12/04/2012 Newsnight


In-depth investigation and analysis of the stories behind the day's headlines with Jeremy Paxman.

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The budget from hell was how one senior Tory described it today. It


would be a huge exaggeration to say there is anything like panics in


the ranks of the Conservative Party, but there is unease at how one


measure after another seems to be blowing up in their faces.


A champion of fill thranthropy takes on a Treasury Minister, over


the Government's plan to cap wealthy people's donations to


charity. A fragile ceasefire begins in


ceasefire, but the fear and loathing are far from gone. We will


hear from the former chief of the general staff, and the wounded


photographer, recently smuggled out of the country.


Is the legacy of the Republican race for the presidential


nomination, a party so obsessed with abortion, that it can no


longer speak to normal women. all worked up because Hitler killed


six million, look how he did it, we are allowing it and promoting it.


And will the world soon be turning to half-a-dozen otherwise


unconnected countries to find the growth upon which capitalism


depends more its survival. It is over three weeks since the


coalition Government's budget, and now another one of its measures


wreaking political damage, one minute it is pasties and tax breaks


for the wealthy, now uncovered is deep disquiet in the Conservative


Party over the plans to cap donations to charity. Even if, as


some suspect, the ultimate author of the measure is Nick Clegg, this


is not the sort of thing MPs expected from George Osborne, who


is widely thought within the party as being competent.


Our political editor, Allegra Stratton, is here. How deep is the


disquiet? I understand from someone who has spoken to the Prime


Minister about this, that there will be action in the next weeks


and months, to make the distinction between those genuine donations to


charity, and those that are a wheeze to get down a tax bill.


However, we should acknowledge, which we will go on to talk in the


package. There is a killer sentence in this red book, which is the


budget, which stipulates they were going to talk to philanthropists in


the coming months to make sure they did deep down the damage to


charitable donations. All of that to one side, this is playing to a


sense, not just on the backbenches, but within Government, you have


people in the culture ministry that weren't consulted about this


measure, so there is a minutes from people like Nick Herd that they


need to be on the attack about this you have the Big Society, central


to the primal vision, which he think is central to the country,


with this perceived attack on charities, if it is not a real one.


Today, ask pretty much any Tory MP how they feel about their


leadership, whether they might be prepared, to say, erect a statue to


the men who run the party, they would cloak on the leftover Easter


eggs. Only six days before the end of the parliamentary term, the


Chancellor delivered a budget so heavily prebriefed, it could surely


have few surprises. In the intervening few weeks, perpetual


bad surprises makes this an unpopular budget, in the words of


one senior Conservative, it is the budget from hell. This latest


surprise to party manages is target today hurt like a boomerang with


sat-nav. This is the angel of Christian charity, it was put to


the Earl of Shaftsbury, in the Victorian era, in recognition of


all of his philanthropy. It is something David Cameron has wanted


to emulate. The Big Society, would see charities take on the role the


state had in previous years taken on. With the recent budget move,


MPs feel this is being made impossible. One MP described it as


entirely indefensible, another, normal low very loyal MP, said he


was just waiting for the grown-ups to take over.


The modern-day attack on philanthropists began like this.


Months ago the Tories decided to scrap the 50p rate of tax, they


knew they could only do so if they could show they were getting more


back in otherwise, Nick Clegg's tycoon tax. Higher rate tax players


could donate unlimited amounts to charity and offset it against tax.


Last month the Government sought to cap it, as they felt phantom


charities were being used. Charities said they would lose �80


million in donations, Tory MPs weighed in their own side.


Today Conservative MP, Chris White, was typical of the feeling within


his party. He urged the Chancellor to have a


re-think, to have really good thinking, and not damage a sector


that need to be thriving rather than damaged for others' faults.


