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QUEST MEANS BUSINESS
Mark Carney Hints at Post-Brexit Stimulus; Pound Sinks After Bank of England Governor Speaks; Wall Street Climbs for Third Straight Day; Sources: ISIS Leadership Planned Istanbul Attack; Airports Increasing Security After Terror Attack
Aired June 30, 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, CNN ANCHOR: Closing bell on Wall Street is ringing. Another bullish day, the market is sharply up. The lady ringing
the bell and the gentleman hit the gavel. Good grief, sir. Three of the best on a robust, firm gavel. That was a lively gavel on Thursday, the
30th day of June.
Tonight, he is the man with a plan. Mark Carney says a post-Brexit breakup may be near. The man who didn't have a plan and is now left, Boris Johnson
votes to leave the race for Downing Street. And the man with the plan that we're never actually going to see or hear about. That's preventing airport
attacks. We'll hear from IATA who says the best plan is better intelligence as a priority. I'm Richard Quest live from London. Of
course, I mean business.
Good evening. The politicians are floundering and the market are gyrating. Into this maelstrom of misery steps the governor of the Bank of England to
try to calm the uncertainty. In the wake of last week's vote to leave the EU, the Bank of England could stimulate the British economy by cutting
interest rates or even restarting QE. Governor Carney said the bank could make a move, if he has his way, as soon as this summer.
(BEGIN VIDEO CLIP)
MARK CARNEY, GOVERNOR OF BANK OF ENGLAND: Now, in my view, and I'm not prejudging the news of other independent members of the MPC, the economic
outlook has deteriorated. And some monetary policy easing will likely be required over the summer.
(END VIDEO CLIP)
QUEST: The prospect of monetary easing, of course, makes British investments worth less and the pound sank against the dollar immediately
after the announcement. If you look at the numbers as the trading day came to an end, not hugely, just off a tad. But remember, the pound had been
holding its own until then. Now, the idea of more monetary same will your stimulus, which is always a bullish move for stocks, and instead the stocks
were rallying. The FTSE was up 2.25 percent. And stocks were up all over Europe. The third straight day of gains after getting pounded following
the Brexit vote. The FTSE at 6500 and the DAX is still the one that is having the most difficulty ratcheting back the gains because of the dangers
to the German economy.
The post-Brexit situation has become so fluid that official's statisticians are delaying their own forecasts. The OBR, the Office for Budget
Responsibility, has cancelled the July publication of projections. Instead we're going to have to wait until the autumn statement in the autumn OBR.
Banks are already slashing growth predictions for the U.K. Goldman Sachs believes there could be a mild recession by 2015. And has cut growth from
2 percent to two tenths of 1 percent, that's dramatic. Increased uncertainty and deteriorating terms of trade are the reason. Bank of
America Merrill Lynch says a recession until early next year will take place. Cutting 2017 growth from 2.3 again to .2 percent. The only thing
we know, is that we know very little about where the U.K. is heading. And Citigroup says that U.K. GDP is to fall sharply, revised down at 3
percentage points over three years. Brexit could trigger financial turmoil and a global slowdown.
Christian Schulz, is the European economics director for Citigroup. I read, sir, your digest this morning. "We revised on our GDP forecast,
major uncertainties in the outlook, the nature and result over new arrangements, the follow-on effects." I mean, this is gloomy.
CHRISTIAN SCHULZ, EUROPEAN ECONOMICS DIRECTOR, CITIGROUP: It doesn't sound good. But we have to remember that we are downgrading 2019 GDP level down
by 3 percent. That means we still get some growth until then, but less than we had previously foreseen.
QUEST: The word is, "We worry that Brexit and it's direct and indirect spillovers, could dent household business and financial markets more
strongly than we currently expect." You are sort of basically saying, this is what we think, but even more than normal economics, we don't really
SCHULZ: That is very right, Richard. At this point I wouldn't possibly even call it a forecast but rather an assumption. Before Brexit, before
this referendum, we ran some simulations. And that gave us a 3 to 4 percentage point hit to GDP We've come out after the referendum at the
lower end of the hit.
QUEST: And these forecasts or assumptions or guesses, it's a bit more than that, they are, even before we get to a deal on the single market or not.
So these are just predicated on the uncertainty of the environment.
SCHULZ: Yes. But the ultimate deal plays a certain role, because whatever deal the U.K. is going to get with EU, it's likely to be worse for trade
than what we currently have. So potential growth, long run growth in the U.K. will be lower. That means if you invested in the U.K., your long run
returns will be lower, and that means people will invest less. That means the economy will be shrinking already now, even though you may call it
uncertainty, it's more than uncertainty, it's an expectation that the future will be worse than the present.
