:00:02. > :00:10.And you can get in touch with me and most of the team on Twitter.
:00:10. > :00:14.Now on BBC News it's time for The eurozone crisis has been a test
:00:14. > :00:17.not only for Europe's politicians but also its institutions. The
:00:17. > :00:26.European Union's response to the economic turbulence in its midst
:00:26. > :00:29.has been criticised as too slow and ineffective. Sharon Bowles is a
:00:29. > :00:32.British Liberal Democrat and the Chair of the EU Parliament's
:00:32. > :00:42.Economic and Monetary Affairs Committee. She has a big say in how
:00:42. > :01:09.
:01:09. > :01:14.economic legislation is drafted, Sharon Bowles, a welcome. And the
:01:14. > :01:18.EU parliament was set out more than 30 years ago. The idea was to
:01:18. > :01:23.bridge a gap between Europe and the people of Europe. But with each
:01:23. > :01:27.election, fewer and fewer voters have turned up. How relevant are
:01:27. > :01:34.you to the daily lives of European citizens crash probably more than
:01:35. > :01:39.ever before. Almost everything I do and now matters of economic
:01:39. > :01:44.governance. It direct -- directly affects citizens and their pockets.
:01:44. > :01:50.If they knew, they would take more interest. It is very big picture
:01:50. > :01:55.staff. That makes it difficult for individuals. They want to know how
:01:55. > :01:59.it is special for them and their town, against any other town. The
:01:59. > :02:07.answer is setting it is not special to your town but it affects every
:02:07. > :02:12.citizen. It is definitely it of concern to all European citizens -
:02:12. > :02:18.the current crisis in the eurozone. When Andy doing to alleviate that
:02:18. > :02:28.an emperor that in any way? We have several roles and this. We have a
:02:28. > :02:28.
:02:28. > :02:35.lead us to believe rolled in the stability and Growth Pact. -- bled
:02:35. > :02:39.ledger stone. It is very important to make sure that once we climb out
:02:39. > :02:44.of the whole, we do not fall back in. There are proper monitoring
:02:44. > :02:49.wars to make sure that countries do live up to their promises in how
:02:49. > :02:54.they're going to repay their debt. We have a very big role in that. We
:02:54. > :03:00.made over 50 additional changes to the chaff legislation that came.
:03:00. > :03:04.That includes the voting in the council. If there is going to be
:03:04. > :03:08.measures imposed on a country, it is still left to the council of
:03:08. > :03:13.ministers to take a vote. We changed the burden they are so that
:03:13. > :03:17.it happens unless they boats against it which is a very
:03:17. > :03:20.significant change. We have done quite a lot in strengthening.
:03:20. > :03:27.Looking forward to solving the problems we have exerted a lot of
:03:27. > :03:32.pressure, for example, to do things around the issues of reduction --
:03:32. > :03:36.redemption funds, euro Barnes and bail-out. I had been so many
:03:36. > :03:44.meetings and had been very forceful in saying you have to do more and
:03:44. > :03:50.faster. Of course, we know it is difficult. We have been there.
:03:50. > :03:54.and faster is what the people of Europe want. It is what the markets
:03:54. > :03:59.want. They complain that the institutions are not getting on
:03:59. > :04:03.with it. You say you exert influence but at the end of the day,
:04:03. > :04:07.it is the members, the nation states of Europe, who have to agree
:04:07. > :04:13.before something can become policy. You had been accused of heel
:04:13. > :04:16.dragging and therefore making the crisis worse. If you're saying to
:04:16. > :04:21.members of a country, are you going to pull your sovereignty further,
:04:21. > :04:26.are you going to put the country in a situation where you're going to
:04:26. > :04:33.be responsible for debts that have run up in another country, I do
:04:33. > :04:38.think they actually want us to do things willy-nilly. It is not
:04:38. > :04:44.possible to do that. The markets want more bail-out funds because
:04:44. > :04:48.every time there is money put in, they get rid of their dodgy assets.
