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QUEST MEANS BUSINESS
World Leaders Push Back at Trump on Trade; Tax-Cut Bonanza Continues for Blue Chips; Trudeau urges Inclusive Growth at WEF 2018; Bankers in Davos Hail Trump's Tax Cuts; Russian Bank Chief on Possible U.S. Sanctions. Aired 4-5
Aired January 23, 2018 - 16:00 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 HOST: Closing bell ringing on Wall Street. Records for the markets as they continue their upward swing. Hit the
gavel. Trading is over on a strong day. Today is Tuesday. It's January the 23rd.
Tonight, the battle lines are drawn on the question of trade. We have both sides of the argument from Davos. More companies getting back to employees
as a result of the Trump tax cuts. And the Canadian Prime Minister, Justin Trudeau, reminds everyone, don't forget inclusive growth. Live from the
World Economic Forum in Davos. I'm Richard Quest, yes, I mean business.
Good evening from Davos. Let's go to the White House.
(WHITE HOUSE PRESS BRIEFING)
UNIDENTIFIED MALE: Fake news to describe reporting that is not flattering, and it reflects poorly on their country and reports that are inconvenient
truths. And President Trump has made a point of not publicly talking about things like human rights and freedom of speech, freedom of expression. Is
he concerned at all or are you concerned that the president's rhetoric combined with his silence on these issues is creating a climate where
authoritarian leaders feel they have free reign to do what they want, and the United States will not speak up publicly?
H.R. MCMASTER, U.S. NATIONAL SECURITY ADVISOR: Well, it's just not true. It's just not accurate that the president hasn't spoken loudly both in
words and in deeds against those who violate human rights. So, I would ask you to go to his speech that he delivered at Warsaw. Where he talked about
the importance of individual rights and the rule of law. I would say go to his speech in Riyadh where he said all nations of the world have to come
together to defeat this wicked ideology that perpetuates terrorism. I would say look at his U.N. General Assembly speech where he defined
sovereignty, as strong, sovereign nations who respect the sovereignty of their citizens and the sovereignty of their neighbors. Look at his deeds.
Look at his deeds in confronting the most brutal dictatorial regime in the world, North Korea. How could that not be a human rights issue? How about
QUEST: There we were at the White House with a briefing that was ahead of Donald Trump's visit to Davos. Today the battle lines were clearly drawn
here. We start tonight usually with the snow man. I want to do so because to show you that this snowman, Davos, is now bearing on his shoulders the
weight of global trade. On the one side, the United States with its America first policy. On the other side, as we heard today, other nations
saying no. Globalization was still the way forward.
(BEGIN VIDEO CLIP)
JUSTIN TRUDEAU, CANADIAN PRIME MINISTER: Today is a great day for Canada, but it's also a great day for progressive trade around the world. Today I
am pleased to announce that Canada and ten other remaining members of the Transpacific Partnership concluded discussions in Tokyo, Japan, on a new,
comprehensive and progressive agreement for Transpacific Partnership, the CP TPP.
NARENDRA MODI, INDIAN PRIME MINISTER (through translator): The solution to this worrisome situation against globalization is not isolation. Its
solution is an understanding and accepting change.
DONALD TRUMP PRESIDENT OF THE UNITED STATES: Our companies will not be taken advantage of anymore, and our workers are going to have lots of
really great jobs with products that are going to be made in the good old USA and that's what this is all about.
TRUDEAU: We're working very hard to make sure that our neighbor to the south recognizes how good NAFTA is, and that has benefited not just our
economy, but his economy and the world's economy.
TRUMP: I'm going to Davos. We'll be talking about investing in the United States again for people to come in and spend their money in the good old
USA, and that's what they're doing.
(END VIDEO CLIP)
[16:05:03] QUEST: This battle comes at a pivotal moment for global trade. Only hours ago, Donald Trump's agreed to slap new tariffs on solar panels
and washing machines from South Korea and China. Companies like Samsung and LG are furious. China, South Korea and Germany and Mexico are all
grumbling. And it complicates that the NAFTA renegotiations started again today. You just heard Justin Trudeau defend the deal here in Davos.
All over we saw new trade alliances being forged. For instance, it's one year to the day since Donald Trump pulled the United States out of the TPP,
the Transpacific Partnership, and yet today the remaining 11 countries announced their own version of exactly the same deal. Martin Wolf is chief
economics commentator at the "Financial Times.'' Good to see you, sir.
MARTIN WOLF, CHIEF ECONOMIC COMMENTATOR, FINANCIAL TIMES: Lovely to see you.
QUEST: Thank you for joining us. This trade battle that's -- I mean, I use the word erupted today. But on the one hand you've got Donald Trump
signing tariffs and you've got Trudeau and Modi saying global trade. What do you make of it?
