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Eurozone Economic Woes; US-Pakistan Relations

Aired May 22, 2012 - 15:00:00   ET


CHRISTIANE AMANPOUR, CNN INTERNATIONAL HOST: Good evening, everyone, and welcome to the program. I'm Christiane Amanpour.

My brief tonight, We are not going to take it anymore. That is the refrain ringing throughout Europe, as voters across the continent mobilize to reject austerity measures.

Many are pointing the finger at one leader - that's, again, German Chancellor Angela Merkel. The anti austerity Greek politician, Alex Tsipras, is taking his message on the road. Right now, of course, he is leading in the polls, ahead of next month's elections in Greece, and at a rally in Paris, he is continuing his campaign against Merkel and the mandated cuts, which he has been calling barbaric and inhuman.

And then he moved on to Merkel's home turf, Berlin, insisting that if Greece has to live on the budget imposed by others in Euorpe, Athens will be dealing with a humanitarian crisis.

Meanwhile, in Ireland, beleaguered taxpayers are refusing to pay a new property tax, and recent regional elections in Italy saw an anti austerity fringe party, led by a comedian, winning almost 10 percent of the vote, while calling on Italy to default on its debt and quit the euro.

In tonight's program, Austerity - the Backlash. Can the euro survive? And how does all of this affect America and President Obama's reelection?

And then later, a critical US partnership in meltdown. I'll be talking to the leading authority, Ahmed Rashid, about the United States, Pakistan, and whether there is any hope of saving Afghanistan.

Bur first to the turmoil in Europe, and a short time ago, I sat down with Italy's foreign minister, Gulio Terzi.


AMANPOUR: Foreign Minister Terzi, thank you very much for joining me.

Is the EU a lost cause? Have we basically reached the point of no return? Can the euro be saved?

GIULIO TERZI, ITALIAN FOREIGN MINISTER: It is going to be not only saved, but Europe is a great project. Our vision on the further integration economic, fiscal, budgetary, but especially political integration in Europe is there, it is very clear it is shared with a number of extremely important partners. I would say with all 27, but within the eurozone, there's specific reason to be because there is no point of return in terms of integration of the eurozone and all the instruments which are the financial compact - and fiscal compact - the SMA, the SFS --

AMANPOUR: All those acronyms -


AMANPOUR: And here's the real - the real crux of it. You've got a Greek crisis staring at you in the face. You've got a Spanish crisis underway. You have fears of contagion, and you have people openly talking now what happens if Greece exits the eurozone.

TERZI: Absolutely. There is no doubt that the Greek situation is a challenge, especially after the election. And we expect that the Greek public is going to consider properly for the next election what it means to remain in the eurozone and what the alternative is - extremely negative and dramatic could be.

AMANPOUR: I'm going to play something that the British prime minister, David Cameron said in Parliament. Just listen to what he said:


DAVID CAMERON, BRITISH PRIME MINISTER: If the eurozone wants to continue as it is, then it has got to build a proper firewall. It's got to take steps to secure the weakest members of the eurozone, or it's going to have to work out - it has to go in a different direction. It either has to make up or is looking at a potential break-up.

That is the choice they have to make, and it's a choice they cannot long put off.



TERZI: I think it's a very positive statement in the sense that the British govern believe that it is in fact the stakeholder, although it hasn't belonged to the euro group. But it feels that it is a stakeholder and it has all the possible advantages of the success of the euro - for our vision.

AMANPOUR: And you've seen - I mean, look. There's a backlash in Ireland right now. Taxpayers saying they're not going to pay an extra tax. You know what's going on in Spain. In France, there's a lot of hope that President Hollande can change the memorandum or renegotiate.

And even in Italy this week, you've had just recently - you've had elections where some fringe parties did very, very well. In other words, there is a populist backlash. How do you get a grip on that?

