10/09/2014 Newsnight


10/09/2014

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


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Tonight, how did this become Team Westminster, versus Team Scotland.

:00:08.:00:14.

The PM was virtually on his knees today begging the people of Scotland

:00:15.:00:19.

to vote no. I would be heartbroken if this family of nations that we

:00:20.:00:23.

have put together and that we have done such amazing things together,

:00:24.:00:27.

if this family of nations was torn apart. We will ask the Chief

:00:28.:00:31.

Secretary to the Treasury and Scottish MP which team he feels more

:00:32.:00:36.

part of. What would happen to the UK's place on the world stage if

:00:37.:00:41.

Scotland goes it alone? We talk to the former NATO secretary-general

:00:42.:00:45.

George Robertson and the SNP's Keith Brown.

:00:46.:00:48.

President Obama's about to tell America that its campaign against

:00:49.:00:53.

ISIS will intensify. We will ask the former head of US counter terrorism

:00:54.:01:04.

how that should be done? Good evening, if you are fed up with

:01:05.:01:10.

the effing Tories, David Cameron pleaded today, you can think again.

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This is totally different, with the tone of a desperate boyfriend the

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Prime Minister ditched his pride and party to beg a country of people who

:01:19.:01:22.

don't much like him not to leave. There are few things in his

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professional life he could ever have wanted more. The reason is simple,

:01:27.:01:30.

if the UK breaks up under his watch it is the only thing he will be ever

:01:31.:01:33.

remembered for. He was in Edinburgh today and back next Monday. The one

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person genuinely pleased to see him is one Alex Salmond who believes the

:01:39.:01:41.

presence of all Westminster party leaders there is helping him.

:01:42.:01:50.

News tonight about Lloyd's? That's right, after a few days where

:01:51.:01:53.

Alex Salmond had reasons to have a bigger and bigger grin on the

:01:54.:01:56.

campaign trail, a couple of reasons for the no side to feel a bit more

:01:57.:02:01.

cheerful tonight. In the last few minutes RBS and Lloyd's who employ

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thousands of people, just in this city, and right across Scotland have

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confirmed that if there is a yes vote they will move their

:02:10.:02:14.

headquarters down to England. If you live in this city and you have been

:02:15.:02:21.

hearing economic warning aplenty from Westminster, and not convinced

:02:22.:02:24.

about whether or not they are real, that news tonight may cause some

:02:25.:02:28.

people to think again, or certainly those undecided to understand that

:02:29.:02:31.

according to the no side there is a very real threat to them and their

:02:32.:02:38.

incomes too. What is the mood tonight with the Westminster

:02:39.:02:41.

contingent in full swing during the day? After Westminster I suppose

:02:42.:02:46.

woke up in a nightmare having dosed their way through two long years of

:02:47.:02:52.

this campaign, it did feel, here in this city, a bit panics in the way

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the trio arrived today. By the same token for some on the other side in

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a sense it provided some of that emotion, that feeling from the gut

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that campaign has been yearning for. In terms of whether or not it will

:03:06.:03:10.

change any minds, in a funny way, having been out and about today, it

:03:11.:03:19.

felt like a bit of a side sideshow from the real campaign. You would

:03:20.:03:31.

never have known something was brewing in Edinburgh's polite city

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centre. But what was about to happen? We are not sure we have been

:03:35.:03:38.

told David Cameron is here today. We know he's meant to be out on the

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streets but obviously he has come straight to the financial district.

:03:43.:03:46.

I don't understand why he's in Scotland, not actually talking to

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the public, like he's supposed to be doing. When David Cameron arrived,

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through the back, he knew the union is now on the line. Instinct, not

:03:55.:04:00.

economics wrote the script. I think people can feel it is a bit like a

:04:01.:04:03.

general election, that you make a decision and five years later you

:04:04.:04:06.

can make another decision if you are fed up with the effing Tories, give

:04:07.:04:10.

them a kick and maybe we will think again, this is totally different to

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a general election. This is a decision about not the next five

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years, it is a decision about the next century. Not so polite now.

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There are just eight days until he could become the last-ever Prime

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Minister of Great Britain as we know it. He has come to talk to voters to

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listen to them, he has certainly spoken plainly and from the heart.

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But controlled visits like this, despite the chaos outside aren't

:04:43.:04:46.

exactly diving into the fray of the campaign.

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Ed Miliband tried to show he cared, in front of a "friendly" audience. I

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say don't choose an irreversible separation, choose to stay together.

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Not least because it is Labour votes that have shift today yes. Nick

:05:00.:05:06.

Clegg did at least brave the street. Whether a mercy mission or madness,

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the trio were trying to counter the independence campaign's energy. Yes

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shops on high streets. What has the last week been like?

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This week has been busy, I thought it would ease off today as time went

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on. But it is getting busier. The shop was really busy today. You

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could hardly move in here at some stages. And visitors from the UK

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parties gave Scotland's master of soundbites a key line. We have jobs

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in Scotland protecting the National Health Service, they are concerned

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this last gasp effort seems to be with their own jobs, that is the

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contrast between the breadth and reach of Team Scotland and the

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narrow focus of Team Westminster, that is why I think we are

:05:52.:05:55.

decisively winning the campaign on the ground. It is not decisive yet,

:05:56.:06:00.

but it has taken Westminster too long to hear this. This is the

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vision we have for your country. This fight and it is a fight has

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been happening for more than two long years. This high street was

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covered in posters until they were torn down in the middle of the

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night. It has been a lengthy and fierce campaign. I feel like I have

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run an American presidential campaign. It feels like that. It has

:06:22.:06:25.

been difficult at times, but at the same time we're knocking doors and

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people are telling us every day I'm voting no. The real campaign doesn't

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feel like it belongs to any politician. It belongs to the

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street. And there is a sense something has started that just

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can't be stopped. And that has implications for the whole of the

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UK. Perhaps it started long before all this. Are you voting for

:06:46.:06:51.

origins? Keep your voice down. Creating the Scottish Parliament

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when he was in the cabinet was meant to kill the argument for

:06:55.:06:58.

independence, instead are we witnessing the inevitable erosion of

:06:59.:07:02.

the status quo. You have to remember this, when I was first examining for

:07:03.:07:06.

this the Labour executive in Scotland, the Labour in Wales, led

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by Neil Kinnock, all refused devolution, why, because they were

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running before the nationalists. Where you are right nationalists

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have got stronger and stronger. Wasn't it Labour's decision to

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create the Scottish Parliament that inevitably might mean the union

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breaks up? Well, it was the Labour Party recognition that the Scottish

:07:29.:07:31.