:04:48. > :04:57.Where are they going? They are going in the pension funds of
:04:57. > :05:02.people. Too little is being sung each time. Quoting one at PIP,
:05:02. > :05:06.fighting the crisis is keeping an liferaft above water. We have been
:05:06. > :05:11.pumping out the liferaft, feeling it with just enough air to keep it
:05:11. > :05:14.afloat even though it has a leak. Sir Mervyn King has described
:05:14. > :05:20.your's decision-makers as kicking the can down the road and making
:05:20. > :05:24.problems worse. That is pretty damning. Those are the kinds of
:05:24. > :05:32.things that I have said. It is always too little, too uncertain
:05:32. > :05:37.and too late. I can join in with those voices. But at the same time,
:05:37. > :05:42.I am very conscious because I sit in the room, having to do the
:05:42. > :05:46.legislation of these things. It has to carry a majority across the
:05:46. > :05:50.European Parliament. It will be even more difficult if it have to
:05:50. > :05:55.go to referendums in individual countries. For the long-term fix,
:05:55. > :06:01.we are looking at things like a banking union, more fiscal
:06:01. > :06:05.integration, these are things you cannot do quickly. It is an
:06:05. > :06:09.unfortunate fact that the situation hass to almost get worse before you
:06:09. > :06:15.can make the politicians turn around it to their national
:06:15. > :06:23.electrodes and say we have to do this. Were sent it is now? We have
:06:23. > :06:28.had leaders queuing up again - Italy, Germany, France - they are
:06:28. > :06:33.saying they are going to do what about it takes. That is very true.
:06:33. > :06:37.We were not get any gold medals for the way in which it has been
:06:37. > :06:45.presented for the execution. But the things that are being done a
:06:45. > :06:49.very genetic. Every country in the EU, especially in the eurozone, is
:06:49. > :06:55.now monitored with a severity that is the equivalent of being in an
:06:55. > :07:02.IMF programme. You do not have monitors coming to inspect two. But
:07:02. > :07:06.the way the statistics are done and the way you find... But are they
:07:06. > :07:11.are effective? We do not know if the revised rules are going to be
:07:11. > :07:20.effective until the time comes when somebody has to be fined. That is
:07:20. > :07:25.the point. It takes a certain amount of time. That is acquired
:07:25. > :07:33.their knees to the conditions attached. Marioni says conditions.
:07:33. > :07:38.We have not proven the rules we have made. Looking at some concrete
:07:38. > :07:44.measures that are on the table, we are looking at the permanent bail-
:07:44. > :07:49.out fund for the year. If it is approved by Germany in September,
:07:49. > :07:53.there is not enough cash in in any way to make a difference. The
:07:53. > :08:01.dominoes are wobbly now. Even if the figure Greece, you are looking
:08:01. > :08:05.as Spain and Italy - the third and fourth largest European economies.
:08:05. > :08:08.If you are saying the fund has to be big enough to rescue every
:08:08. > :08:15.country and potentially or the banks in that country, it is not
:08:15. > :08:19.big enough. We are talking about real problems like Spain. Are you
:08:19. > :08:27.saying it is expected to take all the dead? That is not the case.
:08:27. > :08:31.These countries have less debt than many other countries. Italy runs a
:08:31. > :08:37.larger primary surplus than any other country in Europe. Are you
:08:37. > :08:43.denying it? The markets are more concerned about them then the
:08:43. > :08:49.basics should indicate. What they are concerned about is an effect in
:08:49. > :08:52.the eurozone of what happens if something worse happens. And we
:08:52. > :08:56.start going countries out of the euro, will the whole thing
:08:56. > :09:01.collapsed? They are worried about the size of the debt burdens in
:09:01. > :09:07.those countries. At the moment, they are paying more than is
:09:07. > :09:11.necessary giving the overarching stability. Yes, I would have liked
:09:11. > :09:18.a bail-out fund of two trillion. But you get to the plate where no
:09:18. > :09:22.bail-out fund is big enough. What you have to look out is the future
:09:22. > :09:26.trajectory of the eurozone countries. They are going to move
:09:26. > :09:32.towards a much greater integration, both in banking and in fiscal
:09:33. > :09:37.matters and in their hot economic policy. This may take until 2018,
:09:37. > :09:43.2019 to complete. If you look at what we're doing in banking
:09:43. > :09:48.regulation, we're saying we would give banks and to 2018 or 2019 to
:09:48. > :09:53.get up to the bars or standards for capital. If you're going to give
:09:53. > :09:59.that much time to a bank, don't you think we should give that much time
:09:59. > :10:05.for countries? Those are issues that we will come back to. Looking
:10:05. > :10:12.at fiscal integration, we need to be more federal, coming together,
:10:12. > :10:18.on a European level in terms of banking or fiscal policies. Do we
:10:18. > :10:27.have the time in the EU? Do you have the time to wait? Certain
:10:27. > :10:31.moves to take time. Certain others can come quickly. The banking union,
:10:31. > :10:35.putting the EC be in control of the eurozone banks, even if they have
:10:35. > :10:40.to involve the national supervisors to deliver on the ground, that is
:10:40. > :10:45.something that can be done quite quickly. It will improve
:10:45. > :10:51.consistency across the banking sector. If you're saying how long
:10:51. > :10:55.it will take to get to a fiscal union, how long it will take until
:10:55. > :10:59.you can have everything cross guaranteed, that will take longer.
