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QUEST MEANS BUSINESS

Trump Hits NATO Spending, German Energy, Pfizer Prices; Croatia Defeats England to Reach World Cup Final; U.K. Authorities Impose Maximum Fine on Facebook; Cambridge Analytica Whistleblower Responds to Facebook Fine; Global Markets Fall on U.S. Trade Threats; U.S. Prepares Tariffs on $200 Billion of Chinese Goods; China Promises to Counter New Tariff Threats; Mohamed El-Erian: Tariff Row is not an End in Itself. Aired 4-5p ET

Aired July 11, 2018 - 16:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: All the ringing on Wall Street, Dow Jones Industrials (inaudible) is the lows of the day, all the markets

are down with a down day. We will get to the reasons as we go in the course of the next hour together. Stop ringing the bell now, it's all

over. Trading is finished. Bell is rung. Gavel is gone. It's over on Wednesday, it's July the 11th. What's not over is England versus Croatia

which has now gone to extra time. We're going to have the match, the highlights and we'll be in the fan zones in London and Zagreb.

And NATO in Brussels where President Trump makes a new demand on military spending insisting 4% is on Germany over its reliance on Russia for energy.

And Facebook, fined over the Cambride Analytica data breach. The whistleblower who revealed the scandal joins me now. Put it all together,

I am Richard Quest, live in the world's financial capital, New York City where of course, I mean business.

Good evening. Tonight, World Cup final gyms are on knife edge for both Croatia and England. It's been a tense semifinal in Moscow and they're now

playing extra time. So England surged into a lead early in the first half. There was a free kick in the fifth minute and Kieran Trippier made it one

nil. And so it was for most of the rest of the match, but then Croatia came to life in the second half, equalizer coming from Ivan Perisich.

Don Riddell is at the CNN Center. Don, where do we stand at the moment and talk us through how long and when?

DON RIDDELL, HOST, WORLD SPORT: Well, for an extra time, again, so we've got about 25 minutes more of that agony to go if you're in England or a

Croatia supporter and this one really is on an absolute knife edge, Richard. As you just detailed, a terrific start for England here in

Trippier scoring, an absolutely brilliant free kick.

That was the reaction in fan parks all across England, an absolutely ton of being going into the air, and at that point, England having made such a

great start, really had terrific momentum and they could have got a second when Harry came and hit the post, but it wasn't to be for them and Croatia

in the second half came out as a completely different side. They had the momentum. They got the equalizer from Ivan Perisich. He then hit the post

himself Ivan Perisich. He then hit the post himself and toward the end, England really were just hanging on, and I think they are glad that they

are now in extra time and they've had a chance to catch their breaths.

Croatia remarkably are playing their third consecutive game in extra time, both their games to this point have gone to penalties, of course, England

had to also go through that route to get past Colombia in the round of 16, so both these teams are going to be tied at this point. They have both

played a lot of football together and quite honestly, hits to of course the (inaudible) ...

(CROSSTALK)

QUEST: And this is when the silly mistakes happen, isn't it? This is when - it's not so much good football, it's just a question of who makes a

mistake first.

RIDDELL: Yes, but you know, sometimes, when you're in this situation, it's almost inevitable that the thing is going to go to penalties, and then,

mistakes do happen and then it really comes down to who can hold their nerve, and quite honestly, who has practiced the better and I think if it

gets to that point, both teams will fancy themselves, Croatia especially, they beat Russia on penalties the other day, they came through against

Denmark on penalties, but then England did it, too, having ended their penalty curse, which has lasted ever since 1990 at the World Cup.

Of course, they were very, very good against Colombia, so who knows what's going to happen, but this game means so much to both countries. This is

England's first semifinals since 1998. Croatia in their very first World Cup - I mean, it's 1990, Croatia, in their first World Cup in 1998, got to

the semis as well when they lost to the eventual winners, France, neither have been back at this stage since then, so this game for both teams has

been at least two decades in the making.

QUEST: Don, stay with us. Thank you. Don't go too far away, we'll need you at various different points. Mark Bolton is with us to one of the

London fan zones. Mark, the atmosphere?

MARK BOLTON, CORRESPONDENT, CNN: Oh, sensational, absolutely sensational, Richard, as you'd expect, 30,000 in the air. We heard from the Duke of

Cambridge before kickoff saying football coming out. Prince William himself has spoken, as yet, nobody in England have a corner kick, we're

just watching over the big screen behind me. We know that in England have scored nine of their 12 goals from set pieces. I know you've got a

wonderful bit of trade, and you know the statistics often come true. England so close to game. I need a set piece, a penalty would be a huge

bonus of course with that thing, absolutely anything they can get.

We talked steps a few hours ago, didn't we, Richard? We mentioned those champions league wins amongst players, nine in the Croatian team, one in

England. Energy against quality here, steps, spreadsheets, yes, often they work out, but the football guards are just like an orange ...

