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QUEST MEANS BUSINESS

11 Killed in St. Petersburg Terror Attack; UK And Spain Contend Over Gibraltar; Trump Prepares for Xi Jinping's Visit; South Africa Cut to Junk Status By S&P

Aired April 3, 2017 - 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] ZAIN ASHER, CNN ANCHOR: Hello everyone, I'm Zain Asher in New York and it's 11:00 p.m. in St. Petersburg, Russia. I want to give you an

update on the breaking news we've been following for you all day. St. Petersburg, that is where a deadly explosion tore through a subway train

this afternoon. President Vladimir Putin who is actually in the city in St. Petersburg earlier in the day says that all causes right now are being

investigated including terrorism.

You will have all the business news later on this hour but first I want to give you want update as to what exactly we know right now about the events,

the unfortunate events that took place in St. Petersburg earlier. We know that at least ten people were killed in the this explosion in this blast.

As many as 39 people have been hospitalized. Some of those victims are in critical condition.

The explosion actually so vicious so violent that it blew out doors and windows on the train. You can see some images there. Fill the tumbles

with smoke and dust and it happened as the train as moving. The train was actually in between stations at the time. So far though in terms of who is

responsible no person no group has claimed responsibility. The governor of St. Petersburg has actually declared Tuesday, Tuesday is going to be the

first of three official days of mourning. I want to go straight now to my colleague Paula Newton live for us in St. Petersburg. Paula, just us a

sense where you are in relation to the metro stop and just set the scene for us there.

PAULA NEWTON, CNN CORRESPONDENT: Yes, Zain it was a little bit more than eight hours ago, today that people were rushing out of the very subway

stop. They had not known what was going on. There was panic here. As you can see now it turned in a vigil. Very spontaneous we have seen dozens and

dozens of dozens of people laying flowers and lighting candles. And I can tell you, Zain, a lot of are still in profound shock over what happened. I

don't know if you can hear commotion behind me. A lot of them very emotional about what went on here and still quite saddened.

Underneath this subway station right now investigators are still combing the area trying to figure out what went on as for the pictures you just

showed, Zain, you can see the pure power of the explosion. People who were inside the carriage at the time said, look we thought for sure we were

going to die in there. When it finally arrived at the platform people were basically trying to break down windows pry open the doors and get out

anyway they can. They described scenes where people were absolutely splattered with blood. Did not know if they had been injured or not and

continued to run from the scene.

Other people, one man I spoke to said that he actually stopped to help a man who was lying flat on the platform. And they had no idea in terms of

where to go next. How people were actually injured in the carriages? In terms of the investigation Vladimir Putin saying that look they are

obviously investigating all angles there opening this as terrorism investigation. But they don't want to rule anything out. As you said

again he was in this city I mean, Zain, this is his hometown. There has been at least one lawmaker speculating that look in terms of this attack

the fact he was in the city, and that it was his hometown is no coincidence and yet very, very few answers tonight, Zain.

ASHER: Yes, and no coincidence that Vladimir Putin happened to be there at the time of this attack. How much has security been beefed up in and

around St. Petersburg particularly around transportation sites?

NEWTON: It's certainly been beefed up quite a bit, I mean they've shut down most of the metro. It's starting to come back up slowly. But again,

this kind of high alert now is on throughout Russia. They had had one of the most recently horrible attacks was in the city of Volgograd. Closer to

the Caucasus, of course, in Moscow where they have seen some very deadly terror attacks. Again, they announced people remain vigilant and security

measures taken.

At the same time given the fact that there had been yet another explosive device that was thankfully -- it was much larger than the first one.

Reportedly up to a kilogram of TNT. Authorities did find it at the other subway station. And they were able to control that and also obviously

dispose of it before anyone was hurt. But that has a lot of people nervous as well. They continue to say that they are on the lookout for suspects

but have not given us details, Zain, in terms of who they might be looking for any or getting anywhere close to giving us a motive. Which is why you

can really sense the people here in this city. Especially still feel very, very afraid but I can tell you, Zain, Russians are very stoic.

You will see the city get up very shortly in a few hours and start the morning commute. They promised to try and get the metro service operating

shortly. And again, they are saddened but they are resilient and say they will continue to commute in and out of the city.

[16:05:00] ASHER: As you're speaking actually seeing a little girl behind you coming to lay flowers obviously, people there extremely moved all right

Paula Newton live for us thank you so much appreciate that. On the St. Petersburg metro system is the 12th busiest metro system in the world,

Clare Sebastian joining me live in the studio.

This metro station Sennaya Square happened in the afternoon local time in St. Petersburg give us a sense how busy this metro stop would have been

between the hours of 2:00 and 3:00 in the afternoon.

CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: It's helpful to look at where this is on this map. You can see the scale of the system with 67

stations in St. Petersburg this is Sennaya Square it happened in the tunnel between Sennaya Square and Technological Institute both of you can see

interchanged, Sennaya Square is part of the only three-way interchange on the St. Petersburg subway systems, so even before we talk about the time of

day this is clearly a very busy part of that system.

I want to though show you this station over here is where the the Russian authorities they found and disabled another device. Very close to main

line stations which serves trains coming to and from Moscow But I want to take you to street level we can put this in another kind of context. These

are the stations here. Where they are right now. You can see this is the tunnel in between them. And this is a very busy area. There are two major

malls here, banks, even schools. This is where it becomes particularly important to look at timing.

Schools in Russia let out at 2:00 p.m. it's also close to some key tourist sites, this the this is the Hermitage just a mile away. St. Isaacs

cathedral. Over here the Mariinsky Theater and perhaps one of the most important theaters in Russia second only to the Bolshoi. It's hard to

overestimate how busy this area would have been at any time of day but particularly at that point in the afternoon.

ASHER: Clare, it's interesting because you know we're in New York and you know we're both from London. And those major metropolitan cities and a lot

of the subway stops you do have big security. You will see men with machine guns whether it's in grand central. Is there the same kind of

thing in terms of security in equivalent in Russia?

SEBASTIAN: There are certain measures in place metal detectors go back to the maps we can look at that. Metal detectors, CC TV this is something the

Russian authorities putting resources into. They will be looking at this again in the wake of the disaster. St. Petersburg is looking at this

because this city is hosting not only the world cup in 2018 it's one of the 12 host cities for that. But it will be hosting the confederation cup this

summer, the finals. We know that that security on transport is something the emergency ministry in the city of St. Petersburg is definitely looking

at and has been looking at but looking at even closer in the wake of today's disaster.

ASHER: Clare, appreciate you breaking that down for us. Thank you.

Well, investigators are seizing items that could be related to the blasts and they're also interviewing and questioning witnesses as well, president

Vladimir Putin says all possible causes are being investigated that of course includes terrorism.

(BEGIN VIDEO CLIP)

VLADIMIR PUTTING, PRESIDENT, RUSSIA (through translator): The causes are not yet clear. So, it is very early to talk it the investigation will show

we were natural look into all possible scenarios and into criminal and first of all causes of a terrorist nature. We'll see what answers this

investigation will give us about tragedy.

(END VIDEO CLIP)

ASHER: Vladimir Putin mentioned it is certainly early in the investigation it only happened a few hours ago. I want to bring in terrorism analyst,

Paul Cruikshank. So far Paul, it is early as I said but so far there hasn't been any claim

of responsibility and all your years and experience in terms of covering terrorism would this be the work of perhaps Chechen rebels gone overseas to

the Middle East to train and come back?

PAUL CRUIKSHANK, CNN TERRORISM ANALYST: We'll have to see. It is possible it could be ISIS inspired. Possible people coming from the Caucasus

region, almost every single attack wave seen in Russia has been a linked to the Caucasus. There may be a link to Syria, according to Vladimir Putin up

to 7 thousand Russian nationals have travelled to Syria to join with groups like ISIS over there. They've trained with them in Syria. They've been

fighting over there. And ISIS indeed al Qaeda have made clear that Russia is actually their top priority. It's not the United States anymore. It's

Russia.

Why is that? It's because of those Russian air strikes in Syria, that brutal campaign of airstrikes which killed Sunni Muslins inside Syria.

[16:10:00] That has enraged the global jihadi community and also massively energized the jihadi groups they really want to get attacks through against

Russia. We've seen a string of plots over the last several months targeting Russia, notably in November a Paris style plot was about to go

into operation but the Russian managed to thwart that. That was a plot targeting shopping malls in Moscow and St. Petersburg, of course back in

October of 2015 the ISIS affiliate in Sinai carried out that out attack on a Russian airliner was heading for St. Petersburg 200 people killed.

ASHER: Russians, are they prepared, are they ready to actually handle the threat, the domestic terrorist threat inside their own country whether ISIS

or ISIS inspired?

CRUIKSHANK: Well the FSB and other intelligence services in Russia are capable. They have a lot of experience it's difficult for people to move

around. But that being said, the sheer scale of the threat right now in Russia is unprecedented because they're not just looking at people from the

Caucasus. They're looking at ISIS inspired lone wolf plots we've been seeing, then the big threat from Syria, from Iraq with, from IS, from al

Qaeda who are throwing the kitchen sink at getting attacks through against Russia. I think in the year leading up to the world cup there is going to

be a lot of concern about the terror risk in Russia and the capability that they have to thwart attacks.

ASHER: When you -- if you're in Russia in terms of the investigation, how do you -- how do authorities even begin to investigate something like in

terms of surveillance or I mean how do they even start the process?