TERZI: In every situation, economic downturn, economic devastation as we have been going through over the last four or five years for a crisis which was not originated in Europe, as we know. In every situation of this kind, government parties in power or parties with government experience - recent governments are going to suffer. That there's a logical conclusion --

AMANPOUR: But then how do you fix it?


TERZI: -- the more the crisis goes on, the more this kind of backlashes, as you say, are going to be evident. So, are we - how we fix? We fix being credible in the management of the economy. And on our side, you may have seen today there was a report for OACD, quarterly outlook, which gave a distinct definition of the Italian economic measures. They said in Paris, the OACD, that the flasher reforms (ph), which have been adopted by the Italian government, are given a perspective of long-term growth and long- term improvement of the economy.

Now, the challenge is to bring this long term as close as we can to our - to our moment. And therefore, to find measures which could reignite the economy and the hope. And these are infrastructure project bonds for the special project bonds, the recapitalisation of the European investment bank. And maybe - mainly out of tools which are on the table. Monsieur Moscovici yesterday said --

AMANPOUR: That's the French finance minister.

TERZI: The French finance minister was saying in Berlin that every measure is on the table. And they get that tomorrow, there will be a number of countries participating to the council which will propose measures.

AMANPOUR: I do actually want to ask you, because you were at the G8, you were at NATO, and everybody's watching Syria and now it's expanding into Lebanon. How concerned is Italy about what's happening in Syria and the fallout.

TERZI: Very concerned. Very concerned for a number of reasons. First one is a humanitarian reason. We cannot see these people suffer so terribly. More than 10,000, 11,000 people have been killed, and one million and more displaced internally. The spillover, already, in terms of refugees, so we -

AMANPOUR: -- but and yet, the headline out of NATO is that no, there will be no NATO intervention. Nobody's asked for intervention, not Italy, not France, not the U.S., nobody.

TERZI: I think that was a very wise line to take, because if we - NATO countries - we would like really to have some chances of going back to the Security Council and to insist for a resolution, which should give permission of observers in Syria some more capacity, more personnel, more capacity of self-protection, because we have seen what is happening. It is very worrisome, the fact that the U.N. observers, who are there for the implementation of the Annan Plan, being - maybe we cannot say clearly, they are being targeted, but -

AMANPOUR: But what do you really think that they can do? I mean, even the president of Turkey - I mean, certainly yourself, many other people, have cast quite a lot of doubt over whether this so-called Annan Plan can ever work, because there seems to be no sincerity on the part of the Syrian government.

TERZI: We have to push in every possible way. I have been in touch, as many other colleagues, especially the Turks, but those are French - France, and so on, with the Syrian position. The different components of the Syrian position. So this is a path of pressure we have to take on the country. Very careful about the protection of minorities, and so to engage also this component of the Syrian society -

AMANPOUR: How long do you see this going on for like this?

TERZI: It should stop. It should stop quickly, and the pressure on the regime - you know, the European Union has increased economic measures, the sanctions against Syria, we have to continue fast along the track and to take up the issue again in New York, the Security Council.

AMANPOUR: Do you think that - I mean, you talk about another security council resolution. What would be a timeline for that?

TERZI: I know there have been informal contacts. I don't know when the negotiation would be right, but over the next four or five weeks that would be possible.

AMANPOUR: Oh, really?

TERZI: Yes, at least starting a movement in that direction.

AMANPOUR: Because, of course, what I hear, is that everybody is letting the Annan Plan sort of happen because they don't know what else to do.


AMANPOUR: And at some point, it just going to have to be - a spade is going to have to be called a spade.

TERZI: As Kofi Annan said in Security Council, the plan is not open-ended. The plan cannot be given a certain time to work and be fully supported, and that is what we are doing. But there is also follow-up. If the Syrian regime continues in this behavior, we have to measure in follow-up.

AMANPOUR: So, is the international community just biding its time, then? Are you trying to figure out something else to do, or what? I mean, what is Plan B, I guess?