[16:05:16]

BOLTON: ... truffle or something else can always go wrong. You never know quite what's going to happen.

QUEST: We'll be back with you in a moment. Hrovoje Kresic s a senior correspondent at the Croatian Broadcast N1. He joins me live from Zagreb.

All right, so, the mood there, sir?

HROVOJE KRESIC, SENIOR CORRESPONDENT, CROATIAN BROADCAST N1: Well, Richard, let me say it this way, we are going to give you a soft Brexit

tonight, and the atmosphere, I know you are afraid of a hard Brexit, but I hope it's going to be a soft Brexit tonight. We all love England. We all

love Great Britain, but it is (inaudible) ...

(CROSSTALK)

KRESIC: ... we are going to have four players and it seems that we have one champions league that played these intense games. Champions League

finals, two awesome players for Real Madrid for Juventus, for Barcelona, so everybody in Croatia believes that Croatia has got more experience, more

confidence and more patience tonight.

QUEST: Good to see you. Don Riddell, are you still with me?

RIDDELL: I am sir.

QUEST: All right, you've heard both sides there. More according to the Croatian soft Brexit and more experience, more energy, more skill from

Croatia.

RIDDELL: Well, certainly more experience and - but I think the beauty of this England team is that they are young, they are raw, they are innocent.

They are not weighed down by the baggage of the past, and I think that has been a good thing for this England team and that has been, I think the

downfall of many England teams in the past, that they have gone to these tournaments knowing that everybody is just desperate for them to finally do

something positive and I think that's always been very, very difficult for them to overcome.

I think at this point, quite frankly, it really is a tossup. It's been a war of attrition up until this point. As I said, I think England is very

grateful that they were able to survive the second half because they were like a heavyweight boxer who was just kind of out on his feet and they did

were to hang on and get to this period of extra time, but you can tell these players are tired just looking at (inaudible) ...

(CROSSTALK)

QUEST: An achievement for both teams to have gotten this far, would you agree?

RIDDELL: Absolutely. Absolutely. I mean, before this tournament started, Richard, it was Germany. It was Brazil. It was Spain. It was maybe

France, and three of those four are long gone. Lionel Messi in Argentina proved to be nothing. So, I think England and Croatia are very grateful

that they have got to this point.

Of course, clearly now they are so close, they want to go all the way and win it, and to be in the semifinal and to lose is absolutely heartbreaking,

they do say, but it's harder to lose a semi than it is for final because you get so close and you don't get to taste the occasion, and enjoy such an

amazing event as a World Cup final, but I think both teams whatever happens will return home to a hero's welcome for sure.

QUEST: Rightly so on both sides. Don Riddell, thank you. Don't go too far, Don. You never know. I mean, we need you immediately if not sooner

as this develops. As we continue tonight, there is business, too, it's serious business. It's very serious. Donald Trump is taking his trade war

with China to a new level, and now Beijing is not backing down. This could get serious; after the break, another World Cup inspiring fashion trend.

It was waistcoat Wednesday for thousands of football fans in England. We'll explain why.

[16:10:16]

QUEST: "Quest Means Business" for 69 years, NATO has collectively shouldered the defense of much of the western world. We've never seen

anything quite like Donald Trump, but the NATO saw him join today (inaudible). He arrived brawling this morning in Brussels whereby labeling

other countries delinquent by not paying their full amount or hurling accusations at Germany about energy security. The US President is

skewering his allies. He got NATO leaders talking and he had not only slammed them for falling short on goals of spending, but said the goal

itself should be doubled.

(START VIDEO CLIP)

JENS STOLENSBERG, SECRETARY GENERAL, NATO: And we have agreed to being committed to the pledge increase in defense spending to 2% and let's start

with that. So, we have a way to go and - but the good news is that they really started to deliver.

DALIA GRYBAUSKAITE, LITHUANIAN PRESIDENT: But I want to confirm that if not Germany, we will be not be able to have security especially in Baltic

states today. If not Germany, we would be - we have no united Europe on sanctions against Russia, that's mainly because of Merkel. We have unity

around this question, so from this point of view, I think Germany is responsible in my country, it's a leading nation in deterring and

stationing their military forces from Germany in Lithuania, so we have no complaint at all, and we think the commitment of Merkel very much for

security and defense of Europe.

JOSE ALBERTO DE AZEVEDO LOPES, PORTUGUESE DEFENSE MINISTER: And you can speak about those who are reaching 2%, those who have earned the 2%, but I

think that NATO is and should be much more than this. The idea of a group of states, France and allies that are working together for almost 70 years,

I don't think that the idea of the GDP and the average of what every member state spends is the only the idea that should be taken from this summit.

(END VIDEO CLIP)

QUEST: One accusation in particular from the US President has raised eyebrows. He said Germany is a captive of Russia.

