Return to Transcripts main page
QUEST MEANS BUSINESS
BP CEO "Preparing Vigorously" for Trial; BP's Earnings Rise; BP's Management Priorities; Glencore Proposes Merger With Xstrata; Greek Crisis Talks Drag On; Greek MP Concerned Austerity Plan Will Deepen Recession; Greeks Teachers Strike Over Further Austerity Measures; Olympic Fencer Follows Family Trade; Ukraine Hit Hard by Cold Freeze; Maastricht 20 Years On; Interview with Miranda Xava
Aired February 7, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Tonight, BP's chief exec Bob Dudley tells me getting back in the Gulf is playing dividends.
Slowly they turn. Greece makes progress. It's inch by inch, step by step.
And it's game, set, and Maastricht. The European dream where everyone has now woken up.
I'm Richard Quest, we have an hour together, and I mean business.
Good evening. Back in profit and back in the Gulf of Mexico. Preparing "vigorously," in his words, for a courtroom fight, BP's chief exec says he's ready to settle the hundreds and thousands of lawsuits which are in the pipeline only on terms which he calls "fair and reasonable."
The limitation and liability trial over the Deepwater Horizon disaster is due to start in New Orleans this month. Bob Dudley says BP's prepared to settle if the terms are right.
Two years on from the worst environmental disaster in US history, and BP is making solid recovery, stripping out charges and payments, Q4 replacement cost profit more than 14 percent. BP is also raising its dividend payout, also by 14 percent. A remarkable achievement for a mature company, one that only started paying dividends after a moratorium last year.
I spoke to Bob Dudley earlier today. He told me why he thinks BP is gaining momentum this year.
(BEGIN VIDEO CLIP)
BOB DUDLEY, CEO, BP: I think it's bringing on the oil and gas production from the projects. People weren't sure. We hadn't been back to work in the Gulf of Mexico. We now have rigs back working in the Gulf of Mexico, and I think that gave us the confidence, now, to increase the dividend by 14 percent, which we announced today.
And it -- and I think we now are in a year of milestones, and we now just are doing many things in 2012.
QUEST: So, what's the difference between a year of consolidation and a year of milestones?
DUDLEY: It is reestablishing the new organizational structure. So, with our events in the Gulf of Mexico, you can imagine, bringing safety and operational risk in everything we did, branch -- root and branch review of everything took time.
Brought in a lot of talent and expertise from military, chemical businesses, to really look at how we work. And we completely restructured our upstream organization and centralized it. Those are big things in a company the size of BP.
QUEST: Are you comfortable with where the progress has been made? And if not, where would you like to have seen more progress?
DUDLEY: I don't think I'll ever by comfortable. When we have safety and operational risk at the heart of everything we do, it's not an initiative. This will always be a focus for us.
So, we're -- we've got many projects that are going to come on this year. Six big, new upstream projects. We're going to double the level of expiration from 6 wells to 12. All of those are going to be done with great care.
QUEST: I see. Now, that's the point, isn't it? How are you going to ensure that you manage that? Are you taking a personal interest in ensuring the management of these big projects, now?
DUDLEY: Absolutely. We set up a new safety and operational risk organization. The head reports directly to me. It's a separate organization from our line organization. It's got the ability to put checks and balances in our decisions. It has become a big focus of my time and the entire executive team.
QUEST: Now, dividends have been raised by 14 percent, and I'm wondering, that tells us more than most, doesn't it, though? About your ability to move the cash back from a -- one of surround the wagons to actually start paying it out, when you can raise a dividend by 14 percent.
DUDLELY: Well, I think that's right. We've said to the markets in October that by 2014, we will increase the amount of operating cash flow from the company by 50 percent. We're going to take 50 percent of that and put it into new investments, and we're going to take 50 percent of that and doe things like distribute to shareholders.
QUEST: But it suggests you don't believe you'll need the money to pay out or the compensation for Gulf of Mexico will be higher than you'd anticipated.
DUDLEY: Well, the audit committee goes through. We have a big provision in the Gulf of Mexico, it's down around $36, $37 billion after a settlement with Anadarko this year. And we've reviewed that every quarter very carefully to see if we need to put new provisions aside, and we haven't seen a reason to do that.
If there is a reasonable and fair settlement that we can reach before the trial date, we would do that, but right now, we're vigorously preparing for the trial.
QUEST: What would you consider fair and reasonable?
DUDLEY: The tradeoffs go in every direction, here, so obviously, I couldn't talk about a settlement. But we're ready for the trial.
QUEST: As chief exec, how much -- of your time is now spent looking at that, or is the nature of the business that you basically have to compartmentalize it and say, "I'll give it so much time of day or so much time, but I really need to focus on running the safe business"?
