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QUEST MEANS BUSINESS

Russia Bails Out Ukraine; Deal Between Neighbors; US Markets Flat; Tech Leaders at White House; Bernanke's Journey; Federal Reserve Preview; Spain's Slow Recovery

Aired December 17, 2013 - 16:00:00   ET

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


(NEW YORK STOCK EXCHANGE CLOSING BELL)

RICHARD QUEST, CNN INTERNATIONAL HOST: The market is flat as a pancake. It's playing the waiting game. The trading day may end, the market is flat, and all eyes are locked onto the Fed. Today is Tuesday the 17th of December.

It's a big cap that we report on tonight. Russia hooks Ukraine with a financial lifeline.

We've got the top CEOs in high tech, they're turning a meeting with Obamacare into demands for reform.

And we report on trouble in Turkey. Leading businessmen are questioned in a corruption crackdown.

I'm Richard Quest at the CNN Center, and I mean business.

Good evening. Tonight, Russia is extending a lifeline to the country of cash-strapped Ukraine and providing urgent funds and cut-price fuel as part of a deal which appears to strengthen ties between the two countries.

The Ukrainian president, Viktor Yanukovych, and the Russian president, Vladimir Putin, met in Moscow and they discussed the terms of the bailout, which is so badly needed by Ukraine. These are the details.

(RINGS BELL)

QUEST: Russia will buy $15 billion worth of Ukrainian debt. It will provide desperately needed cash for an economy verging on bankruptcy. Russia will also slash the price it charges its neighbor for gas, easing the pressure on the Ukrainian economy.

Now, that is a controversial issue, but one which will be welcome in Ukraine, where of course, it's the depth of winter. Russia and Ukraine -- Ukraine relies on Moscow for about 60 percent of its national gas.

And President Yanukovych insisted that he was left with "no alternative" -- his words -- "no alternative" but to sign the bailout agreement. It's unlikely to go down well with the crowds in Kiev, who've been protesting for weeks against the Ukrainian government's decision to spurn the free trade deal with the EU in favor of Moscow.

So, that is the situation. The deal seems to have been done with Russia to help the bailout, and the president, President Putin, reaffirmed it was a vital relationship between the two countries.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): We discussed in many details with the president practically all vectors of our cooperation. Russia and Ukraine are strategic partners not in name only, but our actions also prove it.

We are united both by many centuries of our friendship and by having lived a long time together in the same country.

(END VIDEO CLIP)

QUEST: President Putin. Now, Diana Magnay is live for us tonight in Kiev. Diana, no one should be surprised. He went to Moscow specifically to get this bailout deal where the money is badly needed.

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: That is true, and it is a huge deal, the $15 billion that Russia will pay out of its national welfare fund to buy up Ukrainian sovereign debt, and that 30 percent discount on Russian gas, which will amount to about $5 billion a year.

So all in all, a huge package, one described by the head of the main opposition party here, Fatherland party, Arseniy Yatsenyuk, as not just a big deal, a very big deal, and he is, in fact, with me now. I'll just bring him in. Were you expecting this package on this kind of a scale?

ARSENIY YATSENYUK, UKRAINIAN OPPOSITION LEADER: This was a very big deal and very wrong deal. That's what we've been expecting from Russia, because what has happened, Russian values got victory over European values.

And every sum of $20 billion is amazing, it's something awesome. But what's for sure is that you can get the free cheese only in the mousetrap. And in order to --

MAGNAY: You'll have to explain that. I know that that is a Ukrainian phrase I've heard on the square down there. What does that mean?

YATSENYUK: It means that Russia would never give $20 billion for nothing. There is a concealed or hidden deal between President Yanukovych and President Putin, and I strongly believe this deal is strictly correlated with the Customs Union.

Probably President Yanukovych agreed to join the Customs Union just before the presidential elections of 2015. This is a geopolitical move of Russia, let's be frank, because Ukraine, Syria, Snowden, Russia, it sounds like USSR.

MAGNAY: But the European Union, their first reaction to this, the EU Enlargement Commissioner said, "Oh, well, all well and good. We never said that an association agreement should come at a cost of relations between Russia and Ukraine and our deal can go alongside this deal." Do you think that that is the case?

YATSENYUK: I strongly believe that this president will never sign an association agreement with the European Union. Because again, this president never shared the European values. It's not about the money, it's about the values.

And it's only up to the new president to change the course and to make the U-turn from Russia, go back to the European Union and to resume talks with the European Union and sign AA over the CU.

We strongly believe that the Ukrainian future only is in the European Union, but we strongly believe that we face a huge challenge, a geopolitical influence of Russia over Ukraine. Because the Customs Union is not an economic union, and President Putin was very clear saying that this is a political union. And today, they even made the statement on military cooperation.

So, my feeling is that this is an increasing influence of Russia over the post-Soviet states, and what we got today, we got today that Russia pleads for a non-signature of the European Union to President Yanukovych and to the Ukrainian regime.

MAGNAY: So what are you going to do about it? How long are these people going to be out there, and how will you, as one of the three main opposition leaders here, going to respond? What are you going to tell them happens next?

