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QUEST MEANS BUSINESS

Trump Budget Proposes Widespread Cuts; Questions Over Dijsselbloem's Euro Role; Tillerson Calls for New Approach to North Korea; Kenya's Tourism Surge; Trump Suffers Second Defeat on Travel Ban. Aired 5-6p ET

Aired March 16, 2017 - 17:00:00   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: The closing bell ringing on Wall Street an hour ago, the Dow off 15 points when the bell rang and Vantiv

ringing the bell. It's what you call a really firm gavel on an interesting day. Which was Thursday, it's March the 16th.

Tonight, President Trump's budget puts America first. And most everything else seems to be on the chopping block.

Rex Tillerson is calling for a new approach in Asia. With a quarter of his budget now on the line. And while the Dutch Prime Minister survives the

election, his finance minister, Jeroen Dijsselbloem, may not be so lucky.

I'm Richard Quest live in the world's financial capital. And I mean business.

Good evening, tonight, from soft power to hard power and President Trump turns his campaign promises into the budget. And this is the blueprint.

It promises sharp cuts to most U.S. government agencies. It's described as America first, a budget blueprint to make America great again. Well the

core of this document, which as budget goes is extremely light. It runs to just some 58-odd pages, is a reallocation of funds from foreign aid and

diplomacy to defense and Homeland Security. Mick Mulvaney, heads the White House Office of Management and Budget, OMB, and he said the White House was

preparing the budget and was watching Trump's campaign speeches.

(BEGIN VIDEO CLIP)

MICK MULVANEY, DIRECTOR, W.H. OFFICE OF MANAGEMENT AND BUDGET: The president said specifically, hundreds of times, you covered it, I'm going

to spend less money on people overseas and more money on people back home. And that's exactly what we're doing with this budget.

(END VIDEO CLIP)

QUEST: Now, this is the result, the American First budget, but the reality is, if you go through it in some detail where you see that most government

departments are going to lose out. And some of them quite considerably, from the arts to transportation, it's a U.S. budget that makes departments

across the U.S. capital seemingly small again.

There is the White House. The biggest cut comes to the EPA, the Environmental Protection Agency, which focuses on climate change. And that

sees a reduction in its budget of 31 percent. But then, straight across to the State Department, which loses 28 percent and they're focusing on

foreign aid, most of those cuts. And in fact, if you look within those cuts, some funds are losing 35 percent of their budget.

So, the EPA and State bear the brunt, along with multinational organizations like the World Bank which will also see cuts as well. But

there's more. Take for advantage Health and Human Services. Which is responsible for the Obamacare replacement. There it's going to see a cut

of 18 percent, which will be in health, research. Cut the National Institutes of Health, the NIH. And this doesn't attack entitlement

programs which account for two-thirds of the U.S. budget and will get the entitlement numbers and will get the budget deficit numbers and the

taxation as part of the bigger budget reconciliation bill late they are year.

If these, if HHS, State, EPA, agriculture, transportation, just about every department is down, the hard power departments are seeing sizeable

increases. The three in particular. Of course, defense which is going to get 10 percent. Homeland Security, which Also will include the wall by the

way. Where 2.6 billion or something has been appropriated for the early part of the wall with Mexico. And veterans affairs, is also getting 6

percent. The problem with all of this is this budget ultimately, the president's budget, it's Capitol Hill, the other side of Pennsylvania

Avenue that actually has to pass this as, or pass the Budget. The President proposes, Congress passes.

Now CNN's Michelle Kosinski is at the State Department. Michelle, look, they knew it was coming. But when you look at what at what it says and the

detail, there must be some very gloomy faces in the state today.

[16:05:00] MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: That is true and it's been like that for some time. And in fact, Richard, when you

also include the overseas contingency operations, some of which is controlled by the State Department, that's for kind of emergency needs, it

amounts to a 31 percent cut of the budget. If you remember just a couple of weeks ago, we were talking 37 percent. This is better than expected.

But today to get more detail, hearing things like the Green Climate Fund, the Global Climate Change Initiative just slashed. Different kinds of

State Department and United Nations programs, cut significantly. Yes, it is not just a surprise. It is deeply disturbing to many.

And I think, I think what gives people some optimism though, is that when you look at the opposition to these cuts which again we've been talking

about for a couple of weeks now, you see people like more than 100 former top military brass. You see top members of Congress, you see the former

Deputy Secretary of Defense saying wait a minute, soft power is not separate from hard power. It works hand in hand. And they see a lot of

need in the world right now. And they say these are the kinds of programs that the U.S. should be doubling down on right now. And not cutting.