WOLF: It really follows from the clash we saw a year ago when we had the inaugural speech which was protectionist and Xi Jinping was here speaking
about globalization. What it looks like to me is that the U.S. is in a minority of one in this issue. Which is very extraordinary and countries
that used to be very protectionist, really protectionist like India and China -- was totally closed 40 years ago -- are on the other side. I think
actually, the U.S. could turn out to be quite irrelevant. The world trading system is bigger than the U.S., we're going to find.
QUEST: And the evidence for that, of course, is that the 11 other TPP minus as it used to be called. The TPP minus the U.S., they've gone ahead
and done the deal.
WOLF: Yes. I think that's quite extraordinary. I think that if you look at Europe, as well and you look at the TPP 11, which includes Japan and a
very important ally of the United States. You think of what the Indians and Chinese are saying. It doesn't seem to me that anyone is following the
U.S. And though it's a very big partner, it's not the only part of world trade. So, I wonder whether the Americans will start sort of feel they're
on the sidelines. Then so what is he going to say when he comes?
QUEST: But maybe he doesn't care then. Because he has got a $16, a $17 trillion economy. It is the place where all companies want to do business.
We just heard from Gary Cohn that the president when he's here will be meeting European CEOs who have investments in the U.S.
WOLF: Of course, the U.S. is a very important economy. It's growing. The tax cut is certainly good are if companies. People aren't going to ignore
it and it is important to stress the trade measure he taken are very small. These are very significant indicators. There sort of ways of placating the
base, but they're not going to change anything, and most serious analysts regard them as pretty silly. You might say his bite has been actually in
the end, much less bound than his bark.
QUEST: So, when he comes here, he's got a choice, doesn't he? He either says I want to play nice, but there's got to be better trade terms, or he
says it's my way and this is the way it's going to be. And the way he said after the Jerusalem vote at the United Nations.
WOLF: It'll be fascinating to see what he says. I think what he says is America's back. America matters. I've made it matter, but I'm completely
happy to do deals with you as long as you accept that they must also be in our interest. A lot of it has to be unfair. Now it has to be fair. But I
think he will be sensible. If he doesn't, as it were, declare war on the world.
QUEST: Finally, as one of the great economic commentators of our time, you know and can tell us about the dangers of protectionism. If the U.S. even
starts the scintilla of protectionism, the snowball can start rolling down.
WOLF: I think actually it could be like Reagan's period. We forget this. The early Reagan period was very protectionist, remarkably so. But in the
end, it didn't matter. As long as they continued to these targeted small measures, it's an irritant, it's border line legal. I think the world can
survive that. The question is, will he slap a great big 35 percent tariff on the whole of China's trade? That's something completely different.
QUEST: Come and join me at the fractured wall. We're told that we are in a fractured world. This is not fractured at all. This is extremely
fractured. Where would you put your cross and which direction would you go?
WOLF: Well, I think we are at the moment about here, and we're definitely going in that direction.
QUEST: Thank you very much indeed.
QUEST: Good to see you, as always. Thank you for taking the time.
WOLF: Great pleasure.
QUEST: Thank you very much, indeed.
As we continue, says, she hopes Donald Trump will come to Davos and see that globalization can benefit anyone.
[16:10:00] Erna Solberg is one of seven co-chairs of this year's WEF. For the first time it's an all-female lineup. And the prime minister took part
in the panel with Christine Lagarde. Debating how to create a shared future in a fractured world. The Prime Minister told me she was optimistic
about Donald Trump's visit to Davos.
ERNA SOLBERG, NORWEGIAN PRIME MINISTER: I hope that we will see Donald Trump, maybe clearer viewing the fact that we are so interconnected today.
That the problems around the world will affect every country in the world. And I'll be meeting the United States -- is participating in conflict
resolution making and all understanding that you need multilateral answers to some of these issues. And I hope that is growing in the America sense
because jobs in America is dependent on market and their outs. It's dependent on inoperative immigrants. It's dependent on the circle together
which we have.
QUEST: Is the gap between Modi and Trump as great as it might seem to us today, do you think? I mean, I put it in terms of personalities, but I can
just as easily say is the globalization gap that this world currently faces as dangerous and as wide as it might appear at the moment?
SOLBERG: I think globalization, because it's run by technology, and it's run by innovative people. It's going to close gaps in the future. I think
the problem is to make sure that politicians all over the world have that concept in hand. Because all transformations lead to political
instabilities in countries. When jobs move away, when other new jobs come there are people in between. And we have to take more care of that. And
that is what I hope is that their agendas will become more alike in a couple of years' time, when there is a clearer understanding that there
isn't that competition between a poor worker in India and a worker in the United States. In fact, they have a mutual benefit from globalization.
QUEST: Would you agree as WEF says, that we're in a fractured world?
