19/01/2016 Newsnight


19/01/2016

A look at the potential warning signs of a new global recession. Is democracy under threat in Poland? The political fallout of the Alexander Litvinenko murder inquiry.


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Transcript


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How to tell what's going wrong in the world economy right now.

:00:07.:00:12.

Now, desperately touting for business.

:00:13.:00:23.

Our average rate is $2600 per day. That compares with a peak of the

:00:24.:00:30.

teen 250,000. For those who thought China

:00:31.:00:32.

would grow at a lightning speed forever, find themselves

:00:33.:00:34.

disappointed - the world is dealing We'll ask Jeffrey Sachs how we got

:00:35.:00:37.

here, and how we might Is Poland's new government eroding

:00:38.:00:41.

democracy, and should For all that we made

:00:42.:00:45.

for the last 25 years. Donald Trump gets endorsed

:00:46.:00:56.

by Sarah Palin no less. Is he just a joke candidate

:00:57.:01:13.

with a new punchline or the unstoppable

:01:14.:01:15.

republican nominee? You might have noticed that we've

:01:16.:01:21.

been covering different items of economy news lately -

:01:22.:01:26.

low oil prices, problems in the steel industry,

:01:27.:01:28.

a slowdown in China and a resulting We could add today's

:01:29.:01:32.

inflation figures here - What's particularly interesting

:01:33.:01:36.

is that these are all in their own way, manifestations of the same

:01:37.:01:44.

global economic story. One that's summarised

:01:45.:01:46.

in the word overcapacity. The world economy is beset by it -

:01:47.:01:49.

we've got more steel, more oil, more stuff

:01:50.:01:52.

than we currently know how to buy. That's why inflation remains

:01:53.:01:58.

dormant, it explains why we're finding it hard to export more, -

:01:59.:02:01.

how can we sell more, when there's too much

:02:02.:02:03.

out there already? Overcapacity explains why it's

:02:04.:02:05.

turning out to be hard to make We'll talk more about it shortly,

:02:06.:02:08.

but if you want another example of it - a metaphor for the dashed

:02:09.:02:16.

optimism of recent years, take a look at the extraordinary

:02:17.:02:19.

events in the global These ships setting off Gibraltar

:02:20.:02:35.

are being buffeted in the wake of global forces. Owners of big car go

:02:36.:02:42.

vessels are bleeding money at the amount they can charge is

:02:43.:02:48.

collapsing. It tells you a lot about how global trade has been weakening.

:02:49.:02:52.

There are three categories of merchant ship. Tankers which carry

:02:53.:03:00.

liquids, container ships which carry stuff in shipping containers.

:03:01.:03:07.

Finally, dry bulk carriers, ships that carry coal or Ireland. It is

:03:08.:03:14.

the cost of that which is measured by the dry bulk index. It tells you

:03:15.:03:23.

what is happening to the cost of shipping loose stuff. It is used as

:03:24.:03:27.

an economic indicator to show demand for those sorts of goods. At the

:03:28.:03:36.

moment it is at an all-time low. It is under shooting the prices

:03:37.:03:44.

registered. It has never been a worse time. At the moment the

:03:45.:03:49.

average rate for a ship which carries 180,000 tonnes is $2600 per

:03:50.:03:56.

day. That is incredibly low. That compares with a peak rate of between

:03:57.:04:09.

200,000-250,000. That was an incredibly high market just as this

:04:10.:04:18.

is an incredibly low market. Our ship owners losing money?

:04:19.:04:24.

Absolutely. That is well below expenses, takes no account of

:04:25.:04:28.

depreciation or funding. You can hire exactly this kind of ship for

:04:29.:04:41.

less than $3000 per day. The cause of this is massive overcapacity.

:04:42.:04:53.

World dry bulk capacity was 177 million gross tonnes. By 2014 it was

:04:54.:05:06.

more than double. You've got rather desperate ship yards out there in

:05:07.:05:12.

places like Korea and China. They've been offering huge discounts. They

:05:13.:05:21.

want to place big orders. They've had these big deliveries on the

:05:22.:05:30.

premise that China would keep going. There is a huge mismatch between the

:05:31.:05:34.

supply of ships and the demand to move stuff. You can see how much

:05:35.:05:40.

