12/06/2012 Newsnight


12/06/2012

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


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The United States believes the Russians are sending military

:00:12.:00:14.

helicopters to Syria. The Secretary of State's warning came this

:00:14.:00:19.

evening. We are concerned about the latest

:00:19.:00:24.

information we have that there are attack helicopters on the way from

:00:24.:00:29.

Russia to Syria. Which will escalate the conflict quite

:00:29.:00:33.

dramatically. At least 50 people are said to have died in Syria

:00:33.:00:37.

today. What will this intervention do to what the UN now calls a "full

:00:37.:00:42.

scale civil war ". Brussels plans a system to link all

:00:42.:00:47.

the banks of Europe to make the eurozone secure. Paul Mason is in

:00:47.:00:49.

Athens. Locking Europe's banking systems

:00:49.:00:53.

together, might save this place, but it would change Britain's

:00:53.:00:56.

relationship with the continent forever.

:00:56.:01:00.

Could such an institution save a currency in such deep trouble that

:01:00.:01:03.

George Osborne today openly discussed the benefits of a Greek

:01:03.:01:09.

exit. We will hear from Berlin, Strasbourg and from London.

:01:09.:01:13.

The Lib Dem leader contradicts Cameron and tells his cabinet

:01:13.:01:16.

colleague, the Culture Secretary, you're on your own in tomorrow's

:01:16.:01:20.

vote in the House of Commons. A former Prime Minister discloses the

:01:20.:01:24.

price Murdoch sought for his endorsement. He wished me to change

:01:24.:01:28.

our European policies. If we couldn't change our European

:01:28.:01:32.

policies, his papers could not and would not support the Conservative

:01:32.:01:37.

Government. Also, a stand-off with one of Britain's most violent young

:01:37.:01:42.

offenders in his new �20,000 cell. We go inside the wing where they

:01:42.:01:52.
:01:52.:01:54.

handle the most violent teenagers in British jails.

:01:54.:01:59.

It is only a belief, a suspicion, an accusation, but it is a Sirius

:01:59.:02:03.

one. The Russians are shipping attack helicopters to support

:02:03.:02:07.

President Al-Assad in Syria, according to the US Secretary of

:02:07.:02:11.

State Hillary Clinton tonight. If if she didn't look or sound like a

:02:11.:02:17.

woman warning of world war III, if did sound like the bad old days of

:02:17.:02:21.

the Cold War. This, on day when the UN head of peacekeeping said the

:02:21.:02:23.

conflict was now full scale civil war.

:02:23.:02:28.

Our diplomatic editor Mark Urban is here. How did this revelation come

:02:28.:02:32.

about? A bit of a bolt from a blue. The Israeli President was on a

:02:32.:02:35.

visit to Washington. He and the Secretary of State did an event,

:02:35.:02:42.

and she was asked about the issue of Russian arms supplies. We have

:02:42.:02:47.

confronted the Russians about stopping their continued arms

:02:47.:02:53.

shipments to Syria. They have, from time to time, said that we

:02:53.:02:59.

shouldn't worry, everything they are shipping is unrelated to their

:02:59.:03:06.

actions internally. That's patently untrue. And we are concerned about

:03:06.:03:10.

the latest information we have, that there are attack helicopters

:03:10.:03:16.

on the way from Russia to Syria. Which will escalate the conflict

:03:16.:03:20.

quite dramatically. Do you think it will escalate the

:03:20.:03:24.

conflict dramatically, as she puts it? I don't think it would, no. It

:03:24.:03:29.

is an exaggeration. Bear in mind that Syria already has something

:03:29.:03:33.

approaching 200 Russian-made helicopters, about half of them

:03:33.:03:36.

armed or gunship helicopters. They have been filmed. This footage,

:03:36.:03:46.
:03:46.:03:47.

taken by the BBC, in northern Syria, of this Mil-17-Hip, machining

:03:47.:03:54.

gunning positions of the Syrian national army. Other pictures show

:03:54.:04:00.

these helicopters firing rockets at the ground. This confronts the

:04:00.:04:05.

Russian lie that these are not being used on the civilians in

:04:05.:04:11.

military operations. The close- range nasty intercommunal violence

:04:11.:04:15.

with militia groups and other murder gangs going around stirring

:04:15.:04:23.

it all up is the issue. It is an escalation on the diplomatic level,

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the US trying to push yau, into a more robust line. We have seen a

:04:29.:04:33.

lot of information published about Russian ships docking in ports,

:04:33.:04:37.

delivering Syrian arms. It is all campaign to put pressure on the

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Russians, in particular. What is the Russian game in this? It is a

:04:42.:04:45.

big geopolitical thing. As far as they are concerned they say they

:04:45.:04:48.

have no interest in the survival of the Al-Assad regime, per se, that

:04:48.:04:51.

is the line they have used in recent weeks. They do seem to feel

:04:51.:04:55.

that this group of people around them, many of them Russian-trained

:04:55.:04:59.

generals, and people who they have cult vailted for many years around

:04:59.:05:04.

him, -- cultivated for many years around him, are national interest,

:05:04.:05:09.

they should stay in power as a bulwark against Saudi and Sunni

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forces, they would see as taking over there.

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We have the director of the Middle East centre in the LSE, and our

:05:18.:05:28.

guest from waarken to, the director of the Euraisa group's Russian team.

:05:28.:05:35.

What do you think President Putin's reaction is likely to be to this

:05:35.:05:38.

ultimatum, threat or menace from Hillary Clinton? He won't be very

:05:38.:05:43.

happy. Mr Putin, who I have met a few times, is a tough customer. He

:05:43.:05:48.

will not be shamed, he doesn't mind being named. He will just put his

:05:48.:05:54.

next foot forward. I think we have a bit of a stand-off here now.

:05:54.:05:59.

does it seem from a Middle East point of view, this is not new this

:05:59.:06:02.