CRUIKSHANK: They'll be looking at all the CC TV footage inside the subway trying to see if they can see someone leave a bag. They'll be looking at

that second device they managed to recover.

ASHER: How did this that they manage to recover that by the way.

CRUIKSHANK: We don't exactly know. The presumably after the first attack took place they -- they did a sweep. And may well have been they just

found abandoned bag we don't know exactly where the bag was. But we understand there was a more powerful explosives device there. They'll be

running forensics on that bomb to link to a bomb maker try and recover any DNA, fingerprints that are in their databases, very significant databases

ty have. This is now a race against time. Because if they don't camp the people next few hours they could leave more bombs on the subway tomorrow

morning in St. Petersburg and we could have a horrible day again like today.

ASHER: Well, security we know is being beefed up in St. Petersburg particularly around the hot spots and transportation sites our

correspondents are talking live for us there thank you so much.

Well, we have much more on breaking news story late are later on this hour certainly bringing you latest on the deadly subway blast in St. Petersburg.

A scrap of land with just 30 thousand people on it certainly raising tensions across Europe, Spain and the U.K. are in a spat over Gibraltar, I

spoke with the rock's chief minister who says Spain has certainly overplayed its hand.

[16:15:00] (COMMERCIAL BREAK)

ASHER: All right welcome back everybody want to give you the latest on the Brexit drama happening in Europe. Politicians in London and Madrid right

now are waging a war of words over the rock of Gibraltar, all began last week in Brussels. The European Commission's draft Brexit guidelines gave

Spain a veto on any potential U.K. trade deals that involve Gibraltar. This seemed to come up as a shock to a lot of people in Britain which has

had sovereignty since the early 1700s and things got more heated when Michael Howard, a former leader of the British Conservative party even

hinted that prime minister Theresa May should be prepared to go to war to protect Gibraltar.

Spain's foreign minister said he was surprised by the talk of war, the Spanish are calling for everybody to had calm down to cooler heads at the

same time Madrid said it is dropping longstanding policy to block the future bid by Scotland to the join EU. Spain has been careful not to fuel

independence sentiment because it's concerned a Scottish break away that would encourage Catalonia, a campaign to become independent from Spain, so

they certainly have to be careful what they wish for. When I spoke to Gibraltar's chief minister Fabian Picardo, he said what Madrid is doing

would only hurt the people of Spain take a listen.

(BEGIN VIDEO CLIP)

FABIAN PICARDO, CHIEF MINISTER, GIBRALTAR: Spain is trying to manufacture an opportunity where there isn't one. You see, it would appear that what

Spain thinks makes sense is to try and suspend the application of any potential trade deal the U.K. may do with the European Union because in

respect of services and the trade and goods doesn't reply to Gibraltar on the basis there has been to be bilateral agreement between U.K. and Spain

before any such deal could apply.

Who is that going to hurt? It's not going to hurt the businesses in Gibraltar because they do most of the business with the United Kingdom not

with the rest of the single market. Is it going to hurt those living in Spain and coming to Gibraltar? No, because we are clear the frontier is

going to remain open and fluidity is guaranteed doesn't relate to the freedom of movement of services. But of course that agreement is likely to

contain all of the provision that is would protect workers if there is such an agreement. So, it's going to affect Spanish workers coming Gibraltar,

new workers after the 30th of March 2019. Very short sighted position by Spain, doesn't affect the sovereignty of Gibraltar, doesn't affect the

attractiveness of Gibraltar to do business but can affect the livelihoods of Spanish workers.

ASHER: In terms of coverage of this issue in the United Kingdom a lot has been made of the fact that you know Theresa May in article 50 letter she

did not mention Gibraltar specifically obviously, she referenced it in terms of linking to another letter. But he did not mention Gibraltar

specifically. Why do you think that is? And do you think that she should have?

PICARDO: I'll tell you very clearly that I would have wanted Gibraltar mentioned in the letter if it was in the hundred-page letter that mentioned

every many single detail about what the United Kingdom was looking for. But in the context of the letter sent which was three pages which can only

be a notification, and the kicking off of a process and the cross referencing to the white paper, then the decisions that we made were made

together. And we looked tat how best to protect the interests of Gibraltar which is in a way I'm responsible for and how best to teal with the issues

that relate to the rest of the United Kingdom in way that would have the effect required by article 50 but without highlighting any issue

unnecessarily. It's been Spain that's immediately wanted to put Gibraltar front and center as an issue despite the fact that Gibraltar would

necessarily cause issues for those in the United Kingdom who wouldn't want to see Gibraltar excluded from any new trade deals. Spain has nonetheless

gone and done that months ahead of the rest of the European Union is prepared to put the issue of Gibraltar ahead of many other issues for

example the well action of the British citizens in the Spain, all of those issues, she hasn't put in the draft guidelines.