:10:59. > :11:03.We may have to move towards a political union which would take
:11:03. > :11:07.longer still. There is a question whether these theoretical
:11:07. > :11:17.discussions are a waste of time and whether the eurozone should be
:11:17. > :11:21.
:11:21. > :11:28.broken up now. And expect believes short-term measures like buying
:11:28. > :11:34.government bonds is burying its head in the sand. He says, sooner
:11:34. > :11:38.or later, they should contemplate an orderly end to the eurozone.
:11:38. > :11:45.What do you think? There are several levels you can take that.
:11:45. > :11:55.You have to try. Every country in the Euro house to try. The things
:11:55. > :11:56.
:11:56. > :12:02.that we're doing in that trying also gives space for there to be
:12:02. > :12:06.more separation between the dead of various countries. If you look at
:12:06. > :12:11.what has happened, far from being more integrated at the moment, the
:12:11. > :12:21.debt is becoming more and more ago and within individual member states.
:12:21. > :12:21.
:12:21. > :12:26.Exactly. Within the eurozone... Just cut of the brain for parts.
:12:26. > :12:31.Say goodbye to Greece, Spain and Portugal. Short-term it may cost
:12:31. > :12:37.countries but in the long-term, surely not. I do not think that is
:12:37. > :12:40.the European idea. That is not what we want to see done. I think if you
:12:40. > :12:44.undermine that idea, you can undermine the stronger countries.
:12:44. > :12:49.There is a tendency to stick together, especially where
:12:49. > :12:54.countries have shown they are willing to make substantial such
:12:54. > :12:57.changes. In the long-term, you can see the way through. Portugal is in
:12:57. > :13:05.that situation in the same way that Ireland is. They have done
:13:05. > :13:09.everything that has been asked. So has a spade. Greece? They are the
:13:09. > :13:12.exception. They still have to be dragged kicking and screaming to
:13:12. > :13:18.make some of the changes that the reduction in the civil service and
:13:18. > :13:22.so on. Greece is a special case. If you look up the rest, where
:13:22. > :13:27.everybody has shown they are willing, it would be a bad thing to
:13:27. > :13:31.say we're going to change the euro in the ideal and change that.
:13:31. > :13:36.you accept that Greece is going to go? Adding something else is going
:13:36. > :13:40.to happen to Greece. Whether it be another default and how we are just
:13:40. > :13:45.in response to that. People are asking the questions. I do not have
:13:45. > :13:49.the answer. Within the parliament, the general view is that we would
:13:49. > :13:55.rather we all stuck together. We believe in the European ideal and
:13:55. > :14:00.we believe we want to move forward together. Behind closed doors, the
:14:00. > :14:08.markets are saying something different. If the eurozone stays
:14:08. > :14:12.together, you say then is to be closer unity and so on, this would
:14:12. > :14:20.involve treaty changes at a European level. This will frighten
:14:20. > :14:24.the UK. Does that put you in a difficult position? My position is
:14:24. > :14:31.to look at things across the peace and to represent all member states.
:14:31. > :14:36.They take pride in doing that. At times, it may put me in loggerheads
:14:36. > :14:43.with my own government because I have an overarching objective view.
:14:43. > :14:48.What about other members of the committee? After David Cameron
:14:48. > :14:57.vetoed the treaty, there was a louder than usual thumping of the
:14:58. > :15:02.table. The chair had to be from a My track record in approaching
:15:02. > :15:08.things as at technocrat fits well with the current situation we have.
:15:08. > :15:14.That is what is needed I think to try to steer a careful path through
:15:14. > :15:17.the conflicting views that do come from different member states.