Parliament eventually went on to say that there should be a Scottish

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Parliament. We agreed with that. I then said it should be everywhere

:07:34.:07:37.

else. All politicians have had a sharp reminder straight from the

:07:38.:07:44.

streets of Scotland, voters wants and needs don't always stay the

:07:45.:07:47.

same. With over a week before the vote, neither might the shape of the

:07:48.:07:52.

country. That was Laura Kuensberg reporting

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there. In a moment we will be talking to Lord Robertson, the

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former secretary-general of NATO about the implications for a new UK

:08:01.:08:06.

or for a new Scotland on the world stage if the vote goes to a yes next

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week. But in the meantime I think we can speak to Danny Alexander, the

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chief secretary to the Treasury in Inverness. Thank you for your time

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tonight, we have seen an awful lot of emotion in the last 48 hours. I'm

:08:23.:08:27.

wondering how you, a Scot, are feeling tonight, whether you share

:08:28.:08:32.

that emotion? I'm a proud Scot and Highlander, I'm a brought Briton and

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European too. Of course this is something which is about who we are

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as a country, about our history, about the shared endeavours we have

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engaged in over very many years. Of course there is emotion there too. I

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think the principal thing today is there are some hard-headed economic

:08:51.:08:54.

fact, which has raised its head in the debate today, which is showing

:08:55.:08:57.

to people again just how serious this is, and just how damaging

:08:58.:09:02.

independence would be for jobs, for prosperity, for the funds that we

:09:03.:09:06.

have for our public services. Of course those things are facts but

:09:07.:09:10.

they are also emotional too. But people don't want to live in a

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country if we make the wrong decision and vote yes next week we

:09:15.:09:17.

will cause all those problems for people. It was interesting hearing

:09:18.:09:23.

David Cameron today recognise the "effing Tories", we don't know if

:09:24.:09:26.

that was a slip of the tongue or very conscious, but he knows they

:09:27.:09:33.

are hated there. The Lib Dems have 11 seats, you have not, could you

:09:34.:09:38.

have taken a firmer role in the campaign from the start? I have been

:09:39.:09:42.

taking a full role from the start, and making my views known from the

:09:43.:09:46.

start. What went wrong, presumably it is not in the place you would

:09:47.:09:53.

like it to be now? Right? We always expected that the referendum would

:09:54.:09:57.

get tighter as you got closer to the day, but I think that what we have

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seen over the last few days is a real crystallisation of the choice

:10:04.:10:07.

for people, where you have on the one hand an economic risky,

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dangerous idea of independence, which of course represents change,

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but I think change for the worse. And the change that you get by

:10:15.:10:18.

voting no, a stronger parliament within the UK, a stronger economy

:10:19.:10:24.

within the UK, a safer, faster form of change for Scotland. That is the

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choice people are facing and my sense is people are coming my way.

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You say risky and talked about fears, I wonder would you admit if

:10:34.:10:37.

the campaign was rather heavy-handed, there was too much

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fear and loathing and not enough love and passion? You are asking me

:10:41.:10:43.

questions as if some how the referendum is over. The referendum

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is not over. There are seven, eight days of campaigning left. Those are

:10:48.:10:50.

important days because there are a lot of people who are still

:10:51.:10:55.

undecided. There are votes to win. And what I'm saying is the choice

:10:56.:10:59.

crystallises into a very positive argument for the change we get if we

:11:00.:11:06.

stay as part of the United Kingdom. The extra political strength that

:11:07.:11:09.

Scotland gets with the more powers, and the economic strength we get

:11:10.:11:12.

from being part of the strongest economic recovery in the G 7. You

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wouldn't be here if the devo max question was on the ballot paper at

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the beginning, everyone could have saved a huge headache with that? The

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choice on the ballot paper is the best choice, it was a democratic

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mandate. You don't think it was a mistake not to have three questions?

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It was the only choice after the democratic mandate after the 2011

:11:36.:11:43.

election. The SNP won an election on the basis of the the results. We

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worked to make sure it was legal and fair. What people are seeing today,

:11:49.:11:53.

on day when major businesses are speaking up, that independence is

:11:54.:11:58.

such a risky choice for prosperity. Fair enough, let's look ahead,

:11:59.:12:02.

Alastair Carmichael has said he will resign and help Team Scotland

:12:03.:12:05.

negotiate if it is a yes vote, will you? No, I'm on Team Scotland right

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now. I'm on Team Scotland and arguing for Scotland, to stay within

:12:13.:12:16.

the United Kingdom. I'm as passionate and committed to Scotland

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as any nationalist politician. Look the issue here is how do we make

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sure that over these final days of the campaign, we focus on the

:12:26.:12:30.

massive economic risks of independence, we spell that out.

:12:31.:12:33.

Today has been a Black Wednesday for Alex Salmond, we have seen Lloyd's

:12:34.:12:38.

this evening, we have seen Standard Life, BP and Shell, big companies,

:12:39.:12:43.

big employers in Scotland who are saying this really matters for jobs

:12:44.:12:45.

and prosperity. Alex Salmond says they are not going to leave and

:12:46.:12:50.

wouldn't be building new buildings if they were? Do you really believe

:12:51.:12:55.

that? I don't, I think we should listen to those companies who are,

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and those employers in Scotland who are making the point powerfully

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today that jobs and prosperity, as well as mortgages and growth in

:13:06.:13:08.