YATSENYUK: The key factor is that we prevent President Yanukovych from signature of the agreement to the Customs Union. And this is the good news. The bad news is that we are not sure about the hidden deals that President Putin hammered out during his -- the last week in Moscow.

We started a non-confidence procedure, we started to collect the votes to sack the government, and we already got 217, so a lack of 9 votes. It's doable.

But for sure, what we need in my country, we need the unity of all opposition forces in order to win the presidential elections, in order to create a new pro-European Ukrainian team, and to sign an agreement and to make Ukraine a part of this big European space. It won't be easy. It will be very hard. This is a hard toil, but it's doable.

MAGNAY: Thank you very much, Arseniy Yatsenyuk from the Fatherland Party. And certainly, it would appear as though today, Richard, the chances of that happening are that bit further away. Richard?

QUEST: Diana, just before we leave this discussion, it is worth mentioning that there is a very sizable part of Ukraine on the Eastern side, the heavy industry side, that does believe in a closer relationship with Russia. And although the protesters may be on the streets of Kiev, this is not as, perhaps, simple as one side at may seem at first blush.

MAGNAY: Absolutely not. The heavy industry, which is concentrated in Ukraine's south and east, the space sector, farming, heavy machinery, all that really does depend very heavily on good relations with Russia, on the Russian export market. And it is always said that there is this sort of pro-Russian south and east and pro-Western west and north to Ukraine.

But that said, you do see quite a lot of the young in this square having also come from the east. As the country's economic situation deteriorates, you are seeing a shift, especially in the youth in that part, which has traditionally been seen as the pro-Russian side of the country, Richard.

QUEST: Diana Magnay in Kiev this evening. Now, the protesters there may not be happy about the economic deal with Russia. The head of the World Trade Organization, the WTO, sees it differently, telling us at the end of the day, it's a deal between neighbors.

(BEGIN VIDEO CLIP)

ROBERTO AZEVEDO, DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: And the relationship with neighbors is almost by definition very complex, because it's not only about the trade itself, it's not only about the economic impact itself, there are other political considerations that come into play. And that's clearly the case of Ukraine.

And I believe that that's -- that's the way it's supposed to be. It is going to be complex, it's going to be difficult, but that in no way -- in no -- absolutely no way would affect the relevance or the type of businesses and deals that are struck at the multilateral level.

(END VIDEO CLIP)

QUEST: More from Roberto Azevedo of the WTO later in the program, where he tells us about the global trade deal that was reached in Bali after 12 years of haggling.

Onto the markets and how they've performed. And stocks pretty much flat as the investors wait to hear from the Fed. Maribel Aber is live for us at the New York Stock Exchange. I'm going to short-circuit you. We know that they are waiting for the Fed, but what do they think the Fed's going to do?

MARIBEL ABER, CNN BUSINESS CORRESPONDENT: Hi, Richard. Well, it's all about mixed opinions down here, the traders I've talked to. You've got on the one hand people who want to see tapering get underway. That would give the market greater certainty, which is what the market wants, instead of all this hand-wringing every month about whether the Fed will finally pull back.

Then you've got the other set of folks, right? They want QE to continue as long as possible, keep the kool-aid out. Also to keep in mind, though, we've got a lot of upbeat economic data lately. Remember, the jobs report, GDP, home sales, auto sales. We also know another government shutdown has been averted.

But again, going back to your underlying question will be, is this all enough for the Fed to justify a pullback, or do they want to see a more consistent, longer-term trend in the data. Investors seem unsure, and the reason we saw a lot of caution, we were flat today, Richard.

QUEST: Maribel, we will talk about this tomorrow when we'll have the results from the Fed, of course, in this program, and we'll know exactly what they decided.

The leaders of Silicon Valley descended on the White House to share their concerns about surveillance, this time with President Obama. It was an A- list of the tech world who traveled to Washington one week after they asked government to change its spying practices.

In the room, who did we have? Well, let's have a look. We had, first of all, the Apple chief executive, the CEO, Tim Cook. We had Google's executive chairman, who is Eric Schmidt. Next in the middle there is Facebook's COO, Sheryl Sandberg, Yahoo's president and chief executive, Marissa Mayer to the right over there, and coming in at the end there, Twitter's chief executive, Dick Costolo.

So, you have the biggest names in social media and tech all at the White House, pressing their case. The president had a lot to tackle on the issues from his inbox on the Tuesday's meeting. Number one was, of course --

(RINGS BELL)

QUEST: -- the NSA surveillance program. The executives intent on making their concerns known. They urged the president to make aggressive reforms. On Monday, you'll be aware, a federal judge ruled that the Obama administration's phone surveillance program appeared to be unconstitutional. That's a case that's still to be heard.

Also, next, Obamacare on the website. How to improve the site's performance in the wake of the failed rollout. More importantly, how did this fiasco ever happen in the first place? The president announced a former Microsoft exec will oversee healthcare.gov.

Third on the agenda, how the tech sector can help government when it comes to growing the economy and narrowing the income gap. Our senior White House correspondent, Brianna Keilar, is in Washington for us tonight and joins me. Brianna, which of all those issues do you think got them hottest under the collar?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Without a doubt, Richard, it was the spying because ostensibly, you had President Obama inviting what are really a who's who, quite the Silicon Valley brain trust here to the White House, to talk in part about healthcare.gov.

