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or half past the hour here in the russian capital you with a reminder now of our top stories and japanese authorities are launching a massive radiation check ups in the fukushima area three months after the nuclear disaster hits are made public anger with the government's late response to the leaks and lack of transparency. the russian intelligence chief has been found guilty of treason and sentenced to twenty five years in jail for exposing a group of russian sleeper agents in the u.s. last year the verdict by a moscow court was delivered in absentia as alexander fled it just before the news of the scandal emerged. and israel warns of foreign journalists against joining a gaza flotilla due to depart from greece it threatens to ban them from entering the country for ten years if they go aboard the ship monetary and convoy. now those

are the headlines on this monday here and next it's our debate program across to host people of elena's guests will be discussing greece's debt crisis and arguing whether the eurozone is already sinking this is art. keep. a low and welcome to cross talk 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 mounted whether the euro project has a future. you. can

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 garrett jones he's an economics professor with the market to 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 eurozone is facing a crisis in which few can predict that south come 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 the small metairie experiment. overburdened with crushing debts greece is fighting for its financial and political life as lawmakers defend the unpopular us stared in measures meanwhile the european union the european central

bank and the i.m.f. say these measures are the only way to revive a sick in the common me the country is undergoing a crucial moment we are obligated to ensure the future the future of our country with a sense of national judy facing the 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 until still yet another round of sweeping austerity the first condition to have success if we speak about she pulled to greece he said greece. and that greece is able to deliver on its part and if greece this its part i simply opinion has to do its part because it is in our joint it is now our common interest are this is

financial woes overblown after all many policymakers 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 assured that a compromise agreement would have hurt a meltdown and propose a strategy akin to the vienna initiative of two thousand and nine which tackled mounting eastern european debts so. we have to move forward on this and i think it makes sense to involve the private sector this is important to us 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 contagion and so many experts may be rightfully concerned that if greece were to go bankrupt it would sink the entire eurozone originally conceived as a geopolitical theory the very concept of the european union would also face

a serious threat a threat that few of that you founders could have anticipated. in a for cross-talk our team. ok vanessa if i go to you first in london around the july third meeting does the bailout for greece is really a done deal because they have to bail out greece or the eurozone itself faces a idea 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 if the players many of for example the banks the derivatives contracts the other private investors have had ample time to review and understand portfolios and there are 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 had moved 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 difficulty is all that we will have to be very quick at containing any problems that arise in greece. the debtor countries and that i think is something that the e.u. should it be and hopefully has been working all 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 good we hear about the euro i mean the former of foreign secretary jack straw showed

a few days ago that the euro can survive and it should just be given instead of a slow death that should action should be taken to start dealing with going beyond the euro in this weekend but nothing has really been settled with greece is just throwing more money at it. absolutely you know greece is effectively passed and they're just delaying 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 it benefits germany at the expense of other nations within the euro zone it was a mistake for those countries to join the euro is a mistaken project and it should be wound up and then only then will their colonies in the mediterranean and in ireland start 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 points of view here

where do you stand. well i think they're both finance and robert make good points but as 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 what the question's 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 financial what is the difference really you know no evidence of 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 that this is the problem we first need to tackle the immediate problem we have which is there may or may not be a long term a shit about how the euro zone management can change whether it can change and 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 to you just delivering the immediate way to make the poor here you know this was a greek crisis and there was no there is not necessarily a you are and we have it all i see what you actually we have already seen since lehmann go if you go and you know we have like we have a crisis in greece which probably wouldn't be the crisis before anyway greece was in and out of crises before it joined the euro so but we know it was made you cry this is the boiling we already so massively when they joined us on the day that the current economic depression if you don't use call right now i know that your vendor is carrying a stepparent 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 no you know of course greece is. going i mean

are you dating miles or to the other class. all right internationally this is getting in around 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 partly depends on how the e.c.p.a. react these c.p. 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 defines what is sort of the or not this also 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 buy 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 by choice to suggest to avoid 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 larry as you know you don't even. want to hear injured garrett jump in there go ahead. well the big to me the big lesson of this is not just the economic class and it's the political lesson 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 the us i mean is

going to this is the same 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 that 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 with 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. policies are being dictated to rather you not have power over agrees yes it does you mean you know there's a power over greece is taking the policies the greece must follow through to deal with. its they're the ones that are imposing they will still be more measured on gracey they're not dictating what greece has to do what they're saying is they are

because they know they have the money and you say to the terms are you really going to jump in here a short break we'll continue our discussion on greece and the euro stay with r.t. . if you want. the british. markets. find out what's really happening to the global economy for a no holds barred look at the global financial headlines tune in to cause

a reported. twenty years ago this country. began a journey. where did it take. you to. welcome back your boss talk i'm here a little to remind you we're talking about the euro and its future. ok garrett 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 a 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 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 will be very disappointed if the e.u. just shut off the spigot tomorrow because they find out that all of their breaks have just reported but also how do you see that's nothing that any greek voter wants of course with a missile how do you see that because there is this there is there's probably a perception out of the problem that 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 there's been big increases in gold sales

