17/06/2011 Newsnight


How worried should the UK and the rest of Europe be about a bail-out for Greece? Angela Merkel and Nicolas Sarkozy have met to dicuss the offer.

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to 70% would render the ECB close to 70% would render the ECB close


to 70% would render the ECB close that Greek default would impose


direct losses on loans made by direct losses on loans made by


French, German and Belgian banks to Greece. The third is that it would


trigger losses contracts from US banks which have


bet heavily that Greece wouldn't default. Of those three,


think the last is likely to the next couple of months. Today


Prime Minister Papandreou reshuffled his Cabinet. Out went the western


oriented oriented technocrat who negotiated


the austerity package and in came Mr Venitsalos. The advantage isn't


obvious. The old guy was western oriented but had little roots in


business Mafias that run Greece so he was pulling levers which just


aren't working. The next man party bruiser so things may change.


TRANSLATION: I told the defence ministry that today I leave from


defence to go to the real war and come here in the name of the Greek


people because they are the managers of the crisis. They are the


ones called to make sacrifices. Only with people, only with society, only


with the productive forces climate of consensus and mutual


understanding can we carry out this great historic challenge. In Berlin


meanwhile a climbdown. Chancellor Merkel suddenly persuaded not to


insist on making investors bear the cost of the second bail-out.


The crunch comes on Sunday with a confidence vote. If he wins,


Papandreou will most likely try to re-negotiate the austerity package


with the EU. If he doesn't, the opposition may yet again come into


frame with calls for a national unity coalition. TRANSLATION: We


have before us a difficult negotiation. These next days are


critical because the handling of our country's crisis in the European


Union had some not so correct calculations. The crisis has now


spread and the right solution for our country will be the


But the problem remains. Any serious But the problem remains. Any serious


austerity package stands the chance of plunging this economy so


into recession that it out. The people here want a default.


Luke, the world famous riot dog, be resting now but he and the


protesters are prepared for more. On the streets and in the Parliament,


everybody knows this is just the lull.


In the last hour Paul has managed to In the last hour Paul has managed to


escape from baggage reclaim at Heathrow and hot footed it to the


studio. The Greeks want to re-negotiate this austerity package.


What do they want? The principle of the renegotiation will be social


justice, so this is delivering to the social base in Greece. They are


working on changes they want to the thing they have already signed up


with the European Union, will be trying to soften some of the


blows that what we call the horizontal cuts, so cuts in welfare,


cuts in wages. The other thing he said is that the fiscal story


have to be delayed. Now, slightly speaking in riddles, but I


read it as that they will ask for some forbearance. They


going for such a big cut in the of the Greek state, which


to be cut from about 55% to about 40-something% in about three years


of GDP. How worried do you think those leaders are, particularly


Sarkozy and Merkel? If they've got their intelligence services as well


as their global and national on the job, their first worry is not


going to be contagion taking down the banking system. That's going to


be their second worry. Their first worry is going to be, and


should be given what I've seen this week, a breakdown of European


solidarity because the Greek people are beginning to think of this in


Nationalist terms. An anarchist to me: I never went on demos with


the Greek flag. Now I'm cool with it. We are all together. And you've


got this re-thinking of the crisis as Greece versus the rest of Europe.


Then, yes, it's the banking crisis. If we do get the Greek banks taken


down, as you saw there 45% of the debt is held by Greek institutions,


they default on half of it, the end of the Greek economy. That


speeds over and spills over to rest of Europe. That's going to be


their worry but the first one political. Thanks. I'm joined now


by the equities investor Julian Pendock, Gideon Rachman


Financial Times and Katinka of the Centre for European Reform.


