1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:34,000 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg So 5 00:00:34,040 --> 00:00:36,960 Speaker 1: we spoke to many finance ministers, but now let's get 6 00:00:36,960 --> 00:00:39,440 Speaker 1: back to someone who we haven't spoken to yet because 7 00:00:39,440 --> 00:00:43,599 Speaker 1: he's a newly minted economy minister and he is Romano Escolano, 8 00:00:43,840 --> 00:00:47,080 Speaker 1: the new Economy Minister of Spain. Mr Escolano, thank you 9 00:00:47,120 --> 00:00:49,080 Speaker 1: for joining us. There's a lot that we want to 10 00:00:49,120 --> 00:00:51,720 Speaker 1: talk about. We want to talk about trade ters reforms. 11 00:00:52,080 --> 00:00:54,080 Speaker 1: But first of all, what was the biggest surprise in 12 00:00:54,120 --> 00:00:56,240 Speaker 1: the job. So you've been in the job, you've always 13 00:00:56,280 --> 00:00:59,440 Speaker 1: followed the economy. Is there something that surprised you. Well, 14 00:00:59,480 --> 00:01:02,279 Speaker 1: I've been as a economic Minister of Spain for just 15 00:01:02,320 --> 00:01:07,520 Speaker 1: one month, very veteran. Well it's been it's still brand 16 00:01:07,520 --> 00:01:10,600 Speaker 1: new in the position. But I'm being surprised by many things. 17 00:01:10,640 --> 00:01:13,480 Speaker 1: I mean the intensity of the European debate. I just 18 00:01:13,920 --> 00:01:16,880 Speaker 1: joined a train which is in full speed. We have, 19 00:01:17,360 --> 00:01:21,399 Speaker 1: you know, prospects who find important agreements. I mean the 20 00:01:21,440 --> 00:01:24,480 Speaker 1: much of June, the debate in Europe is at full speed. 21 00:01:24,880 --> 00:01:27,039 Speaker 1: But then I have in my own ministry in the 22 00:01:27,080 --> 00:01:30,839 Speaker 1: area also responsibility and many interesting things like science, which 23 00:01:30,880 --> 00:01:33,280 Speaker 1: is an important and research, which is an important part 24 00:01:33,319 --> 00:01:35,440 Speaker 1: of the policies of the government. And this is of 25 00:01:35,480 --> 00:01:39,120 Speaker 1: course extremely interesting. The discussion of the budget of Spain 26 00:01:39,520 --> 00:01:43,360 Speaker 1: happened to coincide exactly with the first weeks of my 27 00:01:44,080 --> 00:01:47,120 Speaker 1: stats as the ministry, so the things as you mentioned, 28 00:01:47,319 --> 00:01:49,120 Speaker 1: and all of them coinside at the same time. So 29 00:01:49,160 --> 00:01:52,160 Speaker 1: it's been a busy time, but a very important time 30 00:01:52,240 --> 00:01:54,800 Speaker 1: for Spain and for Europe. Do you find there's commonality 31 00:01:54,800 --> 00:01:57,559 Speaker 1: in the G twenty Are a lot of G twenty 32 00:01:57,600 --> 00:02:02,279 Speaker 1: ministers rallying against people asking for the end of globalization? Well, 33 00:02:02,320 --> 00:02:05,360 Speaker 1: I think that there is a broad consensus. If you 34 00:02:05,360 --> 00:02:07,840 Speaker 1: ask me, there's a full consensus. Maybe I wouldn't go 35 00:02:07,920 --> 00:02:10,200 Speaker 1: that far, but there's a broad consensus on many of 36 00:02:10,280 --> 00:02:13,040 Speaker 1: the issues that have been discussed. First of all, protection 37 00:02:13,080 --> 00:02:15,640 Speaker 1: is m I think that there is very very wide 38 00:02:15,639 --> 00:02:18,919 Speaker 1: consensus among our colleagues that we have to avoid escallation 39 00:02:18,960 --> 00:02:22,080 Speaker 1: in the matters of protectionism. There is a perception that 40 00:02:22,840 --> 00:02:25,920 Speaker 1: via sunny shining in the global economy, but there are 41 00:02:26,000 --> 00:02:29,480 Speaker 1: underlyingable and abilities, and we have to be aware. In 42 00:02:29,520 --> 00:02:32,120 Speaker 1: many of the areas we see normalization of monetary policies, 43 00:02:32,120 --> 00:02:34,320 Speaker 1: including in Europe, of course, and we have to be 44 00:02:34,400 --> 00:02:36,880 Speaker 1: prepared for that. We still have an economy which is 45 00:02:37,080 --> 00:02:40,160 Speaker 1: full of debt. So I would say that these basic 46 00:02:40,200 --> 00:02:43,000 Speaker 1: elements are part of the consensus that I find when 47 00:02:43,040 --> 00:02:45,400 Speaker 1: discussing with my colleagues. May I say that there is 48 00:02:45,440 --> 00:02:48,440 Speaker 1: also consensus among my colleagues to see that the Spanish 49 00:02:48,480 --> 00:02:50,800 Speaker 1: economy is doing well, if you permit me, that is 50 00:02:50,840 --> 00:02:53,919 Speaker 1: also a part that frankly, I can tell that all 51 00:02:53,960 --> 00:02:56,559 Speaker 1: my colleagues I wanted to go to in this atrium 52 00:02:56,800 --> 00:02:59,360 Speaker 1: six seven, eight years ago, friends and acquire and I 53 00:02:59,440 --> 00:03:03,040 Speaker 1: noticed the pain to swear the crisis, and what has 54 00:03:03,080 --> 00:03:07,400 Speaker 1: been noted is Spain led the way to greater stability. 55 00:03:07,720 --> 00:03:11,079 Speaker 1: As you look back five years, six years, seven years, 56 00:03:11,120 --> 00:03:13,640 Speaker 1: what we would call the pixie dust, What was the 57 00:03:13,680 --> 00:03:17,480 Speaker 1: pixie dust of Spain that allowed for you to recover 58 00:03:17,960 --> 00:03:21,480 Speaker 1: so promptly. Well, I think they've been uh, not just 59 00:03:21,560 --> 00:03:26,400 Speaker 1: when reason, but few reasons. Uh. If you want to 60 00:03:26,400 --> 00:03:28,440 Speaker 1: put a summary to what happened in Spain. I would 61 00:03:28,440 --> 00:03:31,840 Speaker 1: say that the main economic reforms that we're undertaken in 62 00:03:31,880 --> 00:03:37,280 Speaker 1: two thousand and ten are which are depending the covering recovery. Particularly, 63 00:03:37,280 --> 00:03:40,640 Speaker 1: we had a change in the law regarding the budget 64 00:03:41,120 --> 00:03:43,800 Speaker 1: and that that creates a path for physical consolidation, which 65 00:03:43,840 --> 00:03:47,120 Speaker 1: has been actually important. Then we have a banking reform. 66 00:03:47,840 --> 00:03:50,480 Speaker 1: We have a very intense banking reform. The banking landscape 67 00:03:50,520 --> 00:03:53,440 Speaker 1: has been completely transformed in Spain as opposed to the 68 00:03:53,520 --> 00:03:56,240 Speaker 1: last six years when you were mentioning. And finally we 69 00:03:56,280 --> 00:03:58,760 Speaker 1: have labor market reform. So you put the three together 70 00:03:59,000 --> 00:04:02,800 Speaker 1: that has called for this transformation. Talk about europe valuations 71 00:04:02,840 --> 00:04:05,560 Speaker 1: and we talk about Germany, the Netherlands, maybe we talk 72 00:04:05,600 --> 00:04:09,160 Speaker 1: about countries struggling firm work than a successful Spain. Do you, 73 00:04:09,240 --> 00:04:12,560 Speaker 1: ever you had an octomo euro valuation, I would not. 74 00:04:13,920 --> 00:04:17,120 Speaker 1: I would not comment on the eurovaluation. Next month you will, 75 00:04:17,320 --> 00:04:19,320 Speaker 1: but I will tell you. But I will tell you 76 00:04:19,480 --> 00:04:23,840 Speaker 1: is that despite the evaluation of the Euro, the Spanish export, 77 00:04:23,839 --> 00:04:29,039 Speaker 1: particularly Spanish sport, outperforming not only the European or the 78 00:04:29,080 --> 00:04:32,120 Speaker 1: euro Area average of export, but the world trade as such. 79 00:04:32,200 --> 00:04:34,920 Speaker 1: So we are gaining actually wait, Spain is gaining ground 80 00:04:35,600 --> 00:04:38,120 Speaker 1: in the world trade and this is extremely part of 81 00:04:38,160 --> 00:04:40,800 Speaker 1: the recovery. Let me say, if you compare the Spanish 82 00:04:40,800 --> 00:04:44,320 Speaker 1: economy today when west was six seven years ago, there 83 00:04:44,360 --> 00:04:47,320 Speaker 1: has been a reduction of eight points of GDP of construction. 84 00:04:47,640 --> 00:04:49,280 Speaker 1: We used to be a country with that had that 85 00:04:49,520 --> 00:04:52,680 Speaker 1: this real estate boom and then a lot of construction, 86 00:04:52,760 --> 00:04:56,040 Speaker 1: a lot of jobs link with construction. This has disappeared 87 00:04:56,080 --> 00:05:00,200 Speaker 1: essentially and now this eight ten points are exports. So 88 00:05:00,240 --> 00:05:03,320 Speaker 1: we have moved from this non tradeable economy to a 89 00:05:03,360 --> 00:05:07,719 Speaker 1: tradeable economy. And this is the underpinning the present the 90 00:05:07,760 --> 00:05:11,240 Speaker 1: Spanish budget bill. It is difficult to get past next 91 00:05:11,240 --> 00:05:14,000 Speaker 1: week well and then not actually this week. It is 92 00:05:14,040 --> 00:05:16,200 Speaker 1: a bit more of time. But let me say that 93 00:05:16,320 --> 00:05:19,680 Speaker 1: the main features of the Spanish budget are very important. 