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ISIS War Machine; State of Emergency in California; Protests at McDonald's Shareholder Meeting. Aired 16:00-17:00p ET.

Aired May 21, 2015 - 16:00:00   ET


[16:00:00] RICHARD QUEST, HOST: It's up a point, down a point. They can't decide exactly where it's going to settle.

So whatever happens, it's going to be a small movement. From the man with no tie - one - oh dear. That wasn't exactly a very exciting gavel.

For Thursday the 21st of May. Tonight think of it as terror at the crossroads of civilization -- the ISIS war machine has rolled into Palmyra

and we will have details of just what's happening.

It's a state of emergency in California as thousands of gallons of crude oil are leaking in through the Pacific. How bad will it get?

And supersized protests at McDonald's annual general meeting. What are they protesting about? I'm Richard Quest. We'll have an hour together

and I mean business.

Good evening. Tonight ISIS has overrun a city at the wellspring of civilization. The Syrian government forces have retreated from Palmyra, a

UNESCO world heritage site and that's allowed ISIS to expand its brutal takeover in the region.

It's now feared ISIS will continue on its path of cultural cleansing and destroy the city's ancient treasures. Palmyra isn't just home to the

ruins, it's home to tens of thousands of people and that must (inaudible) first. One resident told CNN, "The world does not care about us. All they

care about is the stones of ancient Palmyra."

It's estimated more than half of Syria is now firmly in the grip of ISIS and that includes most of its oil fields. To the southeast ISIS has

also captured large sways of Iraq. Earlier this week it took the city of Ramadi and its tentacles are growing ever closer to Baghdad. And it's in

the Iraqi capital in Baghdad that we find our correspondent Arwa Damon who joins me now.

Arwa, is there a sense of panic that ISIS is now several dozen kilometers/miles away from Baghdad? Or is there something in the geography

and in the politics that makes this a very difficult final hurdle?


ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: There's all of what you just mentioned there, Richard. When it comes to how the

population here is feeling, yes of course there is concern, there is fear that ISIS is inching closer to the capital.

But there's also the knowledge that it is not going to be able to just barrel through the way that it did in Mosul and in other areas. People

here will fight until the very bitter end and there is the sense that all of the various different entities that make up all of the fighting forces

here will somehow unite to make sure that ISIS does not pose a direct threat to the capital.

But that being said, one does also need to take into consideration just how far they have come despite the defeat that they suffered in Tikrit

some six weeks ago. They did now manage to capture the provincial capital of al-Anbar Province Ramadi in the last few days.

And in the last few hours, they advanced on the town of Husaybah, some 17 kilometers to the east -

QUEST: Right.

DAMON: -- of Ramadi, capturing the eastern portion of that town after a attack with car bombs and heavy machine guns. And this is how they're

taking over large parts of the country -

QUEST: All right.

DAMON: -- they barreled through and the Iraqis are unable to put up a proper fight.

QUEST: I can hear our viewers asking and through me asking you how did this happen? I'm not sort of inviting sort of a massive discussion on

failures of policy over the last few years, but the fact that ISIS has managed to regroup, reform, go on the attack again and take these

strategically important places. How has it happened?

DAMON: Well first and foremost they have an ability and a capacity that one can't help but to recognize when it comes to drawing in new

recruits. And I'm not just talking about any old recruit. The bulk of the fighters that make up ISIS on the frontlines are individuals who go to the

battleground with the intent to die.

Many of them end up being suicide bombers. That is one of the great pieces that allowed them to move into these areas. We hear numerous

descriptions about how they just sent wave after wave of suicide bombers.

That is how they managed to take over Ramadi and if we just look at the battlefield in Iraq, they bogged down the Iraqi security forces in

these Iranian-backed Shia militias in the battle for Tikrit for weeks. But that wasn't even necessarily something that ISIS wanted to keep its grips


[16:05:00] Following the fall of Tikrit back to the Iraqi government, we've been seeing pitch battles for the oil refinery in Baiji, we saw ISIS

focusing on what many will argue and tell you is their true goal and that is Anbar Province.

So they have this capacity to recruit, they have this capacity to get their hands on - through numerous various mechanisms - machinery, army

weaponry, of the likes that allowed to create this kind of a battle and force the Iraqi security forces to retreat time and time again.

QUEST: Arwa Damon who is in Baghdad. Thank you. Now, calling them idols or false gods, ISIS claims to be following the strict footsteps of

the Prophet Muhammad as ISIS destroys ancient artifacts. You are seeing scenes of ISIS deliberately smashing relics thought to be priceless. It's

almost too painful to watch in many ways this sort of - I was going to say vandalism, but it's way beyond vandalism.

But what is extraordinary is it's not only the destruction of these artifacts that's involved but in a most stunning piece of hypocrisy of

policy, the trade of antiquities is a key revenue stream for ISIS. They have the black market networks that allow them to smuggle artifacts - like

these mosaics - from the lands that they conquer and they are smuggled out and they are bought by willing buyers.

