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Zika Virus Concerns; Iran's President Visits Europe; McDonald's Rides Breakfast to Bigger Earnings; Tesla Hoping to Build Autos in China. Aired 4-5p ET

Aired January 25, 2016 - 16:00:00   ET




MAGGIE LAKE, HOST: The Dow sinks below 16,000 and yes, it's another triple digit swing on Monday, the 25th of January.


LAKE: Tonight, a health scare across continents. The tourism industry prepares for the spread of the Zika virus.

Iran's President visited Europe hoping to bring back more than just souvenirs.

And it's the most important meal of the day. All day breakfast gives McDonalds a big earnings boost.


I'm Maggie Lake and this is "Quest Means Business."


LAKE: Tonight, a disease with no treatment and no cure. The World Health Organization expects the Zika virus will hit almost every country in South

Central and North America.


LAKE: The virus is carried by mosquitoes and may cause serious birth defects. It first surfaced in Brazil in May last year and has quickly

spread. The U.S. Centers for Disease Control and Prevention has warned pregnant women against traveling to more than 20 countries, including

Brazil, Mexico and Columbia.


LAKE: The CDC says anyone traveling to the affected countries should take precautions against possible mosquito bites. That's forced hotels and

travelers to review their procedures. The head of the WHO Says many countries with the virus have little immunity.


MARGARET CHAN, DIRECTOR GENERAL, WORLD HEALTH ORGANIZATION: The explosive spread of Zika virus to new geographical areas with little population

immunity is another cause for concern. Especially given the possible link between infection during pregnancy and babies born with small heads.


LAKE: Hotels in the Caribbean are already implementing new measures to protect tourists. Hugh Riley is the Secretary-General of the Caribbean

Tourism Organization and he joins us from St. Michael in Barbados via Skype. Thanks very much for being with us. I'm sure this is of great

concern to you and all of your partners. What kind of precautions are you taking?

HUGH RILEY, SECRETARY GENERAL, CARIBBEAN TOURISM ORGANIZATION: A massive public education campaign. We first of all have to make sure that people

who are thinking about visiting the Caribbean have all the information they need. We need to make sure that their travel professionals, who was

advising them also has all the information that they need. And most especially we have to be treating it seriously here on the ground in the

Caribbean because of course we are interested in protecting our guests as well as our citizens. We who live here have to pay a great deal of

attention to this virus as well. So there's a lot that's happening.

LAKE: Hugh, you know, how realistic is it to say that these precautions will work? I mean when we're talk about viruses transferred human to human,

we know the types of the medical community has a lot of protection against that, a lot of understanding. We're talking about mosquitoes, insects

incredibly difficult to protect a visitor from that kind of threat. What exactly is being done?


RILEY: Well, you're absolutely right. I think the first thing is to deal with the prevention. So look at where the mosquitoes live. Look at where

mosquitoes could breed and treat that. So local populations are aggressive about this and our ministries of health and the health authorities have

been pretty aggressive about this.

We are in touch with CARFA, which is the Caribbean Health Agency. They are the equivalent of your CDC. And they have mounted a campaign of education,

of authorities as well as local. So the first thing is to prevent the spread of mosquitoes. And then of course we have to make sure that people

understand how to protect themselves using Deet and wearing the right clothing and so on.


RILEY: So you know the vast majority of people who visit the Caribbean and who live here will not encounter a mosquito. But we have to make sure those

who do are well prepared for it. Even when you encounter a mosquito, of course the chances that it may not necessarily be a Zika mosquito.


RILEY: So the fact is that we need to give people education, make sure they protect themselves by wearing the right clothing, and doing the right

things, and most especially that we eradicate the nesting grounds, the breeding grounds of mosquitoes.


LAKE: Absolutely. You know - we know that -- you can understand why tourists or visitors that are planning a trip are scared and fearful.

Tourism is such an important industry for this region of the world. How concerned are you?


RILEY: We are. We're treating it very seriously. I mean, there are 26 million people that visit the Caribbean every year of it and 40 million of

us live here. So there are a lot of people.

Now the vast majority of people who come here and who live here will enjoy a daily wonderful experience that the Caribbean is famous for. But we have

to make sure that the tiny minority who might encounter some kind of difficulty or who might somehow or other be bitten by a mosquito, that they

know exactly what to do. And most especially that when someone gets bitten by a mosquito, we know exactly what to do with that person as well so that

that person does not become a source of infecting other people in their party or in their family.



LAKE: You know I think that people watching this, our viewers probably think, wait a second, I've barely heard of this, and now suddenly 20

countries under a warning. It seems the story seems to be accelerating so rapidly. From your point of view, what is the greatest challenge?

RILEY: I think the greatest challenge is public education. We need to make sure that people go to websites like our own website,


RILEY: Or go to the website by the Caribbean Hotel and Tourism Association, that's the trade group representing hotels in the Caribbean. We together

have joined forces have the public health agency CARFA and we really have got a solid campaign of educating the public here and the public in the

source countries for tourism. And making sure that the staff at the hotels and in the villas, and making sure that the travel agents that book these

trips, understand what to do.