DUDLEY: Well, obviously, number one priority for me is safe, reliable operations around the world and making sure the team executes that with great care. But it comes in waves, as you can expect. It does require my time and the board's time and people time as events unfold. So, we're pretty busy at BP.
QUEST: Final question. Do you have any idea what your legal bill will be?
DUDLEY: Not yet.
QUEST: And I'm sure there are more than one lawyer in the southern United States that will make a foreign home or a conservatory or buy a new boat on the proceeds of that litigation.
The other big story. Tonight's one of those programs where we are well and truly back to traditional business news, whether it is BP's results or a merger and acquisition. And today, the commodities trader Glencore has made a $62 billion proposal to marry Xstrata, the mining giant.
It's a golden wedding, and it will create a company worth a staggering $90 billion. The name, Glencore Xstrata International, and it will become a major player in mining and agriculture.
The companies describe it as a move of a merger of equals. Some of Xstrata's minor shareholders disagree. Standard Life and Schroders say the merger undervalues Xstrata and have vowed to vote against it. There's also major red tape to sort out. International competition regulators will need to give their permission.
From Capetown in South Africa, CNN's Robyn Curnow now looks at how the merger might change the landscape of the mining industry.
ROBYN CURNOW, CNN INTERNATIONAL CORRESPONDENT: It was here in a Capetown convention center during a mining conference that the mining industry had final confirmation of a proposed deal between Xstrata and Glencore, a deal that has the potential to create a new mining powerhouse, a company that Xstrata and Glencore are selling as having a unique business model, spanning from the mines to the markets.
Now, many people here say this deal has the potential to change the landscape of the resources sector to change the rules. Other say, not so much.
GRAEME HOSSIE, CEO, LONDON MINING PLC: The change may not be as significant as everybody thinks. But I think it's very good for taking uncertainty away from some of their shareholders, because they've always had the issue of 35 percent stakeholder of Xstrata and what's going to happen, and when or if, et cetera.
So, taking that activity and concern and uncertainty away allows them to very much focus on an end-to-end -- building an end-to-end miner with very strong distribution.
CURNOW: Now, one banker at the Capetown mining conference told me that the announcement of the Glencore-Xstrata deal awakened the animal instincts, essentially saying that he expected more aggressive consolidation in the mining industry in much the same way the industry was stimulated after the BHP Billiton deal more than ten years ago.
Now, which companies are looking vulnerable, well names being thrown around are Anglo American and Longmen.
KOBUS VAN DER WATH, FOUNDER, THE BEIJING AXIS: Perhaps this is only the beginning, not the end. So, yes, it's perhaps inevitable that we'll see some more numerations and, perhaps, even interesting corporate activity.
I think there are many potential targets that can form part of a long list and eventual short list. But we know that the personalities involved, both Mr. Glassenberg and Davis are known for their acumen when it comes to anime, and I think we'll certainly see the talk intensifying. It's not the end, it's only the beginning.
CURNOW: The deal still has to be approved by regulators and shareholders, but many here believe that this $90 billion deal will go ahead, and for Xstrata and Glencore, this is mostly about China, about riding a wave of demand for commodities that they believe is not over yet.
Robyn Curnow, CNN, Capetown.
QUEST: Coming up next on QUEST MEANS BUSINESS, the Greeks vent their frustration outside Parliament. The bailout talks grind on.
QUEST: Paralysis and chaos. Two Greek words which sum up what is happening in Athens tonight, as Greek political leaders remain locked in negotiations over the final terms of the second $170 billion bailout.
According to the latest report, the three political parties will meet with the prime minister and will be asked to endorse the agreement, the final terms of the new bailout memorandum.
Today, the prime minister met with the private sector involvement initiative, Charles Dallara, and tried to put an end to the agreement -- or at least put the final touches to that agreement.
Meanwhile, while they were talking, in the streets civil servants and private sector workers staged strikes and protest over proposed cutbacks, which they say further austerity would impoverish households and take the country further and deeper into recession.
Scuffles broke out as strikers tried to enter Parliament. One group burned a German flag in response to calls from Berlin for strict budgetary discipline.
The European Commissioner president, Jose Barroso says it's what he calls a "decisive moment" for Greece, and has urged politicians to come to an agreement so that Greece can stay in the eurozone.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: We want Greece in the euro. The European Commission has made it clear from the beginning that this very important, not only for Greece, but for the euro and for the European project to keep Greece in the euro.
For that, we are urging the political parties in Greece to make a commitment to the common goals. I think it's very important for them.
(END VIDEO CLIP)
QUEST: The three political parties will be asked tomorrow to endorse the memorandum, as I say, and one of those parties, the New Democracy Party, may find that difficult, because some of their own MPs are having difficulty with the terms.
