20/11/2012 Newsnight


Pay day loans. No cease fire in Gaza. Is an apprenticeship as good as a degree? Ethnic tensions in Burma. With Emily Maitlis.

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They are known as payway loans, gained at a matter -- payday loans


gained in minutes, agony to repay. The Office of Fair Trading today


puts them on warning, and sides with the customers. You have been


kidnapped and you are so believing that they are helping you, but they


are not, they are living off your misery and low financial status.


Tonight we hear from the industry and the minister.


The Israelis warn the people of Gaza to evacuate their suburbs as a


ceasefire was meant to be imminent. After hours in which Egypt and


Hamas said a truce would come in tonight, it manifestly didn't. So


why did they talk it up in the first place? Is an apprenticeship


like this one, better than a university degree? The Government


wants us to forget snobbery and broaden our mind. I'm already


looking at by the time I'm 25, I can probably have a nice car, a


flashy house and stuff like that. Is Burma open for business? As the


country attempts to reform, the Muslim minority experience a very


unZen attitude from local Buddhist amongst. TRANSLATION: Around the


world there are many Muslim countries, the Muslim countries


should take care of them, they should go to a country with the


same religion. Hello, good evening, it can take


less than 20 minutes for the loan to arrive in your bank account, and


it take a lifetime to pay it back. The payday loan business is one of


the few growth successes in this struggling economy, for reason that


is are not all together to be celebrated. Fuelled by shrinking


incomes, at a time when banks are reluctant to lend, they have become


the lender of last resort, often for those who have no other stream


of credit. Today the Office of Fair Trading has written to all 240


lenders to express concerns about how some of the sector operate.


Young, struggling for money, but still having a good time. This


generation is finding its own way of dealing with the downturn.


My first loan I took out about a month a I used it to pay for going


out and seeing my friends, without that I wouldn't be able to see them


or anything. Keira is celebrating her 21st


birthday, she wouldn't dream of taking out a credit card to pay the


bills, the temptation would be too great. But, like many of her


friends, she is more than comfortable with a new and even


more expensive form of credit. go on to their website and you get


two little slides, telling you how much you want to borrow and how


long for. No filling out forms or meeting the bank manager, all you


need is a smartphone and an internet connection. About an hour


ago I took out a loan for �100, trt on it was just under �18, because I


took it out for 12 days. I clicked apply, it was my bank within 20


minutes. It is like another payday and you


are paying it back and take another one out if you need to. As long as


you are not, you know, using it for ridiculous things.


The payday loan industry first grew out of the cash chequing stores of


small town America, from nowhere, ten years ago, loan shops now seem


to be everywhere on the British high street. And, legitimate


demands for convenient credit, particularly among young consumers


growing, at exactly the time when traditional lenders, like high


street banks, find themselves with less and less to lend.


The payday boom has been fuelled by something else as well, in much of


Europe and some US states, these types of loans have now been


effectively banned. In Japan the rate of interest charged by some


payday lenders could get you ten years in prison. In this country,


regulation is much more relaxed. A large number of competing loan


sites are now operating on the Internet. Tarting a new type of


cuss -- targeting a new type of customer. Internet borrows tend to


be much younger, 65% under the age of 35. Most are single, two thirds


don't have any children. It is a new business that is growing at a


phenomenal speed. A quarter of all under 25s say they are planning to


take out a payday loan in the next six months. Three-times the rate of


the rest of the population. I'm very surprised at how quickly


it has grown. But then, that has come on the back of banks slashing


overdrafts, reducing their lending criteria to people, and the sheer


fact that it is a convience of being able to go on-line via your


computer on your desk, or, phone, to apply for a loan. There is one


name, and one company, that's the driving force behind the on-line


loan industry. Run, not out of a call centre on the edge of an


industrial estate, but out of this Georgian town house on the edge of


Regent's Park. This is the headquarters of what is


fast becoming a household name in finance. The people in the


buildings behind me work for the on-line loan site Wonga, six years


ago this company didn't even exist. Now it is worth hundreds of


millions of pounds. Wonga moments. We all have them. Those times you


need a fast little loan. Much of that growth is thanks to


some very clever marketing. The firm is spending �20 million a year


on quirky daytime TV adverts, aimed at that young, tech-savvy audience.