TERZI: We are not buying any time, because all the major countries are very active diplomatically in the European Union as such, you know, the latest Council of External Affairs was adopted (INAUDIBLE) measures and sanctions. So we are pressing and we are showing strong urgency. But the regime has not shifted yet, and we have to -

AMANPOUR: Do you think it will?

TERZI: I think it will.


TERZI: I think - with time, or with some more time, I think it will.

AMANPOUR: So, not open-ended. Is that four to five weeks? How long do you give the Annan Plan?

TERZI: We may say so. We may say that we have to go back, of course, draw the conclusion at the Security Council. We shall see what is really the capacity of the observer mission to move around the country, and if there is really the willingness for the regime to find a political solution. And stress the need for a political solution to start a dialogue and a new condition. Though the force of negotiations at that point, would mean that the Annan plan is working.


TERZI: And in that sense, we could proceed on that track, but it's not -

AMANPOUR: Right, but you haven't seen any of that yet.

TERZI: Some early indications of - but really at the margin.

AMANPOUR: At the margin.

TERZI: At the margin, there were some indications that the Annan plan is very slowly moving ahead.

AMANPOUR: On that note, Foreign Minister Terzi, thank you so much for joining us.

TERZI: Thank you so much. Thank you.


AMANPOUR: And we have this just in from Syria. It's a video that was sent to us by the United Nations, showing its monitors in action in Syria, there, actually negotiating the release of two hostages. It's the sort of thing we don't see very often; the monitors have largely been unseen since they've arrived in Syria.

This took place in an opposition-controlled town in western Syria. We see here the UN team meeting with opposition forces, and the monitors are trying to talk them into giving up an army tank that they've been holding, in return for the release of two men that the government forces are holding.

And here we see a member of the Syrian military and his team starting to retrieve the vehicle as members of the opposition observe from nearby. They load it up, and they leave the town. And then, members of the Syrian Red Crescent come in to help facilitate the return of the two men. And according to the UN, these are men who have been held captive by the Syrian military, and are for now safely back home.

Small steps indeed, but we do continue to monitor what is going on, as the world continues to wring its hands over the crisis in Syria.

And the relationship between the United States and Pakistan is growing more dysfunctional. Ahmed Rashid, the world's leading expert on Pakistan and the Taliban is coming up next.

But before we go to a break, take a look at this - a vivid picture of Europe's economic woes. This is a cultural center in Spain, opened just over a year ago. It lost its funding and it's now shut down. But it's not a total loss; kids use the plaza for skateboarding.

We'll be right back.


AMANPOUR: Welcome back. And now to what many are calling the most dysfunctional relationship in the world - America and Pakistan. It's a partnership of necessity - perhaps no other country is as important to the stability of Afghanistan than its neighbor to the east.

And I sat down with the leading authority on Pakistan and the Taliban, journalist and author Ahmed Rashid. His latest book is called, "Pakistan on the Brink."


CHRSITIANE AMANPOUR, HOST: Ahmed Rashid, thank you for joining me. It seems now that Afghanistan is being pushed to the side - and the United States has always said Pakistan, in any event, is our main relationship. We have to have a good relationship with Pakistan. Let's have a look at this picture. This is at the NATO summit. President Obama practically just bumped into President Zadari. There's no real meeting at all. Why not?

AHMED RASHID, PAKISTANI JOURNALIST AND AUTHOR: Well, I think this was the U.S. trying to express its frustration over the fact that Pakistan has not opened the road for supplies to Afghanistan. And the fact that this haggling was going on now, over the price. I think the Pakistani leadership wants to open the roads. They are very fearful of the backlash from fundamentalists. There's a kind of paralysis in Pakistan right now, both within the army and within the political leadership. And Obama is - was trying to really pressure them.

AMANPOUR: And yet, the Pakistanis, from everything they're telling me, are pretty upset that the Americans have not apologized for the accidental killing of some 24 Pakistani soldiers.

