27/10/2011 Newsnight


27/10/2011

European Commission President Jose Manuel Barroso hails the deal on eurozone debt. But does it go far enough? Will it end the crisis or just buy more time? With Kirsty Wark.


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Transcript


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Have Europe's leaders delivered us from disaster? At least for a

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little while. There was a deal, but one that begs more questions than

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it answered. One thing is clear tonight, that Greece will get a

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write-down on its debts, but will it be the last it need one. The

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centre of the crisis is moving across the Adriatic, with all eyes

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on Italy. I will ask, Romano Prodi, the man who ushered in the euro in

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1999, if he's about to call time on Silvio Berlusconi. With fiscal

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integration part of the new euro deal, is it now clear that Britain

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will never be at the heart of Europe. I will speak to the

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Treasury, and from New York, the Shadow Chancellor, Ed Balls. Next

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week, the world's population will pass seven billion souls, do we

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need to revolutionise our eating habits. We will be cooking and

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eating some insect delicacies with cullinary enthusiasts, the

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Colombian ambassador, and a very adventurous cook.

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Good evening, it took unto the dark watches of the Brussels night, but

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in the end there was a deal of sorts. A 50% loss of those who lent

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Greece money. The French President said they had prevented a cat it is

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a trophy, but Greece shouldn't have been allowed to - catastrophy, but

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Greece shouldn't have been allowed to join the euro. There was a

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trillion fund for future bailouts. Markets bounced on the news, but

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nobody thinks the crisis is over. Maize Paul Mason was there when it

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happened, he - Paul Mason was there, but joins us now.

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I think it was massive event. In the first place. We are about to

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see a developed world country renege on its debts in modern times,

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that hasn't happened before. We don't know what happens when that

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happens. On top of that, I think it was big because the European Union

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had to admit everything it has done for the last 18 months didn't work.

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Remember it is not just the Greek politicians sitting in Athens

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saying let's do more austerity, we can recover, the EU signed every

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one of those plans. On top of that, I think we have taken a major step

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forward, de facto, towards fiscal union. This EFSF fund, we will hear

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the details of, it is a rough form of fiscal union, if it doesn't work

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the European Central Bank will have to controversially step in and do

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exactly the same thing, that is yet another, unofficial, unplanned step

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towards fiscal union. The credibility of, as it were, the

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recent past, is burning, and we just have to hope that the burning

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doesn't, as it were, get through to the core of the euro project.

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Up until 4.00am this morning, the euro was burning, but in the

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Brussels twilight, the politicians found way to put the fire out.

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The French President, who had resisted the idea of banks losing

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money over Greece, tonight laid it on the line to journalists, just

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how much they would have to lose. TRANSLATION: We asked the banks we

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thought carried a responsibility for their loans to renounce 50% of

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their claims. So as a result of last night's meeting, Greek debt

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has gone from 200 to 100 billion euros. The deal, when it came,

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surprised on lookers with its coherence. 50% of grees Greek

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detects to banks will be written off, voluntarily, it says. It will

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be sweetened with 30% of tax- payers' money. Banks will be

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recapitalised with tax-payers' money, and the EFSF, the

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megabailout fund, will be expanded to one trillion euro, by borrowing.

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The fund's boss is headed to China to drum up support. The price for

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Greece will be high. To Athens they woke up to more news of austerity,

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and effective control of fiscal policy hand over to a committee of

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foreigners. TRANSLATION: I don't think it was a good deal. But it

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was inevitable. At the moment Greece is bankrupt. TRANSLATION:

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is a dark and shadey deal, everything here gets worse by the

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day, God help us. This graph shows the horror story

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Euro-leaders were faced with on the eve of the summit, a new projection

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showing Greek debt out of control, peaking at 186% of GDP next year,

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and still 140% in 2030. Under this morning's deal, debt peaks lower

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and falls paster to 120% of GDP by 2020. - faster to 120% of GDP by

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2020. 120% is a very high proportion of debt. Greece would

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still be very heavily indetected by 2020, even if they - indebted by

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2020, even if they achieved the stated aims. If it fails, since

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this is the last roll of the dice, the implication would be that

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Greece will have to leave the euro. It would have to default of its own

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accord, it would have to reduce the debt through its own decision

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making, not the decision making of the EU, and the powers, it would

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have to leave the Euro-. It may fail because the details are

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crucial, and many are missing. We know French banks will be hit hard

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by the Greek writedown. We don't know where the money will come from

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to recapitalise them. It wouldn't surprise me at all to find a number

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of banks, including particular French banks, have to raise rather

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more capital than that, it wouldn't surprise me either to find they

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can't raise it from the private markets, and they have to get that

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money from Governments. Which then puts quite a lot of strain on the

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French Government's position, which is already under threat. There is a

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chance that France is going to lose its triple A credit rating. As we

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waited last night, and waited, the decision to boost the he was was

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was expected, but again - EFSF, was expected, but again we don't know

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who will raise the money. But we know that one trillion euros will

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be borrowed on risky terms. If it comes from European banks that is

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not a good result. What happens in those circumstances is if these

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sovereign borrowers go down, then the institutions that lose as a

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result of that are European banks. What's at the root of the problem

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here, is European Governments being unable, or unwilling to put up a

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enough money themselves to put their own money at risk. It was

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these worries that led, not just the French, but also David Cameron,

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last night, to propose behind the scenes the European Central Bank as

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the backstop, to leap beyond its mand date and become the ultimate

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buyer of bad debt in Europe. Critics think that suicidal.

