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CONNECT THE WORLD

ECB Announces Massive Stimulus Program; Friction Over Netanyahu Trip to US; Arab Spring Economies Struggling; Oil Concerns Dominate Davos; OPEC Won't Cut Production; Shale Oil Changes Market

Aired January 22, 2015 - 11:00   ET

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


BECKY ANDERSON, HOST: A row in a Tunisian marketplace set off a chain of revolutions four years ago and changed the face of the Middle East.

Well, we are revisiting some of those uprisings this hour. We'll be speaking to the acting Tunisian prime minister in just a moment.

And, we'll also look at the bloodiest of those revolts, and one that continues to claim lives by the minute.

We talk Syria with UN Secretary-General Ban ki-moon.

And we assess the economic fallout. We talk to Egypt's finance minister as new figures show record numbers of young people out of work in

the region.

ANNOUNCER: Live from CNN Abu Dhabi, this is Connect the World with Becky Anderson.

ANDERSON: And a very good evening. At 8:00 here locally.

We start tonight in Yemen, a country that had its own uprising in 2011 and which is still feeling the after effects.

The capital Sanaa on edge after a tentative peace deal following days of clashes between the army and Houthi rebels. Mistrust between the two

sides appears to be slowing implementation of any agreement.

Nick Paton Walsh is standing by, our senior international correspondent. And he's been following developments on the ground in Sanaa

joining us tonight.

And at this hour, as perhaps I repeat myself as I asked you at this hour last night, is it any clearer who is in charge?

NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: On paper, it's still President Hadi. In reality on the streets it seems still to be the

Houthi movement. We've seen a day in which the flurry of optimism last night at a sort of deal of some description seems to be ebbing.

The deal was quite clear, the steps and the time table ahead of both parties. It asked that the Houthis would pull out of the buildings the

militants were occupying and would release the presidential chief of staff. Well, it started to do the withdrawal, but the president's chief of staff

is still in their custody.

The government was supposed to allow changes to the constitution and let the Houthis into key ministries. Well, we are hearing I think from the

information minister concerns that the chief of staff isn't out, does that mean the Houthis are still honoring the deal?

So, it seems as though both sides are deeply mistrustful of the other. We haven't seen the kind of detente that was supposed to be emerging

quickly today. We are hearing reports in the capital the Houthis have gone back to some of the checkpoints they were supposed to be vacating on the

deal. They can't obviously confirm that from the Houthis side.

But it is a mess. And really people are asking, too, if the government doesn't like Houthi conduct what can it do about it? The

Houthis were clearly the dominant power on the street. The government managed to carve this deal to calm things down and provide a roadmap out,

but does Hadi really still have anything he can play as a card to push them on their back feet if he doesn't like how this is going -- Becky.

ANDERSON: Nick, two U.S. navy warships are in position, I understand offshore, ready to evacuate the U.S. embassy personnel if ordered. At

present that isn't happening.

If Washington has concerns about the security of its citizens in Yemen, that is nothing, it seems, to the concerns of Yemen's Sunni neighbor

to the north. Has Riyadh been outmaneuvered by Iran in Yemen? Or is it more nuanced than that?

WALSH: This is an internal Yemeni conflict really. And the Houthis have been in conflict with the government here, the government Saleh

before, the government of Hadi, for years. What seems to have been happening is that the Houthis have recently got significantly better, some

would say financed and trained militarily. Some diplomats put that down to Iranian influence on the ground here. The Houthis deny that. But they

certainly wouldn't deny that they really significantly change the fighting force in just the last year.

So you might to choose to cast doubt. Is Iran trying to boost its influence here? The Houthis would say would deny that.

The Saudis for their part, of course, consider Iranian influence here to be the worst thing imaginable, straight on their border. And the

Houthis occupy a stretch of land quite close to the Saudi border, too. And of course the Saudis are Sunni and so many of the tribes that oppose the

Houthis here.

So, also of course are al Qaeda in the Arabian Peninsula.

So, yes, we are seeing potentially as we've seen across the Middle East, that sectarian fault line emerging. But it's more diluted here

because of the tribal loyalties people have, because of the different other conflicts inside Yemen altogether, except that it's still possible to paint

it in light if you want to simplify, Becky.

