welcome back to this our live from moscow here's a recap of all our top stories to iran says it will keep to its nuclear program a denying claims of the u.n. nuclear watchdog report that suggests it's building governments the experts are worried the study is just a pretext for a preemptive strike against iran. the high price of education draws thousands of students back to the streets of london i mean here's a repeat of last year's riots could be on the cards. nato peacekeepers take over a serbian barricade erected in northern kossovo as a long lasting standoff in the region between paid for forces and local serbs

continues to pull that many roadblocks already started blending into the scenery. believing tower of death collapses and italy's prime minister berlusconi has promised resignation sparking fresh market products and sending rome's borrowing costs soaring. you're watching r t do staging for peter lavelle's cross talk show would be on certain future of the euro zone is the only certainty today that's coming right. q. hello and welcome to crossfire i'm peter lavelle the hero of crisis without end eurozone 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. start. to cross-talk the prospects for the eurozone i'm joined by robert oulds in london he's the director of the proof group also in london we have caro well i knew he is chief executive officer at the center for european policy studies and in minneapolis we cross to clare hill she's professor at the university of minnesota law school all right folks this is cross talk i mean she 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 the big numbers involved but you know as we i thought last week everything had been decided i thought everything was going to be done you know as our clothes 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

they're 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'll point is it's a political fiasco more than anything else right now. well yes it is it's a political yes coincident 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 to disaster that has been predicted a long time ago before the single currency was actually on the news 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 there might not be very easy to do clarify concurred here i think one of the tragedies in 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 terry you will be punished by the voters so it's this 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 is a loser i mean 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 of the iceberg of this crisis. well couple of things first i want to. use everyone could predict it will end this way i'm not quite sure what he

means by this but i see a lot of kicking into the moderate if not the long term i don't think we're anywhere near and. i think to so many people are potentially so on her 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 there to give it up or they have strong expectations that 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 in title and you know in the air you breathe very interesting point people you. know 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 the of cronyism you have certain different differential attitudes towards the banking sector when everything's all going fine you know everyone can cover this all up but when you look at italy for example in greece then you find out who really doesn't pay taxes and who doesn't have an interest in ever paying taxes and who's taking responsibility in the greece and italy greece as we speaking right now nobody really wants to be responsible. never taught people how to overcome the problem i mean i don't think that's how you could generalize it so easily let's say there is 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 is governance why it was probably much better minister of italy years into the for example certainly has huge problems which are being revealed today greece we all know them by now but there are many other countries

which had a core of europe which are certainly well run of course there is still some denial of the problem some hiding of the problems for example in the banking systems but it 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 that it would recognise 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 a finger pointing to italy and the minutes of the council saying italy should happen to be increase its retirement age to sixty seven years which is unprecedented this would never have happened in the past when you think about that rather because it seems to me that you know 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 we see that why why would the northern countries of europe want to be having to

have to deal with. the kind of political corruption that we see in italy and in greece 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 then you could out there some sense of entitlement i think claire was getting to. well there where did 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 will 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 and and 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 southern countries and people in the south will be just totally fed

up with the austerity measures being forced upon them by countries and in the north it will create serious divisions within the european union the attempt to have greater centralization will store up trouble for the future and is it is to be greatly alarming it's greatly alarming what's happening weekly how do you how do we deal with the convergence so of a unit labor costs i mean that's exactly what robert is getting at i mean and it's been said over and over again as the german workers are larger for going to greek worker who are you know to the beginning i know that claire are now i agree. i agree with robert with us i agree with robert with respect to the crowd while i suspect that i don't agree with i want respect to the solution but if say i think. there is there are intractable and probably ultimately irreconcilable differences among both. financial aspects and economic aspects of the country it's

a question you just have values different practices that aren't different and a very strong. kind of love for. 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 are to do but i don't think that realistically people other can kick for the moderate term and tell themselves they're not doing that ok i'm going 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 you have to approach it considering last week apart everyone was told it was being wrapped up now that's not the case nor would it be able to be seen this crisis for the last two years and if you compare it to two years ago we definitely made steps forward but it was things to try to be able to do you know what these people what is

