An auto expert and former Energy Department adviser says the policies of a handful of states have pushed the development of electric vehicles. How the U.S. could win the global competition for the car of the future.
A panel of journalists joins Diane for analysis of the week’s top international news stories: A Taliban attack on the U.S. embassy in Kabul, Afghanistan, killed 16 people (including six children); the European Central Bank said it would coordinate with the Federal Reserve to aid troubled euro-area banks; and Iran’s highest court denied the release of two American hikers, which was promised by president Mahmoud Ahmadinejad.
- Susan Glasser editor-in-chief, Foreign Policy.
- Shashank Bengali national security editor, McClatchy Newspapers.
- Matt Frei Washington correspondent of the U.K.'s Channel 4 News.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Taliban insurgents attack the U.S. embassy in Afghanistan. U.S. officials warn Pakistan against harboring militants. Rebels in Libya battle pockets of Gaddafi loyalists, Gaddafi himself eluded capture. In Iran an internal power struggle placed the fate of two American hikers on hold and the E.U. is grappling with a worsening debt crisis.
MS. DIANE REHMJoining me in the studio to talk about the week's top international stories on "The Friday News Roundup," we welcome Shashank Bengali of McClatchy newspapers for the first time. Thanks for being here. Susan Glasser of "Foreign Policy" magazine, Matt Frei of the UK's Channel 4 News. And as always your calls, your comments are welcome. We'll open the phones in just a few moments. I wonder, Matt Frei, if I could start with you? The European Finance Ministers Meeting in Poland this week. What's going on?
MR. MATT FREIWell, what's going on is that the glorious euro zone is on the brink of something really rather ghastly and has been for some time. And what has happened in the last week is that Europe's finance ministers, having spent most of the year bickering with each other, have now managed to get together and decided that they would try and avert any contingent coming from Greece by basically flooding the banks with enough money that if there were to be a banking crisis the banks would not seize up. There would be enough cash in the system to keep things running on a day-to-day basis, as there almost wasn't in 2008.
MR. MATT FREIBut the bigger picture here, Diane, and it is an alarming one and it's one that was reinforced in an interview that I did yesterday with the president of the World Bank, Robert Zoellick, is that there simply isn't enough political leadership in Europe to try and deal with the fundamental crisis. And that is the question at the heart of this help project. How can you have fiscal union without having political union? How can you have something like the United States in monetary terms but not in political terms? And you remember that old cliché when America sneezes, the world catches cold. Well, now it's when Greek snivels, the world catches pneumonia.
MS. SUSAN GLASSERWell, you know, two quick observations on that. Number one, you know, forget about the Greek cold. It's, you know, the Italian flu that we need to worry about next and I...
FREIOr the Spanish flu.
GLASSERRight, exactly. And I think that that, you know, I think has what's been prompted this heightened level of concern is an awareness that Italy's financial position is just truly unsustainable at this moment. I was struck, also, by Christine Lagarde's debut this week, her public debut, in her new position as the head of the IMF, in which she came in and she made this point very strongly, that it's a political crisis that has now full-fledge been triggered by the economic crisis and that it's the failure of political leadership that is leading us into what seems to be almost a checklist of worst case scenarios.
GLASSERI was struck. I went back and I looked at just such a list that we ran in early August. We said, "What's the worst case scenario at this point? What are the things we should be worried? And honestly, you know, almost every single one of those are in contention from inflation in the emerging markets to the potential of a double dip recession. We are looking at almost all of them potentially playing out in a very negative way.
REHMAnd yet, Shashank, it sounds -- I was surprised to hear that Brazil and its fellow brick countries are thinking about supporting the euro zone?
MR. SHASHANK BENGALIWell, this is very interesting. The brick countries, Brazil, Russia, India, China and South Africa, the sort of emerging powers around the world, actually weighing in at this moment and saying, hey we can lend a hand to Europe, in this case. It's sort of the world turned on its head a bit. I was wondering whether the Brazil proposal wasn't a bit of -- wasn't a bit self-serving.
MR. SHASHANK BENGALII mean, they've always seen themselves as trying to be a bridge from the developing world to sort of the old, you know, the older world Europe and such and I heard a number of commentators say in the past couple of days that the amount of money Brazil is talking about injecting isn't really sufficient to do a huge amount of -- give a huge amount of help to what Europe needs, especially if you're considering about having to prop up both Italy and Spain, much bigger economies than Greece is, down the road.
REHMBut there is...
FREIBut they must just love the idea of even being heard as a credible voice, especially, not just the Brazilians, of course, the Chinese have cropped up and said, look we could help the Italians for instance. And I think, you know, you mentioned that there's a certain self-serving interest here. Well, in China that's doubly the case because China's economy does not grow at eight percent or more a year. If they can't export stuff to Europe and the rest of the world, and if Europe isn't buying Chinese stuff, the Chinese economy is in a bad way.
