just reported but that's how you see that's nothing that any greek voter wants of course minister how do you see that because there is this there is this positive reception out of the problem this is exactly part of the problem that if there were to be

a disorderly default almost immediately the greek banks would probably shut down now actually a lot of people in greece have already worked that out and this is one reason why they've been picking creases in gold sales take about of withdrawals from deposits in order to protect the money so to some extent that holds only i mean the c.p. providing liquidity so we already know that this situation has moved a long way towards assuming a default and therefore people are positioned for it but there will be some last poor souls that were to lose their money here and that's not a good situation in the banking sector problems could be very persistent it would take time to overcome that and greece would almost certainly go into an even bigger recession that it's now in if it chooses to go down this road but i did leave the euro the economic growth. i think and recapitalize their economies. they were to leave you with the only common story but i think you'll you're living in cloud cuckoo land if you think that greece devaluing will do any use for the greek

economy. when the united kingdom learned of their sterling no really you really you are you know i take you you need to. replace you . with john being here. right man is i am going to be here right now with. the economy grew that is the only way you agree this is not. a value their value and come and see the value that devalued ireland so you. all right we're going to change gears you know we're going to change gears here and we're going to change gears right now do you care in this. robert robert place garrett how much do you think of this is that i don't i don't see this there really any solutions out there i mean i agree with it but i said you know they had time to think about this but they really haven't thought it out

because they just don't want to let go of the political aspect of this the into a political integration of it all and they and that's where the mismatch continues because looking at statistics you know we're going to have the southern part of the euro zone is going to be inimical for years with economic growth how can you match that with the economies further up north that are much more dynamic and i especially germany i mean the how much of a committed to this political integration in the end of all countries in the in europe germany is most committed with all this from all the german girl is let me go in there and let me go let me hear you were completely for it this is like talking to let me let me carry on this one minute let me phrase folks please this is great crosstalk episode but let's go to garrick ok. yeah the european project is something the germans completely believe in. the european periphery is going to make a lot of money on germans but if you look at all of that you're sort of going to hear. ok robert the voters say the voters that you're only going to lead support

the euro because the economy's benefits are greatly wrong that it helps their exports to other nations within the eurozone and doesn't allow other nations of the eurozone nations to compete. so really that's why the german we believe that we does not have the area for the journey across a laser device and i was only detect usually. ok. go ahead and as i said this is not somebody to go only so it's in the form of the you. research research royal when i say can digest the e.u. vassal go ahead please it's important that germany has been leading the charge together with other parts of northern europe like sweden which is not in the euro so it's nothing to do with that it's a state of para called the rest of the types of goods they produce but they are selling well into emerging markets into china with the union labor cost today we can now see only no growth that we're going to really experience right so i don't

think you understand a single race pace how really you're going to make sports all right all right ok garrett if i could go back to my not just greece is not doesn't know how might i not export economy they simply will not be changing the currency will not change those parameters there's deep structural issues which need to be tackled if they choose to think that that's better outside the euro zone that's their choice i have no question that it would help at an early to help their kids to be prime not necessarily in solving markets. right in their conference i want to explain to you larry for you seems to be very careful not to get you and i began to this is like you're going to canada and washington carrots what are these monkeys. my terminology here and i haven't seen this elsewhere ok but it seems to me that the way the eurozone is evolving if it's going to continue to evolve that is it is turning into an apartheid system we're going to have poor euro countries and you could have relatively rich ones can can

a currency union be sustained when you have an economic and financial apartheid system different than the united states ok the difference is you know you're going to carry out this like a transfer tourist in the united states yes go ahead because you're. indeed that's a perfect example the united states has poor regions and rich regions i'm sure germany has poor regions and rich regions and they all managed to stay within the same political system and it meant they managed to keep their currency union together but that required a political commitment it's not an economic question there are plenty of times when i'm sure east germany wanted lower interest rates or the southern us would have liked lower interest rates but we all stuck with it together because an economic monetary union is a political question first and foremost that's why we should be talking like to call it to say how are we going to live by the same system to transfer wealth from poorer regions to reach of age and deviations to offset some of the discrepancies now that's exactly what recent years are you know and i just see how you were in government we want to go national governments and democrats ok so i think you'd