Argyris Dinopoulos is a member of the Greek parliament. The former war correspondent is part of the country's second-biggest party, New Democracy. Now, he is very much opposed to the proposed measures, the austerity plan, which he says will deepen the country's downturn.
Earlier, he joined me on the line from Athens, and I began by asking him how close the Greek political leaders actually were to reaching an agreement they could all live with.
ARGYRIS DINOPOULOS, GREEK MP, NEW DEMOCRACY PARTY: We must underline and we must say that this is a forced agreement, and I have to say that there is a lot of fury in Greece, because we all know that this bailout package doesn't really take us out of the recession.
QUEST: So, the alternative is for a Greek default, a full-scale, non --
DINOPOULOS: No, no, no --
QUEST: But there's no other alternative. The bondholders don't get paid, there'll be a default.
DINOPOULOS: No, that is -- it is not a default. If some people in Europe, if German chancellor or if even the French president want Greece to default, we are not going to default. Because these people know how to fight and how to really -- get out of this crisis.
What we really want for our partners, because don't forget that this is a deal, we've been partners. What we really want from our European partners is to really help us. It doesn't help the Greek economy to cut the wages, to cut the minimum wage, to cut the pension of 300 euros per month.
I cannot imagine this, Richard. We cannot live with this -- with this bailout plan
QUEST: OK. The bondholders have to be paid. If they are not paid, there will be a credit event. If there's a credit event, there will be a default, and the money has to be found somewhere. So, who pays the bankers?
DINOPOULOS: What we really need is an agreement, but an agreement between partners. This troika, this so-called troika, comes to Greece and imposes some measures which don't get us out of the recession. These measures don't help the Greek economy to get out of the recession, to go to recovery and into growth.
Which means that even if these measured are applied, there is no solution to the problem. What we really want is an agreement between partners, a real agreement, which can help this country to get out of this problem.
Which, don't forget, Richard, is not a special Greek problem. It's a European problem. We are poor, we are getting poor, because some other Europeans, Germans, French, Dutch, get richer.
And don't forget, also, Richard, that there is also the contagion risk, OK? If Greece defaults, don't think that Spain, Portugal, or even Italy, don't follow.
QUEST: The Greek element announced today that another 15,000 public sector workers would be laid off over the next couple of years as part of the restructuring and austerity measures.
With unemployment rates now close to 20 percent, the prospect of further public sector job cuts is unbearable for many in the country. Elinda Labropoulou spoke to some of those who were demonstrating outside the Greek parliament in Athens.
(CROWD CHANTING IN GREEK)
ELINDA LABROPOULOU, CNN INTERNATIONAL CORRESPONDENT (voice-over): Responding to a call by their unions, protesters gathered in Athens to vent their anger against the new austerity measures a new bailout package would bring.
Cutbacks put in place since Greece's first bailout package has cost severe shortages in school supplies and is undermining education, some teachers said outside Parliament today.
EVANGELOS LAKOVIDIS, TEACHER: In my school, their problem is very difficult. We don't have electricity in the classroom, one. Second, very difficult with the heating. The pupils, it's very difficult to follow the schoolteacher because they don't have gas for the heating. It's with the clothes inside of the classroom, and very difficult to think, to write.
LABROPOULOU: The teachers are also feeling the squeeze in their pockets.
MARIANNA NIKOLAIDOU, TEACHER: In the last two years, our salary has been cut about 25 percent, almost, on average, yes. And the worst thing is that in the future, we see much more cuts coming, and our work is been more difficult, our salaries cut down, and this is -- it's not going to be better.
DIONYSSIS MATAFIAS, TEACHER: Nowadays, schools are closing, they're laying off the teachers. You can't find a job at a public school at the moment. Salaries are going down all the time. Taxes are going up. Everything is going up, and we don't -- we can't live. You can't live like that. The measures are killing the Greek people.
LABROPOULOU (on camera): As last-minute details on the bailout are being ironed out that will bring more austerity to Greece, the education ministry is introducing food coupons in schools after reports that a number of students have been fainting in classrooms from malnutrition.
Elinda Labropoulou, CNN, Athens.
QUEST: The irony of the unrest today and the cause of it is not lost in Brussels. It's 20 years since the treaty of the European Union was signed, known as the Maastricht Treaty, and serving out a chain of events that led to Athens today. We'll be looking at where and why Maastricht failed in a moment.
Also on the program, dexterity, danger, and dueling. A British Olympic fencer battles to stay fit and focused. We meet the man behind the mask. It is --
QUEST: A World at Work.