So people need not be scared about it, but the fact of the matter is, that we all have to treat it seriously. You can protect yourself from being

bitten by a mosquito. Now the vast majority of people who come on vacation in the Caribbean will never have any contact with a mosquito but we have to

make sure we treat the thing seriously and get the people information they need.


LAKE: Absolutely and information is power in these situations. Hugh Riley, appreciate your coming on tonight and walking us through it.

RILEY: My pleasure, Maggie, thank you for having me.

LAKE: Now the U.S. markets have tumbled in the last hour of trade. We need to bring you right up to date.


LAKE: The Dow experiencing really a late push of selling, falling 208 points. It had been down for the entire day but that decline really did

pick up speed toward the very end of the session. Never a good sign.


CNN's money Paul La Monica joins me now. And Paul, you know traders hate to see that fade right into the close. It seems that this idea of sell any

rally or sell into the close very much with us in setting a bearish signal.

PAUL LA MONICA, CNN MONEY CORRESPONDENT: Yes, I think that's definitely the case Maggie. And what it really came on the heels of was oil rapidly

plunging at the end of the day as well.


MONICA: And markets now for better or for worse, mostly for worse are following every move that oil makes. So with oil down below $30 a barrel

again. You saw that big sell-off in the broader markets. It is accelerated at the end of the day.


LAKE: And even though it feels unnerving, we have to remember, it's sort of giving back the gains that we gained last week. In all this churn, we're

not actually moving in any direction but it does indicate that there's just a lot of nervousness out there. How much of this feels like momentum to


MONICA: Yes, it's really difficult I think for investors to make up their minds about when the worse of this sell-off is going to be over.


MONICA: You don't have a lot of conviction about corporate earnings, even though some companies have been reporting some decent results. We've got

the Fed later this week, but that's probably not going to clear up much of the global confusion. Because we all know the Fed is not going to raise

rates at this meeting. And there's no press conference as well, so we may not get that much more guidance about when the Fed is going to potentially

raise rates if at all this year.


MONICA: And what the Fed thinks about oil prices continuing to plunge. Because you know that's something, Maggie, they've been talking about oil

prices as something that's transitory, the decline for a while now. You know, it's been a year and a half of oil prices plunging, not so sure you

can call that transitory any more.

LAKE: Yes, and a lot of people wondering if the Fed's going to start preparing the market for the fact they're going to be more data dependent.

And maybe they're not going to pull out another rate hike as soon as they had originally maybe indicated.

Paul, when people get stressed out, they eat and it seems that they're back to eating at Mickey Ds. Shares of McDonald's actually closed up slightly.

They touch an all-time high earlier in the day, this seems to be off the back of this earnings report, a jump in U.S. sales of nearly 6%.


LAKE: What's going on here? Is this finally the turnaround everyone's been waiting for?

MONICA: It seems like the company is in firm turnaround mode.


MONICA: And a lot of it has to do, amazingly enough, we joked about it off camera that breakfast, all day breakfast, is really what's bringing a lot

of "lapsed" McDonald's customers back.


MONICA: The fact that you can get an egg McMuffin at any point in the day is something a lot of McDonald's customers have been clamoring for many



MONICA: Now, all day breakfast is just a U.S. thing right now but McDonald's reported very strong sales internationally as well. Asia,

Europe, they said even emerging markets like China and Russia which aren't exactly two economies that people associate with health right now in terms

of healthy growth. You know McDonald's is really doing pretty well. It's a testament I think to the turnaround strategy of the new CEO.

LAKE: Yes, and it's amazing because a lot of people were doubting him at the very beginning. He didn't come out with some of those details really

quickly and you kind of felt this collective disappointment so maybe finally delivering.

I don't know Paul, I'm all about the French fries but we'll give it to the egg McMuffins who are carrying the day for now.

MONICA: You get the hash browns, so that's some potato.

LAKE: That's right, don't forget that. It's not the same thing. All right, Paul, thank you so much we'll catch you in a little bit.

MONICA: Thank you.


LAKE: Now, in the air on the road and its crucial oil industry. Iran is trying to bring itself into the 21st century. That's why the president is

on a shopping spree in Europe.






LAKE: Iran is going shop in the west. Iran's President has embarked on his first foreign trip since international sanctions were lifted just over a

week ago.


LAKE: First stop, Rome. Where the Italian President greeted his Iranian counterpart. Hassan Rouhani is also expected to meet with Pope Francis.

But his primary mission is to tell the world that Iran is open for business.

In Italy, he's expected to fill his shopping bags with $18 billion in deals. Those include steel and oil pipeline contracts that will help Iran

modernize its oil industry. Iran is also hoping for a tourism boom. Air Italia has announced it will begin daily flights between Rome and Tehran,

that's in addition to the deal Iranian officials announced with the French aviation giant Airbus. Iran is planning to buy 114 Airbus jets to bring its

airline industry into the 21st century.

And Europe's automakers are eager to put Iranian drivers in their cars. Rouhani said deals with the French car companies Peugeot and Renault are



LAKE: Speaking with CNN, Italy's Foreign Minister called the trip the beginning of a new era.