REHMBut self-serving is good in this case.
FREIIt is good. No, it's -- we're all in this together. There are no I am's in this particular crisis.
GLASSERWell, for now, China is an island so the question is, you know, they're the only ones who do in fact have the resources to make a substantial contribution to the European mess at this point. Whether they will and on what terms, very much up in the air. In fact, there's no certainty at the end of this week it doesn't look any clearer than it did at the beginning of the week that China would intervene in a significant way.
FREIBut they do need to export an awful lot in order to keep the economy growing and the one thing that -- I mean, I've talked to Chinese officials about this and they're very honest about it, they say the one thing that inspires just about everything we do in foreign, domestic and economic policy is whether we can keep those factories running. Because the minute that stops they face social unrest on a massive scale.
REHMSo U.S. Treasury Secretary Timothy Geithner is attending this meeting really unusual here. What's he saying?
BENGALIWell, you know, clearly this, you know, the bigger question is this United States of Europe, I think down the line we can avert a crisis here with an injection of cash into the banks but down the line is there a solution for Europe to become a real union, you know, fiscally and not just monetarily. This is, I think, the biggest question and I don't know if Geithner was going to raise it but he ought to.
GLASSERFurther integration on some level is the direction we're moving away from at the moment and I think the spotlight turns right back to Germany, which has been playing the pivotal role in these negotiations. The German public has signaled every way possibly it can that it is not in the mood to continue offering blank checks on the back of their hard work to a sort debt and corruption plagued southern Europe and so I think the prospect of risks really serious occurs.
GLASSERThree years ago even at the beginning of the financial crisis it was hard to imagine that we would end up having a conversation about the splintering of the euro zone and yet we have very much having that conversation.
REHMIs -- how likely is it that Greece that would either default or withdraw from the euro zone?
FREIWell, if you talk to, even some Greek officials, they will say, look a default is inevitable. What we should be doing is cutting our losses, have the -- that wonderful new word the drachmatization of the Greek economy, something to remember, go back to our original currency because by -- and this is the point, by hanging on longer what you're doing is you're turning that boil, if I can use that rather nasty image, into something really septic because the contingent doesn't need to spread as much as many people fear it would.
FREIBecause a lot of the banks have already de-leveraged themselves from Greece, French banks, German banks, the markets have kind of factored in the, you know, the Greek scenario...
REHMBut what would happen to Greece if...
FREIWell, what happened -- but here's the point, Diane, two points really. If you wait too long, the problem becomes much worse and what Christine Lagarde and Robert Zoellick were saying yesterday is what FDR said at the height of the Great Depression, what we have to fear most is fear itself. Because the one thing you don't want is what we had in 2008 and that is panic.
FREIBecause through panic all this does becomes toxic for everyone because then all the bets are off and if you really want to change Greece, it's not just about the sticky, black plastic of, you know, a couple of billion here, a couple of billion there. It is about changing the economic culture of Greece where only a fraction of people pay their taxes and everybody assumes they can retire at the age of 55.
GLASSERWell, that's right. I think though, a couple of things that have been interesting to note as the fear of fear has crept back into our dialogue this week. Two things, one you're hearing that resurrection of the Great Depression analogy, probably hearing more about that than you have at any time in the last three years. And what's the analogy people are making? It wasn't the Wall Street crash but it was the bank crisis that followed that really led to the taking hold of the global Great Depression and of course that's the possibility we face right now, is of a European banking crisis, number one.
GLASSERNumber two, I think is this question of contingent and political will. We are Americans, right? we are big believers in action, any action, in the face of a crisis and I think one of the things that's been very humbling about this financial crisis is that we seem determined to unlearn the lessons of history here and the lessons of history are, it takes much, much longer than you think to put into place structural changes. And, number two, political action can only do so much in the face of economic and structural problems like those that we face right now.
REHMDo you believe that Greece will default, Susan?
GLASSERI believe that the Greek political class believes it's inevitable that they will default and the question that we're arguing over is the terms of how and the timing in particular. Arguably this has been known by the sort of financial elites for the last several years that this was inevitable and that what they -- what Europe did successfully last year was not solve the Greek crisis. What Europe did last year was successfully put off the resolution of the Greek crisis.
REHMShashank, would you go along with that thinking?
BENGALII think they're both right. I think they elites have known for some time. I think a short term default on terms that can be agreed to and then moved past is probably the way this is going to go. And then, the question is, how do we shore up the remainder of the economy for the longer term?