QUEST: The Secretary of State, Rex Tillerson, traveling in Asia, has been almost the invisible man. In the sense of seemingly back in Washington in

the White House and the role he's playing. Surely Tillerson did not leave the CEO-ship of ExxonMobil to join the administration and the State

Department, to see his budget slashed.

KOSINSKI: Yes, I mean, that's a big question. I think that -- he knew he had to have known coming in, what the priorities were. And you have to

assume that he spoke at length with top members of the administration before he agreed to come on. When you listen to some of the things that he

says, he's all about efficiency, he takes that corporate outlook to the new budget. I think when you look at this more broadly, overall, there's tons

of waste in government. There's waste in every government. What this administration is doing is wanting to cut all of that out by kind of

putting out, sending a message really. Putting out there an absolute baseline.

When you see the opposition that is in Congress, even among top Republican members of Congress, you know that these cuts are not going to be like

this. There are going to be cuts, surely. Some of them I think people on both sides of the aisle would say are good cuts. Just to make the

government run more efficiently. But again, because there are so many people who feel these programs are important, it's not going to end up

being what it looks to be right now.

QUEST: Michelle Kosinski at the State Department. Thank you, good to talk to you.

Now one of the phrases that you're seeing again and again in the document is things like, eliminating a particular fund because it's duplicative of

other federal states. Eliminating a program because there's no evidence that it has any effectiveness. All of these or many seem to be related to

the poor or the underprivileged or those in need. Jeffrey Saks is the director of the Earth Institute at Colombia University. He spoke to me

earlier and he called the president's proposals nastiness incarnate and dead on arrival. I asked him if it was simply the president's opening

gambit in negotiations.

(BEGIN VIDEOTAPE)

JEFFREY SACHS, DIRECTOR, COLUMBIA UNIVERSITY, EARTH INSTITUTE: Perhaps, although we also know he's surrounded by mean-spirited, nasty people. He

seems to be himself, so it's also a snarling kind of budget. I think it's unaccountable. It's trying to be feared, it seems. They proudly call it a

hard-power budget. So, they went after everything soft, like saving lives. Doing science, helping medical research, honoring diplomatic niceties.

Things that we have signed up to for years, in order to show how tough, they are.

But I think you're right. It doesn't prove anything but a kind of theater of the absurd. Because it's not going anywhere. But it does show a kind

of disdain for America's constructive role in the world. I don't think that it is not only going to be well-received in Congress. It's not going

to be received at all. But around the world, I'm in Europe today, people are scratching their heads, and saying, what is this? What does America

think it is?

[16:10:05] QUEST: But there are no votes in the State Department. Or indeed some of the other areas that you talk about. But Americans do like

some of the idea of a powerful military, and that $54 billion will be spent on military bases across the United States. So, there will be a real

economic benefit to many communities from this.

SACHS: Yes, although -- Americans really like the National Institutes of Health. Which is provided the biomedical breakthroughs that help keep the

whole world alive. Why are they slashing that? Americans actually want alternative clean energy, but he eliminated the high-tech program that has

been delivering breakthroughs in new kinds of clean energy.

Americans actually don't want to be a hated country. They rather like diplomacy. But he essentially gutted the diplomatic budget. I don't think

that this really plays to the American people. And we haven't seen the rest of the budget, which is going to be huge tax cuts for rich people.

That is not even part of this discussion so there's more ugliness ahead, which to my mind shows that he's trapped into a bunch of fantasies. He

can't actually get anything implemented, not even his travel ban, because it breaks the law. It's stopped by courts. Or it's stopped by his own

party.

So, he's stymied on healthcare, because it's too nasty to slash taxes and throw 20 million people off the healthcare rolls. He's going to be stymied

on this budget. He's stymied on the travel ban. He appeals to a hard-core base, which is not a big-enough base to govern.

(END VIDEOTAPE)

QUEST: Very forthright views from Professor Jeffrey Sachs of Columbia. Well, obviously, that needed the other side of the viewpoint. For that,

Jeffrey Lord, who I think Jeffrey, we can both agree that you will take a different point of view.

JEFFREY LORD, CNN POLITICAL COMMENTATOR: How did you know, Richard?

QUEST: I don't know, just one of those things on a Thursday. You're a Trump supporter. Nastiness incarnate. I've read the budget, I read all 58

pages of it. And what's your reaction to that?

Well Richard, I have to say I have a sense of deja vu in this, in my youth, my misspent youth. I was a young Congressional aide to a member of the

House Budget Committee and therefore had to do his staff on the budget committee. And this was in 1981 when President Reagan had just taken

office. I can tell you that what Jeffrey Sachs was said then in one form or another about the mean old Ronald Reagan and the mean people around him.

