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QUEST MEANS BUSINESS

IOC: Brazil Crisis Will Not Affect Olympics; Rousseff: Impeachment "Is A Coup"; Trump Meets House Speaker Ryan; Officials: Debris "Almost Certainly" from MH370. Aired 4-5p ET

Aired May 12, 2016 - 16:00:00   ET

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


[16:00:00]

RICHARD QUEST, HOST: The market is doing just about nothing. We're back to a gain of no percent. We've been up, we've been down during the course of

the session. Real topsy-turvy. Not huge changes and now I think -- oh hang on. Oh dear, you're only supposed to do three. But anyway, a timid gavel

that's ended trading on Thursday. It's May the 12th.

(BEGIN VIDEO CLIP)

QUEST: New President same old mess. Michel Temer takes over in Brazil as Dilma Rousseff is impeached. The campaign to keep Britain in the E.U. gets

a boost from the Bank of England and a serious warning to boot. And Donald Trump meets the Republican establishment that's not quite ready to back him

yet.

(END VIDEO CLIP)

QUEST: We have an hour together. I'm Richard Quest. I mean business.

Good evening. We begin tonight in Brazil where the new President is facing a host of old problems.

(BEGIN VIDEO CLIP)

QUEST: Dilma Rousseff was suspended today for 180 days while the trial to impeach her gets under way. Peeking to a crowd of supporters, the president

said she's done nothing wrong.

DILMA ROUSSEFF, BRAZILIAN PRESIDENT: (As translated) I am the victim of a great injustice. Those who did not manage to get through the government

through the direct vote of the people, those that lost the elections, try now by force to get to the power. This coup is based on irresponsible

reason because the acts I have committed that they have accused me of are pure acts of government. They were also performed by all the Presidents

before me. If it wasn't a crime before it's not a crime now.

QUEST: The word coup used time and again. By Dilma Rousseff who stood on the spot where she helped to light the Olympic torch only last week. She

will not, of course, be the President who opens the games which is a couple of months from now. Her replacement is Michel Temer and he's facing crisis

on multiple fronts.

(END VIDEO CLIP)

QUEST: First of all you've got the vice president who's not from the same party and the two haven't got on particularly well in the past. Now the

significance here is, of course, the question first of all of Zika virus.

Health officials now are saying because Zika virus is a certain prevalence in Brazil that the Olympics should be postponed because of this.

(BEGIN VIDEO CLIP)

QUEST: However, look at the words, the advising from the health advisers. Dr. Amir Attaran, Olympic games must not proceed. Is how it's been put. So

serious is the worry over the Zika virus.

Then you have the economy and Brazil's GDP. The longest recession since the 1930s. If you take a look, this is the 2013, you get growth there but it

goes into recession in '14 and that recession just gets ever deeper to where GDP could be off many percent over the course of the next twelve

months.

(END VIDEO CLIP)

QUEST: The Vice President, now the President, or President pro-tem Mr. Temer is to name a former Central Bank Chief, Enrique Morales as the

finance minister. Putting this together you end up with multiple corruption investigations. Particularly concerning the large oil company Petrobras,

senior politicians across the political spectrum have been accused of corruption, serious, deep endemic corruption vis-a-vis Petrobras.

But it is important to note the allegations against Dilma Rousseff do not relate to Petrobras, do not relate to corruption, they're all about

supposed budgetary shenanigans which the impeached President now says everybody else was up to.

Shasta Darlington, is - Shasta, you've covered this from every twist and turn, but we have reached a point which was inevitable. Is Rousseff's

conviction at trial also inevitable?

SHASTA DARLINGTON, CNN CORRESPONDENT: You know, Richard, I'd have to say the answer to that is yes. If you just look at the vote this morning, 55

senators voted in favor of launching this impeachment trial against 22 who voted against it. That means they've already got two thirds majority in the

senate that will likely push this through.

(BEGIN VIDEO CLIP)

DARLINGTON: So at the end of the whole trial, in six months' time, that's exactly what they need. So it is looking pretty inevitable. This is a

political trial, most of the evidence if you will and the arguments are already out there. So can she introduce anything new? No. The only thing

that could really turn this around would be some explosive new developments in the corruption probes that maybe make the vice president look worse or

someone else in the alliance. But that's the real sort of undefined element out there, Richard.

[16:05:14]

QUEST: So give me an impartial view on this question that Dilma Rousseff said. You heard her just before she left the presidential palace. She says,

I did nothing more than every other president has done when it comes to budgetary machinations. If it wasn't a crime for them, it shouldn't be

crime for me.

DARLINGTON: You know, Richard, the problem with this whole impeachment process is that it is a political trial by nature. This is a trial that's

carried out not in a criminal court but in the senate so there is -- this isn't just about the laws. There is a political element to it. And people

will bring their politics to the table. But having said that, did other presidents do similar things? Yes, they did. Does that make it legal? I'm

not the expert on that. That's certainly not a good argument I wouldn't think, well he did it, so therefore I can too.

