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- [00:00]
A
Okay. This is the fourth or fourth in the lectures which I've organized through summer school here at the LSE for 2013. We've reflected on a number of big issues. I kicked the series off, if you like, with a debate with Professor Danny Kwar on whether or not power is shifting from the west to the east, from the transatlantic area, from the west to Asia and particularly to China. We had then magnificent speech by our director, Craig Calhoun. I've got to say it's magnificent because he's my boss on social movements in the USA when he showed the great importance of social movements. Last week we had Lord Meghnad Versailles talking on the crisis of 2008, its consequences and how to get out of it. And this evening I'm actually delighted to welcome and to introduce to you Robert Cooper, who works with me in the center I help run called Ideas, and has a very long and distinguished career. Educated at Oxford, joined the Foreign Office in 1970, he worked in a number of senior positions in Tokyo and then the capital of West Germany, Bonn. Between 1989 and 1993, he was head of policy planning, and in 2002 he moved over, so to speak, to work on European Union issues, with particular relationship with and under the leadership of Xavier solana. And in 2000, he became on the steering committee of the European Action Service Committee, developing, in a sense, the development of a new foreign policy for Europe. Though formally, I think, retired, he retains the role as a councillor with the European Union, particularly Cathy Ashton, with a particular interest in Burma, Myanmar. Apart from a distinguished diplomatic career, Robert is also the author of two major books, the Postmodern State and World Order in the year 2000, and then the breaking of nations in 2003. And again, he's doing some wonderful work with us over in Ideas. He's going to speak tonight and I can't think of a better speaker to speak on the straightforward problem. Europe on the Brink, From Crisis to collapse. Let me just say very quickly, Bob has to go at 6:30 to get to a concert, a rather important one this evening because his wife is playing. So he has to leave on the. 6:30. So Bob will be speaking for about 25 minutes, a kind of short, sharp, breathtaking introduction. Then we're going to move to questions and answers for the next 40. I wonder if you can give Sir Robert Cooper a very warm welcome, please.
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B
Thank you. Thank you. Thanks.
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A
Yes, you look at yourself. I know. It's quite disconcerting, unless you're an egomaniac like me.
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B
Well, the title of the lecture says crisis or collapse?
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A
And.
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B
I don't know about collapse, but actually crisis is a way of life if you're in government and if you look around the world, you can actually make a case for more or less anyone who's in crisis. China in 2005, they had 87,000 what were called major incidents, which means that there was some kind of a demonstration or something of a kind involving more than, I think 200 people. And about 5% of those were riots. That was 2005 and there's probably double that number. And there are problems in the usa.
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A
What is that?
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B
My telephone maybe. I don't know.
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A
That's probably China.
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B
Anyway.
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A
They've got fed up with this anti Chinese propaganda already. Robert, you know, wonderful place. Yeah, I know wonderful place, wonderful place, great people.
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B
Anyway, there's lots of crises around and actually Europe has had lots of crises too. If you think back to 1945, this is a continent swarming with refugees. There are civil wars going on here and there. There are attempted communist takeovers in some European states. There were successful communist takeovers in other European states. And then you go through, if you're British, you go through a series crises, post war crises about shortages, foreign policy crises, partition in India, terrorism in Palestine, France has Algeria, Britain has Suez and so on. It goes on and on. Even the European Union, a fundamentally boring institution, has had crises. It had empty chair crisis at the beginning when the French boycotted, it had budget crises. When Britain got inside, it had energy crises. It had 20 years ago, really a bad crisis in its inability to do anything about the wars in the Balkans. It had a crisis over German unification. So why is this crisis difficult? I think you need to be careful about getting bored with this crime crisis, particularly as you've now heard, In a way, two lectures on it, one about 2008 and now about the impact of that on the European Union. The main thing to understand is that it's not over yet. And the second thing to understand is that it is actually dangerous for Europe. It's dangerous for Europe because. Because the European Union is rather weak and I'll explain why later on. And this is about what does the European Union do? What's the European Union's kind of claim to exist? Well, one of the answers is that it has provided prosperity for Europe in the post war period. And if instead of providing prosperity, it provides endless austerity, endless zero growth and political instability, then that will be a crisis and there is a possibility of collapse. What is. When I say it's not over. What do I mean? First of all, Greece is not over. There's