SOLBERG: We are in a fractured world, but I think you have to ask from where do we start? We are in a world where more children managed to reach
the age of five. There are a lot of health issues and we are doing much better on the general benefit. We are combatting extreme poverty much
more. But the last years we have had a little bit of setbacks on trade issues, on conflict and on democracy and human rights.
QUEST: Join me at the fracture board. How fractured are we and which way are things going?
SOLBERG: Well, I think we are around here somewhere, but I'm a politician. I live out of hope. Not analysis.
QUEST: Hope more than expectation.
SOLBERG: Oh, and expectation, and I hope we move there. We have an agenda on the global strategies and global growth. If we can manage to reach them
we will move that way.
QUEST: If anybody can manage to get to the SDGs, there are so many of them.
SOLBERG: Yes, but --
QUEST: And the subsections.
SOLBERG: Yes, but if we manage to eradicate the real poverty, the extreme poverty, we are starting work, if girls get education and if we really have
maternal and child health at heart, then I think we will solve some -- and climate change -- we will solve a lot of the issues.
QUEST: On that point of the #metoo. Do you now feel real change is taking place and has it jumped from a # to a policy shift?
SOLBERG: I hope it's a policy shift. We have all organizations in mind having problems with #metoo, and I've seen that in the last weeks. And I
really feel that there is very draw in the sand and that we have to move forward. We will not get equal rights in our societies if we don't talk
about also what happens behind closed doors. What happens in offices and what happens in political parties.
QUEST: That's the prime minister of Norway.
Turning to Wall Street and the S&P and Nasdaq closed at records. The Dow just fell just a couple of points, down four points at the close. Netflix
share, now they were the star performer of the day and they spiked 10 percent. Last night we told you that they were describing their result as
beautiful. And today you saw the reaction. Oil prices rose sharply, as well.
With the rising tide for optimism in the world C-suites, that's according to PWC's new surveys of CEOs. Improving fundamentals and U.S. tax cut are
boosting confidence in the global economy. In contrast to that, 40 percent of the CEOs surveyed, expressed extreme concern about geopolitical upheaval
and cyber threats. In short, they feel businesses are at the mercy of threats they cannot control.
[16:15:00] Bob Moritz is chairman of PWC. He told me the results of the survey have changed in the last year.
ROBERT MORITZ, GLOBAL CHAIRMAN, PRICEWATERHOUSECOOPERS: CEOs have a record amount of confidence in the economy globally across each region that we
looked at. But that level of optimism that was a big increase this year is not commensurate with their optimism that they can grow revenues over the
next 12 months at the same level. They're positive, but not as positive as their view on the economy.
QUEST: So, they think that the economy is doing great. They're just not enjoying the benefits. How can that be?
MORITZ: You have a couple of issues out there. You have the issue that the threats that they're worried about are outside of their control,
geopolitical issues, terror employee, et cetera. You've also got the threat of is technology as positive as they need to be and are they well-
equipped to take advantage and deliver bottom line results.
QUEST: And into this you have the big really big issues, never mind war and peace. You've also got the U.S. administration. You've got the tax
cuts. You've got Brexit. You've got North Korea.
QUEST: All of which play into this.
MORITZ: All of them play into this and in fact, the kind of threat you just talked about actually rose higher than the normal business risks. FX
risks, ability to finance debt, et cetera, those dropped down this year. So, the headline news that we've been talking about, the ones you just
talked about, hit us great. So, they're all focused on I can't control them, but I better scenario plan for them right now.
QUEST: Let's talk about the tax cuts in the U.S. We saw Apple bring -- paid $38 billion in taxes on what it's bringing back. Are you expecting
many more companies to take advantage of this?
MORITZ: I think we'll see many more companies take advantage of the opportunity, but I also think the one thing that hasn't been talked about
yet is how other countries react in lieu of the U.S. point of view and the change they just recently made.
QUEST: Now, arguably, the U.S. just brought itself down to the same rough barometer of the others. I mean, with the exception of Ireland. Everybody
else is in that 18 to 22 percent. Is there much room for a race to the bottom?
MORITZ: So, I think there is the potential for incremental race to the bottom. So, a recent trip to Australia and a few other countries, they've
all talked about we need to react in order to retain the opportunity for people to invest in our country, because the U.S. just became a hell of a
lot bigger investment opportunity.
QUEST: You would expect other countries to reduce?
MORITZ: Think they'll reduce. Then they'll nibble around the edges. They can't race to the bottom because they're dealing with the debt on the
balance sheet and the debt coming out of the crisis.
QUEST: WEF says it's a fractured world. How fractured?
MORITZ: It's pretty fractured.
QUEST: Choose your color. There's not fractured it all. The scale goes this direction. Put your cross and the direction you think we're going.
Why do you think we're getting better?
MORITZ: So, I think there is -- our CEO survey itself actually talks about the diversification and the polarization of people's points of view on this
topic. So, it's clearly coming through. Acknowledgement is the first part of the answer. And the CEOs now are finally starting to step up. That
they actually have to do something about it. Working with business and community alike.