Is this Lehman Brothers 2? it could well be because no one


foresaw the carnage when Lehman Brothers went down. People


understand the interconnectivity. We do know that France and Germany have


the most direct exposure to periphery nations. Secondly, what we


don't know because the banking stress tests have not forced the


banks to reveal how much is in their banking books is exposed to the


peripheries, the degree of interconnectivity. So the problem


with Lehman's is once they went down banks decided that, if we don't know


how to value our balance sheets, we are going to stop doing business


with other banks and then you have a Europe-wide banking crisis. So for


those who say Greece is such a part of the eurozone, it doesn't


matter, I think they are missing much bigger picture. Do British


people get this? Because we can't quite stand idly by and watch


this happen, can we? No, I don't think they do. There is a


potentially dangerous problem for the British government in that the


Brits tend to pat themselves on the back: we were clever,


the euro, it's not really our mess. You can see that in the


of the British to get involved in the bail-outs to a full extent but


if there is a Europe-wide crisis we get sucked in


these are our major trading partners. We heard Paul talking


about that as people seeing it in Nationalist terms. Some people in


Germany are seeing it that way. heard Germans saying: why should I


pay my taxes for people who don't work hard and pay their taxes? They


might be wrong or right but how some see it? My sense is that


the mood in Germany is now more nuanced than a year ago. A year ago


the mood was: the Greeks had a party, they trashed their house, let


them clean it up. They were going to tide them over but there was


understanding of how deep trouble in Greece was. That has now


shifted. How much austerity can you impose on an economy that is already


shrinking so much and can we actually afford a scenario in which


the euro itself is under threat? So the debate is a bit more nuanced.


It's absolutely right, the political solidarity is not necessarily there


to use taxpayers' money ad infinitum to transfer it to poorer nations in


the south of Europe but there is also a sense that the euro is at


stake and the Germans are still very much prepared to do what it takes


save this. But if people get how important Greece is to the rest


Europe it's also true perhaps that they have less faith in their own


European elites? The Greek government has its problems, the


German government has its problems, Sarkozy has his problems and to talk


about European solidarity moment doesn't play well


everybody, does it? No, not at all. 50% of people in Germany weren't


allowed to vote on joining the euro and so once again you see the


periphery governments, just changing, shifting deck chairs on


the Titanic and the problem that Europe faces as a whole is that the


whole system was designed not to arrive in this position because it's


almost impossible to get out of, so from here you have two choices:


you have a move towards currency area which means a federal


superstate like the US, where California can bail out Michigan,


for example; or do you have a break-up and have some members of


the eurozone, southern bloc, leaving the euro? Do you agree with that,


that Europe is absolutely at a crossroads, where an Eurosceptic or


a real europhile there has to be big change as a result of this?