ANDERSON: Nick, continued corruption, continued economic malaise and broken promises from its government and the international community, of

course.

Four years after the Arab Spring, you could forgive the average Yemeni for thinking that the world is pretty much turned its back on the place.

Should we expect things to get worse before they get better? And if so, what will the consequence be?

WALSH: Well, I think in 2011 -- you know, it wasn't like some sudden overnight flicking of a switch and the lights came on and Yemen suddenly

turned a corner. That was one political deal. Then a further political deals followed and we've seen sort of a lurch between compromise between

all the different sides trying to keep the country together and the new constitution, which the Houthis now want rewritten substantially and the

government was supposed to be introducing shortly. That was supposed to be the fruits of all of that.

But some say that 43 percent of Yemenis lack the food that they necessarily need. We see a city behind us here that lurches from shadowy -

- sorry, from scurrying indoors to try and keep away from shelling and violence, to running out trying to fill up on the goods and services they

need in between the fighting and that power vacuum without basic institutional services here or a government they can really rely upon.

People turn towards the tribes. That explains how the Houthis have risen. They are in many ways backed by a lot of young men from outside of the

cities who see that Abdul Malik al-Houthi is to some degree a young potential difference from the corrupt aged leadership they've seen in the

past.

So, it's a phenomenally similar pattern here. A population explosion that's led to the government's inability to provide services to its people.

And that spiraled now with the added complication of al Qaeda and the potential for a sectarian kind of prism in all of this, Becky.

ANDERSON: All right Nick, thank you.

Yemen's government has been a key U.S. ally in the fight against al Qaeda. And the power struggle there may put that partnership at risk.

Here's Pentagon correspondent Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Even as Houthi rebels surround the presidential palace in Sanaa, the U.S. is uncertain it can, or

will, work with the rebel group.

For now, the assessment, the Houthi rebels are not anti-American. But what happens next is the question.

The U.S. says President Hadi is still the leader of Yemen. He and the rebels appear headed towards some type of agreement. That has lead the

State Department to hope it will not have to evacuate the embassy just a day after an embassy car was shot at.

JOHN KERRY, U.S. SECRETARY OF STATE: Our personnel are well protected. We have strong and multiple security personnel there. We've

been building that up over a period of time.

STARR: But not everyone agrees staying put...

(END VIDEOTAPE)

ANDERSON: I want to just break away from that for a moment. Delegates from 21 countries have been meeting in London. They're part of

an anti-ISIS coalition. And I want to go to what is the news conference being held now. This is the British Foreign Minister Philip Hammond

speaking.

(ANTI-ISIS COALITION PRESS CONFERENCE -- LONDON)

ANDERSON: All right. You've been listening to John Kerry, the Iraqi prime minister and indeed the foreign minister from the UK.

The fight against DAISH, or ISIS is a global fight, defeating it as an idea is one that all 60 coalition members must be involved in, said John

Kerry at a news conference in London.

As I say attended by the Iraqi prime minister and the British foreign minister.

Also, some 19 other sort of headliners, as it were, in that anti-ISIS coalition.

And John Kerry said he'll speak tomorrow in Davos in more detail about the fight against extremist violence.

We have to get this right, he said.

Well, for a lot of people, especially in this part of the world, radical groups like ISIS benefited a lot from the instability brought about

by the Arab Spring uprisings. The experience of countries like Libya and Syria have been truly catastrophic.

But one stands out. And that is Tunisia, the birthplace of the Arab Spring. In December, a new president took office in the country's first

free and democratic presidential election.

And the country's acting Prime Minister Mehdi Jomaa joins me now from Davos where he is in attendance at that World Economic Forum.

Tunisia is a member of the anti-ISIS coalition. And when we last spoke about Tunisia, I think it was a couple of months ago just before the

elections, we talked about the contradiction that is your country today. On the one hand, a success in terms of its democratic transition post-Arab

Spring, on the other a country that sends more fighters to join ISIS than any other country in the world.

What is the new government doing to fight radical Islam and its ideology, sir?

MEHDI JOMAA, ACTING PRIME MINISTER OF TUNISIA: Hi, Becky.

