09/10/2012 Newsnight


09/10/2012

Is austerity still the answer for Greece? What would a BAE merger mean? And inside the parts of Syria still loyal to Assad. With Gavin Esler.


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Transcript


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Tonight, Greece gets a pat on the back from Germany's Chancellor

:00:13.:00:17.

Angela Merkel, fork knuckling down to austerity. With more unrest on

:00:17.:00:21.

the streets and the IMF forecasting a further downgrading in global

:00:21.:00:26.

growth, is austerity still the answer?

:00:26.:00:32.

The IFM now thinks it totally underestimated the impact of

:00:32.:00:38.

austerity growth. Greece's former Finance Minister is here. The

:00:38.:00:42.

Conservative Party Conference cheers plans to make it legally

:00:42.:00:46.

easier to have a go at burglar Bill. Will changing the law have any

:00:46.:00:51.

practical effect. We hear from the police minister.

:00:51.:00:54.

The biggest defence and Aerospace merger is due to be decided

:00:54.:00:59.

tomorrow. BAe and EADS could create a giant to rival Boeing. But at

:00:59.:01:03.

what cost to our relationship with America. If you introduce European

:01:03.:01:09.

Governments into that equation as well, American receipt since to

:01:09.:01:19.

share intellectual -- receipt at this since to share intellectual

:01:19.:01:23.

intelligence will be there. So many people have died in Syria because

:01:23.:01:33.
:01:33.:01:38.

of it. Because of terrorism! In ancient myths Sisyphus was

:01:39.:01:43.

punished by the Gods, if would roll a boulder up a hill and when he got

:01:43.:01:51.

to the top he would start again. And The person many Greeks blame

:01:51.:01:54.

for the cuts in their living standards, German's Chancellor,

:01:54.:01:59.

Angela Merkel, when she arrived in Athens today, she was greeted with

:01:59.:02:05.

protests and hostility on the streets. The advise Tim came as the

:02:05.:02:07.

International Monetary Fund published figures to suggest that

:02:08.:02:12.

it may not just be the Greeks rolling a stone up a hill to no

:02:12.:02:15.

effect. What is happening? They have put

:02:15.:02:19.

out a statement saying the eurozone is the cause of acute instability

:02:19.:02:23.

is the cause of acute instability in the world. We knew that. A few

:02:23.:02:26.

hours ago they issued a forecast for the world economy, which we

:02:26.:02:30.

will see as a turning point in attitudes. There is a growth

:02:30.:02:33.

downgrade across the board they have forecast. In this country we

:02:33.:02:38.

are going to say 0.4% shrinkage of the economy. We have suffered the

:02:38.:02:40.

biggest downgrade in growth projections for any major economy.

:02:40.:02:45.

But the IMF is also starting to basically put it about in politics,

:02:45.:02:47.

it is saying to the British Government, you have to start

:02:47.:02:51.

thinking about a plan B, abandoning your debt and deficit targets, if

:02:51.:02:58.

things don't get any better than this. It said outright to the

:02:58.:03:02.

American Government, that its planned, across the board cuts,

:03:02.:03:07.

planned for next year, must be removed, or they will tank the

:03:07.:03:11.

American economy, and possibly the world's. It is very political.

:03:11.:03:13.

Especially with the American elections and implicit blame on

:03:13.:03:18.

Congress. In simple terms, is this the high priest of austerity, the

:03:18.:03:22.

IMF, saying it is not working? have just decided that their own

:03:23.:03:25.

economics have been wrong for several years, that their maths are

:03:25.:03:29.

wrong. Now, what it is about is how you calculate the impact of tax

:03:29.:03:37.

rises and spending cuts, on growth. These are consult mult pliers. They

:03:37.:03:42.

thought for every 1% of austerity you do, you lose about half a per

:03:42.:03:49.

cent of growth. That is the British Government's methodology for

:03:49.:03:52.

departmental spending. But they have said tonight it is more like

:03:52.:03:56.

1.7%. That is not just a little bit more, it is in the opposite

:03:56.:03:59.

direction. Instead of minimising the impact of austerity, as a

:03:59.:04:03.

normal economy would, the current economic conditions aream plifying

:04:03.:04:08.

it in a way they didn't --am plifying it in the way they didn't

:04:08.:04:13.

think. They said you do austerity and you get growth, they now

:04:13.:04:16.

realise you don't get growth and you can get a death spiral. There

:04:16.:04:21.

is no country more in the grip of that than Greece. If the IMF

:04:21.:04:25.

manages to change attitudes and its own attitudes, as a player in

:04:25.:04:29.

Greece, there will be nobody more pleased than those who had to cope

:04:29.:04:39.

with what we are about to show new Greece. Angela Merkel arrived, she

:04:39.:04:43.

said, to support Greece, to support its progress on reform and

:04:43.:04:53.
:04:53.:04:54.

austerity. She did not find much support on the streets of Athens.

:04:54.:04:58.

7,000 riot police were deployed, all demonstrations banned, the

:04:58.:05:08.
:05:08.:05:17.

square outside parliament cleared in the same old way. The Greek

:05:17.:05:22.

Prime Minister said this weekend his country was facing a collapse,

:05:22.:05:26.

democracy, he said, faces its greatest challenge, his coalition

:05:26.:05:29.

had pledged to renegotiate the bail out deal, with softer conditions,

:05:29.:05:34.

and more time to balance the books. But Mrs Merkel could offer none of

:05:34.:05:37.

that. TRANSLATION: Despite the fact this is a difficult path, I think

:05:37.:05:41.

it is going to prove worthwhile for Greece, for if you would not attend

:05:41.:05:46.

to solving the problems now, they would recur at a later point in

:05:46.:05:50.

time in a more dramatic way. many Greek, even away from the

:05:50.:05:53.

trouble, it is dramatic already. 25% of them have had to join the

:05:53.:05:59.

dole queues, and since the crisis, the economy has shrunk by 23%. A

:05:59.:06:03.

country that was once peaceful and prosperous, is just depressed.

:06:03.:06:11.