Yes, I think that's the debate that's beginning to emerge. If you


speak to the real europhiles a lot will say the only way out of this is


through political union, like setting up a European Ministry of


Finance, much bigger financial transfers of the sort that were just


referred to, sort of moving towards an US model where you have a


federal system. The trouble is there's no evidence that's


politically acceptable to the electorates of Europe. There was


sort of gamble among some of the federalists that there would almost


be an automaticity, but that hasn't happened because people


willing to buy it. Do you with that? I do, in a way this is


calling Europe's bluff. It was when good times were rolling to talk


about an ever closer union and the European Union was always


to go forward. Now we are in a crisis situation, we find out


the political fabric we needed for this is just not there, so I think


what's going to happen first is, rather than a federal superstate


emerging, those countries that come up with the cash will set very tough


rules for those countries the moment are in trouble. Now, this


is somewhat ironic because, when Europe was set up part of the


rationale of it was to reduce the dominance of the Bundestag, that it


had over European economies, and give other countries in Europe at


least a share of the decision-making - and we are now going back to a


situation where other core countries together with the Netherlands


the other countries exactly do. I will bring in


well just to hear what you think. Does anybody say in Greece: it would


be a great mercy if we had the drachma back, we could devalue,


tourists would flood back and we would be out of this. They


still be poor. One old guy said to me on the streets I would rather be


poor than take any more money from the European Union. That's the way


they think about it. I think it's likely. Because the problem is, we


are talking here about the known, aren't we? We are talking about what


we expect to happen. But this is a social breakdown going on in Greece


and, if he doesn't get the confidence or if he does and they


form a national government, it's one step closer to the kind of Bolivian


leftist President who was preceded by a unity government of technocrats


and I think the opponents of the whole system who are quite large,


are thinking: bring it on. Bring a national government. What do you


think of that? Let's take a step back. Number one, you don't help


someone who is bankrupt by them with more debt,


interest you take, and number two, I do believe that unity is fragmenting


across Europe. Isn't it set to fail? That great thing we said a few


years ago about certain banks: it can't fail, it has to be bailed out


because the consequences of doing so are so awful? Yes, but


think the phrase that will be entering the lexicon, and we have


seen unrest on the streets of Greece, is austerity fatigue because


inside what's known as internal devaluation because traditional IMF


medicine is you do devalue as have just discussed, if you can't do


that then your wages have to go down, asset prices like your house


prices go down, you get stuck; there's less mobility of labour


people get worse and worse off. Then you get social instability. That's a


description of a vicious circle, isn't it, because that doesn't get


you out of it but deeper into it? No, and there is a re-thinking


on at the moment. I cannot quite foresee a scenario yet in which


Greece or any other country leaves the eurozone. Greece is not actually


a very open economy. It's quite closed, so even a big devaluation


wouldn't do an awful lot for the country to restore growth. What it


needs is fundamental reform and they have started, and Greece is a small


economy. It might actually around relatively quickly. It is


totally right that it is a matter of how much is politically feasible in


Europe, but there will be another package to tide Greece over. At


point in time they will have to write down the debt. At that


in time probably there won't be much of that debt left in the


banking sector; it will all be in public hands so it will be the


taxpayers in the rest of Europe who have to swallow some of these


losses, but these are not enormous sums. As long as we can contain it -


Well, not yet. As long as Spain and Italy don't come into the equation -


yes. Gideon? It seems to me the key point is the one that Paul was


making: how politically sustainable is this? Greece is an extreme


example of a country that saw its salvation as Europe. Europe


associated with rising prosperity, with democracy, and that whole


narrative has turned around and now they feel almost like they are being


colonised by Brussels, by and people react badly to that.


Paul, you would chime with that, sort of things


on the streets? Yes, I think it's impossible until you have been


to get your head around the scale of the social crisis. It's not


Portugal, it's not Ireland, it's not Spain, it's not Egypt. Cairo was


calmer. The streets of Greece are full of single male migrants and


single male poor Greeks and I think, if people think it's the demos or


the 2 or 3,000 anarchists in balaclavas who have caused this,


well, they have put the edge on but the politicians can't survive


forever driving to and from places in closed limos and behind shutters


when they are surrounded by social breakdown. That is what has caused


the rethink and I think that you are right, that is what is causing the


rethink in Brussels, Paris and Berlin. Thank you very


much. Now, the Conservative Philip Davies suggested in the


Commons today that disabled people might benefit from being allowed to


work for less than the minimum wage. He said that the minimum wage


prevents those people from being given the opportunity to get to the


first rung on the employment ladder. Campaigners for disabled people


variously said this was nonsense, preposterous, outrageous and would


take Britain back decades. Here is some of what he had to say. When I


went to visit Mind and I spoke people there that were using


service offered by that charity, they were absolutely upfront with me


and they said that when they went for a job and they came across


situation where there was people who had applied for that job,


they've got mental health problems; other people haven't. They said to


me: who would you take on? They were quite accepting of the fact that


was inevitable that the employer would take on the person who hadn't


got any mental health problems, given that they were both going to


have to be paid the same rate. Given that some of those people with


learning disability clearly by definition can't be as productive in


their work as somebody who hasn't got a disability of that nature,


then it was inevitable that given the employer was going to have


pay them both the same they were going to take on the person who was


going to be more productive, less a risk and that was doing those


people a huge disservice. I'm joined now by the Conservative MP Philip


Davies and by Liz Sayce of RADAR, the leading organisation helping


people with disabilities. Why should disabled people become cheap labour?