The argument hasn't changed.

Here's the political problem. You are going to have -- the President is going to have to face conservative members of his own party. And I'm not

talking about liberal Republicans, we're talking about conservatives. They're going to have constituents coming to their office and say a

variation of this, "Congressman, I love the president and I think he's terrific and I voted for him and I love you. But this particular program

here, I think cutting the budget is great, but this particular program here that affects me, please don't cut it." That will go on in every office on

Capitol Hill and what you will find very quickly, you're going to find members of Congress, Republicans and conservatives saying, oh, whoa, we

can't cut this, we can't cut that. That was a battle in 1981, that's the perpetual battle, that's what's going to happen right now.

QUEST: As I say in my newsletter piece today, this is an opening gambit, isn't it?

LORD: Yes.

QUEST: This is basically saying, this is as nasty as I can possibly make it. This is as hard as I can possibly -- but I don't expect to get all

this through.

LORD: I would say on the nasty part, Richard, if you remember, before the financial crash, then Congressman Barney Frank was insisting out there that

there was nothing wrong with Fannie Mae and Freddie Mac and it was all fine et cetera. Then the whole thing crashed. President Trump, I know, from my

own conversation with him a couple of years ago, is very concerned about the national debt. And believes strongly if we reach a certain tipping

point here, the country is going to be in serious financial trouble and not be able to recover.

This is part of the way that you have to do this. It's a very difficult thing to do. And his negotiating style, as we all know, is to get about

four or seven miles out from where he wants to be, negotiate from there.

[16:15:00] QUEST: The idea cutting State by such an amount in the soft power, the one that troubled me most I think is the, the National Endowment

of the Arts, humanities. Corporation from Public Broadcasting. I suppose, Jeffrey, when you start cutting at the state support for the arts. All

right, maybe I would say that sitting in the studio, I would perhaps say that. You start to question what is value. What value do you -- what

value do you put on cultural aspects?

LORD: Right, that's a very good debate to have. And frankly, Richard, the Corporation for Public Broadcasting was begun by Lyndon Johnson in 1964

`65, somewhere in there. This is now 2017. I don't have to explain to you or anyone watching that the media environment has changed drastically. I

mean there's a kid in a basement out there somewhere who is starting his own media company. The Corporation for Public Broadcasting is in its own

fashion, a dinosaur, a media dinosaur. And why U.S. taxpayers, I mean I'm not saying it's not great, I'm just saying why isn't it privately owned.

And competitive with other media? Instead of having the government do the deal here?

QUEST: The one thing I was impressed when I read the budget, the blueprint. It's got a CEO's feel about it. This is not a government

document. It feels like the chief financial officer has gone through the entire organization and said, "Yes, like that. No, don't like that. Not

sure why we're doing that. That doesn't work, let's have a look at that. Get rid of that."

LORD: Yes, I would call your attention to the Trump campaign apparatus. I can't tell you how many nights we spent on CNN, during the campaign, and

the topic of conversation was that Hillary had this mammoth organization in Brooklyn and around the country and the Trump staff was only a relative

handful of people. That was Donald Trump's CEO mind at work. I think he's going to apply the same mindset to the budget of the U.S. government.

QUEST: Jeffrey we're very grateful that you came along to talk to us tonight, thank you, sir.

LORD: Thank you, Richard, anytime.

Always good to have Jeffrey Lord to put it into the other side of view. My newsletter talks about this one. The CEO meets the President's budget.

It's in the newsletter which has arrived after the New York market closes, before Asia opens. It's got blurbs of everything that happened of

importance today in the financial world today and prepare you for tomorrow. If you're not signing up at CNNmoney.com/Quest, well there needs to be some

questions asked.

And the sharp can take a breath as the Dutch went to the polls. Now they voted for of the same, although it could mean changes at the European

level. Exactly what it means in a moment.

(COMMERCIAL BREAK)

QUEST: Well, the establishment in the Netherlands may have survive the Dutch election. There could be big changes on the European level. The

president of the Eurogroup Jeroen Dijsselbloem, may have to step down.

[16:20:01] That's if he can't hang on to his job as the Dutch Finance Minister. The reason is his Labor Party was trounced in the elections,

basically losing most of its seats. Barbara Baarsma is the director at Rabobank and a professor of economics at the University of Amsterdam and

joins us now. Good to see you, thank you for joining us.

