01/12/2011 Newsnight


01/12/2011

In-depth news analysis. Paul Mason asks how at risk the British economy is from the eurozone debt crisis, and what can be done to solve it? Presented by Kirsty Wark.


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Transcript


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Will the map of Europe be redrawn by Christmas? According to George

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Osborne, the future of the British economy relies on the plan now

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being hatched in Paris and Berlin. A new treaty for a new Europe. But

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is anyone buying it? TRANSLATION: So, I say to you,

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Europe has to be rethought, rebuilt, there is an emergency. The world

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will not wait for Europe. Wel we will be discussing how the

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eurodrama will unfold, and whether this is the last chance before we

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go under the edge. Now we know big deficits will be

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with us long after the next election, how will our parties and

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political actors react. Tonight, we reveal how British

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technology, which can monitor your phone, e-mails and tweets, has been

:00:59.:01:03.

supplied to middle eastern regimes. The Syrian regime has access

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supplied by western companies, that enables them to follow those users

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and locate them and therefore arrest them.

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And Martin Scorsese on film, art and the politics that permeate his

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pictures. For me, Casino, for example, was a political film. The

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amount of excess, there is nothing that is never enough, until finally

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it explodes. Good evening. Maybe the eurozone

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will break up, said the governor of the Bank of England today. Maybe it

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will continue, but countries will default. The truth is, no-one knows.

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It was a particularly worrying sentiment from the governor, given

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the Chancellor, earlier this week, said Britain's economic future now

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depends on what happens across the water. Tonight in Paris, President

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Sarkozy began to set out yet another rescue plan. One that would

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involve a new treaty to overhaul and re-think Europe. But has it any

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chance of working? Paul Mason reports.

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There are, technically, just nine days left to bring financial order

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to Europe. By the time the EU's leaders meet, a week tomorrow, they

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need to have some kind of little piece of paper to wave, some plan,

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some undertaking. But E-day is looming, and no such undertaking

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his been given. We did get this, though. A speech

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from the man who could sort it out. The credible signal is needed to

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give ultimate assurance over the short-term. What I believe our

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economic and monetary union needs is a new fiscal compact. A

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fundamental restatement of the fiscal rules, together with a

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mutual fiscal commitments. That means putting Brussels, Berlin and

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maybe Paris in charge of everybody else's budget, leaving eurozone

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voters to decide what colour ties the politicians doing their bidding

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will wear. Here's the problem, peripheral Europe is effectively

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bust, the money the rest of Europe raised to bail them out is not

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enough. And, the ECB could sort it by printing money and lending it,

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but it won't, that is the problem. And so tonight, a cunning new plan

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from President Sarkozy. Well not a plan, but the promise of plan on

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Monday. It will involve treaty changes. TRANSLATION: France and

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Germany, after so many tragedies, decide to unite their destiny, to

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look towards the future together. My dear compatriots, to backtrack

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on this strategy would be absolutely unforgivable. Germany

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and France separated would result in the whole of Europe being

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separated and weakened. Under the emerging plan, eurocountries will

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hand powers to Brussels to oversee national budgets, to intervene and

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cancel them where needed to stay within the rules. Then, and only

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then, will the Germans allow the ECB to start buying the debts of

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the distressed south. Ultimately, that would lead to pooling Europe's

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debts in called eurobonds, a sticking point with the Germans up

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to now. In Nicolas Sarkozy's speech tonight, we have a feeling that

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perhaps if France is willing to go towards a new treaty, which is the

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word Nicolas Sarkozy used in his speech, perhaps it means that

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Germany is going towards the creation of eurobonds. Which today

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looks a something that is inevitable, at least from France.

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There is a credit crunch happening in Europe's banks, that creates two

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dangers for Britain. One, economic slowdown, because that is our

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export market, two, contagion, to our banks. The Bank of England

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revealed today that RBS is heavily exposed to bank debts in the

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troubled south of Europe to the tune of 30% of its core capital.

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Add in the exposures to the debts of troubled countries, and 83% of

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the core capital of Britain's big four banks is at risk. Of course,

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that's only a problem if there is a credit crunch. You can see signs of

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a credit crunch already in the euro area, I don't think that is begun

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yet, but you can see how it would come through here, if funding costs

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were to continue to be as high as they are. Now they are working on

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contingency plans for a eurobreak up, what kind of event are they

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planning for? Maybe it won't break up, maybe it will in various forms.

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Maybe there will be questions of default. None of us know. It is no

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sense to say there is a single one event in which we have to make

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contingencies. While those in power contemplate Armageddon, people in

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the high streets, here and across Europe, have to sense the gloomy

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atmosphere and hope for the best. The best might have to be a large

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amount of money. It is still possible they will come up with the

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called bazooka mark II, about 300 billion euros from the IMF, 250

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billion from the EU stability fund, and maybe 160 billion from the

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European Central Bank itself. Analysts believe it is this, money

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cobbled together from wherever you can, that has the best chance of

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ending the crisis. But all ending the crisis means, this time, is

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putting it off for a year, or maybe two.

