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Stephen Pope on "Quest Means Business" CNN

Friday August 17th 2012



QUEST: Alexander Stubb, who even managed to answer that last question with a straight face. And I'd give a fiver to have heard the conversation between the Finnish prime minister and the Europe minister -- the foreign minister after today's story.

 

Finland wasn't the only country to raise the future of the euro. You saw Alex in his library. Join me in my library. Austria was having a bash where the chancellor Werner Faymann said the breakup would do more harm than good in response to questions about expelling members who break the rule.

 

The EC has reaffirmed the commitment, no surprise there. But its spokesman described it as "irrevocable." No, sorry, I beg your pardon. That's what the treaty describes it as. He said it's "irreversible." Maybe he should have said "irrevocable."

 

Anyway, "irreversible" is the phrase that, of course, Mario Draghi used last month. And Angela Merkel, she's in Canada, "committed to saving the euro." Well, that's all right, then. She said -- she went on to say, the EU leaders are making progress and she knows time is not necessarily on their side.

 

Stephen Pope is with me. Breakup more harm than good? Euro irreversible? Committed to saving the euro? Finland's not aiming to fall out of the eurozone, or they're not planning for it to fall out?

 

STEPHEN POPE, MANAGING PARTNER, SPOTLIGHT IDEAS: Remind me, it's August. We haven't done this one before, have we? The euro is irreversible. It's a bad plan that cannot be changed. And how many more times do we actually have to give a bit more money and a bit more time to the Greeks so that they can muddle their way through?

 

QUEST: Right. Let's start with the Finland story.

 

POPE: OK.

 

QUEST: So, you wrote a note on this today, didn't you?

 

POPE: Yes. I think that finally somebody stepped forward and spoke the truth. Any sensible government is going to be making all sorts of plans and contingencies.

 

QUEST: We know companies are making plans for contingencies. They've admitted on this program that they're making plans.

 

POPE: Absolutely right. And I think shareholders in companies or electorates in any given nation would feel that their people they turn to to be in charge are being derelict in their duty if they don't make those provisions.

 

QUEST: So, if -- forget contingencies for the moment, and "irreversible" and all the political nonsense that we're hearing at the moment. When we come out of the summer --

 

POPE: Yes.

 

QUEST: We first -- we've got the EFSF and the ESM to deal with, and then we've got the banking union, and then we've got to decide whether more money goes for Greece.

 

POPE: Well, first of all, are we going to put the right sort of money into the EFSF and ESM, or are we going to allow the ESM to become a bank so it can draw money from the ECB? We have to answer those questions quite clearly and quite firmly before we can even dream to move forward.

 

QUEST: And then we've also got the question of Spain and whether or not Mariano Rajoy is going to ask. And that depends on the conditionality that'd be offered up.

 

POPE: Yes, indeed. Well, there's Mr. Rajoy, he seems to change his mind from month to month. He didn't want a bailout, didn't need a bailout, and now he does. They can't afford to sort out their own banks, but that's not a bailout. And now he's going to have to go for a state bailout.

 

But of course, it's bailout easy terms. And that's going to make the Irish and the Portuguese want a renegotiation of their terms as well.

 

QUEST: But what's the risk? Because everything seems stable at the moment, Stephen, so why are you getting excited? And why am I getting my blood pressure up?

 

POPE: Ah, it's because we go through these phases where the ECB president, Mr. Draghi, says that we'll do everything that is possible and is needed, and then he comes out in that press conference with a great statement. But it's going to take two weeks to design the plan.

 

Well, please, go away. Come back to the market when the plan is ready to roll rather than "We've got an idea, but we've got two weeks before we design it properly."

 

And Merkel, there she is in Canada. Notice the semantics she used. "We will do all we can." Not "We will do absolutely everything that is required."

 

QUEST: Well, it's the same thing. That's the same thing. She meant one thing. I turn that to translation --

 

POPE: Well, maybe so. Maybe so, but the devil's in the detail on these things.

 

QUEST: OK. Your fear is fundamentally what as we go into September?

 

POPE: My fear is that we just carry on doing the same thing we have been for the last two years, agreeing that Greece can have a bit more time and a bit more money. Now, this plan was agreed in February. I said in six month's time they'd want more money, and here they are looking for it.

 

We have the Spanish, Spain is bust. It cannot afford to finance itself much more. It cannot afford to sort out its banks. And then we start turning our attention to Italy, where there is a politician, Mr. Monti, who was positioned by the Germans, supported by the Italian politicians, but now because there's an election next April, he's being hung out to dry.

 

QUEST: Calm yourself. It's the weekend.

 

POPE: How can we be calm when it's like this? It's crazy.

 

QUEST: Thank you very much.

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