:00:31. > :00:40.Our top team of crystal ball gazers and clairvoyance will be predicting
:00:41. > :00:57.
:00:57. > :01:02.some of the likely outcomes of the Europe and the world economy - will
:01:02. > :01:12.we have the euro in a year's time? Will there be a euro by next
:01:12. > :01:12.
:01:12. > :01:19.Christmas? We will have a euro. I think we will have to let go of a
:01:19. > :01:24.country like Greece to begin with. To begin with we have this attempt
:01:24. > :01:29.to get fiscal union in place by March, which is very hard to do for
:01:29. > :01:33.some countries. We cannot predict whether that will happen. It is
:01:33. > :01:38.unpredictable whether it will succeed. This is a German idea of
:01:38. > :01:48.austerity imposed on countries who have no growth to begin with. Will
:01:48. > :01:57.
:01:57. > :02:04.this be a lie for Europe -- a life. Winnowed the central bank needs to
:02:04. > :02:10.come forward and offer money for buying bonds. -- we know. It is
:02:11. > :02:17.like inflating your way out of a crisis. The German member of the
:02:17. > :02:21.ECB will resign immediately and will have a huge uproar. The
:02:21. > :02:26.Germans will say yes we will continue with the euro but we have
:02:26. > :02:33.two separate some countries from the pack. We will have you row,
:02:33. > :02:37.maybe in a different form? Do you agree? I do agree. This is one of
:02:37. > :02:42.the things about the EU, whenever there is a crisis - four months
:02:42. > :02:47.before the final agreements are Initial, the way forward is clear.
:02:47. > :02:51.It is just the incredibly difficult domestic politics that go along
:02:51. > :02:55.with getting them back that happens. There is no doubt that to this day
:02:55. > :03:03.the bid to make in the middle - France and Germany - what to keep
:03:03. > :03:10.the euro together. -- want to. It is possible that Greece may not be
:03:10. > :03:18.part of it and it is possible Portugal may not be part of it. And
:03:18. > :03:25.even in Ireland, which swallowed the austerity medicine as bravely
:03:25. > :03:35.as any other, they may be given a vote as to whether they remain in
:03:35. > :03:57.
:03:57. > :04:07.the euro. You would have thought that, Sarkozy would vote for him
:04:07. > :04:09.
:04:09. > :04:19.sufficiently to keep him in Office. -- thought that, yes, Sarkozy,
:04:19. > :04:21.
:04:21. > :04:25.I think it is far from clear whether the euro will survive. I
:04:25. > :04:32.disagree with the other panellists. I think what we have in many
:04:32. > :04:36.European economies is patients lying in the road pleading and
:04:36. > :04:40.rather than getting on with the surgery, what Europe is doing is
:04:40. > :04:50.building a hospital for the future, rather than giving surgery now. I
:04:50. > :04:54.pick it is possible that Britain, during 2012, even if it does not
:04:54. > :05:00.bring economic benefits... Everyone is clear that if the euro goes,
:05:00. > :05:05.Britain will suffer. It is a question of whether the problems
:05:05. > :05:10.will be long-lasting or short. My view is that, until countries are
:05:10. > :05:15.free from the euro bankruptcy machine, recovery will not begin. I
:05:15. > :05:25.see the break-up of Euro -- the euro is like surgery - painful at
:05:25. > :05:27.
:05:27. > :05:35.David Cameron has bought himself time by not agreeing to the plant
:05:35. > :05:40.signed off on in Brussels. -- to the plan. He can sit pretty and
:05:40. > :05:45.watch what happens and how they take care of their own problems. I
:05:45. > :05:48.was going to change the metaphor from hospital and so want to be
:05:48. > :05:53.psychological problems of the euro. It is basically facing up to
:05:53. > :05:57.reality. It is one of the things looking back on the year, people
:05:57. > :06:01.would say that they did not face up to the problems with the honesty
:06:02. > :06:11.many voters understand when they tried to pay for food at the
:06:11. > :06:17.supermarket. The term of "Too big to fail" Is one thing that a lot of
:06:17. > :06:24.people look to. People cannot imagine the euro failing because
:06:24. > :06:28.they do not know what that means for Europe. Economic problems as
:06:28. > :06:33.well as political problems - what does that mean for the EU? What
:06:33. > :06:41.will happen in Britain next year, that distancing will continue to
:06:41. > :06:48.impact the European Union in the long haul. You have just returned
:06:48. > :06:52.from the United States. How was Britain's role in Europe seen from
:06:52. > :06:59.there? When I talk to American politicians of different
:06:59. > :07:05.ideological positions, they see Britain's role as being Max someone
:07:05. > :07:11.they can talk to within the EU. If they become semi-detached, does
:07:11. > :07:16.that pose a problem? President Obama would call Angela Merkel once
:07:16. > :07:23.a week and then he calls Sarkozy and that what happened next year.
