it's seven thirty pm from the moscow from moscow in your life with r t let's take a recap of the headlines a turkish warplane is told you have been detected over syrian territory. by the syrian military according to local media reports turkey's confirmed it lost contact with its jet in the mediterranean. julian a son comes forward with his first up public comments as exhausting aquittal for political asylum claiming his case is deliberately being slowed down by sweden and the u.k. to give the u.s. time to go off on this i do instant. and attends also the rally on egypt

square against military rule and the delay in announcing presidential election results that as the ruling generals the muslim brotherhood's claim of let's hold victory for rising tensions. up next appeared to live well and his guests discuss whether a single european currency is going to become a thing of the past stay tuned for that that's crosstalk. if you. still. want to. follow him well to stop trying to hold on to the euro crisis the never ending agony of the european union where to the problems come from and just anyone have any solution. to. start. to discuss this

i'm joined by a gusto carlos lopez he is director for the global indicators and analysis department of the world bank also we have. he is an economist and we have tom conway he's a principal at tru t.v. reinsurance consultants international if i could go to you first. when you when we look at the euro crisis today much far put into what could go wrong because it seems to me that we have nineteen emergency meetings. nineteen. and everybody keeps looking over the cliff and we keep hearing a solution is in sight and then we have another emergency meeting when told went so wrong. i think there are. two factors that are played one is political and the other one is economic the political one is that i think we have to keep in mind that democracy is

a very slow process by stuff mission and european union is is maybe too democratic for song good which plays adversely most people would say it's the world versus now i don't think so but i still think so at least during the outbreak of the crisis that was definitely the case so that meeting at the meeting as you said decisions that the markets were expecting were not coming up who said one word money for the markets is it working for the people i guess one of the things i always hear what the markets think but when i say people i'm not a i'm not a great fan of markets that people understand it because i think when it comes to signaling that always two ends of the emitting ends and the deceiving ends this evening on the markets so what i was going to say the people i get to receive back whenever there's a problem in communication everybody assumes that the meeting party is faulty with the parties to blame but i think a lot of the times the markets get all the wrong signals because the perception about situations before the short side so does surprise us to prominence in today's

world i also perception. do you think come from the perceptions that this is a political problem that european political elite can't overcome or are they afraid of their people are they afraid of being voted out because eleven governments last two years have been voted out. i think that we are underestimating the little bit the difficulties of. basically getting seventeen countries in the euro area to essentially move to a much higher level of integration and to develop institutional mechanisms that will be necessary you know to support the euro area a longer term basis. just think a little bit from a historical perspective we're coming out of several centuries of national sovereignty where basically the local power you know was the national government right but now we live in the age of globalization in the age of interdependence and in the age of one global economy these seventeen governments are essentially trying to work out a new way of doing business in the context of these new realities and it is not off

easily that's one life to find but that the clock is ticking right now the clock is ticking and as we heard earlier in the program the markets are baking decisions ok there it jacks that they're juxtaposed right now i don't see them in sync i mean as we speak right now the the vultures are circling around spain ok right now we already saw it with with greece ok and we have a government in greece we who's making the decisions the government leaders the people the markets. i think that in terms of what needs to be done you know to ensure this is thing ability to go to area very much the focus is on much not just a government but a group of governments who are you know trying trying to come together and trying to develop this issue and making mechanisms that would actually allow them you know to introduce the innovations that are necessary to ensure sustainability of the area down it was never supposed to happen this crisis right was never supposed to

happen we just should be more and more prosperity and people are going to retire earlier and earlier and everyone was going to be richer to go to vacations in greece oh i have been really didn't work that way it never got and never does but what i'm what i'm trying to when i'm trying to get out is that we're all talking about what needs to be done in that's the fiscal side of this monetary union a federal side of this the european union but not once ever correct me if i'm wrong gentleman as europeans ever voted for that they never voted for such things it was all. no we're not going in that direction we can do it with this monetary union that's a blatant false right there you can't do it without a federal so while the monetary union is in some ways a union and in some ways not and you've got to just how is the problem of eventually you have to go back to the fundamental flaws in the original structure