:15:17. > :15:22.Sometimes to be on the objective and on the outside is the right
:15:22. > :15:28.place to be. The place for the UK is uncomfortable. These changes,
:15:28. > :15:32.the banking union and so on, are extremely uncomfortable. But the
:15:32. > :15:36.eurozone has not forgotten the reason we have this problem with
:15:36. > :15:43.the German constitutional court at the moment is because of the UK's
:15:43. > :15:47.veto. It was not going to affect us, but the UK tried to get an opt out
:15:47. > :15:52.on financial services. Having done something that was the trigger that
:15:52. > :15:57.caused this eurozone crisis, we know there were flaws in the way
:15:57. > :16:01.the euro was constructed, but the trigger that exposed those flaws
:16:01. > :16:06.blatantly was the disaster in financial services. And then, as
:16:06. > :16:10.one of the culprits, we seem to think we can say sorry as the UK,
:16:10. > :16:15.and then set all of the rules for rehabilitation. It does not work
:16:15. > :16:20.that way. Let's look at the Curragh uncomfortable position. You are
:16:20. > :16:26.discussing at the moment putting a cap on bankers' bonuses, the
:16:26. > :16:32.European Parliament is in favour of a one 2-1 ratio on pay and bonuses
:16:32. > :16:35.across the senior bankers. You are in favour. Your government is not,
:16:35. > :16:42.including George Osborne, whose advisers says, we are not convinced
:16:42. > :16:48.about the beach house you are proposing. They are not convinced.
:16:48. > :16:57.Nobody is. -- the details. People might say, you might be right, and
:16:57. > :17:00.if you are, we will follow. I would not name that quote. Effect of the
:17:00. > :17:06.matter is, we cannot have banks on a different planet from the
:17:06. > :17:12.ordinary person. If all they are motivated by his bonuses, that is
:17:12. > :17:16.bad. If banks are only one to motivate by poaching, by hiring and
:17:16. > :17:20.firing, and not knowing upfront what their costs of the employees
:17:20. > :17:24.are, they're not living in the same world as everybody us. The
:17:24. > :17:29.parliament is pretty determined. Financial services account for
:17:29. > :17:33.almost one-tenth of the British economy. Do you by the bankers'
:17:33. > :17:37.argument, the lobbyists of argument, that if you put this cap on, you
:17:37. > :17:44.will be driving business out of the city of London, or driving talent
:17:44. > :17:50.out? No. We do not. It has got to the point that we say, we will see.
:17:50. > :17:54.I do not buy that. There are not enough jobs in Asia or the US for
:17:54. > :18:01.all of these people to run off there. I do not believe that there
:18:01. > :18:06.is only these small pool of talent. That is the problem. We concentrate
:18:06. > :18:09.on a small pool of talent and we get grouped think, which is what
:18:09. > :18:15.caused the financial crisis in many respects. We have to move on from
:18:15. > :18:19.it. We have to move on. So much to discuss. At the beginning of this
:18:19. > :18:23.year you pledged to be at the forefront of redefining Britain's
:18:23. > :18:29.role with the EU. I assume you meant that in a positive way.
:18:29. > :18:34.Indeed. William Hague has now announced an audit on the UK's
:18:34. > :18:40.relationship with the EU. What does Britain get out of Brussels study.
:18:40. > :18:44.You think this is a good idea, the Audit? It is a dreadful idea. It is
:18:44. > :18:51.a good idea to look at European legislation and say collectively,
:18:51. > :18:55.where is it working, where is it working, where does it impede
:18:55. > :19:00.growth, in an across the EU view. We would have a lot of allies in
:19:00. > :19:05.that. To look at it from a point of view of, what do we want to
:19:05. > :19:08.repatriate, which is what underlies this review, is a dreadful idea. We
:19:08. > :19:16.will not be able to repatriate anything. We're not going to be
:19:16. > :19:21.able to say, we're going to veto something, or else. The rest of
:19:21. > :19:25.Europe is not prepared to pay the UK to stay in the EU. You are
:19:25. > :19:30.interpreting what is at the bottom of this audit. Isn't this a
:19:30. > :19:36.fundamental problem in the coalition government? You are from
:19:36. > :19:41.the in Liberal Democrat Partick. The Conservatives are producing a
:19:41. > :19:43.more Euro-sceptic twist. You have David Cameron saying it is a very
:19:43. > :19:47.honourable idea to more than a referendum on whether Britain
:19:47. > :19:52.should belong in the EU. Whereas the former leader of the Lib Dems
:19:52. > :19:56.says, this audit could be very positive for the EU and the UK. It
:19:56. > :20:00.is two party is going in very different directions. Is it
:20:00. > :20:04.possible does stay in the coalition when this view differs so strongly?
