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QUEST MEANS BUSINESS

Oil Prices Hit $110 a Barrel; Inside Interpol

Aired February 23, 2011 - 14:00:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: A jump at the pump. Oil prices hit $110 a barrel.

Removing the core from the Apple, shareholders demand to know about the Steve Jobs succession plan.

And inside Interpol, tonight, we find out how the organization catches their criminals.

I'm Richard Quest. We have an hour together and I mean business.

Good evening.

The rise in the price of oil marches on. And in today's trading this Wednesday that surge gathered speed. NYMEX crude is pushing $100 a barrel for the first time in two years. That is the NYMEX blend. The surge is even stronger with Brent crude, where prices have risen more than 16 percent since the start of this year.

This is how it has been played out in terms of history and what's happened. The Egyptian revolution helped push prices to $100 a barrel. That rise accelerated with Libya, now Brent at $110 a barrel, the first time since '08. We know there is disruption to Libya's oil supply, we don't know how much. It is a case of uncertainty.

Barclay's Capital says 1 million barrels of Libyan oil are being affected daily. Now that is three-quarters of Libya oil exports, 1 million barrels a day. That is the way some people see it. But there are others who say the disruption is less, production continues. And, in fact, just today there are reports of a tanker carrying 600,000 barrels of oil that left the Libyan port earlier.

So, we need to look now at not only the current situation, but what happens with the price of oil. After all, the international energy agency says it is plenty in its stockpiles, it would look to OPEC first, though, to fill the gaps. The idea of using emergency reserves is unnerving.

Harry Tchilinguirian joins me now, to talk more about, head of commodities at BNP Paribas.

Harry, let's begin. The price rise that we are seeing, how much of this is speculation, how much of it is true fundamentals?

HARRY TCHILINGUIRIAN, HEAD OF COMMODITIES, BNP PARIBAS: I think, you know, when you look at the oil market, the key issue, as you said, is uncertainty. The thing that the market likes the least is uncertainty. We don't have an idea of the duration of the upheaval on the ground. And we don't have a clear picture in terms of the volumes of oil that are as stake in terms of what is being lost. And really that is the key issue.

And beyond Libya, the uncertainty relates to the geography of the upheavals. Can the scope of the geography expand to neighboring countries such as Algeria, or possibly even certain Gulf countries?

QUEST: If that is the case, then if tensions ease, the price should, by definition, fall back again. That is unless concrete gets poured in underneath this price.

TCHILINGUIRIAN: Yes, I think really, it is an issue, really, in terms of uncertainty once again. When you look at the broader picture we see spare production capacity in OPEC countries, such as Saudi Arabia, maybe some 3.5 million barrels per day. So, on paper you could compensate for the loss in Libya, most of it is exports going to Europe. The question is, duration and geography of the upheavals. And will it adopt the same violent nature that we are seeing in Libya today?

QUEST: There are two potential ways out. One is, of course, these various strategic petroleum reserves around the world, that could pump oil into the market. But they are only used in extremists. The other is that Saudi, or another starts, tapping the pumps harder. Which do you prefer?

TCHILINGUIRIAN: Well, obviously, the international energy agency would prefer to see Saudi ramp up production. The use of strategic reserves is for supply disruptions. And as we cannot discern (ph) the extent of outages in Libya for the moment, I think the IEA would rather see OPEC, and particularly Saudi Arabia, increase its production first. With an increase in production, and as we discern (ph) the amounts that are involved the IEA could choose to release stocks in order to smooth over the transition.

QUEST: Right. Let's put this another way. How dangerous is this to the fragile recovery that we have oil at $110, and probably headed higher?

TCHILINGUIRIAN: Well, again, I come back to duration. How long can we sustain a higher oil price? And really the issue is in terms of costs that are going to impact businesses and consumers alike. And in terms of the cost of crude oil prices translating over to retail costs, we have to look at a situation on whether or not oil companies are hedged, using derivative markets, against the possibility that we have seen developing over the course of the couple past weeks.

QUEST: So my final question to you, is a sort of a deeply unfair question, but forgive me nonetheless.

TCHILINGUIRIAN: Don't worry, I won't blame you.

QUEST: Well, you may after you have heard it. Does the price go higher?

TCHILINGUIRIAN: I guess, you now, when dual (ph) are involved in the oil market all bets in terms of conventional wisdom based on supply and demand, or economic indicators are off. So, yes, oil prices could go higher simply because liquidity dries up in the market with the expectation that price is going to rise. Not because the event has actually happened, but because there is a potential for realization of that event.

QUEST: All right. Many thanks indeed.

TCHILINGUIRIAN: Thank you.

QUEST: For joining us from BNP Paribas. Putting that into context for us.

As we look around the world and we consider exactly what's happening, we need now to go to the epicenter of the crisis that has caused the rise in oil prices. And in that regard it is Libya that has been driving up price, higher.