Scotland all depend on making sure we keep the UK together. And they

:13:09.:13:12.

may not leave if it does break up. If it is a yes, your job would be to

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negotiate the rest of the union's deal against the interests of your

:13:19.:13:22.

own constituents. That is pretty untenable isn't it? My job over the

:13:23.:13:27.

next eight days is to make sure we present as awful and passionate a

:13:28.:13:32.

positive case for keeping the UK together and make sure no-one in

:13:33.:13:36.

Scotland votes... You are refusing to say you will stay in the job if

:13:37.:13:40.

it is a yes vote? Continue to serve Ly my constituent, that is my

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primary duty and one I take incredibly seriously come what may.

:13:46.:13:49.

I will be on Team Scotland, today, tomorrow for as long as it takes. At

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some stage you will have to choose between a job working in a

:13:54.:13:58.

Westminster Government, if it is a yes vote, and an allegance to a new

:13:59.:14:04.

country that needs you -- allegiance to a new country that needs you? I'm

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not speculating about a result I'm confident will be a no vote. Because

:14:10.:14:12.

the case for voting no is so strong. It is a case about delivering change

:14:13.:14:17.

of the right sort for Scotland and case of avoiding something that

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would be incredibly difficult for this country. Help me work through a

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no vote. There will still be, we understand, more economic powers

:14:26.:14:28.

granted to Scotland, income tax and so on we have been hearing about. So

:14:29.:14:37.

would that make you then an MP in a Scottish seat deciding England and

:14:38.:14:40.

Wales' spending when the rest of the UK couldn't hold you accountable,

:14:41.:14:45.

because Scotland would be doing its own economics for the most part? I'm

:14:46.:14:51.

already an MP for a Scottish constituency deciding spending for

:14:52.:14:55.

the whole of the United Kingdom. If income tax is devolved to Scotland?

:14:56.:14:59.

You are referring to spending and spending matters are already

:15:00.:15:01.

determined in the Scottish Parliament. How much money is spent

:15:02.:15:04.

on health, how much money is spent on education. Unnen those will be

:15:05.:15:08.

included in new powers to Scotland, is that right? You are not going to

:15:09.:15:12.

change any of the spending in terms of the new powers to Scotland? The

:15:13.:15:16.

point I'm making is the spending hours are already with the Scottish

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Parliament. So we decide budget all locations for departments at --

:15:23.:15:27.

allocations for departments at a UK level and the Scottish Parliament

:15:28.:15:30.

gets it via the formula. We have heard income tax is one of the major

:15:31.:15:35.

issues for change, if Scotland is deciding its own income tax, and you

:15:36.:15:39.

are working as chief secretary to the Treasury, presumably with George

:15:40.:15:43.

Osborne on a budget, deciding the income tax rates for the people in

:15:44.:15:46.

the rest of the UK, we can't hold you accountable at all? Let's not

:15:47.:15:50.

speculate on the result of the next general election just yet. You have

:15:51.:15:54.

been speck late on banks and big business, I'm asking you how your

:15:55.:15:57.

position would work in either way? That is completely wrong. I haven't

:15:58.:16:04.

been speculating on what banks and big business will be doing, I have

:16:05.:16:08.

been commenting on the profoundly important statements those companies

:16:09.:16:11.

have been making today. When a company like Standard Life says it

:16:12.:16:15.

would, unfortunately, sadly, have to relocate its business to London,

:16:16.:16:19.

that is not some sort of decision that they make lightly. They make it

:16:20.:16:22.

on the basis that they regard that as the best way to protect their

:16:23.:16:26.

customers under the new circumstances. When we hear Lloyd's

:16:27.:16:29.

and other banks making clear they would have to do the same, again

:16:30.:16:32.

that is not something they say lightly. They say it having thought

:16:33.:16:37.

about it and talked to the board and the senior people in those

:16:38.:16:43.

companies. When the people of Scotland respond to. That When you

:16:44.:16:46.

dismiss it as speculation, it is a fact. When the people of Scotland

:16:47.:16:50.

respond to that, as many I have spoken to over the past couple of

:16:51.:16:53.

days saying all they are trying to do is scare monger and drive us

:16:54.:16:59.

towards them instead of any kind of approach that sounds attractive to

:17:00.:17:04.

Scotland, you are doing it again aren't you? I think the approach

:17:05.:17:09.

most attractive for most Scots is the approach that says we want a

:17:10.:17:15.

more powerful, more responsible parliament, but whilst remaining the

:17:16.:17:18.

financial, economic, wider security we get from being part of the UK.

:17:19.:17:22.

That is what I, as a Liberal Democrat, have believed in for all

:17:23.:17:26.

of my time in politics. A federal solution for Scotland within the

:17:27.:17:29.

United Kingdom. That is what is so excite beg the step that we can take

:17:30.:17:35.

after a no vote in the referendum but I don't consider it could be

:17:36.:17:40.

scaremongering for companies and people like Sir Ian Woods to set out

:17:41.:17:45.

the facts. People need to know the facts and not just the nonsense from

:17:46.:17:49.

the SNP Thank you for your time. Over the next week we will speak to

:17:50.:17:53.

senior figures from the yes campaign in getting their thoughts on. That

:17:54.:18:06.

what of the UK standing alone on the international stage. No better man

:18:07.:18:10.

to answer the question is the man who ran NATO, Lord Robertson rob,

:18:11.:18:16.

and Keith Brown the SNP's veterans' minister joins us.

:18:17.:18:20.

What do you think will happen? The first thing that will happen is the

:18:21.:18:25.

break-up of Britain will mean the break-up basically of the second

:18:26.:18:28.

military and diplomatic power in the west. And destablise the west, just

:18:29.:18:33.

at a moment when ISIS is rampaging in the Middle East and when

:18:34.:18:37.