:20:04. > :20:08.-- to stay. I am not a government minister but I think it is very
:20:08. > :20:11.important the coalition stays together, to do what it said it had
:20:11. > :20:16.to do. If you remember, made for the coalition together very quickly
:20:16. > :20:23.at the time that there were riots in Greece and we were concerned
:20:23. > :20:28.that there would be a loss of confidence in UK bonds. We are a
:20:28. > :20:32.safe haven at the moment because the financial crisis has moved on
:20:32. > :20:35.to the eurozone crisis. But we have huge debts. Holding on to
:20:35. > :20:41.confidence is important. That was the main thing that drew the
:20:41. > :20:51.coalition parties together. Yes, the whole attitude... It is not
:20:51. > :20:54.just Conservatives. I say it is also in Whitehall. It is doing the
:20:54. > :20:59.UK no good whatsoever. They think they can throw weight around,
:20:59. > :21:04.repatriate things, say, we know best, and the rest of Europe is not
:21:04. > :21:08.going to lead the UK get away with it. Immediately after the veto
:21:08. > :21:11.happen, there were various things that the UK wanted in financial
:21:11. > :21:18.legislation that is appeared. Because they just thought, if you
:21:18. > :21:23.are going to play hardball, we're going to play too. Maybe that is
:21:23. > :21:27.why you are the first British citizen to hold the chair position
:21:27. > :21:32.that you do. Apart from the policymakers, the people of Europe,
:21:32. > :21:38.returning to them. If you look a UK polls, the majority are showing
:21:38. > :21:41.that most Britons, is aware that -- referendum were held tomorrow,
:21:41. > :21:45.would choose to leave the EU. The leaders of Europe say, trust them
:21:45. > :21:51.to do what is best for Europe in the eurozone crisis, and so on. How
:21:51. > :21:56.long will it be that trust can remain? In Germany, Finland,
:21:56. > :21:59.Holland, will voters still want to keep paying out bank transfers? And
:21:59. > :22:04.in the other countries, the ones forced to take austerity measures,
:22:04. > :22:08.Spain, Greece, how long will they put up to -- put up with that?
:22:08. > :22:14.Difficult questions. I want to correct you. They has not been any
:22:14. > :22:19.chance they get. What I mean is, it is rather to seem like bank
:22:19. > :22:23.transfers. What they had been so far are loans, which initially you
:22:23. > :22:27.got twice as much back as you were paying to borrow the money.
:22:27. > :22:32.Countries like Germany, because they are a safe haven, are now
:22:32. > :22:36.being paid, effectively, to issue debt. They have a premium. But
:22:36. > :22:40.there has not been transferred. I don't believe we will get out of
:22:40. > :22:46.the crisis that we are in without there being some kind of transfers.
:22:46. > :22:50.I think that is the truth of the matter. And until that is faced up
:22:50. > :22:58.to there will not be a long-term problem. You can do the transfers
:22:58. > :23:02.through the ECB, and maybe it is more here than there, but transfers
:23:02. > :23:09.still it is. And that is something that the populations of those
:23:09. > :23:13.countries have to face up to. -- hidden. That decision will be made.
:23:13. > :23:17.But the people of Europe in those different countries? Do you expect
:23:17. > :23:21.them to take to the streets? don't necessarily expect them to
:23:21. > :23:26.take to the streets in Germany. I expect them to sit down and have a
:23:26. > :23:32.very long and hard debate about this. Germany understood absolutely
:23:32. > :23:36.what they were doing when they joins the EU. -- the euro. And
:23:36. > :23:39.another country that absolutely understood was the UK. The two
:23:39. > :23:42.countries jumped in opposite directions. UK said, and you will
:23:42. > :23:46.have to have a lot more fiscal integration and potentially
:23:46. > :23:51.transfers, and we don't want to have any part of it. In Germany
:23:51. > :23:56.they said, we will have the stick stability and Growth Pact rules and
:23:56. > :24:00.we can go into it with that. -- Street. They have to face up to the