Governor Carney, today what do you expect him to do by way of monetary easing? Because we're zeroed down on the interest rates. So a quarter
point, between you and me isn't going to make much difference. It can go negative, but that would be major. More QE, how much more would you like,
you've got 350-odd billion. What's left?
SCHULZ: It is true that central banks are already quite far into their toolbox and going further is not going to have the same effects as before.
The market reaction shows today that you still can have some impact. The Bank of England is really in a tradeoff. Because, yes, they can support
the economy, at the same, and Carney said it, inflation is going to be higher. The Bank of England has a price ability target, so they can't go
all in. They have to keep in mind that their long term target has to be keeping inflation around 2 percent.
QUEST: What do you believe he will do? What's your favored monetary easing response?
SCHULZ: I think now we need a signal. We need a signal that the Bank of England is that business needs to do something. So a 25-basis point rate
cut either at the July or August meeting and at least open mouth policy about further steps if things get worse than we currently project.
QUEST: But at best, that will just stand, it won't reverse.
QUEST: Good to see you, sir. Thank you very much indeed.
SCHULZ: Thank you.
QUEST: Now, Mark Carney spoke about the Bank of England's weather vane which is in the bank courtroom, which plots the meteorological uncertainty.
There's the picture of it in the 19th century. It's over the arch of the door. Back then the bank made policy decisions based on the direction of
the wind on the River Thames. Because if the wind was blowing in the right direction, it would mean more goods would be arriving. Therefore, there
would need to be more credit to pay for them, and vice-versa. They could draw money from the system. They have something similar, Bloomberg
machines, Reuters machines and Market Watching.
Carney says, the winds have now changed direction. The banks have identified clouds on the horizon warning of economic PTSD, post-traumatic
stress from Brexit, for households, business and financial markets. He also then quoted Timothy Geithner, the former treasury secretary. He said
plan beats no plan. Urging lawmakers to get a plan in place. It should be clearly articulated and transparently executed.
(BEGIN VIDEO CLIP)
CARNEY: To emerge from an uncertain world with confidence, people and businesses need a fixed point by which to navigate. Once identified,
everyone can then play a role supporting that strategy to get us to our destination.
(BEGIN VIDEO CLIP)
QUEST: Ian Bremmer in New York, the President of the Eurasia Group. Ian, you may have been hearing our economic discussion a second or two ago. So
the economics don't look very good. The politics, whether it's labor other conservative or even within the EU, look even worse. What's your take?
IAN BREMMER, PRESIDENT, EURASIA GROUP: That's right. The politics are what's driving a lot of this uncertainty. You know, that Boris Johnson, of
course, is not in the running for the Conservative Party leadership. But the two people that are the favorites right now, Mr. Gove and Madame May,
both of them mush more strongly problematic on the immigration side. That makes it harder for the Grits to get towards a Norway-style EU deal, if
that's what they want to accomplish. In other words, maintaining being in the EU common market in return for allowing for free transit movement of
labor. That's a real problem, right, because it means that the negotiations from the U.K. into the EU are going to be challenging. And on
the other side, nothing is going to move until you have German and French elections next year. So the markets are going to have a lot of uncertainty
for quite some time.
QUEST: I want to get your perspective on the European side, because we keep talking about the ability of others, the National Front in France, the
right wing in Denmark or Italy, to sort of get a referendum off the ground. How realistic is this contagion theory in Europe, and how much of it is
just fear of it?
BREMMER: Some of it is realistic. If you ask me, I think there are a couple of countries were referenda, copycat referenda are reasonably
likely. One would be the Netherlands, because the far right party of Geert Wilders is likely to be the king maker in the next election. And his price
for joining in a coalition government would be a referendum. I think in Austria as well, when they have national elections. There's a good chance
that you would see a move for a referendum as well. I don't think it's likely in France or in Italy, and these other countries. But in most of
the countries in Europe, the demand for referenda from the far right is going to move the politics. And that fear itself will get the Europeans to
negotiate much harder against the U.K. to ensure that it doesn't actually come about.
