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QUEST MEANS BUSINESS

Obama and Business Leaders in Cuba; Presidential Candidates Address AIPAC; Solving Valeant's Problems; Indian Wells CEO Derides Women's Tennis Apple Unveils Devices and Vows to Protect Privacy; Republican Candidates Address AIPAC; John Kasich Addresses AIPAC Meeting; Kasich Addresses Pro- Israel Lobby Group

Aired March 21, 2016 - 17:00   ET

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


[17:00:27]

ELENI GIOKOS, HOST: The woman's (inaudible) continues for the Dow, stocks finished higher about an hour ago on Wall Street. It's Monday, the 21st of

March.

(BEGIN VIDEO CLIP)

GIOKOS: Tonight, new Cuban links. Top American companies join the U.S. President to strike deals in Havana. Valeant hopes a CEO switch can save

the company from financial ruin. And time is money, now Tim Cook says the Apple watch will cost you less.

(END VIDEO CLIP)

I'm Eleni Giokos and this is "Quest Means Business."

GIOKOS: Well a very good evening to you. Tonight, President Obama shakes hands with President Castro and American business leaders set to work on

tapping the Cuban marketplace.

(BEGIN VIDEO CLIP)

GIOKOS: The U.S. and Cuban President met for over an hour, marking a once unthinkable shift in attitude between the two nations. Mr. Obama is trying

to bring change to Cuba; a key part of his plan is to pry open economic channels with the island. Now both leaders took questions from reporters.

It's a rarity in a country where the state controls the press. Mr. Obama went on to make a declaration about the longstanding trade embargo on Cuba.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The embargo is going to end. When? I can't be entirely sure. But I believe it will end. And the path

that we're on will continue beyond my administration. The reason is logic. The reason is that what we did for 50 years did not serve our interests or

the interests of the Cuban people.

(END VIDEO CLIP)

GIOKOS: The U.S. President is certainly not alone on this historic trip to Cuba. Mr. Obama is accompanied by the CEOs of some of the major American

companies including Arnie Sorensen of Marriott, Daniel Schulman of PayPal, Ryan Chesky from Airbnb and Ursula Burns of Xerox. Now these business

leaders are looking to get a jump on the new opportunities for commerce as relations between Washington and Havana sore.

Robyn Curnow has been speaking to some of those CEOs on the ground with President Obama, and she joins me live from Havana. And it's not only

historical for the country, Robyn, it's also going to change the way that U.S. business is going to view Cuba, as basically a country that has so

many opportunities, and untapped opportunities.

ROBYN CURNOW, CNN INTERNATIONAL CORRESPONDENT: Absolutely. And as you said, I've spoken to a lot of the CEOs here on the ground, a massive delegation

that President Obama has brought with him. And specifically the CEO of Marriott Hotels says Cuba captivates the imagination, and it does, doesn't

it? It was isolated so long, the potential, the opportunities really exciting people and companies like Marriott.

(BEGIN VIDEO CLIP)

CURNOW: Now they want this rush of tourists to come here. They're excited about that. And of course Marriott is talking to me on the very day that

the deal to buy -- their deal to buy Starwood Hotels and Resorts was given a new life. Starwood said last week, if you remember, Eleni, that it was

accepting a bid from a Chinese firm. However Marriott has upped its offer and now the deal is back on. And when combined, let's not forget, these two

companies will create the largest hotel chain in the world. This is what Arne Sorenson had to say to me about this new and improved deal.

ARNE SORENSON I think it's the biggest deal announced from Cuba which we did this morning. So we issued a press release this morning, we reached a

new agreement with Starwood last night, pursuant to which we revised our offer, increased it by about 15% to acquire Starwood for Marriott stock and

cash, about $3 and a half billion of cash and about $10 billion worth of stock. And we're moving forward towards the integration and hopefully

closing by mid-year.

CURNOW: So you jumped in ahead again of the Chinese, the previous bid. There's been a lot of movement here.

SORENSON: Because - well that's right. We had a deal until last Friday. And last Friday Starwood announced that they had determined to proceed with

Unbond, a Chinese Insurance company that had submitted a bid about a week ago. And so we negotiated over the weekend and reached a deal last night

which we're very excited about. It is substantially more value for the Starwood shareholders but still a deal that we think makes sense for

Marriott shareholders. And combined we think that this platform of SPG and Marriott rewards, of their brands and our brands, will create a

transformative company in the hotel space.

[17:05:25]

CURNOW: No doubt going to make an impact on people travelling and staying in all of these hotels. Let's then talk about Cuba. We're here; you're

wearing a very smart traditional Cuban shirt. What does this mean for Starwood's deal that they signed with the Cuban's a few days ago as well?

SORENSON: Well, Starwood will be proceeding with that deal. Starwood obviously is an independent company today. We're not working together in

this. On Friday of last week, the U.S. State Department approved both Starwood's application to do business in Cuba and Marriott's application to

do business in Cuba. Starwood has already signed two definitive management contracts for existing hotels.