BARBARA BAARSMA, DIRECTOR, RABOBANK: Good to see you.

QUEST: Are you expecting Mr. Dijsselbloem to have to go?

BAARSMA: Well actually the chances that Mr. Dijsselbloem will return in an upcoming cabinet are really slim. Because just as you said, the Labor

Party, his party, lost dramatically in the last elections. His party lost about 75 percent of its voters. So, it is highly unlikely that his party

will be part of the new cabinet. He won't be a minister of finance any more, once a new cabinet is put into place.

QUEST: Obviously -- he's not a finance minister then, he can't really be the Eurogroup president.

BAARSMA: Well as far as I know, to be the president of the Eurogroup, you should be a minister of finance in one of the member states in the EU. And

once there is a new government, he won't be part of that. And then he won't be, a president of the Eurogroup. But there's no need to despair.

Because the other parties that are likely to be part of the new government, the new cabinet, they have also very capable candidates to become minister

of finance.

QUEST: Barbara, I need a good, honest, straightforward assessment of exactly what happened last night. In the sense that did Geert Wilders, was

it a victory as he would say in part because he is still there with more seats? Was it a defeat? Because the populism was stopped, as the Prime

Minister, Mark Rutte, suggested? What was it?

BAARSMA: Well actually the truth is in between. Because it's not true that populism was stopped. But only other hand, populism didn't win,

either. And I think that the most important result, of our election is that the Dutch population, they thought it less populist, less nationalist.

And then the opinion polls, predicted at the beginning of the election, race and they voted less populist and less nationalist. Then what happened

in the U.K. with the Brexit and in the U.S. with Trump. So, there still populist voters in the Netherlands, but it's less than we expected.

QUEST: Thank you. You made it clear. Thank you, I appreciate it. Barbara, good to see you. We'll talk again. Hopefully more on QUEST MEANS

BUSINESS, Thank you.

European markets closed higher and that included the Amsterdam AEX, which hit a 10-year high. Look at that, Amsterdam, which was up about a half a

percent. The best gains remained in Frankfurt and the FTSE was also at a high. Quite interesting these markets, although they are on an absolute

tear.

The chief executive of Eurostar says the strong dollar is driving U.S. tourists to Europe. While the weak pound is deterring the British from

leaving it. It's a win/win for the French rail operator. Nicholas Petrovic told Eleni Giokos that the currency situation is doing them a

favor.

(BEGIN VIDEOTAPE)

NICHOLAS PETROVIC, CEO, EUROSTAR: It looks like people really are any attention to the very strong dollar. It's cheaper to come to Europe,

because the sterling and the euro are week. Also, last year we see that every four years. Where there's a national election, people tend to be a

bit more prudent that year. And once the election is out of the way, then we spend again. That's what we're seeing. Hopefully it will be the same

for the whole year.

ELENI GIOKOS, CNNMONEY CORRESPONDENT: You've had a really strong euro, the pound is coming under pressure. You've got a strong dollar. What do you

think of the currency situation now. How is that affecting your revenues?

PETROVIC: It's difficult to forecast, but what we see at the moment is that the strong dollar helps us in two ways. One of course, the Americans

are coming and if so, maybe for people let's say in the U.K., they would have gone to the U.S. to travel. Because too expensive. So, they would

rather go to the continent. So, for us, it's good. I would say in the euro, it's not going to be a problem, because people travel both ways. So

really, the strong dollar is a helpful at the moment.

(END VIDEOTAPE)

QUEST: Nicholas Petrovic of Eurostar. The price of oil has stabilized after a slight slip earlier in the session. Take a look. Brent crude is

currently at around $51 a barrel. Up just a tad. Now Brent has fallen by 7 percent over the past month. The Austrian oil company OMV is looking to

Russia for expansion. Buying about 25 percent of a Siberian gas field run by Gazprom.

[16:25:00] Rainer Seele, the chairman and chief executive, good to see you, sir.

RAINER SEELE, CHAIRMAN AND CEO, OMV: Good to see you.

QUEST: Before we talk about what you're doing, is it your feeling that this deal, that the OPEC deal to reduce production, and output holds true?

And that the price we're sort of seeing at the moment is pretty firm, or not?

SEELE: Well Richard, I think everybody is surprised with the whole -- with the compliance of the OPEC in the first month. They have shown really good

work. The question is, of course, whether it's enough. The production cut and the main question is how is the U.S. oil industry reacting on the high

oil price. If they are swinging out, what OPEC is doing, then the effect is only a minor one.

QUEST: Is it a completely new world, because of the U.S. fracking production or nontraditional production.