RASHID: Yes. I mean, I think it would have been very easy for President Obama to have - or somebody around him, like Hillary Clinton, to have apologized. Or, if not, if there was not going to be an apology, he would have said openly, that, look, we're not going to apologize. Let's move on now. And that would have given Pakistan, perhaps, a way out. To say, OK, let's move on now. Not even that was said, so we're still hanging on this apology business. Pakistan saying it must come. The Americans saying it won't come. And this is creating a huge blockage.

AMANPOUR: So, not just a literal blockage of goods into Afghanistan, but a blockage between a very important alliance. How is this war in Afghanistan going to be - going to end in any successful way, if these two leaders are not talking, or if these two countries have no relationship?

RASHID: Well, you know, when President Obama came in, four years ago, he talked about a regional settlement, with all the six neighbors of Afghanistan involved. We are further away from that than ever before. Look at the state of play with Iran right now, the state of play with Pakistan. Unless the neighbors come on board of any kind of settlement, or a NATO withdrawal next year - which would start next year - we are going to see, I think, enormous unrest in the region as the neighbors start jockeying for position and influence inside Afghanistan.

AMANPOUR: Well, you say we're worse off than we have been in a long, long time. One of the key elements of peace, according to President Obama, was - and now we've learned, not to defeat the Taliban. He's saying, "even my own military didn't internalize that. I never said defeat the Taliban. I'm saying let's talk to them." But there's not even that going on, as far as I can determine.

RASHID: Well, you know, the talks that have been held for the last nine months are now suspended. And very heavily, the U.S. is to blame for this, because they backtracked on a commitment they made to free five Taliban prisoners from Guantanamo in exchange for the U.S. soldier who was being held by the Taliban. Now, the Taliban - four or five of months of this led to their frustration. They suspended the talks. And really, what is needed at Chicago, I think what was totally missing was the lack of a political strategy. And at the center of a political strategy - when President Obama says the war is going to be wound down. Well, how is the war going to be wound down without a political strategy? Which, of course, involves talking to the Taliban.

AMANPOUR: He actually said - the war is going to be wound down is code for, "We're getting out, whether the war is carrying on or not." So the question really is, do you see an end to this war?

RASHID: At the present moment, no. The war is not going to end just because the Americans are leaving. The war is going to only end when there is a dialogue between the Americans, the Taliban, and Karzai. There is an agreed withdrawal with the Taliban. There is also a power-sharing deal with Karzai. And unless these elements come into play quickly - and don't forget, now we have an American election. Everything is being run according to the timetable of the American election. We're going to lose six months, perhaps.

AMANPOUR: So, if this doesn't happen, quickly or otherwise, by the end of 2014, and the U.S. is pulling out, come what may -- there is no wiggle room, it's not conditions-based, President Obama has made that very clear - what do you see, then, as the future in Afghanistan? And will it threaten neighbors? Will it threaten the United States?

RASHID: First of all, I am optimistic, I'm hopeful that the talks will resume. But the real question is whether the Americans are prepared to give the kinds of concessions to the Taliban that they want.

AMANPOUR: Such as?

RASHID: Well, such as, for example, the first confidence-building measure -- freeing these prisoners.


RASHID: Which would allow the Taliban, then, to open an office in Qatar, which would then expand the negotiations to allow them to talk to Karzai and others. If this doesn't happen, and the region is - peace is not made with Pakistan, there's not some kind of deal between NATO and Iran on interference in Afghanistan, we're going to see a lot of regional interference in Afghanistan, which could lead to a much more bloody and a multidimensional civil war.