have an ass of n.s.a. if i could ask you a question let me ask you a question and it's something like what the united states or i mean the people the populations of the eurozone like the euro when things are good when you don't have to think about these type of things up until the crisis in. greece but now things are breaking down some of the contradictions of the year old becoming very obvious then the euro becomes very very unpopular i mean it's just when things are good you don't really care how it works but when things get tough you do it in this is really a good reason to question the entire structure of the eurozone isn't it. oh i totally agree with that it's a big problem i don't see the critique of many of these problems for years i look or feel not always popular in brussels if you say those things that birthday party was and all of the success well not all result long afterwards we're facing these problems you can't brush them under the culprit you have to talk all these fundamental differences how do you create cycle down growth from germany to the periphery for example how do you help these periphery economy i don't think that's

where i disagree i think i totally i totally disagree that the idea is that simplistically somehow devaluation will work there's a lot of other structural if you look for the you know if you're going to be ninety nine but you should have done with the youth and experience right i totally agree i could really go through the same for the safe thing to say we're going to do until recent research and repairs result of having it i'm sorry he said it isn't right sorry but you did the particular received a report and you know we learned your history learn as you were you know what it is you know if you kingdom and therefore we didn't join forty other countries didn't learn from our example now they've changed i want to read one of them is called i want to bring up another important issue here which i want to bring up another important issue garrett about to go to you what in moving forward. it is do we have to when we look at what's going on in greece i can never get away from moral hazard in the contagion because whatever happens with greece and i think they will be i was going to have portugal and ireland and maybe belgium and they say well

what's there to worry about ok we'll just go through the same thing because the euro one is not going to be allowed to fail in chile completely collapses in on itself because nobody will have any money left including the germans ok that's an exaggerated scenario but what you think about that's why that's why that's why the markets are paying so much attention to greece there are no time outs in financial markets every time something happens in greece people say whatever is happening here fifty percent chance it happens in ireland percent chance that happens in portugal and so therefore that's why there's. news contagion even if there's no financial links between these countries between their banks there is news contagion ok vanessa what do you think about a contagion to element and moral hazard and i stress moral hazard. well i think there's signs that other eurozone countries either taking medicines they all playing ball in whatever way they're not playing the same kind of game is greece unfortunately with greece i think there's an internal problem about the way in

which the public doesn't understand the issues has not had it properly explained and which decisions are being made and this is just going to be a continuous festering sore even if the government now signs up to these fiscal measures will be back again in a few months time to demonstrate on the streets and the uncertainty about whether a new greek alphabet a great relation did not want to join the market they were going to go to robert robert let me ask you a question let me ask you a question because i think you bring up an interesting point here is that you know if we go through if there is contagion out there there's more how is it out there it's really the people that pay it's not governments it's what i'm sorry it's not central banks it's not private banks they're going to pull through this pretty well at the end of the day but it's the populations of those countries want. well the european central bank has bought up a lot of greek banks so they will pay but yes it will be than the ordinary population that will pay they paid when the euro was introduced to lead to higher prices in their shops that was deeply unpopular in greece and it's now helping to

create a very deep vast within the greek economy so really it is that it is no ordinary people of greece that are paying for something which they never actually asked for where the political elites of you got together decided that it would be a nice idea to have a common say but of course didn't listen to economic reality and it will be their populations that will pay the price unless of course they recognize that they have made a mistake by creating the euro and they begin to have their own currencies and manage with all of the euro that would be the appropriate way for rightly and journey. times of our run out of time here and nothing has been resolved our eyes on july third many thanks my guest today in london and in washington and thanks to our viewers for watching us here are keep see you next time and remember past up rules . if you. still.

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