no doubt that Greek debt is unsustainable. At some point or other there's going to be a default. It probably won't be called a default, it'll be called a restructuring. It's been one already, but we'll have the second half of it soon. This time there will probably be less panic about the so called restructuring because most Greek debt is now no longer held by banks and individual. It's held by the European Stability Fund. But the result of that there will be a real transfer of resources from, if you like, from the north to the south, because this is going to be paid for by the European countries in the Eurozone, the ones that can afford it, that is to say Germany and the others. And so it will not be an attractive event, but it's necessary and it will probably and it will cause some trouble. But I think everybody's expecting it, so probably it will be managed quietly if possible. Portugal looks quite problematic. I don't think that the levels of Portuguese debt are probably sustainable, either politically or economically, but that will take some time to play out. The big questions. But Greece I think everybody's expecting. Portugal I think everybody can live with. The real questions are about Spain and Italy. If you can't. All of these countries have had zero growth for a couple of years. Greece has had a decline of 25% in GNP. The crisis started, it's falling another 7%. Italy and Spain are not so bad, although in Spain levels of unemployment are really terrifying. But if they're going to get out of this, then they need to find growth from somewhere or other. The theory in the currency union is that because you can't devalue, you solve the problem by reducing wage levels to make yourself more competitive by taking advantage of that with investment. In order for that to work, you need to have some kind of growth in northern Europe so that people can export there. And you also need. But you also need to have reduced costs at home and the wage costs are falling. But because the banking systems are so fragile, the costs of borrowing are if anything rising. So the prospect looks extremely poor. There is not going to be any kind of major flow of funds from the north to the south. So the real question is where is growth going to come from? Maybe it's just going to come. It looks even as though some might be coming in this country for no reason, except that what goes down must eventually come up. Maybe that will begin somewhere in Europe. The second most the Second important thing is the possibility of strengthening the banking systems in these countries because across Europe, particularly in the south, there has been a near collapse of the banks. And the problem in countries like Spain and Italy is that although they are more competitive in terms of wages, they are now less competitive in terms of the cost of capital. Costs of borrowing have gone up and the ability to borrow has become more difficult. Some of the kind of regular supply chains through which they made things, imported stuff from Germany, processed it, exported it back to Germany, that's become more difficult because of the extremely nervous state of the banks. So the two things to look for in the course of the next 12 months are, first of all, is there going to be any groom in those economies and in the north of Europe? And secondly, is there going to be a serious attempt in the European Union, Banking union? That's probably what is needed in order to strengthen sentiment in the banks and to allow them, to allow them to function properly. Why is this dangerous? Well, the answer, I said, is because the European institutions are weak. And what does that mean? Well, it means that. It means that people don't love them. There's no reason why anybody should love any institution. But people don't see, I mean, nobody loves the Ministry of Finance, for example, in any country, and yet they still pay their taxes. But the European institutions don't have any obvious supporters. The business community probably ought to support them, but most of the people actually don't know what they do. And what they do isn't very visible. In the end, people support their government because it provides things that they can see. Roads, schools, hospitals, those sort of things. Well, what does the European Union provide? The answer is it provides things that you can't see. It provides, I would say, but others now trying to dispute this, I would say no war. And then I would also say no queues of borders. A friend of mine actually deliberately took their family on holiday into the Balkans in Croatia, so that they could all wait for two hours in a queue to cross the border because the children had never seen this before. This used to be the case all across Europe. Just as a matter of fact, light wars used to be the case across Europe at some stage too. It also provides a thing which people can't see and which they mostly dislike, which is lots of regulation. At least they dislike the regulation until the moment when the bank fails, although that's not regulated as European level until somebody dies of food poisoning, because that's the result of European regulation. So you either complain about regulation because it's imposing Constraints on your ability to sell horse meat in hamburgers. Or you complain about regulation because it's stopping, it's not being effective in stopping people from than selling horse meat in hamburgers. So regulation doesn't really win you any friends, although it's essential if you want to have a well functioning market. And it's rather, and the European Union is rather remote, it's rather distant. People don't know who it is, don't know what it does. And because the institutions of the European Union are actually pretty awful, I can tell you with authority, because I worked.
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A
In them.