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Tomorrow David Cameron heads for Paris, he has pledged to do what he

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can. The problem is, that's not much, except stick to the old

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addage, keep calm, and carry on cutting. Paul Mason, to peer

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through the economic gloom is Ken Rogoff, who wrote the book on debt,

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quoted by George Osborne, to justify his economic strategy, Lord

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Lamont, once Chancellor himself, of course, and by Gillian Tett of the

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Financial Times, who is in New York. First of all, Ken Rogoff, a hedge

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fund manager said, was he worried? He wasn't just worried as a hedge

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fund manager, he was worried as a father what was happening. We don't

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have to worry about his own personal finance, how long do you

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think Merkel and Sarkozy have got to sort this out? Let's put it this

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way, they can make things blow up really quickly, but I don't think

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they can fix things really fast. The discussion here is very, very

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simple, the Germans don't want to put water into a leaky bucket. It

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is not just a matter of having a big bazooka, it is not just a

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matter of having enough this time, they need a system so it doesn't

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just keep going. Germany is being asked, essentially, to take on a

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lot of debt, and open-ended guarantee, in return for handshake

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from the periphery of Europe. It is a very, very delicate deal. Gillian

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Tett, the Germans don't want to put water into leaky bucket, if it

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could be fibgsd that would be better, this is this super-- fixed

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that would be better, this is where you have this superdeal with

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fingers in every pie in Europe. There is a game of brinkmanship,

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and Angela Merkel is taking it to the brink. The key thing to

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understand is what the central banks did on Wednesday in terms of

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their joint arrangements, is really provide a breathing space for the

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next eight or nine days, for the eurozone leaders to get their act

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together. The brilliant irony is the Central Bankers around the

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world are in some ways quite a co- ordinated bunch, they understand

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each other and operate together smoothly. The problem is, it is

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still not clear if you have a deal on the table. There is real concern

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in the US, where I'm sitting, if they don't get their act together

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in seven days, they will have missed their last, best chance.

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What does it look like from your position, Lord Lamont, first of all,

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before we talk about David Cameron's reaction to all of this,

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does it looks a if a deal could be on the table? From what has been

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outlined in the programme, it sounds as if it is going to be more

:09:31.:09:34.

supervision of national budgets, peer group pressure, with a little

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bit more teeth, a bit more discipline. To be honest, I don't

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think that would really work, I'm rather surprised that the

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suggestion is, that if they can get more control of other country's

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budgets, the ECB would then be asked to buy the bonds of these

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peripheral countries. I personallyam -- personally am

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rather surprised Germany would accept this. Let's talk about the

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British response, the idea there would be a new treaty, do you think

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that David Cameron's position would be that in order to get this new

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treaty through, he would be prepared to wave it through or --

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wave it through, or looking for differences in Working Time

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Directives or is it the wrong time to make those arguments? If the

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provisions don't affect Britain, it would be reasonable to say we would

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allow them to go through. It would be ridiculous to call a referendum

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in Britain over something that didn't affect us. He has to

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absolutely ensure any new treaty changes can't, in some indirect way,

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be used against British interests, be used as protection. Be used to

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discriminate against the British financial services industry. He has

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to be absolutely sure about that. Obviously the financial

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transactions tax has to be something that, if it ever comes

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into existence, does not have any effect on Britain. Ken Rogoff, are

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you as pessimistic as Lord Lamont, as to whether this supervisory

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structure would actually work, nation-to-nation? I agree entirely

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with Lord Lamont, that it is not going to work, at least not for

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years and years. The Maastricht Treaty didn't really work, that was

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a treaty. The Maastricht Treaty the French and the Germans just

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violated it, they won't over the 60% rule, Tewin suited them. What

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they realise -- when it suited them, they realised there wasn't a lot

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they could do about it. There is basically a handshake, this isn't a

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treaty, even if it was a treaty, what are the ramifications. You

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really need more of a political union. It is not enough just to

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talk about superadvising national budgets. You have to have a

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Treasury that has huge taxation power, you have to transfer a lot

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of power to the centre, or at least lay out a road map where that will

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happen. Do you agree with that? There has to be something, a much

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bigger idea than what has been put forward just now, Gillian Tett?

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think the problem right now, we have been up and down this hill so

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many times in the eurozone in the last six months, the trust has

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really shattered. People, as Ken says, doesn't trust a handshake,

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but want tangible action. What people are looking for, in terplgs

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of creating a union that work -- terms of creating a union that

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works, is some element of fiscal union and transfers, be it joint

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eurobonds or something like that t will be a question of whether they

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can come up with something tangible that will matter in the next eight

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days. A giant Treasury, a big fiscal union? When Mrs Merkel uses

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the phrase "fiscal union", she means something completely

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different, she doesn't mean a European Treasury, or European

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minister of finance, she just means more supervision of other country's

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budgets, with Germany in a leading position. But, frankly, that is

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more or less what we have had, and when you have the criminals as the

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jury, you don't get very far. Inevitably, will the shape of

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Europe change, there will be defaults, will countries drop out

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of the eurozone in order to keep the northern centre holding?

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think we have moved into more dangerous territory, because you

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are now, for the first time, getting people openly talking about

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the shape of the eurozone altering, about individual countries dropping

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out, about the possibility of the whole thing imploding. This is

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quite unusual for people openly to be discussing this. We had that at

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the Cannes summit, when the for the first time, having denied Greece

:13:34.:13:38.

could ever leave the euro, people suddenly said, yes, if Greece

:13:38.:13:41.

doesn't want to abide by the rules, it may have to be chucked out.

