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Quest Means Business

ECB Unveils $1.3 Trillion QE; European Stock Markets Rise; US Stocks Surged; QE Gives Breathing Room; QE Not a Panacea; Draghi Calls for Governments to Step Up

Aired January 22, 2015 - 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)

RICHARD QUEST, HOST: The market is closing, the Dow is up more than 200 points. A very strong rally. As the gavel is hit, trading comes to an

end. What a day it has been, Thursday, the 22nd of January.

Tonight, finally, the monetary big bazooka's brought out as the ECB introduces quantitative easing. On this program, you're hearing from a

prime minister, the president of the eurogroup, a finance minister. You're also going to hear from a top banker.

Also on the program, the president of the World Bank. He sees economic risks everywhere. In other words, we've inflated the snowman.

I'm Richard Quest. I mean business.

A very good evening to you. Tonight, Mario Draghi, president of the ECB, has unleashed his potentially last and certainly most powerful weapon,

a $1.3 trillion bond-buying plan. QE has arrived in the eurozone.

The European Central Bank will create new money and buy 60 billion euros' worth of government and private debt each and every month until at

least September of 2016. Now, putting it another way in dollars, it's $70 billion every four weeks or so, just only about $8, $10 less than the Fed

was doing in its own QE3.

The money taps will open in March. They'll stay open until September of next year and purchases may continue beyond then if inflation fails to

reach the ECB's 2 percent target. Speaking earlier, Mario Draghi rejected criticism he'd waited too long to launch QE.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: After months pass by, it's the announcements that really matter. In other words, expectations

work only if there is a certain credibility, and we are showing that this credibility is deserved with today's action.

(END VIDEO CLIP)

QUEST: With those words, Mario Draghi has transformed every aspect of the European economy. So tonight, you're going to hear the perspectives of

all sides of the equation.

On the heads of government, we'll be live in a moment with the prime minister of Finland, Alex Stubb. You're going to hear from the eurozone's

top finance minister, Jeroen Dijsselbloem, and a Spanish economy minister.

We'll speak to the European overseers and the economics commissioner from Brussels, Pierre Moscovici will be with us tonight. And the banks

themselves, we'll be live with the head of BBVA, one of Europe's biggest banks.

As you can see, we have all aspects covered because it is a momentous day, and joining me now is Alex Stubb, the prime minister of Finland. He

says he welcomes quantitative easing, he welcomes the actions of the ECB. I know the ECB is independent.

ALEXANDER STUBB, PRIME MINISTER OF FINLAND: Right.

QUEST: Let's get that old bromite out of the way. You welcome it. Is it in time?

STUBB: I think it's in time. Basically, when you have extraordinary times, you need extraordinary measures. We need anything from the monetary

side to pump money into the economy and to get growth going in. So, I welcome it with a smile.

QUEST: You wish it had been sooner? Or is that a bit in rear view mirror?

STUBB: Well, I think it's a great thing that the ECB has exclusive competence, and prime ministers like me have nothing to say about it. What

they do, we react to.

QUEST: They have given -- and we will hear later from Minister Dijsselbloem, who you know well -- they have bought you time. They have

bought you politicians time to make the necessary structural adjustments. But it is only time that you've been given.

STUBB: Definitely. I think all of us need to do structural reforms, and we should have done much more in 2008, 2009, 2010. We should stop

giving the narrative that politicians create growth, that politicians create jobs.

No, we don't. We do structural changes and the entrepreneurs and enterprises do the growth. And I think that's why QE was timely.

QUEST: Are you worried that in this case the questioning of the euro at its core has been raised by the fact that there's not full risk sharing?

A hundred percent of the debt is not going to be risked to the ECB. Most of it still lies on the books of the national central banks.

STUBB: Well, I think it's quite important that each and every country takes care at the end of the day of its own debt. As I said, this is an

extraordinary measure. At the same time, we must make sure that we are not trying to put the blame, the damage to someone else.

QUEST: When we look at the measures the ECB's taken, we've had the securities markets program, the SMP, we've had the OMT, we've had the LTRO,

we've had the TLTRO. And now we've got the QE. A real alphabet soup. Now, I know that politicians and governments have done so much. But Europe

is still in a dreadful state.

