Return to Transcripts main page

QUEST MEANS BUSINESS

Pound Flash Crash Rattles Investors; Bank of England Opens Flash Crash Investigation; Dijsselbloem: Tone Down Verbal Warfare; U.S. Accuses Russia of Political Hacks; Colombian President Wins Nobel Peace Prize; Colombian Minister: Peace Will Be Accomplished; IMF Predicts Colombian Growth at 2.2% in 2016; Colombian Finance Minister: Oil Price Good for Us; Latest Hurricane Matthew Update; U.S Jobs Report. Aired 4:10-5p

Aired October 7, 2016 - 16:10:00   ET

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


(CNN DOMESTIC SIMULCAST TO HERE)

(COMMERCIAL BREAK)

[16:10:56] RICHARD QUEST, CNN ANCHOR: Good evening from Washington. I'm Richard Quest at the annual meeting of the IMF and World Bank.

You've been watching continuing coverage of Hurricane Matthew. Over the course of the next hour, we will be updating you with the storm's progress

and path throughout the hour. But allow me, first of all, to bring you the day's business agenda.

It has been an extraordinary day, one of confusion and concern after the pound sterling suddenly took a very sudden dive. The currency has been

under pressure for months ever since the Brexit vote. But what we saw on Friday was something quite extraordinary. Sterling was down 6 percent in

just moments.

Now, the British Chancellor of the Exchequer, Philip Hammond, who is here at the IMF -- I've only seen him once walking past. We're told he has been

in meetings nonstop. He is calling for calm. And there has been no formal statement yet from the government, but the cause is still a mystery.

It took just two minutes for the pound to make the dramatic fall. Now, the sterling was already depressed trading a 31-year low, and the crash pulled

it down to around 118 against the dollar, roughly a 6 percent fall in a matter of two minutes. It has since recovered to 124.

The Bank of England has now launched an investigation. Perhaps the most disturbing fact for British leaders is that we don't know what caused the

swing. Why did this suddenly happen?

Well, the key suspects, the so-called fat fingers, the human error. Now, this is magnified within trading but literally, it's where a trader pushes

the wrong button, enters the wrong amount, and it is known as a fat finger. And it's usually reversed and everybody pretends it never happened. This

is amplified by computer trading-driven selling, which may have reacted to smaller moves.

But the most serious possible reason was Francois Hollande, the President of France. And strategists say that the French President's call for a hard

Brexit negotiation started to slide.

Vicky Pryce is the chief economic advisor at the Center for Economic and Business Research. Vicky joins me now from London. What do you believe

was the cause, fat finger, computer trading, or dear political Francois Hollande?

VICKY PRYCE, CHIEF ECONOMIC ADVISOR, CENTER FOR ECONOMIC AND BUSINESS RESEARCH: I think a mix of all, frankly. I mean, clearly the very

substantial drop cannot just happen because trade just decided not to hold the pound anymore, because with that, if that had been the case, we would

not have seen the bounce back that happened at a point soon after that.

So there is no doubt, nevertheless, that the attitude, if you like, of the Europeans, it's hardening and it's hardening very visibly. We had this

Conservative Party conference, which, of course, indicated that the U.K. was moving towards a hard Brexit itself. And the Europeans just don't want

now to be seen to be giving in at all to any of the U.K. demands and that's affecting, spooked actually, the markets.

QUEST: Now, Vicky, we've seen just one currency strategist who joined the week has forecast possibly parroting by the end of the year for sterling.

Now, that is absolutely at one extreme, but there does seem to be a consensus around 118 to 120 on the sterling-dollar rate. If that is true

or if that is accurate, then really, all we saw today was it getting there a little bit faster.

PRYCE: I think that's absolutely true. I think the markets must have now finally decided, after it's very clear that we are going to be leaving the

E.U. and there is a time table for it which was announced just earlier this week or the end of last week.

It's quite clear that the economy is going to be growing quite slowly, much more slowly than they had anticipated even a few days ago, because, of

course, the British economy seemed to be doing reasonably well over the summer after the initial shock in June and early July.