Greece is now going through a humanitarian catastrophe. The

:06:11.:06:14.

social fabric of the country's is decaying, and may collapse. With

:06:14.:06:19.

the huge number of homeless in the streets, with people shooting up,

:06:19.:06:24.

with people looking into rubbish bins to get food and so on. The

:06:24.:06:29.

place is collapsing. Two years ago, the IMF predicted that, despite the

:06:29.:06:34.

cuts and tax rises, the Greek economy would now be growing, at 1%

:06:34.:06:40.

a year. It is now predicted to shrink by 6% this year. Its debt

:06:40.:06:45.

looks set to reach 171% of GDP by Christmas. And the EU, yesterday,

:06:45.:06:50.

said Greece has until the 18th of October to implement a new round of

:06:50.:06:56.

cuts, privatisations and reforms, only then will the 31 billion euro

:06:56.:06:59.

bail out payment be repleased. problem, of course, if the money

:06:59.:07:03.

doesn't come and there is no change in conditions, it is, first of all,

:07:03.:07:06.

that everyone will get completely disillusioned with the Government

:07:06.:07:08.

that promised they were going to achieve some negotiations in all

:07:08.:07:13.

this, and come back with some goodies to show to the Greek

:07:13.:07:16.

population that voted for them. The second is, they won't be able to

:07:16.:07:21.

carry on as they are at present. I predict that at that point, if you

:07:21.:07:25.

like, the things we have seen so far, in terms of protests, are

:07:25.:07:29.

nothing by comparison to what we will see then.

:07:29.:07:34.

But Greece's problem is no longer just economic. The far right party,

:07:34.:07:42.

Golden Dawn, is coming third in the polls at 12%. Here, the activists

:07:42.:07:47.

clash with police as they attempt to attack a migrant centre.

:07:47.:07:52.

Meanwhile, strikes are everywhere. It was hospitals today. And Syriza

:07:52.:07:56.

Party, the big far left party, that nearly won the last election, is

:07:56.:08:04.

drawing a stark conclusion. When austerity come, democracy goes.

:08:04.:08:10.

This is absolutely true in Greece. We have seen democracy

:08:10.:08:15.

deteriorating all these years, three consecutive years. They

:08:15.:08:22.

change the laws and when they don't change the law, they put the police

:08:22.:08:31.

to do their dirty jobs, or they allow their -- the new Nazi party

:08:31.:08:38.

to run the society. Today, the demonstrators brought in

:08:38.:08:43.

some distinctly non-Neo-Nazi uniforms in fancy dress to make the

:08:43.:08:47.

point. But worries about Greek democracy are widely shared. To be

:08:47.:08:51.

in the European Union, you have to be a democracy. When communist

:08:51.:08:57.

states wanted to join in the early 1990, they were shown the called

:08:57.:09:00.

Copenhagen criteria, stable institutions, guarnteeing democracy,

:09:00.:09:06.

the rule of law, human rights and the protection of my norts. There

:09:06.:09:10.

is now growing concern -- my norts, there is growing concern inside and

:09:10.:09:20.
:09:20.:09:22.

out of Greece that the country itself may no longer meet them.

:09:22.:09:25.

military won't standby and see all this happen. It is interesting for

:09:25.:09:29.

me, the only way Greece can actually leave the EU is if it is

:09:29.:09:33.

no longer a democracy. I suspect if the rest of Europe doesn't help

:09:33.:09:37.

Greece, Greece will not be a democracy for long.

:09:37.:09:41.

Greece is approaching some kind of end game, if the IMF, which

:09:41.:09:46.

prescribed austerity, now says it should be taken in smaller doses,

:09:46.:09:51.

no-one will heave a greater sigh of relief, than those trying to hold

:09:51.:09:54.

this country together. George Papaconstantinou was the Finance

:09:55.:09:59.

Minister of Greece when this crisis began. Let's start with the IMF,

:09:59.:10:03.

first of all, what do you think is the impact going to be in Greece,

:10:04.:10:07.

what we have heard tonight, which is the suggestion that austerity is

:10:07.:10:14.

not working, simply not working? are in the fifth year of recession,

:10:15.:10:19.

basically, growth stopped in 2008, since then we have lost a quarter

:10:19.:10:26.

of GDP. And unemployment, as you reported, is about 23%, one in two

:10:26.:10:32.

young people are out of job. 50% of young people is out of a job,

:10:32.:10:35.

austerity is not working for you? It is clear that austerity by

:10:35.:10:40.

itself cannot work. We are now beyond a point where you need to

:10:40.:10:45.

find a way to get growth going again. Whatever you do, on

:10:45.:10:49.

expenditures and getting revenues up. If your economy isn't growing,

:10:49.:10:52.

it is a self-defeating process. That is where we are at the moment.

:10:52.:10:56.

If that is where you are at the moment. Do you think Greek people

:10:56.:11:00.

feel you are at the sharp end of an experiment going completely wrong?

:11:00.:11:03.

I don't think there is any high mathematics behind the kind of

:11:03.:11:07.

formulas that the IMF is using. It depends on a number of factors. For

:11:07.:11:11.

example, are other countries growing, so you can grow by

:11:11.:11:15.

exporting toe them? Is the confidence so the investors can

:11:15.:11:18.

come into the country? At the moment we have not been able to get

:11:19.:11:26.

rid of what people call a currency risk, people are afraid Greece will

:11:26.:11:30.

exit the eurozone, so investors and assets out there are not coming in.

:11:30.:11:34.

As long as we don't turn that, whatever we do on austerity won't

:11:34.:11:38.

be enough. You have got to negotiate for the next tranche of

:11:38.:11:42.

bail out money, which means negotiating for the next round of

:11:42.:11:46.

austerity. I mean, the implication of that IMF report, one would have

:11:46.:11:49.

thought, and you say the mathematics are not that difficult,

:11:49.:11:53.

would be that the appetite for more austerity in Greece is absolutely

:11:53.:11:58.

zero? Yes, because you have had wages being reduced by 40%, you

:11:58.:12:05.

have had huge increases in taxation, and you have everyone hurting.

