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Tonight - party tricks.

Too many people knew, you know, that he was backing me and as a result of that when they saw that
he went the other way, which was his choice to go public in doing the show and tell, it was just
inevitable wildfire through the party.

Accusations fly in the brawl over over the Liberal presidency.

I'm not going to get into the question of who said to to whom when. The important thing is we had a
ballot, it wa as clean ballot. We have a winner and we're now moving forward.

Good evening, welcome to Lateline, I'm Ali Moore. It's more than 100 days since the NATO operation
to protect civilians in Libya began and the fighting continues. The International Criminal Court
has issued an arrest warrant for Colonel Gaddafi but that meaned little while he remains in
sceptical of the ICC as an organisation is John Bolton, the former US ambassador to the UN who
calls the International Criminal Court one of the world's most world's most illegitimate
multilateral institutions. John Bolton Bolton is also warning of the consequences of the Arab
spring, all the while still deciding whether he'll enter the Republican presidential race. John
Bolton is our guest tonight live from Washington. First to other First to other headlines. Ill
health forces Papua New Guinea's longest serving prime minister Sir Michael Somare to step down. An
Australian citizen arrested in Israel and charged with spying for Hamas appears in court. As Greece

Gillard plunges to Keating-esque unpopularity

ALI MOORE: Julia Gillard's become the most unpopular prime minister since Paul Keating, according
to the latest Newspoll.

She says she's thinking long-term, but a short term solution to Labor's woes may be developing.

Some in the Liberal Party are trying to move the debate back on to industrial relations, where the
Government will feel it's on safer ground than its carbon tax.

The revival on IR policy push in the Liberal Party has been triggered by a falling-out over Peter
Reith's failed tilt at the presidency.

Political correspondent Tom Iggulden has more from Canberra.

TOM IGGULDEN: In 1993, Paul Keating set a record low for a Newspoll approval rating just a few
months after what would be his first and last election win.

PAUL KEATING (1993): Well you know these things go up and down all the time. It's early days of a
long parliament.

TOM IGGULDEN: Julia Gillard's just equalled his low point, and she's also playing for time.

JULIA GILLARD, PRIME MINISTER: I believe that once carbon pricing is in place people will see how
the system works and the benefits of it. We're a long way from that, and that's why I think we're
in a tough period now.

AD VOICEOVER: Paul Keating's economic policies have resulted in over one million Australians being
out of work.

TOM IGGULDEN: A radical industrial relations policy proposed by the Coalition helped propel Paul
Keating back into the lodge in 1993.

Tony Abbott's boxing-up talk about that issue as he tries to dislodge Julia Gillard and her Fair
Work scheme.

TONY ABBOTT, OPPOSITION LEADER: We'll be carefully watching to see how these laws turn out.

PETER REITH, FORMER LIBERAL MINISTER: I was born and bred in the Liberal Party.

TOM IGGULDEN: But he's being urged to go much further.

PETER REITH: If you want to have higher living standards, you can't pretend workplace relations is
not an issue.

TOM IGGULDEN: Former hardline industrial relations minister Peter Reith's breaking an agreement
with Tony Abbott to stay silent on the issue.

PETER REITH: I'd suspended my interest, as it were, publicly talking about these issues and sure,
the suspension by his own hand has been lifted.

TOM IGGULDEN: He says Mr Abbott broke his side of the agreement first.

PETER REITH: Look, he rang me up and said, it would be great if you were federal president. And he
went round and got some of his mates to come around and be on my campaign team.

TOM IGGULDEN: But Mr Abbott voted against Mr Reith, and made sure senior colleagues knew about it
by showing them his ballot.

Now that Mr Reith's self-imposed gag has been lifted, Liberal backbenchers are getting on the
industrial relations bandwagon.

STEVEN CIOBO, LIBERAL MP: Labor's policy is not sacrosanct. It's driving up wage price and
inflation. It's costing people's jobs. It needs to be improved and reformed.