# Want my holiday to be a bit longer


All that seems to be paying off, profits trebled last year to �46


million. The founders of Wonga hope that one day it will be the UK's


answer to Facebook or Google. The company says 90% of its customers


would recommend its service, it charges at 1% interest per day are


clear and responsible. Its critic, and there are many, say the whole


on-line loan industry is making it far too easy to borrow money at a


rate that many young customer also struggle toll pay back.


This is Plymouth. Unemployment here is running well above the national


average. Half of all under-25s say they have


money worries, one in five has used a payday loan to make ends meet.


The local Citizens Advice Bureau has just won lottery fund, to teach


social tenants about the risks of payday loans. Payday loans, I'm


absolutely horrified by the vast increase in them. It is an


imbalance of arms, if you will. Those people are relatively


inexperienced, they are weak, if you will, or innocent, and like


most of us we can give way to temptation. In the last few


days...27-year-old Seth is one of those customer, he borrowed last


year from on-line loan firms, not from Wonga, or Inant Loans Direct,


soon he found himself bombarded with other loan offers and deep in


debt. Once you start doing it you are in a vicious circle. Say you


borrow �100 and you pay �150 back, that is �50 less you will have the


next month, you have to borrow again. That is what they rely on,


the repeat business of it, you they they are doing you a favour, it is


like Stockholm Syndrome, when you are kidnapped, you so believe they


are helping you, but they are not. Some think the situation is so


serious that the Government and the regulators need to take decisive


action. I would ban them outright. They are so dangerous and toxic,


and create so much detriment for the people who take them and


society at large, I would do away with them. I drew the analogy with


drug dealing, and I do it purposefully, we take a view as a


society that actually, freedom of choice should be trammelled as far


as serious Class A drugs are concerned. I don't see a great deal


of difference between that situation and payday loans.


Regulation in this country is unlikely to go that far. Today the


OFT didn't directly criticise Wonga, or Instant Loans Direct, and it


said there is a role for payday loans in the market. But the


regulator is still very concerned about the practices of some lenders


in the industry. In today's report, it said it


doubts the extent to which some lenders check the affordability of


loans. And it is concerned that borrowers may not always be given


balanced information about the costs and risks involved.


What we would not want to do is paint a single picture of the pay


day centre in saying everybody is equally bad. Not at all, you have


quite a broad spectrum of practice. As I say, from the worst, where we


are taking immediate action, to other areas, where we have real


concerns, but we think it appropriate to give the businesses


an opportunity to put them right, but if they don't put them right,


then they risk enforcement action. Back in the bar, these young


consumers don't look too worried. For many, payday loans are just a


quick, simple way to get hold of cash, when banks just aren't


lending. Some say a crackdown could put the


whole industry out of business, and push some borrowers into the arms


of illegal lenders. But, given the level of concern about the industry,


it is likely that at the very least, this new form of credit will soon


have to carry a significant health warning.


I have been speaking to Russell Hamblin-Boone, the chief executive


of the Consumer Finance Association, which represents around 70% of all


payday loans companies. I began by asking him whether he recognised


the criticisms made by the Office of Fair Trading? I think what the


report is highlighting is that there are some, a small number, of


lenders acting irresponsibly. I represent those who want to be


responsible lenders, they want to introduce self-regulation, on top


of the consumer credit regulation that already exists. The Office of


Fair Trading has written to companies across the board, looking


at lenders across the sector, 240 letters, and they say that they are


concerned that the loans are extended too often, that lend


remembers too aggressive, that they are not checking if borrowers can


afford it pay back the money, that is serious? And our own practice is


that we don't extend loans beyond three-times. We do robust


affordability checks to make sure we are lending to people who can


afford to pay back. We are making sure people aren't getting into


financial difficulty. There is no point in lending to someone...You


Are saying no company who you represents falls the wrong side of


any of the things that the OFT says are across the industry? Our self-


regulation and Code of Practise, that comes into effect next week,


makes sure that sort of thing doesn't happen, absolutely.


