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QUEST MEANS BUSINESS
Jobs Unveils Apple's Latest Innovation; Modern Silk Road; Future Cities: Copenhagen
Aired June 6, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST, QUEST MEANS BUSINESS: Steve Jobs unveils the iCloud, the new apple of Apple's eye.
Spain counts the economic damage from the E. Coli scare.
And Dominique Strauss-Kahn pleads not guilty.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
Well, Apple wants customers to jump on board its Cloud and let the competition float away. CEO Steve Jobs is at the Apple worldwide developers conference tonight. He got a standing ovation from the crowd when he appeared on stage in San Francisco. It is only a second public appearance since he went on medical leave nearly six months ago. Apple's new iCloud service is being unveiled at the event and basically it is an online storage space. It will mean customers can get their music, photos, e-mail and other data on any Apple device without having to manually load the data onto each one.
Apple played the song, "I Feel Good" to introduce Steve Jobs. And he said the welcome he got in San Francisco certainly helped.
(BEGIN VIDEO CLIP)
STEVE JOBS, CEO, APPLE COMPUTER: If the hardware is the brain and the sinew of our products, the software in them is their soul. And today we are going to talk about software. We got some great stuff to talk about. OS Tin Lion, IOS5, and some pretty interesting cloud stuff.
(END VIDEO CLIP)
FOSTER: Well, Steve Jobs (UNINTELLIGIBLE) San Francisco just about an hour ago. David Meyer of ZDNet it there. He joins me now
I know he hasn't got onto the Cloud, quite yet, has he? But we know more than we normally do about these Apple announcements.
DAVID MEYER, ZDNET: Well, yes, Steve Jobs has long talked about how actually the sort of vision he has for the Cloud. And they have been building the data center to do that. They have certainly got the facilities now. We are just waiting to hear precisely what they are going to do with this.
All of the rumors, so far, seem to point towards lots of deals having been signed with the record labels. Something that Google has quite managed to put off. So, we are looking at sort of very media centric stuff, whether that will also take on Microsoft in mail and various other avenues is yet to be seen.
FOSTER: You mention a data center, but actually this unbelievable, isn't it? It is fields and fields worth of data center from what I understand and it can only mean Cloud.
MEYER: Absolutely. No, that is definitely what they are trying to do. Everyone has now already seen the shiny new iCloud logo that they were setting up at the Moscone Center. So that is definitely what is coming up.
FOSTER: And whilst we are here anything else grab you about what he has said so far, about those other elements he mentioned?
MEYER: Well, it hasn't been Steve Jobs, himself, making the announcements. He introduced the whole event, but otherwise it has been various of his deputies. And they talked about Mac OS 5, the new version of the desktop operating system that they have. A lot of that was shown earlier this year already. So far they have been showing off the IOS5, the new operating system for the iPhone and the iPad. And there is some interesting stuff in there. Particularly, on the phone side they have been taking lots of cues, it seems, from Android and from Windows Phone 7, which they have taken a feature from there, that you can go straight to the camera, without having to enter the password on your phone. And from Android, they seem to have borrowed the new notification system straight from their competitor Google. So, interesting times.
FOSTER: Just back to the Cloud, it has been around for a while, hasn't it? And people like you have been talking about it for years. But what is momentous about this, as I understand it, is that it simply Apple getting involved and having these record companies signed, it actually popularizes it. It brings it to the mass market, right?
MEYER: Absolutely. Google has to, you know, they recently launched something which was U.S. only, a few weeks ago, which is a similar sort of idea, but they certainly didn't get the labels on (UNINTELLIGIBLE) and that does seem to be absolutely integral to get something out to mass market, it is having the industry buy into it.
FOSTER: OK, David Meyer, thank you very much indeed for joining me from ZDNet.
Now many people already have their head in the clouds without really noticing. If you share photos or videos on a Web site, or maybe you have Web based e-mail, you are one of them already. And as more of us start to use wireless mobile devices, demand is only going to get bigger. Kristie Lu Stout explains why the future could be cloudy.
KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT (voice over): OnLive is a gaming service with a difference. You are playing games on your computer but the game isn't actually running on your computer. It is running on a computer back at OnLive's data center. You are playing a game by remote. Sending commands to a computer far away, which streams video of the game back to you. That means you don't need a powerful computer to play the latest games, just a screen and an internet connection.
(On camera): OnLive is part of a popular movement in the technology industry. It is called cloud computing. Sounds futuristic, but what is it?