And update now: It is the ninth day of protests, which have already cost Moammar Gadhafi control of the eastern part of his country. More top ministers are defecting. The control over his military seems to be slipping. Governments are scrambling to get their citizens to safety. Reporting on this crisis from inside Libya remains challenging. The government maintaining tight control over communications. CNN's Senior International Correspondent Nic Robertson is with us now, just over from the border, in Tunisia.

Nic, we are getting a very odd picture of what is happening in Libya. But the core of it, is the regime falling apart fast enough to collapse?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: (AUDIO GAP) appears to be at the moment. The country is certainly fractured, the country is certainly fallen apart, into two pieces, the east and the west. And the indications are it may fracture further.

But as far as Tripoli, the capital, is concerned what we are hearing at the border here, where people are crossing over, they are saying since Moammar Gadhafi's speech last night, he has put more security forces on the street and the people have fled the street. So there haven't been the nightly violent confrontations between people and security forces, and for that reason the streets have been calm. And that reason, people say, is why they were able to flee.

However, they say there are thousands upon thousands of people stuck at the airports. But it does seem, as far as the capital is concerned, and the road to the border, the government is still in control. Checkpoints, government checkpoints, on the road to the border are systematically stripping people of their cell phones, SIM cards and memory cards. Meaning any crimes by the regime that are stored on those cards are being obliterated and destroyed, Richard.

QUEST: Nic, difficult one, this. But just to put us into a bit of analysis and perspective. If-if, and I'll put that as a big if, out there. If the regime were to pull-I saw pictures earlier from the east of the country, basically, saying the West's oil, the West needs oil, our oil for the West. If Gadhafi's regime goes, and it is a big if, does whatever replaces it look more pro-West?

ROBERTSON: Certainly a lot of the people that are helping, journalists that are trying to bring information to the situation, that are trying to bring awareness of what is happening inside Libya. The patriots, the ex-patriots community, whether they are living in the United States, Great Britain, around Europe, many of them are businessmen, many of them are businessmen that want to see, and build, a better and more democratic Libya in the future. All of these people would have a more pro-Western interest.

There are, of course, other interests inside Libya. And the power players in Libya are some of the old families who have held power before Colonel Gadhafi came along. The tribes would have a play as well. But they all have an interest in selling their product to the outside world. It does them no good to sit on it. The question will be is how quickly can they restore stability to the country when Gadhafi finally is defeated. And how equitably and fairly and quickly they come to a power-sharing agreement and somebody rises to leadership. It is the interim, it is that period of instability in between that is the question mark at the moment, Richard.

QUEST: Nic Robertson, who is on the border of Libya and Tunisia.

European markets, we need to put the perspective, from the oil to the equities. It was a second straight day of heavy losses, across London, Frankfurt, Paris, they were all down, at the end of trade. The Xetra DAX lost more than 1.5 percent. Now, not surprisingly, it was the big carmakers, BMW, Daimler, and Volkswagen amongst the worst performers. Any form of uncertainty which might cause problems with economic activity, particularly in key markets, is going to be a worry.

And if we look to Wall Street now, a second straight day of declines; there was a big sell off at the end of trade on Monday.

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This is where we stand now. We are off the lows of the day. It was off more than 100 points earlier. So we pulled back a little from that. Now down at 12,111, just under 1 percent. But that gives you an indication of the sort of disgruntled view of the equity markets. We have seen this over several sessions now.

When we come back, in a moment, the shareholders are revolting. They want answers from Apple. And of course, it is all to do with who is at the helm. In a moment.

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(COMMERCIAL BREAK)

QUEST: Apple has sent the media invites for an event on March the 2nd. Now we don't know that it is all about, but it is at the same destination at where they launched the original iPad and everyone is basically saying this could be iPad 2, the one with the camera.

In the meantime, Apple shareholders are pretty much demanding to know who will take over from Steve Jobs as chief executive, if he does not return from illness, or indeed, he becomes incapacitated.

What Apple shareholders are wanting is they are asking management to give them their plans, or at least outline the plans for succession to the Apple co-founder. Now, we know, that Steve Jobs has been on indefinite medical leave since mid-January. It is the second leave in as many years. He also had cancer surgery in 2004. And reportedly had a liver transplant in 2009.

Apple is still quiet on the current status. We do have a picture of him, sitting here, at the-having dinner when President Obama was in California last year, up in Northern California, talking to tech leaders in Silicon Valley.

As for the man who is in charge at the moment, Tim Cooke is the chief operating officer. He was the interim CEO in `04. He is touted as a possible successor to Steve Jobs in the long run. He held this job, and is held in very high regard within the company.

So, will the Apple shareholders get anything from the notoriously secret company? David Miller communications director at the Laborer's International Union of North America. David joins me now.

You and I are both acutely aware we are talking about an insensitive subject. You are talking about a man who maybe seriously ill and we are already carving over the remains. But, be that as it may, you say this is a nasty business, but it has to be done.