So, first we were not used with this phenomena of radical Islam and terrorism. And they took advantage from the weakness of the state, which

is (inaudible) to the revolution. And now we made a job of ramp up this year to defeat, to dismantle and to face these radicals. And that's why we

succeeded organizing the election without any incident.

So it was (inaudible) to the weakness of the state, to the condition and what's happening in the region. And what we made, we cut the flow, the

flow of (inaudible), but the flow of weapons, the flow of money, financial flow and as well we dismantled it and we organize it ourselves to -- with

better cooperation with all the friendly countries, among them the United States, France, but Algeria and all the neighbor countries.

So, now we can say that Tunisia is safer. We succeeded to organize this election. And -- but we think that we should be careful and aware

that it's a global phenomena. It's across the border, its borders. And we have to be united fighting and facing this phenomena and to give a global

answer.

ANDERSON: Now, sir, you are a member of the coalition, which is some 62 countries fighting ISIS, but in unspecified terms. You're not in London

today where 21 of those sort of headliners, as it were, those very much involved in this fight in the air and on the ground are gathering. If you

had one message for the international community -- for Washington, for London, for Paris, for example, today, what would it be from the region

that you are in post-Arab Spring. What's the message to western governments?

JOMAA: So, the first message is that we have some threats and we have to collaborate more and more to face the threats. The second that with

this experience in Tunisia with the successful experience in Tunisia of the political transition, now I think that we have to focus on the fact that

there's still some threat, security threats, but economic threats as well, because the success and the sustainability of this experience should be

economic and social.

So, it's time really to give a big support to this experience, to make it facing the threat, but as well succeeding and giving the hope for the

whole region.

Because, you know, even for the terrorism. Now we are looking for an efficient and security answer. But we should have a plan for the future to

give them hope, to give them another spirit, to give them other projects.

ANDERSON: Let me ask you this, sir, do you feel in Tunisia that the west has let the post-Arab region -- post-Arab Spring region, as it were,

down, that it missed opportunities to help?

JOMAA: I don't understand.

ANDERSON: I think we've lost the Tunisian prime minister. Fascinating to hear him from Davos today.

You're watching CNN. I'm Becky Anderson. This is Connect the World. The latest world news headlines are just ahead.

Plus, four years after the Arab Spring, the region still dealing with crippling youth unemployment as the Tunisia prime minister was alluding to.

We hear from the Egyptian foreign minister next on how his country plans to deal with that.

(COMMERCIAL BREAK)

ANDERSON: You're watching CONNECT THE WORLD. I'm Becky Anderson. The top stories for you this hour on CNN.

US secretary of state John Kerry says the coalition fighting ISIS has made major gains in slowing the terror group's advance in Iraq. Kerry

meeting in London with delegates from 20 other coalition partners.

In Yemen's capital, mistrust between the government and rebels is slowing implementation of what is a peace deal there. The government

agreed so make constitutional reforms if rebels withdraw from key government buildings and release a senior aide, but both sides appear to be

waiting for the other to act.

In Donetsk in Ukraine, at least seven civilians have been killed by artillery fire that hit a trolley station. The government in Kiev is

blaming pro-Russian separatists for the attack. Russia blamed the Ukrainian government forces and demanded an investigation.

The president of the European Central Bank, Mario Draghi, revealed the central bank will spend at least $1.3 trillion in a scheme known as

quantitative easing, or QE as you might know it. The decision is being welcomed by the likes of the EU's economic commissioner, Pierre Moscovici,

who is spoke -- who spoke, sorry, to my colleague Richard Quest.

(BEGIN VIDEO CLIP)

PIERRE MOSCOVICI, EUROPEAN UNION ECONOMIC COMMISSIONER: Mario Draghi and his team always react in the interest of the euro zone. What is the

problem that we face? Low inflation, risk of deflation, low growth. And I think that the decisions which have been taken are the decisions which

contribute to a solution.

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: Too late? Should have happened a year ago.

MOSCOVICI: No. I think that gradually, the answer to the crisis of the eurozone has developed, and it needs cooperation between all

institutions and member states, the ECB, with a wise monetary policy, and the fiscal consolidation by member states, structural reforms and the

investment plan we are leading.

