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it can. be. blowing welcome across our computer a little uncertain future as the eurozone grapples with the single currency what is the future of political union to save the euro is it necessary to accelerate political unification is greater political union by definition more or less democratic but what about the rise of the extreme right. taking. to cross-talk the political future of the e.u. i'm joined by charles could chime in washington he's a senior fellow at the council on foreign relations and professor of international affairs at georgetown university in london we crossed averting bogen or he is a research professor at the institute of contemporary history king's college london

and in brussels we crossed through years of yearning he is the director of studies at the european policy center all right gentlemen this is crosstalk that means you can jump in anytime you want and i very much encourage it but first tell us more about the euro in the state of the european union there's been a lot of talk about and i think there's no coincidence that last week german chancellor angela merkel and now that europe has reached its most difficult hour since world war two to deliver an address to her christian democratic union party calling for not less direct but more as a solution to the sovereign debt crisis merkel's overarching message the deeper cooperation within the union is the. economic and political unity resulted in a troubling skepticism over the entire european project as well as talk of defaults and departures. in my view the best the best option for the greeks is to default of course that there is much bigger financial consequences for for the rest of europe than for the rest of the world if that happens he'll leadership as well aware of

the spare. also has staked its hopes on deeper political cooperation especially from its biggest economy germany. europe cannot be successful i also believe that germany could of been successful in the old europe penchant for political integration and the understanding that the euro and europe have become intricately connected is more than shared at the moment merkel has time and again driven that point home saying if the euro fails europe will fail and that argument could hardly be more cogent at a time when the crisis not only threatens to wreak havoc on the european economy but also in danger its political stability but well all the parties concerned seem to acknowledge the need for a concerted approach in practice the will to make this happen is still lacking and with a series of departures and governments across that you the current structure of european institutions seems to be slowly losing relevance ultimately this comes at the expense of the rest of politics where it is the extreme right there has been gaining momentum as a backlash against the euro zone's failure so really not just the economy but also

domestic politics that is at stake here well take a look about the future of the political union if i can go to vernon first in london thank you michael says we need more europe not less europe how is it politically tenable these days because so many people say in the european union is failing because the euro was failing and i'm sorry gentlemen we don't see the light at the end of the tunnel when it comes to the fate of the euro so britain in london what do you think about that. short answer is a political europe isn't in fact terrible probably euro zone is simply stated you have a federal currency in a nonfederal political system so you may say as anger merkel does to put it right you need to federalize the political system but i don't think that there's a full understanding of what a federal political system means it means there's more loyalty to the whole than the parts for example more loyalty to the united states as a whole than california more loyalty to germany than to build varia now there are

very few people in any of the member states who have more loyalty to europe than their own member state and this is particularly important in germany because if you federalize the system it means the germans will have to contribute more to the properly good countries to greece italy and the other mediterranean states so i don't think a federal europe is on the way it would be create at the moment would be nondemocratic it would be created by elites so it's a nonstarter ok charles if i can go to you i mean i think everyone would say that the economic union has gone pretty well quote unquote because everyone's cart in this euro mess here i mean the it was the thinking you think when they were putting this together their political union would slowly but surely put layer after layer that people would get used to it because the euro would be so successful well in fact it hasn't been and is really just the really and so being a a nail in the coffin of the european union because people do not want to participate in an organization where it's actually economically everyone is at risk

. well i think that when the euro was launched over ten years ago the idea was that ideally you would have a federal type structure you would have convergence on tax policy you would have the kinds of institutions that vernon was talking about to go with the single currency that wasn't on because the politics wasn't there so they therefore launched the euro anyway and started to pray but the prayers didn't work and then comes along globalization and the downturn in the financial system and right now you have the politicization of europe people are now talking about europe in the streets but it's almost a dirty word they're not supporting it i would disagree with what vernon said in the sense that one should give up on any federalist aspirations it's important to keep in mind that the and i in the united states it took decades over a century before people said i'm an american before i'm a virginian i'm an american before i'm

