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Quest Means Business
Final Day of Campaigning in Scotland; Polls Open in Less Than 12 Hours; Rajoy Warns Referendums "Torpedo" Europe; Olli Rehn Says Scotland Must Choose Pound or EU; Independent Scotland's Economy; Salmond's Final Pitch to Scottish Voters; Fed Renews Low Rate Pledge; Dow Hits Record High; Caterpillar CEO Warns US Economy Under Threat
Aired September 17, 2014 - 16:00 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)
POPPY HARLOW, HOST: The Dow closes at an all-time high in New York on the eve of a crucial day for the UK and Europe. It is Wednesday, September
17th.
HALA GORANI, CNN INTERNATIONAL CORRESPONDENT: All right, I'm Hala Gorani in Edinburgh, Scotland. Welcome, everyone, as we continue our
special coverage of the historic referendum. Will Scotland stay or will it leave the union?
HARLOW: That is indeed the question tonight. Also tonight, markets race to new records as the Fed continues to taper. I'll be live with the
CEO of Caterpillar on how Washington can still do a whole lot more. This is QUEST MEANS BUSINESS.
Good evening, I'm Poppy Harlow, joining you from New York. The sun has set on the United Kingdom. Scotland's polling stations will open just
hours from now for the referendum on independence. Thursday could mark the beginning of the end for the UK as we know it.
Alex Salmond, the leader of the Scottish National Party and the "Yes" campaign is traveling across the country, calling on Scots to seize the
moment and to vote yes. Meanwhile, David Cameron and Gordon Brown continue their call for unity and urge Scots to vote now.
Some say they have not done enough, though. The latest polls show the referendum is far too close to call, Yes coming in 49 percent in the most
recent polling, No at 51 percent. Undecided voters are tough to make up, but about 8 percent, it looks like, of the electorate at this point in
time.
For the leaders of each campaign, this is the crucial moment. Yet, the passion is obvious for both the former British prime minister, Gordon
Brown, who is campaigning against independence, and also the Scottish Nationalist leader, Alex Salmond.
(BEGIN VIDEO CLIP)
ALEX SALMOND, FIRST MINISTER OF SCOTLAND: The fact that people are participating and this joyous fashion that they're doing it, this festival
of democracy we're seeing is a comprehensively magnificent thing. And I think what politicians should be doing instead of being negative about it,
like the "No" campaign are, is you should be embracing it.
GORDON BROWN, FORMER PRIME MINISTER OF BRITAIN: All these achievements and all the more achievements I can mention, these happened
not outside the union but inside the union.
(APPLAUSE)
BROWN: They happened not in spit of the union but because of the union.
(END VIDEO CLIP)
HARLOW: Let's go straight to Hala Gorani, who is covering this in Edinburgh for us. Good evening, Hala.
GORANI: All right, Poppy, indeed. And you mentioned a historic vote. Of course, it is the referendum that will determine whether or not Scotland
remains part of the United Kingdom -- this is a 300-plus-year union -- or whether it secedes. Our chief international correspondent Christiane
Amanpour joins me now.
And Christiane, you've been, of course, talking to people on the street, but also to high-level officials and former prime ministers,
including Gordon Brown, who's a Scotsman himself.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, exactly right. And he actually has been sort of the savior of the
unionists, if you like, because they were doing incredibly badly. As we all know, September 7th, that poll, which for the first time in two years
gave the "Yes" a slight lead, galvanized all the "No" campaigners of the no vote, and Gordon Brown has emerged as the face and the impassioned voice of
the "No" campaign.
And so, he did a pretty humdinger, stem-winder of a speech today. Many have tweeted and talked about how this could be his -- not only
writing his political obituary, re-writing it in a positive way, but also saving the union. So, I asked him about that. He wouldn't go so far as
saving the union, but he said that what he's offering is radical change if they vote no.
(BEGIN VIDEO CLIP)
BROWN: Britain can no longer think of itself as a centralized state, a unitary state of undiluted Westminster sovereignty. That has changed.
And in some sense, we're moving closer toward the American model of government and models of government that we see where there is very
considerable decentralization. Canada, Australia, Germany. Very big decentralization in these countries, and I think that is the model that
we'll see in the future.
(END VIDEO CLIP)
AMANPOUR: Devo-max, that he was describing this sort of weird, technical term called devo-max. Look, whatever happens, as we all know
now, there is a radically different Great Britain on the horizon.
Or not a Great Britain. There's either a Scotland and an England and they become foreign countries, competing neighbors, as opposed to
cooperating neighbors. Or, there is a potentially very federalized Britain in England, and what happens to all the rest of the elements, Wales or the
other provinces who might, indeed, also want a lot more control?
GORANI: And Christiane, let's remind viewers how this came about, because David Cameron, the prime minister of Britain, when he was
negotiating the terms of this referendum, was given an option to include this "maximum devolution," this "devo-max," more powers given to Scotland,
but chose the "yes or no" model instead. How much of a mistake was that?
AMANPOUR: Well, he's been asked about it many, many times, and in "The Times" of London today, he said, look, I look myself in the mirror and
I don't blame myself. I chose democracy. He said, if people want self- determination, well, I'm a democrat, I believe in democracy. But I believe that our democracy is much better united.
But you're right, many, many people criticizing the "No" campaign for taking it for granted that this would be an easy vote --
GORANI: Right.