CURNOW: One Memorandum of Understanding as well as --

SORENSON: Correct, there is a third that we're working on but not quite as definitive yet. We have conversations underway with a number of

prospective Cuban partners, we're optimistic that we can get to the same place fairly quickly. They, like we, are very interested in the potential

for tourism to Cuba. It is a place that absolutely captivates people's imagination. And so, maybe in part because of the complicated history,

people want to come and see this place, see its history, see its culture, see the architecture and we can't wait to be here to welcome them.

(END VIDEO CLIP)

CURNOW: Now, I also spoke to the head of Starwood's operations here in the Latin America about that deal he says he's signed with the Cubans, they're

going to roll out of course their operations here in Cuba. This is what he had to say about how difficult it had been doing the deal and what they

expected it to be like on the ground.

(BEGIN VIDEO CLIP)

JORGE GIANNATTASIO, CHIEF OF LATIN AMERICA OPERATIONS, STARWOOD HOTES: Having local knowledge in the ground, plus a good powerful desire to open a

new market is the key. We never went - we have a lot of possibilities to do that. I mean you may imagine, there has been a process where there were

many opportunities to give up and to say no more, "no mas." But reality is that we have a commitment to fly the flags of our hotels in Havana, and

that's what we did.

(END VIDEO CLIP)

CURNOW: Patrick Oppmann our Havana bureau chief is with me and we heard the Starwood head of Latin America just say there were lots of opportunities to

give up and say no more. I mean -

PATRICK OPPMANN, CNN CORRESPONDENT: He's being diplomatic.

CURNOW: He is being diplomatic. A lot of the business people I've spoken to have tried to put on a brave face but clearly we have been hearing how

cultural differences have really stymied a lot of the optimism.

(BEGIN VIDEO CLIP)

OPPMAN: You know, you have a communist Latin bureaucracy. It's a unique combination for Americans maneuvering through all the different very

strange and foreign concepts of doing business here. But then they see the opportunities. And I've talked to people who do agricultural sales from the

U.S. and they come and see the Cubans buying food from New Zealand, and they say, we're closer, this should really be our territory, we could do it

for better and for cheaper. It just makes sense.

CURNOW: So what are the things that are limiting expansion of business opportunities here?

(END VIDEO CLIP)

OPPMANN: Well before it was the U.S. embargo, to some degree it still is. But you know we've seen industries that before could not operate here,

whether it's telecom, whether its hotels, they've got to partner with the Obama administration. Then you get to the Cuban government which does not

have a lot of money.

(BEGIN VIDEO CLIP)

OPPMANN: They want to -- they'll pay more if they can pay later. And then it's just getting the right meeting with the right official. There are so

many different ministries, no one really knows how it's all working. People are writing the book as they're doing this. It's a wild west. So you have

to be in a bit of an adventure, you have to be in it for the long haul. But I think for the people who can say they are, it is worth the frustration,

the hair pulling.

(END VIDEO CLIP)

OPPMANN: It's difficulty either -- it's not easy, but it's not difficult and we are seeing deals get done, which is really surprising.

CURNOW: Surprising, because two currencies. We've got, you know trying to hire people here via the Cuban government. The minutiae of this is

fascinating.

OPPMANN: And you don't just come in and open up a business. You have to partner with the Cuban government. And the Cuban government can be a very

fickle partner sometimes.

(BEGIN VIDEO CLIP)

OPPMANN: You might be working with someone who learned economics in Moscow. And as well - you know they don't know necessarily what they need or how to

go about this. The service industry is so new for people who have said we are the vanguard of the revolution.

(END VIDEO CLIP)

OPPMANN: They are learning as they go along. But I think you know America is obviously the heart of capitalism and Cubans are also incredible

entrepreneurs. So I think as more and more American's come here, some will get frustrated and go home, but for the people who stick it out, and have

the language skills. You know the (inaudible) now is before very few people were doing business in Cuba. Now everybody wants to do business in Cuba.

So you hear about e-mails not being returned, calls not being returned. It's just a different business environment. It's meeting after meeting,

lots of cups of very strong Cuban coffee and building trust.

[17:10:25]

CURNOW: OK, Patrick Oppmann, thanks so much.

And of course as Patrick was saying there a lot of officials, got their economics degrees in Moscow and they're doing deals where with Google, with

Airbnb, with Cruise Line. So exciting times, confusing times and as Barack Obama also said though today in his statement, he said it's about people,

and that's why he's brought such a huge delegation with him. He wants people to literally sit down and have a coffee. And he's hoping that's the

best way, that diplomacy will win out in the end.

GIOKOS: And absolutely lifting embargoes overnight you know is very difficult to do so this is going to of course take some time. Robyn, thank

you very much for that update, live for us from Havana.