traditionally change what is structurally change you know 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 beach were unimaginable but i mean until two years ago for example if we change the lisbon treaty for example it was a new front closely on the bailout clause also know that if you go to say that we need to have a third is to return to the lisbon treaty letter to have a more federal structure but you can also look at the conclusions from two weeks ago where they said look we need to have a separate eurozone council we need to have the much stronger government of course it should 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 economy turning out and. sensitive that we will start to have a more civil structure the keeping has delegated out there exceptions most common sovereignty gradually move to the european level and it's no longer national and i

want to see the second part of the program running i am because we've elected go ahead rather jump them soften seamers not move to a center which is unaccountable which has been a root cause of the disaster which is in unfolding power should be returned to the nation states from people that we've actually elected who can actually dismiss it and let elections and that will respond to the people's needs and the sponsor the different conditions of each individual country centralization in amassing power of brussels in the european union level will just 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 let's try some democracy and returning powers back to the nation state ok where you want to jump in there. can i ask robert or i'd like to ask robert a question which is to say i understand that he sees this is where we ought 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 the details as well different things have happened different things are being contemplated creditors the chance of them taking over fifty percent haircut all of this again very minor things like. we've been we've. been here. in this part of the program after a short break we'll continue our spirit to be on the euro states are to. you .

nature and discover its beauty. communicate with the wild. test yourself and become free. see what nature can give you. a very warm welcome to you this is your news today protesters on the walls streets they are. leasing canceling your chance of a chance to get good grades the status of the human experiments get explode with the weakest you proclaim this rap music awards it goes to the movies really trying to make sense of global economy and it's on changelings us financial temples to the

release traveling to maintain our confidence in hmong kids and taking on the critics wants to be seen trade imbalances recession looks to be nations close to collapsing a sub prime loans foreclosed homes. to bail circulates again field level tightening of the us crash seven and smashed it seems like all the classes and street stocks mail just programs increase the total economy. and. the be. the big. welcome back to cross talk on peter about trying to cramming a very spirited debate about the crisis of the heroes above and.

well robert doesn't happen to us in our craft i think you're on trial do you want to answer claire's questions. how are you going to turn the nation states and countries can exit even exit the european union if they so wish in fact most people in britain would actually favor that option and the euro can be dismantled just like the ruble zone was dismantled when the soviet union collapsed the countries can restore their own common seas and that will actually be to their benefit it will free up their markets from being dominated by german german exports which benefit from the euro because it favors their unit labor costs it will help their problem gain competitiveness just like when britain excepted the precursor to the euro the exchange rate mechanism which picked the u.k.'s currency pelle counseling to the deutsche mark when the u.k. left the its economy grew off to come and see it was devalued the same would happen for germany and for italy it would be an important part not the whole picture an

important part of those countries regaining 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 sitting at a serious recession if they were to leave the euro it would help that i can see in your face you want to answer clara where you are you satisfied with those out of us . yes ok you know i understand that robert finds this desirable state of affairs. and i understand that logistically of course we know a variety of routes to get to the place where rather wants to go the question i have is the feasibility given the political climate and just as we were talking before about how people don't have political will how is the 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 having trenched interests that how

would the endeavor work to say they 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 you know i mean you're damned if you do damned if you do carry question i was over to find out first of all two hundred first let me go back i think it's very interesting i mean what is the choice is really good for the populations of the eurozone 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 you have a fiscal side and the eagle leave it all the way the other direction you can't have this middle ground that they've had for the last decade. and there's quite a coincidence what i just mentioned a moment ago it is a choice between national sovereignty and federalism and we need to accept that for