One of the first critic was a These Conservatives were riled when


the Business Secretary this morning, was the first cabinet minister was


to sanctions a source to brief that he would sanctions a change. A


source close to Vince Cable said he fullied supported the need to clamp


down on tax avoidance, but it should be separated from genuine


charitable giving. As a fundraiser for over 16 years, I would have


loved a donation of that magnitude in the first place. I recognise


there are charities that do get that amount of money. It is


important that they are not suffering, or made to suffer


because of these changes. So it is important that, and it is crucial,


that the Government get into dialogue with the charity sector,


to ensure that doesn't happen. The Victorians celebrated


philanthropists, another London statue, another figure of the angel


of charity. Today the Government is maintaining that they too are


freoints of the philanthropists, if you look at page 33 of this, the


budget from last month, it says they intend to explore with


philanthropists ways that it won't impact on charitable giving.


Cabinet ministers are acknowledging they will have to make sure there


is a distinction between genuine charitable giving, and those


seeking to put money into charities as a way of keeping their tax bill


down. For those more sceptical of the Government's intentions, there


is echos of how they dealt with another unpopular change, child


benefit before, the Treasury said it wouldn't do s and then


introduced a complicated taper system. One idea being discussed


with charities is to define more clearly with what a charity s and


impose a cap on charities unrecognised, even if the


Government's policy is what it says it is, it is a marker of the mood


in the parliament that stuck. Legend has it the angel has been


put facing away from Shaftesbury Avenue, that could be for the


Tories an accurate description of their Government. Cabinet ministers


insist this is the mid-term blues, the two years into the Government


when there is hard pounding, and it is just difficult. Others say that


is not quite true, when they are chasing economic deficit reduction


and growth it is one thing, when growth looks elusive, who is this


Government for, who do they stand for?


Within minutes of it coming from the Chancellor's mouth, it was


clear they had a problem with the changes they intended to make to


pensioner allowances. What became known as the granny tax. Within a


week, revelations about millionaire donors being invited to Number Ten,


came unhelpfully quickly after a budget that cut the top rate of tax.


Budget changes to the taxation of pasties were revealed quickly after


that. Senior Government members were


found scrambling to remember the last time they had eaten a pasty.


We have a series of good policies that help working-class people,


that are designed to help the most vulnerable, not enough people know


about them. At the moment there are a series of clothes pegs without a


washing line linking them all together. We need to do a lot more


to communicate to people that we are the party of the vulnerable,


and the party for the hard working- classs for aspiration and


opportunity. For all people inside Government


think they are damage, they think the damage is not deep. Education


and welfare reforms show plenty of direction, they say, they also


point to the upcoming sequence of events, they think Boris Johnson


wins the London election, and the stories of Labour faring ill in


London and Glasgow, soon a Queen's Speech and second legislative


accession, yes, include their critics, elections for the House of


Lords, which their critics also loathe.


The statue was paid for by subscription of devoted followers,


the Tory leadership have heard loud and clear that they have a lot of


work until the statues are in the - - statutes are in the bag.


My guests join me now. How many people do you know give


more than �50,000 or a quarter of their income to charity? I can't


answer that, the Sunday time's giving list that comes out at the


end of the month, talking about a quarter of the top 1,000 wealthiest


people lists are philanthropists, that is knowledgeable, plus another


quarter, perhaps, also give. They may be philanthropists, they may


not give a quarter of their income or over �50,000? That is not known.


We don't know what the loss to charity would be? The estimates


have been 20%. It is a nice round figure, and maybe people are just


guessing, what would you think, minister? I think as far as what


the behavioral impact will be, it is not entirely clear.


Philanthropists, such as yourself, don't just give because there is a


tax break there. People give money to charities because they want to


help a charity. You have done the sums when preparing the budget, how


much will it bring into the Treasury? The overall package of


capping reliefs, of which charitable donations is one, will


bring in �300 million. How much of that by capping charitable


donations? Roughly, our estimate is between �50hch �100 million


relating -- �50-�100 million relating to the capping of


charities. That money would have gone elsewhere? That is money we


believe should go to the Exchequer. But not to charity? The big point


here, if I may, is that we don't think it is right that people are


able to give to charities, or make use of these reliefs, in such a way,


that they have a very, very low rate of income tax. Indeed in some


cases they don't pay income tax at all. Everybody should pay some


income tax. One of the things I found when I was meeting with the


Treasury, fairly frequently, is they saw tax breaks as lost revenue.