And if we put all these answers together, and today's decision of the ECB is an important part of the game, then we can raise growth and create

hope and, first of all, create jobs.

(END VIDEO CLIP)

ANDERSON: The latest out of Davos for you on the ECB.

Well, in March, the Israeli prime minister, Benjamin Netanyahu will be going to Washington to address the US Congress about Iran, but the White

House is indicating that it's not so happy about how this plan came about.

Mr. Netanyahu was invited by the speaker of the House of Representatives, John Boehner, a Republican. He accepted, and President

Obama was not consulted. Now, the White House says it's going to reserve judgment on the whole matter until they speak to the Israelis.

White House correspondent Michelle Kosinski joining us now from Washington. This is turning into a bit of a spat, isn't it, Michelle?

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: It is. It's interesting to see it evolving day-to-day as sort of who said what when and

who made the plans for this meeting in the first place.

But it's been called a snub, a drama, a foreign policy confrontation, because Congressional Republican leaders here worked directly with the

Israelis to invite Prime Minister Benjamin Netanyahu to address a joint session of Congress here in the US.

He accepted. It's now been scheduled for March 1st. But all of this completely bypassed the White House, and the White House is saying they

haven't heard from the Israelis at all. We'll see if that changes when we hear from the White House in a few hours.

But they say this is a departure from protocol in what a world leader does, generally, before he visits another country. Congressional leaders

here are saying that Netanyahu is planning to talk about the treats posed by Iran and by radical Islam.

But you have to look at this politically. This is coming at a time when many members of Congress, including some in President Obama's own

party, are talking about voting to increase sanctions on Iran. They feel that Iran poses a big danger, they're frustrated by what they see as Iran's

continued delays in the negotiations ongoing over its nuclear program.

But the White House is deeply opposed to additional sanctions. The president has already threatened to veto anything new that comes out of

Congress, and he says negotiations would be derailed by any kind of sanction action.

He says negotiations are what are in the best interests of both the US and Israel. And we're hearing the same from some other leaders, including

Secretary of State John Kerry. Becky?

ANDERSON: Michelle is out of Washington for you this evening. Thank you.

We've been talking about the revolutions that swept across the Middle East and North Africa since 2010, 11. they have, for better or worse,

transformed the region.

The uprisings in part driven by poverty and lack of opportunity, but the unrest itself has left its mark on economies, and things are still very

tough for many people who are working for work. Unemployment among the young is especially high in the Middle East in North Africa.

John Defterios has been looking at some of the new figures on youth unemployment in the region, and he joins us now from Davos. John, what did

you find?

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: What's interesting is the International Labor Organization updated report on youth unemployment,

Becky, is actually very grim, and it puts the highest youth unemployment in the Middle East and North Africa. And I know you've been talking to the

Tunisian prime minister, and many of those leaders that emerged after the Arab Spring are in attendance at the World Economic Forum today.

Now, Egypt's one of those countries, Becky, that's had a more difficult transition, of course. First the ouster of Hosni Mubarak, and

then after only one year in power, the ouster of Mohammed Morsy as well.

Abdel Fattah el-Sisi thought this was the right time to roll out the mat, here, to investors and talk to business leaders about the transition

forward. He says he wants to push ahead with institutional reforms and also constitutional reforms and also deal with the wider threat of ISIS

and, of course, Syria and Libya as well.

It's a very long list to deal with, of course, because of the instability we see. After his speech, I had a chance to speak with his

finance minister, Hany Kadry Dimian, and he was very candid, suggesting that this transition out of the Arab Sprig is, in fact, a difficult one.

(BEGIN VIDEOTAPE)

DEFTERIOS: Egypt's gone through two major transitions, but is it harder to rebuild economically after such a shock, where it almost scares

off investors, to get the growth back up to, say, pre-Arab Spring levels?

HANY KADRY DIMIAN, EGYPTIAN FINANCE MINISTER: Well, we're not seeking the pre-Arab Spring levels, because these levels were not putting Egypt

anyway in the right placement. So, we're seeking to put Egypt in the right placement.

