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QUEST MEANS BUSINESS

Theresa May Appeals to EU Leaders for a New Brexit Extension; Bill Barr: I Think the Trump Campaign was Spied Upon; Scientists Discover First Picture of a Black Hole from 55 Million Light-Years Away; Benny Gantz's Blue and White Party Concedes Defeat in Israeli Election; EU Leaders Discuss U.K. Plea to Delay Brexit; Lithuanian President Says She Supports Brexit; ECB Warns of Slow Growth Ahead for Europe; European Stock Markets Finish Mixed; U.K. GDP Grows Faster Than Expected; Brexit Stockpiling Gives the U.K. Economy Unexpected Lift. Aired 3-4p ET

Aired April 10, 2019 - 15:00   ET

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


RICHARD QUEST, CNN INTERNATIONAL ANCHOR, QUEST MEANS BUSINESS: This is the moment. This is the day. The words of the European Commission's chief

spokesman. Good evening from Brussels where day has now turned to night. Talks are still going on. I am Richard Quest.

HALA GORANI, CNN INTERNATIONAL ANCHOR: I'm Hala Gorani in London. Theresa May has blamed the people in the building behind me for bringing us to this

point in rejecting her deal. Whatever she secures in Brussels, Richard, will provoke a reaction here and we will monitor it for you, live.

QUEST: As we go together throughout the hour, thank you, Hala. Here in Brussels, the Brexit timetable could be thrown up in the air all over

again. For the second time, Prime Minister Theresa May has had to come here to ask for more time. The decision whether to grant it rests with the

E.U. 27, the other members and their decision must be unanimous according to Article 50.

Theresa May wants to leave the E.U. by June the 30th and she is going to perhaps be forced to accept a longer delay, although, the French President

Emmanuel Macron, nothing should be taken for granted.

At this moment in Brussels and in London, politicians are trying to answer these questions which we're going to go through with you this evening.

Firstly, when should any extension end, in other words, long or short? How should it play out? Should they be strings attached? And crucially, who

will be Britain's Prime Minister when Theresa May stands down? Which begs the question well, when will she stand down? What will happen to the

British Parliament to break the log jam? Could it include a second referendum? These are the key questions that will guide the future of

Brexit. Erin McLaughlin is with me. Erin you're getting more information.

ERIN MCLAUGHLIN, CNN CORRESPONDENT: Yes, I am Richard. Last night, there was an Ambassador's meeting in which for the first time, Council

conclusions were tabled for tonight. Those conclusions outline -- it seemed to be largely in line with what Donald Tusk suggested in his letter

pointing to in the direction of a flexible extension, although the conclusions tabled last night before the E.U. Ambassadors did not

specifically mentioned the date, left that open for tonight's decision making.

I just have a leaked copy that was sent to me by a source of an updated set of those conclusions, the results of last night's Ambassadors meeting. I'm

told that tweaks have been made to Paragraph 7 and 8.

QUEST: Seven, if I remember correctly, is the crucial one.

MCLAUGHLIN: Yes, well, 7 has to do with assurances. The assurances that the French have been demanding, according to my sources.

QUEST: And these are assurances about how the U.K. will comport itself in the Union while it waits during this flextension.

MCLAUGHLIN: Exactly. And the updated conclusions tabled tonight say the following, "The European Council takes note of the commitment by the United

Kingdom to act in a constructive and responsible manner throughout the extension in accordance with the duty of sincere cooperation and expects

the United Kingdom to fulfill this treaty obligation in a manner that reflects its situation as a withdrawing member state."

Although this source tells me that this updated set of conclusions with additional assurances might not be enough to satisfy the French. That is

the big question mark going into the Summit.

QUEST: So just to understand what this is about, once the U.K. goes into this extension, they'll have to be in the European parliamentary elections.

They'll be full members, but to put it crudely, that also gives them the opportunity to bugger the whole thing up by voting inappropriately,

demanding certain things, being deliberately obstructive.