SEELE: Well we have learned a paradigm shift of OPEC. Saudi is not taking over the role as the swing producer any more. And therefore, I think the

U.S. oil industry is taking over.

QUEST: Turning to your own company, this investment that you make, what's behind it?

SEELE: The investment in Russia is of course a shift towards low-producing countries. Richard, we cannot wait for higher oil price, we have to

prepare the company for the low oil price environment. Therefore, if I have to move it into countries where I see low production cuts.

QUEST: Right, but are you concerned that you are investing in countries where at a time of geopolitical instability with those countries, say for

example in the West, obviously, I'm talking about Russia and the West.

SEELE: Well, Richard, I have to go into countries where I find oil and gas. Then we are looking at the Middle East and into Russia. But I have

no concern.

QUEST: But Russia at the moment -- you don't have a concern?

SEELE: No.

QUEST: Even though relations are, let's take the U.S./Russian relations, which look like they might get spectacularly bad before they get better.

SEELE: But I don't care, I'm a European. The relationship between Austria and Russia are the ones that counts. And therefore, I have long tradition

working with Gazprom for 50 years. I have seen Gazprom always to be a reliable partner.

QUEST: Except you've got issues, and again just to push you on this, you've got issues of for example, Ukraine. Which at any given moment if

the EU decided to get tougher with sanctions or whatever, I suppose you've got to have nerves of steel to do what you're doing at the moment.

SEELE: There are two opinions on the sanctions right now. On the with your hand side industry would like to get rid of the sanctions, because

they are losing business. But on the other hand, I see the position of politician who is are taking seriously security and in Europe into account.

And I think we have to accept this.

QUEST: Is this one of the most difficult environments that you've faced at the moment?

SEELE: The environment of Russia?

QUEST: Just generally. You've got Brexit. Which could cause all sorts of dislocations. You have Donald Trump in the White House. You've got a poor

relationship at the moment with Russia. You've got North Korea bellicose, and making noises left, right and center and you're only an oil company.

Energy company right in the middle of it good luck to you, sir. Is this most difficult?

SEELE: Well, it is difficult of course. We do have a challenging environment. But what is in our hands is that we have to work on costs and

we have to work on partnerships. I can't accept some geopolitical risk. If I find a partner which is reliable one. That's why I continue to invest

in Russia.

QUEST: to see you, sir.

SEELE: Good to see you.

QUEST: Thank you for coming in and talking to us. You were just saying you are rather pleased that it's a bit colder in New York, of course that's

good for profits.

SEELE: I'll take the blizzard with me to Germany and to Austria. Thanks a lot. It's good for business.

QUEST: Thank you. We finally found somebody who likes bad weather. Good.

The U.S. Secretary of State is making his first official trip to Asia. He was in Tokyo where he has called for a fresh approach to North Korea.

QUEST MEANS BUSINESS, live from New York.

[16:30:00] (COMMERCIAL BREAK)

[16:31:29] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When Rex Tillerson threatens to beef up

sanctions against Chinese companies that help North Korea's weapons program. Next up, Kenya, the U.S. prefers to start direct flights, I'll be

joined in the studio by Kenya's tourism minister, before that, this is CNN, and here the news that will always come first.

The leaders of the U.S. senate intelligence committee have joined their house counterparts in a firm rebuke of President Trump. They say they see

no evidence to support the president's claim that Barack Obama or indeed any of the government entity wiretapped him during the election campaign.

The White House Press Secretary Sean Spicer said President Trump stands by his claim.

A school shooting in France has injured four people, including the principal and three students. The 17-year-old who opened fire has been

taken into custody by French police, authorities say they're not considering the attack as a terrorist incident.

And France is also launching an inquiry into a blast at the International Monetary Fund's offices in Paris. One person was injured after opening a

letter that contained explosive material. The Paris prosecutor's office says investigators have found fragments of Greek stamps.

Rex Tillerson, the U.S. Secretary of State has described his plan to ratchet up pressure on North Korea as a new approach. Saying all efforts

for the past 20 years have failed. The secretary is expected to threaten stiffer financial penalties for Chinese companies that do business in North

Korea. He's heading to China this week to deliver the message in person. In an exclusive interview, the Chinese ministry of foreign affairs spoke to

our Matt Rivers and told Matt sanctions against Chinese companies is the wrong approach.

(BEGIN VIDEO CLIP)

XIAO QIAN, CHINESE MINISTRY OF FOREIGN AFFAIRS: We hope it would not. That's not fair. It's not right. It's not the correct way of dealing

things.