AMANPOUR: Now, let's talk about Pakistan's responsibility. We've talked a lot about the United States, and obviously, the responsibility is, as everybody knows, to crack down on its own militants, to deny safe haven in the border area. Your own ambassador, Ambassador Sherry Rehman, has just written an article saying "We can get better relations, and we are trying to battle terrorism." In fact, she said that, you know, the number of Pakistanis that are being killed by terrorists, including the former prime minister, Benazir Bhutto, makes her very upset. Saying that it's unseemly for our resolve against terrorism to be questioned by the West. So there - your country is upset about its resolve being questioned. And yet, one of the strongest defenders of Pakistan was the former chairman of the joint chiefs, Admiral Mullen. And here's what he had to say before he stepped down


ADMIRAL MICHAEL MULLEN, FORMER CHAIRMAN OF THE JOINT CHIEFS OF STAFF: The Haqqani Network, for one, acts as a veritable arm of Pakistan's Internal Services Intelligence agency. With ISI support, Haqqani operatives planned and conducted that truck bomb attack, as well as the assault on our embassy. We also have credible intelligence that they were behind the June 28th attack on the Intercontinental Hotel in Kabul and a host of other smaller but effective operations.


AMANPOUR: So these were attacks last year, before last September when he started to step down. This is a man who has spent hundreds of hours with the Pakistani military, with the Intelligence Services. Trying to have a better relationship. If he says that, and puts his finger on that, I mean, there's a real problem in Pakistan.

RASHID: There is, absolutely. I mean, I think most Pakistanis will admit that Pakistan has played a double game throughout this period. The entire Afghan Taliban leadership is living in Pakistan right now. Now, what is the need of the moment for Pakistan to do is - if we're not going to crack down on the Afghan Taliban leadership, we need to push them into talks quickly with the American -


AMANPOUR: So why -


RASHID: -- We're not even doing that.

AMANPOUR: Why not?

RASHID: Because there's paralysis in Islamabad. There's paralysis by the army, with the Intelligence Services, with the government. First they're at loggerheads with one another. They have been for the last two or three years, each trying to gain supremacy over the other. That has not worked, and now there's total paralysis. After all, Christiane, it's not just this issue. The economy is in meltdown right now. We have no electricity for 16, 18 hours a day.

AMANPOUR: In Pakistan.

RASHID: In Pakistan.

AMANPOUR: In major cities.

RASHID: In major cities. It's even worse in the countryside. Industry, the economy. As Ambassador Rehman said, the growth of terrorism inside Pakistan, which has not been tackled. I've been touring the United States, and the numbers of minorities from Pakistan who are seeking asylum here - Christians, Hindus, Ismailis, people within the Islamic fold, wanting to run away from Pakistan. So I think, you know, the leadership is not showing the responsibility that it should be, and that is the real crisis in Pakistan.

AMANPOUR: What is that going to take? Because former Ambassador Haqqani said to me the other day, Pakistan is in a total state of denial. Are you saying most Pakistanis know that we have our own terrorism problems and we're behind a lot of this kind of stuff? And yet, there really isn't that debate in public. Most is finger-pointing at the West or at each other.

RASHID: The tragedy is that unfortunately, the government, the military have also been involved in whipping up this anti-American hysteria. We are now paying the consequences of that with these pictures you are seeing now. The state has allowed banned Islamic extremist parties onto the streets to hold rallies to condemn America. Now the state, the government and the army, wants to pull back and allow America to, you know, restart this road supply, and all the rest of it. They can't get to grips with the problem that they themselves have unleashed. And that is the tragedy.

AMANPOUR: Indeed a tragedy. Ahmed Rashid, thank you so much for joining us.


AMANPOUR: The Taliban's return, Syria's civil war, Europe's economic revolt: you'd think the world had run out of good news. Well, it hasn't, and we'll share some of that when we come back.


AMANPOUR: And finally, we have found some good news. Imagine a world where child mortality is on the decline in Africa. According to the World Bank, since 2005, 16 of 20 African countries have reported a drop in their child mortality rates. As you can see, from west to east, annual rates have dropped more than 8 percent. No one seems certain of the reasons for this - some say better hygiene, better governance. The unsentimental World Bank calls it a miracle, and who are we to disagree?

That's it for tonight's program. Thank you for watching. Goodbye from New York.