Where as from the outside, a tax break is an investment in future


revenue. If you look at it like that, the Treasury is going to lose


as well as the clairts, if philanthropists -- charities, if


philanthropists start giving less. They already have started giving


less, we are having charities ringing up and saying they are


getting the warning knowss. If people are noblely motivated,


why will they be less so if they don't get a tax break? It leverages


what we are doing, I decide what to give to whom at what value, then I


decide to do it tax efficiently. It makes me feel good, because I'm


working with the local authorities. Would you give less if you weren't


getting a tax break? When the paper came out, I wouldn't make any


difference, but my advisers phoned me and said watch it, this will


affect you. And one has to be effective as well as efficient.


wouldn't affect how you behave? Frankly, no. Why should it affect


anyone else? They have different policies, I'm running out my


charity. My charity will be given away any way, and so I have put


everything into the Shirley Foundation, and it is going to come


out pretty fast. How many people did you consult


with before deciding upon this measure? We decided upon the


measure for the very reasons I have outlined, we think it is the right


thing to do we think it is fair. What we have said, and as was


pointed out in the report, we said we would consult with charities.


That is in the small print after saying you will bring in this


change. You will bring in this change, won't you? We will bring in


this change, what we have also said is we will explore ways to protect


those charities dependant on large donations. Did Jeremy Hunt know it


was going to be in the budget, did Vince Cable know it was going to be


in the budget, did you know it was going to be in the budget? Yes I


did. And you agreed with it? think it is fair. I think it is


unfair if most people are paying income tax at 20% or 40%, and yet


there are people who are very wealthy, and we are talking about


some of the wealthiest people in this country, who effectively are


paying very little in income tax, in some cases not paying income tax


at all. They may be doing some very, very good things, as Dame Stephaine


has done, in terms of charitable giving. We think there is a balance


that needs to be struck between contributing towards charities,


which people choose to do, and making a contribution towards


Government and paying for things like the Armed Forces and the NHS


and so on, all of which need to be paid for by somebody, and actually,


looking at the list they need to make their contribution. You can


see the force of the argument, don't you? Absolutely, I think


really you owe an apology to the philanthropists because you have


not consulted any. There is a summit scheduled for next month,


perhaps that might be an opportunity. But in the meantime,


none of us know what we are doing. People are already approaching the


charities and saying I may not be able to give you this amount next


year. To be fair, I have already had a meeting with representatives


from some of the charitable organisations. The charities are


different from the philanthropists. I agree that we need to have


meetings with charities, with philanthropists, all of that is


absolutely right. As we set out, on the day of the budget, we will


explore this carefully, we will consult, we will listen. But the


broad principle, which we announced, and the policy of a cap on reliefs.


We recognise that the tax system should encourage charitable giving,


the question is, should it be an unlimited relief. Up to now it has


been very pro. Your request for an apology has not been granted?


Indeed not. I'm not giving an apology. Can you help us with


something else then, the Prime Minister's spokesman said on


Tuesday, that one of the reasons you were so worried about this, was


because in some cases the charities didn't do much charitable work. Can


you tell us what those charities are? No, I can't name them. Because


don't know? Because of taxpayer confidentiality, and ministers


don't get informed of this. What I can say is HMRC have advised me


that there are cases where, for example, you might have a charity


where something like �20 million might be put into the charity, but


only something like �250,000 is actually spent. It is acting as a


charity, but we are not seeing the money spent properly. There are


other cases which are clearly flouting the rules. That is


something for the Charity Commissioners to engage with, isn't


it? It is, and HMRC works very closely with them. In some cases, a


lot of these charities aren't necessarily regulated by the


Charity Commission, because they are based overseas. It is difficult


in those circumstances to regulate them. But the particular example I


gave there, the Charity Commission would say well it's performing a


charitable purpose, but it's not proportionate to the amount of tax


relief that the donor has received, putting money into that charity,


but not actually seeing very much coming out and benefiting society


as a whole. The fact remains no matter how good the tax reliefs are


or not, you give much more than you get in relief. These are volunteer


givers who choose to invest in social issues. I accept that is the


case in the vast majority of the cases. The difficulty is if we end


up with a system whereby people are essentially able to take themselves


out of the income tax system, we want to take low earners out of the


income tax system, it is not right that the very wealthiest can take


themselves out. Despite all the gloomy prediction, a ceasefire did


happen in Syria today. It is pretty fragile, and the leader of the UN


mission there says the Assad has regime has yet to withdraw weapons


from urban areas. The secretary- general thinks a sing the shot


could wreck the whole thing. But the Russians, Assad's main


supporters, say there nai be an unarmed UN force deployed there


soon. Bring us up-to-date? I don't think many people dared hope that a


ceasefire would take hold at all. It is extremely fragile, but it is


really the first let-up Syrians have had since all of this began.


