03/11/2011 Daily Politics


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Afternoon folks, welcome to the Daily Politics. Confusion and chaos


are the only ways to describe the extraordinary events surrounding


the G20 summit in the south of France. It's all down to the Greeks.


As we come on air the Greek cabinet is in another emergency session.


Prime Minister Papandreou has already lost his parliamentary


majority. Coe be about to lose his job. It looks like he's lost his


plan for a referendum and there is a confidence vote to lose tomorrow.


No wonder the G20 is left scratching its head back in Cannes.


World leaders thought the G20 summit would rubber stamp the euro


don't deal agreed last week. Now there's nothing to endorse, bar the


growing realisation that if Greece defaults Europe and America are


heading back into recession. We will be hearing from our


correspondents in Cannes and Athens and talking to two former British


Chancellors, Alistair Darling, and Nigel Lawson.


And how is the crisis changing the landscape of British politics?


Should Conservatives who want out of Europe altogether join the UK


Independence Party? All that coming up. With us for the


duration former Conservative politician who recently defected to


UKIP, Alexander Hesketh, twobg the programme. Events are moving


quickly this morning as world lieders set out for the -- leaders


set out for the G20 in Cannes expecting to endorse the Greek


bail-out and the rest of the plan that was supposed to save the


eurozone. But that plan has unravelled before the ink was dry,


thanks to various shenanigans emanating from Athens. As things


stand, no one in the G20 knows if Greece is staying in or out of the


euro. Backs or rejects the bail-out, or even has an operating Government.


The Greek Prime Minister, George Papandreou, has has just announced


that he as offered his resignation to the Greek cabinet. We don't know


what the response is yet, but he is clearly hanging on to his job by


his fingernails. He has lost his majority, the support of Ministers,


including his ambitious deputy, the referendum plan is in tatters. He


faces a confidence vote in 24 hours. We will keep I posted -- on all the


news as it happens. Th President Obama and the G20 host President


Sarkozy made the usual pleasantries this morning and had a joke about


the recent birth of the French President's daughter but it was


clear neither had a clue about what to do next. We are going to flesh


out more details about how the plan will be fully and decisively


implemented. We also discussed the situation in Greece and how we can


work to help resolve that situation, as well. The United States will


continue to be a partner with the Europeans to resolve these


challenges. TRANSLATION: We need leadership of Barack Obama,


we need the solidarity and support of the United States of America and


we need a joint, common analysis as to the way we can put the world


back on the path of growth and stability.


Now, let me go through this breaking news that we are getting.


Reuters reporting he hasn't resigned and doesn't intend to, but


also reports that he may at least have offered his resignation to the


Greek cabinet. When we get clarification of that we will bring


you up to speed. Alexander Hesketh, this is a remarkable G20, because


normally these summits are planned in advance, the draft is usually


written before they get there. It's all falling apart, what do they do


next? I mean, this has happened before and was totally predictable,


because the history books are full of examples of where you try and


have a currency union without having a political union. It's


doomed from the kick-off. That's why the Germans and French are now


realising they have to have a fiscal union. They're going to have


a fiscal union and it's going to cost a great deal of money if


they're not careful. Will they have a fiscal union that will include


all 17 of the eurozone members. You would have to bet any fiscal union


is not going to include Greece now? My bet is that they will


desperately try and hold the whole thing together with - I mean, July


21st was a complete fraud. The last meeting was a complete fraud in


terms of if you actually looked at in the cold light of day and


outside the Brussels bubble and they'll try and keep it together


because in a sense France ogt to be the leader of club med and the


Germans should lead a group if they want to stay in the euro in


northern Europe. I don't see the French allowing... I agree, which


is why the whole thing is doomed. Let me bring you up to date, we are


getting more clarification of what's happening in Athens. It


seems the Greek Prime Minister, Mr Papandreou, hasn't just offered his


resignation to the cabinet, he is actually going to see the Greek


President to offer his resignation to the President. It's largely an


honorary title. He is going to do this, he hopes as a prelude to


forming what's been called a Government of national unity. That


may sound sensible, the problem is that the opposition, the main


centre-right opposition in Greece is totally opposed to the bail-out


that Mr Papandreou is proposing and wanted to have a referendum on. So


whether there would be much unity in that Government is something


that we will fine out in the days - - fine out in the days ahead. The


stakes for today's G20 summit couldn't be higher, at the moment


they're spectators at the feast watching Greeks not bearing gifts.