FREII think one of the really interesting questions, which I think you touched on, Susan, is also in discussing political leadership, what we've all realized is that the political class in Europe, be it in France, be it in Germany, be it in Greece or Italy has not been honest, have been honest with their electors about what the real terms of the euro are and whether it's worth the sacrifice.
REHMMatt Frei, he's Washington correspondent for the UK's Channel 4 News. Short break and do join us, 800-433-8850.
REHMAnd welcome back to the international hour of our "Friday News Roundup." Here this week, Susan Glasser. She's editor-in-chief of Foreign Policy magazine. Matt Frei, Washington correspondent for the U.K.'s Channel 4 News. And Shashank Bengali, he's national security editor for McClatchy News. We're going to open the phones shortly. First, though, let's talk about the visits of world leaders to Tripoli and Benghazi in the post-Gadhafi era, Susan.
GLASSERYes. We saw the dramatic scene of Prime Minister Cameron and President Sarkozy of France flying in to free Tripoli to take a victory lap. You know, they were pretty remarkable scenes. Obviously it's still a very unsettled situation in Libya today. And I frankly was surprised that they decided to sort of go so quickly into this capitol. Remember Gadhafi himself is still on the loose, along with at least parts of his family.
REHMWhere is he?
GLASSERGood question, you know.
FREIHe's at (word?) just down the road.
GLASSERRight, exactly. He's -- no, I think he's in Iraq in Saddam's (word?) right?
GLASSERExactly. You know, but it was meant to be a victory lap. But if so, it was a victory lap with a lot of question marks and asterisks attached.
REHMBeen a lot of fighting continued in certain (unintelligible) .
GLASSERNot only fighting, but there's infighting among the rebels. And I think this is something that's going to be an emerging story to keep your eyes on. You know, it's much, much easier to unite people in the cause of toppling a tyrant who's put his boot on your heel, so to speak, for the last four decades than it is to really have political consensus about what should follow, especially in a society that has been so isolated as Libya.
GLASSERYou're seeing rifts inside that governing council, the Transitional National Council between the Islamists and the actually regime turncoats who have been leading and have been the public figures. Jibreel and Jaleel gave a big public sort of rally in the streets of Tripoli. At the same time the sniping is not even occurring privately anymore, but publicly and very much out in the open.
BENGALIIt's very -- as difficult as this six or seven month campaign against Gadhafi's regime has been, it's much easier, as we know, to break things than to make things. And I sort of read the pretty stunning stories of Sarkozy and Cameron in Tripoli to be an effort by these countries which have led the NATO intervention to, in some ways, close that chapter a bit and move on.
BENGALIYou know, they've got, as we've just been discussing, pretty big problems in their own pocketbooks. And Libya now, after all the hand wringing about it, in some ways can be seen as a success in the west, however, as Susan pointed out, just tremendous questions. I mean, we have a long way to go in this country. The rebel leadership has made efforts to -- I shouldn't call them rebels anymore -- the revolutionary leadership has made efforts to come to Tripoli. But for the most part they're remaining in the eastern capitol of Benghazi. Tripoli remains kind of a shell city and not one that they can govern from.
REHMSo what does Libya need now?
FREIIt needs a strong man. No, no, I'm joking. I think what it needs is for us to get -- to be slightly more patient and less judgmental, to be honest. I take all the points onboard that we've just heard in the last five minutes, but at the same time, being optimistic for a second, if I may, they've had their seven months of a bruising entrench conflict in which the National Transition Council could actually get to grips with transition perhaps more than they would have done if this conflict had been quicker.
FREIThere is an influx of Libyan exiles from Britain and the U.S. and all over the world who are trying to, you know, resurrect that country. You know, after 40 -- what is it, 43 years of Gadhafi in which all the tribal differences brewing, you know, at the heart of Libyan culture and society were basically sublimated by this one strong man, you know, it's going to be tough to form some sort of viable government. But give them a chance. I mean, they've only just started.
FREIAnd if you look around the region there is all sorts of reason to be alarmed about how these transitions, these post revolutionary transitions are working. But not all of them are miserable and some of them are still in the middle of a revolution that might be fading, like Syria.
REHMHere's a message on Facebook from Tom. He says, "Humanitarian conditions worsen in Sirte. Will NATO intervene to save the people?"
FREIWell, I mean, that's its remit. The whole remit of NATO is to stop any sort of aggression against civilians. And, of course, you have to ask yourself whether the bombing of Gadhafi's compounds in Sirte, which is his birthplace, or in Bani Walid where he also has a strong base is really about completing regime change or is it about protecting civilians.