of the euro. supposedly it's a single currency but in actuality. it's a currency mainly or all that is any each individual country because the sovereign governments of each country are soley responsible for the bonds they issue so what you will but at the same time this is what got greece ok is it if you have your own currency you can default you can devalue you can do you can start over again yes but the euro is a straitjacket you can't do that in the argument just winning the argument is made because you can't do that you surrender your sovereignty and it's somewhere in berlin it's somewhere in brussels it's not at home well. in some ways that's true but in saying that there's no way out i think i wonder there is ways out and there's history on earth i mean if you look back ten or twelve years to the time

that argentina had their peso a link to the dollar and it was pretty obvious for at least two years prior to the dealing that it was going to happen you could see it in the argentine bank structure where they were paying eight or ten percent interest on peso accounts and two percent interest on dollar accounts even though the peso in dollar language what happened and they dealing i mean basically you had an immediate devaluation of about. as i recall. the pace or went down to two and a half to the dollar overnight we had some inflation and basically inflation is nothing but an additional tax on given even one solver in state you can't do that in the european union you can't you can't do with one country at a time ok and it was this the no i mean a greater disgrace ok that's. it was never contemplated aside but now that the

push else comes to the shove maybe you should something about that as well by the way say there are ways out yes the other ways out but there's a cost significant cost attached to each way out so i think what you have is the one at this moment as they try to calculate these costs as best as they can and they will choose the lower cost so i personally think lending greece out or any country is going to be hurting the zone and they couldn't see the mess the water that's either precedent has been set if they're exactly as if you know you know as they always are you cut it out you're no going to be able to avoid the who's next question that's number one because people say the markets will say at least if greece is out why spade why is portugal then why is a set of so these weak links will always be questioned and police i think can be maintained in the union but that has to get the calls the shots as well as well nobody is safe and even germany a lot of people think that germany is safer germany is not because when you look at

the share of germany's getting d.'s in the f.s.a. for example they're in excess of one ten billion dollars when you look at the problem conti g.d. i put for you the e.c.b. it's in excess of six hundred billion euros and l.t.l. is one chilean view at all and one third of the e.c.b. is buddhist one not that i contingent liabilities of jordan money they have a material eyes but they can do lie with these so the situation actually these quite difficult to cope with deal with but yes that are ways out but we asked on the stand that there's a secret legal us a little part of a little bit of a goose if i can go to you you know when germans were. really likes to hit the wrist of the of the greeks of the spaniards would anybody the weak links in the euro zone put germany has been the greatest beneficiary of the euro and has every interest in keeping it he just wants to control the rules of engagement with the currency that's a couple of things first of all you said earlier that you know you surrender

yourself aren't you to brussels and i don't think that's quite a curse you know used to render your sovereignty to a broader world can nationalize the super national body in which you have a vote. actually i think you are some own kind of board of a small vote on the board of the european central bank and you know you have basically sitting around the table representatives from all this all the members of the euro area. and they have a voice and they have a vote so i think it's important to about that no one surprise because otherwise you know you get this this perception that this is basically a show run out of brussels which i don't think that is the case you know again i come back to my original point these countries are trying to come up with some kind of collective decision mechanism in which you know they are truly truly represented tough so if you do europeans want more of europe or less of europe now because you know he the more you have to get the more crisis you get ok well you could make

that argument maybe for the man on the street the woman on the street might say in particular if you're unemployed that's true and you know when you talk about the population i mean the population is natural to my ears and so the question is you know has the majority of the population favor this or that and in a lot of the recent post you say that. many of the votes are coming out against expanding the powers of the european union but it's a matter of like a ninety day town vote it might be fifty three a dad. forty seven which would be considered landslide so i mean it's it's an ongoing issue and different people have waited things differently in their own mind yes but i mean a lot of people that have waited he did not come out with a solution been voted out of office ok and of the people that usually come in well less of europe all of the in and for in france i think is saying he wants more of

europe but it has to be done more equally more as an equal partner balancing out the germans so more of this sort of cozy merkel cozy relationship even if it was good for friends. i think there's a more fundamental problem of working which is that even before the crisis i think european union as a union had the following problem the outage so-called huge opinion didn't feel the emotional attachment to the union the way say an american that the united states might get i think that's in good times such deficiencies and such laws are basically kept on the cops but on the government but when tough times each you pay on that very important note gentlemen we're going to go to a short break and after returning from a break we'll continue our discussion on the euro crisis stay with r.t. . and if you. still.