QUEST: Did you go safe there? Were you playing save getting on that side?
MORITZ: No, no, no. I'm not as fractured as the WEF is right now in terms of what's going on. Because I think you have a huge potential of bringing
the world together. The world is still connected. Let's not forget that. Technology, social media will also actually make that come to life. The
challenge is what I see and read from the CEOs when I meet with them, they're waking up to this and they're pushing the issues harder. That's
why I think there's potential for the future.
QUEST: Bob Moritz with the issues of the PWC survey. The economic optimism tempered by geopolitical uncertainty. It's a theme repeated by
executives across industries. And that includes Microsoft's Brad Smith. After the break, he tells me no country can succeed by walling itself off
from the world. It's QUEST MEANS BUSINESS in Davos.
[16:20:00] (COMMERCIAL BREAK)
QUEST: Welcome back to Davos where the temperature has fallen, but as you can tell, the weather is considerably clearer. There hasn't been a drop or
a snowflake throughout the course of the day, and it's going to remain that way for at least the next couple of days. Until the president arrives,
President Trump arrives, and we learned that, of course, he leaves the U.S. on Wednesday night, arrives here on Thursday morning.
Now, while everybody awaits this arrival, there is much already on the agenda here at Davos. Microsoft's president has been warning that
companies must do more to calm people's fears about technology in the workplace. Brad Smith says the solution that some governments have taken
to wall themselves off will not work. And as he speaks, of course, you are once again, very much aware of the trade battle or the trade differences of
opinion that now exist. Which are made ever clearer for a company like Microsoft that is truly global. Brad Smith told me the uncertainty about
the approach that political leaders are taking is creating anxiety in the C-suites.
BRAD SMITH, PRESIDENT, MICROSOFT: This is a time when to some degree, geopolitics and macroeconomics feel very disconnected. You see our huge
optimism about the economy and huge nervousness about the world of politics.
QUEST: How do you square that circle so that they don't -- the nervousness doesn't destroy the economic confidence?
SMITH: Well, I think we all have to do what we can to contribute on the politics of the day, on the issues of the day. For a company like
Microsoft it's in no small measure about what technology is doing and addressing head-on the consternation and anxiety to some degree that
technology creates in some quarters.
QUEST: That consternation can take so many forms at the moment. Many of which are in the future that are going to arrive, AI.
QUEST: Retraining, reskilling.
SMITH: Success is going to come to those who seize the opportunity, don't stand by the sideline, make the most of the technology, that's where the
jobs will go. But second, it is the point you made. These jobs will require new skills, and as companies, as communities, as countries, we're
going to have to invest in skilling people to a far greater degree.
QUEST: How far behind are we in that? Companies getting ahead of what is necessary?
SMITH: Well, I think we're in some ways behind. I mean, look, you could argue that this has been happening for 30 years.
QUEST: Oh, it's accelerated.
SMITH: It is. It's accelerated. But look at the politics of our day. In some ways it does reflect the concerns of people who feel they were left
QUEST: What do you want Donald Trump to tell people here this week? The U.S. president is coming here arguably with an America first agenda that
stands against what much of this place stands for?
SMITH: I think we live in a time where to some degree we should expect countries to put their own interests first, -- maybe they always have. But
they can't themselves from the rest of the world. I don't believe that the United States, I don't believe that any country can succeed if it tries to
seal itself off from the rest of the world community. And I hope that what we'll hear is a message that has some commitment to continued engagement
and collaboration with the rest of the world.
QUEST: I would be remiss if I did not ask you, what are you planning to do now you're going to get this large tax windfall? Apple has already said
they're paying $38 billion in taxes to bring -- they won't tell us how much they're bringing back. So, where's your checkbook, Mr. Smith?
SMITH: Well, the first thing we would say is, I think there is a bit of a myth almost that every company is going to see some great windfall. It's
actually going to affect many different companies and industries in different ways. The more one has an intangible and intellectual property-
based business, the less of a windfall let's say there's going to be. But I will say this. We have been investing. We have been investing in the
United States as well as around the world. We're going to keep investing because that's how we're going to grow.
QUEST: It's a fractured world, we are told.
[16:25:00] QUEST: Join me at the fracture board. Where are you going to go? Going there we're not fractured at all. This is where we are
exceptionally fractured. So, where are you and which arrow?
SMITH: Well, I would say we've become unfortunately, very fractured. I would put us more over here, and I think we have moved this direction in
the past year. I think in the year ahead we will move back a little bit. The pendulum is going to swing back because we are all going to recognize
you can only get so far in life if you try to go it alone.
QUEST: I wonder whether your arrow that way is based more on hope than reality?
SMITH: It is based on optimism and in a year, we'll know whether it was hope or reality.
QUEST: The president of Microsoft, Brad Smith, joining me earlier.