Code of Practise, which is the fourth Code of Practise we have


seen for your industry, which makes minute changes from the Code of


Practise that was introduced last year, which made minute changes to


the Code of Practise the year before? It is a young industry and


is evolving and growing. Where we identify issues that need to be


resolved, then we tackle them. This is part of the industry as it


mature, we will start to become more mainstream. In these early


days, of course we are going to come across areas that need to be


addressed. We are absolutely committed to sorting those out.


is not just areas, a Which? Survey found half of users took out loans


they couldn't afford to pay. 70% of users regret taking out the loans.


That is not just a corner of the industry, is it? I don't


acknowledge the Which? Survey of a couple of hundred people. What we


have done is surveyed our customer, 100 people, and found that 85% of


them didn't have any difficulty in paying back the loan. In fact, 71%


of people pay back in full on time. The other 29% extend their loans,


but they can now only do that three times. You are suggesting there is


no problem with your industry, the companies you represent. You can't


accept that self-regulation has demonstrably failed? I didn't say


that I didn't accept there were problems that needed to be resolved.


What I'm saying is the larger lenders I represent are absolutely


committed to solving those through self-regulation and statutory


regulation, if if that is required. Why not put a cap on the amount


lent, most countries have done that? And it has failed in most


countries, you have reduced the availability of credit. That is not


what happened in Japan. Japan introduced measures like that six


years ago and they have cut down the amount of indetectedness that


Japan has? Japan has a very different credit market to ours. We


are a credit-based society, whether credit cards, overdrafts, personal


loans, that is the way we operate. Many people have been cut out of


all of those different options. There isn't another country in the


west that doesn't have some kind of measures, some kind of cap in place.


Are you saying we are fine, we are just a soft target, aren't we?


cap is a blunt instrument, if you set the cap too high, you are not


achieving anything, if you set it too low you are reducing the number,


the amount of lenders there are able to provide to people reducing


the level of competition. I'm going to go back to Steve, who


you heard in the film, Seth, Steve says they are so dangerous I would


ban them outright. So toxic, he used the analogy, with drug dealer,


and he does that purposefully. Your industry is being compared to that


of drug dealing? It is the very emotive issue, I absolutely


understand that. We have to focus. It is emotive because people are


left in dire straits, unable to pay things, getting 60 messages a day


from phones, from people asking do they want to borrow more money?


average salary of one using a payday loan is �17,000, that is


much higher than the minimum wage. People who use payday loans


understand what they are getting into it, because it is a simple and


transparent project. They rely on repeat business, because you think


they are doing you a favour, and you feel like you have been


kidnapped. You end coming back to your kidnapper for more, that was


what one man said? If you are putting a cap on the product, you


are demonstrating this isn't about trying to get people into perpetual


debt. We are not a credit card company. You are not putting a cap


on it, you said you wouldn't? cap the amount of times to extend


the loan. We don't lend to people who can't pay back. It doesn't make


good business sense. There is a cost to collect the debt if you


don't get it back. That have the industry spokesman.


We speak to the minister in a second. We have our economic


editor's take on this. Paul Mason, how significant is this to our


economy? Some of the data we know about this sector, for a sector


that is causing so much angst, is patchy, the OFT doesn't seem to


have many of the details toened happen. What we do know, or we


think we know, is it has doubled in size over the past three years of


the crisis. From about �900 million to �1.8 billion. That is the payday


loan sector specifically. If we put it into the context of the whole


consumer lending situation. This is unsecured lending, not credit cards,


mortgages, but loans. You can see at the height of the boom it peaked


at around �200 billion, it fell back to �150 billion, leaving a �50


billion gap, at the very least. What do we think is happening? If


we extrapolate some of the OFT's figures, it is possible that about


�14 billion a year of lending is coming from the whole high-cost


lending sector, of which this is just part. We talk about the


doorstep lenders, the shops on the high street where you can pay 300%


interest for a fridge. It is beginning to fill a bit of a gap.


How dangerous do you think it could be to the economy? I have to say,


the first problem is, you look at that film, it is like the boom is


over, but nobody wants to tell the poor. That's what it seems. Why do


we know that's a problem? Because if we study what happened before


the Lehman Brothers crash, sub- prime lending, the OFT keeps asking,


how much demand is there for this kind of loan,? What the regulators


asked in hindsight about the crash we went through, is did these


lenders create their own demand. Are there, in fact, a million in


2009, maybe two million now, we don't know the numbers, two million


people, or is it the same million borrowing double the amount. It is


still quite startling that we don't seem to know some of the answers.