President Putin is waving his nuclear weapons in the air. That

:18:38.:18:42.

would be a serious destablisation, which I think would have

:18:43.:18:45.

reprecussions way beyond Scotland and the United Kingdom. It would

:18:46.:18:51.

also lead to the dismemberment of the British Armed Forces. That is

:18:52.:18:55.

strong, dismemberment of the British Armed Forces? It would be, the SNP

:18:56.:19:01.

plan to take two frigets out of the Navy, and patrol boats out of the

:19:02.:19:08.

Navy, and Eurofighters. It is 12% isn't it? The amount of critical

:19:09.:19:12.

mass, the amount of training, pit lots, the background, the logistic

:19:13.:19:16.

tales, all of that, yes you start to dismember the Armed Forces of this

:19:17.:19:20.

country, you reduce the budget by ?2. 5 billion, that is what the SNP

:19:21.:19:25.

say they want out of the UK defence budget. That is serious

:19:26.:19:34.

reprecussions for England. You are talking about England, not Scotland,

:19:35.:19:39.

they are not as badly affected? They will have a Dad's Army rather than

:19:40.:19:42.

being part of the British Armed Forces. They will have 3,500 troops,

:19:43.:19:49.

that is maybe 800 active combat troops. So Scotland will build up,

:19:50.:19:57.

they claim in a plan for defence that was described by the retiring

:19:58.:20:02.

deputy Supreme Allied Commander as being purely amateur. They are

:20:03.:20:06.

saying it is more like 15,000. Eventually. It sounds woefully

:20:07.:20:11.

melodramatic some of this, doesn't it, it is not really going to take

:20:12.:20:14.

us off from being the second military power in the western world?

:20:15.:20:19.

It is going to have to happen. Can you imagine the process of

:20:20.:20:24.

negotiation. You are unpicking you know 300 years of integration in the

:20:25.:20:29.

armed force, 300 years of integration right across the boar.

:20:30.:20:37.

-- board. That will disrupt any effort we have. And the embassies.

:20:38.:20:41.

You have talked to NATO member countries about the possibilty of

:20:42.:20:45.

Scotland joining. What is the take on it? The key thing is that you

:20:46.:20:50.

have got to be able to contribute security in order to benefit from

:20:51.:20:53.

common security. That is the key thing. I negotiated the entry of the

:20:54.:21:04.

former communist countries, the Baltic Republics, Romania, Slovenia

:21:05.:21:07.

and Slovakia, that wasn't an easy process. Slovakia, the people there

:21:08.:21:13.

were basically told if you elect Mr Mectia as the Prime Minister of

:21:14.:21:17.

Slovakia, don't expect to get into NATO or the European Union. So you

:21:18.:21:22.

know it is not a question of we have got an army, a Navy and air force

:21:23.:21:26.

and we are in a strategic position and we will come in. If you are

:21:27.:21:30.

going to disarm the nuclear deterrent of one of the founding

:21:31.:21:35.

members of NATO you won't be welcome into a nuclear alliance. Take it to

:21:36.:21:46.

Keith Brown. You are talking about automembership of NATO that doesn't

:21:47.:21:49.

look like it will happen? Members of the UK Armed Forces currently who

:21:50.:21:55.

want to join the Scottish defence force will be in horror at the

:21:56.:21:59.

contempt of being described as Dad's Army. And George Robertson waving

:22:00.:22:04.

around President Putin as a danger was the same person who went to

:22:05.:22:07.

Moscow to try to get Russia to sign up to NATO. We can't take it too

:22:08.:22:12.

seriously. We talk about break up, but we are breaking down just now.

:22:13.:22:16.

We have an historic low of armed forces in Scotland, we have no naval

:22:17.:22:22.

vessels, we don't carry out the basic patrols we should. General

:22:23.:22:25.

Sharif said of the UK Government that they had cut to the bone and

:22:26.:22:30.

hollowed out the Armed Forces we want to increase the Armed Forces.

:22:31.:22:34.

Why would they let you in as antinuclear? 20 of the 28 countries

:22:35.:22:38.

in NATO are non-fluke clear countries. -- nonnuclear countries.

:22:39.:22:45.

We are situated in the North Atlantic, a very important strategic

:22:46.:22:49.

position for NATO. We have the same standardised operating procedures

:22:50.:22:52.

and standardised equipment that all NATO countries have, we are a

:22:53.:22:55.

democratic country, the real issue is, most people hearing these things

:22:56.:22:59.

bandied around will think there is no reason on earth why NATO would

:23:00.:23:02.

not want to see an independent Scotland as NATO. You would keep

:23:03.:23:07.

your typhoon, will you still be player on the stage? We would want

:23:08.:23:11.

to play, the part we would want to play is a democratic, peaceful,

:23:12.:23:16.

affluent north European country, a foreign policy and defence posture

:23:17.:23:20.

commensurate with that position. That seems entirely sensible and far

:23:21.:23:24.

preferable to the people of Scotland then as with George Robertson's

:23:25.:23:28.

cronies being involved in illegal wars in Iraq. We would want to play

:23:29.:23:35.

in the charter and play responsible international relations. If there

:23:36.:23:39.

were strikes against ISIS in Syria, would you want to deploy there?

:23:40.:23:45.

First of all the creedo of NATO is NATO acts together. If there is an

:23:46.:23:48.

take all countries have license to support each other. But the nature

:23:49.:23:52.

of that support and involvement in NATO operations is up to individual

:23:53.:23:55.

NATO countries, what we have said is any involvement that we would have

:23:56.:23:58.

would be democratically endorse bid the Scottish Parliament and Scottish

:23:59.:24:02.

Government and consistent with the UN Charter. That seems a far more

:24:03.:24:09.

statesmanlike response, rather than Tony Blair getting involved in Iraq

:24:10.:24:12.

previously, that is sustainable. Can you imagine the kind of response you

:24:13.:24:16.

will have from countries like Spain or Italy or like Belgium with their

:24:17.:24:26.

own secession problems and saying we want to be part of that, they won't

:24:27.:24:32.

thank you? I have served alongside Dutch marines and armed personnel

:24:33.:24:36.

who get involved with NATO exercise with Scottish personnel. I wonder if

:24:37.:24:40.

