market panic today send roman borrowing costs or it. will available to me now with the latest cross talk show where the uncertain future of the eurozone is the only certainty these days. and you can. follow and welcome to cross talk 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. to cross-talk the prospects for the eurozone i'm joined by robert oulds in london

he is the director of the bruges 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 to clare hill she's professor at the university of minnesota law school or i folks this is crosstalk that means you 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 i recall is 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 hope point 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 to 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 born when is just being talked about many people knew it would end of 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 can go to you 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 governments 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 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 call this crisis. well couple of things first i want to quibble with robert's you so everyone could predict it would 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 and i think too that so many people are potentially so unhappy

by any kind of major change because you have a bunch of beneficiaries of a system that just doesn't earn its keep and no surprise they're not willing to give it up but they have strong expectations that the stuff they have led been 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 heritage as 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 so you know there you bring up a 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 we 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 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 and in greece and italy at least as we speaking right now nobody really wants to be responsible. never tamati will have to overcome the problem i mean i don't think you could generalize it so easily let's say there's so much corruption that maybe 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 is probably a bunch better at minister than italy is italy for example certainly has huge problems which are being revealed by the day greece we all know them by now but there are many other countries i would say the 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 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 let's say to recognize certain problems however i think that if you read for example the conclusion from the last two weeks ago or so from european council you see that as a clear change and we are moving rapidly to a more federal model look for example there is a clear statement a finger pointing to italy and the minutes of the council saying italy should that 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 that robert 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 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 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 the some sense of entitlement that i think claire was getting to. well they are wedded 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 has created problems but in a sense some perceived 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 southern countries and people in the south will be just totally fed up with the austerity measures being forced upon them by countries from the in the north it will create serious divisions within the european union the attempt to have great decentralization will store up trouble for the future and is it is to be greatly alarming it is greatly alarming what we call it how do you how do we deal

with the convergence of our unit labor costs i think that's exactly what robert is getting at i mean and it's been said over and over again is the german workers are a lot different than a greek worker well they're only going to claire are now i have great great going to. i agree with robert with chris i agree with robert with respect to the problem i suspect that i don't agree with them with respect to the solution that if the say . i think. there is there are intractable and probably ultimately irreconcilable differences among both the financial aspects the economic aspects of the countries that question you just have values there are different practices that are different and it is very strongly imbedded kind of level. robert may think well this is so serious and so bad that we have to try to blow it up i i'm not sure what we ought to do but i don't think that realistically people will

do any other can't kick for the moderate term and tell themselves they're not doing that ok karl 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 two approaches considering last week apart everyone was told it was being wrapped up now that's not the case nor would we notice who we see in this crisis for the last two years and if you compare it to two years ago we definitely made steps forward let's say there are things which are debatable today no one wants to do what is traditionally changed what is structurally change no money's been thrown at the problem but what structurally is change do you mean draw the road we have made we have made adjustments we have made decisions those who bitch were in imaginable you know to do years ago for example or to change the lisbon treaty for example or say

to institute this new fund let's say on the bailout clause also know there is a debate or say that we need to have a fergus to change the lisbon treaty law to have a more federal structure but it can also look at the conclusions from two weeks ago where they said look we need to have a separate eurozone gansler we need to have be 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 for the civil war in the mid nineteenth century i mean we are in a form of an economic go it's not a good healthy turning out and the good. sensor i said that we will start to have a more severe little structure the key thing here is the latte that separates most common of the sovereignty gradually moved to the european level and is no longer national and i want to add that i was arguing the second part of the program running i had a look at how we've elected go ahead robert jump to soften team is 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 with people that we've actually elected who can actually dismissive

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 to 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 your piece just too different and too diverse and let's try are some democracy and returning powers back to the nation state ok where you want to jump in there. can i ask robert why 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 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 what i say kicking the can and 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 right you know i don't understand why i am going to try to be in here we're going to only when i'm going to jump in here we've all run out of time here in this part of the program after a short break we'll continue our spirit to be on the euro stay with r.t. . if you. want. discoveries to be. communicated with you want to. become free.

