13/01/2012 BBC News at Ten

The eurozone crisis deepens. The French economy is downgraded

tonight amid new fears about Greece. France loses its cherished AAA

credit rating and other countries face being downgraded. President

Sarkozy insists his government won't change course but others

argue the decision could have a serious impact. The downgrade for

France means that potentially in the future, French borrowing costs

will rise. That is bad for France and potentially bad for the

eurozone. And growing concern that talks in

Greece over its debt burden are in serious trouble. We'll be looking

at how damaging the day's developments are for the euro.

Also tonight: Plans to cut child benefit for

better off families. The Prime Minister acknowledges it's unfair

for some. A British student is to be

extradited to America for his website which helped people watch

films for free. The Prime Minister visits the Saudi

king but are they talking diplomacy or weapons?

And a new exhibition by the man dubbed Britain's greatest living

In sport on the BBC News Channel, Amir Khan gets set for a world

title rematch. He says he has been given another chance against Lamont

Peterson, who beat him on a points Good evening. Within the last hour

France, the second biggest economy in the Eurozone, has had its

cherished AAA credit rating downgraded. The decision by one

ratings agency, Standard and Poor's, could have an impact on its

borrowing rates and crucially, the viability of the eurozone's bailout

fund. There are reports tonight that four other countries may be

downgraded and there are new fears that talks to resolve Greece's debt

problem may be in crisis. Gavin Hewitt is in Paris and reports on a

turbulent Friday 13th for the euro. The French Evening News tonight,

and the moment that France learnt it had been stripped of its top

griddle -- Triple A credit rating. Facing an election, this had been

President Sarkozy's fear. It was only the verdict of one ratings

agency, but already his opponents say it represents a failure of his

policies. It was left to the French Finance Minister to make this

announcement. TRANSLATION: It is not good news

but this is not a catastrophe. The ratings agencies do not control the

politics of France. We do. At the Lycee Palace tonight, President

Sarkozy gathered together his top advisers. What the downgrade will

mean is an increase in French borrowing costs. France's debt is

set to reach 90% of its output this year. They have to raise 290

billion euros just to pay off old debts. The French government

already has to pay 3.1% to borrow. That figure could now increase.

Potentially in the future, French borrowing costs will rise. That is

bad for France and potentially bad for the eurozone, because France

finances the rescue shield. President Sarkozy and Chancellor

Merkel the downgrade also weakens the firepower of the eurozone's

main bail out fund, which is linked to the credibility of the nations

that bracket. -- that back it. There was a protest tonight outside

the ratings agency's office tonight in Paris, calling it a declaration

of war against France. But most people say they downgrade has the

potential to damage President Sarkozy. It is a very big blow to

Sarkozy, to his party, and 100 days from the elections, it is very bad

news. As well as France, Italy, achy country, was significantly

downgraded tonight. Spain, too, saw its credit rating cut and Austria

lost its triple-A rating. Other European countries were also set to

be downgraded. The downgrade discussed here tonight and in other

affected European capitals was not the only bad news for the eurozone

today. Key talks aimed at reducing Greece's debt burden have now run

into difficulties. Protests against spending cuts have continued in

Athens. Greece needs to agree a new rescue package. A central element

of any deal is that investors agree to take significant losses. Those

talks appear close to collapse, raising the prospect of a Greek

default. I think it is pretty much 99% certain that Greece will

default on its debts. When you look at the crease economy and the rate

it is contracting and the fact that the debt is going up day-by-day. --

the Greek economy. France says the judgment of the rating agencies

should not be overestimated but today after a brief lull, the

eurozone crisis was threatening once again.

Robert Peston is here. You have a formal statement from Standard and

Poor's. What does it say? It has just landed in my e-mail basket in

the last few minutes and it is, frankly, pretty shocking. It is as

bad as we feared it might be. Nine eurozone governments have had their

credit rating downgraded. Cyprus, Italy, Portugal and Spain have had

their ratings downgraded by two notches. And importantly, Portugal

is now categorised in the junk, as Juncker, essentially, meaning

broadly it is as bad as Greece in the view of Standard and Poor's.