JEFF LAWRENCE, ACTU SECRETARY: The intention is to return to a policy which is effectively
WorkChoices. And I think Mr Reith has actually done the Australian community a service today by
exposing that agenda.

TOM IGGULDEN: Tangling Tony Abbott up in an industrial relations debate might give Labor a glimmer
of hope. It was partially propelled into office by John Howard's WorkChoices and it's been downhill
ever since.

Tony Abbott is now leading Julie Gillard in the preferred prime minister question in Newspoll which
until now, were her only bright spot.

The carbon tax has been the undoing of Labor this year, but Julia Gillard says it's a small price
to pay to change the behaviour of carbon-emitting businesses.

JULIA GILLARD: They'll look at all the dollars and cents in their profit and loss statements, and
they'll see this item that says carbon pollution price and they'll go how can I make that less.

TOM IGGULDEN: That process has effectively already begun as the Government moves closer to naming
the carbon price.

TOM ALBANESE, RIO TINTO CEO: It's a good thing to take a lead, but my recommendation is that a
policy should be cautious. It should start low and it should safeguard the export sector.

TOM IGGULDEN: But there was also some support for the Government's approach from another business

CAMERON CLYNE, NATIONAL AUSTRALIA BANK CEO: If you're asking for an economic assessment of the two
the carbon price followed by an ETS is economically superior to the direct action policy.

It will drive certainty, it will drive investment and so as a straight comparison between the two
that's the choice.

TOM IGGULDEN: A choice voters are weighing up too.

Tom Iggulden, Lateline.

PNG's Somare retiring from distinguished career

ALI MOORE: Papua New Guinea's longest-serving prime minister, Sir Michael Somare, is to retire from

The announcement was made a short while ago in Port Moresby by his son.

Sir Michael led PNG to independence from Australia in 1975.

He was its first prime minister and served three more terms in a political career spanning half a

Arthur Somare says the family made the decision because Sir Michael's recovery from heart surgery
has been unexpectedly slow and difficult.

ARTHUR SOMARE, SON: The uncertainty of the recovery period has essentially put us into this
position where a decision by the family needed to be taken.

ALI MOORE: It's not known when a decision will be made about his successor.

Athens anti-austerity protests turn violent

ALI MOORE: Unions in Greece have begun a 48-hour general strike and protest against austerity
measures forced on the Greek Government as part of an EU/IMF bailout.

Parliament is due to vote on the strict measures on Wednesday and Thursday.

For the latest we're joined now from Athens by Europe correspondent Emma Alberici.

Emma, organisers were promising millions on the street. We can see a little of the picture behind
but what's the turnout like?

EMMA ALBERICI: Well I'm sure you'll be able to hear in the next few minutes some of what sounds
like gunfire but is actually the release of tear gas.

We felt it, we're seven floors above street level here. You can hear it. And even at this distance,
seven floors up, we're getting large wafts of it coming up and affecting our vision and I have to
tell you it's a shocking situation all around.

People who are based here are telling us that they haven't seen conflict like this in three years,
since that young teenage boy was killed by police three years ago.

ALI MOORE: To date Emma the protests have been very peaceful, what's happened with this particular
protest to inspire this response from authorities?

EMMA ALBERICI: Oh no, it started off very peaceful but I have to say there are hundreds of people

What they've been doing is they've taken picks and axes to the stone walls around the square here
and they've actually chopped off bits of stone and marble and they're hurling that at police and
pretty much anyone who isn't on their side.

So we're seeing clashes between the anarchists and the police but also between the anarchists and
the otherwise peaceful protestors.

So it's really erupted in absolute chaos. Everyone's shutters are down including this hotel where
we are.

It was very difficult for us to even get in here and we were caught in the melee down there and had
tear gas fired at us indiscriminately because we were part of a general crowd trying to get through
to here.

ALI MOORE: As we said earlier, this vote on the austerity measures will be taken later this week,
are these protests going to make any difference to that outcome of that vote?