Well, I didn't solely feature disabled people in my speech. This


is something that the media have latched onto. I made the point - You


did say it though and Downing Street repudiated it. You said it


undermines fairness in the place. No, no, I said that


who was having difficulty in accessing the jobs market should


able, if they chose to - they shouldn't have to, shouldn't be


expected to - but if they chose to, were trying to build up some work


experience and weren't getting the opportunity, they should be able to


if they chose to, to work below the minimum wage. Are you actually


saying that disabled people were better off when there was no


wage? I was pointing out that was said to me by people at


Mind, the service users at Mind said that they encountered this


problem - Are you saying that people with disabilities were better off


before the minimum wage? No, I before the minimum wage? No, I made


the point in my speech - You they were better off - if you


let me answer, lots of people have benefited from the minimum wage.


Lots of people, with or without disabilities, but we


heads in the sand and pretend there isn't an issue, there's lots of


people out there who haven't got job who are finding it very


difficult to get a job and for those people, some of the


former prisoners, people disabilities, people who leave


school with no qualifications, actually the status quo is doing


them a great disservice. Why did many disability groups and people


with disabilities find this really offensive? Well, I think it was


insulting to kind of assume that just because you are


you are going to be less productive, have less to contribute. We need to


think about assets that people bring and also about the support that


people need in order to be productive. So if, for example,


are blind and you don't have right software on your computer,


then of course you are not going to be productive because you can't work


on a par with everybody else. Aren't you describing a


we would like, which is people having much more equality of


opportunity, no matter what their background or disability may be, but


that's not the world we live in? world we live in is very


competitive, tough to get a job and people with disabilities,


unfortunately, tend to be at the of the queue? I think for the last


couple of decades we have been fighting hard for equality. We have


anti-discrimination law and employment rates


have been going up and we now know - I've just done an independent Review


for government, we know what works and it's not dropping the minimum


wage. What it is is support that is flexible for individuals and


employer knowing that there's somebody to turn to for advice if


they need it and there's all sorts of types of support that mean that


people with learning disabilities who Philip mentioned can have the


instruction they need to do a job. They have status with their families


and communities as never before. is she wrong? No, not at all. So


therefore everything is fine? No, what I am saying is it may be


unpalatable but we have lots of people with or without disabilities


who want a job and can't find one. The preposterous situation where


it's fine for somebody to go and work for nothing, but if they said I


want to work for �5 an hour to prove myself for a short period of time,


that's - Why do you think Downing Street ran away from your comments


like a scolded dog? They are fundamentally wrong but they


think that plays to the chord that people want to call them the nasty


party. I'm actually highlighting real issue for lots of vulnerable


people in the country and we can pretend there isn't a problem, it's


an unpalatable truth but what I'm saying is with employers being


reluctant to take on people, true. That bit is true and


Davies says some people with disabilities have said they would


take a job at less than minimum wage. Absolutely. Some people


obviously work in voluntary work for nothing. I don't dispute


people may have said that but just done a rue speaking to hundreds


of people and that is not disabled people are saying. They are


saying we want fair chances to get jobs. It's not rocket science. We


can do this and I think otherwise we are just entrenching


inequality. We are saying disabled people can work for less than


minimum wage. It sounds like exploitation to me. But aren't


having your head in the sand about this because it's a very competitive


job market and employers will discriminate, whether we think it's


legal or good, they do do that? Well, I think what we need is the


opportunity for disabled people to get into apprenticeships, to get


internships, work experience, and that is a growing area. There are


number of employers number of employers doing very good


work in this area and there's also a law to challenge employers that are


not doing their bit. I think things are gradually moving in the right


direction but I have just been doing a review that made recommendations


to double the number of people would provide the support that


this possible. You don't want a minimum wage for anybody?


would prefer it if there was a private agreement between employers


and employees. But it seems preposterous to me that we want


disabled people to be in internships where they are paid nothing but it's


totally offensive to suggest they might take a job at �5 an hour.


Surely it's more offensive that get jobs for nothing than taking


jobs just below the minimum wage for a short period of time to prove


themselves to an employer who might be reluctant. We will leave it


there, thank you. In Canada there was a riot recently after


hockey match as the police in full Robocop deer piled in to clear


protesters, a photographer took a picture of a young couple appearing


to be kissing in the middle the mayhem. It became an internet


sensation. We try to work out what was really going on and what makes


an iconic photograph. A kiss is a lovely kiss.