AMANPOUR: -- a vote in the bag. And for kind of playing poker to the very, very last. And the "No" campaign has been criticized for not making
it as emotional as the "Yes" campaign has.
GORANI: And being a negative campaign, all the reasons why you should not secede, not the reasons that being in the union is a positive thing for
everybody. But so, what is the expectation, because this is really, genuinely too close to call in terms of the statistical dead heat between
the two sides?
AMANPOUR: Very close to call. We have no idea what will happen if it is no, but devo-max, because that hasn't been negotiated or fully agreed
yet.
GORANI: Yes.
AMANPOUR: In a way, the "Yes" campaign is right, because you know that this all has to be fully and finally agreed. But I think for a global
audience, there is NATO, there is the EU, there is Britain, Great Britain's current role on the international stage, which will change --
GORANI: Yes.
AMANPOUR: -- if there's a yes vote.
GORANI: All right, Christiane Amanpour, our chief international correspondent, thanks very much. And if you'd like to see the rest, of
course, of Christiane's exclusive interview with Gordon Brown, you can catch her on "Amanpour" and also online.
Poppy, that's going to do it for us for now. Back to you in New York.
HARLOW: That's right, that's coming up a little bit later this evening, fascinating interview that Christiane did. Thank you, Hala.
Still to come here on the program, former European Commissioner Olli Rehn says an independent Scotland will need to choose between using the
pound and membership of the EU. We'll hear from the man himself, straight ahead after the break.
(COMMERCIAL BREAK)
HARLOW: Welcome back to the program. Spain's prime minister has warned separatist votes like the one in Scotland "torpedo" Europe's
foundation and lead to economic misery. Mariano Rajoy also says that it could take years for an independent Scotland to be admitted to the EU.
Rajoy's government government has vowed to block an independence vote for the northern region of Catalonia. Hundreds of thousands of Catalans
turned out for a pro-independence protest in Barcelona just last week. Catalan president Artur Mas has said that he would like to see a yes vote
in Scotland.
Meantime, former European Commissioner Olli Rehn is squarely in the "No" camp. Speaking to me earlier today, Rehn said Scottish voters must be
aware of the consequences of independence.
(BEGIN VIDEOTAPE)
OLLI REHN, VICE PRESIDENT OF THE EUROPEAN PARLIAMENT: The question of sterling accession would certainly not be compatible with membership in the
European Union or applying for membership in the European Union.
Personally, I don't have a vote in the referendum, but I certainly do hope that the "No" side wins, because I believe Scotland is stronger as
part of the United Kingdom and as part of the European Union.
HARLOW: What are your contingency plans if, indeed, the yes vote does win out in this. And if, indeed, Scotland does move forward using the
pound?
REHN: In case there would be a maturity for Scottish independence, then in the first place, it would mean probably quite a long and difficult
negotiations between London and Scotland in the United Kingdom. Then it would be up to the Scots to decide whether they would apply for membership
in the European Union.
HARLOW: Scotland's finance chief said this week, quote, "Only a week ago, the 'No' campaign were claiming Scotland would have to join the euro,
now they are saying we wouldn't even get into the EU. They should at least try to keep their scare-mongering consistent." What's your reaction to
that?
REHN: The essence is that it's important that the people of Scotland are aware of the consequences of their vote one way or another. And in
case there are plans of, for instance, unilateral sterling accession, I just have to say as the former commissioner for economic and monetary
affairs of the European Union that this is not compatible with trying to become a member of the European Union.
HARLOW: If we do see a yes vote win out, the fact that Scotland has really no intention of joining the euro, do you see that as an indictment
of the trouble in the eurozone? Is that how you read that?
REHN: I take it as, say, reasonable realism at the current juncture. We all know that the euro has suffered a very difficult period. We have to
both do firefighting in order to save the euro, and at the same time, reform -- renew reform and reinforce the economic governance of the euro so
as to make the foundation of the euro stronger and the foundation of economic recovery and employment stronger.
HARLOW: Looking big picture, with all of the instability, the uncertainty over the future of Scotland, also the UK's place more broadly
in the European project, what does this say to you about the strength and the cohesion of the EU moving forward?
REHN: In my view, we can best solve these problems, such as the security crisis in Europe because of Russian power politics, only by being
united as Europeans. And at the same time, we can only solve our economic problems by together seeking for solutions to our economic illness, and
that's what we are doing for the moment.
(END VIDEOTAPE)
GORANI: Well, there you have it. And one of the big discussions surrounding this referendum is what would happen to an independent
Scotland's economy? What currency would it use? Would it have to have a central bank? Would it be united with the United Kingdom? Would it
automatically join the European Union, for instance?
Well, John McLaren is the executive director of Fiscal Affairs Scotland and joins me now to answer all of our economic questions. First,
I want to ask you a simple question.
JOHN MCLAREN, EXECUTIVE DIRECTOR, FISCAL AFFAIRS SCOTLAND: Yes.
GORANI: Can an independent Scotland's economy survive and thrive, really, on its own?
MCLAREN: I don't think there's much question that it could thrive and survive. I think there would be some difficult negotiations, which you
wouldn't get what I wanted from all of them. But it's already a successful economy.
It's just -- you've just got to avoid things like capital flight and people moving their bank accounts out of banks and to England or somewhere
else, I would think. Those are the things you've got to avoid, but everybody knows that, so I think they'd probably be able to overcome that.