Britain's competition watchdog has put a huge question mark over Rupert Murdoch's chances of buying the British broadcaster, Sky, or at least the
bits he doesn't already own. They told the U.K. government that the $16 billion deal should probably be blocked. Its provisional view is that
letting Murdoch take full control of Sky would concentrate too much power in the hands of the Murdoch family trust. Hadas Gold is in Washington.
Whilst this is extremely bad news at one level for Rupert Murdoch, it certainly is complicated by the Disney deal, because they'd hoped to do the
Sky bargain or the Sky deal before Disney completed.
HADAS GOLD, CNNMONEY EUROPEAN POLITICS, MEDIA AND BUSINESS: That's exactly right. The Disney deal, though, doesn't exactly have any effect quite yet
on how the CMA is viewing this. They're still looking at it as though Fox will completely own Sky News. However, they did say in their report
released today that the Disney -- they would have less concerns with Disney being a full owner of Sky as they did with Murdoch.
Now, another bright point for 21st Century Fox and for Rupert Murdoch, is that the CMA ruled that actually when it came to broadcasting standards,
they didn't have concerns. And had they ruled they had concerns with broadcasting standards that would have been a death now for this entire
deal. There are still avenues that Fox can take in order to please the CMA and they still have some time. The final decision on this -- the final
recommendation will come in May, and then the final decision from the culture secretary will come in June.
QUEST: The issue, though, of how Murdoch sells the company to Disney and at the same time deals with the U.K. over Sky almost boggles the mind.
GOLD: It does, and a lot of this has to do with timing because the CMA, the British regulator, is looking at this and is going to give a decision
sometime in the summer. Whereas, the Disney/Fox deal won't be completed in that time period. And Disney has expressed that they want to keep Sky, and
they would like to own all of it. So, there is a question of should this deal somehow be completely blocked? Would Disney then try to buy the rest
of Sky? That's not clear yet, and I tried reaching out to Disney today and so far, they're not talking.
QUEST: Hadas, thank you. Hadas Gold joining us from Washington. And when we come back the president's top economic adviser insists America first
doesn't mean America alone. David Gergen is going to be here to tell me what President Trump should expect when he arrives here. We will go
through President Trump's agenda and try to make some sense of who's going to get what? It's Davos.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. The bankers in Davos say the Trump tax cuts could be the
key to unlocking global growth. The chairman of Russia's VTB bank says his name might be on the next list of U.S. sanctions and that he'll be in the
QUEST MEANS BUSINESS studio before anything like that takes place. As we continue tonight, this is CNN and on this network, the facts always come
We've learned now that the special counsel Robert Mueller's team has spoken to the Attorney General Jeff Sessions. In addition to the former FBI
Director James Comey as part of his Russia investigation. Attorney General Sessions was questioned for several hours last week while sources say
investigators spoke with Comey last year.
A German nurse already serving a life sentence for killing patients has now been charged with another 97 murders Niels Hoegel was showing off his
resuscitation skills and to fight off boredom. Police say we may never know how many people he actually killed because some potential victims were
In Pakistan, police save they have arrested the serial killer responsible for the rape and murder of Zainab Ansari. The 7-year-old girl's body was
found in a trashy in the city of Kasur earlier this month. It sparked a widespread coverage, police say the DNA of the 24-year-old suspect that they identified only as Imran was a 100
The nominations for the 90th annual Academy Awards have been done, in "The Shape of Water" leads with 13 nominations, including best picture and best
actress. Greta Gerwig is the only woman up for best director for her debut film "Lady Bird." Just the first woman to be nominated in that category.
And the Oscars will be held March 4 in Los Angeles.
Executives here in Davos and in the American C suite aren't focused on a possible trade war just yet. They're too busy rolling out their responses
to President Trump's tax cuts. Verizon's awarding employees below executive level 50 shares of stock. The price of the shares will be set
next week. Disney is giving more than 125,000 workers a $1,000 bonus and devoting $50 million to paying tuition costs for its hourly employees.
JPMorgan Chase is rolling out a $20 billion investment plan promising 400 new branches, although an unknown number will be closed. Thousands of new
jobs and there will be pay raises for 22,000 employees. Now put all that together, there's lots of optimism and not surprisingly here in Davos, the
chief executives of Blackstone and Credit Suisse said the power of the tax cuts may have been underestimated.
(BEGIN VIDEO CLIP)
STEPHEN SCHWARZMAN, CEO, THE BLACKSTONE GROUP: There are going to be a lot of flows into the United States and this has been underestimated to
forgotten aspect of the tax reform. Certainly, as you listen to the U.S.
commentators that there are companies all around the world who are looking at the U.S. now and saying this is the place to be in the developed world.
TIDJANE THIAM, CEO, CREDIT SUISSE: The tax reform in the U.S. has been exactly what we needed, something really fundamental to happen at this
point in time to give a new impetus to our growth there. I do believe that the positive impacts of that are underestimated.