(START VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Look at it, Germany is a captive of Russia because they supply - they got rid of their coal plants,

they got rid of their nuclear - they are getting so much of the oil and gas from Russia. I think it's something that NATO has to look at. I think

it's very inappropriate. You and I agreed that it is inappropriate. I don't know what you can do about it now, but it certainly doesn't seem to

make sense.

(END VIDEO CLIP)

QUEST: And for the NATO Secretary General, he isn't delighted. Maybe his private agreement with Donald Trump has now been made public, but the core

issue is Europe's dependence on Russian energy, and it has split the continent both figuratively and literally. If you look at the super

screens, you'll see what I mean.

Now, it's the Nord Stream 2 pipeline which would send Russian natural gas straight to Germany and in doing so, it would cut through the Baltic Sea.

It would on its way of course miss out other pipelines that have gone through Ukraine. Other pipelines have taken different routes, but this one

goes directly there.

Now, the United States is not alone in his concerns over this particular map. Ukraine is also worried and various European countries have written

to Jean Claude Juncker two years ago, saying the pipeline could destabilize the region. It was Angela Merkel's predecessor, Gerhard Schroder who

signed the pipeline deal before he left office in 2005. You have the deal being signed. He is on the left here, just there, talking about this old

history, helping Mrs. Merkel and then Russian President Medvedev inaugurate starting there is Gerhard Schroder and of course, President Medvedev in

there.

Now, later, we are getting the head of Nord Streams shareholder committee, so perhaps dubiously one might argue. John Defterios is in London and

joins me now. Is there validity to this accusation whether one wants to put it in such pejorative terms as being captive to Russia, but that there

is an overreliance upon Russia for Europe's gas?

JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: It's the key question, Richard. I would say Russia is a big player, but not ...

[16:15:16]

DEFTERIOS: ... as big as Donald Trump is suggesting. I thought it was clever by the President though to single out the Nord Stream 2 pipeline

because it is, as you suggested right there, very controversial. It does cut out Ukraine and all of the transit fees, so it's lower cost, fuel going

directly to Germany and Germany can disperse it from there, but I have to dispute the President's number here. He is saying that Germany will be

importing 70% of its natural gas supplies coming from Russia, that's just not the case.

It imports nearly 100% today, 94% of all of its imported natural gas, but just over a third of that comes from Russia today. We have Norway as the

number two supplier to Germany, and then you have the Netherlands dropping off below 30%, about 29%. That's not going to change radically over the

next 10 years. In fact, the analysts I spoke to was suggesting by 2025, Russia, Richard may have 40% of the market, but to think that Vladimir

Putin is going to get 50% of the market in 10 years or even 20 years is not realistic and I also think we have to remind our viewers here, Angela

Merkel is no big fan of Vladimir Putin. I actually chaired a panel with them back in 2015 in Russia when she tried to reboot relations.

She wasn't a huge fan over the Nord Stream 2 pipeline or Nord Stream 1. They realized they need Russian gas. They don't want shortages, Richard,

but there's going to be competition in the market coming from Egypt, Algeria and also from Azerbaijan as well. It won't be going above 50%.

QUEST: But you also believe, John, don't you that there is an element in all of this of the US feathering its own nest.

DEFTERIOS: Absolutely, Richard, and I think that most of the competitive media overlook this fact. We have two major export terminals in the United

States right now. One of out Louisiana already operational, one out of the East Coast. Get this, they're going to be adding four more export

terminals in the United States by 2020. By then, the United States will rank three in the liquefied natural gas market.

Qatar, one; Australia, two; the US, three. Donald Trump is as a matter of fact leaning on the NATO allies saying, "Why are you going to Russia for

all your gas when the US and NATO allies could be your partner for decades to come?"

QUEST: John Defterios in London. Thank you, sir. Remember, all of this NATO business began with a row over military spending. Jan Techau is the

Director of the Europe Program with the German Marshal Fund. He joins me from the Summit in Brussels. Really very simple here, let's assume that

the President continues with his line, never mind 4% at 2%. Let's say he continues with his line and the others don't. What are Donald Trump's

options against the other members? In other words, what could he do?

JAN TECHAU IS THE DIRECTOR OF THE EUROPE PROGRAM WITH THE GERMAN MARSHAL FUND: Well, I mean, the thing is the following. The options here are

limited when you want to actually keep NATO intact. The position that the United States is quite clear, it needs to squeeze the other members of NATO

very hard so that they pay more, but at the same time, it can't squeeze them too hard because then the security guarantee that the Americans give

becomes less credible and others will see this as well. That's the super power dilemma in a way.

Of course, Trump is not particularly interested in any of this, so he could come up with all kinds of sanctions and ideas that he basically cooks up on

short notice, but all of that could very quickly go to the substance and the trust which is the underlying the key essence of NATO.