The looting is so profitable ISIS employs teams to dig for relics. Tens of thousands if not millions of dollars all funneled to fund the

growing terror network. Now of course as they move into Palmyra with its unique antiquities of the birth of civilization, there are greater fears of

what might be coming on the market.

Erin Thompson is an art crime specialist who joins me - the John Jay College. Very good of you to come in. Thank you.


QUEST: Let's talk about what -- in Palmyra - what is it that is of grave concern for you?

THOMPSON: Well Palmyra is a unique site. It's been inhabited for 4,000 years, so it has so much to tell us about how humans have lived from

the Bronze Age to the present. But what makes it really special and almost unique in the world is it's a well-preserved ancient desert oasis stop on

the route from Rome to China where luxury good flowed.

QUEST: And what antiquities will be there? Because we were looking at some pictures a moment ago of Palmyra where you see vast columns and huge

structures. Well it's going to be pretty hard to move one of those.

THOMPSON: It's going to be so hard that I'm afraid that the only value of those for ISIS is to destroy them in the public videos like we've

seen before.

QUEST: Like we're looking at now. If they do sell or manage to carve out smaller pieces from Palmyra, who buys them?

THOMPSON: Well Palmyra like other archeological sites has so many unexcavated areas. So who knows what's in the sand surrounding the sites

we have now. We know -

QUEST: But the excavated stuff - the stuff that you can see - who would be buying them?

THOMPSON: There are always people who are willing to have a piece of the past. These are incredibly high status objects, so we think that new

markets are opening up, perhaps in the Gulf States, perhaps in China of people who want to own this remnants of the history of the world.

QUEST: And how can organizations, how can governments, how can NGOs - how can you stop this? Because the people who are going to buy this know

that they shouldn't be buying it. But they're going to buy it anyway because as you say, there's a market for this.

THOMPSON: There's a market. I think we need to spread the word to ISIS and anyone else who's doing the looting in Syria and Iraq now that

there will not be a market. We are recognizing -

QUEST: But there will be. How do you kill the market?

THOMPSON: Well we need to try and do so because there's - no, we can't go in and hold ISIS' hands right now and stop them so we need to tell

people who are - who want to own these things that they cannot, that the world will not tolerate this destruction.

QUEST: Thank you very much indeed.

THOMPSON: Thank you.

QUEST: I appreciate it. Thank you very much indeed. Now, King Abdullah of Jordan says that ISIS is enemy number one. Now I want you to

come to the map and you'll see exactly the sort of situation we're talking about.

Obviously you have Israel here, you've got Jordan, you've got Syria, you've got Iraq and you have Saudi Arabia. Now we know from the militants'

destruction of the region's heritage sites, according to the King, makes no sense whatsoever.

Jordan has been the country that's been at the behest and has been at the middle of this since it began. Whether it is refugees coming over the

border from the Syrian civil war or coming west from Iraq or, more recently, as ISIS continues its rampage of violence and destruction between

Syria and Iraq so Jordan - and we've talked about it on this program many times - has been the influx of many refugees. Many -- understatement -

hundreds of thousands.

[16:10:13] King Abdullah spoke to our emerging markets editor John Defterios who is with us now from the Dead Sea. John, you just heard my

introduction there. Jordan is absolutely front and center --


QUEST: -- of the effects, but obviously with many relics of its own like Petra, Little Petra, Big Petra - they are concerned by what might be

happening in Palmyra. What did you learn from His Majesty?

DEFTERIOS: Well it's interesting, Richard. Because of this drive into Palmyra most recently in Ramada even - Ramadi -- even in the last

week, there's great concerns that Jordan will be tarnished with same brush. Obviously because of the concerns about antiquities and the destruction of

antiquities and what it does to tourism in the broader region.

But very importantly for Jordan, it's all about investment. It's had a very rough six years starting with the global financial crisis leading to

the Arab Spring - as you suggested the refugees. They've taken in one and a half million refugees over the last three years alone.

So this is what the Jordan re-launch is all about. It's a program that's going to be put forward here at the Dead Sea at the World Economic

Forum on Friday. I had a chance to talk to the King about it today along with Palmyra and the antiquities drive there, and I asked him first can he

reboot the growth from 3 percent in 2014 and really get it above 7 percent in the near term.


KING ABDULLAH, JORDAN: Well, you know, before the international financial crisis a couple of years ago, we were at 7 percent. So getting

back to 7 percent is actually I think doable. And as you said, we're at 3 at the moment. We hope to be at 4 next year and get ourselves back up to


DEFTERIOS: In fact you've put forward a buffet for foreign direct investment of up to $20 billion over five years. And I went back five

years and your foreign direct investment is just below $9 billion. So you're suggesting almost a doubling up of foreign direct investment. How

do you do that?