94 00:05:19,680 --> 00:05:23,039 Speaker 1: First of all, reduction in deficit. We are really have 95 00:05:23,160 --> 00:05:26,560 Speaker 1: an ambitious target for reduction deficit. H the consolidation of 96 00:05:26,560 --> 00:05:28,840 Speaker 1: the growth. We will be growing more than the European 97 00:05:28,839 --> 00:05:32,080 Speaker 1: average for the fort in a row. Among the largest 98 00:05:32,080 --> 00:05:35,720 Speaker 1: European economy in Spain is the leading performer this year 99 00:05:35,760 --> 00:05:37,640 Speaker 1: will be as a mention for the four year in 100 00:05:37,640 --> 00:05:41,440 Speaker 1: a row. And then there is socialistic particular regard intentions 101 00:05:41,720 --> 00:05:43,719 Speaker 1: there have been some social groups that have been left 102 00:05:43,720 --> 00:05:46,760 Speaker 1: behind because of the economic crisis, and we try to 103 00:05:46,760 --> 00:05:49,560 Speaker 1: compete to that. So in political terms, I think there's 104 00:05:49,640 --> 00:05:52,479 Speaker 1: no reason for the rest of the political not to support. 105 00:05:52,680 --> 00:05:55,520 Speaker 1: We are still confident that this agreement with Minister were 106 00:05:55,560 --> 00:05:59,320 Speaker 1: Plumberg surveillance from London and from New York, wonderful coverage 107 00:05:59,680 --> 00:06:03,560 Speaker 1: of the crisis in Barcelona. The domestic politics of Spain. 108 00:06:04,000 --> 00:06:07,599 Speaker 1: Give us an update and how the nation is coming 109 00:06:07,600 --> 00:06:11,520 Speaker 1: together after the challenges that you saw in person. Well, 110 00:06:11,600 --> 00:06:15,560 Speaker 1: the nation assumation is coming together around the constitution and 111 00:06:15,600 --> 00:06:18,720 Speaker 1: are around the constitutional order. Spain is a fully modern 112 00:06:18,800 --> 00:06:22,640 Speaker 1: and advanced democracy. Around are very i would say respected 113 00:06:22,640 --> 00:06:26,400 Speaker 1: in the constitution. The polls, the latest polls, including from 114 00:06:26,440 --> 00:06:30,080 Speaker 1: the Catalan government itself, showed that the support from independence 115 00:06:30,120 --> 00:06:33,599 Speaker 1: is diminishing, and it's diminishing quite fast. Actually, we see 116 00:06:33,640 --> 00:06:36,840 Speaker 1: that in terms of the economic situation and the business situation, 117 00:06:36,920 --> 00:06:40,800 Speaker 1: the financial situation. Actually we'll see a clear recovery in 118 00:06:40,880 --> 00:06:43,760 Speaker 1: Catalonia after difficult months at the end of the year, 119 00:06:44,040 --> 00:06:46,599 Speaker 1: and we are calling for the Catalan government to be formed, 120 00:06:46,960 --> 00:06:49,440 Speaker 1: to have a majority in parliament and to go back 121 00:06:49,440 --> 00:06:52,760 Speaker 1: to normal relations with the national government. I think that 122 00:06:52,800 --> 00:06:55,640 Speaker 1: this is an extremely important economic area in Spain. It's 123 00:06:55,680 --> 00:06:58,960 Speaker 1: around twenty of the Spanish GDP and we want normal 124 00:06:59,000 --> 00:07:01,200 Speaker 1: relations to get restable. It's as responsible with the new 125 00:07:01,240 --> 00:07:04,880 Speaker 1: Catalan government so well, we want this to happen. And 126 00:07:05,640 --> 00:07:08,000 Speaker 1: let me say that with the current existing data, we 127 00:07:08,040 --> 00:07:11,760 Speaker 1: see that the business situation in Catalonia is recovering pretty much. Minister, 128 00:07:12,080 --> 00:07:15,000 Speaker 1: if we talk about European integration, so Marianna Avoy like 129 00:07:15,120 --> 00:07:18,520 Speaker 1: zero bounds, he likes the European budget and a finance minister, 130 00:07:19,000 --> 00:07:22,360 Speaker 1: what will Germany likely say or you know, push, push 131 00:07:22,440 --> 00:07:26,720 Speaker 1: through and watch the priorities be Our priorities is essentially 132 00:07:26,720 --> 00:07:30,320 Speaker 1: the completion of the missing parts of the economic and 133 00:07:30,400 --> 00:07:34,000 Speaker 1: monetary union. We have made a tremendous advance in the 134 00:07:34,040 --> 00:07:37,400 Speaker 1: last four years, probably more than people actually realize. We 135 00:07:37,480 --> 00:07:40,280 Speaker 1: have a single supervisory system, we have a single bank 136 00:07:40,360 --> 00:07:43,720 Speaker 1: resolution system, but there's still some missing parts. Namely, we 137 00:07:43,800 --> 00:07:46,920 Speaker 1: need a common the possible guaranty scheme. I mean, the 138 00:07:46,920 --> 00:07:50,240 Speaker 1: Americans have this for seventy eighty years, but we lack. 139 00:07:50,360 --> 00:07:53,640 Speaker 1: We still have national systems. We need a backstop for 140 00:07:53,800 --> 00:07:58,120 Speaker 1: the resolution system to really function in times of stress. 141 00:07:58,320 --> 00:08:01,440 Speaker 1: These are missing parts. So these are priorities. We think 142 00:08:01,520 --> 00:08:05,160 Speaker 1: that the Spanish government and we will publish next week 143 00:08:05,360 --> 00:08:07,760 Speaker 1: a paper on that we need a kind of physical 144 00:08:08,160 --> 00:08:12,120 Speaker 1: stabilization mechanism that we think will complement the monetary policy, 145 00:08:12,360 --> 00:08:14,920 Speaker 1: particularly in times of shocks and times of prise. As 146 00:08:14,960 --> 00:08:16,600 Speaker 1: we get it in our lifetime, we'll we even get 147 00:08:16,600 --> 00:08:19,200 Speaker 1: a banking union. I love you. It must be at 148 00:08:19,240 --> 00:08:23,600 Speaker 1: the end of them cynical. As you may see, I'm 149 00:08:23,640 --> 00:08:27,600 Speaker 1: a Europhile. We are used to have step by step process. 150 00:08:27,680 --> 00:08:30,200 Speaker 1: We used to have difficulties. We need to have a 151 00:08:30,360 --> 00:08:33,440 Speaker 1: quarreling between ourselves, arguing between ourselves. At the end of 152 00:08:33,480 --> 00:08:37,680 Speaker 1: the day, sometimes at the very latest moment, agreements are found. 153 00:08:37,960 --> 00:08:40,679 Speaker 1: This is the typical European way. So in this sense, 154 00:08:40,760 --> 00:08:44,240 Speaker 1: I think that we are optimistic. We are clearly pushing 155 00:08:44,320 --> 00:08:47,480 Speaker 1: for European integration. You will find in Spain one of 156 00:08:47,520 --> 00:08:50,680 Speaker 1: the countries which is pushing more for your pintanzization. Why 157 00:08:50,920 --> 00:08:53,679 Speaker 1: because our population is clearly in favor of the more 158 00:08:53,760 --> 00:08:56,400 Speaker 1: you in integration, and we think that we benefit from this. 159 00:08:56,760 --> 00:08:58,920 Speaker 1: In the historical sense, this maybe are if your remit, 160 00:08:59,000 --> 00:09:00,520 Speaker 1: but I'm going to take a risk here because you've 161 00:09:00,559 --> 00:09:02,480 Speaker 1: only been doing this for one month. There's going to 162 00:09:02,559 --> 00:09:04,920 Speaker 1: be a new e c V president here in a 163 00:09:05,040 --> 00:09:07,720 Speaker 1: year and a half or so, and there's a raging 164 00:09:07,760 --> 00:09:10,959 Speaker 1: debate that we observe in London and New York about well, 165 00:09:11,000 --> 00:09:13,800 Speaker 1: should it be German, should it be this, or should 166 00:09:13,800 --> 00:09:17,760 Speaker 1: it be that? What does Spain feel about the leadership 167 00:09:17,840 --> 00:09:20,120 Speaker 1: of the e c B and US Spain could fit 168 00:09:20,240 --> 00:09:23,280 Speaker 1: into that equation. What I will tell you is that 169 00:09:24,040 --> 00:09:27,640 Speaker 1: soft June July, the CP will have a brand new 170 00:09:27,760 --> 00:09:31,000 Speaker 1: vice president from Spain, which is my predecessor, which is 171 00:09:31,000 --> 00:09:34,480 Speaker 1: an extremely talented and respected economies and he would make 172 00:09:34,559 --> 00:09:37,079 Speaker 1: an impact. He will leave his mark in the working 173 00:09:37,120 --> 00:09:39,079 Speaker 1: of the e CP, so he'll be from rushould be 174 00:09:39,120 --> 00:09:41,760 Speaker 1: able to move right up. He will leave his mark 175 00:09:41,880 --> 00:09:44,240 Speaker 1: and his talents at the service of the works of 176 00:09:44,280 --> 00:09:46,880 Speaker 1: the CB. Apart from that, if you expect me to comment, 177 00:09:46,920 --> 00:09:49,800 Speaker 1: I will not at MR on Bankia it has to 178 00:09:49,800 --> 00:09:53,680 Speaker 1: be fully privatized by two thousand nineteen. Will that that 179 00:09:53,760 --> 00:09:57,559 Speaker 1: deadline stick Bank will be fully privatized. We don't think 180 00:09:57,559 --> 00:09:59,280 Speaker 1: that there is any role for the government to be 181 00:09:59,360 --> 00:10:02,000 Speaker 1: in the in all been banking, and that's clear the 182 00:10:02,040 --> 00:10:06,000 Speaker 1: government policy. Second, we want to be sure that the 183 00:10:06,040 --> 00:10:08,600 Speaker 1: money and the support that was given by the taxpayers 184 00:10:08,920 --> 00:10:11,600 Speaker 1: to the rescue, let's say, of the depositors of the 185 00:10:11,640 --> 00:10:15,600 Speaker 1: banks are to the maximum extent possible recovery. So these 186 00:10:15,640 --> 00:10:18,199 Speaker 1: are the two pillars of our policy. In the frame order, 187 00:10:18,200 --> 00:10:20,880 Speaker 1: these two pillars we will advance, but in mind that 188 00:10:21,120 --> 00:10:23,719 Speaker 1: banking will be privatized, because we do not see any 189 00:10:23,840 --> 00:10:27,000 Speaker 1: role of public own banks. Minister, thank you so much 190 00:10:27,000 --> 00:10:29,760 Speaker 1: for joining for our net World Bank special. That was 191 00:10:30,200 --> 00:10:47,920 Speaker 1: the Spanish Economy Minister. He's Roman Escolano. David Lipton is 192 00:10:47,960 --> 00:10:51,680 Speaker 