global financial headlines tune in to cause report. past the hour here in the russian capital you with a reminder now of our top stories and judges in the hague issue arrest warrants for libyan leader colonel gadhafi and two of his closest confidantes charged with ordering the killing of the regime protesters over the last four months. israel says its navy is gearing up to intercept a humanitarian aid flotilla heading for gaza but perhaps away from previous threats to deport journalists sailing with the armada. it's been

confirmed that fifteen people will show signs of radiation exposure japan's fukushima nuclear plant last month the latest government checks are being met with anger and skepticism. well our debate program across talk is next with a host of people i discuss discussing for greece that crisis and arguing whether the eurozone is actually sinking and after cross-talk it will be my colleague bill daughter this is artsy. hungry for the full stomach we've got. the biggest issues get a human voice face to face with the news makers on the party. became. a low key and welcome to crossfire 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 is god's mount whether the euro project has a future. kick. in crosstalk 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 a mccotter 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 its outcome 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 experiment. overburdened with crushing debts greece is fighting for its financial and political life as lawmakers defend 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 second the common me 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 facing the present difficult and multifaceted crisis in a persuasive 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 entail so yet another round

of sweeping austerity the first condition of success if we speak about should poor greece is it greece loans that support and that greece is able to deliver on its part and if greece this its part i simply opinion as sport because it is in our joint is now our common interest. recent 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 assured that a compromise agreement will divert a meltdown and propose a strategy at kantar the vienna and michigan 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 jones 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 geo political theory the very concept of the european union would also face a serious threat a threat that few of the e.u. founders could have anticipated also turning for cross-talk our team. ok vanessa if i go to you first in london around the july third meeting. for greece is really a done deal because they have to bail out greece don't play or the eurozone itself faces a new idea a 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 affectively with the e.u. i.m.f. then 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 the confidence in the us my view is borne out by the way in which the euro has reacted this year last year if recent 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 quickly containing any problems that arise in greece visibility other debt or countries and that i think is something that the e.u. should be you know hopefully house 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 gloom we hear about the euro i mean the former from out of foreign secretary jack straw issued a few days ago that the euro can't survive when it should just be given instead of a slow death it should be action should be taken to start dealing with or going beyond the euro industry and nothing has really been settled with greece is just throwing more money at it. absolutely you know greece is effectively past alleges to 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 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 course checked and it should be wound up and then only then will the economies 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 kara where do you stand on this we have two polar different point points of view here where you stand. well i think they're both finance and robber make good points but this is right having two years to get ready for this means that there are 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 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 just orderly 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 this may or may not be a long time issue about 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 of the u.k. is delivering immediately it will be more like you know this was a greek crisis. he's not necessarily a you are we have a crisis scene where you actually we have the i.c.c. inflamed court you go and you know we have a we have a crisis in greece which probably wouldn't be the crisis before anyway greece was in and out of crises before it fell in the year or so but we know it was made worse but why do you try this is the boy so massively when they join you're saying that

the current economic depression if you don't use the right. here is comparing a stepparent i'm going to you what is the euro zone to 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. doing i mean why you need to miles and to. question all right international go ahead this is an interim read your head of course first thing there but 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 debates 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 solvent c. of all this banking system and that partly depends on how the e.c.b. reacts the e.c.b. has already been beyond almost the pale in terms of accepting poor collateral in

exchange for liquidity ger and all the crisis now if greece goes default and that's made quite clear these tepee is all going to resume forcible situation of having to ask well what comes with it sort of the are not this sort of means they're immediately having to ask but 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 is the reason there is no decision to avoid being on the politicians bases 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 really think that you're in for you i realize easier when you're like me as i know you don't. want me injured

garrett jump in there go ahead ken. well the big to me the big lesson of this is not just the economic crisis 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 the british saying on the nasserist affectively time has been called i mean this is what the latest statements from the e.u. were about her 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 lot of explanation with increase itself and it's greece that should have to face

up to what really it wants to do with a solution does it think that it would like to leave your is a measure of the e.u. of the e.u. process is being exaggerated drug use is not have power over greece yes it does you mean you have the power over greece is it people taking the policies the greece must follow through to deal with. its they're the ones that are imposing the also with the majors along gracey they're not dictating what greece has to do what they're saying is they are because they have the money in any state in the terms. of germany short break we'll continue our discussion on greece and the euro stay with r.t. . ok. if you want.

but i was just thinking about my future before the foreign companies came i dreamed of owning a can cabin factory. but we have less garbage now. some businesses who come here make fun of me. regular garbage boy i'm not bad like people saying. i'm a good person. it's just the people don't see me. but i feel it was time people like me. that one. that i feel people will start to appreciate us. from.