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Previously they said that was unthinkable. Ken Rogoff, in your

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view, will there be 19 countries in the eurozone after the new year, or

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will we see a much smaller eurozone s that inevitable? I think it will

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have to get smaller before it gets bigger. I don't see how they can

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have a real fiscal union, more political union, without looking

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hard at the current membership, and realising some of the countries,

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Greece is the obvious one, but I think there are others, Portugal,

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they are really ready to be in that. What worries me about what they are

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doing, they seem to be making this handshake as if they don't have to

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make those decisions. Then it is hopeless, Italy is at least an

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interesting case. You might be able to keep Italy in, Greece has

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reached absurdity. Gillian Tett, as you said, we have been marched up

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and down the hill. We heard Mervyn King, hearing about the nine days

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ahead. Will this just be kicked forward again, or does this

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actually have to be the real crunch? The onus is we -- the

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answer is we just don't know. One of my reporters went ahead to a

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conference in New York, of emerging market investors from around the

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world. The question was asked of the audience, how many of you think

:15:08.:15:12.

the eurozone will be together, in its current form, with all 17

:15:12.:15:16.

members in a year's time, 80% of the audience said they didn't think

:15:16.:15:22.

it would hang together. That is the indication of the scepticism and

:15:22.:15:29.

cynicism in the markets. If you, from what Lord Lamont said about

:15:29.:15:33.

what Angela Merkel thinks fiscal union is, they think everyone needs

:15:33.:15:36.

to be German right now, and the rest of the world is saying it

:15:36.:15:40.

won't happen. We are in the middle of a decade of economic pain,

:15:40.:15:44.

living standards are dropping, the gulf between the rich and poor yawn,

:15:44.:15:49.

and the structural deficit, George Osborne admits, will be with us

:15:49.:15:53.

through the next election. The bombshell, how will the political

:15:53.:16:00.

debate change, and are our politicians up to the challenge? As

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the dust settled on the Autumn Statement, what became clear is

:16:03.:16:06.

that the Conservative attempt to demonstrate the support for women,

:16:06.:16:10.

is hardly going smoothly. It is women, overwhelmingly, who will be

:16:11.:16:16.

hit by the Chancellor's decision to snatch back �110 a year, promised

:16:16.:16:21.

to many of Britain's poorest families. How could the Liberal

:16:21.:16:27.

Democrats show themselves as distinct from the Tories, amidst

:16:27.:16:30.

the prognosis of economic doom beyond the next election. Danny

:16:30.:16:34.

Alexander said it himself on Tuesday's Newsnight. You are going

:16:34.:16:38.

into the next election, promising further billions of pounds in cuts

:16:38.:16:42.

and public spending. That is what you are going to say in your

:16:42.:16:47.

manifesto in the next election. afraid so. Senior Liberal Democrats

:16:47.:16:51.

Newsnight spoke to today, have intimated their fears for the

:16:51.:17:01.
:17:01.:17:12.

party's distinctiveness. One senior Does the public believe that Labour

:17:12.:17:16.

has a different and credible economic script? When the task of

:17:16.:17:21.

the next Government will be to curb a still large deficit. The polls

:17:21.:17:27.

suggest that people think things would be even worse under Labour.

:17:28.:17:34.

How are the politicians going to deal with this future for political

:17:34.:17:38.

insiders, I'm joined by Danny Finkelstein of the Times, and once

:17:38.:17:45.

of Conservative Central Office, Tony McNulty, and Edward hare sis

:17:45.:17:50.

former ld MP. The idea we are all in this glrb Liberal Democrat MP.

:17:50.:17:54.

The idea we are all in this together, with the Conservatives

:17:54.:17:59.

thinking about women and the idea of that, with the fewer public

:17:59.:18:02.

sector workers, the idea that violent and mental issues won't be

:18:02.:18:08.

at the fore any more. It is back to the barricades. There will be

:18:08.:18:11.

massive distributional issues making cuts of that kind. Making

:18:11.:18:14.

cuts in public spending will come from people who depend on spending

:18:14.:18:18.

more or who work in the public sector, that is very hard. For

:18:18.:18:21.

people who are Conservative modernisers it is very difficult.

:18:21.:18:25.

Isn't the problem with this, David Cameron set himself out to be the

:18:26.:18:32.

moderniser, that was the USP, and here you have it, the retrenchment

:18:32.:18:35.

again, the language doesn't sell that in any kind of positive way,

:18:35.:18:40.

does it? It is very, very difficult. The problem for all political

:18:40.:18:43.

parties, is the next election will be one in which you are not looking

:18:43.:18:47.

at how do you spend the money in the future, you are looking at how

:18:47.:18:51.

to make more cuts, how do you make a little bit less and a bit more.

:18:51.:18:55.

You have Steve Hilton not believing in climate change any more? I don't

:18:55.:19:00.

know about that. This leaves a problem for the Liberal Democrats,

:19:00.:19:05.

Evan Harris, you are tied in a sense to the Conservatives' coat

:19:05.:19:10.

tails, Danny Alexander himself said, you go into the next election with

:19:10.:19:13.

the deficit not obliterated, having to promote the same level of cuts.

:19:14.:19:17.

The problem that exists for Conservative modernisers is even

:19:17.:19:21.

greater for Liberal Democrats, that is why I think, it is quite clear

:19:21.:19:25.

when you make cuts, as most Liberal Democrats accept has to be done, as

:19:25.:19:29.

Danny said, it will affect people who use public services the most.

:19:29.:19:32.

That is why I think Liberal Democrats will now concentrate on

:19:32.:19:36.

stopping story tax cuts for better- off people, the 50p rate must stay.

:19:36.:19:43.

There must be no question of there being inheritance tax cuts, things

:19:43.:19:47.

like that will be well defined. has to be something more creative,

:19:47.:19:51.

otherwise you seem joined at the hip? There will be differenciation,

:19:51.:19:55.

more on those issues, they become even more important. How do the

:19:55.:19:57.