GORANI: But how would it thrive? One big contributor to gross domestic product in Scotland is, of course, oil revenue.
MCLAREN: Yes.
GORANI: But there is no reliable projection going forward over the next several decades for oil revenue, right?
MCLAREN: No. The interesting thing about oil is on the one side, yes, it's quite big for the economy, but on the other side, it's mainly
overseas owned. It's mainly owned by other people, America, China, various other people. So, it doesn't affect income that much. There's only a few
people working out there.
However, where it is important is in terms of the finances, the government finances to spend on public services.
GORANI: Right.
MCLAREN: And there, because it's declining, it's already only about a third of the level it was at its peak in 1999, then that is an issue that
they would have to deal with in the longer term.
GORANI: Yes.
MCLAREN: And they couldn't do it by building up an oil fund, because there isn't enough there.
GORANI: Right.
MCLAREN: They talk about renewables, Scotland's a good base for renewable energy. But I still --
GORANI: But that's a long-term project, right there.
MCLAREN: That's a long-term project, yes.
GORANI: Let's talk about the currency. That really has been --
MCLAREN: Yes.
GORANI: -- the biggest question that people have been asking about Scotland.
MCLAREN: Sure.
GORANI: Because Alex Salmond, the leader of the "Yes" campaign, the Scottish National Party, has said, well, that's OK, we'll just form a
monetary union with England.
MCLAREN: Yes.
GORANI: But England is saying, well, why would we shoulder responsibility for your banks without having a political say in the way you
govern your country? So, that's out. The European Union is not going to automatically grant accession to the eurozone to Scotland. So, where does
that leave Scotland if it's independent?
MCLAREN: Well, I think for a start, nobody -- almost nobody in Scotland wants to join the euro. That's -- so that's not really --
GORANI: Because they see what's going on --
MCLAREN: Exactly.
GORANI: -- with Spain and Greece and other countries, yes?
MCLAREN: Exactly. In terms of a currency union, technically, a currency union would be possible, but it's being politically opposed at the
minute. But if it was agreed, then as you say, the Scottish government would have to give up quite a lot of -- wouldn't be able to decide its own
interest rates, it would have to have the same sort of fiscal rules that applied in England.
So, it would lose a quite a lot of autonomy that way. But probably with negotiations, bringing in other things, like trident and things like
that, then you might be able to get a deal.
However, there's a reasonable argument to be said that Scotland should have its own currency, particularly because of the oil. Because obviously,
if the oil price -- it's not a petrol currency, but it's going that way, and because of that, like Norway has, having your own currency would be
quite a good idea. And a lot of economists think that. But most of the public like the pound.
GORANI: All right. And it's a scary thing, uncertainty is scary. It certainly has people wondering --
(CROSSTALK)
MCLAREN: Yes, if you've got your mortgage --
GORANI: -- what to think of it.
MCLAREN: -- in pounds and your pension's in pounds, then --
GORANI: Yes. That's how you've been calculating it. John McLaren, thanks very much.
MCLAREN: Thank you.
GORANI: Alex Salmond, the leader of the Scottish National Party, is speaking right now.
MCLAREN: Oh, yes.
GORANI: He's in Perth, Scotland, up north, I believe, right?
MCLAREN: Near my hometown.
GORANI: There you go. Let's listen in for a moment.
(CROWD CHEERING)
SALMOND: You see, Scotland has had an example of that over the last few weeks, have we not? When we staged the greatest Commonwealth Games in
history in the great city of Glasgow.
(CROWD CHEERS)
SALMOND: And all of us would have had a highlight from that great festival of sport and culture. My highlight was that wonderful South
African singer, Pumeza, when she sing Hamish Henderson's anthem, "Freedom Come All Ye" at the opening ceremony.
(APPLAUSE)
SALMOND: "So come all ye at home with freedom, Ne'er heed what the houdies croak for doom, In your house all the bairns of Adam, Can find
bread, barley-bree an painted room." One of the most moving renditions of that great anthem of freedom and democracy that we've ever heard.
But the point about the Commonwealth Games is this: that 71 nations and territories across the commonwealth of nations, just about every single
one of them have become independent from Westminster government over the last 100 years.
And you know what they have in common? These countries rich and poor, large and small, lucky and unlucky? Not one of them, friends, has any
intention of going back under Westminster rule.
(CROWD CHEERS)
(APPLAUSE)
SALMOND: As we meet on the even of the --
GORANI: Salmond, there, in Perth, Scotland. All right, Alex Salmond there, the leader of the Scottish National Party, the man who wants voters
to cast ballots in favor of yes during tomorrow's referendum. He wants Scotland to be an independent nation. The first minister of Scotland
making a last-minute impassioned plea to voters, who will be heading out to the polls tomorrow.
That's the view from here for now. Poppy, back to you.
HARLOW: It is fascinating to watch, and the polls open very early tomorrow morning. We shall see what happens. It is certainly neck-and-
neck.
Still to come here on the program, the Fed has laid out its strategy to support the economy. We will tell you what Janet Yellen said and what
it means right after a quick break.
(COMMERCIAL BREAK)
HARLOW: It is the moment investors have been waiting for, the US Federal Reserve says interest rates will stay near zero for "a considerable
time," those being the key words. Even so, officials raised their forecast for rates next year, suggesting that when they do eventually start to rise
sometime in 2015, they may rise faster than officials previously expected.