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B
People talk about the European Union as a bunch of unelected bureaucrats. Well, it's true. It's generally the case with bureaucrats that they're unelected. The speciality in the European Union is that the Commission itself is not so much unelected bureaucrats as unelected politicians, which is in some ways even worse. Originally the idea of the Commission was that it was going to provide a kind of collective leadership for Europe. The Commission has, it doesn't, in the end is not the decision maker in Europe. The decision maker in Europe is the Council. That's the member states together. The Commission though has used to have one very important power, which is the power of making the proposal. When the Council makes a decision in practice, a law or regulation on something, it has to be on the basis of proposal by the Commission. If you're British, you find this idea slightly strange. It's actually, in the end it's quite an important power. I only discovered recently where it comes from historically, you know, Mick, it was the power that the French monarchy had after the restoration in 1815. It must be a French idea, the King presided over the Council, that any proposal for legislation had to come from the King. Well, this role is now played by, is now played by the Commission. I guess in a way it does resemble Louis the 18th enormous fat man. But there are 28 of them and they are chosen at random here and there by people who, either because these jobs are very well paid people want them, or because somebody wants to get rid of somebody from their cabinet or something else. There is no very obvious coherence in the Commission. When it began, it did provide some kind of intellectual leadership. Personally, I think that this is now extraordinarily important and I think really vital. The curious thing is that as a result of the Euro crisis, the Commission has got more power than it's ever had before and yet it seems to have less authority. It's now got some really quite Extraordinary powers, potentially the power to look through people's national budgets before they are passed by parliaments and tell them, no people in the Eurozone, countries in the Eurozone and say, no, this is not acceptable, you're going to have to change that. So actually quite extraordinary powers, and yet, as I say, it doesn't have authority. So I think the collapse, by the way, is next year rather than this year. But the things you have to look for, not just in economic symptoms, you have to look to see, do we make progress on banking union? Is there any growth appearing? But a vital question in 1814 will be about who is chosen to lead the next Commission. People always often complain about the Commission, as I say, that it's unelected. I think personally I'm actually very in favor of electing it, but you can make a good case against that as well. But let's suppose it continues unelected. Then the body which claimed people say it's illegitimate, it's got too much power, it ought to be elected by somebody. But the counterexample for that is the European Parliament, which is elected, which has a lot of power as well, much more than many national legislatures, but seems to me to have no democratic legitimacy at all. Being elected does not make you legitimate democratically. The European Parliament actually has got some admirable people and it does a respectable job of reviewing legislation. But out there, the people who vote for it don't know what it is, who represents them, what they do, why they're there, anything, they don't know anything about it at all. And the only thing you hear from the European Parliament is that they are the only democratic legitimate body and they should therefore have more power. But they are not. They are not. Democratic elections are not enough. It's a puzzle which political scientists should one day give us the answer to. The third body is the body which does have democratic legitimacy, and that's the council that consists of the member states, the 28 member states now. And yet that doesn't. It's very difficult to. To get a body to function with 28 when you're in a crisis. In the past, when it's functioned well, it's functioned out of some kind of traditionally out of Franco German leadership. Sometimes in the area of foreign policy, it's been British, French leadership, and that doesn't seem to work at the moment. I don't know why. Germany seems too strong. France almost seems absent. If you look at the way the EU works at the moment, Britain seems to be standing somewhere near the door wondering Whether it really made a big mistake 40 years ago when it joined. And that's not a very persuasive position to be in either. And that's why I say, well, the two elections, that there are two things that matter next year in this area. One is the choice of the new commission. Actually what we need is a commission with authority, with trust of the member states and with some kind of intellectual authority to deal with these very difficult and complicated questions. And the second change of personnel is going to be in the European Parliament. And the trouble with the European Parliament is that because nobody knows what it does or what it's for, and because it doesn't seem to have any real direct impact on their life, either they don't vote or they quite frequently make a protest vote. At the best, if they're really serious voters, then they go and vote on some kind of national issue, which is irrelevant in the European context. But quite likely we'll find that people like the Five Star Movement, Pepe Grillo's Italian Internet party, will do well. The Front national in France is very likely to do well. And in Britain, this I find unattractive party UKIP may do rather well and we may finish with a European Parliament which actually demonstrates that it's not a serious body by its membership. So there we are. So that's the. So that's the problem and that's the weakness. But I have this difficulty and perhaps the other real weakness is in this crisis, supposing everybody wants the Euro to survive, but