MCLAUGHLIN: That's right. And legally speaking, there will be very little the E.U. could do in any events that the U.K. goes down that road in the

event of a long-term extension, and thinking being what could happen if Theresa May is no longer Prime Minister and someone else steps in and takes

a much different view.

They were all alarmed by Jacob Rees-Mogg's tweet from the other day, that hard Brexiteer back in London, when he was saying that the U.K. should be

as obstructive as possible. That did not play well here in Brussels.

QUEST: What's the mood here tonight in there?

MCLAUGHLIN: I think it's an era of anticipation that we're anticipating to see what Theresa May had to say in her presentation. What she said the

last Summit really didn't play well with the E.U. leaders. They thought she was invasive. They're really looking to her to provide a game plan of

what she's going to do with this extension. That's the key question.

[15:05:13] QUEST: Erin, stay watching. The last person we spoke to said 1:30 for the end, that's about three hours from now. So hopefully, they

are wrong. Join in the conversation yourselves. Get out the phones, go to cnn.com/join and interesting to know your thoughts the kind of extension

that the E.U. should grant. Should it be long and unconditional? A short extension just to get things done? Or no extension at all. Now, that

would mean crashing out in two days' time, cnn.com slash join. And we'll update you on the results over the next two hours, because it's a longer

QUEST MEANS BUSINESS tonight.

Alex Stubb was Finland's Prime Minister, and before that a Euro Minister and before that Finance Minister. He is Vice President of the EIB. He

joins me now. He is also incidentally talked about as a successor to Jean- Claude Juncker or at least a Commissioner in the next E.U. Commission,

Alex STubb, from your knowledge from having been in these rooms during the Greek crisis, what's going on around that dinner table? How are they

actually dealing with it?

ALEX STUBB, FORMER FINNISH PRIME MINISTER: Well, the sequence of events is such that first the President of European Parliament gives an intervention.

He leaves, then after that, Prime Minister Theresa May has given her intervention, and now there's pretty much what they call a tour de table.

So people are eating and making interventions, and in the background, you have a lot of tasseling going on. People working on the drafting and

looking at dates and looking at wordings and so on and so forth.

Usually what happens is that you have two people in charge. In this particular case, it is going to be Chancellor Merkel and President Macron,

and once they find a compromise, I think the rest will follow suit.

QUEST: So in this tour de table, are they actually talking to each other? Or are they just making speeches? You know, there is one country that is

saying here? Yes, but what about this, or I'm not happy with that. Or is that the case of, you speak, then I speak and he speaks and then she

speaks.

STUBB: It's a combination. The conclusions, which were referred to in the earlier piece, before I came on, have been distributed already yesterday to

go around, and the people have been working on them, and what will probably happen is at first, there is just a general conversation, then they will

break up and there will be some drafting going on in the background.

It could be that it's only the French president, the President of the European Council, Donald Tusk who has been leading this very well, and then

the President of France and perhaps a third or fourth party, and then they come to a conclusion and then they start distributing and say with this

word, and at the end of the day, it's a process of iteration. They will come with a conclusion.

QUEST: So it's highly unlikely, just about impossible that they will reject giving her an extension. But what's your feeling, from what you're

hearing? Long or short? And what conditions would be involved?

STUBB: Okay, there are three options. Number one is no deal. I don't believe in that for a second. And you have two options. One is a long

extension and that would be to the end of the year or even a full year. That's the flextension that the President Donald Tusk has been talking

about. That would be rather conditional with some wording. But the problem is that you can't legally bind the U.K. to anything. It has to be

a bit of a gentleman's agreement that, "Hey, don't mess up our decision making when you are members."

The second option is a shorter one and that would be something before the European Parliament elections, but then it would probably be conditional

with three things. One, you either accept the treaty; two, reject the withdrawal agreement; or three, you actually withdraw or revoked Article

50.

I personally believe that we're moving towards the longer extension and giving the U.K. more oxygen, so that it can decide for itself without

messing the European agenda.