What can we expect? It's changing all the time.


President Sarkozy who is hosting today's summit had hoped it would


be a relaxed and glamorous affair on the French Riviera, where they


presented the deal thrashed out last week to the rest of the world.


Instead it's turned into a big fat Greek nightmare. The Greek Prime


Minister's decision to hold a referendum on the rescue package is


set to dominate the discussions and now we learn Mr Papandreou will go


to the Greek President to offer his resignation. This morning he lost


his majority in parliament, which doesn't bode well for his


confidence vote tomorrow. Then there's the referendum itself,


thought to be held on December 4th. Last night the Greek leader had a


difficult meeting with President Sarkozy of France and Chancellor


Merkel of Germany, where they warned him Greece's future in the


eurozone was at stake. Mr Sarkozy said later:


The two leaders have said the next bail-out cheque will be withheld.


President Sarkozy was hoping the meeting would allow him to lobby


the Chinese President to contribute to the European financial stability


fund, designed to protect countries in the eurozone from collapsing.


But they too have indicated they need more clarity on the situation


in Greece. So, where does this leave David Cameron? Last night the


British Government said they're prepared to give more money to the


IMF, which could, in turn, could could towards helping struggling


eurozone countries, something that won't go down too well with his own


back backbenchers. I am joined by our correspondent Christian Fraser


at the G20 meeting in Cannes. We have had the spectacle of the Greek


Prime Minister being summoned by the leaders of France and Germany,


to explain himself. Now we hear he is off to see the President to


perhaps offer his resignation. It's chaos, isn't it? There must be


total bewilderment among the G20 leaders gathering here. They come


to talk about the global economy and how to resurge to - to create


resurgence in the economy and they're focusing on one of the


smaller members of the eurozone, Greece. What we are hearing from


Athens in the last few minutes is that the Prime Minister has in fact


offered - is going to offer his resignation to the Greek President.


There will be a Government of national unity that will be given


powers to negotiate with creditors and they will move, instead of a


vote of confidence and a referendum, towards elections in the short-term,


probably within around four weeks. Now, as Andrew was saying, that


does create all sorts of other problems because the opposition,


presumably would be included in this Government, has already


indicated that it wants to renegotiate the bail-out package


that is it - that's been offered to Greece and the German Chancellor


has already made it abunantly clear it's not up for renegotiation.


What's come out of the confirmss over the past 24 hours is something


new and that's that the spectre of Greece leaving the eurozone is very


much on the table. And that begs questions in turn, how do you do


that? What mechanism is there for one of these members to leave the


eurozone? Can they be forced to leave? Can Greece go back to the


drachma? You can forgive the be-- bewilderment of other leaders here


who have been invited to try to invest in this new expanded bail-


out fund, they must be scratching their heads asking what do you want


to us invest in? Greece perhaps leaving the eurozone, the


Commission has put out a notice saying there is no mechanism for


that, if you leave, you have to leave the the European Union, too.


If you are saying Angela Merkel has anticipated what is going to happen


and says there is is going to be no further negotiation, do you think


that threat will stand, bearing in mind that will harm countries like


Germany if there is a disorderly default or do you think the Germans


and French could be pushed into perhaps either renegotiating or


giving the money without the bail- out fund or referendum on it to say


yes in Greece? Well, I think it comes down to domestic politics at


the end of the day. The French have been terrified, not particularly


about Greece in isolation, but the knock-on effect to the likes of


Spain and Italy. There are two concerns this raises, first of all,


the idea of giving the people a referendum, while it might be


applauded in some quarters as a step towards democracy, on issues


after all that will affect a generation for perhaps up to ten


years, it does then open the door to other countries like Italy who


also have a Government of disunity. We have seen one of the partners of


Mr Berlusconi's coalition are already digging their heels in,


what is is to stop them saying how come the Greeks get a decision on


this and we don't? The second problem is the Germans have


obviously, and we did see Angela Merkel taking the lead again last


night, they are obviously saying now that we can't go on like this


indefinitely. Greece has to make a decision, whether it's in or it's


out. Whatever the wording of the referendum is, whatever the wording


they would have decided for this referendum, it boils down to this:


Is Greece in or out? That's further than the French would have wanted


to go but Angela Merkel is pushing it in that direction. Thank you.