(BEGIN VIDEO CLIP)

DARLINGTON: On top of that, on top of that, she used this recourse to a huge degree while previous presidents maybe used -- borrowed 900,000 et

cetera. We are talking billions of billions, so there is that difference, as well. But again, this is political. We can't ignore that fact, Richard.

(END VIDEO CLIP)

QUEST: OK. So now give me the view in the country. How split is the country? I mean, she was elected. She was re-elected. There are supporters

of her. But how -- how deep is that support?

DARLINGTON: Richard, when she was re-elected, this was back in October 2014, the extent of the economic crisis was not known. She -- the Workers'

Party, her predecessor, Luiz Lula da Silva, and Rousseff have largely been supported by Brazil's lower classes, people who saw their lives improved

over the last 13 years, millions of people lifted out of poverty. As we sank into this recession the funds available for them also shrank.

Unemployment is high. People have lost their jobs. Inflation is high. They can't buy what they need. Loans, all these people that took out loans to

buy cars, T.V.s, maybe send their kid to a private school. Well guess what, they can't pay them back.

So all of that support that she had during the re-election really has been eroded. When you look at the polls, she is right around 10% support. So it

really has shrank and that's why lawmakers felt they could go through with this impeachment proceeding, Richard.

QUEST: Shasta, we'll talk about the Olympics on a future occasion because today really is much more about the importance of the country and the

economy than the Olympics which is coming up. Thank you, Shasta.

The stocks in Brazil now they jumped on the news. The Bovespa is up more than 1%. You might have expected it to be up higher bearing in mind the

significance of the day's events. But I think what we're seeing here is it's been priced in. If you recall when we've met before we have seen gains

of 2%, 3%, 4% on previous sessions. So you're seeing a priced in buy on the rumor, sell on the news. Investors see Temer as more of a friend to big

business and they're hoping he can turn the economy around. We need to put some perspective into all of this.

Alberto Ramos is with me. How good to see you, sir.

Now, you and I have talked about this before. And you're not surprised at the result today.

ALBERTO RAMOS, SENIOR LATIN AMERICAN ECONOMIST, GOLDMAN SACHS: I'm not. In a way the political capital off the President has diminished significantly.

Within society, the President unpopular and the political capital with congress was also diminished. So that turned the administration quite

ineffective in driving the policy agenda. This is an economy with a very large - very large microeconomic imbalances that need to be fixed.

QUEST: Right, so what are you telling GS's clients tonight? Give us an insight what they're paying a fortune for. Give us an insight for free.

RAMOS: Absolutely. I mean we're going through a process a political authorization. There is a lot of hope invested in the notion that this

could be a successful political transition that may lead to a political backdrop that is not only more inclined to endorse and approve the fiscal

measures that are needed to stabilize the debt dynamics.

QUEST: But the new team that Temer, he's wasted no time in getting rid of Rousseff's cabinet. He's brought in a new cabinet including Henrique

Meirelles, who's believed to be the finance minister. What do we know about him?

RAMOS: What we know it's quite positive. It's a very -- you know he's an experienced technician. He managed the Central Bank for a few years. He has

some very relevant private sector experience. I think his credentials are orthodox and conventional.

QUEST: Orthodox and conventional which might be what the economy needs but it's not a reforming government yet, is it?

[16:10:05]

RAMOS: Time will tell. We need a combination of both. We need short term measures to address the cyclical problems of the economy. You need to

recommit to drive inflation lower. We need to unveil a policy vision, a fiscal vision to stabilize the debt dynamics. Beyond that we also need

structural reforms in order to improve the efficiency of the economy and elevate potential GDP over the long term.

QUEST: Is it your view that this government temporary in nature could be gone in 180 days or it could be permanent thereafter that Temer has a

mandate to do anything other than just keep the lights on?

RAMOS: That's a great question. You know he needs to unveil a very bold policy agenda. Some of the measures that are needed are unpopular. Such as

tax heights, cuts in public spending, social security reform. And although legitimate this is a government that is special in nature. He inherits

power from an impeachment proceeding and they need to deliver this against the backdrop of a sharply contracting economy very significant (inaudible)

of the labor market. He's a transition administration without a mandate from the ballot box to implement those very difficult measures.

QUEST: Is the Real, is the Bovespa a buy or do you really need just of steel - you need nerves of steel or anything else to actually want to go to

Brazil at the moment?

RAMOS: I mean, there is more upside but it really will depend on the policies that will be unveiled over the next few weeks and the capacity to

drive that agenda.

QUEST: Good to see you, sir.

RAMOS: Good to see you.

QUEST: Thank you for your guidance on this.

Let's look at the other markets after spending much of the day, negative, down, Wall Street ended the day - well have a look at that.

(BEGIN VIDEO CLIP)

QUEST: It was up. And then it was down., then it was up, then it dwindled and virtually unchanged. Just 10 points. Hardly worth talking about.

