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CONNECT THE WORLD

New Treaty for the Eurozone; Interview with Mohamed El-Erian; More Protests in Russia; Eurozone Deal Reached; Poll Shows Eurozone Citizens Split on Euro Membership and "United States of Europe"; German Member of EU Parliament's Take on Germany and Euro; Sarah Palin Focus of New Film; European Youth Reaction to Euro Deal; Former US Treasury Secretary Comments on Euro Deal

Aired December 9, 2011 - 16:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEO CLIP)

DAVID CAMERON, BRITAIN PRIME MINISTER: When I couldn't get those safeguards, I said I wouldn't sign that treaty. I didn't. No I didn't.

(END VIDEO CLIP)

BECKY ANDERSON, CNN INTERNATIONAL HOST: Britain gets the cold shoulder, as the rest of Europe forges ahead with a plan to save the euro. Tonight, I'll ask one of the world's biggest bond investors whether Europe has done enough to avert a disaster.

Live from London this Friday evening, I'm Becky Anderson.

Also tonight, Russia braces itself for more rage on the streets as demonstrators proper for the mother of all protests.

And the hockey mom uncovered -- free market Nick Broomfield spills the beans on the real Sarah Palin.

Well, it's an historic deal that could change the political and economic landscape of Europe forever. After hours of consultations in Brussels, 26 of the 27 European Union nations look set to go through with an inter-governmental treaty that's meant to pull the Eurozone out of debt crisis. But it also appears to be resulting in a more insular Britain.

At the heart of the plan, European leaders are accepting tighter rules on borrowing and spending. Now, it's a deal that German Chancellor Angela Merkel called, a quote, "new beginning."

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): What we've achieved as this Council meeting constitutes an important step in the direction of a permanently stabled euro. It's a very important step that we've taken. We have achieved a breakthrough to a stability union, a fiscal union or stability union, as I call it, will be developed step by step in the years to come.

(END VIDEO CLIP)

ANDERSON: Well, the only clear holdout is Britain. Prime Minister David Cameron called for exemptions to the UK's Financial Services sector, saying without them, the deal is unacceptable.

(BEGIN VIDEO CLIP)

DAVID CAMERON, BRITAIN PRIME MINISTER: We had a chance, did we want to sign a new treaty with huge amounts of extra complexity and bureaucracy and all the rest of it that would go into our existing treaty?

Did we want to do that without proper safeguards for Britain?

If I couldn't get those safeguards, I said I wouldn't sign that treaty. I didn't so I didn't.

(END VIDEO CLIP)

ANDERSON: All right. So let's find out more about what exactly is being called for in this plan.

Our man, Richard Quest, has been monitoring developments in Brussels. And he joins us now -- Richard, this was billed as the summit to end all stock markets, the last opportunity to save the euro.

So what was the final solution?

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": That's a very good question.

There were two issues that had to be addressed, Becky.

The first was the immediate crisis, beefing up the bailout fund.

And the second was the longer-term restructuring of the euro and putting it onto a firmer footing.

So let's take them and look at what they actually agreed.

On the future of the euro, the Eurozone agreed to have balanced budgets. Now, those balanced budgets would be buttressed and would be enforced by automatic sanctions that would be involved if they were breached. On the question of beefing up the bailout fund, the bailout fund would be given to the ECB, the EFSF and the ESM. Supervision of these facilities will be given to the ECB to gain maximum advantage.

And the IMF, the International Monetary Fund, will be given $200 billion, will be leant $200 billion by European countries. It's a perverse way of doing business, a rum way, they would say, Becky. But basically the Europeans lend it to the IMF, who then can lend it back to individual countries.

ANDERSON: Stick with me, Richard. And our viewers, forgive the acronym soup tonight. It is important. Everything that Richard was suggesting about EU/IMF, EFSF and all of that stuff is important.

Let's take a closer look at where each of the EU countries actually stand on this deal. All 17 nations in the Eurozone, those which use the euro, of course, as their currency, have agreed to use this plan.

In addition, six more countries which are not in the euro have also said yes.

Then, Sweden, Hungary and the Czech Republic all say they must consult with their respective parliaments. And as we mentioned, Britain is rejecting the plan.

Back to Richard in Brussels -- Richard, where does Cameron's move leave Britain in all of this?

QUEST: Completely, totally isolated. And, indeed, we can talk in a moment or two about just how pleased the Schadenfreude there is here at some of the discomfort that the Brits have got a bloodied nose and are out on their own, the troublemakers.