Russian arms supply to Syria. At this point it seems a strange thing

:06:02.:06:07.

for the ruarks to do, doesn't it? Not at -- The Russians to do,

:06:07.:06:14.

doesn't it? Not at all, Russia is the main supplier for Syrian arms,

:06:14.:06:19.

helicopters, jets, tanks and what have you. As your guest has just

:06:19.:06:23.

said, Syria has scores of armed helicopters. Syria has no shortage

:06:23.:06:29.

of armed helicopters. Syria has utilised armed helicopters, and in

:06:29.:06:33.

the last few days, extensively. I think Clinton's statement, and this

:06:33.:06:38.

is the point, is designed to exert more pressure on the Russian

:06:39.:06:42.

leadership in order to stop supporting the Al-Assad regime. In

:06:42.:06:46.

fact, statement itself testifies to the fact that the Obama

:06:46.:06:52.

administration, as you know, has been trying to co-opt the Russians

:06:53.:06:56.

to get a Security Council resolution and exert more sanctions

:06:56.:07:01.

on Syria and the threat of force. It seems to me a rift has developed

:07:01.:07:07.

between Washington and Russia. The second point, that hasn't received

:07:07.:07:10.

any attention, Clinton warned the Syrian leadership against massing

:07:10.:07:17.

groups in Alapo, that is a city that faces Turkey. This tells but

:07:17.:07:21.

the implications, the potential that the Syrian conflict could

:07:21.:07:25.

merge into a region-wide conflict. Syria has already become a

:07:25.:07:29.

battleground, a war for proxy for regional players and we are seeing

:07:29.:07:32.

the Russians and the Americans clashing over Syria at this point.

:07:32.:07:36.

Does this seem to you to be a purely diplomatic manoeuvre that is

:07:36.:07:41.

being engaged in here? Not really. It doesn't to me. I have a

:07:41.:07:44.

different take than your other guest. I think it is a real big

:07:44.:07:49.

deal when a global power sends attack helicopters on the very same

:07:49.:07:55.

day the UN use the words "civil war" for the first time. On the

:07:55.:08:00.

same day that a report documenting unspeakable atrocities has come out.

:08:00.:08:04.

This is direct intervention in a military conflict by Russia. Now,

:08:04.:08:10.

yes, there is stand-off, there is a diplomatic stand-off going on here.

:08:10.:08:14.

But I think it is more than that. I think the Russian, I think the

:08:14.:08:22.

secretary was right in calling it escalatory. How do you think, you

:08:22.:08:27.

don't think this could evolve into any kind of military confrontation

:08:27.:08:31.

between the two great powers, do you? Ironically an American general

:08:31.:08:36.

was asked today why the Americans, the American military does not

:08:36.:08:40.

really stop the shipment of Russian arms into Syria, his answer was,

:08:40.:08:43.

well the administration has not made a decision to basically stop

:08:43.:08:48.

the shipments. He said the question is not whether Syria receives arms,

:08:48.:08:52.

the question is what does Assad do with the arms. The reality is, we

:08:52.:08:59.

do have a stand-off, between Russia and the United States, and the

:08:59.:09:04.

Russian-American rivalry over Syria has really exacerbated the Syrian

:09:04.:09:08.

conflict. There is no doubt that Russia's support for Syria has

:09:08.:09:12.

emboldened the Assad regime, and allowed him to do what has been

:09:12.:09:17.

doing for the last 14 months. Are we closer to any outside

:09:17.:09:22.

intervention in Syria? I doesn't doubt it very much. There is no

:09:22.:09:24.

political will, on the part of the United States or the international

:09:24.:09:29.

community, to intervene in Syria. The consensus in Washington is

:09:29.:09:32.

military intervention would exacerbate an already dangerous

:09:32.:09:37.

situation, and would turn into a region-wide conflict. Where

:09:37.:09:42.

Hezbollah, Iran and Saudi Arabia would become involved, and also the

:09:42.:09:49.

spill over into neighbouring countries, particularly Lebanon.

:09:49.:09:52.

are led to believe then that these are rather hollow words by the

:09:52.:09:56.

Secretary of State? I don't think they are hollow words, I think it

:09:56.:10:01.

is a shot across the bough to Russia to stand down. There are

:10:01.:10:05.

ways across this, the President of Yemen where the Dayton accords and

:10:06.:10:11.

the power-sharing agreements in the Balkan agreement, there are -- the

:10:11.:10:16.

Balkan conflict, there are model, but the Russians have to stop

:10:16.:10:19.

saying no to everything. Which is there policy. I think this is

:10:20.:10:26.

running through the hole and call your bluff, and make you play a

:10:26.:10:34.

constructive game rather than an obfuscating role. You think that Mr

:10:34.:10:43.

Putin is person who might take that opportunity? To Play a more

:10:43.:10:47.

constructive game. Yes. Not when he has been caught shipping attack

:10:47.:10:53.

helicopters over to Syria. I think when they take on more wart he,

:10:53.:11:01.

taking bad press -- more water, taking bad press throughout the

:11:01.:11:04.

world. The Secretary of State was right to call him out today. Things

:11:04.:11:08.

are looking worse and worse in Syria? Absolutely. I think that

:11:08.:11:13.

Syria is nearing the end of the point of no return. It is nearing

:11:13.:11:17.

the tipping point. Syria reminds me of Lebanon during the first phase

:11:17.:11:27.

of the 1975-1976 war. Massacres, assassination, car bombings,

:11:27.:11:33.

neighbours turning against neighbours, communities against

:11:33.:11:36.

communities. In Syria the Syrian Government is losing control of

:11:36.:11:41.

areas of Syria, and losing its monopoly on the use of force. That

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is Sirius situation. There is plan to safety trembling

:11:49.:11:53.

banks of Europe, and therefore the euro. It is said to approve a first

:11:53.:11:58.

stage of a banking ewe union in the eurozone at a summit this summer.

:11:58.:12:02.

The British Government said it supports the scheme, yet earlier

:12:03.:12:06.

today the Chancellor of the Exchequer was wondering aloud if it

:12:06.:12:09.

would take the departure of Greece for the Germans to sign up for the

:12:09.:12:14.

scheme. Something more is need for the bail out of troubled Spanish

:12:14.:12:17.

banks, that was supposed to restore confidence there and didn't

:12:17.:12:19.

convince the international money markets today. Last night Paul

:12:19.:12:27.