The Fed also cut its economic growth forecast for this year and for next year. Officials now project the US economy will grow 2.8 percent in
2015. Joining me now, David Stubbs, who's a global market strategist with JPMorgan Asset Management. Thank you for joining us, sir. We appreciate
it.
DAVID STUBBS, GLOBAL MANAGEMENT STRATEGIST, JPMORGAN ASSET MANAGEMENT: Good to see you.
HARLOW: The market here in the United States certainly applauded the Fed's move. We have a record close for the Dow. But you say the Fed was
quite cautious here.
STUBBS: I think the Fed is certainly being cautious with this recovery. It's invested so much in stabilizing the US economic system over
the past few years. Now, they're gradually reducing their purchases of assets, they're expected to complete those and stop buying next month.
HARLOW: Right.
STUBBS: And they've got it to us again that it's going to be quite a while before they actually start raising interest rates.
HARLOW: We did see some division, though. Two dissenting votes coming from the Federal Reserve. What we also heard, though, is some
concern over the labor market here and the slowing job growth in recent months from Janet Yellen when she spoke this afternoon. What kind of pause
did that give you?
STUBBS: Look, I think there is an enormous variation on the FOMC of what they believe is the optimal pass for monetary policy going forward.
If you look at the projections they gave us, each of the committee's members' views of interest rates over the next few years, there's an
enormous spread out a couple of years from now. Views that the interest rate should rise significantly, and views that it should rise very, very
gradually.
HARLOW: Right.
STUBBS: I think in general, Janet Yellen is seeing that there's significant slack in the labor market. Unemployment has a lot further to
fall, there are a lot of people working part time who want to be working full time. And they believe as a group that they can push unemployment
lower and improve the economy before they get any problem with inflation.
HARLOW: I'd like your read, obviously, on the situation in the UK. Do you believe that what happens with this vote, what happens if Scotland
becomes independent, matters to US stocks? Because it could be perceived as a sign of what is to come.
STUBBS: Of the immediate reaction, no, I don't think it's going to matter for US stocks. I think it's going to matter very little for UK
stocks. Any way you slice it, if you look at sales or profits or the number of companies based up there, it's a very, very small amount of UK
equity benchmarks.
I do think it's going to be an issue for the currency. Because if they voted for independence and we have a continuation of the uncertainty
and the negotiations around the pound, you don't know what you're buying with the pound. So, I wouldn't be surprised --
HARLOW: Right.
STUBBS: -- if it weakened any further.
HARLOW: Yes, and none of us can predict what is going to happen. It is going to be fascinating to watch. Certainly history in the making.
David Stubbs with JPMorgan, thank you for joining us this evening from London. We appreciate it.
STUBBS: Thank you.
HARLOW: Well, US stocks rose following the Fed's announcement, we saw that. The Dow here in New York closing at a record high. The NASDAQ, the
S&P 500 also ending the day higher.
Caterpillar's CEO is warning America's economic future is under threat by Washington's failure to act on key economic issues. He has a list of
reforms he would like to see on taxes, on infrastructure, also on education. Doug Oberhelman joins me now from Caterpillar headquarters in
Peoria, Illinois. Thank you for joining us, sir. We appreciate it.
DOUG OBERHELMAN, CEO, CATERPILLAR: Great to be with you, Poppy, thank you.
HARLOW: You gave a speech yesterday in Indiana on competitiveness. I want to read part of it to our viewers. You said, "While I do my job
keeping Caterpillar competitive, and many states do their job to support business, we are still waiting for the feds to do theirs."
That was an understatement of sorts. You went on to talk about the fact that we need to -- must see more from Washington. You are personally
a Republican, you supported Mitt Romney. You've also been complimentary of President Obama in terms of his push for manufacturing jobs. Where is the
disconnect? Where is the failure? The president's part or Congress's part?
OBERHELMAN: Well, I would say that kind of all of the above on some of these really big things that we need to get done. And you mentioned
them. Tax reform, both corporate and personal these days, is backed up, and there's really nothing on the horizon, although there's some talk about
maybe next year. Certainly the Senate in the election in November will have a lot to say about that.
Immigration reform. It looked like we had great momentum going over the summer, and that fell apart. Education has been an ongoing kind of
issue for many, many years. We are seeing it in terms of the talent, the technical skills we need coming up are fewer and farther between.
So, just a lot of things are backed up that I really think if we could make a little headway on some of them, we'd see quite a change in economic
growth and job creation in this country.
HARLOW: Right.
OBERHELMAN: You mentioned infrastructure. Being the CEO of the largest maker of construction equipment, that's very near and dear to me.
But at the same time, we've always used that in the past in this country as a jobs creator.
And then, the investments we put into roads, bridges, ports, airports, you name it, becomes part of our competitiveness down the road --
HARLOW: Yes.
OBERHELMAN: -- in the next generation.
HARLOW: Look, you --
OBERHELMAN: So, we're all frustrated with this. And like you say, I think it was kind of stating the obvious, really.
HARLOW: You've also said, look, you can't build a house if you only know you have the money for the framework and for a few doors and windows.
When you're a business trying to go into it, it's very hard not knowing what you're going to get.