DAVID MILLER, COMMUNICATIONS DIRECTOR, LIUNA: Right. And, you know, as for Steve Jobs, I mean, we want to see him come back to the helm at Apple as soon as possible. But the fact is, as you know representing a long-term shareholder, we are looking at the long-term and we would like to see Apple, like many other companies have done, do the responsible thing and disclose more about their CEO's succession plan.

QUEST: OK, but this has been around for a while. What has rattled your cage, suddenly?

MILLER: Well, we filed the proposal, or one of our pension funds filed the proposal back in August. So it is not like his most recent absence, you know, rattled the cage. I mean, we've also-like we said, we have gone after other large companies, including companies in the tech sector, like Intel and Hewlett-Packard. Apple is by some measures the second largest company in the world. And so we think that given that position and their importance to the global and U.S. economy that we think they should put these disclosure procedures into place.

QUEST: Apple, of course, always say that there is a process. There is a person in charge; a competent man in charge. Why are you not happy with that? Because at the end of the day-I mean, at the end of the day, David, look, they are not going to send the thing down the toilet.

(LAUGHTER)

MILLER: Well, we don't believe they will. And I'll say this, you know, Apple has been a very good investment for our pension fund. It has worked out very well. We are happy now. We want to make sure we are happy in the long-term. And we want to make sure that the members, the construction workers who build America, who invested into this pension fund, we want to make sure that they are happy in the long-term, too. We are looking out for their retirement and we hope that Apple will look out for it as well.

QUEST: If we talk generally now about-let's move away from Apple-and this whole question of succession, particularly for pension funds. At a time of crisis when you have got, whether it is geopolitical in the Gulf, or economic, it is a very, very sore subject.

MILLER: Yes, it is. I mean, it is especially a sore situation for the people who count on these pension funds. For example, you know, our members, construction workers, nearly 23 percent of them are unemployed in the U.S. right now. You know, we need to look out for their interests. And we're doing the best we can by, you know, by trying to promote some stability when there isn't that much in the economy right now, by at least getting these succession plans out in the open.

QUEST: Let's talk about the economy, just for a second. We have a spare moment.

MILLER: Sure.

QUEST: So we do need to look.

President Obama, today, is just adding more people to his economic and jobs council commission that will be all revealed tomorrow. Is it your fundamental fear that the jobless rate at 9.5, or 9 and change, does not come down in the next two to three years, substantially?

MILLER: Well, we think that there is a way to help it come down. And you know, our position is that one of the best ways to do that is by doing what the president has called for, which is a substantial long-term investment in the country's infrastructure. If we can bring down that construction unemployment rate, which I already said is over 20 percent, then I think we can make a big dent in the overall unemployment rate. And make a long-term investment in the country's future, too.

QUEST: All right. All right. But when it comes between investing in infrastructure, long-term or otherwise, and deficit reduction, David, come off the wall, which side are you going for first?

MILLER: We think one can lead to the other.

QUEST: Oh.

MILLER: I think if you create jobs. If you create jobs in this country and if you give America the infrastructure that it needs and deserves, and lives up to the infrastructure it once had, then you are going to see-you are going to see, you know, you are going to be laying the ground for a long-term economic turn around.

QUEST: We'll talk more about it. David, great to have you with us from Washington tonight. Lovely to see you. Many thanks.

MILLER: Thank you, Richard.

QUEST: Many thanks, indeed.

When you and I come back together, in just a moment, Joseph Ackermann explains what he thinks about women in top management. Now, you'll remember, the head of Deutsche Bank outraged female groups by suggesting his board would be colorful and prettier with women members. What did he mean? In a moment.

(COMMERCIAL BREAK)

QUEST: Many of us already knew it. Tomorrow a report to the British government, will confirm it, there aren't enough women at the top. Just 12 percent of boardroom members on the London FTSE are women. In the 21st century, many say, that is simply too few. This report by Lord Davies is expected to suggest that the number should rise to 20 percent by 2013. The EU Justice Commission Viviane Reding is meeting business leaders next month. And she said she might impose quotas on boardrooms if more women don't get top jobs. She is hoping for 30 percent of women in boardroom's positions by '15, and 40 percent by 2020.

The row, of course, or at least the focus of this came into sharp focus. Germany Chancellor Angela Merkel filled one third of her ministerial positions with women. Speaking at the conference in Berlin, earlier this month, she said the lack of women was a scandal. Mrs. Merkel, who opposes quotas, says she'll give companies in Germany one last chance to address the issue before her government forces them to change. It follows comments from Joseph Ackerman, the chief executive of Deutsche Bank, who outraged the chancellor and many of her ministers, by suggesting his bank's board would be more colorful and prettier with a woman-well, more women.

Now, well, actually in his case with a woman. I don't think there are any women on that board. For the record, Germany's largest bank doesn't have a single female on its executive committee. It does on its supervising, but not on its executive.