would be so much brighter if you all about someone from files to impressions. from start totty dot com. on. vacation or and sisters. welcome back to rostock i'm here all about your mind you were talking about the euro and its future. kick. start. ok garrett i'd like to go to you in washington are 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 or arms or german banks and 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 the partners will be very disappointed if the e.u. just shut up and speak out tomorrow because they find out that all of their base of just about it. vanessa how do you see that's nothing that any greek voter wants of course minister how do you see that because there is this there is there's probably a perception 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 they've been picking creases in gold sales take about of withdrawals from deposits

in order to protect the money so to some extent holders only i mean these people providing liquidity so we already know that the situation has moved a long way towards assuming a default and therefore people are positioned for it but there will be some lost poor souls that were to lose their money here and that's not a good situation i think 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 do believe the euro the economic growth. can recapitalize their economy. they want to leave the relationship with the really calm i'm sorry 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 greece you kill history. i think when the united kingdom don't. know really really you all do you know i think you know you need to learn

from history. you know you keep trying to jump in here and jump in here jane is right mine is i'm going to jump in here right now with. the economy grew that is the only way you agree greece is not greece need to devalue their own come and see the value that. we're going to change here you know richard. gere is right now. robert garrett. 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 less of 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 intrade political integration of it all and the and that's where the mismatch continues because looking at statistics you know we're going to have the southern part of the eurozone 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 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 girl is let me go in here and let me go in there you were completely for it this is like talking to let me let me clear it on this one to me please folks please this is a great cross truck episode but let's go to garrick ok. the european project is something that germans completely believe in. european periphery is going to make a lot of money i don't know that you're going to play here. ok robert the voters i think you only got a single lead supports the euro because the economy's benefits are greatly exaggerated 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 that we doesn't everyone for the german prosecution of us and i was going to fix it jointly. ok. go ahead and ask ok this is how to finally go next it's all in the you very very recent research royal when i say it was concise you think that's a 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 the state of barrack all the rest of the types of goods they could use but they are selling well into emerging markets into china we are all you like the cost to there you can see only no growth we're going to really experience rates for us i don't think you understand going for a space how really are you going to make sports all right all right ok garrett if i could go back to may not to but just greece is not doesn't realize we've got home i know the export economy has 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 to talk to outside the euro so that's their choice i have no question that it would help them with a hate crime not necessarily in solving markets and will make them wait in their countries while we spend you know larry in places to pay very care and i think you know you guys are going to this is like to go to canada and washington care 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 a currency union be sustained where you have an economic and financial apartheid system you mean different than the united states that's ok. if you're going to carry on 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 it meant they managed to keep their currency union together but that required a political commitment that'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 have a say are we going to anybody sort of try to spur system to transfer wealth from poor regions to from richer region in deviations to offset some of the discrepancies now that's exactly what reasons because i do you know i just see how you agree and governments we want our own national governments but then i'm democrats ok so i didn't have an s. 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 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 it in this is really 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 can't be the 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 model of success well no not long afterwards with facing these problems you can't brush them under the carpet you have to tackle these fundamental differences how do you create trickle down growth control money to the periphery for example how do you help these periphery economy i don't think i do it wasn't really 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 think you're going to . let you go usually i totally agree i think he should go through the

same for the safe thing to say with no no no you can't do it until the recent recession because it's all good having it i'm sorry he said it isn't right sorry but you look at the particular received a report and you learn or your history loses you or you know what if you like you kingdom and therefore we didn't join forty other countries didn't learn from our example now they change i want to. bring up another empowering issue here age i want to bring up another important issue garrett i could 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 you could have portugal and ireland and maybe belgium and they could say well what's there to worry about ok well we'll just go through the same thing because the euro one is not going to be allowed to fail in chile completely collapses it on its own because nobody will have any money left

including the germans ok that's an exaggerated scenario but when you think about it 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. use contagion even if there's no financial links between these countries between their banks there's news contagion ok vanessa what do you think about that contagion delamater and moral hazard and i'm stressed moral hazard. well i think there's signs that other eurozone countries either taking that since 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 lots of internal problem about the way in which the public doesn't understand the issues how it's not how to properly explained in 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 uncertainty about whether a new great deal for the great relationship you know one thing if you're 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 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 then the ordinary population that will pay they paid when the euro was introduced the lead to higher prices in their shops that was deeply unpopular in greece and is now helping to create a very deep vast within the greek economy so that it is not 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 with all of the euro that would be the appropriate way for rightly and journey. times of 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 crossfire pools. to kick. start. the. wealthy british science.

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