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QUEST MEANS BUSINESS
Emergency Summit Underway in Brussels; Greece's Proposals For Reform Under Review; Will Deal Be Done?; Greek Stocks Surge on Day of Hope; Taylor Swift Takes on Apple. Aired 4-5p ET
Aired June 22, 2015 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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[16:30:21] PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT FILLING FOR RICHARD QUEST ON THE "QUEST MEANS BUSINESS" SHOW: Good evening. I'm Paula
Newton and welcome to an abbreviated version of "Quest Means Business."
Our top story tonight -- right now an emergency summit is underway in Brussels as leaders from across the European Union convene. Greece has put
forward finally its proposals for reform. Now those proposals are now being reviewed and assessed by the International Monetary Fund and the
European Central Bank.
Meantime in Athens, thousands of Greeks have been gathering on the streets calling for a deal and for Greece to remain in the Euro.
European Council President Donald Tusk is optimistic. He says the Greeks are finally getting serious with their proposals.
DONALD TUSK, EUROPEAN COUNCIL PRESIDENT: The latest Greek proposals are the first real proposals in many weeks. Although they still need - it's
obvious for me - and (AUDIO GAP) of the institutions and for the work of course.
NEWTON: A meeting of finance ministers earlier in the day promised the deal this week. Now Eurogroup president Jeroen Dijsselbloem says things
are now going in the right direction.
JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: It's a welcome step and we consider it a step in a positive direction. So I think it is - also an
opportunity to get that deal this week and that's we will work for.
NEWTON: No surprise then that stocks across the globe are rallying since Greece put forth its reform proposals. And it was a triple-digit gain on
the Dow and strong gains throughout the European markets. And we talk about Europe - you see the Dow there up a little bit better than a half a
But look at Europe, specifically the DAX and the CAC got on almost up 44 percent. Some people say that was a hangover, there had been such good
growth numbers really out of Europe and now they can finally celebrate those. Look at the Athens General up 9 percent. It absolutely exploded.
Now, Valdis Dombrovskis is the European Commission vice president. In the last hour, I asked him that one question that everyone wants to know the
answer to of course - will there be a deal by the end of the week?
VALDIS DOMBROVSKIS, EUROPEAN COMMISSION VICE PRESIDENT: Certainly situation is better now than it was last week because this time we have a
real Greek proposal on table. (AUDIO GAP) calls (ph) are going to ensure a return to the financial stability and also to the economic growth.
So we are still not there, there is still more work to do on this proposal, but it's, broadly speaking , going in a same direction as institution
proposal which was proposed couple of weeks earlier. So it's a good start for negotiations.
NEWTON: Well from what we understand, there now has been movement from Greece on the VAT, on an early pension, on higher contributions to those
pensions. It looks like they have come to table - come to the table - with a broader proposal than we've seen in a long time.
What could still be the hang up here? I mean, what you worried about in terms of not getting a deal?
DOMBROVSKIS: Well, first three institutions - European Commission, IMF and European Central Bank still needs to evaluate as a proposal in more detail
because as you know it arrived just after midnight, so institutions are still evaluating it.
But I think first it's really to finalize as a package to see if it adds up. But then if this is done, implementation is the key. So we really
need to see that those proposals are supported and legislated by the Greek Parliament.
NEWTON: So it sounds like the internal politics in Greece. The fact that if they can't pass it through Parliament, the government might collapse.
That's a worry for you still?
DOMBROVSKIS: Well in any case we had been spending quite a few months without any serious proposals from the Greek side. Now finally there is a
proposal which is a serious - which is a comprehensive proposal - well there is still some work on it but it's certainly a good start for
But at the end of the day, implementation is a key - how those proposals are going to be legislated and implemented.
NEWTON: The leaders are meeting at this moment and looking over some of these proposals. Do you expect to have some something substantive to show
them in terms of the technical details?