The European markets if you take a look there, the red arrows the board. The U.K. is deeply worried about "Brexit" we'll talk about that in a

moment. The Xetra Dax was off more than 1% in Germany where stocks fell. There were lackluster earnings, one of the factors that pulled things down.

And as you can see the Zurich SMI also off sharply, as well.

(END VIDEO CLIP)

QUEST: In Britain, arguments against the so-called Brexit now have the weight of the Bank of England behind them.

(BEGIN VIDEO CLIP)

QUEST: The bank has warned of a possible recession, a technical recession according to the governor of the bank and the pound could fall sharply. It

would also push up import prices. The Bank of England's governor Mark Carney says some weakness is already being seen.

(END VIDEO CLIP)

QUEST: And in fact if you read the inflation report time and again the words that come out again and again and again uncertainty.

(BEGIN VIDEO CLIP)

MARK CARNEY, GOVERNOR, BANK OF ENGLAND: The most recent weakness reflects in part the fourth coming referendum on the U.K.'s membership of the

European Union. Which has pushed up uncertainty levels to measures not seen since the euro crisis.

(END VIDEO CLIP)

QUEST: David Blanchflower is a former member of Monetary Policy Committee, Economics Professor at Dartmouth College joins me from Hannover, New

Hampshire.

DAVID BLANCHFLOWER, PROFESSOR OF ECONOMICS, DARTMOUTH COLLEGE: Hi, Richard.

QUEST: Look you -- good to see you, David. Look, you know, I know, the bank doesn't want to get involved. But today, the governor said he had a duty to

make their views clear.

BLANCHFLOWER: Yes, He did. I think he had really no choice. Not least because the economy has started to slow.

(BEGIN VIDEO CLIP)

BLANCHFLOWER: And it certainly looks that uncertainty over the outcome having an effect on the economy. And the Central Bank has to make a

forecast two or three years ahead and it's quite clear that this brexit vote is going to have an impact. And he said the ten members of the FBC and

the nine members of the MPC think this is the biggest risk to the U.K. economy.

(END VIDEO CLIP)

BLANCHFLOWER: So he has to kind of delve into that. And he has to tread this very narrow line between the economics and the politics.

QUEST: OK. As he treads that line, I mean, you know, giving evidence before the commons treasury select committees and speeches, we've heard it before,

so I'm guessing that you weren't surprised by this conclusion that they've come up with but are you surprised that they were as blunt in their

language?

BLANCHFLOWER: I guess I was a little bit surprised. The one thing I was really surprised about there were six words, Richard, which he said global

financial conditions could also tighten. So he said what you said which is that the U.K. could go into recession because of this brexit vote but they

broadened it to say this could have global repercussions in financial markets.

(BEGIN VIDEO CLIP)

BLANCHFLOWER: Obviously, it could have an impact on the rest of Europe because other countries might want the leave. But the concern is that that

was quite a broad statement that I hadn't expected and a lot of people focused on presumably because financial conditions in the U.S. in 2008

spread around the world. So that's the impact of globalization. But I was surprised that they really went quite that far.

(END VIDEO CLIP)

QUEST: And also, this phrase that sterling world could weaken perhaps significantly. Again, you know, when I hear this I sort of say, well, tell

me something I don't know. You know?

BLANCHFLOWER: Right.

[16:15:10]

QUEST: It's a bit of an obvious one but to hear the bank saying it, and it is six weeks to the day that the referendum takes place.

BLANCHFLOWER: Right. Well, this's right. And the word -- it was in the MPC minutes today, it was in the governor's statement and he was asked about it

in the questions at the press conference. They said the word, the exchange rate would fall sharply and the question is said, well, it's fallen 9%

already. How much more do you mean by sharp? Do you mean 20?

They weren't absolutely clear on it. But the word sharply presumably means by at least another 9%. So yes I -- again, that word was a very strong word

and central bankers like me are very careful about words that they use. So you're right to pick up on that word sharply and I think that it was clear

that the MPC was basically saying the risks to brexit are essentially all to the downside. The only question is how much. But they also said the

risks to remain are actually to the downside. Because of the uncertainty from the leave potential vote so both options look kind of bad both

impacted by this uncertainty.

QUEST: Mr. Blanchflower, you're wanting your cake and eating it. You're on the left one hand and one other hand. Good to see you, sir.

BLANCHFLOWER: Yes. Good to see you, indeed.

QUEST: In fact, I've been writing about the brexit Carney statement it's in the newsletter, the "Quest Means Business" newsletter that's just coming

out now. In fact, it will be arriving in your inbox, your e-mail box, just as we are speaking. It's the daily newsletter, it arrives after New York

closes, before Asia opens. Cnnmoney.com/quest to subscribe.

Cracking down on corruption, fantastically corrupt in some cases.

(BEGIN VIDEO CLIP)

QUEST: governments are saying it has to become harder to hide stolen wealth. Ukraine's finance minister says it's still priority number one for

the new government to actually deal with this. After the break.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

QUEST: "Quest Means Business." Corruption is a killer for business. That's what the Ukrainian finance minister's just told me from London where an

anti-corruption summit, the first ever is being held.