Especially when you are competing against fierce competitors like China. You are headed to Asia at the end of the week and you talked about
China. You said, "We have over a hundred competitors in China." You don't mince your words when it comes to China. You are fiercely competitive with
them.
Some, as we approach the Alibaba IPO, have talked about the risks of it, given the unknowns, dealing with the Chinese government. What is your
take right now of business in China for Caterpillar and all the competitors you have there?
OBERHELMAN: China for us is really two tales. One, a huge opportunity. It's the largest construction equipment market in the world.
It will likely be that way for a long time to come. Even at 7 to -- 5 to 7 percent growth, there will be a huge opportunity for us down the road.
But it comes with risk, and we all know what those are. We've been very careful with our growth there. Today, we've got about 26 plants
between us and our distributors, about 25,000 employees. And we're in really good shape there.
But there are all kinds of risks that come up every day no matter where we are in the developing world, and that's certainly one to keep an
eye on. But the opportunity is so large and there are so many competitors there that eventually will leap out of China and we'll see here in the
United States and elsewhere around the world. We've got to be there to compete and really get after that and learn how to do that.
HARLOW: And we have to do -- go in a moment, but very quickly, before we go, you said that if we don't fix our schools in this country, we have a
serious problem. A staggering statistic, five out of ten of your entry- level applicants are not qualified at Caterpillar. That is stunning. What is missing?
OBERHELMAN: Well, basic skills: reading, writing, math. And frankly, drug tests. This country spends something like $700 billion or
$800 billion a year in K through 12 education.
When we see a high school graduate come out and can't have basic skills for our opening production jobs, which by the way are pretty
sophisticated these days, and we can only take half of them, it seems to me that there's a disconnect between what we're spending and the outcomes
we're getting and what we have to do to bridge that gap.
Certainly, other countries are figuring this out also, and they're doing very well in some places with STEM -- Science, Technology,
Engineering and Math. We've just got to up our game. There's lots of great ideas on that around the country on how to improve education, we just
can't seem to get momentum to get that proven.
And I also said that in that speech, that there's a lot of smart people working on it, we just have to make some really big leaps here if
we're going to stay up with everybody else. It's no secret we're not first in the world anymore in STEM.
HARLOW: Right.
OBERHELMAN: We're well down the lists in all of those sciences.
HARLOW: Yes.
OBERHELMAN: We've got to really get after that.
HARLOW: Especially when you --
(CROSSTALK)
OBERHELMAN: I also said, Poppy, one last thing on that subject, that the really true -- the only true competitive advantage anybody has, whether
its Caterpillar, the country of the United States, or anybody else, is the smartness and education of its people. The smartest, brightest people will
win every time, so that's really something we've got to be --
HARLOW: Yes.
OBERHELMAN: -- very, very cautious with.
HARLOW: Doug Oberhelman, good to see you, sir. Thank you for coming on the program. We appreciate the time.
OBERHELMAN: Thank you, Poppy. Great to be with you again.
HARLOW: Well, the high road and the low road to this Scottish independence vote has been marked by all kinds of claims about its economic
impact. Next, we will look at some business leaders who say yes, and we'll be joined also -- Hala will be joined by Sir Martin Sorrel, who vehemently
says no.
(COMMERCIAL BREAK)
HARLOW: Welcome back. I'm Poppy Harlow in New York. These are the top headlines we are following at this hour. Scotland's First Minister Alex
Salmond has been making his final pitch to voters in Scotland. Polling stations over - open, rather - in just over nine hours' time as voters
choose to accept or reject independence. The latest polls show that voters appear to be very evenly divided. Meantime, U.S. Secretary of State John
Kerry says Washington has been focused on stabilizing the Iraqi government and military since January in order to beat back the threat from ISIS.
John Kerry has been testifying before the U.S. Senate Foreign Relations Committee this past hour.
And the U.S. expands its operations against ISIS. This civil war rages on in Syria with more deadly results. The Syrian opposition group says that
at least 200 people were killed on Tuesday alone. The United Nations says more than 190,000 people have been killed since the conflict started more
than three years ago.
And the World Bank today saying that the Ebola outbreak in West Africa could cost the region billions of dollars' worth of productivity. Liberia
is expected to take the hardest economic hit. The disease could wipe more 11 percentage points off its GDP next year alone.
David Cameron may be on the verge of becoming the last prime minister of the United Kingdom as we know it. Tonight Mr. Cameron is denying he will
resign if Scotland votes for independence.
(BEGIN VIDEOCLIP)
Female/Male (ph): Will you quit if it's a yes vote?
DAVID CAMERON, U.K. PRIME MINISTER: My name is not on the ballot paper. What's on the ballot paper is does Scotland want to stay in the United
Kingdom or does Scotland want to separate itself from the United Kingdom. That's the only question that will be decided on Thursday night. The
question about my future will be decided in a British general election coming soon.
(END VIDEOCLIP)
HALA GORANI, ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL BASED IN LONDON: And there you have David Cameron, the prime minister of the United
Kingdom there on the eve of this important vote. It's important because there are still - according to the latest polls - five percent of voters
who are still undecided. Now, Alex Salmond is the leader of the Scottish National Party, he's the first minister of Scotland, he's the man behind
the yes campaign for independence. He's speaking live right now in Perth, Scotland up north. Let's listen in for a moment.
ALEX SALMOND, SCOTLAND'S FIRST MINISTER: -- better to meet these challenges for this nation than the people who live and work in this
nation.
