the euro crisis without eurozone leaders and national governments continue to be above your heads and how to rescue a currency. i'll come back this is r t live from moscow here's a recap of all our top stories the u.n. nuclear watchdog of course that iraq could be developing the technology to produce wealth that's its first public revelation of such claims the findings are raising worries they tried to come up with charts for the active strikes against terror. the lengthy stand off in more than cost of overtime and serves our nature back cos of the police and finally draws you have exceptional partly blames pushing for the trouble the locals who don't want to live in self-proclaimed good to have a casa both left their barricades into the scenery and start every day life. and

as the financial fall of rome looms closer the previously politically bulletproof prime minister finally agrees to go once budget cuts are passed was resignation is not making italy's made easier probably cost of certain sorts with critical seven percent. of his europe's deepening money and the lace that's on the minds of peter yes next they ask if the euro can be fixed that's next summer to. q. hello and welcome to crossfire gang peter lavelle the hero of crisis without end euro zone leaders and national governments continue to be at loggerheads on how to rescue a currency that has an unpredictable future which clearly started out as

a financial fiasco of the highest order is now a political disaster with few if any positive outcomes. can. cross-talk the prospects for the eurozone i'm joined by robert oulds in london he is the director of the druze group also in london we have caro new he is chief executive officer at the center for european policy studies and in minneapolis we cross the clare hill she's professor at the university of minnesota law school all right folks this is cross talk that means he can jump in anytime you want all right robert if i could go to you first and you know we can talk about the financial nuances about this i think everybody that's been following the story knows basically that the big numbers involved but you know that as we i thought last week everything had been decided i thought everything was going to be done you know as our close a mark all they had decided everything decided to fate of three hundred million people and now we find out well not really and even the national governments there

are not particularly sure what they want to do the french are just worried about their aaa rating and what's going on in greece now well maybe by the time this program airs we'll have a different scenario playing out there i hope oint is it's a political fiasco more than anything else right now. well yes it is it's a political fiasco it's an economic disaster it's becoming a political disaster as well certainly through the case of greece and it's spreading to other european union countries such as italy a disaster that has been predicted a long time ago before the single currency was actually born it is just being talked about many people knew it would end this way and so it's been long predicted and we're seeing it play out as we speak this disaster so really it was predicted and really the answer to problems is to wind up the single currency which just doesn't work that might not be very easy to do clarify things out here i think one

of the tragedies and looking at what's being played out with the the euro crisis here is going into its second year here is that you know there seems to be so little political will in national government because nobody wants to make the hard decisions ok because if you really push too hard for us dearly you will be punished by the voters so it's kind of kicking the can down the road as this crisis continues to snowball i mean amazingly so i mean ok the transfer for greece has been accepted but that's still very tentative because if you don't play by the rules you don't do the right thing you're not going to get any more and then everybody's a loser i mean it why is this political crisis so paralyzing because it's like everyone sitting on the titanic arguing over the seating arrangement as we go right into this this the iceberg called this crisis. well things first i want to quibble with robert you so everyone could predict. this way i'm not quite sure what

he means by this but i see a lot of kicking in to the moderate if not the long term i don't think we're anywhere near and and i think to have it so many people are potentially so i'm happy by any kind of major change because you have a bunch of beneficiaries of the system that just doesn't earn its keep and no surprise they're not willing to give it up but they have strong expectations there the stuff they have led to believe is the case that is to say in the case of greece maybe not paying taxes or retiring early and characterizing hairdressing as a person as a profession so they can retire even earlier then things like that are a sense of entitlement and you get into a mindset where someone's trying to take away something that's yours and there's so many entrenched entitle you know very briefly very interesting point people are very interesting if i can go to you in london one of the things i find very interesting and what following this crisis is that you do see how corrupt

a lot of these national governments are because they have all of these clientele is them they have cronyism you have certain different differential attitudes towards the banking sector when everything's all on going fine you know everyone can cover this all up but when you look at it only for example in greece then you find out who really doesn't pay taxes and who doesn't have an interest in ever came taxes and who's taking responsibility in greece and italy greece as we speaking right now nobody really wants to be responsible. there are some of people out to overcome the problem i don't think you could generalize it so easily let's say there's so much corruption there may be certain countries where there is a huge problem but already you could compare spain and italy and say that spain for example is has a huge economic problem but this governance why it why it's probably a bunch better at minister of italy years italy for example certainly has huge problems which are being revealed today greece we all know them by now but there