QUEST: Laurence Halsted is in the family business, and he'll be following in his parents' footsteps when he competes in the London Olympics later this year. His father fenced for Britain in the 1968 Mexico Games. His mother, in Munich in 1972 and in Montreal four years later.
Now, Laurence may well have, you would say, a genetic advantage, but it still takes a lot of hard work to be an Olympic fencer. It's life at the sharp end, at the pointy end and, needless to say, we had to have a look at his World at Work.
LAURENCE HALSTED, BRITISH OLYMPIC FENCER: Fencing for me is -- is really what I've had keeping me going for the last six years and doing something that I absolutely adore.
You can win fencing with pure tactics and intelligence. Get yourself into a state of mental strength where you've built yourself up to a place where you're -- you feel confident and yet not arrogant so that you underestimate them, and still calm and cool so you can execute these really precise actions at the right time.
The routine's quite important. It helps you just -- just kind of arrive on the piste at -- in a similar state every time, so -- yes. I had the same warm-up and the same processes. I don't have an superstitions, which is -- I don't think they're helpful. But I'll try and do things the same way leading me up to -- to a fight, so that I know that I'm ready physically.
The beauty of fencing that I see is that it's one-on-one, it's really close combat, and man-on-man fighting, you've got to -- you've got to be able to outwit your opponent, while staying sort of calm and cool and the psychology plays such an important part.
The real key that the top fencers have is footwork. The footwork is what puts you in position, it gets your distance right. And when your distance is right, that means your technique's going to be better.
It is so important to be in the right state of mind when the fight's about to kick off that -- yes. You can spend your whole life searching for that right mental preparation, and that's what we're all looking for, really.
You're putting yourself on the line, and when you lose, it's all on you. It's just you that's done -- done something wrong. It's horrifically painful. It's like a breakup every time you lose.
I love kind of -- every part of it. I love the preparation, the training, and the competition more than anything. And it really gives me something to be proud of and to be passionate about.
QUEST: That's one way to earn a living.
Gas supplies to parts of Europe are falling, and nobody is taking the blame. Next, as the cold front bites, we'll look at why it couldn't be a worse time for an energy crisis. QUEST MEANS BUSINESS --
QUEST: Good evening.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
Syrian opposition activists say at least 23 people died in clashes on Tuesday, mostly in the city of Homs. This video posted online appears to show the aftermath of recent shelling, according to Syrian state media. President Bashar al-Assad now says his government will cooperate with all efforts to end the crisis in his country and promote stability.
Earlier today, Mr. al-Assad held talks in Damascus with Russian's foreign minister. After the meeting, Sergei Lavrov called on the Arab League to resume its monitoring mission in Syria and also announced that Syria is closer to voting on a new constitution.
Athens is packed with protesters angry at proposed new cuts. Greek unions are staging a one-day general strike to oppose the additional cuts in jobs, wages, and pensions and public programs. Greece's government is said to be close to agreeing upon the cuts. European leaders are insisting on them in exchange for a new $170 billion bailout.
The Republican race for the White House is set to advance further tonight as Colorado and Minnesota hold caucuses and a non-binding primary in Missouri takes place. The workings of these contests are rather complex in terms of delegates. The important point is that they create momentum and bragging rights.
Air France says 70 percent of its long haul flights are running today, despite a four day strike. Some Air France workers are protesting over draft measures that require them to provide two days notice ahead of strike action. This walkout is due to last until Thursday.
The death toll from Europe's winter freeze has now pushed past 250 people. Temperatures are reaching new lows across the continent. Snow, 10 foot deep in some parts of Bosnia, where helicopters have been delivering supplies to isolated regions.
The homeless suffered the most. Frozen victims have been found. They'd been in abandoned and unheated homes, fire escapes or makeshift shelters on streets. In a bid to save lives, Poland's homeless shelters have dropped a ban on accepted drunkards.
And emergency situation is in place in Southern Serbia, where 70,000 villages are stranded by snow. And Italy has imposed emergency measures on businesses to conserve gas supplies, while in Greece, several villages near the Bulgarian border have been evacuated after the River Evinos burst its banks.
Ukraine is amongst the hardest hit so far, where 135 people died there over the last 11 days. Tonight, CNN's Matthew Chance is in Kiev, where severe cold is forecast to continue all week.
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it is unbearably cold here in frozen Ukraine. And, obviously that's having an economic impact.
Heating is being cranked up in homes and hospitals and schools. Ukraine's energy minister told parliament that electricity use across the country had reached what he called an historic maximum, raising concerns about where Ukraine is getting all the extra energy from.
Well, Russia's energy giant, Gazprom, is accusing Ukraine of siphoning off gas meant to supply countries in Western Europe. Most of those Russian gas exports transit through Ukraine pipelines.