But I thought it was very telling, we learned from one participant in the meeting that they were talking, these executives were talking about healthcare.gov for about 45 minutes with administration officials, but not until they started the discussion about spying.

President Obama and Vice President Biden came in and they talked about this for about two hours, we'll told, a participant telling us --

(CROSSTALK)

QUEST: But -- sorry, I'm just going to jump in here. What -- we know the industry is against it in the sense of the way they put that open letter last week, and we know the president basically continued to justify it. So, where was the middle ground for them to discuss it?

KEILAR: I don't think we're there yet, to be honest, Richard. I think at this point, you have them voicing their concerns. We know that they really covered the gamut here, they talked about bulk collection, that meta data collection, internet usage, phone calls. They also talked about the secret court that gives the warrants to look at that.

They talked about the privacy law that governs -- that really protests the customers of these companies, and they also talked about the agreements between different countries on sharing this kind of information across borders, because a lot of these companies are multinational.

So, I think, really, this was them coming and explaining, I think, all of their concerns in detail. And this was the administration showing that they're listening. I think we're a little ways off before we see how that all kind of fleshes out, but I suspect this meeting is a sign that it's heading in that direction.

QUEST: It's fascinating, isn't it? Because these -- in many ways, these tech CEOs are now the standard=bearers for the millions of people who object to what was done but don't feel that their voice may have been heard by, say, for example, members of Congress. But they can be heard through these CEOs.

KEILAR: That's right, and -- That's right. And customers are alarmed. They're alarmed that many of these companies have been used to essentially provide the infrastructure for the government to spy.

And these companies are worried because that in turn threatens their bottom line. So, their economic concerns are certainly one of the things that they were talking about here as they were pressing for transparency, and that's a concern that I think is being passed up the chain.

But what's really interesting here, as well as a lot of these leaders in tech, Richard, are supporters of President Obama. They have even donated to his campaigns in the past. So they found themselves, many of them --

QUEST: Right.

KEILAR: -- in this position of supporting him but at the same time being very alarmed by the disclosures that we heard from Edward Snowden.

QUEST: Briana, good to talk to you. Thank for putting into context at the White House for this evening. Brianna Keilar.

Now, when we come back, there really is only one mega big story for investors this week. Everything else takes a back seat behind what's going to happen at the Fed.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: Ben Bernanke's turning onto the exit ramp after eight years as chairman of the Federal Reserve. He's faced some unexpected bumps and pitfalls whilst in the driver's seat at the US central bank. As Bernanke hits the road, Maggie Lake takes a look back at his journey.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT (voice-over): It's been a long, perilous eight-year ride for Ben Bernanke, filled with virtually every economic challenge imaginable.

BEN BERNANKE, CHAIRMAN OF THE US FEDERAL RESERVE: I, Ben S. Bernanke --

LAKE: It all began in 2006, when Bernanke was sworn in as the 14th Federal Reserve chairman, taking the reins from the man once called the maestro, Alan Greenspan. At first, it was smooth sailing. The US economy was expanding. Storm clouds seemed far away.

(THUNDER CRASH)

LAKE: But all that changed in 2007.

BERNANKE: The economic outlook has been importantly affected by recent developments in financial markets, which have come under significant pressure over the past few months.

LAKE: The slump in housing gathered speed, foreclosures surged. Publicly, Bernanke remained upbeat.

BERNANKE: Our forecast is for moderate but positive growth going forward for the next few quarters.

LAKE: In fact, the Great Recession was just beginning. Bear Stearns collapsed in 2008 and was gobbled up by JPMorgan Chase. Lehman Brothers collapsed. Stocks tanked and credit markets seized up.

BERNANKE: This plan is an emergency plan to put out a fire.

LAKE: Bernanke stepped on the gas and revved up the engine.

(CAR ENGINE REVVING)

BRIAN BELSKI, BMO CAPITAL MARKETS: Mr. Bernanke was aggressive at a time when our country needed him to be aggressive and, quite frankly, needed for him to be decisive. And I think a lot of people don't realize how close this country was with respect to having a run on the banks.

LAKE: Bernanke helped craft the controversial bank rescue plan, TARP. He cut interest rates to near zero and launched the massive Fed stimulus programs quantitative easing 1, 2, and 3. The Fed's promise to try anything to ease the crisis, no matter how unorthodox, was key.

ETHAN HARRIS, BANK OF AMERICA MERRILL LYNCH GLOBAL RESEARCH: They said, we're going to do whatever it takes. That message, I think, that the psychological effect of that message was to make the actual policy changes more powerful.

(STOCK EXCHANGE BELL RINGING)

LAKE: By 2009, the markets recovered. "Time" magazine named Bernanke its person of the year. But years after the worst of the financial crisis, the Fed is still pumping billions in stimulus, earning Bernanke the nickname Helicopter Ben.

Critics say the easy money is fueling risky investments, but unwinding stimulus will not be easy and could upset world markets.

BELSKI: We have now reared an entire generation of investors that have become dependent on QE to buy stocks.

LAKE: The jury is still out on Bernanke's tenure at the Fed. But after such an eventful economic journey, he's earned the right to do something a little less stimulating.