CNN's Andrew Stephens caught up with Joseph Ackermann in Hong Kong. And whatever else there was to talk about at the bank, he started, of course, obviously by asking about the low-level of women in Germany's boardroom.

(BEGIN VIDEO CLIP)

JOSEPH ACKERMANN, CEO, DEUTSCHE BANK: I don't think it is a cultural issue. And I don't think it is an issue of not being most interested in having much more women in the boardrooms, on the executive level, as well as on the supervisors side. The problem is really we haven't yet found the right work life balance with many women.

We have here in Deutsche Bank, we started the project several years ago where we had women being part of all this networking of projects where they had a platform to excel. It worked perfectly well. And many women have made career steps in the mean time. But we have also lost women. Not because we didn't want to have them. We would have loved to have them in the most senior positions, but because they had different career plans. And maybe the family demanded different steps, so-

ANDREW STEPHENS, CNN INTERNATIONAL CORRESPONDENT: Is that changing?

ACKERMANN: It is changing. I just-I must say, the last 10 days I had many, many meetings with senior female managers in Deutsche Bank. And I was absolutely astonished how things are changing. How the willingness to contribute, the willingness to make a career, the role they are assuming. I think it is just a question of time before we have many, many more women in executive positions.

The problem was because we had so few that if one then didn't succeed, because she didn't want to stay on or whatever. People said, see, it is not going to work. We need a much larger group of women and it is true for men. If one or two will not be willing to assume more responsibility, 10, 20 or 100 others will do. And I think that is the most important one, you have to broaden the base and that is what we are doing. Young people, graduates, but also, of more senior women. In that sense I am very, very optimistic.

STEPHENS: Yes, you have been attributed with making those comments about women in the boardroom. Was that taken out of context?

ACKERMANN: Oh, my, obviously, I mean I explain for five minutes how important women are and I also explained-and I'm a strong believer that the quota is not the solution. And I hear that from our own women as well. They are saying we want to be strong. We want to be qualified, we don't want to be in a boardroom because of the quota. And I think that is very strong, our view, and we have a very good relationship.

But I also think that in all, the context of how serious it is, and how much we have to do. We should also not loose sight of being a little bit charming to women from time to time. And I think the reaction I got to my remarks from hundreds of women, was very encouraging, I have to say.

(END VIDEOTAPE)

QUEST: I will leave it up to you to decide whether Joseph Ackermann just put his foot in it again. Or maybe he hit the mark straight on, as anyone in the business world knows, what can you say, in terms of just, "you look rather good today"-or anyway, @RichardQuest is the Twitter address for that one. And we'll talk more about that, you and I, in the hour ahead.

A fugitive may run, Interpol has a message, you can't hide. We'll be back inside the business of international crime fighting. The methods, the pitfalls, the results. QUEST MEANS BUSINESS, Interpol, inside.

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(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN and on this network the news always comes first.

(NEWSBREAK)

QUEST: Any good business has to-it must, focus on results. And Interpol, the world's largest international policing agency, frankly, is no different. Now, these are some of the results from last year; 160 fugitives were found, 600 people were arrested for pirating fake goods or faked goods and pirated goods, if you get the idea. Seven million dollars worth of counterfeit or illegal medicines were seized -- $7 million.

Is that a lot?

You be the judge. In the third part of our series, we'll find out how they do it and whether these results really spell success, as tonight, again, we go inside Interpol.

(BEGIN VIDEOTAPE)

QUEST: The creed of detectives everywhere -- survey the scene, scope out your target, then move in. In my case, it's souvenir shopping in the heart of the world's largest international policing organization. Yes, they have a gift shop in the lobby.

(on camera): So I have a tie, spoon.

(voice-over): For Interpol, there are bigger fish to fry, knowing your target is a big part of fighting crime.

(on camera): What are we looking at here?

DIMITRIOS SOUXES, INTERPOL: Actually, this is the criminal database of Interpol, which has been set by 188 different member countries.

QUEST: The popular belief is that the red notices are an Interpol arrest warrant.

SOUXES: In reality, it is not. But it's a strong warning that the global police is looking for the specific international wanted person.

QUEST (voice-over): The red notices are part of a system of electronic alerts which are Interpol's most powerful tools in catching fugitives. The number issued has more than quadrupled in the last decade.

(on camera): On average, how many of these red notices actually are successful?

SOUXES: When it comes to our own unit, I would say between 5 and 10 percent.

QUEST: Really?

SOUXES: Yes.

QUEST: That's not very successful.

SOUXES: On the contrary, I would say it's extremely successful because you have to bear in mind that we have thousands, literally thousands of red notices.

QUEST (voice-over): Through the Internet, Interpol is challenging the view that policing must be shrouded in secrecy. Forty percent of red notices are published online, even some of the more controversial ones.