Lives have been saved, that is very welcome, obviously, for the people


of Syria. But both sides are accusing the other of violating the


ceasefire. Syrian state television said a bomb attack in Aleppo had


killed an army officer, activist groups say 15 civilians have been


killed. We will give awe flavour of some of the videos that have been


uploaded by the opposition to YouTube, we can't obviously verify


them. But this is purportedly the town of Homs today.


This is Aleppo, people run ago I way from gunfire, we are not sure


of the circumstances, but clearly people are very scared. Elsewhere


there are protests that went ahead untroubled. As you can see. But a


very clear message, spelled out by students in Aleppo. I hope you are


seeing the pictures. They are forming the letters S-O-S? A very


clear message to the international community, they don't think the


danger is passed. Friday is the Day of Prayer, traditionally the day of


protest, since the Arab Spring began. People are expected try to


take to the streets en masse, how will the regime respond. Have you


spoken to anyone connected with the UN mission there? I have spoken to


UN officials in New York. There are discussions at the UN Security


Council at the moment over the deployment of UN observers to


monitor the truce. There is talk of an advanced team of 30 people who


could arrive in the next few days. They could be boosted to a couple


of hundred at a later stage. There are UN officials who have been in


Syria, led by a Norwegian general, who are negotiating with the


authorities there. They have apparently been pretty difficult


discussions. But this idea of an observer mission is being seriously


talked about. When I spoke to an visor for the secretary-general,


Ban Ki-Moon, he said he was hoping for a unanimous vote at the


Security Council tomorrow. They might decide it to be a lightly


armed force, as peacekeepers are. My guess is in Australian


probability they will have mostly side arms for personal protection


in some situations T would basically be an unarmed force for


prak -- practical purposes. They would be there to observe,


facilitate and report back on what is happening on the ground. To make


sure that the ceasefire has a bit more feet, and a bit more


sustainability than it looks like at the outset.


Caroline, within you think about that, and you think about the Arab


League mission, also an unarmed bunch of observers, that wasn't a


conspicuous success? I was told that lessons had been learned from


the ill-fated mission. He said UN observers in place are more


experienced, he said they have done this before. He said they had


always done this against the odds. The ceasefire is just the first


stage, this is meant to lead to a political process, the opposition


sitting down with the regime. And UN UN officials are seriously


sceptical about the Assad regime's intentions. So far they have shown


a strong tendency to think the answer is a military one, that you


can crucial your opposition militarily. We don't know that the


opposition has a unified platform, can choose people to represent them,


and that can come together in an effective and cohesive way. We


really don't know those kinds of things. One has to have tempered


optimisim at best. To discuss this is the photographer


Paul Conroy, injured in the Syrian city in Homs, in the same incident


that killed the Sunday Times reporter, Marie Colvin, and the


former commander of the NATO force in Kosovo. There were less people


killed and injured today, that is a good thing? That is a good thing


for today. That is one thing. There is a lot of rampent optimisim


floating around about the ceasefire. Obviously they would like it to


work. Why do you say that? Experience, everyone has looked


over the last year at the regime's approach. I was there in Homs when


they had the referendum on the new constitution. I sat there in the


room while they shelled Homs consistently they gave the soldiers


an hour off to vote on the constitution, then it was back to


shelling. That is my experience of the regime's approach towards


negotiations and democracy. Let's talk about, we will talk


about what measures might be taken further than an unarmed mission.