QUEST: OK. But on that point, this idea that somehow the Europeans are at risk of breakdown apart or that some of the -- say, for example, the Poles
or the Hungarians or maybe some of the more recalcitrant countries who have gone their own way are likely to become troublesome. Do you buy into this
BREMMER: I certainly think that what Europe has been is not retrievable. I think that you're going to see a lot let integration from Europe going
forward, a two-track Europe, a core Europe around Germany. But many countries like Poland and Hungary will never get back the Schengen
agreement, free movement across borders. And they're never going to achieve sort of a unified digital strategy for example, financial
regulation. I think those things will fall away. And for the core Europeans, to ensure that they maintain their levels of integration and a
strong common market, they're going to make the Brits pay.
And they're going to do that both in terms of having a challenging negotiation, but also extending it out, over certainly the entire two-year
period. Because the longer it goes, the more leverage the Europeans have. Because at that point, at the end of that period, either the U.K. is cut
loose or the Europeans have the sole and unilateral right to continue negotiations. The farther we go, the worse the negotiating position of the
QUEST: Good to see you, sir, thank you.
BREMMER: As you, sir.
QUEST: We'll be talking about this, Carney's message to the markets, we have a plan, a plan is better than no plan. That's part of our Profitable
Moment in the newsletter. It's the QUEST MEANS BUSINESS newsletter. Remember, it arrives after New York closes and before Asia opens. And you
can get it at CNN.com/quest where you can subscribe.
Wall Street continued its post-Brexit rally. The Dow Jones was up 235 points. A gain of 1.5 percent. It's the third straight day of increases,
1.33 percent. The third straight day of 200-point rises. From Moscow, you've already heard, the British economic view. You've heard the global
view. The view from Moscow, Andrey Kostin is the President and Chairman of Russia's VTB bank. Andrey, good to see you, sir. Now we're really
starting to see the fallout. Do you believe we've seen the worst of it yet?
ANDREY KOSTIN, PRESIDENT AND CHAIRMAN, VTB BANK: Well, nobody knows. I would not 100 percent exclude the possibility of a second referendum. And
changing mind on the part of Britain. Because what we've seen now is the disastrous consequences of the vote. If you look at the domestic policies
situation inside the Conservative, Labour Parties, if you've got the international situation, you know, Americans are very unhappy, Europeans
are very unhappy. And I think definitely there should be some solution. Nobody knows at the moment, as Britain has not officially applied to
trigger Article 50. So we shall see. I think there will be uncertainties for the next couple of months at least.
QUEST: For any bank, and I understand, of course, your bank has specific difficulties at the moment, obviously, because of the sanctions, et cetera.
But just as a general view, as a top banker from an international bank, Andrey, what are the difficulties in setting strategy when everything is so
uncertain? Do you move staff? Do you actually shift investment portfolios? What goes on at the top levels of banks at this scenario?
KOSTIN: Not really, Richard. Because, you know, Russian stock market is very calm. During the first couple of days we lost 2 or 3 percent, but
then the market completely recovered. As far as our activity in London or other European capitals are concerned, we at the moment are conducting our
business as usual. We still believe that even if Britain leaves the EU, I think London will continue to play a very important role in international
finance, although of course it might lose a certain role as a euro instrument trading center.
QUEST: Right. You're the first top banker who has put his head out above the parapet and agreed to be interviewed. So let's ask you quite bluntly,
would you start to think about moving staff from London to other parts of Europe because there was the passporting rights from the U.K.? Is this
something that you have to start planning now?
KOSTIN: No. No. The answer is no. For some time, we were thinking about strengthening our position in Frankfurt, where we have a small banking
institution. But definitely no plans to leave London at the moment.
QUEST: Andrey, good to see you, sir, in Moscow, look forward to seeing you there before the year is up. Thank you very much indeed.
Now from Brexit to Bo-exit. The top Brexitier, Boris Johnson, dropped out of the race to become Britain's next prime minister. His fellow
campaigner, Michael Gove -- well did he stab Johnson in the back? Or is everything fair in love, politics, and Brexit? QUEST MEANS BUSINESS.
QUEST: I would say I'm almost speechless but not quite there yet. But it was a decision that sent shock waves through the British political
establishment. Boris Johnson, who spearheaded the campaign to get Britain out of the EU, widely seen as the favorite to take over the PM's job, and
then it all went pear shaped.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, FORMER MAYOR OF LONDON: And instead of being afflicted by nerves, I'll should seize this chance and this our moment to stand tall in
the world. That is the agenda for the next prime minister of this country. But I must tell you, my friends, you who have waited faithfully for the
punch line of this speech. That having consulted colleagues and in view of the circumstances in Parliament, I have concluded that person cannot be me.