STUBB: Well, I think at the end of the day, we'll come out of it. Again, I'm not the person who's going to start passing a judgment on the

ECB. I think they've actually been fairly good throughout this whole crisis. But us, the governments, haven't been that good, and we need to

work a little bit more.

QUEST: I'm going to take you straight into the depths of politics, then. Angela Merkel does not necessarily believe in too much more -- in

monetary easing, fearing that the southern European governments will not make the changes. True or false?

STUBB: I don't think this is a moral hazard for anyone, not the southern states nor for us. At the end of the day, the ECB did what it had

to do because it basically needs to fight inflation on one side, and in this particular case, fight deflation. What we need to do is to continue

the structural reforms. We shouldn't stop with those.

QUEST: You are going into an election in a few months, aren't you, Prime Minister?

STUBB: Yes, we are. We are, in three months, actually.

QUEST: Right. Are you going into it with an economy that's -- well, you wish it could be better. I don't want to be mean about it, but you

wish it could be better.,

STUBB: Yes -- no, you're not mean about it, Richard. And truth of the matter is that our economy's not in very good -- in a very good state

right now. There have been some mistakes throughout, and now we need to do repairs. Basically, we have four years to do those, and we need to do them

as of day number one when our elections have been held on the 19th of April.

QUEST: And you, sir, will join me over at the map. Where for you is the biggest risk in 2015, besides your own political career up there?

(LAUGHTER)

STUBB: Right. Well, as you see, we have 1,300 kilometers of border with Russia. There is a hot situation going on, especially in eastern

Ukraine. I think the political risk is right about there.

QUEST: You think it's on the border -- it's the Russia/Ukraine --

STUBB: It's Russia/Ukraine.

QUEST: Minister -- Prime Minister, thank you so much, indeed, sir.

STUBB: Thank you.

QUEST: Thank you very much, indeed.

Now, that size of the stimulus program trounced investor expectations. The rumor had been it might be $50 billion a month. It was, of course, $60

billion. It pushed European stocks higher. The DAX ended at a fresh record high, look that that. The DAX at one and a third percent.

Portuguese and Italian stocks performed the best of the day, not surprised. They're going to get a certain monetary boost, naught-half, up

two and a third and two and a half percent. Even the FTSE was up one percent.

Now, stocks in the United States surged on the announcement from the ECB. The Dow ended the day up more than 260 -- well, 259 points, except

for that minor little blip just around 10:00 in the morning.

So, the prime minister welcomes it. What about the head of the eurozone group, who's also the Dutch finance minister? The president of

the group says structural reforms remain key to reviving Europe's economy.

Jeroen Dijsselbloem sits as the president of the eurogroup. He also sits at every bit of negotiation concerning the euro, the bailouts, and the

messes that he has to rescue. He told me quantitative easing gives individual governments breathing room.

(BEGIN VIDEOTAPE)

JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: It buys us time, which I think we should use very urgently, us politicians, to get some of the

structural issues sorted out.

QUEST: Is there a danger that with this, once again, monetary policy is doing the hard lifting and fiscal policy getting a free ride?

DIJSSELBLOEM: Fiscal policy we've done a lot. So, it's not about fiscal policy at the moment in Europe. It's about the structural reforms,

making Europe much more competitive, opening up markets, making the labor market more flexible, getting the tax system to be incentivizing

investments. These are the changes that we need.

The only thing you can say is monetary policy usually gives us time, takes off the immediate pressure, it's always short-term effects.

Hopefully it will have short-term effect. But for the medium-term or long- term, we get -- you've got to sort out these structural issues.

QUEST: And here was see once again a deficiency vis-a-vis the United States, where when it comes to structural reforms, the federal government

can do an enormous amount. In Europe, that is not the same. You're going to have to wait for each individual country to make those structural

reforms.

DIJSSELBLOEM: Yes, but the interesting thing is that a number of countries, either in a program, but also the Baltics, also my country, the

Netherlands, have pushed very hard on these reforms, and those are the countries that are now back on top of the growth list in the eurozone.

They are back to percentages of 1, 1.5, or even 3 in some countries.