1: the American representative. He has four titles here, but usually 193 00:10:51,760 --> 00:10:55,000 Speaker 1: to Medroow McCard. He's the important number two. Many of 194 00:10:55,040 --> 00:10:58,160 Speaker 1: you will know John Lipsky of another time in play, 195 00:10:58,240 --> 00:11:01,640 Speaker 1: serving in the same important dude, He's Ductr Lifton. Wonderful 196 00:11:01,679 --> 00:11:03,520 Speaker 1: to see you again. What do you do every day 197 00:11:03,559 --> 00:11:06,959 Speaker 1: for Madame Leguarde? What's the real job of the first 198 00:11:07,000 --> 00:11:10,760 Speaker 1: deputy director to manage the staff and the work of 199 00:11:10,760 --> 00:11:14,760 Speaker 1: the staff and make sure that everybody is uh doing 200 00:11:14,760 --> 00:11:17,560 Speaker 1: what they've got to be doing. Thinking about the policy, 201 00:11:17,640 --> 00:11:20,200 Speaker 1: the strategy and the crisis situations. We give us the 202 00:11:20,240 --> 00:11:25,160 Speaker 1: stereotype of one PhD making the Green Book, the Blue Book, 203 00:11:25,280 --> 00:11:27,800 Speaker 1: the Fiscal Book. Give us an example of who that 204 00:11:27,920 --> 00:11:30,520 Speaker 1: PhD is. It's giving you your brain power. You know, 205 00:11:30,600 --> 00:11:32,560 Speaker 1: we've got people from all around the world. They're the 206 00:11:32,920 --> 00:11:36,920 Speaker 1: very well educated PhD economists. But what separates them from 207 00:11:36,920 --> 00:11:41,240 Speaker 1: others is we are clinical economics. We're gonna go economists, 208 00:11:41,280 --> 00:11:43,679 Speaker 1: meaning you have to practice what you preach. It has 209 00:11:43,720 --> 00:11:45,920 Speaker 1: to not just work in theory, it has to work 210 00:11:45,920 --> 00:11:48,400 Speaker 1: in practice. And these are people who've been doing this 211 00:11:48,480 --> 00:11:52,520 Speaker 1: around the world, in real world situations, dealing with the 212 00:11:52,600 --> 00:11:55,120 Speaker 1: actual problems, and the leaders who have to bring about 213 00:11:55,160 --> 00:11:58,080 Speaker 1: the changes. The zeitgeist of the nineteen fifties and nineteen 214 00:11:58,160 --> 00:12:01,280 Speaker 1: sixties I m F was maybe over week, over a quarter, 215 00:12:01,440 --> 00:12:04,280 Speaker 1: maybe out six months. The zeitgeist now is one or 216 00:12:04,320 --> 00:12:07,000 Speaker 1: two days. How do you see here within these spring media, Well, 217 00:12:07,040 --> 00:12:10,360 Speaker 1: we have to be agile. What everyone is saying this week, 218 00:12:10,480 --> 00:12:14,000 Speaker 1: one way or another is very simple. Things are good, 219 00:12:14,280 --> 00:12:18,280 Speaker 1: but they're getting risky. And our message, of course, is 220 00:12:18,400 --> 00:12:21,080 Speaker 1: in that kind of setting, while things are still good, 221 00:12:21,400 --> 00:12:25,120 Speaker 1: it's time to try to prolong this recovery in ways 222 00:12:25,200 --> 00:12:28,640 Speaker 1: that will be sustainable and prepare for those risks, try 223 00:12:28,679 --> 00:12:31,520 Speaker 1: to lessen the risks and be in a better position 224 00:12:31,559 --> 00:12:34,080 Speaker 1: to deal with them if they materialize. You have a 225 00:12:34,120 --> 00:12:37,960 Speaker 1: beautiful social media effort. I can tell you that in 226 00:12:38,000 --> 00:12:41,040 Speaker 1: the bars now, maybe Arsenal football with the British continue 227 00:12:41,160 --> 00:12:43,520 Speaker 1: today will be different. But in the bars of the 228 00:12:43,559 --> 00:12:47,439 Speaker 1: I M F of cocktails, there is one video people 229 00:12:47,480 --> 00:12:50,800 Speaker 1: are looking at, and it's the debt video of all 230 00:12:50,880 --> 00:12:54,240 Speaker 1: the nations with improving debt structure, and there's one nation 231 00:12:54,320 --> 00:12:57,319 Speaker 1: with a red bar, and it's the United States of America. 232 00:12:57,640 --> 00:13:01,760 Speaker 1: Is the United States of America's saving for a rainy day? Well, look, 233 00:13:01,880 --> 00:13:03,920 Speaker 1: there are debt issues all around the world. The key 234 00:13:03,960 --> 00:13:06,800 Speaker 1: number you're referring to is a hundred and sixty four trillion. 235 00:13:07,160 --> 00:13:10,280 Speaker 1: That's a big number. That's more than twice global GDP. 236 00:13:10,559 --> 00:13:12,720 Speaker 1: So there are a range of countries around the world 237 00:13:13,400 --> 00:13:16,160 Speaker 1: that will not have the buffers, will not have the 238 00:13:16,200 --> 00:13:19,040 Speaker 1: space and room to maneuver if something goes wrong, and 239 00:13:19,080 --> 00:13:22,480 Speaker 1: so they should be doing something about that, trying to 240 00:13:22,640 --> 00:13:26,120 Speaker 1: rebuild space. The United States is in that category. It's 241 00:13:26,160 --> 00:13:28,280 Speaker 1: important and we've been saying this for years that the 242 00:13:28,400 --> 00:13:33,880 Speaker 1: US soon reduces the budget deficit and tries to get 243 00:13:33,880 --> 00:13:37,240 Speaker 1: the debt to GDP ratio to come down because you 244 00:13:37,320 --> 00:13:40,640 Speaker 1: never know what will happen tomorrow. The arch theory for 245 00:13:40,720 --> 00:13:43,559 Speaker 1: all Americans and frankly for many in the advanced economy 246 00:13:44,040 --> 00:13:48,280 Speaker 1: is growth will solve everything within your forecast in the 247 00:13:48,360 --> 00:13:52,199 Speaker 1: blue book, your World Economic Outlook. Thank you, Marie Sobsfeld. 248 00:13:52,480 --> 00:13:54,840 Speaker 1: Can you yank it over to the brown book the 249 00:13:54,880 --> 00:13:58,240 Speaker 1: fiscal space and say the growths will be there for 250 00:13:58,320 --> 00:14:02,760 Speaker 1: every unique story, include in the United States. Well, we 251 00:14:03,120 --> 00:14:06,360 Speaker 1: would like to see people countries, all of our member 252 00:14:06,400 --> 00:14:11,560 Speaker 1: countries try to take steps to improve growth in the 253 00:14:11,600 --> 00:14:13,720 Speaker 1: medium term, because this is a cycle and you have 254 00:14:13,760 --> 00:14:15,960 Speaker 1: to look over the crest of the hill and see 255 00:14:16,000 --> 00:14:18,960 Speaker 1: what's going to come. And we believe that actually potential 256 00:14:19,000 --> 00:14:22,320 Speaker 1: growth will be somewhat lower in the future, uh than 257 00:14:22,400 --> 00:14:24,080 Speaker 1: it's been in the past. So they will have to 258 00:14:24,120 --> 00:14:29,560 Speaker 1: be affirmative steps through infrastructure and structural reforms to improve 259 00:14:30,200 --> 00:14:33,000 Speaker 1: the growth prospects. But I would say that there are 260 00:14:33,200 --> 00:14:35,920 Speaker 1: there are there are new wild cards on the horizons. 261 00:14:35,960 --> 00:14:40,520 Speaker 1: I think example, well, the three subjects non traditional subjects 262 00:14:40,520 --> 00:14:43,880 Speaker 1: in a sense, that are on everyone's minds this week 263 00:14:43,960 --> 00:14:47,920 Speaker 1: are the three t s, Trade, technology, and trust. Trade 264 00:14:48,000 --> 00:14:50,840 Speaker 1: is a semi traditional subject because it used to be 265 00:14:50,880 --> 00:14:53,360 Speaker 1: a big deal. But everyone's been in agreement for years 266 00:14:53,720 --> 00:14:56,520 Speaker 1: that there should be liberal trade. We need to on trade. 267 00:14:56,720 --> 00:14:59,960 Speaker 1: We need to pivot from where we are. Two country 268 00:15:00,080 --> 00:15:03,600 Speaker 1: is that have gained from globalization and know their future 269 00:15:03,680 --> 00:15:07,240 Speaker 1: is linked to globalization, but are now big enough to matter. 270 00:15:07,840 --> 00:15:12,080 Speaker 1: They need to be thinking about opening up their own economies. 271 00:15:12,440 --> 00:15:15,080 Speaker 1: And at the same time, the United States needs to 272 00:15:15,120 --> 00:15:19,880 Speaker 1: be letting go of uh unilateral pressures to achieve its 273 00:15:19,920 --> 00:15:22,440 Speaker 1: goals here at the here, at these meetings, people are 274 00:15:22,520 --> 00:15:27,480 Speaker 1: really now talking about all together trying to find ways 275 00:15:27,960 --> 00:15:34,160 Speaker 1: to shift to more market access, more competition. Countries are 276 00:15:34,200 --> 00:15:37,000 Speaker 1: now strong enough to open themselves up to competition. They 277 00:15:37,040 --> 00:15:40,240 Speaker 1: will all gain the template. This is so important, David. 278 00:15:40,280 --> 00:15:44,600 Speaker 1: The template here is a multilateral effort in this idea 279 00:15:44,720 --> 00:15:48,960 Speaker 1: of trust butter stuff against an America with the president 280 00:15:49,000 --> 00:15:53,400 Speaker 1: who is to be kind bilateral, maybe unilateral, or maybe 281 00:15:53,440 --> 00:15:56,920 Speaker 1: my way or the highway. How do you draw the 282 00:15:57,000 --> 00:16:01,800 Speaker 1: present administration into a more success us full trust relationship. 283 00:16:02,040 --> 00:16:04,880 Speaker 1: I think that are politically the breakdown and trust is 284 00:16:05,000 --> 00:16:08,840 Speaker 1: very is very broad in the United States, in Europe. 285 00:16:08,840 --> 00:16:15,200 Speaker 1: In many places, trust is um between international partners. Trust 286 00:16:15,240 --> 00:16:19,520 Speaker 1: in national institutions is diminished. And I think that's a problem. 