Ukraine denies it's taking any extra gas, saying instead, that Gazprom has reduced the amount of gas flowing into Europe to meet its own domestic demands.
The effect, though, is the same. Many European countries are reporting a significant drop in the amount of gas being delivered from the east.
Italy, for example, heavily dependent on Russian imports, is experiencing some of the coldest weather they've heard for a decade. And it's calling the gas situation critical.
With no letup in the cold weather in sight, it could yet, for Europe, get a whole lot colder and worse.
Matthew Chance, CNN, Kiev.
(END VIDEO TAPE)
QUEST: It is just winter weather that's to be expected in that part of the world, in fact, in most of Europe at this time of the year?
Jenny Harrison is at the World Weather Center -- no stranger, Jenny, these parts, are to cold, cold temperatures...
JENNY HARRISON, ATS METEOROLOGIST: No.
QUEST: -- but this is exceptional.
So what's going on?
HARRISON: It's exceptional because it's been going on so long, Richard, and because the temperatures have been so far below the average. But I think, really, it's the length of time now that is having the real impact, as we go into week two.
But you can see, as well, it's still a very unsettled picture. There's plenty more snow out there. That's just adding to the problems.
By the way, if you're wondering, in Kiev, it was actually minus 17, the overnight lows Tuesday morning, where Matthew was there. It's not at the top of the table for us right now.
The air, as we were saying last week, has moderated a little bit, with that low pressure coming into the southeast. The wind has been coming from the slightly less cold southeast, the direction. So that's why we have got Latvia at minus 23, Germany, minus 20 in Berlin, and Paris, as well, minus 10, in fact, one of the coldest nights so far in Berlin and Paris.
But look at how long this has been going on, 13 days in Kiev, 12 across in Warsaw. And the temperatures so far below the average, minus four the average in Warsaw, minus seven, the average low in Ukraine; minus 27, minus 23. And as I say, Berlin and Paris, as well. Bitterly cold over the last several days, nine days now in Berlin with temperatures below the average. And minus 20 is the lowest it has got yet there.
Now, this is why. So it's because of this area of high pressure. But it's very stable. It's very strong, very dominant. And so nothing is -- is managing to shift it or budge it, apart from that low that's just changed the direction of the winds a little bit in the southeast.
And this is what has been going on. So you've got those clear skies. So there's no cloud. There's nothing. And we should be seeing the sunshine during the day. There's nothing to trap it with the cloud coming in later at night. You've got the air coming over the ice, over the snow. So it's just bitterly cold air that's blowing in. The winds have been strong, as well, of course, coming from that cold direction. And then also, the jet stream is so far south because of this high, that it's pushing all the cold air right the way across into Central, Western and Southern Europe. And the jet stream is so far south that these winter storms are even impacting the Atlas Mountains in north areas -- the northern areas of North Africa.
Now, of course, a real knock-on effect now when you're in toward day 13 of this. And as you can imagine, it's difficult to actually conduct your business.
Have a look at this video from the Danube in Austria, because it shows you the ice breaker. Now, in fact, there are parts of the Danube that are now closed because of this ice. It is too dangerous for ships to be there, so the ice breaker goes out. It goes out just to asses the situation and to try and keep the waterways free of solid ice. But as I say, right now, parts of the Danube have been closed for shipping.
And, so, you know, this is part of the problem, as well. So even if you can actually get the goods, you can't get them to where they need to be.
Come back to me and let me just show you what's going on, because still, we've got this high pressure in control. So nothing is going to change in the short-term.
Here's more snow coming into the southeast. Turkey looks like you're going to get quite a bit of snow over the next couple of days.
And look at the temperatures right now, minus 18 in Kiev, minus six in Paris. You factor in the wind, look what it does, it feels like minus 26 in Kiev, minus 14, minus nine is how it feels in London right now.
Pictures like this, or images, I should say, it's not just a picture, it's the real thing, cars stuck in the ice. This is just the (INAUDIBLE) on the shores of Lake Geneva. This is what's called lake-sea ice, really - - it's not lake-sea ice, Richard, it's called sea spray ice is the more common picture or scenario. This is literally the water which has been coming over from the Lake Geneva there with the winds and it's just literally continued to coat this car, everything at all which is close to it. So that's currently been doing quite well, with those temperatures as low as they are -- Richard.
QUEST: Jenny, what does it take, looking at your maps and all the high pressure and the low pressure and whatnot, what does it take to break the cycle?