QUEST: He's got a point in terms of the countries not spending their 2%. That 2% has been a guideline in NATO for a long period. It was reinforced

in Wales in 2014. It begs the question, why should any country require ten years to get to a 2% of GDP when they've always known that was the

requirement, what sort of excuses people in places like Germany and Portugal and Spain coming up to for being in Donald Trump's words,

delinquent.

TECHAU: There's not really any excuse. Every country can do this including Germany and this is why all of us here in the strategic community

in Europe have been very critical of Germany including us, Germans, because of the government position which is too reluctant on the spending here.

But at the same time, there's a difference between making a valid strategic point which Mr. Trump has not invented, but other Presidents before him

have been making, and then on the other hand, treating allies as if they're delinquents. That's not the way to go about it.

A security guarantee must be based on strategic considerations and it must be unconditional ...

(CROSSTALK)

QUEST: No, no, hang on ...

TECHAU: ... if you turn it into a business model, then it's not going to work.

QUEST: No, he's not turning it into a business model. I think this is a - he's not saying it's a business model. He's saying you agreed to pay this

...

[16:20:16]

QUEST: ... amount and you haven't done it, and by definition therefore, you are delinquent.

TECHAU: Well, that's what I am saying. I mean, there is no excuse why they - you know, it shouldn't go to 2%, that point of his criticism is

correct, but then there's a whole different kind of bargain that he is playing in terms of accusations, in terms of dealing with allies as if they

were kind of folks that cannot entirely be trusted.

But the point here is, that a security guarantee must stand regardless of the contributions that those make, because if it becomes conditional, it

loses its strategic value, and this is the dilemma that the United States has been in for a while, it needs to squeeze them, but if it does squeeze

them, it becomes a conditional thing, and that's kind of the circle that we need to square here.

It's conceptually not quite sophisticated, perhaps slightly too sophisticated for the debate that's going on in many corners here of the

alliance.

QUEST: Good to see you, sir. Thank you very much indeed. By the way, I can see - oh, hang on. Somebody is just giving me some very important

information. Repeat that for me, please? Croatia - here is the picture from Zagreb. Croatia has just scored in extra time, Croatia 2-1. Not

surprisingly, that's the scene in Zagreb. I'm imagining the scene in London is looking a lot less cheerful, I think, at the moment, but while we

were talking there, Croatia has scored 2-1 now, to Croatia in extra time, and by my reckoning, extra time must be coming towards the close - we can't

have much longer to go since they started 45 minutes or so, somebody will give a review on that.

We will wait to get Don Riddell back who could give us some analysis on what all of that means. President Trump has found time to tweet to US

business chiefs as a result of the pressure the drug maker Pfizer says it won't put up its prices at least for now. Donald Trump praised the

company's announcement. The drug company says it is splitting itself up. Paul La Monica is covering it all.

Look at this tweet, "Just talked to Pfizer Chief Executive ..." Did they roll back their price side because Donald Trump spoke to them?

PAUL LA MONICA, CORRESPONDENT, CNN: It sounds like that's the implication, but I think what's important here is that they are delaying the price hike

for a bit, but that doesn't mean they're going to not do it ever. I think what Pfizer is hoping for is that this will give the President and the

administration a little bit more time to try and figure out whatever their plan is going to be for potential regulation of drug prices and they said

that if it's not done by the end of the year that they could go ahead and institute that price hike once again.

So, I don't think this means that Pfizer is definitely never going to raise prices again, they're just waiting and biding their time to see what the

Trump administration is going to do. By the way, I think we've got about nine minutes to go before we hit that 120 mark pending any ...

QUEST: Nine minutes. It's not looking good. Anyway, back to Pfizer. And then splitting themselves into these various different - why? What's gone

wrong with Pfizer?

LA MONICA: Yes, this is I think a cosmetic change because they're not splitting up into separate publicly traded companies. What they are going

to do is have the units highlighted by their growth characteristics basically, so you have the biotech sort of unit for emerging drugs which is

the most exciting. You've got the existing drugs, a lot of them were going off patent, and then the consumer healthcare business, things like Advil

and Chapstick and Centrum vitamins, they're still trying to figure out whether or not they want to sell that or spin it off.

There's been chatter that P&G took a look at it, and J&J and Glaxo Smith- Kline, so far, Pfizer still owns it. They haven't found a buyer just yet.

QUEST: Thank you.

LA MONICA: Thank you.

QUEST: Eight minutes left. In just the last 24 hours, Donald Trump has managed to call out Germany's energy strategy; NATO's members under

spending, Pfizer's drug war and while some are focusing on the delivery, the substance of the President's message is resonating. David Gergen was

adviser to Presidents Nixon, Ford, Reagan and Clinton, he joins me from Harvard in Cambridge, Massachusetts. David Gergen, my goodness, believe

me, I apologize if I have to interrupt you if there's - if somebody scores a goal somewhere in Croatia versus England, but anyway, while we battle

along with that ...