(APPLAUSE/CHEERS)
SALMOND: So the question of trust in this election is trust in ourselves, trust in each other. And Scotland before was (ph) had the wealth, the
resources and the talent. We know that with independence we'd start as one of the richest countries in the world - the top 20 nation -- according to
the "Financial Times." There's no doubt in this campaign the argument has been one that Scotland could be a hugely successful, independent country.
But what has amassed (ph) in this campaign? It's something very new that has changed Scotland forever. I have met it in every community that I've
been in in the last few weeks - confidence, belief, empowerment and understanding that working together, Scotland can be a global success story
- a beacon of economic growth, a champion of social justice. That is who we are as a nation. It is a extraordinary thing that we have Westminster
politicians who actually believe that they can tell the nation of Adam Smith that we are not able to run our finances as a country, --
(LAUGHTER)
SALMOND: -- who can the nation who produced Robert Burns that we don't understand the importance of internationals. We did produce Adam Smith and
Robert Burns. Adam Smith who founded economics, but who also argued that no society can be content or happy if the great part of its citizens live
in poverty.
(THUNDEROUS APPLAUSE)
SALMOND: Robert Burns who loved Scotland as dearly as any man ever could, but also understood the humanity of mankind the world o'er. So for us,
Scotland's success can only be accepted when poverty for so many is replaced by employment and opportunity for so many.
(CHEERS)
GORANI: This is live, it's happening in the north of Scotland. Alex Salmond, the leader of the Scottish National Party. Over the course of
this entire campaign, Alex Salmond has accused the British government of scaremongering by putting pressure on businesses to oppose independence.
As we've heard over the course of the week, there are several business leaders who are firmly behind a Scottish breakaway. Listen.
DAVID CAIRNS, CHAIRMAN, PRISMTECH GROUP: Scotland by any measure is a wealthy country. In fact, I think it's undisputed that Scotland is
wealthier than the U.K. Under the current OECD rankings, it'd be the 14th wealthiest country in the world. It is a country that has been paying more
tax per head into the U.K. treasury for every one of the last 33 years, and it's received the smallest share of tax receipts back than it's paid in.
So we have a wealthy economy, we have a well-balanced economy, we've got a trillion pounds or more of oil wealth.
SIR BRIAN SOUTER, CHAIRMAN, SOUTER INVESTMENTS: In the last 35 years we've pumped our oil revenues to Westminster, and in return, we've had poll tax,
bedroom tax. We've still 200,000 children in poverty in Scotland and we also have a nuclear arsenal 30 miles from our largest city. So we don't
feel that the deal is very good for us at the moment.
GORANI: Business leaders who are coming out in favor of Scottish independence. Now, for a business voice on the no side - firmly on the no
side - Sir Martin Sorrell is the CEO of WPP, and he's been saying Scottish independence would create uncertainty and damage to the U.K. economy and he
joins me now from New York.
SIR MARTIN SORRELL, CHIEF EXECUTIVE, WPP: Good afternoon.
GORANI: Sir Martin, first of all you heard there one - good afternoon to you . Good evening here from Scotland where because of the fog, you may
not be able to see behind me, is again, Blair (ph) Castle.
(LAUGHTER)
(CROSS TALK)
SORREL: I guess the weather will be an important inference on the election tomorrow actually. But go on - yes.
GORANI: Absolutely and on the count, let me ask you about oil wells, about the possibility that Scotland truly has now to be the master of its own
destiny and have a rich, independent economy. What is so wrong with that?
SORREL: Well, I think as you heard, I mean, Alex Salmond is a wonderful politician, a wonderful speaker, a very passionate speaker. He enjoins
Adam Smith and Robert Burns into the argument. But these are emotional arguments. They're about separation and very little about the cost of
separation. I think it's generally accepted that following that separation, if it occurs tomorrow, their prices will rise, unemployment
will rise and there will be a fall in living standards in Scotland as a result of it. Many people say that view is a negative view. I think it's
a wholly practical view.
The currency issue -- Alex Salmond wishes Scotland become a member of the E.U. But the British government - the Bank of England - made quite clear
that the pound is not on the table. So Scotland will have to develop its own currency and that's going to be quite painful. Interest rates, the
risk premium that institutions will demand for Scottish debt and financing will rise, and interest rates will rise as a result. And unfortunately,
this is not really an economics debate. It's really a debate about separation and the costs of separation are really being put to one side. A
300 billion-dollar economy which is what Scotland would become on its own, as opposed to a 2 and 1/2 or 3 trillion-dollar economy --
GORANI: Right.
SORRELL: -- that the U.K. represents as a whole is a much more powerful - the U.K. economy's a much more powerful engine. The other collateral
damage may be unintended consequences of a separation vote tomorrow will be that we will probably exit the E.U. as well, which I think will further
marginalize the U.K. and further call into question -
GORANI: But, Sir Martin -
SORRELL: -- its economic role.
GORANI: What about these industries that generate very high levels of tax revenue? And of course I'm talking about the oil industry which
potentially could raise revenue to the count of 3 trillion pounds according to some estimates. Why not rely on that for an independent economy with a -
of course - customs and trade union with England and the rest of the United Kingdom? There would be some pain in the beginning with setting up a
separate currency for sure, but beyond that.