(END VIDEO CLIP)

GIOKOS: Also happening in the coming hour, three Republican candidates hoping to replace Barack Obama will face their own foreign policy test.

They'll be speaking to the influential American Israel Public Affairs Committee, better known as APAC.

Now Hillary Clinton spoke there a little earlier today. The economic ties between Israel and the U.S. run deep.

(BEGIN VIDEO CLIP)

GIOKOS: The two countries have had a free trade agreement since 1985, that has helped make the United States, Israel's single largest trading partner.

The U.S. and Israel exchanged $38 billion worth of goods last year. In addition the U.S. sends Israel some $3 bill a year in military aid.

CNN's Oren Liebermann now joins us live from Jerusalem.

(END VIDEO CLIP)

GIOKOS: And Oren, thank you very much for joining us today. It's going to be really important in terms of what is going to transpire at APAC today.

We heard from Hillary Clinton. Of course a big one is going to Donald Trump. And it's said that this is going to be important for him to smooth

over some of the issues that of course have been plaguing the Republicans.

OREN LIEBERMANN, CNN CORRESPONDENT: Absolutely. He came out and said he wanted to be the neutral guy on the Israeli-Palestinian conflict. That was

seen as being a very -- I don't want to say an anti-Israel comment, but certainly not a pro-Israel comment and he caught a lot of flak for that.

Saying something like that, waffling like that in front of APAC would not be a good move for Donald Trump. That would turn this crowd into a hostile

crowd very quickly. This crowd wants to hear a pro-Israel message.

(BEGIN VIDEO CLIP)

LIEBERMANN: They heard it from Hillary Clinton. She came right out and said she is pro-Israel, and then she went right after Donald Trump including

that neutral guy comment. I suspect he'll hear even more about that as the other Republican candidates speak before him and they'll have to make up

for that somehow. An apology probably seems unlikely in this case, but that is what hangs over his head. That single "neutral guy" comment that he had

to walk back, we'll see how he smooths over that one, what his promises are.

In terms of what he says, all the Republicans will come out, they've been arguing about who is the most pro-Israel. We've spoken with political

analysts on this end who say there really isn't that much of a difference on how pro-Israel these candidates are. It will be the APAC crowd, the

American-Jewish crowd and the Israeli crowd on this end looking for Donald Trump to say something definitively and not to make any wishy washy

comments here.

(END VIDEO CLIP)

GIOKOS: And Oren, just lastly, what are the views on the ground by way of the - the way that the elections have been ongoing? I mean Hillary Clinton

was talking about ensuring there is a steady hand when it comes to foreign policy. What is the perception on the ground?

LIEBERMANN: Well, for Israelis, they're familiar really with only two candidates, Hillary Clinton and Donald Trump. They view Trump with a bit of

curiosity. They're not nearly as familiar with the other names, with Cruz and Kasich. And they worry to an extent about Donald Trump because of some

of his unclear comments. He doesn't have a history in foreign policy. He doesn't have a long history here. He does have Jewish son-in-law but that

doesn't score him too many points. So there will be a lot of people curious here.

There have been some recent surveys, Hillary Clinton has a big lead in public opinion polls over Donald Trump. A lot of that is because of Bill

Clinton, Bill Clinton is still very, very popular in Israel, and with the American Jewish vote, Hillary Clinton has a big lead there simply because

American Jews are overwhelmingly Democrats. So she has the advantage. Donald Trump will be trying to make up for that.

GIOKOS: Thanks very much for that update, Oren, live for us from Jerusalem. And we are now waiting for those speeches to begin in Washington. Any

minute now, once they begin, we'll bring them to you live.

Up next, the pharmaceutical company Valeant is sick. It says the first step to a cure is getting rid of its CEO. Don't you go anywhere.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

[17:16:30]

GIOKOS: Welcome back. U.S. Stocks finished largely flat today. As you can see, the Dow Jones up just 22 points and that's basically slightly in the

green. Several Federal Reserve officials hinted the Fed could raise rates as early as April. They also expressed confidence that inflation would hit

the Fed's 2% targets in the coming years.

Now the patient has seen an immediate and dramatic improvement. And that patient is Valeant Pharmaceuticals. The improvement is a 7% jump in its

share price. And that's because the company has just received a new prescription. So the CEO Mike Pearson is on his way out. Activist investor,

Bill Ackman is in.

He will join Valeant's board and Valeant's symptoms are serious. Its stock is down 70% this year. And the company has also downgraded its profit

outlook and warned of possible defaults.

Now the underlying issue, a series of investigations into the way that Valeant prices and distributes its drugs. One research firm even accused

Valeant of Enron-like fraud. Now, as Valeant's treatment begins, there's one complication. The former CFO, Howard Schiller, refuses to step down

from the board. He is denying accusations of improper conduct.

Now CNN Money's correspondent, Cristina Alesci joins me now live. It's a conversation that we started last week. Are we seeing a seven percent jump

in today's session? That's nothing compared to the 70% that we've seen over the past year. The CEO is now on his way out, no surprise, actually, right?