XENI JARDIN, BOING BOING: Cloud computing is like outsourcing. Yes, it is very much like what manufacturers say, here in the U.S., do with task, you know, like producing goods and services. Why should you have to store everything locally, and process everything locally, when you know, with faster internet speeds, you could rely on the far greater processing power or storage space, available at some offline site.
STOUT: And it is very likely you have been doing some cloud computing without even knowing it. Flicker, an online home for your photo library. Google.docs, keeping our work online. Hot mail, has been hosting our e- mail on the clouds since 1996. By keeping all of this information in one place that means our different devices, phones, laptops and tablets can have access to the same information.
(Voice over): You don't need to store any of it on any of those devices, you just grab what you need, when you need it, over the Internet. But what happens when your internet connection fails?
JARDIN: Well, one of the great vulnerabilities in cloud computing is the fact that all of this, for us, is built on the assumption that Internet speeds will remain fast and that connectivity will remain reliable. And as anybody who has ever, you know, walked around in San Francisco or New York, with an iPhone know, you can't always count on mobile data being fast or reliable.
STOUT: Now, another worry about cloud computing is security. Now you are willingly handing over your information to another company and relying on someone else can cost you. Now, when some of Amazon.com's cloud servers suffered a brief outage it took down the social network FourSquare. Worries aside, the shift to the cloud is coming. Next week laptops running Google's Chrome OS are set to go on sale. They are remarkable because they contain just 16 gigabytes of storage space, about the same as an iPad Nano, that holds 4,000 songs.
(On camera): So why so little space? Well, Chrome Books are designed for all your data, including your apps to live remotely on the company's servers. Google is convinced that we, the computing masses, are ready to live in the cloud. Kristie Lu Stout, CNN, Hong Kong.
FOSTER: Well, we are sticking with clouds because there is one over hanging Wall Street today it seems. Traders very concerned about the recovery. That follows Friday's weak jobs report, which had a big impact; down a quarter of 1 percent at the moment. Major banks making the biggest losses. Apple shares edging higher as we get those announcements coming from the conference. And Google, is also up.
Stocks didn't fare much better in Europe. Most of the main markets ended the day lower. Only the FTSE 100 managed to gain any ground, there is great concern about the pace of global economic growth. It was a bad day for airline stocks. The International Air Transport Association says the industry is facing a much year than previously forecast. We'll have more on that later this hour.
Next revolutionizing global trade; we'll look at the emergence of a new Silk Road, linking the South to the South, and changing the power of economic-the balance of economic power in process.
FOSTER: HSBC's chief economist says we are seeing the emergence of a new Southern Silk Road that will revolutionize the global economy. In his new report Stephen King says the new routes will lead to exploding trade among Asia, the Middle East, Africa, and Latin America. The South-South links could increase trade between emerging areas by tenfold with in the next forty years, bringing with it a boom in capital flow. That will require investments in infrastructure like ports and rail links and new agreements on trade tariffs. The report says that the center of economic and political gravity is heading south and east and that is something we are all going to have to get used to.
Stephen King, who wrote the report joins me now.
Thank you so much for joining us. Just describe geographically what routes you are talking about here.
STEPHEN KING, CHIEF ECONOMIST, HSBC: Well, really it is a route through from Asia through to Latin America, Africa, the Middle East. And these are really new connections as far as world trade is concerned. Because much of the trade that we have seen has been either a north-south basis, say between the U.S. and Latin America. Or on an east-west basis in terms of China and the U.S. We have seen very little in terms of these new trade flows taking place between say, Brazil and China, Russia and parts of the Middle East. It is those connections which I think will take off dramatically over the course of the next few years.
FOSTER: Why will they take off? Because, of course, China has links elsewhere, which are much bigger right now?
KING: Well, part of the reason is that China desperately needs commodities and many of the commodities that are being produced in the world come from Latin America, come from Africa. Another reason is that the economic borders that currently exist between these different nations are incredibly high. Tariffs, a lack of infrastructure, all of these things have to change in the years ahead. What we are beginning to see are capital flows coming from, for example, China or India, investing in Latin America, or investing in Sub-Saharan Africa. And those capital flows will fund the very infrastructure that is required to allow this trade to take off in the years ahead.
FOSTER: Aren't you assuming economics would dictate that, but the politics is that there are these trade barriers and there is a long history behind them. So why are they going to suddenly going to change just because the economics suits your argument.