George Robertson knows how many Armed Forces personnel there are in

:24:41.:24:47.

Scotland, it is up to Napoleonic levels. We want to undertake the

:24:48.:24:52.

proper maritime patrols and air patrols and having reasonable

:24:53.:24:55.

standard of defence in Scotland which we don't have currently in the

:24:56.:24:59.

UK. We don't have defences we need, we have nuclear weapons and ?100

:25:00.:25:04.

billion being further spent on nuclear weapons. It is ridiculous to

:25:05.:25:10.

say you will be disarming the nuclear deterrent, it is

:25:11.:25:19.

disingenious? I this is the SNP don't care. If it led to the

:25:20.:25:24.

British... It doesn't literally take away our capabilities, it just means

:25:25.:25:29.

we have to do a bit more? A week ago President Putin reminded the world

:25:30.:25:32.

that his was a country with nuclear weapons. You wanted them in NATO.

:25:33.:25:39.

You wanted Putin in NATO. You have made that point. It is a bit of a

:25:40.:25:45.

joke actually for an SNP, MSP says that I went to invite Russia to join

:25:46.:25:49.

NATO and they are the ones who are actually going to get the position

:25:50.:25:53.

where we disarm. Thank you very much both of you.

:25:54.:25:59.

We have three planned Bs was Alex Salmond's memorable response to the

:26:00.:26:02.

currency question when asked during the last televised debate, much has

:26:03.:26:06.

been made of the uncertainty of what Scotland does for money if it votes

:26:07.:26:10.

yes, and what the markets will make of it. Today the Governor of the

:26:11.:26:14.

Bank of England today the Treasury Select Committee that keeping the

:26:15.:26:17.

pound would be expensive for the Scots. We set out the options that

:26:18.:26:23.

await an independent Scotland. As much as it belongs to England it is

:26:24.:26:30.

our pound as well as your pound. If we don't have a currency union

:26:31.:26:38.

what's Plan B? I'm seeking a mandate for the pound sterling. I presume

:26:39.:26:47.

the flag is a saltire, I presume the capital is Edinburgh, but you can't

:26:48.:26:51.

tell us what currency we will have. The question of what currency an

:26:52.:26:54.

independent Scotland would use has dominated much of the campaign. And

:26:55.:26:59.

we're no closer to a clear answer. An independent Scotland would have

:27:00.:27:03.

four basic currency option, the first and the preferred option of

:27:04.:27:06.

the Scottish Government would be to join a formal currency union with

:27:07.:27:09.

the rest of the UK. The second would be to continue to use the pound

:27:10.:27:15.

without any formal agreement. Much as Montenegro uses the euro, or

:27:16.:27:18.

Panama uses the US dollar. Option three would be to join the euro, or

:27:19.:27:23.

finally it could always launch its on currency. A new currency is seen

:27:24.:27:27.

as unrealistic in the short-term, and the euro is pretty unpopular at

:27:28.:27:32.

the moment. So really there are two immediate options. Scotland and the

:27:33.:27:35.

rest of the UK have shared a currency for more than 300 years. In

:27:36.:27:42.

fact this 1909 coin is one of the first minted after the Act of Union.

:27:43.:27:45.

Most think this sterling zone has worked pretty well. In terms of

:27:46.:27:52.

trade linkages, existing bank loans and the wider financial system,

:27:53.:27:55.

preserving it makes sense. It doesn't mean a formal currency union

:27:56.:28:00.

is straight forward or likely. A formal currency union means things

:28:01.:28:04.

carry on much as they are now. Scotland will continue to use the

:28:05.:28:07.

pound and the Bank of England will act as the Central Bank and lender

:28:08.:28:11.

of last resort for both Scotland and the UK. But the UK Government and

:28:12.:28:16.

opposition have both ruled this out? There is no way they could entertain

:28:17.:28:20.

a currency union with Scotland without having the full control over

:28:21.:28:24.

Scotland's finances, in every respect. Of course interest rates

:28:25.:28:28.

would be set by the Bank of England in London. Financial regulation

:28:29.:28:33.

would be under London's control and crucially fiscal policy, that is to

:28:34.:28:39.

say borrowing would also have to be under London's control. In fact

:28:40.:28:43.

Scotland would end up with no independence at all, you could argue

:28:44.:28:46.

they would be less in control of their affairs than now. In the

:28:47.:28:51.

absence of a currency union, continuing to use sterling without a

:28:52.:28:55.

formal agreement has become the yes campaign's Plan B. The problem with

:28:56.:28:59.

using someone else's currency unilaterally is you have no lender

:29:00.:29:03.

of last resort. When you get into trouble there is no Central Bank

:29:04.:29:06.

that can issue the currency that you can go to. Not everyone agrees. The

:29:07.:29:12.

free market think-tank, the Adam Smith Institute actually thinks

:29:13.:29:14.

informal use of the pound would be preferable to a formal union. Using

:29:15.:29:18.

the pound with permission means all of the same problems you have with

:29:19.:29:21.

the eurozone, for example, banks know they

:29:22.:29:24.

the eurozone, for example, banks much debt as they need and want to,

:29:25.:29:27.

they can act recklessly and so on, and even if they are insolvent, they

:29:28.:29:31.

will probably be backed up by the Central Bank. If banks know they

:29:32.:29:35.

have to act responsibly and make reserves and they have to make

:29:36.:29:37.

private accommodation in the form of clearing houses when they need to

:29:38.:29:41.

access liquidity they will act more prudently. It is that prudence that

:29:42.:29:45.

the Scottish economy could flourish with, that they would only get with

:29:46.:29:51.

sterlingisation with an informal currency union. Scottish financial

:29:52.:29:59.

institutions may not be entirely comfortable with no lender of last

:30:00.:30:03.

resort. Lloyd's and other banks said they would move south of the border

:30:04.:30:10.

with a yes vote. It could be prepared to hand back

:30:11.:30:16.

great deal of independence using sterling, using the pound without

:30:17.:30:22.

that is possible, I can't imagine those big business staying in

:30:23.:30:26.