(END VIDEO CLIP)
[16:20:00] QUEST: He is sounding more Churchill than Churchill. Robin Oakley, our political contributor. Well, he wrote a book about Churchill.
It sounds like him.
ROBIN OAKLEY, CNN POLITICAL CONTRIBUTOR: Yes, I was part of setting himself up. People say he didn't have the ambition, of course he had the
ambition. The Churchill book was all part of building Boris the future prime minister. But Michael Heseltine, the former deputy leader of the
Conservative Party saying, here he is the general, gets to the sniff of the battlefield and runs away from his troops.
QUEST: Is he finished?
OAKLEY: As a politician looking for office, I would think so. I mean, he writes like an angel.
QUEST: No, no, in public life he's not. But this was the moment of mettle-testing.
QUEST: Why did Michael Gove do him over?
OAKLEY: Ambition has always been there. But Michael Gove has always insisted that he wasn't fit to go all the way. That he was likely to be a
chancellor of the exchequer, foreign secretary, maybe, but he wasn't leadership material. At one stage he said he was happy for it to be
written in blood on vellum, that he was not going to be a prime minister. Perhaps the excitement of being part of a successful leave campaign changed
his mind. I think also it's a question of, the Tory Party seeing the situation the country is in now, wanting somebody who is more of a
statesman than Boris Johnson. Boris with a wonderful joker, lots of charisma, but his colleagues have realized that at this moment a joker can
only take you so far.
QUEST: Right, and indeed, that is what Gove said. But what I listened to Michael Gove saying, basically in the days since, I was shocked in that
Gove thought anything different. I'm not saying I knew him, but there are those who say Boris behaved like Boris has always behaved, so how come Gove
didn't know this?
OAKLEY: Yes, they worked together for long enough on the leave campaign --
OAKLEY: -- pretty closely. The idea was Gove was the brains and the substance, Boris was the charisma and the crowd appeal, and it would have
made a very successful jewel ticket. But something's gone wrong in the relationship. At the end of the day, a lot of conservative MPs were
running away from Boris. He could still have toughed it out and fought against Michael Gove if he wanted to have a go, but they had decided,
particularly one article that he wrote soon after the leave vote came about, it just wasn't serious enough for the situation the country was in.
And a lot of MPs recognized it, despite a lot of them having hitched wear wagons to Boris Johnson's star.
QUEST: Robin, good to see you, thank you.
Boris Johnson has closed the door on a run for prime minister, which leaves five conservatives in the running to succeed David Cameron. The two
leading contenders are the Justice Secretary, Michael Gove, who is the top Brexitier, with Cameron's cabinet, and says Britain needs a bold break with
the past. Also ringing the doorbell of number 10, the Home Secretary, Theresa May, largely staying above the fray, and says trade with a single
market is essential. But she warned that wiggling out of the promise to curb immigration would be unacceptable. May and Gove have put forward very
different visions of Britain's exit from the European Union.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH HOME SECRETARY: Brexit means Brexit. The campaign was fought. The vote was held. Turnout was high. And the public gave
their verdict. There must be no attempts to remain inside the EU, no attempts to rejoin it through the backdoor, and no second referendum. The
country voted to leave the European Union. And it is the duty of the government and parliament to make sure we do just that.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
MICHAEL GOVE, BRITISH JUSTICE SECRETARY: Our shared mission is clear. Securing the best possible terms for Britain. And of course informal
discussions should proceed our formal negotiations. Overall, the changes that we will see will be a process of gradual divergence. And it's
important that representatives from every part of the United Kingdom, every community, and different political traditions are involved in shaping our
(END VIDEO CLIP)
QUEST: Joining me now is Lord Francis Maude, served as minister for trade and investment, the former chairman of the Conservative Party, and he knows
how this -- I want to say game is played. I'm not being disrespectful, but you know what I mean, your Lordship, you know how this process is played.
Who are you supporting so we know where the bodies are left?
FRANCIS MAUDE, FMR. UK MINISTER FOR TRADE AND INVESTMENT: I'm supporting Michael Gove. I don't have a vote at this stage until it becomes a vote
for members of the Conservative Party much more widely. But I've thought for some time that Michael had the qualities needed to be lead the party
and be prime minister. And actually, what was interesting is, there are a lot of people who thought more of Michael's capability to do this job than
Michael himself did.
[16:25:06] QUEST: You're not put off by the fact, this is my words and nobody else's, he stabbed Boris Johnson in the back overnight?