China matters when you look at what is allocated to keep size ships. The

:05:41.:05:47.

key routes are from South America through to China and from Australia

:05:48.:05:58.

through to China. All the largest mines are in South America and

:05:59.:06:03.

Australia. You can see why if China is having a bad time, it will hit

:06:04.:06:12.

these carriers. Yes, if China is struggling then these are the groups

:06:13.:06:15.

these carriers. Yes, if China is where you will be seeing

:06:16.:06:15.

increasingly less activity. where you will be seeing

:06:16.:06:23.

similar process to dry bulk. Tankers are different. The tanker market is

:06:24.:06:32.

2012, 2013, it was rotten, nobody 2012, 2013, it was rotten, nobody

:06:33.:06:38.

ordered new ships. You did not have the problem of having a big glut of

:06:39.:06:41.

new ships trashing rates. The the problem of having a big glut of

:06:42.:06:51.

waiting is further cutting tanker supply. By contrast, there is not

:06:52.:06:53.

enough like this busy. You might think

:06:54.:07:08.

overcapacity as like this busy. You might think

:07:09.:07:13.

the world economy is a nice problem to have.

:07:14.:07:21.

And to make it worse, the people who paid for that

:07:22.:07:27.

overcapacity - who've built unnecessary ships,

:07:28.:07:28.

or who've invested in oil, thinking the price would be 100

:07:29.:07:31.

a barrel, or who have shares in steel factories -

:07:32.:07:34.

they will all find the money they thought they'd

:07:35.:07:37.

So - how did we we get into this, and how do we get out of this?

:07:38.:07:45.

Economics professor at Columbia and the. Bestselling author. Thank you

:07:46.:07:55.

for joining us. Do you see some connection between what has

:07:56.:07:58.

happening in the global steel market, what we've heard about

:07:59.:08:01.

happening in the global steel shipping, the price of oil, is it

:08:02.:08:07.

just overcapacity that is the general theme here? Your story told

:08:08.:08:12.

it just right. China has slowed down more than expected. It was going to

:08:13.:08:18.

be the machine which would pool in commodities from all over the world,

:08:19.:08:23.

commodity prices were very high just a few years ago, China has slowed

:08:24.:08:34.

down significantly. Those prices have plummeted, not only oil but

:08:35.:08:41.

metals as well. The shipping prices themselves. This is the China first

:08:42.:08:54.

story, China is now slightly ahead or behind depending on whose numbers

:08:55.:09:01.

you believe. You've got to be amazed, the capacity, we have more

:09:02.:09:11.

than doubled it, the price has come down by 95% from the peak. Those are

:09:12.:09:18.

extraordinary ructions in the global economy. It was expected that China

:09:19.:09:29.

would continue to grow, it is growing depending on who you

:09:30.:09:35.

believe, still growing but significantly less than believed. It

:09:36.:09:40.

was not only the great machine pooling the commodities but also a

:09:41.:09:47.

great exports engine as well. With all the optimism, money flowed into

:09:48.:09:50.

China, pushed up the value of the currency, and the currency is now

:09:51.:09:58.

overvalued, but instead of the market is pulling it down, China has

:09:59.:10:02.

been resisting depreciation of the currency because they fear that

:10:03.:10:05.

would create even more ruckus, though I believe it is part of what

:10:06.:10:14.

is needed to keep China's exports growing. When you've got too much

:10:15.:10:18.

stuff, the world should try and stoke up demand and find people to

:10:19.:10:25.

buy it, then everybody lives happily ever after. It feels like for the

:10:26.:10:30.

last 20 years we've been trying to get global demand up and have not

:10:31.:10:34.

been able to do it sustainably. I think you said it quite properly, we

:10:35.:10:40.

have a lot of capacity, good capacity to build a lot of things

:10:41.:10:45.

that we would like, and infrastructure and consumer goods,

:10:46.:10:53.

people have needs, it is a shame for these factories to lie empty. The

:10:54.:10:58.

question is how that demand is to be manifested. The usual way that has

:10:59.:11:08.

been attempted is through trying to boost consumption spending, but

:11:09.:11:12.

consumers do not want to spend so much, they want to save, and what I

:11:13.:11:19.

believe we need to do more is boost investment spending. Investment

:11:20.:11:25.

spending in countries which desperately need infrastructure.