:07:23. > :07:27.Less so with the next year. The UK is already seen as distant. Britain
:07:28. > :07:36.is not playing a primary role any more. That raises a question about
:07:36. > :07:39.Britain's overall role in the world in 2012 and beyond. It is somewhat
:07:39. > :07:44.inevitable the American President will speak to the euro leaders when
:07:44. > :07:52.it is the time when the eurozone is having a crisis. We have had a
:07:52. > :08:02.succession of American Presidents, when they come to power, as --
:08:02. > :08:02.
:08:02. > :08:07.deciding Britain is less important our relationship. -- a year
:08:07. > :08:12.relationship. It may not have the status of recent times, during the
:08:12. > :08:21.Cold War, for example, but Britain and America will have that
:08:21. > :08:26.essential relationship for a long time. Confidence in politicians is
:08:27. > :08:35.at the lowest ebb ever and if this creation of the euro fails, people
:08:35. > :08:39.will ask what happened to the politicians. They will have -- that
:08:39. > :08:46.will have huge repercussions in the way people look at the political
:08:46. > :08:50.elite in general. I would like to say that it is quite a good thing
:08:50. > :08:56.that David Cameron has finally put in the open what we have all known
:08:56. > :09:00.for decades about any Conservative Prime Minister, but just generally
:09:00. > :09:04.the establishment in this country, that is Britain has always been a
:09:04. > :09:08.slightly separate issue and has its own special relationship with the
:09:08. > :09:12.EU. It seems to be that, in a crisis, which this is, particularly
:09:12. > :09:22.one that will have to be addressed in the first 90 days of this year,
:09:22. > :09:25.
:09:25. > :09:35.it is better to be in the back of the room as observer status. If
:09:35. > :09:39.
:09:39. > :09:46.this was a problem in Britain, the The onus is on Europe to prove that
:09:46. > :09:53.they can solve and save the currency. Britain was wise in this
:09:53. > :10:01.decision not to enter. Praise has to go to Gordon Brown. Some people
:10:01. > :10:07.were writing off President Obama's presidency. Now, equally foolishly,
:10:07. > :10:12.some people are writing off the Republican presidential candidates.
:10:12. > :10:20.It will be an interesting year but it is true that in 2011 people were
:10:20. > :10:25.writing off Obama. Looking at the Republican field... You would have
:10:25. > :10:33.to say that Obama will probably be re-elected with the highest level
:10:33. > :10:40.of unemployment since the war. Probably re-elected? Probably. The
:10:40. > :10:45.Republican race is still likely to come down to two candidates. Both
:10:45. > :10:50.carry so much baggage forward. The situation to me is much like 2005
:10:50. > :10:56.in Britain where Tony Blair had taken this country against popular
:10:56. > :11:02.opinion into war in Iraq. By 2005, the war had gone badly wrong yet
:11:02. > :11:08.Tony Blair won his third election. Why? The Conservative Party was led
:11:08. > :11:12.by Michael Howard. No-one would lead the -- he would not lead the
:11:12. > :11:16.Conservatives to victory. The Republicans are Stark. They will
:11:16. > :11:24.come out of their primary process with a candidate who will not stand
:11:24. > :11:32.up to scrutiny unless, going back to 1952, the Republican Party was
:11:32. > :11:39.in the same situation and they went scouting through the generals... We
:11:39. > :11:44.may have a President David Petraeus by the end of this decade. I do not
:11:44. > :11:48.think it will happen this year. Looking at how Obama goes into the
:11:49. > :11:56.2012 elections, he can say that he killed Osama bin Laden, pulled
:11:56. > :12:00.troops out of Iraq and was drawing down troops in Afghanistan, nearly
:12:00. > :12:04.over by the time he goes to the elections. Those are strong points.