Those who have learnt to Portugal now face very big risks of a

default of serious losses. France, downgraded by one notch. And a

number of other countries, nine in total downgraded. What I also found

really extraordinary is that if you look at all the members of the

eurozone, only one is said by Standard and Poor's to have a

stable outlook, and that is Germany. How serious is this for the

eurozone? Well, some will say it is simply a statement of the obvious,

that they have not fixed their financial prices. It may, however,

exacerbate that crisis, because it may make it harder for some of

these countries, in particular Portugal, to mend itself. One has

to be worried about Portugal because the economy is contracting

so fast. But the other thing about today, Friday the 13th, that was

shocking, is that talks between Greece's creditors and the Greek

government broke down. And that raises the risk of a default by

Greece. Although many people have probably said to you, we expect

this default, actually, as and when it comes it will do significant

damage, because the eurozone has still not put in place the bail out

fund that would protect other countries from a withdrawal of

credit. Unfortunately, these downgrades make it much harder to

put in place that firewall, that bail out fund. So this particular

Friday the 13th may be remembered for some time to come. And it

absolutely shows, everything that has happened today, while this

process of so-called kicking the can down the road, not reaching a

lasting, sustainable solution, is so profoundly worrying for all of

The Prime Minister has hinted that there may be a rethink of

controversial plans to stop child benefit for higher-rate taxpayers.

David Cameron acknowledged that there is potential unfairness for

some families. The Chancellor has insisted the principle of taxing

the benefit of better off parents will stand. Ministers will look at

how the plans are implemented when the changes take effect next year.

The first family allowances will be paid on August 6th. From 1946, the

principle was clear, all families got the allowance later called

child benefit, irrespective of their income. Simple but expensive.

When the coalition came to power, it said that universal child

benefit was no longer affordable. In 2010, the Chancellor announced

it would be withdrawn from all families where a parent paid tax at

40%, that is earned more than about �44,000 a year. That would save the

Treasury around �2.5 billion annually. The political problem for

the Government is that it hits around one in five families who are

currently receiving the benefit, including many in the Conservative

heartlands. And there are strange anomalies. A working couple could

together earn up to �87,000 and still receive child benefit. That

is because they are each paying basic rate tax of 20%, and not the

higher 40% rate. But a family with one working parent and an income of

�45,000 only just over the 40% tax threshold, lose all have their

benefit. David Cameron is keen to show that his family friendly. He

will not drop the child benefit policy entirely but he is hinting

that he may be willing to make changes. He said, there is a

threshold, a cliff edge issue. We have always said we would look at

the steepness of the curve, we have always said we will look at the way

it is implemented. The Prime Minister has been under sustained

pressure from backbenchers who think the policy of taking child

benefit away from higher rate taxpayers is a guaranteed vote-

loser. So he has been playing good cop, sympathising with their

concerns, and he has asked the man next door, the Chancellor, to see

what can be done to soften the blow. George Osborne may have to play bad

cop and tell MPs there simply is not enough money to change the

policy. We will be removing child benefit from higher rate taxpayers.

We have not set out how we will implement that. We will do that in

the next few months. I do not expect major rewriting of the

policy, but even making small changes to help those who fall just

inside the higher tax bracket could be complicated and costly. They do

not have the information available about household income that would

enable them to solve one of the problems. Unless and until they

recreate that system, which I do not think they are prepared to do,

these sort of problems are almost impossible to overcome.

opposition's advice to the Government is to leave child

benefit will alone. These proposals would be unfair and bureaucratic.

Unfair because some families on lower incomes would end up losing

child benefit while wealthier families would end up much better

off. The Treasury say that now that times are tough it is both fair and

popular to take handouts away from better-off families. While there

may be minor changes, universal child benefit is about to be

consigned to history. A 23-year-old university student

faces extradition to America up on charges of copyright infringement.

Richard O'Dwyer from Bolsover in Derbyshire allegedly earned

thousands of pounds through his website which helped people watch

American films and TV shows for three. He could face up to 10 years

in jail if convicted in the US. He says he will appeal against the

decision. This report contains flash photography.

On his way to court this morning, the Sheffield student who funded

his education with a website that earned him �150,000. Richard

O'Dwyer has been trying to stop his extradition to the US. At the

moment, we are banking that the judge agrees that the website was

legal in the UK. If it is legal here, you cannot extradite someone.

His TV shako website got 300,000 hits a month. It was a gateway to

other websites where people could watch programmes and films for free.

Now in its place, a page from the US government warning others not to

try the same. Richard O'Dwyer's lawyers argued that his website

amounted to little more than a list of other website links, a bit like

a Google page, and as such he had not broken the law. They also said

that because British authorities had not brought any charges against

him, there were no grounds to extradite him to the United States.

But the judge disagreed. He said US prosecutors spoke of direct

consequences of criminal activity by Richard O'Dwyer in the USA. Such

a state of affairs does not demand a trial here, and does, in my

judgment, permit one in the USA. Richard O'Dwyer's mother condemned

the decision and the extradition treaty behind it. Very disappointed.