Mason was in Madrid, on his no so grand tour, tonight he's in Athens.

:12:27.:12:30.

Here in Athens we are in the last few days of a very important

:12:30.:12:33.

election campaign. Opinion polls are banned. But it feels to me,

:12:33.:12:38.

having been here half a day, speaking to contacts and ordinary

:12:38.:12:43.

people, it is still 50-50 whether the Conservatives win this or the

:12:43.:12:49.

far left party, Syriza. If they win, as their leader, Alexis Tsipras

:12:49.:12:54.

said today, a new era starts on Monday. They scrap the bail out

:12:54.:12:58.

conditions and throw the ball back into the European Union's court.

:12:58.:13:02.

The old era is looking dodge year, the Spanish debt costs today rose

:13:02.:13:06.

to their highest-ever in the eurozone, nudging the point of

:13:06.:13:10.

uncontrollability, despite the bail out. So, what we have seen is bait

:13:10.:13:14.

of choreography from the called mass Masters of the Universe, the

:13:14.:13:20.

people supposed to run the whole system. Finally Doug a bit less

:13:20.:13:24.

running and floundering, with this proposal of a banking union in

:13:24.:13:30.

Europe, in the form of a plan from Mr Barroso. The eurocrisis needs a

:13:30.:13:34.

circuit breaker. For months the leaders have struggled to find one.

:13:34.:13:37.

The President of the European Commission proposed a European

:13:37.:13:44.

banking union. He wants to flip the switch, sharpish. The commission in

:13:44.:13:47.

this debate will be for a structured and ambitious approach,

:13:47.:13:53.

that may include what you can call a banking union. Some elements of

:13:53.:13:57.

this banking union will be more integrated financial supervision,

:13:57.:14:02.

and also more integrated deposit guarnantees. And I think it is

:14:02.:14:07.

important we have this long-term vision about more Europe. Here is a

:14:07.:14:11.

clue to the size of the problem, when the European Central Bank lent

:14:11.:14:15.

over a trillion euros to EU banks on rather favourable terms a few

:14:15.:14:19.

months ago, there was no shortage of takers. We don't know the exact

:14:19.:14:23.

figures, or participant, we found out quite a bit about the health of

:14:23.:14:29.

the sector. Banks in Austria, Netherlands, Ireland, Denmark,

:14:29.:14:33.

Britain and Spain. Barroso's plan involves moving rapidly towards a

:14:33.:14:37.

common supervision system, and a common bail out fund, raised

:14:37.:14:42.

through a levy on the banks themselves. Deeper reforms, like a

:14:42.:14:46.

common deposit guarnantee and formal commitment to tax-payers to

:14:46.:14:50.

fund cross-border bail out, would require a treaty change. But, says

:14:51.:14:54.

Mr Barroso, the first phase could be agreed at the European Council,

:14:54.:14:59.

this month, and implemented as early as January 1st next year. The

:14:59.:15:03.

plan comes as the focus of the euro crisis has switched from

:15:03.:15:08.

Governments struggling to borrow, to banks struggling to stay solvent

:15:08.:15:12.

as losses on property loans mount, and billions of euros fly out of

:15:12.:15:17.

the system to safe havens. Germany has already signalled its

:15:17.:15:21.

support for common supervision, and Newsnight understands, Angela

:15:21.:15:25.

Merkel is now ready to sign up to the first phase of a banking union

:15:25.:15:29.

at the European Summit. The plan comes as the focus of the

:15:29.:15:32.

eurocrisis has switched from Governments struggling to borrow,

:15:33.:15:36.

to banks struggling to stay solvent as losses on property loans mount

:15:36.:15:42.

and billions of euros fly out of the system to safe havens.

:15:42.:15:47.

TRANSLATION: We do want Europe, we do want more Europe, but I want a

:15:47.:15:51.

Europe in which it is always made certain that joint accountability

:15:51.:15:57.

and joint control are always in one hand. There is a near consensus

:15:57.:16:01.

amongst political leaders in Germany, business leaders, and

:16:01.:16:06.

indeed senior bankers, and top officials, that the answer to the

:16:07.:16:12.

eurozone crisis is more Europe, loosely defined, more integration.

:16:12.:16:17.

Almost nobody is saying the reverse. There are one or two people in the

:16:18.:16:23.

Bundesbank, who are not in favour and would be happy if it broke up.

:16:23.:16:28.

And one 0 two maverick euro-sceptic academics saying the euro is bad

:16:28.:16:32.

for Germany, they are very isolated. Britain has signalled its support

:16:32.:16:36.

for the plan, agreed last week at the called quad of senior ministers

:16:36.:16:40.

and at the cabinet today. But the UK will stay out of the union. Veto

:16:40.:16:45.

any attempt to impose it beyond the eurozone, and insist on a

:16:45.:16:50.

strengthened single market for financial services across the 27EU

:16:50.:16:54.

countries, protecting the City of London.

:16:54.:16:59.

Ever since the euro crisis started here in Greece, the focus has been

:16:59.:17:03.

on bailing out countries, now the focus is definitely on bailing out

:17:03.:17:07.

banks. Because money is flowing out of the system here and out of other

:17:07.:17:10.

stressed peripheral economies. But the banking union, as a solution,

:17:10.:17:16.

poses the question, point blank, who is in, and who is out?

:17:16.:17:21.

But the circuit breaker might come too late. On Sunday Greece votes,

:17:21.:17:26.

the left, Syriza, stands a chance of winning, and it would cancel the

:17:26.:17:29.

austerity programme demanded during the write-off of the country's

:17:29.:17:33.

debts. In any case, some think there are big problems with the

:17:33.:17:41.

whole concept of the banking union. I think it is quite easy to levy a

:17:41.:17:44.

criticism at European politicians and commissioners and say they are

:17:44.:17:49.

just trying to do union of any description, because that's their

:17:49.:17:53.

agenda and actually it is putting all Europe's sovereign invalids

:17:53.:17:59.

together, which isn't going to make the situation better for anyone. I

:17:59.:18:09.
:18:09.:18:10.

think that is a mistaken view on it. And taken by euro-sceptics, the key

:18:10.:18:13.

to the euro-system survival is integration or bust, there is very

:18:13.:18:18.

little inbetween. Meanwhile, this is a scene from the

:18:18.:18:24.