From Britain's point of view, it was a very high stakes game and one that has, to some extent, backfired, as our senior international correspondent, Matthew Chance, puts into perspective.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The pictures spoke volumes -- as Europe's leaders chatted about closer ties, Britain's prime minister sat alone, isolated, next to the Maltese PM. Nicolas Sarkozy of France, one of the architects of the new financial treaty within a treaty, has little time, it seems, for anyone who isn't on board. See how David Cameron goes to shake hands, but settles for a face- saving pat on the presidential arm.

Observers say Britain may now be more isolated from Europe than at any time over the past 40 years, though in public, the rift is being played down.

DAVID CAMERON, BRITAIN PRIME MINISTER: Why are we in the European Union?

We're in it because we're a trading nation and we need the single market because we want to have that market open for our goods, our services, our growth, our investment, our jobs. That's what, for us, Europe is all about. And that will continue.

CHANCE: It's the city of London's lucrative financial services industry that's divided Britain from the rest of Europe. Prime Minister Cameron demanded safeguards for the city in exchange for support a new European treaty.

Euro skeptics in his own party may have been cheered by the stance. Critics say he should have negotiated better. But in the end, say analysts, he had little choice but to say no.

DOUGLAS MCWILLIAMS, ECONOMIC FORECASTER: It's a bit like, you know, your neighbor's house is on fire, but mind you that at the same time, they're trying to break in through the kitchen window and borrow your handbag.

The city of London, for all its failings, is one of the UK's vital national interests. And when Europe, far from protecting its member states vital national interests, actually tries to attack its members -- states' vital national interests, we know that then it becomes very difficult for us to get on with the rest of it.

CHANCE: No one yet knows what the consequences of this use by Britain of its veto will be for its role in Europe. But as the continent moves toward closer financial cooperation, the British government is standing aside. Now, supporters say that's not necessarily a problem. But many believe it fundamentally changes this country's relationship with its European partners.

(voice-over): The hope is that relationship can still be managed, that divisions exposed in business leaders can be branded. But there's also now real concern Britain and Europe may be on divergent paths.

Matthew Chance, CNN, London.

(END VIDEO TAPE)

ANDERSON: Well, there's no doubt that national egos play a big part in these sort of negotiations -- now, Richard, has -- do you think Cameron shot himself in the foot or did he do what -- what needed to be done, effectively?

QUEST: Both at the same time. He shot himself in the foot. It's going to be very difficult to get out of this behind it. But he knew he had no choice.

Becky, tonight, I was -- just before we came on air, I was just talking to one Spanish journalist who could barely contain his glee at what they believe is Britain's bloodied nose. And some people really do believe that the troublemaker, the troublesome nation, could be on its way out of Europe.

ANDERSON: Fascinating.

Richard, we thank you for that.

Richard Quest is in Brussels for you this evening.

U.S. and European stock markets, well, they rallied on the news -- sort of -- of a possible debt busing deal. Let's have a look at the markets.

The Dow, FTSE, DAX and the CAC, well, they all closed out the week posting fairly solid gains. Financials leading the way on both sides of the Atlantic despite Moody's downgrading three of the top French banks, that being BNP Paribas, Credit Agricole and Societe Generale.

But, frankly, that doesn't -- or these numbers, at least -- don't suggest to me an overwhelming thumbs up to the deal from those who count as being the market spectators.

So, have Europe's leaders done enough to save the euro?

Let's bring in Mohamed El Erian, who is the CEO of PIMCO, who's the world's biggest bond fund. They speak, the markets move, of course.

It's now or never.

So, have the European leaders done enough, Mohamed?

MOHAMED EL-ERIAN, CEO, PIMCO: They've done a lot, Becky. And everything they've done was necessary. But they haven't done what's sufficient.

Think of it in -- in the following way. They recognize that the Eurozone, as a building, is too weak and what they have started doing is building a new building and today was all about the foundation.

But they'd better get moving quickly...

ANDERSON: Sure.

EL-ERIAN: -- otherwise the occupants of the first building are now going to move to the second building.

ANDERSON: Yes, we're talking about this fiscal compact. What we really need -- you and I know this -- if -- if the euro is to work going forward, is a fiscal union. That would imply tax and spend initiatives which are going to take months, if not years, to get on with.

So given what we've got and the fact that you say can they do it quickly enough, what can we expect from the people who matter most in all of this, which is the traders and investors, the market speculators, going forward, in the next couple of weeks?

EL-ERIAN: Expect continued uncertainty, continued volatility and a small but steady destruction in the demand for European assets. So as long as this uncertainty prevails, Becky, the more investors will step to the sideline and just wait, because they're trying to worry about the return of their capital.