are many other countries i would say the core of europe which are certainly run of course there is still some denial of the problem some hiding of the problems for example in the banking systems but this is a thing which we have known in europe since a long time let's say this is the national champions and sometimes no sufficient willingness to recognize certain problems however i think that if you read for example the conclusion from the last two weeks ago or so from the european council you see that as a clear change and we are moving rapidly to a more federal model and look for example there is a clear statement i think you are pointing to italy in the minutes of the council saying italy should happen to increase its retirement age to sixty seven years which is unprecedented this would never have happened in the past when you think about there rather because it seems to me that i am kind of reiterate is that when things are going fine when you when you can lie to get into the euro and everyone carries your weight but when a crisis starts hitting then people start looking after themselves more often and

and we see that why why would the northern countries of europe want to be having to have to deal with because the kind of political corruption that we see in italy and in greece in maybe to some extent in spain also is that you know they're the ones paying for this continuation of a system that really needs to reform itself and there's no political will to do that because if you do that and you could out with some sense of entitlement i think claire was getting to. well the way to the idea of political union within the e.u. and we've just heard it it's moving towards a federal structure but that would be creating another disaster the european union is creating problems but in a sense some perceive as a beneficial crisis where they can use the problems that the euro has created in the in the eurozone debt crisis to create fiscal union in a sense an economic government for the whole of the you or the eurozone states that will be a disaster will have new people in northern countries which will be fed up with subsidising the the southern countries and people in the south will be just totally

fed up with the austerity measures being forced upon them by countries from in the north it will create serious divisions within the european union the the attempt to have great decentralization will store up trouble for the future and is it is to be greatly alarming it's greatly alarming what we call it how do you how do we deal with the convergence of of a unit labor costs i mean that's exactly what robert is getting out i mean it's been said over and over again it's a german workers a lot different than a greek worker well you know it's going to clear on our great great go ahead i agree with robert with us i agree with robert with respect to the prague well i suspect that i don't agree with them with respect to the solution but if say. i think. there is there are intractable and probably ultimately irreconcilable differences among both the financial aspects and economic aspects of the countries

or question you just have values there are different purposes they don't different and very strongly kind of all out war. robert we think well this is so serious and so bad that we have to try to blow it up i am not sure what we ought to do but i don't think that realistically people other. kick for the moderate term and tell themselves they're not doing that ok if i go to you in london how long can the eurozone kick the can down the road and who's going to pay for it because as we're speaking right now you're getting so many different points of view i mean everyone agrees it has to be solved ok wow well that's a that's a great consensus but i mean there's still different ways of having to have to approach it considering last week apart everyone was told it was being wrapped up now that's not the case nor do we know what has to be seen this crisis for the last two years and if you compare it to two years ago we definitely made things step forward let's say there are things which are debatable today we know what needs to

do what is traditionally changed what is structurally change no money's been thrown at the problem but what structurally has changed we've always been thrown out of rome we have made we have made adjustments we have made decisions for so beats were unimaginable i mean until two years ago for example it returns and it's been three d. for example it was a new front let's say on the bailout laws but also know that it had to be able to say that we need to have a fergus to return to lisbon treaty relative to have a more federal structure but it can also look at the conclusions from two weeks ago it said look we need to have a separate eurozone gansler we need to have be much stronger government of course truth have been decided much earlier i fully agree with this but you really are somewhere i mean in the same situation as the united states was a bit of civil war in the mid nineteenth century i mean we are in a form of an economic growth not a good healthy turning out and a good. sensor i said that we will start to have a more severe the key thing here is the let's say that the exceptions most common of the sovereignty gradually move through the european level and it's no longer at

the nationals i want to argue the second part of the program running i had a look at it we've elected go ahead rather jump them so often seem has not moved to a center which is unaccountable which has been a a root cause of the disaster which is in unfolding how it should be returned to the nation states with people that we've actually elected who can actually dismiss it and let elections and that was spawn to the people's needs and was on the different conditions of each individual country centralization in amassing power to brussels and the european union level which is create further difficulties for the future we see it's unfolding for the euro does not suit all member states and neither would a centralized economic government for the european union that will not be in our interest is just too different and too diverse and that's why some democracy and returning powers back to the nation state ok querrey want to jump in there. can i ask robert but i'd like to ask robert a question which is to say i understand that he sees this is where we are to be and

i can certainly see the merits in that position i guess the two questions i have is first robert do you in fact expect this to happen and if so what is the route by which it would happen one of the reasons i asked this question is because you know when i say kicking the can i'm fully mindful of what counts as well different things have happened different things are being contemplated creditors the chance of them taking you know fifty percent haircut all of this again. and we've. run out of time here in this part of the program after a short break we'll continue our spiritual beat on the euro stage with our chief. q. .