Liberal Democrats do that? I think actually there is a position for

:19:57.:20:01.

the Liberal Democrats, it is on distributional issues. I think the

:20:01.:20:07.

Tories will obviously try to close it down, they won't go after the

:20:07.:20:13.

50p or the in herance tax, that gives them a problem -- inheritance

:20:13.:20:16.

tax, and that gives them a problem with their base. The Liberal

:20:16.:20:19.

Democrats believe in redistribution and they can argue about the

:20:19.:20:22.

fairness of the measures and moderate them. If we are

:20:22.:20:26.

Conservative fiscal, it is in the coalition, it is not in the next

:20:26.:20:31.

manifest at the moment that is why I think Danny Alexander did get it

:20:31.:20:41.
:20:41.:20:42.

wrong. If you say your people are in the public sector, will you get

:20:42.:20:47.

the vote next time round with this platform? Danny Alexander nor Nick

:20:47.:20:52.

Clegg writes the manifesto, you can call them the architect, he was

:20:52.:20:56.

chairman of the body that wrote it, he didn't win many of those battles.

:20:56.:21:00.

What I have been told today, and you said this in the introduction,

:21:00.:21:02.

rightly, when he said the Liberal Democrats would go into the

:21:03.:21:07.

election with, not just more cuts set out, which may be the case, but

:21:07.:21:10.

a specific agreed cuts with another party. That is not going to happen,

:21:10.:21:16.

because we are committed to being independent of the other parties.

:21:16.:21:19.

Let's talk about that with Tony McNulty, you are independent of

:21:19.:21:24.

both parties. Can we see a position, or would it just be so beyond the

:21:24.:21:27.

pale, that Labour could do a deal with the Liberal Democrats? I think

:21:27.:21:32.

this week has been seismic in terms of politics for some of the reasons

:21:32.:21:36.

suggested. The notion that the next election, whatever the outcome, if

:21:36.:21:45.

it is not a majority Labour Government, that we do deals with

:21:45.:21:52.

Huhne and others that is gone. That is a question for the Liberal

:21:52.:21:58.

Democrats. They are getting rid of four of their beasts? Let's see if

:21:58.:22:04.

they get four seats. What about the Labour Party? We have to put

:22:04.:22:10.

ourselves in the polls. The redistribution we have seen that

:22:10.:22:14.

the liberals are endorsed have been from the poorest to the richest.

:22:14.:22:18.

The new cuts announced have been much more severe on the bottom

:22:18.:22:22.

percentage than higher. Labour has some flexibility. I don't think the

:22:22.:22:26.

Liberal Democrats have, you can't issue a red book with an as tricks

:22:26.:22:36.
:22:36.:22:37.

that said only subject to the agreement of the Liberal Democrats,

:22:37.:22:41.

The Labour Party has a degree of flexibility, you still have to

:22:41.:22:44.

commit to vast cuts and explain, roughly speaking, where they come

:22:44.:22:47.

from. There may be some flexibility for slowing down the cuts, at that

:22:47.:22:52.

point, you won't be able to cancel them all. You will have to fight

:22:52.:22:59.

that on the election. How will Labour get its credibility back,

:22:59.:23:06.

will Ed Balls say slash, cut, slash, cut? They have to say it now, not

:23:06.:23:10.

six months down the road towards the next election. The policy of

:23:10.:23:15.

Labour has not to come forward with the big decisions because they see

:23:15.:23:19.

it as foolish? They don't have to go into the detail, Cameron learned

:23:19.:23:23.

that from the last election. They must get to stage where Labour's

:23:23.:23:28.

economic narrative become as real one. Part of that is challenging

:23:28.:23:33.

the analysis so far. David Miliband started that last night with a good

:23:33.:23:38.

speech. With the Labour Party needs to recover, it is almost as

:23:38.:23:42.

tempting as being tribunal and saying we don't do a -- tribal and

:23:42.:23:46.

saying we don't do a deal. Let him speak? You have this problem, there

:23:46.:23:49.

are plenty of people in the Labour Party who think if the economy

:23:49.:23:53.

tanks or doesn't improve or flatlines Labour won't need to

:23:53.:23:58.

regain credibility. That is tempting, just as it is tempting to

:23:58.:24:01.

personalise politics and say whatever the merits after the next

:24:01.:24:05.

election of getting power, we are not going to deal with individuals,

:24:05.:24:08.

I don't think your leader take that is same view.

:24:08.:24:12.

What I think we are missing a big point, that is all the parties are

:24:12.:24:16.

going to face something that nobody has faced in this country ever,

:24:16.:24:20.

that is we simply not going to be able to afford the state, in the

:24:20.:24:24.

way that we have been able to afford it in the past. We are all

:24:24.:24:27.

going to have to propose new ways of doing things, on a very grand

:24:27.:24:30.

scale. What we have learned is the economy is far less wealthy. So

:24:30.:24:34.

this changes not just this kind of politics, the politics we have

:24:34.:24:37.

talked about, but much more fundamental things. I think there

:24:37.:24:42.

is room for the superrich to pay more, that might well be a dividing

:24:42.:24:44.

line. I'm not convinced that those in the Liberal Democrats will take

:24:44.:24:49.

that view and win out. That will be a battle. We will want to

:24:49.:24:52.

differentiate ourselves, even more than we have in the past. And I

:24:52.:24:57.

don't accept this idea that the red book writes the manifesto, that is

:24:57.:25:00.

absolutely wrong. I don't think Nick Clegg agreed with what Danny

:25:00.:25:04.