[16:35:10] DOMBROVSKIS: Well, as I said we had already earlier today we had a Eurogroup meeting with Eurozone finance ministers and all of these
institutions presented the growth outline of the proposals but also emphasized that there is still need for more detailed assessment for some
negotiations as the Greek authorities and also for three institutions to arrive at a common approach to this proposal.
NEWTON: Well some rather detached analysis there from the European Commission vice president. There was a much more emotional response as you
can imagine in Greece. Elinda Labropoukou joins me now from Athens. And what a day, Elinda. I can't imagine the range of emotions. We just had a
protest wrap up.
In terms of the fact that it looks like the Greek government - the left- leaning coalition has actually capitulated and come to the table with a lot of what Europe wanted to see. How is that being received in Greece
ELINDA LABROPOUKOU, JOURNALIST: It's being received with mixed feelings simply because everyone expected that Greece will partly give way and make
some concessions, but what everyone is waiting to see here is what will Greece get from its European partners as a result of this.
I mean, Greece has always been asking for debt relief or this package of measures to be linked to growth somehow. So, slowly we're starting to find
out more about the concessions Greece is will to make.
But I think what will determine for the Greek people whether this is a good deal or a bad deal -- or in some ways how bad a deal it will be because
everyone knows that it will come attached with a number of austerity measures - will really depend on what long-term perspectives it gives to
the country and whether they will feel that this is a deal that could help Greece return to growth and stability, Paula.
NEWTON: And, Elinda, it's going to be a tough sell no matter what. Is there a lot of concern that once these proposals hit Parliament, that the
government would collapse - that there just will not be the political will to see them through?
LABROPOUKOU: Well there's certainly concern about that and certainly the hard left part of the government has made it clear that it is not prepared
to vote in a number of these measures.
But the truth is that Greece finds itself in a very difficult position at the moment. The banking system is really collapsing. We know that a lot
of money is leaving the banks daily. So I think the government will find itself in a position that it will really, really have to make up its mind
on whether it wants to remain in the Euro or not. And the truth is that it does not have the mandate to take Greece out of the Euro, it does not have
the mandate to make such a big decision without at least asking the Greek people first.
So we're looking at a lot of political developments in the days and possibly the weeks ahead before we can really know which way this is going
to go, Paula.
NEWTON: Yes, it really is a big political gamble and unfortunately many people in Greece just on the sidelines. Elinda, thanks for that update.
Now in a moment, Finland's finance minister tells me why he believes the Greeks still have plenty of work left to do.
[16:40:34] NEWTON: Finland's finance minister says there has been no progress made toward securing a deal with Greece. Now that's his
interpretation. He still said that the glass was half full, but listen to this. Alexis Stubb says Greece had five months and now they've left it to
just five days and he's not really keen on the proposals that are on the table right now.
Now going into Monday's meetings in Brussels, he did struck - strike - one of the most pessimistic tones yet. Take a listen.
ALEX STUBB, FINLAND FINANCE MINISTER: I mean we have an inkling of what Greece has been looking for. But as I said, you know, there seems to be a
little bit of a Monday when we have wasted a lot of air miles both on the finance ministers' side and on the prime ministers' side because I don't
foresee a breakthrough today.
NEWTON: A little bit of travel fatigue there and blaming Greece for it. Now after the meeting, Mr. Stubb spoke to me on the phone from Helsinki and
I asked him what needs to happen for him to see progress.
STUBB: Oh I'm usually an optimist and I guess the assessment is the glass half full or half empty. I think progress has been made in the sense that
we finally have a proposal from the Greeks. It took five months and now we have five days to deal with it. That's the progress.
But to be quite honest, it needs to be verified and identified by the European institutions, namely the European Central Bank, the (AUDIO GAP)
Commission and on top of that the IMF. After that we can say that progress has been made. So no real proposals on the table yet.