:12:05.:12:09.

There is no question that, there has been an agreement, and we have

:12:09.:12:14.

to pass these measures, but that is the first step into changing the

:12:14.:12:19.

environment, whereby you then tell the European Parliament and the IMF

:12:19.:12:22.

that we have done our bit. You need to help with debt sustainability,

:12:22.:12:25.

there is a number of ways to do that, for example the money that

:12:25.:12:29.

goes into the banks, the recapitalisation of the banks does

:12:29.:12:34.

not count towards the national debt. The official sector agrees to also

:12:34.:12:37.

participate, and some how get the level of the debt down. There by

:12:37.:12:41.

you change the environment outside. So that the outside wall, the

:12:41.:12:44.

investors -- outside world, the investors see you are out of the

:12:44.:12:49.

hole you are in. Do you worry as a number of people in the film said,

:12:49.:12:57.

that Greece's democracy itself is so fragile, the idea of the Neo-

:12:57.:13:02.

Nazi party, and the far left, making a stance saying the

:13:02.:13:06.

traditional parties haven't handled this, including your own party?

:13:06.:13:09.

don't needing to to the extreme of what we have heard, that when

:13:10.:13:12.

austerity comes in, democracy leaves. There is no question when

:13:12.:13:15.

you started off with the kind of deficits and external deficits we

:13:15.:13:19.

had, and you tried to put these into some kind of control, it hurts

:13:19.:13:23.

everyone, it hurts everyone very badly extremes find a fertile

:13:23.:13:28.

ground, and yes, indeed, at the moment, in the Neo-Nazi parties

:13:28.:13:31.

polling third, that is extremely dangerous. I don't think we are

:13:31.:13:37.

close to a coup, as some people seem to believe here. Because the

:13:37.:13:43.

military wouldn't want to takeover that kind of mess? We do have a

:13:43.:13:45.

stable democracy, but we are very close to the kind of social unrest,

:13:45.:13:50.

after which you don't know where it will go. And whoever is looking at

:13:50.:13:54.

Greece, at the whole problem, cannot simply look at where weather

:13:54.:13:59.

the targets are met. Most of the tarts have met. We have done more,

:13:59.:14:03.

in terms of austerity, than any other country, in the modern rather,

:14:04.:14:07.

in a short time. We have to go beyond that, in that context we

:14:07.:14:10.

have to take account of what is happening to the democratic process

:14:10.:14:13.

and the social tensions in the country. Forgetting the politics of

:14:13.:14:16.

it, as a Greek man, are you really worried about the future of your

:14:16.:14:20.

country right now? I'm worried because I see young people that

:14:20.:14:23.

think there is no future. I'm worried because I see

:14:24.:14:26.

disillusionment, and I'm worried because people don't see the end of

:14:26.:14:30.

the tunnel. It is a shame, this country has tremendous potential,

:14:31.:14:34.

great people, fantastic natural resources. Its geopolitical place

:14:34.:14:37.

in the world is excellent for growth and prosperity. It needs to

:14:37.:14:41.

be given a chance. It has proven over the last two years that it is

:14:41.:14:48.

willing to do what it take, even though it hurts. Now, it was, as

:14:48.:14:51.

one observer suggested, tough- talking Tuesday, at the

:14:51.:14:54.

Conservative Party Conference today. Everything from immigration and

:14:54.:15:00.

Europe to burglars and other law and order issue, the Conservative

:15:00.:15:04.

leadership were pretty conservative. Victims of anti-social behaviour

:15:04.:15:11.

may in future be able to choose suitable punishments for tormenters.

:15:11.:15:15.

Homeowners may find it less legally problematic if they tackle burglars

:15:15.:15:19.

in their own homes. This all heads up for the Prime Minister's big

:15:19.:15:22.

speech tomorrow. We have had some sight of the Prime

:15:22.:15:27.

Minister's speech tomorrow. Obvious low it is all subject to rather

:15:27.:15:30.

tedious embargos, what we will be talking about tomorrow evening is,

:15:30.:15:33.

firstly, his speech will have a message that the coalition is the

:15:33.:15:37.

only group in town who are determined about bringing down the

:15:37.:15:40.

deficit. That's pose supposed to highlight the fact that last week

:15:40.:15:44.

the lead -- that's supposed to highlight the fact that last week

:15:44.:15:48.

the leader of the opposition gave a speech and never mentioned the

:15:48.:15:51.

deficit once. It is supposed to highlight the difference in

:15:51.:15:54.

seriousness and the coalition is the only group to do anything about

:15:54.:15:57.

it. What we will be talking about tomorrow, I think, is this is a

:15:57.:16:01.

speech different in tone than many others have come before, it is very

:16:01.:16:04.

personal. It is the seventh speech that the Prime Minister, as was

:16:04.:16:07.

leader of the opposition, and for two years as Prime Minister has

:16:07.:16:10.

made. It does feel like there is elements of his background we are

:16:11.:16:14.

learning for the first time, certainly in speech form. We will

:16:14.:16:17.

discuss that tomorrow evening. We will also discuss what they won't

:16:17.:16:21.

talk about in the speech, which is what we call in politics, the

:16:21.:16:26.

process of everything, which is why they are reaching out in the way

:16:26.:16:28.

they are. They have been in Government for two years and they

:16:28.:16:33.

are shifting the message, it is more about the strivers, what they

:16:33.:16:37.

call blue collar Conservatism, it is about those who want an emphasis

:16:37.:16:40.

on crime, welfare and immigration, it is not to say the party is going

:16:40.:16:44.

right-wing, many will say that, it is a central concern for lots out

:16:44.:16:47.

there, it is saying, and perhaps in the past the Government hasn't

:16:47.:16:50.

talked about it enough. We have done what the Conservative managers

:16:50.:16:56.

don't really want us to do, which is to look at the methodology and

:16:56.:17:01.

process behind it, and the strivers and blue collar Conservatism. In

:17:01.:17:06.

the first two years of the coalition this chap, Burglar Bill

:17:06.:17:09.

might have thought he was operate anything a benign climate. If you

:17:09.:17:12.

found him on the other side of your front door, you might have felt

:17:12.:17:15.

helpless. When we woke up in Birmingham this morning, we had

:17:15.:17:21.

gone back to basics, batter a burglar, the Sun announced.