And I think it proves that if you get some of the tough measures done -- and I'm not saying it's easy. It's politically tough, it's economically

tough. But if you get them done, there is potential growth out there. And I think that should be a great encouragement for some of the major

economies in the eurozone to do the same.

QUEST: Which ones?

DIJSSELBLOEM: Well, the main concern is, of course, Italy, which is in a recession, now, for a number of quarters, which is the number two

economy in the eurozone, and the other one is France. Both governments are very ambitious, the new governments in those countries. Getting it done is

step two.

QUEST: Do you worry that the way in which this QE has been framed with the only 20 to 80 percent risk sharing, the national central banks are

baring the risk rather than sharing it?

DIJSSELBLOEM: Well, the ECB balance sheet is, as a matter of fact, about risk sharing. So, it's not as if risk sharing is excluded. And part

of the risk already at a national level. So, I think there is a sort of an equilibrium there.

The key thing, it's not about risk sharing. The key thing is about the size of the operation, getting liquidity out in the markets. That's

what the ECB is doing. Targeted at price ability driving up inflation.

QUEST: Final thoughts on Greece. Now you've got the Greek elections. You must be watching very closely.

DIJSSELBLOEM: We were already in a hard situation because we had trouble completing the last program. We'll have to pick that up with the

new government.

Whomever is in the new government, Greece has to continue on this reform path. It has to pick up its economy, it has to become financial

independent again. And that requires some tough measures, even in the future, whomever is in the government.

QUEST: Which is a real risk.

DIJSSELBLOEM: I don't know. Let's be realistic: every government has to work within some constraints. Constraints are how much money can

you spend? Who's going to finance you? And what are your key issues?

The key issues in the Greek economies have not changed and will not change because of an election. They're still there.

(END VIDEOTAPE)

QUEST: That's the president of the eurozone group, that's Jeroen Dijsselbloem. Europe joined the QE club six years after the crisis began.

We'll see if the moves by Mario Draghi are too little, too late. QUEST MEANS BUSINESS, we're in Davos on a day when QE arrived in the eurozone.

(COMMERCIAL BREAK)

QUEST: By launching its own quantitative easing program, the European Central Bank is hoping to replicate the success of QE that was seen in the

United States and, arguably, also by the Bank of England in the UK.

In the US, the program began in 2008 just after the financial crisis began. The Fed spent $3.7 trillion across three full rounds of QE. Now,

six years on, Europe's joined the party. It's got $1.3 trillion on its head. As the ECB moves to boost growth, it's a stark reminder of the

situation that remains dire in some countries.

In Spain, the unemployment rate seems to be stuck at 23.7 percent. The minister will probably disagree that it's stuck. He's Luis de Guindos,

Spain's minister for economy and competitiveness. I've given the bad side. The good side is that you are growing at at least 2 percent and you are

amongst the fastest-growing countries, now, in the eurozone.

LUIS DE GUINDOS, SPANISH ECONOMY MINISTER: That's certainly right. If you look at last year, for instance, the unemployment in Spain was

reduced by almost half a million people. So, it's a stark contrast with the situation that we had only two or three years ago.

QUEST: Do you welcome the QE that was announced today?

DE GUINDOS: I think that it's a step in the right direction. I think that the ECB is fulfilling its mandate. But I would say that it's not a

panacea. You can not address structural problems with monetary policy.

QUEST: Is it enough, that they put in? Still to -- would you have preferred it to have been totally open-ended, "as much as we need for as

long as we dare"?

DE GUINDOS: I normally always endorse the proposals and the actions of the ECB because I'm a firm believer in the independence of central

banking. I think that it's the right move. I think that it has been thoroughly thought and sketched. And I think that it's going to have an

impact. An impact especially on inflation expectations. That is the key point.

QUEST: Right. Now, inflation in Spain is negative.

DE GUINDOS: Yes.

QUEST: It is going to get worse, as obviously the oil prices hits further down. Is it real deflation, or is it just price deflation?

DE GUINDOS: It's not real deflation, because deflation is defined -- the bad deflation, as bad cholesterol, is defined as a situation that you

enter into a sort of --

QUEST: But it could happen.