Europe they are trying to save. Miners in the Spanish provinces,

:18:24.:18:28.

protesting about job losses, after the Government withdrew their

:18:28.:18:35.

supsidies. Europe can at least measure its

:18:35.:18:40.

banking and bond risks in tenths of one per cent. The social risks of

:18:40.:18:47.

failure are, in some parts of southern Europe, off the scale.

:18:47.:18:51.

Paul's still in Athens. Are the Germans likely to fall for this

:18:51.:18:57.

scheme. Mr Barroso wouldn't have made the point so strongly today,

:18:57.:19:03.

come out, with the proposal, unless he was getting big signals, and I

:19:03.:19:07.

understand he is, from the CDU, from Merkel's Government, that they

:19:07.:19:13.

are going to support phase 1, the du doable bit that they can decide

:19:13.:19:18.

at the end of the month of banking union, likewise voices in the ECB

:19:18.:19:22.

are being put behind that. There is a theory out there, among people

:19:22.:19:25.

close to the loop, it is a were, that the Germans are in the process

:19:25.:19:28.

of deciding that the future of Europe will look like who will go

:19:28.:19:32.

with them, which countries might not make it. Obviously with Mr

:19:32.:19:35.

Osborne raising the possibility of Greece here not making it through

:19:35.:19:39.

to the much more tightly integrated Europe that is being designed. One

:19:40.:19:44.

has to hope that somebody is indeed designing the future of Europe.

:19:44.:19:47.

Because day by day, as we cover this, the surface impression

:19:47.:19:51.

remains that nobody is really designing much.

:19:51.:19:57.

Thank you very much. Our political editor, Allegra Stratton, is here

:19:57.:20:02.

today. There were some surprisingly frank words from George Osborne

:20:02.:20:06.

weren't there? An American journalist once said gap is when a

:20:06.:20:10.

politician speaks the truth. Today George Osborne suggested this idea

:20:10.:20:14.

that he was possibly speaking off the record, but his aides are not

:20:14.:20:18.

resigning from his comments, that it might be best for Germany if

:20:18.:20:21.

Greece were to leave the Europe, because the German public would

:20:21.:20:25.

have a greater sense of clarity of there being resolution within the

:20:25.:20:28.

eurozone to deal with various countries, and Greece wasn't one of

:20:28.:20:31.

those countries that was prepared to deal with it. Is this what is

:20:31.:20:35.

known as being helpful? He's incredibly frustrated. Some of his

:20:35.:20:41.

friends talk about his stories from some G20/eurozone meetings where

:20:41.:20:44.

people are playing on their I pads rather than coming up with

:20:44.:20:49.

pollution -- iPads rather than coming up with solutions. His

:20:49.:20:54.

frustrations is coming through. Equally, Paul used the phrase,

:20:54.:20:59.

"people close to the loop", many people don't think there is a loop

:20:59.:21:04.

and people are close to the game plan. And other people saying

:21:04.:21:07.

really Barroso could legislate with all these eurozone economies for

:21:07.:21:11.

the beginning of January 2014, that is very quick and unlikely even

:21:11.:21:14.

Barroso's plan is being met with raised eyebrows inside Government

:21:14.:21:17.

right now I think there is a sense that we are hearing concrete plans,

:21:17.:21:22.

but actually the likelihood of them being realised is still, very, very

:21:22.:21:25.

small. One further thing, there is a growing number of people within

:21:25.:21:28.

cabinet who think this entire chaos should be used as way in which to

:21:28.:21:34.

back out of Europe. We might explore that later on.

:21:34.:21:39.

Here also tonight we have Joe Johnson, the business ministers's

:21:39.:21:42.

Parliamentary Private Secretary, an opening bowler for the House of

:21:42.:21:45.

Commons cricket team. We have the chair of the European Parliament's

:21:46.:21:49.

economic affairs committee in Strasbourg, and from Berlin we have

:21:49.:21:53.

the head of the Berlin stock exchange.

:21:53.:22:01.

Let's go to Strasbourg, do you think this is a good idea?

:22:01.:22:05.

banking union? Yeah. There are elements of a good idea in it. One

:22:05.:22:10.

of the things it recognises is that banking supervision has to take

:22:10.:22:15.

account of what monetary policy is. So to have the ECB involved in

:22:15.:22:19.

supervision of eurozone banks, and therefore taking account of

:22:19.:22:23.

eurozone monetary policy in that supervision is a good idea. The

:22:23.:22:27.

parallel to that is, of course, that it would mean that in the

:22:27.:22:31.

United Kingdom then the Bank of England would be able to continue

:22:31.:22:36.

to have some adjustment in banking supervision, in line with the

:22:36.:22:40.

policies that we were setting. So there is some happy parallels there.

:22:40.:22:44.

There is a lot more that we would have to do. There is concern, I

:22:44.:22:48.

think, as to whether Germany actually would have all their banks

:22:48.:22:52.

in it. They tend to talk about the largest banks. Let's go to Berlin

:22:52.:23:02.
:23:02.:23:03.

and find out does it seem a sensible idea to you there?

:23:03.:23:06.

Obviously it is feasible with having a centralised supervision,

:23:06.:23:12.

most likely that will happen, but please remember we have the EAB in

:23:12.:23:17.