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Right, yes. No surprise. Because this problem as we found out today, radiates all the way to the top. And

not only - and this is like a really dramatic turn of events right, because a week ago we were talking about how the board, and everyone - and all the

investors, were right behind him, affirming confidence in him. Today we find out not only has the strategy that the CEO was pursuing all wrong, but

also the tone that the CEO set was all wrong. Because in this release it suggests that the tone and the aggressive targets that came down from the

CEO was part of the decision - was part of the reason decisions like the one the CFO made and others that the company made to perhaps inflate

earnings and revenue, it really came down from the CEO, and that why this is happening.

GIOKOS: What perplexes me is that we know that Pearson came in in 2008 to turn the company around. But if you look at the business model in itself,

you could see that there were problems from the very beginning.

ALESCI: That's right.

GIOKOS: So acquisitions basically debt fuelled acquisitions. You saw very little money on RND and then obviously the business model is made around

trying to increase prices on some products which doesn't work at this point in time.

ALESCI: Right. It was a huge political backlash against raising prices on drugs. It's been a subject as we discussed before on the campaign trail

from many of the candidates, both on the Republican and Democratic side. So there's clearly an effort to reduce drug prices so this brilliant

turnaround strategy that Mike Pearson was championing is all wrong. But again, it's not just the business strategy here. It seems to be something

way more nefarious than that in the sense that Mike Pearson may have set unrealistic targets. He may have encouraged people to be aggressive. And

that tone may have encouraged people to make bad decisions, which is why they're asking for the resignation of the CFO, because there were some

accounting problems, including potentially booking revenue, you know that should have not been booked.

(BEGIN VIDEO CLIP)

[17:20:13]

ALESCI: And now the CFO feels like he was the guy that got thrown under the bus. And he doesn't want to resign because he doesn't want to be the

scapegoat. But clearly that's who they're throwing under the bus.

GIOKOS: So where to from here?

(END VIDEO CLIP)

GIOKOS: What are expecting further investigations? What are we going to see?

ALESCI: That's a very good question. Because there's still ongoing investigations, not just internal but external as you said. The Federal

government is now looking in and all over Valeant's business. So there's going to be a lot of questions that it's going to have to answer. And the

company is going to have to spend so much money now on lawyers and advisors to reinstate those financial statements that they said that they were going

to reinstate today. So there's a tremendous amount of cleanup that the company is going to have to do. I mean, the 7% stock bump is great, but

it's going to need a lot more turning around before it even gets close to that stock price just about a year ago.

GIOKOS: All right, Cristina thank you very much for that update, of course much appreciated.

GIOKOS: All right, so Serena Williams and other female tennis players are taking a stand against comments claiming they should be on their knees

thanking men for their success and popularity. This coming up next, stay with us.

(COMMERCIAL BREAK)

GIOKOS: Female tennis players rely on their male counterparts for the sport's popularity and success. Well that was the message from the director

of one of the sport's most prestigious events.

Indian Wells CEO Raymond Moore says women should be grateful.

(BEGIN VIDEO CLIP)

RAYMOND MOORE, CEO INDIAN WELLS: They ride on the coattails of the men. They don't make any decision. They're lucky. They're very, very lucky. If I

was a lady player I would go down every night on my knees and thank good that the Roger Federer and that Rafael Nadal were born, because they've

carried the sport.

(END VIDEO CLIP)

GIOKOS: Well the comments have sparked outrage among some of the sport's top athletes. Billie Jean King tweeted that "all top players, male and

female, contribute to the sports' success." Chris Evert, tweeted that many women's matches have been bigger draws than mens. Serena Williams, the

world's best female tennis player, told reporters no one should not have to listen to - no one should have to listen to those kinds of comments.

(BEGIN VIDEO CLIP)

SERENA WILLIAMS, RANKED NO. 1 IN WOMEN'S TENNIS: There's only one way to interpret that. Get on your knees, which is offensive enough, and thank a

man, which is not -- we as women have come a long way. And we shouldn't have to drop to our knees at any point.

(END VIDEO CLIP)

GIOKOS: Well BNP Paribas, the main sponsor of the Indian Wells tournament stated that it supports all tennis players. Let's take a listen.

(BEGIN VIDEO CLIP)

GIOKOS: And Raymond Moore has already apologized for his comments about WTA, and that's the association that runs women's tennis. "BNP Paribas is a

supporter of a single type of tennis from amateur through to professional and is strongly committed to diversity as an organization." And that

statement coming through from BNP Paribas.

(END VIDEO CLIP)

GIOKOS: Joining me now to discuss this further is Don Riddell from Atlanta. Don, thank you very much for joining us. Shocking comments, many are

calling them ignorant. Backlash coming through from all rounds but also when you see what the comment is from BNP Paribas some have said that it's

not really taking a strong stance against these shocking words.