DE GUINDOS: No, no, no. It's not happening in Spain. We have a pick-up in domestic demand, we have a pick-up in consumption, we have a

pick-up domestic investment. And the reason why we have a negative inflation rate is because the decline in oil prices has been translated to

the prices at the pump.

QUEST: So, what now needs to happen? Because you've all been given breathing room. You've made structural reforms.

DE GUINDOS: Yes.

QUEST: What other reforms? You've got to make more on pensions. You've got to do more on labor reforms.

DE GUINDOS: Well, we have done a lot of reforms. I think that the reform agenda of the Spanish government has been, perhaps, the most

ambitious one in the eurozone. That's why we are growing and we are outperforming our peers.

That's why we are growing above 2 percent. That's why we have current account surplus. That's why we are creating jobs.

QUEST: So now you turn around to Italy to -- and say go on.

DE GUINDOS: No, you're not one to make any comparisons --

(CROSSTALK)

QUEST: Oh, why not? Why not?

DE GUINDOS: No, no, no. I suppose, well, the Italian government knows perfectly what they have to do. What I can tell you is that there is

a recipe in the eurozone to deal with the reforms and to start to reap the rewards of these reforms.

QUEST: Put it this way: you'll all sleep a bit easier tonight with Mario Draghi's money.

(LAUGHTER)

QUEST: Let's -- the risk. Where, for you, sir --

DE GUINDOS: The risk.

QUEST: Where for you, sir, is the biggest risk in 2015?

DE GUINDOS: Well, I think that --

QUEST: The economic risk.

DE GUINDOS: -- the risk is geopolitical, and it's Ukraine and Russia.

QUEST: You believe it's definitely in that area?

DE GUINDOS: That's right. I believe it.

QUEST: Thank you very much, indeed.

DE GUINDOS: Thank you very much, Richard.

QUEST: Good to see you, sir. Thank you sir.

DE GUINDOS: Thank you very much.

QUEST: Have a good Davos.

DE GUINDOS: Bye.

QUEST: Now, Mario Draghi has consistently said that governments have an enormous role in deciding Europe's economic future. That's exactly, of

course, the point that they've been making this evening, the prime minister made and, of course, the finance minister.

Even after announcement as huge as this, today was no exception. This is not about Europe's leaders getting a free pass. The president was

adamant: he couldn't rescue Europe alone.

(BEGIN VIDEO CLIP)

DRAGHI: What monetary policy can do is to create the basis for growth. But for growth to pick up, you need investment. For investment,

you need confidence. And for confidence, you need structural reforms.

The ECB has done -- has taken a further very expansionary measure today. But it's now up to the governments --

(END VIDEO CLIP)

QUEST: There we leave Mario Draghi for the moment. We're now going to join the Brady press conference on the NFL live. We'll be back in just

a moment.

(SIMULCAST OF CNN DOMESTIC - TOM BRADY NEWS CONFERENCE)

QUEST (voice-over): Now what you're hearing about is deflation, normally in a different type of deflation that we were just discussing with

the ministers earlier. In American football, the New England Patriots have been accused of cheating to reach next weekend's Super Bowl.

It's alleged that the ball that the teams were using, the balls -- in plural -- were intentionally deflated to make it easier to throw and to

catch. CNN World Sport's Don Riddell joins me now from the CNN Center.

Don, put this into perspective for us, please, for the size and scale. For our viewers who may have been expected deflation of a different kind,

this is big news.

DON RIDDELL, CNN CORRESPONDENT: Well, yes, it is big news. It sounds ridiculous when we're talking about such a small amount of air. Two pounds

per square inch of air, Richard, weighs the same as a couple of sheets of paper. But it can make all the difference in a big NFL game.

We're talking about deflation, of course; I would counter it with this story now is taking on air of stagflation, if we're going to use an

economic term, because we're not really getting anywhere with who was responsible or what went on. You just heard one of the most legendary

quarterbacks in the history of the game.

Certainly the Patriots' best player ever denying that he had anything to do with it. He said it wasn't him. He doesn't know what happened. He

was very surprised to learn on Monday morning that something had happened, that the air had been taken out of 11 of the 12 balls that the Patriots

brought to play in the game.