(END VIDEO CLIP)
QUEST: Now, within the last hour the president's top economic adviser says tax cuts and import tariffs are not at odds with free trade. As President
Trump prepares to come here, Gary Cohen insisted the President Trump's America First mantra doesn't mean America alone.
(BEGIN VIDEO CLIP)
[16:35:00] GARY COHN, CHIEF ECONOMIC ADVISER TO THE PRESIDENT: The president believes we can have truly win-win agreements. America first is
not America alone. I said in my remarks when we grow the world grows. When the world grows we grow. We are part of a world economy, and the
president believes that. He's going to talk to world leaders about making sure we all respect each other, we all abide by the laws, we all have free,
fair, open and reciprocal trade, and if we live in a world where there are not artificial barriers we will all grow, and we will all help each other
(END VIDEO CLIP)
QUEST: Joining me, David Gergen, adviser to numerous presidents and has been to Davos on more than one occasion I think it is safe to say.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Almost as many as you.
QUEST: Now, David, what do we make of what President Trump is going to hear when he gets here. We know what his agenda is. He'll meet European
CEOs and world leaders and he it's going to give an America First speech.
GERGEN: I'm not sure what his agenda is, and it's worth talking about it for a moment. Talking to a lot of people around here the best bet on a
scenario is this. He arrives around noon on Thursday and that afternoon he'll spend mostly with CEOs and he has an evening dinner with CEOs, and he
may spend more time the next day with CEOs, and he'll see a few world leaders, and it's mostly about CEOs.
And I think, Richard, what this is, is a ramp up to the state of the union address coming Tuesday night out of Washington, D.C. If he can get these
CEOs to commit to investing in infrastructure in the United States over Thursday and Friday, he can go back with a bountiful of those announcements
and he can put right in the speech just like the clips you're showing of the companies paying their people more money.
QUEST: Except today when he announced the tariffs on washing machines and solar panels it was a very much America First, bring back American jobs.
Now that will not be well received if that's the tenure of his closing speech here.
GERGEN: I agree, and a lot of what he's done before has not been well received and you will see a lot of the CEOs thinking it's positive for them
and what you'll find here, and the atmosphere is one of a lot of CEOs are anxious about him, but they welcome hills economic policies. They're
anxious about his volatility and some people think he's crazy, but they like his policies.
QUEST: That is the dichotomy and the enigma that is Donald Trump and they love what they see in terms of the economic policies. You and I talked
about it. He got that tax cut that people had said was necessary that nobody else has managed to get.
GERGEN: That's right. He's repatriated that money, that's big, it's a big thing. And I think he wants to come back home and says I'm delivering for
you a gift and here is my big infrastructure plan, and I've got 100, whatever, 100 billion already.
QUEST: Does the base in the U.S. require him to lay down the law here at Davos?
GERGEN: I think he will -- a portion of the speech will be to the base and it will reassure them that I'm still the Donald Trump you voted for and I
am going to kick some ass on trade. You got it right. He went after some countries on the eve of coming to Davos.
QUEST: But how do you square that, David, with what we heard from Narendra Modi, and he took a long time to get there and he got there in the end on
globalization, and Justin Trudeau and the 11 other countries in Asia that all basically got together minus the U.S.
GERGEN: Does anything square with Donald Trump? It does add up. Right? He's trying to create a new calculous, and that's what the CEOs are seeing
they welcome. When he first said he was coming here, I thought why is he going to go in the lion's den? And why will people turn their backs on
them and will they say nasty things when he comes out? The atmosphere here is more welcoming of Trump and I don't think he would be coming here were
it not for the fact that he thinks it is in his political interest to do it. At first, he didn't want to go because he didn't think it was in his
political interest. Now I think is coming because he thinks it would help them politically.
QUEST: I suggest respectfully, he is going to do a victory lap, and say look, I won. My policies were the ones that we prefer by the American
GERGEN: I think that is absolutely right. That's the top of his speech now we have to do the next thing we have to do infrastructure. And we have
to do x, y, z. I am going to stay on the track with regulation, and by the way we are no longer going to allow you to do things to us on trade.
I think it will be a mixed bag, but the idea that he's going to convert to be a Davos man, I cards. Trudeau was basically the story is out that
Trudeau from Canada persuaded him to come.
QUEST: Choose your color.
GERGEN: Choose my color?
QUEST: Choose your color. We are very generous here. We have four pens.
GERGEN: One's blue and one's red. I will choose Green. I guess bipartisan.
[16:40:00] QUEST: On the fracture board. This is very fractured, and this is we are not fractured? How fractured or is it getting better or worse?
GERGEN: I think the world is about here, and you personally are way out here, what do you think of that? OK, Richard.
QUEST: Don't trip on the wires.