PAOLO GENTILONI, ITALIAN FOREIGN MINISTER: We will sign this very evening eight or nine agreements in several sectors from railways to energy. It's

not easy to make such calculations, but for sure, there is an opening of a new era in economic relations.


LAKE: CNN contributor Barbie Nadeau is in Rome, and she joins me now. Barbie, it's so interesting to see this take place, I wonder what the

reception or the reaction is among ordinary Italians. How are they viewing this?

BARBIE, NADEAU, CNN CORRESPONDENT: Well, I think a lot of Italians remember the business deals of the past. And Italy was really the strongest European

partner that Iran had for many years before the sanctions and a lot of business was lost when those sanctions took place.


NADEAU: It certainly wants to be at the front and center for the new business. You know, they really rolled out the red carpet today. They were

a huge motorcade, 45 cars, taking them through the streets of Rome. You know, there was a lot of attention today and there weren't a lot of

complaints. I think people see this as an opportunity, a mutually gratifying opportunity for both sides.


LAKE: Yes, and Barbie, this is -- we mentioned some of the areas that we're looking at, including some of the more obvious ones. But they're also

talking about really targeting what a lot of people see as the Holy Grail, that big middle class in Iran that's been cut off from the rest of the

world. This is coming at a time when Italy desperately needs new avenues of growth.

NADEAU: That's absolutely right. But you know you see some of these business deals, like you said, $18 billion worth of business deals, you

know, going right into even the ship building industry.


NADEAU: Findham and County Co., is one of the companies that will benefit from this. Fiat Chrysler as well is one of the companies that will benefit

from this. It really goes across the board.


NADEAU: And if Italy can you know create some jobs out of this, obviously Italians are going to you know really want to really take advantage of this

as well. But this is really seen as just the beginning. The Ambassador -- the Iranian Ambassador to Italy said they saw Italy as the doorway into

Europe and Italy really wants to keep that door wide open, Maggie.


LAKE: It does, and Barbie, are there any concerns? I mean you know things are never that straight forward. You try to get things back on track when

there's been this long period. (Inaudible) and Renault being a little cautious at Davos talking to us about it. We know there are still some

concerns about corruptions. What do Italians see as the roadblocks?

NADEAU: Well, you know I think Italians are looking at you know, really crawling out of their own recession right now. And so I think you know they

can't be too picky about who their business partners are because they've suffered a great deal.


NADEAU: You know, they're looking also at the businesses they've lost perhaps in Libya as well. They need to - you know Italy has lost a lot of

business with the troubles there. And they need to recoup some of the businesses that were easy deals and lucrative deals for them.


NADEAU: So I don't think you're going to see a lot of resentment here from every day Italians. Of course there are people want to remind the governor

here - the governing party here about human rights concerns and things like that and I think you're going to see a little bit of that tomorrow when he

meets Pope Francis, just about persecution of Christians, human rights in general, things like that.

But overall, I think this is seen as a very positive return to sort of the glory days in which Italy benefited from their business deals with Iran.

LAKE: And you can hear that in the language, calling it a new era. Barbie Nadeau thank you so much.

In the 1970s, Iran's air fleet was the state of the art. It had the very latest Boeing jets and was even trying to buy the supersonic Concord. Now

after years of sanctions, many of those planes are still in the air. An inability to get new parts has given the airline one of the worst safety

records in the world. That's about to change as Frederick Pleitgen explains.


FREDERICK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: A high-end video produced by Iran's Civil Aviation Authority. As the country looks to

drastically modernize its air travel sector. In a CNN interview, the transport minister outlines ambitious goals.

ABBAS AHMAD AKHOUNDI, IRANIAN TRANSPORT MINISTER: I'm seeing that Iran Air will compete within five to seven years with all the regional airlines.

PLEITGEN: Years of sanctions have devastated Iran's airlines. Many of its aircraft are old and unsafe because of a shortage of spare parts. But at

one of the first major international airline conferences in Tehran, companies from all over the world are scoping out what they hope could be a

dynamic new market.

Iranian authorities believe they will need hundreds of new planes in the coming years, not just to meet the demand of its citizens but also for the

millions of tourists they believe could be coming here soon. Iran is looking to buy more than 100 aircraft from both Boeing and Airbus. And the

minister in charge says that is just the beginning.

AKHOUNDI: We think we'll have about 100 short-range fleets for our local flight. And for national flight and international flight, about 400 fleet

that can do the medium and long range air flights.

PLEITGEN: But because Iran's economy is highly dependent on oil, the drop in international crude prices could hamper Iran plans for a large-scale

modernization of its air, road and rail infrastructure.

While some believe that could also affect development of the tourism sector, Iran's tourism minister tells me the country will be ready for a

major influx of foreign visitors.

The price of oil has a big effect on our economy, he says, but 90% of our investment in tourism is done by the private sector and the private sector

started investing even during the sanctions. For years, international sanctions have made Iran's airline some of the most unsafe in the world.

Now, Tehran is keen to leave behind its troubled aviation past and get its fleet and airlines up to speed.

Fred Pleitgen, CNN, Tehran.


LAKE: Just like stock markets, oil prices are falling fast bringing an end to a rally that started on Thursday.