the Euro is not going to. Nobody wants it to fail. But first of all, if it fails, it won't be because of something that happens in Brussels, it will be because of something which happens in Lisbon or Madrid. It will be some national event, there will be some national crisis, an anti euro party will be elected and the markets will go crazy, or something like that. It will be something unexpected. But even worse than that, nobody knows exactly what failure would look like. Nobody knows how you would exit from the euro. When the Euro first began, they had, I can't remember how many trucks for full of euro banknotes, dropping them all over Europe. The one thing you can be sure, if the euro stops, if somebody says, right, we're out of the euro, is that you're going to have a lot of trouble using parking meters because they're all designed for euro coins. It's very difficult to change a currency overnight. Actually, the introduction of the euro notes and coins took an enormous, complicated, semi military operation. If you decided to exit the euro, you could not do that in secret. And once the markets think that it's going to happen, then you've got your crisis. And the real problem is that if somebody decides to do that secretly, maybe they even get away with it. But then if it's Greece, then the markets will immediately go after Portugal, Spain, Italy. So all kinds of things could happen which nobody intends and which nobody expects. I don't want that to happen because I can't think of how Europe could be organized other than the way that it's organized at the moment. If you want to know what the alternatives are, then think back 100 years. 1913, The Germans have just increased the size of their military. The French, having noticed this, have just introduced three years conscription. The second Balkan War is now coming to an end. Actually, the armistice was signed on August 10, 1913. The first Balkan War, with all of the Balkan countries attacking Turkey and pushing them back to where they are now. The second Balkan War, with all of the Balkan countries fighting each other to see who was going to own the bits of land that they'd taken over. The second Balkan War was much more worse than the first. The Second Balkan War strongly resembled what we saw in 1993. Villages burned, inhabitants massacred. The only difference was that in 1993, it was done with machine guns. Then it was done mostly with bayonets and the rifle bar. If you. If you think of the difference that the European Union makes, then you can think about these two Balkan wars. 1913, 20 years on from that, where were we? 1933. Well, you can work out where we were and what happened between 1993, 20 years on, where are we? From that the answer is that Croatia has just joined the European Union. Slow and painful process, and I hope that it works, but it looks okay. And earlier this year, there was a deal actually brokered by the European Union between Serbia and Kosovo, which will enable the European Union to begin negotiations with. With Serbia next year. So it's altogether a different Europe, and European Union is central to that. So if we lose it, we lose something which is really important. So I think I'll stop there. There's much more to say, but we'll say it. Answering the question.
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A
Okay, well, thank you very much. I deliberately ask Rob, to be pretty brief, just to give you some thoughts and suggestions and some ideas. And I think he's done all of those. And I think. Let me start the question rolling, Bob. Bound to ask the question which everybody asks. The question about Germany at the heart of all this, is it that Germany's too powerful or that Germany's too weak. David Marsh, in his recent book on Europe and the European crisis, said, there's a hole. There's a hole at the heart of Europe and that hole is spelled G, E, R, M, A, N, Y. Germany. I think I spelled that correctly. Is that at the heart of the question or is that only one aspect of the problem? Germany's too strong economically. But for a good series of good historical reasons, which you alluded to at the very end, there doesn't feel the capacity to, or the desire to lead, whatever. Because you mentioned this issue of leadership. Maybe we start there and then open up for Q and A quite quickly.
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B
Paul? Yes, it's not the German style. Happily, just after the war, German football team had a big success, which represented kind of national revival. And the coach was asked, how was it you did this? And he said, it was the. And I think he got fired.
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A
I mean, I wonder why.
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B
Sense of humor, actually. Germany's been, I think, consistently the best governed country in Europe since the war, but it's been governed on the whole in a rather modest way by people who are extremely clever but didn't make a big fuss about it. And Angela Merkel, well, there were one or two, actually. Helmut Schmidt could be pretty arrogant, but Angela Merkel is in a way one of the cleverest, nicest, most modest of them, least wishing to take a prominent position and to lead. When Germany and France have worked together, well, that has actually worked quite well because France provided that extra touch of arrogance which.
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A
You said it, not me. And then just to add a final point, then France, which is in a sense part of the heart of this leadership, this kind of Franco German going back to de Gaulle and in the 1960s, that critical moment of transition in Europe's history, post war history. Where is France in this? Because everybody, I mean, Brits used to complain enormously about the French. Now I find the Brits are kind of saying, where are the French? So is there been a power shift between Germany and France? Or is it that France is now preoccupied by its own problems internally and makes it therefore less of an important partner? Or is it that Merkel doesn't trust Hollande or what?