ANDERSON: That is fascinating.

So given what you've said, is the UK's decision to veto this deal really as bad an option as it being reported at this point?

EL-ERIAN: No. It's the lesser of two evils. And I think what the U.K. has done speaks to something much bigger. You have 27 members both of the EU, but only 17 of them are in the Eurozone. So as they pursue close integration, the 10 that are not in the Eurozone are going to find it harder and harder to stay in this club. And I think that what you're seeing happening in the U.K. is a leading indicator of the tensions that will now be created within the EU.

ANDERSON: Have they saved the euro at this point?

EL-ERIAN: Too early to say. They've certainly reduced the vulnerability a little bit. But it's still flashing yellow. It's still in intensive care.

ANDERSON: How do you rate Europe's leaders, Mohamed, in all of this?

EL-ERIAN: So I would say they're progressing. We've gone from total denial to underestimating the problem to finally realizing that it's not only a big problem, but it's an urgent problem.

So I'm very encouraged that they have finally understood the enormity of their challenge. But as yet, they haven't come together in a decisive enough fashion.

ANDERSON: Always a pleasure.

We thank you very much, indeed for joining us tonight out of Los Angeles.

Mohamed El-Erian, we thank you.

You're watching CONNECT THE WORLD live from London.

Still to come, we're going to ask Europeans what they think of EU officials in all of this. And what CNN's exclusive poll says about how we, the people, feel about the mess that is Europe today.

And scenes from this week's protests and mass arrests in Russia are still resonating, as activists plan another mass demonstration.

And as the giants of Spanish football prepare to face off in Madrid, we'll look ahead to El Clasico.

All that and more ahead here on CONNECT THE WORLD.

(COMMERCIAL BREAK)

ANDERSON: You're watching CNN, the world's news leader.

This is CONNECT THE WORLD here on a Friday evening out of London.

I'm Becky Anderson.

Welcome back.

Now, opposition activists in Moscow are gearing up for another mass demonstration on Saturday. The States have been relatively quiet since Tuesday, when police arrested 250 protesters who were angry over last weekend's elections.

CNN's Phil Black has more from the Russian capital for you.

(BEGIN VIDEOTAPE)

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: The protestors organizers have the official permission. They have been assigned a venue. A square in Central Moscow that can take 30,000 people. They now just have to fill it. And that's going to be quite some ask.

Most of the protests that we've seen so far have been driven by organized political groups and their membership. They're going to need tens of thousands of Russians who are not normally politically active, but who have decided that they are sufficiently frustrated with the Kremlin, frustrated by these recent claims of electoral fraud in the parliamentary elections last weekend, so frustrated that they decide to turn out and add their voice to this sense of outrage.

It will be something of a challenge, but if they do it and they get those sorts of numbers, it will be one of the biggest protests the Russian capital has seen for some time.

Russian Prime Minister Vladimir Putin says that this sort of street democracy, as he calls it, should be allowed to happen, that opposition groups should be allowed to have their voice heard on the streets, but only as long as, he says, it is legal and peaceful. And there are going to be the two issues that are going to be examined very closely as this crowd assembles and meets in Central Moscow tomorrow. The organizers behind the protests are also expecting a large police presence and they're pleading with everyone who's planning on coming to this protest not to provoke the police in any way, not to give them any reason to shut down this protest.

(END VIDEO TAPE)

ANDERSON: Phil Black reporting for you from Moscow.

A look at the other stories connecting our world this hour for you.

And at least 88 people are dead after a fire tore through a hospital in Calcutta in India. The blaze started in the basement of the five story hospital early on Friday. Now, according to officials, at least, most bedridden patients were abandoned by the staff on duty. Six managers have been arrested for negligence and the hospital has lost its license.

Well, there are fears of new unrest in the Democratic Republic of Congo after presidential election results came out there. Incumbent president, Joseph Kabila, has now been declared the winner of last month's vote, but his rival has rejected the result, calling himself the new leader of the country. Eighteen people were killed in post-election violence. The supreme court has until December the 17th to declare a final winner.

Well, a warning from the Syrian activists. They fear that a government massacre is being planned for the western city of Homs. It's a major center of clashes between pro-democracy demonstrators and security forces. Now, the Syrian National Council says thousands of troops are manning checkpoints just inside the city. The warning comes as activists say 37 people died today across Syria, 18 of them in Homs itself.

Well, Israel's military says it was going after terror sites when it launched air strikes on Gaza. Hamas officials say an elderly man was killed and women and children were among the 15 wounded in Friday's raids. Israel says it was aiming for militant camps and regrets that non- combatants were harmed.