[16:15:12] Now, of course, they know that it's going to be happening, but also what they do know is that there is no plan. There is no certainty

about anything that may happen afterwards, and there is no real economic policy.

QUEST: Right.

PRYCE: And I think what they would be voting with their money for is leaving the pound because they think that, actually, the government right

now is not in control.

QUEST: Now, that is something, Vicky, that I'm hearing again and again. And no matter what ministers will tell me publicly here, privately, they

will all say everybody seem -- and this is very familiar on the European side and the British side -- everybody is making it up as they go along.

This is, you know, where we'll used the cliche many times, uncharted waters, but this is the true definition. Would you agree?

PRYCE: Completely. And I think what we don't know, of course, is exactly how the whole game is going to be played and exactly what, in the end, the

Europeans will want to do.

But, for the moment, what it looks like is we may indeed have a standoff. The city of London is hoping that there might be some transitional

arrangements. Philip Hammond from the treasury, the Chancellor of Exchequer or the finance minister of the U.K., is going to be able to

negotiate some sort of extension, if you like, of current arrangements so that, at least, the banking sector can feel that it can carry on doing what

it was doing with Europe. There is no guarantee that this is going to happen, and if the city suffers, then I think the rest of the U.K. will

suffer too.

QUEST: Vicky Pryce, who is in London with the market. We actually think it's worth just -- thank you, Vicky. It's worth just pointing out here at

the IMF where the meetings are taking place, the Chancellor of the Exchequer, Philip Hammond, the British finance minister, has been in

meetings all day. We are hoping to speak to him throughout the course of the day. That is still somewhat my hope perhaps for tomorrow.

But as far as the risk of a broader currency contagion is concerned, the Eurogroup President and the Dutch Finance Minister, Jeroen Dijsselbloem,

says he is not worried. He is more concerned about the promises that the British government is making to its citizens concerning Brexit.

JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: I think we would all do well to keep our joint interests in mind as we go into these negotiations in the

coming years, starting, of course, with Prime Minister May, who I think should put the economic interests and the interest of growth and jobs for

the U.K. first.

And then we need to find a sound base for future relations. I think that the warfare, the verbal warfare, could be tuned down.

QUEST: And that goes to both sides, obviously, but there does appear to be a hardening on the side of some leaders of the E.U.

DIJSSELBLOEM: Yes.

QUEST: If we look at the last comments in the last 24 hours, from President Hollande and Chancellor Merkel, not just restating the position

on freedom of movement but seeming to entrench it.

DIJSSELBLOEM: Well, I think it's about the reality check that the British government must have because what they are putting on offer for the British

public is simply not a fair deal. They are saying we will keep all the benefits and all the exits to the internal markets, but we'll make sure

that we don't have to pay for it any more. We can make our own migration policy, et cetera. So that's not a fair deal. That's not on offer.

And that's the reality check that I think Juncker, Hollande, and Merkel are giving them back, saying, look, guys, what you're telling your people is

not a fair deal because it's not on offer. So I think there is the element of reality check.

QUEST: Obviously, ultimately, it's going to come back to individual countries to ratify or to agree whatever deal is within the council of

ministers. Where do you stand on this?

DIJSSELBLOEM: Well, the Dutch perspective is very much trade oriented. We have strong trade relations with the U.K., always have had, so I think that

is the interest we should all put first. But it will require, from the U.K., to accept European standards because, otherwise, full access to

internal market and open trade will be very difficult.

QUEST: When the Chancellor says two years of turbulence ahead, is he right?

DIJSSELBLOEM: It very much depends on their stance. The messaging coming from the Conservative Party Congress was not very helpful. It did not make

me very hopeful. It sounds like a lot of turbulence, and I don't think that's the right sort of approach to the negotiations.

QUEST: We'll talk more about Brexit in a moment. Some breaking news, the U.S. government says it is confident that Russia was responsible for the

recent hacks against political organizations in the United States.

[16:20:01] Homeland Security says the attacks and the leaks were an attempt to interfere with the U.S. election process. Jim Sciutto is CNN's national

security correspondent. He joins me now.