DAVID GERGEN, FORMER ADVISER TO PRESIDENT CLINTON: Go ahead, I hope you will interrupt. We all want to know.

QUEST: David Gergen, let's - this President is turning into one of the most effective in history and it's only halfway through.

GERGEN: He is turning into one of the most disruptive in history. I think we have yet to decide whether it's all positive ...

[16:25:16]

GERGEN: ... or negative or a mix of both, and obviously, there are partisans who will give you every sort of answer on that issue, but I do

think that we - I don't we've had a President that any of us can remember who has been so disruptive of the alliance system since built up since

World War II, the end of World War II.

Every President I've worked for, every President I've known had been as deeply - had a deep commitment to the strength and the unity of the

alliance. It comes first, there are other issues such as who is paying what, but those issues are less important than the alliance itself, and

sending a signal to the Russians in particular that they came out and or they can't annex Croatia without paying a large price.

QUEST: Now, let's talk about this. Of all the things that he's said over the last 24 to 48 hours, which to you is most destabilizing? Is it that he

says his meeting with Putin could be the easiest, even easier than NATO and close allies like the UK? Is it the fact that he's called Germany captive

to Russia, is it the fact that he's now asking for 4%? What do you find the most disruptive and how dangerous is it to the solidity of the

alliance?

GERGEN: Well, I think the calling and the questioning of whether NATO is obsolete shows a doubt that has been there with him from the beginning, but

I think in the last 24 hours, the most destructive thing he did was take on Angela Merkel, yet again, undermining her leadership at a time when she is

vulnerable and she has been such an important figure in holding together the alliance. She was a major, major friend and ally of Barack Obama when

he was President. It helped to stabilize transatlantic relationships and I think an attack on Germany who is such a vital player, Angela Merkel in

particular undermines the confidence of others in the leadership of America and where we're trying to go.

QUEST: When you put it like that, one assumes that he's getting advice. He is getting advice from people who must say to him, "Don't undermine

Angela Merkel, she's very weak. Theresa May has got huge difficulties. Be careful what you say there." So why do you think he does it? Is it just

off the cuff? Praising Boris Johnson when he must know that that's a red rag to the bull at Downing Street? Why does he do it, David?

GERGEN: Absolutely. You know, Richard, I think the historians will be trying to figure that out for a long time to come. Part of it, I think is

buried in his personality. I think he also from experience in the real estate business, what he likes to do is to separate out players and then if

he can disrupt the system so that he is going one on one against a player, he can bully that player. He knows how to do that. I think part of this

is the same thing Putin is trying to do if you break up Europe, you then have to deal one on one with France or Germany or England, but that's very

different from dealing with and negotiating with a United Europe.

It gives you more leverage. I think that's part of it and there's a part of it, he wants to go down in history as the man who changed the world and

he's rightfully doing that. I mean, I just find it - I just cannot remember a time when almost intentionally we have the United States in an

argument with his strongest ally and partner, public arguments that are insulting to our partners. We are in a growing trade war with China and

we've just come out of a negotiation with North Korea which seemed - we seem to have way over sold the results and we're going back to square zero.

It is all over the world that we find that the United States is engaged in combative relationships, which has not been the case in the past. I think

this is - I don't know that we have a crisis in transatlantic relations right now, but we certainly have a great deal of head taking at people who

are wondering, and I worry that we are going to convey to the world from the United States this is not just about Trump, this is who Americans have

become. I don't think this is what most Americans support.

The Senate of the United States voted 97-3 yesterday to say that NATO is - we believe in a strong NATO, and I can just tell you among - within the

foreign policy community people who have been movers and shakers in American foreign policy over the last 40 years, for the most part are very,

very opposed to what's going on right now.

QUEST: David, good to see you, sir. Thank you.

GERGEN: Thank you.

QUEST: David Gergen joining us from Cambridge, Massachusetts -- the other Cambridge. Now, when we return, there are just moments left in extra time,

there could be a shoot-out, a penalty shoot-out very soon, but that will depend -- that's I'm imagining the second goal -- no, that's the first goal

being scored.

Anyway, we are -- England, we -- England is 2-1 down at the moment in extra time and we'll get the latest down in just a moment.

(COMMERCIAL BREAK)

QUEST: The semifinal between England and Croatia is reaching its final moment. Croatia is leading 2-1 with seconds to go. Don Riddell is with

me, Don, how long -- we're looking at split screens here of Croatia on the right, obviously waiting for that final result, the fan zones.

And on the left, London as we come to the end. Don, how long have we got?