EMMA ALBERICI: Well the vote is scheduled for just another 24 hours time. It's hard to see how this
situation could get any worse and yet they still haven't heard the word about whether the
parliament will pass this $40 billion worth of tax rises and public service cuts.

The people we've been speaking to on the streets here are simply saying yes, there's widespread tax
evasion in Greece but it's not the people on the street, the PAYE earners, it's the upper end.

Yes, there is fat to trim in the public service but not the doctors, the nurses and the teachers,
the people who are going to feel the economic pain being inflicted by the parliament because of a
condition imposed on them by the EU and the IMF in return for this 100 billion or so, a second
bailout that is being argued for in the parliament just behind us here.

ALI MOORE: Emma Alberici in Athens, many thanks for joining us. I know you will keep us up to date
with events through the night.

Australian denies being Hamas recruit

ALI MOORE: A tourist trapped? Or an international spy?

An Australian citizen charged with spying for the Palestinian movement Hamas has declared his

Eyad Abuarga was arrested along with his wife in March when they arrived at Tel Aviv airport.

The Palestinian-born IT specialist has been in jail ever since, fighting accusations he is a Hamas
recruit on a mission to spy on Israel.

Karen Barlow reports.

KAREN BARLOW: Eyad Abuarga is accused of pretending to be an Australian tourist while spying for
the Islamist group Hamas.

Standing before an Israeli court overnight, he declared his innocence.

EYAD ABUARGA, ACCUSED SPY: I'd like to say loud and clear that I'm not a member of Hamas. Never
was, and never will, or any other group.

KAREN BARLOW: The 46-year-old electronics engineer was arrested in march as he arrived at Tel
Aviv's Ben Gurion Airport.

His family has not seen or spoken to him since.

EYAD ABUARGA: I am an Australian tourist who came to this country with my wife to celebrate our
25th anniversary of our marriage, and ended up in jail.

KAREN BARLOW: The charges against Eyad Abuarga are not finalised, but he's been accused of
undertaking terrorist training in Syria, being a member of Hamas and spying for Hamas.

Eldest son Osama Abuarga says his father is not a violent person.

OSAMA ABUARGA, SON: He was never into such a position where someone would do that. Because this is
human life, this is human life. None of them should be spared for the other. So he would just get

I mean whatever country it is that it is happening in, I mean these are innocent souls that are
being lost and this pretty much it. I don't think that he would have any involvement no.

KAREN BARLOW: The allegations from Israeli intelligence are quite detailed.

They allege Eyad Abuarga has been attending secret Hamas meetings since 2007.

And a 2008 trip to Syria to visit family is alleged to have been a cover for a terror training

Eyad Abuarga has also been accused of trying to infiltrate leading Israeli technology companies to
get information about encryption and missile guidance systems.

OSAMA ABUARGA: They are specific but are they true? I don't think so.

KAREN BARLOW: The son, Osama Abuarga, is now heading his distraught family while his father's legal
case continues in Israel.

He says his Palestinian-born father was too busy with life and work to concern himself with the
Palestinian struggle.

OSAMA ABUARGA: He does not bother himself the political aspect of everything.

KAREN BARLOW: Nothing online? Any online relationships?

OSAMA ABUARGA: No not really nothing I don't think so.

KAREN BARLOW: Is it possible that you father has become involved in something that he has not told
the rest of the family about?

OSAMA ABUARGA: Is it possible, I also high doubt so.

KAREN BARLOW: The family has welcomed Australian consular support but would like more diplomatic
pressure on Israel to help their father.

Despite the family's rejection of the Israeli allegations it appears from Eyad Abuarga's legal team
that some sort of deal could be struck.

LEAH TZEMEL, LAWYER: The case altogether is very severe is not, so we see. If we can even much

REPORTER: You are going to try to reduce the charges?

LEAH TZEMEL: To reduce to the facts.