:11:26.:11:35.

Here we have the great capacity to build exactly those urgent needs,

:11:36.:11:44.

but those needs require government cooperation, financing systems, and

:11:45.:11:55.

the government have not taken the time to build the public investment

:11:56.:11:59.

which would be vitally used by the world and keep demand high. That is

:12:00.:12:06.

an alternative way of spending money in those infrastructure investments.

:12:07.:12:10.

Reflect on the problem for savers. It feels to a lot of elderly people

:12:11.:12:15.

who don't have mortgages and have money in the bank that for the best

:12:16.:12:20.

part of the last 15 years they've been earning very little on their

:12:21.:12:24.

investments. It feels like there is virtually no way you can invest.

:12:25.:12:28.

You're certainly not going to be investing in building ships or

:12:29.:12:33.

manufacturing. What is going on for savers? Why has it been so hard? An

:12:34.:12:41.

excellent question. The big long-term saving goes through

:12:42.:12:44.

pension funds and insurance funds. Ironically that has then been put

:12:45.:12:50.

into the casino marketplace in short-term investments, trying to

:12:51.:12:57.

time the market and in the market, whereas if our pension funds and

:12:58.:13:01.

insurance funds which are long-term savings, we are investing in

:13:02.:13:04.

long-term infrastructure worldwide, whether it is in the ports or the

:13:05.:13:11.

power generation, the clean energy that we vitally need, then there

:13:12.:13:17.

would be a good match of the long-term saving needs and

:13:18.:13:20.

investments that would be the counterpart. But many investors have

:13:21.:13:28.

noticed in the last few years that investment has become a short-term

:13:29.:13:31.

game and we don't yet have what in the jargon is called the acid class

:13:32.:13:40.

of infrastructure, which is the proper use of this long-term saving.

:13:41.:13:44.

How worried are you at the moment? It feels like it's been a very

:13:45.:13:49.

gloomy year. A lot of people talking about financial problems and global

:13:50.:13:57.

implosions. How worried are you? You've got to be a bit nervous.

:13:58.:14:02.

We've lost about $5 trillion of market capitalisation in recent

:14:03.:14:08.

weeks with the stock market decline. But this is still relatively small

:14:09.:14:12.

compared to the size of the world economy. The problem is if a panic

:14:13.:14:19.

broke out as happened in Thailand in 1997 or after the Lehman Brothers

:14:20.:14:29.

failure in 2008. If we fail to keep liquidity and see the market seizing

:14:30.:14:32.

up then we have serious trouble. If there are big mistakes in this shaky

:14:33.:14:39.

period it could turn worse, but so far we have the means to avoid any

:14:40.:14:46.

serious downturn as long as we are vigilant and keeping liquidity in

:14:47.:14:48.

the market place. Poland - once seen as one of the big

:14:49.:14:50.

achievements of the EU, with its transition to democracy

:14:51.:14:53.

and strongly renovated economy - finds itself in the naughty corner

:14:54.:14:57.

of the EU at the moment. It elected a populist socially

:14:58.:15:01.

conservative government back in October, one that is giving

:15:02.:15:03.

a prolonged kick up the backside But that is not to the taste

:15:04.:15:06.

of the EU establishment which is questioning

:15:07.:15:10.

whether the new Polish government The issue was debated

:15:11.:15:12.

in the European Parliament today. One MEP said the Polish government

:15:13.:15:21.

represented the "Putinisation The atmosphere in Poland

:15:22.:15:23.

is shifting fast. For the first time since the end

:15:24.:15:43.

of communism, a democratically elected government has

:15:44.:15:46.

a majority and is busy implementing its own brand

:15:47.:15:49.

of Christian conservative You don't really know where this

:15:50.:15:52.

politics is going to. Everything happened so fast

:15:53.:16:02.

and it is suddenly a different For several decades Poland has

:16:03.:16:04.

been the poster nation But its new government has set it

:16:05.:16:14.

on a course that now sees it accused of eroding the progress made

:16:15.:16:23.

here over the last 25 years. It has only been in power for two

:16:24.:16:26.

months, but already the ruling Law and Justice party here has

:16:27.:16:30.

made some pretty big It has pushed through reforms

:16:31.:16:32.

to increase its influence over It has sacked managers

:16:33.:16:41.

and reporters at And it has boosted

:16:42.:16:44.

surveillance rights For the Law and Justice party this

:16:45.:16:49.

is about leaving behind what they depict as

:16:50.:16:54.

the liberal, corrupt elites they say ruled

:16:55.:16:55.