Upon what are they basing this, Jim?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, I'll tell you, a serious and long intelligence assessment. And the fact is,

intelligence officials have been telling us for some time on background, not in public, that they believe that these attacks originated in Russia.

But a public naming and shaming by the Obama administration of Russia is a significant step here, a diplomatic step. I know that this is a

deliberation that's gone on for some time within the administration as to whether and when to point the finger at Russia, and they're doing it now,

which is a sign of just how seriously they're taking this.

And, Richard, I would draw your attention to two lines in this statement, one you just mentioned there, saying that this attempt by Russia, these

operations by Russia, are intended to influence the U.S. election, that these are not just things done for the hell of it, that they're actually

trying to have an effect on a significant election here in the U.S., the election for president.

QUEST: Good.

SCIUTTO: The second point they say, that these hacks, in the view of the White House, must have been approved by very senior level Russian

officials, and that points the finger directly at the Kremlin, also very significant.

QUEST: You anticipated my next question beautifully there, Jim. I was going to say, is there any knowledge or feeling of how high up this went?

And, of course, ultimately, one really wants to know, did President Putin either know about it and sanction it or certainly approved of it ex post?

SCIUTTO: Well, that's the thing. They do not mention Vladimir Putin's name in this statement, but to say, in no uncertain terms, that they

believe very senior Russian officials would have had to approve this, we know how top heavy the Russian government is. That connection is not a

significant leap there.

I should make one distinction though. As you know, Richard, there's been a series of election related hacks here in the U.S., one of the Democratic

National Committee e-mails (INAUDIBLE) attempted hacks of U.S. state voting systems.

Now, in the statement, they say that they believe that those hacks are somehow tied to Russia. They come from a Russian server, but they not, at

this point, pointing the finger at the Kremlin at Russia for those election system hacks as well.

QUEST: But, Jim, assuming for the purposes of my next question that Russia is to blame -- humor me and we'll assume that Russia is to blame -- what

can the U.S. do about it? What remedy or message or, indeed, action is the administration able to do?

SCIUTTO: Well, you have a series of possibilities. One, and this has been on the menu for some time, is the act of publicly naming and shames Russia.

They've just done this. And this is something that the U.S. has done in the past with Chinese hacks.

You may remember they attributed hacks -- in fact, they even have the names and faces of people working for the Chinese military that they blame.

They've named and shamed North Korea for the SONY hack.

Their view is, that when they name and shame, that that has an effect. That once the actors are caught, that that makes them likely to do it. So

that's one step.

As far as sanctions, punishments, possibilities are economic sanctions.

QUEST: Right.

SCIUTTO: We've seen that, for instance, with Ukraine. But further than that, it's really an open question as to how far you can go. Obviously,

there are offensive cyber actions that the U.S. could take, but the U.S.'s fear is that if you get into a tit for tat like that, that this could

quickly escalate. And that is not a step, at least, they've been publicly willing to take.

QUEST: Right. Jim, thank you. Jim Sciutto who is in New York watching that story for us.

SCIUTTO: Thank you.

QUEST: Colombia's president, Juan Manuel Santos, President Santos, is the winner of this year's Noble Peace Prize. And the country's finance

minister says that this will help the country's peace process.

The President was on honored for his effort to make peace with the country's FARC rebels after some 52 years. Now, of course, the irony of all

of this is it comes a week after that very peace deal was rejected by the Colombian people in a razor thin referendum. Nonetheless, the President

said he would never give up on peace.

(BEGIN VIDEO CLIP)

JUAN MANUEL SANTOS, PRESIDENT OF COLOMBIA (through translator): I receive this recognition with great humility and as a mandate to continue to work

without rest for peace for all Colombians. I will dedicate all my efforts to this cause for the rest of my days.

(END VIDEO CLIP)

QUEST: A peace now would not only transform Colombian society. It would, without doubt, open up swathes of land once controlled by the rebels. And

it would allow easy travel through old FARC territories.

[16:25:08] Now, Colombia is still one of the fastest growing Latin American economies, even if growth has moderated in the last 12 months. The IMF

predicts more than 2 percent for the country so far this year.