London, there is almost something already in place. The EAC doesn't

:23:17.:23:22.

have the power which is -- EAB doesn't have the power needed for

:23:22.:23:27.

centralised supervision, and the ECB might be better suited to do

:23:27.:23:31.

that. The second part is there should be a joint debt insurance

:23:31.:23:36.

system, here I believe we first need some kind of fiscal common

:23:36.:23:40.

policy. And the third bit would be some kind of institution which

:23:40.:23:43.

deals with failed banks, which currently happens on national level,

:23:43.:23:47.

and then should happen on a European level. The British

:23:47.:23:53.

position has been that we want the euro to succeed. So we think this

:23:53.:23:57.

is a good idea, do we? Britain is supportive of anything that

:23:57.:24:02.

resolves the eurocrisis, and this is potentially the big bass zook ka

:24:02.:24:08.

that the eurocrisis -- bazooka that the eurocrisis has been waiting for

:24:08.:24:11.

years. If it resolves the crisis, Britain won't stand in the way of

:24:11.:24:16.

it. We won't be part of any banking union, but we won't be part of the

:24:16.:24:19.

problem. We are in favour of the eurozone taking the medicine, but

:24:20.:24:25.

not taking it ourselves? Osborne has made clear he's happy for

:24:25.:24:29.

eurozone countries to go ahead with banking union, but Britain would

:24:29.:24:33.

want safeguards to protect British tax-payers, and to make sure that

:24:33.:24:39.

the single market continues to be the property of all 27 member-

:24:39.:24:45.

states. And isn't arrogated to the signatories of the Fiscal Compact

:24:45.:24:50.

or members of a banking union. you think the German people be

:24:50.:24:56.

prepared to see perfectly decent German banks used to prop up flakey

:24:56.:24:59.

foreign banks? Only if there is a control element in it. I believe if

:25:00.:25:07.

the control, the budget control has been influenced by German

:25:07.:25:12.

politicians then, then the German taxpayer is willing to risk moving

:25:12.:25:18.

some of its tax into banks which fail in different nations.

:25:18.:25:23.

Britain would be right to worry, wouldn't they, about some of the

:25:23.:25:27.

implications of an agreement like this? Yes, I think we would have to

:25:27.:25:31.

get the balance right, in the model that I'm envisaging where the

:25:31.:25:34.

European Central Bank does the actual supervision, or the high-

:25:35.:25:38.

level supervision of the banks. There would still be the European

:25:38.:25:42.

banking authority, which is in London, and that would be looking

:25:42.:25:47.

after the single market side. We still would have common rules about

:25:47.:25:51.

our financial services industry being able to have passports into

:25:51.:25:55.

doing business in other European countries. That's not going to stop

:25:55.:25:59.

and we still would have the EBA as the referee for that. We would have

:25:59.:26:03.

to make sure the voting rules were changed so that the eurozone didn't

:26:03.:26:07.

always outvote everybody else. I think that could quite easily be

:26:07.:26:11.

done. When it comes to market infrastructure, that is talking

:26:11.:26:19.

about whether you are operating in euro, it has been said by the E --

:26:19.:26:23.

ECB that they would want everything cleared by the eurozone, they don't

:26:23.:26:27.

do that in the United States with dollars. We would demand that there

:26:27.:26:29.

wouldn't be discrimination that have kind. That would be the single

:26:29.:26:32.

most important thing for the City, and many other things flow from

:26:32.:26:35.

that. Do you think that an agreement like

:26:35.:26:41.

this would require revisions of European treaties? Foingsly, a

:26:41.:26:46.

banking union might -- potentially, a banking union might. There are

:26:46.:26:50.

many different variations of fiscal union and banking unions. Wouldn't

:26:50.:26:53.

this country be committed to a referendum on membership of the

:26:53.:26:55.

whole thing? The Government's position is pretty clear, it is set

:26:56.:26:59.

down in legislation, if there is a transfer of powers or competences

:26:59.:27:04.

away from the UK to Brussels, then that would automatically trigger a

:27:04.:27:08.

referendum. But that need not necessarily apply in the case of

:27:08.:27:13.

this sort of a thing? Ultimately it will be a political decision as to

:27:13.:27:17.

whether closer fiscal and economic co-ordination among the eurozone

:27:17.:27:21.

members or the Fiscal Compact members, which is a broader group

:27:21.:27:24.

of countries, constitutes a transfer of powers from Britain.

:27:25.:27:30.

Personally I think it is certainly, you can see the strengthening of a

:27:30.:27:32.

group diminishes the relative standing of a country outside of

:27:32.:27:35.

that group, in relation to that group. But it doesn't necessarily,

:27:36.:27:39.

in legal terms, constitute a transfer of powers. It is a

:27:39.:27:42.

political shift of power, not necessarily a legal one. But the

:27:42.:27:44.

question of where exactly the national interest lies is a

:27:44.:27:48.

difficult one, isn't it? Certainly, and Britain's national interest is

:27:48.:27:51.

in resolving this eurocrisis, that is why Britain is supporting

:27:51.:27:56.

measures po, tensionly, such as the banking union, that might do that.

:27:56.:27:59.

The British Chancellor today, the Chancellor of the Exchequer, said

:27:59.:28:06.

that it might require a Greek exit to make Germany take the crisis

:28:06.:28:11.

sufficiently seriously how does that play in Germany? We call this

:28:11.:28:15.

a Lehmans event. There is actually discussion in Germany if it might

:28:15.:28:21.

be a healthy thing to go through an exercise like that. It is pretty

:28:22.:28:25.

drastic, but I believe the eurozone could demonstrate they could

:28:25.:28:28.

survive an exit of a country from the euro. That would stablise on

:28:28.:28:32.

the one hand, on the other hand it would discipline everybody else.

:28:32.:28:35.

I'm not sure if that is the right approach. I personally think you

:28:35.:28:40.

should try everything to keep Greece in the euro, we should try

:28:40.:28:45.

everything to avoid further distance between the most important

:28:45.:28:50.

financial centre in Europe, which is London, from mainland Europe. I

:28:50.:28:55.

think it is very important that if you have a banking union, with 25

:28:55.:29:00.

banks, or so, that we stay as close as possible to what happens in the

:29:00.:29:04.

UK, because we depend in mainland on London and the City. I think the

:29:04.:29:08.

other way round as well. From your point of view, supposing there were

:29:08.:29:14.

this banking union, which didn't involve Britain, for obvious

:29:14.:29:19.

reasons, would that be in, would it do Britain any good or not?

:29:19.:29:24.

wouldn't do Britain any good, it wouldn't do Europe any good.

:29:24.:29:30.

Because the financial system is very much interwoven, and having a

:29:30.:29:34.

two-speed Europe is bad thing, and having two different financial

:29:34.:29:38.

systems in place, might make things even worse. I can see that there

:29:38.:29:45.

will be a lot of arguments coming up between banks sitting in London,

:29:45.:29:50.

and banks sitting in Europe. Thank you all very much indeed.