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: If it did happen, would that pose a serious obstacle, in China's ability to deal with the United States

diplomatically? And work together on this issue?

QIAN: Well since he's coming in two days' time. Let's see how communicative he is with his Chinese colleagues.

(END VIDEO CLIP)

QUEST: Jamie Metzi is a senior fellow at the Atlantic Council was part of the National Security Council in the Clinton administration and author of

the book "Eternal Soon After." He joins me from Texas. Let's get to grips with this. How realistic is it for the U.S. Secretary of State to penalize

Chinese companies for doing business with North Korea?

JAMIE METZI, SENIOR FELLOW AT THE ATLANTIC COUNCIL: Well it's realistic that the United States could put more pressure on China to lessen its

support for North Korea. It's unrealistic that Rex Tillerson could be an effective vehicle for that policy. Because he seems to be completely

sidelined within the Washington power structure.

QUEST: Nice threat, shame about the reality?

[16:35:00] METZI: The reality is that North Korea is a big problem. The reality is that China is enabling North Korea and the reality is that a

rational U.S. policy would put more pressure on China. The problem is that U.S. policy writ large is in complete disarray in how the United States is

going to exert that pressure. That's the big question.

QUEST: Let's forget about North Korea for a second. I have here the America-first budget blueprint. You'll be familiar with the cuts to things

like the department of state. In your view, how serious is cutting state by 20 percent to 30 percent?

METZI: This is a fundamental threat to America's not only diplomacy, but America's security. The whole reason that we have a military is for when

diplomacy fails. Our diplomats are already underfunded and at least in this administration under supported. Cutting that budget by 30 percent, is

only going to make America less safe. And you'll need more and more bullets if diplomacy doesn't work. They're cutting basic science research,

which is the foundation of American power. If all you're investing in is the military you're going to need a bigger and bigger military. Probably

bigger than we can afford.

QUEST: So, what's behind this? Is it just in your view, is it political dogma? Those who have never liked the trendy liberals at state and foggy

bottom or those who have always believed that some of those programs from agriculture or the interior, are just simply a waste of money? Or is there

more to it than that?

METZI: It certainly seems ideological. There certainly seems to be an agenda of reducing the power of the quote-unquote administrative state.

And there are issues, the United States government is in need of reform? But by eviscerating diplomacy and eviscerating science and eviscerating

some of the fundamental foundations of America's not only our democracy, but our presence and influence in the world -- we reduce our soft power and

if soft power isn't working then hard power isn't enough.

QUEST: Jamie, are you prepared to accept, that a hard-nosed approach to, to many of these programs, lots of whom which have not been looked at

properly for years, and much of which are well past their sell-by date.

METZI: That is certainly true across the government. If you start by saying we're going to cut diplomacy by 30 percent and we're going to

increase defense spending, you're already starting at your conclusion it would be great if we looked across the government and said what kind of

programs are costing a lot and having a minimal return. The f-35 might be on the top of the list, but that's not what happened.

QUEST: Jamie Metzi joining us from Texas. As we continue tonight, Kenya now has direct flights through and from the United States. Tourism is on

the rise, the minister of tourism is good to see you, sir, do come and join me in the c suite, we're going to get to grips with your tourism industry

after the break.

[16:40:00] (COMMERCIAL BREAK)

QUEST: A case of Deja vu for President Trump's new travel ban. Temporarily blocked by a federal judge on Wednesday. One of the six

countries targeted by the executive order is Somalia. And yet just next door in Kenya, tourism is surging. It's tourism ministers says 100,000

Americans visited last year and direct flights between the two countries could come soon. Now that Kenya has been upgraded to category. The let's

start with the travel ban. I mean there's no shortage of people who have criticized it. Are you one of them?

NAJIB BALALA, KENYAN TOURISM MINISTER: Well possible tourism allows people to travel freely. But definitely I cannot interfere with the politics of

the U.S. but we encourage free travel. And we don't, we don't like travel bans. Because we have been victims and any security -- is --

QUEST: In fact, you've only just recently ceased to be on the U.K. and others' travel ban list.

BALALA: Including America. So, we don't like travel bans. We don't like travel bans to any other country and tourism to grow creates jobs. Every

11 tourists, one job is created in Kenya. So, it's very important to have this freedom of people traveling.

QUEST: How important is it, then and when do you expect to see direct service, direct flights from say Kenya to the United States?

BALALA: Discussions are going on now. Between Delta and the Kenya Airways. We hope soon.

QUEST: So, this year, or maybe probably next year. The -- you're about to remind me it's one of the few African countries I've yet to visit.