QUEST: Right. But in all of this, Donald Tusk's letter made it clear and one of the terms is that this extension cannot be used to discuss the

future relationship. But isn't that the problem? Why not, if the U.K. was to pass the withdrawal agreement, then have a have a proper discussion

before the U.K. leaves about the future relationship? That's the difficult bit.

STUBB: Yes, it's the chicken and egg question, a bit of a Catch 22 situation. I think the E.U. leaders and also the European Commission, the

guardian of the treaties and Michel Barnier are quite adamant that first, you have to approve the withdrawal agreement. And after that you start

talking about the future relationship. And I think that's going to be the marching order.

Of course in the background, they keep on talking, you know, is it going to be Norway plus? Is it going to be Canada plus? Is it going to be Ukraine

or Switzerland? But I do think that this withdrawal agreement thing has to be approved first by both parties before you can start talking about the

next step.

[15:10:10] QUEST: Alex, thank you for joining us, and we'll talk more about it once we've got a result, at least in the days and weeks ahead.

Now, whatever the European leaders decide, there will be a sharp reaction in Westminster. Hala Gorani is at Westminster, which absolutely is the

other half or the other side, if you like, to this coin.

GORANI: Richard, this was all about taking control, taking back control. Brexiteers said the U.K. was a member of the Union that was imposing rules

on it and if you supported Brexit, then finally the country would be free. Well, now you have a U.K. Prime Minister in Brussels that is not even

sitting down at the dinner table with the other 27 leaders, who will probably have to take whatever extension they give her, that extension will

probably have conditions attached as well.

Some who criticize Brexiteers for overselling a fantasy are saying, is this taking back control? No, it's not. We are being told what to do. Bianca

Nobilo is here with me at Westminster. And thankfully, the sound of silence, lovely, not even Steve is screaming, "No more Brexit" behind us.

Let's talk a little bit about what the options are here for Theresa May when she comes back with whatever the E.U. tells her the extension will or

can be?

BIANCA NOBILO, CNN CORRESPONDENT: She has few options, because it's understood now in Westminster that the balance of power squarely with the

European Union. So whatever they give, we know what she's asked for, an extension to the 30th of June, whatever they give her back and return and

say, "These your options. Here are your conditions," and probably what would be most helpful for the Prime Minister would be that the European

Union grant her longer extension with this guillotine clause, so the notion that if she does manage to pass the Brexit deal, then that period of time

will be truncated. Britain will be able to leave on the first of the following month. That will probably be most helpful for her.

But there is an understanding, a resignation within parliamentary circles, that there is very little they can do. So once the extension is granted,

then it will be back these cross party talks between Jeremy Corbyn and Theresa May if they don't succeed, and what the Prime Minister has said

comes next, is presenting Parliament with options and getting Parliament to vote.

GORANI: Yes, but look, It gives the country a bit of breathing room. Everything was being done in such a rush, with such a sense of urgency.

One of one of the most --

NOBILO: Well, only in these last few months.

GORANI: Yes, but I knew once the process started of voting on the deal, and then alternative ideas to the deal, it seemed as though, you know,

there was actually too much going on for any parliamentary body to come up with a clear compromise position.

NOBILO: Yes, there was concerns on two key levels. The first being the Brexit deal itself. It is such a monumental decision to disentangle

Britain from a relationship it has had with the E.U. for four decades and more. Not only that, it's the fact that there was concern that

constitutional conventions were being ripped up and new ones were being designed on the fly. Bearing in mind, it's taken about nine centuries to

get Parliament to work in the way it does and democracy to function as we are used to seeing it.

And so all of this was being done on the intense time pressure and urgency and we've seen the Speaker intervene at Parliament ...

GORANI: Unprecedented. It's a test case for the House of Commons.

NOBILO: Exactly and because it's been this sort of incubator of political intensity of recent weeks. There has been concern about both those things

and this will provide at least a bit more time for Parliament to operate in a more considered manner going forward.

GORANI: All right, Bianca, thanks very much. We will be tossing back to Richard in Brussels and we'll see you in a little bit with more reaction

from London. Richard, over to you.