Edinburgh without a lender of last resort. Another factor complicating

:30:27.:30:30.

this, technically all new EU member states have to commit to joining the

:30:31.:30:33.

euro. At the moment the situation remains

:30:34.:30:36.

uncertain, it is that uncertainty which is driving the currency market

:30:37.:30:43.

volatility of recent days. Do discuss all this now is John Kay the

:30:44.:30:48.

economist, an LSE fellow, and Anthony Yates, a top official from

:30:49.:30:53.

the Bank of England and from New York, Gillian Tett, assistant editor

:30:54.:30:58.

of the Financial Times. Do you think they will carry on using the pound?

:30:59.:31:02.

Yes I do, I think on Independence Day if it happened nothing much need

:31:03.:31:09.

change or would change. Some would say that is ridiculously niave, if

:31:10.:31:12.

you are not controlling your own currency then it will all go

:31:13.:31:17.

horribly wrong? There is an argument there but it is an argument that

:31:18.:31:21.

says as far as currency is concerned things carry on very broadly as they

:31:22.:31:24.

have for the last couple of hundred years. Anthony Yates, what is the

:31:25.:31:33.

problem? Well the problem is that they won't have access to or control

:31:34.:31:36.

over the resources that the lender of last resort has got, in turn,

:31:37.:31:40.

backed by the Government to bail out their financial sector. The UK

:31:41.:31:44.

Government would still bail them out, our closest partner in trade?

:31:45.:31:48.

I'm not sure that is the case. You can see exactly this struggle going

:31:49.:31:54.

on in the euro-area, trying to negotiate bail-outs for Greece. We

:31:55.:31:58.

did bail out Ireland? We did, and the Scots can gamble on whether we

:31:59.:32:05.

might repeat that after all the approbium and acrimony that will

:32:06.:32:08.

come from political divorce, would they really think that would happen.

:32:09.:32:12.

How is this seen internationally or where you are? Frankly from New York

:32:13.:32:20.

it has come as quite a shock. The markets, investors and frankly

:32:21.:32:24.

diplomats hadn't really woken up to the magnitude of the threat of the

:32:25.:32:28.

yes vote until very recently, really this week. And frankly it looks

:32:29.:32:33.

bizarre from the perspective of America. Americans have watched the

:32:34.:32:39.

eurozone struggle in the last two or three years with a tension between

:32:40.:32:44.

having a currency union without a political union and essentially

:32:45.:32:46.

saying it is ridiculous to have this situation. The idea the Scots could

:32:47.:32:53.

be trying to replicate the eurozone's problems looks peculiar.

:32:54.:32:56.

It goes against the grain of all the chaos we have seen in Europe over

:32:57.:33:00.

the last four years? Europe has certainly messed up its currency

:33:01.:33:04.

union, that is for sure. There are two issues here and they are largely

:33:05.:33:08.

separate issues. One of them is what money do you use in Scotland and the

:33:09.:33:13.

other is who is underwriting failed Scottish financial institutions. Now

:33:14.:33:19.

it is quite as instructive there to ask what these Scottish financial

:33:20.:33:22.

institutions are. Because we're talking about Royal Bank of

:33:23.:33:28.

Scotland, 82% owned by the British taxpayer, Lloyd's, which is not

:33:29.:33:34.

primarily a Scottish institution. Clydesdale Bank, part of National

:33:35.:33:38.

Australia Bank, Hong Kong and Shanghai Bank and Santander. This is

:33:39.:33:41.

sounding like it has already happened again? It has. It could go

:33:42.:33:49.

further. We have seen not just sort of declarations about where banks

:33:50.:33:53.

are going to redomicile, but also we have seen hits in share prices and

:33:54.:33:57.

you will get a contraction in credit. Danny Alexander was saying

:33:58.:34:01.

they have already warned they will go south of the border and of course

:34:02.:34:06.

Alex Salmond has said everyone threatens this at this point in the

:34:07.:34:10.

debate. Do you think from what you know banks do pick up and move? Well

:34:11.:34:14.

certainly they do. I don't see what interest they would have to threaten

:34:15.:34:18.

it, I mean they are operating for their shareholders, they are not,

:34:19.:34:22.

they haven't any political axe to grind in this game. I believe they

:34:23.:34:26.

are going to shift their brass plate, but that is very different

:34:27.:34:31.

from shifting the operational activities which are taking place in

:34:32.:34:35.

parts of Edinburgh at the moment. It is interesting, Gillian Tett, you

:34:36.:34:38.

were talking about the falls on the market, particularly on Monday which

:34:39.:34:41.

came as the real shock, and when I put that to the SNP they said it has

:34:42.:34:46.

been a gradual thing, it is because of uncertainty, it would happen

:34:47.:34:50.

whatever was going on right now because that's, you know, there is a

:34:51.:34:54.

period of uncertainty that comes before an election, do you buy that?

:34:55.:34:59.

Well I don't actually. What is very interesting right now is this has

:35:00.:35:02.

been the year when global investors have really woken up to the concept

:35:03.:35:08.

of the geopolitical events creating unexpected shocks. And frankly this

:35:09.:35:12.

is yet another surprise that has come out of the wood work as far as

:35:13.:35:18.