ABDULLAH: We have learned lessons because of the regional turmoil. A lot of it is going into alternative energy which is going to make I think

Jordan a powerhouse. We're gifted with 300 days of the year with beautiful sunshine, and because we are an energy importing country, renewables are

going to be very important. So there's a major leap in renewable energies in Jordan and we're targeting to be an exporter of renewable energies I

think to Europe and beyond.

DEFTERIOS: About a third of the young-aged Jordanians who could be working right now are without a job. It's a similar tale throughout the

Middle East and North Africa -

ABDULLAH: Throughout the world actually. I mean, I think that's the major challenge that we all have, you know, -- the youth. But as you

pointed out, in the Middle East, the largest youth cohort in history, we're talking about 25 million jobs in the next decade.

So this is why, one of the reasons, we want to launch this because it's so important for us to get jobs for young people.

DEFTERIOS: Concretely, you want to create 500,000 jobs over five years. Again, it sounds like you're setting the bar very high but you need

to deliver because of this 33 percent youth unemployment rate. It's quite painful.

ABDULLAH: Jordan's export has been its human talent. But now how do we adapt Jordan and our young population to be able to take advantage of

that. We're a young population, tech savvy, bilingual - so a small country to be able to adapt to the regional challenges is something that we've been

usually fairly successful in being able to do -

DEFTERIOS: It's extraordinary that we're talking about foreign direct investment, international companies coming in and in the north, ISIS took

Palmyra and has a line of sight to Damascus. They took Ramadi and Iraq and have line of sight to Baghdad.

Who's going to make a bet on a region that has that much chaos and did other partners, particularly the United States and those in the Gulf,

underestimate the threat of ISIS which you said was enemy number one?

ABDULLAH: Well you know for Jordan looking north and east, it is our tactical enemy number one. We have 1.4 million refugees in Jordan which is

a tremendous burden for our country, but there's also displaced Syrians across our border.

Fairly safe, fairly stable and I believe that people should start looking at how do we make that Southern Syria area more conducive to normal


DEFTERIOS: If you look at the destruction in Palmyra, it is destruction of heritage. It's almost like the Middle Ages.


DEFTERIOS: And in fact destroys the potential for tourism in these heritage sites in the future.

ABDULLAH: To me it just makes no sense whatsoever how these people think. I think they have no concept of humanity, of religion, of life and

I think it's just a wakeup call for all of us, what this threat is.


[16:15:01] DEFTERIOS: So once again, the King Abdullah at the Hashimiya Palace in Amman today. And, Richard, he - as he walked around

the palace and escorted me out, he made a point to say this is not just a threat - this extremism that we see going through Iraq and Syria right now.

He's trying to put together a global coalition that tackles it all the way down to East Africa.

He said pockets into Southeast Asia and he's very worried about the Balkans right now. He held a bilateral meeting after I left with Abdel

Fattah el-Sisi, the president of Egypt. You'll recall two months ago Egypt raised $36 billion because of the economic plight that it had.

Jordan wants to at least raise and put forward $20 billion over the next four years. Thank you.

QUEST: John Defterios joining us. John, many thanks for that. Now 48 hours after Los Angeles increased its minimum wage to $15 by 2020, workers

across the country say they want the same deal. It's a fight for 15 and it's now spilling over. We'll be talking about them.


QUEST: McDonald's workers are now joining the fight. They want $15 an hour, and thousands of those workers were protesting for a second day at

McDonald's headquarters in suburban Chicago during the company's annual meeting.

The food giant says its brand is under union attack, and all this two days following Los Angeles which is the second U.S. city where the city

council voted to lift its minimum wage to $15 an hour by 2020.

CNN's Claire Sebastian's been out to meet the people behind the wage boost campaign here in New York.


Male: What do we want?

Crowd: 15!

Male: When do we want it?

Crowd: Now!

CLAIRE SEBASTIAN, CNN PRODUCER: It's a rallying cry that's growing louder across the United States -- fast food workers leading the charge for

a $15 minimum wage.

Female: What do we want?

Crowd: $15

Female: When do we want it?

Crowd: Now!

SEBASTIAN: Chantel Walker is one of the leading voices in this two and a half year old campaign. She earns $9 an hour at Papa John's Pizza.

CHANTEL WALKER: We cannot continue to live like this and have to struggle to pay for Metro cards. This is a multi-million dollar city.

SEBASTIAN: These demonstrators say they're feeling more (inaudible) than ever before. In this building behind me several members of a new wage

board are meeting for the first time. Their job is to decide over the next few months whether all New York fast food workers will get a raise.

The New York governor Andrew Cuomo passionately supports the campaign.

ANDREW CUOMO, NEW YORK GOVERNOR: It's a minimum wage that doesn't work! It has to stop and it has to stop right here!

SEBASTIAN: The restaurant industry strongly objects to being singled out. In a statement, the New York Restaurant Association called the wage

board process a "pre-determined farce" that will "unfairly elevate the cost to do business."