(BEGIN VIDEO CLIP FROM CNN NEWSROOM, DECEMBER 1, 2010)

UNIDENTIFIED FEMALE: And today we hear from a man the whole world wants to find. He's Julian Assange. The global police agency, Interpol, says it's put out a red notice.

RONALD K. NOBLE, SECRETARY GENERAL, INTERPOL: Interpol encourages that they be made public, put on our database so the world knows, but we're accountable for what we do and how we do it.

QUEST: The World Wide Web has another side that's made Interpol's job much harder, especially in new areas like counterfeit pharmaceuticals.

ALINE PLANCON, COUNTERFEITING AND PHARMACEUTICAL CRIME UNIT, INTERPOL: The Internet is a very good tool for the counterfeiters. They are using the business to business in order to -- to make their orders, to -- to ship their medicines and to deliver them in a timely manner and transfer the money into -- into their bank account.

QUEST: These clever fakes come in a variety of packages, everything from lifestyle medications, such as erectile dysfunction drugs to life- saving anti-cancer medication.

PLANCON: These counterfeiting pills are killing people. The patients, they are buying these counterfeiting not knowing that they've got the risk to lose their health, but also their lives.

QUEST (on camera): Are you losing the battle against counterfeit medications?

The speed at which they move is faster than the speed law enforcement moves.

SOUXES: We must say that we are behind the counterfeiters so far, but we are trying to make it up and we need, really, some support to be able to -- to win the race against them.

QUEST: It's nighttime now in Lyon and although Interpol's headquarters are quiet, they're not silent. This operation runs 24 hours a day because somewhere in the world, there is a police force that needs Interpol's unique form of help.

(voice-over): On the other hand, without the work of its member countries, Interpol couldn't function. Ron Noble knows that like politics, all crime is local. For instance, the gang of jewel thieves known as the Pink Panthers, who were blamed for robberies all over Europe and beyond for decades.

NOBLE: The most important issue to all your viewers is local crime, crime that could affect them or their families. And what Interpol tries to do, as we say, we're going to protect you from non-nationals that want to come into your country, commit robberies. You mentioned the jewelry store robberies, the Pink Panther gang, that's been in operation for almost 20 years and has been involved in robberies in 90 countries and hundreds of millions of dollars.

But the robberies still occur in countries at the local level. And when the police at the local level are investigating those cases, if they only check their national databases, they would never have known that the origin of this criminal group is in Serbia or Montenegro or the Balkans

QUEST: Catching criminals is what this business is all about, whether it's good old-fashioned jewel thieves or sophisticated counterfeiters.

And if Interpol has its way, the cliche holds, the fugitive can run but can't hide.

Richard Quest, CNN, at Interpol headquarters, Lyon, France.

(END VIDEO TAPE)

QUEST: That's what Interpol can do now. But the work of an international policing agency is never truly done. In the final part of our series on Thursday, we look at the future of Interpol and why it's looking to the east.

(BEGIN VIDEO CLIP)

NOBLE: We go where the crime is. And we, as a world community, recognize that South Asia and Asia is an area of growing importance both for legal activity and illegal activity.

(END VIDEO CLIP)

QUEST: Interpol has got big plans -- a brand new global base in the works. And one big problem -- how to tackle cyber crime.

Find out more at the same time in tomorrow's QUEST MEANS BUSINESS.

And online, you can see all the episodes in the series so far, CNN.com/questmeansbusiness, of course.

We're desperate on the street -- it isn't the Middle East, it's the snowy streets of Madison, Wisconsin in the United States. The battle -- there's a big one in the future of the American labor movement may be at stake, in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SCOTT WALKER, WISCONSIN GOVERNOR: You see, despite a lot of the rhetoric we've heard over the past 11 days, the bill I put forward isn't aimed at state workers and it certainly isn't a battle with unions. The legislation I put forward is about one thing -- it's about balancing our budget, now and in the future.

(END VIDEO CLIP)

QUEST: Whether it's Illinois or Wisconsin, of course, the budget battle continues in the United States. And we've been covering it in some detail.

There you heard the Wisconsin governor, Scott Walker, trying to drum up support for his bill that would restrict collective bargaining for many government workers.

Some union bosses say despite what the governor says, this Republican- led effort is part of a bigger plan -- and behind that plan, kill off the unions.

CNN's Carol Costello looks at the uphill struggle that's being faced by U.S. organized labor.

(BEGIN VIDEOTAPE)

CAROL COSTELLO, CNN CORRESPONDENT: (voice-over): What's happening in Wisconsin...

UNIDENTIFIED PROTESTERS: Kill the bill!

COSTELLO: -- and now in Ohio, is not new. It's the culmination of a decades long fight between organized labor and management. And if you ask pro-union folks...

UNIDENTIFIED FEMALE: I want my children to support union labor so their children can have a future, too.

COSTELLO: Corporate America is about to win, big time.

Mary Kay Henry is the president of the Service Employees International Union.