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B
I mean, France just. I think the question you ask is the answer, where is France? And I think a part of this is that France is in deep economic trouble and that for France, managing the relationship with Germany over the Euro has become more important than anything else. And this is no longer the relationship of equals that it was. And Hollande actually seems a decent professional Sort of person, but he doesn't make an impact. I don't know why. I don't know about the personality.
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A
Okay, well, I asked you a question about Germany.
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B
Even wishing for Sarkoz return.
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A
Sarkozy's return. Really? Okay, well that is incredible. I mean, I asked you a question about Germany and France because I didn't want to ask you a question about Britain.
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B
Someone else can.
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A
Somebody else. Okay, let's open it up from the top or the bottom. Can we have the first question from below or first question from above? Okay, the gentleman right in the middle here. Okay, pass it on quickly. Is this anybody down here wants to ask a question?
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B
People up at the back?
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A
Yeah, I'll get this one. I like to kind of go up and down. I'll take two together. Try and make them brief, if you could. And a question mark at the end of the sentence.
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B
My name is Oliver Benzer. I'm from Bonn, Germany. Speaking about. With that background, speaking about roles of the countries in Europe, the European crisis has largely been a euro crisis in the last years. Britain is not a euro country, obviously. Obviously. And I want to ask, in how far do you see Britain's role at the moment? Does Great Britain see the crisis as the European crisis, where it meets the way in to get over it, or does it merely say it's a euro crisis, we going to reject the euro even more and that's all we're going to do? Or do you think there's a prospect of more influence by Britain?
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A
Okay, that's one question on the Brits. Thanks. And there was another person over here. Yeah, please, you could introduce yourself.
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B
Yes, I'm Pablo from Spain.
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A
Very good.
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B
Thanks very much for your words. I would like to ask, if the UK left the eu, who do you think would be more hard? The former or the latter? Or in other words, who would be more benefited? Okay. Okay.
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A
So we have friends from Germany and Spain to ask the British question.
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B
That's fantastic. Quite right. Yeah, yeah. Only on the first of those, actually. I now go back a little bit and say something about the origins of the euro. I think that Britain played a bad role in the construction of the euro. I remember some phrase by Thatcher about I shall be up in heaven twanging my harp before there's ever a European Central Bank. Thatcher simply had nothing at all to do with it. And I think that. And therefore I think Britain in a way shares some of the guilt of the mistake that was made in the construction of the euro. Again, this is purely personal. I'm not an economist. If the. If you ask me what's wrong with the euro, I think my answer is that it was an Enlightenment project. Clever people sat down at a table and designed something and were sure that it was going to work. I think that life is a bit more complicated than that and that one ought not to kind of make big decisions like that. I think one should do things gradually, organically later on. And I think that if Britain had been committed to Europe and to the euro, I think it might have turned out a bit differently. We were more or less absent from the debate. Later on when Thatcher was gone and John Major was here, he introduced an idea called the hard aq. This has disappeared into the dustbin of history, unfortunately. But this was an attempt to create not a single currency but a common currency. And the idea was that if you had had a common currency which was actually going to be a very hard currency, it was called hardaq because it would always have been aligned with the strongest currency in Europe. So it would have been very attractive for people to hold their bank accounts in it and it would have been usable as a means of payment throughout the whole of Europe. And you would have gradually found over a period of years that some countries, their currency would have been indistinguishable from the hard at you and well then they could have gradually merged into it and dropped their national currency. That seems to me that it would have been a very sensible way to have proceeded much better than the grand design which suddenly, whoosh, we had it and then now we don't know how to do it.
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A
But do you think, Bob, just to follow up on the question with my friend up there, that now it looks like a massive piece of wonderful wisdom to have stayed outside the euro. I mean, because that's what the Brits are now saying. Schadenfreude, we told you so never worked, haven't we done well, blah blah, blah. But Britain's been affected by this crisis for goodness.
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B
I don't think that Britain, if you look at the way that sterling has operated in the post war period, I think it would have been rather silly for Britain to have joined the euro. The one thing that would have happened if Britain had joined the euro is we would have had a housing boom like we never had before. And we've had some really awful housing booms. It would have been Ireland, but on steroids. Interest rates in Britain were systematically 2% below European rates. So what would have happened? Everybody would have borrowed money and bought.