[16:20:00] ASHER: You've talked about the fact that you know Spain is quote unquote obsessed with winning Gibraltar back I do want to tack talk

to the fallout. Because Michael Howard said Theresa May will defend Gibraltar as they did in the Falkland Islands. Is that kind of rhetoric a

little bit too extreme?

PICARDO: I think he was speaking figuratively I think he was trying to highlight how fiercely the United Kingdom was defending. He won't say that

war is the right approach. Far from it. I think what we want is an opportunity for dialogue that helps us deliver the best possible Brexit

deal for a truly global Britain and alongside it a truly global British Gibraltar.

ASHER: Lastly, how is this being interpreted or covered or talked about by ordinary Gibraltarians?

PICARDO: We've seen over the last 72 hours the Spanish newspaper and Spanish politicians pretending thinking they've achieved something in

relation to Gibraltar, we've seen the passions enflamed in the United Kingdom and how vehement the support Gibraltar is enjoying in the U.K.

People are relaxed about the future because Spain does not have any say on the future of Gibraltar even if the draft guideline is firm it's only for

the beginning of a negotiation. We're clear we have a very prosperous future ahead of alongside the unique and global Britain doing business with

the rest of the world beyond the European Union in particular the nations of commonality and I think there is everything to play for Gibraltar is

going to get even stronger we're going to do so being one hundred percent entirely British going forward.

(END VIDEO CLIP)

ASHER: Let's talk about stocks. With you, it the first day of trading for the second quarter the Dow as you can see ended pretty much flat. Paul La

Monica joins me live now, so there really wasn't that much to be excited about, obviously, the market has a lot to look forward in terms of the rest

of the week. We've got the fed minutes coming out Wednesday of course, all important jobs report on Friday. But today it was a bit of hoe hum day on

market.

PAUL R. LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Pretty quiet day for the most part, auto stocks moving I know you want to talk about Ford and GM

their shares falling sharply on the back of week sales. Tesla shares soaring as yesterday they came out with another quarter of really solid

deliveries and people are excited about the future of Tesla with that model 3 a cheaper car coming out later this year.

But the market didn't have anything specifically today to really get itself going either way because it was pretty much flat.

Pretty much flat. I think the market is looking ahead to later in the week. The fed minutes might have a little bit of drama because there is

still a question of how many times will the fed raise rates this year and how dramatic will they be? But the jobs report that's the key number for

Friday, Zain with obviously president Trump is going to be very interested in the number as well if. If we get a second straight month of solid job

gains and unemployment rate going down that would be a victory for him with the tax perhaps gives him more leverage with negotiations for calling the

things he wants to push through Congress.

ASHER: Let's talk auto sales as you touched on because they were disappointing in comparison to February. Talking about inventories

specifically inventories came in higher than expected.

LA MONICA: GM in particular, there are worries maybe we've reached what people are talking about peak auto. Have taken already taken advantage of

lower car prices a cheap financing to buy new cars they don't need to buy any new ones.

ASHER: Right.

LA MONICA: The obvious difference here is Tesla because selling the electric only cars they're still mainly for the affluent model s and model

x are not cheap by a stretch. But there is hope that that model 3 coming out later this year that's where Elon Musk will be able to vault Tesla into

the big league of auto manufacturing.

Elon musk certainly has so much reason as you just touched upon to be excited because Tesla in terms of market count they have now surpassed

Ford, it's a big deal.

They are the second most valuable car company in America only a couple billion dollars behind GM it's not out of the recommend of possibility that

Tesla could pass GM, Honda as well, they still have a long ways to go about before they catch Volkswagen with its problems and Toyota way ahead of

everyone.

[16:25:00] ASHER: Paul, live for us there good to see you as always European markets finished in the red after the deadly explosion in St.

Petersburg. The FTSE was one of the investors also reacting to disappointing manufacturing data they got in the United Kingdom. One firm

leading learning the hard way I should say what happened when Apple stops buying your stuff. Shares in the British firm Imagination Technology

plunged dramatically more than 60 percent this session after Apple said it planned to stop using graphics technology that Imagination owns just over

half of the company's annual revenue comes directly from Apple. Pete is the tech editor at Mashable. So, this is a warning a dramatic warning of

what happens when you over rely on one particular company for revenue.

PETE PACHAL, TECH EDITOR, MASHABLE: Very much so. And it is always a sad day when Apple breaks up with you if you're a supplier. They -- we learned

about this through our press release they put out. It was a very short statement. There was a lot of flailing around in the statement I would say

where they were you know somewhat almost threatening Apple to sue them because they had asked them to provide evidence that they were -- because

Apple wants to do this graphics technology on its own now, they're not consequence convinced they can do that.