And yet there's a feeling of momentum. Los Angeles voted this week to raise its minimum wage to $15 by 2020, following Seattle and San Francisco.

The Fight for 15 has grown from a 200-person walkout in New York in 2012 to this last month. Chicago, Atlanta, Miami and again New York --

around 60,000 people in coordinated rallies on U.S. tax deadline day, April 15th.

SCOTT STRINGER, NEW YORK CITY COMMISSION: There's an energy and excitement that 15 brings to struggling families to working people around

America and I just hope that as the presidential campaign gets underway, as people start to look at who they want their leaders to be, this is going to

be the economic discussion.

[16:20:11] SEBASTIAN: While restaurants worry it could hurt their bottom line, for the fast food workers here, the economics are very simple.

Female: This movement is giving me hope that one day I'll be able to afford to pay my rent - in full - with one check.

SEBASTIAN: Claire Sebastian, CNN New York.


QUEST: Now you don't see this very often. That's the way the Dow Jones closed - 0.00 percent. We were down, then we were up, then we're

down and on it went wildly this session (ph). It bounced around throughout the last ten minutes or so and when all was said and done, it just gained a

third of one percent.

The S&P 500 tonight did close at a record. But there were some very funny goings-on in the market. Now on Wednesday morning Hanergy, a thin

film solar company, was - which was worth more than Sony and seven times as much of America's largest sort of - well, look what happened to the share


This is what happened on Wednesday - 24 minutes was all it took to wipe half of Hanergy's energy value before trading was halted. Starts just

shy of 7 and it goes to just 3.7.

As for the damage, the damage was considerable - $18.6 billion dollars of value - gone! And the reason? Absolutely unknown.

And then there was another mystery crash in the market. If you can take a look, it's from Goldin Financial. Now shares of Goldin Financial

and Goldfield Property - Goldin Property - fell more than 40 percent. It was a much - it wasn't quite as a dramatic fall in the sense of it fell,

then it went back up again and it bounced along. But in the case of Goldin, the total cost to their company was more than $16 billion.

All these mysterious crashes preceded by spectacular run-ups over a four-month period. Hanergy's value raised questions about manipulation.

It made the chairman the richest man in China. Whatever it's all about, the market has been buzzing with why these vast sums disappeared.

Now, if you'd been within earshot of a pop radio station the last few years, you've heard of Auto-Tune. The man who invented is a scientist and

he used it to find untouched crude for oil companies. You're going find out how the sound of music came about.


QUEST: On last night's "Quest Means Business," we told you how the corporate battle over music and the streaming business is heating up.

Spotify is releasing new features and now some artists are rushing to defend Rapper Jay-Z's service called Tidal.

Users will pay more for Tidal and artists keep more of the profits. It's not the first time Jay-Z's taken a public stand on a trend in the

music industry.

In 2009 he released a song called "Death of Auto-Tune."



"This is anti-Auto-Tune, death of the ring tone. This ain't for iTunes, this ain't for sing-alongs. This is Sinatra at the opera" -


QUEST: Auto-Tune corrects the pitch of a singer's voice. It's an integral though controversial part of the music industry.

[16:25:07] Tonight you're going to meet the man who invented Auto- Tune. It was part of his decision to make, create, innovate.


NICK GLASS, CNN REPORTER AT LARGE: Pumping oil in Texas and several thousand miles away to the west, a bosca (ph) belting out a song on the

wharf in San Francisco. You wouldn't think there would be any connection between the two activities but there is.

I'm here in California to meet an inventor with two strings to his bow. He's developed a technology that helped us find more oil and more

recently our singing voices.

DR. ANDY HILDEBRAND, INVENTOR, AUTO-TUNE: I've invented Auto-Tune. Auto-Tune is a software product that takes a singer's voice and makes it

pitch perfect.

GLASS: Dr. Andy Hildebrand isn't your average engineer. He dreams in equations and algorithms. Twenty-five years ago while working for Exxon,

he developed an approach that transformed oil exploration in the United States.

HILDEBRAND: What they would do in the oil industry, it was - they would detonate an explosion either on land or in the sea and then they have

a long array of detectors that would listen to the reverberations from underground.

GLASS: Hildebrand's algorithm converted these complex signals into a simple computer readout, telling the oil companies where exactly to drill.

HILDEBRAND: When I retired from the oil industry, I started doing some computing for music.

GLASS: The breakthrough came in 1997 - this series of symbols, the secret to a perfect singing voice. Auto-Tune was born. And just a year

later, the first hit record to use the software - "Believe" by Cher.

HILDEBRAND: It makes this robotic sound because it changes the pitch instantly from note to note. And that was a big hit. That was a biggest

selling record. I think it still is.

GLASS: Auto-Tune is now an integral part of an industry that was worth some $15 billion in 2014. The claim that it can make anyone sing in

tune was one that needed to be tested. And who better than a tone deaf correspondent? (HUMMING TUNE)

HILDEBRAND: Nick, ready?