KING: Well, the politics is important, but I think if you go back to the 1950s and 1960s, you could say very much the same sort of thing about the Western world, and about Europe and the States. You know you had war in the 1940s, by the 1950s you started to see a huge increase in trade. And the reason why I see that coming through this time around is precisely because and of the fact that you have got this mutual interest associated with commodity producers, commodity consumers. And we are seeing new political formations coming through currently. One example is the Shanghai Cooperation Organization, which basically a connection of energy producers and energy consumers across Asia, including China, Russia, Central Asia republics, and what is there is an energy version of the original Silk Road of many hundreds of years ago.
FOSTER: And what impact will that have on Europe and America?
KING: Well, one impact is that we get left behind; and Europe and America, our share of world trade will diminish rapidly over the course of the next few years. Another important impact, of course, is working out where we should be trading in the years ahead; the U.K., for example, looking very, very poor at trading with the emerging nations. That needs to change.
The other big question is geopolitics. If China and Latin America have a much more cozy relationship in the future, China will be looking to protect its interests by expanding its navy, that means more Chinese ships on the high seas, and how does Washington cope with-
FOSTER: Military agreements?
KING: Yes, absolutely. I mean one of the big things that we are beginning to see is the investment by China in ports across many different parts of the Indian Ocean. Those ports not just investments from the point of view of commercial shipping. It is also for military shipping as well.
FOSTER: Does this mean that the Chinese currency then becomes the reserve currency for world much more quickly than many people anticipate?
KING: From the U.S. or the European perspective the chance of using the Renminbi, the Chinese currency, are pretty low. But from the point of view of Latin America, Africa, the Middle East, it is-
FOSTER: It's likely.
KING: I think it is quite likely, yes.
FOSTER: OK, Stephen, thank you very much indeed.
Well, coming up, Richard Quest gets on his bike.
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (On camera): From the city where four wheels, bad, two wheels, good. We show how the Danish capital, given the world's Copenhagenization. "Future Cities" after the break.
FOSTER: When it comes to tonight's "Future City" it seems that there is plenty to make a song and dance about.
(MOVIE CLIP, MAN SINGING)
FOSTER: Well, "Wonderful, Wonderful Copenhagen" is how the song goes. And that is from the musical, "Hans Christian Anderson". These days Denmark's capital is as well known for its eco credentials as for its fairy tales. In fact, when it comes to getting its residents out of their cars and onto their bikes the city is almost doing too well. Richard went to tryout for himself. Tonight, Copenhagen is your "Future City".
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (voice over): The sights, sounds and smells of a city are all at the mercy of whatever rules its streets. Here in Copenhagen it is bicycles.
UNIDENTIFIED MALE: Bikes in Copenhagen it is like-
UNIDENTIFIED MALE: It's the heart of Copenhagen. I mean, it's- everybody bikes, everybody.
UNIDENTIFIED FEMALE: Just, I don't know, a part of every day, the way I get around.
QUEST (on camera): They're so good at making the city bicycle friendly it has given the world a new word, "Copenhagenization".
(Voice over): The concept of Copenhagenization has become a celebrated form of urban planning. It refers to what you see before you. A city that doesn't just make cycling possible, but redesigns its streets to make it the norm.
UNIDENTIFIED MALE: Your bike is your fellow. It is your friend who gets you from A to B.
UNIDENTIFIED FEMALE: It is the only natural way get around.
QUEST: If everything is good, in moderation, what has happened here is the cycling has become so popular the city now finds itself faced with new challenges, bike congestion.
JAN GEHL, URBAN PLANNING CONSULTANT: What we see now is that there are so many people who bicycle that we started to have serious congestion problems on the bicycle lanes. They are in a full program now on trying to do something about it.
CLAUS JUHL, CEO, CITY OF COPENHAGEN: What you can have in rush hour is that your lowering the average speeds of going by bike and that is a problem.
It is not about accidents. It is about speed.
QUEST: Having spent years mastering the art of making streets bicycle friendly, the city is calling on established expertise to take them forward into phase two.
JUHL: First of all, it is a problem that we are very proud of. That we have a bike jam not car jams in Copenhagen. But, of course, we have to solve this problem.
QUEST: Luckily Copenhagen is already in the know when it comes to planning for two wheels. Thanks to a process that started many years ago.
GEHL: Fifty years ago every street in Copenhagen was full from wall- to-wall with traffic. All the squares were parking lots. At that point it was decided to push back the traffic. So gradually it has become safer and more convenient. And when this has happened, more and more people have taken to the bicycles.
And why is it called Copenhagenization? That is because Copenhagen was absolutely the very fist one who started along this road.
QUEST: Today more than half the adults in Copenhagen ride a bike to and from work everyday. It is the transport mode of choice for one simple reason, it's easy.