(BEGIN VIDEO CLIP)

QUEST: A short time ago the British Prime Minister announce add new plan to recover stolen assets to African countries. David Cameron says the global

forum for asset recovery in the United States next year.

DAVID CAMERON, U.K. PRIME MINISTER: Corruption is the cancer at the heart of so many problems we need to tackle in our world. If we want to see

countries escape poverty and become wealthy, we need to tackle corruption. If we want countries that have great natural resources make sure that they

can use those for the benefit offer that people we need to tackle corruption.

(END VIDEO CLIP)

[16:20:10]

QUEST: On a visit to Kiev back in the winter in December the U.S. Vice President Joe Biden said corruption is eating Ukraine like a cancer, in his

words.

(BEGIN VIDEO CLIP)

QUEST: Ukraine's got a big problem. It's ranked 130 out of 160 countries in a league of table drawn up by Transparency International. That's on par

with Iran, Nigeria and Paraguay.

(END VIDEO CLIP)

QUEST: In an exclusive interview a short while ago I asked the Ukrainian Finance Minister, Oleksandr Danylyuk, if dealing with corruption was

priority number one for his government.

OLEKSANDR DANYLYUK, UKRANIAN FINANCE MINISTER: It is the priority and I totally agree with your statement because we can do systemic reforms, we

can reform industries but if corruption is in place it kills the investment climate and business climate. And that with Ukraine without prosperous

business cannot exist. So it is a priority and will address it in all possible ways. And by the way, the reforms are certain areas, for example,

health care reform, education reform, it's also the part of it is actually to remove corruption in area of corruption, room for corruption in all of

these fears. So it is priority number one and we understand it, appreciate it and we act on it.

QUEST: What more is this new government going to do? Corruption is perceived to be one of the biggest issues affecting the Ukrainian system if

you like what more are you going to do?

(BEGIN VIDEO CLIP)

DANYLYUK: We as a government, there is something which is basically beyond, beyond the control of the government but I in my previous capacity working

for national administration was playing an active role. It was setting up the National Anti-Corruption Bureau and Agency for Prevention of

Corruption.

(END VIDEO CLIP)

DANYLYUK: Now within the government what we can do is to -- in order to make, to speed up this process and to show the results, is actually to

drastically change regulations to reduce the role of the government in impacting the private sector because this is pretty much where the

corruption is happening. Right? So -- and that's a lot of it is - depends on the minister of finance. You know the reducing the number of

inspections. Under my continuation there is a tax administration which actually is number one.

QUEST: Once again, you find -- Ukraine finds itself in some disagreement with the IMF and international lenders. On the question of the speed and

the pace of reform necessary to unlock further funds. How are you going to resolve this?

DANYLYUK: I cannot say there is a disagreement. Currently, there is an IMF mission in Kiev and before coming here to London I met with the mission. I

was the first one to meet with them. And basically, I'm coming, returning to Kiev tomorrow and i will continue working with the mission and it's --

there is no disagreement in terms of pace. There was some period of political instability which prevented IMF mission to come and assess our

progress. Now when there is new government in place they have a counter party, they have a client in place and it's now matter of, you know, matter

of actually weeks to find the -- to reach the agreement on the new memorandum.

QUEST: Now, this's the finance minister - the new finance minister of Ukraine. Jose Ugaz, is The Chair of Transparency International and joins me

now live from London. The problem as you will have been listening, sir, is that everybody says handling, dealing with corruption is priority number

one. And yet, you still end up with countries to quote David Cameron that are fantastically corrupt.

JOSE UGAZ, CHAIR, TRANSPARENCY INTERNATIONAL: Yes, yesterday we heard that. And we addressed the issue on a panel where the President Buhari, from

Nigeria was present.

(BEGIN VIDEO CLIP)

UGAZ: And what I mentioned is it is not fair to point some country and say these are the countries with significant or fantastic levels of corruption

and not see what's going on on the other side. I said yesterday that you need two to tango. The moneys are stolen from the developing countries are

brought to this part of the world, to the developed world, to the U.K., United States, France, Spain, and Switzerland and other places to be

enjoyed by the corrupt.

(END VIDEO CLIP)

UGAZ: So this has to be confronted from a comprehensive strategy.

[16:25:00]

QUEST: Right. So you will applaud the British Prime Minister's plan and the summit that's going to be held so there can be recovery of corrupt assets

that have been stolen. Let's face it. Everybody's talking about tax evasion and a huge (inaudible) about that but recovering corrupt assets could be

just as large.

UGAZ: Well, there have been some experiences in the world. In Peru we were able to recover more than $250 million that were stolen by Fujimori and his

criminal network. And some others have been recovered by Nigeria, Philippines and Indonesia and other countries in the world. This morning,

the Prime Minister Cameron said that it is a time to break impunity and that the U.K. with the other countries that have agreed on this will work

in order to speed the asset recovery of ill-gotten goods.