ASHER: Without violate willing patent rules.

PACHAL: There was allusions to that. They said they were pursuing alternative arrangements for licensing. It's -- Apple did say they would

phase out their use of their technology over.

ASHER: Two years.

PACHAL: Approximately, yes, the year and a half two years, so probably next iPhone maybe more components after that but Apple seems determined to

basically leave Imagination by the side of the road.

ASHER: Imagination really didn't see this coming. Did Apple give any concrete explanation as to why all of a sudden?

PACHAL: No, I don't expect that's going to be made public. But there is probably -- I see three possibilities here. One it's a straight-line item,

straight capital they figure over the long-term they can save money. The second is maybe the technology wasn't up to snuff. This is more

speculative but Imagine was focusing some of their platforms on VR and AR so far Apple has not expressed a lot of interest in those technologies.

Tim Cook has a few comments here and there said things but product-wise they haven't. Third, Apple has been very clear they will not let the tail

wag the dog. Lawsuit against Qualcomm one of the biggest most important suppliers made it clear they are the boss as far as the iPhone and

technologies are concerned. And if they don't see something to their liking they're going to change what they do.

ASHER: The big question is how does Imagine diversify beyond Apple we saw the shares plunge 60 percent.

PACHAL: Also, how do you retain talent? If you are engineering working for Imagination you're thinking about your mortgage payment. They were

investing in trendy technologies and VR and Ar.

ASHER: Pete, thank you so much for being with us.

As we brought you at the top of the hour, at least 11 people died after an explosion on a commuter train in St. Petersburg today. Taking a look at

the recent history of terror attacks in Russia we'll have that and more as soon as we come back. Don't go away.

(COMMERCIAL BREAK)

[16:30:00] ASHER: Hello everyone, I'm Zain Asher in New York and this is CNN news now. Authorities in Russia investigate an explosion on a subway

train in St. Petersburg as a terrorist attack. The blast machined afternoon killed 11 people and wonder you said dozens as the train was

traveling. A second device was found as a subway station and disarmed. There has been no claim so far of responsibility.

Senate Democrats have now reached enough votes needed for a filibuster against Neil Gorsuch. That came after four more Democrats announced Monday

they plan to oppose him. Now it is up to Republican to change senate rules and set up the so-called nuclear option to lower the threshold for

advancing nominees.

It was president Trump who sat down with his Egyptian counterpart at the White House where he told reporters he looked forward to a quote very long

and strong relationship as the first White House visit by an Egyptian leader in seven years. Ties between the U.S. and Egypt were strained after

the Obama administration criticism of Mr. Sisi's human rights record. Mr. Trump's senior adviser has met in Iraq with prime minister -- the prime

minister of Iraq, Mr. Kushner is part of a delegation traveling with the chairman of the U.S. joint chiefs of staff. He is there to become more

familiar with Iraq and U.S. efforts to crush ISIS.

OK, I want to get you caught up now on the top story today, subway blast in St. Petersburg. Russia. Russian prime minister Dmitry Medvedev says

authorities are treating the act as an act of terrorism as our Phil Black reports it would be not the first time.

(BEGIN VIDEOTAPE)

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Russia's military brutally crushed Chechen separatists when they fought to break away from the Russian

Federation around the turn of the century. But the war did not end. Fighters went underground or deep into forests to continue their campaign

against the Russian state.

In 2002 Chechens invaded a Moscow theater holding 850 people hostage. Two passenger planes which departed Moscow in August 2004 brought down by

explosions almost simultaneously. Authorities blamed two Chechen women the combined death toll 89 people. The next month the world watched with

horror as more than 1 thousand people were held hostage for days at a school in north Caucasus, it ended when Russian forces stormed the school

more than 330 people were killed including 186 children. Moscow's metro system was targeted with suicide bombs in both 2004 and 2010 killing around

80, in November 2009 a bomb derailed the high-speed train which ran from Moscow and St. Petersburg.

36 died in January 2011 when the arrivals area at Moscow's airport was struck by a suicide blaSt. Before the St. Petersburg metro bombing the most

recently Russian terror attacks took place in the southern city of Volgograd at the end of 2013. First, the local train station was hit

killing 18 people. A day later a suicide blast tore apart a bus, killing a further 60. Russian authorities are now also worried about the terror

threat from Syria.

It's believed thousands of people from the Russian Federation have traveled to Syria to join Islamist groups. President Putin told people that's why

he ordered airstrikes in late 2015 to kill the terrorists before they could return and kill people within Russia's borders. Analysts believe Russia's

efforts in Syria have motivated Islamists to strike back at Moscow. And point to the ISIS bomb which brought down a Russia passenger jet over the

Sinai Peninsula in October 2015. Russia as has dedicated huge resources to fighting terrorism at home and abroad. Authorities will be desperate to

learn how those responsible for the St. Petersburg attack were able to get past Russia's formidable security and intelligence services. Phil Black,

CNN London.