KAREN BARLOW: Eyad Abuarga's case has been adjourned until next month in a court near Tel Aviv.

Karen Barlow, Lateline.

Fukushima emergency plan underestimated tsunami

ALI MOORE: The ABC has obtained documents confirming that the operator of the crippled Fukushima
nuclear plant grossly underestimated the size of a potential tsunami that could hit the facility.

It also shows that the Tokyo Electric Power Company, or TEPCO's, initial tsunami plan was contained
on just a single page, a scant plan accepted by Japan's nuclear regulators.

Today TEPCO held its annual general meeting, with its newly appointed president vowing an all-out
effort to achieve a cold shutdown of the stricken reactors by January.

North Asia correspondent Mark Willacy reports from Tokyo.

MARK WILLACY: It was the biggest turnout for a TEPCO annual general meeting in the company's
history, both in the number of shareholders and the squads of police keeping protestors out.

Once a pillar of Japan's business establishment, TEPCO is now about as popular as the radioactive
fallout from its nuclear plant, even among its shareholders.

YUI KIMURA, TEPCO SHAREHOLDER (translated): We'll fight at this meeting for TEPCO to abandon all
nuclear power plants and not to build any new reactors.

MARK WILLACY: TEPCO has long been accused of incompetence and cover ups.

This document would also suggest wild optimism.

A single page, this is the tsunami plan for its Fukushima plant that TEPCO submitted to Japan's
nuclear safety agency a decade ago.

The ABC has obtained it through a freedom of information request.

HIDEYUKI BAN, NUCLEAR INFORMATION CENTRE: From the beginning, the Government, the regulators and
TEPCO have had a cosy relationship. It's led to many cases of cover-ups.

MARK WILLACY: The waves that smashed into the Fukushima nuclear power plant were up to 15 metres
high, triggering nuclear meltdowns. The TEPCO document obtained by the ABC dismisses any tsunami
higher than 5.7 metres threatening the plant.

The magnitude nine earthquake that rattled Fukushima was also four times more powerful than TEPCO's
worst-case scenario.

For Fukushima resident and protestor Ikuko Hebiishi the single-page document is an example of
TEPCO's arrogance.

IKUKO HEBIISHI, FUKUSHIMA RESIDENT (translated): They are incapable of running nuclear plants. Do
they care about the safety of people? I'm so angry with TEPCO.

MARK WILLACY: Before March 11, TEPCO shareholder meetings were polite, predictable affairs. These
days after the nuclear meltdown they require bus loads of riot police as well as undercover
officers to monitor the crowds.

Having lost $15 billion and seen its value slump 85 per cent, TEPCO is now feeling the heat from
shareholders and protestors alike.

Mark Willacy, Lateline.

Libya defies ICC warrant for Gaddafi

ALI MOORE: The Libyan government has responded with defiance to an arrest warrant issued for
Colonel Gaddafi by the International Criminal Court.

The country's deputy foreign minister has described the court as a political court which serves its
European paymasters.

Middle East correspondent Ben Knight reports.

BEN KNIGHT: This is how Libyans in the main rebel cities greeted the news that Moamar Gaddafi is
now an initially wanted man.

HUDA AL-HAJJ MOHAMMED, FEMALE MISRATA RESIDENT: We've been waiting not from the beginning of
February, not from the beginning of this revolution, but from 42 years ago. And I hope justice will
prevail and everyone will be happy.

BEN KNIGHT: But predictably, the response from Colonel Gaddafi's inner circle was quite different.

KHALED KAIM, LIBYAN DEPUTY FOREIGN MINISTER: The ICC's claims to international jurisdiction and
judicial independence are in any instance questionable, where not simply false. The court's
approach has been marred by obvious double standards and endemic judicial irregularities.

The ICC has become the European equivalent of the US tribunal of the Guantanamo Bay.

BEN KNIGHT: And in the probably unlikely event that Moamar Gaddafi and his son should ever appear
on trial in The Hague, it was this hint as to what their defence might be.