Alexander said on this programme. We can explore this, even further

:25:04.:25:08.

in weeks to come and months to come. If everybody is going to be

:25:08.:25:12.

batoning down the hatchs in the economy and there is no room for

:25:12.:25:15.

manoeuvre. In what way does politics play out, what do people

:25:15.:25:18.

want from politicians they are not getting now? First of all, everyone

:25:18.:25:22.

knows the situation is very, very grim. They don't expect politicians

:25:22.:25:26.

to solve the problems immediately, but they do expect some hope at the

:25:26.:25:30.

end of the day. The problem will be, not what politicians say, but

:25:30.:25:34.

simply the actual reduction in people's real living standards, for

:25:34.:25:37.

people who don't earn very much. That will be very difficult for the

:25:37.:25:41.

Government. The problem for Labour is, it weakens them because they

:25:41.:25:45.

will fight an election where their narrative is let's borrow some more

:25:45.:25:51.

in order to borrow less. Such an unconvincing line that nobody will

:25:51.:25:55.

believe. The line is to let's borrow more as a result of failure,

:25:55.:25:59.

that can't be right either. Syria is now in state of civil war, a UN

:25:59.:26:04.

official said today, it is estimated more than 4,000 people

:26:04.:26:09.

have been killed by pro-Government forces since March, who is

:26:09.:26:12.

supplying President Assad and other repressive regimes with the

:26:12.:26:16.

technology to hunt down the dissenters. An investigation by

:26:16.:26:18.

Newsnight and the Bureau of Investigative Journalism, has found

:26:18.:26:22.

a British company, based in Oxfordshire, has been implicated in

:26:22.:26:26.

the sale of state-of-the-art technology to Syria. It is not the

:26:26.:26:31.

only British company with a role in allowing despotic regimes to access

:26:31.:26:39.

technologies to help them spy on their sit ens.

:26:39.:26:47.

-- citizens. The Arab Spring, Egypt, Libya, now Syria. Popular uprisings,

:26:47.:26:52.

fuelled by new technology. Co- ordinated using mobile phones, the

:26:52.:27:00.

Internet, texts and tweets. These pictures captured last week

:27:00.:27:06.

from Syria, spread around the globe, on the World Wide Web. But now, the

:27:06.:27:10.

very technologies that helped spark these revolutions are being used to

:27:10.:27:18.

crush them. Technology of this kind can be every bit as lethal as the

:27:18.:27:20.

bullets directly sold by a munitions company, or armments

:27:20.:27:30.

quartermastre. Brighton beach, on the Sussex coast,

:27:30.:27:35.

an unlikely venue to host a hub of dissent. But the current Syrian

:27:35.:27:39.

popular uprising is organised on an international scale. Here in

:27:39.:27:48.

Brighton, mam mam plays his party. The Arab Spring has turned into

:27:48.:27:53.

winter in Syria, we have 20,000 people in prison, 4,500 people are

:27:53.:27:58.

dead and people are struggling on daily basis. He has no permanent

:27:58.:28:04.

address. He flits from place-to- place, using friends' address,

:28:04.:28:08.

using their internet connections, laptops and computers, fearful he's

:28:08.:28:11.

being monitored by the Syrian Security Services, here on British

:28:11.:28:19.

soil. He maintains daily contact with

:28:19.:28:23.

friends and colleagues, in Syria. Helping to desem raitate

:28:23.:28:27.

information about developments in - - deseminate information about

:28:27.:28:31.

developments in his country. And such has been their success, that

:28:31.:28:35.

even the cyberactivists, operating behind closed doors, those

:28:35.:28:37.

uploading images of the demonstrations, are now being

:28:37.:28:42.

targeted too. The people who are usually using

:28:42.:28:48.

the Internet to communicate with us are at more risk being arrested by

:28:48.:28:52.

the regime than people on the streets. This is because we believe

:28:53.:28:57.

that the Syrian regime, and we have evidence for that, that the Syrian

:28:58.:29:01.

regime has access to software supplied by western countries, that

:29:01.:29:07.

enables them to follow those users, and locate them. How many people do

:29:07.:29:14.

you personally know of who have been actively targeted by the

:29:14.:29:22.

state? Since May, and early July, I know of about 40-50 people, I went

:29:22.:29:26.

to school with when I was back in Syria, they have been arrested and

:29:26.:29:30.

we believe they have been arrested as a result of the new technology

:29:30.:29:35.

and software that the Syrian regime is using to target activists.

:29:35.:29:39.

Newsnight has learned that Syria has been provided with technology,

:29:39.:29:46.

produced by the British-owned company, Sophos. This is its sales

:29:46.:29:52.

pitch. Access to retain telecomdata, has become an important tool for

:29:52.:29:57.

law enforcement and Intelligence Services in their fight against

:29:57.:30:03.

Toryism. We asked Sophos for -- Terrorism. We asked Sophos for an

:30:03.:30:07.

interview. They confirmed that it supplied technology to an Italian

:30:07.:30:14.

company last year, they knew it was part of a bigger contract with

:30:14.:30:20.