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washington d.c. than members of congress. and. if you want to. welcome back your past our computer involved dr drew we're having a very spirited debate about the crisis of the year. well robert doesn't happen too often on crossfire but i think you're on trial do you want to answer claire's questions go right. to be returned to the nation states and countries can 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 was own was dismantled when the soviet union collapsed but countries

can restore their own common sense 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 they will help their help them gain competitiveness just like when britain did the precursor to the euro the exchange rate mechanism which picked the u.k.'s common see pound pound sterling to the door each mark when the u.k. left the its economy grew after the common sea was devalued the same with. happen for germany and italy would be an important part not the whole picture but 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 is next to no growth through a decade since and i seriously session if they were to leave the euro it would help them i can see in your face you want to answer claire were you satisfied with those

answers yes ok you know i understand that robert finds this a desirable state of affairs. and i understand that all of just to clean 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 that going to be changed around i also want to know the answer the question so many people have entrenched 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 you know i mean you're damned if you do damned if you do are a question i want to and 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 population 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 then you have a fiscal side i mean you go leave it all the way the other direction you can't have this middle ground that they've had for the last decade. there's quite a closer that's what i just mentioned a moment ago notice of 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 or to have passed it on the left the choice to do greek citizens would

have meant that the greece greek citizens would have got a veto on fact on economic governance within the euro zone which is almost unheard of let's say there should be there couldn't be a feat or against it of course all 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 what needs to go out there but that is the good thing of this crisis is that you see we are clearly moving in this direction also the president about these airlines you see the anxious stay there you see are losing their jobs is a good side to this crisis. that is still going to be no less said on the other and there's only because it's on the streets people will know and you say there's a good thing to this crisis and that some political project some political found fantasy held by a small political class small people critique class the fear was they call greater interests to serve their own interests rather than protecting their own interests they're the people that work in their countries that astounds me an astounding thing to say you know yes you want to reply to that go ahead and again i just don't

apply early on that on that issue it's very simple to say we have to look back to the period ninety ninety two ninety ninety four when you had a similar situation as we have to not now to not such a deep recession but also recession we have to combat that if the of liberation for example in italy almost in spain and we have to look at the result and imagine ourselves if this were to happen to their 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 many countries and primarily for germany the model of economic growth in europe at the moment you know clear franco do you mean and i. another element of all just. when you need it i want to i want to go to claire 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 differential 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's just 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 playing on the well ahead you know kind of like to have governments throwing money at people so people could spend it on the other hand the people are not let's say we're turning it back as they say spending enough that they are working hard enough and so the government is getting a lot of money to pay off its debts and then becomes less credit worthy and that. the borrowing costs go up so it's ok later claire can i ask you i mean where i absolutely agree with on this where i think that kind of a kind of echo a little bit what robert is saying is here is that you can do that on the nation

state level can 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 to do it then you have to have brussels decide to schooling system in italy and 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 euro zone 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 call. 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 the zone tomorrow maybe they should but i want to sort of focus my energies 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 people are way more solicitous to creditors than they should be and i completely agree with this certainly in the states that's been a massive feature of what's gone on. this is a rare state socialism for the rich and capitalism for the poor car i'm going to let the banks off the hook here in the the euro zone 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 as you saying what's the two zone posy 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 council there's no solution on this gabble charge for globally systemic banks i mean there's an extremely important step forward would have been again let's say something difficult to imagine two years ago i mean the governments did it against clearly against the lobby of the banking secretary which was certainly not. convinced about that was he wanted to keep a very call log of the ratio of those they had lost their knowledge they would have only for distance that would be important banks a much stronger capital the market which in fact obviously you have many of the one of the the greenwood 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 and a day it's just dropping kicking down the can to make somebody else pay for it they

did 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 he's got the french elections coming up and he doesn't want to lose it to pull a credit rating because i 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 to the european union the money it's given over so really it was still be paying money 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 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 so very much challenged right now in the eurozone 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 and sarkozy has elections coming up

here governments are teetering it's very important 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 want to but you don't want to be the person that has you know it has to preside over a budget of paid. well i mean i mean how do you get around how do you how do you turn around the fact that you get around that because there's no leadership to say well 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 maybe maybe we want to end on a serial yet maybe we want to add that i really believe you know ok being 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 don't get it past there be no way to know for sure that it was being carried out. how greece managed to fall everybody with respect or if not for everyone at least be able to take the position in a manner that didn't get in trouble but it had

a lot of let's lessen it but 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 room afraid i don't know if you hate it when we were in the military action it's clear you have ended the program on the bleakest note ever ok many thanks so much yesterday in london in minneapolis and thanks to our viewers for watching is here r.t. see you next time and remember rostock rules.

he could. do. with you.

tonight and i'll tell you to ryan says it will keep to its nuclear program denying claims in the u.n. nuclear watchdog latest report that suggest is building weapons experts are worried the study is just a pretext for a preemptive strike on iran also. thousands of students from all over britain gather in central london to protest against education cuts and tuition fee hikes. plus nato peacekeepers have used tear gas to take over a serbian barricade erected in northern kosovo as the long lasting standoff in the region between careful forces and local service continues we'll bring you the latest and. the leaning tower of debts collapses on its knees pm berlusconi has promised resignation spots fresh market panic and said rome was borrowing costs soaring.