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We are asking the ECB to buy the debt of 17 states, not one state.

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Some of these states are manifesto insolvent. So we are asking the ECB,

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in other words, to act as if it were a fiscal authority itself.

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We're asking it to create by stealth, as it were, the

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hommojisation of these types of debts, that doesn't exist in

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praktirbgs we are asking it to acts the state which - practice. We are

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asking it to act as the state which Europe lacks. For all these reasons,

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the euro leaders have to hope that last night's decisions put the fire

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of debt contagion out for good. With us is the Financial Secretary

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to the Treasury, Mark Hoban. Does the deal commit UK tax-payers to

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pay up for eurozone countries in difficult difficulty? We have made

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it clear that the UK Government won't be contributing towards the

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strengthening of the EFSF, the bailout fund. The Chancellor made

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that clear this morning, it is a matter for the eurozone to resolve.

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Let's talk about the IMF He makes it clear he thinks we should put

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more money into the IMF, that is committing UK tax-payers to put

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more money into a fund which may eventually be used to help eurozone

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countries? Let's be clear, there has been no request for IMF

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resource, and the IMF can't lend money to the bailout fund, but only

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to countries as part of an agreed bailout programme. What is

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suggested is the IMF helps administer the bailout fund, or the

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special purpose vehicle, that is what we are talking about, which

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doesn't involve the IMF lending out money. The idea that some people

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call suicidal, David Cameron saying that the ECB should be the one to

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lend the money? I think the challenge is, trying to find the

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resources to ensure the bailout fund is credible, and it can, not

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only help recapitalise banks, if they can't find capital from

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markets or their own Governments, but also put a firewall around

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Greece. You don't need the ECB at all, that is out of the equation?

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What's important is that the mechanism is there to ensure that

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the bailout fund is big enough, and strong enough. That is why, given

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that the eurozone have ruled out using the ECB, they are now looking

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at other areas. Not using the ECB, in your view, the ECB will not be

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called on? That's what the eurozone lead - leaders agreed last night.

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What do you think should happen? What Paul Mason said last night was

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absolutely right. Last night's deal was good progress, now they need to

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provide detail to boost market confidence and keep it on track.

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Part of that detail is how will the EFSF be funded. Let's talk about

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our banks, are you convinced our banks are secure at the moment?

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What the work that the EBA, the European Banking Authority did

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demonstrate, is there was no requirement for additional capital

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to be paid into British banks. What we have seen over the course of the

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last two or three years, is British banks, putting aside more capital,

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and also holding high liquidity. That has meant they have been in a

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better place to withstand this crisis than banks elsewhere. At the

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moment we have talked about the fact it is more the French banks

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exposed to the write-down of Greek debt, what if other countries in

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the European Union need write-downs, British banks will be more exposed?

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The European Banking Authority, looked at the exposures each bank

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has to European sovereign debt and market-to-market, that is

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demonstrated where capital is required in places like Greece and

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Spain, and France and Italy, and those countries where it is not

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required, that includes Britain. I think our banks are in a good place

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to withstand this. Of course the Bank of England and the FSA do

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regularly look at what's happening in the banks and ensure they are

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still safe. What we have seen is significant progress in the last

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two or three years to strengthen the banks. That has kept our banks

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in a good place during this crisis. Thank you very much for joining us.

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We're joined by the Shadow Chancellor, Ed Balls, who joins us

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from New York. In your view, was the best deal

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done last night that could have been done? Well, we don't know, to

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be honest. It is good to have progress, it is good to see a

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political commitment, but we have been here before, where we have had

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strong words from eurozone leaders, and it has not turned out to

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deliver the detail. In fact, there has been contradictory messages

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afterwards. We will have to wait and see. I really hope they have

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managed to agree what needs to be done. At the moment there is a

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question about the detail, and there is two questions. First of

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all, in the end the European Central Bank ought to be the lender

:12:25.:12:29.

of last resort. If that is not going to happen, is there really

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the financial clout in the eurozone to do it other than the Central

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Bank. And secondly unless the European economy grows in the next

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year, this crisis will deepen. Is there a plan for growth and jobs?

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Not really on the table yet. That is actually the biggest risk to the

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eurozone economies and the British economy too. So, let's be clear,

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your view is, you have heard what Mark Hoban said, that actually the

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ECB should be directly involved, it will be very much as a state fiscal

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authority, it would be step anything, there would be a very

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strict set of rules and that is what the ECB's rules should be?

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Mark was being diplomatic. But the fact is, there is a single currency,

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in a single currency, in America, or in Britain, where we have a

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currency, and in the eurozone, the lender of last resort, should be

:13:16.:13:19.

the Central Bank. And the Central Bank should say, we will stand

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behind the sovereign debt of our member states. Now there is a quid

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pro quo for that, which is fiscal responsibility, but the problem in

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recent months has been this doubt. Will the ECB actually guarantee

:13:33.:13:37.

Italian debt when there is no solvency problem for Italian debt.