Our mission now is to rebuild the confidence in the Egyptian economy and make sure that everybody understands the opportunities quite well,

whether for investors, for capital flows, for foreign, for Egyptians, because Egypt has a lot of opportunities.

And this has taken time. Rebuilding the confidence and achieving inclusive growth are our two missions. And this we're achieving through

policies, programs, and projects.

DEFTERIOS: It's fascinating. Most people outside the region don't know that the UAE, Saudi Arabia, and Kuwait, have been very supportive with

billions of dollars. When do you transfer from that aid support to actually hard foreign direct investment.

DIMIAN: We have already started. This year's budget, which is targeting some 10 percent of GDP as a deficit, down from 13.8, and if I

exclude the generous support that we have received, it would have been compared to 15.-something, like 15.5 or 15.6.

So, this year's budget is almost free from generous support. And we're switching from the type of support that we used to receive, which

came at the critical point of time for Egypt and helped to save the economy. We're shifting from this into structural reforms and into

different type of investments and inflows coming from the region and from other regions as well.

DEFTERIOS: After the Arab Spring, the MENA region still has the highest youth unemployment rate in the world. It's just under 30 percent.

Can the reforms that you're suggesting really dent the youth unemployment after the Arab Spring?

DIMIAN: That is the core of the reform. That is -- we want to create jobs, and the type of the projects and programs which are mostly

intergenerational, they're economically viable in the first place.

And two, they are labor-intensive. Look at the doubling of the Suez Canal passage, for example, which is the step number one on the reform or

on the introduction of a huge investment opportunity on the entire Suez Canal access for industrial logistic services type of projects.

Look at the agricultural projects that the country is pushing. Egypt is populous. We are very keen to make sure that our reforms are inclusive

and good for creating new jobs.

(END VIDEOTAPE)

DEFTERIOS: Hany Kadry Dimian, once again, Egyptian finance minister. He said populated, Becky, indeed. A market of 86 million consumers, but no

FDI, foreign direct investment, during this period of transition just yet. Back to you.

ANDERSON: John Defterios out of Davos for you this evening. I'm Becky Anderson in the UAE, that was CONNECT THE WORLD. Thank you for

watching.

(COMMERCIAL BREAK)

DEFTERIOS: The snowy slopes of Davos, Switzerland, are far removed from the desert sands of the Middle East, but it's events in that region

that are dominating the agenda here at the World Economic Forum. Mainly the plunging cost of crude.

With oil prices at better than a five-year low, we'll look at the impact this will have on the region's producers, but also the relief it

provides to the region's importers as well. MARKETPLACE MIDDLE EAST is looking at both sides of the oil debate.

(BEGIN VIDEOTAPE)

DEFTERIOS (voice-over): Six years ago, one of the key issues in this Swiss alpine valley was the threat of peak oil, the inability to find new

energy reserves.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I, Barack Hussein Obama, do solemnly swear --

DEFTERIOS: US president Barack Obama took the oath of office promising to do something to reduce America's dependency on foreign crude.

(MUSIC - "HAIL TO THE CHIEF")

DEFTERIOS: Fast-forward to 2015. US shale producers are cranking out nearly 4 million barrels a day, more daily output than oil-rich Iran.

Since their meeting in November, OPEC producers, led by Saudi Arabia, have refused to cut their production in a battle for market share,

suggesting non-OPEC players can do so if they are worried about prices.

ALI AL-NAIMI, SAUDI ARABIAN MINISTER OF PETROLEUM: If they want to cut production, they are welcome. We are not going to cut. Certainly

Saudi Arabia is not going to cut.

DEFTERIOS (on camera): And this is a position you'll hold for, what, the first six months of 2015?

AL-NAIMI: It's a position we'll hold forever, not 2015.

DEFTERIOS (voice-over): As a result, oil is not $115 a barrel, like last June, but hovering below $50. Leading up the Davos annual meeting,

energy executives, polled at this Gulf Intelligence Energy Forum, say prices will remain between $50 and $60 this year.

Industry analysts say stability, or the so-called end-point, when oil can level off between $70 to $90 a barrel, could be three to five years

away.