Richard, earlier today, we had the Patriots' coach, Bill Belichick, who has previous with bending the rules. He was severely fined half a

million dollars a few years ago for spying on another team, a clear breach of NFL rules. And that's why some people think that maybe the Patriots

really did know what was going on here and they did have something to do with it.

But the two key players have both denied it and this is the story going into the biggest event in the American sports calendar, the Super

Bowl, which takes place in Arizona next Sunday. It's one of the biggest sporting events in the world of sport, Richard. This is not what the NFL

would want the buildup to be.

QUEST: Don Riddell, who puts it into perspective, and now proving that the world is truly surreal.

We'd invited Howard Lutnick, the chief executive of Cantor Fitzgerald to join us this evening to discuss economics, the World Economic Forum, the

risks, quantitative easing, on and on with that.

But you, Howard, tell us your connection with Mr. Brady, Tom Brady. So Tom Brady.

HOWARD LUTNICK, CEO, CANTOR FITZGERALD: We have a -- we financed a daily MVP. It's a fantasy football app, and Tom Brady is our lead

spokesman and so he's -- he wore a mullet in the ad and he's our spokesman. So we've -- we have a nice connection to him.

QUEST: Well, you -- I mean when you heard this allegation, that he -- well, allegation, that he deflated the ball...

LUTNICK: Well, let's be -- Tom Brady is not going to -- taking the air out of the ball, that's got to be the silliest thing I've ever seen. I

mean, I don't know what the New England Patriots have done. People have accused them of all sorts of things. But in the end, he's the quarterback.

He's a great quarterback. He's going to do it.

I think what happened is they did it for you, because you knew QE was --

(CROSSTALK)

QUEST: -- this is the commercial.

LUTNICK: We're going to -- isn't that fantastic? He's wearing a mullet.

QUEST: Are you concerned tonight -- I mean, you're paying him a lot of money. You're paying him a lot of money, Howard.

LUTNICK: Well, he's in the news. This is fantastic.

QUEST: Oh, come on.

LUTNICK: He's in the Super Bowl. You got -- you know, people will just basically -- you can't talk about quantitative easing. Talk about

football easing. It's deflation. I mean, it's so funny to think that Tom Brady would give a hoot how much air is in the football. I don't buy it.

QUEST: You don't buy it?

LUTNICK: I don't buy it. It's absurd.

Come on, it's silly.

QUEST: I don't know. I mean, I'm not even sure -- I mean, I was trying to understand from Don Riddell why they care how much air's in the

ball. It makes it easier to --

(CROSSTALK)

LUTNICK: Well, I guess it's a little softer --

(CROSSTALK)

QUEST: But you're not concerned that your investment tonight in that man is in jeopardy?

LUTNICK: No, he's going to be in the Super Bowl. There's going to be zillions of people watching.

QUEST: That's all you care about.

LUTNICK: He's totally handsome and famous and he's wearing a mullet in our ad so we love him.

QUEST: Right. Let's talk about our other agenda tonight.

Economics: the QE, the quantitative easing, European Central Bank has finally done it, a little bit too late, you would think.

LUTNICK: Well, you wonder why they were waiting so long. But you know, the worst thing that ever happened to America was the Great

Depression. The worst thing that ever happened to Germany was hyperinflation.

So there's always been this bent in Europe to keep interest rates higher and hawkish, right? And now finally, finally they realize they need

to drive interest rates down to zero, just like America, to save the economy.

So I would say finally, but what you're going to see is the euro is going to get whacked.

And how long until the next 20 months?

QUEST: Is that good? It's good for European competitiveness. It's good for European industry.

LUTNICK: Correct. It's just not good for the lifestyle of Europeans.

QUEST: We'll have to do a risk map.

Here we go, the risk map.

LUTNICK: I think it's amazing that you have all these people and it's Greece, it's Greece, it's Greece because if they vote and they start to

think that it's a good idea to pull out of the euro, you have not seen anything but QE1, QE2 and then you'll see QE3.

QUEST: You believe that we're in this for the long haul now in Europe?

LUTNICK: Well, now, remember when America did it, it was called QE? And all of a sudden, we were talking. We said, what does that, the end of

QE, mean, when we were together, and I said, "QE2."