GEHL: It is the principle in Copenhagen that we always have the bike lanes right next to the sidewalk. In this way the parked cars will protect the bicyclists, and that is a much better system.
QUEST (On camera): They have gone out of their way to make sure that everything is easy for the cyclists.
They had asked the people in Copenhagen why are you bicycling? Is that because it is good for climate? Yeah, a little percentage. Is that because it is good for health? Yeah, a little percentage. Is that because it is cheap? A little percent. Is that because it is convenient and fast, yeah.
UNIDENTIFIED MALE: People have been riding bikes forever, almost, in Copenhagen.
I mean, it is like, probably the best thing in the world to be on a bike.
QUEST: Cycling is already part of the life of this city. Looking to the future, the challenge is to make more room for the growing army of cyclists. For them, it is a tried and trusted road they are happy to continue to drive down.
JUHL: In the last five years we have built five bridges for biking infrastructure. And I think in the next five years we'll have to build five more.
GEHL: They do exactly as we did with the traffic in the `70s. They are adapting the width of the bicycle lanes, taking another lane from the cars, giving it to the bicycles. That is why Copenhagen is in many ways the city of the 21st century.
QUEST (on camera): If you had any doubt about the way this is going, just look all around you. In just a few weeks this cycle lane will be wider, giving more room for bikes at the expense of cars. In this "Future City" two-wheels rule.
(voice over): The growing number of cyclists is a problem of which this city is proud. While other city catch on to the benefits of bicycle schemes, Copenhagen moves on, cheerfully, to phase two.
FOSTER: This week on CNN some big names on "PIERS MORGAN TONIGHT". U.S. presidential candidate Mitt Romney, a former chairman and CEO of General Electric, Jack Welsh, and Sarah Ferguson, to name just a few; 30 minutes from now.
Details on a real-life courtroom drama playing out in the U.S., that is a "PIERS MORGAN TONIGHT", right after QUEST MEANS BUSINESS.
FOSTER: Welcome back;.
I'm Max Foster.
You are watching QUEST MEANS BUSINESS and these are the headlines.
We want to take a moment to update you on a story that we've been following for several hours now, that is that Syrian state television reports that at least 120 members of the country's security forces have been killed, more than 80 of them in one northwestern town.
BENJAMIN BRAFMAN, DEFENSE ATTORNEY:
The reports blame armed gangs for the attack. The opposition says helicopters are roaming the sky over the town, shooting at civilians.
Stay with CNN for the latest on this developing story.
So far, no trace of E. coli at a German farm thought to be the source of the deadly outbreak there. Agriculture officials in Lower Saxony say tests for half the samples taken from the farm came back negative. It's unclear when the result of the results will be available. On Sunday, authorities said German grown bean sprouts were the likely source of the infection.
Dominique Strauss-Kahn has pleaded not guilty to charges stemming from allegations that he sexually assaulted a hotel maid. The former head of the International Monetary Fund was arraigned in New York today. Lawyers say his alleged victim intends to testify against him.
Peru's stock market was temporarily suspended in trading. It plunged almost 9 percent after Ollanta Humala claimed he won Sunday's presidential runoff. Humala is a part ally of Venezuelan president, Hugo Chavez. And analysts say that made investors nervous. But Humala denies he wants a Chavez-style government in Peru.
In an exclusive interview, Sepp Blatter has told CNN that Qatar's winning bid to host the 2022 World Cup could yet be investigated if FIFA's ethics committee allows it. The FIFA president was reelected unopposed last week amid allegations of corruption within the governing body. His only rival was suspended over bribery allegations relating to the Qatar bid.
CNN's exclusive interview with Blatter is coming up on "WORLD SPORTS" in around three hour's time. Blatter tells our Alex Thomas that while he was disappointed to win, only a one horse race for the presidency, he is still the man to restore FIFA's damaged image.
(BEGIN VIDEO CLIP)
SEPP BLATTER, FIFA PRESIDENT: You see, I was prepared to go in this dual election. And it's always so if you win without -- without a battle, it is finally you have the title without glory.
UNIDENTIFIED MALE: And improving FIFA's image is your number one priority, is it?
BLATTER: Yes. I had in my -- in my manifesto, if this could be a manifesto -- I have said something else. I have said zero tolerance is one thing. But I've also said the social/political, social and cultural implementation of football is important. But now, it's to ridden the image of FIFA that's number one. And I have already started.
(END VIDEO CLIP)
FOSTER: Well, you can watch all of that exclusive interview with FIFA's controversial president at 10:30 p.m. London time, 11:30 in Central Europe. That's "WORLD SPORT" with Pedro coming up.