287 00:16:19,720 --> 00:16:22,560 Speaker 1: The way it has to work is that people cooperate 288 00:16:22,680 --> 00:16:26,560 Speaker 1: and show that cooperation leads to gains, and then you 289 00:16:26,640 --> 00:16:28,960 Speaker 1: start to rebuild a sense that there is something to 290 00:16:29,000 --> 00:16:31,760 Speaker 1: be achieved together. I was talking to Jason Furman about 291 00:16:31,760 --> 00:16:35,080 Speaker 1: the wonderful economist Robert Barrow and the trust over time 292 00:16:35,640 --> 00:16:38,800 Speaker 1: are we destroying within your study of trust at the IMF, 293 00:16:39,080 --> 00:16:41,840 Speaker 1: I did a panel on this, and Dr Lipton will 294 00:16:41,880 --> 00:16:45,160 Speaker 1: do a panel on this as well. Do large deficits, 295 00:16:45,320 --> 00:16:49,600 Speaker 1: do burgeoning debt over the long term, they must destroy 296 00:16:50,120 --> 00:16:54,480 Speaker 1: institutional and societal trust, which I think the globalization and 297 00:16:54,520 --> 00:17:00,200 Speaker 1: the dislocation, the financial crisis, technology, all of the as 298 00:17:00,200 --> 00:17:03,720 Speaker 1: things have led to an erosion of trust. People don't 299 00:17:03,720 --> 00:17:07,959 Speaker 1: believe that institutions government has taken care of them, and 300 00:17:08,000 --> 00:17:11,600 Speaker 1: so there's globalization. Uh, you know, we've been saying this 301 00:17:11,680 --> 00:17:14,760 Speaker 1: for years. Globalization has to be managed in a way 302 00:17:14,800 --> 00:17:16,800 Speaker 1: that it is going to be durable. You have to 303 00:17:16,880 --> 00:17:20,840 Speaker 1: deal with the dislocations that come from globalization. And I think, 304 00:17:21,160 --> 00:17:23,080 Speaker 1: as you're saying, you have to make sure that you 305 00:17:23,119 --> 00:17:26,960 Speaker 1: maintain stability. Because the financial crisis was the biggest destroyer 306 00:17:27,359 --> 00:17:30,800 Speaker 1: of trust. We've not really we've recovered in the sense 307 00:17:30,800 --> 00:17:34,160 Speaker 1: that people trust financial institutions because we did a huge 308 00:17:34,200 --> 00:17:37,200 Speaker 1: reform to make banks safe again. But more broadly, it's 309 00:17:37,320 --> 00:17:41,919 Speaker 1: very important to maintain uh stability of public finances in 310 00:17:42,040 --> 00:17:46,480 Speaker 1: order to that people will trust in their governments. Within 311 00:17:46,600 --> 00:17:50,439 Speaker 1: this is China, and within this is a trade This 312 00:17:50,480 --> 00:17:53,440 Speaker 1: has been a wonderful discussion centered on the United States, 313 00:17:53,840 --> 00:17:56,879 Speaker 1: but there are changes in the Pacific room, their changes 314 00:17:56,920 --> 00:18:00,440 Speaker 1: in China, and maybe the dialogue into May is about 315 00:18:00,520 --> 00:18:03,640 Speaker 1: t p P. The President swings back and forth. Who 316 00:18:03,640 --> 00:18:06,840 Speaker 1: knows where the President will be on t PP review. 317 00:18:06,960 --> 00:18:11,760 Speaker 1: The I m F stands on the efficacy the benefits 318 00:18:11,800 --> 00:18:15,760 Speaker 1: that all can see from TPP, even the China potentially 319 00:18:15,760 --> 00:18:18,359 Speaker 1: excluded from it. I mean at the root is the 320 00:18:18,440 --> 00:18:23,480 Speaker 1: proposition that we still can gain from more interconnectedness and 321 00:18:23,480 --> 00:18:25,520 Speaker 1: that that's key to the future of the of the 322 00:18:25,560 --> 00:18:29,400 Speaker 1: Asia Pacific region UM and I think that that there's 323 00:18:29,440 --> 00:18:34,040 Speaker 1: there's certainly having high standard trade agreements where there can 324 00:18:34,080 --> 00:18:38,960 Speaker 1: be a deepening of links and countries can open themselves 325 00:18:39,080 --> 00:18:42,560 Speaker 1: up to competition and everyone gains from competition. It's a positive. 326 00:18:42,640 --> 00:18:45,919 Speaker 1: Some game is important. It's been a shame that the 327 00:18:46,000 --> 00:18:49,240 Speaker 1: United States hasn't found yet found a way to participate 328 00:18:49,240 --> 00:18:51,520 Speaker 1: in that, because the United States could be a real 329 00:18:51,640 --> 00:18:55,080 Speaker 1: driver of growth. David lefton thank you for this spirited 330 00:18:55,119 --> 00:18:58,880 Speaker 1: conversation that they of course with the International Monetary Fund. 331 00:19:12,240 --> 00:19:14,240 Speaker 1: On behalf of Tom and I am now a spokesman. 332 00:19:14,320 --> 00:19:16,159 Speaker 1: We say good morning to you for the second day 333 00:19:16,200 --> 00:19:18,560 Speaker 1: of coverage from the world back I m F meetings 334 00:19:18,600 --> 00:19:21,120 Speaker 1: here in Washington, d C. An interview that we've both 335 00:19:21,160 --> 00:19:24,320 Speaker 1: been looking forward to all week is speaking to the 336 00:19:24,359 --> 00:19:27,160 Speaker 1: e Commissioner for Monetary and Physical Affairs here is Mr 337 00:19:27,200 --> 00:19:30,800 Speaker 1: piamos Covic and joins US now Commissioner. When you look 338 00:19:30,840 --> 00:19:33,840 Speaker 1: at what Europe wants, a lot of countries want more integration. 339 00:19:33,960 --> 00:19:38,000 Speaker 1: Others want to maybe toned down the integration. What are 340 00:19:38,000 --> 00:19:40,800 Speaker 1: the Germans as are they getting a little bit more 341 00:19:40,840 --> 00:19:43,840 Speaker 1: cold feet than maybe six months ago on banking on 342 00:19:43,960 --> 00:19:47,440 Speaker 1: capital markets, union and getting closer together? Well, it took 343 00:19:47,480 --> 00:19:51,040 Speaker 1: time after the elections for the German government to be formed. 344 00:19:51,720 --> 00:19:54,280 Speaker 1: It has been done recently. The country is may be 345 00:19:54,400 --> 00:19:56,959 Speaker 1: more divided than it used to be. It has its 346 00:19:57,000 --> 00:20:01,439 Speaker 1: own cultural stability. The political lens is quite difficult to 347 00:20:01,480 --> 00:20:05,520 Speaker 1: strike and this can explain why I wouldn't say they're reluctant, 348 00:20:05,560 --> 00:20:08,840 Speaker 1: but they are careful. But I think that they need 349 00:20:08,880 --> 00:20:12,960 Speaker 1: to understand that the situation Europe is as well positive 350 00:20:13,119 --> 00:20:16,920 Speaker 1: for the economy and complex politically, and that they need 351 00:20:16,960 --> 00:20:20,720 Speaker 1: to take their responsibility as economic leaders and to show 352 00:20:20,760 --> 00:20:24,560 Speaker 1: that well, their tradition of risk reduction must be respected, 353 00:20:24,920 --> 00:20:27,560 Speaker 1: but that they also need to show solidarity, and that 354 00:20:27,640 --> 00:20:31,959 Speaker 1: means also taking Mr mccon's and the Commission's hand in 355 00:20:32,040 --> 00:20:35,600 Speaker 1: order to reinforce the Economic and Monetary Union to have 356 00:20:35,640 --> 00:20:38,960 Speaker 1: a Eurozone which is stronger for all its members, and 357 00:20:39,000 --> 00:20:42,360 Speaker 1: also to recreate the tools to converge for our economies 358 00:20:42,400 --> 00:20:45,760 Speaker 1: to reduce inequalities A commissioner, can any good come of 359 00:20:45,760 --> 00:20:48,280 Speaker 1: of the trade ward a possible trade war between the 360 00:20:48,400 --> 00:20:50,920 Speaker 1: U S and China, And I'm not talking about economically, 361 00:20:51,000 --> 00:20:53,360 Speaker 1: but we've heard in the last eighteen months twenty four 362 00:20:53,400 --> 00:20:57,439 Speaker 1: months that European countries lacked commonality. Now they have something 363 00:20:57,480 --> 00:21:02,639 Speaker 1: to try and avoid together up. You cannot define yourself 364 00:21:02,840 --> 00:21:07,040 Speaker 1: against another one, but we must not be divided by that. 365 00:21:07,480 --> 00:21:12,040 Speaker 1: There is no French, German, Italian interesting that as far 366 00:21:12,080 --> 00:21:15,240 Speaker 1: as trade is concerned, we are all together. The Commission 367 00:21:15,400 --> 00:21:20,320 Speaker 1: is responsible for negotiating on trade. My colleague Manstrom is 368 00:21:20,440 --> 00:21:22,719 Speaker 1: in charge of that. I will meet Phil Burass in 369 00:21:22,760 --> 00:21:26,040 Speaker 1: a few minutes. I met yesterday Stephen Millucin. I saw 370 00:21:26,119 --> 00:21:28,520 Speaker 1: people in the White House, and I think that we 371 00:21:28,600 --> 00:21:32,359 Speaker 1: must get down on the tone on that trade. War 372 00:21:32,760 --> 00:21:36,960 Speaker 1: is as every war, it's bad, nothing, nobody wins, it's 373 00:21:37,040 --> 00:21:40,680 Speaker 1: lose lose, and we need to find protectionism. Here. We 374 00:21:40,760 --> 00:21:43,480 Speaker 1: are in the temple of multilateralism. Will be in a 375 00:21:43,560 --> 00:21:47,520 Speaker 1: gwenty meeting in a few seconds, and there we must 376 00:21:47,560 --> 00:21:50,720 Speaker 1: say protection is m is not a solution, it is 377 00:21:50,760 --> 00:21:53,159 Speaker 1: a problem, and we must do that all together. But 378 00:21:53,280 --> 00:21:56,359 Speaker 1: that's not enough for Europe. For Europe, we really need 379 00:21:56,480 --> 00:22:00,359 Speaker 1: to integrate more where