Coming up here on CONNECT THE WORLD this hour here on CNN, we'll bring you the very latest from golf's Dubai World Championship, where the race is on to top the European money list.

That and more, after this.

(COMMERCIAL BREAK)

ANDERSON: You're watching CONNECT THE WORLD live from London.

Twenty two minutes past nine this Friday evening.

Welcome back.

I'm Becky Anderson.

It's just 24 hours until the two giants of Spanish football go head- to-head in La Liga. Barcelona will lock horns with Real Madrid in a record seventh El Clasico of 2011. And a win would be a massive boost to both sides' chances of winning.

The title now, Real are top of the Spanish league with a game in the hand and Barca are just three points behind them.

Joining me for more ahead of this crunch match is "WORLD SPORTS'" Mark McKay at the CNN Center -- Mark, tell us why El Clasico, is arguably, the biggest football match in the world.

MARK MCKAY, CNN SPORTS CORRESPONDENT: Well, I know it might be hard for you to get your head around, Becky, that any match that doesn't involve Tottenham Hot Spur can be called Clasico. But this probably even tops that for a football fan like yourself.

Real Madrid and Barcelona, certainly the two biggest clubs in Spain, two of the biggest clubs on the European continent and two clubs that enjoy worldwide support no matter where you go.

So many supporters get up for this match. And here we go again on Saturday, with Real Madrid hosting the latest El Clasico at the massive Santiago Bernabeu.

Interestingly, though, Barcelona's coach, Pat Guardiola, has never lost a match on Real's home pitch. So it's no wonder why the Catalinans are mighty confident ahead of opening whistle.

(BEGIN VIDEO CLIP)

XAVI, BARCELONA MIDFIELDER: We are ready to face Real Madrid or anyone else. We feel a lot of respect toward them, because I think that they fought hard until the end, despite that we won the majority of titles. And this year, they are very competitive again. You must be strong, emotionally speaking. They look great physically and this is probably the Clasico they have been best prepared for in the last three or four years. But anything can happen, evidently.

(END VIDEO CLIP)

MCKAY: That it can. And to a man, Barcelona may be mighty confident, Becky. But remember, Real Madrid have won 15 straight matches in all competitions coming into Saturday's latest installment of El Clasico.

ANDERSON: That's -- that I do get. But Barcelona have dominated in Spain and Europe in recent years.

Do you really think this is Real Madrid's year?

MCKAY: Well, there is a ways to go. But you have to look at all signs pointing to that. The Catalinans, they had a three point lead. The -- Barcelona now trails Real Madrid atop the table, as -- as you were saying earlier. Real Madrid's supporters, they also have seen their team storm into the knock out stages of the European Champions League without losing a single match.

So, really, the pressure is on, Becky, the holders, the Catalinans, as they are the ones that need a positive result Saturday night at Real Madrid's home grounds, and not the leaders, who mirror their coach, don't they, in their confidence?

Jose Mourinho is nothing if not confident.

ANDERSON: Absolutely.

All right, let's move on to the golf, shall we?

Bring us up to date, Mark, if you will, on the Dubai World Championship, because I know that there is a battle for the number one ranking at present, isn't there?

MCKAY: A heated battle, indeed, Becky, between Rory McElroy and Luke Donald. Luke Donald, of course, the reigning and the number one European player at the moment.

Let's take you to Friday's second round in Dubai. And watch the current European number one and the world number one do his thing. Donald opening with a 72 on Thursday. He followed up with a 68 on Friday. But he is eight shots off the pace.

But all the pressure in this, like perhaps El Clasico, all the pressure, perhaps, lies on Barcelona's shoulders tomorrow. All the pressure this weekend likes on Rory McElroy's shoulders, as he has to go out, win the Dubai World Championship to have any chance of knocking off Luke Donald from the European number one.

A pretty good effort for McElroy, as he was able to put himself into a share of third place. Everyone, though, chasing the Spanish golfer, Alvaro Quiros. He led his way up the leaderboard with birdies like this one following the approach at number 11. And you talk about ending your day on a high, Becky, I know you're a golf fan. This is an eagle at the last, a bogy-free round of 64 for Quiros. He's at the top of the leaderboard four clear.

But if McElroy wants to do it, he has to not only get past Luke Donald but that guy right there. McElroy has to win. But at the moment, he's too -- he's five back with two rounds to go.

ANDERSON: Straights like that make you want to weep, don't they?

(LAUGHTER)

ANDERSON: On the 18th. What a fantastic feeling.

Mark, thank you for that.

Mark McKay back with "WORLD SPORT," of course, in just over an hour's time here on CNN.