So the end of QE1 will beget QE2. We're going to be doing this a long time.

QUEST: Get back to Tom Brady. Get back to the mullet. You're so pleased that the man that you're sponsoring is on television in a scandal.

LUTNICK: They just can't spell his name wrong. That's all that matters.

QUEST: Good to see you, Howard.

LUTNICK: Nice to see you.

QUEST: This is QUEST MEANS BUSINESS. You never guessed you'd see that on a business show. We're back in a moment.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: We're back to quantitative easing. Yes, remember, that did happen today as well as some deflated balls. Francesco Gonzalez Rodriguez

is the chief executive of BBVA bank. It's Spain's second biggest bank.

You're not a central banker.

FRANCESCO GONZALEZ RODRIGUEZ, CHIEF EXECUTIVE, BBVA: Not yet.

QUEST: You're not a foreign minister.

RODRIGUEZ: Not.

QUEST: So you can't claim the independence of the center of the ECB.

RODRIGUEZ: I am.

QUEST: Do you welcome what they did today?

Was it necessary?

And is it enough?

RODRIGUEZ: I think it was a bold and good moment because it conveyed two messages, in my view. One, more money in the market; that means more

credit, more pressure on deflation.

Of course, not possibly to growth. But the second measure for me is more important. It showed that the central bank, the ECB, is in charge and

its president is in charge.

QUEST: But its president only just about got this, didn't he? Germany was still -- would prefer less of it.

RODRIGUEZ: Probably. But now the central bank has made out of 28 central bankers and you have to reach a tradeoff.

QUEST: So the -- so what will the banks do now?

I mean, you're a bank. One assumes that you've got Spanish government debt in your vaults, in your portfolios. You will now be selling it to the

Bank of Spain.

RODRIGUEZ: No. The Bank of Spain will sell the bonds directly to the head of the ECB for the first time in the history. And that is a very

important message for Europe, because this ECB is working as a real lender of last resort. And that's important in terms of dictations.

QUEST: In terms of banking in Spain at the moment, the trends that you're seeing, it's been a very difficult 5-6 years for you. But you've

got to get back to normal. What does normal look like?

RODRIGUEZ: Spain is out of the recession, no doubt. We are growing, last year 1.4 percent; this year probably around 2 percent to 2.5 percent.

And Spain and Germany is going to be -- are going to be very agents of growth in Europe and probably this can be solved. No, the situation is far

better than a couple of years ago.

QUEST: And in terms of your bank, what's the future for your bank? What are you going to be doing in the future?

RODRIGUEZ: We are an international bank and we are in Spain and Mexico, Turkey and --

QUEST: Expanding?

RODRIGUEZ: -- expanding in the States and Latin America and China. Therefore, Spain is a part of the cake. But that is important for us and

that means we will spend our capes. We will have less provision and more prophecy in Spain for the first time in five years.

QUEST: Let's do the map, sir. Let's do the map.

RODRIGUEZ: I will go to Silicon Valley.

QUEST: What?

RODRIGUEZ: You know why?

QUEST: (INAUDIBLE).

RODRIGUEZ: Yes, because --

QUEST: You've gone out to Silicon Valley. RODRIGUEZ: You know why? Because we are in the middle of a big revolution, which is the data revolution, which is changing the interest

grow up in the world in terms of sector has attacked many sector like music, prayers, the taxes and so. Next we learn is banking.

In that part of the world, in Silicon Valley, there will be a lot of challenges for the people who don't want to change and offer opportunities

for people who will embrace when it conveys change. And we are embracing change.

QUEST: Good to see you, sir.

RODRIGUEZ: Thank you.

QUEST: Thanks for joining us. Much appreciate it.

RODRIGUEZ: Thank you. Bye-bye.

QUEST: That was sweet.

Well, as you can see, the risk map gets ever more complicated as we move around the world. There still are two big locus. Now we've heard

about QE. We've heard about structural reforms.

The E.U.'s economics commissioner is adding investment to the recipe for economic growth. Pierre Moscovici told me hitting economic targets

will require cooperation from all Europe's institutions.

(BEGIN VIDEOTAPE)

PIERRE MOSCOVICI, E.U. COMMISSIONER FOR ECONOMIC AFFAIRS: Mario Draghi and his team always react in the interest of the Eurozone. 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.