Earlier, I spoke to Colombia's finance minister, Mauricio Cardenas. He told me the Peace Prize will help the peace process.

(BEGIN VIDEOTAPE)

MAURICIO CARDENAS, MINISTER OF FINANCE AND PUBLIC CREDIT OF COLOMBIA: This has to be accomplished. The support I'm hearing for my colleagues from the

IMF, from the World Bank, send a message to President Santos that he has to continue.

Colombia has to succeed. The peace process and the peace for everyone has to be a reality. That's where the world community is waiting, and I think

that was the message of the Nobel Peace Prize award today.

QUEST: Is there a real risk now as a result of the failure of the referendum of hostilities to restart?

CARDENAS: No. I think we have all the elements to make sure that whatever was agreed to is adjusted in a way that is acceptable to all Colombians.

We don't want this to fail. The youth came out to the streets two nights ago in massive numbers, and they said to the politicians, let's make sure

that this does not get derailed.

QUEST: But this means rewriting, as best you can, the peace agreement, ostensibly to give more justice for those who were against the process and

getting the FARC to agree to that.

CARDENAS: Making adjustments. There has to be flexibility on all sides, including those that voted for the "no." The ones that were against this

agreement, they have to be flexible.

QUEST: Why? They voted no, they won.

CARDENAS: Yes, but they have to be flexible because Colombian's want peace, and most of all, Colombians want the current situation, which is

security. There's been no kidnappings, no extortion. Security has improved significantly. We don't to go back to the years in which we had

more violence.

QUEST: Let's talk about your economy.

CARDENAS: Well, we're growing, just 2.5 percent this year.

QUEST: Slowing down.

CARDENAS: Slowing down a bit, but the magnitude of the shock has been significant. We lost all our fiscal revenues coming from oil. We have an

economy that had a large current account deficit at the onset of these declining oil prices, and now the current account looks a lot better.

QUEST: Really. Of course, it does. It's oils at $50 a barrel.

CARDENAS: That's good news for us.

QUEST: And is this where you'd like it to stay? Is $50, for you, the sweet spot for your economy?

CARDENAS: No. If we get a higher price, we wouldn't mind it. Of course, we'd like higher prices, but this is a price at which we keep our

production at 900,000 barrels per day. And Ecopetrol still make profits at these numbers, so I think this is reasonable. We're not hoping for

anything better. We have to be realistic.

QUEST: Realistic. Sir, thank you very much. Congratulations, though, whatever the -- I mean, congratulations, winning the Noble Peace Prize, I

mean, for your President.

CARDENAS: Yes, well, well deserved.

(END VIDEOTAPE)

QUEST: And there we have, not only the minister, but lots of people obviously wanted to take pictures of the minister while he's talking about

the Peace Prize and the peace process.

We'll continue QUEST MEANS BUSINESS. We're live at the IMF in Washington.

Several hundred miles further south from where I am, the focus, of course, is Hurricane Matthew. The storm is battering up the eastern seaboard of

the Florida coast, and the authorities continue to warn those in the path. Probably, it's too late to evacuate, but I suppose it's better than being

in the path of this ferocious storm.

While in Haiti, the hurricane's power has been laid bare. At least 300 people have been killed and that could double. You're going to hear the

full details in two minutes.

(COMMERCIAL BREAK)

[16:31:23] RICHARD QUEST, CNN ANCHOR: Welcome back now. While the east coast of the United States carefully tracks the path of Hurricane Matthew,

the storm has left a trail of devastation further down in the Caribbean in Haiti. Three hundred people are confirmed dead by the local authorities,

and that number distressingly will rise.

The evacuation centers are overwhelmed as the worst affected areas are cut off. The President, Barack Obama, is urging Americans to donate help to

the Red Cross to help the Haitians. But on the ground, the stories of survival are made more poignant by the loss of homes and the loss of

livelihoods.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): Luckily, we didn't have loss of lives, but we lost everything. Look, this was my small business that I

completely lost. Everything is destroyed by rain. We don't have food nor a hospital to get health care.