HILDEBRAND: All right, give it a go, all right? All right recording.

GLASS: (SINGING) The camp town ladies sing this song, doo-dah, doo- dah.

With every warbled note, Auto-Tune set to work programmed with the right pitch, it pulled and pushed each note, modulating in real time,

making me sound - well - in tune.


GLASS: (SINGING) The camp town ladies sing this song, doo-dah, doo- dah. The camp town race track's five miles long, oh the doo-dah day.


GLASS: And you can do that with any song presumably and any singer?


GLASS: And improve them? In my case, immeasurably.


GLASS: Hildebrand's hoping to use the same software to help doctors monitor our health, making sure our hearts don't skip a bit.

HILDEBRAND: There's a new kind of device called the imbedded defibrillator and it's like a pacemaker, it's planted in your chest and if

your heart beat stops, they electrocute you to wake up your heart. The problem is sometimes your heart's not stopped and they electrocute you

anyway. And it's because the software algorithms fail to detect a heartbeat. And I'm very good at that so hopefully I can get my algorithms

imbedded in these pacemakers.


QUEST: Absolutely fascinating! Who would've thought that having a machine to improve your tunes could also improve your heart.

Well we're going to talk about something that perhaps needs a little bit more than a tuning up and improvement. The U.S. Senate's moving

forward as part of its fast-track deal on trade, but will the Europeans go along with it? I'm joined by Europe's commissioner who will be joining me

after the break and discuss agriculture - much to get to grips with, Commissioner.


[16:31:56] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when the governor of California declares

an emergency over a massive oil spill and Lord Browne tells me about his new venture in business. It's one of Russia's biggest billionaires.

Before that, this is CNN and on this network the news always comes first.

Reports of atrocities are emerging from Palmyra after ISIS overran the historic Syrian city. An opposition group says the militants have executed

at least 17 people including civilians. ISIS is reportedly going door to door hunting anyone connected to the government.

Syria's antiquities chief says the takeover of Palmyra is a disaster for humanity.


MAAMOUN ABDULKARIM, SYRIAN ANTIQUITIES CHIEF: Now we are really afraid what happened in Palmyra. Palmyra now under control of ISIS. How

they will do in this city if they consider this city like the cities in the north of the - Iraq - it will be really the big - the big - disaster for

the cultural etakisorns (ph).


QUEST: King Abdullah of Jordan says all countries must be united in the fight against organizations like ISIS. Speaking to CNN's emerging

markets editor John Defterios, his Majesty says the conflict transcends culture and religion.


ABDULLAH: What we need to do is help this as a holistic approach because this is a fight that brings all countries and all religions

together. This is a fight as I've said many times before. Inside of Islam but Muslims, Christians, Jews, other religions - -all nations are all

together inside of this fight.

It should be led by us because this is a problem inside of our religion, but it unifies Muslims, Christians and Jews and other religions

and other countries in this global fight against these people.


QUEST: Australia's Prime Minister Tony Abbott has said Australia will not take in any of the asylum seekers adrift in the Andaman Sea.

Malaysia's Navy and Coast Guard are preparing a search and rescue mission to save thousands of Rohingya Muslims stranded in open waters.

The migrants are fleeing Myanmar on boats operated by smugglers. London police have now arrested a tenth suspect in the Hatton Garden heist.

Eight men have appeared in court and have been remanded in custody in connection with last month's raid on the safety deposit company in the

jewelry district. Another man has been released on bail.

The Portuguese football legend Luis Figo has dropped his bid to become FIFA president saying the election process has no legitimacy. Figo had

hoped to defeat the current president Sepp Blatter who's seeking a fifth term in office. Figo says the election process is little more than, in his

words, "A plebiscite for the delivery of power to one man."

Prince Ali of Jordan is now Blatter's only opponent after the head of a Dutch football association also dropped out.

[16:35:09] The U.S. Senate has decided to hold a final vote on its bill that would grant President Obama so-called fast-track authority to

negotiate trade deals. Fast-track is essential because the Trade Promotion Authority Board would help the Obama administration finalize partnerships

with both the Pacific countries and the European Union.

Simply put, if the President doesn't get a fast-track authority which means that any vote, any treaty, any agreement is up or down in the Senate

then people won't negotiate with the United States. The E.U. Agriculture Commissioner Phil Hogan joins me now. Commissioner.


QUEST: How good to see you, sir.

HOGAN: You too.

QUEST: So, you've been in Washington.


QUEST: Is it your feeling that the President gets this authority.

HOGAN: It is my feeling. I think there's a growing optimism and certainly on the part of the Senate that they're going to pass TPA this

week and I expect that there's, you know, greater opportunity now for the House of Representatives to do so by the end of June or early July.

QUEST: If the President does not get this authority for fast-track, do you pack your bags and go home? I mean you collectively.

HOGAN: Well it's not for the European Union to make the decision for the United States but I suspect that the United States Congress and

policymakers will pack their bags because we need this particular TPA authority -- the President needs it in order to finalize these agreements.