FREIBut at the same time, we have been in a worse place in this ongoing agonizing conflict than we are now. And I think, you know -- I mean, despite the irony of seeing David Cameron being cheered by the Libyans when Tony Blair was hugging Colonel Gadhafi in moments of 2004 -- let's just forget that for a moment, shall we -- there is a real, you know, effort here and I think it's quite deftly handled, to keep the footprint of the West relatively light in what's going on in Libya, both in military terms and political terms. And let -- give them some space to try and rebuild themselves.
FREIAnd Libya is a rather special case, probably has a better chance of doing that than some other countries in the region.
GLASSERYeah -- no, I definitely agree with that. If anything I would say that a few months from now regardless of how things turn out inside this new leadership, Libya won't even be on our radar screen. The situation in Syria, on the other hand, I think is a much more serious ongoing thing. I wouldn't be surprised -- the U.N. came out with figures this week saying that more than 2600 civilians have been killed in the crackdown by the Assad regime -- I wouldn't be surprised if this end up being a much bloodier conflict inside Syria than the one we've just witnessed in Libya.
REHMSusan, who is Little Gandhi?
GLASSERWell, you know, this was a tragic story among many, many tragic stories this week. You know, this was a young man. I think he was days away from his 25th birthday who was killed and delivered to his parents' home. He was a tailor. He was an activist. He was, I think, a symbol in many ways of the sort of leaderless but yet very, very compelling and human resistance that has taken place in -- organically almost in cities around Syria.
GLASSERAnd that, you know, on the one hand might be its weakness. You know, there's no TNC for us to get behind. There's no one rebel leader or dissident figure who has emerged that can be rallied around that the West can endorse and support. The flipside is this is really -- it's an organic uprising and this young man's death I think has really sort of captured, in a way, part of the human story that's going on here.
REHMIt's interesting. AP is reporting from Beirut that Syrian troops killed at least 17 people today in raids on antigovernment protestors. But they failed to stop thousands from pouring into the streets nationwide and taking their uprising against President Assad's autocratic rule into a seventh month. These people who know they will be shot moving out into the streets.
BENGALIThis is what happened in Egypt eventually that turned the tide, this feeling -- of course it happened more quickly there because the military and the protest numbers were so huge. But once the people conquered their fear in the streets of Cairo they were able to remain on the streets in the face of police brutality, thug brutality.
BENGALIIn Syria, there's, you know, very -- it's very difficult to get clear reporting out of there because of the restrictions the regime has put out. So we're relying on reporting from Beirut and from the small but brave number of people inside Syria. What we hear, of course, is that every day people are in the streets and every Friday after prayers the numbers are at their greatest. But how long this can go on, you know...
BENGALI...our levers to really pressure the Assad regime are very few. And I think, you know, that's a difference we face from Egypt and Libya where we had some levers. Syria we have very dissatisfactory ones.
FREII think it's a really good point because what we're learning is the lesson of the perils of isolation. And Syria, rather like Burma, which was completely isolated by most of the world, apart from China, Syria isolated by most of the world apart from, you know, Russia and Iran, a bit of China, it's much more difficult to exert any sort of influence on those regimes...
REHMAnd the sanctions, nothing.
FREIWell, the sanctions should work, but the thing is what you're dealing with -- I mean, here's the difference. Egypt had a military that was basically financed by the U.S. So the generals at some stage were sat down by someone from the Pentagon and said, look, if you want your shiny toys next year, this is what you've got to do. There is no one to take the shiny toys away in the Syrian regime. And they have nothing to lose other than, you know, being in power.
REHMBut speaking of the Egyptians, a mob attacked the Israeli Embassy in Cairo. Was that a coordinated attack, Susan?
GLASSERWell, it certainly had some of the hallmarks of it. And I think, you know, it also was a jolt to the world community because it was a reminder that for, you know, seven months now, nine months now we've been lost in the Arab Spring and not so much -- you know, sort of almost taking a relieved break from the Israel Palestine issue telling ourselves in many ways that this was not at the heart of this, that it wasn't going to come back. That okay, there was some nervousness at the beginning but Egypt and Israel are going to work things out.
GLASSERYou know what? I think we're in for a very rocky period. Next week is the U.N. General Assembly. We're headed for a major showdown. The Palestinian leadership has determined that they are going to go and ask for a major upgrading in status. And they're potentially going to go to the U.N. Security Council...
REHMIs it going to get to the U.N. Security Council?
GLASSERWell, you know, we don't exactly know yet. The rumblings today are that they are determined and that Mahmoud Abbas the leader of the Palestinian Authority is determined to go ahead and take this step, which would trigger a certain U.S. veto and would really cause a major rift. Of course, we are the major funder of the Palestinian Authority in addition to our enormous military aid to Israel.