QUEST: All right, thank you, Bianca. Thank you, Hala. There is so much more that we need to put into perspective here. After the break, straight

from the horse's mouth, the Conservative MEP, Mark Francois warns the E.U. of his battle plan, next.

(COMMERCIAL BREAK)

[15:16:58] QUEST: A warm welcome back. The hour grows late here in Brussels and there are some in the E.U. that are still hoping out that the

U.K. won't go. Before leaving for Brussels, Theresa May said she won't support a second referendum.

(BEGIN VIDEO CLIP)

THERESA MAY, BRITISH PRIME MINISTER: My position on the second referendum, the government's position has not changed. The House has rejected a second

referendum two times. Now, when we come to a deal, we will have to ensure that legislation goes through this House. Of course, it may be that there

are those in this House that wish to press that issue as that legislation goes through, but my position on this has not changed.

(END VIDEO CLIP)

QUEST: Jeppe Kofod is one of Denmark's Members of Parliament -- in the European Parliament, Vice Chair of the Progressive Alliance of Socialists

and Democrats and joins me now. And what do want out of tonight accepting that, you know, everybody says they don't want the U.K. to leave? Well,

for the purposes of this, assume that U.K. is going, so what do you want out of this?

JEPPE KOFOD, DANISH MEMBER OF PARLIAMENT: No, I think what we see now is probably a long extension of Brexit and time for the British government of

Parliament to find a solution on the crisis that is self-imposed by the government and Parliament in the U.K. and if they agree on something,

whether to support the withdrawal agreement, I also think in a way when your political system breaks down, you need to ask the population in a

referendum, you ask -- you need to ask for consent of what way to go in the future.

So I expect a longer process in the U.K. and therefore, they need time and I hope that the Council will give them time to solve the problems in the

U.K. in the future.

QUEST: Are you worried that as the U.K. takes part in E.U. elections, so a whole host of anti-E.U. MEPs could be returned?

KOFOD: No, I'm not that worried about that. I mean, really if you -- U.K. has not left the E.U. yet. They are still members like the 27 other member

states, they have full obligations and full rights according to the treaty to take part in the election, so we cannot prevent a European election in

the U.K. and let's see who will return. I mean, I'm sure that will be a lot of also very hardworking MEPs, in my own group. In my own family, we

have a lot of hard working sort of Democrats and Labour people there.

So I mean, I'm not so concerned. But I'm more concerned that the chaos it has created in the U.K. is actually showing to the population that the

government and Parliament do not live up to their role. I mean, there's a lot of disappointed voters will be out there and I don't know how the

reaction will be, but I think they'll be very angry.

[15:20:00] QUEST: It seems that the E.U. is prepared to do everything. Bend over backwards, take whatever stand that is necessary. Some suggest

it's a case of the E.U. will not take the blame if the U.K. falls out of the Union.

KOFOD: Yes, you know, I mean, this is not the 27 member leaving the U.K. It is the U.K. that wants to leave the E.U. and the 27 member states and

the cooperation in Europe, and therefore, of course, we, in the 27 member states, we want to help the U.K. to resolve the crisis, although they can

only do it themselves.

So I mean, we are in a chaotic situation, and I think many people in Europe are tired and also frustrated, or what we see now, a breakdown of the U.K.

government under Theresa May and the inability to find some kind of solution to this crisis.

QUEST: Now, straightforward question for an honest answer from a politician, are you sick and tired of Brexit taking over everything to do

with the Union?

KOFOD: Yes, I'm much more concerned about, you know, what led to Brexit? Why people are turning against politicians, governments, E.U.? We need to

resolve the crisis of inequality, climate change, migration and so on. These issues are there to be solved by cooperation between E.U. member

states.

These transnational issues and challenges is what people expect us to solve, and therefore the Brexit crisis is taking too much time, and

therefore we see people are tired of this and frustrated and they turned their back to politics and in the end of the day, maybe democracy which

will be a disaster.

QUEST: Good to see you, sir. Thank you for taking time on a busy night for everybody to come and talk to us. It is appreciated.