Now, the search for the origins of the deadly E. coli outbreak across Europe has so far failed to turn up any conclusive answers at all. German bean sprouts were thought to be the culprit over the weekend. But the first test results have come back negative.
Fred Pleitgen reports.
(BEGIN VIDEO TAPE)
FREDERIK PLEITGEN, CNN CORRESPONDENT (voice-over): Police and security guards at this organic farm in the tiny town of Bienenbuettel in Northern Germany. Authorities believe sprouts from here could be the source of a deadly E. coli outbreak that has killed nearly two dozen people in Europe. Neighbors like Brune Greve say they're shocked.
"I really hope this all ends well for the owners," he says. "On the other hand, everything must be done to find the source of the outbreak."
The farm's management didn't address the public. But on its Web site, the owners wrote they could not explain why their produce were believed to be the culprits for the E. coli infections. They say they regularly tested their sprouts for E. coli bacteria and that all tests were negative.
First results from samples taken by German authorities also showed no contamination of sprouts from this farm. However, officials say there is still strong evidence suggesting the deadly strain of E. coli originated here.
GERD HAHNE, AGRICULTURAL MINISTRY, LOWER SAXONY (through translator): It may well be that on that farm, no more trace of it can be found, because it is operating correctly and hygienically. And if one bad batch of goods was processed along the way, then it could be that it can no longer be found.
PLEITGEN: Investigators say almost all of the places that have suffered E. coli outbreaks received sprouts from the farm in Northern Germany, mostly as ingredients for salads. After German authorities falsely blamed Spanish cucumbers and issued warnings for raw lettuce and tomatoes, they are now urging people to stop eating sprouts.
German health officials have since shut this farm down. And also, they're trying to recall all of the products that have gone out of here in the past month. However, health officials also say they believe that some of the sprouts from this farm are still in the inventory of restaurants, cafeterias as well as in the refrigerators of private people.
Doctors in Germany say they have no treatment for this deadly strain of E. coli. The best way to stop it, they argue, is to cut off the source. And people here in Bienenbuettel say the outbreak has already altered the way they eat.
"Of course all this makes you think twice about things," this man says. "We had planned to go out for dinner here tonight, but now I don't think we will do that."
The E. coli crisis will continue in Germany until authorities find the origin of the deadly bacteria. They hope this farm might hold the key to containing the outbreak that has already taken so many lives.
Frederik Pleitgen, CNN, Bienenbuettel, Germany.
(END VIDEO TAPE)
FOSTER: When this outbreak started, the finger of blame was pointed squarely at Spain and its cucumbers, causing a huge drop-off in demand for Spanish produce. Now, that the cum -- cucumbers appear to have been ruled out as a source, Spanish farmers want compensation.
Madrid bureau chief Al Goodman spoke with traders in the Spanish capital.
AL GOODMAN, CNN CORRESPONDENT (voice-over): Sales of Spanish vegetables are back to normal in the domestic market, but still way down in the export market to Northern Europe, especially in Germany, industry experts say. At this market in Central Madrid, they sell cucumbers, but a shorter variety, not the long cucumber grown in Southern Spain, which German authorities initially blamed as the likely cause of a deadly E. coli outbreak.
"I think they hurt Spain," he says, "without knowing where the infection came from. They directly accused Spain without knowing if that was true or not."
Now that Germany and the European Commission say Spanish cucumbers did not cause the outbreak, Spain's export industry demands a clear-cut apology and economic compensation from Germany or the European Union. Vegetable producers estimate losses of nearly $600 million in the past few weeks, when most of Europe blocked not just cucumbers, but also other Spanish produce, like tomatoes and lettuce. Exporters say the bigger problem is the damage to Spain's image. European importers have finally started ordering Spanish produce again, but wary consumers are not rushing to buy it.
Most of the fresh produce is for export so even a robust domestic Spanish market for these products can't make up for the losses, which come at the worst possible time, during Spain's deep economic crisis, with 21 percent unemployment.
Al Goodman, CNN, Madrid.
(END VIDEO TAPE)
FOSTER: Dominique Strauss-Kahn has entered his plea in the case that lost him his job. The former IMF chief also got a frosty reception outside the courthouse. We'll be live in New York after the break for you.
FOSTER: Dominique Strauss-Kahn has pleaded not guilty to charges of sexual assault. The former IMF director general is accused of attacking a maid in a New York hotel last month.
Let's go straight to Richard Roth in New York -- quite a reaction, Richard, outside the court, as anywhere else.
RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: All right, this was the scene here inside -- outside the court when Dominique Strauss- Kahn arrived here.