GLASSERSo the consequences here are very high. We just sent two American envoys in a last ditch effort yesterday to persuade them not to take this step. And you know what the answer was? Sorry, guys. You're too late. You're too late.
BENGALIWe've heard this before. We've heard the same old...
REHMBut the other fallout from this attack on the embassy is that you've got the reenlistment of emergency rules.
FREIIndeed. I mean, the emergency law was never taken off the table completely. Bits of it have lingered rather distastefully on the shelf for some time, since the revolution in Tahrir Square. The Israeli -- the Egyptian military's obviously terrified that the incidents like the one we saw last week with the Israeli Embassy will escalate. And that this becomes something that is completely out of hand that could even lead to some sort of, you know -- I mean, one, the end of diplomatic relations with Israel. But further down the line some sort of action -- military action from the Israelis.
FREIThat's the last thing the Egyptian military wants to deal with. They are totally focused on internal crowd control. But by bringing back the emergency law all they're going to do is inflame the public. What they need to do is stick to their plan, have the elections in November, set out some sort of, you know, guideline towards transition, stick to it and then go to the polls. Otherwise this thing will fester.
REHMWell, what will the emergency law mean for those people?
FREIWhat it means is that you will be tried -- for instance the people involved in the Israeli Embassy siege, raid, call it what you like, would be tried in a military court rather than a civilian court. There are several paragraphs of the emergency law banning public gatherings of a certain nature, destruction of public goods. I mean, it's fairly weasel-worded stuff that can be used by the military should they want to crack down.
REHMMatt Frei is Washington correspondent for the U.K.'s Channel 4 News. You're listening to "The Diane Rehm Show." Susan, remind us what happened on Tuesday in Kabul.
GLASSERWell, you know, this was a coordinated and very serious attack. It took more than 24 hours, you know, for them to subdue these insurgents. They took over basically a very strategically positioned building in downtown Kabul, used it to launch an attack on the U.S. Embassy, other parts of downtown Kabul.
GLASSERIt was really a stark reminder, hey guys, we're still here. You know, it was only last week, I believe, that the U.S. Ambassador to Afghanistan, Ryan Crocker, was quoted as saying that the major problem in Kabul today was the bad traffic. And, you know, so this was really a reminder that we...
REHMAnd how did they do this? That was the question. How did they manage to gain access to this vantage point? What did they do, Shashank?
BENGALIIt's pretty stunning. This is a 14-story unfinished or half-finished concrete building that was meant to be an office block, a privately owned building. Kabul is in the middle of a building boom and there's a lot of unfinished buildings around town. However, there are very few that are within striking distance of the U.S. Embassy and NATO headquarters. So question number one is, who's building this building and, you know, what the heck is it doing there?
BENGALIYou know, secondly there are questions about whether these insurgents were able to stash weapons in this building. They had, you know, police officers at the scene saying there were sacks of hand grenades, rocket propelled grenades, bullets, a huge amount of ammunition. I mean, as Susan said, the siege went on for nearly 24 hours before it could be subdued by Afghan and international forces. So clearly a lot of coordination went into this.
BENGALIFor me the bigger question really -- I mean, Ryan Crocker, the U.S. Ambassador the same day said that this was an instance of harassment and not a real attack. But I'm sure for the folks hunkered down in the Embassy for 20 hours this seemed more like harassment. As Crocker put it in those same remarks, there were RPGs bouncing off of the embassy walls.
BENGALISo the question is, you know, we are beginning our military drawdown. Our international partners are beginning the drawdown along with us. These kinds of attacks are increasingly arriving in the capital Kabul where they had not been for a very long time. We had the siege of the hotel in Kabul a few months back. I mean, we have to really wonder, is this, as Crocker says, an instance of insurgents being desperate in launching these sort of spectacular attacks? Or is it really a sign that they can continue to do this, you know, on a regular basis?
REHMOr is Pakistan helping these insurgents, Susan?
GLASSERWell, both the Afghan officials and international officials were quick to point the finger at the Haqqani network, which is widely perceived to be the most effective force mounting attacks inside Afghanistan today. It's believed to be headquartered inside Pakistan in the region of North Waziristan. It's been a continuing flashpoint, I would say, of real tension between the United States and Pakistan why this safe haven, if you will, of the Haqqanis inside Pakistan is able to continue.
GLASSERAnd so I think, you know, it does underscore some of the long term -- think about it. But I just quickly on this point, are we in a stage of wishful thinking? Let's remember the American public, much of the Republican party's leadership and certainly their presidential campaigns, a large part of the liberal, part of the Democratic party, they've moved on from Afghanistan. We are, as far as Americans are concerned, out of there.