MOHAMMED AL-QAMOODI, LIBYAN JUSTICE MINISTER: The leader of the revolution and his son do not hold
any official position in the Libyan government and therefore they have no connection to the claims
of the ICC against them.

BEN KNIGHT: Moamar Gaddafi might not be Libya's president in name, but the International Criminal
Courts says he is the recognised and undisputed Libyan leader with absolute, ultimate and
unquestioned control over the Libyan state apparatus of power, including its security forces.

And that gave him the opportunity and the means to conceive and develop a plan to crush the
rebellion in partnership with his son Saif and chief of intelligence, Abdullah Senussi, who've also
had warrants issues for their arrest.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: It's another indication that Moamar Gaddafi has lost his
legitimacy. We certainly believe that in the face of the crimes of the magnitude that he has
committed and the gravity there must be justice and accountability.

The court's decision underscores the stakes and importance of the coalition effort in Libya. So,
it's another step in this process of holding him accountable.

BEN KNIGHT: As always, the charges mean nothing unless Moamar Gaddafi is actually arrested. But it
does mean that the Libyan leader now has very few places he can go if he does choose to step down.

Which has led some to fear that it works against a political solution in Libya, because with
nowhere to go, and nothing to lose, Moamar Gaddafi may dig in even deeper, and fight to the end.

That's the last thing NATO would want. Its military mission has now been going for a hundred days,
and is under strain, politically, and operationally.

But the rebels do appear to be gaining ground and are now within 100 kilometres from Tripoli. A
senior United Nations official says the rebels now have the upper hand, but only just.

understanding of the military situation on the ground. It is clear that the initiative, although
halting, is now with the opposition forces, supported at times by NATO air power.

BEN KNIGHT: But it's slow going and they're yet to face Moamar Gaddafi's toughest and most loyal
troops in Tripoli.

Gaddafi will fight it out: Bolton

ALI MOORE: And joining us now from Washington to discuss the current situation in Libya, as well as
other international issues, is John Bolton, the former US ambassador to the United Nations and now
a senior fellow with the American Enterprise Institute, specialising in US foreign policy and
national security.

John Bolton, many thanks for joining Lateline tonight.


ALI MOORE: To Libya first, as we've just heard the International Criminal Court has issued an
arrest warrant for the Libyan leader. It's a move that's been welcomed by the rebels. You're not
supportive of that move?

JOHN BOLTON: Well, at best it's counterproductive.

As your report indicated, the likely effect of this indictment will simply to be to lock in
Gaddafi's impression that he might as well fight it out to the end and the only way he will leave
Libya, if ever, is horizontally.

So this is a case where the ICC, I think, has made it harder to reach a solution where Gaddafi
voluntarily steps down from power, number one.

Number two, on the broader philosophical front the crimes that Gaddafi has committed in the last
five months during this civil war in Libya, he has committed in the name of the Libyan people
against the Libyan people.

Now, who should try him? The answer's clear: The Libyan people, ultimately, not some distant court
in a far away capital.

The way to political maturation for the Libyans, as for anyone else, is to take responsibility for
their history and having this from The Hague come in is an impediment to political growth in Libya

ALI MOORE: I want to look at the court in a minute, but do you suggest there has been some chance
that Gaddafi would voluntarily remove himself? That there was chance a chance of a deal?

JOHN BOLTON: There certainly have been efforts at negotiation.

I think that would be the easiest way out if NATO couldn't finish him off, which they haven't been
able to do in over 100 days. And I think it's a propaganda tool for Gaddafi to use in the internal
struggle in Libya.

I am pretty sure I'm right when I say the only people who have been indicted by the International
Criminal Court are Africans. Now in the African context, what kind of tool does that give Gaddafi?

ALI MOORE: You call the ICC the world's most illegitimate multilateral institution, why? And I
should point out here Australia is one of 114 countries that have joined the treaty that underpin
the ICC

JOHN BOLTON: That's your problem, not ours.