MARY KAY HENRY, PRESIDENT, SERVICE EMPLOYEES INTERNATIONAL UNION: There's been a coordinated campaign for the last 30 years to undermine the American middle class by weakening the power of workers to be able to collectively bargain to raise their wages.

COSTELLO: Henry says corporate America save themselves money and wages by lining the pockets of Republicans running for statewide offices. According to FollowTheMoney.org, in the 2009, 2010 election cycle, business interests donated $878 million to candidates running for governor and other statewide offices across the country. That includes hundreds of thousands of dollars in donations for Governor Scott Walker of Wisconsin and John Kasich of Ohio.

Organized labor groups donated far less to state candidates, $225 million. But Republicans argue it's the voters, not the campaign dollars, who have spoken.

UNIDENTIFIED MALE: At least there's a few teachers out there who have the guts to stand up against you union thugs.

COSTELLO: Many Republican lawmakers say one of the biggest threats to our economy is not a lack of corporate regulations, but unions out of control.

SHANNON JONES, OHIO STATE SENATE REPUBLICAN: We've got a projected $8 billion plus budget deficit that we have to deal with. And we're not like Washington. We just can't print more money and pawn it off on our children. We've got to balance these budgets.

COSTELLO: That's why Senator Jones is introducing Ohio's bill -- a bill that would essentially gut collective bargaining rights for state workers.

(on camera): And Democrats say there is another reason Republicans want to gut unions. Organized labor donates hundreds of millions of dollars to candidates like Barack Obama. So if you weaken the unions, you weaken a traditional monied supporter of the Democratic Party.

Carol Costello, CNN, Washington.

(END VIDEO TAPE)

QUEST: Now, with the spotlight on unions, some say what's happening in Wisconsin is the last gasp of organized labor. Membership has been declining for years.

Poppy Harlow joins us from CNN New York to understand the power of the unions in the United States -- Poppy, we know that the -- the unions' membership has been declining. But in key industries -- auto workers, pilots, flight attendants, they're -- they still do have that capacity to cause disruption.

POPPY HARLOW, CNN BUSINESS CORRESPONDENT: That -- that is a very good point. They -- they have the power, whether it's the Pilots Association, the auto workers. I mean we've seen it, clearly, year after year. But overall, unions in no way, Richard, in this country, have the power that they had.

Take a look at these numbers. You look at sort of the peak of unionization in America and it was back in the '50s, 1953 -- 27 percent of all workers were unionized. Today, it is below 12 percent.

But still, you see the most union workers in the public sector. Those are the people that are protesting right now in Wisconsin and elsewhere. Thirty-six percent of public sector workers, they are unionized. Only about 7 percent of private sector workers.

But you make the good point that in -- in the auto industry and the airline industry, unions still hold a lot of power.

Now, when we talk about this issue of pay and why collective bargaining is so important to these union workers, it is clearly, in large part because they make more money if they're unionized. Take a look at the numbers. The average union worker, the median income for, say, 50 weeks of the year, over $45,000, Richard. That drops by $10,000 if they are not part of a union.

And this is the point that I think is fascinating, when you talk about the gap between rich and poor. There are economists out there, Richard, who argue the decline of unions in America is a big driver of the wealth disparity in this country, right.

Let's take this last two decades, the last 20 years. The red line is the richest 1 percent of Americans. They have seen their income rise 33 percent over the last two decades. The average American is the blue line. They have seen their income remain flat. And some economists say, without question, Richard, that is because of the decline, year by year, of the unions and their power and their -- their membership in this country -- Richard.

QUEST: OK, but if you take manufacturing -- and, of course, we're all familiar with the Wal-Mart example of how -- how long and hard Wal-Mart has fought to prevent workers from unionizing.

Why, in so many manufacturing areas and so many parts don't workers want to be part of a union if there is that economic benefit that you talk about?

HARLOW: That's a very good question. Some workers want to be part of a union. Some workers don't. Look, it -- it is ultimately up -- up to the company to say we're disbanding this union. Sometimes they get sued for doing that or not.

A lot of it has to do with the issue of choice, Richard, right?

Let's say that we know that manufacturing jobs that are unionized make more money. Now, the company has the power to say, OK, if you're going to demand to be unionized and demand more money and demand more benefits, we're going to take those jobs out of this country and we're going to move them elsewhere. We're going to move them overseas. That is a conscious choice that the company makes.

So workers have to calculate that in -- do they want to see the jobs go elsewhere?

And -- and when you look at what the Heritage Foundation, which is a conservative group here in the U.S., says, they say the proof is in the numbers. The majority of manufacturing jobs lost over the last 30 years in the U.S. have been union jobs, while non-union manufacturing jobs...

QUEST: Right, but...

HARLOW: -- have actually increased, Richard. So that's the choice.

QUEST: But what a -- what -- isn't it fascinating, then, with 9.6 percent or whatever it is, unemployment now in the United States, with jobs going overseas, the -- it's almost like -- it's almost, Poppy, it's a contradiction in terms that people don't go back to the union, they actually go in the opposite direction.