:29:50.:29:56.

Now, when Jeremy Hunt, the embattled Culture Secretary, faces

:29:56.:29:59.

the House of Commons demands tomorrow that he be investigated

:29:59.:30:02.

for alleged breaches of the Ministerial Code, he will do so

:30:02.:30:07.

without the aid of some of his supposed allies. The Lib Dem

:30:07.:30:12.

leaders has told his MPs to abstain, when the man he shares a cabinet

:30:12.:30:17.

table with faces censure tomorrow. One might say with friends like

:30:17.:30:20.

this...He Survived Leveson, but not the Lib Dems. They had a meeting

:30:20.:30:23.

this evenings, and Nick Clegg told them to abstain on a vote tomorrow.

:30:23.:30:29.

It won't be critical in terms of the Government losing the vote. But

:30:29.:30:34.

it will be embarrassing, or a sign to Jeremy Hunt that his Lib Dem

:30:34.:30:38.

colleagues don't support him not having been referred to Sir Alex

:30:38.:30:42.

Allan who is the Prime Minister's adviser on the Code of Conduct

:30:42.:30:46.

issues. Is it surprising that Nick Clegg is behaving like this, or is

:30:46.:30:51.

he leading from the back? It is not surprising, he's supposed to have

:30:51.:30:54.

raised these issues with David Cameron many times in private, and

:30:54.:30:58.

indeed, his MPs have made careers out of these sort of probity issues.

:30:58.:31:03.

It is not surprising, it is very, very irritating for Tory MPs,

:31:03.:31:08.

possibly like Joe Johnson, but more discreet than Joe Johnson, who feel

:31:08.:31:12.

they have been ordered back. One person has come back from honeymoon

:31:12.:31:17.

to vote in favour of the Government, and alongside Jeremy Hunt tomorrow

:31:17.:31:21.

afternoon, and then they learn their coalition colleagues are

:31:21.:31:25.

abstaining. It stores up this feeling that the Lib Dems are

:31:25.:31:28.

allowed to do what their consciences says but the Tories

:31:28.:31:33.

can't. There is elements of the Jeremy Hunt that upsets Tory

:31:33.:31:36.

backbenchers, but it is also about coalition relationships getting

:31:36.:31:41.

more difficult. What do you feel about it, Joe Johnson? Jeremy Hunt

:31:41.:31:43.

has the confidence of the Prime Minister and the parliamentary

:31:43.:31:47.

party. Tomorrow's vote should be mechanical and over quickly. What

:31:47.:31:51.

do you think about the Lib Dems abstaining? It is something for

:31:51.:31:54.

them to explain. Frankly Jeremy Hunt has the confidence of the

:31:54.:31:58.

Government and the Prime Minister, and parliamentary party, and

:31:58.:32:02.

everybody wishes him the best of luck into the olympics. You are

:32:02.:32:05.

more discreet than the people Allegra Stratton has been talking

:32:05.:32:08.

Earlier today it was the turn of the former Prime Minister, John

:32:08.:32:14.

Major, to appear at Leveson, it turned into an awkward session for

:32:14.:32:18.

Rupert Murdoch. David Grossman looked on. By his own admission,

:32:18.:32:20.

John Major cared too much about what the press wrote about him. It

:32:20.:32:25.

was natural, he explained, to get a bit raty, when his policies, like

:32:25.:32:32.

"back to basics ", were, he said, willfully misrepresented. I wear by

:32:32.:32:36.

almighty God...We Did get an and very interesting anecdote of a

:32:36.:32:39.

dinner before the 1997 election, where, Rupert Murdoch, apparently,

:32:40.:32:44.

sought to change the Major Government's policy on Europe.

:32:45.:32:47.

Murdoch said that he really didn't like our European policies, this

:32:47.:32:53.

was no surprise to me. That he didn't like our European policies,

:32:53.:32:57.

and he wished me to change our European policies. If we couldn't

:32:58.:33:02.

change our European policies, his papers could not and would not

:33:02.:33:08.

support the Conservative Government. As I recall, he used the word "we",

:33:08.:33:14.

when referring to his newspapers. He didn't make the usual nod

:33:14.:33:19.

towards editoral independence. this point there was a collective

:33:19.:33:23.

"aha" from those watching. Afterall Rupert Murdoch had previously told

:33:23.:33:27.

the inquiry this. I have never asked a Prime Minister for anything.

:33:27.:33:31.

Mr Murdoch's supporters say he was talking there about asking prime

:33:31.:33:36.

ministers for personal or commercial favours. Changing

:33:36.:33:40.

Government policy is another matter. Afterall, more or less every

:33:40.:33:43.

newspaper seeks to change Government policy, more or less

:33:43.:33:48.

every day. Although, not always in that sort of face-to-face personal

:33:48.:33:51.

way. It is not very often someone sits in front of a Prime Minister

:33:51.:33:55.

and says to a Prime Minister, I would like you to change your

:33:55.:34:00.

policy. If you don't change your policy, my organisation cannot

:34:00.:34:04.

support you. So it is unlikely to be something I

:34:04.:34:09.

would have forgotten. John Major then went on to accuse former

:34:09.:34:14.

advisers of Gordon Brown of lying about him to the press, on not one

:34:14.:34:20.

but two occasions. Firstly, saying both he and Norman Lamont were

:34:20.:34:23.

trying to prevent publication of documents relating to Black

:34:23.:34:27.

Wednesday, and on a second occasion, that he had tried to prevent Robert

:34:27.:34:32.

Mugabe being striped of his Knighthood. In fact, Sir John said,

:34:32.:34:35.

he was so angry about what had happened, he wrote to the then

:34:35.:34:45.
:34:45.:35:04.

cabinet secretary about it. In the I regarded the behaviour that

:35:04.:35:09.

Norman Lamont and I, in the first instance, and me in the second, had

:35:09.:35:12.

suffered, as being absolutely dishonest and dishonourable. I

:35:12.:35:15.

suppose we're big enough to take t but it seemed to me, from what I

:35:15.:35:18.

heard, it was happening to lots of other people as well. In terms of

:35:18.:35:22.

this direct briefing against people. I thought it was time that there

:35:22.:35:26.

should be no doubt that the Prime Minister knew about it. Ed Miliband

:35:26.:35:31.

was next up, giving evidence. He, of course, was once one of Gordon

:35:32.:35:36.