[17:25:17]

DON RIDDELL, CNN WORLD SPORT: Yes, I would agree with that. Of course it remains to be seen how much longer they want to be associated with this

tournament. You've already mentioned that it is one of the biggest tennis tournaments in the world, arguably the biggest, just outside the four grand

slam events. It's very hard to see that Raymond Moore can remain in this position for so many different reasons.

First of all, Larry Ellison, the co-founder of Oracle, took over this event a few years ago and made it into one of the biggest events in world tennis.

I can't imagine how pleased he is about the fact that neither the men's or women's finals yesterday are getting any coverage at all because this is

what we're talking about.

We've got the fact that Martina Navratilova is now talking about women's players perhaps even boycotting this event last year. And I can tell you

that Serena and Venus Williams have no problem boycotting this particular tournament.

(BEGIN VIDEO CLIP)

RIDDELL: Serena didn't play it for 14 years after she claimed to be racially abused by fans in the 2001 final. So none of these things are

looking very good for Raymond Moore or for this tournament.

And what he said was just extraordinary, wasn't it? I mean it wasn't even just an off-the-cuff remark that was picked up by a single press

journalist.

(END VIDEO CLIP)

RIDDELL: I mean this was on camera. And it was so explicit, so detailed. And he now as a result of this finds himself under investigation by the

WTA. And the last man to find himself in that position for a breach of conduct ended up being suspended from all involvement in tennis for 12

months.

GIOKOS: Well then we look at comments coming through from Novak Djokovic. And while you know he came out and said that you know we should all be

looking to some form of equality, he did then mention that the statistics show that men actually draw more audience to the men's games. Which is

interesting, because then could then counter argue that and say, well, there's more sponsorships and more attention given to the men within the

industry. What do you think is going to happen by way of some of the backlash that we've seen?

RIDDELL: Well, it certainly reignited the debate. And it's a very controversial one. Many of us thought it had been put to bed several years

ago when all four of the grand slams agreed to pay both their male and female players equal prize money regardless of how many sets they played.

So this is perhaps a new line to the argument from Novak Djokovic. But I'm not sure how many people would actually agree with him. Serena immediately

countered with the fact that her final at the U.S. Open last year sold out quicker than the men's final. Of course she was chasing history at the

time.

(BEGIN VIDEO CLIP)

RIDDELL: But there is no doubt that there are a lot of major stars in women's tennis. They are stars in their own right. They have their own

following. They have their own fans. And I'm not sure that really they need to be thankful for anyone other than their own efforts for getting

themselves to where they are.

(END VIDEO CLIP)

GIOKOS: Well Don, thank you so much for that update. And that was Don Riddell joining us from Atlanta.

It was a big event for small devices.

(BEGIN VIDEO CLIP)

GIOKOS: And Apple's CEO included one more thing that had nothing to do with new hardware, coming up, right after this.

(END VIDEO CLIP)

[17:30:00] (COMMERCIAL BREAK)

[17:31:23] Hello, I'm Eleni Giokos. Coming up in the next half hour of QUEST MEANS BUSINESS, we're live from California where Apple has unveiled

its latest products. The Xerox CEO tells us there are huge challenges to undergo before they can do business in Cuba. Before that these are the top

news headlines we're following for you this hour.

U.S. President Barack Obama says the American embargo on Cuba will end as he continues his historic visit to the island nation. Mr. Obama made the

announcement during the first state visit to Cuba by a sitting American President in nearly 90 years. Speaking at a joint press conference, Mr.

Obama said changing the relationship between the two countries would benefit both Cuba and the United States.

(END VIDEO CLIP)

BARACK OBAMA, U.S. PRESIDENT: Our growing engagement with Cuba is guided by one overarching goal, advancing the mutual interest of our two countries

including improving the lives of our people, both Cubans and Americans. That's why I'm here. I've said consistently, after more than five very

difficult decades, the relationship between our governments will not be transformed overnight.

(END VIDEO CLIP)

GIOKOS: The press conference was notable for Raul Castro also took questions from the media, which is highly unusual for the Cuban president.

Now In response to a question from CNN's Jim Acosta, Mr. Castro promised to release any political prisoners held by the Cuban government.

(BEGIN VIDEO CLIP)

RAUL CASTRO, CUBAN PRESIDENT (through translator): Give me a list of the political prisoners and I will release them immediately. Just mention a

list. What political prisoners? Give me a name or names or when, after this meeting is over, you can give me a list of political prisoners, and if

we have those political prisoners, they will be released before tonight ends.

(END VIDEO CLIP)

GIOKOS: A gunman has attacked a hotel in the capital city of Mali. The E.U. Training Mission in Bamako has its headquarters in the hotel. The

mission says no one was hurt. Bamako experienced another gun attack at a hotel last November when 22 people were killed.