HARLOW: That's -- that's -- that's a very good point. I think that's what we're seeing play out in places like Wisconsin right now, Richard, is that they're saying this is the only power we have to not only keep our jobs in this country, but to -- to keep them at the wages that we are used to, that we want to see.

But again, in an industry like airline pilots or teachers or firefighters or policemen and women, that's who you see on the streets now. They can't outsource their jobs.

So they have more power than other unions, where their jobs absolutely can be outsourced -- Richard.

QUEST: Poppy Harlow, who is in New York with that extremely interesting look and discussion on unionization and the power of the unions.

We'll talk more about that, Poppy.

In a moment, fresh out of the oven and getting more expensive -- it may be very French and certainly Parisian, but what can the humble baguette tell us about the cost of food in France, in a moment?

(COMMERCIAL BREAK)

QUEST: Tens of thousands of Indians took to the streets of New Delhi today. They were protesting against surging food prices. They marched through the capital and to the Indian parliament. And there, they chanted slogans and demanded the government provide them with food security. They carried red flags.

The demonstrators represented several trade unions, including one linked to the ruling party. India has been struggling with double digit food inflation. And that's hit the country's poorest the hardest. They've seen the cost of basic staples, and that includes wheat, rice, vegetables - - those prices have gone up sharply.

But unlike the protests that have swept across North Africa and the Middle East, also sparked by rising food prices, in India, no calls for the removal of the country's democratically elected government.

We have been reporting extensively on this high cost of food around the world.

In France, it's much more than just the price of a traditional staple. The cost of the humble baguette says a lot about the overall economy.

CNN's Jim Bittermann explains in the latest installment of The Price We Pay.

(BEGIN VIDEOTAPE)

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: I'm Jim Bittermann in Paris.

And I wanted to say a few words about the baguette. There's nothing more unifying in France than the ordinary baguette. And while the France, on average, consume about 85 fewer of the breadsticks than they did a century ago, it's hard to get through a day here without at least once seeing a baguette on a plate or in a bread basket.

They've been such a staple, that up until 1978, the prices of baguettes were controlled by the government to protect consumers.

But since then, the cost of baguettes has risen with consumer prices and sometimes at a higher rate. Over the past five years, for example, the price of an average baguette has risen by nearly 10 euro cents, just above the rate of inflation. This year, though, there may be a sudden jump. According to some retailers, surging wheat prices could push up baguette prices by five cents this month -- a one month rise of 6 percent. And while the baguette may not be as important as it used to be in the French diet, its rising price is a sure sign that other food prices will be rising here.

(END VIDEO TAPE)

QUEST: Jim Bittermann in Paris on the price you pay for a baguette.

I suppose it would be a bagel in New York. It would probably be cheaper than a baguette in Paris.

I don't know why we're going down the bread route, because we're actually talking about the markets, the New York Stock Exchange, to be precise.

Alison Kosik probably enjoys a bagel every now and again -- Alison, look, the market is down 114 points. We had a very sharp fall yesterday.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, we did.

QUEST: There must be some concerns that this is not just a crack.

KOSIK: This is all about Libya. And it's Libya and beyond, Richard.

You know, first of all, it is worth noting -- and I need to point this out -- that Wall Street has really been predicting a correction to happen some time in the second quarter. This is maybe the -- a little earlier and a lot faster than everybody predicted.

But a correction was predicted. I mean the markets had a really big run-up. And as far as oil, the same thing there. You know, there's been this prediction for $100 oil before any of the protests in the Middle East started.

Now, keeping that in mind, sure, the worry is Libya. But the worry is also what's going to happen throughout the Mideast. I mean, there's a lot of uncertainty as to, first of all, what's going to happen in Libya and then where else these protests may go...

QUEST: Right.

KOSIK: -- and then possibly disrupt oil supplies -- Richard.

QUEST: OK. I saw some interesting numbers -- you will have seen them, too, house prices, particularly in some parts of America, the worst that -- in the recovery.

If the Schiller numbers are right, then this isn't over by a -- by some way.

KOSIK: It's really not. I mean the -- the depressed housing prices, you know, are at nine year lows, at this point. And it shows that we haven't hit bottom in the housing market. And until we do, Richard, hit bottom, we're not going to see a strong recovery in the housing market.

Now that being said, today, we just got a report showing that housing prices for previously -- or housing sales for previously owned homes went up 2.7 percent in January, which is kind of unusual, because people don't usually go house hunting in the cold. But we did see this jump in house -- in housing sales for January, maybe because prices are so low. So maybe in that case, it's helping.

But the fact of the matter is, you know, we had this huge glut of empty properties just sitting on the market, and then, forget about the fact that we've got foreclosures -- millions of foreclosures that have yet to even hit the market. That's why we're seeing housing prices so depressed. And that's why we don't see any -- any relief any time soon, as far as prices go -- Richard.