:12:04. > :12:09.We will see consistent messaging about a bummer's successors,
:12:09. > :12:16.especially fighting terrorism and in ending the war in Iraq. That is
:12:16. > :12:21.a promise kept - that his language we will see until the elections
:12:21. > :12:27.next year. What no-one can predict is whether there will be any sort
:12:27. > :12:30.of attack on the US which could change that. The record stays clean
:12:30. > :12:37.and good and sparkling for President Obama as long as there is
:12:37. > :12:39.no attack, especially in the US, or anywhere of US interest. There is
:12:40. > :12:44.uncertainty in the coming year looking at foreign policy for
:12:44. > :12:54.President Obama. Pratt -- Pakistan will be important and the slow
:12:54. > :12:56.
:12:56. > :13:01.transition in Afghanistan, whether that goes well, we will have to see.
:13:01. > :13:09.I think Iran is less important for their foreign policy. We are seeing
:13:09. > :13:13.in Washington, domestic politics will be there strong focus.
:13:13. > :13:19.Fighting terrorism is a domestic issue. The Iraq war, even
:13:19. > :13:24.Afghanistan, people do not feel that they are at war. The Arab
:13:24. > :13:30.spring will be vital in the coming year for Obama's standing
:13:30. > :13:33.internationally but he will not be looking towards that until 2013. Do
:13:33. > :13:40.you share the opinion that some Republicans have that this is a
:13:40. > :13:45.great party with the -- incredible people in it but they have better
:13:45. > :13:55.candidates than the ones likely to emerge in 2012. Jack Bush, the
:13:55. > :14:01.
:14:01. > :14:11.former President's brother, has so much compassionate credentials, so
:14:11. > :14:11.
:14:11. > :14:19.many good features yet he is not running. -- Jeb Bush. I think a
:14:19. > :14:23.Republican candidate still can win this because looking at the opinion
:14:23. > :14:27.polls in America and the attitude to government in America at the
:14:27. > :14:37.moment, there is such despondency and a concern about Washington is
:14:37. > :14:39.
:14:39. > :14:49.more broken than they feared. That is where the Republican candidate's
:14:49. > :14:54.
:14:54. > :15:04.opportunity comes if he can betray himself as a fixer. He may also
:15:04. > :15:12.
:15:12. > :15:21.warned about a divided Washington They call it Obama care. Do you
:15:21. > :15:26.take my point? I think I'm actually hoping there will be a Republican
:15:26. > :15:29.President because they are the party who it is still helping all
:15:29. > :15:35.gem to be broken up in Washington. They have refused all the
:15:35. > :15:38.suggestions that Obama put forward. History will allow them to prove
:15:38. > :15:41.themselves - once they are in office they will have to govern
:15:41. > :15:45.more responsibly and they would have to remove all of those
:15:45. > :15:51.obstacles they have put in the way. One thing I would like to say about
:15:51. > :15:58.2012 is that America's problems, as bad as the economy is, it seems to
:15:58. > :16:02.be settling. The social volatility in my native country cannot be
:16:02. > :16:08.underestimated. How this plays out in traditional politics I think is
:16:08. > :16:11.anyone's guess. If we say, well, Obama is likely to win for the
:16:11. > :16:16.Republican is a credible candidate, it does not begin to scratch what
:16:16. > :16:23.is happening deep in American society. American society is in
:16:23. > :16:27.crisis. How that is acted upon in 2012 will be critical I think.