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A
Coming up to this question over here, The UK and the eu. Are we going to get out and if so, what will happen or won't we get out? It doesn't matter.
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B
Well, it's absolutely. I mean, if you ask really, what does the European Union do, the answer is. Well, it mostly does regulation in order to make the market work. If the UK wants to sell stuff in Europe, it's going to have to follow the regulation anyway. So it's got a choice of being at the table when the regulations are made. And it gives you a little bit of influence actually, if you're British, quite a lot of influence over the regulations or just accepting what regulations you get anyway. You can't escape the regulation. It's just a question of whether you want to help make it so. Actually it's a no brainer. Who does it harm? Britain. Absolutely clear.
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A
And can you predict the results of the referendum?
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B
Well, no, you can't. I mean, referenda are the work of the devil. Anybody who thinks that serious decisions should be made this way, it's completely ridiculous. Nobody in this country would dream of having a referendum on the death penalty because. Because they know that we would make the wrong decision on it.
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A
Absolutely.
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B
Why they choose?
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A
I think it was a referendum in France and Holland that rejected the Lisbon Treaty, wasn't it, if I remember?
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B
Yes. And the mastery. Well, I mean, but these are ridiculous ways to make decisions.
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A
Okay, there was people at the back there. Chap there at the back, he had to put his hand up and then pass the mic forward to the lady there, please, Chop in red and then. Yep, go, go, please. Thanks. So I have a question for you about the whole European Union.
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B
Do you think the problem is that.
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A
The member countries are not willing to work like on their own? Or is it they're not. They're not willing to work together on their problems. Okay, existential question that one, I think. And then move the mic forward and I'll take two together here in green. Thank you.
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B
Hi, I'm. I'm from Germany as well. I'm Viola. Thank you very much for your lecture. If I may come back to the German question, if I call it like that. And I would like to ask you whether you think that the German leadership style as it is at the moment is sufficient, or whether one should follow the Polish foreign minister and say whether one would strongly would rather see German activity than rather German in activity.
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A
Okay, so you've got an existential question number one, if I might put it like that. A German question again about the German question.
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B
The existential question. Oh, do they? Do people really want to work together?
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A
If they can't work by themselves, why do they work together? And what are the advantages of working together?
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B
That's not really a question about the euro, because with the euro, there's no choice. But if you ask that question about foreign policy, then you see the other kind of difficult contradiction. In the European Union, everybody knows that if you really want to make an impact in this world, the world of continents, China, India, Brazil, usa, you really want to make an impact, you're going to do it together. And yet every country has a foreign minister, and foreign ministers like getting their pictures in the paper. And they, you know, governments get elected by their foreign minister doing this. I'm waiting to see what happens in Iran, whether. Although actually the European Union has been dealing with this problem, I have a nasty feeling we may get a succession of foreign ministers going to Tehran to sort of negotiate, because that's kind of what they do. And in a way, you can't blame them. It's what you do if you're in the government. So although there are things like this where it really makes sense to do them together, there is no political force telling people that they have to. In fact, the political force, which is known as the electorate, is mostly telling them to do something else.
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A
Bob, you worked on. Just to bring another point in here quickly before we get back to the German question. I mean, you work quite a lot on developing or formulating a notion of a common foreign and security policy. You work with a great man, Xavier Solana, you've worked with, and you know Kathy Ashton quite well from your inside knowledge, without revealing any secrets. We can reveal one or two. I don't mind. Did you, from your own privileged position, inside position, feel constantly frustrated there should be a European common foreign policy, but it was almost impossible. Or is it a better story to tell than that, do you think?
- [42:07]
B
No, I think it's a better story. I mean, actually, I think the. I mentioned Kosovo. I think the Kosovo story is in a way, rather, it demonstrates how well the European Union could work. Remember, of the 28 countries, there are five which don't actually recognize Kosovo. But still, Kathy Ashton managed to make a deal between Serbia and Kosovo, which is in the end actually going to preserve. Preserve the peace because there was going to be violence in the north. Otherwise, it's not a very interesting story and no one will ever know about it because there hasn't been a war. I did this for a year before I left Brussels and done with a very small team, very un Bureaucratic. And what was good about the team was, was we all came from different places. Much better if you're dealing with that part of the world. I had, in particular, I had a Greek lady, an Italian, an extremely good Dane, who was very helpful to us. But people like the Greeks and the Italians understand the Balkans much better than people like the Brits do because they understand power in a different way. So actually, when it works, the ability to power put people from different countries together can be very powerful. So when it works, it can really do. It can really be extremely good. And then the German question again, which aspect of the German.