QUEST: The market is off 107 points. It's going to be a gloomy day in New York, at least for those who are long on stocks.

Alison Kosik is in New York for us tonight.

If you wanted any sign of just how complex the position in global economics is at the moment, whether it's the housing market that we've just heard about, the unions in -- under deficits in Wisconsin, the Bank of England has taken a step closer to raising U.K. interest rates. We've just had the minutes of the Fed rate meeting earlier today and it revealed that another member of the monetary policy committee, a man called Spencer Dale, who's also the bank's chief economist, he has now joined Andrew Sentance and Martin Weale voting for a rate hike.

Now, what does it mean?

It means three members of the nine strong committee now want to increase borrowing costs compared with two in January. The minutes reveal the three hawks are concerned about inflation, which is doubling at the bank's 2 percent target.

The weather forecast -- Guillermo back with us at the World Weather Center and -- and welcome back to you.

GUILLERMO ARDUINO, CNN METEOROLOGIST: I -- you -- you know what I'm thinking about this, I can't focus because of your tie. That's a wonderful tie. And I wish...

QUEST: Oh, well, now -- now, I'll tell you, now I'm going to -- now, you (INAUDIBLE) -- four euros in Paris.

ARDUINO: No way.

QUEST: People constantly say -- yes, absolutely. I may be strobing (ph) a bit. Four euros. I can't be doing with these 100 euro ties. You get a bit of makeup on them, a bit of schmutz down the middle and it's all over because you can't dry clean them. Four euros and it does the business.

ARDUINO: You are my hero. The cheapest I've paid was one euro in Torino, Italy some years ago and one of the few bargains that I got with ties. Real -- I look up to you. No doubt about it.

Now, enjoy, because the weather is not that bad in the west. It's cold still in the east and in many parts of Russia and the Baltics. But things are getting a little bit better. And it's shrinking. I was thinking of Jim Clancy, who is in Berlin today. And the weather is really cold, minus seven, I think.

But I'm thinking, also, about all those people that are trying to get out of Libya, because of this low pressure center here, slow moving, bringing intense winds and also a lot of rain. We will have seen more than the average for February in terms of rain in Tripoli. And look at the winds. So those planes taking off from there or circling around are going to have a bumpy ride.

The satellite picture also shows how that system is going to move even farther east and things are going to clear, especially in Tunisia first and then into Libya.

Now, let me tell you, London not bad at all. I think that we still believe that Thursday is going to be the best day. The weekend in London is going to be rainy but at least we don't see the snow that we have here in the Netherlands and in Germany and the cold weather anywhere from Germany all the way to the east.

But we'll see some foggy conditions. I mean I think it's looking fine. Sofia, Bulgaria with some snowy conditions. The -- actually, the Balkan Peninsula is where we have a lot of snow in the forecast and where we have, also, those cold conditions that keep dipping down.

Look at the temp right now in Stockholm, minus 16 compared to 10 in London; nine in Istanbul, minus six in Kiev and Berlin, zero is the forecast for today. But right now it's -- for tomorrow. But right now it's like minus seven or so.

So it's not nice, but it's not nasty, either. I would say that this storm here, combined to the cold in the east are the two main factors that are bringing some discomfort in general.

In the United States, things are OK for now, Richard, but we are seeing some delays in the Northeast. The problems are going to be in the South, though, where we expect, possibly, some tornadoes here developing in the South. So watch out for the next two -- two days, of course, for this story.

QUEST: How much did you pay for that tie, Guillermo?

ARDUINO: Let me see. I think this is from my Aunt Susan. Let me see. Hold on.

QUEST: Oh, well, then -- well, then we...

ARDUINO: Yes.

QUEST: -- we wouldn't be indelicate -- we wouldn't be indelicate to ask...

ARDUINO: No, but wait...

QUEST: -- how much...

ARDUINO: But it's Danielle Hester (ph), which is a very expensive brand, I think. So my Aunt Susan...

QUEST: Well, we would...

ARDUINO: -- spent some buck on it.

QUEST: We would expect nothing less...

ARDUINO: Exactly.

QUEST: -- from dear Aunt Susan.

ARDUINO: Exactly.

QUEST: I'll have a Profitable Moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

The rise in oil prices, it's a cause of worry because there's not a lot that can be done about it. If prices continue and remain high for some time, then eventually it will feed through to global inflation. And some central bankers, like Mervin King (ph), may discount it as being cyclical, not structural, inflation, but it won't matter if it crimps economic growth, slows the system down and feeds through into wage demands.

There's not a lot that can be done. Strategic oil reserves are for emergencies and we're far from that. OPEC members could pump harder, except there'll be wary of a price collapse if tensions ease. The oil markets have always been at the mercy of world events. We're on the cusp of a crisis and it could happen before we know it.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

"WORLD REPORT" is next.

END