(END VIDEO CLIP)

QUEST: That put it's into perspective, neither food nor hospitals for health care. But help is on its way from Silicon Valley. The nonprofit

start up, New Story, has raised around $300,000 so far, and that has come from companies like salesforce.com, Google, Docu Sign, and Amazon.

But let's put this into real perspective. Around 350,000 people, at least, are in need of assistance, and the authorities are still trying to reach

many of them. CNN Shasta Darlington with our report.

SHASTA DARLINGTON, CNN CORRESPONDENT: Hurricane Matthew slammed into Haiti on Tuesday, only now are we starting to see the extent of the damage. A

Category 4 hurricane, Matthew was the strongest storm to hit Haiti in half a century, a country still reeling from the 2010 earthquake.

Thousands are without power and communications have been down making it difficult for officials to make contact with those affected. Some areas in

the country's southern peninsula have been decimated.

In the city of Jeremie, 80 percent of the buildings are destroyed, thousands of homes now just piles of wood. Trees and crops completely

levelled. Many villages are still under several meters of water.

UNIDENTIFIED MALE: Most people lost everything, their clothing, their clothes, their shoes, their home, and so they have no shelter.

DARLINGTON: In some regions, people have been living in makeshift homes or tents since the earthquake. Bridges have collapsed and roadways blocked

with fallen trees and debris.

By Thursday, aid workers were finally able to reach many areas cut off from the rest of the country, discovering more bodies in flooded homes and

streets. According to the U.N., more than one million people have been affected by the disaster, a tenth of Haiti's population, one of the world's

poorest countries again facing a humanitarian crisis.

The impact of the storm is raising a public health concern. Shelters are overflowing. Food and clean water are scarce.

UNIDENTIFIED MALE (through translator): After visiting the shelter, I've realized there isn't any water. There's no water. We can't help the

people. There is no food, and there are additional problems given the way people are living in the shelters.

DARLINGTON: Aid agencies fear that mosquito-borne diseases will spread, and the conditions could also worsen the cholera epidemic, which has

plagued the country since the earthquake.

To make matters worse, for the fourth time, the long awaited Presidential election scheduled for Sunday has been postponed, forcing the fragile

democracy to wait even longer for much needed political stability. Shasta Darlington, CNN.

[16:35:09] QUEST: Now, let's bring in the journalist Yvetot Gouin who joins me from Port-au-Prince. Thank you for being with us this evening.

We need a feeling and understanding of how much more aid and effort you need in Port-au-Prince.

YVETOT GOUIN, FREELANCE JOURNALIST: Well, just to put it in perspective, Port-au-Prince has been largely spared, right, so there's not a need in

Port-au-Prince. The need is further south, in Jeremie.

Port-au-Prince is six hours from Jeremie, just to give you an idea. So any aid that's coming or that's going towards that region is going to take that

long under normal conditions. Now, with the roads cut off and the roads blocked and trees falling, then it may take even longer because as they get

closer and closer, they're realizing that there are areas that they haven't even gotten to that have been severely affected.

QUEST: So not only are you going to --

GOUIN: So the aid is needed in Jeremie --

QUEST: Well, right, right. But not only are you going to need the aid itself, but there's going to need to be the logistics, the helicopters, the

trucks, the ability to get that aid where it is most required.

GOUIN: That is absolutely correct. I mean, we're not talking about one town or one community. We're talking multiple communities and several

cities, you know, across the southwest of Haiti -- Jeremie, Les Cayes, Port Salut, and the list goes on.

So as they get closer, you know, day by day, they're going to uncover more and more, you know, hopefully, but still -- hopefully not, but more and

more of those who had perished, you know, to put it lightly.

QUEST: Right. In terms of the government, how overwhelmed is the government in this regard? Obviously, we were hearing about the

presidential elections in one respect, but the full recovery from the earthquake has not taken place. So how overwhelmed can we say that the

Haitian government is?

And we were lucky to have the picture for as long as we did but we did lose the line there to Yvetot, but I think we certainly got a very clear view.