It's unclear what the leaders can do now, there is a nice little


restaurant to the left of our correspondent's shoulder there.


They might as well have a walk along there and enjoy themselves.


The breaking news, the Greek Prime Minister, Mr Papandreou, is


planning to stand down. He is handing in his resignation to the


Greek President within the next 30 minutes. It looks like a new


coalition, a so-called Government of national unity is going to be


formed under a former governor of the bank of Greece. At this time a


week ago we were told that there was a deal to bail out Greece and


save the euro. Some of us doubted it, we spoke to two former


Chancellors about where we went from here. They were pretty sniffy


about the whole affair. One week on the deal looks near to collapse,


their scepticism looks vindicated. We thought we better reassemble the


team, I speak of messers Darling and Lawson, to discuss again where


do we go from here? Alistair Darling, are we on the brink of a


Greek departure from the eurozone? It's very difficult for them to


stay, I am not an expert on Greek politics pwau Government of


national aou -- unity does sound odd, it may take some skill to hold


something together. The real problem which I set out last week


is that the Greek fix was never going to work. Even if it had


worked, it was still going to be left with a debt of 120% of its GDP,


which that doesn't work. So the deal they were being offered and


asked to implement was never going to work and should never have been


on the table last week. Never mind the other two legs of what they did


last week, the Greek capitalisation of European banks which is now


urgent, because if you talk about disorderly default there will be


default in the Greek banks which will come back to other European


banks and the rescue fund is not there. As you said at Prime


Ministers questions yesterday, it's a fund that doesn't exist.


doesn't exist and the rescue may be needed very, very shortly. I think


- I hope the G20 is not sitting at the side of the Mediterranean


waiting for the Greeks to come back. They have to look at what was


agreed last week, because it won't work and I said it would unravel


and it has. What they also need to do, which is urgent, is to look at


policies that will get growth back into the system, because as long as


we have this lack of growth, these problems are going to get worse and


worse. It's the lack of policy for growth, the G20 could do that and


it should meet with the same urgency and purpose it did two


years ago. The economy is smaller now. And by the way, without


wishing to hog the programme, if Greece does get tipped out of the


euro, don't let's kid ourselves that's going to sort the problem


out. It's not in our interests to have a country cast adrift with all


the things that could go wrong, not The fact is, even before Mr


Papandreou announced he wanted a referendum, the deal that Alastair


was talking about was already falling apart. The Italians were


having to pay much higher yields on their debt because the bond markets


didn't believe the deal. Let's isolate the three different strands.


There is first of all the eurozone itself, which is a completely


flawed construct, European monetary union, it cannot work. I predicted


this. I made a big speech at Chatham House when I was Chancellor


in 1989 predicting precisely this. Plenty of others saw this too.


Greece is clearly going to fall out of the eurozone... You think it is


as clear as that? Yes, I do, quite soon. The others will struggle on


for quite some time, but it is fundamentally flawed. So that's


that. Alastair is right that growth is important, but there is no quick


growth injection you can produce. You have to say, what is the


immediate problem. The immediate problem is the threat of a European


and to some extent global banking crises as a result of this severely


impaired sovereign debt that's around the place. Therefore the


banking crisis has to be addressed in two ways. I think Europe as such


is not going to be able to play a significant part. There are two


levels. First of all, each nation, each member state, just like


Britain had to address its own banking problems with when it had


banking problems. Which Alistair Darling was involved in. Absolutely.