HARRISON: Well, it takes the high pressure to actually just become a little bit weaker, Richard. But it takes, also, an area of low pressure to become purpose a little bit more dominant. And -- and it's to do with the direction of the winds, as well. So, for example, it's not as cold in Kiev. But basically, that high pressure that is at the center of the high is up toward Northern Europe. That has to shift away. That's got to continue to push up toward the north, for example. And then we would get more of the southerly flow across much of southern and mainland Europe. That would really change all this.
But bear in mind, we don't want this to happen quickly, because there's so much snow in some parts that the next problem...
QUEST: All right.
HARRISON: -- would be, you know, quick snow melt and then you've got flooding.
QUEST: And you don't see any sign of that pushing up and pushing down in -- in the charts just at the moment?
HARRISON: Not as we go through this week, no.
QUEST: All right.
HARRISON: Another very cold week.
QUEST: We'll talk more about this tomorrow.
Jenny Harrison at the World Weather Center.
Many thanks for joining us, Jenny.
The Australian state of Queensland is struggling yet under rising floodwaters that have forced at least 2,000 residents to flee their home. Network Ten reporter Renee Henry now takes a look at how the economic impact of the floods are having on the region's cotton farmers.
RENAE HENRY, NEWS TEN CORRESPONDENT (voice-over): A four kilometer levee, built in three days and being put to the test. In part, the small (INAUDIBLE) record high of the long river laps at the banks. But this is the third flood in two years and this cotton farming town is prepared.
UNIDENTIFIED MALE: Oh, it's always giving something back to these lovely workers who are saving our town.
HENRY: The local butcher thanked the levee builders with a well- earned feed. Some water is seeping up through drains, but dirt paths are keeping it at bay. But there was only time to build the levee so far. Downstream, dozens of homes now flooded in some way. Yesterday, an earth wall made this home into a fortress against the tide. Sadly, today, it was swallowed by the rising brown sea.
Plastic wrapping protects some houses. This homeowner is keeping water out with a manmade pump system.
(on camera): Residents who did stay to try and defend their homes say a lot more would have done the same if there wasn't that original and frightening prediction of a 15 meter peak.
(voice-over): A big cleanup lies ahead. Downstream, the floodwaters rush on to Durin Bandhi (ph). A new, higher levee is going up there, as well, a peak expected Thursday.
Nearby Bolin (ph) has been isolated since Friday. Water runs through the entire town, as people flee the flood. Cotton farmers due to harvest in the next few weeks have lost 10 percent of their crop, $275 million worth in Queensland and New South Wales.
But here's something to warm the heart and quench your thirst. Queensland's oldest pub at Linden Gully (ph) has survived this latest flood.
UNIDENTIFIED MALE: When they get through it all, we'll probably have a bit of a -- a party here to celebrate everybody's survival.
HENRY: After devastation in 2010, the town's population of all their people pitched in to build a levee. In the end, it wasn't needed.
(END VIDEO TAPE)
QUEST: Nice when the weather priorities are protect the pub first. Everything else will follow on after.
When we come back after a break, it's 20 years old today. Happy birthday, European Union. And it still looks like a dysfunctional teenager.
Untangling the Maastricht treaty mess next, in a moment.
QUEST: It was 20 years ago on this day and we witnessed the birth of the European Union as we know it today. The 7th of February, 1992, when leaders signed the Maastricht Treaty. Now, Maastricht gave us the European Union, the EU, as opposed to the EC. And it set out a new political and economic union. It set out the criteria that was to be put forward for those who wanted to join the single currency. It was known, of course, as the Maastricht criteria. It was controversial then and it's widely derided now.
CNN's Jim Boulden looks at where Maastricht went so horribly wrong.
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: If you vote for me, I'm a practical person.
JIM BOULDEN, CNN CORRESPONDENT: It's February, 1992. Governor Bill Clinton is campaigning for the U.S. presidency. The Soviet Union has officially ceased to exist. And in a little known Dutch town, European leaders are taking a major step toward political and economic union.
Maastricht was to open a new era of European unity and economic discipline and pave the way for the single currency. That meant some new rules, the so-called Maastricht criteria. Inflation was not to be more than 1.5 percent above the average of Europe's strongest economies. Government deficits could not exceed 3 percent of GDP and debt to GDP was to be capped at 60 percent.
(on camera): I'm proof enough that much has changed since 1992. This was my reporter's pass to the conference.
But match those criteria to the current figures and it's clear Maastricht has not aged well at all. By 2010, all but two of the original signatories, Denmark and Luxembourg, have exceeded the deficit limit. And only Denmark and Luxembourg are still within the 60 percent debt to GDP ratio.
So Maastricht, it seems, wasn't strict enough.
PETER SUTHERLAND, FORMER EUROPEAN COMMISSIONER: It was clear in setting the parameters for deficit management and debt. But it didn't contain oversight. It didn't contain the necessary mechanisms for looking at national budgets in advance. It didn't provide for surveillance. And it didn't provide for sanctions.