NEWTON: That goes counter to some people who are saying, look, they're going to bend on early retirement - that's going to happen, they're going
to extend the VAT. Are these not good enough? Are they not enough yet to get to deal?
STUBB: I think what's good enough is what was agreed on in the memorandum of understanding on the 20th of February. They have things that have to do
with structural reform, say pensions or labor markets, they have to do with VATs, they have to do with corporate rate taxes, they have to do with tax
collection. And we'll just have to look at the overall package and the details.
At the end of the day, this is about debt sustainability and about the credibility of both the Greek economy and the Euro area.
NEWTON: In terms of the proposals that are there now, if you had to put something on it, are they halfway to where you want them to be, are they
three-quarters of the way?
STUBB: Well, to be quite honest that's why we have professionals making the assessment. The IMF, the ECB and the European Commission. We the
politicians then listen to what the institutions and the economists have to say and make our final assessment.
So in that sense I can't tell you whether the glass is half empty or half full at this stage.
NEWTON: You sound annoyed. You said we had an agreement five months ago, they're now giving us five days on a wholly new agreement? You sound more
than a bit annoyed.
STUBB: No, I'm not annoyed. I mean, at the end of the day, we all have to find a deal. It's just a matter of fact that thing have taken quite a long
time and we're pushing this to wire. We could have done this I think much earlier had we stuck to all the agreements that were made on the 20th of
NEWTON: Now Greek stocks, despite what the Finnish finance minister just said, they surge on the day in hope of that possible deal and there was
plenty of emotion playing out as you can see from this one-day chart. I mean, what a rollercoaster on that Greek stock exchange.
The benchmark utire (ph) at the open, and back down and then finally rested at a nice tidy gain of 9 percent. Now this was interesting - Greece's four
largest banks closed up about 20 percent higher, Piraeus up 21 percent, Alpha 24, National Bank of Greece up more than 20 percent and Eurobank up
It has to say - these are among the most battered stocks in Greece right now and I think people were betting, look, they've got the liquidity, they
can do this, they will be a good bet going forward.
Now Thanos Vamvakidis is the head the European G10 Foreign Exchange Strategy for the Bank of America Merrill Lynch Global and he's here with me
in London. I can only imagine what it was like for you on the sidelines today. I mean, with everything that we're hearing, we have concrete
proposals on the table from Greece. Do you think this deal can be done? Markets seem to already be saying yes.
THANOS VAMVAKIDIS, BANK OF AMERICA MERRILL LYNCH GLOBAL: Well clearly it was a step in the right direction. The markets were actually surprised to
see how far the Greek government went with these proposals.
However, we are not out of the woods yet. The proposals need to be evaluated by the technical teams, and more important is that these
proposals by the Greek government are conditional on debt relief. This is extremely important -- in order for the Greek government to be able to
approve these proposals which are unpopular measures in the Parliament.
Everything has to be discussed in the next few days, time is very, very short and even if everything goes right, it might not be enough time to
disburse money to Greece before their payment to the IMF that is due on June 30th. So a lot of challenges still ahead.
NEWTON: That's a technical default -
NEWTON: -- if that happened.
VAMVAKIDIS: That's true. There is flexibility. Although Ms. Lagarde has indicated that if (AUDIO GAP) payment is missed to the IMF, this will be
immediately a default. The truth is that if a deal's around the corner, then if, yes, some flexibility, they can use a grace period before they
trigger a default to the IMF.
And as you say, it's not a default for the sovereign, but it could lead to a chain of events that eventually lead to a default to the sovereign.
NEWTON: Thanos, I have to ask you. You know, many people today - commentators - have said look, this is not going to be the last Greek
crisis we are going to have even if there is a deal by the end of the week. In your opinion, what does Greece really have to do in order to return to
any kind of growth scenario?
Because that's really what they have to do no matter what kind of a deal they get.