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The problem is this question mark, the question mark is, is there

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really a political commitment in Germany, France and other member

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states, to deliver on the reality of what they have already done,

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which is form a single currency. What we are seeing instead is lots

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of gyrations, getting money from the Chinese, and now there is the

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question of the IMF putting money in, it is all a substitute for

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doing what should be done in a single currency, which is have a

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Central Bank with the power and political backing to do what it

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takes. Let's talk about the IMF, Labour voted against increasing the

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amount of money into the IMF. Was that a mistake when you voted

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against that in the summer? Not at all. Would it be a mistake now,

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George Osborne said today that they will increase the amount of money,

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if necessary, for the IMF, is he wrong about that? Let me explain

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exactly our position. The Conservative Party make as very odd

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claim about all of this. The IMF is a hugely important institution, I

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back it 100%, I was the chair of the deputies for a number of years.

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But what you can't do is say the IMF will step in to provide money

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for the eurozone, which the eurozone leaders themselves are not

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willing to sort out and commit. That is still a question mark. What

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the position was in the summer. What is your position now, quite

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clearly, is your position now, that you agree with George Osborne, that

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if necessary, there will be an increase in funds, from Britain to

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the IMF, do you agree with that or not? Well, what we said in the

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summer, and what I will vae say to you again tonight, is - I will say

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to you again tonight, if they are not relying on IMF funding to bail

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out the eurozone, for an excuse of the eurozone putting the money up,

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then I agree to an upping of the subscription. But if it is so the

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eurozone itself hasn't got to do it, that would be completely wrong and

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misleading to British tax-payers. There is a lot of clarity - lack of

:15:35.:15:41.

clarity about what the role will be. President Sarkozy was talking about

:15:41.:15:46.

the financial transaction tax again, do you support the so-called Tobin

:15:46.:15:53.

tax, do you support that tax? if it is based on the widest

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constituency possible, that must include the major financial centres

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of the world. It wouldn't be satisfactory for it to happen

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simply at the level of the eurozone. You don't think it should just be

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the eurozone? I don't, that has never been the Government as

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position, the British Government under Labour and now Conservative,

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is here in New York, in other financial centre, they would all

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need to be part of it. My frustration is George Osborne says

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no to a eurozone tax, but is not making the case for global action,

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that is what I have been discussing the last couple of days here in New

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York. A global case for action on a financial transactions' tax.

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Eurozone-only, absolutely not. The big question is, are we going to

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have growth and jobs in the eurozone in the British economy in

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the next year, without that all of this is pie in the sky.

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Ed Balls thank you very much. For years, Silvio Berlusconi has

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provided colourful and sometimes staggering stories for the world's

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media. Now, however, feel he might be the key to making sure the

:16:55.:16:58.

European crisis won't get much worse. Italy is the third-largest

:16:58.:17:04.

economy in the eurozone, and has considerable debts. If it needs

:17:04.:17:09.

bailout, the question is Germany's pockets won't be deep enough, that

:17:09.:17:14.

is why there has been pressure on the ilt Italian premier for

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austerity and reform. We have spent the day in Rome.

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Austerity, Italy? Some how the who words just don't go together. This

:17:27.:17:33.

is still a country that knows how to live well. That makes and sells

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quality goods the whole world wants to buy, and yet, the fear is, that

:17:37.:17:43.

the disease that is sinking the Greek economy, may spread here next.

:17:43.:17:50.

With a public debt equal to about 120% of its GDP, and growth barely

:17:50.:17:54.

above zero, Italy has to reform fast, to avoid possible financial

:17:54.:18:01.

meltdown, and a bailout the EU might not be able to afford. The

:18:01.:18:03.

Prime Minister, Silvio Berlusconi, seems to have calmed the fears of

:18:03.:18:07.

some of his fellow EU leaders this week, with a list of plans to cut

:18:07.:18:11.

spending and revive the economy. The question is, can Berlusconi,

:18:11.:18:17.

that great salesman, sell those reforms to his own people. The

:18:17.:18:24.

answer, from Italy's powerful trades unions, is IRA sounding, no.

:18:24.:18:30.

It would be negative because the burden of the crisis is put only on

:18:30.:18:35.

the shoulders of the workers and the pensioners. For the pensioners

:18:35.:18:44.

increasing the age of working to to the retirement, for the workers

:18:44.:18:49.

easing dismissal by enterprises, and for the young people having

:18:49.:18:56.

nothing in terms of employment for new jobs.

:18:56.:19:06.
:19:06.:19:13.

But in Italy's parliament yesterday, passions over the retirement age

:19:14.:19:23.
:19:24.:19:26.

led to fist at this cuffs between some deputies, - this member of the

:19:26.:19:30.

Northern League was not involved in that, but she won't take economic

:19:30.:19:38.

lessons from Germany and France, and resents the conconned sepbgs

:19:38.:19:42.

this week TRANSLATION: It is not nice to laugh at another country,

:19:42.:19:46.

and not nice behaviour from two respectable people, who both have

:19:46.:19:50.

different internal problems of their own. Her party was reported

:19:50.:19:53.

this week to have dropped its long standing opposition to raising the

:19:53.:19:59.

pension age. In fact there was no major concession. Retirement at 67

:19:59.:20:02.

won't become universal until 2026, as already planned. In this society,

:20:02.:20:08.

where many are used to long holidays, generous benefits and job

:20:08.:20:12.

security, it won't be easy for Mr Berlusconi, or any other leader to

:20:12.:20:18.