And in fact, in many ways, I think his first couple of answers easily answered my third question.

So the view from where the hurricane has been, but now we need to know where Matthew is headed. Tom Sater joins us at the Weather Center. Tom,

look, we had so many dire predictions, and I know the winds are strong and the rain is falling but how bad is this?

TOM SATER, CNN METEOROLOGIST AND WEATHER ANCHOR: This is really a storm about storm surge. Now, it's not going to be the surge that we had in

Katrina or even Superstorm Sandy, but records are being broken.

The National Weather Service out of Jacksonville put out a haunting statement yesterday, Richard, saying, prepare for what will be an

unprecedented storm and worst case scenario for the storm surge.

The forward momentum right now could carry this into a land fall. We haven't had that yet. That still goes back 11 years. But the surge and

the circulation around the eye, which is just about 44 kilometers to the south, southeast of Jacksonville, could take this system in toward South

Carolina or maybe near Charleston, which is a real vulnerable spot, you know, one of the oldest cities in the U.S. So, again, still extremely

dangerous.

QUEST: Does this storm, once it gets to the Carolinas and it continues north, is it one of these storms that will go out to sea again and pick up

more power, or is it going to head up towards the northeastern United States, obviously, causing more damage, say, Washington, New York, and then

up towards Boston?

SATER: Right. About three days ago, Richard, the models did want to carry it right along the coastline, the curvature of, of course, our coastline,

and then carry it out near the outer banks and then up to the northeast. That's changed a little bit somewhat.

High pressure has been wrapping winds around it from the U.S. trying to steer it off the coast, and then drop it down south again. Now, the surge

problem is still is going to be a problem, but let me share with all the viewers here exactly what happened in the last 24 hours which is critical.

Just the 45-kilometer difference from what the models were telling us could have been a landfall near Cape Canaveral. That 45-kilometer distance

offshore, Richard, meant Category 3 or 4 storm offshore. They fell to Category 1, Category 2.

Seven million losing power off shore, 700,000 actually losing power. Catastrophic damage off shore, moderate to severe. But economically,

really, this is the big news, several hundred million in damage probably now which could have been a few billion.

QUEST: OK. But even so --

SATER: So it didn't take much.

[16:40:13] QUEST: Right. But even so, the fact that it is off shore, and as I look at that swirling nature of that, help me understand. The fact

it's off shore dumps more water in many ways --

SATER: Right.

QUEST: -- if I'm not mistaken because the outer bands of the hurricane are over shore and the other side is picking up water.

SATER: Yes. Think of it as an engine. Let's talk about it this way. Because it did not make land fall on the eye, the fuel line has not been

clogged. Because it is over water, the fuel is still there feeding the engine. Because we haven't had any winds come aloft the sheer the system

away at the upper levels, the exhaust is still perfect, so it's running on all cylinders right now. It's at 185 KPH. Once it drops down to 177, it

becomes a Category 2. That's what we are hoping for.

QUEST: Tom Sater, who's at the World Weather Center. We're pleased. Do keep us fully informed on the movement of this storm.

Now, overall, it's the first major hurricane of what we might call the Periscope era. The mobile live streaming site, Periscope, has spawned a

generation, a new generation, of storm watchers, some of whom are broadcasting to tens of thousands of viewers.

Periscope does not know exactly how many people have been live sharing videos. It has set up a dedicated channel for the Matthew live streams,

and it's a mobile streaming platform.

You'll be aware Periscope was acquired by Twitter last year. And this is the sort of quality, remarkable quality, that people are sharing on

Periscope, and I'm sure, even as we speak.

Britain's referendum didn't turn out the way the government hoped, neither did Colombia's. Italy's Finance Minister says his government will have

more luck when they have a referendum by the end of the year. He's warning a "no" vote would be a missed opportunity for Matteo Renzi and more

importantly for Italy.

(COMMERCIAL BREAK)

QUEST: Welcome back, QUEST MEANS BUSINESS at the IMF. A "no" vote in Italy's referendum will be a missed opportunity, that's the warning from

the country's Finance Minister to me today.