Do join Mark for that.

Thanks, Mark.

Still to come on CONNECT THE WORLD, a question of trust -- CNN's exclusive poll asks Europeans how they feel about their political leaders. And we've got some pretty interesting answers up next.

Then, watching Europe like a hawk -- the White House reacts to the deal. A little later, we're going to be live stateside with former U.S. Treasury secretary, Larry Summers.

And she may have ruled herself out of the U.S. 2012 presidential race, but Sarah Palin still draws crowds and criticism. Why free market Nick Broomfield decided to make a documentary all about the former Alaskan governor. It makes for great viewing.

All that and more, after this.

(COMMERCIAL BREAK)

ANDERSON: Welcome back, this is CONNECT THE WORLD here on CNN. Time for a quick check of the headlines for you this hour.

And European leaders have agreed to tough new economic rules, 26 of the EU's 27 nations are set to go forward with a plan for stronger fiscal union, including tighter rules on deficit and a new permanent bailout fund starting next year. The UK is not onboard.

Congo's election commission says President Joseph Kabila has won reelection by a wide margin, but the opposition calls the results totally unacceptable, and its leader has reportedly declared himself to be the president.

In India, witnesses and authorities say hospital staff left patients helpless and asleep while fire tore through the building. At least 88 patients were killed. Six hospital managers have been arrested on negligence charges.

And Syrians have taken to the streets once again, despite warnings of impending government assault. At least 37 people were reported killed across the country on Friday. Activists have called for a nationwide dignity strike to pressure the regime starting on Sunday.

And finally, Russia's political opposition is promising more protests in Moscow and across the country this weekend. That is despite hundreds of arrests at its last protest on Tuesday. Demonstrators are angry over last weekend's election results.

Those are your headlines this hour.

All right, returning to our top story tonight, and that is the dawn of a new Europe. Will history remember this night for a deal that saved the eurozone? Let's get back to Brussels and my colleague, Richard Quest.

It's -- it's a big ask. What do you think?

QUEST: It -- it is a big ask, and that's been the question throughout the day. It's late at night here, now, in Brussels, and as you can see, just -- well, not just about -- it is deserted.

The journalists from other countries are heading back to their countries and their nations. The politicians are going back believing that they have done sufficient to not only beef up the bailout fund, but also put the euro on a much firmer footing in the future.

Now, Becky, the politicians are happy with what they've done. But the question really is, are the politicians out of touch with the people?

ANDERSON: Yes.

QUEST: Do the people of Europe actually want something very different to what was negotiated here? And on that question, I need to throw it back to you.

ANDERSON: Yes, OK, because we've got what is the first eurozone polling -- thank you, Richard -- to have been done in the wake of this current crisis.

This is an exclusive CNN poll, which was carried out in association with the firm ComRes across seven eurozone countries between December the 5th and the 9th, with a representative sample of 200 people interviewed in each.

Questions were put to citizens of Portugal, Ireland, Italy, Greece, and Spain as well as the core eurozone countries of France and Germany.

Is there a democracy deficit here? The results, let me tell you, all are pretty clear. They are an indication of the mood of Europe. Asked if they felt it was a good decision for their country to join the euro, almost half of those polled, or 49 percent, agreed it was, 35 percent disagreed.

But we also asked them this question. "Should your country continue in the common currency indefinitely?" Opinion there was split, 56 percent of Italians felt they should do so versus just 34 percent of those polled in France.

How fascinating, Richard, just a third of those polled in France were looking for a euro membership going forward.

QUEST: Becky. So far, so good. But now, take those numbers and those polls, and I ask you, factor in the question, because this is what was discussed here, this movement to a greater federation within Europe, a "United States of Europe."

ANDERSON: All right.

QUEST: What's the results there?

ANDERSON: All right. And that was a question that we asked in this poll. It depends, Richard, who you ask, let me tell you. The majority of people in Spain in Italy said they would like to see that, that being a federal Europe. Two thirds of those polled in both countries saw it as a good idea.

But get this. In Germany, just 36 percent were in favor, with 41 percent saying they don't want to see this happening. Now, that is a rather surprising statistic, given Angela Merkel's push towards a greater fiscal union in Europe.

And finally, out of all of those polled, it was Germany which emerged as the nation with the most faith in the country's national politicians, 40 percent said it was they who are best placed to meet the needs of their economy, whereas elsewhere, there was much greater support for EU officials.

You and I have been saying this for some time, Richard. I'm not sure I would trust EU officials to run me a bath at the moment. I'm not sure if you agree with that. But quite a lot of people said they do across Europe.