it's necessary, not everywhere. I'm not 380 00:22:00,480 --> 00:22:03,959 Speaker 1: asking for a federal Europe, but I'm saying there are 381 00:22:04,080 --> 00:22:10,280 Speaker 1: items such as migration, trade that you mentioned, monetary union 382 00:22:11,000 --> 00:22:13,320 Speaker 1: on which we must make decisive progress in order to 383 00:22:13,359 --> 00:22:18,600 Speaker 1: have more investment, to have a better and stronger growth 384 00:22:18,680 --> 00:22:22,520 Speaker 1: for the future. Secretary Molutions also giving you the gift 385 00:22:22,600 --> 00:22:25,760 Speaker 1: of a trillion dollar deficit, and it seems like chronic 386 00:22:26,000 --> 00:22:30,280 Speaker 1: trillion dollar American deficits. How does that affect your your 387 00:22:30,359 --> 00:22:33,520 Speaker 1: inner recovery? And yet the story of this IMF as 388 00:22:33,560 --> 00:22:38,000 Speaker 1: a US it has a tone of fiscal irresponsibility. How 389 00:22:38,080 --> 00:22:41,199 Speaker 1: does that affect era well? Without short term effects, make 390 00:22:41,240 --> 00:22:44,439 Speaker 1: pro commically long term effects that we cannot really falsey, 391 00:22:44,800 --> 00:22:46,959 Speaker 1: and there are political effects. For the short term effects, 392 00:22:47,040 --> 00:22:51,080 Speaker 1: they are positive since the American growth is picking up, 393 00:22:51,800 --> 00:22:55,480 Speaker 1: and with a booming American economy, it's good for the 394 00:22:55,520 --> 00:22:58,720 Speaker 1: rest of the world because we are partners a lies, 395 00:22:58,880 --> 00:23:01,159 Speaker 1: we exchange together. There is no trade war for the 396 00:23:01,240 --> 00:23:05,520 Speaker 1: time being, so that's good for the medium term. As always, 397 00:23:05,680 --> 00:23:07,560 Speaker 1: when you've got to high debt and a high deficit, 398 00:23:07,680 --> 00:23:12,520 Speaker 1: you need to watch that carefully to avoid imbalances. And 399 00:23:12,680 --> 00:23:15,480 Speaker 1: this is not only for Europe, this is worldwide. Politically, 400 00:23:16,280 --> 00:23:20,120 Speaker 1: our situation is not the same. We have a high debt. 401 00:23:20,359 --> 00:23:22,960 Speaker 1: We don't have the privilege of having the world currency, 402 00:23:23,000 --> 00:23:26,320 Speaker 1: which is the dollar, so we must still be careful 403 00:23:26,400 --> 00:23:30,240 Speaker 1: about our public and private debt. And as Mara Lagal said, 404 00:23:31,200 --> 00:23:33,959 Speaker 1: debt is still the problem for the future. The two 405 00:23:34,040 --> 00:23:36,800 Speaker 1: main risks for growth, which is now very solid all 406 00:23:36,840 --> 00:23:39,680 Speaker 1: over the world are on the one hand, protectionism and 407 00:23:39,880 --> 00:23:44,720 Speaker 1: trade attentions, and on the other hand, debt and our 408 00:23:45,119 --> 00:23:47,960 Speaker 1: pop culture in Europe must not change. We must reduce 409 00:23:48,040 --> 00:23:51,479 Speaker 1: debts because without question, without that, we cannot finance our 410 00:23:51,480 --> 00:23:54,000 Speaker 1: public It's it easier to actually sell austerity to the 411 00:23:54,080 --> 00:23:58,480 Speaker 1: Europeans than it is to the US. As a political 412 00:23:58,720 --> 00:24:01,879 Speaker 1: ewer politician before do we talk about it differently? And 413 00:24:01,960 --> 00:24:04,760 Speaker 1: this was a point town that you today about austerity 414 00:24:06,480 --> 00:24:09,960 Speaker 1: was I was not a politician. I'm still a political appointee. 415 00:24:10,400 --> 00:24:15,080 Speaker 1: Being a commissioner is being a political appointee. Uh. And 416 00:24:15,200 --> 00:24:18,399 Speaker 1: so I think about that politically. I never was in 417 00:24:18,480 --> 00:24:23,280 Speaker 1: favor of austerity. Austerity is when you become poor and 418 00:24:23,359 --> 00:24:26,639 Speaker 1: you cannot develop public services, you cannot invest. You need 419 00:24:26,680 --> 00:24:30,000 Speaker 1: to be serious, and that's somehow different. That means that 420 00:24:30,119 --> 00:24:31,720 Speaker 1: you need to reduce your debt, you need to reduce 421 00:24:31,760 --> 00:24:34,200 Speaker 1: your deficits. Our rules are there for that, but you 422 00:24:34,280 --> 00:24:37,399 Speaker 1: can also apply these rules with flexibility. And that's what 423 00:24:37,600 --> 00:24:42,080 Speaker 1: we've done. We We never punished or or made constraints 424 00:24:42,359 --> 00:24:44,439 Speaker 1: to one of our member states need a Portugal, need 425 00:24:44,480 --> 00:24:48,040 Speaker 1: to Spain, neither Italy, neither France. And this was positive 426 00:24:48,080 --> 00:24:50,639 Speaker 1: because at the same time they reduced that debt. The 427 00:24:50,800 --> 00:24:56,000 Speaker 1: average deficit per year is under one percent in Europe. Uh. 428 00:24:56,280 --> 00:25:00,000 Speaker 1: And that is getting down and we did that without Austere. 429 00:25:01,640 --> 00:25:03,640 Speaker 1: That's the same case with Greece. I hope that now 430 00:25:04,160 --> 00:25:06,520 Speaker 1: in a few moments will have grease out of its 431 00:25:06,600 --> 00:25:11,800 Speaker 1: program because well, being serious must not damage growth. And 432 00:25:12,080 --> 00:25:14,359 Speaker 1: that's that balance is the one we are looking for. 433 00:25:14,560 --> 00:25:16,000 Speaker 1: You mentioned here at the I m F, in this 434 00:25:16,080 --> 00:25:21,240 Speaker 1: beautiful atrium, the temple of multilateralism great four blocks down 435 00:25:21,359 --> 00:25:23,600 Speaker 1: is a temple of my way or the highway. How 436 00:25:23,680 --> 00:25:27,639 Speaker 1: does Europe adapt to President Trump in his claim of 437 00:25:27,720 --> 00:25:31,280 Speaker 1: a bilateral discussion which everyone agrees is my way or 438 00:25:31,320 --> 00:25:34,119 Speaker 1: the highway? Do you wait out the president of the 439 00:25:34,200 --> 00:25:39,000 Speaker 1: United States? Or do you sense a structural change in 440 00:25:39,119 --> 00:25:43,240 Speaker 1: American negotiations with its allies. That's the least we can say. 441 00:25:44,160 --> 00:25:46,560 Speaker 1: The change with President Trump and his team is huge. 442 00:25:47,280 --> 00:25:53,240 Speaker 1: Uh and well, when the words I pronounced multilateralism, refusal 443 00:25:53,280 --> 00:25:57,720 Speaker 1: of protectionism, fighting climate change, it's not really in the 444 00:25:57,800 --> 00:26:02,560 Speaker 1: vocabulary and in the culture of this administration. So we 445 00:26:02,680 --> 00:26:05,159 Speaker 1: know that we need to to defend our own values. 446 00:26:06,160 --> 00:26:09,840 Speaker 1: I don't mean against Trump. Europe cannot be built against Trump, 447 00:26:10,000 --> 00:26:12,600 Speaker 1: but for our own sake. But at the same time, 448 00:26:13,040 --> 00:26:15,960 Speaker 1: we have to negotiate, We have to discuss with the administration. 449 00:26:16,080 --> 00:26:18,960 Speaker 1: Here I meet everybody and we are trying to establish 450 00:26:19,040 --> 00:26:24,159 Speaker 1: with them the best possible discussion climate. But longer term, 451 00:26:24,240 --> 00:26:26,480 Speaker 1: could this actually hurt growth? And I'm not talking about 452 00:26:26,560 --> 00:26:29,240 Speaker 1: US growth. I'm talking about US growth and world growth 453 00:26:29,320 --> 00:26:32,679 Speaker 1: and therefore European growth. I said, there is short term 454 00:26:32,720 --> 00:26:35,960 Speaker 1: effect which is positive, and medium term effects have to 455 00:26:36,080 --> 00:26:40,760 Speaker 1: be certainly ablibrated. First, we need to avoid the fact 456 00:26:40,800 --> 00:26:43,520 Speaker 1: that at one moment the economy seems to be overeated. 457 00:26:44,640 --> 00:26:48,680 Speaker 1: And the second thing is protectionism is really a pain 458 00:26:48,800 --> 00:26:52,760 Speaker 1: for the economy for various reasons, uh for itself, but 459 00:26:52,880 --> 00:26:56,120 Speaker 1: also for the climate, for what the message it sends 460 00:26:56,200 --> 00:27:00,480 Speaker 1: to markets who don't like this, for the risk of voluntiny. No, 461 00:27:01,280 --> 00:27:03,639 Speaker 1: I'm quite sure. Here in Washington, I told you that 462 00:27:03,800 --> 00:27:06,480 Speaker 1: we are different from the Trump administration by all means, 463 00:27:06,880 --> 00:27:09,480 Speaker 1: but at the same time we respect them the legitimate 464 00:27:09,560 --> 00:27:11,720 Speaker 1: here they've been elected and they were in the country. 465 00:27:12,160 --> 00:27:15,159 Speaker 1: And so I think the messages we are trying to 466 00:27:15,280 --> 00:27:17,880 Speaker 1: define together and again I met a few of them, 467 00:27:18,600 --> 00:27:22,159 Speaker 1: are that we need to avoid that trade war, that 468 00:27:22,440 --> 00:27:25,800 Speaker 1: finally we need to refuse protectionism, That we need to 469 00:27:25,880 --> 00:27:29,199 Speaker 1: defend free trade, even an organized free trade. We need 470 00:27:29,280 --> 00:27:32,119 Speaker 1: certain need to resolve some problems. The over capacity is 471 00:27:32,200 --> 00:27:34,960 Speaker 1: still in China our problem, but we need to resolve 472 00:27:35,000 --> 00:27:37,400 Speaker 1: them together. But in twenty seconds, so you're saying those 473 00:27:37,480 --> 00:27:39,400 Speaker 1: U S officials told you that actually they were ready 474 00:27:39,440 --> 00:27:42,440 Speaker 1: to ratch it down the rhetoric. I wouldn't say that. 475 00:27:42,480 --> 00:27:45,040 Speaker 1: I'm not a spokesman, but I feel that the climate 476 00:27:45,560 --> 00:27:49,160 Speaker 1: is a climate of exchange of use, not of imposing views, 477 00:27:49,440 --> 00:27:55,439 Speaker 1: neither of confronting views. And that's true dialogue, dialogue between 478 00:27:55,560 --> 00:27:59,760 Speaker 1: different people thinking differently, that we will find a way. Almost. 