Poland for too long. But tens of thousands don't buy that

:16:56.:17:40.

and have taken to the streets to protest, many for the first time

:17:41.:17:44.

since the collapse of communism. As a flat in central

:17:45.:17:50.

Warsaw members of the committee for the defence

:17:51.:17:53.

of democracy, created just a week after the new government

:17:54.:17:55.

was sworn in, The Standard and Poor

:17:56.:17:57.

rating agency downgraded Poland's credit rating on Friday

:17:58.:18:04.

saying Law and Justice has weakened the independence

:18:05.:18:07.

of key institutions. I'm afraid that the

:18:08.:18:08.

good changes in our economy for the past 25

:18:09.:18:15.

years could be reversed because the ratings go down

:18:16.:18:19.

and the economy could also Germany is being framed by the right

:18:20.:18:22.

wing media as the enemy to this Angela Merkel recast,

:18:23.:18:33.

not for the first In the offices of an internet

:18:34.:18:37.

magazine I wanted to know whether the independent Polish

:18:38.:18:45.

media is worried the government might try and exert

:18:46.:18:49.

influence over them next. I hope it is not going to happen

:18:50.:18:51.

because that is the worst-case I mean if politicians

:18:52.:18:54.

would like to influence the content of our magazines,

:18:55.:18:57.

that is the end of the free-speech, I hope that it is not

:18:58.:19:00.

going to happen. We fear it as the whole

:19:01.:19:06.

of civic society, that something could happen

:19:07.:19:14.

in the future. Because you don't really know

:19:15.:19:16.

where this politics is going to. Of springing bills on Parliament

:19:17.:19:26.

and holding late-night In just two days

:19:27.:19:28.

between Christmas and the New Year the country's

:19:29.:19:33.

media laws were amended. And now the government has

:19:34.:19:36.

the power to dismiss and appoint the management

:19:37.:19:39.

of all the state broadcasters. One of Poland's

:19:40.:19:45.

best-known TV presenters lost his job after his channel

:19:46.:19:48.

TVP got a new boss. In Poland criticising the government

:19:49.:19:55.

to foreigners has been It is amazing to us that

:19:56.:19:58.

for so many people abroad, for so many people in

:19:59.:20:07.

Western European countries, it is interesting

:20:08.:20:09.

what is going on in But I really do believe

:20:10.:20:11.

that it is on us to do our job. It is on us to build a successful

:20:12.:20:17.

country for every citizen of Poland. You have been sacked,

:20:18.:20:21.

how can you do your today defending her country's

:20:22.:20:23.

actions against accusations that they contravene

:20:24.:20:35.

the liberal values The European Commission

:20:36.:20:36.

is investigating. But plenty say that Poland

:20:37.:20:39.

is modelling itself To toe the line on

:20:40.:20:42.

migrants, for example. That it is flexing its muscles

:20:43.:20:58.

as part of an increasingly illiberal Some of those who oppose the new

:20:59.:21:28.

government came themselves in part for what has happened. -- blame.

:21:29.:22:05.

Poland is the sixth largest economy in the queue. It could have its

:22:06.:22:13.

voting rights suspended if its government is found wanting. But in

:22:14.:22:18.

reality it is unlikely there is a will to pick a serious fight with

:22:19.:22:20.

the country that is so important to the union.

:22:21.:22:24.

On Thursday, at 10 am in Court 73 at the Royal Courts of Justice,

:22:25.:22:28.

the former high court judge Sir Robert Owen

:22:29.:22:30.

He will outline the conclusion of the 18 month inquiry he's been

:22:31.:22:34.

heading into the death of Alexander Litvinenko

:22:35.:22:36.

He seems likely to conclude that some Russians were involved.

:22:37.:22:41.

I hope you were sitting down when I broke that to you.