VAMVAKIDIS: There are three basic things. Greece needs economic reforms, structural reforms to increase the growth potential of their economy. The
Europeans need to put together a plan that addresses Grexit (AUDIO GAP) once and for all and they need to address the issue of debt sustainability.
The ideal scenario is to come up with a plan that as Greece implements reforms, the Europeans deliver on debt relief, and on this program you
build market confidence so that the market is not concerned about Grexit anymore. You need all these elements together. Today we got only one step
in the right direction - an important step - but many challenges still ahead.
NEWTON: And very quickly I'm just going to lean on you for a minute - (AUDIO GAP) the politics in Greece - do you think he can get this through
VAMVAKIDIS: This is actually the big question. It will help a lot if he gets something on debt relief, but this is a key risk.
NEWTON: OK, thank you so much.
VAMVAKIDIS: Thank you.
NEWTON: Appreciate you being here this evening. Now, call it a case of swift justice. Apple has been forced to change a key policy after a
tongue-lashing from one of music's biggest stars.
(TAYLOR SWIFT SONG, "BAD BLOOD")
"So take a look what you've done,
`Cause baby now we got bad blood.
Now we got problems and I don't think we can solve them.
You made a really deep cut
And baby now we got bad blood.
Remember when you tried to write me off? -- "
NEWTON: During carpool, my children turn this up very loudly. It is Swift's "Bad Blood" and she has a lot of influence with people like my
children. The bad blood is now behind her now that Apple has changed the way it pays artists.
The company wasn't planning on paying music royalties during the free trial period of its new streaming service until Taylor Swift stepped in. Yes,
[16:50:06] Kelly Morgan explains how the singer took on the world's most powerful company and won.
(TAYLOR SWIFT SONG, "TIM MCGRAW")
"When you think Tim McGraw
I hope you think my favorite song"
KELLY(ph) MORGAN (ph), CNN JOURNALIST: Taylor Swift burst onto the music scene with her first hit Tim McGraw when she was just 16 years old. At
almost a decade on, the girl next door is proving she's got plenty of punch, and not just in her latest music clip "Bad Blood."
The 25-year-old megastar taking on Apple's new music service and its three- month free trial offer to subscribers. In an open letter on social media, she spelled the policy out. "Apple Music will not be paying writers,
producers, or artists for those three months. I find it to be shocking, disappointing and completely unlike this historically progressive and
In protest, the singer refused Apple permission to stream her chart-topping album "1989." But within hours, the company was performing a U-turn with
executive Eddy Cue tweeting that Apple would pay artists during the free trial.
DAN WORTH, DEPUTY EDITOR, V3.CO.UK: It's interesting the speed at which Apple changed its mind because it shows how big a brand Taylor Swift is
almost and that when she says something like this, they react and they realize that this has become a serious issue.
Now we had seen some small labels already voice the same concern before Taylor Swift did, but when she comes into the argument with her brand
appeal, her mass market appeal, her big army of fans on Twitter and Tumblr and like, I think it made Apple realize that this wasn't going to go away
and they need to reverse this as soon as they could.
MORGAN: Indeed, Swift is a brand to be reckoned to be with. Billboard ranked her the top-grossing artist of 2014. She's also the youngest woman
on the Forbes list of the World's 100 Most Powerful Women, ranking 64.
It's on social media where she packs her biggest punch. Swift is one of the world's most accessible stars and is rewarded with more than 59 million
Twitter followers. She had this to say on news of Apple's backflip. "I am elated and relieved. Thank you for your words of support today, they
listened to us.
Her boyfriend, fellow musician Calvin Harris went as far as to credit her with revolutionizing the music industry. It's not the first time Swift has
used her star power to campaign for musicians. In November, she pulled her catalog from Spotify in protest over the service's free access to music.
WORTH: Began to generate headlines around the world, it showed that, you know, she was willing to stand up to these big companies and say I don't
think it's right the way you're not paying enough for music or your business practices.