a texan so these things take time and i think this is a link or break moment for europe it was very good point vernon civil war vernon you want to elaborate on that point there real quick. well it also took a civil war in america before america was united there was also civil war in switzerland because switzerland became a federal state the differences between the peoples of europe are much greater than they were between americans obviously there was not a single language for a start and there's no real federal p.d. in new york except among various people people josefina in brussels which i mean maybe the civil war comment is really germane here because as angola merkel has pointed out and other european leaders the second world war isn't that long ago in the unification is so very important here between france and germany is world historic when you look at her to country's history to my point is that either you keep you have to keep pushing ahead or you just drop the whole idea altogether

because the status quo simply is not tenable you also what do you think about that in brussels. well that's what it is we have to remember that monetary unions never come about by finding the optimal currency zone you know this is most monetary unions in history have been achieved by power either by the power of the law by treaty or by power of the sword and they have been sustained that way it is very rarely that you can actually convince an entity to voluntarily do so it comes over time when that instruments provides actually stability and prosperity for the time being the euro has done that and we should not forget we're not really having a euro crisis we're having a debt crisis in european countries and we're not having the instruments that other major currency areas are using in order to deal with that and the fact that we're not having that has to do with the consolations that vernon has related to there

wasn't the idea that monetary union would go hand in hand with political and then as charles has said it was the idea that political union in the end would come alongside monetary union ones. actors and publics would understand and that situation is forced upon us now where we actually see that the member states are using actual sovereignty and they find it very hard to somehow rebuild that sovereignty on the european level that's that's a contradiction here i was going to ask charles real quick it's the contradiction right here because at a time when you need more political union to save the euro to save the union itself it is a time when it's least popular because of austerity means you have you know you have the germans and the dutch and also you know why do we have to pay for the austerity of somebody else we didn't lie to get into this is monetary union i mean this is the worst possible time for quote unquote more europe at least politically

. well i would agree with that and i think that there is a growing gap between the institutions of europe and the need for governance and the politics of europe which are becoming increasingly skeptical of the e.u. and this is something that's also affecting things here on this side of the atlantic where you have electorate saying help me i have lot on losing my house i'm losing my income and governments are not able to act and so this is really a shared problem a crisis of governance and it leaves the e.u. in a very awkward position because no one is really getting out there and trying to provide the courage the leadership that europe needs america is just now coming to use the kind of broad vision and encouragement that's been lacking but it may be too little too late because politics is running away from leadership in capitals and in brussels it seems that vernon if i go to you looks like anyone that wants to take a lead on this is going to find

a political career short and very quickly i mean over the past year we've seen six governments fail or change in europe and anyone that gets out there in front is going to be marked forever like herbert hoover at this point out in the united states of the enduring the great depression i mean if anyone that shows leadership now is really going to have to think twice about their political career moving forward. yes indeed the euro has become an instrument for inducing deflation and recession in the member states and of course that makes governments unpopular with the voters so you've got governments along chosen by the voters as now in greece and italy but i rather disagree with those if it's a debt crisis i think it's not wholly a debt crisis to crisis of competitiveness the truth is that greece and italy are much less competitive than germany and therefore the natural market response would be thawed their currency to devalued to make them more competitive now america of

course and the currency union but there is shall we say mississippi is less competitive than california no doubt people will move from mississippi to california and the market will work but of course there isn't that mobility between countries in europe where people speak different languages so the euro which it was hoped would bring competitiveness would bring some sort of convergence between countries at different levels of competitiveness it hasn't done that and if anything the disparity of competitiveness is actually widened since the european union was set up and that's what's proving so dangerous to governments particularly in the mediterranean states you know you said you were responding go ahead yes sure . let's not forget the depreciation of one's currency is not the only way to get competitive means after all this is a a short term easing of the situation. hardly has led in the past to

a significant longer term increase in competitiveness in fact if you look at the center of the eurozone today terminate the benelux countries in france they have long had a stable exchange rate relationship and during that time when you said i have to be sure you go to a short break and after that short break we'll continue our discussion on the e.u. state. to keep. the. world. science technology innovation all the the elements from around russia we've got the huge earth covered.

six. take.