Thank you very much. Jo Swinson, the consumer affairs minister joins


me now. One of the points that Paul is getting at there, is the grim


truth that the majority of people who use these services are the


hardest hit. They are hit by your Government's welfare cuts, this is


essentially privatisation, if you like, of the welfare state? I think


it is important just to recognise that most people who are using


payday lenders are working, although not necessarily on very


high income, less than the average. They are on �17,500, on average?


These are people who are it is important that they are looked


after. The Government has already taken action on this issue. We have


a revised and improved Code of Conduct that comes into place next


Monday. It is fair to say that the OFT's interim report today is


pretty damning. Let's get back that-to-that point, your Chancellor


has spent two-and-a-half years saying debt is the problem. The


last crisis was fuelled by debt, and this is making people more


indebted. This is just laying the foundations for another crisis?


Payday loans can work for some people. You saw some of the people


in the film where that was the case. There are concerns when a report


says that the majority of the investigations of companies they


looked into it, they downed practices where customers weren't


treated properly that is raising alarm bells. There is circumstances


where it is a week before payday and the washing machine is on the


blink, and the car needs to be fixed, there is some circumstances


where it is an appropriate form of credit. And it is always working


for some people. Wonga, the one that most people recognise, the


poster child, would you say this is a big British success story, and


you would like to see more of it? don't think it is an area where we


need to see particular loor more of, it plays a particular role --


particularly more of. It plays a particular role in the market.


business has doubled in the last few years s that a good thing?


Where it is used for the purposes of short-term credit and it is


helpful. The short-term credit, where it is filling the gap that


the banks who aren't lending as much? That is fine? There is a


variety of different customers will end up in a situation where they


suddenly need access to �200, for some people that is an earnings


tension to an overdraft or cred -- extension to their overdraft or


credit car, and some people don't have access to those things and it


provides an answer. The issues the OFT outlines are very important,


the lenders shouldn't be lending to those irresponsibly to people who


can't afford it pay it back and will need to role over the loan


multiple times. The cuts are introduced because the households


are massively in debt? The personal debt crisis has been one that


happened many years ago. It is something which my colleague Vince


Cable warned about and asked for previous action from the Government.


These are the figures we have from the last two or three years, since


the cuts have been introduce, since your Government has been banging on


about austerity, and sending people to these loans because they haven't


a feasible stream of income? Government is working hard to make


life easier for those on low and middle incomes. We are giving more


than 20 million people a significant tax cut each year and


that will help. We need to make sure when people go to the lenders,


because they have a general financial sustainability problem,


instead of being offered a payday loan, they are advised to seek


advice about their debt situation, through organisations like the


Citizens Advice, the Money Advice Service, if people seek advice


quickly they can get a grip of the situation. What would you do, the


OFT is confronting the problem now, would you like to see a cap now,


like many other countries do? issue around the cap is not clear


cut. We have issued evidence on this from Bristol University, which


we expect by the end of the year. There is a superficial thing where


you say that is the answer. commissioned it a year-and-a-half


ago, why is it taking so long to answer one question? Primary


research and hundreds of pages of evidence. There is a draft report


put forward, we want to make sure the analysis...What Do you


understand of it now? There is analysis of a cap and a full report


by the end of the year. There are issues where if you set a cap too


low, you could end up with a perverse consequence that you end


up pushing people into the arms of illegal lenders, nobody wants that


to happen. That hasn't happened. The other point to make about the


total cap on credit, is it doesn't address those other issues that we


saw around affordability, and people being lent to where it


shouldn't be happening. The problem is, we have four different codes of


practice, you told parliament there will be a review in 2013 this is an


industry exploding before our eyes, five million people looking at


taking out a loan, and a third won't be able to pay it back?


is a clear shot across the boughs at the industry from the OFT. I


felt frustrated with the response from the industry in your interview,


I don't think there is room for complacency in that industry. The


OFT is taking action today. They said they are starting


investigations into some of the companies who they think could have


to have their credit licenses revoked. We have given additional


powers in next year to suspend credit licenses. We are keen to


make sure vulnerable consumers are protected.


Thank you. There was much anticipation today


that a ceasefire deal between Israel and Hamas could be realised


this evening. As it is, shelling and rocket attacks between the two


sides continue unabated. The appeals for a diplomatic solution


are being urged in their usual way by the international community.