- [43:41]
A
I think it was the Polish foreign minister's advice to Germany be stronger. It's very strange to hear a poll saying that. But nonetheless, there you go.
- [43:47]
B
I mean, on the question, interesting. On the question of the. On the question of the euro, first of all, actually, I think Angela Merkel is head and shoulders above everybody else in Europe. The trouble is that we've got a single European currency, but we don't have a single European economic theory, because everyone in Germany seems to belong to the neoclassical school. Perhaps the budget and those of us in rather less reliable economies seem to be Keynesians. And I think that we should have had a harmonization of economic theory before we went into this. But. And the trouble is that to solve this problem requires some very big steps indeed. And I can see why people don't want to take them. I can see why people in Germany don't want to give financial handouts to people in Italy and Spain. And I can see why people in Italy and Spain would like to have handouts from Germany. But. So I hope that we will get a little bit of growth. I hope that we will get a little bit of banking union. Actually, the more banking union the better. Personally, I would have Britain join the banking union too, because you're much better off with a large banking union than a small one. And you're much better off with not national supervisors who are too soft on their banks, but with tough international supervisors. So step by step in this direction.
- [45:35]
A
Okay, thanks. But I've got a chap at the back there in stripes, if I might describe you like that. The man in stripes.
- [45:42]
B
Good evening, I'm Giorgio Faustini from Italy. Excellent. Before you have been talking about bank regulations, I would like to hear a point of view on the role of rating agencies within the crisis or the collapse.
- [45:55]
A
The role of the rating agencies.
- [45:57]
B
That's a very easy. Rubbish. Yeah, rubbish.
- [46:00]
A
Yeah, they were rubbish.
- [46:04]
B
I don't know where they came Anyway, they didn't do their job either. The banking supervisors were all wrong. The rating agencies were wrong, the people who created the Euro were wrong. All these things say to me, you should be very cautious about taking irrevocable steps. Hence my preference for doing something. If we run back history, let's do Euro again and let's do it kind of slowly, organically, rather than with a big bang.
- [46:33]
A
Okay, Right, that's the end of the rating agencies. Can you just bring it down to the front chap on the corner and then anybody down here and I'll quickly there.
- [46:42]
B
Hi, I've got a question about Cyprus crisis this summer. Winter, winter basically Cyprus tried to help. Greece got in trouble. They've got big debt, they couldn't return it, so they decided to take. Well, not decided. They were forced to take money from banks accounts. So basically they freezed customers bank accounts, they cheap money, stolen money.
- [47:09]
A
Yes.
- [47:11]
B
How likely is this scenario going to happen again in let's say, Spain, Portugal, Italy? No, no, it won't happen again. It was a mistake. It was really a bad mistake. I'm sure it won't happen again. I think everybody regrets it, particularly those.
- [47:28]
A
Who had their money, particularly the depositors.
- [47:30]
B
Yeah.
- [47:32]
A
Hey, I was a millionaire last night.
- [47:34]
B
No, I think that this was actually.
- [47:36]
A
You think that was a genuine.
- [47:37]
B
I think it was a mistake. I think it was a shame. I think it was a scandal. Yeah, absolutely.
- [47:43]
A
Okay, we're moving down to the young lady in white, please. Thank you. We've got two or three questions to come, I think. Yeah, please.
- [47:48]
B
Okay. I'm Mei from China and since no one have talked about the Eastern Europe when I have been there, people there, although it's crazy this time, but a lot of people, they want to abandon their own currency and change to the Euro. And how do you think about this situation? Because it's very strange. They still want to abandon their own currency.
- [48:12]
A
People still want to join the euro, you mean? Yeah, there you go.
- [48:15]
B
Well, think about that. These currencies are very small and I mean the Finns for example, decided to join the Euro because at some point or other some crazy in a bank somewhere decided let's have a run on the finmark. And there's nothing you can do if you're as small as Finland and if you are Estonia, for example, actually the Estonian economy is very flexible. They will do very well under any circumstances. But you're much better off not putting your life in the hands of these crazy kids in the banks. So the Euro may be bad, but these small Eastern European countries are potentially a nightmare in the market.
- [49:06]
A
Do you think China will anytime soon be joining the Eurozone? And please, would you do so?