DON RIDDELL, CNN WORLD SPORT: I was about to say seconds, I can tell you four minutes, we've just reached the 120-minute mark, the referee is going

to play an additional 4 minutes, that's 4 minutes for England to somehow try and conjure an equalizer because at this moment Croatia are on the

brink of heading to the World Cup final for the first time in their history.

And it would be quite an achievement for them. Since we last spoke, Richard, you were saying that at this point of the game, that's when

mistakes are made, I think England would certainly feel as though it was a mistake to allow Mario Mandzukic in behind their defense.

He is a very dangerous striker and he put his chance away and that is where we are. Croatia leading by 2 goals to 1, England look as though their

World Cup tournament is going to be over at any minute --

QUEST: Right, I didn't see the goal, was it a good one?

RIDDELL: Mandzukic took the -- took his goal very well. From an England perspective, it was a very bad goal to concede. I think they just -- they

were just tired, they just took their eye off the ball for a moment and against some of the top strikers in the world, you only need to give them a

half chance and they're in.

So that is how Croatia have managed to score what at this point is the game winner. And I must say they will deserve their place in the final if they

can see this through, but England are giving it absolutely everything there, hoisting the ball up field, trying somehow to score a goal which

would force a penalty shoot-out which would just shot everybody's nerves just a little bit more.

QUEST: Don, interrupt me as soon as your result is final or the match is over --

RIDDELL: Yes --

QUEST: Mark Bolson(ph) is with me -- the mood, Mark, in London.

[16:35:00] UNIDENTIFIED MALE: Oh, it's somber, it's somber, Richard, you know how it is here, you know how it will be tonight. People still hoping,

those seconds one-by-one ticking away ever faster, the dreams ebbing away with them. Thirty thousand in here still hoping, still praying that

England can pull this out of the fire.

It looks like England are coming home, Richard, rather than football is coming home. It is an achievement, it's way beyond what anyone expected in

this tournament, expected has to kick in very quickly, this England team has got so much more to offer beyond tonight, that's what Gareth Southgate

said at kickoff, it still remains regardless of the results, England though as it stands on course --

QUEST: All right --

UNIDENTIFIED MALE: To return to London, Heathrow much sooner than they hoped.

QUEST: Cohneyan(ph), are you there? Can you hear me? And the mood --

UNIDENTIFIED MALE: Yes --

QUEST: Where you are, where the game will be seconds away from ending.

UNIDENTIFIED MALE: Yes, well, everybody here is excited towards, everybody believes Croatia is about to enter their World Cup finals just as I told

you before. Croatia has so many players who have won four Champions League titles, Luka Modric, won Champions League, Ivan Rakitic won Champions

League, Mario Mandzukic, they know how to handle the pressure.

They have handled the pressure of being behind for one goal for -- that was the game, and it seems they have done a good job, they're minutes away, but

like I told you, I think that what we are about to see is a soft Brexit, it could have been harder.

QUEST: A soft Brexit, Don Riddell, it's tough being English watching this. You must be used to this in your job, I look at markets, you must be used

to this --

RIDDELL: Yes, you know, it's hard to be impartial on a night like this. So you know, I've been a football fan, an England fan for a very long time

and historically, the England team has gone to these tournaments with so much potential and they've let everybody down.

This time it's been the complete opposite. They went with very little expectation and they've really surprised everybody, and England fans are

really fallen in love with their team again. But it does feel as though we are pitching towards a very familiar conclusion, England falling just short

again.

But this is the farthest they've been in a World Cup in 28 years, and I say this as they pump the ball into the box one last time, the Croatian defense

has managed to clear the danger though. So -- and that is it. That is it, it is over --

QUEST: Let's just enjoy Croatia's moment.

(BEGIN VIDEO CLIP)

(CROATIA FANS CHEERING)

(END VIDEO CLIP)

QUEST: Scenes of jubilation tonight in Zagreb. Croatia advance to the World Cup final after beating England 2-1 in extra time. Where on this

weekend, they will face France in the final.

(BEGIN VIDEO CLIP)

(CROATIA FANS CHEERING)

(END VIDEO CLIP)

[16:40:00] (COMMERCIAL BREAK)

QUEST: Croatia advance to the World Cup final to meet France this weekend after beating England 2-1. An extraordinary match where the final goal was

scored in extra time. Kavia Krosijic(ph) is senior correspondent of the Croatia broadcaster "N1". Congratulations sir, you're going to the World

Cup final.

UNIDENTIFIED MALE: Thank you so much, Richard, thank you so much. Many have believed that this was possible, many have believed that this will

happen, but only few have actually dared to think that this will happen, that Croatia will play the World Cup finals in Russia, in Moscow.

Songs are beginning to be sung here in Zagreb and I guess that you can hear the noise behind my back, I don't know how well you can see me, but I guess

that if you can hear everybody actually incredibly enjoying this incredible moment. It's a moment of pure, beautiful, wonderful insanity.