want the. business meeting on a global scale. hundreds of deals billions in investment. the international economic forum in st petersburg own party. good laboratory to mccurry was to build a new most sophisticated robot. fortunately it doesn't give a darn about anything tim's mission to teach music creation why it should care about humans and worry this is why you should care only. if you. still. want to.

welcome back to cross talk on here a little to remind you we're discussing the implications of the euro crisis. and if you stood. up tom if i could go back to you. do you think. the majority of europeans want to become part of what could be called the united states of europe. i think in their outlook it varies by country i mean for instance the smaller countries particularly the eastern european the emerging countries in eastern europe basically want to be a part of at least the european union to get a benefit for a movement labor cost advantages that they can take care of. trade be decision makers what state you come from and you and i come from colorado oh i know

i was brought up in colorado but i call myself a california who has more weight in the united states in the federal union of the united states well right over california in today's market for our next coming election this fall colorado actually has more weight because it's considered a swing state oh ok. so anywhere where a question a trick answer you know what i mean here i come from rhode island ok come from luxembourg. are they more pro european than greeks. i doubt i'm not sure but i doubt it's i wouldn't even i mean if it's different based on current specific bases again that's a problem i mean the nature of the problem doesn't go away. that feeling of emotional attachment to the union as a european i don't see it that i've never seen it that actually but as i said during good times you don't feel that too much but do it in best times it just

plays out as a cd is political so that's the stability of the union and that's exactly what's happening at this moment so i think that i think that having a bit of a historical perspective on this is quite useful you know if you think about the twentieth century we have to all the wars that involve you know huge complete collapse economic collapse and destruction from you know between european powers right we have more from the air to a point where basically the way that europeans resolve their issues are to a committee meeting and working groups and essentially you know peaceful coexistence right here on this it will be here soit be but i take your operas you know one hundred times better than better than war and it wasn't so long ago right but actually we have talked at the very beginning you raise the issue of the design of the euro area and if you remember when the euro was introduced there was actually a gentlemen's agreement between the members of the european union called the girls and of stability pact right but whereby they would actually keep their budget

deficits below three percent a good leverage germany broke first and they waived their also that it was under sixty percent of g.d.p. right i think what was missing a point and perhaps because they were not ready for it yet where actually binding mechanisms right such as exist in the area of monetary policy and i think that this crisis essentially is moving europe kicking and screaming in doubt. direction shifted if i can go to you and. i like what i got so i just say i agree with his history historical analysis completely but you know for at least the last thirty years there's been another can being kicked down the road and that's called death it's rolling it over rolling it over well let's look at the demographics i mean we have a lot of people a lot of elderly people they've got are getting very cushy cushy social services in retirement the envy of the world i would point out the envy of americans for sure

ok but you can't keep kicking the can down because the bill finally arrived. actually at the break of the crisis in one of my writings that one of the reports claimed that even in the absence of this financial crisis you look at some point would have had a fiscal crisis because of the pensions that there was on stage so add on top of that the fiscal crisis and fiscal body composition the financial sector it's a hindu and then taken into account what happened in the united states ok so huge that problem on the bats in the body that is not the stock of that per se but when you look at the difference between the growth rate foreseeable that you would have versus the real rate at which they would have to bottle that rate exceeds the growth rate which means your debt dynamics has become unsustainable by default so you have to be very very austere on the fiscal front which could be self-defeating you know that's the economic advice to austerity create growth for me that's the big question. there is one interesting counterexample in the european union which

is sweden you know that sweden. already ten fifteen years ago incorporated into their place called policy the notion of sustainability they basically said the following we are an aging population if we want to be able to pay our pensions on monday in our safety net. broadly in the same terms for future generations as we have it now we have to begin to accumulate budget surpluses. leading up to the crisis in two thousand and eight if you just look at the historical data we've been consistently year in and year out of budget surplus. why because they understood that they did not wish to become captive to the market because what has happened to some of the countries in the european union. the only country in the european union which actually has seen its debt levels come down since two thousand and eight is sweden so we didn't there on the totally different path low on declining debt levels why because the politicians long noble understood that we have to live within our means we have to have the means have a very interesting point in it and it's something that politicians are terrified of