(HAWAIIAN MUSIC)

LAKE: Maggie Lake, CNN, New York.

(END VIDEOTAPE)

QUEST: Now, the Federal Reserve has one more chance to scale back stimulus this year. This time tomorrow, we'll know if they took it. Joining me now is Ronald Hart, the managing director of the Hart Group at Morgan Stanley.

RONALD HART, MANAGING DIRECTOR, THE HART GROUP AT MORGAN STANLEY: Great to be here.

QUEST: First and most important question --

(RINGS BELL)

QUEST: -- are they going to do it or not tomorrow?

HART: Probably not, 20 percent chance we say tomorrow, 80 percent chance first quarter of 2014. But they are going to do it.

QUEST: They're going to do it, and it's inevitable, it's going to happen.

HART: Yes.

QUEST: What do you think is going to be the weighing principle tomorrow? Is it still they're not sure sustainability?

HART: Well, the economy is on a solid footing. Unemployment and the projection for unemployment and inflation as well. Inflation's been relatively tame, and unemployment's been better, 7.6 percent in June, 7 percent now. So the trend is good.

QUEST: So why do you think they're going to wait? Why -- what's your gut feeling for why? There's an argument that would say from Janet Yellen's point of view, get Bernanke to at least break the back of it, open the door of it --

HART: Sure.

QUEST: -- and then she doesn't have to take the blame when that first decision is taken.

HART: True. Bernanke's legacy is such that he doesn't want to leave the fire hose on when he leaves --

QUEST: Right.

HART: -- right? So --

QUEST: Or at least be seen to be turning it down a bit.

HART: Exactly. So, if anything happens -- look. This is unprecedented. This is monetary policy never before in history. They buy $85 billion a month, $1 trillion a year of securities. That is an awful lot, and it's expanded about $800 billion to $4 trillion. So this is unprecedented, no one knows the right answer.

But politically, it's expedient to do so. It certainly has helped the economy a good bit. We know they're going to do it. The question is when. They're going to shut down the bar. The question is, who's drunk?

QUEST: Right. And you're thinking Q1 of next year. This whole issue of what investors do --

HART: Sure.

QUEST: -- if we look back at 2013, every time there was the potential for tapering --

HART: Sure.

QUEST: -- the market took a tumble.

HART: Right.

QUEST: Now, admittedly, it recovered pretty quickly.

HART: Quite. Yes. In May, they started talking the taper tantrum --

QUEST: Right.

HART: -- as you call it, and the bond market moved up 125 basis points. So there's a clear argument that it's already priced in. The question is how much and when is it priced in and what is the longterm effects?

QUEST: And if we again put this into the context of rebalancing one's portfolio --

HART: Right.

QUEST: Risk on, risk off.

(LAUGHTER)

HART: No one does it that way. You're tactically allocated. You have asset allocation in place. You may reduce equities. They're up 21 percent this year.

QUEST: But I hear people saying now, well, you've still got to be with equities --

HART: Right.

QUEST: -- but it's time to start looking elsewhere at different equities.

HART: Individual investors don't do completely risk on and risk off. They never should. You've got to allocate. Now, if you're saying return comes from your allocation.

QUEST: So, what would you be doing now at this point? And I know -- let me give the --

(LAUGHTER)

QUEST: -- let me give the warning. Nothing we say on this program should be taken as investment advice.

HART: Well, I would take back a little bit in stocks --

QUEST: Right.

HART: -- not much. I'd trim a little bit. When you're up 21 percent in the year, your allocation goes higher by mathematics. So you need to trim back stocks a little bit. Bonds have had their --

QUEST: To what?

HART: -- first day on year -- well, it depends on your situation, age, and circumstances. You know, 40, 50 percent roughly in equities if you're a reasonable age, you're not close to retirement.

Now realize, bonds this year, for the first time since 1999, had a down year. First time. They're down 2 percent this year. You and I are old enough -- barely you -- to remember the Carter days and the height of inflation.

QUEST: Oh! Oh!

HART: Bonds can get crushed, you know that.

QUEST: Oh!

HART: Bonds can be at par, and it can be at 75 cents if rates move up.

QUEST: I think we'll have this guest again, talk charming. All right, we'll wait and see what the result is for tomorrow. Thank you for coming in.

HART: It was a pleasure.

QUEST: Good to see you, many thanks, indeed. Now, coming up in just a moment, finding a job in Spain. Well, we all know with an unemployment rate at 25-plus percent, Valentin Garcia was out of work for three years until now. You're going to hear his story as QUEST MEANS BUSINESS continues.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: Today in Spain, the cost of employing someone is rising while salaries are falling, and the numbers we got today on labor costs prove that the Spanish economy is still struggling as it emerges from recession. There are millions of people out of work, and the country is still one of the hardest places in Europe to find a job. Just how difficult, Al Goodman in Spain tells us.

(BEGIN VIDEOTAPE)

(CHAINSAW RUNNING)

AL GOODMAN, CNN MADRID BUREAU CHIEF (voice-over): Tree-trimming in a Madrid suburb. It's the first steady work for Valentin Garcia in three years. We met him in 2012, when he got a handout from the Red Cross. An unemployed waiter with almost no savings, he was desperate to find a job.