MORGAN: And her fans don't want her to stop there. No sooner had Apple backed down, and Twitter was lighting up with other grievances people would
like Swift to fix. Kelly Morgan, CNN London.
NEWTON: Perhaps we should have had her on the Greek crisis. Now, "Everything Has Changed." That was the title of one of Taylor's songs, so
has everything changed in streaming? Joining me now to answer that question is CNN's senior media correspondent Brian Stelter.
I mean, it was an incredible move. Apple may have even have been thinking about it already. Taylor Swift gets all the credit. But what has changed
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: (LAUGHTER). What's changed is Taylor Swift has even more clearly than ever established herself as a
leader in this industry. And I have a feeling people will be looking to her in the future to weigh in on these sorts of business dealings.
You know last year of course she took her music off Spotify - that was a big move. Now this is in some ways an even bigger move because of Apple's
quick reversal. The Recording Industry of America came out to thank Taylor, to give her credit for this today.
And by the way, we still haven't heard whether her music will in fact be back on Apple Music - well be on Apple Music in the first place. This
streaming service is going to launch at the end of the month. If it doesn't have Taylor Swift's new album, that'll be a black eye for the
service and if it does have her music, that will be a big win.
So far we've been asking the label this week - this morning, this afternoon and now this evening - they're not commenting yet, and Apple says it's up
to Taylor Swift. They don't know for sure either. So maybe Taylor Swift is holding out for a little bit more. I don't know. I guess we'll find
NEWTON: (LAUGHTER). It does represent quite a power shift though, doesn't it?
STELTER: It does.
NEWTON: And have we seen this happen in entertainment? No.
STELTER: There's sort of a storyline that we see in the media world about talent, about the biggest stars - whether it's in movies or music or
television or other mediums - having more power, having more leverage. Where do they get that power from? They get it from their fans.
In Taylor Swift's case they get it from Twitter and Tumblr and Facebook - from the so-called "Swifties." I'm one of them, you know, her so-called
fans who will listen to what she says online and will react to it. That's this was such a publicity nightmare for Apple and that ultimately why they
reached out to her, told her about the decision and announced it on Sunday.
NEWTON: And quickly, Brian, I mean downloads are dead. I realized when my kids didn't bug me for any money to download anymore, that they doing
something else, and it was streaming. They were at the forefront of this. But that's the future - they are hitting on the future of the music
[16:55:11] STELTER: They are. The future and increasingly the present of the music business, whether it's Spotify or Pandora or now Apple Music.
Apple frankly is entering a very competitive, somewhat saturated market. There's already a lot of competitors for the streaming music business.
Apple wants to stand out with this three-month free trial. But of course now, thanks to Taylor Swift, they will be paying those musicians for the
free trial period.
NEWTON: Many thanks, Brian, our Swiftie in residence.
STELTER: Thank you.
NEWTON: Thanks so much.
NEWTON: Appreciate it. We'll be back with more of "Quest Means Business" in just a moment.
NEWTON: Now while we wait for news out of Brussels, we want to put the steps Greece took Monday in some context there. Now, every day is now
precious as the clock ticks down to possible default.
One June 25th, Thursday of this week, a long-scheduled E.U. summit will convene. Now if no deal is struck before then, the agenda will likely be
thrown out and it will become all about Greece.
Now the date with the big red circle on the calendar is June 30th - next Tuesday. That is when the bailout expires and it's the deadline for Greece
to pay the IMF $1.7 billion. Now Greece doesn't have that kind of cash - that's what we've been discussing here. It must find more funding, or
without it Greece will default.
Now looking down the line to July 20th - and this gets even more serious - two bonds are due to the European Central Bank, totaling nearly $4 billion
and that could be the final breaking point for Greece and it may at that point contemplate leaving the Eurozone. Technically that country will be
And that's "Quest Means Business." I'm Paula Newton. We will continue to keep you up to date on the events in Brussels. Stay with CNN.