New details are emerging about the capture of the key suspect in the Paris terror attacks. Belgian authorities say Salah Abdeslam and an accomplice

had contacted somebody already under surveillance by Belgian security services. Now officials said Salah Abdeslam, quote, "Came right into our

net."

South Korea said North Korea fired five short-range projectiles Monday into the sea off its east coast. This comes just days after Pyongyang fired two

mid-range ballistic missiles. It also comes as a South Korean and U.S. militaries are conducting joint annual exercises that routinely draw

threats and criticisms rom Pyongyang.

Tim Cook says Apple will not shrink from its fights with the FBI. The purpose of today's Apple event was for the company to show off new iPhones

and iPads. But Apple's CEO Tim Cook began with an impassioned defense of his stand against the U.S. Justice Department.

(BEGIN VIDEO CLIP)

[17:35:00] TIM COOK, CEO, APPLE: We did not expect to be in this position, at odds with our own government. But we believe strongly that we have a

responsibility to help you protect your data and protect your privacy. We owe it to our customers and we owe it to our country. This is an issue

that impacts all of us. And we will not shrink from this responsibility.

(END VIDEO CLIP)

GIOKOS: CNN money's Samuel Burke is now in Cupertino for us tonight. Samuel, a very good evening to you. And you know, at a product launch, how

significant is it that CEO that Tim Cook would talk about the encryption debate?

SAMUEL BURKE, CNN MONEY, BUSINESS CORRESPONDENT: Nobody was surprised that he talked about it. But we were all surprised in that room when it was the

first thing he said. He came charging out of the gate talking about this. And that is very strong language, "We will not shirk our responsibility,"

sounds a lot like "we will not back down." Again, he said they never thought they'd be in this position, and to your point, this was a product

company, these launches are all about products. So to say it first sent a very strong message.

But I have to tell you, Eleni, someone here in Silicon Valley pointed out something very poignant to me. If there's one place that Apple is going to

launch this fight, it's probably best here in the United States. This is their government. This is where Apple is from, here in California. So

they might have a lot better odds in fighting this fight in the country where they're from, rather than fighting it in China or another country,

because this is an issue that is affecting countries' governments all around the world and their relationships with companies here in Silicon

Valley.

GIOKOS: All right, Samuel, thanks for that update.

We now take you to Washington where John Kasich is speaking at the American Israel Public Affairs Committee. Let's take a listen.

GOV. JOHN KASICH, R-OH, PRESIDENTIAL CANDIDATE: -- as we can see today. You know, I first visited Israel in 1983 with my late dear friend Gordon

Zacks. As you all know, Gordon was a founding member of AIPAC, and it was on that trip that I actually visited Bethlehem and I called my mother on

Christmas night from Jerusalem. As you can imagine, it was a very, very special moment. And Gordon always reminded me of it.

Gordon helped me as much as anyone has over the years to know and to appreciate the importance of our relationship with Israel and Israel's

unique security challenges. And I can't think of a better guy who could have taken me to Israel. It was on my trip in 1983 that Gordon introduced

me to Avital Sharansky, when her husband Natan was still in a Soviet prison. She told me her husband's story over lunch in the King David Hotel

in Jerusalem, and said she was going to Washington to plead for his release. I asked her, would you mind if I organized a rally in support of

your husband on the steps of the capital. And so we came together in a bipartisan way to call for Natan Sharansky's release.

You know, Gordy had taken Sharansky into the oval office to meet with the President Reagan, and when the meeting ended, Mrs. Sharansky was told by

the president, "I will not rest until your husband is free." Sharansky's story has always inspired me from the day that Gordy first introduced me to

Avital. But I don't know how many of you here have ever read his book, "Fear no Evil."

Natan wrote in that book, as I related to him, and he said, I'm glad that you saw it," that when they went to him in the prison, they wanted him to

confess something. And they said to Natan, "Well, you understand that Galileo even confessed." And think about Sharansky sitting in that prison

in that solitary confinement. And he thought to himself and told them, "You're using Galileo against me? No one will ever use me any against any

other prisoner of conscience." For that he deserves to always be membered.

I had a phone conversation with Natan for years, but I never had the chance to meet him. And ironically, I met him at the cemetery when we laid Gordy

Zacks to rest. Where Natan gave a eulogy on behalf of our great friend.

[17:40:00] Look, I want it to be clear to all of you that I remain unwavering in my support for the Jewish State and the unique partnership

between the United States and Israel. When I was first introduced to Israel and some of its leaders, of course of core of our partnership with

Israel was already very well-defined. We give thanks to Harry Truman for the courageous steps he took when Israel was established. I applaud our

continuing legacy of support for the Jewish State and the struggles, inventiveness and vitality of the Jewish people. This legacy is one that

will not only honor in my administration, but will take active steps to strengthen and expand.