QUEST: Do you believe -- I mean, when I say do you believe him, you believe him that he's going the try, but do you honestly seriously with your vast

experience of this believe any difference will be made?

UGAZ: Look. The communique and the statements we have read this afternoon after the summit have a fantastic wording. But it is -- that is good for

today. We want the know when's going to happen tomorrow. We will make a follow-up, we will try to put the mechanisms in place in order to monitor

and make it possible.

We said yesterday that we expect that this is not another summit where you go and shake hands and have new and very nice speeches but nothing happens

after. We want action and concrete action in order to reduce corruption, deter the corrupt, break impunity and make the corrupt pay the consequences

of their acts.

QUEST: Why, sir, do you have any hope that this will be any different?

UGAZ: Well, there are happening new things around the world. If you see what's happening in Brazil, what just happened to the President Dilma

Rousseff, we have seen millions of people in the streets demanding the end of corruption. People has outrage because they're seeing that all millions

or billions of dollars are being diverted for the corrupt. You see what happened in Guatemala, there is a President, and a Vice President in

prison, a President in Brazil now has been suspended for six months. Ministers and other high-level officials in Honduras are being indicted.

Fujimori is in prison in Peru convicted to 25 years so some things are really happening.

QUEST: Good to see you, Jose Ugaz, we'll talk to you more about this. Thank you.

Now, we talked about Nigeria. You heard from Ukraine. The other end of the corruption scale of Ukraine is, of course, Norway. It's ranked as number

five out of 168 countries in the transparency index. The Norwegian Prime Minister Erna Solberg told CNN's Phil Black why it's important to be at

such an anti-corruption summit.

(BEGIN VIDEO CLIP)

ERNA SOLBERG, NORWEGIAN PRIME MINISTER: All countries have an obligation to fulfill the demand for no corruption, also towards companies who are based

in your country, but also in other countries and doing their economic activity.

PHIL BLACK, CNN CORRESPONDENT: A lot of the leaders here today have spoken about not just fighting corruption but changing the culture of their

countries. Norway clearly has a very strong landing culture of not permitting corruption. What is your advice to these countries that are now

beginning this process?

SOLBERG: It's much more difficult to change culture than not getting it in a way. It's much more difficult if it's inherent. I think young people have

a very - it's very important but I also think that having a transparency, we have since 1863 had the sort of individual and companies being open. You

can go and look at what your neighbor have earned and how much tax he has paid the last years and how much wealth he has and we have had that since

1863. That's an openness part. And you can also check if somebody is checking you because you can see who has checked your audits.

So we have a good basis. Starting with that type of transparency in other countries, that's I think is extremely important. Using organizations to

monitor and see and asking the questions why have some politicians suddenly become so wealthy? I mean, if you're low public pay as a politician for a

long time, it's nearly impossible to become one of your country's richest.

But it's interlinked of course this with human rights, freedom of speech, all of these other issues that's important. But you know I think one of the

things that we really can do is make sure that our companies behave without using corruption, without bribery when they are working in other countries.

(END VIDEO CLIP)

QUEST: You have heard both sides of the argument. You have heard from the countries believed to be the most corrupt and those that are said to be the

least corrupt.

Progress and still no endorsement. Donald Trump flew to Washington hoping to build bridges with his own party.

(BEGIN VIDEO CLIP)

QUEST: Particularly with the house speaker Paul Ryan. We'll talk about that after the break. It's "Quest Means Business."

(COMMERCIAL BREAK)

[16:30:00] QUEST: Progress and still no endorsement. Donald Trump flew to Washington hoping to build bridges with his own party. Particularly with

the house speaker Paul Ryan. We'll talk about that after the break. It's QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

RICHARD QUEST, CNN ANCHOR: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in just a moment. And the search team looking for

Malaysia airlines flight 370 says they're almost certain debris from the plane found in the western part of the Indian Ocean. We'll bring you a

special CNN money investigation into the dark side of the modeling industry. Before all of that, this is CNN and on this network the news

always comes first.

International Olympic committee said the suspension of Brazil's president should not affect the games in Rio de Janeiro. The IOC says the Olympics

is a chance for Brazil to show the world it can overcome the political crisis. President Dilma Rousseff will not be in office during the games.

Following the Senate's decision that she should face an impeachment trial. Dilma Rousseff told supporters the campaign against her was a little more

than a coup.

(BEGIN VIDEO CLIP)

DILMA ROUSSEFF, SUSPENDED BRAZILIAN PRESIDENT (through translator): My government has been objective of sabotage. The objective is clear.

There's speeding my government to go forward. And so, create a climate that would be open to the coup when a Brazilian or when a president is

impeached for a crime that has not committed the name that we have for this in the democracy is not an impeachment. It's a coup.