LAKE: West Texas Intermediate is down 7% with Brent Crude performing not much better. Persistent concerns other a global oil glut have again dragged

prices down to around $30 a barrel.

The head of OPEC has reiterated that the cartel will need cooperation from non-OPEC producers to cut supply. One of them is Russia, which has been

pumping oil at a record level.

The Vice President of the country's second largest oil producer, Luk Oil, reportedly said that they could work with OPEC and trim the output.

Russia is being hit hard by the prices, the latest data shows its GDP fell almost 4% last year.


LAKE: Robyn Kriel reports on the economic hardship ordinary Russians are facing.



ROBYN KRIEL, CNN CORRESPONDENT: Aleksandr Krupetskov's situation, well, stinks.

The luxury cheese market in Russia, as with most import industries, has been hit twice as hard as most. First, economic sanctions meant Krupetskov

could not import much cheese from countries like France, Italy or Spain.

ALEKSANDR KRUPETSKOV, CHEESE SOMMELIER: I tried to find some cheeses in Russia. I spent a lot of time searching them in Russia's little villages,

some little cities.

KRIEL: And now he and his customers must battle rising inflation and a devaluing ruble dependent on the price of oil that's at its lowest in

years. Many no longer can afford the appetite.

Outside Moscow, those economic issues continue to plague poor Russians much of the same, except here many have no alternative.

That is people are forced to spend what they can't afford. North of Moscow at a local market in the town of (inaudible), women explain how bad

business has become.

At the end of the month, where do you find that your salary is going?

UNIDENTIFIED FEMALE: (As translated) It's enough only for food. Nothing else.

KRIEL: The elderly may be some of the worst affected.

UNIDENTIFIED FEMALE: (As translated) Putin told us he would increase pensions but they remain low and everything is getting more expensive.

KRIEL: Oil is the linchpin of the Russian economy but its price is at a 13- year low. The nation is currently running on a budget deficit in 2016 and the Kremlin has just downgraded its economy forecast from .7% growth to a

.8% decline. Couple those circumstances with Moscow's tenuous relationship with the West and it would appear at this juncture Russia faces a very

worrying perfect storm.

Robyn Kriel, CNN, Moscow.


LAKE: As the first vote for the U.S. Presidential candidates gets closer, we will take a look at the Democrat's final push before a CNN Town Hall.






LAKE: U.S. Democratic candidates have one final chance to pitch their vision to the nation before the first votes are cast in the race for the

White House. We are just hours away from the Democratic town hall in Iowa.

For Hillary Clinton, it's a chance to retake the lead in the crucial state.


LAKE: CNN's Poll of Polls shows the former secretary of state trailing Senator Bernie Sanders by two percentage points among Iowa Democrats. That

is in part because Iowa voters say they trust Sanders to handle the economy. He holds a 22 point lead over Secretary Clinton on economic



LAKE: At the World Economic Forum in Davos, Richard spoke to Gene Sperting, economic adviser to Hillary Clinton. He explained how Senator Clinton's

pragmatic plan for the middle class will give her the edge at the polls.


GENE SPERTING, ECONOMIC ADVISOR TO HILLARY CLINTON: One statistic Secretary Clinton likes to say is I think that the top 25 hedge fund

managers earning hedge fund managers in the United States make more than all of the kindergarten teachers in the United States combined.

So there's no doubt that the inequality's a significant problem. But I think you see it more, you know, in the fact that the middle class, that

the typical household is probably making about $4,000 less in real income than they were in 2000. And so she's really put the focus on rising middle

class wages and I think also more security on things like making sure they can afford college, that they can afford their health care, their pensions.


RICHARD QUEST, HOST QUEST MEANS BUSINESS: But how does she balance that when she's running against an avowed socialist who's clearly on a much more

tax and spend basis then she knows, that she wants to put forward? That's her difficulty. Because a lot of the core on economic issues in the

Democratic Party like what they're hearing from Sanders.

SPERTING: Yes, well look, there's no question, he's giving a very strong message and he tends to support everything from the most expensive kind of

simple and most side. And that feels good for people to hear for many people who are progressive to hear. And what's she's tried to say is look,

this is really about improving lives, and that means being progressive, pragmatic, and you have to think about what are your actual priorities.

So I do -- I think the stakes are so high for Democrats knowing they could be running against Donald Trump or Ted Cruz. And I think more and more

Democrats will realize that as compelling a message as Bernie Sanders has put forward, that Hillary Clinton is more likely to win and more likely to

be able to get progressive things done.

QUEST: Now you have to come up with a policy assuming that Donald Trump gets the nomination, and he's basically building walls with Mexico and

levying tariffs against goods coming over and the same with China. What are you going to respond to that?

SPERTLING: She will have strong policies but things less likely to provoke instability in the world. And I think ultimately the American people are

going to decide, do they want a President who really has the experience and knowledge to actually deal with other countries with ISIS, to help build

coalitions that doesn't offend, you know, Muslims throughout the world just because we want to take down ISIS.