Syria. We don't monitor data, that is done within the

:30:20.:30:23.

telecommunications software. The software is designed so when data

:30:23.:30:27.

is requested by police forces can be safely be passed to the police

:30:27.:30:32.

force. But you are selling it to nation states?, you are providing

:30:32.:30:36.

it to nation states where the police force don't have a

:30:36.:30:40.

particularly good track record, if we look at Syria there are problems

:30:40.:30:45.

for many years? As a company we ensure, whoever we sell to, we

:30:45.:30:51.

ensure we follow EU regulations and guidelines. Our customers are

:30:51.:30:53.

telecommunications companies. say you follow the letter of the

:30:53.:30:58.

law, isn't there a moral responsibility? Yeah, when we see

:30:58.:31:04.

situations like Syria, absolutely, we are concerned, and we will take

:31:04.:31:07.

further steps, the moral responsibility. We don't have the

:31:07.:31:12.

benefit of hindsight to look back and remove our software where it

:31:13.:31:21.

has been sold. Steve Mumford admits Sophos doesn't know if its product

:31:21.:31:25.

has been sold to other authoritarian regimes. We showed

:31:25.:31:32.

him the interview with Mahmood. have evidence that the Syrian

:31:32.:31:37.

regime has access to software supplied by western companies, that

:31:37.:31:42.

enables them to follow those users and locate them. Will you think

:31:42.:31:48.

hard about who you supply in the future? First of all, I think, from

:31:48.:31:53.

what I hear on this report, none of our software would be involved in

:31:53.:31:56.

that. You would not need our software to do the tracking down

:31:57.:32:04.

and the finding of people. Secondly, absolutely, when we see activities

:32:04.:32:08.

like this, we absolutely will stop doing business with anyone

:32:08.:32:12.

contributing to this. He agreed there was a need for tighter

:32:12.:32:20.

regulation of the industry. industry which now sells equipment

:32:20.:32:25.

to dictators and democracies alike. Today WikiLeaks, in conjunction

:32:25.:32:29.

with Privacy International, launched a database detailing the

:32:29.:32:34.

scale of the electronics surveillance industry. It is worth

:32:34.:32:37.

surveillance industry. It is worth more than 3 billion a year, with

:32:37.:32:43.

more than 160 companies in 25 countries. Most pariah states don't

:32:43.:32:48.

have the technology base to develop good surveillance software. The

:32:48.:32:50.

Chinese can, I would be very surprised if countries like Syria

:32:50.:32:54.

could. If you are the secret police in Syria, you are naturally going

:32:55.:32:58.

to buy your surveillance software from Britain or France, or America

:32:58.:33:05.

or Italy or wherever you can get it. It is not that hard to find. This

:33:05.:33:09.

is the Milipol International Trade Fair held in Paris a few weeks ago.

:33:09.:33:15.

We went along. Amid the sniper rifles, machine guns, weapons and

:33:15.:33:19.

military hardware up for sale. An entire section was devoted to

:33:19.:33:23.

surveillance. I spoke with one salesman, I asked him if he was at

:33:23.:33:27.

all concerned about how his company's technology might be used

:33:27.:33:32.

by certain regimes. This is a direct quote. "We have no control

:33:32.:33:36.

over what they will do, targeting, we can't have any control on that,

:33:36.:33:40.

the person who may be bad for you, may not be bad for me. So we can't

:33:40.:33:44.

judge that. We're just providing the technology for finding people

:33:44.:33:51.

who are of concern to a particular nation." We reject the view that

:33:51.:33:54.

Government's oppression of the internet, phone networks and social

:33:54.:33:58.

media at times of unrest is acceptable. Britain will always be

:33:58.:34:03.

on the side of people aspiring for political and economic freedom. In

:34:03.:34:09.

the Middle East and around the world. Laudible sentiments from

:34:09.:34:15.

Foreign Secretary, William Hague, but actions speak louder than words.

:34:15.:34:18.

Newsnight, and the Bureau of Investigative Journalism, have been

:34:18.:34:21.

looking at the role of UK-based companies, exporting state-of-the-

:34:21.:34:27.

art technology, which can be put to use by questionable regimes.

:34:27.:34:31.

ThorpeGlen, Suffolk, said to have sold tracking and monitoring

:34:31.:34:39.

technology to Indonesia. Gamma Group, Andover Hampshire, via a

:34:39.:34:43.

third party, offered monitoring technology to President Mubarak's

:34:43.:34:47.

regime in Egypt. Hidden Technology Systems Limited, Essex, sold

:34:47.:34:51.

tracking devices to Saudi Arabia, who, it says, wanted to buy the

:34:51.:35:00.

best of British. And, Creativity Software, Kingston upon Thames,

:35:00.:35:07.

Surrey, sold tracking technology to a mobile phone tracking network in

:35:07.:35:13.

Iran. It is this involvement with Iran that has prompted concern from

:35:13.:35:17.

leading politicians. The crossbench peer Lord Alton has asked dozens of

:35:18.:35:22.

questions in the House of Lords. He cites the case of an Iranian

:35:22.:35:26.

journalist tortured in jail. He was subjected not only to physical

:35:26.:35:30.

abuse, but they detailed all of the conversation that is he had, and

:35:30.:35:34.

they were able to say whom he had met as a result of using technology

:35:34.:35:37.

which had been sold to the Iranian regime. My concern is, that it is

:35:37.:35:40.

not just Iran, but throughout the whole of the region, that we have

:35:40.:35:44.

been aiding and abetting, the very despots that democracy activists

:35:45.:35:49.

and human rights campaigners have been trying to replace through the

:35:49.:35:54.

Arab Spring. The details of Creativity Software's deal with

:35:54.:35:58.