(END VIDEO CLIP)

QUEST: France's government survived a vote of no confidence in parliament. Opponents of the ruling Socialist Party called the vote after the

government forced a controversial labor laws. Thousands of people joined rallies across the country in protest against the reforms.

The Governor of the Bank of England Mark Carney says Britain could fall into recession if it votes to leave the European Union next month. Six

weeks ahead of the referendum, Governor Carney said, leaving could drive unemployment and inflation higher and cause the U.K. economy to shrink.

(BEGIN VIDEO CLIP)

[16:35:01] MARK CARNEY, GOVERNOR OF THE BANK OF ENGLAND: Of course, there is a range of possible scenarios around those directions which could

possibly include a technical recession, could possibly include that.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

QUEST: The Pontiff at the Vatican should look into whether women can become deacons in the Catholic Church, responding off the cuff to a

question from female religious leaders. He said exploring the issue would do good for the church. The Vatican press office has declined to comment

on the remarks.

(END VIDEO CLIP)

QUEST: Now, Dilma Rousseff has been removed or suspended from office. Michel Temer is the acting president for 180 days while the impeachment

trial continues. You're looking at pictures coming to us from Brazil. We're waiting for the acting president of Brazil to speak. He's already

appointed his new cabinet. He will be the one who opens the Olympic games. Just over two months from now in August, in early August. He has not from

Dilma Rousseff's party and two didn't always necessarily always get on, but now the man who is in his 70s and who has already said he will not run

again will, of course, become the ruler of the country. He's under somewhat of a cloud himself over allegations in a conviction or non-contest

over expenses in the last election. Anyway, when we hear Michel Temer speak, we'll bring it in or at least we will be listening closely to' what

he has to say.

He came. He met. He did not conquer. Donald Trump tried to win over the key parts of the Republican establishment in a series of meetings in

Washington. CNN's chief political correspondent Dana Bash has the story from Capitol Hill.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): It was an event congressional Republicans never imagined in their wildest dreams, gathering to greet

their nominee for president, Donald Trump. And they all could not sound more eager to get beyond the discord.

(BEGIN VIDEO CLIP)

REINCE PREIBUS, CHAIRMAN REPUBLICAN NATIONAL COMMITTEE: New headline is positive first step toward unifying our party.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

PAUL RYAN, U.S. CONGRESSIONAL HOUSE SPEAKER: I do believe that we are now planting the seeds to get ourselves unified.

(END VIDEO CLIP)

BASH (voice-over): In fact, Trump and House Speaker Paul Ryan even issued a carefully crafted joint statement using a version of the word unite three

times in one paragraph. Including "We will be having additional discussions but remain confident there's a great opportunity to unify our

party and win this fall." But also, said "While we were honest about our few differences we recognize there are also many important areas of common

ground." The differences ran deep during the primaries.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: A total and complete shutdown.

(END VIDEO CLIP)

BASH (voice-over): Ryan recoiling at Trump's tone and tenor, especially Trump's call to temporarily ban Muslims last December.

(BEGIN VIDEO CLIP)

RYAN: This is not conservatism.

(END VIDEO CLIP)

BASH (voice-over): CNN is told that today behind closed doors Ryan made clear to the billionaire it would be up to Trump to unite the GOP, a source

familiar with the meeting says Ryan told Trump that while millions voted for him, many Republicans oppose him, too.

(BEGIN VIDEO CLIP)

RYAN: I represent a wing of the conservative party you could say. He's bringing a whole new wing to it, he's bringing new voters that we have

never had for decades. That's a positive thing.

(END VIDEO CLIP)

BASH (voice-over): Still, Ryan was not yet ready to endorse Trump.

(BEGIN VIDEO CLIP)

RYAN: This is a first very encouraging meeting. But again, in 45 minutes, you don't litigate all of the processes and the issues and the principles

that we're talking about.

(END VIDEO CLIP)

BASH (voice-over): A source familiar with meeting also said Ryan brought up something near and dear to his heart, balancing the budget by reforming

Medicare and Social Security, which Trump has argued he doesn't want to touch. And sources tell CNN during the meeting Trump mostly listened and

said all the right things. The most anticipated meeting of the day was the first just these three men, Trump, Ryan and Republican Party Chair Reince

Priebus. CNN is told Priebus has been working hard behind the scenes for over a week to bridge the divide between the two.

REINCE PRIEBUS, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: It's important to be unified, it's also important to remember that --

BASH: But it is not usually this hard.

PRIEBUS: Well, you know what, this was not a usual election. I mean, it was a very contentious, tough primary and obviously no one can deny that.

It is something that a lot of us haven't been through.

BASH: Do you feel like a couple's therapist?

PRIEBUS: No, you know what, you wouldn't say that if you're in the room. It was very -- it was great and I think it had very good chemistry between

the two of them.

(END OF VIDEOTAPE)

QUEST: Dana Bash reporting. The party of Lincoln is now the party of Trump. The 16th president's said a house divided against itself cannot

stand. He was talking about the United States. But now, of course, we could arguably say the same thing about the party of which he led.