The authorities there are going to have to address the problem of


their ropey, dodgy banks, and see what needs to be done and on what


terms. Then there's a case for a global approach. I think the


British Government is absolutely right to do it through the IMF. A


further advantage of doing it through the IMF, I think if China


is going to be able to allowed greater voting rights within the


IMF which I deserves to have because of the strength of its


economy, I think you will get Chinese money only in that way will


you get Chinese money and resources devoted to solving the global


problem. So I think those are the three strands. That's way ahead.


Alistair Darling, you've done a bit of G20ing in your time. You were


involved in the big summit in London. If you were there today in


Cannes, given the events that are playing out in Athens, what would


you do? Well, I think there are two things I would do. Firstly, the G20


does need to do everything it can to bring every influence to bear to


try to get the eurozone countries to sort out their immediate


problems. I agree with Nigel about the recapitalisation. It can only


do that nationally. No-one else can do that. That's the first thing. I


also agree with him that there isn't a quick fix for growth 2009,


when countries agreed to do whatever it took to stop recession


becoming depression by putting stimulus into their economies, even


a week before it wasn't clear they would agree to that. But because


they were scared stiff about the confesss -- about the consequences,


they acted. You now have the risk of countries defaulting. You have a


risk of that spilling outweigh beyond Europe. So there is every


interest in the world here in getting, in making sure that we


address some of the big imbalances, the China problem, the American


problem, but also that countries act together. On their own, yes


they can do some things, but they need to act together, otherwise


they'll be dragged along in the wake of events. Nigel Lawson, you


said there's a danger to European banks if the national Government


have to act. It seems to me the biggest danger is the Italian


system, as they buy most of the Italian bonds. And the Italian


Government is in no shape to recapitalise Italian banks.


Italian Central Bank is still quite a strong institution, even though


the Italian Government is very, very rocky. I think that the


Italians ought to be able to manage this. We are talking, the Italian


political situation will clearly have to be resolved soon. Silvio


Berlusconi can't go on like he is. That has got to be resolved. Buying


time is an important element in all of these sorts of problems. One of


the first problems I was dealing with in 1983 was the Latin America


sovereign debt crisis. Hit many similarities to this. -- it had. We


solved it satisfactorily through the IMF, buying time. That's what


you have to do. And through an Argentinian default as well. Yes.


Countries do default and they come back from the grave, as it were.


Only Honduras and Ecuador has defaulted more than Greece. Greece


has got previous on this. It is not unusual for it to happen. Is UKIP a


bit like Madame Lafarge as you do your knitting as the tumbrils roll?


Every working family in this country is going to be affected by.


This we have an interest in trying to avoid this ever happening again?


That's why we do not wish to be involved within Europe. Of a way


and manner that's conducted way. That's why we have a great interest.


Finally, ex-Charles, if the eurozone is going to move towards


more fiscal integration, which is the policy of this Government as


well as Her Majesty's opposition, and is the policy of Mrs Merkel and


Nicolas Sarkozy, will it be an integration of the 17 or even the


16, or will it be a smaller eurozone that does that? My guess


is that a lot of uncertainty that it will be a smaller unit. There is


such a disparity between Germany on the one side and if you assume


Greece is out of it. One point that Nigel made, an important one, what


is desperately needed is time. You can't reorder the eurozone within


days but they won't get that time unless they deal with the problems


that were there last week. On a smaller eurozone? They may try that,


but I don't think the people s even of the smaller part, the inner core,


I don't think they really want a full political union. So the thing


is not going to make sense even at that level. Gentlemen, we'll leave


it there, but don't go too far away. We may need to make a block booking


for you. Remember Harold Wilson said a week is a long time in


politics? It is certainly a long time in eurozone politics! An hour


is a long time in Greek politics! Gentlemen, former Charles, thank


you. -- Chancellors, thank you.