deliver on promises of speedy reform. It is our ruling class,

:20:18.:20:23.

including the political class, including trade unions, the

:20:23.:20:31.

entrepeneurs, the bankers, are they ready to risk something in terplgs

:20:31.:20:35.

of consensus between their - in terms of consensus between their

:20:35.:20:40.

associates and public opinion, and do something that can be, to some

:20:40.:20:46.

extent, not exactly popular, but that is needed? On this I have

:20:46.:20:54.

doubts. I think there is not this sort of ability now, there is not

:20:54.:20:58.

enough willingness to risk something. One problem in

:20:58.:21:02.

persuading Italians to accept reform, is that the political class,

:21:02.:21:06.

which must implement any changes, is itself so widely discredited by

:21:06.:21:13.

revelations of its featherbeded lifestyle. How come, Italians ask,

:21:13.:21:19.

an MP can serve just one-term, and still receive 5,000 euros a month

:21:19.:21:24.

in pension at age 50. While an ordinary voter will get 1,000 a

:21:24.:21:30.

month, an offage, at age 65, after a whole lifetime's work. If there

:21:31.:21:38.

is no reform, will Europe end up throwing money at itly the as

:21:38.:21:43.

recklessly as the tourist at the Trevi fountain.

:21:43.:21:46.

Some think Italy will solve its own problems, perhaps under a new

:21:46.:21:50.

Government. Is that wishful thinking? If they are wrong, the

:21:50.:21:54.

consequences for the whole European project would be immeasurable.

:21:54.:21:57.

cost of financing our debt would become so high, and this will

:21:57.:22:05.

happen if we do not do the things that were discussing before I think

:22:05.:22:12.

in that case Italy will be forced out of the euro at some point, by

:22:12.:22:15.

the markets. Only the European Central Bank could do something,

:22:15.:22:24.

but how then becomes not exactly clear. At that point, the euro and

:22:24.:22:30.

the area could break up. In the streets of the eternal city, you

:22:30.:22:34.

might think, crisis, what crisis? Tomorrow in the streets there will

:22:34.:22:38.

be a demonstration by pensioners, angry about falling living

:22:38.:22:46.

standards. The organisers' slogan "when there is a threat of cuts

:22:46.:22:49.

nessun dorma" nobody sleeps. I will speak to the former Italian Prime

:22:49.:22:55.

Minister, Romano Prodi, in a moment. First, no-one disputes last night's

:22:55.:23:01.

events could be a new era in Europe, with the eurozone fiscal

:23:01.:23:04.

integration being regards as a Euro-state. What will bind it

:23:04.:23:07.

together and who will bind it together? Our diplomatic editor is

:23:07.:23:11.

here with his thoughts. What do you think the UK

:23:11.:23:16.

Government's real reaction to last night's summit is? As you imply,

:23:16.:23:18.

superficial politeness, if you think about the two key messages

:23:18.:23:21.

they have been giving. They have been disappointed in both. On the

:23:21.:23:25.

one hand, the Chancellor, we want to move towards some kind of fiscal

:23:25.:23:31.

union, on the other hand, the UK and the other ten non-your you are

:23:31.:23:34.

eurozone countries, must - non- eurozone countries must not be shut

:23:34.:23:37.

out of it. We know the key business was done last night after the ten

:23:37.:23:41.

had left and it was just the eurozone. What can the Government

:23:42.:23:45.

say today, simply reiterate their earlier position, and we heard that

:23:45.:23:49.

today from William Hague. changes or reforms that take place

:23:49.:23:53.

within the eurozone, it is vital that matters like the European

:23:53.:23:57.

single market which belongs to all 27 of the EU members, that those

:23:57.:24:02.

decisions are made by the 27 nations. So in any changes the top

:24:02.:24:07.

priority of the UK will be to ensure that is the case. But are

:24:07.:24:10.

there actually opportunities for David Cameron in this situation?

:24:10.:24:14.

There could be. If things go full speed towards fiscal union, in a

:24:14.:24:20.

way they clearly are not doing, but if it picks up momentum, there

:24:20.:24:25.

could be a definitive two-stage Europe. Casting some people back to

:24:25.:24:28.

the 1960s for a similar moment. If you look back to the very early

:24:28.:24:31.

days, Britain and some of the other countries, the so-called outer

:24:32.:24:34.

seven, they were called, they were the country on the fringes of

:24:34.:24:39.

Europe, that were not part of the EEC, as it then was. And France was

:24:39.:24:45.

the leading power in the EEC, they blocked Britain's entry, and they

:24:45.:24:51.

saw the EEC as a vehicle for an extension of their political will

:24:51.:24:56.

through Europe. Germany relatively weak back then. Britain had EFTA,

:24:56.:25:00.

the European free trade association on the margins. Today, different

:25:00.:25:06.

shadeings on the map, the core is bigger, the 17 of the eurozone,

:25:06.:25:10.

including one or two of the EFTA countries, but there is an

:25:10.:25:14.

opportunity in the east there are countries also like Sweden, that

:25:14.:25:17.

are closely aligned, and there have been definite hints from Downing

:25:17.:25:21.