479 00:28:00,160 --> 00:28:13,160 Speaker 1: Thank you so much. Yes, we are here. It's stay 480 00:28:13,200 --> 00:28:15,320 Speaker 1: two of our coverage and I am delighted to be 481 00:28:15,440 --> 00:28:19,280 Speaker 1: joined by the French finance minister. He is Mr and 482 00:28:19,400 --> 00:28:22,800 Speaker 1: he joins us now to talk about reforms that tariffs. 483 00:28:22,880 --> 00:28:25,159 Speaker 1: Trade minister, thank you for giving a little bit of 484 00:28:25,200 --> 00:28:27,960 Speaker 1: your time to Bloomberg. How word are you that a 485 00:28:28,119 --> 00:28:33,119 Speaker 1: trade tensions escalate into trade war. I'm rorried because I 486 00:28:33,280 --> 00:28:35,560 Speaker 1: think that there is a risk of having a tad 487 00:28:35,640 --> 00:28:40,760 Speaker 1: war between the United States and China, between the United 488 00:28:40,840 --> 00:28:43,240 Speaker 1: States and the rest of the world, and I really 489 00:28:43,320 --> 00:28:46,680 Speaker 1: think that we should do our best to avoid that 490 00:28:47,160 --> 00:28:51,400 Speaker 1: tad war, which would lead to a less growth, lesser 491 00:28:51,720 --> 00:28:56,120 Speaker 1: employment and more job political difficulties. But in the more 492 00:28:56,160 --> 00:29:00,320 Speaker 1: immediate term, it's about also convincing the US so not 493 00:29:00,480 --> 00:29:05,360 Speaker 1: to impose terrors on Still for the moment, we cannot 494 00:29:05,480 --> 00:29:10,320 Speaker 1: accept France and Europe to be hit by new terrorists 495 00:29:10,480 --> 00:29:14,320 Speaker 1: coming from the United States. And what we really want 496 00:29:15,040 --> 00:29:19,720 Speaker 1: is a full and permanent exemptions for the EU of 497 00:29:20,000 --> 00:29:23,600 Speaker 1: the new American terrorists. We are allies and we cannot 498 00:29:23,680 --> 00:29:28,120 Speaker 1: understand that kind of policy which might jeopardize growth and 499 00:29:28,240 --> 00:29:32,240 Speaker 1: private companies, either in France or in other Upan states. 500 00:29:32,320 --> 00:29:35,000 Speaker 1: So we are waiting. I want to be very clear 501 00:29:35,080 --> 00:29:38,760 Speaker 1: on that we are waiting for a full and permanent 502 00:29:38,840 --> 00:29:43,800 Speaker 1: exemptions from the American terrifs on Europe. Do you think 503 00:29:43,920 --> 00:29:46,040 Speaker 1: that you will get some kind of indication that the 504 00:29:46,200 --> 00:29:49,000 Speaker 1: US will be willing to grant you that today? I hope. So. 505 00:29:49,400 --> 00:29:53,480 Speaker 1: I've been very clear with Steven Minuchine. We have a 506 00:29:53,600 --> 00:29:57,040 Speaker 1: very good relationship, and I think that it allows us 507 00:29:57,120 --> 00:30:00,320 Speaker 1: to have very clear and very frank discussion on that 508 00:30:00,480 --> 00:30:03,640 Speaker 1: question of trade. I will have also important meetings on 509 00:30:03,760 --> 00:30:07,280 Speaker 1: Monday in Washington during the state visit of McCool to 510 00:30:07,360 --> 00:30:13,320 Speaker 1: the United States with Bilbo House and with Mr Yser, 511 00:30:13,760 --> 00:30:16,840 Speaker 1: and I hope that they will understand that we are allied, 512 00:30:17,160 --> 00:30:20,520 Speaker 1: the United States and France. The United States and Upian 513 00:30:20,600 --> 00:30:24,560 Speaker 1: countries are allied, and we cannot understand that between allies 514 00:30:24,960 --> 00:30:30,120 Speaker 1: there are such trade coming from Newtais on steel an aluminium. 515 00:30:30,520 --> 00:30:32,840 Speaker 1: Would that be the main message also from President Loco 516 00:30:32,960 --> 00:30:35,600 Speaker 1: when it comes to Washington next week or will there 517 00:30:35,640 --> 00:30:38,880 Speaker 1: be also talk about, you know, digital technologies. Says that 518 00:30:38,920 --> 00:30:41,720 Speaker 1: will be other topics, of course, but that question of 519 00:30:42,200 --> 00:30:46,400 Speaker 1: trade will be really one of the important questions that 520 00:30:46,520 --> 00:30:49,320 Speaker 1: will be raised during the state visit of McCoo to 521 00:30:49,600 --> 00:30:53,440 Speaker 1: the United States. United States, and I want to see 522 00:30:53,520 --> 00:30:57,600 Speaker 1: the opportunity although G twenty and just seven meetings here 523 00:30:57,680 --> 00:31:01,600 Speaker 1: in Washington to explain the pot called position of France 524 00:31:02,040 --> 00:31:05,520 Speaker 1: and of all Upan countries. We are allied, we want 525 00:31:05,600 --> 00:31:08,520 Speaker 1: at full and permanent exemption and we do not want 526 00:31:08,560 --> 00:31:12,160 Speaker 1: to run the risk of having decisions coming from one 527 00:31:12,240 --> 00:31:16,440 Speaker 1: of our closest allies, I mean the United States jopodizing 528 00:31:16,760 --> 00:31:19,800 Speaker 1: growth and the economic situation in France. How much of 529 00:31:19,880 --> 00:31:22,280 Speaker 1: the talks at the G twenty and seven level was 530 00:31:22,360 --> 00:31:25,000 Speaker 1: on China, on what China will do next and what 531 00:31:25,200 --> 00:31:28,200 Speaker 1: Europe can do to bring China closer to We have 532 00:31:28,360 --> 00:31:34,000 Speaker 1: to engage China and we won't China to abide by 533 00:31:34,080 --> 00:31:37,520 Speaker 1: their international commitments. We won't China to help us to 534 00:31:37,720 --> 00:31:42,040 Speaker 1: build a new mudiatal approach as far as trade is concerned. 535 00:31:42,360 --> 00:31:46,480 Speaker 1: But the right solution is not to engage into any 536 00:31:46,640 --> 00:31:51,720 Speaker 1: kind of war against China. The right solution is to 537 00:31:51,920 --> 00:31:56,560 Speaker 1: engage China, to have China on board trying to improve 538 00:31:56,920 --> 00:32:00,640 Speaker 1: the multilatal institutions related to trade. When you're looking at 539 00:32:00,640 --> 00:32:02,720 Speaker 1: the current situation, we all know that there is a 540 00:32:02,840 --> 00:32:07,800 Speaker 1: full weakening of all multilitable institutions related to trade. We 541 00:32:07,960 --> 00:32:12,040 Speaker 1: want to build a new multiatle approach and a new 542 00:32:12,240 --> 00:32:16,080 Speaker 1: multiatle order as far as trade and economy is concerned, 543 00:32:16,360 --> 00:32:21,400 Speaker 1: and we want Shanna to be onboard with us. Minister. Domestically, 544 00:32:21,760 --> 00:32:25,600 Speaker 1: the French President yourself are pushing for a lot of reforms, 545 00:32:25,920 --> 00:32:29,480 Speaker 1: but there are strikes almost every week. Does that mean 546 00:32:29,600 --> 00:32:32,600 Speaker 1: that they're at risk or will you double down? And 547 00:32:33,320 --> 00:32:36,360 Speaker 1: does you even have more resolve to actually person's reportful. 548 00:32:37,440 --> 00:32:40,960 Speaker 1: We will keep the path of reforms, We will keep 549 00:32:41,040 --> 00:32:44,840 Speaker 1: the pace of reforms because with Eminem mccon we strongly 550 00:32:45,000 --> 00:32:49,200 Speaker 1: believe that we need those reforms to improve the competitiveness 551 00:32:49,240 --> 00:32:54,160 Speaker 1: of French companies, to improve the attractiveness of France, and 552 00:32:54,400 --> 00:32:56,720 Speaker 1: at the end of the game, to create more jobs 553 00:32:57,040 --> 00:33:00,280 Speaker 1: for French people. So we have already decided last here 554 00:33:00,640 --> 00:33:03,680 Speaker 1: to introduce a total of a whole of the French 555 00:33:03,800 --> 00:33:07,800 Speaker 1: tax system. We have been able to modernize the liberal 556 00:33:07,880 --> 00:33:11,520 Speaker 1: market in France, and this year we will adopt a 557 00:33:11,640 --> 00:33:17,640 Speaker 1: new law on competitiveness for French companies, especially for French samese, 558 00:33:17,960 --> 00:33:22,120 Speaker 1: which will allow us to have more competitiveness within French companies. 559 00:33:22,200 --> 00:33:25,520 Speaker 1: Because the key issue is first of all to improve 560 00:33:25,600 --> 00:33:28,800 Speaker 1: the level of growth and the creation of jobs in France, 561 00:33:29,200 --> 00:33:34,840 Speaker 1: but also to restore the credibility of the French political power. 562 00:33:35,320 --> 00:33:38,360 Speaker 1: But the French want to be reformed or you concerned 563 00:33:38,400 --> 00:33:43,400 Speaker 1: that the large majority of French people one of those reforms, 564 00:33:43,640 --> 00:33:46,480 Speaker 1: because we are in a democracy and in the democracy 565 00:33:46,560 --> 00:33:49,880 Speaker 1: there are people that are against reforms. For there are strikes. 