QUEST: How close are we - or you, -- I'm not part of the negotiations. How close are you on the TTIP - the TransAtlantic Trade

Investment Partnership?

HOGAN: Well I suppose it's a bit like plane lined up on an airport runway. We have TPA, we have TTP which is the Pacific countries and their

agreement and then TTIP. But in parallel with the TTP Agreement -

QUEST: Let's just call it the Asia deal -

QUEST AND HOGAN: -- and the European deal.

QUEST: Right.

HOGAN: Well the European deal has made a lot of progress in the last couple of months with the United States and we're very happy with the

progress we've made. And it's a question in the political will between now and next February if we're going to do a deal or not.

I hope we can do a deal. Europe certainly wants a deal.

QUEST: France has said no deal or nothing will be signed in 2015.

HOGAN: Well, France is entitled to its opinion, but as a European agriculture negotiator, I'm working closely with our trade negotiator

Cecilia Malmstrom to make sure that Europe is best positioned to do a deal. We're optimistic rather than pessimistic about the outcome.

QUEST: The problem with this deal is, a) it's very difficult, and b) even after you've got it, there are various mandate issues. Again, the

French have been concerned about the so-called negotiating strategy or the resolution strategy and you've got the cultural exception, all of which

have been swept under the carpet for another day.

HOGAN: No, we have a very transparent arrangement now. Commissioner Malmstrom opened up all of our mandate to public consultation and she's

certainly got a tremendous response from politicians in the European Parliament and member states for doing that.

We have 28-member states and the European Parliament will have to approve any deal. So therefore we have to get a balanced deal that we can

sell to our member states.

QUEST: You have the same issue of course in terms - you have a mandate and you have to get it through and it's an up and down vote in the

same sense. You know, what's sauce for the goose is sauce for the gander in that sense.

I ask everybody on this trade question the same question because I think I'll have retired before you get a deal.

HOGAN: Well I don't agree with you. I think there is a timeline - a tight timeline - between now and presidential elections take over in 2016.

QUEST: They've started.

HOGAN: I know that but then certainly the negotiations haven't certainly stopped and I've met Mike Fruman (ph) - U.S. CR, I've met people

like U.S. agriculture secretary Tom Vilsack and key people like Paul Ryan and Chairman Roberts and Chairman Conway on the Hill this week and they are

certainly very eager to get a deal done but they know that the window of opportunity is actually tight.

QUEST: And do you see any problem with negotiating this - is it - from the European side - with negotiating the European deal with Britain's

- I'm using the phrase because it's the only phrase I can think of - renegotiation of terms within the Union? Do you see one starting to

impinge on the other?

HOGAN: No, I think the TTIP Agreement will be very important for the United Kingdom. United Kingdom are very pro-trade. They have a good

relationship with the United States and it is very important from the point of view of, you know, improving the atmosphere for the British people in

order to say to the European Union that we have a good deal, a good agreement between both sides and TTIP.

QUEST: Thank you very much indeed, sir.

HOGAN: You're welcome.

QUEST: (Inaudible). Now, let's - markets in Europe - they closed with modest gains or no gains or maximal gains in the United States. Have

a look at the numbers and you'll see the FTSE eked out a small gain. The best gains of the day - that was in Zurich - the SMI. They were recovering

from lot - followed mixed reports on Eurozone manufacturing, stronger-than- expected retail sales, all boosted sterling against the dollar.

[16:40:01] There's a very nasty oil spill in California that's blanketing the beaches. It follows an underground pipeline breakage and

the environmental defense lawyer joins me as crews race to clean up the Santa Barbara spill. This is "Quest Means Business."


QUEST: A big cleanup's underway at the scene of an oil spill on the California coast. The California governor Jerry Brown has declared a state

of emergency in Goleta where the underground pipeline that's carrying the crude ruptured and this is an all-too-familiar site when you have these

sort of ruptures in pipelines.

As much as 105,000 gallons of oil have been released along the Santa Barbara coast - some of the most beautiful parts of the world near the

natural - the Refugio State Beach down there. The chairman of the company that operates that pipeline says that they're going to work 24 hours a day

- as you might expect - to clean up the oil spill.

CNN correspondent Paul Vercammen is at the scene with the latest on the cleanup. So how - first of all, Paul, has the oil spill stopped? Have

they plugged the leak?

PAUL VERCAMMEN, CNN CORRESPONDENT: Well one of the things that's happened, Richard, this is interesting because I should note that not all

of this oil got into the water - this is a rarity. This was an onshore rupture of a pipeline. A lot of it underground in a culvert under a

freeway and then the oil went into the water.

Of the 105,000 gallons that spilled - according to Plains All American only about 21,000 gallons made it into the water or this would be a lot


They are now investigating this leak, trying to find out just what caused it. Plains All American maybe somewhat of a dubious record - 175

maintenance and safety infractions and in 2010 the U.S. EPA and Justice Department went after Plains.