First of all, this question of an unarmed mission, would you like to


be part of an unarmed UN observer mission in Syria? I wish them very


well. I wish the whole mission very well, of course. But my own


experience of unarmed observers is not a terribly happy one. They have


no power, of course, all they can do is to report. Now, there is a


moral, strength to that reporting, if somebody's getting it wrong. But


it needs goodwill on both sides to implement such an agreement, and I


echo Paul. How confident are we that the Assad regime has goodwill


to implementation of this. There is little evidence of any God will


there. Do either of you have any suggestions about how the cause of


peace mighting advanced there? think it is what sort -- Might be


advanced there? I think it is what sort of peace. You have oppression


and people beaten into called "peace". I think the genie is out


of the bottle. One needs to be careful, with comparisons, they are


not always directly helpful, but we have been here before, in other


places. Which other places? Libya is an obvious parallel. There was


western intervention in Libya? There was western intervention. And


one could argue, and I would, that the situation in Syria is at least


as bad, arguably worse. Does it justify western intervention?


but that depends now on basically the western approach, and indeed,


let us not forget, the two members of the Security Council who have


always been very shy of intervention, Russia and that.


the basis of your experience, and what you saw about how the Syrian


Government and forces behaved, what do you advocate? I'm fully in


favour of an intervention, I think the whole Annan peace plan depends


on the Syrian people putting their trust in this Government. Now they


have no reason, I think, to be honest. This is a brutal question.


But why is peace in Syria worth putting at risk the life of a


single British soldier? I think it boils down to a question of


humanity. Are we all prepared to sit around for the next year and


watch thousands upon thousands of innocent people slaughtered.


you imagine a British Prime Minister standing up and trying to


justify that decision? I would certainly like to see a British


Prime Minister stand up and try to just foi that decision. Can you see


it? You are dammed if you do, and you're dammed if you don't. That is


exactly the position regarding Benghazi a yor ago now had we not


taken action, -- a year ago, had we not taken action along with allies,


there would have been conned dem nation of allowing this brew --


condemnation of allowing this brutal inhad you tan me to continue,


some people were not -- inhumanity to continue with that. Would you


have wanted to see forces committed without knowing the end game and


how to get them out? You would have to think through your campaign


carefully, we have not always been quite as good at the end game as we


should have been. The military campaign would be simple and fast,


it is transforming a country after that, that is the real challenge.


Do you have a view on that? I would see the intervention, not as a form


of arming the rebels and topping them up to overthrowing the regime.


I think it is now a case of saving lives, I would like corridors, safe


havens, established, on a light humanitarian basis. These people


have nowhere to run. It is not like in Libya where there were safe


areas people could get to, every inch of Syria is covered with the


regime. Now it is a humanitarian need, as opposed to regime change.


I think we need to provide some form of that.


Thank you very much. Rather unusual happenings in the


American presidential race today. Barack Obama's people are letting


it be known that they are in complete sympathy with the wife of


Mitt Romney, the likely Republican challenger for the White House.


They are defending her against Democrat accusations she has never


worked because she has been at home raising five boys. It is a mark of


how the presidential race is divided. And may be determined,


indeed, by gender. Obama has far more support from women, partly


because of the remarkable divisions in the US over abortion.


As Paul Mason reports, the issue has become charged in a way almost


unimaginable in Europe. An abortion clinic in Ohio,


protestors come here every day the clinic operates.


Inside, for all the intimacy and calm, they can't escape the sound


and fury the presidential election has stirred up.


Barack Obama voted in favour of legaliseing infantiside. He voted


to protect doctors who provide abortion. It is a campaign where


each candidate has tried to sound more anti-abortion than less.


America has become a country where a talk show host can attack a woman


for advocating publicly-funded contraception. She's having so much


sex she can't afford the contraception she wants, you and me


and the tax-payers paying her to have sex, it makes her a salute,


right? These are not just words, last year


half of all US states imposed new curbs on abortion. The laws being


proposed represent a new radical restriction on abortion.


The debate is being conducted in a language that is shocking and


extreme. And some Republicans think their party is being dragged so far


to the right on this issue, that its prospects in November's


election could be seriously compromised.