(LAUGHTER)

ANDERSON: I don't know what to say to that, do you?

QUEST: What one can say is that when they do start things here, it's on a grand scale, and certainly -- I'm tap dancing gently as I try to work out how not to be too rude about the process here.

(LAUGHTER)

ANDERSON: So those you might be meeting on the way out of the building that you're in this evening. Richard Quest, an enormous pleasure, as ever. Thank you for joining us out of Brussels, your man for CNN tonight.

Well, Germany isn't so keen on the euro. That's what our poll shows, at least. That's what nearly half of the country told our pollsters. But Elmar Brok isn't so sure. He's a German member of the European parliament as well as a member of Angela Merkel's ruling party, so I asked for his take on Germany and, indeed, on the euro. This is what he said.

(BEGIN VIDEO CLIP)

ELMAR BROK, GERMAN MEMBER OF EUROPEAN PARLIAMENT: From time to time, you have opinion polls, but the figures are so clear that the trade surplus of Germany, the economic success, the political stability, to be surrounded by countries who live in the same legal -- all in the same market with the same currency is in the middle of this -- continent the best culture and we could have the best moment in our history.

And therefore, the political and economic advantages so high -- much higher than any disadvantages which come out of solidarity. And I think therefore, 65 percent of Germans want to have more Europe, not less Europe, because they have understood that Germany or other European countries alone cannot survive in this global environment.

ANDERSON: Well, that contradicts what our poll is saying today. Questioned about a move towards a more federal Europe, only 36 percent of Germans polled said that they agree with that.

BROK: Look, it becomes -- it's the type of question you put to the results. But it is so that the vast majority in Germany is for more Europe. That opinion polls show clearly.

And sometimes you have to control the leadership. I think a breakdown of European unification is a disaster economically and politically, and the 60 years of peaceful development in Europe has to do with European integration.

And we want to continue such a policy another 60 years at least, and we will not be divided by anybody who has interest in the euro breaks down.

(END VIDEO CLIP)

ANDERSON: The view from Germany this evening. Well, plenty more on Europe's deal and what it means going forward coming up later in this show.

Just ahead, though, on CONNECT THE WORLD, will the real Sarah Palin please stand up? One filmmaker's mission to discover what goes on inside the world of America's most famous hockey mum. We'll be back with that in 90 seconds, stay with us.

(COMMERCIAL BREAK)

ANDERSON: Well, she is worshipped by some, she is ridiculed by others. Sarah Palin burst onto the political scene three years ago after former presidential candidate John McCain chose her, you'll remember, as his running mate.

Until then, the self-described hockey mum had only served as governor of Alaska for two years. Her previous job was mayor of a small Alaskan town called Wasilla. Sarah Palin has ruled herself out of the 2012 US presidential race, but that doesn't make her any less of a powerful and intriguing political figure.

In fact, she's now the focus for filmmaker Nick Broomfield. Earlier this week I spoke to him about his latest documentary out tonight aptly called "Sarah Palin: You Betcha!" I asked him why he decided to make a film about her. This is what he said.

(BEGIN VIDEOTAPE)

NICK BROOMFIELD, DIRECTOR, "SARAH PALIN: YOU BETCHA!": She represents an enormous change in the Republican Party, and I think she was also this phenomenon that just swept onto the stage surrounded by lots of kids.

And I kind of wondered, along with everybody else, where did she come from and who is she and what was her background and what kind of made Sarah Palin Sarah Palin?

ANDERSON: You began this film by getting Sarah Palin to promise to be interviewed by you.

BROOMFIELD: Right.

ANDERSON: You betcha.

BROOMFIELD: You betcha.

ANDERSON: What happened?

BROOMFIELD: Well, we went along, talked to her at a book signing. She couldn't have been more happy to see us and cooperative and I said, "We're doing a documentary film, would you be in it?"

And she batted those wonderful eyelids and said, "You betcha, I could."

(BEGIN VIDEO CLIP, "SARAH PALIN: YOU BETCHA!")

SARAH PALIN, FORMER GOVERNOR OF ALASKA: Well, I'll betcha I could do that.

BROOMFIELD: Could you do that?

PALIN: Yes.

BROOMFIELD: That'd be fantastic!

PALIN: Yes.

(END VIDEO CLIP)

BROOMFIELD: But I believed her. I believed her, and we carried on contacting her lawyer and negotiating and stuff. And then, I think after about two months, I started believing that this was going to be very difficult, and it was very frustrating.

But then I think, Sarah Palin only really talks on Fox News and only to people who sort of throw her softball questions. She doesn't really want to deal with anything very substantial.