BALALA: Yes, yes. And you're invited now.

QUEST: Well I look forward to my visit. You're not getting off that easily, let's go to the UNWTN. Which is about to choose its next secretary

general, whoever replaces him is going to be a challenge, who will you support?

BALALA: Talib has created big shoes, anybody to come in has to create their own shoes. But so far there are seven candidates, we need to

evaluate all of them and then be able to give the best. I know in Africa we have two candidates, Seychelles and Zimbabwe.

QUEST: Was that a mistake? For the Seychelles? The EU had already selected the Zimbabwe as a candidate. There's a lot of bad feeling, you'll

admit.

BALALA: I think to be fair is that members were not given enough time to give their proposals. So, that is fine. Every country is a sovereign

state.

QUEST: Have you decided how you're going to vote yet?

BALALA: I want to vote for the best. But definitely priority I give to colleagues in Africa.

QUEST: That's a no?

BALALA: We want the best for. Because UNWTO is very important for tourism. We don't want just to put people for the sake of putting people.

QUEST: Is there a risk that it just becomes a job serving time? I'm not seeing any particular candidate now. But the easiest candidate, the lowest

common denominator. The most mediocre that doesn't offend. The good work that's been done by Talib over the last five, ten years, just whoosh, off

the table.

BALALA: We need a charismatic leader.

QUEST: Who?

BALALA: We're still analyzing. The deadline was last week.

QUEST: It was.

BALALA: So, we are working on it.

QUEST: Coming back to Kenya. You've had your security issues. You've had your travel bans, you've had your downturns, what's your priority now for

getting tourists back?

BALALA: Well first of all, our GDP is growing by 5.9 percent. So, tourism is number two, is 12 percent is our GDP. It's very important to support

tourism. Create employment, create wealth. But the priority at the moment what we're doing as a government is infrastructure. Transformation of

infrastructure, new infrastructure, a new standard railway to take people through from Kenya to Uganda to Rwanda. So, this is interesting. And that

is key for tourism. So, enabling tourism to work efficiently, you need infrastructure, that's why we're investing heavily in infrastructure. But

we cannot ignore security and we are putting almost 15 percent of our budget into security. Because we know how important it is. It can just

kill a whole industry like tourism.

[16:45:00] QUEST: Al Shabaab, one attack like we saw in Kenya.

BALALA: But two years now, it's working better, touch wood. Things are working very well. Definitely, priority for us is security and

infrastructure.

QUEST: Here's the deal -- when I come to Kenya, you've got to show me something suitable like this.

BALALA: I'll be your tour guide.

QUEST: Are you sure?

BALALA: Yes.

QUEST: I can be a very demanding tourist.

BALALA: We're used to demands.

Thank you, minister. Now we're going to be back in a moment. As we continue with the latest in our series -- India 20 Under 40 and a fashion

start-up that's helping give a voice to Muslim women.

(BEGIN VIDEOTAPE)

NAFIS WAKA, CEO, AMALIAH: My parents are Muslim and it was only really in our 20s where we started thinking OK, what is our identity? We're Indian,

but we're Muslin. I was born in the U.K. and all of that. Kind of makes you quite confused. And we both came across to where we realized Islam was

something we actually saw as an integral part of our life.

My name is Nafis Waka, I'm 23 years old. I'm the co-founder and CEO of Amaliah. It started as a personal frustration, we realized it was a really

big pain to find clothes that were modest, but also fashionable. And so, we started with a curation platform from well-known retailers and created

it and put it all together. And we have a section where all contributors writing about things that matter to them. I think with us, I don't really

see us as just a clothing brand. I see us as more a platform that represents Muslim women across fashion, beauty, lifestyle, topical issues,

global affairs.

Since we've launched we've seen the likes of Dolce & Gabbana. And other brands, it's on the agenda for brands to be able to cater to women in an

ideal world, the money wouldn't exist it wouldn't be difficult for a Muslin woman to find the right clothes she doesn't feel compromises her values.

The moment here is full of passionate people and people who really believe in what they're doing. It's a real community. A community of individuals

who are passionate about creating products, creating businesses that add value to the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

[16:50:00] QUEST: The fast food company, McDonald's, said it's investigating after an offensive tweet was put out in its name earlier

today. The company said its Twitter account was compromised. McDonald's and any company, cybersecurity remains a paramount concern. Laurie Segall

looks at one of the most notorious data breaches of all, in her CNN's superb series.