[16:40:00] Trump is evoking Lincoln on the campaign trail at every turn. Sidney Blumenthal is a former adviser to Hillary Clinton and to President

Clinton. And Mr. Blumenthal is the author of this book "A Self-Made Man: The Political Life of Abraham Lincoln." Which is fascinating, sir,

congratulations on your excellent book.

SIDNEY BLUMENTHAL, FORMER ADVISOR TO HILLARY, AUTHOR, "THE POLITICAL LIFE OF ABRAHAM LINCOLN": Thank you, Richard.

QUEST: What do you think Abe Lincoln, honest Abe, would have made of this Trump victory to become the nominee?

BLUMENTHAL: Well, Lincoln saw parties disintegrate. He saw his own party fall apart underneath him. It was the Whig Party. Who are members of the

Whig Party now? But the Republican Party is now echoing what happened to the Whig Party. The Whig Party fell apart for two reasons. One, race.

Divided between north and south over slavery. And two, anti-immigrant feeling. A whole party evolved out of the Whigs called The No Nothings.

They were called the American Party. They wanted to make America great again and they brought the Whig party apart and Lincoln saw this.

QUEST: So you see similarities to some extent between the issues and the internecine warfare for the Republicans today from then?

BLUMENTHAL: The same issues that broke apart Lincoln's Whig Party and led him to create this Republican Party are now breaking it apart more than a

century later.

QUEST: Now we must be honest about it. You're not displeased by that because you support the other side.

BLUMENTHAL: Well, I'm a -- I'm observing the break-up of a great political party and the abandonment of its original principles. This is -- when you

say the party of Lincoln has become the party of Trump, that's something that in which it's become the opposite of what it once was.

QUEST: You have been a friend of Hillary Clinton's for 30 odd years. And, you know, you now know how she has to fight against Donald Trump and it's

going to be a difficult fight. I want you to just listen to what former vice president Dan Quayle had to say on the question of how Trump's come so

far. Have a listen.

(BEGIN VIDEO CLIP)

DAN QUAYLE, FORMER U.S. VICE PRESIDENT: For somebody that has really no experience in politics, to be able to start off and win with a strong field

and not even go to the convention, that he's the presumptive nominee, a month before we have our final primaries is quite remarkable. It shows

that he is a winner. He knows how to win.

(END VIDEO CLIP)

QUEST: That's Hillary Clinton's challenge. Trump is perceived now and indeed he is now a winner. He knows how to win.

BLUMENTHAL: Well, Quayle makes -- Dan Quayle makes a very interesting point which is that here's Donald Trump. He's not been in politics before

and yet he's staging a hostile takeover of the Republican Party. Why is that so? That's because he represents the Republican base in a revolt

against its leadership. Its leadership has enflamed them over issue after issue and now he represents the Republican voters in their hatred of their

own party.

QUEST: But how do the Democrats, particularly how does Hillary Clinton beat somebody who's perceived to be, who has won?

BLUMENTHAL: It goes to -- the real issue is the issue that you raised, Richard. Quoting Lincoln, a house divided against itself cannot stand and

what Lincoln said right after that is that the country will be all one thing or the other. And those are the stakes and I think that the election

has to be made very clear that there are two diametric opposing views here and that the stakes could not be higher for the country.

QUEST: Which is exactly the time and the same of when Abraham Lincoln. I'm looking forward to reading this in particularly more detail over the

summer, sir. It will inform me as head into election, thank you.

BLUMENTHAL: Thank you so much, Richard.

QUEST: Now the phrase that's being used is it's almost certain. Australian officials think two more pieces of debris recovered from the sea

are part of the missing Malaysia Airlines flight 370 but they are not saying certainly. Almost certainly. After the break.

(COMMERCIAL BREAK)

[16:46:53] QUEST: Australian regulators and investigators say two pieces of aircraft debris found earlier in year almost certainly from the Flight

370. The jet as you're aware disappeared. The jet disappeared, we know it disappeared off the coast between Malaysia and Vietnam. The search has

been right the way across down through the southern Indian Ocean and off to the coast of Australia where it's believed the plane founded. The Dutch

firm Fugro Survey has been contracted for the underwater search in this area.

And pieces of debris believed to be from the plane, of course, have washed ashore but they washed ashore way over here on the other side of the

southern Indian Ocean, Mauritius, South Africa, Mozambique and the like. So today's statement from the Australian Transport Safety Board refers to

part of an engine cowling and the interior panel. The first interior part that's been found. One was found in South Africa. The other was in found

in Mauritius back in March.

So far, the only piece definitively linked MH 370 was the flapper-on which was found up in Reunion island last year. That's what we know so far.

Now, Blain Gibson is the American lawyer who discovered the debris 2,000 kilometers west of Reunion on the coast of Mozambique. Mr. Gibson says he

is still searching for wreckage from the Malaysian plane and he joins me now on the line. Blain, good to talk to you, sir. The phrase that is used

is almost certainly for both the Rolls Royce engine cowling and the interior part and that's really basically common sense. They can't prove

it's from there. But common sense tells us it's 9 M MRO.