MAUDE: No. Not a bit. Because he didn't. This is not what happened. He worked very closely with Boris during the campaign. I wasn't involved with
that, I was underclad, I took no part in the referendum campaign. But my understanding is that Michael was in a way managing the campaign. Boris
was very much more the front person. And then in the intervening period, when Michael decided that Boris rather than he should be the candidate
taking forward the banner for the Brexitiers, as it were, then there was a lot of -- for the candidate there's a lot of dealing with people,
formulating policy. It was during that period, as I understand it, that Michael concluded that it wasn't going to be possible for Boris to put
together the plan.
QUEST: Not up to the job?
MAUDE: It's a different job, that's the point.
QUEST: How important is it, bearing in mind you're neutral, and I accept that, at least going into it, how important is it for you that it's a
Brexitier leading the government and not, say, for Theresa May, who was a lukewarm remainder?
MAUDE: I'm a huge fan of Theresa, I worked closely with her over a long period. I think it's helpful for it to be someone who was making the case
for Britain to leave the European Union, because people know totally where they are. And I think Michael can do that very well. It requires a deep
grasp of detail. It requires clarity and deep intellect and an ability to play this sensibly in a measured and considered way over what might be a
QUEST: And you're former minister of trade and industry. You know better than most the significance of being a member of the single market.
MAUDE: I do. Indeed, in the late `80s I was the minister under Margaret Thatcher who was negotiating a lot of the single market measures. I had a
ring side seat at the internal market council. So I know how much this stuff can matter.
QUEST: So you also know that full open access to the single market, without accepting all four pillars including freedom of labor, is not a
MAUDE: Well, let's see how all of this develops. Because the concerns about freedom of movement -- see, in the old days we used to talk about
freedom -- the phrase you just used, free movement of labor. People being able to move around the union in order to take a job. And that's not what
it's turned into. And I think you'll find across the European Union, you have some of that flavor in the earlier packages, a concern in many
countries that that free movement, which was envisaged in a different way but also in a different world.
MAUDE: I don't think there's going to be just the U.K. These concerns were not just coming from the U.K. These are much more widespread across
Europe than just in the U.K.
QUEST: But whatever it is, whatever deal it is, would you agree it's likely to be more detrimental or deleterious to the one the U.K. currently
MAUDE: Let's just see. I hear some people in the European Union, some, by no means the majority, who say Britain must be made to suffer for having
made this impertinent decision. But actually that's an act of self-harm for our partners in the European Union. We're the second biggest economy
in the European Union. We are the biggest single trading partner for other countries in the European Union. And, you know, so if action was taken,
which caused Britain to capture cold, then other economies in the European Union would pretty soon start sneezing. So there's much more common
interest in having a sensible arrangement which doesn't disadvantage Britain than there is -- this is not a zero sum game.
MAUDE: Britain suffering does not make others benefits. The reverse is likely to be the case. And look like what's happening in the stock
markets. Because the stock markets on the continent have suffered more than the stock market here. And that continues to be the case.
QUEST: Good to see you.
MAUDE: Good to see you.
QUEST: Thank you, sir, thank you very much indeed.
As we continue, we'll talk about airport security after the break. We're assessing what can be done, following the attacks in Istanbul. More
security officers are patrolling terminals. After the break, the head of IATA on this program, says that might not be enough. It's not an answer
just to create bigger, wider parameter. QUEST MEANS BUSINESS.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment, when the chief executive of Gatwick Airport tells me he can still
get a new runway despite Brexit. And the CEO of Aston Martin tells us and shows that his car is getting more popular overseas. Now sterling has
fallen sharply. For all of that this id CNN and here on this network, the news always comes first.
Turkish government sources tell CNN that three Istanbul Airport terrorists entered the country about a month ago from an ISIS held area of Syria.
They say ISIS leaders helped plan the attack that left 44 people dead. More than 200 people injured, 94 remain in hospital. Funerals are to be
held for some of the victims. Speaking on Thursday, the Turkish president called for the world to stand united against terror.
(BEGIN VIDEO CLIP)
RECEP TAYYIP ERDOGAN, TURKISH PRESIDENT (through translator): Without any discrimination, we reject terror altogether as well as all terrorist
organizations and terrorists. We expect to see the same honorable stance from other countries as well. May the power of God prevent my nation from
experiencing this kind of grief ever again.