Just before coming on air strikes the US Secretary of State, Hillary


Clinton, arrived for talks in Jerusalem. President Obama asked me


to come to Israel with a very clear message. America's commitment to


Israel's security is rock solid, and unwaviering. That is why we --


unwavering, that is why we believe it is essential to deescalate the


situation in Gaza. The rocket attacks from terrorist


organisations inside Gaza, on Israeli cities and towns, must end.


And a broader calm restored. Hillary Clinton, in Jerusalem. Mark


Urban's here now. After all the toing and froing, and one comment


from one side and contradictions from the other. Why do we think it


didn't happen? Indeed President Morsi from Egypt said it will


happen tonight. Hamas was giving out similar signal, there were


suggestions that a press conference would happen at a certain time. Who


would be on the platform. It hasn't happened for a number of reasons. I


think, in essence, because all that was agreed was ceasefire light, if


you like, stop shooting at one another. Where as we know full well,


that both sides are actually after something more substantial than


that. In the case of Hamas, of an easing of the blockade of the Gaza


strip, more access for their economy. From the Israeli side, of


course, something that deals with more fundamental security issues,


people moving in and out of the Gaza strip to the Sinai Peninsula,


causing them problems there now, the supply of missiles, all these


other factors. There clearly isn't agreement on those things. And the


Middle East is always a place that is full of theories, but I think it


is reasonable to suspect, that the flagging up of the possible truce


by Egypt and Hamas, was designed to put pressure on the Israelis to


agree today something they didn't Right, because at the weekend there


was the threat, it seemed, of a ground war, and an incursion, has


that been averted? I don't think it has. The Israelis have been


threatening it, since early on in this military x a, as you say. In


some -- military action. As you say. In some cases it is patently


incredible, it would be so against what they are trying to achieve


diplomat closed circuit everyone is warning them off, from Hillary


Clinton, who has arrived tonight, the US, the EU, all sorts of people


are saying don't do it. They know from the experience of 2009, that


casualties among civilians and damage to infrastructure could be


heavy if they went in. They risk having soldiers kidnapped, all the


risks there are doing it. So much so the head of Hamas said in Cairo


yesterday, he taunted the Israelis, saying he didn't really believe


they were serious, and come and have a go if you think you are hard


enough, more or less. They do have to make it credible. This is where


I think the crisis has its own dangers and possible momentum.


Today we heard about leaflets being dropped to warn citizens to move


away from certain areas where the Israeli army would, we imagine,


punch in to the Gaza strip. There is an attempt to make it more


credible. It is only fair to say, if there isn't agreement on a


broader peace package, in the next 48 hours, then it may well become


an inevitability. The image of the apprentice tends


to lie at two ends of the spectrum, Alan Sugar's chosen fewer, or the


Dickensian blacksmith. But the Government wants us to believe that


an apprenticeship is the lead to a prosperous career and a cheaper


alternative to university. Will we as a country ever buy into. That


The world of work, and the choices we make to get there? It is a


thorny and emotive set of decisions. Difficult decisions, crystalised by


a civil servant recently speaking to Newsnight. How would a Prime


Minister react if their son or daughter turned around to them and


said that instead of going to university, they wanted to be an


apprentice. What would our Prime Minister, imaginary or otherwise


say, right now, the mandarin predicts, their face would fall.


Out by Heathrow, their attitude at British Airways has already changed.


For the first time in this country, they are training up management


apprentices. I can start planning ahead in life more now, I I'm


already looking at by the Who I Am' 25 I can have a nice -- by the time


I'm 25 I can have a nice car and flashy house. What do you think?


is the same, with money, they will be in debt, where as we are working


for our money and go what we learn. The Business Secretary, Vince Cable,


thinks our chaps, have got the right idea, in a speech tomorrow he


will say by the end of this parliament, he wants an


apprenticeship to be as good a bet as university. Vince Cable has


always already put �1.2 billion into supporting firms taking on


apprentices. Tomorrow he goes Cordell, he's 18, two A-levels and


a B-Tech. This is Tim, he's 19 and has three A-levels. They both have


more drive than a jumbo jet, which is just as well, because though


they are young, their roles see them dragooning their elders in


meetings. What skills could you possibly have got from university


you might be missing, there must be something, otherwise why have


people been going to university for years? They get all the theory


behind it, I suppose we get both, we get the theory and use what we


have just learned in the working environment. I think there is sort


of a thing, I know for me, in my college, it was a lot of, there was


a lot of push behind universities, there wasn't this whole


apprenticeship idea I did on my own, I went out and searched for it, I


researched what project management was, I didn't have the backing.