KOFOD: You're welcome.

QUEST: The question still stand when and how the U.K. leaves. Tonight, we're looking to the European Parliament for answers. Angela Merkel is

being clear. Europe's leaders have certain expectations.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (Through a translator): The European Institutions must be able to function without disruption. This includes

the European elections in May in Great Britain, as well as the readiness to constructively cooperate with E.U. decision making.

(END VIDEO CLIP)

QUEST: Now, with so many new possibly MEPs, anti-European arriving, the pro-Brexit Conservative MEP, Mark Francois warns the E.U. leaders that if

the U.K. fails to leave the club, in his words, we will become a Trojan horse within the E.U. and utterly derail all their attempts to pursue a

more Federalists project.

Francois and his fellow Brexiteers are seething and threatening to sabotage the E.U. from within, and they could soon have a Prime Minister equally

anti-E.U. Theresa May, it's not known when, but she is expected to step aside before the next phase of the trade negotiations.

So here are some of the contenders as part of this Trojan horse that could actually be on the agenda. First of all, Michael Gove, a Brexit

campaigner, now Environment Secretary. He ran for the leadership in 2016. And then Boris Johnson, a constant thorn in Theresa May's side. And then

David Lidington. Now, the Prime Minister's de facto deputy, he has said he won't seek the job permanently. But then they all say that at some point.

Claude Moraes is an MEP from U.K.'s Labour Party. He joins me now from another part of Brussels, from our Bureau here in Brussels. Good to see

you, sir, how worried are you that firstly, an entire suave of MEPs could be elected from the U.K. whose sole purpose would be to disrupt until the

country leaves.

CLAUDE MORAES, BRITISH MEMBER OF EUROPEAN PARLIAMENT, LABOUR PARTY: I am absolutely not worried about that, Richard. I think what is happening

here, and you've covered this extensively, so I don't know if you agree with me. But what is happening here is that those things that we thought

were impossible in this extraordinary Brexit journey, like not having European elections are happening. And they're happening because there can

be no real agreement in the House of Commons that is so adversarial, where there is no real agreement on what the solution is. There's no majority in

the House of Commons.

And for that reason, we're going through a process now. One of those processes is having European elections, and I think what will be returned

is roughly possibly what we currently have. Some Eurosceptics will have a hope, and positive, pro-European, constructive MEP, I hope like myself and

my colleagues, so I'm not worried about these scare stories. I think it will be constructive.

[15:25:04] QUEST: Two weeks ago, you thought you'd be out of a job. Now, it looks like, you'll have a job for the foreseeable future, assuming your

electorate return you.

MORAES: I mean, I'm happy to kind of do my duty. I'm chair of one of the biggest committees here in the European Parliament. I think I've done my

stint. But I'm happy to go through this period, as one of the more kind of experienced MEPs now particularly for my party, because I think it's

important to get through this safely and positively.

For the reasons that you mentioned at the beginning of the program, people are kind of coming out with the kind of scare stories about it, and I think

it's important to get this period right in the Parliament as well.

QUEST: Do you worry about who comes after Theresa May back in London in Westminster? I mean, arguably, Michael Gove is a more acceptable face of

Brexit, since he seems to have become a lot more moderate in terms of the withdrawal agreement. But for example, a Boris Johnson would be the

wrecking ball that people are you would fear.

MORAES: I think everyone is worried about it. I think the psychodrama of the Conservative Party is why we're here. I think she's pivoted towards

the Conservative Party's problems, and that's why we're in this mess and I think the problem is that these kind of destructive elements would be a

problem unless they had been factored in. I think the European Union is now factoring a kind of Boris effect. We are factoring that in.

So of course, what they're talking about in there, in the Council, and why they're going to spend hours on it is factoring in the disruption of a

potentially kind of awkward Prime Minister, and I think they should do that.

QUEST: Right. Good to see you, sir. Thank you. We'll talk more when we have some more news to show you.

MORAES: Thank you.