Let's listen and watch as he was greeted, not enthusiastically, by people we're going to tell you about after we watch this.
ROTH: Not, these are organized hotel workers protesting the -- what happened in this case, supporting the unidentified anonymous hotel maid who has lobbied these exit -- lobbed these acquisitions against Dominique Strauss-Kahn. They say that safety should be first for the hotel workers of New York and that they are continually harassed.
Inside court, Dominique Strauss-Kahn asked by the judge how he pled when facing seven criminal charges, including attempted rape, sexual assault. He simply said, "not guilty."
Afterward, his attorney, starting to make the case for his client, seemed to lay out the statement that, well, this time, the focus should really, according to the defense, be on the woman making these accusations.
(BEGIN VIDEO CLIP)
BEN BRAFMAN, ATTORNEY FOR DOMINIQUE STRAUSS-KAHN: Once the evidence is reviewed, it will be clear that there were no element of forcible compulsion in this case whatsoever. Any suggestion to the contrary is simply not credible.
(END VIDEO CLIP)
ROTH: That's the defense trying to say that whatever happened in that hotel room in Manhattan near Times Square was of a consensual nature. The new attorney representing the accuser, the hotel maid, fired back.
(BEGIN VIDEO CLIP)
KENNETH THOMPSON, ATTORNEY FOR ALLEGED VICTIM: Some of you in the media have portrayed the victim as being part of some sinister plot to bring down Dominique Strauss-Kahn. That's just not true. The victim is simply a hard-working single mother who got up every mg and went to work to earn a living cleaning hotel rooms in order to provide for herself and her young daughter. The suggestion by defense council that this was consensual is preponderous.
(END VIDEO TAPE)
ROTH: Now, the defense is going to be asking the prosecution and has asked for materials that are used in the prosecution's case. They'd like to see what they have on the forensic examination, the testing done on Dominique Strauss-Kahn after he was first arrested. And the next court appearance here, Max, July 18th, where we'll once again have a large array of international media standing here alongside me, waiting for another piece of video of Dominique Strauss-Kahn.
FOSTER: Yes, just waiting for him to appear, isn't it?
Richard, thank you so much for that.
Well, as it awaits its new director general, the IMF's work goes on. It's agreed to provide a $3 billion loan to Egypt for the country's post- revolution economic problems, reforms even.
As Diana Magnay reports, it may be some time before Egyptians see the financial benefits of the Arab spring.
DIANA MAGNAY, CNN CORRESPONDENT (voice-over): Janet Wahib has worked in quality control at this Cairo garment factory for six months. She wasn't out on the streets during the revolution. She felt she should keep on working so the country didn't come to a standstill.
"This revolution started," she says, "so people could improve their standard of living and get better jobs. It started so that we could be better, not worse off, than before."
For the tourism sector, which accounts for one in eight jobs in Egypt, things have definitely got worse.
(on camera): Normally in June, these boats, which are called falukas, are packed with tourists. But now the people who run them are taking the time to do some basic repairs. The tourists are staying away, worried that the security in this country is still not under control.
(voice-over): Investors, too, are wary as protests continue. And the country's political future after September elections remains far from clear.
Hisham Ezz El Arab, who runs one of Egypt's biggest banks, CIB, says the outlook is positive, despite this period of pain.
HISHAM EZZ EL ARAB, CHAIRMAN, COMMERCIAL INTERNATIONAL BANK: The minister of finance, I sympathize with him, because he is confronted with many challenges on many issues that were being buried all the time. Talk about the minimum wages, OK; employer rights on productivity; all those issues they have been there on the table for the last 10 years. But they are like the taboos you cannot touch. It's quite good that we open that Pandora box. You need to cleanse things, put things on track, because the current government is not there only just to nurse the country. No, they are preparing the ground for the coming government to -- to take over.
MAGNAY: Al Arafa, where Janet Wahib works, is Egypt's number one clothing exporter, employing around 8,000 staff. They're now paid close to the new minimum wage, which isn't much -- $120 a month, rising to $200 over five years.
But CEO Hala Hashem says even this wage runs the risk of stifling growth, especially when the strong Egyptian pound makes exporters like Al Arafa less competitive.
HALA HASHEM, CEO, AL ARAFA: The other thing is actually the minimum wages is an excellent concept. And I totally believe in it. It's only fair for this country and the population in it. The problem is it's quite challenge at this time for this industry.
MAGNAY: Perhaps the greatest challenge is managing expectations. Egyptians overturned 30 years of oppression in just 18 days. It will take far longer for the average Egyptian to feel the economic benefits they fought so hard for.