Now, the Greek Prime Minister isn't the only European leader with his


own domestic political problems. There's no prospect of him losing


his job, of course, but you'll remember last week that 81 of David


Cameron's MPs defied him and voted in favour of a referendum on


Britain's relationship with Europe. We decided to take a look back


through the archives and began to wonder - can you guess what these


Apology for the loss of subtitles for 41 seconds


Yes, they were all former Conservative Party members who have


now joined UKIP. One of them was a young Lord Hesketh, our guest of


the day here, who joined UKIP last month. Well, we're joined now by


Andrea Leadsom, a Conservative MP and one of the 81 rebels who defied


the party leadership last week. Thank you for joining us. Lord


Heskey, you have made this radical switch after a long history with


the Conservative Party. What's wrong with the Tory Party? I think


that all political parties over the European issue have become


completely controlled by the Civil Service. That's a combination of


the Civil Service in this country and the Civil Service in Brussels.


And the establishment that goes with that. It is not just the civil


servants. But Europe is hard-wired into the system. But if you've got


a Prime Minister like David Cameron, who reputedly was very Euro-sceptic,


surely it is down to the leadership of the party? I think the actions


of Andrea and 81 people in the House of Commons last week shows


that there's a distinct sense of unease about whether or not whoever


is running the House of Commons is actually able to deliver. This is


the real problem. This is the actuallity of it, which is for


instance I saw one Tory MP once weekend, wisely, in my opinion,


suggesting that we should immediately get rid of the UK


ambassador in Brussels, who goes under the winning name of Akreb.


Unusual to say the least! actually I would put a politician


in there. This is about politics, not about the grand project which


Giscard d'Estaing would have called it. But your main aim is to have a


referendum isn't it? And surely the best and only likely way of making


it that happen is to work through the Conservative Party isn't it?


disagreement I don't think you spend 50 years with the Tory Party


and make the jump that I made unless you've come to the collusion


that -- conclusion that all political parties, for want of a


better word, set-up, are incapable of dealing wit. You might as well


jump ship and join UKIP? Not at all. I think the Government are doing an


excellent job. At what? For example ensuring Britain doesn't remain a


part of the bail-out mechanism after 2013. Looking after British


interests. David Cameron, William Hague and George Osborne have


spoken strongly about the need to renegotiate powers in Britain's


best interests. I'm certainly working with a wide range of


colleagues across the party to look at ways that we can renegotiate


powers. But then, as Lord Hesketh said, he spent all this time in the


Conservative Party, but none of these things have come to fruition.


There is no reliable evidence to say any of those power would be


repatriated, and you won't get that referendum. But things have changed


in the last week, they've certainly changed in the last couple of years.


And I remain incredibly hopefully and positive that this Government


is going to make that difference. In terms of having a referendum?


They've already ruled that out and your colleagues have argued this is


the best opportune time to have a referendum to renegotiate Britain's


relationship with Europe. Very a slightly different take on it. The


point about the vote last week, for me at least. The key thing is that


the British people should have their say at some point. This


wasn't about a lack of confidence in the Government. This was a point


about democracy, that people have waited since 1975 to have a further


say on the EU. It is that alone that made me decide to vote for a


referendum. That is not to say that I think the Government is doing the


right thing in moving towards a situation that looks after


Britain's interests in the EU. you worried that any of your


colleagues will leave the party and join UKIP? Not at all. There are a


group of people in the Conservative Party who believe Britain would be


better outside of the EU. My straw poll of the 20 is 10 intake, we are


a Euro-sceptic bunch but we don't favour getting out altogether.


Doesn't that represent the majority view, regoegs yes, but not pulling


out of the EU altogether? I think what Andrea said was interesting.


She is talking about the parliamentary party. I don't expect


to see many people coming out of the parliamentary party, if any.


Peter Oborne in today's Telegraph, he says we are going as a political


party. We are not just a single- issue party. We had a manifesto at


the last election and the reality is that more and more people are


coming to us. Can I give you two examples. Briefly. One is the Tobin


tax. The response we've had from the City in the last two weeks is


simply breathtaking. Now, just time to put you out of


your misery and give you the answer to yesterday's Guess The Year


competition. 1960 was the year. Alexander, pick a winner. J reg


began from Peterborough. -- J Regan.


I'm back here tonight on This Week with Alastair Campbell and Michael


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