American investors are concerned and provided nasty reminder that

:35:19.:35:22.

economics is not just about numbers but politics and culture and society

:35:23.:35:29.

too. I was with Christine Lagarde the head of the IMF for an interview

:35:30.:35:33.

we are running on Saturday. She points out this fascinating and

:35:34.:35:37.

important issue that the world today is marked out by growing economic

:35:38.:35:42.

integration and political disintegration, Scotland is one

:35:43.:35:45.

example and Ukraine is another. That is a big problem for investors to

:35:46.:35:50.

grapple with, as they look at countries like England and Scotland

:35:51.:35:54.

and work out where to put the money. It is interesting to hear Scotland

:35:55.:35:59.

and the Ukraine to be put in the same sentence and it opens up the

:36:00.:36:04.

opportunity for more of this outside it. Is there a chance of a new

:36:05.:36:08.

currency? I think they will be forced into it eventually. It is the

:36:09.:36:12.

only viable and credible option that can be stuck to. I don't think they

:36:13.:36:18.

could credibly be do anything else. You would imagine they would have to

:36:19.:36:21.

stick the pound is what you are saying? In the next two years there

:36:22.:36:25.

is no option, it would take two years to set up the Central Bank.

:36:26.:36:29.

George Osborne can't stop them doing it, he can protest now but after it

:36:30.:36:33.

has happened he has to let them use the pound, right? That I think is

:36:34.:36:37.

the key point. To go back to what Gillian was saying, we are now

:36:38.:36:41.

living in a world which as far as economics and capital markets are

:36:42.:36:46.

concerned we are completely integrated. That transcends

:36:47.:36:51.

boundaries and exactly what contract and law you are making a contract

:36:52.:36:57.

for, where the head office of a particular institution is located. .

:36:58.:37:04.

It isn't important any more and away from the way the politics of a

:37:05.:37:09.

country is performing. The jobs Alex Salmond was talking about today were

:37:10.:37:12.

those of Ed Miliband, David Cameron and Nick Clegg.

:37:13.:37:17.

Point I am making today is Team Scotland in terms of its breadth and

:37:18.:37:22.

reach sun precedented in terms of campaign in Scotland, where as team

:37:23.:37:25.

Westminster seems narrowly focussed today on the leaders of Westminster

:37:26.:37:28.

parties who are more concerned about their own jobs. Alex Salmond talking

:37:29.:37:33.

today, no surprise he knows the Westminster boys play rather well

:37:34.:37:36.

for his heartland what of their jobs, or what of the unintended

:37:37.:37:40.

ramifications that a yes vote could have on all their parties and plans.

:37:41.:37:46.

Joining me now to discuss this is Phil Collins from the Times and

:37:47.:37:49.

Isabel Hardman from the Spectator. It is only when you start to take

:37:50.:37:54.

yourself into the what ifs of next Thursday that you realise how

:37:55.:37:57.

complicated things are going to get. What are you hearing behind the

:37:58.:38:02.

ripples of Westminster about any plot now that is building against

:38:03.:38:06.

the PM? There is definitely a plot that is building against David

:38:07.:38:10.

Cameron. There are enough Tory MPs who really dislike him, who are

:38:11.:38:13.

quite keen to use a possible yes vote to get rid of him. However,

:38:14.:38:18.

what I found really interesting in my conversations with senior Tory

:38:19.:38:23.

MPs, backbenchers, ministers, is there is a sizeable contingent of

:38:24.:38:27.

the party who want it to keep a cool head and who will try to do

:38:28.:38:31.

everything they can to stop a vote of no confidence succeeding in the

:38:32.:38:34.

Prime Minister. Do you think he could survive being Prime Minister

:38:35.:38:38.

of a lesser Great Britain? Yes, I think he could, it would be

:38:39.:38:42.

incredibly dishonourable even for the backbenchers in their current

:38:43.:38:48.

move in a moment of constitutional crisis to unseat the Prime Minister.

:38:49.:38:52.

It is ridiculous, there is no obvious replacement so I think he

:38:53.:38:57.

will survive T but to lose even one country is careless and his

:38:58.:39:00.

authority will be hugely diminished by this. Authority is what Cameron

:39:01.:39:05.

has over Ed Miliband. To lose authority is a very important

:39:06.:39:08.

commodity for him. What he would be doing is to say to the British

:39:09.:39:12.

public in 2015 I'm going to condemn you to the next parliament for two

:39:13.:39:17.

years which is entirely dominate bid separating from Scotland and then a

:39:18.:39:20.

referendum on the European Union. What kind of little England

:39:21.:39:22.

parliament would that be. Does anyone at the moment think the

:39:23.:39:26.

election is not going to be in May if there is a yes vote? There are a

:39:27.:39:30.

number of Tories who think if there is a yes vote it should be moved.

:39:31.:39:35.

Moved forward straight away? Some think there should be an election

:39:36.:39:39.

immediately, some think it should be after Scotland goes independent. We

:39:40.:39:44.

have to repeal that and put in other legislation. That would be the

:39:45.:39:50.

smallest thing. I think we will muddle on and carry on. What about

:39:51.:39:53.

Ed Miliband's position in this, presumably gets the criticism for

:39:54.:39:57.

not having got the Labour voters out in the heartlands of Scotland where

:39:58.:40:01.

they have voters? He has a more serious party but more loyal party.

:40:02.:40:06.

His backbenchers don't have the same anti-pathy towards him as David

:40:07.:40:10.

Cameron. Every plot against David Cameron is 50% of the problem at

:40:11.:40:14.

land and 50% people hating them. With Ed Miliband it would be more

:40:15.:40:17.

about the problem in hand and whether he could persuade his

:40:18.:40:20.

backbenchers to stick by him. I don't think Ed Miliband has a

:40:21.:40:23.

problem right now. Underneath all the attention on Scotland Labour has

:40:24.:40:27.

had quite a good run in the national polls. Doesn't have a problem now, I

:40:28.:40:31.

think he has in due course. To be the leader of a Government which is

:40:32.:40:35.

elected with 40 Scottish MPs who are soon to be declared foreign

:40:36.:40:38.

nationals would be entirely legitimate.

:40:39.:40:41.

Just talk us through, without looking ahead too far, but we have

:40:42.:40:46.

this referendum fixed for 2017, which would then be without

:40:47.:40:49.

Scotland. What impact would that have? There is no evidence actually

:40:50.:40:57.

that the electorate of Scotland are more pro-EU than the overall

:40:58.:41:00.

electorate. It won't make a huge difference you haven't got the

:41:01.:41:02.