ANDERSON: So, you went off to Wasilla.

BROOMFIELD: Went to Wasilla. It was unfortunately in the middle of the winter, so it was already sort of minus 25 by the time we got there. And it's a teeny little community, 5,000 people, 76 churches, extremely evangelical. And at first, very welcoming.

And then, as the nights grew darker and they got colder still, there was a kind of -- you get a sense that the town is split between those who are pro-Sarah Palin and those who are very much against her.

ANDERSON: Did you come up against a lot of resistance from those were pro-Sarah Palin?

BROOMFIELD: I think what's happened is that she was enormously powerful, particularly mayor, governor. And I think there's a lot of fear in the town.

So, it wasn't just that people were sort of against us making the film, it was more that people who were actually against her and were tempted to speak up were frightened to do so, because it was a small town, and I think people were just genuinely frightened of losing their jobs.

ANDERSON: Do you think she was an easy target for you?

BROOMFIELD: Well, she was a really difficult target, because I rarely, rarely managed to even get her into my sights.

I think that it's -- she's complicated, because part of -- I think to really understand Sarah Palin, I think you need to understand evangelicals really well. And you also need to understand the incredible change that has happened in the Republican Party.

And also, I think Sarah Palin is a populist, and she's changed so much. So, she kind of blows with the wind, wherever she thinks the most support is going to be, she'll go there.

And of course, she has God on her side. She believes she's God's anointed one, so she just carries on. So, she's actually much more complicated than you would expect.

I think there is -- I think her friends, obviously, like her for her fun side. There is that side. But I think the one that has been the dominant one is her evangelical, black and white view of the world, very much like God and the devil.

And if you're an enemy of Sarah Palin's, she will finish you off. She won't just sort of fire you from your job and have a nice going away party, she'll actually make sure you don't get employed again.

I think she has just collected so many enemies, particularly -- I mean, normally, I think, politicians have the most support in their own hometowns and where people know them. Sarah Palin has the least support in Alaska, and probably even less support in Wasilla, where people know here.

And she's ended up pretty much in this very isolated house with these enormous iron gates around it, very rarely goes out into the community. There's some wonderful people, and very brave people in Wasilla, who've been standing up to her despite all the death threats and stuff.

I think Wasilla had started off as a very beautiful town. A pioneering town, which was, incidentally, Democrat. A small -- a few small, little, wooden buildings next to the Alaska railroad, surrounded by the most beautiful mountains.

And it changed into this community with a super highway going right through it, which Sarah Palin engineered, and all these enormous super stores. You feel it's a lost opportunity of something that could have been fantastic.

Wasilla was originally kind of -- its origins went back to FDR with the New Deal, when he sent pioneers to Alaska to sort of set a new world up. And it's very sad, I think, what's happened there.

(END VIDEOTAPE)

ANDERSON: Amazing stuff. Nick Broomfield, talking about his new documentary, which is out tonight, "Sarah Palin: You Betcha!"

You're watching CONNECT THE WORLD here on CNN, and it's a Friday evening in London, 47 minutes past 9:00. When we come back, a European treaty with a global impact. Former US Treasury Secretary Larry Summers gives us his take on Europe's financial reforms. Do stay with us.

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ANDERSON: All right, a recap of tonight's top story. European leaders have reached a deal that they hope will save the single currency. The majority of the EU agreed on a treaty that sets out tough budget rules across the region. Britain, though, has refused to back it.

Well, the impact of that new deal will be felt throughout Europe, and largely by its youth. We spoke to some people, youngsters from across the continent, to hear how they feel about the latest developments from Brussels. Have a listen to this.

(BEGIN VIDEOTAPE)

THOMAS DELANO, STUDENT, PARIS, FRANCE: I think that the agreement they reached this morning is a pretty good thing. But on one side, I really do not understand the English position. They want to have a kind of all the financial markets with them, and I really don't understand why, because it's basically because of the financial markets we're in this situation right now.

LUKE MARFLEET, STUDENT, LONDON, ENGLAND: I think that David Cameron saying no to the eurozone proposals was a good decision, because he made his own decision rather than running with the rest of Europe. And he's sort of put himself to one side, saying it doesn't suit him rather than just agreeing because it suits the rest of Europe.

GIACOMO DINOTO, FREELANCE WRITER, ROME, ITALY: I really don't know whether this is enough or not. The problem is, everyone knows that the ECB should have probably a role as a lender of the last resort. And that's not what we're going to achieve with this -- with this kind of deal. So, we can just adopt a wait-and-see approach at this stage.