And I do believe that right now we're still early in the season. And I would imagine both Democrats and Republicans as they get closer start

actually - starting to imagine somebody sitting behind the oval office. And I think a lot more Americans will find it easier to imagine her in the

great position of responsibility when the stakes are so high, than Donald Trump or Ted Cruz.


LAKE: The Democratic Town Hall with all three candidates begins in just a few hours from now, moderated by CNN's own Chris Cuomo. It starts at 2:00

a.m. in London, 3:00 a.m. Central European time. If that's too late or too early in the morning, watch the replay at noon in London, 1:00 p.m. CET,

only on CNN.

Now, weeks after track and field's global governing body was accused of having a deeply rooted culture of cheating at all levels, the IAAF may be

bracing to lose one of its biggest sponsors.







Coming up on the next half hour of "Quest Means Business," we see how likely it is the new Adidas CEO will run away from its athletic sponsorship

deal. And Twitter is restructuring its nest. Before that, these are the top news headlines we are following for you this hour.

The World Health Organization says that Zika virus will spread to almost every country in North, South and Central America.

The mosquito-borne virus is believed to be linked to severe birth defects. Some countries have already warned women against getting pregnant.

The WHO says the virus is spreading at an alarming rate.


MARGARET CHAN, DIRECTOR-GENERAL, WORLD HEALTH ORGANIZATION: The explosive spread of Zika virus to new geographical areas with little population

immunity is another cause for concern, especially given the possible link between infection during pregnancy and babies born with small heads.


LAKE: Peace talks to end the civil war in Syria have been delayed until the end of the week.

The talks in Geneva were supposed to start Monday, but an agreement could not be reached on who would represent the Syrian opposition.

The U.N. Special Envoy to Syria says he wants these talks to succeed where others have failed.


STAFFAN DE MISTURA, U.N. SPECIAL ENVOY FOR SYRIA: We are going to aim at the proximity talks starting on the 29th and ongoing for six months on a

staggered chronological proximity approach. That will be the way we try to make it different from the past. This is not Geneva 3, this is leading to what we hope will be a Geneva success

story if we are able to push it forward.


LAKE: Iran's president is in Italy at the start of a European tour. Hassan Rouhani is meeting with Italian politicians and business leaders as

he seeks investment into Iran's economy. Rouhani's expected to leave Italy with some $18 billion in deals. He will travel to France later in the week.

The Democratic candidates for U.S. president are about to take part in a CNN town hall in the U.S. State of Iowa. This time next week the state

will be the first to vote in this year's presidential primary. A CNN poll shows Bernie Sanders has a narrow lead over Hillary Clinton. In the Republican race Donald Trump has extended his lead over Ted Cruz. Airports are slowly reopening on the U.S. East Coast. More than 8,000 flights were canceled over the weekend because of a blizzard.

Parts of New Jersey have been hit by flood after the storm triggered a sea surge that was much higher than expected.

In the wake of a widespread corruption and doping scandal, track and field's global governing body may be about to lose one of its major

sponsors. The BBC is reporting that Adidas is looking into ending its sponsorship deal with the International Association of Athletics Federations.

The potential loss to the IAAF could be devastating. It counts just five major sponsor.

Canon for its part has confirmed in a statement there are no plans to terminate its current contract.

The BBC claims Adidas' sponsorship deal is worth around $8 million a year to the Federation.

Adidas named its new chief executive last week. This move could be a new sign that management will have a lower tolerance for ethics violations in

the sporting world. World Sports' Don Riddell is at CNN Center. Don, a really fascinating development. What do you think this impact will have?

DON RIDDELL, CNN "WORLD SPORT": Well, if Adidas goes through with this, and that's certainly what the BBC are reporting although neither the IAAF

or Adidas have confirmed or denied that that's actually the case. But if a major sponsor like this was to walk away, I think we'd have potentially disastrous consequences for world athletics.

You talked about the $8 million a year contract. This deal, which runs until 2019 is worth probably north of $30 million.

If they were to walk away, it could force those other sponsors to have a very serious conversation about whether or not they wanted to stay in it.

And you have to remember that world athletics isn't exactly flushed with cash. It is a sport that doesn't really have a lot of money and if one or

more than one sponsor were to walk away, I think you could have potentially disastrous consequences for the sport.

[16:35:03] LAKE: And I suppose it's made all the worse by the fact that this is happening in the run up to the Summer Olympics.

I mean, this is the showcase for this type of sport even though Adidas may or not be an Olympic sponsor, you know, they are very present in sports.

And that has to be a tremendous blow.

RIDDELL: Yes, that doesn't help and it certainly makes the spotlight even brighter on this situation.

Of course this all began with the Russian doping scandal. The Russian Athletics Federation is currently banned from world athletics.

They may well not be at the Summer Olympics in Rio. And of course the IAAF is now trying desperately hard to restore its battered credibility.

But it's very, very difficult for the new president Sebastian Coe - he's only been in the job a few weeks.

And the thing he's really struggling to deal with the most is the fact that his predecessor Lamine Diack has been arrested, he has been investigated.

He is accused of taking bribes to cover up that doping scandal. And that is why I think this scandal is kind of different to the FIFA, whereas with

FIFA's scandal, you're talking about institutional corruption and the authority figures getting rich on dirty deals.