(END VIDEO CLIP)
QUEST: Dozens of ISIS fighters have been killed in coalition air strikes over the past two days, according to Iraqi and U.S. officials. Two ISIS
convoys were targeted as they left the city of Fallujah. U.S. officials say the destroyed vehicles could have carried up to 250 ISIS fighters.
The pentagon has lifted its ban on transgender people being allowed to serve openly in the U.S. military. The Defense Secretary, Ash Carter, made
the decision following a year-long study. Gays and lesbians have been able to serve openly since 2011.
Turkish government officials tell CNN that ISIS leadership was involved in the planning of the deadly terror attacks at the airport. They believe the
three attackers entered the country about a month ago from the Syrian ISIS stronghold of Raqqa. CNN's Nima Elbagir is live for us tonight in
Istanbul. Nima, how do we know this?
NIMA ELBAGIR, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they say all the evidence in terms of what they've been hearing from those they've been
interrogating. There has been a pretty big sweep of detentions in the last two days. But also, the apartment where the attackers had been holed up,
it had a Russian passport, which was the identity of one of the attackers. In it they managed to match the movements of the people. This is not as
yet fully confirmed.
[16:35:00] But they say at this point this is what all their evidence is pointing to. Even the suicide vests they believe were smuggled in from
outside the country. And frankly, that's not a very flattering admission to the Turkish government, that these men were not only able to enter the
country from Raqqa, given how locked down that border is supposed to be. There's even a wall running for 190 kilometers of it. They were also able
to bring in the instruments of all the damage that was wrought here at this airport.
QUEST: And the idea of this command and control or at least assistance being planned outside, with your expertise in this area, give us some idea.
Who would have planned this? How high up these so-called ISIS chain of command would this have gone?
ELBAGIR: We have no confirmation that it came directly from the ISIS Amir al-Baghdadi. But then increasing the sense that a lot of the sources we've
been speaking to say he's slightly disconnected. He hasn't appeared in public for some time now. A well as that kind of top layer is what our
sources are telling us. And what we saw in Paris and Brussels is you had the commander in charge of external operations as he was referred to at the
time, he was involved. But it's a bit of a time for a change for ISIS entire top leadership level to be involved. It really shows how much
Turkey is a problem for ISIS. Turkey has been involved in the aerial bombardment campaign. And the fact that they are a majority Muslin nation,
they have a really big standing in the Islamic world, propaganda-wise, recruitment-wise.
QUEST: Nima, just before we finish, we're going to hear in a second from the head of the airline association. But I need to understand, looking
behind you, the airport looks as if it's well and surely bustling, if not back to normal, well on the way.
ELBAGIR: It absolutely feels like it's back to normal. It feels like it is busier than ever. But in very crucial ways, it's not. Just behind me
is the first entry point into the airport. And what's changed, critically, is that now that external perimeter fence, if you will, that now has armed
counterterror officers there. That's one of the things that Turkish officials tell us they believe was a security failing, that the attackers
opened fire right from that external perimeter. And this they're putting this into place to try and make sure that can never can happen again,
QUEST: Nima, thank you for that. And the question of the external perimeter and how far it can go is being discussed and thought about by
airports around the world as they increase the security in the wake of Istanbul. The head of the International Airline Transport Association,
IATA, told me the best security is stopping is terrorists from reaching airports in the first place.
TONY TYLER, DIRECTOR GENERAL AND CEO, IATA: We have to recognize that the answer to security has to be better use of intelligence and keeping these
threats away from the airport. These are attacks on humanity after all. We've seen airports attacked. We've seen shopping centers, public squares,
subways. The reason that they're attacking airports is its high profile and there are crowds of people there. What the aviation community wants is
what everybody wants, is to catch these people and prevent them from perpetrating these atrocities anywhere. There are things you can do to
make airports perhaps less vulnerable by speeding up the flow of passengers through terminals so that we don't get the crowds there that attract this
kind of thing. There's some important work going on with that. That's what we need to see happen.
QUEST: Fundamentally, though, would you agree it is not just enough to extend the perimeter. Because if you take, for example, Ataturk airport,
it had x-rays at the front door. And if you take Ben Gurion, it has a car check two miles away from the terminal building. So merely creating a
greater perimeter probably doesn't create greater security, would you agree?
TYLER: I would agree with that. I think putting the perimeters further out simply relocates the problem.
[16:40:00] You have to think carefully about it because you could introduce more problems, if the perimeter isn't adequately resourced. So you get
crowds building up at it. And you just simply provide another target. So that's right, simply moving the problem is not solving the problem.