Down the road, quite a lot of road, to the accounting and management


consultancy firm, PWC, they have been taking non-university recruits


for some time. This year sees the first formal apprentice management


consultant. They believe they can train a young person up in the


skills that are required, as well as any university could.


Cirsity has three A-levels, one of them an A*, they are older brother


became an apprenticeship, and she thought it wasn't for her. I think


traditionally apprenticeships are more vocational, electricity,


plumbing, I didn't realise there were apprenticeships in more


professional services. Especially a higher apprenticeship you can only


do when you leave school. Typically an apprenticeship is for a school


lever at 16, you work for an electrical company and move up.


This is for school leavers who have A-levels. Why was university not


attractive to you? I think the tuition fees put me off. Here in


the City, the aspiration doesn't appear to be that far off. This


month PWC launched the first management consultancy


apprenticeship, and many of their high-flyers don't have degrees at


all. But the problem is one of whether you can roll it out on a


national scale. The Secretary of State for Education, Michael Gove,


is known to love apprenticeship, but his fears are about the scale.


The difference between him and the Business Secretary, Vince Cable, is


not that the aim isn't laudible, it is whether it is plausible.


The Government has struggled in the past with ensuring that all


apprenticeships are of quality, and they do not exploit workers. They


have introduced this, as I have said, this minimum duration of a


year, which is fantastic. We have yet to see that play out. That is


the most important thing, we need to see that is working. As I say,


it is really important that it is real work, that we have employed


people doing apprentices. I think it was a big surprise for many that


some aren't employed. That is the most important thing, it is about


work and training, we hope that is where we are going with this.


Linford points out if measured as an apprenticeship rather than lump


sum, it is set to go down 2%. Recently parliament's business


Select Committee said it could not ignore the perception that quality


may have been damaged, and there must not be a trade off between


number, quality and brand. So back to that offspring of a


future Prime Minister, will they listen to the aspiration to be laid


out tomorrow by the Business Secretary, Vince Cable. The demand


for apprenticeships is there already, the Government still has


to work out how to meet that demand. The most difficult time in any


transition is when we think success is in sight. The words of


opposition lead, Gary Mackay, who has seen her fair -- Aung San Suu


Kyi, who has seen her fair share of disappointments. Burma's problems


as well as progress resurface, one of the biggest challenges facing


the leadership, are the long held ethnic tensions between Buddhists


and Muslims, which are a by-product of reform.


Generations of Muslims worshiped here at the mosque. It took just a


few hours to ensure they would never use it again. But at least


here, there is some trace of the uprooted people. A mile away, the


mosque at Nasri, all the houses around it have been levelled. The


Muslim presence has been erased. Several thousand people lived here,


until last June, when sectarian violence erupted. Buddhist mobs


descended on the area, killing and burning. The destruction here is a


direct consequence of Burma's own history. But it has a universal


resonance. The kind of language that I hear people using, reminds


me of things I have heard in Northern Ireland, in the Balkan, in


central Africa. At its heart, the idea that for one group of people


to survive the others must be driven out.


The refugees from Nasri fled to the another by Muslim neighbourhood.


Close Tory the city centre, it is protected by the army and police.


-- closer to the city centre it is protected by army and police. It


feels like a ghetto. In the mosque, refugees mix with


the older population. Outside, they have begun to use the garden as a


makeshift cemetery. These are the graves of people who have become


sick and died in the past few months, orderly they would be taken


to a cemetery, but the people here tell me they are too afraid to


leave this area, fearing they would be attacked.


A few moments ago a man came out of the crowd and handed me this piece


of paper, it says "good afternoon Sir, please rescue us from the


tyranny of our Government and Rakine, please help us", there is a


sense of isolation and fear here. What would happen if you go


outside? They will kill them and they will beat them, they mean the


Buddhists will kill them and beat them if they go outside.


refugee camps are appearing across the plains outside the city. The


buddists have suffered too, but most of the 100,000-plus displaced


are Muslims. Everywhere we heard testimony of violent attacks.