:22:42.:22:46.

Now President Putin may be about as popular as Sepp Blatter

:22:47.:22:49.

in this country, but here's the thing: at the moment,

:22:50.:22:51.

we kind of want to be nice to him - as he could be helpful when it

:22:52.:22:55.

Here's David Grossman on the awkward diplomacy of the Litvinenko inquiry.

:22:56.:23:02.

The Russian Embassy in London's website puts the British-Russian

:23:03.:23:13.

In recent years, our political relationship has been

:23:14.:23:16.

characterised by instability and volatility, it says.

:23:17.:23:20.

By abrupt changes, from relatively good, to overt hostility.

:23:21.:23:27.

It is certainly not a normal relationship at the moment

:23:28.:23:29.

and that is partly as a reaction to this kind of misbehaviour by Russia.

:23:30.:23:33.

The murder of Alexander Litvinenko, a British citizen in London,

:23:34.:23:37.

in November 2006, was viewed in Whitehall as nothing short

:23:38.:23:41.

On Thursday the enquiry into his death will report.

:23:42.:23:47.

The only real question about its findings is how far up

:23:48.:23:50.

the Russian state it will say the order to kill was taken.

:23:51.:23:55.

But so much has happened in the interim.

:23:56.:23:58.

The Ukraine crisis of 2014, the shooting down of MH17 with 290

:23:59.:24:02.

It was Britain that led the way demanding sanctions.

:24:03.:24:11.

We have to address the completely unacceptable

:24:12.:24:13.

situation of having Russian troops on Ukrainian soil.

:24:14.:24:17.

But then in September of last year, Russia began bombing

:24:18.:24:20.

Shortly after, in December, Britain too engaged in military

:24:21.:24:26.

Putting us and the Russians at least notionally on the same side.

:24:27.:24:34.

Which is why the report into the death of Alexander

:24:35.:24:36.

Litvinenko could not come at a more delicate time.

:24:37.:24:40.

The enquiry has heard extensive evidence of Russian

:24:41.:24:42.

Lawyers for Mr Litvinenko's widow called his murder

:24:43.:24:48.

The evidence has demonstrated step by

:24:49.:24:54.

painstaking step that Putin and his personal cabal are directly

:24:55.:24:59.

That they're willing to murder those who

:25:00.:25:06.

And that Mr Litvinenko was murdered for that

:25:07.:25:10.

I think if the finding of this inquest is that this murder

:25:11.:25:18.

was conducted at the behest of the Russian state,

:25:19.:25:21.

or that that is where the evidence most strongly points,

:25:22.:25:24.

the ramifications for the Russian state will be exceptionally serious.

:25:25.:25:30.

This is a hearing which has been conducted in London,

:25:31.:25:40.

under the well recognised standards of British justice,

:25:41.:25:42.

which are still widely admired around the world.

:25:43.:25:44.

I think a finding of that sort would have real

:25:45.:25:46.

credibility and I think it would do real damage to the Russian state.

:25:47.:25:50.

But is a full-scale diplomatic row right now likely,

:25:51.:25:52.

given that it suits neither ourselves nor the Russians?

:25:53.:25:54.

We have serious common interests with the Russians in fighting

:25:55.:25:58.

They have a real problem, particularly in southern Russia,

:25:59.:26:03.

and one only has to think there are perhaps 400 Britons

:26:04.:26:11.

or maybe more still fighting for ISIS in Syria and there are many

:26:12.:26:14.

more times that of Chechens, for example,

:26:15.:26:18.

who are also fighting alongside them.

:26:19.:26:19.

That is British and Russian citizens fighting against the interests

:26:20.:26:21.

So there is clearly a common interest.

:26:22.:26:25.

And that gives us a common interest in bringing the Syrian conflict

:26:26.:26:28.

to an end so that we can turn our attention to defeating

:26:29.:26:30.

But for Russia the incentive for better

:26:31.:26:34.

Since the start of the Ukraine crisis in 2014 the price of oil has

:26:35.:26:42.

It is now well below the point at which experts say Russia can pay

:26:43.:26:46.

Mr Putin urgently needs Western sanctions lifted.

:26:47.:26:54.