- [49:17]
B
Be careful. Way back when the crisis was just beginning, in 2008, when it was just a Greek crisis, I was standing next to the Chinese ambassador in Brussels and said to him, you know, look, you've got a real interest in stability of the euro. You don't want to have turbulence in the markets and, and Europe, big export market, few get in trouble. It's very cheap. All you've got to do is to find some way of investing in Greece and a couple of weeks later they bought Piraeus. So I actually think that China needs stability too.
- [50:01]
A
It certainly does. It certainly does. Massively impact. Okay, we're going to take two very last quick questions because. Robert. Yeah, okay, yeah, up there. Yeah, the lady. Yeah. Hi there.
- [50:13]
B
Good evening, Professor Cooper. Well, there is one thing that I really don't understand. According to official figures of the EU Commission, since the euro crisis in late 2009, every year the trade between the European Union with the United States, with ASEAN with China, with the countries of brics is increasing and there is like a huge amount of investment from the United States in the eu. So my question is, where's the growth? Why there is no growth?
- [50:49]
A
Well, what is the crisis? If there's, if. What is the crisis if this foreign direct investment keeps going up and the trades still going up? How weak, how fundamental, therefore is it a crisis book? That's always the question I ask. It's still structurally a very powerful part of the world economy. Innovation, R and D, universities, technology. You know, we talk down Europe, but I mean the fundamental structural structure is just huge.
- [51:11]
B
I mean, it's the nicest place in the world. It's the best. Anybody? Well, you, maybe you can have a look around yourself and see. But if you look around, you look around Tuscany, there's. Every village has got something which would be a national treasure anywhere in the world. No, this is a wonderful place to live. The answer to the question is I bet you'll find there's a large amount of. The extra exports were coming from Germany and the north and they were happening because the weakness of the euro has been quite good for the countries with strong manufacturing. So the crisis is kind of quite localized in a national economy. What would happen is there would be some flow of resources from the prosperous bit to the less prosperous bit that's more difficult to organize in the European Union. So I think the answer is some bits of Europe are Doing extremely well and others are doing extremely badly. Check with the Spanish friend.
- [52:19]
A
Yeah, okay, I'm going to take what I'm going to take. Okay, I need one more question. And yeah, the man with a hand up. Chat with a hand up. I've just asked two of my students to ask questions. That sounds like favoritism. Anyway, one of my students, please ask a question. Sorry about that, guys.
- [52:34]
B
Good evening, I'm Lin, I'm French. And thank you for your lecture. I want to ask earlier you mentioned.
- [52:44]
A
That.
- [52:47]
B
One of the problem with you.
- [52:49]
A
Was that the institutions were weak.
- [52:51]
B
So for example, you mentioned the problem of transparency and all that stuff.
- [52:55]
A
So would you be in support of any institutional changes?
- [53:00]
B
If so, which ones?
- [53:01]
A
Yeah, we'll make that last question.
- [53:03]
B
Wow. Well, the answer is yes. I think that we really need to. People are right when they say the commission is a bureaucratic nightmare. In some ways it is the commission itself, the 28 people. It's too much. You cannot provide the kind of intellectual leadership which is really its job with 28 people, but also the bit underneath it all of the bureaucrats. So there are not as many as people say. Actually this is pretty awful. Very good people, very badly organized. So I think that the European Parliament basically I think is a failure and needs to be completely re examined if not abolished. We need some kind of democratic contact, but the European Parliament doesn't provide it. So I actually think that we ought now slowly to begin reflecting about this because I think the thing is this is Europe is too valuable to let it go on in this rather.
- [54:08]
A
Rather.
- [54:09]
B
Messy, unattractive, ill organized way. There's an enormous project that needs to be done slowly and carefully and thought about.
- [54:18]
A
Okay. On that upward and more optimistic note, I'd like to bring the proceedings from this evening to a conclusion. Thank you again for all of your great questions.
- [54:28]
B
Questions.
- [54:28]
A
And I wonder if you can say thank you to Bob. It is by the way.
- [54:39]
B
I love.
- [54:39]
A
The way that everybody introduced themselves as a country. I thought that was very good. I am Spain. I am Italy. I am Germany. We gave Germany two votes there too, by the way, and one from France. Anyway, thank you very much. There is now a reception upstairs in the fifth floor. And thank you, Gans. Thank you.