Brown's advisers, although not one who briefed the press. He was,

:35:36.:35:41.

though, asked about the then advisers who did? Were you aware of

:35:41.:35:44.

off the record briefings against Tony Blair and other Government

:35:44.:35:53.

ministers by, in particular, Ed Balls, Charley Whelan, and Damian

:35:53.:35:59.

McBride? Let me answer that specifically, Ed Balls, no, Charley

:35:59.:36:03.

Whelan left the Government in 1999. One of the reasons he left was

:36:03.:36:06.

because of his style of operation. I can't point you to direct

:36:06.:36:11.

evidence, but I would say one of the things he did, was he briefed.

:36:11.:36:14.

Including potentially against people who were in the Government.

:36:14.:36:21.

On Damian McBride, when I was a cabinet minister, I did raise a

:36:21.:36:27.

specific concern that I had with Mr Brown, I believe in September 2008,

:36:27.:36:32.

about some of Mr McBride's activities.

:36:32.:36:36.

Mr Brown, of course, yesterday told the inquiry, that he didn't

:36:36.:36:40.

authorise any briefings against John Major, Tony Blair or indeed

:36:40.:36:44.

anyone else. Today, his successor as Labour leader told the inquiry

:36:44.:36:49.

that part of the problem has been the size of Rupert Murdoch's

:36:50.:36:55.

newspaper operation. I don't believe that one person should

:36:55.:37:05.
:37:05.:37:06.

continue to control 37%, or now 34% of the newspaper market. My strong

:37:06.:37:12.

instinct is that's too much. And I would like to see, I submit, that I

:37:12.:37:15.

would like to see the inquiry looking at the question as to

:37:16.:37:20.

whether we should have lower limits. Tomorrow the inquiry will be

:37:20.:37:23.

hearing from Alex Salmond and Nick Clegg, before hearing from the

:37:23.:37:29.

Prime Minister on Thursday. What do you do with young

:37:29.:37:32.

criminals? Bang 'em up is the usual answer from much of the population,

:37:32.:37:36.

despite the fact that we know that most of them will just go on to

:37:36.:37:41.

offend again. Battery farms full of bothered young people is what one

:37:41.:37:46.

reform group -- bored young people is what one reform group calls

:37:46.:37:51.

prison. The hardest cases can be a nightmare to manage. Now the

:37:51.:37:54.

biggest young offenders prison in Europe is trying a new way of

:37:54.:37:59.

dealing with these most troubled and troublesome images. In this

:37:59.:38:09.
:38:09.:38:09.

report they use some strong language.

:38:09.:38:15.

Beyond two walls, hundreds of yards of razor wire, and five secure

:38:15.:38:20.

gates. Europe's largest youth prison. Hindley, near Wigan, is

:38:20.:38:23.

home to some of the most violent and disruptive teenagers in Britain.

:38:23.:38:31.

And we're the first to film inside. Two lads tried to jump me, I turned

:38:31.:38:35.

around and started fighting with them. One picked up a bottle and

:38:35.:38:40.

tried to hit me with it, I took it off him and smashed it around one

:38:40.:38:46.

of them and put it in the other one's neck. I walked into a shop

:38:46.:38:52.

with a knife, I pointed the knife at him to give me all the money.

:38:52.:38:56.

Talk me through the incident? a couple of drinks with the boys

:38:56.:39:01.

and that, and just got into a bit of an argument, and broke one of

:39:01.:39:08.

their noses, and the police seen it. This unit inside Hindley, the

:39:08.:39:11.

Willow Unit, is the first of its kind, a prison within a prison, set

:39:11.:39:16.

up to take the most difficult, violent teenagers. Almost all are

:39:16.:39:19.

transferred here after getting involved in fights on the sprawling

:39:19.:39:28.

main wings of Hindley. Why did you do that, did you that on purpose

:39:28.:39:34.

you fuckin dickhead. I hit one lad and he fell on the floor and I

:39:34.:39:37.

stamped him, and I went on to another one, I sorted two people

:39:37.:39:41.

and went for the third one. People want to wind you up, you have to

:39:41.:39:45.

stand your ground, or people will start bullying you. Is that quite

:39:45.:39:48.

important to you, the whole reputation thing? If you don't have

:39:48.:39:51.

a reputation people will take you as a Muppet, if you have a

:39:52.:39:55.

reputation they will ease on you a bit. If I can't beat you I will

:39:55.:39:59.

come back with a weapon. We are locking up far fewer young people.

:39:59.:40:03.

The number held across England and Wales has fallen by a third in five

:40:03.:40:09.

years. Fewer than 3% of those in custody are now under 18. But those

:40:09.:40:14.

under 18s are involved in more than 20% of all assaults in prison.

:40:14.:40:19.

The main wings in Hindley are large, 60 prisoners, watched over by six

:40:19.:40:22.

prison officers. It is easy for one small incident

:40:22.:40:28.

to get out of hand. Willow is the first real attempt to change that.

:40:28.:40:33.

A separate 11-bed unit, with three- times more staff. There to respond

:40:33.:40:43.
:40:43.:40:44.

when things go wrong. (shouting) A routine search has

:40:44.:40:48.

turned violent a teenager has smashed up his TV. Now he's

:40:48.:40:57.

throwing himself against his cell door again and again and again.

:40:57.:41:01.

Do this on the busy main wing of the prison and you disturb everyone

:41:01.:41:06.

else. You make yourself a target, as soon as you step outside your

:41:06.:41:11.

cell. Ryan, are you going to talk to me? Talk to me, fucking talk to

:41:11.:41:19.

He has been quite problematic this morning, very threatening and

:41:19.:41:23.

abusive towards staff. He doesn't like to accept any responsibility.

:41:23.:41:28.