Iran are not known. Through Lord Alton's persistent questioning, it

:35:58.:36:04.

has emerged it had a stamp of approval through GCHQ. I find it

:36:04.:36:07.

really extraordinary that in many to a question I tabled, that the

:36:07.:36:12.

Government have conceded that an agency, operating out of GCHQ, held

:36:12.:36:17.

a meeting with Creativity Software, and they discussed the dual

:36:17.:36:21.

application of this technology, and then nothing at all was done to

:36:21.:36:26.

deter the export of technology, that could be used to abuse humam

:36:26.:36:30.

rights activists, to arrest democracy activists and to lead to

:36:30.:36:34.

people being tortured in Iranian prisons. We contacted all of the

:36:34.:36:39.

companies named in our investigation. Creativity Software,

:36:39.:36:46.

confirmed its commercial engagments started in 200 9, it says it wasn't

:36:46.:36:51.

deployed until 2011. It says any connection with alleged human

:36:51.:36:57.

rights abuses is clearly erroneous. Hidden Technology, confirmed is

:36:57.:37:01.

supplied tracking technology to Saudi Arabia. ThorpeGlen, we made

:37:01.:37:07.

repeated requests for comments, it is yet to reply. Gamma Group, it

:37:07.:37:10.

said in statement that it did not supply a specific tracking

:37:10.:37:16.

technology to Egypt. Sophos say the deal with Syria has

:37:16.:37:22.

now been terminated. It and its Italian business partner said the

:37:22.:37:27.

system was installed but not operational. As the protests in

:37:27.:37:31.

Syria continue, cyberactivists are looking at new ways to avoid

:37:31.:37:35.

detection, fully aware that a growing number of western companies

:37:35.:37:38.

are successfully selling monitoring and tracking technology to whoever

:37:38.:37:43.

is prepared to pay. No Government minister was

:37:43.:37:46.

available to speak to us about the sale of British technology abroad.

:37:47.:37:56.
:37:57.:38:25.

Machismo, religion, redemption, Martin Scorsese's films from Taxi

:38:25.:38:28.

Driver, Mean Streets and Raging Bull, have shed light on all the

:38:28.:38:33.

darkest places, now he has come out with Hugo, a family film, and a

:38:33.:38:38.

celebration of moving pictures in 3D, no less, this week Scorcese was

:38:38.:38:42.

in London and met Peter Marshall to talk about movies, music, in what

:38:42.:38:46.

he considers to be his major political work, you may be

:38:47.:38:51.

surprised by his answer. The master on set and in his

:38:51.:38:55.

element. Martin Scorsese's first family film, Hugo, honours the

:38:55.:38:59.

history of cinema itself. With a British cast, homage is paid to the

:38:59.:39:03.

pioneers that brought, what the director calls, the magic, into his

:39:03.:39:10.

life. The first thing that came to mind, or the feeling, was being

:39:10.:39:15.

always, more or less, streeted as an invalid as a child, because of

:39:15.:39:19.

the asthma I had for so many years. You had asthma? Yes, from the age

:39:19.:39:25.

of three on. Being kept away from sports, nature, anything green, and

:39:25.:39:31.

certainly animals, and no running, no hysterical laughter, and so I

:39:31.:39:34.

was in the movie theatres a lot. Whatever I couldn't do or be a part

:39:34.:39:40.

of, in the life around me, some how in the imagination, and in the

:39:40.:39:46.

spirit of the cinema, I experienced it. I shared it with my father,

:39:46.:39:52.

mainly, in the early days. The message from Hugo, in ultra

:39:52.:39:57.

modern 3D is for getting the past only kills the present. Kingsley is

:39:57.:40:02.

the great director, now reduced to running a toy shop, his film work

:40:02.:40:05.

disregarded, as the movies have moved on. History, says Scorcese,

:40:05.:40:13.

is the key to understanding. are a human encliek peedia! I saw,

:40:13.:40:17.

I was able to see many of these films at the time, when I was home

:40:17.:40:20.

alone, waiting for my parents to come back from work, there was a

:40:20.:40:26.

television set. Jean Cocteau, the basic American films and British

:40:26.:40:33.

films. The British cinema is a very important to me from 1945 on.

:40:33.:40:38.

Scorcese's own place in film history is assured. From Taxi

:40:38.:40:47.

Driver to Raging Bull, and then, into the new century, an Oscar for

:40:47.:40:53.

The Departed, these days his music documentaries are matching the

:40:53.:40:57.

success. If I had the ability to compose and play music, that is

:40:57.:41:01.

where I would have found myself, in a sense, expressing myself. I think

:41:01.:41:05.

music in its basic form is a pure form. You bring them together and

:41:05.:41:09.

make them work together in way which seems to enhance both? Film

:41:09.:41:14.

to me is very musical. A film without music is very musical,

:41:14.:41:19.

because of the rhythm of the cuts and how you proceed, the pacing of

:41:19.:41:23.

the picture. The pace of the film and how the audience reacts, I

:41:23.:41:29.

should say, camera moves, obviously a musical. The rhythm of motion in

:41:29.:41:38.

a way. So, for me, music is part of your blood, in a way, it has to be

:41:38.:41:41.

so much part of your life. My brother played guitar, my father

:41:41.:41:45.

used to be able to. I was never able to. You have fairly Catholic

:41:45.:41:53.

tastes as well? I think so, yes. We're New Yorkers, and you know,

:41:54.:41:59.

working-class people, radio playing all the time, whether it was opera,

:41:59.:42:03.

or swing music, or whether it was American or British swing, some

:42:03.:42:13.

jazz, of course. Dylan's music in No Direction Home,

:42:13.:42:18.

was punched up to startling effect. With George Harrison's Living In A

:42:18.:42:23.