One only has to look at Putin's speeches to see

:26:55.:26:56.

that it is beginning to sink in that Russia is facing a really serious

:26:57.:27:00.

While Putin did gain in the short run from the nationalist outburst

:27:01.:27:14.

that accompanied the annexation of Crimea,

:27:15.:27:15.

Russian people can't live off, can't eat, nationalism.

:27:16.:27:17.

They need something more substantial.

:27:18.:27:23.

But for all the real politique, there is also British

:27:24.:27:25.

domestic politics to consider as well.

:27:26.:27:26.

Pressure on Mr Cameron to take a publicly tough line.

:27:27.:27:31.

For us it would seem to be very simple.

:27:32.:27:34.

If people are implicated and named in this report,

:27:35.:27:36.

which they absolutely should be, and I expect them to be,

:27:37.:27:41.

then there should be an immediate EU wide travel ban,

:27:42.:27:45.

there should be an asset freeze, and we should demonstrate not just

:27:46.:27:48.

to Putin but to anybody else around the world

:27:49.:27:50.

we will not accept that kind of breach of our sovereignty.

:27:51.:27:54.

That kind of outrageous act here on our soil.

:27:55.:27:56.

And so the challenge for the British Government

:27:57.:27:58.

is to balance outrage at what might prove to be Russian state

:27:59.:28:01.

murder in London with the need to maintain

:28:02.:28:04.

A fragile but important relationship with Vladimir Putin. And how should

:28:05.:28:14.

we respond to the enquiry? Here to discuss the impact this may

:28:15.:28:18.

have on Anglo-Russian relations are Bill Browder, a former investor

:28:19.:28:21.

in Russia who fell out with President Putin and has been

:28:22.:28:23.

campaigning against corruption since his lawyer died in police

:28:24.:28:25.

custody, and the academic and author Good evening. Bill, do you think

:28:26.:28:38.

that we can it important diplomatic issues like Syria affect our

:28:39.:28:45.

response to an enquiry that the Banco enquiry? -- like the

:28:46.:28:53.

Litvinenko enquiry? First we have a situation where there is an active

:28:54.:28:58.

nuclear terrorism on British soil. Not only was Litvinenko killed at

:28:59.:29:06.

this radioactivity was at Arsenal Stadium, in Grosvenor Square, at a

:29:07.:29:10.

restaurant. You cannot allow Russians to be going around settling

:29:11.:29:13.

their scores and doing assassinations and putting British

:29:14.:29:18.

personal lives at risk. And so first and foremost, is public safety and

:29:19.:29:23.

that demands that there is a sharp response to this otherwise the

:29:24.:29:28.

Russians will carry on doing it and they do carry on doing it. This is

:29:29.:29:32.

not the only murder on British soil or attempted murder of Russians

:29:33.:29:34.

settling scores. Tell us what you would do because we

:29:35.:29:45.

already have sanctions. What extra would you do give and we cannot

:29:46.:29:48.

conflict the individuals who might have done it? Good question.

:29:49.:30:00.

Everybody in the UK thinks they can keep their dirty money safe and put

:30:01.:30:12.

themselves in London. We can take away their ability to travel and

:30:13.:30:18.

freeze their assets. The United States government did just that and

:30:19.:30:23.

I can tell you that truly pierced the imperviousness of Russia. It

:30:24.:30:29.

touched their Achilles heel. This is what they care about. It would not

:30:30.:30:34.

affect the average Russian but the people at the top? It is like one of

:30:35.:30:43.

these targeted cancer drugs, it does not kill the patient. You make a

:30:44.:30:51.

list of the people involved in this crime and you freeze their assets

:30:52.:30:54.

and ban their visas. It does not touch the Russian people. It touches

:30:55.:31:00.

the regime and it shows they are serious. We heard Tim Farrand say it

:31:01.:31:10.

is quite simple. If the crime is committed, action must be taken. Is

:31:11.:31:18.

it that simple? Let's think back to when their were IRA people on the

:31:19.:31:28.

run in America. We have precedents. We have the problem that in reality

:31:29.:31:36.

at the moment, many Russians, the great majority, think they are

:31:37.:31:48.

facing economic warfare. Ordinary Russians say the sanctions do hit

:31:49.:31:56.

and that is creating a mood in Russia that is anti-Western. One of

:31:57.:32:01.

the reasons for the collapse of communism is nobody believed the

:32:02.:32:06.

antique Western -- the anti-Western rhetoric. Now, ironically,

:32:07.:32:11.

antique Western -- the anti-Western seen as being the fault of the West.