:17:21.:17:25.

Householders acting instinctively and honestly in self-defence, are

:17:25.:17:28.

victims not criminals. They should be treated that way.

:17:28.:17:35.

APPLAUSE That is why we are going to deal

:17:35.:17:41.

with this issue once and for all. I will shortly bring forward a change

:17:41.:17:47.

to the law. It will mean that even if a householder, faced with that

:17:47.:17:52.

terrifying situation, uses force, that in the cold light of day might

:17:52.:17:56.

seem over the top, unless their response is grossly

:17:56.:18:03.

disproportionate, the law will be on their side. Except the first

:18:03.:18:07.

figures available show that from 1990 to 2005 there were 11

:18:07.:18:10.

prosecutions against people defending their property. Of those

:18:10.:18:14.

only seven were domestic burglaries. Grayling's move poses philosophical

:18:14.:18:18.

questions, but on the numbers alone, it is clearly a signal, not a

:18:18.:18:23.

seismic shift, for those involved in the every day fight against

:18:23.:18:29.

crime. Battering burglar, wap loling the welfare budget,

:18:29.:18:34.

emulating the immigration, lots of policy speeches, not that much

:18:34.:18:36.

substance right now. The Conservatives are trying to subtley

:18:36.:18:40.

move on to an agenda more about the every day concerns of most people's

:18:40.:18:44.

lives. Like life on the street like this. In the past people used to

:18:44.:18:49.

talk about whether the party would go off to the right or TUC into the

:18:49.:18:53.

centre. Actually, the -- tuck into the centre. Actually the public's

:18:53.:18:56.

views on crime are very tough, same on welfare and migration. The

:18:56.:18:59.

question for the Conservatives in terms of get to go the centre, is

:18:59.:19:02.

about what they are going to do for people on low incomes, what they

:19:02.:19:05.

will do about things like jobs. That is the balance that the party

:19:05.:19:08.

is trying to strike. They know a lot of their positions, like being

:19:08.:19:11.

tough on crime, are very popular. They have been trying to balance it

:19:11.:19:15.

out, and talking about the strivers, talking about people working hard

:19:15.:19:19.

on low incomes. That is where they needing to to next. The challenge

:19:19.:19:22.

for them, against the background to do things different, are big enough

:19:22.:19:26.

things that cut through in the public and they notice them. In her

:19:26.:19:30.

speech today, Theresa May, the Home Secretary, for the first time, made

:19:30.:19:33.

explicit the link between bringing down immigration levels and the

:19:33.:19:39.

positive effect that would have on people's wages. By the way, Labour

:19:39.:19:46.

knew exactly what they were doing. According to the John Cruddas, Ed

:19:46.:19:51.

Miliband's policy chief, Labour were using migration to introduce a

:19:51.:19:56.

covert 21st century incomes policy. That's right, Labour, the party of

:19:56.:20:02.

the working man and woman, admit that they deliberately used

:20:02.:20:08.

immigration to keep down British wages. So we will reduce and

:20:08.:20:13.

control immigration. Though their means for doing so controversial

:20:13.:20:18.

and not proven to work yet. This is why Boris might be more than just a

:20:18.:20:22.

pretty face. As the Mayor of London arrived to titilate conference, it

:20:22.:20:25.

was his article yesterday, calling for much more house building, that

:20:25.:20:29.

resonated with senior Conservatives. The bore business bandwagon may

:20:29.:20:33.

have rolled back to -- Boris bandwagon may have rolled back to

:20:34.:20:37.

London, but his threat remains. Those close to Cameron believe that

:20:38.:20:41.

unless they tackle house building they will struggle with strivers,

:20:41.:20:48.

and Boris Johnson knows that. Last week Ed Miliband laid claim to the

:20:48.:20:51.

one-nation Disraeli mantle, today Conservatives are grumbling about

:20:51.:20:55.

that. They say Miliband can't be Disraeli's disciple, because he

:20:55.:20:59.

took on the vests interests in Victorian Britain, and Miliband's

:20:59.:21:02.

interests are unions and public sector workers, until he knows he

:21:02.:21:06.

will face them down, he can't claim to be the heir to Disraeli. David

:21:06.:21:10.

Cameron's claim to be a modern-day Disraeli is also in the balance.

:21:10.:21:13.

Disraeli tried to break down the boundaries between the haves and

:21:13.:21:17.

have nots in Victorian Britain, for David Cameron today, doing exactly

:21:17.:21:22.

like, pumping up the chances of the have-nots is in question. That is

:21:22.:21:25.

why they are talking in this conference about the strivers.

:21:25.:21:30.

start of David Cameron's modernisation of the Tories, people

:21:30.:21:35.

would have said they were backward looking, the polls said he didn't

:21:35.:21:38.

like migrants and gay people, he has dealt with those challenges,

:21:38.:21:43.

but there is a lot of negative things he has inherited from the

:21:43.:21:46.

past, and one is that it is a party for the rich and it doesn't care

:21:46.:21:49.

about people working on low income. That is why they are talking about

:21:49.:21:53.

the strivers. They have dealt with one set of challenges, but they

:21:53.:21:56.

have such baggage from the fast they have to deal with that. When

:21:56.:21:59.

they return to London the Conservatives' task is tough. If

:21:59.:22:03.

catching burglars is so central to the new no-nonsense Tory offer,

:22:03.:22:08.

many strategists and non- strategists alike, regard it to be

:22:08.:22:12.

monumentally unhelpful, that one of their number called policemen

:22:12.:22:17.