BOULDEN: Peter Sutherland, a former European commissioner, who says Maastricht was flawed and Greece is proof of that.
Back in 1999, his former colleague and the architect of Maastricht, Jacques Delors, was a lot less concerned.
JACQUES DELORS, FORMER PRESIDENT, EUROPEAN COMMISSION: The prediction is Greece will be able to join in two or three years.
BOULDEN: Two years later, with inflation at 4 percent, Greece joined the Eurozone.
JEAN-CLAUDE TRICHET, FORMER ECB PRESIDENT: The market, we are making no difference between good behavior and bad behavior. Greece and Germany were borrowing at the same interest rates.
BOULDEN: Jean-Claude Trichet calls it benign neglect. The Eurozone was booming and the Maastricht criteria were the last thing on people's minds.
(BEGIN VIDEO CLIP FROM SEPTEMBER 2011)
NORMAN LAMONT, FORMER U.K. FINANCE MINISTER: When the euro was set up, a lot of people said, well, it's very good, you have a currency without a government. That's a plus part, not -- a plus point, not a minus point. But actually, it's turned out to be a minus point because no one is in charge.
(END VIDEO CLIP)
BOULDEN: Hindsight and Maastricht are hostile bedfellows. In 20 years, we've gone from entry strategies to talk of exit strategies, from three pillars to three bailouts.
The treaty and the currency it created were part of a post-war dream of European unity. 20 years on, there's still talk of the war but not a victory.
(BEGIN VIDEO CLIP FROM OCTOBER 2011, COURTESY GERMAN PARLIAMENT TV)
ANGELA MERKEL, GERMAN CHANCELLOR (through translator): The world is watching Europe and Germany. They are watching to see if we are ready in the worst crisis in Europe since the end of the Second World War, to take responsibility.
(END VIDEO CLIP)
BOULDEN: Jim Boulden, CNN, London.
(END VIDEO TAPE)
QUEST: Jim Boulden certainly looks as if he's aged perhaps one or two years since then, as, indeed, all of us do who covered Maastricht.
I spoke to Miranda Xava, a Greek economist.
She was a member of the IMF's executive board.
And I asked her on the line from Athens if Maastricht had failed -- failed because countries like Greece had gamed the system.
MIRANDA XAVA, PRESIDENT, EF CONSULTING: Greece, I don't believe, broke the rules, but they certainly abused the exceptions to the rules. And so there were large off-budget shifts and securitization operations that understated the size of the deficit and of the public debt.
So when Greece got into the Euro Area, its fiscal accounts were far from balanced.
QUEST: Was the Maastricht Treaty a failure?
XAVA: The debt problem, not just in Greece, but more broadly in the Euro Area, is due to the failure, institutional failure, of the matt to bring the deficits under control.
But there was also a problem of market perception, because markets perceive that there is no credit risk in the Euro Area. And there was also a regulatory problem...
XAVA: -- because the bonds of every Euro Area country had the same zero risk weight in bank balance sheets.
QUEST: OK, now, what that in mind, are you any more confident that the new fiscal pact puts right the problems of Maastricht?
Because Maastricht had a stability pact. It had a growth pact and it failed.
So does the fiscal pact make things better?
XAVA: Yes, it will certainly make it better because there will be far more strict enforcement of budgetary rules, with automatic penalties being imposed.
But this is not enough to resolve the crisis. To resolve the crisis, you have to address the legacy debt. You had to -- you have to address the debt overhang just as the one in Greece that is being addressed through the PSI.
But market participants are not confident that Greece will be the end of the line. They always think, you know, who will be the next in line, possibly Portugal?
QUEST: Finally, do you believe the only way is a major PSI, or, ultimately, Greece does default?
XAVA: If there is -- if the PSI is implemented and the second rescue package is agreed and implemented -- and that's a big if -- then, of course, Greece will not default.
The question is, will the Greek political system implement all the measures that they are signing up for? (END VIDEO TAPE)
QUEST: The question of Maastricht then and now and the fiscal pact. These are things that you may well have some thoughts about. As we have a very good way that you and I can have a discussion and a debate, of course, @richardquest is Twitter address, the Tweet. And before any of you start having any funny ideas, I do actually Tweet those things myself. I do read them. And it's the best way that you and I can have a dialogue together, @richardquest, the Twitter address.
Now, tonight's Top Tweets do, indeed, come from some of the top minds on social media, chief execs and economists.