:32:12.:32:21.

The public opinion creates a problem. You saw in Poland, a party

:32:22.:32:25.

can win an election on an anti-Western ticket. What about

:32:26.:32:32.

Syria? We might want to cooperate with Vladimir Putin on Monday and

:32:33.:32:36.

punish him on Thursday. Does that complicated? The real threat comes

:32:37.:32:40.

not from people who are effectively banned from Britain but from

:32:41.:32:49.

potential terrorists operating. They have links with people who the

:32:50.:32:57.

Russians fear. Ironically, whatever problems we have with Russia we also

:32:58.:33:01.

have possible advantages of cooperation. We did cooperate with

:33:02.:33:08.

Stalin in the Second World War. Sometimes the moral simplicity of

:33:09.:33:13.

deciding we are good and the other side is bad, there are grey areas.

:33:14.:33:22.

Would you still advocate if I told you on Monday we will be asking

:33:23.:33:26.

Vladimir Putin for favours and what you are proposing will make that

:33:27.:33:28.

more difficult and we don't want to prolong the Syrian war, a bigger

:33:29.:33:40.

thing than worrying about that? Let's look at what we are asking

:33:41.:33:48.

Russia for. At the moment Russia have interfered in Syria and started

:33:49.:33:54.

bombing 90% targets that are not Isis. They are basically going after

:33:55.:34:05.

allies, bombing civilians and creating a larger refugee crisis. I

:34:06.:34:11.

don't believe we are in a situation where we are working with Russia,

:34:12.:34:18.

they are operating blackmail in order to negotiate down Ukrainian

:34:19.:34:22.

sanctions and to staff in these types of issues for when they commit

:34:23.:34:24.

murders and do another terrible things. Our approach needs to be

:34:25.:34:31.

firm because Russia laughs at us when we tiptoe around them begging

:34:32.:34:35.

them for favours. This is a tyrant. Vladimir Putin is not a man who can

:34:36.:34:45.

be reasoned with or begged. Quick last one from you. Whether we like

:34:46.:34:51.

it or not, Russia has a role to play. Have we any way of stopping

:34:52.:34:58.

it? What can we do to make the Russians compromise? We might get

:34:59.:35:03.

something we would otherwise not get and unfortunately that is what

:35:04.:35:06.

diplomacy is about. Sometimes, swallowing your pride, I'm afraid

:35:07.:35:13.

megaphone diplomacy has not worked, maybe we could try something

:35:14.:35:16.

different and we could get something more in tune with the moral stance.

:35:17.:35:18.

Thank you. The US is abuzz tonight

:35:19.:35:21.

with the news that Sarah Palin is about to endorse Donald Trump's

:35:22.:35:24.

bid for the republican presidential We are joined from by New York Times

:35:25.:35:27.

journalist Josh Barro. Good evening to you. Let's think

:35:28.:35:53.

about the similarities between them. He is a metropolitan New York, they

:35:54.:35:58.

are not entirely on the same wing of Conservative thinking. I think they

:35:59.:36:08.

are closer together than they look initially. Sarah Palin ran on a

:36:09.:36:15.

platform of taxing oil companies more. What they represent is

:36:16.:36:23.

conservatism not really being about small government and low tax. They

:36:24.:36:27.

had a sense that the country is moving in the wrong direction. They

:36:28.:36:39.

both reflect that. This is exasperating for a lot of

:36:40.:36:41.

professional conservatives who say these are not actually about small

:36:42.:36:45.

government philosophies but it aligns with what voters want. They

:36:46.:36:53.

are both reality show stars to some extent. They seem to have very good

:36:54.:37:04.

communication skills. They do. They tap into the frustration. The phrase

:37:05.:37:12.

it in different ways. You talk about the difference between real America

:37:13.:37:15.

and not real America. Donald Trump is from Manhattan. He does talk

:37:16.:37:23.

about how political correctness is terrible. They both signal the

:37:24.:37:31.

attitudes of the mostly white middle America. We are way ahead of Donald

:37:32.:37:43.