I want you all to know something very special to me, because it was at a ceremony recognizing the holocaust that as governor I proposed that we

build a permanent memorial. So that people, and particularly our young people, could understand the history and the lesson of man's inhumanity to

man and the incredible suffering visited upon the Jews cross the globe. I worked with some prominent Ohioans as the Ratners, Schauenstein's, the

Wexner's, and many other members of the Jewish community over three years to make it happen. They told me it could not be done. I said, "You watch

me, we will build a memorial." The memorial finally was designed by Daniel Libeskind, and it was the first of its kind in the nation. And you all

please come to Columbus and look at it, it is just beautiful.

But I want to tell you that a very good friend of mine, Victor Goodman, a prominent member of the Jewish community in Ohio, asked me to take him over

to look at that memorial before it was unveiled. We walked over behind the tarp. I had my arm around his shoulder. And we read the inscription and

the memorial together. And I will never forget, when he finished reading it, he buried his head in my chest and wept. And we wept together. And he

looked at me and said, "John, thank you for what you have done here. This will exist as long as the State of Ohio exists."

As you may know, I served on the House Armed Services Committee for 18 years. And I worked to implement Ronald Reagan's strategy to revitalize

our military and to defeat the Soviet Union. Together, my colleagues in Congress and I gave our alliance with Israel meaning. We assured Israel's

continuing qualitative military edge by authoring the initial $10 million for the Arrow Iron Dome Anti-Missile Program that we know is so critical to

the security of Israel.

We supported the Phantom 2000 program guaranteeing Israeli air superiority with the latest fighters and the transfer of reactive armor technology that

has made Israel tanks so effective. I think it could be fairly said that my support and friendship for our strategic partner Israel has been firm

and unwavering for more than 35 years of my professional life.

Israel is the only democracy in the Middle East, has in turn been a faithful and dependable friends. The American friends of Israel are not

fair weather friends. They recognize the strategic hinge with Israel and that America's and Israel's interests are tightly intertwined despite our

inevitable disagreements from time to time. We share a critically important common interest in the Middle East, the unrelenting opposition to

Iran's attempts to develop nuclear weapons.

In March of 2015, when the Prime Minister spoke out against the Iran nuclear deal before a joint session of Congress, I flew to Washington and

stood on the floor of the House of Representatives that was in session, the first time I had visited since we had been in session in 15 years. And I

did it to show my respect, my personal respect, to the people of Israel.

And I want you all to know that I have called for the suspension of the U.S.'s participation in the Iran nuclear deal in reaction to Iran's recent

ballistic missile tests. These tests were both a violation of the spirit of the nuclear deal and provocations that could no longer be ignored. One

of the missiles tested had printed on it in Hebrew, can you believe this, "Israel must be exterminated." And I will instantly gather the world and

lead us to reapply sanctions if Iran violates one crossed T or one dot of that nuclear deal.

[17:45:00] We must put the sanctions back on them as the world community together. Let me also tell you, no amount of money that's made by any

business will stand in the way of the need to make sure that the security of Israel is secured and that Iran does not have a nuclear weapon. No

amount of money can push us in the wrong direction. And I want you to be assured that in a Kasich administration there will be no more delusional

agreements with self-declared enemies. No more.

And as the candidate in this race with the deepest and most far-reaching foreign policy and national security experience, ladies and gentlemen, I

don't need on-the-job training. I will not have to learn about the dangers facing this country and our allies. I have lived these matters for

decades. One day and on day one in the oval office I will have in place a solid team of experienced and dedicated people who will implement a long

term strategic program to ensure that the security and safety of this country and that of its allies such as Israel. I will lead and make

decisions and my national security appointees will work tirelessly with Israel to counter Iran's regional aggression and sponsorship of terror. We

will help to interdict weapons supplies to Hezbollah. We will defeat ISIS in Syria and Iraq. And we will assist Israel to interdict Iranian arms

supplies and financial flows to Hamas.

Let me stress I will also work to build and expand on Israel's new-found regional relations as a result of the flawed Iran nuclear deal, amazing,

Israel and the Arab Gulf States are now closer than ever. The bad news here is that the U.S. is not part of this new web of relations. I will

work to participate in, expand, and strengthen those ties.

Israelis live in one of the world's roughest neighborhoods. And Iran is not the only threat that the U.S. and Israel both face there. ISIS,

headquartered in Syria and Iraq is a mortal peril and of course ladies and gentlemen, its spread must be stopped. Since it is dedicated to

destruction in Israel, the Middle East, Europe, Africa, Asia and the United States, it is a threat to all civilization unless we recognize and unite

around the central truth we remain committed to ineffective and piecemeal approach to dealing with ISIS. Because the world recognizes the

existential threat posed by ISIS, I believe I can lead a regional and NATO coalition to defeat ISIS both from the air and on the ground, in Syria and

in Iraq. We're all in this together.