VALENTIN GARCIA, UNEMPLOYED WAITER (through translator): If there is just part-time work, fine, at any hour, any job, even if I have to learn it from scratch.

(CHAINSAW)

GOODMAN: He got his wish -- sort of. At 50 years old, he's learning all about tree-trimming on a city work crew and earning minimum wage, about $900 a month. But the job lasts only six months.

GARCIA (through translator): It's very boring, but it's what there is. Since they've given you an opportunity, at least you are busy.

GOODMAN: Other men in the crew also are recent hires. After years of economic crisis, Spain's jobless rate is finally declining, but it's still almost 26 percent.

GOODMAN (on camera): Unions say about 1.2 million jobs are being created in Spain each month, but that most of them are part-time and temporary, and a third of them last less than four hours a day.

GOODMAN (voice-over): Garcia works five hours. He'd like to branch out, but thinks his chances are slim because he says most companies aren't hiring older workers. The mayor of the town that employs Garcia is from Spain's ruling conservative party, which has been touting the economic recovery, including the temporary jobs.

JESUS MORENO, MAYOR OF TRES CANTOS (through translator): No, they are not the solution to Spain's problem of more than 5 million people out of work, but they are important so the longterm jobless can get training.

GARCIA (through translator): I'd like to change places with the politicians for a month or two so they could see what it's like to suffer in the economic crisis.

GOODMAN: But his most immediate concern: paying the bills when this job ends in April. He says he'll have to ask his elderly mother for help -- again.

Al Goodman, CNN, Tres Cantos, Spain.

(END VIDEOTAPE)

QUEST: In a moment, the World Trade Organization head tells us it's back in business after the success in Bali. The head tells CNN it's ready to tackle the really difficult issues. It's QUEST MEANS BUSSINESS, stay with us.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.

Russia has agreed to bail out cash-strapped Ukraine. Moscow is to buy $15 billion worth of Ukrainian debt and also slash the price it charges its neighbor for natural gas. President Putin and President Yanukovych signed the deal in Moscow. Protesters in Kiev, of course, want the Ukrainian government to pursue closer ties with the European Union instead of Russia.

Some of the biggest names in Silicon Valley came to the White House, where they pressed for aggressive changes in US surveillance activities.

The meeting followed the day after a federal judge ruled that some of the U.S. government's data mining practices are likely unconstitutional. Now staying with intelligence matters, in the former U.S. intelligence contractor Edward Snowden, is now offering his expertise to Brazil to help investigate claims the U.S. spied on people there. Mr. Snowden suggested he'd need permanent asylum to so do. He's currently in Russia.

Angela Merkel has been sworn in for a third term as Chancellor of Germany, now heading what's being called a 'grand coalition' of her conservative block and its center left rivals. Europe's lingering debt crisis will be one of its primary challenges.

The United States has ordered all non-essential personnel to leave South Sudan after an apparent coupe attempt. The government also announced ten arrests - mostly former ministers (sacked) by the president. Fighting reports leaves dozens of soldiers and sent thousands of people - I beg your pardon - fighting reportedly has killed dozens of soldiers and sent thousands of civilians fleeing (inaudible). He calls it a deal of tremendous economic significance. That's the chief of the World Trade Organization.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It is so agreed.

(END VIDEO CLIP)

QUEST: That was the scene in Bali ten days ago when 160 countries struck the so-called "Bali Package." It is the WTO's first-ever global trade agreement. The organization's hoping it will revive the comprehensive Doha Round of talks that began about 2001, and since well and truly stalled. The deal that was agreed simplifies paperwork and border delay. It could give the global economy a $1 trillion boost. Many critics say it is minor at best even though it was the best that could be done. The WTO chief Roberto Azevedo spoke to CNN and told Nina Dos Santos the agreement was exactly what the organization needed after many years of failure.

(BEGIN VIDEO CLIP)

ROBERTO AZEVEDO, DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: The package itself has tremendous economic significance, otherwise it wouldn't be so difficult to reach. It was reached precisely because members wanted it to happen. They wanted it to happen because of the benefits that have come from it, just costing - red tape cost to members - approximately - estimates vary, but it can cost up to $1 trillion a year. And that is a very significant amount of money that will be - that will be spent more productively in doing business. Other than that, the negotiators now feel that they can do it, and that's a very important emotional boost to the organization. We have been stuck for so long. We have come close to an outcome very often. We always failed. This is the very first time that we actually carried it through the end, and that's extremely important.

As I was talking to delegations today, and the unanimous view was that now we have a positive cycle that we may be starting a virtual cycle rather than the vicious cycle that we had before of failures.

NINA DOS SANTOS, NEWS ANCHOR AND CORRESPONDENT BASED IN LONDON FOR CNN INTERNATIONAL: I suppose what all of this shows is that you've got to be very, very careful in negotiating these multi-national trading agreements without biting off more than you can chew because that in turn exposes an organization like the WTO towards power plays here. How did you manage to overcome those kind of power plays?

AZEVEDO: The whole negotiation in Geneva was very transparent, was very inclusive. It was painstakingly low - slow. So, the members had to negotiate with everybody in the room, there were no closed-doors meetings to finalize deals, the deals were conducted in an open and transparent way. We did it overnight, negotiating up into the early mornings of the - early hours of the morning. But it paid off, because at the end of the process, everybody felt that they owned the process, that they had a stake in it, that they had ownership of it.

