05/11/2011 Dateline London

How does the EU looked to the rest of the world?

What to do about Iran's nuclear ambitions?

Welcome, everyone. The G20 summit in France this week was supposed to

pr pratform for economic recovery. Proceedings were hijacked

by the bizarre going on is in Greece. China, the United States

and other big parties were looking on - how does the EU looked to the

outside world? Cannot put its house in order? I don't see any crisis.

(LAUGHTER). Greece is getting a new government,

it has a bail-out plan, Italy is under IMF supervision. It has a

good industrod industrer countries which had troubles are implementing

austerity measures. The German economy is doing very well. France

political impetus to the euro. The euro is very stable, it is all in

the imagination of the outsiders. (LAUGHTER).

Your glasses are rose-tinted, I mean, come on! On the whole, there

is a road map for the future. In

what to whom. I think in the end, the Chinese will give the money to

the Europeans, which is provoking a lot of American indie.can indie.

afraid that the Chinese will not finance American interests any more

-- jealousy. The problem is that now there is a real eurozone,

Germany does not have the same interest rate to finance its

debt.... I think you should go to Beijing and give a speech, because

they are not convinced there. you think they will cough up some

kind of money? Investment? Bail- outs, what yts, what yhey will do?

They already hold $600 billion in Euro bonds. They have a strong

interest in Europe. They are completely unconvinced by what is

on offer. They are saying - if you can get your act together, we will

cough up. Were they convinced before the Greek referendum

possibility? It was not that that put them off? That did not help. I

think even before the extraordinary events in Greece I think it was a

triumph of hope and expectation to believe something would come out of

this. The American economy is doing badly, it has an enormous deficit.

It is not providing the sort of hope that the Euro is providing.

an outsider I could say that it is a Greek tragedy.

(LAUGHTER). You said there is a road map - yes,

but there is no road. This is the problem. These communications have

been Declarations of intention, but there is no decision.... President

Sarkozy has been next to Obama, they are a duet on French TV, which

has helped him. Europe is in crisis. People do not share the idea of the

bureaucrats. They have nothing to offer. They have created what was

supposed to be a common currency, but it became a single currency.

Between the two they find it difficult. I would not dismiss it

so easily. Anglo-Saxons are always conspiring - the Americans are

always plotting, things like that. I think Obama is going to have some

second thoughts about appearing on stage and in photographs with this

particular group of European leaders as his election draws close.

He does not want to be seen on stage with these people who are

perceived in the US as being rather a farce. This group of leaders is

not taken seriously. Is it their fault, or at is it that nobody can

actually do it? What you have is 27 different electorates with 27

different mandates and they are trying to produce common ground.

They can't actually do it. When you are Germany, you think one way,

when you are Greece, using a knot. -- you think are -- are off....

this all came together, we knew the figures were being fudged, this was

not a unified 27 nations. You could see it being fired at the time, but

we thought it would work. Now it may all fall apart. -- fine. Half

of these countries are doing well, half are doing badly. The euro is

stable on the market, it is a reserve for many central banks. It

is a very difficult question for the Anglo-Saxons, the British and

the Americans. They are against the euro because it is bad for their

own interests, they can't understand the notion of solidarity.

But does solidarity extend to the French and German governments

trying to change the composition of the Greek and Italian governments,

which has been going on this week. They do not want President

Berlusconi all present and Papandreou. -- Prime Minister

Papandreou. Italy needs the money. With Greece, we are heading towards

a much better government francs to external pressure, it is such a

mess of there. And that is how democracy works, is it? No. It is

in Europe's interest... In most other countries, the left and the

right is together. What matters is that Germany, France, benevolence,

God countries who are helping the others -- of the Netherlands, the

good countries who are helping the others. There is talk about not

rewarding bad behaviour. President Sarkozy talks a different kind of

language - about printing money. They have a problem with their own

electorates about the limits of solidarity. I think what Germany

and China have in common is that they have benefited hugely from

curious currency arrangements, shall we say. The Chinese are

undervaluing their currency, and Germany is inside the euro which

has allowed the German currency to be undervalued. I do not detect a

willingness in the German electorate to acknowledge that

ought to make the kind of transfers that are required. The Euro was

supposed to unite these countries. Now it has divided them into good

ones and bad ones. We have already seen that there are two locks

within the Euro, -- blocks. Those who rule and those who are ruled.

You cannot have a European Union without a political union. The

British make it impossible to have a political union. You need fiscal

harmonisation, monetary harmonisation. You need political

harmonisation. This is impossible now. We only have the euro with no

political solidarity. That is putting the cart before the horse.

Having the currency before you have the union? Yes. The currency

doesn't work without single governments. What is the point of

having a single currency? You can see in Greece already we have wiped

out up to 50% of what they borrowed. Maybe someone will have to pay it -

French taxpayers, German taxpayers. You can see Nicolas Sarkozy and

Angela Merkel saying that Greece could be kicked out of Europe.

could be a disaster for Greece, and a disaster for Germany. There are

currency would have value upwards very strongly. Economically, it is

like shooting yourself in the fort. But in 17 feet, in this case.

sorry, how is the British economy doing at the moment? We are not

talking about the British economy... I think it is very important. When

you are outside the eurozone you should have a good economy. The

problem is that the eurozone is doing well, but the moral hazard is

not in the eurozone. It is the refusal... You are in favour of

these taxes? Yes, it will make less austerity for the people of Europe.

How is that tax seen in the United States? It is seen as a joke. It is

not taken seriously. All these Ben date approaches that have been

tossed around this week are not taken seriously -- bandage. Let's

accept that the eurozone is doing great, for the sake of argument.