GLASSERSo this contravenes the narrative, right? We don't want to hear about Afghanistan, we don't want to talk about it. Last week in the debate in California that the Republicans had, Afghanistan was mentioned only twice, once when Ron Paul said, gee, we're spending $20 billion on air conditioning for our troops in Afghanistan and Iraq. And he thinks we should pull the plug on that. And then once when John Huntsman said, we should get out of there as soon as possible and focus on nation building here at home.
GLASSERRick Perry, somewhat controversially, seemed to echo that this week and then has spent the last two days walking back from his statement. But I think what you really see is that even Republicans who have been the most gung-ho as a party up until now on the war are no longer interested in talking about it.
REHMSusan Glasser of Foreign Policy magazine. When we come back from a short break, we'll open the phones, read your e-mail. I look forward to hearing from you.
REHMAnd let's take a call from Ernie in St. Louis, Mo. good morning you're on the air.
ERNIEGood morning, great show, I'm a German immigrant and a proud American. My family, all my family is over there and I'm in communication with them a lot about the economic issues. I guarantee you that Germany is heading towards an inward view. They are going to vote in every election, maybe even precipitate a national election ahead of schedule and they are going to pull out of the Economic Union. They're going to re-adapt the Deutsche Mark.
ERNIEThese people are still paying for the reunification of Germany. They're fed up. I'm not saying I agree with that philosophy but it is a lot worse than the media even understands.
REHMWhat do you think?
FREIWell I'm a German immigrant, a proud Briton and a very happy resident of the United States and I have to say that I think to some extent the caller is right, on another level he's not. It's politically the project of the euro, the project of euro, the ever-closer union is not allowed to fail as far as the German elite is concerned.
FREIAnd what they need to do is to try and redefine what that project is all about to their own people and that's where the caller is right. There is an increasing feeling and I get this from my own family, why should we, the Germans, the richest nation in Europe become the ATM machine of a Europe that doesn't necessarily deserve to get its hands on our money. Why should we bail out Greece or Italy or Spain when they haven't been paying their taxes? And that is a very valid point but at the same time one has to remember the historical, emotional context in Germany in which the European Union was founded and that is after the Second World War to prevent that sort of calamity from ever happening again.
FREIAnd although that is an incident that is more prevalent with my father's generation than with mine or indeed my children's generation, it is still out there. It is in the historic and political DNA of Germany and I think what if the leaders of Germany want to save the euro what they need to say to their people, if you allow one country after another to opt out and basically it's everyone for themselves then this whole rather brittle edifice could fall apart. Do you really want that?
REHMAll right, let's hear another view from Mike in Fenton, Mich. good morning you're on the air.
MIKEWe love you. You're a national treasure Diane.
MIKEThat is more than we can say for our leaders at this point, Diane. I would like your guests to comment on this. We're all in this together. We need to help out Greece, the Italians and Portugal. We shouldn't wait for the Europeans to help or allow this to go, you know, into a worse situation. If we help them our markets will immediately take off. This will give the world the push we need to get out of this hole the politicians have allowed the world to get into. It's time to stop passing the buck, isn't it Diane? This downturn is an opportunity to show ourselves to the world and what the Americans are all about.
REHMWhat do you think, Shashank?
BENGALIWell the sentiment is well taken but there's just no appetite politically in this country for another infusion of American cash, even in some quarters into American markets let alone into European markets. You know we are in this together clearly as Matt said, you know, the inter-connectedness when Greece sniffles we get pneumonia as he said. I mean this is a major problem for the U.S. but there just isn't interest in a huge bailout.
REHMAll right, let's hear another view from Michael in Alexandria, Va. good morning to you?
MICHAELGood morning, good morning Diane, thanks for having me on your show.
MICHAELI was calling just to challenge a notion that default or orderly default is a bad thing. I mean nobody talks about the big Russian default from seven, eight years ago.
REHMOh dear, I'm afraid we've lost you Michael. What do you think about that Matt Frei?
FREIWell I think he made his point rather succinctly, I think he's right. I mean it is really to try and de-stigmatize what a default means that is now incumbent upon Europe's politicians because it may well happen. Angela Merkel, the German chancellor said only yesterday that she expects Greece to default by 2013. Well if you're putting a timeline on it why not, you know, rush it through the pipe and say let's do it right now and let's do it in an orderly fashion.
FREIRemember the one big problem that all the euro's own countries have is that they're all tied together by this one currency therefore they don't have the freedom to devalue their own currency...
FREI...in order to get out of that debt.
FREIThe only reason why that great island of ours, Great Britain is still, you know, economically viable is that the pound was effectively devalued, the British pound, sterling by Gordon Brown the then prime minister by roughly about 30 percent...