"plebs", even Burglar Bill would stop there, he has become a striver

:22:17.:22:21.

at the end of his story. We have the police minister joining

:22:21.:22:27.

us from the conference in Birmingham, Damian Green, in terms

:22:27.:22:33.

of homeowners and burglars you have aprepared to help everyone, if

:22:33.:22:37.

there is only one problem every two years? There may not be many

:22:37.:22:40.

prosecutions, but a lot more people may have been arrested and never

:22:40.:22:44.

brought to proskueing. Each one of these prosecutions does give rise

:22:44.:22:49.

to a sense of huge unfairness for people. These people are victims of

:22:49.:22:53.

crime and then they become criminalised. What Chris Grayling

:22:53.:22:56.

announced today was clearly designed to shift the balance in

:22:56.:23:00.

favour of the householder, and against the intruder. Because this

:23:00.:23:04.

is not people taking a decision calmly, these will be people in the

:23:04.:23:08.

heat of the moment, they will be frightened, they will certainly be

:23:08.:23:13.

angry. And so what we are saying is you will only be doing something

:23:13.:23:16.

illegal if it is grossly disproportionate. I think that does

:23:16.:23:19.

move the balance sensibly. The Home Secretary, Theresa May, said today

:23:19.:23:23.

that you are the party of law and order. But, surely you would expect

:23:23.:23:26.

the party of law and order to have reasonable relations with the

:23:26.:23:30.

police. And relations between you and the police right now are

:23:30.:23:34.

appalling? Well, I have just done a number of fringe meetings today,

:23:34.:23:40.

including one this evening put on by the Police Federation, with ACPO,

:23:40.:23:44.

chief police officers organisation there, and the superintendant. We

:23:44.:23:49.

all agreed that we are doing one of the biggest public sector reforms

:23:49.:23:54.

ever, certainly one of the biggest reforms to the police ever. Cutting

:23:54.:23:57.

by 20%? To welfare and education. We are doing it against the

:23:57.:24:00.

background of a very tough financial crisis which we inherited,

:24:01.:24:04.

very bad public spending numbers. Of course there are stresses and

:24:04.:24:07.

strains. These are absolutely the necessary reforms we need to make

:24:08.:24:12.

sure that the police can become ever more professional, and can

:24:12.:24:16.

provide an ever-better service. The backdrop to all of this is crime is

:24:16.:24:21.

falling and victim satisfaction is rising. So, actually it is not

:24:21.:24:25.

unreasonable. That is because there is a lot more police on the streets

:24:25.:24:28.

than there will be. For example, the idea that Vic imits of anti-

:24:28.:24:32.

social behaviour should be allowed to choose -- victims of anti-social

:24:32.:24:35.

behaviour should be allowed to choose the punishments, Theresa May

:24:35.:24:39.

was talking about that. Isn't it to stop people becoming victims of

:24:39.:24:44.

crime, that is why people like bobbies on the beat? People like a

:24:44.:24:47.

lot of things, they like an attack on serious and organised crime,

:24:47.:24:52.

that is why we are setting up the National Crime Agency, to make us

:24:52.:24:55.

more effective against that. There are many ways in which you can

:24:55.:25:00.

release police to do the job we all want to see them doing, actually

:25:00.:25:03.

fighting crime. We have taken out millions of hours of form filling

:25:03.:25:07.

from the police. It is the equivalent of adding more than

:25:07.:25:11.

2,000 extra police on to the streets. So the way you organise

:25:11.:25:15.

the police is important. The way the police are run is important,

:25:15.:25:19.

that is why we have the elections next month for police and crime

:25:19.:25:21.

commissioners, so local people, for the first time, will have a say in

:25:21.:25:27.

how their local police force is run. Should we read what happened today

:25:27.:25:33.

as the end of the hug-a-hoodie period of the cabinet

:25:33.:25:43.
:25:43.:25:43.

administration, and it is now back to "prison works" and other simple

:25:43.:25:46.

Conservative ideas? The appeal of the Conservative Party at its best

:25:46.:25:50.

is it chimes with the instinct of the British people. It is perfectly

:25:50.:25:55.

possible and politically coherent to care about the NHS and to care

:25:55.:26:02.

that immigration is high -- too high, to care about law and order

:26:02.:26:06.

and to worry that welfare should help people who want to help

:26:06.:26:10.

themselves, the strivers everyone is talking about here this week.

:26:10.:26:14.

That's a very traditional set of Conservative values, which people

:26:14.:26:18.

can hold on the left or the right- wing of the party. Just a final

:26:18.:26:22.

thought. Did it help you and your relations with the police that

:26:22.:26:25.

Andrew Mitchell didn't turn up at the conference today? Andrew, what

:26:25.:26:29.

he did was wrong, he has apologised for it. The police officer he had

:26:29.:26:33.

the row with has accepted the apology, everyone has moved on from

:26:33.:26:37.

there. Indeed the police representatives at the meetings I

:26:37.:26:41.

was at today were saying that. There were big important debates to

:26:41.:26:48.

be had about the future of policing. We have all moved on from that.

:26:48.:26:53.

the two high-tech giants BAe and EADS, should, tomorrow, be on the

:26:53.:26:57.

way to becoming a unified European defence and Aerospace giant, but

:26:57.:27:00.

there are reports that the deal is on the brink of collapse, because

:27:00.:27:03.

of concerns from the French and German Governments about what the

:27:03.:27:08.

deal means for them. Supporters of the merger say BAe will help win

:27:08.:27:14.

sales in America, while EADS concentration on passenger

:27:14.:27:19.

airliners compliments BAe as defence work. Opponent of the plan

:27:19.:27:29.

worry that Britain is, yet again, selling off the family silver.

:27:29.:27:33.

In the hey day, this was the cutting edge of aircraft

:27:33.:27:38.

manufacturing, 18,500 planes were builter, now broke lands is a

:27:38.:27:41.

museum. Perhaps -- Brooklands is a museum, perhaps this monument to

:27:41.:27:45.

the past could be a warning to the future. If you want to see the

:27:45.:27:49.

impact of megaindustrial mergers, come to the Brooklands Museum in

:27:49.:27:55.

Surrey. This place used to make DC- 10s, Harrier jump jets and Concorde.

:27:55.:28:00.