I was proud when I was in the State Department to unsign the United States from the Rome statute.

This is an organisation that takes one of the most fearsome and important powers of government, the
power of prosecution, and puts it in the hands of a body that is essentially unaccountable.

That is as fundamentally anti-democratic a step as anything I can think of. Now, the advocates of
the court say oh, but the member states control and oversee the prosecutor. Let me tell you with
perhaps 130, 140 states parties to the Rome statute, anybody who's controlled by 130 or 140
countries isn't controlled by anybody.

So if you're of an anti-democratic view, you will just love the ICC's prosecutor.

ALI MOORE: Of course you were very critical of the US involvement in Libya, you cast president
Obama as indecisive and inconsistent and said he'd set himself up for a massive strategic failure.

The US is not leading the NATO effort, they're supporting it. Do you think particularly in the
light of this ICC move that should now change? Would you like to see the US step up its role?

JOHN BOLTON: Well, I don't think the ICC means anything so I wouldn't change my views in light of
this indictment or any other activity they might undertake.

I have felt for quite some time since over three months ago Gaddafi threatened to return to
international terrorism that there was a strategic interest for the United States and for the West
as a whole in removing Gaddafi from power and that it was worth using force with or without
Security Council authorisation to accomplish that objective.

That's not why the United States or the Arab League or anyone else is involved in Libya.

It's by the terms of the Security Council resolution and president Obama's repeated commitments
only to protect Libyan civilians.

While we may want Gaddafi gone, according to the president we're not supposed to be using force to
accomplish it, although we did manage to kill three of Gaddafi's grandchildren in a NATO strike.

That is part of the problem of leadership and incompetence really on president Obama's part. Had we
acted swiftly and decisively at the beginning of this conflict, I think it might well be over now
and Gaddafi would be out of power.

ALI MOORE: Do you worry about what will come after Gaddafi, whenever that might be?

JOHN BOLTON: I definitely worry about what would come after him and I think that is sad to say,
another failing of the United States and NATO in this engagement.

We should have been working quite some time ago to find responsible pro-Western leaders who could
take over once Gaddafi is removed.

I don't think we have succeeded on that front and I think there is a risk that terrorist and
Islamic radicals among the opposition forces could end up in control once Gaddafi is removed or in
another scenario that's entirely possible, a divided, a petitioned Libya, you could end up with the
worst of both worlds - Gaddafi in control of the ancient province of Tripolitania in the west and
the radicals in control of Cyrenaica in the east.

ALI MOORE: You've written on the Arab spring more generally, you've written about the rising threat
of what you call the Iranian winter which you say could outlast and overshadow the Arab spring.
What do you mean by that?

JOHN BOLTON: Well, the government of Iran for 20 years has been the world's central banker for
international terrorism and it funds terrorists on an equal-opportunity basis.

It funds Shia terrorists and Iraq, Hezbollah in Lebanon but it funds Sunni terrorists as well,
Hamas in the Gaza Strip and its former sworn enemy the Taliban in Afghanistan.

So Iran is clearly fishing in troubled waters in the Arab world and when you combine that with its
ever closer presence to achieving a deliverable nuclear weapons capability Iran is a real threat
throughout the Middle East and I worry about it in a number of different contexts.

ALI MOORE: And do you believe though that it's where it should be in terms of the list of
priorities right now?

JOHN BOLTON: No, I don't think president Obama's paying much attention to Iran.

He's still waiting to find some ayatollah to negotiate with, as if they're ever going to give up
their nuclear weapons program voluntarily. We see the quasi Assad regime in Syria and our
administration and the Europeans have done nothing, I think in large part because they realise that
Syria, in effect, is a satellite of Iran and they're afraid of truly taking on Assad and taking on
the ayatollahs and the Iranian revolutionary guard core.