CHRISTOPHE RUEHL, GLOBAL HEAD OF RESEARCH, ADIA: This end-point will only come -- nobody talks about tomorrow and today -- but it will only come

when global demand is again strong enough to match A, the increased production growth in North America which we have seen, and B, OPEC

production at whatever level they decide.

DEFTERIOS (on camera): But those attending the meeting here in picturesque Davos know a great deal can happen between now and 2020,

especially in places like Libya and Yemen. After all, we've had four turbulent years after political upheavals.

DEFTERIOS (voice-over): In countries where budgets require $100 or more per barrel to break even, some say the price squeeze could spark more

unrest.

ALI KHEDURY, CEO, DRAGOMAN PARTNERS: If they incur too much suffering on some of their neighbors, that those fires they light through

exceptionally low prices can ultimately lead to radicalization and regional destabilization, fundamentally threatening the global energy supply.

(END VIDEOTAPE)

DEFTERIOS: Here within the Congress Center, no one seems to be factoring in any sort of geopolitical risks, especially in the Middle East,

and as a result, there's downward pressure on prices, and this is not helped by the fact that the four core producers within the Gulf are

unwilling to cut production.

(BEGIN VIDEOTAPE)

DEFTERIOS (voice-over): With 12 members, the Organization of Petroleum Exporting Countries controls over 80 percent of the world's

proven reserves. The bulk of those are in the Middle East. The man at the helm of the group is Abdalla el-Badri, the secretary-general. An oil

veteran, he has been in the post since 2007.

DEFTERIOS (on camera): Two months into this process, would you say it's been the wisest strategy for the organization?

ABDALLA EL-BADRI, SECRETARY-GENERAL, OPEC: If we cut our production, first of all, we don't know by how much. If we cut in November, say 1

million, then we come back in June we reduce another million. We come back 2016 and we reduce production, we keep reducing our production, replacing

it by non-OPEC supply of a very high cost.

DEFTERIOS: You see that the shale producers are starting to cut jobs already. Can Russia withstand a price of $50 a barrel, and OPEC will

benefit from this process?

EL-BADRI: Let me tell you one thing. Our decision was not targeted to shale oil, it was not targeted to Russia, we are not targeting anybody.

It is a pure economic decision for the benefit of our member countries.

DEFTERIOS: Finally, is it worth all this dislocation we're seeing in the oil market? Isn't it a lot of pain to determine what the bottom of the

market is and for OPEC to hold the production? Isn't it a lot of pain for many oil producers of the world?

EL-BADRI: Because some of them, they are saying that OPEC caught them by surprise by this non-OPEC supply. But it is the other way around. It

is the non-OPEC supply with the high cost that caught by surprise that OPEC did not produce its production.

DEFTERIOS: So, Russia's not cutting production right now. The shale producers are cutting some production. We could be in this mess for

another six to eight months, don't you think, sir?

EL-BADRI: It's OK, this is the market. We are accepting it.

DEFTERIOS: And playing a pretty hard game, wouldn't you say?

(LAUGHTER)

EL-BADRI: Maybe.

(END VIDEOTAPE)

DEFTERIOS: So, a strategy that is leading to a showdown between the Middle East producers of OPEC and non-OPEC players like Russia, Norway, and

as we discuss after the break, the United States.

(COMMERCIAL BREAK)

DEFTERIOS: It was less than a year ago that the United States hit a landmark milestone. After the back of a shale oil boom, the country jumped

from 5 million barrels a day in 2008 to over 8.5 million with expectations to increase even further.

But there is a serious threat to that expansion. For producers, the current cheaper prices mean less profits and potentially even losses.

DEFTERIOS (on camera): Every year at the World Economic Forum, business and government leaders and even celebrities descend on this Swiss

resort to debate he key issues of the year. And after four years of record prices of over $100 a barrel, the falling price of crude was right at the

top of the agenda.

(BEGIN VIDEOTAPE)

SUNIL KANT MUNJAL, CHAIRMAN, HERO MOTOCORP: The oil prices are likely to stay where they are or trend down a little bit further. And I think for

the world, especially for the developing world, where many of the countries are oil importing countries, I think this is wonderful news.