They are not just kissing, they are They are not just kissing, they are


making out, aren't they? Second or third base.


# I have been looking for so long at # I have been looking for so long at


# I have been looking for so long at these pictures of you #


these pictures of you # these pictures of you #


Incredibly these are Canadians and Incredibly these are Canadians and


# I have been they are rioting over an ice hockey


game. In the midst of the skirmishes between fans and riot police in


Vancouver a photographer took a picture of a young couple apparently


embracing on the street. They been identified as Scott Jones and


his girlfriend, Alex Thomas. I it's special for lots of reasons


really. The policeman in the foreground out of focus is really


strong and very well placed in the frame. The kiss is a lovely kiss,


you know. There's moments that it looks boring, ugly,


clumsy, but this is just the delicate moment that he is caught


and as I say the colour, I don't know if it's street lighting


smoke in the background, just gives it that vibrancy.


But was it a kiss at all? Another But was it a kiss at all? Another


picture of the scene suggests rather different interpretation. I


think it was Cartier Bresson who said you can reconfigure the world


totally if you are a photographer just by moving a few paces to the


left and of course another picture of the same scene taken from


makes it clear that actually this isn't a kiss, that some sort of


accident has taken place. I one of the things about all of these


pictures is that what you tend to get is a huge narrative, compressed


into it. Then it's up - then you can read the picture, you can expand the


moment depicted and build a around it.


In the past couple of hours In the past couple of hours


Newsnight has caught up with an eyewitness, a reporter who was


covering the ice hockey riot. I think it was a kiss. He was trying


to just make sure she felt comforted. I am sure she was hurt a


little, so in the middle of that chaos, and you got to remember flash


bank bangs were going off so that is pretty disorienting, so I think he


was just being a good lover and helping her up.


There's something about love across There's something about love across


the barricades, says the man who took this picture during the poll


tax riots. I think it's the conjunction of the flames of London


burning, the police, the feeling of tension that you still get and their


complete lostness in each other, the woman and


woman and - her name is Lawrence and the guy is Nidge I found out later


and they were just out of and out of everywhere, they


just in each other. She is pregnant in that picture by the way and now


But ever since this famous French But ever since this famous French


kiss in postwar Paris was have been a little stage-managed by


the photographer, Robert Doisneau, some of us are sceptical about such


striking images of intimacy. I reckon the worldwide disappointment


about the Robert Doisneau kiss was enormous. With this one, I think,


OK, if it turns out that it was kind of set-up, it would be


disappointing but the thing is things are speeded up so much now


that it achieved its - you know, it achieved its instant iconnicity and


then the disillusion. Will be equally quick, I think. Well,


sign of that as we go to press, or do I mean bed? As far as we know,


That was our snogging correspondent, That was our snogging correspondent,


Stephen Smith. Now here is Suzy Klein with a word of what's


Thanks a lot, tonight we have Thanks a lot, tonight we have


highlights of the Edinburgh Film highlights of the Edinburgh Film


Festival and the Sheffield Festival and the Sheffield


Festival and the Sheffield Documentary Festival, everything


Documentary Festival, everything Documentary Festival, everything


Thanks a lot, from domesticated chimps to killer


plagues. For all the hot tips, join me in a moment.


A quick look at tomorrow's front pages. The Independent has: Greek


debt, Europe at a crossroads. The Times has a picture of Rory McIlroy,


66 makes history at the halfway the US Open. Let's hope he


do what he did before. The FT: Berlin concedes on the Greek rescue.


The Guardian also has McIlroy. he hold on this time? Biggest strike


for 100 years says union chief over pensions. It won't be like miners


because we will win, says the Unison leader.


For now we leave you with a reminder For now we leave you with a reminder


How worried should the UK and the rest of Europe be about a bail-out for Greece? After days of rioting and political unrest in Greece, Angela Merkel and Nicolas Sarkozy have met to dicuss the offer of a bail-out. And was that really a couple kissing on the ground between police and rioters in Vancouver? Newsnight is presented by Gavin Esler.

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