With athletics, it's very different because you're talking about the integrity of the competition being compromised and that is why some of

these sponsors may feel as though they can no longer be associated with it.

LAKE: That's right. I mean, and we were talking about medals that may be were awarded to people that shouldn't have been awarded.

(Inaudible) I mean, it is the athletics themselves and the sport itself in question. A lot of people are wondering if Sebastian Coe is going to be

able to survive this, Don.

RIDDELL: Well this is without doubt the biggest challenge of his career and he's had a few. I mean, to me he's starting to seem like King Canute

standing there on the beach trying to keep the waves at bay. It's becoming very, very difficult for him. These revelations which are continually coming out, you know, to some extent happened before he was

manning the decks although he was the vice president when some of this stuff was going on.

But, you know, the scale of the scandal is so severe that it may well be that there's not very much he can do about it.

He says he's trying his best, he says he'll leave no stone unturned. They did kick the Russian athletics team out. He says he's working 18-hour

days. But this is an almighty mess. And as I say, if Adidas and others walk

away, you know, I don't know where they're going to get the money from to continue because there's not much money in the sport.

LAKE: Yes, and it's going to be interesting to see if this is a new chapter in terms of ads. Sponsors getting a bit more active.

We don't have -- we have no shortage of scandals on the sporting front. A lot of people have accused them of not doing enough. So we'll see if

they're going to put some action behind those words, right Don?


LAKE: I know you guys will be on it for us. Thank you so much. Now, as accusations fly at an E.U. summit on the migrant crisis, Europe's

common border agreement appears under threat. Finland's finance minister tells us Schengen is vital to survival of the European project. That's up next.


LAKE: Once again, Greece has found itself at the center of a potentially turbulent European Summit. This time, it's not the Greek economy, it's the

migrant crisis gripping Europe. At a meeting of E.U. interior ministers on Monday, there were calls for Greece to be thrown out of the Schengen area for failing to deal with the

influx of refugees onto its islands. Last week in Davos, Richard spoke to Finland's finance minister who said Schengen must be preserved.


[16:40:01] ALEXANDER STUBB, FINNISH FINANCE MINISTER: Usually we take 3,000 asylum seekers a year, last year we took 33,000.

It is a big cost, a huge burden on our society as well and we're trying to grapple with it, both in terms of social costs, economic costs and

political costs.


it's in Finland or Germany or - the growing swell of public criticism is rising.

STUBB: Yes, a little bit, but we're trying to, you know, deal with it as well. And you need to do two things. One is to understand that this is a

European-wide problem so there are European solutions. And the second one is to deal with it domestically. What does this mean?

Deal with the asylum-seeking applications quickly and if the people stay, teach them the language, integrate them into the culture and society and

try to take away the prejudices that exist.

QUEST: But you only need a Cologne on New Year's Eve -


QUEST: -- to turn - to suddenly turn the entire opposition against you.

STUBB: Well definitely. I mean, that's why it's very important also to communicate what is happening and then take the concrete measures to makes

sure that it doesn't happen again. There is a certain clash of civilizations going on here -- we have to admit that. You know, we live in a Western liberal democracy and the refugees

who are coming, they come from different cultures. And we have to grapple with this in an open, honest and sensitive way without increasing prejudice.

QUEST: Can Schengen survive? Denmark and Sweden's changed the rules, we obviously know `round other countries have also changed.


QUEST: Should it survive? I mean, it clearly cannot work.

STUBB: Well Schengen must survive because it's a prerequisite for the survival of the European Union which is based on the free movement of the

people, money, services and goods. Two of them (inaudible) are under threat. The euro and Schengen we need to deal with it. What is step number 1? Step number 1 is to deal with the

external borders. They are leaking, and if you have an external border after which -

QUEST: It was - it was inevitable that the external border was going to leak. It's too big and many of the countries who are responsible off some

of those borders are not developed sufficiently to deal with it.

STUBB: I think you're right. I'm not going to name any countries, but Finland for instance is a 1,300 kilometer border with Russia - that does

not leak. We deal with it in a very manageable way. At the same time, it's a land border, it's not a sea border. A sea border is much more difficult to

control. That's why we need more efforts through Frontex and other European measures.

QUEST: But you think that Schengen shouldn't be suspended or shouldn't be reformed as a result of this?

STUBB: Oh, it definitely must be reformed. There's no question about that. And I think that's what will happen. Some people are talking about

revisiting Dublin. I don't think that is actually going to happen. But the starting point is, for instance, you need to have hot spots. And you need to have those hot

spots in countries where people come in and Greece is a good example. Over 800,000 refugees coming in through Greece -- deal with refugees in the country of entry. That is the best way to deal with it.


LAKE: It is a new case of #twittertrouble. New users are scarce, the stock is tumbling and now executives are heading for the exit.


LAKE: Twitter's transformation is getting rockier. Four top executives are leaving the company. Twitter's business is under extreme pressure.