QUEST: If you want to know how this whole place works. Just look behind, I was getting out of the way. You see this little huddle that takes place

for the next several hours, this is exactly what is going to happen. Different countries will be sending different politicians, different

spokesmen, when all the way down here. There will be these hurdles as we try to clean what is happening within this room.

And be assured, we have people in that huddle, too, so they'll be plenty of huddling going on, and you're always trying to work out what is spin, what

is reality, what is downright fiction, with the ultimate goal to know what is likely to happen next.

As we continue tonight on QUEST MEANS BUSINESS live from Brussels, new developments in the Israeli election. The Blue and White Party has decided

to concede. Now, we have to understand how Benjamin Netanyahu puts together a government and certainly what that means for policy. We will be

back in a moment.

[15:30:00]

(COMMERCIAL BREAK)

[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, we'll have the latest developments from the emergency summit in

Brussels in just a moment. First, I'm going to bring you the news headlines at this hour.

It is a big day for Brexit, Theresa May is in Brussels and she is asking the European Union to extend the withdrawal deadline from this Friday until

June the 30th. She must get unanimous approval. EU leaders are talking about giving her a longer extension, and that requested, giving the British

Prime Minister more time to receive parliamentary approval of her Brexit deal.

Donald Trump's Attorney General is promising to look into the origins of the Russia investigation. Saying he thinks the Trump campaign was spied

upon in testimony before Congress. William Barr refused to say whether the investigation was a witch-hunt as the president has repeatedly claimed.

Oh, there it is. The first ever photo of a black hole. Now, it is a long way away, 55 million light years away, and it took 200 researchers working

a decade to capture this image. They had to combine eight radio telescopes from all over the planet to take this picture.

New developments in the Israeli election. Benny Gantz's Blue and White Party conceded on Wednesday night, and that gives the victory to the Prime

Minister Benjamin Netanyahu. Gantz said "we all accept the decision of the nation, we all welcome and accept the decision of the president and we will

abide by it."

Arguably, Bibi Netanyahu pulled this rabbit out of the hat at the last moment. CNN's Oren Liebermann is in Jerusalem. Just how much of a

remarkable achievement would you say this is tonight?

OREN LIEBERMANN, CNN JERUSALEM CORRESPONDENT: The rabbit out of a hat may be a very good analogy because the first thing Likud supporters; the party

of Benjamin Netanyahu's supporters came out and chanted when he took the stage with his victory speech late last night was "you're a magician",

"you're a magician", "you're a magician" as he came out to those cheers.

If you paid attention to the election polls, if you paid attention to the exit polls, this was not the outcome that everybody was expecting. A clear

path to Prime Minister Benjamin Netanyahu for victory, a concession which we just got a short time ago from Benny Gantz, his main rival.

But they do vow to keep fighting, they realize that there's no clear path to a coalition for them, granting Netanyahu a victory. A victory

Netanyahu was very happy to talk about and very happy to take. In fact, President Donald Trump calling to congratulate him as well. Richard?

QUEST: Oren, what sorts of a government will this be? One that it seems is even more dependent upon a right-wing party, some would say on the extreme

end of the spectrum, then the current one he currently leads?

LIEBERMANN: The government will look much the same in terms of a solid right-wing coalition with the backing of the ultra-orthodox parties. The

difference here, and it may well include a far-right party that has extremist elements to it.

The difference here is the size of the parties. Netanyahu's Likud Party is so much bigger than the other parties in his coalition now that it's

Netanyahu that has all the leverage, all the power, all the ability for the negotiations to decide how this will proceed.

In that sense, Netanyahu has come out of these elections, which we called the political fight of his life, perhaps even more powerful and influential

in his government than he was before --

QUEST: Right --

LIEBERMANN: Will he pursue dramatically different policies? We shall of course wait and see here.

QUEST: Before we leave you, Oren, I'd be remiss, what happens to all the investigations and the charges and the corruption stuff? I mean, now he is

Prime Minister again. Does he have an immunity for the duration of his Prime Ministership?