ALI MOORE: And now if we turn to Afghanistan, president Obama has announced the first troop
withdrawals. It was what was expected, wasn't it? It was what was flagged when the troop surge was
announced in 2009?

JOHN BOLTON: Yes, and it was a mistake to flag a withdrawal in December of 2009. An arbitrary time
limit, 18 months after the announcement.

It was signalled to the Taliban then and it's an even clearer signal to the Taliban now that if
they just wait in their privileged sanctuary in Pakistan that America and the rest of the NATO
troops will withdraw and the field will be theirs.

You know, they say the Taliban have a saying in Afghanistan, you have the watches, we have the

ALI MOORE: So what is the ideal exit strategy, if you like, given the domestic political imperative
in the US with waning support for the war, given the fact that we now know there are preliminary
discussions going on with the Taliban, what sort of an exit strategy should there be?

JOHN BOLTON: The purpose of political leadership is leadership. President Obama has displayed no
leadership on Afghanistan. I think the American people confronted with the strategic interest we
have in making sure that Afghanistan does not again become a base for the terrorism we saw on 9/11
would support a continued American presence.

The exit strategy is the defeat, the eradication of Taliban and Al Qaeda and their top leadership.

ALI MOORE: And the implications then for countries like Australia?

JOHN BOLTON: Well, you know, the implications for countries like Australia is when the United
States loses the will to provide the framework for international peace and stability that we have
since 1945 other countries are in jeopardy too. As I like to say to our European friends, you're
going to miss us when we're gone.

ALI MOORE: It does imply though, I guess, a confidence on your part that international forces can
win in Afghanistan?

JOHN BOLTON: I believe the way you win is by killing the Taliban and Al Qaeda systemically,
demonstrating to the people of Afghanistan, whether it's in Kandahar, in Helmand in the south or
the other provinces in the north-east, that we are there, we are there for as long as it takes, we
are there to win and we will win. If we demonstrate that, they will be loyal.

ALI MOORE: We talked about the domestic political imperative there for the US and the US
administration in terms of Afghanistan, how far are you into the process of making a decision about
whether you will run for the presidency?

JOHN BOLTON: Well I'm still considering it very actively. I've talked to a wide variety of people
across the country, political activist, campaign types, fund raiser, pollsters, the whole range of
people who would be involved in a campaign.

I don't think there's any coalescence yet around one or more Republican candidates. I think there's
a very strong feeling about the need to defeat president Obama. And I think there's a clearer and
clearer understanding of the relationship between international affairs and our domestic economy.

The president's failed badly not just internationally, failed badly on the economy as well. I think
he's very vulnerable next year.

ALI MOORE: That said, of course, we do know most of the Republican candidates except perhaps
whether Sarah Palin will run, do you risk running out of time yourself? Is there a deadline for
this decision?

JOHN BOLTON: Yes, I'm looking at basically Labour Day, the first week in September. I think
logistically you have to make a decision by then because of some of filing deadlines on the early
primary and caucus states and so that's my target to make a decision one way or the other.

ALI MOORE: Of course we've seen Michele Bachmann nominate as well in the last couple of days, do
you think it's possible that she could in fact eclipse Sarah Palin?

JOHN BOLTON: I think she's very likely to do that. I think people underestimate Michele Bachmann,
they underestimate her at their peril. She's a tax lawyer with an advanced degree in tax policy.
She's been successful in business. I think she's a very formidable candidate.

ALI MOORE: Would you join her ticket perhaps as vice president?

JOHN BOLTON: First I have to decide whether I'm going to run myself.

ALI MOORE: Let's look at the domestic issues in the US because of course there's a major debt
problem there. Negotiations don't appear to be making too much progress and there's a looming
August deadline to have the debt ceiling increased, will a deal will done?

JOHN BOLTON: I think it's looking less likely at the moment because the president again here is
simply not displaying leadership. He has not put a plan on the table to resolve this fiscal crisis
that he has helped create.