GERGEN: OK. Good to see you, thank you, sir.
QUEST: Thank you very much, indeed.
In Donald Trump's first year at the White House, the shadow of the kremlin has loomed large over Washington. In a moment I'll speak to one of
Russia's biggest banks who has fascinating things to say about sanctions and we are fascinated to hear where he thinks we are on the fracture board.
QUEST: Donald Trump says he's not at all concerned about what his attorney general may have said under questioning by Special Counsel Robert Mueller's
team. Many Americans have concerns of their own. A new CNN poll conducted by SSRS suggests 58 percent of people think the Russia investigation is a
serious matter. 38 percent say it's an effort to discredit the president. President Trump, that is. My next guest is a key player in Russia's
financial sector and says he won't be surprised if Washington targets him with possible economic sanctions, and Andrey Kostin is the chairman of VTB
bank and it is always good to have you on QUEST MEANS BUSINESS. Sanctioned or not, and are you expecting to be sanctioned?
ANDREY KOSTIN, CHAIRMAN, VTB BANK: I don't know. Frankly speaking, we know very little about these new sanctions what they are, and with the are
going to be, so we should just wait, just wait. I think treasury promised next week to publish some documents and we'll have to wait and see.
QUEST: Is it worrying you?
KOSTIN: Not very much. We can influence the situation. The sanctions are not the result of my work or my activity. I'm a banker and I have a good
banking practice in my bank. I didn't violate any regulation in America and the world and if I am punished, I am punished for some political
reasons, because I think somebody who doesn't like very much, Mr. Trump, and trying to use the Russian card against Mr. Trump. I can very much
QUEST: The relationship is extraordinarily bad now between the U.S. and Russia.
KOSTIN: Extremely bad.
QUEST: Which is ironic since Donald Trump said he would have such a good relationship. Never mind the sanctions just how difficult it is doing
business now with both sides?
KOSTIN: No, I think business is more secure than any other areas fortunately because business people are practical, and they want to
cooperate, and they want to work, and I don't know any of American bankers or European bankers who said no, we don't want to work VEB anymore on Mr.
[16:45:00] So I think it is more concern about security in the world, and about political stability, about war and peace and that's something we
should be concerned very much.
QUEST: On this question of the stability, the current stability, CEOs say they're very optimistic in terms of economics because of the tax cuts in
the United States. They are very worried about the geo-political crisis. You've got an election in Russia in which Vladimir Putin is almost
certainly going to win.
QUEST: You would agree.
QUEST: How does Russia engage itself once again?
KOSTIN: Mr. Putin himself is a good negotiator and he used to have very good relationship with many leaders including Mr. Bush, by the way. So, I
think he's quite ready to talk, and I think Mr. Trump is ready to talk to Mr. Putin. Unfortunately, Mr. Trump is not allowed I would say because the
Russian subject became so important and the investigation and other things.
QUEST: Do you think they're obsessed in an anti-Russian way United States?
KOSTIN: Absolutely. I am just surprised because look, this investigation, it didn't bring any results yet. Now, nothing about Russia about Mr. Comey
and money laundering and about Ukraine, and nothing about Russia, so show us some evidence and some documents and we might believe that there is
something in it, up until now nothing.
QUEST: The global economy. Let's go to the global economy and when are we looking at the global economy and the fragility of it, what do you believe
now needs to be done? To strengthen the global trading because what we saw today on the one hand, protectionism, and on the other hand globalization,
and the Indians want globalization which is somewhat unusual in that sense and you've got an America First policy.
KOSTIN: The major processes in globalization, a liberalization, for example, the WTO negotiation, they're stuck, and we don't see any further
liberalization. We see the adverse trend, as Mr. Trump, and I know last year the community was shocked and Mr. Trump was very anti-liberal and very
protectionist and of course, one has to see and to hear what he's going to say here, but I think it's a big, it's a big problem now, I think, and I
believe that it will be a problem for the global economy.
QUEST: So, on that note choose a color.
KOSTIN: Of course, red.
QUEST: Of course. I gave you the choice. Now we are told it is a fractured world.
KOSTIN: Yes, it is.
QUEST: That is, we are not fractured at all.
KOSTIN: It's blank. It's blank. It blank. The whole day is blank.
QUEST: For the week. This is we're very fractured. Where are you at the moment?
KOSTIN: Hopefully here.
QUEST: Right. Which way are we going? Getting better or getting worse?
QUEST: That doesn't give us much cause for optimism.
KOSTIN: That's not our fault.
QUEST: We can always try and blame the Russians. You're getting blamed for most everything else.
KOSTIN: I know. OK, Richard. Thank you very much.
QUEST: Good to see you. Thank you very much, indeed.
As we continue, we've talked so much about money, banking, global growth. Two important voices with one critical message, the Canadian Prime Minister
and the head of Oxfam our both telling the world's elite, address wealth inequality will live to regret it.