In fact, disgusted. I had hoped for better from the judge. Disappointed

with this Government was signing up to this treaty which has opened the

floodgates to America to come and see his British citizens without

even having set foot out of this country. That extradition law needs

fixing, fast. Critics say the extradition rules favour American

prosecutors, but a review last year said they were fair. Of 130

American requests between 2004-2011, Britain refused seven. But the US

authorities agreed to all of Britain's 54 requests. I am sure

the family are disappointed. Many feel there should be in operation

something which would allow in appropriate cases, where the facts

take place mainly in this country, for any trial to take place here.

This would have been one case where there would have been compelling

arguments for that to happen. Richard O'Dwyer is the first person

to face extradition under copyright laws. He has got two weeks to

appeal, and if convicted in the US, David Cameron has used his first

prime ministerial visit to Saudi Arabia to reassure the Saudis

Britain is doing all it can do a pose the threat posed by Iran.

Saudi Arabia fears instability in the region and is boosting defence

spending, which could benefit British arms manufacturers. But the

visit is proving controversial for some. Frank Gardner has this report,

which contains flash photography from the start.

David Cameron's first visit to Riyadh as Prime Minister is not

before time, said the Saudis. They would have liked him sooner.

Today's talks have been about deepening the strategic partnership

and confronting shared concerns. Like Iran's recent military

exercises in the Gulf, its suspect nuclear programme and its threat to

block the Strait of Hormuz, vital to global oil supplies. We are now

looking at this whole issue of having an embargo on Iranian oil.

We need to get that regime to think again. It can take a different path

at stop destabilising the region, stop a march towards a nuclear

weapon in. In terms of the Straits of Hormuz, it is in the interests

of the whole world that they are open, and I'm sure that if there is

a threat to close them, the world would make sure they stayed open.

Western warplanes, bought by Saudi Arabia, patrol the coastal oil

field. The country is a huge customer for British arms exports

and it is once again on a buying spree, nervous about developments

in the region. Saudi Arabia feels that it is surrounded by threats.

In Egypt, the Arab Spring protest movement has removed a key ally,

President of Barack. On its southern border, Yemen risks

becoming a failed state. The Eastern Province of Saudi Arabia

has seen violent clashes with Shi'ites. Iran is flexing its

military muscle. The Saudis are also suspected of stoking unrest in

the Arab world. -- the Saudis also suspect it. It is concerned about

the way in which Washington dumped Hosni Mubarak last year, concerned

about the way that could leave Saudi Arabia hanging or abandoned

itself. So it is really rearming itself, preparing for any

challenges over the next several years. Saudi troops have already

gone into neighbouring Bahrain to bolster the Government's there when

it put down large-scale protests by Shi'ites. Recent clashes with its

own Shi'ite minority have left several dead and raised ethical

questions over human rights. think we are really concerned that

we may see the sale of arms which could be used to put down protests

within Saudi Arabia or indeed with in other countries in the region.

Downing Street says sales of arms and warplanes like these were not

the focus of today's talks, but if bilateral trade is to continue

growing, while at the same time Britain pushes for democratic

reform, David Cameron will have to navigate a delicate middle course.

Coming out on the programme: David Hockney on how there is beauty in

everything, even fly-tipping. how could they do it? Other times I

think, you know, it looks rather good with a tree next to it, rather

Network Rail is to be prosecuted for the crash at Grayrigg in

Cumbria back in 2007. One passenger died and 28 people were seriously

injured when a Virgin train careered off the line. Now the rail

regulator is taking legal action after earlier investigations

revealed the derailment was caused by poorly maintained points. Danny

Savage has more details. The Grayrigg rail accident let the

carriages of a Virgin Pendolino train from London to Glasgow are

scattered across an embankment in the field. It had been travelling

at more than 90 mph when it derailed. One passenger was killed,

and more than 80 others were injured. Now Britain's rail safety

regulator is bringing charges against Network Rail. A statement

today reads: It is in the public interest to bring criminal

proceedings against Network Rail for a serious breach of health and

safety law. 84-year-old Margaret Masson died in

the crash. The lawyer representing her daughter has welcomed today's

developments. It seems to me that the prosecution of Network Rail is

an appropriate and natural consequence, given the evidence

that came out of the inquest in Kendal towards the end of last year.

Why has it taken five years to bring any charges? The rail

regulator says it had to wait until after the inquest into the death of

Margaret Masson. That finished late last year, concluding that a badly

maintained set of points in his cutting here caused the crash.