Street that they see a political opportunity here in marshalling the

:25:21.:25:27.

awkward squad, as it were, the non- eurozone countries. If you try to

:25:28.:25:31.

project ahead in the coming months or years, we could see a situation

:25:31.:25:35.

where France's diplomatic objectives of the last 50 years

:25:35.:25:40.

come absolutely no nougt, as Germany takes over real power

:25:41.:25:46.

within the eurozone. Britain has some kind of diplomatic latitude on

:25:46.:25:53.

the periphery. To discuss that in the studio, former British cabinet

:25:53.:25:57.

minister, Lyon Britain. And former Italian Prime Minister and

:25:57.:26:00.

President of the European Commission when the euro was

:26:00.:26:04.

introduced, Romano Prodi. First of all, Romano Prodi, tonight

:26:04.:26:08.

President Sarkozy said it was a mistake to have let Greece into the

:26:08.:26:13.

euro in the first place, you were presiding at that time, is he

:26:13.:26:20.

right? Well Greece came later. year later? Not when I was there.

:26:20.:26:26.

But any way. We have to be also very clear, when the commission

:26:26.:26:34.

proposed to France and Germany, to all the countries, to check the

:26:35.:26:40.

national accounts of the countries, France, Britain, and Italy, who was

:26:40.:26:48.

trailing in that moment. They refused it, they refused even the

:26:48.:26:54.

control, and so Greece could cheat because it was permitted to cheat.

:26:54.:27:02.

This is the real historical fact. It is important, because you know,

:27:02.:27:07.

when I declared in that time that we couldn't only be based on the

:27:07.:27:14.

"stability pact", because it was stupid, I told them, maybe I used a

:27:14.:27:21.

bad word, I was just thinking what could happen. You needed an

:27:21.:27:25.

authority, but it was refused by the leading European states.

:27:25.:27:29.

now we're in a situation where looking from Greece across the

:27:29.:27:33.

Adriatic, it is your country, where a lot of the problems lie. And some

:27:33.:27:38.

of these problems, for Silvio Berlusconi, may be insurmountable.

:27:38.:27:44.

What is going to happen, because soon Italy may need a bailout too?

:27:44.:27:51.

Look, look, look, let's be clear, insurmountable is a strong word. In

:27:51.:27:59.

the sense that we have 120% outstanding debt, it is the same

:27:59.:28:07.

number we had when Italy entered into the euro. But your growth is

:28:07.:28:11.

only 0.7%? Yes, yes, yes, I come to the growth. Because you are right,

:28:11.:28:19.

this is the point. But you know, a tragic aspect is, if your debt

:28:19.:28:24.

explodes, second, the deficit is under control, much better than in

:28:24.:28:32.

France, or in the UK. I want to bring in Lyon Britain, Romano Prodi,

:28:32.:28:37.

just one quick question for you on this, in order for Italy to have to

:28:37.:28:41.

put its house in order, does Silvio Berlusconi have to go quickly?

:28:41.:28:51.

He has to go quickly. He has been obliged because of the letter he

:28:51.:28:57.

sent, it was, I think, written with a pencil of the European

:28:57.:28:59.

authorities. I have another question for you on the basis of

:28:59.:29:03.

that, before I come to Leon Britain, if Silvio Berlusconi has to go

:29:03.:29:07.

quickly, are you going to come back, are you going to ride to the

:29:07.:29:17.
:29:17.:29:19.

rescue? Me? Personally you mean? No, I am grandfather!

:29:19.:29:23.

Is Italy one of the biggest problems now in facing the eurozone

:29:24.:29:28.

countries? There is no doubt at all that Italy needs and radical

:29:28.:29:31.

structural reform and that is a very important factor in the whole

:29:31.:29:35.

equation. There is no doubt about that. Where do you think last

:29:35.:29:40.

night's deal leaves Britain, because you heard Mark Urban say,

:29:40.:29:45.

there may be a role for Britain, as a kind of the ringleader of the

:29:45.:29:50.

others? Let's be clear, what Britain's real interests are. They

:29:50.:29:54.

are, above all, to protect the operation of the single market,

:29:54.:29:58.

which has been a huge gain for Britain. And which means the

:29:58.:30:02.

removal of barriers across Europe. And therefore, what Britain has to

:30:02.:30:08.

do is to be extremely vigilent about that, and rightly so. Whether

:30:08.:30:12.

other countries engage in diplomatic manoeuvres or not, is a

:30:13.:30:16.

of very much less importance in protecting the single market.

:30:16.:30:21.

Romano Prodi, on your view of where Britain stands on this, obviously

:30:21.:30:24.

it was only the ten who were talking last night about the way to

:30:24.:30:27.

sort out the problems in the eurozone, Britain had to leave

:30:27.:30:30.

because Britain is now seen by some as not being at the heart of Europe.

:30:30.:30:40.

Do you think that Britain has lost its position in Europe now? Yes. I

:30:40.:30:49.

think, yes. Because I do think that Europe cannot be stopped. We will

:30:49.:30:57.

make progress, and I see the UK more and more in a corner, less and

:30:57.:31:04.

less, more and more reluctant to engage itself in European

:31:04.:31:14.
:31:14.:31:14.

engagments. After last night, I think that in any case. Europe will

:31:14.:31:21.

be more strongly linked to the European countries, and the UK is

:31:21.:31:30.

not among them. The EU remains absolutely central to Britain, and

:31:30.:31:34.

yes it does. Does it? It doesn't remain essential to a lot of the

:31:34.:31:38.

backbenchers in the Conservative Government? You will not find there

:31:38.:31:42.

are very many backbenchers asking Britain to leave the EU. They are

:31:42.:31:46.

asking for a re-think? They are asking for a renegotiation of

:31:46.:31:50.

various aspects, which may or may not be possible. The important

:31:50.:31:52.

thing is Britain's membership of the European Union cannot be taken

:31:52.:31:56.

away from it. Britain's participation in the single

:31:56.:31:59.

currency, and the maintenance of the single market, something

:32:00.:32:04.