FREI...otherwise Britain would be today's Greece.
REHMHelp me to understand what happens to the ordinary person in Greece if in fact there is a default, Susan?
GLASSERYou know it's really impossible even to answer because there is no mechanism short of leaving the euro for which there is also no mechanism. There is no mechanism for them to do that at the moment so anything that Europe does as a policy matter will have to be negotiated from scratch at this point. There is no way for one country within the euro-zone to default and not affect the rest of the countries so they're going to have to come up, they're writing the script here for how this is going to happen...
GLASSER...and that of course is going to determine what happens to the poor people in Greece who already by the way of course have been through successive rounds of belt-tightening and belt-tightening and belt-tightening and what's so sad about it of course is that those measures are already exacting an enormous toll inside Greece and yet they're wildly insufficient to deal with the scale of the problem.
REHMAll right and here's a tweet: Greece's financial problems are their problem. The culture of financial corruption and economy in the tank, dump the euro in Greece. What do you say to that Shashank?
BENGALIWell as Susan just said that there really isn't a mechanism to dump, you know, in one country. We do have a situation now in Europe where there is a series of northern countries that, you know, have been pretty, Germany for example, the most robust country in Europe economically, has been very responsible in the way it's worked its system out.
BENGALIAnd you've got a series of failing economies and structural problems in the south and at the moment one country can't opt out. That's not how the system works.
REHMAll right, to Louisville, Ky. good morning, Abdul.
ABDULGood morning, how are you?
ABDULGood, my point, Diane, is what is this Europe crisis going to mean for West Africa and (unintelligible) because you remember 1994 they devalued our money so what is that going to mean for us?
FREIWell, it could. Well, first of all, there will be less money obviously if the euro were to be in a really serious crisis or indeed were to collapse. The concerted European aid policy towards Africa, I can't put a number on it at the moment but I'm imagining that there's more money there and there's more of a policy direction there than there would be if these countries acted on their own that presumably would crumble or certainly be diminished.
FREIThere would be less money to help countries like Libya rebuild. That would mean that there would be, there might be more Libyans or indeed African migrants washing over into Europe. Remember one of Colonel Gaddafi's threats was I will inundate Europe with, you know, with Libyans, with desperate Libyans trying to get a job somewhere.
FREIYou know, if you don't get your hands off my country -- and to some extent we've seen in these rather dramatic pictures of people on rafts that this is already happened. And you know, within Europe, of course, that causes problems as well. For instance, there is in Europe an agreement called The Schengen Agreement by which all the countries that sign up to this agreement can travel from, you can travel from one country to the next, from France to Germany to Italy without ever having to show your passport to someone at the border. It's wonderful you know, for people who live on the border or for tourists.
FREIWell there was a huge argument this summer. Too many Libyans or people who had worked in Libya were coming into Italy. The Italians weren't enforcing their sea borders. Where did these people go? They go straight from Italy to France and Germany. The French insisted that there should be border controls and so it all falls apart. This whole argument about The Schengen Agreement, you know, is mirrored on a financial, on an economic level by the spats between the various finance ministers.
BENGALII'll just say two observations and I think Matt's totally right. You know, two things, number one it's inevitable that there will be less money for Africa, for humanitarian crises. We have a massive drought and famine in Somalia right now, the worst in the generation there. People are dying every day. And the appeals by the United Nations for humanitarian aid are falling terribly short.
BENGALIIn the early '90s, we had a robust international intervention. The U.S. went in with troops and of course that ended badly with the Blackhawk down incident but the goal of the mission was to bring aid to Somalia. The aid pledges are much, much lower this year, they're at a fraction of what's needed.
BENGALIThe second point, though, and so there will be consequences and we have to face those. The second point though is that we're in a different world than we were in the early 90s. We saw in Libya the huge role that Qatar played as an emerging power. They're really flexing their muscle on the world stage here. They were, you know, beyond the military help they provided, which was instrumental in helping the Libyan rebels topple and take Tripoli they were providing huge amounts of humanitarian aid at the Egyptian border, on the Tunisian border for refugees leaving Libya.
BENGALIAnd we also saw countries like Turkey step in with their own aid so we will leave a bit of a vacuum if we step back but there are other countries that can fill it.
REHMYou know, it's very interesting, yesterday, I spoke with the UNESCO representative to Haiti who talked about the NGOs who are receiving monies from the U.S. and the fact that the government which doesn't exist is not getting money from the U.S. The same is true in Somalia. There is no government to successfully deliver that money.