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because ninety to ninety five percent the cancers hurt people with health funding history of cancer the pharmaceutical industry spends about fourteen percent of their budget on research and development and about thirty one percent for marketing and ministration. in fact there are more pharmaceutical industry lobbyists in washington d.c. and members of congress. to. see. if you want to. welcome back to cross talk computer about dr drew we're having a very spiritual being about the crisis of the euro zone. well robert doesn't happen to off. i think you're on trial do you want to answer

claire's questions go right ahead. and be returned to the nation states and countries can exit even exit the european union if they so wish in fact most people in britain will actually favor that option and the euro can be dismantled just like the ruble zone was dismantled in the soviet union collapse the countries can restore their own currencies and that will actually be to their benefit it will free up their markets from being dominated by german german exports which are benefit from the euro because it favors their unit labor costs it will help their help them gain competitiveness just like when britain accepted the precursor to the euro the exchange rate mechanism which pegged the u.k.'s comes the pelt pound sterling to the torch mark when the u.k. left the e. of m. its economy grew after the concert was devalued the same would happen for germany and for italy it would be an important part not the whole picture the important part of those countries really gaining competitiveness and beginning to grow again

because that is the ultimate answer to the problems of the southern european countries is a distinct lack of growth. italy has had next to no growth for a decade the us is a serious recession if they were to leave the euro it would help and i can feel your fish you want to answer clarabelle you are you satisfied with was outrageous. yes ok you know i understand that robert finds this desirable state of affairs. and i understand that all just to clear of course we know a variety of routes to get to the place where robert wants to go the question i have is the feasibility given the political climate i mean just as we were talking before about how people don't have political will how is a whole country that has expectations of paying very few taxes and getting a lot of government benefits how is there going to be changed around i also want to know the answer the question so many people have been trenched interests that how

would the endeavor work to say that have the people who believe or understand that this is the right way to go to in fact persuade people who are going to be massively hurt and dislocated by it to proceed in that direction i mean you're damned if you do damned if you do carry question. right first go back to london first let me go back i think it's very interesting i mean what is the choice is really before the party ration of the euro zone is it is it to save the currency or to save the union can you do both simultaneously or do you choose one and if i'm saying you choose the union you go political union because only a political union can support a euro ultimately because if you have a fiscal side i mean you go leave it where you go all the way the other direction you can't have this middle ground that they've had for the last decade. and that is what i said that's what i just mentioned a moment ago not a choice between national sovereignty and federalism we need to accept that for certain decisions we have done it for monetary union but not for economic union

that things have to be decided at the center say for the seventeen not necessarily for the twenty seven and no longer at the member state level for example if greece last week were to have voted in a referendum passed out of it and left the choice of the police or persons that would have meant that greece greek citizens would have got a veto on focus on economic governance within the euro zone which is almost unheard of let's say there should be there couldn't be a free to again so of course the member states can have all the solutions but if there is a majority deciding in a certain sense we have to go in a certain sense and that's not need to go out there is the good thing of this crisis is that you see real clearly moving this direction also who has the ability through i.c.c. banks macedo you see are losing their jobs there's a good side to this crisis. understand only we know. it's on the streets people we know and you say there's a good thing to these crises and that some political project some political. time

to see how a small political class. class but it was a goal greater interests to serve their own interest rather than protecting their own interests today and the people that work in their countries that astounds me understanding things to say oh yes you want to reply to that go ahead but i just don't buy it on that on that issue and it's very simple to say we have to look back to the period one thousand nine hundred ninety ninety four when you have a similar situation as we have not now let's say not such a deep recession but also recession we have competitive do of liberation for example in italy almost in spain and we have to look at the results and imagine ourselves if this were to happen today let's say well it has work to be better yes or no if the euro breaks down let's say this will be a disaster for money countries primarily for germany the motor of economic growth in europe at the moment you know clarifying how do you mean and other element of all germany was. going to do you know what i want to go to choir here the thing is that i'm a lot of the great skeptics of the way to your euro zone has been dealing with this