Nobody has believed in --

QUEST: All right --

UNIDENTIFIED MALE: So after we saw it, I cannot -- I cannot --

QUEST: All right --

UNIDENTIFIED MALE: With my words.

QUEST: And we're grateful that you enjoyed it with us tonight, sir, good luck in the final -- excuse me, on Sunday. Don Riddell at the Cnn center.

Don, now, let's look forward to this weekend's final. France and Croatia, you know, you are well aware of my limited knowledge on football, but I

would say this should be France's.

RIDDELL: Let's stop making predictions in this tournament, Richard, and just enjoy the final. And I'll tell you what, it should be a really

exciting final. Both these teams can play. Of course, France are in to the World Cup final for the third time in only six tournaments, Croatia are

there for the first time ever.

Croatia will give this as unfinished business, Richard, because in their very first World Cup back in 1998, it actually lost to France in the

semifinal --

QUEST: Oh --

RIDDELL: France went on to win that tournament. This is a terrific achievement for Croatia, having got to the final, and even though they have

some incredibly talented players, they have done this the hard way. They have been behind in all three of their knockout games and they've gone on

to win, I believe, that is historic, I believe nobody has done that before.

They won their last two games on penalty shoot-outs. I will say this, they effectively played again more than France. They've played three periods of

extra time, they've played 90 minutes more than France have at this point. Plus, France have had a day to recover more than the Croatian team.

So perhaps yes, on paper, you would think that France with edge in this final come the weekend, but it's going to be a terrific occasion. And this

World Cup, though disappointing for many people whose teams have fallen by the way side, it really has been thoroughly (INAUDIBLE).

QUEST: And England go home with glory.

RIDDELL: Yes, I would say so, they headed out to Russia with very little expectation, there's very little excitement in the U.K., I think English

football fans have learned their lesson, their team so often in the past has had great potential and let everybody down.

And I think everything has been turned upside down on this occasion. This team has grown in confidence, they've put in some terrific performances,

they've punched well above their weight by getting to the semifinals and they've made their fans believe again. And I think this is a young team,

they are really just getting started, and I think this team will have more to offer in the years ahead.

QUEST: Don Riddell, thank you sir, thank you for being with us throughout the course of the hour, it's been great to have your --

RIDDELL: Yes, me too --

QUEST: To enjoy the moment one way or another. And now, we will turn to our business agenda. U.K. authorities say that Facebook broke the law by

failing to safeguard users data in the Cambridge Analytica scandal. And they're imposing the maximum possible fine which is half a million pounds,

around 650 -- $664,000.

A drop in a bucket compared to Facebook's overall revenue. In 2017, the company brought in more than $40 billion.

[16:45:00] Christopher Wylie is the co-founder of Cambridge Analytica and he revealed the misuse of Facebook's users data. Now, obviously,

Christopher Wylie, you accept that that was the maximum, you can't help it, you know, they've got to find the maximum, but it's still a relatively

poultry amount I would imagine in your view.

CHRISTOPHER WYLIE, CO-FOUNDER, CAMBRIDGE ANALYTICA: Well, it is and it isn't. You know, it's important for people to understand that Europe has

now entered a new data regulatory regime since May, so beyond that point, any future data crime or unlawful behavior of these companies will face

much larger fines upwards of 4 percent of their annual turnover.

So this was only old regime, it is much lower, but I think you know, what's important to understand is that it sends a signal to these companies that

they -- you know, people are starting to pay attention and they need to own up to the fact that they have both social responsibilities and legal

responsibilities to its users.

QUEST: Are you still -- or you would just say you are surprised or amazed or the sort of ramifications, the enormous amount of effect that followed

on from what you did.

WYLIE: You know, I am optimistic, I am happy that in my coming forward as a whistleblower that people are now starting to take these issues

seriously. You know, data is the new electricity of our economy and our society, people don't have a choice but they have to use the internet now.

And so we need to make sure that the platforms that they're using are safe and respectful of -- sorry --

QUEST: No, please --

WYLIE: Of -- just lost my earpiece here.

QUEST: Oh, hopefully, you can still hear me.

WYLIE: And respect -- I can hear you now.

QUEST: Got it --

WYLIE: And respectful of users rights, so --

QUEST: So with this month, is there an inevitability, is there an inherent contradiction between companies who make their money requiring and selling

and manipulating data for commercial purposes and data privacy. Whether companies are inevitably going to be pushing the envelope to see just how

much more data they can pass into many more different ways without breaking the rules.

WYLIE: Well, I mean, yes and no. This is why we need robust data protection rules and we need data regulators like the ICO empowered with

both you know, the financial and human resources and also the legal resources to make sure that you know, companies like Facebook don't

continue with their unlawful behavior.

And let's be clear, the ICO has found that this behavior was unlawful, Facebook broke the law.