a look. at the back of rostock here although remind you we're talking about the destiny of the e.u. . they can. still. go to charles in washington i think what if an observation i have been looking at this year of the euro crisis is that centrist governments are being punished all across europe and who knows but beyond me to even i i have been in the united states and what we see is the rise of the left wing in some cases but mostly the rise of the right wing and the and the rise of the right wing makes the any kind of political union greater political union in europe impossible right now. that's exactly right and i think that centrist governments are are being punished in part because they're asking electorates to do things that they don't like and the case of greece tighten their belts in the case of germany bailout the laggards and that

is adding to a situation where the influx of immigrants particularly muslim immigrants is fueling right wing parties anti immigrant parties but many of those parties are also anti e.u. they disagree with the threats to sovereignty that come with with union and in that sense that the political landscape is becoming more hostile to the e.u. it's tying the hands of leaders behind their backs and that's one of the reasons that governments have been so slow to react to a very very fast unfolding that crisis yousif what do you think about that i mean the rise of the right wing is it again is this another nail in the coffin for any kind of further political union in europe. well i beg to differ greatly i don't see the right wing as so much being on the rise there is of course a conservative or right wing surge of sorts but i think the strongest movement we see is the rise of populist policies ok and that goes across the political spectrum

and its main impact is that it makes the centrist leads more euro skeptic because they they react to this perceived rise and they seek to neutralize it by taking off and taking on some of the key concerns here you know look at the true finns there they are not necessarily nationalists but they are kind of centrist euro skeptic populists and that's what's happening and that's what makes it very difficult particularly for those governments who would now have to shoulder the kind of reforms that they have shied away from over the past decade ok vernon if i can just continue with what you're supposed to say but then the result is still the same there's not going to be the pursuit of greater political union when greater political union is absolutely necessary if you want to save the euro the euro isn't an end in itself the euro as a means to securing greater prosperity and cooperation among the member states of the european union if it isn't achieving that then it's not achieving what people

hoped for it and perhaps it ought to be looked at again rather than trying to force european politics into a mold we thought it suited and it was absurd to say that if anything happened to the euro the european union would come to an end the single market will still remain that still be foreign policy cooperation cooperation on matters like energy climate change security dealing with terrorism and so on and the euro's a part of the european union and the part that frankly is now working very badly indeed when you think about that charles i mean i would i would be a big difference being in the european union and the euro have to go hand in hand to have the union or you just go back to the what is it european economic cooperation the e.c. i mean am i going to betray my age ok i mean you go there now to get to know the right not only one reactor that correct. yes look the german constitutional court has said that the european union is not

a federation it's an association of sovereign states that's the european union and the federalist dream remains that for the moment but it doesn't mean that the european union itself comes to an end it's the union of cooperating sovereign states ok charles what is that how do you see the fate of the time the euro and the european union together i mean can they go their separate ways at this point. i would i would i would disagree rather strongly with that view in the sense that if the euro does collapse and countries start jettisoning a single currency i think you will see a very very serious threat to the global economy it will wash across the atlantic we may be heading to a very dark period and secondly to see the new go backwards to little more than a trade block seems to me to head to the world in which europe and desperately underperforms we're moving into a global transition we're seeing the rise of china and other emerging powers the

united states is turning inward because of its own deficits the wars in iraq and afghanistan the world desperately needs european will and european power and if europe is nothing more than a collection of its member states nothing more ambitious than that but i'm afraid that europe and the rest of us will be much worse off your will in power does europe have it will and the power. well it has both of it probably not enough of it but let me say there seems to be a greater convergence between brussels and washington at least in this talk then between brussels and london i support we're charlie has on occasion seen here it is you know the euro is actually delivering it's delivering to the people and the economies of europe we have low inflation we have high stability our currencies as such and in the old as in the old days cannot really be really attacked by speculators what they can attack their attacking now which is government bonds but

you know the the euro as an instrument is actually delivering to a degree that unfortunately is not noticeable remember that italy before the euro was went through various economic crises was managed by the i.m.f. at times had to pay interest rates of well over twelve percent had inflation go and nowadays people have got used to the fact that this doesn't happen any longer and now we need to solve well they don't play us now we need to get back on that track in order to deliver on the kind of goods that charles has mentioned vernon guy had in in mind. well the euro. came in forty years after the european union was formed the european union existed perfectly happily without the euro for forty years it's a mistake to say i think because child stars that europe would become just