Italians are due to vote in December, and it's a constitutional issue on changing the role of the senate, in effect, putting it in blunt language,

making the Italian government more efficient than defective. The finance minister, Pier Carlo Padoan, says the reforms will also help the economy.

Now, I asked him if the people reject their government like the British and the Colombians before them.

(BEGIN VIDEOTAPE)

[16:45:02] PIER CARLO PADOAN, MINISTER OF ECONOMY AND FINANCES OF ITALY: No, it is not. If the "yes" will prevail, which I do hope and believe,

there will be an acceleration of the reform process. If there is a "no" vote which prevails, there will be a lost opportunity for the country,

which I hope will not happen and I believe will not.

QUEST: Is it wise to have such a referendum at a time when general publics, voters, are extremely angry, and there is a huge distrust of

governments, elites, politicians?

PADOAN: Well, this is a general problem throughout Europe and even beyond Europe, as we know very well. The setting of the date was, in a way,

compulsory because of the constitutional requirements. And this is in the wave of a very strong reform process which has been enacted by the

government since its inception. So we are still on a positive reform wave in the country.

QUEST: There is so much more to be done for you to be reach hard growth, never mind stronger growth. What more do you need to do?

PADOAN: Well, first of all, we need have a little more time to have the enacted reforms fully deliver their benefit. This is true of all reform

processes. And of course, yes, we do not stop where we are. We have a full reform agenda which we're looking more and more at enhancing and

boosting productivity growth, boosting innovation, improving education system.

QUEST: When do you expect Italy to be able to make a sensible contribution to Eurozone growth?

PADOAN: It will be increasing overtime, it will not be overnight. We are seeing slowly improving growth prospects. And, of course, let me remind

all of us that the overall performance of the Eurozone, not to say the global economy, is going the other way. It's going towards lower growth in

the institution (ph).

QUEST: But doesn't that make your job much harder? If the train is slowing down, and you're one of the carriages at the back, it's pretty

difficult to keep going fast.

PADOAN: Of course, but we are climbing up and we are in the middle of the train and we'll be at the top of the train shortly.

QUEST: When is "shortly" shortly?

PADOAN: A couple years.

QUEST: Oh, that shortly?

PADOAN: Yes.

QUEST: Right. Let's talk about Brexit. Are you a hard Brexitier or a soft Brexitier?

PADOAN: I am for Brexit in the sense that Brexit has been voted for by the U.K. citizens and Brexit must be implemented.

QUEST: Ultimately, it will come down to people like yourselves about how far you are prepared to deviate from the single or from the freedom of

movement of labor to allow some form of access to the single market.

PADOAN: Well, I think that mixed solutions will not work. We have to be very clear about who is in and who is out the single market and from all

the dimensions of the single market.

QUEST: That's a hard Brexit.

PADOAN: Well, I don't know. I think it's what we need to do in Europe.

(END VIDEOTAPE)

QUEST: That's the Italian Finance Minister. Brexit means Brexit but what does Brexit mean overall?

On that question, we're going to be talking to Andrey Kostin who joins me here. We'll be talking to him after the break. The head of VTB Bank.

Brexit means Brexit, what Russia wants for Brexit, and is this a chance, potentially, for a bit of Russian mischief for the Europeans? After the

break.

(COMMERCIAL BREAK)

[16:50:40] QUEST: Welcome back to the IMF. That sharp surprise fall, the flash crash on the pound, of course, had a corresponding effect on

financial markets. Because the FTSE rose, exporters will do better as a result. And you can clearly see that the FTSE was the only one of the big

four in Europe that actually rose. The other three, largely, they lower by some nearly three quarters of a percent.

Into the United States where the only word to describe the jobs report was under whelming when you look at the numbers, just around 156,000 jobs were

created in the U.S. in the last month. That was below consensus and certainly below the recent trend of recent months. You can see that quite

considerably.

The problem was, August, which was low, had been thought to be an aberration. September which is similarly low is now starting to look like

a trend. Even so, of course, again, the perversion of the markets, that means interest rates may not be going up as fast in December. And so the

Dow Jones, it was off just 28 points when all was said and done.