:16:27. > :16:30.Let's move on to British politics. The coming year is set to be
:16:30. > :16:38.another one of austerity. Why is the Labour Party up making more
:16:38. > :16:42.headway? What about David Cameron, faced with a difficult year with
:16:43. > :16:45.the more Euro-sceptic wing of his party. How difficult is it to have
:16:45. > :16:52.to prove Euro-sceptic credentials when people would say he has done
:16:52. > :16:56.that? It is funny that we are having his programme now. If I was
:16:56. > :17:00.on four weeks ago we would have been talking about David Cameron
:17:00. > :17:03.being in a lot of trouble with his own party. There were huge grumbles
:17:03. > :17:08.about how the Conservative Party and the Conservative press was
:17:08. > :17:18.viewing him. That has all changed because of this EU treaty. It sets
:17:18. > :17:18.
:17:19. > :17:23.him up very nicely for the new year. He is has a weak Labour leader, he
:17:23. > :17:26.has the junior partner almost as a prisoner. His opinion rating is so
:17:26. > :17:30.low he cannot escape. David Cameron is perhaps not the best leader
:17:30. > :17:35.Britain has ever had, someone was quite compromising in a lot of
:17:35. > :17:38.respect, not a great Churchill-like a figure. He is surrounded by such
:17:38. > :17:45.weak opponents that he has dominated British politics and he
:17:45. > :17:49.will for some time. Do you agree with that? That can run may face
:17:49. > :17:54.another vote that he might win as he won back the last one, due thing
:17:54. > :17:59.he has established his credentials? I think within his party, somewhat.
:17:59. > :18:03.Again, because the weakness of the coalition is that the Lib Dems no
:18:03. > :18:07.longer have a say. Previously, what Cameron had to do was try to
:18:07. > :18:10.balance the two met sides. Those who were not happy about the
:18:10. > :18:14.collision and those who said they needed it. Now the Lib Dems are
:18:14. > :18:24.stark and they will not get out of it. That strengthens him somewhat.
:18:24. > :18:24.
:18:24. > :18:30.He said that, maybe in 2012 the Lib Dems about -- will lose out so much
:18:30. > :18:37.that they will need to stand for something. Why is the Labour leader
:18:37. > :18:46.not stronger than he is? Dock like this is not the time for an
:18:46. > :18:51.alternative political philosophy to emerge. In the olden days we could
:18:51. > :18:55.going to imaginary policies put before the electorate. It is just
:18:55. > :18:59.one issue - the economy, and they don't have an alternative answer.
:18:59. > :19:02.Yes, they keep saying - I should have gone a little easier on the
:19:03. > :19:07.speed of the cuts to public spending, but that does not make an
:19:07. > :19:11.alternative philosophy. It is trimming around the edges. I agree
:19:11. > :19:15.with you, in substance there is not a lot of difference between the
:19:15. > :19:20.economic plans, but the body language, the posture, the Labour
:19:21. > :19:25.Party was against the cuts. Most people in Britain by huge numbers
:19:26. > :19:35.of percentage points, think that we have to cut. They don't like it,
:19:36. > :19:38.
:19:38. > :19:43.but the... It hurts them. I will stick my neck out for a wild
:19:43. > :19:49.prediction - I can see the Lib Dems out of the coalition and rolling
:19:49. > :19:59.over - going to the people again and getting even a small, a wafer-
:19:59. > :20:00.
:20:00. > :20:10.themed majority by 2012. Then you get five years.... Why not just
:20:10. > :20:12.
:20:12. > :20:19.extend the life of the Parliament up until 2017. AB gamble. -- at a
:20:19. > :20:26.big gamble. What do you see as the big predictions for 2012? What
:20:26. > :20:31.would you like to see happen? the United Kingdom? I think we will
:20:31. > :20:35.have continuing austerity. That is clear. We are not masters of our
:20:35. > :20:38.own destiny - the issues that we started with the beginning of the
:20:38. > :20:42.programme - will the eurozone continued to be a chronic problem
:20:42. > :20:47.or will there be an acute crisis where the eurozone needs to face up
:20:47. > :20:51.to its problems and deal with them? I think Britain is an observer in
:20:51. > :20:57.this. The will there be some irritation about that? That we are
:20:57. > :21:03.not masters of our are in destiny? Maybe we will not be ever again.