BENGALIIndeed, but I just want to add one more point to what you were saying which I thought was really good which is that, you know, it's not just that Europe doesn't provide enough aid or that the United States is withdrawing further within its own borders. Basically the Western world is less interested, less engaged, less generous in that policy but also look out for China. The Chinese are providing tons of aid in return for commodities.
BENGALIThere is, you know, the Chinese are basically using Africa as a huge kind of harvesting field for the commodities that their economy needs and if you talk to people in Angola or Uganda they'll say you know what? We love that European aid, it's great but actually we're rather busy at the moment trying to set up a, you know, a new factory for our Chinese clients and they're basically propping up the economy.
REHMAll right, to Lasalle, Ill. ,good morning Renee.
RENEEHi, I am going back to Greece and studying the playbook for the euro and the default in Greece. Would there be any way of comparing this to a state in the United States going bankrupt? If when you talk about Greece setting up their own playbook or drawing a new playbook, is there any way to compare this to something like that and in the dollar-zone?
REHMPerhaps not a state, but a city like Detroit, like Cleveland, like many others...
GLASSERNew York when you know...
GLASSERNo question, that's why you have a lot of Europeans today scratching their heads and looking ruefully at the road not taken which would have been a more united states of Europe confederation. And unfortunately the ways in which they set up the euro-zone do not at the moment allow for this kind of scenario and it the classic case of unintended consequences.
REHMEven in the future?
FREIWell, this is it. I think the real problem here is that whenever people and some politicians have been saying this, in Germany, in France, call for that ever-closer union to become the united states of Europe they're doing this at precisely the time when the cultural historic differences, the bickering, the finger-pointing have come to the fore.
FREII mean, you know, the number of swastikas that appeared on Greek walls saying, you know, this is basically just like the kind of stuff that the Nazis did to us, I mean outrageous, out there but basically there's a lot of anti-German feeling. There's a lot of anti-Greek feeling in Germany as one of the earlier callers referred to. You know, this is the problem that that whole beehive of rather brittle, national sentiments is being kicked.
REHMAnd you're listening to "The Diane Rehm Show." Let's go finally to Miami, Fl. Good morning, Jeff.
JEFFGood morning. My question quickly is the recent discovery of natural gas in the eastern part of the Mediterranean offshore of Israel, what reference does Turkey's posturing have to do with the discovery of gas there and the revenue that Turkey might want to be able to have and what's happening with the flotilla for Palestinian aid?
GLASSERWell, I think, you know, in recent years there have been significant finds of potential gas fields offshore for Israel in a way that would finally re-write the resource map of the Middle East and give Israel, unlike its neighbors it hasn't been blessed with these enormous reserves of oil or gas. Were they to become more energy independent of course, were that to be a big new source of revenue it would change the politics of the region but that's not something that will happen tomorrow.
REHMFinally, let's talk about what the latest is going on with the American hikers in Iran. Are they going to be released as Ahmadinejad, the president said or are they not going to be released as the Supreme Leader said?
BENGALIWe're seeing, it's quite extraordinary. We're seeing another iteration of this conflict between Ahmadinejad, the president and the Supreme Leader, Ayatollah Ali Khamenei play out in this case involving the fate of two young Americans who have been held for more than two years now. Ahmadinejad said it first that, you know, he's going to the U.N. next week and is going to speak in New York which promises to be theatrical I'm sure. He was hoping to, as some sort of a gesture to the West, a conciliatory gesture say that he was going to release these two men. But of course it just took a matter of days or hours even before the judiciary in Iran said that no, that wasn't the case.
BENGALISo clearly we have a rip that's been going on now for more than a year in public view of the President Ahmadinejad trying to exert executive authority and constantly being just slapped down like a kid out of school by the judiciary and by the clerical leaders in Iran.
FREIYou know it's really interesting we tend to think of Iran as just another repressive, monolithic regime but actually ever since the Iranian revolution there has been this fissure, the heart of the country between the judiciary, between, you know, the clerics essentially and the civilian leadership. It's interesting that Ahmadinejad has now got exactly the same problem that his predecessor President Khatami who was classed as a reformer in a city like Washington encountered and finally was his undoing. This is something that has not been resolved within Iran and until it does I think you're going to get very mixed signals out of that country.
REHMMatt Frei of the U.K.'s Channel 4 News, Susan Glasser, Foreign Policy magazine, Shashank Bengali of McClatchy Newspapers thank you all.
REHMHave a great weekend everybody, thanks for listening, I'm Diane Rehm.
UNIDENTIFIED MAN"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth, Sarah Ashworth, Lisa Dunn and Nikki Jecks. The engineer is Tobey Schreiner. A.C. Valdez answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our e-mail address is email@example.com and we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.
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