Network Rail says it has not hidden from its responsibilities and that

it accepted quickly that it was a fault that caused the accident.

Five years on, the points have been removed from the track here. But

The United States has upgraded diplomatic relations with Burma and

will start the process of exchanging ambassadors with the

country. The announcement came after today's release of hundreds

of political prisoners by the Burmese government. Large crowds

gathered outside jails to Greek leaders of the democracy movement

as they were set free. -- Crete. After days of mounting tension in

Pakistan between the government and the army, the country's Prime

Minister has appealed for support from Parliament. As the need to

choose between democracy and dictatorship. There are unconfirmed

reports that the Prime Minister phoned British diplomats earlier

this week expressing fears of an impending coup. Today the Foreign

Secretary, William Hague, calls for calm beneath nuclear state. Orla

Guerin reports from Islamabad. In the grip of a political crisis

Today Pakistan buried two policemen, the latest victims of the militants.

As well as battling that enemy, the fragile civilian government here is

facing an escalating conflict with its own army. The military is on

the warpath because of a mysterious memo asking the Americans to help

prevent a coup. It was sent last May in the turbulent days after

Osama Bin Laden was killed on Pakistani soil. The government

denies sending the unsigned document, which requests direct

intervention in conveying a strong, agent and direct message to the

army chief. In parliament today, another crisis session, but

Pakistan's Interior Minister insists the Government will serve

its full term until 2013. democracy, we are in transition, so

our sand downs will be there. As I always say, we have a bird in

flight, but we will land in a nice way. Aren't you having a real

crisis with the army? There is speculation about a coup.

wouldn't say crisis, no. Difference of opinion is always there. Will

this Government still be in position next week? Next week,

insha'Allah until 2013. Interior Minister is trying to send

a message here, that the tension can be diffused and he is adamant

that the government will survive, but with the army and government

engaging in open verbal warfare, sung here are writing off this

administration and predicting that it could be gone within days. --

Inside Parliament, defiance from Prime Minister Yousaf Raza Gilani.

We have made mistakes, he said, but that does not mean democracy should

be punished. Many here doubt the army has the stomach for another

coup, but it seems military chiefs want change, one way or the other.

They are determined that the government should go, but they

would like it to take a form in which they do not get the blame for

it, and at the same time I think they will probably use the

judiciary for that purpose. Supreme Court is the next

battleground. It could disqualify the Prime Minister over a long-

running corruption case. Judges will consider that on Monday. For

now, this nuclear armed nation is The Royal Academy is preparing for

a major exhibition of the landscape work of British artists David

Hockney. It is a show that includes enormous canvases, drawings and

films displayed on banks of video screens. It is all inspired by the

landscapes of East Yorkshire. Arts editor Will Gompertz went to meet

the man described as Britain's greatest living artist and heard

his views on art, life and fly- tipping.

David Hockney's new exhibition is called A Bigger Picture because the

pictures get bigger, and one is 10 metres wide. And the artist wants

us to step back and think about a bigger picture. The majority of the

exhibition his recent work, almost all of which is of the same subject,

the landscape of East Yorkshire. You have swapped the sunny climes

of Los Angeles for East Yorkshire. Why? Well, it wasn't planned. I

tell my friends in Los Angeles, you know, they said, when are you

coming back? Why are you there? I say, I am on location, as we say in

Hollywood. I began to realise there was a very good subjective.

much of the Hollywood hills are in these paintings? Remember,

California has, you know, marvellous light, I mean that is

why Hollywood is there, but East Yorkshire can have rather wonderful

light. I mean, it is not quite as intense, but there is more variety

in it. The worry about things like wind farms? -- do you worry? I mean,

yes and no. There is beauty in everything in a way, even a wind

farm. For instance, sometimes they dump rubbish in this lane, and of

refrigerator, something like that. Sometimes I look at it and think,

how could they do it? Other times I think, you know, it looks rather

good next to that tree, rather absurd. There is a side of me that

some have... It is not that bad! One of the things you have to live

with these days is the moniker of being Britain's greatest living

artist. It doesn't bother me. It doesn't mean much to me, actually.

I mean, I live in a remote place, I tend to stay in it. I am not very

social. Deafness played a part in all of this as well. Los Angeles

Zoo is not too bad, New York is difficult. London is difficult. I

like the quiet of the East Yorkshire. First there was

Constable, then Turner, and now David Hockney is reinventing the

way we look at the British landscape. Are you pleased with it?