[15:35:00] LIEBERMANN: He does not. And those corruption investigations continue. We're waiting on the preliminary hearing that's expected to

happen sometime this Summer, perhaps in the July time frame. He may try to use the coalition he has just gotten to try to pass some sort of immunity

law that a current sitting Prime Minister cannot be investigated, cannot be indicted.

That may be his aim here in trying to shore up his own coalition. Can he do it? I think we're about to find out the answer to that very quickly.

But that -- the corruptions investigations and he has -- the Attorney General has said he intends to indict him on bribery and breach of trust

charges.

That still very much hangs over his head, even if the voters clearly didn't really take that into consideration when voting for him.

QUEST: Oren, good to see you, Oren, you have much more and many more hours of reporting ahead of you, thank you. In the room making the decision,

there are 27 leaders. One of them is Lithuania's president. Here in Brussels tonight, before she went into the meeting, she spoke to me.

You'll hear her after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's emergency summit appears to come down to one question. Should the EU give the U.K. grant, if you will, a long extension or a short

one? The British Prime Minister has made her case, and Theresa May has since left the room to let them decide the U.K.'s fate over dinner.

The question we're still not sure whether she's still in the building having dinner or has she gone back to the ambassador's residence here in

Brussels. Now, the president of Lithuania exclusively told me the Brexit deadline will clearly have to be extended beyond June the 30th.

(BEGIN VIDEO CLIP)

DALIA GRYBAUSKAITE, PRESIDENT, LITHUANIA: We will support in general the request of Prime Minister May for extension. But highly probable that we

will propose a longer extension than she had been asked.

QUEST: And on this question of the length of extension, what would you be happy with? The end of the year, a whole year, until March of next year?

What's your preference?

GRYBAUSKAITE: For me, the preference is not the time line, but the possibility and given the space for British politics to make a decision, to

finally decide on something. And that's why we're giving more space for government and the House of Commons for the decision.

[15:40:00] QUEST: But how much conditionality would you like to see on that? For instance, do you think the U.K. could legitimately have a

commissioner? What restrictions would you like to see the U.K. placed under on voting, for instance?

GRYBAUSKAITE: I can say only one thing, only one condition is legitimate, is a request for the U.K. to have European elections. Everything else,

what you mentioned, are far beyond the European treaties. That means legally, it's not possible.

QUEST: And that's the interesting part, isn't it? Because Donald Tusk said that in his letter to those who want to somehow penalize or neuter the

U.K., you can't, because it's a full member until the U.K. leaves.

GRYBAUSKAITE: All member states are equal and need to be respected. And that's exactly how the European Union works and how treaties are describing

our statutes. So every proposal which goes beyond and makes some ungraceful proposals for diminishing the dignity of any member states are

illegal.

QUEST: How would you describe how you view Prime Minister Theresa May? Do you admire her tenacity? Are you frustrated by her stubbornness? As a

fellow leader who obviously has -- I mean, you have your own domestic politics, so you know to an extent the difficulty that she's facing.

GRYBAUSKAITE: In some extent, of course, but the situation is incomparable in my country and in U.K. But as a head of state, I understand very much

in what situation she's in, what decisions she needs to make and how little support she has and understanding.

And if looking a little bit from outside, not from British point of view, but from outside. I can admire and can say that she has the stamina, she's

got strength and patience, and that, in this situation for Britain, it's very important to have.

(END VIDEO CLIP)

HALA GORANI, HOST, HALA GORANI TONIGHT: That was the Lithuanian president speaking with Richard Quest, we'll get back to Richard in a moment. Nic

Robertson is at 10 Downing Street, he's here with us now. I mean, the Prime Minister is going to have to come back, Nic, with whatever the EU

proposes in terms of extension.

And whatever the EU says the conditions attached to that extension should be. How easily or how difficult, I should say, will it be for her to

convince MPs, even to convince her own party and cabinet?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, the more ambiguous the language is in the way that the Prime Minister was

referencing there, that Britain is you know, essentially a fully paid up member of the European Union with equal rights, et cetera.