They ordered the company to repair $40 million worth of pipeline. They fined them $3 and 1/2 million and all of it stemming from ten leaks

and most of these leaks in these states - Texas, Louisiana, Kansas and Oklahoma were traced to corroded pipelines, Richard.

QUEST: So we have a situation if I understand what you're saying correctly where this was a bad situation that perhaps could have been well

foreseen and most definitely could have been a great deal worse?

VERCAMMEN: Absolutely, Richard, because what we articulated - it started onshore and if more of it had gotten into these waters, it would

have been five times worse if all of it, let's say, that came from this pipeline had gotten into the water, we would have a much more extensive


I mean, behind me you can see the waves and I'll tell you that yesterday they were much more filthy with these tar balls. Yes, these

rocks right here are dirty and they're filled with tar, but they've been doing a better job of getting after it.

[16:45:00] This is a land and a sea fight. We've got the crews on the ground and then we have out there in the water - and you can't see them

from here because they've gone around the point - vessels with what we call booms or floating fences. And these floating fences corral the globs of

oil and then they get the skimmers out and they pull it in.

And they suggest they've been rather effective -

QUEST: Right.

VERCAMMEN: -- today, getting about, oh, 7,700 gallons of this stuff cleaned up so far, Richard.

QUEST: Paul, quickly before I leave you - the camera that we just saw - is that an offshore oil rigging out to your right over there? Is that

offshore oil rigging --

VERCAMMEN: Absolutely -

QUEST: -- or is that --

VERCAMMEN: -- yes.

QUEST: -- the phone? Let's have a quick look. There we are, we can see one there.

VERCAMMEN: No, we'll go ahead and push it in for you.

QUEST: And a bit further left, there's another one.

VERCAMMEN: Those are rigs, those are option - yes, and as you may know, you know, on an international level, the Santa Barbara Channel well

known for having rich oil deposits.


VERCAMMEN: It was 1969 that perhaps many people credit the environmental movement with being spawned because of a horrific spill in

Santa Barbara that led to the formation of dead oil out which was also called goo and other agencies that were really at the vanguard of

environmental protectionism and laws being enacted.

So there's a sensitivity too that's here, Richard.

QUEST: Excellent. And thank you, Paul, very much for that because that brings us very interestingly - because the spill and what you've seen

there in terms of the other offshore drilling.

Because it was from an underground pipeline, it'll be a while before inspectors know how much oil has leaked. Officials say hundred thousands,

it could be a bit more, could be a little bit less. And Linda Krop joins me now from Santa Barbara, California - the chief counsel at the

Environmental Defense Center.

A hundred and five thousand of course we've heard. Do you think that number is accurate or are you now concerned we're talking more?

LINDA KROP, CHIEF COUNSEL, ENVIRONMENTAL DEFENSE CENTER: Well we won't know the exact number for a while. The number was increased five-

fold from the first day to the second day so it could be more. We won't know for a while.

And one of the difficulties in estimating the size of a spill is that so much of it has washed out to sea. We have heard that much more than

21,000 gallons washed out to sea. I was onsite the first day and the tide was coming in and the waves were definitely carrying the oil out to sea, so

it's hard to have an estimate.

QUEST: What we saw - and you may have heard me just asking Paul to show us the offshore oil rigging that the - that's in Santa Barbara.

You'll be well familiar. It always seems to some extent as if it's an accident waiting to happen. And that there's an inevitability that these

will happen.

So if you accept - and maybe you don't - that you have to have an oil industry of sorts - what is that you now seek?

KROP: Well we definitely see these kind of accidents happening over and over. We're best known for the oil spill in 1969 which did launch the

modern environmental movement and led to the enactment of most of our environmental protection laws that we enforce to this day.

But accidents do continue to happen. You know, this pipeline was built to carry oil from these platforms to refineries outside of the county

and it was seen as the safer alternative to marine tankers. And while pipelines are preferred, the tankers they too can spill and so it's all

part of one system.

QUEST: Right.

KROP: There's no way to prevent an oil spill from an oil development project.

QUEST: Well in a sentence or two, are you suggesting what we have here is bad management? I mean, not in this company - I'm talking about as

an industry or in terms of these things. Is it - is it a case of malfeasance/misfeasance? What's going wrong?

KROP: Well it's inevitable that something will go wrong. We were actually very shocked and disappointed at the oil spill response.

QUEST: Right:

KROP: First of all, the pipeline should have shut down immediately - it did not -- some more oil spilled and then the oil spill response should

have prevented all oil from reaching the ocean. This spill happened a quarter of a mile from the ocean. None of that oil should have made it

into the ocean.

I was there on Tuesday evening -

QUEST: Right.

KROP: -- there was no land-based response or cleanup happening at all. They were waiting for the next day. So a lot of that oil made it

into the ocean. We've got migrating whales including the endangered blues and humpbacks, we've got the gray whales bringing their calves up to

Alaska, we've got really important and rare seabirds. They're all at risk now and they should not be.