Britain is entitled to, legally, demand, and protect. That is

:32:05.:32:08.

Britain's main interest. Manoeuvrings of a diplomatic kind,

:32:08.:32:11.

in my view, are much less important than that, particularly at the

:32:11.:32:15.

moment. What Britain has to watch is to make sure that any

:32:15.:32:20.

developments with the political or economic, do not jeopardise its

:32:20.:32:23.

central position of the kind that I have described. It is interesting,

:32:23.:32:27.

Romano Prodi, that now we have a situation where, as you heard

:32:27.:32:30.

earlier, that actually France maybe the ones who have trouble in their

:32:30.:32:34.

leading position in Europe, and actually de facto what we have is a

:32:34.:32:40.

kind of capital of Europe, that is Berlin. What do you think of that?

:32:40.:32:50.
:32:50.:32:52.

Well, first of all, to reply to what Leon said before. If you go on

:32:52.:32:56.

with the reinforced co-operation, and reinforce and reinforce, and

:32:56.:33:04.

the UK always stays out, of course, it loses the central power in

:33:04.:33:11.

Europe. Certainly it must protect the Common Market, everything, but,

:33:11.:33:15.

there will be an increased distance between the leading European

:33:15.:33:21.

countries, and the reluctant European countries. This is taken

:33:21.:33:24.

for granted. They will be left behind. What do you make of the

:33:24.:33:29.

idea that actually the force to be reckoned with now is Germany, and

:33:29.:33:34.

that Angela Merkel really leads the way? Well, look, I have to be very

:33:34.:33:42.

frank and clear, by far, it is completely changed, Europe, since

:33:42.:33:50.

20 years ago. Now Germany is absolutely leading. No doubt about

:33:50.:33:58.

that. My point is that maybe the Germans think they are too big for

:33:58.:34:04.

Europe. That is a very good point. Both of those points, the de facto

:34:04.:34:11.

capital of Europe is Berlin now? The leading country economically in

:34:11.:34:14.

the eurozone is, of course, Germany, there is no question about that.

:34:14.:34:17.

The important thing to remember from the British point of view, is

:34:17.:34:22.

the British Government, George Osborne has said, that he actually

:34:22.:34:25.

encourages and wants there to be greater fiscal integration in the

:34:25.:34:31.

eurozone, and he wants to do that, because he thinks that is in the

:34:31.:34:35.

interests of Britain, eventhough Britain is not participant in it.

:34:35.:34:39.

That's very important. Thank you very much. Before we go on to the

:34:39.:34:43.

next item, let's do the papers on this. The Financial Times has China

:34:43.:34:48.

set to aid the Europe bailout. This is the one trillion euro bailout

:34:48.:34:58.
:34:58.:34:59.

package. The Mail has Osbourne clawing back EU powers.

:34:59.:35:09.
:35:09.:35:12.

Guardian All week Newsnight has been looking at the possible

:35:13.:35:16.

implications of a growing world population. Tonight we examine the

:35:16.:35:20.

foods of the future. They are nutritious, protein-rich and easy

:35:20.:35:26.

to farm. Were l we soon all be eating inglrb will we soon all be

:35:26.:35:34.

eating infects. Joining me is the Colombian ambassador, Mauricio

:35:34.:35:39.

Rodriguez, who has brought some Colombian delicacies.

:35:39.:35:44.

And we have our chef cooking up locusts and mealworms. First we

:35:44.:35:54.
:35:54.:35:55.

Look at any restaurant menu and it appears to offer a world of choice.

:35:55.:36:00.

Lamb, pork, chicken, fish, but, actually, we humans are very

:36:00.:36:05.

conservative when it comes to food. We eat just a handful of the more

:36:05.:36:15.

than seven million animals species reckoned to exist on the planet.

:36:15.:36:20.

But is it time for us to get a bit more adventurous. There is a

:36:20.:36:25.

growing movement arguing the world needs to eat more of these.

:36:25.:36:31.

Insects. Daniel is the head chef here, what have you on offer today?

:36:31.:36:36.

Here we are cooking locusts and crickets in a mixture of chilli and

:36:36.:36:43.

south eastern flavours, we serve them on top of a salad, and call it

:36:44.:36:49.

"bug salad". Is it popular? It is. This is a locust, let me try that.

:36:49.:36:53.

It is a rather unusual salad ingredient, some people would find

:36:53.:36:58.

the prospect of eating this little chap disgusting. I will give it a

:36:58.:37:03.

go. There is a nice crunch. But it is more of a texture than a flavour,

:37:03.:37:13.
:37:13.:37:15.

but there is a lovely chilli sauce there. That's not bad.

:37:15.:37:19.

# Insects # See them crawling

:37:19.:37:29.
:37:29.:37:29.