a big about of withdrawals from deposits in order to protect to protect the money so to some extent the whole design is i mean these c.p.g. providing liquidity so we already know 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 would lose the 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 if but i do believe so your economic growth will be even. recapitalize their economy. you want to leave you with the dates things are really calm i'm sorry but i think you know you're living in cloud cuckoo land if you think that greece devaluing will do any use for the greek economy greece you. and when the when the united kingdom you know when the first sterling no they really only really you are the

united you know you need to learn from history thanks for going out and play so you . can jump in here and jump in here is chinese right maddy's i'm going to be here right now with. the economy grew that is the only way you agree greece does not need to devalue their own common see the value that they value that come in so you are. going to change. gears right now. for robert robert garrett. so how much do you think of this is that i don't i don't see that there really any solutions out there i mean i agree with that 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 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 do how much are they committed to this political integration and of all countries in the in europe germany is most committed with all this from all the german i'll just let me go where you let me go where you are completely fred and this is like talking to let me let me clear in on this one to me please folks please this is a great cross stock up or so but let's go to garrett ok. you know the european project is some of the germans completely believe in. the european periphery is going to make a lot of money off germans but if you know that you're going to take him. ok robert the voters are the voters that you're only going to call the leaders or supports the euro because the economy's benefits greatly are going with it helps their exports to other nations within the euro zone and doesn't allow other nations of the eurozone nations to compete. so really that's why the german we believe but we

don't join a project like this and i was only the victim shortly. ok. i had been asked that this is going to go only in the form of the you very very recent research royal when i say. the e.u. vanessa 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 after it's the state of their economies the types of goods they produce but they are selling well into emerging markets into china. to the how are you labor cost if they are kind of not only no growth really experience rates for us i don't think you understand they have really you're going to make sports all right all right ok garrett if i could go back to may not to but just greece it's not doesn't going to. export economy it simply will not be changing

the currency will not change those parameters there's deep structural issues which need to be toppled if they choose to think that that's better to tackle it outside the euro so that's their choice i have no question that would help them sarah would hate to be prime not necessarily in solving markets and. their countries while we spend you larry. page eric garrett i'd like to get you and i do want to get into this is like you're going to. washington carrots what are you. 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 going to have relatively rich ones can can a currency union be sustained when you have an economic and financial apartheid system i mean that's different in the united states ok it was very different so if you're going to go to the area this guy who transfer system in the united states

yes go ahead because you. did 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 man 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 about to how to have the same are more going on about using our system to transfer wealth from poor of asians to from which of age and deviations to offset some of the discrepancies now that's exactly what greece is because i read you and i just saying how do you agree in government we want i'm national governments and democrats ok so you could have a massive n.s.a. if i could ask you a question but i said let me ask you a question and it's something like what the united states here 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 euro 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 and in this is really a good reason to question the entire structure of the eurozone isn't it. oh i totally agree with this it's a big problem i have been a critic of many of these problems for years i love course you're not always popular in brussels if you say those things but state policy was a marvelous success well no not long afterwards with facing these problems you can't brush it under the carpet you have to talk all these fundamental differences how do you create trickle down growth from germany to the periphery for example how do you help these periphery of color i don't think that's going to do it wasn't really i did 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 after you and. i totally agree i do you want to do the same for the sixteen to sixteen but no i don't know yet who until recently certainly did as a result of having it i'm sorry he said it was right sorry but you look at the particular received a falling out of order and you know we learned you know stimulus is you know you know what it is you know i think kingdom and therefore we didn't join forty other countries didn't learn from our example now they want to. bring up another empowering issue here each i want to bring up another important issue gather that to go to you what in moving forward. 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 would say well yes you could 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 will is not going to be allowed to fail into

a completely collapses in on itself because nobody will have any money left including the germans ok that's an exaggerated scenario but what do 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 that happens in ireland thirty percent chance it happens in portugal and so therefore that's why there is news contagion even if there is no financial expert when these countries between their banks there is news contagion ok vanessa what do you think about that contagion element and moral hazard and i'm stress moral hazard. well i think there's signs that other euro zone countries. taking medicines they all playing ball in whatever way they're not playing the same kind of game as greece unfortunately with greece i think there's an internal lots of internal problem about the way in which the public doesn't understand the issues has not how to properly explained english 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 demonstrations on the streets and uncertainty about whether a new greek. did not want to join the war they were going to. 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 housing out there it's really the people that pay it's not governments it's 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 populations of those countries won't. well the european central bank has bought up a lot of greek debt of other banks so they will pay but yes it will be then 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 bust within the greek economy so 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've 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 common seas and manage a withdrawal from the euro that would be the appropriate way for all rightly and journey ladies and gentlemen we've run out of time we've all run out of time here and nothing has been resolved all eyes on july third many thanks to my guest today in london and in washington and thanks to our viewers for watching us here r.t. see you next time and remember cross talk rules. you. still. want.

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