Trump King is a running mate. Is the expectation that something is going

:37:44.:37:50.

on here? I doubt that, for a few reasons. We've seen in Sarah Palin's

:37:51.:37:58.

career, G has a reputation for not being very dependable. She wants to

:37:59.:38:04.

be a public figure, give speeches, write books and get paid for that. I

:38:05.:38:08.

don't think she wants to go back into government and I don't think

:38:09.:38:12.

Donald Trump would find her to be an asset. I think she will be useful in

:38:13.:38:22.

Iowa. It would hardly be a balanced ticket. Donald Trump would want a

:38:23.:38:26.

detail person. She hardly qualifies as that. The Republican

:38:27.:38:31.

establishment, they must have their head in their hands. All the

:38:32.:38:36.

momentum is around this chap. Every two weeks another story. It is

:38:37.:38:45.

complicated. They are very frustrated by it. People thought he

:38:46.:38:49.

was a joke when he announced. On the other hand, the problem for the

:38:50.:38:56.

establishment is the alternative, Ted Cruz. People are puzzling over

:38:57.:39:03.

why they don't unload everything at Donald Trump and it is partly

:39:04.:39:08.

because if they bring him down, Ted Cruz will be the beneficiary and for

:39:09.:39:11.

a lot of the establishment he is seen as even worse because Donald

:39:12.:39:18.

Trump is totally unique. There would be nobody like him waiting in the

:39:19.:39:26.

wings. It would be an intermission and they could come back and do what

:39:27.:39:29.

they did before whereas if Ted Cruz wins he can take over the party.

:39:30.:39:37.

They are more scared of that. A lot of people would rather have him as

:39:38.:39:44.

the nominee. That's why you seen part of this conversation about

:39:45.:39:49.

whether he is eligible, Ted Cruz, because he was born in Canada. This

:39:50.:39:53.

is normally a fringe idea but because people hate Ted Cruz so

:39:54.:39:58.

much, people like John McCain are saying this is a serious issue, it

:39:59.:40:03.

reflects the fact that the establishment is more petrified of

:40:04.:40:08.

Ted Cruz than Donald Trump. You've got literally five words, is he

:40:09.:40:13.

going to be the candidate? I think he's the most likely person. I would

:40:14.:40:16.

not bet my life on it but I would pick him over the field. Thank you.

:40:17.:40:19.

There is a very story -- important story in the Financial Times

:40:20.:40:35.

suggesting Brussels is proposing a change to remove the arrangement by

:40:36.:40:42.

which the first country into which an asylum seeker lands is the

:40:43.:40:48.

country which needs to take responsibility. David Grossman is

:40:49.:40:56.

with me. Fill us in on the details. It is not big news that this

:40:57.:41:01.

agreement is not working. We've seen massive flows of asylum seekers

:41:02.:41:06.

across Europe and Angela Merkel said they would no longer be sent back to

:41:07.:41:10.

places like Greece or Italy but they've not said what it will be

:41:11.:41:14.

replaced with and that will be crucial in the context in the run-up

:41:15.:41:21.

to the referendum on whether we will stay in the EU or not. Britain has

:41:22.:41:26.

an opt out on migration but we opted in to Dublin because it worked for

:41:27.:41:28.

us. What the new rules would be in to Dublin because it worked for

:41:29.:41:31.

not clear in to Dublin because it worked for

:41:32.:41:37.

EU is already trying to share the quarter and it is not working at

:41:38.:41:45.

all. Migrants sitting in Calais, if there is no Dublin it is not obvious

:41:46.:41:52.

who's problem it is. Indeed, the system which replaces it will be

:41:53.:41:58.

crucial but how it can coexist with Schengen is very difficult to

:41:59.:42:01.

crucial but how it can coexist with Thank you. That is all we have time

:42:02.:42:05.

for. I will be back here tomorrow. Have a good

:42:06.:42:09.

A look at the potential warning signs of a new global recession. Is democracy under threat in Poland? The political fallout of the Alexander Litvinenko murder inquiry. Sarah Palin backs Donald Trump's bid to run for president. With Evan Davis.


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