:21:03. > :21:07.Even the most powerful countries are completely... Will there be
:21:07. > :21:12.some irritation that we have not got a bigger voice in the big
:21:12. > :21:17.decisions that affect us? I think where the pressure will come is in
:21:17. > :21:22.Britain was like new semi-detached situation in Europe. We will try to
:21:22. > :21:27.reach integrate, which is what the junior part of the collision want.
:21:27. > :21:30.The majority of the party will try to formalise the semi-detached
:21:30. > :21:34.status and it look at the fact that the rest of the world is growing,
:21:34. > :21:37.China, India, and we are chained to the European model which is in
:21:38. > :21:43.serious economic decline. That will be the pressure on David Cameron,
:21:43. > :21:49.to build on that a veto and chart a more independent, internationalist
:21:49. > :21:53.outlook, less European. Let's look more widely at predictions. What
:21:53. > :21:58.about the Middle East? In Iraq, which is where you're from, and you
:21:58. > :22:08.see more progress, more stability? Notes. A huge political problems
:22:08. > :22:10.
:22:10. > :22:14.coming up in the next year. -- know. The American troops leaving have
:22:14. > :22:18.just opened all the problems, there was a bandage on, it is off now.
:22:18. > :22:22.When there is a problem, Americans will not fly into Baghdad to sorted
:22:22. > :22:26.out. They do not agree, it is a dysfunctional political system.
:22:26. > :22:30.Iraq also has Syria on its border, which have a hugely unpredictable
:22:30. > :22:34.in the next year. The only thing we can guarantee is that it will be
:22:34. > :22:37.unstable. No-one knows how Syria is going to turn out. Middle East
:22:37. > :22:41.peace will not happen in the next year. We have an American president
:22:41. > :22:45.who is busy with his own elections. It is not looking good for the next
:22:45. > :22:50.year. However, it is brilliant because people have found their
:22:50. > :22:54.voice in 2011. I think there will be the continued push for reforms,
:22:54. > :23:03.even if we don't see revolutions we will see the push for reforms and
:23:03. > :23:09.changes. Do you see Iraq falling more and more into the Iranian
:23:09. > :23:17.sphere of influence? No. I think Iran is very influential in Iraq
:23:17. > :23:25.today and has pushed all the boundaries it can. I think Iraq is
:23:25. > :23:34.trying to play more of a role in the Arab world. I think the
:23:34. > :23:40.coalition is too important to fail. It has got to prove that it is able
:23:40. > :23:46.to steer the ship through Safe Waters. Cameron will get a boost by
:23:46. > :23:50.two very positive development, the Olympic Games in London will give a
:23:50. > :23:54.bit of a new surge of optimism to the country, I don't know how long
:23:54. > :24:01.it will last. It may cause a blip in GDP performance because people
:24:01. > :24:09.don't turn up to work. (LAUGHTER). Then he will have to steer it
:24:09. > :24:14.through the storm, that his austerity. This is something we
:24:14. > :24:18.didn't touch on, there could be a significant Lib Dem defection. That
:24:18. > :24:22.would be suicide. It is extraordinary that that hasn't
:24:22. > :24:26.happened yet. Four of the problems of the coalition we haven't had a
:24:26. > :24:31.major defection. We haven't had a member attack Nick Clegg on
:24:31. > :24:36.television. The solidarity has been remarkable given that they are so
:24:36. > :24:42.low it... What do you predict? I predict it is that unemployment
:24:42. > :24:46.will rise and rise. In America, long-term unemployment benefits are
:24:46. > :24:50.coming to an end. Across Europe, where unemployment has been rising
:24:50. > :24:57.since the collapse of the Leman brothers, unemployment benefits are
:24:57. > :25:04.thinning out. We have been lucky enough to see social unrest. I
:25:04. > :25:08.think some of that will turn up in 2012. To quickly get in a word
:25:08. > :25:13.about Iran - it stands out. I'm not quite certain what happens now. I
:25:14. > :25:23.agree with you that you run's direct influence on Iraq is
:25:24. > :25:27.
:25:27. > :25:31.overstated. -- Iran's.... I think Syria will fall. I think of when
:25:31. > :25:37.that happens that Iran's in Florence and the gaining power of