When they merged with BAC to form British Aerospace, this place

:28:00.:28:05.

became surplus to requirements. It is almost inconceivable that BAe

:28:05.:28:08.

systems and EADS, will keep factories open in all four

:28:08.:28:12.

countries, so the political horse trading begins. At the moment there

:28:12.:28:17.

are four factories around Europe where Typhoon aircraft are finally

:28:17.:28:23.

assembled and flight tested. The idea you can have duplication

:28:23.:28:28.

across Europe in the manufacturing of the aircraft and the major sub

:28:28.:28:31.

systems, that must be a thing of the past. In Brussels to underline

:28:31.:28:37.

the importance of the tie-up, defence ministers from Britain,

:28:37.:28:41.

Germany and the US met at the summit. Britain's Defence Secretary

:28:41.:28:45.

added to the air of expectancy? companies now have a very clear

:28:45.:28:48.

understanding of the positions and the red lines of the Governments

:28:48.:28:52.

involved. I understand that the companies have gone into board

:28:52.:28:56.

meetings now, that started half an hour or so ago, they will go on

:28:56.:29:00.

possibly for some hours. They will make the decision whether they

:29:00.:29:04.

think that the parties are close enough together to warrant seeking

:29:04.:29:10.

an extension of time from the Stock Exchange. At stake is potentially a

:29:10.:29:17.

$45 billion defensive Aerospace giant, building some of the

:29:17.:29:21.

politically most sensitive kit in the world. Mostly made by BAe

:29:21.:29:25.

Systems, it is said to be the junior partner to EADS, mostly

:29:25.:29:30.

French and German. EADS owns Airbus, the largest commercial plane maker

:29:30.:29:35.

in the world. Just as civil aviation orders are bloom booming.

:29:35.:29:40.

The Object is to bring together the different skills countries have to

:29:40.:29:48.

build a better product. The other advantage is build a European

:29:48.:29:54.

company to compete with Boeing. It is the role of governments that

:29:54.:29:59.

intrigues most. The French Government owns 15% of EADS and has

:29:59.:30:05.

strong input into decisions. Daimler owns 15% and the German

:30:05.:30:10.

Government has clout there. The UK Government will block any takeover

:30:10.:30:20.
:30:20.:30:22.

of BAe systems using its single, But the real king maker or breaker

:30:22.:30:30.

is the American Government. At over $700 billion a year, US defence

:30:30.:30:34.

spending dwarfs every other country, and they are careful about who

:30:34.:30:38.

building their aircraft and submarines. BAe does 50% of its

:30:38.:30:42.

business with the Pentagon, only because its American division is

:30:42.:30:45.

almost fully hived off from the European business. We have

:30:45.:30:47.

developed, over time, a good relationship with the United States.

:30:47.:30:51.

There will always be some issues of intellectual property, the

:30:51.:30:56.

relationship the UK has with the United States minimises those

:30:56.:31:00.

difficulty. If you introduce -- difficulties, if you introduce

:31:00.:31:04.

European Governments into that equation as well, the Americans

:31:04.:31:11.

will be more reticent to share information. Shareholders are

:31:11.:31:17.

decidedly lukewarm, Invesco is concerned about the level of state

:31:17.:31:20.

shareholding in the combined group will result in governance

:31:20.:31:23.

arrangements driven more by political considerations than

:31:23.:31:27.

shareholder value creation. Not everyone is down on the deal. The

:31:27.:31:33.

respective chief executives, Tom Enders end and Ian King would be

:31:33.:31:36.

big financial winners. We were told the managers would be the only

:31:36.:31:41.

winners. Normally in mergers you get winners and losers, and you get

:31:41.:31:46.

winners and winsers, this is a unique deal with everybody loses.

:31:46.:31:50.

Except the management? If the tie-up collapses then senior

:31:50.:31:53.

management in both companies may have questions to answer F it does

:31:53.:31:59.

proceed, it will be in it the teeth of most major shareholders. All

:31:59.:32:05.

stakeholders will want to avoid the companies ending up in the museum

:32:05.:32:08.

of formerly great industrial players.

:32:08.:32:18.
:32:18.:32:20.

My guests are with me now. I wonder what you are hearing, does

:32:20.:32:23.

it sound as if the deal is on the brink of collapse and can't be done

:32:23.:32:27.

by tomorrow? I very much doubt that it could actually be done by

:32:27.:32:32.

tomorrow. We will have to wait and see whether the companies deciding

:32:33.:32:38.

to for a two-week extension under the UK takeover panel rules, or,

:32:38.:32:43.

indeed, call it a day. The jury is out on it. They are probably still

:32:43.:32:47.

discussing the facts in front of them, as we speak. They will

:32:47.:32:50.

announce one way or the other tomorrow. Why do you think that

:32:50.:32:56.

this dole is in the interests of Britain? I think we have to look

:32:56.:33:03.

forward. Here we have two very large and very large companies. One

:33:03.:33:06.

a global player in the defence industry, with many home markets,

:33:06.:33:10.

not just the UK, and one who is the largest commercial aircraft

:33:10.:33:14.

manufacturer in Europe. They want to come together, because they want

:33:14.:33:18.

to grow together on a level playing field, and compete with the best in

:33:18.:33:22.

the world. They are also looking at the future, in terms of the

:33:22.:33:26.

technology that they can create together. The investment that they

:33:26.:33:29.

can create together, and indeed the jobs and growth that will follow

:33:29.:33:32.

from that investment. This is locking long-term, this isn't a

:33:32.:33:36.

short-term decision, based on jobs or consolidation, this is two

:33:36.:33:39.

companies with very little overlap coming together, if they can.

:33:39.:33:43.

The advantages in the long-term for Britain are what you have just

:33:43.:33:46.

heard? I'm not sure they are those advantages. They are advantages for

:33:47.:33:50.

those firms, but there are bigger security issues at stake in this. I

:33:50.:33:54.

think absolutely the Americans will be very concerned by this. I think,

:33:54.:33:59.

for example, I signed an agreement with an Admiral about exchange of

:33:59.:34:04.

nuclear information for nuclear submarines, the next follow-on

:34:04.:34:09.

submarines who replace the Tridents, the Americans have brought forward

:34:09.:34:11.

a missile compartment that will be shared between the nations, they

:34:11.:34:15.

are not willing to do that with the French or the Germans. Our

:34:15.:34:18.

relationship with the Americans in defence terms is very important.