i think a lot of people don't want to confront but tom says. the people of the european union particularly in the euro zone have to accept that for the next ten or fifteen or twenty years you're not going to live better that you may live for and can that is that politically untenable what politicians are going to come out and say you know we're going to live poor for the next twenty years vote for me it doesn't work we don't have the poor i don't think there's well there's always a deficit there's a growth deficit but i mean if. if growth is said four percent a one there so here is only just flat right well ok except for see it so specifically because it's live in this the fastest growing economy in europe right now ok all right i'll take your point can you believe it can the european union emulate sweden and how long would it take it would and would it be voted it would people vote for it let's not forget about the democratic deficit but i don't think

these dynamics change overnight i mean the police don't have much time does us the problem that exact problem i mean the swedes are not the smartest people they knew that i mean i'm sure that our people are spotless you feel but probably it was even feasible to come up with such bold and they couldn't come up with i mean nobody or can say side is a bit of a cushion so that a certain policies to be pursued. it ends but the feasibility of those overseas becomes a big question mark i think that one of the things we need to do is we need to shift the focus of the debate in europe at the moment it is too much focused on on basically day to day fiscal management right as to what spread i'm i going to be able to show my bed tomorrow that's the big question in the minds of policymakers at the moment for politicians politicians policymakers and so was i don't know if it's because you can you be you can be a policy maker in survive yes governments ok but politician but the point is the point is that it is the fault the debate over the last year or so you know has been over when we focus on fiscal sustainability and we need to shift it you know to

grow the reform efforts more institutional reforms let me give you an example if you're a greek budding entrepreneur right and you would if you want to set up a company in greece it is much more difficult but it isn't russia believe it or not it takes far more procedures and it is far more costly than bureaucracy does your phases and for america to get started is pretty overwhelming that this we do in the doing business report that the world bank it comes out very very carefully so if you don't is going to go on a higher growth profile in the us part of a strategy to get out of the crisis it has to prove competitiveness they have to begin to do this sort of things which the swedes have been doing for the last fifteen years that way ok tell me what one of the issues you know we've heard over the last couple of years is that germans and grades are not the same people it's no they're not the same gene pool we're told they're geographically in the school abroad scheme of things pretty close together but they're very different people and what we've heard about sweden it seems feasible that kim is only going back to

a one size fits all approach i don't know and i think it's too pessimistic to say there are a general population will not accept cutbacks in social programs i mean if the question is to accept some cutbacks and i don't mean cutbacks maybe on the monthly payments but new. it be a longer working life remember sixty five was settled on back in the one nine hundred thirty s. when the average life expectancy was like sixty nine and so you were on a planning on a on average four years worth of payments now they are bridge life expectancy is eighty ok well what's the difference here the difference is people that are sixty five can continue to work and why should they retire well it's nice to retire the high of three nation that you play and but if you understand and most people

when it's really presented properly understand you either accept or maybe you don't get any pension when you retire because there won't be any money left then it's a different matter i work i spent my working career. before i took my first retirement. with a dutch company ok now the netherlands back in the eighty's and ninety's had a very very beneficial social program it was not financed by did it was being financed by gas exports from a large gasket that the government received all the revenues from under designers the lead gas deposits basically ran down ok to the point where the money's coming in and sufficient to continue the social program they cut out ok yeah but what about people that don't get anything as europe lost a generation of young people do you think. i mean if you're if you're spanish.

of course i mean you're not even talking about what you know what the swedes do for merkel's monetary policy or if you're not even even close to thinking about that except maybe in rate. board completely disillusioned i think that is something inevitable loss said that just points something else which i think is missing. as part of the exclusive first with visibility and to see gotten money out of the to follow sets from turkey and he was called in a big crisis of their own in two thousand and one but what we were caught in that crisis cortef the g.d. was about two thousand dollars it was so when they did the stations that tied to the belts the belt was very thought anyway we thought that it won't work when you're caught in a crisis like greece when you enjoyed a very joyful life for more than ten years what broke out they give us one thousand euros all right you want to say they have a job in here thank you very much for participating in this program and thanks to our viewers for watching us we are deep and remember cross talk to. any.

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