Diana Magnay, CNN, Cairo.
(END VIDEO TAPE)
FOSTER: It's not the only economy suffering, of course. Portugal will have a new government, though, to lead it through its economic wilderness after voters tossed out Jose Socrates and his Socialist Party.
Pedro Passos Coelho is the man who will be Portugal's next prime minister. He's a businessman. His Social Democratic Party won almost 39 percent of votes, easily beating the Socialist Party's 28 percent.
The reason the Socialist Party fell was its failure to push austerity measures through parliament. That was a condition of the EU bailout that Portugal asked for. Coelho voted against the Socialist Party's austerity plan, not because he thought it went too far, but because it -- it didn't get far enough. Coelho wants to bring the Portuguese deficit down from 7 percent of GDP to 4.6 percent by the end of this year. He hopes to accomplish that by focusing less on taxation and more on cutting costs.
Given the state of Portugal's economy, that won't be easy. Portugal has $5 billion worth of loan repayments coming up this month. And to the cost of borrowing -- though the cost of borrowing has fallen slightly for Portugal today, yields on 10-Year bonds are still unsustainably high. Unemployment stands at more than 12 percent. And the economy is predicted to shrink by 2 percent both this year and in 2012.
Mr. Coelho is stepping into one of the toughest jobs in European politics.
Jim Boulden joins us now to tell us more about the challenges he faces.
At least this is sort of a fresh start for him, though.
JIM BOULDEN, CNN CORRESPONDENT: Yes, and, you know, he just has to form this coalition government. And the president has come out in the last hour and said he wants that coalition formed very quickly. And this reminds me of the U.K., where we have a coalition government trying to bring down the deficit and in Ireland.
So the people who were involved in this whole mess, or at the time of the whole mess in the economic crisis, have been thrown out in these three countries. So now it's Portugal's turn.
And he's making all the right words, he's saying all the right things, if you're looking at -- at him saying -- wanting faster and deeper cuts than expected and talking about being very swift on these measures.
So as far as the market is concerned, he's saying the right words. Of course, now, we have to see what the action is.
FOSTER: And the markets just wanted a government, as well, didn't they?
FOSTER: So that in itself is a -- is a confidence booster.
BOULDEN: Yes. Yes. And to see the old government out, because that always seems, as you said, to see -- see a fresh face in there and someone -- as a businessman to go in there and make these changes.
FOSTER: Normally, you would -- well, when the U.K. election was sort of kicking off, everyone was suggesting that this coalition was going to be a real problem because they couldn't agree on economic reform.
But I guess we've learned, have we, that that did work, so it can work here?
BOULDEN: It's working so far here. It's working so far in Ireland. In -- in Portugal, you're talking about two center-right parties, though they haven't formed a government yet. But obviously, everyone expects them to do that. And then they will have a majority.
So, therefore, what they decide to do under Mr. Coelho will -- will then be pushed through with -- with little opposition. And it's interesting to see some of the things he wants to do there, as well.
FOSTER: And do the markets want to see what the IMF wants to see and what the EU wants to see?
Is everyone agreed about what everyone wants to see in Portugal?
BOULDEN: Well, of course, you want to bring those deficits (INAUDIBLE). So you're talking about things like privatizations, which is one of the terms people like to hear, if you're looking for -- for these kind of changes. Limited tax deductions, cutting pensions, freezing public sector pay, some of the things we're hearing about that they're doing in Greece and Ireland, as well.
So it's those measures that people say they've been talking about it in Portugal for years and years and years but did not tackle. And now he says he's going to -- he's pledging to tackle it now.
FOSTER: Are they likely to be successful the next auction?
It seems unbelievably ambitious.
BOULDEN: Well, of course, they did get their bailout money. So this was -- as long as they do these conditions, then that money will start following into Portugal. And then, you know, yes, the -- we've seen the yield coming down a little bit. But as you said, far too unsustainable. But it's, what, 9.7 percent right now in the 10-year. Obviously, that's far too high.
FOSTER: Jim, thank you.
Steve Jobs has just been speaking about his -- in this hour, about the latest innovations from Apple. We've mentioned one of them already. But more on the cloud, next.
FOSTER: While we've been on air, Steve Jobs has come back on stage at that Apple conference in San Francisco and he returned to launch the iCloud. He's described it as a system that stores your content and wirelessly pushes it to all your devices. And it's free. Jobs said gadgets are automatically backed up once a day over wi-fi, adding that keeping these devices in sync was driving us crazy.