:34:18.:34:21.

Does it outweigh the long-term strategic planning for these two

:34:22.:34:24.

major corporations? It is interesting them talking about

:34:24.:34:30.

long-term strategic planning. The BA board sold 30% shares in Airbus

:34:30.:34:34.

six years ago. When I raised the question of why are you doing it, I

:34:34.:34:37.

was told I didn't understand, a sailor like me, they need money to

:34:37.:34:40.

buy firms in America and show we are separate from Europe, so the

:34:40.:34:45.

Americans will accept us there. Now, suddenly, six years later, they

:34:45.:34:48.

seem to have changed. I'm not so sure about the long-term views he

:34:48.:34:51.

might have. It is a simple fact, isn't it, that the Americans trust

:34:51.:34:56.

the British a bit, and don't trust the French and Germans at all. Idea

:34:56.:35:00.

of some kind of synergy is perhaps a bit pie in the sky? It is

:35:00.:35:05.

certainly true the Americans and British have a very strong

:35:05.:35:09.

relationship, but remember EADS has sold into the US helicopters, and

:35:09.:35:14.

it is building that relationship slowly. But your guest is

:35:14.:35:18.

absolutely right, that the political implications from the US

:35:18.:35:22.

have to be taken into consideration here. We don't know what those are,

:35:22.:35:26.

because they have kept very quiet, until there is a formal deal,

:35:26.:35:30.

actually put before them. It will be complicated. And it has to be

:35:30.:35:34.

settled. We do have to look forward, and Europe, in this case, will

:35:34.:35:38.

probably do a lot better by standing together. Remember, too,

:35:38.:35:42.

that the US, whilst they are our allies and friends, and we have

:35:42.:35:46.

done and continue to do a lot with them, have not necessarily given us

:35:46.:35:52.

the freedoms over here we would like in the UK. I have to say, also,

:35:52.:35:57.

the way the whole thing has been put together. Invesco, it is

:35:57.:36:01.

amazing, they are very good investors, they hardly had a talk

:36:01.:36:08.

with the chief executive. I think there was a 90-minute discussion

:36:08.:36:11.

with the CEO. It seems pushed together, only a number of us have

:36:11.:36:17.

come out of the wood work and said, hang on, there are real

:36:17.:36:19.

implications here, real implications about how it is put

:36:19.:36:23.

together. Real concerns by some of the shareholders, it does seem to

:36:23.:36:27.

have been rushed a bit. I think there is a sub plot as well, there

:36:27.:36:32.

are a lot of people in Whitehall, some politicians, like the Deputy

:36:32.:36:35.

Prime Minister, Clegg, who see European defence as the thing.

:36:35.:36:39.

Until European defence changes, I can tell you, that is not a defence.

:36:39.:36:43.

That will not defend you, and the Germans and French are about to

:36:43.:36:48.

stop buying military qipt, no wonder EADS are keen to get in the

:36:48.:36:52.

UK, because we don't spend enough on defence, but we spend something.

:36:52.:36:59.

The Americans still spend a lot. agree we don't spend enough on

:36:59.:37:02.

defence. The way ahead is affordability, the Government is

:37:02.:37:06.

forced into the position it is. It is not just here, it is in the US,

:37:06.:37:10.

Germany and France, all concern nations. We have to adapt and

:37:10.:37:14.

change to the new conditions in front of us. As far as Invesco is

:37:14.:37:18.

concerned, they are a shareholder today, they may not have been a

:37:18.:37:22.

shareholder yesterday. There is a long history of disagreements

:37:22.:37:27.

between Invesco and BAe Systems, let's not draw too many conclusions

:37:27.:37:31.

about the particular spat at the moment. They are entitled to a view.

:37:31.:37:34.

One of the complication in the Syrian conthribgt there are over

:37:34.:37:40.

the last 18 months, that is -- conflict over the last 18 months,

:37:40.:37:44.

that is however inconvenient it is for the opposition, Bashar al-Assad

:37:44.:37:49.

does have support among Syrians. Much of the western areas of Syria

:37:49.:37:56.

remains untouched by violence. It is the presidential ancestoral home

:37:56.:38:02.

of the President. Another day dawns along the

:38:02.:38:08.

Mediterranean. It starts slowly, peacefully here.

:38:08.:38:13.

The only fighting on this part of the Syrian coast is between friends

:38:13.:38:20.

on jetskis. Welcome to La Tachia, long a place of holiday for Syrians.

:38:20.:38:25.

Now they are coming here from embattled cities, in if search of

:38:25.:38:28.

refuge. There is an ease on the streets here you don't find in many

:38:28.:38:38.
:38:38.:38:39.

places any more. I arranged to meet a group of young

:38:39.:38:44.

students from lackia, they come from mainly -- Latakia, they come

:38:44.:38:48.

from mainly religious and ethnic groups. There is no trouble around

:38:48.:38:52.

this table, the friends say they are one big family of the listen to

:38:52.:38:57.

them, it is hard to believe war is raging about an hour's drive away?

:38:57.:39:03.

Here is peaceful place. It is so fantastic this place, I like my

:39:03.:39:08.

town. What if they say to you, it is too dangerous to come to Syria?

:39:08.:39:18.
:39:18.:39:18.

No, no. You can see in the streets, people shopping and playing and

:39:18.:39:23.

nothing. There is nothing happening, no problem here in Latakia, they

:39:23.:39:28.

say there is a problem like in Damascus, for example, it is not

:39:28.:39:37.

the whole of Damascus. One area, Aleppo, not the whole city.

:39:37.:39:42.

But this place isn't shut off from the rest of the country. When

:39:42.:39:45.