In fact, very interesting, the director of the congressional budget office was asked in testimony a
few days ago what he thought the impact of the president's plan was and the director of the CBO
said, "We don't score, we don't count up speeches."

The president hasn't given a plan. I think it's entirely cynical politically, he expected the
Republicans to propose cut and popular programs which he will then oppose for political gain.

It's not responsible.

ALI MOORE: He has put some cuts on the table, he has put some numbers on the table and the
Republicans are virtually dead against everything he's proposed to date, in particular tax hikes?

JOHN BOLTON: Tax hikes are exactly the wrong thing to do in the middle of a weak economy. If you
want to grow government revenues you should grow the economy and you do that by getting government
taxation and government regulation off the backs of the economy.

I think the real problem is that we've got a leftist administration, the most radical in American
history, that fundamentally doesn't understand how economic growth takes place.

They think the private sector is like a big cow that you can milk to an infinite extent with no
impact on the economy and they are badly mistaken on that.

ALI MOORE: Final issue, we're almost out of time but we've just seen some relatively disturbing
pictures out of Athens with protests on the streets as the Government considers the austerity
package, of course Greece is facing enormous financial problems.

Do you consider that to be very much a European issue and one that the US should not involve itself

JOHN BOLTON: No, I think the Euro is in large measure a political crusade by many in Europe who
wanted to see Europe, united Europe as a separate pole in the world alternative to the United

Certainly if the Europeans want to save the Euro that's up to them but I don't think the United
States should participate in bolstering a currency that has as one of its objective replacing the
dollar as the world's reserve currency. Let the Europeans worry about it.

ALI MOORE: That said, if Greece defaulted, America wouldn't be able to avoid the reverberations?

JOHN BOLTON: Well, I think Europe would have most of the reverberations and I think it's a caution
to the United States and a very significant one not to go down the fiscal policy road that Greece
has gone down and many other European countries has well. So if you're an American investor holding
sovereign debt from European countries like Greece or others in a similar fix, I'd sell now.

ALI MOORE: We certainly live in interesting times. Many thanks for joining Lateline tonight.

JOHN BOLTON: Thank you.

interesting times. Many thanks for joining tonight.

Thank you.

Navy procurement abilities criticised

ALI MOORE: An audit of the Australian Navy has found significant deficiencies in its ability to buy
equipment, and recommends urgent measures to overcome the problems

A report by the National Audit Office studied the Navy's effectiveness at working out what
equipment it needs and the level of success actually getting the equipment through the navy's
purchasing arm, the Defence Materiel Organisation.

The report warns there are chronic delays in finishing key defence projects because of poor
planning and a shortage of skilled engineers and other technical staff.

It says there's some way to go before the Defence Force becomes effective and efficient at
delivering what's needed for the navy.

Synthetic cannabis banned in NSW

ALI MOORE: The New South Wales Government has followed other states and announced a ban on
synthetic cannabis.

The drug is currently sold online and in herbal and adult stores under names like Kronic, Spice and
Northern Lights.

The New South Wales Government has decided to list the drugs in the same banned category as heroin,
cocaine and cannabis.

Doctors and psychiatrists say synthetic cannabis can impair judgement and cause hallucinations and

ASSOCIATE PROFESSOR JOHN ALLAN, NSW CHIEF PSYCHIATRIST: This is a drug that has been touted to be a
legal form of cannabis or a safe form of cannabis.

There is actually no safety information about it at all so the manufacturers don't have the
information that it is safe because there is not real research in humans and so we can't go around
and say this is a safe way to do that.

ALI MOORE: Selling the drugs will be banned in New South Wales from the 1 July with a ban on
smoking Kronic to come into effect a week later.

And that's all from us. If you'd like to look back at tonight's interview with John Bolton or
review any of Lateline's stories or transcripts you can visit our website. You can also follow us
on Twitter and Facebook. Steve Cannane will be here tomorrow. I'll see you Friday. Goodnight