In Ohio, home to rust belt cities, and millions of the post-industrial


poor, they are working on one of the most restrictive new laws. If


passed, it will ban all abortions, once a heart beat is detected. That


is usually about six weeks. strategy is to put those laws in


place state-by-state, and erode and destroy access to abortions. That


is what's working. Under pressure from protestors,


hospitals here no longer perform abortions. This basic facility in


Toledo, run by a charity, is the only one for miles around. People


who work here say it is the poorest women who need the most help.


know that even when it is illegal, women still have done abortions in


themselves. They do that at great personal risk. It is not an issue


of banning abortion, it is an issue of banning safe and legal abortions.


It makes it harder for them to get services. The other thing is it


makes it harder for them to fund the services, once they find them,


and it makes it, I think it also puts a burden of despair on them.


It puts a burden of guilt and shame that they should not have.


Texas already enforces something called a transhave a guile nan


ultra sound, this -- transvaginal ultra sound, this is so a woman can


see and hear the foetus before an abortion. When other states tried


to follow, the battle wind nationwide. Now to the heated


battle over reproductive and abortion rights. Ultra sounds for


women seeking an abortion. At which point the Obama administration


announced plans to include contraception in its healthcare


reforms, and the Republican presidential candidates went appo


pletic. Sterilisation, and morning- after bill. You voted for birth


control pills. That is what they do, not us. The Obama camp could not


have hoped for a more try dent reaction. Among women voters,


Republican front runner, Mitt Romney, is already polling up to 18


points behind President Obama in battleground states. Senior


Republicans feel the tenor of the debate has seriously affected their


charity's chances in November. don't think they have handled this


too well, let me point out, that they didn't bring this issue up,


the President did. I always resist conspiracy theories, but if this


was a gambit on the part of the administration, it worked


beautifully. Some of our people took the bait. Mitch Daniels was


once a serious contender for the pup can party's presidential


nomination, he lacked support from the conservative base. He believes


the party's focus on these issues could doom them in the elections.


Our party could be doing a lot better. Sometimes I say given the


failure of the policies, a weak economy, it would be very hard to


lose an election to President Obama, but we have just the team that


could do it! That's not how it looks in Ohio. Among these rural


and middle-class voters, the religious right will take the


battle for the party's soul right up to November.


This group of Ohio activists lobbies tirelessly for the heart


beat bill. The doctor has to actually show the woman the heart


beat, on the ultra sound, let her hear the heart beat, if that heart


beat is detected then the baby is protected from the abortion. Why is


the heart beat so important? over the world, the signal, one


important issue of whether or not there is life, is whether or not


there is a heart beat. Politically they are purists, they are


determined to keep abortion at the centre of the election campaign,


regardless of the consequences. The time has come for us to stand


up and stand for what's right. would rather lose on the principle


issue than win with an alliance of quite conservative people, who just


don't share your views on abortion? Yes. It is not political at all.


From my vantage point it is a theological issue, so, yes, courage,


just take the stand, willing to lose? Yes.


We get all worked up because Hitler killed six million, and look how he


did it. And we're allowing it, and we're promoting it. Are you


comparing it to the Holocaust? is a Holocaust, it is time that


America wakes up to the truth. It is genocide. You couldn't then have


a political candidate who denied that, it would be like having a


Holocaust denial? Exactly. Outside the Toledo clinic, the


vigil continues. Inside gynaecologist, Martin Ruddock, has


finished work, after a day in which he terminated ten pregnancies. He


says there is no medical science behind the new laws, above all, he


thinks the ultra sound probe is about pure politics. This is a


transvajal probe, in that -- transvaginal probe, the patient


needs to be up in stirrups, you need to use a condom for protection


and lubricant, you must literally take this lengthy probe, and insert


it into the vagina, in order to get an interior view of what's going on.


It gives you a different perspective. To mandate the use of


this, would be absolute intrusion into women's reproductive care, it


is unnecessary in the practice of abortion practice. Why are they


doing it? To try to drive doctors away. To make the procedure more


expensive, and costly, to scare women away, and basically to put


additional obstacles, one after the other, in the path of a woman who


is pregnant and doesn't want to be. In some ways this is part of the


old culture war between liberals and Conservatives. The result is


almost silently, legal abortion for women from the poorest


neighbourhoods has become harder and harder.