QUEST: This issue of better intelligence, so that you've got a handle on who is in the country, who is a threat and who is not. Would you agree
that's probably the way forward?
TYLER: That is the highest priority. That has to be done. Of course we need to have sensible measures for screening and so on. But those are not
the solution. The solution has to be better use of intelligence.
QUEST: Tone Tyler of IATA.
The pound is struggling after the Brexit vote. That's good for bargain hunters overseas. And that means I can finally afford the Aston Martin
which I rode in a couple of weeks ago. It's a beautiful vehicle, absolutely glorious machine. And you'll hear from the company's chief
executive about the price of an Aston Martin. No, not Freddy Brexit van. That you can have for a couple of grand, the other of a couple of hundred
thousand. And look at this magnificent machine. The car, not me, after the break.
QUEST: The pound is down around 10 percent since the U.K. voted to leave the European Union and the plunge is reverberating around the world's
economies. It does result in some good discounts of British luxury goods for overseas consumers. Now take for example, the magnificent Aston Martin
Rapide or the Vantage or the other Aston Martins. Now the current price sells for GBP 149,500 in the U.K. On June 23rd, the day of the vote, that
translated into $221,000 U.S. Today, just look at the discount. Today, with the devaluation, you have saved nearly $25,000. A relative bargain,
197,000 will get you the Rapide. I'll take three. One for a spare at the weekend. The Aston Martin Chief Executive, Andy Palmer, told me his
company has prepared and was ready for the extra orders that may come because of this discount.
[16:44:45] ANDREW PALMER, CEO, ASTON MARTIN: We anticipated the sterling would significantly weaken, and it has. Significant weakness means our
profitability of cars that we export, and we export 80 percent of our cars, basically profitability improves. With part of funds that yields, we use
that then to market the cars in places where perhaps it's not quite so contagious.
QUEST: Are you seeing more interest in your cars? Is your sales team basically already out there saying, come on, we're a little bit cheaper
now, our cars are a better value?
PALMER: For some of those special cars, customers are asking to pay me in full now rather than just pay the deposit. So the answer is yes. There is
a distinct uptick in purchasing from overseas. Because they're getting a better deal, of course.
QUEST: The U.K. has to somehow rekindle an entrepreneurial spirit because not only to deal with European markets, but to create new markets in
PALMER: It absolutely does. I would say, because I'm reasonably familiar with Japan, we have to start looking a lot like Japan in that sense. You
know, weaker sterling isn't necessarily bad sterling. Weaker yen, is what the Japanese manufacturing industry has been pushing for decades. So first
of all, weaker sterling, great, entrepreneurial spirit, there is no safety net, so now you have to be entrepreneurial, so start behaving like America
and Silicon Valley or parts of Japanese industry. We're by ourselves, we're an island, and we have to do what we used to be able to do really
well, which is trade, trade, trade.
QUEST: Can the United Kingdom do it?
PALMER: Don't know. I've been away a long time. I've only been back in the U.K. for 18 months. Before that, I was away for a long time. I
believe that the spirit of backs against the wall, into a corner, we've got to reawaken that spirit. More than anything else, the United Kingdom has
to pull together. All of this stuff that's going on with the politicians and labor is collapsing and the conservatives are killing themselves, let's
get it done as quickly as we can.
It's absolutely vital that we pull together as one nation, and we start to make the U.K. Let's stop worrying about what might have been. It's done.
It's finished. Now is the time to come together and make sure we make the best of this particular bed that we've chosen to make.
QUEST: He's talking about those expensive cars and how they're a little bit cheaper. Still a little out of my price range. I will settle for
Freddy Brexit van.
The U.K. government has again grounded plans for a new runway. You are going to hear from the chief executives of the two major airports
campaigning to win the rights, that is Heathrow and of course Gatwick, after you've had a moment to cogitate, make, create, innovate.
QUEST: It's gone on for years, the debate about a new runway in the southeast of England. And now the government has postponed a decision
until at least October after Brexit. Two airports are in the running, as you'll be well aware. We've had the Davis report that has basically
finalized them to two particular ones, in South Gatwick and Heathrow Airport in the west of London. To Heathrow first. Heathrow said it would
create 180,000 new jobs. It's already a hub airport with two runways, one in the north, one on the south. More than $300 billion worth of growth
across the U.K. by putting a third runway to the side. The chief executive says a green light for his airport will give a shot in the arm to investor
confidence and it will show the U.K. government is open for business at Heathrow.