More than that, I believe that another very - another very critical aspect of that was the fact that delegations were not being asked to do more than they could actually do. So, do-ability was a very important thing. We're not asking for the moon and the stars, we were asking for things that were politically feasible in all member countries. So that was also a very important element that we introduced for this particular package.

DOS SANTOS: Let me ask you this - how relevant is the WTO these days in a day and age when of course we've got the United States negotiating its own bilateral agreements with the European Union, with other Pacific Rim countries as well?

AZEVEDO: Well, these bilateral and regional agreements are extremely important. They always existed. This is not a new future of international trade. And people I think are looking at these as they are new futures and they're not. They have always been there. But they are always by definition incomplete. They're incomplete because they don't get everybody around the table. The results apply only to a certain number of countries, and there are some disciplines for example, subsidies - agricultural subsidies - which are extremely important for developing counties for example. They would never, ever be negotiated in a bilateral deal or in a regional deal. These take s multi-lateral approach, and these approaches can only happen here in the WTO. So, if you want to tackle the real difficult issues today for developing countries for instance, it has to be done here - nowhere else.

(END VIDEO CLIP)

QUEST: That's the head of the WTO talking to Nina Dos Santos. Allegations of high-level corruption have rocked the government and the stock market in Turkey where 49 people have been detained including the sons of several ministers and the chief executive of the state-owned bank Turkey Halk. The authorities say they are investigating corrupt tenders in the construction sector and other alleged misdeeds. Halk Bank shares plunged 12 percent. Look at the numbers - Istanbul's main stock index dropped 5 percent. The prime minister Erdogan said Turkey will not be manipulated.

(BEGIN VIDEO CLIP)

RECEP TAYYIP ERDOGAN, TURKISH PRIME MINISTER, VIA TRANSLATOR: Turkey is not a banana republic. The people of Turkey cannot be disturbed. Turkey is not a third-class tribal country in which the people's decision can be ignored. No internal or external people can disturb my country by these traps.

(END VIDEO CLIP)

QUEST: Erdogan's retort was probably aimed at the influential Muslim cleric and the former ally Fethullah Gulen. Joining me now from Istanbul, Andrew Finkel. This has seemingly. to those of who may be (inaudible) familiar with the events in Turkey, this seemingly has come out of almost nowhere and blown up rather quickly. So what's behind it?

ANDREW FINKEL, JOURNALIST: Well, yes, it's something of a political earthquake here in Turkey. I don't think that's a term anyone would use lightly in a country that knows real earthquakes. Yes, it came out of the blue, but I suppose these are serious allegations of corruption. The government is going to try to portray these moves as an attempt by this religious community with which it has been quarreling -- the Gulen movement. It said that the prosecutors and lawyers and policemen loyal to the Gulen movement have been moving against the government, but on the other hand, I don't think any public prosecutor or any policeman would act against the sons of three important ministers without really a great deal of proof.

QUEST: Right.

FINKEL: So, I think you know today the government is trying to pop this thing down, but in the days that follow there'll be much more serious allegations, Richard.

QUEST: And this is really the issue to some extent because it has a religious component to it in a country where secularism and religiosity are often - well frequently - at odds and which is very much in the news at the moment. So, understanding this, Andrew, takes us where? Who wins out of this?

FINKEL: Well, I think what's happening is that the religious right is very much quarreling among itself. Of course you'll remember very well that this summer there were demonstrations really in the square just right behind me between committed secularists in Turkey and the government. There were confrontations. But I think those people who were demonstrating yesterday are sitting back and really sort of almost enjoying what's going on. This is basically the religious right in Turkey fighting among itself. The prosecutor basically is saying these people committed very serious crimes and deserve to be punished. I think people would wonder and say, well, you know, if these crimes are as serious as everyone is pretending they are -

QUEST: Right.

FINKEL: -- then why hadn't the police moved earlier?

QUEST: This would be a minor matter in some situations, but a major matter in a country which is an emerging market, has such a strong economy and which has such prospect for the future. And that gives it, surely, Andrew, a much greater seriousness.

FINKEL: Well I think what's happened is that, yes, that Turkey has had a great success story, it came out of the Lehman Brothers crisis with 8/9 percent growth. It's - you know - it's less now but it's still 4 percent growth - that's a figure many European countries would give their eyeteeth for. But of course analysts are looking much more closely, if they check their story they see certain vulnerabilities, there's a current account deficit, Turkey has to borrow a great deal of money every year in order to turn over its deficit. So, an event like this is going to have serious credibility - doubts on the government's ability to carry its program off, and at the same time, an attack on the - the leader of - the head of the state-owned Halk Bank has been arrested, a major contractor has also been taken in for questioning. So this you know, again, it puts a question mark over this huge construction boom which is going on in the city of -

QUEST: Sure.

FINKEL: -- Istanbul where I'm speaking to you now, Richard.