Now, talking to me about markets and, at the moment, the difficulties in the financial world, Andrey Kosin, how good to see you, sir --

ANDREY KOSIN, PRESIDENT AND CHAIRMAN OF THE MANAGEMENT BOARD, VTB BANK: As I to you.

QUEST: -- the chairman of VTB Bank's managing board in Russia. If we were to ask Russians who they want as President, I'm sure President Putin might

want Donald Trump, but what do Russians want? What do you want?

KOSIN: You know, I don't know about Mr. Putin's, of course, favorite, but first of all, Russians want Mr. Putin, because he has a huge support, you

know, inside the country. But as far as the American candidates, I think our position is that American people should elect a new president and the

new president will have to deal with Russia, no way with the position of the candidates today. So we have no specific preferences.

QUEST: But both --

KOSIN: But Ms. Clinton is better known for Russians. Mr. Trump is saying better words about Russia, but nobody knows, you know, what will be after

elections.

QUEST: But if we take a look at the relationship between Russia and the United States at the moment, whether it's over Syria, whether it's the

breakdown we talked over there, whether it's on, for example, like today, the question of hacking or economics or politics, they are at an extremely

worryingly bad level, aren't they?

KOSIN: We don't very much understand why Russia is mentioned when anything happens in America, of course. But, unfortunately, yes, I should agree

with you. Relationships are not good at all. And I think the new administration will have to think about this and to see how to deal with

Russia to improve it.

QUEST: What does dealing with Russia mean now in terms of that? Because President Putin is in an extraordinarily strong position, isn't he, despite

the economic difficulties that Russia has faced, including, indeed, the sanctions over Crimea?

KOSIN: I think what Russia wants is that our voice is heard and our position is recognized. I mean, if we have a different opinion on Syria,

it doesn't mean the American side should react with sanctions against Russia. I think that we should sit and talk about this and find the area

for joint efforts because we are both interested in settling peace in Syria.

QUEST: Brexit. You lost money on Brexit, didn't you?

KOSIN: Personally, yes.

(LAUGHTER)

QUEST: Personally. You got a bet off. You were surprised by it?

KOSIN: I was surprised. I think it was a huge mistake on part of the former British Prime Minister, of course. But for Russia, I don't see how

we can benefit to lose on Brexit, frankly speaking, unlike my colleagues on New York or Frankfurt who definitely see that they will benefit because

London will weaken its position as a financial sector. We don't very much see a difference for us.

QUEST: Maybe I'm being cynical and suspicious. Is this a chance for Russia to create a bit of mischief within the European environment to sort

of poke the argument and to sort of get everybody at each other's throats?

[16:55:01] KOSIN: No, I don't think so. For a little bit of time, we see all the problems inside the European Union, and I think this problem should

be resolved or the European Union should move into some other arrangements. But, you know, Russia is interested in stability in Europe, and we are

interested in having a relationship with E.U. So, no, I don't think how it can benefit from this, frankly speaking.

QUEST: I look forward to talking to you, sir.

KOSIN: Thank you.

QUEST: It will be Davos next?

KOSIN: Yes. Thanks.

QUEST: Cold, but we'll both be there.

KOSIN: OK.

QUEST: But you're used to the cold.

KOSIN: Yes, very much.

QUEST: Much more so than myself. We'll have a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's a profitable moment. There is a distinctive and very different air here at the IMF and World Bank, a sort of reality following

on from, if you like, the recent Brexit referendum, the FARC referendum and decisions and de-votes elsewhere in the world.

But the reality is, one, that the public is angry and they are taking it out on political, social elites. And in many cases the media elites as

well. And that's what they're grappling with here because, frankly, they don't have an answer to the anti-globalization movement, other than to keep

saying they need to prove the necessity and the mood for globalization.

But the truth is they're failing in the argument. And the truth is unless they get themselves together pretty quickly, they're going to find many,

many more problems in the years ahead.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest, at the IMF in Washington. Whatever you're up to in the hours ahead, I hope it is

profitable. Our coverage of Hurricane Matthew continues.

END