So let's start with Eurasia's group president, Ian Bremmer, who's been on this program many times. Mr. Bremmer says: "Saudis could make up the U.S. aid to Egypt if they wanted to" -- this is in reference to U.S. aid perhaps being cut to Egypt because of legislation -- "but it's unlikely and tourism industry is getting crushed."
And he uses the hash tag outlook/troubled.
The Manpower Group chairman and chief executive, Jeff Joerres, is also a regular on QUEST MEANS BUSINESS, has Tweeted tonight. And he says: "UN reports on youth. Young people say theoretical education not preparing them adequately for entry into the labor market."
And let's continue the economic theme from the economist Paul Krugman. Mr. Krugman, Dr. Krugman, or Professor Krugman says: "It's now conventional wisdom that the fate of the U.S. economy over the next three quarters and Obama's reelection chances depend on events in Europe."
And if we keep that message there, just a reminder, of course, Paul Krugman is very much an opponent and critic of the current austerity policies being adopted by many European countries. He believes that expansionary austerity is, perhaps, a misnomer and that Europe has gone too far and too fast.
From one anniversary to another, from Maastricht of 20 years old to 10 times that, 200 years since the birth of Charles Dickens. In today's Hard Times, he's still got economic lessons for us.
QUEST MEANS BUSINESS.
QUEST: The author of "Oliver Twist," "A Christmas Carol" and "Great Expectations," Charles Dickens needs no introduction as one of the world's most loved authors. Today, it's his 200th birthday, 200 years since he was born.
The Prince of Wales, Prince Charles, joined the lord mayor of London for a visit to The Dickens Museum in the British capital. Prince Charles was then joined by his wife, Camilla, just as the Duchess of Cornwall and the actor, Ralph Fines, at Westminster Abbey.
There, the prince laid a whether on Dickens' grave. Charles Dickens wrote through the boom days of the Industrial Revolution. His enduring appeal is bound to what he taught us about living in hard times.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It was the best of times, it was the worst of times. My own belief is that debt is best avoided at all costs, as my old friend, Wilkins McCorver (ph), once pointed out. Annual income, 20 pounds. Annual expenditure, 19.6. Result -- happiness.
Annual income 20 pounds, annual expenditure 20.06, result -- misery.
(END VIDEO CLIP)
QUEST: Famous quotes from Charles Kittens -- Dickens. I love that macabre one. And since the quotations are so up for today's lifestyle and politics, the British culture minister decided his colleagues in parliament could do with brushing up their Dickens. He gave every member of the British cabinet a Charles Dickens book to mark the bicentenary. And there might have been hidden messages in who got what.
David Cameron got two books to sum up his government policies. On the one hand, he got austerity, so he got "Hard Times," but on the one hand, oh, this is just genius political maneuvering. Give the man "Hard Times" for austerity and then give him "Great Expectations" for the future.
The only member of the government to receive two gifts. That's also called creeping up to the boss.
George Osborne, the finance minister, he got close -- has close ties to the city of London. So, because, of course, the city of London is so important, he got "A Tale of Two Cities." and Nick Clegg, the deputy prime minister and leader of the minor coalition party, the Liberal Democrats, a much maligned politician and political leader in Britain as the junior, he got "Oliver Twist." Perhaps that's a sign of disagreements with the EU treaty, because, of course, Oliver Twist's famous line was, "Please, sir, can I have some more?"
The only question is, in Nick Clegg's case is he talking about more power, more say, more politicians or more of everything?
We want more of the markets. Up 31 points, just a small gain of .25 of 1 percent, 12876. At these levels, the New York market is just about trading at recent record highs. There's still more to go though, of course, particular of the growth forecasts for the U.S. are accurate.
When we come back, QUEST MEANS BUSINESS.
And it's A Profitable Moment on Maastricht.
QUEST: Tonight's Profitable Moment.
The year was 1992. Now, it may not have been the most memorable year. Half my colleagues on QUEST MEANS BUSINESS struggle to remember where they were. Well, that could be because they were in primary school or maybe even thinking about just going to university.
For those of us who are perhaps a year or two older, we remember exactly where we were, either covering or getting to grips with this new animal that replaced the European community with something called the European Union.
The Maastricht Treaty -- it created a sorry mess that we see in Europe today. Even then, many forecast that this was a joke from the start. It was an unexploded bomb, a time bomb waiting to go off.
Nation after nation cobbled together their agreements, with all the chaos surrounding the talks. Eventually, it was obvious disaster was going to take place.
And if there was any doubt about how flimsy the stability and growth package was, it vanished when France and Germany broke the rules in 2003, rather than face up to their own consequences, suspending the pact.
Happy birthday Maastricht and goodbye, because now we have the glorious fiscal pact, which might save us, because, let's face it, Maastricht certainly didn't.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
This is CNN.