CHRISTIANA GALANOPOULOU, CURATOR, ATHENS, GREECE: I'm not very optimistic. What I see is that European countries get involved more and more in -- defensive kind of policy which, to my opinion, does not really help to get out of this circle that we're now in.

PHILIP FABIAN, FINANCE, MUNICH, GERMANY: I personally, I don't blame the British for anything. I think it is not demanding too much to keep some sovereignty of their own. But this is something that continental Europeans don't seem to understand, they want everybody to join this messy situation all together.

(END VIDEOTAPE)

ANDERSON: Some voices from across Europe, and it is important when you listen to the youth, given that, for example, in Spain they have 44 percent youth unemployment, something like over 20 percent in Italy and in France. So, what the youngsters are telling us today really matters.

Well, ironically, it was 20 years ago today that the euro was conceived at a supper at the Chateau Neercanne near Maastricht, during which 13 of Europe's then leaders celebrated their decision to pursue what they saw as a monetary union.

Well today, of course, the mission is to save the euro, to save the European Union from splitting in two, and to save the world from a deep recession. And, indeed, the world is watching, have no doubt. From the US, the White House says the new deal shows progress, but more needs to be done.

So, for more on the wider view, let's get to Massachusetts tonight and former US Treasury Secretary Larry Summers. We're delighted to have you with us.

From the outside looking in, has Europe done enough to prevent a systemic breakdown in global growth going forward?

LAWRENCE H. SUMMERS, FORMER US TREASURY SECRETARY: I think they've done enough to avert an imminent collapse. You can see that in the response of markets today, which registered some relief.

Whether this will be remembered as the summit that put the problem in the rearview mirror, I think is very, very much in doubt.

ANDERSON: Sure. And you bring up the markets, though --

(CROSSTALK)

SUMMERS: You can see that in what happened.

ANDERSON: Yes. You bring up the markets, Mr. Summers, and it's interesting, isn't it? The markets were up, but they weren't up hugely. We're looking at sort of one, two, two and a half percent rises. It wasn't a tumultuous thumbs up to what the European leaders have done. What sort of damage --

SUMMERS: Well, even more --

ANDERSON: Go on.

SUMMERS: Even more troubling than that, Becky. If you looked at the debt spreads of some of the key countries, like Italy, they actually rose rather than fell, suggesting more anxiety --

ANDERSON: Yes.

SUMMERS: -- about their ultimate servicing of their debt. So, there will be more summits, there will be more measures, there will be more technical discussions about how all of this will be implemented.

And I think that the focus is going to have to shift somewhat from the very legitimate focus on strengthening European fiscal institutions to make future imprudence less likely, that's very important.

But right now, we've got a growth crisis in much of Europe and in much of the world, and Italy's not going to get where it needs to get unless the European economy is growing in a reasonably robust way.

ANDERSON: Sure.

SUMMERS: The world's economy is not going to function in the way that it needs to unless European banks are sufficiently strong and able to maintain their lending activities.

And I'm not sure that what was done here was fundamentally offensive in terms of resolving the problem rather than defensive in terms of preventing a near-term collapse.

ANDERSON: Yes, Mr. Summers, you make some --

(CROSSTALK)

SUMMERS: So, I fear we have --

ANDESON: -- really good points.

SUMMERS: -- a lot more tunnel ahead of us.

ANDERSON: Yes, you make some really good points, here. Defensive rather than offensive. And given that they've had two and a half years or, indeed, 20 years to sort this problem out, it seems rather lame to many of us.

What sort of damage, do you think, to Europe's reputation has been done by this crisis?

SUMMERS: You know, I think there was a sense several years ago, and it was a very understandable sense, that Anglo-American capitalism, if you like, with its emphasis on free markets, capital markets, free trading, derivatives, hedge funds, private equity firms, all of that, had provoked a massive financial crisis, and that that might not be the way forward --

ANDERSON: Sure.

SUMMERS: -- and that the way forward might lie more with more traditional financial approaches. Large banks --

ANDERSON: All right.

SUMMERS: Banks that were close to governments, emphasis in lending. If you like, the continental model.

ANDERSON: Interesting.

SUMMERS: I think that, after all of these failures, that's probably a less-compelling view today then it was two or three years ago. And in that sense, I think the European ability to lay claim to some kind of moral superiority in the financial area is not what it once was.

ANDERSON: Yes. Fascinating stuff. Mr. Summers, we thank you very much, indeed, for joining us this evening, wrapping up what is CONNECT THE WORLD. Thank you for watching. The world news headlines and "BACKSTORY" up after this. Stay with us.

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