SORRELL: A significant degree of pain and uncertainty in the meantime. Alex Salmond last weekend was arguing that the Scottish economy was based
on oil and fisheries, but I think he ignores the fact that more than half of the Scottish economy depends on some form of government employment. And
if you look at the economy of the U.K., I think it's true to say that London and parts of the southeast are the parts where the significant
wealth resides, and there are some elements of subsidy to the other parts of the country. It doesn't mean there aren't pockets and parts of the
economy that are strong, but it means that generally that's the direction.
GORANI: Yes.
SORRELL: So the net result of all this is there will be increases in prices, there will be increases of unemployment, --
GORANI: Right.
SORRELL: And there will be volatility in the currency. To join the E.U., as Alex Salmond wants -
GORANI: Yes.
SORRELL: They will have to have --
GORANI: Yes.
SORRELL: -- a currency. They want the pound, they won't get the pound, so they'll have to have their own Scottish currency and that will be quite a
painful readjustment process I think for the Scottish economy.
GORANI: But it -- I --
SORRELL: But unfortunately, it comes back, Poppy, to this question of it being a political argument, not being an economic argument.
GORANI: Yes.
SORRELL: And what we're talking about here is really the demise of the Labor Party in Scotland - the rise of --
GORANI: But, Sir Martin, let me add --
SORRELL: -- the Scottish Nationalists.
GORANI: -- let me say you brought up an interesting point because I live in London, --
SORRELL: Right.
GORANI: -- and London is of course the big economic success story -
SORRELL: Right.
GORANI: -- of the United Kingdom. It's where all the wealth is concentrated, where all the focus and emphasis is placed. And there is a
degree of neglect of other parts of the United Kingdom - by Westminster, by politicians - seen as arrogant and focused only on the capital. I mean, is
there a level of understanding there from business leaders - even those who support the no vote - that something needs to change?
SORRELL: Well it has changed already to be fair. I mean, whether it was late action by the government or by the three parties involved - the lib
dems and the labor party. There is this devo max pledge which, if the no vote is successful, significant powers will devo to Scotland. We can argue
as to whether the powers that be should've offered that devo max solution along with the no vote or even separately on the ballot paper earlier on in
the process, and I would take that as a legitimate criticism. That should've been in the negotiation of the terms of the referendum vote - the
separate vote. Unfortunately, that wasn't put into place until late. But the Scottish can get -
GORANI: Yes.
SORRELL: -- their quote, unquote "separation" or independence as they put it - in part by voting now in the poll tomorrow and getting a significant
increase of power to deal with some of the issues you quite rightly raised. Unfortunately, --
GORANI: Right.
SORRELL: Having gone through Lehman with relatively high - the Lehman crisis of 2008 - with relatively high levels of unemployment with a vote
that includes 16-year-olds for the first time - normally it being 18 years plus. What will happen I think is there will be a strong yes vote. I
think most polls indicate it will be a small margin in favor of no. But even having a small margin of, say, --
GORANI: Right, yes.
SORRELL: -- 53/47 or 52/48, will change politics in the U.K. in the future -
GORANI: All right.
SORRELL: -- mainly because of what I just said is that the government has made it quite clear that -
GORANI: Right.
SORRELL: -- even if there's a no vote, there will be significantly devo to Scotland.
GORANI: Right.
SORRELL: So Alec - Alex Salmond -
GORANI: You could argue - yes -
SORRELL: -- at the end of the day -
GORANI: Yes.
SORRELL: -- probably wins both ways.
GORANI: Wins both ways. You could definitely argue that. Sir Martin Sorrell, thanks very much for -
SORRELL: Thank you --
GORANI: -- joining us.
SORRELL: -- very much indeed.
GORANI: -- from -
SORRELL: Exciting times, exciting times.
GORANI: -- New York. Indeed, indeed. This is Hala Gorani in Edinburgh with her continuing coverage of the Scottish referendum. It is tomorrow.
Poppy, for now that's going to do it for us. Back to you in New York.
HARLOW: Thank you. Fascinating interview with Sir Martin Sorrell there. A lot of people saying Alex Salmond sort of wins out either way. We'll see
what happens. Hala, we'll go back to you in just a moment. When we come back here on the program, the wild landscape that is existing now could
become an international border between two independent states - Scotland and England. We'll talk passports and airline passenger duty. Millions of
dollars at stake here. That's next.
(COMMERCIAL BREAK)
HARLOW: Time for today's "Business Traveller" update. If Scotland votes yes on Thursday, the country will have to wait for 18 months for
independence officially from the rest of the U.K. Before that date comes, though, there is much to be decided about travel into and out of the newly-
independent state. On independence, the Scottish border would become an international border. It probably won't look exactly like this. The
Scottish government could choose to join the U.K.'s common travel area or the European Schengen area, meaning that people could move freely between
Scotland and England. The U.K. currently does spend around $3.2 billion managing its border.
If the yes campaign wins, the Scottish government could cut air passenger duty in half. That has been widely discussed and it says that there could
be an extra $3 million to be had from tourism. Also the boss of British Airways has said that thousands of passengers would ten likely cross the
border to fly for less.
Lastly, Scottish passports would need to be issued to Scots and to every British person living north of the border as well as to Scottish people
living of course south of the border. Scots can keep their U.K. passports until they expire. After that, though, who knows? It is up to the U.K.
government.