certain decisions we have gone in 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 and if it ended to have passed it and i left the choice to do keep citizens there would have meant that the greece greek citizens would have got a veto on focus on economic governance within the euro zone which is almost unheard of there should be there couldn't be a vehicle against it of course all member states can have all the solutions but if there is a majority deciding in a certain sense you have to go in a certain sense and that's what needs a lot of our let's say but that is the good thing of this crisis and i say that you see we are clearly moving does that action also good as little about these realize you see the action or stay there you see of losing their jobs there's a good side to this crisis. just because we know it said. 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 found fantasy held by a small political class small people crafty class it was a goal greater interests to serve their own interests rather than protecting their own interests they are the people that work in their countries that astounds me and astounding thing to say this if you want to reply to that go ahead and i just didn't i say on that on that issue that 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 to not now later not such a deep recession but also recession we had competitive the 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 whether this were to be both a yes or no if the euro breaks down let's say this will be a disaster for many countries and primarily for germany the motor of economic growth in europe at the moment you know clarifying what do you mean and other element of all germany was a choreographer you know the moment you might want to i want to go to clare here

the thing is that i'm a lot of the great skeptics of the way the eurozone has been dealing with this is that really at the center of it all is the banks i mean it's not saving countries it's not saving populations it's saving a banking class and when 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 the austerity the way it's being practiced in greece they're going to be in a good in the gutter for a generation and it is going to get worse i mean the government in italy 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 the austerity problem is another kind of intractable pain on the one hand you know you kind of like to have governments throwing money at people so people could spend it and the other people are not let's say returning it that is then i say spending enough of

the 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 their. borrowing costs go up so we thought you would clear the clear contrast you know i mean absolutely even in this. kind of producing series if you could do that to the nation state level can't shoot but 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 and to do it you have to have brussels decide to schooling system in italy in the in the in the plumbing system in spain 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 we capture the good side of it very very difficult call very complicated. 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 ally main thrust here is that as a practical matter i'm more thinking about how to proceed just because it strikes me that nobody is dismantling the zone tomorrow maybe they should but i want to sort of focus my energies are trying to cobble together the best mechanisms that are in fact real world. unfortunately peter as you say the banks they have way more power than they show you who are way more solicitous to creditors than they should be and i completely agree with this certainly in the states that's the nature 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 in new york 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 there to 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 a savior look at the conclusion of last week's g twenty cults all business. capital charge for globally systemic banks i mean it's an extremely important step forward would have been. difficult to imagine two years ago i mean the governments that are against clearly against the lobby of the bank executive which was certainly not. wanted to keep us a very call of the ratio of those they had lost their knowledge they would have only forty cents on the banks a much stronger cut to the market which is a fact obviously but you have been a little one of the green with it was supposed to have come to fruition last week i

mean i read it very carefully it was voluntary this voluntary that voluntary here no no yes it is it's very clear and we use this money come from not very clear it comes from taxpayers apparently what do you think about that robert the other day it was dropping kicking down the can to make somebody else pay for it didn't make these problems in the first place exactly in a large part of a hundred things i say arrange banks is actually to save president sarkozy's career now if he's got the french elections coming up and he doesn't want france to lose it could pull a credit rating because that could well cost him the election so that's a key driver in his decision making. which will be faced by private lenders to greece that doesn't apply to the european central bank which is bought up greek debt it doesn't apply to the in the european union the money it's given over so really it was still be paying money to the politicians and to 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 go to you and 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 still very much challenged right now in the eurozone because as we started our program here nobody really wants to take the lead on bringing bad news because it was mentioned on this program that's right cause he has elections coming up here governments are teetering it's very a party this is where the you know the meat meets the metal 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 you know that has to preside over a budget of paid. well i mean i mean how do you get around how do you how do you go around that you 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 it just kicks the can down the road when it maybe we want to end on a soup yet maybe we want to and i really believe you know ok one of the people have

some good ideas but they don't actually know the right thing even if they did they could get it passed and furthermore even if they didn't get it passed there be no way to know for sure that it was being carried out. how greece managed for everybody with respect or if not for everyone at least be able to take the position in a matter of the didn't get in trouble but it had a lot of let's let it actually did what's on the wall to stop people from being able to take the position that they are complying with various things away from crack i'm afraid i don't know if you. can reckon it's clear you have ended the program on the bleakness note ever ok very thanks so much yesterday in london in minneapolis and thanks to our viewers for watching if you are to see you next time remember rostock. can still.