Scottish people voting in that. But the authority of the Prime Minister

:41:03.:41:05.

will have been diminished. What you have seen in this campaign is that

:41:06.:41:10.

arguments about risk really struggle to work and there is a real strong

:41:11.:41:14.

anti-politics thread to this whole referendum campaign. So if you have

:41:15.:41:19.

got all the political establishment arguing for one side, the status

:41:20.:41:24.

quo, stay where we are, and all the other side arguing emotionally to

:41:25.:41:28.

leave. That can really work. You could get a replay of this. It makes

:41:29.:41:33.

it a very, very tricky couple of years, and especially under a

:41:34.:41:35.

Cameron Government. Thank you very much for coming in.

:41:36.:41:40.

John Kerry has arrived in Baghdad to attempt to forge a new coalition of

:41:41.:41:47.

the willing. Middle East nations united against ISIS, and to affirm

:41:48.:41:51.

the international community's duty to protect Iraq. Obama will have a

:41:52.:41:56.

speech tomorrow morning to pose an escalation to the military response

:41:57.:41:59.

in the region, stopping short of promising boots on the ground, while

:42:00.:42:06.

Saudi Arabia, Turkey and Syria are united in their opposition to ISIS,

:42:07.:42:11.

will Kerry help mould this unlikely coalition. Talk us through this?

:42:12.:42:16.

We're expecting a significant milestone, there will be another in

:42:17.:42:19.

two weeks on the fringes of the General Assembly meeting in New

:42:20.:42:24.

York. We think we will get tonight an intensification of what America

:42:25.:42:27.

has been doing. More air strikes, more US troops to go to Iraq to

:42:28.:42:30.

train and advise, more Iraqi forces to be stood up. They are talking

:42:31.:42:35.

about a National Guard that would include special Sunni and Kurd

:42:36.:42:39.

units, trying to knit the nation back together again. The thing we

:42:40.:42:44.

won't get an answer on is whether or not the strikes will extend into

:42:45.:42:49.

Syria at this point. My hunch would be no, not yet. What position would

:42:50.:42:56.

America be in vis a vis Assad? If they want, well it is an open

:42:57.:43:05.

question in terms of legality, it is simpler with regard to Iraq. The

:43:06.:43:09.

position is still complicated with regard to Syria. The other thing

:43:10.:43:12.

that will happen and we think it will happen at the meeting in New

:43:13.:43:18.

York in two weeks time is the issue of a wider inter-National Coalition.

:43:19.:43:23.

It is at that point the UK might be asked to join strike, but the

:43:24.:43:27.

neighbours of Syria and Iraq will be asked to do a lot more. Turkey,

:43:28.:43:33.

Saudi Arabia, Jordan, those countries, they are the ones who

:43:34.:43:36.

will be asked in two weeks time to step forward. Key things like

:43:37.:43:40.

couldn't the Turk take slightly more control of that border. They will be

:43:41.:43:45.

asked to nail their commitments to the sticking place on that. Frankly

:43:46.:43:50.

we don't know yet how committed some of those countries like Turkey are

:43:51.:43:54.

to making the new US strategy work. There is a lot of moving parts and

:43:55.:43:57.

unanswered questions. Thank you very much indeed. From

:43:58.:44:02.

Washington is Richard Clarke, a senior figure in the Clinton and

:44:03.:44:08.

Bush administration's National Security Council, who resigned from

:44:09.:44:12.

service in 2003 and remains critical of the US Government's disregard

:44:13.:44:15.

towards the threat of terrorism. We talk to him now. You tried to warn

:44:16.:44:27.

the Bush administration about Al Qaeda in spring 2001, you were

:44:28.:44:32.

ignored, why did that happen? That's a topic one can talk about for

:44:33.:44:38.

hours. But essentially the Bush administration came in with its own

:44:39.:44:43.

agenda. And its agenda did not include worrying about Al-Qaeda. And

:44:44.:44:50.

it wasn't changed by facts. And that is much the same situation that we

:44:51.:44:54.

found with Obama in the last few months. Where he wanted his agenda

:44:55.:45:00.

to be something other than worrying about terrorism in the Middle East.

:45:01.:45:07.

For a long time the facts didn't change the White House priorities.

:45:08.:45:11.

Do you think he actually ignored warnings then of rising Islamist

:45:12.:45:18.

militia in Syria. Do you know that? Certainly, if you look at public

:45:19.:45:22.

statements made by people in his administration, in the state

:45:23.:45:25.

department, for example, and the intelligence community. Statements

:45:26.:45:29.

they made in congressional hearings and inquiries. They were warning,

:45:30.:45:34.

very dramatically, and yet the administration did very little over

:45:35.:45:38.

the course of this year until the last month.

:45:39.:45:42.

So do you think this is kneejerk now what he's doing. Do you think he's

:45:43.:45:48.

trying to catch up for time or is it the right response too late? It is

:45:49.:45:52.

the exact opposite of kneejerk. This President is known for being very

:45:53.:45:59.

cautious, very deliberative, very analytical, very coldly calculating

:46:00.:46:02.

and not being swayed by the media and not being swayed by emotion. And

:46:03.:46:09.

he, more than anything else, wants to avoid doing what past Presidents

:46:10.:46:13.

have done. Which is to make decisions about the use of US

:46:14.:46:17.

military force in the Middle East without due consideration. So he has

:46:18.:46:21.

been very, very slow in coming to this decision. Not kneejerk at all.

:46:22.:46:30.

Thank you very much. While we have been on air Clydesdale Bank have

:46:31.:46:32.

said they will also leave Scotland in the event of a yes vote. A sadly

:46:33.:46:36.

that is all we have time for tonight. Kirsty is here tomorrow,

:46:37.:46:38.

good night from all of us here. It was a beautiful day today up and

:46:39.:47:12.

down the UK. More fine weather in the forecast. Subtle variations

:47:13.:47:13.

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