# Insects The Netherlands is leading the way

:37:30.:37:34.

in insect-eating research. At this farm they produce mealworms for man

:37:34.:37:40.

maland human consumption. - animal and human consumption. Is

:37:40.:37:45.

it good being an insect farmer? think it is rather efficient

:37:45.:37:50.

farming. They love to live together in a box upon each other. It is no

:37:50.:37:55.

problem. They love to be crowded together? In the darkness. It is

:37:55.:38:00.

humane. It is their natural behaviour. These are the beatles

:38:00.:38:08.

are the mealworms. These beatles will give each 150 eggs. For a kilo

:38:08.:38:12.

of feed, ten kilos of feed, how much insect do you get? Ten loyal

:38:13.:38:19.

co-of feed will give you eight kilos of mealworms. How does it

:38:19.:38:25.

compare with other animals? Pigs need ten kilos of feed to get three

:38:25.:38:31.

kilos of pig. These are the mealworms? These are the giant

:38:31.:38:35.

mealworms. They will not bite? bit. You will get used to that. You

:38:35.:38:44.

will not die of them. What do these eat? Carrots and chaff. From wheat

:38:44.:38:50.

They eat waste products? In nature they clean up the mess so, they can

:38:50.:38:55.

eat anything. You feeling peckish? If you are, you are in for a

:38:55.:39:01.

nutritional feast, the UN's Food and Agriculture Organisation says

:39:01.:39:05.

insect protein content is comparable to meat, and many

:39:05.:39:12.

contain amenoacids, fibre, in the he can sow skeleton, and iron,

:39:12.:39:22.

calcium and B vitamins. This is an ent tomorrowologyist who is keen to

:39:22.:39:25.

- entomologist who wants to encourage us to eat the insects he

:39:25.:39:32.

has made his life's work. He says it is less risky than eating other

:39:32.:39:38.

animals. Insecretarys are much less related to humans, so diseases that

:39:38.:39:42.

insects have don't jump easily to humans, that is different from pigs

:39:42.:39:48.

and cows. What has persuaded the European Union to offer a grant of

:39:48.:39:52.

2.5 million euros to research insects as food, and the UN to

:39:53.:39:57.

advocate their consumption, are arguments that farming insects is

:39:57.:40:01.

more environmentally friendly. Insects produce much less

:40:01.:40:04.

greenhouse gases than pigs or cattle. How much better are they?

:40:04.:40:11.

If you compare pigs to locusts then lok kuss are doing - locusts are

:40:11.:40:15.

doing eight-times better. Chickens are better than pigs, if you had to

:40:15.:40:19.

choose between chicken and insect meat, you will always choose the

:40:19.:40:26.

chicken? Why. Because chicken is delicious? Why are insects not

:40:26.:40:30.

delicious. These are bees, poached in their own honey, I think that is

:40:30.:40:36.

a little bit mean? I actually serve these on creme brulee. Crunch,

:40:36.:40:41.

strong taste of honey, also another flavour. It tends to be menthol

:40:41.:40:44.

coming through, that is the bee, not the honey.

:40:45.:40:53.

There is a texture of hair! The 12 ounce steak is 1,000 lok cuss kuss

:40:53.:41:00.

to get the - lock kuss to get the same amount of protein. Can you

:41:00.:41:07.

imagine that. I can't, but some clever person will come up with a

:41:07.:41:13.

protein powder based on locusts. It will be called "earth bounty" or

:41:13.:41:20.

something, they will be clever with it. The disgust is huge in western

:41:20.:41:25.

societies, you think by calling it another name that will work.

:41:25.:41:28.

can't underestimate what will happen to food prices across the

:41:28.:41:31.

western world in the next 20 years, there is every evidence they could

:41:31.:41:34.

double or triple. When things like that start happening other

:41:34.:41:39.

considerations will go by the by. It won't be the plate of 1,000

:41:40.:41:43.

locusts to replace the sirloin steak, it will be the very clever

:41:43.:41:47.

powder that will rep Tate the meat proteins, put it in a cheap sausage

:41:47.:41:52.

and you are laughing. Can western revulsion to eating insects be

:41:52.:42:02.
:42:02.:42:04.

overcome? Time for a very unscientific Newsnight experiment.

:42:04.:42:10.

We dressed the producer, Ian, in a fly suit, we gave him a tray of

:42:10.:42:18.

taste snacks and we took to the streets. Would you like a snack?

:42:18.:42:28.

Not particularly. Nein. That is quite nice. You will have a

:42:28.:42:34.

chocolate scorpion. Gone for a locust. What about a quick bee

:42:34.:42:44.

before you go. There you go. There is a nice little crunchy flavour,

:42:44.:42:48.

the chilli sauce coming through. Yeah. You quite like the insects

:42:48.:42:54.

now. I won't try that. You have just had a bee, scorpion and locust,

:42:54.:43:01.

and you are turning your nose up at a mealworm! People had more of an

:43:01.:43:07.

appetite than I expected. Maybe we will all be eating the insect

:43:07.:43:11.

sasauges afterall. Stefan, I know you are finishing off a dish at the

:43:11.:43:15.

moment. Ambassador you feel no revulsion at all about insects. Is

:43:15.:43:18.

that simply because that you find them tasty, or because they are

:43:18.:43:23.

going to be a good source of protein in an ever-demanding world.

:43:23.:43:26.

Insects are not only the food of the future, they are already the

:43:26.:43:32.

food of the present. Let me show you an example. These are apbts.