I'm not litsening to this any more, we are going around in circles and

:41:28.:41:32.

getting nowhere, when you have chilled out I will come back. He

:41:32.:41:36.

saw the TV had been taken out and kicked the TV and went as if he was

:41:36.:41:39.

going to assault staff, so staff restrained him and returned him to

:41:39.:41:47.

his room. How long until he gets to another TV? Smashing a TV is 28

:41:47.:41:57.

days. We're going into the mental health unit. How do you begin to

:41:57.:42:00.

handle teenagers who slam themselves against cell doors, and

:42:00.:42:05.

think nothing of attacking other prisoners? Well, to start with, you

:42:05.:42:10.

put them in a chill-out room. use it for young people to do

:42:10.:42:16.

relaxation, to help them, to engage. Andy Rodgers is the senior clinical

:42:16.:42:21.

psychologist here, he says the main aim is to improve safety in the

:42:21.:42:25.

prison. Any rehabilitation is a bonus. It is not about they are

:42:25.:42:29.

skwhrus going to be better, the reality is -- just going to be

:42:29.:42:34.

better, the reality is they won't be. It has taken up to 17 years to

:42:34.:42:38.

get to this point, it won't take three months for them to be better.

:42:38.:42:43.

But we try to break some of those cycles, I guess. Is this a reward

:42:43.:42:47.

for bad behaviour, you are behaving badly, therefore, you are put in a

:42:47.:42:51.

nice wing, with an XBox, and the rest of it. You want to me ask me

:42:51.:42:57.

is it a soft option? Yes? Our view, very clearly, is it is not a soft

:42:57.:43:04.

option. Actually, developmentally, overcare, being overly nice can be

:43:04.:43:08.

as harmful as neglect in the situation. All this costs money. �2

:43:08.:43:14.

million to set up Willow. �200,000 a cell. Prison reform groups say

:43:14.:43:17.

that will be far better spent taking these teenagers completely

:43:17.:43:21.

out of jail. And putting them in a high-security children's home, with

:43:21.:43:27.

more staff, more care, more help. This place, they say, is no long-

:43:27.:43:37.
:43:37.:43:37.

term answer, just a short-term fix. Give me a tour round here?

:43:37.:43:43.

Scott has been on Willow for three months now, again because of his

:43:43.:43:47.

behaviour in the main prison. There's my TV, I can watch that at

:43:47.:43:52.

night.'S About to finish a sentence for holding up a shop with a knife,

:43:52.:43:58.

and a string of burglaries. Do you think it has made a

:43:58.:44:02.

difference to you? Pretty much, I have started to behave here. I have

:44:02.:44:09.

only been on basics once. You get your XBox if you start behaving, I

:44:09.:44:15.

will behave for that. I don't know, out next week, so, I don't know. It

:44:15.:44:20.

has gone faster in here, time. are going to get leased next week?

:44:20.:44:25.

Yeah. Next Friday. Are you looking forward to it? Not really bothered.

:44:25.:44:29.

At the end of the day. You are not really bothered about getting

:44:29.:44:34.

released? Not really. Are you a bit worried? A bit worried, but it is

:44:34.:44:38.

standard, it was only 13 month, I don't know what to expect when I

:44:38.:44:46.

get out. That is the next big step, reoffending rates in youth prisons

:44:46.:44:50.

are notoriously high .5% of the teenagers in Hindley will end up

:44:50.:44:57.

committing another crime within a year of their release. These young

:44:57.:45:01.

-- These young people here will go d'oh well never to offend when they

:45:01.:45:11.

get out? -- here will do well never to offend when they get out? It is

:45:11.:45:14.

better if they refrain from offending earlier than they would

:45:14.:45:18.

have done if they hadn't had some of the intervention. I guess it is

:45:18.:45:22.

a developmental perspective that we take. It sound like the bar is, if

:45:22.:45:27.

we can get someone to hit someone lightly less than they are at the

:45:27.:45:31.

moment, that is almost a prosession? That is a start.

:45:31.:45:35.

-- A progression. That is a start. It is something another Willow

:45:36.:45:40.

inmate has been thinking about hard. Kieran has been in and out of

:45:40.:45:45.

prison since he was 15, this last time after breaking someone's nose

:45:45.:45:48.

in a pub brawl. He's now packing up his stuff, and getting ready to

:45:49.:45:54.

leave in a few weeks time. Do you think being in a unit like this,

:45:54.:46:02.

has it taught you to control your temper a little bit more? Yes,

:46:02.:46:07.

because I haven't lost it since I have been here. I take it that's a

:46:07.:46:12.

good thing. But it is different when I drink, yeah, but hopefully,

:46:12.:46:19.

since I have been down here, I have had more opportunity to see the

:46:19.:46:26.

alcohol nurse, the alcohol misuse worker, she has given me a lot of

:46:26.:46:29.

advice. It is beneficial at the end of the day. Do you think you could

:46:29.:46:36.

get on top of that? Yeah. Honestly, when you are out with mates back

:46:36.:46:40.

home? I'm moving into a new area, I'm trying to have a fresh start.

:46:40.:46:45.

What do you think your chances are of being successful? Auto-auto.

:46:45.:46:52.

What are the odds of the Willow Unit working? The Government is

:46:52.:46:56.

optimistic, it now wants more of these in other prisons. At the very

:46:56.:46:59.

least they could make life safer behind bars. But even the people

:46:59.:47:04.

working here accept the best Willow can really hope to do, is help

:47:04.:47:08.

these teenagers commit a less serious, less violent crime, next

:47:08.:47:11.

time round. On tomorrow's programme we will

:47:11.:47:17.

continue to explore the issue of troubled teenagers. Tim Whewell has

:47:17.:47:21.

been investigating how the private care home system has left

:47:21.:47:24.

vulnerable children open to abuse. Some of tomorrow morning's front

:47:24.:47:30.

pages now the Guardian chooses as its lead the same story we were

:47:30.:47:32.

focusing on earlier, Hillary Clinton's accusation that is the

:47:32.:47:42.
:47:42.:48:06.

Russians are shipping helicopters That's all for now, for fall-out

:48:06.:48:13.

from last night's draw with France in the Euro 2012 championships. The

:48:13.:48:17.

England supporters' band was banned for performing by stewards in the

:48:18.:48:23.

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