is that really at the center of it all is the banks i mean it it's not saving countries it's not saving populations it's saving of banking class and where you have political elites that are so deferential to the financial system of the eurozone that's what's being bailed out that's what people are saving because you know there are stereotypes the way it's being practiced in greece they're going to be in a good in the gutter for a generation and it's just going to get worse i mean the government in really just survived a vote as we're sitting here talking and then you look at what's going on in france they're going to go down the path of austerity and i can no one can convince me how that creates growth. well i mean they are sturdy problem is another kind of intractable thing on the one ahead and you know you'd kind of like to have governments throwing money at people so people could spend it on the other hand the people or not let's say we're turning it in taxes there say spending enough working hard enough and so the government is not getting the amount

of money that it needs to pay off its debts and then becomes less credit worthy and then. the borrowing costs go up so we thought it was clear to clear can i ask you i mean absolutely. i think. robert is saying as you said you could do that of the nation state level can't shoot it you can't do it the way the euro is set up now because just what you just said makes perfect sense but you can't do it to do it then you have to have brussels decide to schooling system in italy in the in the in the plumbing system in screen and that is this is not something that's going to happen anytime soon nor would it be popular the idea of the eurozone from my perspective on the one hand i can see many arguments for it and on the other hand i can see many arguments against it i think at its inception there were many reasons to be skeptical but also be optimistic right now we're seeing a lot of the downside can they we capture the good side of it very very difficult

call very complicated car. and i mean robert feels very strongly that the euro is just i gather the whole zone bad idea we need to bring back national sovereignty and so on i can totally see the arguments for that i guess my main thrust here is that as a practical matter i'm more thinking about how to proceed just because it strikes me that nobody's dismantling does a lot of maybe they should but i want to sort of focus my energies are trying to cobble together the the best mechanisms that are in fact real world. unfortunately peter as you say the banks they have way more power than they show here people are way more solicitous to creditors than they should be and i completely agree with this certainly in the states that's the feature of what's gone. on so it's a very social this is the rare state socialism for the rich and capitalism for the poor car i'm going to let the banks off the hook here

a new you're the eurozone everything i've seen and maybe i'm just too much of a cynic here and i used to be in investment banking ok it seems to me the banks are calling all the shots every step of the way and merkel is just saying what's the to the sarkozy saying what's the tune we're dancing to now because it's saving those banks that's what's most important isn't it. i'm not so sure about as look at the conclusion of last week's g twenty cults all business or even on this couple charged for globally since their mc banks i mean is an extremely important step forward would have been. difficult to imagine two years ago i mean the government did it against clearly against the lobby of the bank and secretary ridge was certainly not a conference of all the wonderful people it's a very call of the rich of those they have little knowledge they will have only forty cents that would be important banks a much stronger couple than art which is in fact actually we have a little fun to be green with that was supposed to have come to fruition last week

i mean i read it very carefully it was voluntary this voluntary that voluntary you know yes it is it's very clear and where is this money come from not very clear it all comes from taxpayers apparently what do you think about that robert the end of day it is dropping kicking down the can to make somebody else pay for it it did make these problems in the first place exactly in a large part of voluntary things i say range banks is actually to save president sarkozy's career he's got the french elections coming up and he doesn't want france to lose its aaa credit rating because that could well cost him the election so that's a key driver news decision making. which will be placed by private lenders to greece it doesn't apply to the european central bank which is bought up greek that it doesn't apply to the in the european union and money it's given over so really it will still be paying nonny to the politicians and to the institutions of the european union but it's the private sector that would be taking taking the haircut

as it's become known ok clarifying going to kind of maybe fuse this all together as we come to the end of the program here i mean it seems to me that democracy is so very much challenged right now in the euro zone because as we started out the program here nobody really wants to take the lead on bringing bad news because it was mentioned on this program that sarkozy has elections coming up here governments are teetering it's very unlikely this is where the you know the meat leads the medal here because you want to stay in power it's natural that anyone want to but you don't want to be the person that has you know it has to preside over a budget of pain. well i mean i mean how do you get around how do you how do you to around the value get around that because there's no leadership to say you know we have to do this no one wants to do that we started this is where we started the program and this kicks the can down the road maybe maybe we want to end on a sphere yet maybe we want to and i really believe you know ok people have some

good ideas but they don't actually know the right thing even if they did get it passed and furthermore even if they think it it passed there'd be no way to know for sure that it was being carried out here or how greece managed to for everybody with respect or if not for everyone at least be able to take that position in a manner that didn't get in trouble that it had a lot of let's less than it actually did what's in the world to stop people from being able to take the position that they are complying with various things away from cracking the i'm afraid i don't know if you have an american it's clear you have ended the program on the bleakness note ever ok many thanks so much is today in london in minneapolis and thanks to our viewers for watching is here already see you next time and remember. the. story.

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