The stock fell 4.6 percent on Monday. It closed at $17.00 a share. That is down more than 50 percent from just a year ago and it is just a symptom

of Twitter's underlying problems. CNN Money tech correspondent Laurie Segall joins us now. Laurie, four executives. I mean, this is more than just, you know, a trickle. What's

going on?

[16:45:13] LAURIE SEGALL, TECHNOLOGY CORRESPONDENT FOR CNN MONEY: Yes, and you know initially people had said, oh, are they getting pushed out?

But I've been speaking with sources close to the company. They say, no, they all made the decision at separate times that they wanted to leave.

They were all going to announce that this week although it kind of - kind of got out there.

You know, in speaking to one person very close to the company and they said something to me about why people were leaving.

And I thought it was interesting. They say it's exhausting any time the market is crushing you, growth is stagnated. It's a tough place to be.

Now these executives are some of the most senior executives at Twitter. They've been there for a very long time.

Maggie, I remember meeting Kevin Weil who's the V.P. of product probably in 2010. He couldn't have been more excited about the product.

But what you have is shares reaching - going to an all-time low. You have - you have new management, you have Jack Dorsey, the new CEO, coming in

taking over for Dick Costolo. A lot of politics in play at the company and a lot of morale issues.

So now you're seeing a lot of folks are exiting, Maggie.

LAKE: And, listen, if you've been there for a long time, sometimes it's hard to put that behind you and start with a clean slate and do what's

being asked when you do a turnaround. I mean, not everyone is going to be part of a turnaround project. So the people are leaving, is it going to be able to attract new talent, Laurie,

and do they know what they need to do? Do they have a plan?

SEGALL: You know, they're actually holding a meeting this week to talk about new leadership, what they're going to do.

This is already in the works when this news broke. But, you know, they have to make a lot of changes and they are bringing in - they're supposedly

bringing in - a new CMO. There's talk of bringing in new board members and a lot of people are calling on Avorte Verset (ph), a board member.

I mean, you had - when you look at the diversity issues at Twitter, a lot of people - a lot of former employees have come out and said there are

major issues with diversity here. We need more women at high level. Also leadership.

You know, a lot of folks are worried that Jack Dorsey is the CEO of Twitter, he's also the CEO of his other company Square. So can he take on

the challenge? And Twitter's biggest problem is adding new users. You know, they've had a really tough time getting users to sign on, making what they call the

product more useable. I mean, we in the media use it all the time, but how can they attract more

people. They recently launched Moments which let people follow these news events. This is all under Jack Dorsey's new reign.

And they are also talking about adding a 10,000-character limit, changing it from 140 characters because they think maybe that'll add people and get

people to use Twitter more. Because they're facing a lot of pressure, Maggie.

LAKE: Yes. I mean, we sort of all see the power of it as a communication tool, but getting that traction --. They also seem to have - from analysts

that I've talked to have a perception problem that they're not necessarily going to be Facebook.

If you bought it thinking they were going to be Facebook, it's not that. But they do have to define themselves. Do they have an existential problem

though, Laurie? I mean, this goes back to they have to make it easier, they have to track

more users - but do they know what people want to use it for? Have they really like sort of defined their core function?

SEGALL: No, and I think there's a lot of frustration around that. I think, you know, people say well are you a media company? Are you a tech

company? You know, Twitter has constantly struggled to find its footing. I remember sitting down with Biz Stone years and years ago and he was trying to explain how Twitter would be used. And it was very much defined

by its users. But it really kind of struggled to catch up to that. I think, you know, a lot of folks - you know - we use it in the media world, but other people,

you know, it's not that easy if you're just signing in to Twitter to figure out why exactly you need it, especially now that there's Snapchat and

Instagram, and there are all these other social networks. So Twitter had a problem because they didn't get ahead of that, Maggie, and they ended up falling behind. So now they've brought in new leadership.

Hopefully they'll be able to redefine what their ultimate vision is. Otherwise, you hear investors saying, you know, maybe they could be acquired.

LAKE: Yes, an acquisition. I mean, a lot of people think they will be an acquisition. And it is interesting though, we know the power of that

hashtag. That's the crazy thing about it. Can they harness it I guess is the question that's going to be answered by a new management team.

Laurie Segall with some inside reporting for us. Thanks so much. Well, gone are the days of bootleg tapes and CDs. Oh, you remember them.

For artists attracting listeners means building a strong presence on the internet now.

All of this week we will be taking a close look at trends defining the music industry as we know it.

First up, Samuel Burke introduces us to a band gathering its audience through - what else? Social media.



SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: In a music world experiencing radical, disruptive change, L.A.-based pop band Xylo is thriving.

Less than a year together and only four songs released online, they're already headlining their first-ever New York show.

Xylo is the brother and sister duo of Chase and Paige Duddy. Their debut single, "America," gained them instant recognition on music blogs and

social media without the help of a record deal. [16:50:10] It used to be you'd have to write a hit album in two or three

years to win an international fan base. Today before they ever play a premier venue like here, first they have to make it here.

Xylo credits is rise to music hearing platforms like SoundCloud, Hype Machine and their growing social media fan base.

The band has millions of streams on Spotify.

PAIGE DUDDY, BAND MEMBER, XYLO: Hey, guys, it's Paige from Xylo.