How will you regard Greece - it is a gangrenous limb that needs to be

amputated? Why are you all obsessed with Greece? Go to Holland, go to

France, go to Italy. As you know, the difference between... It is

nothing to do with... The Anglo- Saxons did not want the euro, they

want free trade. That is the problem. They might get it in the

end, because the euro might end up a pile of nonsense. No, because

this marvellous enterprise will be a success at the end. I know you

will throw a fit here, but where does this leave the Euro-sceptics

in the Conservative Party? They see this as a great opportunity to

renegotiate British terms of being I think that is the danger for the

UK. Let us assume that the euro survives this. It will only survive

in the long-term with a much stronger a union. That would give

Euro-sceptics their excuse to call for a referendum.

Marc Roche's point is there. That makes things potentially difficult.

Extremely difficult. If the UK were to vote to leave their EU I do not

think the UK would move very long. I think Scotland would make its bid

for independence and go back into Europe. It could precipitate a

series of crises. Greg Katz? They used to be the perception of so

much strength, Winston, economic power, old world art and science. -

- strength and wisdom. Said that tidy made sense. If you were in

Brazil or China or one of the other strong Asian countries where there

is so much growth you would look at these people with their wealth and

questionable standards of behaviour and think it was a joke. Where

would she like to leave? What you like to leave in Brazil or China we

do not have a welfare state and will you have such inequality.

Europe is a wonderful place to live. It is a group which has a political

and economic vision which the Anglo-Saxons are trying to....

Something about 40%. This is not a market place for a lot of people

any more. You have the very dissolution directorates and anger

amongst people. -- disillusioned electorates. We will return to this

topic. With the exception of public statements from the government of

Iran everyone else thinks they are building a nuclear bomb. How

serious is this and will it led to nuclear conflict? Thursday, is in

building a bomb? It is building the wherewithal to make a bomb. This

does it under the Shah and it has continued. Iran wants to become a

nuclear power and nothing can stop it. Nothing? Unless there is their

racing change and the new regime changes things. -- there is a

regime change in around. Under the present regime they will not

abandon it. What he think other consequences of that? We will get

to US and a moment, but in the region, Turkey and Saudi Arabia in

particular. This is immensely destabilising. He started his own

nuclear project with the help of the Gulf co-operation Council

countries. This is the first step and Francis helping them. The

Turkish government has appointed a commission to study yet. They say

they talk about a nuclear umbrella thanks to their membership of NATO.

That well known longer be operational when we wanted. You

could have nuclear arms in the Middle East. And of course Turkey's

centre of gravity is shifting from NATO to some degree of leadership

within the Muslim world. Absolutely. Iran and Turkey are vying for

domination of the Middle East. The chaperone of the Arab Spring. The

Turkey's Prime Minister and Foreign Minister have been all over the

place. -- Turkish. Whereas the Iranian politicians are not welcome.

Noting Tunisia and, not in any of the Arab Spring countries. Welcome

in Damascus, I suppose. A years. In Damascus the regime is divided.

Iran as a government does not went to stand behind Bashar al-Assad

forever. This has paralysed Iran's Syrian... Given that background,

what he think that make the options? On the assumption that

there is not regime change. Even if there is, given the his to root of

Iran, you may have another government that still wants to

pursue this nuclear programme. -- given the history of Iran.

becomes another issue because this makes the Republicans look strong

and a oriented toward national security. They can argue that

others are weak. The options, sanctions or a military strike,

none of them makes sense Bolwell have much impact. What people are

dreaming about his a clean missile strike that has a desired result.

Any analyst with a good understanding will say that is

highly unlikely to have any success. This is why the situation drifts

along. I am not sure it can drift for 15 years. We have not mentioned

Israel yet. And it was reported this week that Netanyahu was trying

to get more people than the Cabinet to -- in the Cabinet to approve a

strike. That is a wild card. What he make of it? All the options have

failed. Pressure has failed. I think they military strike is the

only option. So is the? Yes. seriously? Unless the Iranians show

us the nuclear power is for purely Pacitti queues. -- peaceful use.

Electricity, for instance. Is there was an individual target that is

one thing. If it is dispersed as people think it is, it is difficult

in military terms. The politics RMS given what happened in Iraq. -- the

politics are a mess. The opposition in Tehran is completely repressed.

They are Keneally impossible government to have a relationship

with. For patriotic reasons. Without achieving its military

objective. I think it would be catastrophic. And do you see any

appetite for that in this country? Absolutely not. Before there is a

military strike, let's do the minimum that one could do. That is

to apply punishments or sanctions that already exist any non

proliferation treaty. A candidate for Egyptian President SEA is now

backed by Iran. Every cup the years they put another 20 questions to

Iran and wait for an answer. There are sanctions in the NPT applying

to the Islamic Republic. This is an important issue because part of the

Iranian leadership wants to stay in and the other part does not.

ever the case in Iran. But I wonder: Iranians have prospered in

every continent and country on earth. How were they doing at home?

Given the price of oil and the strategic location, shouldn't they

be doing better than they are? Orang mac his under-achieving. --

of course, Iran is under-achieving. Spain is much richer than Iran now.

We saw those problems. At the same time Iran is now an... Bangalow

just because it is self-sufficient in food and has a diverse industry.

It does not depend entirely on oil. It is a huge country and most

people have very little contact with their government anyway.

think it is important also that the Israelis come clean about their

nuclear situation. We do not know where they are. They are not in the

MPT. -- NPT. That is a big problem. Iranians want to be accepted by the

outside world. Psychologically they want that. We created the world's

First Empire. We do not want to be a pariah. It would have a beaky

impact on the Iranian public opinion and the leadership.