It is in the election, and its effect on how women vote in


November, that the debate might have its loudest impact. Now this,


as David Attenborough, could have told you, is a civic cattle, so our


graphic department imagined. It is best known for secreting the musk


in perfumes, and the coffee beans, said to make a sensational kick


start. If you are an economy, or a banker, it is used as an acronym of


some of the new economies, Egypt, turkey, Brazilians, the acronym is


less agile, but we like it a lot more. A BRIC is a strong and robust


object, CIVIT is a meek mammal, whose oder is used to make perfume,


believe it or not. It is the smell of money that has said the CIVET


more came mus. Columbia, Indonesia, Vietnam, turkey, South Africa and


Egypt, all touted as the next waive of emerging economies, that could,


we stress the conditional, could match in terms of growth, but not


scale. What could unite, one south American, two African and three


Asian countries, separated by vast differences, as well as historical


and financial backgrounds. They all have young educated populations, 28


is the median age, in Britain it is 40, and for Germany, Italy and


Japan, it is a more elderly 44. Youth and especially a trained one,


matters in a growing economy, it means you are producing a stream of


wealth creators, or at least consumers of goods and services.


And the other unifying factor for CIVETs is growth itself, land and


labour is cheap, and they have grown rapid low by our standards


over the past years. It is the combination of growth and youth,


which has led to a boom in foreign- led investment in these countries.


It is who do we look to next, who are the other economies that share


the characteristics of a very low level of development, but really


good foundations, good fundamentals, so they will grow rapidly in the


next few years. That have the potential, we think, to grow


rapidly, not just for a few years, but for a few decades ahead.


Certainly by far outpacing the rates of growth that we are going


to be seeing here in the western world. We could look at all six


countries, but to save time let's look at three. Colomboia has come a


long way from being a by-word for kidnapping and cocaine, a civil war


has fizzled out, main export is oil and coffee. Two commodities that


have soared in price of late. The Colomboians have worked hard to


inprom their corporate governance, that is paying off. Growth is


averageing between 5-6% a year. American companies alone invest $7


billion in 2010. Turkey has long promised, but only now is


delivering. Check where your shirt was made, chances are it is turkey,


so too your washing machine. Turkey also makes cars, 1.1 million in


2010, in joint global ventures with Fiat and Toyota. It is thought to


grow 10% this year. Turkey had serious crises in the past, it has


come through that, has credible policy, and is very actively


attracting investment and boosting growth as a result of that. The


other interesting one is Indonesia, still a country that has an awful


lot of development to do. It is still very split in terms of parts


of it wealthy and parts of it poor. A country that has huge potential


going forward. Particularly in the region in Asia linked to China and


India both on its doorstep. David Cameron was on that doorstep this


week, Indonesia is the largest Muslim country in the world. With


an economic potential to match. Like its neighbours in Australia,


it has made hey on the back of an abundance of commodities, tin and


natural gas. It is the 11th-largest gas producer in the world. Its


young, mostly secular population has acquired a taste for shopping.


However attractive this group of nations are, they are a risky bet.


Most of the six countries aren't even considered investment grade by


the cred date rating agencies. Doing business is not straight


forward, democracy and accountability is new, if it exists


at all. Company law is sketchy, and punishments for what we consider


minor infringements can be draconian in some places. There is


the threat of civil unrest and outright war even. A year after


Israel was included in the -- Egypt was included in the list, it had a


major revolution and investment dried up for six months. You can't


say such events won't happen elsewhere, if a caveat applied it


is to the CIVETs. Here to explain more is the Colombian ambassador,


and a risk consultant at the your racialia group. Is this -- E URAISA


group. It was created by and after a thorough analysis of political


and social variables, it has a lot of potential in the facts, the


recent history proves that the economist is right in forecasting a


high growth rate for our economies. What do you have in common with


Egypt? We have a large young population. They had a growth rate


of less than 1% last year, 2% predicted for this year? The IMF


forecast as growth rate between 4- 6% for the coming three years in


Egypt. I agree that there is the potential for that kind of growth


rate. What do you make of this idea?