(END VIDEOTAPE)

[16:35:00] ASHER: Let's talk more about this with our contributor Jill Dougherty who is also CNN's former bureau chief in Moscow, thank you for

being with us. The interesting thing is Putin actually said very little about this attack. He said that naturally as expected it would be

investigated to see if it is terrorism he said that earlier. But other than that it was business as usual for Vladimir Putin today. What do you

make of that?

JILL DOUGHERTY, CNN CONTRIBUTOR: Well, so far. I mean what he wants to show is this is not deterring him. So, it not changing the country at this

point. His schedule goes on. But I am absolutely convinced that we will hear from president Vladimir Putin.

First, the investigators have to determine whether it's terrorism. All signs point to that. Probably, what they need is that official

announcement. And then what will he do? Number one, what will he say? And then number two, what will he do? Because this is the key issue for

president Putin. And especially as Phil pointed out in that piece, he -- he said early on in Syria that the reason they were sending their forces to

Syria for the air operation was precisely, fight them there so they don't come back home.

And there are thousands of people, primarily from Chechnya but from the southern parts of Russia who have moved from Chechnya when the Russian

government came in pushed them out the Chechnya they moved into other areas they were highly radicalized at this point. They went to join the jihad in

Syria and other places.

They are very fierce fighters, they are now very experienced and a grave concern was

they would come back home and start attacking in Russia. That's again what president Putin said you fight them there so you will not have to fight

them at home. That will be the first I think surmisal of who this could be, what's the most likely scenario.

ASHER: So then how does -- I mean if they are coming back home, how does Vladimir Putin begin to crack down then?

DOUGHERTY: Well, I think he just tightens the situation. You know, you have more -- there are plenty of things they can do. They can have more

raids. They can tighten up security and following people who might be known jihadists or anyone associated with that. They can look at the -- at

the internet and check on things like that. There are many things that they can do. In let's say a security/police way. And then also I think

there is another aspect to this which hasn't come out yet.

But president Putin has made it clear for a very long time that he wanted the United States and the western general to cooperate on fighting

terrorism. He made that -- urged that pitch, that urging back at the beginning of the incursion or the -- the Syrian operation by the Russian

forces. President Trump said during the campaign and right after that he wanted to cooperate. Wouldn't it be good if the United States could

cooperate with Russia. If this is shone to be international terrorism that would be another thing that you might look for with president Putin saying,

join us, we have to do this together.

ASHER: Right, Jill live for us there thank you so much.

DOUGHERTY: Thank you.

ASHER: It is a critical week for the Trump presidency and U.S. foreign policy as well. He is meeting three world leaders in quick succession

starting with the president of Egypt. We'll have that and more after the break.

[16:40:00] (COMMERCIAL BREAK)

ASHER: Welcome back everybody. It is the start of a crucial week for U.S. foreign relations and possibly motivate important week since president

Trump took office in January. He is meeting a tri of important overseas leaders. For example, today president Trump held talks with President

Sisi, he described him as great friend and an ally as well. Wednesday, he will meet Jordan's King Abdulla. After that it is the big one, the two-day

summit with president Xi Jinping of China at Mar-a-Lago. An interview with "The Financial Times" president Trump called on China to do more to reign

in North Korea and said if Beijing won't help the U.S. will act alone.

Gillian Tett joins me live from New York. She is the U.S. managing editor for "The Financial Times" also the author of the article in the financial

times. Gillian, Donald Trump has talked about he bragged about the fact that he is a deal maker. He can get things done. What did you get a

sense? When you spoke to him what did you get a sense to him about what his negotiations strategy and style will be when it comes to dealing with

Xi Jinping especially on the issue of North Korea and trade?

GILLIAN TETT, U.S. MANAGING EDITOR, "THE FINANCIAL TIMES": Well, that's two important things to take away as you say this is indeed an absolutely

crucial summit. Point one is U.S. is seriously concerned about North Korea. But then the last few years they've been looking at Syria and Iran

and Russia. But right now, North Korea is center stage with good reason because it is indeed a developing a nuclear missile as far as people with

can tell. Points two is that Donald Trump is indeed the deal maker president. He has come through his life negotiating in a very tough

aggressive fashion. So, the fact he is basically talking tough ahead of this summit is in entirely in keeping with his modus operandi but right now

he is keen to show the world that North Korea is center of his mind.