QUEST: Andrew, good to talk to you, thank you for joining us. That's a story we will follow closely and we look forward to your coverage on that. Thank you very much. Now, when we come back in a moment, the future of London's airports - it's a story we've talked out many times on this story - on this program. Now reports says expand will become less relevant. The only question - well that hasn't changed in 20 years - expand where?

(COMMERCIAL BREAK)

QUEST: A major report in to Britain's airport says that the U.K. must add or expand runway capacity in the southeast of England to avoid a capacity crunch that could hamper economic growth. It was a government-backed report and it's a commission that has found the country needs more runway capacity in the southeast by 2013 when the country will literally be full-up to the brim. So, what are the various options of the so-called Davies Commission in its interim report has come up with? First of all, looking at Heathrow - an additional runway. Now, the additional runway - you've got the two existing runways. Heathrow's basically in the middle - all the terminals or terminus are here. You've got terminal 5 at one end - that's terminal 5, you've got terminal 4 over here and you've got the runways 27/9 left and right there. The new runway would be up here and it would involve demolishing some several hundred houses in a little village called Sipson and is always considered to be highly controversial. That's one option that the Davies Commission has suggested is -- should be looked at.

The second one is to take the right runway, the northbound runway, 27/9, and actually just extend it. It's currently about 6,000 - add another - so it's about 3,000. Add another 3,000 meters on it and what you would be able to do then of course is use it in mixed mode. You'd be able to have some planes taking off and some planes landing on the runway.

Then you have Gatwick Airport which currently has one runway, and the idea is to build a further runway to the south of it. The problem there is that the government has given an undertaking to residents near Gatwick and Crawley and Sussex that it wouldn't do so for many years. They'd have to pretty much break that promise. And then out to the far east you have the Thames Estuary Grain Island new airport project that would cost the best of 100 plus billion dollars - pounds probably -- $150 billion. Whichever way you slice it, those are now the three options that are on the table and that the chairman of the commission, Sir Howard Davies, says now they need to decide which one to go for.

(BEGIN VIDEO CLIP)

HOWARD DAVIES, CHAIRMAN, DAVIES COMMISSION: The connectivity problem can be overstated. It's serious but it's not critical in the point - at this point. However, if we don't do anything in the next decade, it will become critical, and our modeling shows that we would then lose connections with important new markets which would put London at a disadvantage.

(END VIDEO CLIP)

QUEST: Now, let's put this into some perspective to the rest of the world. Frankfurt has four runways, Paris or de Gaulle has four, and earlier I spoke to the chief executive of Delta Airlines, Richard Anderson, and I put it to him how many air - how many runways did he have? And since he's now a major carrier to London-Heathrow, which was his preferred option?

(BEGIN VIDEO CLIP)

RICHARD ANDERSON, CEO, DELTA: Well, I just - it's been talked about for so long, it'll be decades before they make a decision and do anything finally. But I can tell you here in Atlanta, if you look out that window - we'll have another runway in Atlanta - our sixth parallel runway - long before the Davies Commission puts a shovel in the ground.

QUEST: That's quite a telling thought, isn't it? Because you've got - you're building a sixth runway here -

ANDERSON: A sixth parallel runway -

QUEST: -- sixth parallel runway. You've got the Emirates, the UAE and runways galore and new airports, and in Europe they're arguing over this, that and the other. What does it tell us?

ANDERSON: That the United States shouldn't become like the E.U. in terms of being slow and in terms of making important decisions about change and moving forward in our economy.

(END VIDEO CLIP)

QUEST: Richard Anderson, the chief executive of Delta on the question of course of Heathrow and the new runways. We're getting really close now.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: We are very close, aren't we, you know.

QUEST: Hey, look at this - matching. We got the e-mail.

HARRISON: We got the memo.

QUEST: Jenny Harrison in gray, Richard Quest in gray. But now we're doing the forecast. It's beautiful - it's Jenny but beautiful here.

HARRISON: It's lovely, isn't it? It's actually warmer than it should -

QUEST: I think I need to - I think I need to sit down for this.

HARRISON: You do, let's sit down, let's sit down. It's warmer normally than this time of year, in fact that's the story across the U.S. I'm not starting there, I'm going to talk about Europe first of all. Yes, I'm going to start over there and tell you what's going on in Europe. So, you can see on the satellite pretty good, clear skies across central eastern regions. Not so across the northwest and northern coastal areas of mainland Europe in particular. In fact, we're stuck in a rather unpleasant pattern or certainly much of U.K., Scandinavia and northern France is. Very strong systems coming through, some very, very strong gusty winds, and of course bringing with it more in the way of rain. The only nice thing to say is that the temperatures are going to be above average.

But look at some of these wind gusts in the next sort of 24 to 48 hours. In fact in Aberdeen, we'll have wind gusts really at about 100 kilometers an hour. So, it's going to stay very windy over the next couple of days and of course some rain coming in with it as well. So in some areas we could easily pick up about three, maybe even five centimeters of rain. Also, northern France seeing some heavy rain too in the next couple of days. But this is what I mean about the pattern. So, the next week literally all the way through up to Christmas day, we're going to get system after system across the northwest. More rain, strong storms and of course very strong winds as well.