TRANSLATION: The Rakine surrounded the village, they burned the mosque


and the houses, we tried to put the flames out and they shot, my son


was shot in the neck, he was brought to the hospital. As we were


leaving the hospital they surrounded us, they were killing


Muslims, they killed my husband. The police were just looking on.


TRANSLATION: When they burned the house, my mother was inside, she


was sick and I couldn't lift her. I heard the sound of shooting and ran


away. My mother was burned. On the other side of the barricades,


the buddists have their own narrative of victimhood. They


regard the Muslims as illegal migrants, who really belong in


neighbouring Bangladesh. The buddists themselves are an ethnic


minority in Burma, and see themselves being trapped between


Islam and the majority Burmese population to the south. We are


between the Islamisations and Burmaiesations, so even our own


Government, they are ignore our needs. The people you call Bengali,


where should they go now, should they go back? They are Bengali,


they are not from our own country, they are from Bangladesh, they


should go to their own country, their nations. If somebody is born


here, are they still an illegal immigrant? Their fathers and


forefathers are only illegal immigrants. We can't accept them.


They have to go? Yeah. In this border region, there is unDowning


Streetedly been illegal migration. But there has been a sizeable


Muslim presence here for centuries. Conflict between the two groups has


deep historical roots, but under military rule, divisions were


deepened. The state striped most of these Muslims of citizenship. It


was the politics of discrimination that sowed the seeds of tragedy.


Like here. In the eyes of their Buddhist neighbours the Muslims


were turned into a non-people, when the regime took away their rights


30 years ago. Today the Rakine pick through the ruins of a Muslim


village, which was, until a few weeks ago, home to 1,000 people.


Desperate poverty has exacerbated the divisions between the two.


It is not as if the spiritual leaders of this devoutly Buddhist


community have tried to calm the crisis. Far from it. Across the


troubled areas, Buddhist Clergy have been to the fore, in demanding


the exclusion of the Muslims. TRANSLATION: Around the world there


are many Muslim countries, they should go there. The Muslim


countries should take care of them. They should go to a country with


the same religion. You don't believe that they have the right to


call themselves Burmese? TRANSLATION: No, I do not.


The state has belatedly deployed troops to protect the refugees, it


has promised it will address the crisis over their civil right. In


this overwhelmingly Buddhist country, there is little support


for ending their eggs collision. Even the human rights icon, Aung


San Suu Kyi, has refused to champion their cause.


Last June, as the violence was unfolding here, and thousands of


people were being driven from their homes, Aung San Suu Kyi was in


Europe, to receive the Nobel Peace Prize, there were many of her


western supporters who hoped then that she would make a forceful


intervention. A strong statement, condemning the violence against the


Muslim community. But it never came. She has called for respect for the


rule of law, and in recent week, called the violence an


international tragedy. But the most powerful statement by any public


figure came this week from the President of the United States.


APPLAUSE For too long the people of this


state, including ethnic Rakine have faced crushing poverty and


persecution. But there is no excuse for violence against innocent


people. The Rojinga hold themselves, hold within themselves the same


dignity as you do and I do. Obama framed the Rohinja crisis has


central to Burma's future. Your country will be stronger because of


many different culture, but you have to seize that opportunity,


recognise that strength. Under growing international pressure,


Burma's leaders, Government and opposition, talk of a political


solution. This man, a key ally of Aung San Suu Kyi, listened to the


President's speech. In the past he has denied the Rohinja were a


Burmese group. He seems to be softening. What was the main


message you got from the speech today? The most important point is


the national reconciliation for our country, the different ethnic


groups and religions, we need to maintain the freedom of speech or


worship, so that is the most valuable things today.


There is a change in rhetoric, but the hatred between the groups is so


deep, any big political moves would be met with fierce resistance.


Nobody here believes the crisis is over. And as Burma approaches


elections in 2015, the uncertainty will only increase.


It is the great irony that growing freedom on a national level is


turning this state into a prison for the Rohinja.