Syria's uprising began some 18 months ago, there were also

:39:45.:39:51.

protests here in the main square in Latakia. But they were forcefully

:39:51.:39:55.

put down. Aside from an occasional demonstration, or an explosion

:39:55.:40:00.

since then, this remains one of the most peaceful areas in all of Syria.

:40:00.:40:04.

The authorities are determined to keep it that way, because this

:40:04.:40:10.

region is too important to lose. The long shadow of the Al-Assad

:40:10.:40:14.

family falls across this region. It is not just their political

:40:14.:40:19.

stronghold, it is their ancestoral home. The heartland of their

:40:19.:40:24.

Alawite sect. Like the rest of Syria, this city is mixed. Here the

:40:24.:40:30.

Alawites are a large minority. This is the kind of demonstration they

:40:30.:40:40.
:40:40.:40:43.

allow here. A pro-Al-Assad rally in the city centre. It is organised by

:40:43.:40:48.

a local youth group. They call themselves the Stand Firm

:40:48.:40:58.
:40:58.:41:01.

Volunteers. Why do you support Bashar al-Assad? Because it is the

:41:01.:41:05.

President's world, a very good President in the world. Some say he

:41:05.:41:09.

should step down and lose power? The people who say that are

:41:09.:41:13.

terrorists. We don't believe that, he protects us, all people like

:41:13.:41:18.

Bashar al-Assad. So many people have died in Syria over the past 18

:41:18.:41:26.

months? Because of terrorism. That's what you often here, they

:41:26.:41:30.

defend the President, because he defends them.

:41:30.:41:35.

They brandish photographs of him, and his powerful brother, Maher,

:41:35.:41:42.

who commands the elite Republican Guard. In the governor's office,

:41:42.:41:47.

too, there is a photograph of President Assad and his late father,

:41:47.:41:56.

on every wall. Their Intelligence Services keep a close eye on

:41:56.:42:03.

everything here. Governor Suleiman Al-Nasser is the President's man in

:42:03.:42:08.

the county, I ask him about what's going on. TRANSLATION: The security

:42:08.:42:13.

here in Latakia is normal, there can be plots to harm the people of

:42:13.:42:17.

Latakia, and like in any country the Security Services will

:42:17.:42:23.

intervene to protect the regime and rule of law here. Drive into the

:42:23.:42:26.

mountains above Latakia, this is where people are defending the

:42:26.:42:32.

regime with their lives. These are Alawite lands, these poor villagers

:42:32.:42:35.

are providing foot soldiers in the war. There is a funeral almost

:42:35.:42:40.

every day here. But there is still powerful support for Al-Assad's

:42:40.:42:48.

rule. He's one of them. The Al- Assads are also buried in these

:42:48.:42:55.

hills. We were given rare access to their mausoleum in the town. A

:42:55.:43:00.

monument to a dynasty, that has dominated Syrian life for nearly

:43:00.:43:10.
:43:10.:43:10.

half a century. From poor Alawite roots, Hafaz Al-Assad died as

:43:10.:43:15.

Syria's all-powerful President, even in death he looms large. His

:43:15.:43:19.

son succeeded him with talk of reform. Now it is often said he's

:43:19.:43:23.

under pressure to preserve his father's legacy, a leader who rules

:43:23.:43:30.

with an iron fist. The town of quiet the day we

:43:30.:43:35.

visited. Since then, there have been reports of clash between

:43:35.:43:40.

leading Alawite families, including the Al-Assads, variously portrayed

:43:40.:43:43.

as a feud over money, power or the President's rule. Whatever it is,

:43:43.:43:47.

it is a measure of growing unease over the high price this community

:43:47.:43:53.

is paying in this war. This region is still regarded as the

:43:53.:43:59.

President's last redoubt. There is even speculation it could form a

:43:59.:44:04.

brokaway Alawite state, stretch -- a breakaway Alawite state,

:44:04.:44:07.

stretching from the mountains to the sea. The war is reaching some

:44:07.:44:11.

parts of the coastal region. This amateur region claims to show

:44:11.:44:17.

destruction in mountain village, up towards the Turkish border. These

:44:17.:44:21.

mainly Sunni enclaves have seen heavy fighting, some are now

:44:21.:44:27.

controlled by members. -- rebels. Syria's war is often described as a

:44:27.:44:32.

sectarian conflict. But the regime itself is accused of playing the

:44:32.:44:37.

sectarian card, stalking fear and arming Alawites elsewhere in the

:44:37.:44:43.

country. This man wants his identity hidden.

:44:43.:44:48.

An Alawite, he has long been in opposition, does he see it as a

:44:48.:44:50.

sectarian conflict? TRANSLATION: course it is not. This is the work

:44:50.:44:53.

of the regime from. The very beginning it has been trying to

:44:53.:44:58.

create a fear among the Alawites, to make them align with the regime.

:44:58.:45:04.

They are not going to succeed. Latakia is regarded as an Alawite

:45:04.:45:10.

stronghold, a very strong bastion of support for President Assad, how

:45:10.:45:16.

would you describe it? TRANSLATION: portray, I see it as the opposite.

:45:16.:45:24.

With all the work to make it a sectarian issue, there hasn't been

:45:24.:45:28.

a INGle sectarian attack against all law woits. That is what they

:45:28.:45:33.

want to observe here. This man, Nuhad Abdallah, a leading academic,

:45:33.:45:38.

says diversity is to be celebrated, not feared. This is Jesus Christ,

:45:38.:45:45.

this is Christ in a house of one of the Muslims. He bristles when I ask

:45:45.:45:54.

about his Alawite roots? The issue is not Sunni-Alawites, I can assure

:45:54.:46:04.
:46:04.:46:09.

you very much. Most of my friends, you know, are mixed. The grandson

:46:09.:46:16.

of 130 years of marriage between Alawites and Sunni. Inherited from

:46:16.:46:22.

this family, so that means we have, we don't have that issue.

:46:22.:46:29.

Many in this city, still hold on to a Syria of old. The secular mosaic

:46:29.:46:33.

that helped define a national identity. Other parts of Syria

:46:33.:46:38.

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