QUEST: Good to see you, sir, thank you for joining us, I much appreciate it on a busy night and joining us from London where I suspect you're on

your trip -- on your troubles home, you'll see more sadness of people who - - now that England is out of the World Cup.

We continue tonight, Donald Trump has taken his trade war to China with another level, now Beijing is not backing down. In a moment.

[16:50:00] (COMMERCIAL BREAK)

QUEST: Look at the way the day went on the market, it was lower out of gate, and we had a low point round about two-third -- 210 in the afternoon.

The market was off 219 at the close, fallen just three quarters of 1 percent. The stocks slide, this was the trade war escalated and the

anxiety as Washington said, it's preparing billions of dollars, new trade tariffs against China.

Now, the U.S. market closed lower, but also the VIX index shot up some 8 percent, showing a greater sign of volatility. And if you look at world

market, they were all in the red, Asia and Europe had a particularly tough trading session, Germany was off over 1.5 percent, Paris similarly -- you

can just -- it was just a -- it was a messy day on the market.

And the reason of course is this trade war is going to a level where no side can easily back down and I'll show you in the war room. So this

latest as it relates to China. The first wave of tariffs which came in, $34 billion, they were put up by the U.S. on China and then China

immediately retaliated with a similar 34 billion and that's where we are at the moment.

But there's another $16 billion worth that are about to come from the U.S. to China, and that will be introduced of course immediately quid pro quo

back to the United States. The real worry is this third war which will take the trade war to a new level.

The U.S. says because of the retaliation that's been introduced, it now plans tariffs on $200 billion. The only problem is China cannot respond in

kind because the U.S. does not export that much to China, but it says it will respond in kind. And that would mean non-tariff measures, it's like

regulatory reform holding things up at the borders and further inspections, joint venture requirements.

Put it all together, China says whatever happens it will retaliate.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: The U.S. move is typical trade bullying and China will take necessary counter-measures to firmly defend its legitimate rights

and interests. I also want to say that this is a war between unilateralism and multilateralism, between protectionism and free trade and between

hegemony and rules.

(END VIDEO CLIP)

QUEST: Right now, Mohamed El-Erian is under no illusions as to what this all means and potentially the way out. He told me a short time ago that he

thinks the trade route is all about strategy.

(BEGIN VIDEO CLIP)

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: The baseline for the market is that this tit-for-tat tariff process is not an end to itself,

it's a means to negotiations, ungenuine issue to do with the trading system. Is there a risk that this may go wrong? Yes, there was a risk of a

policy mistake, there's a risk of an accident and that risk goes up every time we have an escalation.

But the market still believes that the most likely outcome is that this is part of a negotiating and posturing process and not an end in itself.

QUEST: Do you subscribe to that view?

EL-ERIAN: I do, and I subscribe to something else that the baseline has two-sided risk, a one-side risk. So yes, there's a risk, a meaningful risk

that we may end up in a very damaging trade war. But there's also a possibility of what you mentioned earlier which is the Reagan moment.

What do we mean by the Reagan moment? If you remember back in the '80s, Reagan embarked on a race, a military spending race that the U.S. was

destined to win in relative terms. And the question was happens in absolute terms because there were risks involved.

Tariffs are the same thing. The U.S. will win the relative war, the U.S. will be less damaged than other countries in a full blown trade war. Is

that enough to get other countries to focus and negotiate? If it is, the U.S. may end up actually in a better place.

So focus on pockets of opportunity because they'll get contaminated by the overall mood.

[16:55:00] QUEST: When you say don't get contaminated by the overall mood, that's extremely difficult, and I mean, for the professional investor,

there's the ability to hedge -- there's the ability to have a variety of other highly sophisticated tools that will alleviate the worst of this.

But I'm guessing for the individual investor or even the savvy investor, you do nothing. You either stay in and write it out or you go the cash and

write it out.

EL-ERIAN: Yes, I think the hardest thing for the individual investor is to understand what the profession of course of market technicals. And that is

when there's a technical factor that totally overwhelms fundamentals. So you look at a company, great earnings or you look at a country, it's doing

really well and suddenly you wake up and it's 5 percent, 10 percent lower, why?

Because it's been impacted by a technical factor. You see this in emerging markets today, the good and the bad get hit when liquidity goes out. So

what professional investors do is they focus on good names, they stay in their trade and they look for opportunities.

For individual investors, you're right, either you stick in very solid names or go to cash and don't get volatility determine how you're going to

react day-to-day.

(END VIDEO CLIP)

QUEST: We're going to have a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight is powerful, barely 24, 25 years after a bloody civil war and Croatia -- look at the scenes in Zagreb tonight as it heads to the

World Cup final to be held in Russia. Oh, and as for poor Brexit Britain, sweeping up the mess. And that's QUEST MEANS BUSINESS for tonight -- hey,

what can I say?

I am Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable, we will do it again tomorrow.

END