From Washington I'm joined by Priscilla Clapp, a former US


diplomat who served in Rangoon, with me in the studio is Zoya Phan,


from buerm had a campaign UK. We heard -- Burma Campaign UK. We


heard in the report there that Obama really framed the Rojihga


crisis as central to Burma's future, do you see that, is any democratic


reform impossible without resolving the ethnic tensions? It won't be a


stable democracy without solving the ethnic tensions. It is not just


the Rohinja but all the other ethnic groups. During 50 years of


military rule, a lot of these differences and problems were


suppressed a. The people have never learned how -- and the people have


never learned how to mitigate and mediate their differences. It is


happening now, and it is happening very dramatically. We saw it in the


Balkans and the caucuses, when dictatorial rule is removed from a


society, very often some of these terrible problems come out. And


this is what they are working through now. Do you see this as a


potential Yugoslavia situation, then? I don't think there will be


"ethnic cleansing" and fighting on the scale that we saw in Yugoslavia,


these are not armed groups. The fighting that is going on is with


fire and spears and knives. The military and the police will


prevent a wide scale violence of the sort that we saw in Yugoslavia.


Zoya Phan, when you reflect on what your country has been through, a


country you left when you were 14, and haven't really been able to


revisit openly. Do you see this as a country now properly on the road


to democratic, economic reform, are you confident? I'm not confident at


all. Given the situations on the ground. So far the reforms that we


have seen in Burma are skin deep and top down. Of course these


positive reforms are welcome, and there have been some civil liberty


in certain parts of Burma. But look at the situations in ethnic areas,


the result is the Government troops are taking civilians and raping


women, including gang rapes, and then displaysing thousands and


thousands of people from their homes. Can Aung San Suu Kyi be the


answer to this, there are critics who say Obama did more in one visit


than she was able to do about this problem? Well, Aung San Suu Kyi is


trying her best, and she is willing to take the risk and then push for


further reforms within the dictatorship system. But she has a


really limited capacity to do that, given human rights and humanitarian


crisis in Burma. Basicically, the Government is dominated by military


person -- basically, the Government is dominated by the military powers.


This is clear, Priscilla Clapp, the photos of Obama and Aung San Suu


Kyi, which go around the world and make everyone feel fuzzy inside,


belie the reality, which is this is a country that is still run by the


military. Is it a country that America is ready to do business


with, do economic business with? don't agree completely with the


statement you just made. The country is run by ex-military, not


"the" military as a force. The uniformed military is, has already


taken a couple of steps back into the barracks. The people in charge


are ex-generals, not sitting generals. They are trying to move


to civilian governance. That is important. And Zoya Phan, when you


see that now, would you like America to be in, would you like it


to be a trade partner and an economic resurgence to begin?


welcome the step up in diplomatic approach from the US Government.


But we think that based in the experience we have in the past,


diplomatic approaches alone doesn't work. Without pressure, we won't


see the reforms that have been taking place so far. Because the


Government knows exactly how to deal with the international


community, and what they care about is trade and investment, but not


about human rights and democracy. Thank you both very much indeed.


As of today, the ZX Spectrum, the Atari and Betamax have gained an


unexpected ally, the last typewriter came off the production


line and went to the mu seem. Good evening, more heavy rain to


come. The Met Office have issued an amber warning, due to the heavy


rain across many southern counties, the risk of localised flooding, and


the rain throughout the day, only slowly clearing eastwards. It is


looking dryer and brighter, in the North West, the North West of


England later on in the afternoon. It is staying cloudy, down towards


the south-east corner with rain still at 3.00 pm. Better prospects


throughout the afternoon, sunshine for south-west England,


temperatures 10, 11 degrees, not as high as they have been so far this


week. A bright finish to the day across Wales, patchy cloud here and


still breezy around the coast. For Northern Ireland much of the day


should be dry, fine and bright, one or two showers scattered around,


highs of eight or nine. For the North West of Scotland, more cloud,


increasing later on in the day. For mainland Scotland after a chilly


start to the day, fine with sunny spells. Sunshine in Edinburgh and


temperatures at nine degrees, down on what we had on Tuesday's value,


you will notice the forecast for Thursday going down hill with heavy


rain around. Throughout much of the day, London is looking cloudy and


Pay day loans. No cease fire in Gaza. Is an apprenticeship as good as a degree? Ethnic tensions in Burma.

With Emily Maitlis.

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