Material World, he has repeated the trick. Scorcese enjoys music with a

:42:23.:42:29.

wallop, he loved punk. # He's in love with rock'n'roll.

:42:29.:42:34.

There was a freshness to it, because it had, direct, it had

:42:34.:42:38.

something to say, they weren't going to be stopped. Somebody told

:42:38.:42:48.
:42:48.:42:48.

me family member made meat balls for the clash? My mother. Your mum

:42:49.:42:54.

and Joe Strummer? I know Joe, and the manager, and a young lady named

:42:54.:43:00.

Pearl Harbour, yes. And we had some good Italian dinners, we used to

:43:00.:43:04.

cook every Sunday, my mother would come. She would say I'm sure all

:43:04.:43:08.

the buys would come, she would hold and hug -- these boys would come,

:43:08.:43:13.

she would hold them and hug them. Punks for lunch? They were very

:43:13.:43:17.

sweet. As far back as I would remember, I always wanted to be a

:43:17.:43:23.

gangster. Scorcese's best known for his gangster films like Goodfellas,

:43:23.:43:27.

rarely stinting on the body count. But the director said one of his

:43:27.:43:32.

hardest hitting, Casino, was more than anything, a political story.

:43:32.:43:36.

The crash we all now endure, he says he put on screen two decades

:43:36.:43:45.

ago. For me it has to be in the microcosim, in way, for me, Casino,

:43:45.:43:50.

for example, was a very political film. In the sense that in the

:43:50.:43:57.

opening image you have Robert De Niro walk out on the screen, in a

:43:57.:44:01.

salmon-coloured sports coat, white slacks, and patent leather shoes,

:44:01.:44:06.

gets into this Cadillac, turns the key and the car blows up. It is a

:44:06.:44:11.

true story. The amount of excess, the amount of never, there is

:44:11.:44:19.

nothing that is ever enough, until finally it explodes.

:44:19.:44:26.

This was in 1995. It was a concern of mine that, and that is one of

:44:26.:44:30.

the reasons of making the George Harrison film, Harrison pointed it

:44:30.:44:35.

out, he had everything at the age of 19, 21, but there has to be more,

:44:35.:44:40.

there has to be more to being alive. It was like how much more do we

:44:40.:44:45.

need of this. Look at this, they are tearing down the old Vegas,

:44:45.:44:49.

where it was like an old western, where you would have gun fighters

:44:49.:44:54.

or gamblers coming in, they would gamble, that is what they do, they

:44:54.:45:00.

gamble. Here, and the new Vegas, by the end of that film, it is a Vegas

:45:00.:45:05.

where they bring the family, because we have theme parks for

:45:05.:45:07.

them outside, while you are gambling away the money, for us,

:45:07.:45:13.

because you are not going to win it, we will keep it. It is purely evil.

:45:13.:45:17.

Martin Scorsese, tomorrow morning's front pages, beginning with the

:45:17.:45:22.

Financial Times, Mario Draghi, the petd of the ECB hints at eurozone

:45:22.:45:32.
:45:32.:45:58.

Unison have offered Jeremy Clarkson a day to be care worker, it seems

:45:58.:46:08.

like great idea. Today marks the start of the

:46:08.:46:12.

Australian summer, celebrated on Bondi beach by some night surfing.

:46:12.:46:22.
:46:22.:46:42.

# Night swimming # Your photograph on the dashboard

:46:42.:46:52.
:46:52.:46:56.

Hi there. Good evening. It will turn out to be a cold night, clear

:46:56.:47:00.

and starry skies, widespread frost will develop, especially into the

:47:00.:47:03.

countryside. A chilly start to Friday morning, patches of ice

:47:03.:47:07.

around, with overnight showers. As we go through Friday, most places

:47:07.:47:10.

will have decent sunshine, it will tend to turn cloudy from the west

:47:10.:47:15.

as we go through the afternoon. Eastern England having decent

:47:15.:47:19.

sunshine, temperatures up to eight degrees. As we travel further

:47:19.:47:22.

westwards, here we will notice the freshening south-westerly breeze,

:47:22.:47:28.

the cloud will thicken up, and eventually outbreaks of rain moving

:47:28.:47:32.

in. Cloudier in the morning, outbreaks of rain pushing into

:47:32.:47:37.

western coastal counties, across the hills, damp weather for the

:47:37.:47:43.

Isle of Man. Cold night, with cloud coming over the top forp for

:47:43.:47:49.

Northern Ireland, temperatures four or five. Turpblg -- turning to snow

:47:49.:47:52.

across the Scottish mountains. Through Friday and Saturday, we

:47:52.:47:56.

lose the outbreaks of rain, it should be dryer generally across

:47:56.:47:59.

England and Wales through the weekend. The exception is across

:47:59.:48:03.

southern parts on Saturday. We will see outbreaks of rain, for example,

:48:03.:48:06.

in London, that should clear fairly quickly. The rain clears away from

:48:06.:48:09.

the far south of England and Wales. During Saturday morning, most

:48:10.:48:13.

Paul Mason asks how at risk the British economy is from the eurozone debt crisis, and what can be done to solve it? Following the Autumn Statement, has the political landscape changed forever? Presented by Kirsty Wark.


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