566 00:33:51,000 --> 00:33:54,240 Speaker 1: This is something normal and we have to live with that. 567 00:33:54,840 --> 00:33:58,360 Speaker 1: But at the end of the game, we will keep 568 00:33:58,440 --> 00:34:01,920 Speaker 1: the reforms, we will adopt the laws, and we will 569 00:34:02,000 --> 00:34:05,040 Speaker 1: improve the situation of the French people. And for the moment, 570 00:34:05,280 --> 00:34:08,319 Speaker 1: there's no talk of retracting some of them or watering down. 571 00:34:09,480 --> 00:34:14,600 Speaker 1: It is really not the right solution. It's what have 572 00:34:14,840 --> 00:34:18,239 Speaker 1: been down during the last three decades. I would say 573 00:34:19,320 --> 00:34:23,640 Speaker 1: we wanted to do something, there were strikes and the 574 00:34:23,719 --> 00:34:28,360 Speaker 1: French governments decided to withdraw that we formed. We won't 575 00:34:28,640 --> 00:34:33,759 Speaker 1: do that. We will stand firm and we will put 576 00:34:34,120 --> 00:34:37,640 Speaker 1: those reforms to the end for the sake of improving 577 00:34:37,680 --> 00:34:40,800 Speaker 1: the situation of French people. We are not doing reforms 578 00:34:40,800 --> 00:34:43,480 Speaker 1: of the sake of doing reforms and being able to say, well, 579 00:34:43,520 --> 00:34:45,319 Speaker 1: there are a lot of reforms in the front. That's 580 00:34:45,360 --> 00:34:48,440 Speaker 1: not the point. The point is to improve the economic 581 00:34:48,520 --> 00:34:52,359 Speaker 1: situation of France and the political credibility of our nation. 582 00:34:52,920 --> 00:34:55,160 Speaker 1: But as the one final question, do you worry about 583 00:34:55,200 --> 00:34:56,880 Speaker 1: the high level of the earl? And then well you 584 00:34:56,960 --> 00:34:58,480 Speaker 1: go because a lot of these people are waiting to 585 00:34:58,760 --> 00:35:00,840 Speaker 1: go into your photo opportunity for the G twenty, But 586 00:35:01,200 --> 00:35:04,120 Speaker 1: are you worried about your own I'm not worried about 587 00:35:04,200 --> 00:35:06,200 Speaker 1: the level of the euro because I think that it 588 00:35:06,320 --> 00:35:10,759 Speaker 1: reflects the growth and the economic recovery in Europe. So 589 00:35:10,960 --> 00:35:14,760 Speaker 1: that's not the point of concern for us. My point 590 00:35:14,800 --> 00:35:19,160 Speaker 1: of concern is really linked to the situation on trade. Okay, minister, 591 00:35:19,239 --> 00:35:34,920 Speaker 1: thank you so much for joining you. Deputy Prime Minister, 592 00:35:34,960 --> 00:35:37,799 Speaker 1: same check, thank you for joining us today. On Bloomberg, 593 00:35:38,239 --> 00:35:40,960 Speaker 1: there were a couple of days ago a huge red 594 00:35:41,239 --> 00:35:45,000 Speaker 1: Bloomberg flash saying Turkey was calling its snap elections. Is 595 00:35:45,040 --> 00:35:47,680 Speaker 1: that good for investors or is that bad for investors? 596 00:35:47,920 --> 00:35:51,480 Speaker 1: It's actually good news market reactions so that the reason 597 00:35:51,640 --> 00:35:59,600 Speaker 1: is that assessive saves investors from getting worried for a 598 00:35:59,760 --> 00:36:05,680 Speaker 1: t months. Normally elections were scheduled for November, so that 599 00:36:05,880 --> 00:36:13,400 Speaker 1: brings it forward and that eases essentially uncertainty, reduces it. Plus, 600 00:36:13,920 --> 00:36:16,520 Speaker 1: you know, it's snapped elections means you don't have a 601 00:36:16,600 --> 00:36:22,280 Speaker 1: prolonged campaign period, only two months. Election economics is highly 602 00:36:22,360 --> 00:36:28,239 Speaker 1: likely to be very limited, noise usually associated with elections 603 00:36:28,680 --> 00:36:32,759 Speaker 1: likely be subside. So in that sense, I think it's 604 00:36:32,800 --> 00:36:36,000 Speaker 1: good needs for investors. It will provide clarity, get a 605 00:36:36,080 --> 00:36:39,520 Speaker 1: fresh mandate and hopefully start with the reforms. What is 606 00:36:39,520 --> 00:36:40,880 Speaker 1: the question you've got the most here in the I 607 00:36:41,000 --> 00:36:42,800 Speaker 1: m F. Is it on the snap elections or is 608 00:36:42,840 --> 00:36:46,600 Speaker 1: it around the following era. Well, yesterday I had meetings 609 00:36:46,680 --> 00:36:51,600 Speaker 1: with investors. You know a number of US investment banks 610 00:36:51,800 --> 00:36:54,759 Speaker 1: hosted a number of events, so I was able to 611 00:36:54,880 --> 00:36:58,800 Speaker 1: interact with almost hundred investors. I think the key question 612 00:36:58,880 --> 00:37:03,799 Speaker 1: in their mind is what sort of policy framework post election? Well, 613 00:37:03,840 --> 00:37:07,759 Speaker 1: Turkey moved to a more of an orthodox, monitored policy. 614 00:37:08,520 --> 00:37:13,800 Speaker 1: Will Turkey jump start second third generation reforms to avoid 615 00:37:14,280 --> 00:37:17,360 Speaker 1: the middle income trap? Things like that. Those were the 616 00:37:17,440 --> 00:37:20,920 Speaker 1: key questions. There was less about the outcome of the elections. 617 00:37:21,000 --> 00:37:23,440 Speaker 1: It seems like everybody seemed to be banking on and 618 00:37:23,560 --> 00:37:26,279 Speaker 1: you Turk. You had a story career, Mary Lynch, and 619 00:37:26,320 --> 00:37:29,680 Speaker 1: then you've had your public service to your nation of Turkey, 620 00:37:29,840 --> 00:37:32,520 Speaker 1: and part of that has been a constant depreciation of 621 00:37:32,560 --> 00:37:36,479 Speaker 1: a Turkish lera for any set of reasons. There hasn't 622 00:37:36,520 --> 00:37:39,399 Speaker 1: been a lot of central bank action on the lira yet. 623 00:37:39,480 --> 00:37:42,440 Speaker 1: Are we at a tipping point where if there's further 624 00:37:42,840 --> 00:37:48,840 Speaker 1: lira erosion depreciation, devaluation, that you and Mr Arawana have 625 00:37:48,960 --> 00:37:53,400 Speaker 1: to act well? For ten years they appreciated in nominal 626 00:37:53,600 --> 00:37:57,560 Speaker 1: terms last few years, which has been traumatic for Turkey 627 00:37:57,600 --> 00:38:01,160 Speaker 1: because of geopolitics and all other you know, domestic and 628 00:38:01,239 --> 00:38:05,399 Speaker 1: external shocks, leadra has been weak. Some support for Lada 629 00:38:05,480 --> 00:38:08,239 Speaker 1: would help, you know, I can't make a call on 630 00:38:08,320 --> 00:38:11,800 Speaker 1: monetary policy because center back is independent. However, having said that, 631 00:38:12,480 --> 00:38:17,360 Speaker 1: clearly some support would help within that and whether the 632 00:38:17,440 --> 00:38:19,759 Speaker 1: idea that some support would help is do you do 633 00:38:19,880 --> 00:38:24,560 Speaker 1: it yourself or do you need institutional allies to help 634 00:38:24,640 --> 00:38:28,759 Speaker 1: Turkey to stabilize lira or even strengthen it. Can you 635 00:38:28,880 --> 00:38:32,719 Speaker 1: go by? Can you go to long? Well, it's gonna 636 00:38:32,800 --> 00:38:36,239 Speaker 1: be a combination of factors. First of all, I think 637 00:38:37,239 --> 00:38:43,120 Speaker 1: uh elections and post election, you know, reviving reform program, 638 00:38:44,080 --> 00:38:48,480 Speaker 1: you know, moving to a more simplified monetary policy framework. 639 00:38:50,160 --> 00:38:53,600 Speaker 1: I think that would provide a strong message. The worst 640 00:38:53,960 --> 00:38:57,360 Speaker 1: is likely behind Turkey in the sense that you know, 641 00:38:57,600 --> 00:39:02,480 Speaker 1: tourism is recovering very strongly. Economy has done very well 642 00:39:02,640 --> 00:39:06,719 Speaker 1: last year. Momentum is still reasonably strong. It's moderating. We 643 00:39:06,800 --> 00:39:10,480 Speaker 1: should ease pressure both on inflation and on current account deficit. 644 00:39:10,920 --> 00:39:14,800 Speaker 1: So fundamentally we still have a strong fiscal position. We 645 00:39:14,920 --> 00:39:19,120 Speaker 1: have load that to GDP, and the banking sector is 646 00:39:19,160 --> 00:39:22,480 Speaker 1: still in reasonably good health. The two rough spots in 647 00:39:22,560 --> 00:39:26,640 Speaker 1: Turkish economy current account deficit and inflation. I think with 648 00:39:26,840 --> 00:39:31,239 Speaker 1: some moderation in credit growth and some reform effort, we 649 00:39:31,360 --> 00:39:35,840 Speaker 1: could kind of like regain market confidence and put behind 650 00:39:36,280 --> 00:39:38,440 Speaker 1: you know, these difficult episode. And I want to get 651 00:39:38,480 --> 00:39:40,560 Speaker 1: on Turkish credit in a second. But when you look 652 00:39:40,760 --> 00:39:43,719 Speaker 1: at the devaluation of the leri ten percent in large, 653 00:39:43,760 --> 00:39:47,480 Speaker 1: why has the central bank not active? Well, center Bank 654 00:39:47,560 --> 00:39:52,560 Speaker 1: has reasonably indicated that they will act. I think it 655 00:39:52,760 --> 00:39:56,640 Speaker 1: is important that we bring inflation back on a lasting 656 00:39:56,719 --> 00:39:59,920 Speaker 1: basis to a single digit. Now this is very critic 657 00:40:00,040 --> 00:40:02,880 Speaker 1: go the only way Turkey was able to deliver very 658 00:40:02,960 --> 00:40:05,879 Speaker 1: strong growth and by the way, it's like five point 659 00:40:06,000 --> 00:40:09,359 Speaker 1: eight percent for fifteen years. He was on the back 660 00:40:09,440 --> 00:40:16,400 Speaker 1: of disinflation, sound macroeconomic policies, structural reforms. Now we cannot 661 00:40:16,440 --> 00:40:19,880 Speaker 1: afford to let that slip. But it is the central 662 00:40:19,920 --> 00:40:24,600 Speaker 1: bank truly independent Turkey. Well, legally there's nothing holding them back. 663 00:40:25,160 --> 00:40:28,240 Speaker 1: They get appointed for five years, they cannot be removed. 