LAURIE SEGALL, CNN CORRESPONDENT: I looked into Ashley Madison. You remember Ashley Madison, the famous cheating website where people went on

there looking to cheat. There was a data breach, 36 million accounts exposed. All of us were obsessed with this list and who was on it. It was

like the modern-day scarlet letter what I found was the company itself knew that as human beings, we're not good or bad, we're all somewhere in

between. They use technology and an algorithm to try to get you to cheat, take a look? Take a look.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Very few people in the world who just walk around and say I'm a liar, I'm a cheater, I'm a bad person. We all kind of find a way

to tell ourselves a story that makes us seem honest.

SEGALL: If people can rationalize their behavior it becomes easier to cheat. Ashley Madison marketed to this their slogans made cheating seem

normal like lots of people are doing it. He says it's easy for companies like Ashley Madison to prey on us, because data shows when we're at our

weakest.

UNIDENTIFIED MALE: There's more where you're likely to cheat and some where you're less. Some show that people are do something bad when they're

stressed, when it's the end of the day.

SEGALL: For example, he says if Ashley Madison knew you were on a business trip, you might be more likely to cheat there if you're browsing from a

different zip code, chances are you might see an ad.

UNIDENTIFIED MALE: All the things we know about you can be used by Google and Facebook to target you in different situations, they focus on making

you buy more cola and captain crunch, but the same knowledge can be used for anything.

SEGALL: When Ashley Madison was hacked, we learned it wasn't just the users who had secrets, it was the company, too. Many of the women on the

site were actually bots, computerized programs. Many customers were paying to chat with robots, not real women. Another secret, stealth users who are

paid to have their data deleted were surprised to find out it wasn't erased. Over a year later, Ashley Madison still exists but its parent

company rebranded itself. It's called Ruby.

I had a lot of questions, but a funny thing started happening when I tried reaching out to former employees.

VOICE MAIL BOX: We'll get right back to you. You have reached the voice mail box --

SEGALL: My name is Lori Siegel, I'm a correspondent at CNN.

And then came the threats. The source a person a former Ashley Madison employee said just so you know there's been talk about board of directors

claim that if we speak to the media, that we will be sued, it's making me nervous. This is a company that had all their dirty laundry aired for all

of us to see. We already know so much. So, what else do they have to hide? What are they so afraid some of their former employees will say?

(END VIDEOTAPE)

SEGALL: It was interesting looking at how much they did not want any of their former employees to speak. I had one former employee say they were

worried about physical threats and violence. Many people said that.

QUEST: I want to talk about, the idea of the algorithm. The idea that they take us at our weakest moment. That's traditional advertising,

though, isn't it to some extent?

SEGALL: It is.

QUEST: People sort of sell you a chocolate bar when you're not feeling well. They sell you, this is the normal stuff.

SEGALL: This ethical question we begin to ask ourselves about technology is when does microtargeting turn into manipulation, and is it used for good

or evil to make sure we get the right dress that we like. It can be used if you have this idea that maybe you're unhappy in a relationship and you

know, you're away on business and there's a company that's going to serve you up an ad knowing that you're --

QUEST: What's the -- you're moving into moral grounds here.

SEGALL: Right.

QUEST What's the difference between a company that offers to sell you a bottle of scotch because you're feeling a bit down. Versus an Ashley

Madison that's offering up a bit of hanky panky.

SEGALL: Maybe there isn't a difference, but I think it's noteworthy to know they look at human psychology. They look at these moments, judges are

more likely to be dishonest around noon. Who knew that? There's actual research that says this. So, the idea that a company and any company,

whether it's target or a company that wants to you cheat on your significant other and have business, can take that information and use that

to tweak you in a way that you had no idea was happening, is pretty unbelievable. And I would say noteworthy, especially when it comes to

something as sensitive as love and sex and being with your significant other and potentially cheating.

QUEST: I don't think there's anything I can say after that. Other than -- Profitable Moment next. Laurie Segall, thank you.

(COMMERCIAL BREAK)

QUEST: Laurie Segall talked to us tonight of love, sex and cheating on your significant other. Which seemed like a good subject for tonight's

profitable moment. And then I thought better of it and we decided instead to talk about the America first budget. That came out today. Now if you

listen to Jeffrey Sachs, it is nastiness incarnate. Listen to Jeffrey Lord on tonight's program, and it is the right budget for the right time. That

will eventually be modified many times as it goes through. The reality is that the document I'm holding is a work of fiction. But what worries some

is that when the reality comes to fruition, that actually a lot of damage will still be done. Many programs will be destroyed. The reality of

course is we won't know for many months. But the fact that this budget process is under way is simply fascinating, as the CEO meets the president.

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

you tomorrow.

END