I will also provide support and relief to our common ally Jordan that has shared the brunt of refugee flows. And I will bring our troops home as

soon as we, together with our allies, have created a realistic prospect that regional powers can conclude a settlement guaranteeing long-term

security there. I will then support allied coalitions as they destroy ISIS's various regional affiliates. My administration will cooperate with

allies to deny Libya's oil as a resource. Deny Libya as a platform to amount attacks against Europe and disband what has become a hub for act of

terror throughout Africa. I will support our common vital ally, Egypt, in its efforts to destroy the insurgency in Sinai and terrorists infiltrating

from Libya.

[17:50:00] And I will provide the Afghan National Security Forces with the key aircraft and support need to defeat the Taliban, al Qaeda, and ISIS,

and then I will bring our troops in Afghanistan back home.

Insurgent states such as Iran and network transnational terrorist actors such as ISIS are not the only threats that Israel, the Jewish American

Community and America together face. Believe me, a Kasich administration will work from the beginning to block and eliminate any form of

intolerance, bigotry, racism, or anti-Semitism, whether domestic or international, particularly in international bodies. I condemn all

attempts to isolate pressure and delegitimize the state of Israel and I will support Congresses efforts to allow this activity both here and in the

E.U. And I am also very concerned about rising attacks on Israel and Jewish students on our college campuses.

I pledge to use the full force of the White House to fight this scourge and I will make sure we have the tools needed to protect students from hate

speech, harassment and intimidation while supporting free speech on our college campuses. I've been horrified by the recent spate of Palestinian

attacks on Israeli citizens. These are not spontaneous actions of lone wolves, they are part of an unprecedented wave of terror that has involved

over 200 attacks on Israeli since October 2015. They are the outcome of a culture of death that the Palestinian Authority and its forbears have

promoted for over 50 years.

Indoctrination of hate has long been part of a planned and well-thought-out strategy. Palestinian children are raised in a culture that glorifies

martyrdom and the willingness to die in the pursuit of killing or maiming Israelis. Children's textbooks have been filled with vial anti-Semitism.

Families of suicide killers receive an annuity after they kill and maim. Imprisoned terrorists receive stipends and are guaranteed jobs in the

Palestinian civil service at salary determined by the length of their sentence. Public squares, streets, and even soccer tournaments are named

after terrorists. If they truly want peace with Israel, then Palestinians cannot continue to promote a culture of hatred and death. We must make it

clear that we will not tolerate such behavior.

And I do not believe there is any prospect for a permanent peace until the Palestinian Authority and their friends in Hamas and Hezbollah are prepared

to take real steps to live in peace with Israel and recognize Israel's right to exist as a Jewish State, and this violence is unacceptable.

In the meantime, we can best advance stability in the region by providing Israel our 100 percent support. We can make sure Israel has what it needs

to defend itself with weapons, information, technology, political solidarity and working quietly to facilitate Palestinian and Israeli

efforts at reconciliation. This is what would be expected of a dependable ally.

[17:55:00] Folks, let me conclude by talking about the greatest alliances with those with countries such as Israel where we share a community of

values. The post-war international system that we and our allies built upon these common values of course is under challenge or attack. And

that's why we have to recommit ourselves to those values. We must not shy away from proclaiming and celebrating them. And why we must revitalize our

alliances to defend and expand the international system, build upon those values, a system that has prevented global conflict and lifted over 2

billion people out of poverty in the last 70 years. In doing this, we cannot go it alone. We must hang together and be realistic but what we can

achieve. We must be neutral in defending our allies either.

We must be counted on to stand by and invest in our friend instead of abusing them and currying favor with our enemies. For effective governance

in our democracy and for the sake of the future, we have to work together at home, as well across party and ideological lines whenever and wherever

possible. This is exactly what I've done in the course of my career in public service. I reached out to the other side countless times to see how

we can sit together and achieve the progress that America wants and deserves. And we all look back to the time of Ronald Reagan and his

meetings with Tip O'Neill, where they came together to put America first, politics and partisanship second. And Reagan, as he reached across the

aisle to Tip O'Neill, very partisan legendary, they managed to hammer out deals that gave Reagan victories in revitalizing our economy and

implementing the military buildup that ended the cold war.

GIOKOS: And you've just been listening to U.S. Republican Candidate, John Kasich talking at the AIPAC meeting in Washington. That's a pro-Israeli

lobby group in the U.S. Capitol. You heard him pledge that he has unwavering support for Israel. In fact he's talking about 35 years of

supporting Israel, and giving specific examples through the decades of being in public service. He also promised to strengthen support, if he's

elected president of the United States, also saying that it's not just about a business agenda, that no kind of business agenda is going to push

that relationship in the wrong direction. We'll also be hearing from his republican rivals Donald Trump as well as Ted Cruz a little bit later on.

And we'll bring you those speeches once they begin. For now, though, we're going to take a very short break and be back right after this.

(COMMERCIAL BREAK)

[18:00:00] GIOKOS: That's it for "Quest Means Business." I'm Eleni Giokos here in New York, and Richard Quest will be back with you tomorrow and the

news continues right here on CNN. Cheers.

END