QUEST: Thank you for coming in and joining us this evening to put this into perspective. We're very grateful to you. Thank you.

We're going to continue to talk about the oil industry but from a question of what's happening in the oil market. Lord Browne is with us.

Now here's a man who knows his onions when it comes to oil. Lordship, good to see you, sir. Come and join me in the C-Suite.

After the break, we'll be discussing oil.


[16:51:30] Lucky to have with us this evening former BP chief executive Lord Browne who is getting back into the oil business as the new

executive chairman of L1 Energy alongside the Russian billionaire Mikhail Fridman. Lord Browne, good to have you, sir.

LORD JOHN BROWNE, EXECUTIVE CHAIRMAN, L1 ENERGY: Thank you. Very good to be here.

QUEST: Why did you get back in again?

BROWNE: Because -

QUEST: You were already in an investment vehicle but now you've decided to get back involved - get your hands dirty again. Why?

BROWNE: Well because it's exciting, interesting and something worthwhile. I did something great, worthwhile for the last eight years. I

was running the world's largest renewable and - renewable energy fund. But I think now is something different.

So I'm starting again and building a company from scratch now for my -

QUEST: But you want to take this company from an investment vehicle, if you like. You want to take it into an operating company.

BROWNE: That's correct. That's the best way to do business is to operate and so we're going to operate. We've started by investing in

Germany in a company which is headquartered in Germany, operates around Europe and in North Africa, and now we're going to expand in different

directions around the world.

QUEST: Are you looking to operate in difficult areas? And I mean, there's no easy areas in the oil as you know better than anybody. But

really frontier?

BROWNE: No. No, this is not a company that's going to go the High Arctic and it's not going to go to the deep water, it's not going to do oil

sands and things like that.

QUEST: Fracturing?

BROWNE: So may do some fracking, but that will be along with others I would think in areas where you need to do fracking.

QUEST: If we take - because I've just come back - I was in North Dakota filming which you'll see on a couple of weeks' time. But I was in

North Dakota and this revolution in the oil industry of oversupply, under demand or whichever way you want to look at it, is completely different to

something we've seen before because of this technological difference.

BROWNE: That's right. There are echoes of it in 1986 when new frontiers were opening. But this is different because so many people are

opening up new frontiers - small new frontiers - when the sum of which is very big. And that's the unconventional oil and gas revolution is the

United States.

QUEST: Do you think OPEC shot itself in the foot when it decided - when the Saudis decided -- to basically abrogate its role as the swing

producer to the effect of the economics of the U.S. production?

BROWNE: Well you have to ask Saudi but I think what they were looking at was the loss of market in America - because America's producing its own

oil, -- a loss of market in China because other people are supplying it and saying something needs to be done.

And so in line very much with the philosophies of the mid-80s where a similar thing happened, they decided they would not be the swing producer,

that they would produce because they produce low-cost barrels and see what happens.

QUEST: And when you look at the market today and the market that you are now barreling forward - pardon the pun, unintended - forward with L1,

what is it you - what is it you see in this market?

BROWNE: So what I see most concerning is what is happening to demand. Because after all we've become much more efficient, we're using less oil

units of GDP and we don't quite know the part yet. But for every year for many years we've overestimated how much oil is needed in the world. So now

hopefully we can understand it a bit better -

QUEST: But then if you're over - if we constantly overestimate, you're about to put more in.

[16:55:04] BROWNE: Well I may put someone else's in. So you can't build a company from scratch starting with nothing. So you start by buying

other people's companies and trying to make them work a little bit better with your money and your people.

QUEST: Finally, Lord Browne, and I say this with respect - what is it that drives somebody like you to come back into a major role in a difficult

industry instead of retiring and enjoying life?

BROWNE: Well I've tried retirement and it's overrated I'm afraid. I rather like working and I like to balance it with the other things I do in



BROWNE: I do plenty of other things. But this is exciting, you get to meet really exciting people and the problems are challenging. And after

all, those are good problems.

QUEST: Sir, thank you very much indeed for joining is.

BROWNE: Thank you.

QUEST: We will take a "Profitable Moment" after the break. "Quest Means Business."


QUEST: Tonight's "Profitable Moment." It's a real alphabet soup - TTIP, TPA - all the various trade agreements. I have to confess a certain

skepticism whenever trade deals are mentioned because they are always put in the most grandiose terms with full of hyperbole of benefits for

everybody and their mother.

But the reality is when they're very difficult to negotiate, they always get bogged down in facts. And unless there is a hard deadline

that's about to expire, nobody's ever prepared to put their best offers on the table.

And frankly if you really want to know about trade talks and the impossibility of them, just look at the Doha Round - 14 years on and a

little eensy weensie teeny negotiated settlement. So the U.S. and Europe - don't hold your breath.

And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope

it's profitable. Let's get together tomorrow.