Now, one thing that has also improved is temperatures in the Middle East. Now, it's still a very cold morning this Tuesday morning - look at this in Egypt. It was 8 degrees below the average, but for the most part, temperatures getting back up the average. Plenty of snow of course on the ground. We've got some nice pictures to show you about the show should it actually begin to melt in the next couple of days. So, make your snowballs whilst you can, children, because as I say with the temperatures actually coming back up, a lot of this snow will melt.

These are the temperatures for the next few days and you can see pretty much back to average. Certainly in Jerusalem, also Beirut getting very close to the average and even Ankara - a little bit below but not as cold as it was.

Now, he doesn't know I've got this - he does not know about these pictures. This was a week ago with the very strong winds. Here he is - look. Doesn't quite you know - he's not good with his (brolly), is he? Now this one -- I particularly like this one - because I think he thinks it's some sort of wind socket. You know, the thought that you have - at your airport - you do, don't you? You like that one? You don't know what you're doing.

QUEST: That's on the sea front.

HARRISON: OK. Well -

QUEST: On the sea front.

HARRISON: -- what were you doing with an umbrella in the first place, I don't know. But, anyway, I like the pictures. Thank you, Richard, for sending those. I just got a couple more things to talk about. We've got another very nice photo to end on.

QUEST: Oh.

HARRISON: Temperatures right now below freezing as you can see in Vienna, Kiev again actually a lot milder than it was, and then we've got the rain coming into the northwest and of course some snow to higher elevations. But for the most part, temperatures are above average in Europe. These are temperatures as you can see for Wednesday - double figures -- London and Paris. Vienna's still very cold at -2 and then I've got this one picture - we have to end on this, Richard.

QUEST: Ah.

HARRISON: This of course is own very lovely and beautiful Gayle Edmond. She's our E.P. - the executive producer -- and that's her (lucky) husband (James) and they got married a week ago in London. And as you can see, she was all dressed up with her winter outfit. But it was good weather. It was dry at least.

QUEST: Absolutely. That, ladies and gentlemen, is my boss. No easy way to say.

HARRISON: I'm glad you finally realized it after all these years.

QUEST: Absolutely. Delightful - I'm not saying another word. (Inaudible). We'll be back in just a moment with "Quest Means Business." We're live at the CNN Center, good evening to you.

(COMMERCIAL BREAK)

QUEST: You can take the boy out of Liverpool but you can't take Liverpool out of the boy - in my case. Well, dozens of previously-unreleased tracks by the Beatles are finally available on iTunes. The band was forced to put out the bootleg 1963 recordings to protect their copyright. It's the first chance in five decades for fans to buy the music legally. It was a chance that didn't last long as Jim Boulden explains.

(BEGIN VIDEO CLIP)

(SINGING CLIP)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: And there it is - the official version of "There is a Place" by John Lennon, released on iTunes in the U.K. at midnight. It's apparently a better copy of the original version than the unauthorized bootlegs which have been kicking around for decades.

RAY BLACK, PARTNER, KING & WOOD MALLESONS: The recordings that were released were unpublished works made by the Beatles in 1963, and under existing copyright law, as unpublished works, if they would not be published before the end of this calendar year, then they would fall into the public domain.

(PERFORMANCE CLIP)

BOULDEN: The European Union has extended the copyright on performed music from 50 years to 70 years. Europe used to have a confusing mish-mash of dates when music performances would reach public domain. And there is the fact that the artists are simply living longer. It used to be assumed 50 years was plenty of time. Without these extensions, the 1960s material could become legitimate digital downloads by anyone.

GENNARO CASTALDO, BPI: In theory, if there's a kind of a super fan who somehow has acquired you know an MP3 collections of all these little bits of music, they could even put out their own album as well. So, I think it is primarily to try to sort of ensure there's some level of control

BOULDEN: But don't call these 59 tracks new Beatles material. These outtakes, public performances and TV spots have been available on bootleg CDs. Some are written by the Beatles but given to others to record. Like this -

(PERFORMANCE CLIP - "BAD TO ME" BY ITUNES)

BOULDEN: "Bad to Me," recorded in the summer of 1963 and never officially released as a Beatles single. Now Beatles fans have a better quality and official copy of the song sung by John Lennon. The change in the copyright rules in the E.U. will also help those artists who need the money.

BLACK: There are many, many artists who are not in that privileged position and who still benefit from earning royalties from their works which is a much smaller - on a much smaller scale. And for them, perhaps this is even more important.

BOULDEN: And though the recordings were pulled from iTunes in the U.K., they reappeared during the day Tuesday, and in some places at a higher price than of the brief overnight release. And now expect more of these limited releases in order to gain copyright. Bob Dylan already did it. And each of the next six years, there is more unpublished Beatles material that will go into public domain if not release, even fleetingly, to the public. Jim Boulden, CNN London.

(END VIDEO CLIP)

QUEST: Tonight's "Profitable Moment" - a little bit of history will be made tomorrow. It'll be the last time that we will hear from Ben Bernanke as he heads the FOMC, the Federal Open Markets Committee. Whether or not the Fed decides it is time to withdraw the stimulus or at least put it - take its foot off the gas - well, you'll just have to join me at this time tomorrow, because that's "Quest Means Business" for tonight. I'm Richard Quest at the CNN Center. Whatever you're up to in the hours ahead, I hope it's profitable.

END