QUEST: Too late? Should have happened a year ago?

MOSCOVICI: No, I think that (INAUDIBLE) the answer to the crisis of the Eurozone is developed. And it needs the cooperation between all

institutions and member states, the ECB, with a wise monetary policy, the fiscal consolidation by member states, 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 a game, then we can raise

growth and create hope and first of all, create jobs.

QUEST: The economic situation now in Europe and particularly the Eurozone has become extremely complicated, complex, would you agree?

MOSCOVICI: Yes, I do, because we are in a recovery. But this current recovery is too slow and too low. With low growth, with low inflation,

with high unemployment, and also with raising inequalities, the situation cannot be considered as satisfying. It's better than in previous years.

We regained stability, but we need to introduce dynamism and that's why this commission has a priority, which is jobs, growth through investment.

And this is why (INAUDIBLE) introduced an investment plan of more than 300 billion euros in order to boost investment. Because we suffer in Europe

from an investment gap. We're not competitive enough if we're compared to our competitors.

QUEST: Is this why more leeway was given to those countries that -- I mean, let's face it, you've basically said even (INAUDIBLE), all right.

You can have a bit more wiggle room on your deficit. But don't push your luck.

MOSCOVICI: No, and this is not helping taken either for France, neither for Italy or Belgium.

QUEST: But is it going to be taken?

MOSCOVICI: It's going to be taken --

QUEST: And it's not going to be the --

(CROSSTALK)

MOSCOVICI: -- by the end of February or March. So let's be patient. We are in constructive dialogue with those countries because I always

thought -- I always think that sanctions are a mistake. The -- Europe is not about sanctioning. It's about convincing.

Sanctioning is possible if you don't convince. And sanctions are also bad for the country, which is, in a way, standardized. So we're in

constructive dialogue. I hope we reach an agreement.

But we also need to be objective. We've got rules. And my role in the commission is to follow the rules, to have them applied even if they

are today more flexible than they were yesterday, because we consider that the main problem's growth and jobs.

QUEST: Jobs and growth.

MOSCOVICI: Yes.

QUEST: Is that consistent with the policies within the union at the moment of some governments like Germany, like Austria, the Northern

European countries that are still seemingly, according to some, hell-bent on austerity?

MOSCOVICI: We believe that they are imbalances which has to be respected. Some countries -- you mentioned them -- must make more efforts.

They still do. But other countries who now has fiscal room to maneuver, I think they can contribute better to investment. That's the debate we have

with all the member states, including those you mentioned.

QUEST: The pen, sir.

MOSCOVICI: Yes.

QUEST: Now where would you like -- where's the biggest risk for you in 2015, the economic risk obviously (INAUDIBLE). Well, what do you --

where are you most concerned?

MOSCOVICI: About economics? And politics? I will say Ukraine is a serious concern. But again, it's also a hope.

(END VIDEOTAPE)

QUEST: Pierre Moscovici putting his point on the map.

After the break, the prime minister of Turkey says to defeat terrorism we must defeat the factors that lead to terrorism. And of course where on

the map does he see the greatest risks?

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(COMMERCIAL BREAK)

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QUEST: Turkey's prime minister says he needs the West to be more assertive in defending against ISIS. Foreign ministers from the anti-ISIS

coalition were meeting in London and discussing the strategy to take on the militant group.

I asked the Turkish prime minister who is leading the fight; if they are not, who's leading against ISIS?

(BEGIN VIDEOTAPE)

AHMET DAVUTOGLU, FOREIGN MINISTER OF TURKEY: P5 should have led this. But unfortunately, P5 was not able to agree on anything on Syria in the

last four years. That was a great disappointment for us as neighbors.

Now the first power to lead the Syrian people themselves. We have to help Syrian people. We have to help moderate opposition.

QUEST: This has been known for a long time. And to some extent, the only new factor that's given urgency, if I can put it bluntly, is the

beheading of certain people from the West and the atrocities that took place in Paris.

DAVUTOGLU: This is different but not new. In fact, if we have taken necessary measures two years ago, today we wouldn't face ISIS. But

unfortunately, the regime has committed all crimes, chemical weapons, (INAUDIBLE) missiles. Out of this power vacuum, ISIS did emerge.