[16:50:00] JOHN HOLLAND-KAYE, CEO, HEATHROW: The best thing to do, we've a plan to the table which is ready to go which the government can make a
decision on to expand Heathrow. All the work has been done. As soon as we get the green light, we can start creating jobs up and down the country
while we're building.
QUEST: That's Heathrow's case. Rival Gatwick Airport, which is to the south of London, absolutely miles away, in many cases the least attractive
option for some and the most attractive for others, Gatwick only has one runway. It is one of those airports that absolutely squeezes the life out
of that one runway, and now says it's joined the premiere level of airports. It has just had its busiest year, the former of London, Boris
Johnson is against the Heathrow option completely, now he is out of the running for Number 10 Downing Street, well Gatwick and Heathrow back in
play. I asked the chief executive of Gatwick if Boris Johnson was a blow to his campaign?
STEWART WINGATE, CEO, GATWICK AIRPORT: I think from our point of view it's really down to the merits of the case that we've put forward. If you look
at our case, the homework question that we've been sent is can Gatwick actually deliver on the long haul routes to and from the airport in the
event it gets a second runway. With our financial results we've announced this week, we've essentially come out and said, look, right now with a
single runway we actually connect to more than 50 long haul destinations with the hard work we've put in over a year or two.
With that answered then all of our attributes of our runway case actually make it very easy for politicians to get behind Gatwick. We're faster to
deliver. We're cheaper to deliver. We keep the airport charges low and the airfares low. Environmentally, we're cleaner and quieter.
QUEST: Except some of the restrictions that would have applied on the environmental front to the Heathrow option in terms of emissions and air
quality won't apply once we leave -- once the U.K. leaves the European Union.
WINGATE: I think what you have to do is --
QUEST: That's true, isn't it? All the EU regulations as regards air quality, particularly around Heathrow, will no longer apply two years after
we invoke Article 50.
WINGATE: I think if you look at the environmental side of this debate, most people look at the noise impacts. They also look at the air quality
impacts. When you look at air quality, the current legal targets in our country are 40 micrograms per cubic meter for NOX. The Heathrow go right
through that target month in and month out. At Gatwick, we have actually got a ten-year track record of delivering within that target. And all the
projections say you can develop Gatwick and still be well with inside of that target.
QUEST: Do you fear that the -- and I understand you're promoting heavily, obviously, your airport and the cause of your airport. But do you fear
that once Brexit takes effect, the government are going to want to take what they believe is sure steps to secure the economic future of the
country, and they will say, listen, we may not like it but we've got to do Heathrow, we can't do anything else?
WINGATE: I think in these uncertain times. We'll be calling on the government to get that economic certainty. But to get it, they have to
choose the runway option that's deliverable. Heathrow has tried many times and failed over the last 20 years. This time around Gatwick in separate
ownership, separate investors, has basically put its case forward and is by far the most deliverable. So in uncertain times if we want certainty of an
additional runway, it's got to be Gatwick.
QUEST: If you don't get the runway, where do you grow? You can squeeze that runway as much as you like, but you're getting pretty close to
capacity on one runway.
WINGATE: Well, ourselves and Heathrow find ourselves now in a very similar situation. Both of 00:55:00 the airports are practically full. The only
way we can grow is not through many more additional movements of aircraft, it's having higher load factors on board the aircraft and it is by having
larger aircraft. So that is really what we are now restrained to in terms of growth. So we desperately need to get an additional runway built.
That's why we need certainty of delivery of that additional runway.
QUEST: The head of Gatwick Airport. That's a nice picture, the Eiffel Tower. They've just turned the lights off. How very inconsiderate of
them. And we think this is a balloon somewhat in the middle of it or maybe it's the moon. I'll have a profitable moment after the break.
QUEST: Another casualty of Brexit, tonight's profitable moment. Heathrow or Gatwick? The debate's only been rumbling for the past three decades but
there have been prospects the government would make a decision this summer. That's what they said. That's now off the table. They're saying it's
going to be October when the new PM comes in and the new government.
I will almost lay you money that the new government will kick it further down the road. Heathrow and/or Gatwick. It seems a decision just cannot
be made. A wonder Willy Walsh the head of IAG owner of British Airways is quite clear he doesn't think there will ever be a third runway at Heathrow
in his lifetime. And I think he might be right. And that's QUEST MEANS BUSINESS for tonight. I am Richard Quest in London. Whatever you're up to
in the hours ahead, its hope it's profitable. We'll be together tomorrow.