BURKE: And thousands of followers on Twitter, Facebook and Instagram. It's become the way of breaking into the business these days.

CHASE DUDDY, XYLO: We made music in our garage and uploaded it on the internet and millions of people heard it.

P. DUDDY: So easy, just press click, and I'm sharing my music with the world.

BURKE: As the online buzz grew, Xylo came to the attention of Sony Music exec Adam Alpert who signed them to his label Disruptor Records.

For Alpert, success is all about connecting with fans.

ADAM ALPERT, CEO, DISRUPTOR RECORDS: I think it's really important for the fan and the arts to communicate directly. I think that is what the fan has

come to enjoy and expect. And I think that fans - music fans - these days want to be on the journey with the artist as they grow their careers. They want to feel like they're

a part of the ride.

BURKE: Xylo's far from the only band using social media to its advantage. And entire new generation of stars are bypassing the traditional tape-


JEM ASWAD, WRITER, "BILLBOARD MAGAZINE": Shawn Mendes who is now - has - a number one album and number one single, he was signed off of Vine.

You know, he was just like doing covers on six-second Vines and he got signed off of that because he got a huge following.

Albeit, you know, he was this cute 14-year-old boy up in Canada and the next thing you know he's got thousands and thousands of young girls


BURKE: In today's pop market, albums take a back seat to singles. Live dates generate much-needed revenue and a band's work is never done.

C. DUDDY: It's like a buried gorilla -

P. DUDDY: Yes.

C. DUDDY: -- social gorilla (ph) (inaudible).

P. DUDDY: Totally, so it's like you just feel like you have to keep posting harder and harder and like pushing people to like share your stuff

each time you release a new single.

BURKE: CD sales are collapsing, streaming revenues remain miniscule. But with a growing fan base spreading the word, Xylo still hopes to connect

with the masses.

P. DUDDY: Thank you guys so much. We're Xylo. Thank you guys, see you next time!

BURKE: Samuel Burke, CNN New York.


LAKE: From one type of disruption to another, Elon Musk says he hopes to build electric cars in China within the next three years.

The founder and CEO of Tesla says the Chinese government realizes the need for more sustainable cars.

He sat down with CNN's Kristie Lu Stout.


KRISTIE LU STOUT, ANCHOR AND CORRESPONDENT: China is the world's largest auto market. China is also to world's largest carbon emitter.

Do you think China realizes and understands how much it needs your technology?

ELON MUSK, CEO, TESLA MOTORS: Well I think that the most stunning by the Chinese government that electric vehicles were important to the future. In

order to have clean air in cities, you have to go electric. And so the policies and initiatives of the national government are increasingly favoring that that outcome.

The challenge for Tesla I think is to figure out local production because right now our cars in China are - they're coming with quite a high import

duty and we're not eligible for local incentives. So all of our sales in China are effectively at quite a high penalty. But that'll be alleviated once we move to local production.

STOUT: Yes, you have the upcoming more affordable Model 3 coming out. Is that going to be made in China?

MUSK: It will eventually be made in China. The - I think that what is sometimes is not obvious for Tesla is that we're actually a very tiny

company. Our total production last year was only 50,000 cars, compared to global

production of 90 million for all carmakers. So there's only so much we can do at one time and if we could - if it was

possible for us to do local production in China sooner we would. But I think it's probably going to be close to three years before we can achieve that outcome.

STOUT: The Model 3 will be a real test for Tesla. That's when you're going to see if the EV - the electric car - can go truly mainstream. Are

you confident?

MUSK: Actually I do pretty optimistic about the Model 3. The key thing with Model 3 is higher volume and a lower price and it is a smaller car and

without quite as many bells and whistles as the Model S of X. But the goal is to have very compelling, affordable in a mass market

electric vehicle and I feel pretty good about that goal.

[16:55:00] STOUT: Are you worried at all about G.M. beating you to the market with its upcoming Bolt due out next year?

MUSK: You know, I think if GM comes to the market with a compelling electric car, that's great. You know, the goal of Tesla from the beginning

has been to accelerate the advent of sustainable transport. So I think if GM or any other company comes out with compelling electric cars, that's good for the world, and you know, we would applaud them.


LAKE: Prices are falling again. The head of OPEC says he needs everyone to pitch in to bring them back up.


LAKE: It was a dramatic fall for oil prices on Monday. Brent crude dropped more than 6 percent. It is off nearly 20 percent so far this year.

Monday's slide came as the head of OPEC called on producers inside and outside the Cartel to put an end to the supply glut.

OPEC has refused to reduce output on its own, saying producers like the U.S. and Russia must do their part.

The fall in oil prices pushed stocks sharply lower. The Dow ended down 208 points after a selloff in the last hour of trade.

The index has seen triple-digit swings in all but one of the last five sessions. The S&P 500 also fell by more than 1.5 percent.

The European markets had a slightly better day. All the major indices closed the Monday session down, although the losses were much less

pronounced than in the U.S. The Paris CAC was the worst performer, down about .6 percent. And that is "Quest Means Business." I'm Maggie Lake in New York. The news continues here on CNN.