a bit more sceptical, I share the view that some of these countries


share a favourable growth outlook, but the acronym, I'm more on the


gimmick side, for a couple of reasons. First of all, it occurs to


me what are the commonalties between these countries, moving


from Indonesia 250 million, to Columbia 46 million. Second, why


Egypt is in this group? The gross outlook for Egypt is not that --


the growth outlook is not that favourable. The assumption that


Egypt has good fundamentals is questionable. We could also ask why


some countries aren't in this group? Why isn't Mexico in there,


why isn't Malaysia in there, for example? I agree Mexico should be


included. Maybe it is a bit more difficult to get some gimmick


acronym if you put in too many countries? It is always difficult


to choose which countries to put in, which countries to leave out of


these catagories. But I agree that Mexico should be included there. It


has a huge population, a very large GDP, and it has solid institutions,


and I hope that they will continue doing well in the economic terms.


Do you have any plans for a CIVETs convention or group? Yes. You are


going to start to try acting as a group? We have been talking to the


prime ministers of these countries, our finance ministers are working


together in defining strategies. What will you hope to do? We hope


to have a common plan to promote investment in our countries. Both


domestic and foreign investment. For example, in Columbia, foreign


investment has multiplied by ten in the past ten years. Would you


invest in these countries? Certainly in some of them.


Indonesia, countries like that, countries like Turkey, South Africa,


Vietnam, they do enjoy a favourable economic outlook, there is no doubt


about that. The question is, once you put them in the same basket,


tough make the case for that. The case, in my view, is a fairly weak


case. Leaving aside creating the acronym, the fundamentals are not


there. The question is why Mexico isn't there, and why Egypt is in


the group. You may say that they suffer from a


silly name, perhaps, you could make all sorts of accusations, what you


can't argue with is their rate of growth. You look at the rate of


growth in this country. It is less than 1%. The rate of growth across


Europe, and you compare it with these countries. They are going


places, we are not? Absolutely. There is no question about that.


They all share, as it was said at the beginning, a favourable


economic outlook, there is no dispute about that. There are


significant challenges, even for a country like Columbia, which has


done very well over the past few years. With a significant take off.


There is a challenge there, how you manage all this new wealth. What


does it mean in terms of controlling inflation, what does it


mean in terms of controlling the rate of exchange, and so on. There


is a challenge there, growth is certainly good, but it comes with


challenges. Have you got any advice you would


like to give us? Jeremy, if you had invested in the Colombian stock


exchange ten years ago, your investment today would be worth 15-


times, but it is not too late, you can already invest now and get


healthy returns in the coming years. Would you invest in the Colombian


stock exchange? Lots of them do. Against your advice? Not at all.


The issue I'm not questioning is the growth of the country, it is


putting them all in the same basket. That is the key question. Not the


question of the growth outlook. Thank you very much. Teapots across


the Midlands were rattled by what the MoD revealed was the sonic boom


of a typhoon aircraft. People swamped the emergency siss after


supersonic was set off after emergency calls from a helicopter.


The last time was in 19 47. There she goes, a big moment, in a


history-making flight. Now she raes approaching the


barrier, the -- she's approaching the barrier. 60 miles per hour. The


really big moment. Through the sound barrier, the


Chilly weekend coming up, sunshine to compensate.


Very chilly start to the day tomorrow. Showers will develop,


just as we have seen over the last few days, mostly across the


southern half of the UK. Where, once more, by the afternoon, they


really will get going with abundance. There will be heavy and


thundery ones too. Particularly down towards the Midland and the


south-east. Wouldn't rule out a thunderstorm, but not as eye vent


as we saw during the course of the die.


More showers than today. Across the south west of England, and parts of


west Wales, where we have had a lot of sun hien in the last few days.


That may -- sunshine in the last few days. A light breeze across the


southern half of the UK, a stronger breeze further north. A chilly one


too. A fair bit of sunshine for Northern Ireland, temperatures


pegged back at 8-10 degrees. For Scotland, cold enough for the


showers to be falling as shoe over the high ground in particular. A --


showers over the high ground in particular. Colder this weekend,


temperatures struggling to get out as single figures. Showers across


the north will be a mixture of rain, sleet and snow. Dry weather and a


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