ASHER: In terms of the other areas that you touched upon in this interview. I mean it's sort of clear I guess to everybody even before we

read this article that Donald Trump tends to change his mind quite a bit as I'm sure you noticed. But you know one thing is in terms of Brexit, you

know he had spoken about Brexit on the campaign as it being very good for the U.K. he mentioned that again in your interview. In the article but he

also softened his stance on the EU. He said I guess other countries won't follow suit. Other countries won't really follow Brexit. Did he explain

why he changed his mind?

TETT: Donald Trump likes to think that he is a tells it as he sees if he changes his mind if he reassesses situation he likes to say he comes out

and says so. Frankly when we asked him about Brexit and Europe and European populism we were expecting him to say we can see populism in

rising in pleases like France. We almost fell out of our chairs well he said actually no I think that probably the European Union is not going to

split up now. It's probably doing better post-Brexit let's hope he is right.

ASHER: Did you think there was some kind of reason as to why he's changed his mind? Can we read deeper into it?

TETT: I think it's hard to read too deeply into the fact other than the fact he recognizes the climate around Europe has become a bit more stable

than it was last year in the immediate aftermath of the whole Brexit shock decision. I think the important thing is he is trying to play nice with

Angela Merkel these days. There was a lot of noise after the summit that he and Angela had not got on well process. There was a lot of speculation

he hadn't shaken her hand as a deliberate slight or insult. He now says hey I never even heard the reporters telling me to shake her hand. He is

trying to play nice. He went out of his way in the interview to say nice things not just about the Chinese premier and leadership but also about

Angela Merkel.

ASHER: When you spoke to him in the wide-ranging interview what did you get a sense that Donald Trump was most proud of in the first few months.

[16:45:00] TETT: I think he is most proud of being unconventional to be honeSt. He sees himself as being a very much a voice of the people, not

exactly a man of the people because he is a billionaire he says he is a billionaire with you he sees himself connecting directly with the people as

tweets and the tweets is fascinating because halfway through the internet I lobbed out a question a as an afterthought because anyone as a journalist

is glued to the tweets because they come in at day and night they often seem to be surprising if not downright baffling or bizarre. I asked do you

regret them, he went nah, nah don't regret anything. It is also because he then called over aides to be absolutely precise if he has 101 million

followers so he has says.

ASHER: Well, you are right journalist we are glued to Donald Trump's twitter account as you mentioned he tweets all hours of morning.

TETT: He was proud of that.

ASHER: Coming up next, Gillian, thank you so much appreciate that.

Mr. Trump's recent comments are raising the stakes for his meeting in a few days with president Jinping. The two governments are at odds on a number

of major issues, for example, North Korea, Donald Trump wants action from Beijing to rein in North Korea's nuclear program, the trade deficit is a

point of contention. Mr. Trump signed two executive orders aimed at combatting trade abuses. He previously accused China of killing U.S.

companies on trade. Finally, of course, the South China Sea. Beijing has built artificial islands in the contested region. U.S. secretary of state

has said China should not be allowed to access them.

Max Baucus was Washington's ambassador to China until a few weeks ago he joins me live from Detroit. Max explain to us if you can, what the general

perception is among Xi Jinping and his inner circle of president Trump?

MAX BAUCUS, FORMER U.S. AMBASSADOR TO CHINA: I think frankly this Mar-a- Lago summit is probably the most important summit president Trump is going to have in his presidency. China is a rising power they are proud they got

bounce in step, nationalism is strong. Clearly, we are proud as an established power. And the relationship between our two countries just has

to get on a good foot off on a good start if we are going to deal with this in a way that makes it -- or our kids and grandkids have a very high

standard of living.

The Chinese are baffled, they're not quite shoe who the guy Trump is. Trump says he is 45 percent tariff. He talks about currency manipulation.

He calls, talks to Taiwan leaders. He questions one-China policy then backs off on all that. They're going to wonder who this guy is. This is

extremely important summit. I think president Trump's got to accomplish two goals, number one is show the United States is not going anywhere.

Show the United States is a prominent in world affairs. When he decided to dump TPP that was a huge mistake because it signals to the world the United

States is perhaps backing away a little bit from Southeast Asia not being a world leader. Second, he's got to establish a really strong relationship

with president Xi and his people with president Xi's people, you don't have one-off meetings at Mar-a-Lago and hope things go right, has to be a lot

more effort. More than we have in the past of focusing on China and developing a long-term strategic policy on China if he does those two

things we're getting off to good start.

ASHER: Listen, you're absolutely right what you touched on in first part of answer. These meetings are absolutely hugely important. One thing that

Donald Trump has said is that you know he -- his priority is to try and bring down the trade surplus that China has with the United States. I'm

curious. Yes, he throughout the idea of 45 percent tariff. I am not sure if anyone thinks he actually going to start imposing tariffs. How do you

think he is going to broach that subject of trade with China?