Well, voters in Scotland will be hoping for clear weather of course when they head to the polls on Thursday. Jenny Harrison joins us from the CNN
International Weather Center with more. I think they would love a clear, sunny day. I do not think they're going to get it though.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: (LAUGHTER). You'd be right actually, Poppy. Ooh! I'm hearing myself, come back to myself,
so I'll even turn me-self down. Yes, Poppy, you'd be right. But in actual fact you can tell is only about two locations that won't have a foggy
start, so it really is not going to be the best start to your day at all. Oh, look - nothing's working. Here we go. That bodes well. Look at this
- a lot of cloud pushing up from the south - you can see this - some rain as well but that really is not going to work its way across into Scotland.
But all this low cloud is going to come in the form of patchy fog for the most part in the morning hours. So, let's take a look at some of the big
cities - Aberdeen, Edinburgh and Glasgow. In all cases, certainly a cloudy start to the day, and there will be some patchy fog too for all of these
locations. Then you've got cloudy skies with rain showers throughout much of the morning. It brightens up a little bit in Aberdeen and also in
Glasgow in the afternoon, and then we've got the fog returning later on in the day.
And then as we head elsewhere, way up there in Inverness of course, the northern-most city, then you can see again we've got a rather foggy start
to the day actually. And then we've got quite a bit of cloud. It does brighten up in the afternoon hours. Dundee - it doesn't really - you've
got some rain to start out the day. Dumfries is going to be one of the warmest locations - 22 Celsius by the afternoon under partly cloudy skies.
So, this just gives you a broad overview of some of those cities, so the best weather in Dumfries, the clearest start to the day actually is
Stornoway, elsewhere quite a mixed bag with quite a bit of patchy fog from 7 o'clock in the morning when of course the voting booths open.
HARLOW: Yes.
HARRISON: We'll see.
HARLOW: Well 97 percent of those eligible to vote have registered to vote, so I think regardless of the weather, we will see quite -
HARRISON: They'll be out there.
HARLOW: -- the turnout tomorrow. We will be following it of course here at CNN very closely. Jenny Harrison, thank you for that. And when we come
back here on the program, China's internet commerce whirlwind, Alibaba, set to go public in the United States on Friday. But not everyone is a fan of
what is set to be the single biggest initial public offering ever.
(COMMERCIAL BREAK)
HARLOW: Welcome back to "Quest Means Business." China's internet star Alibaba will begin trading in New York on Friday. It is billed as the
biggest IPO ever. Our David McKenzie reports from Beijing. Alibaba has become a way of life there.
(BEGIN VIDEOCLIP)
DAVID MCKENZIE, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL BASED IN BEIJING, CHINA: Like most Chinese in their 20s, Gia Hailon (ph) loves to
shop online.
(Female:) I'm not sure if this is real Apple.
MCKENZIE: From drives to D-vans (ph).
(Female:) I got them on Taobao.
MCKENZIE: She's bought them all on Taobao, the online shopping platform run by Alibaba. Can you get anything on Taobao?
(Female:) You can't get weapon on Taobao.
(LAUGHTER)
MCKENZIE: With millions of independent vendors, you can get just about anything else. Fakes a big problem on Taobao and they recently announced a
crackdown. Still, there are dubious deals like a Chanel Le Boy handbag costing $4,000, on sale for just $50. Nine hundred dollars Roger Vivier
shoes, just $19. If you love shopping, it could be a problem.
(Female:) Everyone loves shopping.
MCKENZIE: I hate shopping.
(Female:) No.
(LAUGHTER)
MCKENZIE: In China, they're addicted to it. And all along the chain, they are packing in the profits. At Sin Tong (ph), a midsized career company,
most of their business is now moving merchandise bought online. Manager Shung Jung (ph) says their biggest challenge is keeping up with growth.
(Male:), INTERPRETED BY MCKENZIE: "Santa comes just once a year," he says, "while we work every day of the year to get these packages out."
MCKENZIE: They fill up the packages based on size and then send them to 66 distribution centers across Beijing. During their busiest online shopping
period of the year, they can move more than a million packages to the capital. To go from factory to front door, deliverymen like Pei Ping Fay
(ph) hit the road. A migrant from Henan, he navigates the city of 11 million in his three-wheeler, delivering the goods that make it run.
(Male 2:), INTERPRETED BY MCKENZIE: "Our job is really important," says Pei (ph). "Deliverymen make it all happen in the internet age we live in.
If we did not exist, it would make Beijing a more crowded city. Thing would become inconvenient, inconsistent and worse."
MCKENZIE: E-tailing has seen 120 percent compound annual growth in China for ten years. It's become how business and buying is done. David
McKenzie, CNN Beijing.
(END VIDEOCLIP)
(COMMERCIAL BREAK)
HARLOW: There are just over nine hours to go until Scots go to the polls to vote on independence. This hour we have heard a final pitch from
voters, also from the First Minister Alex Salmond.
(BEGIN VIDEOCLIP)
SALMOND: -- without grassroots engagement, the like of which no one has ever seen before, this is the greatest democratic experience in the history
of Scotland. You've already made Scotland a much better place as a result of that campaign, and as First Minister, I thank each and every one of you
for that campaign and that improvement (inaudible).
(APPLAUSE)
(END VIDEOCLIP)
HARLOW: That is "Quest Means Business." Thank you for joining us this evening. I'm Poppy Harlow in New --
END