He also said that cloud computing is much more than just a hard disk in the sky. ICloud might have been the main event, but Apple has also been busy launching the latest version of its operating system and something called iMessenger, similar to the BlackBerry messenger for iPhones. There you are, all the detail. No great surprise, but it has actually happened at last.
Guillermo now has the weather.
It's slightly less predictable.
GUILLERMO ARDUINO, CNN METEOROLOGIST: But you know that there is a lot of warm weather in the eastern parts of Europe. And I was checking out Britain. And it's quite cool and it's cooling down a little bit more. In the northern parts of France, the same thing. Of course, the coolest of the conditions are offshore.
But let's focus on the problems. Look at the colors here. The darker the red or the yellow is, the hotter it becomes. And that's what's happening here into look at the daytime here, the time stamp, into the south. So especially all those that are in cruise liners around the Greek Islands in the Aegean Sea or in the Mediterranean Sea, very careful.
The coastal parts of Turkey, the same thing. Antalya watch out, because it's time to go to the beach and also time to get burned.
It's 30 in Kiev. And I'm going to take three cities and I'm going to show you what we see in the immediate forecast. So you see how the temperature is way above average in Kiev, seven degrees above average. And even the low temperature of the day, no rain in store.
Warsaw, the same thing. You see especially Wednesday, it's going to be worse. And in this case, nine degrees above average. And close to the -- the high temperature of the day average is where we have the low right now.
And Berlin also, 25, but we may see some rain on Thursday. So the western or let's -- let's put it this way, those that are not all the way to the east are going to see the change first. And then it's going to take time until it goes to the other side.
Not bad in Britain now, clearing, especially in England. You see how the rain is moving away, Max, in here. Northern France now cooling down, but again, no precipitation. And Germany with some -- some storms.
So if you are going there, that's where the problems are going to be, especially within 24 hours in terms of travel delays.
It may happen. It may happen -- Max.
FOSTER: Guillermo, thank you very much.
ARDUINO: Thank you.
FOSTER: We're staying with travel, particularly the aviation sector. It's had some bad news today. The International Air Transport Association has slashed its profit outlook for this year.
Candidate Andrew Stevens was at the Association's annual general meeting in Singapore today.
ANDREW STEVENS, CNN CORRESPONDENT (voice-over): It's starting to become all too predictable -- the global airline industry is once again flying back into stormy weather. The trade industry body, IATA, has just been reworking the numbers for profits for 2011 and they've slashed them in half, from $8 billion expected to now $4 billion. And remember, it was $80 billion last year.
All you have to do is look at the headlines over the past five months.
GIOVANNI BIGISNANI, DIRECTOR GENERAL AND CEO, IATA: The unrest in the Middle East, the increase in the fuel prices in Japan. Japan represents 10 percent of the total revenues of the industry, $6 billion. And that's why we downgraded our profits to a forecast of this year. It's .7 margin. It's pathetic.
STEVENS: Of course, oil prices remain a constant concern for the airlines. And remember, the impact of the global economic slowdown hasn't been fully felt yet. Cargo is at the sharp end of any changes in the global economy.
So here's what John Slosar, the head of Cathay Pacific, which is the world's biggest cargo carrier, had to say.
(BEGIN VIDEO CLIP)
JOHN SLOSAR, CEO, CATHAY PACIFIC AIRWAYS: And cargo is -- is very sensitive to trends in the world economy and trade, certainly. And this year, the world economy is a little bit less robust than it was last year at this time. So cargo is a little bit weaker.
STEVENS: It's certainly been a tough decade for the airline industry. In only three of the past 10 years has the industry managed to stay in profits.
Certainly a lot on the agenda here at the IATA conference. Another big issue, the use of biofuels -- when will they be available in any sort of scale for the airlines?
IATA says that by the end of this year, airlines will be able to use 50 percent biofuel-gasoline mixture. But the problem is supply.
Giovanni Bigisnani says he's angry that big oil is not helping.
BISGANANI: We need the oil companies to understand that this is important for our future. I understand that they are very pleased in cashing $176 billion of jet fuel this year. But I think there are certain kinds of responsibility that would suggest to get a bit more involved in this biofuel reprocessing.
STEVENS: So plenty of issues for airline executives here to be wrestling with. But there is one bright spot and that's the almost uninterrupted growth of key emerging markets, particularly China and India.
Andrew Stevens, CNN, Singapore.
(END VIDEO TAPE)
FOSTER: And bringing us to a close of QUEST MEANS BUSINESS for today.
I'm Max Foster in London.
"PIERS MORGAN TONIGHT" is just ahead after a look at the headlines with Ralitsa.