a free trade area if the euro disappeared it would still be a customs union with a common tariff that still be a single market which is the most important achievement and of course in foreign policy the europeans can perfectly happily cooperate without the euro britain and france work perfectly think ever well together in libya without the euro being involved if the countries want to cooperate in foreign policy they can happily do so so although there's a consensus growing between washington and brussels i think it's a false consensus which is leading europe into deflation and i think although there may be difficulties if anything happened to the euro in the long run i think it would allow european countries to grow again because the euro is proving a terrible constraint on the growth in particular of the mediterranean car and i want to talk about we want to go to about a growth of something else and all through this crisis here there's been commentary that the european union with the euro is simply not democratic and now the

decisions are being made for too many other people in distant capitals charles you want to feel that there because there's a deal and i'm thinking about occupy wall street sentiments here right now if there isn't it amazing disconnect from political elites in many cases of brussels or never elected by anybody and people would look at the fed i suppose and in the us this is a deficit of democracy right now. well you know i think that the european union has actually done extremely well being and a leap led organization and most europeans went along for the ride and they didn't pay a whole lot of attention to what was going on in brussels and what's happening now is a political awakening that is not so much a reaction against the e.u. as it is a reaction against the global economy a reaction against bringing down the welfare state the lack of competitiveness in our mature industrialized economies as jobs are moving overseas to developing countries so there's a cruel irony here europe has become politicized europe is now war democratic but

it is actually working to the detriment of the crisis and it may well be that we need more policy and less of the charges that are europe should go as what he said not only ask maybe i misunderstood is too much democracy that's what people are you know they have the right to express their so much of their displeasure of what's going on here i mean there's a lot of people say i mean i always ask people come on this program who represents you living in the european union who represents you in the european parliament and no one has ever been able to answer that question and you're an american so i don't have to ask you. they do have representatives in the parliament americal was talking not too long ago about having a head of the commission that is directly elected so you can do things to give these institutions more legitimacy but as we've seen with the constitutional referendum some of the lisbon treaty votes for a more democratic europe and europe becomes the more difficult it may be to the to advance the fortunes of the union ok vernon it seems to me the european union just

keeps asking the same question over and over again and then only until they get the right answer is the european union more democratic now. i think it's not necessarily more democratic but you are having a popular revolt against the citizens being made by elites that mattered less than fifty years ago when europe like other areas was much more deferential and people did what the leaders said now these days the leaders can only lead as long as the follows are prepared to follow and when as now the finals are no longer prepared to follow the leaders will find it very difficult to lead and i wonder what democracy can really mean in the twenty seven member states a union of twenty seven member states have such great diversity i mean do people in britain really feel they have anything common with those in portugal greece do people in denmark or sweden think they have anything in common with people in spain are i very much doubt it i think the span is too large to create

a sense of order well which is why of course is a lot of talk of a two tier your we're almost out of time here but again over again if i can answer your question we do have one thing in common it's called an ailing euro or a gentleman we have run out of time i want to thank my guests today in london washington and in brussels and thanks to our viewers for watching us here are to see you next time and remember just tough. to keep. a very warm welcome to you this is your news today protesters on the walls. they

have. been canceled like you did. this is a good look at the status of the human experiment just slipping away to see if we pursue a business rap music in which it snows the globe is really trying to make sense of global economy and it's all changed brings us financial to the researchers clamoring to maintain our confidence in markets and taking on the critics wants to be seen trade imbalances recession low g.d.p. nations close to collapsing a sub prime loan for close hostile settlers and fails we pull a balance again feel a little like think is us crash seven. team something is like ultimate in a club is an open seat the i.m.f. employees for sale just programs increase the total economy but. you know how some love to see a story and it seems so for like you think you understand it and then you glimpse

something else and you hear or see some other part of it and realize everything you thought you knew you don't know i'm sorry welcome to the big picture. the emission free credit case should free in-store charge is free the arrangement free is free. to free. the old free blogs just plug in video for your media project a free media dog cart teton tom. is evening.