BLAIN GIBSON, AMERICAN LAWYER, FOUNDER OF MH 370 DEBRIS (via telephone): Yes.

QUEST: Can you hear me, sir?

GIBSON: Yes. I hear you.

QUEST: Right. So, what does it tell you that they can only say certainly? Because you're continuing to search for more debris. Correct?

GIBSON: Yes, I am. And I believe in my heart that this is from Malaysia 370 and in my mind, as well, because they can confirm that it's from a

Malaysia Airlines Boeing 777. They just don't have because there aren't there any absolutely certain matching numbers. That's all. But I'm

absolutely convinced that this is from Malaysia 370 and provides --

QUEST: Mr. Blain? Blain? I need to interrupt you. Forgive me. The new acting president of Brazil is speaking. We need to go to Brasilia.

(BEGIN VIDEOTAPE)

[16:50:00] MICHEL TEMER, VICE PRESIDENT BRAZIL (through translator): I don't have a speech at this moment but I realizes after talking to several

people this last two days that it would be appropriate to deliver a few words. First, my first words to the Brazilian people is reliability. Rely

the values that form the character of our people. The vitality of our democracy. Trust. Trust in the recovery of the national economy. The

potentialities of our country. In all our economic and social institutions, in the capacity of united we can face the challenges that we

have ahead of us.

I would like to mention again as I have said before it's urgent to calm down the nation and unify all of us. It's urgent to have a government that

could save the country. Political parties, leadership, entities and Brazilian people should collaborate so that we can come out of this serious

crisis that we find ourselves today. The dialogue is the first step to face the challenges to move forward and to guarantee future growth.

Nobody, nobody individually has a recipe for the reforms that you need to put in place.

But we government, parliament and society together we are going to find those solutions. I am convinced that it is necessary to rescue Brazilians'

trust internally and internationally. This is fundamental so that our companies and the workers, therefore, all the productive areas within the

country can have the enthusiasm and go back to their securing vestments. We have to incentivize in a meaningful way the partnerships, public and

private. To the extent that this instrument can generate employment in the country.

The state is not able to do everything. It depends on the productive sectors, employees, employers, the two sectors, there's two sides will

create our prosperity. To us, the states, I think, is appropriate to take care of security, health, education. That is, all the spaces and sectors

that are fundamental that should remain within public management. The rest needs to be shared with the private initiative. So I would propose joint

initiatives between workers and employers.

Jobs are a fundamental right for the Brazilians. But jobs are only going to be available if the commerce and the industry and services are working

properly. On the other hand, a project that guarantees new jobs demands the consolidation of social projects. We all know that, unfortunately,

Brazil is still a poor country.

[16:55:00] Therefore, I would state again and would say in capital letters let's keep our social projects, both of Familia, Pronatec, Peroni, Minna

Casa, Minna Vida among others are projects that worked. And, therefore, they should be better managed. I think we need to finish with this habit

in Brazil that when we take over the government we have to destruct what was done before. That is wrong.

(END OF VIDEOTAPE)

QUEST: So there's the new acting Brazilian president, the first time he's addressed the country in this capacity. He says he's calling for calm. He

wants to calm down the nation. He says he wants a government that can save the nation. A government, industry, the people, the unions, working

together in collaboration to find the solutions that will help the Brazilian economy and put it back together again and most important he said

to rescue Brazilians' trust. But Michel Temer is acting President. Also, made it clear that the number one goal was to get the economy moving. And

to once again put Brazil back to work. We'll have a Profitable Moment after the break. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MARK CARNEY, GOVERNOR OF THE BANK OF ENGLAND: Of course, there is a range of possible scenarios around those directions which could possibly include

a technical recession.

(END VIDEO CLIP)

QUEST: Two quarters of negative GDP growth in the UK. That's the warning, that's what everybody's picking up on from the Governor of the Bank of

England, Mark Carney's, the inflation report from the Bank about the likely effects of the BREXIT.

Sterling falling sharply, output is going down, inflation going up. These are serious warnings being put forward by the Bank of England as part of

its BREXIT analysis if you like. The problem is, there's nothing new about what the bank has said, and it only echoes in many ways what we've already

heard from the OECD, the IMF and the U.K. Treasury.

We've had many reports of how many jobs are likely to go. The economic systemic risk and the wider effects. But the Bank of England is supposedly

the gold standard to that extent. That's why the Bank coming out and saying what it does or did today makes such a difference. I don't think it

will make any difference though ultimately. The truth of the matter is, it's all about politics, it's all about gut feeling, it's all about how you

believe the economy should be moved forward in the U.K., should be in the future. On those issues, I'm afraid Governor Carney and the Bank of

England, they don't matter.

That's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York, whatever you're up to in the hours ahead. I hope it's profitable. I'll

see you tomorrow.

END