QUEST: Are you content with the leadership currently being given by the U.S. secretary of state and the European Union, the high commissioner?

DAVUTOGLU: Yes, of course. They are doing their best. But what we need is more assertive, more firm attitude together to defend our common

values. We need to attack, to have the same attitude against any brutality coming from an autocratic regime or from terrorists.

QUEST: One of the alleged conspirators in the Paris attack is said to have gone through from France down through Spain and on into Turkey. And

we've seen the pictures of her at Istanbul airport and then on into Syria.

The fact is, yes, your intelligence managed to do a very good job of getting a picture of her. And then --

DAVUTOGLU: That's -- in fact, that special case show what intention and efficiency of Turkish intelligence. We discovered that lady. We

informed France. If we --

QUEST: You lost her.

DAVUTOGLU: No, because it was -- we were not informed in advance. We were not informed in advance. (INAUDIBLE) blames Spain because she went

through Spain, if you cannot blame France and Spain, you cannot blame Turkey. This is a big threat to all of us and we have to work together.

QUEST: Let's talk about the economy. Russia's in trouble. You've got lots of tourists coming in from Russia. There's volatility from the

Swiss franc. The Turkish economy is doing well. What's your perspective?

DAVUTOGLU: Yes, Turkish economy is doing very well. Now our growth rate is not as high as we expect, but it is still the second biggest growth

rate in Europe and Turkey is in the OECD.

Because our financial system is strong, our monetary and fiscal discipline is strong and the decrease of oil prices will help us to control

current account deficit from all these parameters, I can say 2015 will be a golden year for Turkish economy.

We will be facing problems because of the decrease of oil, like Russian tourists. But we will find some other ways to attract more Russian

--

(CROSSTALK)

QUEST: -- golden year. I mean, most people are getting ready for a difficult year.

DAVUTOGLU: Yes, but we are self-confident. We will be having an election in June. There is a political stability. My party has now almost

50 percent, which double than the --

QUEST: Is that healthy, to have 50 percent?

DAVUTOGLU: It is, it is --

QUEST: It's not healthy --

DAVUTOGLU: -- if it is true democracy, it is healthy. (INAUDIBLE) here is, Richard, political stability and economic dynamism together.

QUEST: I think I know the answer to this before you do it.

Put a big circle on the area of the map that you think is the biggest risk in 2015.

DAVUTOGLU: You have already drawn, of course here is Cold War zones, (INAUDIBLE) zone as well as some in North Africa. But at the same time,

the real resources are here as well, oil, geopolitical stability. Turkey's an island in an very unstable neighborhood.

(END VIDEOTAPE)

QUEST: And here's the map, as you can now see it developing, more and more people. So we have two definite loci. We have one here, right across

Ukraine and the Europe, obviously the economy and of course around Syria and around Iraq and then down around towards Saudi Arabia.

Where do you think it should be on the map? @RichardQuest is where you can put your point on the map, @RichardQuest is where you'll be able to

do it. We'll have a "Profitable Moment" after the break.

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QUEST: Tonight's "Profitable Moment": actually, very profitable, 60 billion euros a month of profitability right the way through until

September of next year. So the ECB has finally taken out the very big bazooka and gone into quantitative easing. The critics say it's probably

too late. They should have been doing this three or four years ago. And the critics are probably right.

But that ignores the deep political problems getting Germany, Austria and other countries in the North to agree to QE at all was an achievement.

The fact that they've done so in such a way has to be a success. But make no bones about it. This will not be an easy ride, either for Mario Draghi,

the ECB or for Europe.

The countries of Southern Europe still have to make those structural reforms. And they're on notice from Mario Draghi that, frankly, he's done

just about everything short of give them the kitchen sink. And that might have to come along, too.

No, the reality is everyone in Europe is drinking at the last chance saloon. And it's going to cost over $1 trillion to do it.

Well, there you are. That's QUEST MEANS BUSINESS for this Thursday night. I'm Richard Quest in Davos. Whatever you're up to in the hours

ahead, I hope it's profitable. I'll see you tomorrow.

END