[16:50:00] (COMMERCIAL BREAK)
QUEST: The trees full of snow. We're not expecting any more snow for the next couple
of days, but it will return on Friday. Just about the time that Donald Trump is about to give his speech and then head home. We've heard a lot
tonight about giant trade deals, multibillion-dollar tax cuts, stock market records, and frankly, it's easy to forget about the billions of people who
have been left behind in a supposedly booming world economy. This afternoon the Canadian Prime Minister Justin Trudeau took a moment to
remind the wealthy elite in Davos of the uncertainty and the inequality world that is playing out around the world.
(BEGIN VIDEO CLIP)
JUSTIN TRUDEAU, PRIME MINISTER, CANADA: You are rightly anxious about how quickly our existing business models are being disrupted. Still, if you're
anxious, imagine how the folks who aren't in this room are feeling?
(END VIDEO CLIP)
QUEST: So, let us think about those people who aren't here in Davos and those people at the head of Oxfam International was talking about when she
joined me with the similar message.
Winnie Byanyima says wealth inequality is growing ever deeper and frankly, the situation is getting out of control.
WINNIE BYANYIMA, EXECUTIVE DIRECTOR, OXFAM INTERNATIONAL: Our report this year reveals that inequality is really out of control, Richard, and it
shows that our fractured economies are rewarding wealth and not rewarding hard work and that's resulting in the rich getting richer and the poor
trapped in poverty wages.
QUEST: I sometimes feel, though, I've stood here talking to you at Davos and you told me this, but I'm never sure that it's getting better in any
shape or form.
BYANYIMA: It's not getting better. Actually, it's getting worse. Last year, 82 percent of the total wealth that was created was taken by the top
1 percent, and the bottom 50 percent got zero increase in their wealth. Zero increase. The total wealth, 82 percent went to the top 1 percent.
QUEST: So, what do you want them to do here?
BYANYIMA: It is clear what happens. Our report shows what's wrong at the top and what is wrong at the bottom. At the top we have billionaire wealth
growing six times faster than ordinary people's wages. At the bottom, you have ordinary people crushed in poverty wages. Take a woman like Doris who
works in the poultry industry of the United States. She has to wear a nappy to work because she is not allowed a toilet break. That kind of
economy fuels wealth to the top and gives people undignified lives at the bottom.
QUEST: Is it difficult to advance these arguments or these points when people do feel better, people do feel economies are growing.
BYANYIMA: Well, the few at the top definitely feel better because they are capturing most of the growth, the people at the bottom, Richard, we did a
survey, 70,000 people in ten countries that represent a quarter of the all of the world's population. All the people are saying they're unhappy with
inequality, they want a more equal world better than what we have seen today. So, at the bottom it is not the same as at the top.
QUEST: Choose a color.
BYANYIMA: I'll take a red.
QUEST: Come and join me at the fracture wall. How fractured are we? WEF says that we are fractured. How fractured you believe we are? That is not
at, this is extreme fracture.
BYANYIMA: Extreme. There. We need to work on this.
QUEST: And is it getting better or getting worse?
BYANYIMA: It depends on what your measure.
QUEST: You choose, an arrow better or worse?
BYANYIMA: Worse, in terms of wealth, and incomes, it is getting worse, and we need action.
QUEST: That's where Winnie put herself on the board, and we always knew with the fracture board that there was a real risk that everyone would
bunch around in the middle, nobody, of course, in their right minds would necessarily go on this side of the board where no fractures at all, but
what's the most interesting is the way in which the arrows point. Are things getting better or getting worse, and that's where most of our guests
have really shown through in their true opinion, worse, worse, worse, worse, worse. Better, better. Overall people have put themselves to the
right and say things are getting worse, which is why the fracture board is such a good barometer for us this year to show what people are really
thinking about the true state of the world.
[16:55:00] We will have a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment and let's end where we began with the snowman and now caring on both shoulders the economic debate over
globalization. The U.S. with America First, the global, the leaders all saying globalization is the only way forward.
Tonight, Gary Cohen said America First is not anti-globalization, that you can have the two. You can have globalization and the current U.S. policy.
He may be right in a philosophical sense, but the reality is if you go down the road that Donald Trump is presently headed with some form of tariffs,
restrictions and other form of barriers, eventually people's toes get stepped on and they retaliate, and things go downhill rapidly.
And that's why listening to Modi of India, a country with its own protectionist past or Justin Trudeau of Canada who is worried about the
future of NAFTA, we're right to listen to what they say, but then we must also take into account what the U.S. believes and that is there has been
unfair trade for too long. And it's a bedeviling problem and frankly, one that is not going to be solved easily with hot air and rhetoric in a cold
And that is QUEST MEANS BUSINESS for tonight, I'm Richard Quest in Davos. Whatever you're up to in the hours ahead. I hope it's profitable.