664 00:40:28,640 --> 00:40:32,120 Speaker 1: They only mandate is price stability and in death sense 665 00:40:32,280 --> 00:40:36,080 Speaker 1: is independent. But there has been there has been, you know, 666 00:40:36,440 --> 00:40:41,200 Speaker 1: strong debate about where the monetary policy stands should be. 667 00:40:41,800 --> 00:40:44,719 Speaker 1: Now whether or not that has been effective obviously that's 668 00:40:44,800 --> 00:40:47,960 Speaker 1: open to questions. But the central Bank meets on Wednesday. 669 00:40:48,280 --> 00:40:51,800 Speaker 1: Do you think on Wednesday they will take decisions independently 670 00:40:52,320 --> 00:40:58,520 Speaker 1: of political influence. I again, Center Bank is independent and 671 00:40:58,640 --> 00:41:01,359 Speaker 1: they can act independent day. So it's all boils down 672 00:41:01,760 --> 00:41:06,279 Speaker 1: to the Monetary Policy Committee. I'm saying this. Legally it 673 00:41:06,440 --> 00:41:09,120 Speaker 1: is so, and practically it is so. There has been 674 00:41:09,160 --> 00:41:12,640 Speaker 1: occasions that has been cases West Center Bank did respond 675 00:41:12,760 --> 00:41:18,560 Speaker 1: despite despite an intense debate where monetary policy should be. Minister, 676 00:41:18,640 --> 00:41:22,200 Speaker 1: I want to ask you about the sprawl of the 677 00:41:22,320 --> 00:41:24,680 Speaker 1: levant in the Middle East and the Turkey that we 678 00:41:24,800 --> 00:41:28,360 Speaker 1: see right now. Your remit his financial Your claim is 679 00:41:28,400 --> 00:41:31,080 Speaker 1: what you did for the Turkish economy. I think of 680 00:41:31,239 --> 00:41:33,960 Speaker 1: Robert Calvin's Brook, the return of Marco Polo, that's just 681 00:41:34,080 --> 00:41:37,919 Speaker 1: out just talking of a new Eurasia. How did your 682 00:41:38,080 --> 00:41:41,600 Speaker 1: Turkey and with a domestic tumult of Turkey, how does 683 00:41:41,680 --> 00:41:46,880 Speaker 1: it fit into the region in three years or five years? Well, 684 00:41:46,960 --> 00:41:50,600 Speaker 1: first of all, we Turkey right now is the world 685 00:41:50,680 --> 00:41:55,640 Speaker 1: the largest refugee hosting country. We host a combined Iraqi 686 00:41:55,800 --> 00:41:58,480 Speaker 1: Syries about four millions. Are you're getting enough support from 687 00:41:58,480 --> 00:42:00,840 Speaker 1: the West on that you've got the current We appreciate 688 00:42:00,960 --> 00:42:04,000 Speaker 1: Europeans support, even though it's been very slow and limited. 689 00:42:04,520 --> 00:42:08,000 Speaker 1: Turkey has spent close to thirty four billion dollars over 690 00:42:08,040 --> 00:42:11,759 Speaker 1: the past six seven years of refugees. We can afford it, 691 00:42:12,080 --> 00:42:14,880 Speaker 1: and we're doing it simply because we feel that we 692 00:42:15,000 --> 00:42:17,520 Speaker 1: have to do it, you know, because they have no choice. 693 00:42:17,520 --> 00:42:21,400 Speaker 1: They're running for their lives. So my point is Turkey 694 00:42:21,480 --> 00:42:27,160 Speaker 1: is looking forward to somewhat more stable, more democratic, more 695 00:42:27,560 --> 00:42:31,480 Speaker 1: peaceful region. Why and we want to help reconstruction. We 696 00:42:31,600 --> 00:42:35,480 Speaker 1: want to help. I'm not talking about business yet, purely helping, 697 00:42:36,160 --> 00:42:39,320 Speaker 1: but we need to have a lull in violence. The 698 00:42:39,360 --> 00:42:45,359 Speaker 1: good news is the barbaric Isis has been dismantled. That's 699 00:42:45,520 --> 00:42:50,480 Speaker 1: very important, very important. We it's time now to stabilize Syria. 700 00:42:51,000 --> 00:42:54,640 Speaker 1: Iraq has gone a long way in terms of stabilization, 701 00:42:54,719 --> 00:42:57,440 Speaker 1: even though it's not fully there. Then we can talk 702 00:42:57,480 --> 00:43:01,920 Speaker 1: about reconstruction. You're excerpt really important voice your childhood in 703 00:43:02,000 --> 00:43:06,560 Speaker 1: southeastern Turkey. With all the different tensions within Turkey, do 704 00:43:06,640 --> 00:43:10,440 Speaker 1: you see out of the present chaos of the political 705 00:43:10,680 --> 00:43:13,600 Speaker 1: domestic damage has been done? Do you see a new 706 00:43:13,680 --> 00:43:17,040 Speaker 1: Turkey where there can be a more domestic piece from 707 00:43:17,120 --> 00:43:21,200 Speaker 1: the west of Turkey to the east. Well, the current Turkey, 708 00:43:22,360 --> 00:43:25,279 Speaker 1: unfortunately is a product of a number of traumas that 709 00:43:25,400 --> 00:43:29,759 Speaker 1: we have experienced. It is very unusual to have a 710 00:43:29,880 --> 00:43:33,560 Speaker 1: cultish religious network try to grab the power. It's an 711 00:43:33,600 --> 00:43:36,240 Speaker 1: alien concept. I mean, it's very hard for our friends 712 00:43:36,360 --> 00:43:38,920 Speaker 1: and all lies to understand, but it's largely behind us. 713 00:43:39,600 --> 00:43:43,120 Speaker 1: At some point, Turkey was subject to intense terror attacks 714 00:43:43,560 --> 00:43:47,320 Speaker 1: thirty major terrorist attacks between mid two thousand fifteen and 715 00:43:47,440 --> 00:43:50,520 Speaker 1: of two thousand sixteen, and that was because we had 716 00:43:50,600 --> 00:43:53,080 Speaker 1: nine d eleven. We have nine hundred eleven kilometers of 717 00:43:53,120 --> 00:43:56,439 Speaker 1: border with Syria, and Syria is no longer a functioning state. 718 00:43:57,000 --> 00:43:59,479 Speaker 1: Turkey now has a good grasp. We build a wall, 719 00:44:00,040 --> 00:44:02,799 Speaker 1: we're there, so it's under control. So what I'm trying 720 00:44:02,880 --> 00:44:05,279 Speaker 1: to say is that most likely the worst is behind us. 721 00:44:05,480 --> 00:44:10,200 Speaker 1: Rebuilding new Turkey. We require going back to strengthening rule 722 00:44:10,239 --> 00:44:14,400 Speaker 1: of law, enhancing standards of democracy, continue to boost fundamental 723 00:44:14,480 --> 00:44:18,040 Speaker 1: rights and freedoms for everybody. Now, I don't believe that 724 00:44:18,200 --> 00:44:21,640 Speaker 1: there is less of a commitment to this. What is 725 00:44:21,680 --> 00:44:26,560 Speaker 1: happening right now, the threat level, the perceived threat, and 726 00:44:26,600 --> 00:44:28,840 Speaker 1: the real threat is there, and that's why Turkey is 727 00:44:28,880 --> 00:44:31,320 Speaker 1: responding the way it has response. In depicting Premners, we 728 00:44:31,400 --> 00:44:33,200 Speaker 1: want to go back to the economy and back to 729 00:44:33,320 --> 00:44:35,600 Speaker 1: the lira. Is there anywhere to support the Lira that 730 00:44:35,640 --> 00:44:39,359 Speaker 1: the central Bank could do without raising interest rates. Well, 731 00:44:40,160 --> 00:44:46,120 Speaker 1: I think we're beyond talking. Uh, you know, clearly, at 732 00:44:46,200 --> 00:44:50,200 Speaker 1: some point we have to convince the markets that we 733 00:44:50,280 --> 00:44:53,600 Speaker 1: are able to bring inflation down, that we are able 734 00:44:53,640 --> 00:44:58,480 Speaker 1: to contain current account deficit. The world around us is changing. 735 00:44:59,280 --> 00:45:02,759 Speaker 1: I mean right now, global growth is there and maybe 736 00:45:02,880 --> 00:45:05,040 Speaker 1: sustained for a little, you know, for a couple of years, 737 00:45:05,840 --> 00:45:09,439 Speaker 1: but this is the time when we address underlying vulnerabilities. 738 00:45:10,160 --> 00:45:13,760 Speaker 1: Now the bright spots are we have a strong fiscal position, 739 00:45:14,040 --> 00:45:17,080 Speaker 1: we have a healthy banking system. The real economy is 740 00:45:17,120 --> 00:45:21,440 Speaker 1: doing well, but the rough sports needs attention. Does that 741 00:45:21,560 --> 00:45:24,239 Speaker 1: mean that that something on Wednesday? It would be a 742 00:45:24,280 --> 00:45:26,400 Speaker 1: strong message to the investor. I know it is that. 743 00:45:26,880 --> 00:45:28,680 Speaker 1: I know you're trying to get me to say, but 744 00:45:28,960 --> 00:45:31,560 Speaker 1: you know, it wouldn't be appropriate for me to really 745 00:45:31,680 --> 00:45:35,120 Speaker 1: comment on what sentiment will will not do on Wednesday. 746 00:45:35,200 --> 00:45:37,480 Speaker 1: We wouldn't be of course, of course, Deputy Premieres. So 747 00:45:37,560 --> 00:45:39,280 Speaker 1: thanks so much for joining it. It's a great pleasure. 748 00:45:39,960 --> 00:45:50,640 Speaker 1: Thank you. Thanks for listening to the Bloomberg Surveillance Podcast. 749 00:45:51,040 --> 00:45:55,920 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 750 00:45:56,120 --> 00:46:00,840 Speaker 1: whichever podcast platform you prefer. I'm on Twitter, Tom Keane 751 00:46:01,360 --> 00:46:05,000 Speaker 1: before the podcast. You can always catch us worldwide. I'm 752 00:46:05,040 --> 00:46:05,920 Speaker 1: Bloomberg Radio