:43:32.:43:42.
:43:42.:43:43.

These are big-ass? Big-bottomed, diplomatic language. They sum from

:43:43.:43:49.

Santander. Are they treated? Yes, of course. They are soaked in salty

:43:49.:43:56.

water and then they are roasted. They taste salty and crunchy.

:43:56.:44:02.

are OK. They are some of the best ones. These are a delicacy. They

:44:02.:44:09.

are very much in demand. We sell over 1,000 packages, small packages

:44:09.:44:13.

of ants in London, every month. Stefan, you are cooking with this

:44:13.:44:17.

for a reason, you also have a story to tell about the things we eat

:44:17.:44:22.

already and don't realise we are eating insects. These are seen as

:44:22.:44:25.

gimmick foods in Britain, I'm hoping this will change. We eat a

:44:25.:44:33.

lot of the stuff any way. A plate of mealworms there. Far more kilos

:44:33.:44:43.

of actual food. Very resource food. We eat a lot of those already.

:44:43.:44:52.

will wash that down there. I just have ant on my teeth! This is bee

:44:52.:44:58.

vomit and honey. Have one of these marshmallows, have a try of it, it

:44:58.:45:08.
:45:08.:45:08.

is an ordinary marshmallow, but made it these fellas, they are

:45:08.:45:12.

cochienelle bugs, they are these little fellas, grind them down and

:45:12.:45:19.

see what happens to add them to water. This has honey, corriander,

:45:19.:45:24.

and what pug? Locust, mealworms and crickets. I would say it is a

:45:24.:45:28.

delicious way to eat this stuff. The thing is, do you notice the

:45:28.:45:31.

fact it is anything more than crunch, do you get a flavour from

:45:31.:45:36.

the insect? I would say you do. A huge amount of protein, when it

:45:36.:45:42.

caramelises it you get the effect. They have a lot of protein but much

:45:42.:45:46.

less fat and much less cholesterol. Don't you need to eat an awful lot

:45:46.:45:51.

of insects to get the same protein from chicken and meat, you would

:45:51.:45:57.

have to eat a pile? Not really, according experts, you get the same

:45:57.:46:01.

amount as a piece of steak, and you get much less fat, they are

:46:01.:46:05.

recommending to eat this. The production is much better for the

:46:05.:46:09.

world, because it is environmentally friendly. These

:46:09.:46:17.

ants don't need fertilisers, pesticides, fungicides, and they

:46:17.:46:22.

don't produce methane. What do you drink with this? For me I prefer

:46:22.:46:32.
:46:32.:46:35.

beer, it is the perfect drink for ants, snacks. They are are they?

:46:35.:46:41.

They are salty snackss. These ones are cooked? They are already cooked

:46:41.:46:47.

and roasted. They are very nice. They are really good. These are in

:46:47.:46:54.

a bit of salt and curry. These are delicacies, eaten on a night out in

:46:54.:46:59.

a cocktail bar. Will they become a food staple in this country. Are we

:46:59.:47:03.

really going to be eating insects? I think so, there are no other

:47:03.:47:06.

alternatives. It is impossible to supply food to the growing

:47:06.:47:09.

population, the type of food we are eating today, we need to look at

:47:09.:47:13.

other options, this is a very healthy option for all of us.

:47:13.:47:18.

hope you can manage to have some insects for the weekend, some big-

:47:19.:47:27.

bottomed ants, from all of us tonight, from Newsnight, good night.

:47:27.:47:32.

# Hey good looking # What you got cooking

:47:32.:47:35.

Mu how's about cooking something up with me

:47:35.:47:39.

# Hey sweet baby # Don't you think maybe

:47:39.:47:49.
:47:49.:47:52.

# We could find us It is the season of mists and

:47:52.:47:55.

mellow fruitfulness. Nasty fog patches in the morning across the

:47:55.:47:59.

Midlands and Bristol. Be aware if you are on the move first thing.

:47:59.:48:03.

Most of us will have a lovely day with a lot of sunshine out there.

:48:03.:48:06.

Temperatures nothing spectacular, in the sunshine light winds across

:48:06.:48:11.

the heart of England, feeling pleasant once the fog is cleared.

:48:11.:48:14.

In the south-east it will stay stubborn and cloudy with the odd

:48:14.:48:19.

spot of rain. For the south west in stark contrast to Thursday, we have

:48:19.:48:22.

lost the rain clouds and we have sunshine, a super afternoon for

:48:22.:48:28.

much of the South-West and Wales. A little bit of fair weather cloud,

:48:28.:48:31.

temperatures 11-13 degrees. For Northern Ireland too it will be a

:48:31.:48:35.

bright and breezy, the rain clouds holding off. They will arrive

:48:35.:48:38.

during the course of the evening, knocking on the door of the

:48:38.:48:41.

Hebrides. Most of Scotland having a fine day, the best of the sunshine

:48:41.:48:45.

further south and east. Looking ahead to the weekend, the more

:48:45.:48:49.

northern parts of the UK will turn cloudier with outbreaks of rain.

:48:49.:48:53.

Particularly for the west of Scotland and Northern Ireland.

:48:53.:48:57.

Southwards it stays dry. Cloud coming and going, some sunshine

:48:57.:49:02.

warming up nicely as we go through the weekend, reporting some

:49:02.:49:05.