BAUCUS: Well, I'll tell you what he should do. He should say, look, you Chinese, we work with you. We depend on you. We have a $650 billion trade

between our two countries. But you're taking advantage of us. You're closing your markets. You got all kinds of restrictions that make it

unfair for United States companies to compete and participate. And we can't have any more of that.

ASHER: Even if he says that what will come of that? You can answer that go ahead.

BAUCUS: That's my next point.

ASHER: I apologize.

[16:50:00] BAUCUS: My next point is words don't count. Words count but it's will, deeds and action that really count. Have to say what we need to

them. Say to him if. We're going to take actions knowing they're going to retaliate. That's better than doing nothing because China is taking

advantage they're playing us we're a little nice as Americans we don't want to upset anybody we've done too much of that in the past I'm not saying be

bridge lent I'm saying out of self-respect and taking care of ourselves and people and country and workers we're saying enough is enough. And we're

going to draw the line here. And if you cross it we're going to have to take some actions we expect you may not like it but we have to do it

because the alternative is worse. China is a little bit of bully. They talk big. But if we stand tall in many instances they'll tend to back down

but we have to stand tall with conviction in the first place.

ASHER: And one other issue of course that is a massive priority for Donald Trump is North Korea. He has said in this wide ringing interview with "The

Financial Times" he said listen if China doesn't want to help us when it comes to North Korea we don't need China the United States handle North

Korea without China.

BAUCUS: Well it's a huge question. There may be an opening here. In all the meetings I've attended with president Xi Jinping, only once have I

heard him to be to speak of derogatory terms of Kim Jong Un, president of North Korea, he does not like Kim Jong Un. There is a potential opening

here as this issue gets more and more intense, getting closer and closer to a potential day of reckoning where the United States and China may be able

to start talking about how they -- we deal with Kim Jong Un, how we deal with North Korea. Chinese don't like him. Chinese don't like Kim Jong Un

builds missiles and nuclear capability they don't like him personally. There may be opening here. You have to try. At Mar-a-Lago just start

talking about it all calmly just start talking about it develop a little bit of confidence, a little bit of trust that's something we should do.

Maybe China will be interested. If not, we have lots of other options.

ASHER: They're going to be together two days lots of time for lots of talking. S max thanks for being with us sure appreciate that.

BAUCUS: You bet.

ASHER: With South Africa's new finance minister has his work cut out for him just days after taking office the country has been punished with a

credit rating downgrade. We'll have that story next.

(COMMERCIAL BREAK)

ASHER: South Africa's credit rating has been cut to junk by Standard and Poor's, three days after president Jacob Zuma fired his respected finance

minister, Gordhan. Ratings agency S&P says the leadership change puts policy continuity at risk and increases the odds that the economy will

suffer this year. The rand's value slipped more than 2 percent in the wake of the announcement. Eleni Giokos joins us live from Johannesburg. So,

Eleni, explain to us what exactly does that downgrade mean in terms of South Africa's ability to borrow and what will it mean for the economy? I

see you shaking your head in disbelief.

[16:55:00] ELENI GIOKOS, CNN MONEY AFRICA CORRESPONDENT: You know I've been on air for all the wrong reasons out of South Africa from a cabinet

reshuffle to a credit rating downgrade in just a few days. This is the first rating downgrade in 17 years. Basically, S&P pulled us into junk

status, Moody got us two notches above junk that decision is coming through on Friday. Fitch got us one notch above junk if they make a move this week

we will have all the three credit rating agencies saying we're not investment grade.

This has been a long time coming. The former finance minister Previn Gordhan had been trying to get the credit rating agencies to move away on

view few risks in different light and with all the drama happening the last few days that changed. The new finance minister, Malusi Gigaba gave an

important press conference it seems his rhetoric was tilting towards the left talking about radical transformation that could have spooked the

markets as well. But S&P has been saying this could spark a change in policy and of course if this change in policy means there isn't continuity

that's a concern, let's take a listen what the new finance minister said over the weekend.

(BEGIN VIDEO CLIP)

MALUSI GIGABA, NEW FINANCE MINISTER, SOUTH AFRICA: For take a long that's been a narrative or perception around treasury that it belongs primarily

and exclusively to orthodox economists and big business and powerful interests and international investors. With respect, this is a people's

government.

(END VIDEO CLIP)

ASHER: All right, Eleni, live for us there. Go ahead, Eleni, quick.

GIOKOS: I can hear you, sorry. Exactly you're hearing this coming through. I think credit rating agencies investor community has been

wondering what it's going to look like in next few weeks, at the end of the day you've got the rand coming under significant pressures. You've got

investors sitting at the sidelines.

ASHER: Eleni, I'm sorry we have to go. Eleni, we have to go.

Eleni, appreciate that, thank you so much and that is QUEST MEANS BUSINESS for this Monday evening Zain Asher in New York. The news continues on CNN.

END