MANFREDI D'OVIDIO, CHAIRMAN, SILVERSEA CRUISES: Well, certainly for the cruise industry, it's a big advantage, even though the drop in the

price of extraction, the cost of the price is not what we find when we go and refuel our ships.

IYAD MALAS, CEO, MAJID AL FUTTAIM: At this stage, with the volatility that exists and not seeing a bottom -- and maybe we have, maybe we haven't,

and that's what's not very clear.

DEFTERIOS: For the oil-rich producers of the Middle East, there is still a sense of calm, however, mainly because of the cheap rate of

production. On average, it costs around $27 to produce a barrel of oil in the Middle East, $10 or less in the Gulf states.

In the United States, that average is closer to $65. And with oil continuing to sink below the $50, US shale producers are in a difficult

position of having to wait and weather the storm.

Shale producers, like Ross Perot, Jr. The Texan billionaire heads up and manages the family business, which has interests in real estate,

financial investments, and oil and gas.

DEFTERIOS (on camera): How much dislocation will this fall in oil really have, particularly on shale production going forward, in your view?

ROSS PEROT, JR., CHAIRMAN, HILLWOOD: The key to US oil is it's a private sector. Private money, private sector. So already, production is

being shut down, rigs are being laid down. And I think the world will be shocked how quickly we re-correct within Texas within the shale oil place.

DEFTERIOS: It's interesting. The Saudi people I spoke to at the OPEC meetings were suggesting they could knock out to this price correction 20

to 30 percent of the shale production and even permanently. Do you agree with that?

PEROT: Well, because you have a -- I do. There's a lot of shale that's marginal shale. It's very difficult to produce. Core shale plays

will produce even in a low oil price environment, and they'll be the first to come back. But you could take half a million barrels out of the US

production fairly quickly with a low oil price.

DEFTERIOS (voice-over): Only last year, their oil company, HKN Energy, announced that it had struck oil in Kurdistan. Northern Iraq has

flourished over the last few years as international energy companies tap into the region's estimated 45 billion barrels of reserves. But as the

ISIS insurgency continues, could this recent prosperity be under threat?

PEROT: Kurdistan is the great, last onshore oil play left in the world. These are where you have the great oil fields that should have been

discovered 40 or 50 years ago, but because of political reasons, no one drilled them. They're now being drilled.

The Kurds will ramp up to probably over 3 million barrels a day. They will be one of the great additions to the world oil supply out of

Kurdistan. ISIS slowed it down, the turmoil in Baghdad slowed it down.

It certainly makes investors nervous about investing in Kurdistan when you have a war and you have political uncertainty. But the opportunity is

so large, if you're long-term, it's a very strategic place to invest and to be in the oil business.

DEFTERIOS (voice-over): It's not all doom and gloom. Energy importing countries, like Jordan, are immediately reaping the rewards of

cheap oil. Unlike its Gulf neighbors, Jordan doesn't sit on a wealth of reserves. It actually imports about 90 percent of its energy needs.

So, the lower prices are having an impact, according to finance minister Umayya Toukan, when I spoke to him here at the forum.

DEFTERIOS (on camera): Many people are talking about the strain of lower oil prices, but how about for Jordan as an economy when you see a

drop of better than 60 percent?

UMAYYA TOUKAN, JORDANIAN FINANCE MINISTER: It's very good for the economy of Jordan, because the cost of production will be less. A very

important input to producing goods and services is oil, so lowering the oil price by 60 percent should ultimately lead to higher incomes as well as to

higher demand for goods and services and growth.

DEFTERIOS: As a finance minister, do you worry that people lower their guard and don't want to go through more reforms now that the oil

price has come off? Is that the real danger?

TOUKAN: That's very, very relevant. People feel -- maybe they're tired of austerity, and they consider this as a break. But really, that

would be wrong. I think we should use this favorable circumstance to continue with our reforms and to increase competitiveness.

(END VIDEOTAPE)

DEFTERIOS: Umayya Toukan of Jordan talking about the energy market, which dominated the proceedings here at the World Economic Forum.

And that's all for this special edition of CNN MARKETPLACE MIDDLE EAST, this week from Davos, Switzerland. I'm John Defterios, thanks for

watching.

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