The more open it is and leaning in that direction, then it's going to be a tough sell, of course, because there are many MPs within her party that

don't believe that Britain should be going into the European Union elections. She herself has said that this wasn't the right thing to do,

the people voted to leave, so they shouldn't have to do it.

But clearly, she's going to have to, it seems, accept that. She has accepted that. So that's going to be a hard sell. But if there were more

draconian limits put on -- explicitly, put on Theresa May, perhaps in the way that President Macron, we understand, may want to see more definitive

language used to better control what may be the lesser impulses, if you will, of British MEPs in the way that Jacob Rees-Mogg had described earlier

in the week as you know, essentially as a disruptive force.

You know, if that's the way that the outcome leans, that the communique leans at the end of this, then that is going to be a much harder sell for

Theresa May, and there's likely to be a higher political price for her to pay for it. Although, you know, when we talk about high political price,

she's already playing the highest political price because she's already offered to step down and not take this beyond the first phase, beyond an

agreement over the Withdrawal Agreement.

So, it would perhaps be a question of how fast we could see her challenged in her leadership, potentially, or a number of her cabinet members step

away. We heard from Andrea Leadsom, just earlier this week yesterday in fact, when Theresa May went to see the German Chancellor, saying, oh, it

would be good if the German chancellor would open up the Withdrawal Agreement again which everyone has agreed won't happen.

So, clearly, there are people within Theresa May's cabinet who are also going to -- going to feel potentially let down. But how do they exercise

that? Do they decide this is the moment to finally have the challenge, the leadership that they want to have?

[15:45:00] It's not clear -- it's not clear what mechanism they would use for that either.

GORANI: All right, thanks very much, Nic Robertson at 10 Downing Street. When we return, the latest in a succession of warnings on the global

economy. The European Central Bank's Mario Draghi serves up a heavy dose of caution. Richard will be back after the break.

(COMMERCIAL BREAK)

QUEST: So Brexit is not the only cloud hanging over Europe. The ECB's Mario Draghi says weak economic growth could continue, and it could be a

problem for the bloc, rather through the year. The ECB said it will leave its key interest rates on hold on Wednesday, and recently wants that plans

to start tightening monetary policy now. Speaking in Frankfurt, the ECB head signaled it was no time to be taking risks with policy.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: There is surrounding euro, the growth outlook remain tilted to the downside on account of the

persistence of uncertainties related to geopolitical factors, the threat of protection is, and vulnerabilities in emerging markets.

(END VIDEO CLIP)

QUEST: Now, Hans-Olaf Henkel is a German MEP, and the former president of the Federation of German Industries. He joins me from just outside the

European Commission building. The warning about slow growth, it often seems that Europe didn't even enjoy the good growth after the recovery from

the great recession, and now we're being told things are not looking good.

HANS-OLAF HENKEL, GERMAN MEMBER OF EUROPEAN PARLIAMENT: Yes, well, that is not really a big surprise to me and shouldn't be to anybody else, because

it is obvious that the European Central Bank has lost any additional firing power. They have reduced the interest rates to 0 percent, and I think now,

Mario Draghi is at a loss and gives speeches like the one you just heard.

QUEST: So when I think back to how Jean-Claude Juncker's commission, all those policies about leveraging up loans and getting jobs back together

again and the economic policies of this particular commission as it comes to an end. Would you say they have succeeded or failed?

[15:50:00] HENKEL: Well, I think they failed quite frankly. On one hand, they can boast some improvement on the unemployment front, but there were

about a year ago also boasting the new growth of the Eurozone, and now you see that it has come to a grinding halt.

The real reason, Richard, and I have said this since a long time, is the fact that they're all tied to the same currency. The euro is much too

strong for Italy and Spain and Greece and Portugal, and it is much too weak for Germany. But the result is that you have continued high unemployment

in the south of Europe, by the way, including France, and you have quite a good employment situation in Germany.

The German industry is not as good as it projects itself. Half of the success in foreign markets is due in my opinion to an undervalued euro.

QUEST: If we talk about Brexit, if we may, sir, the -- so almost certainly some form of extension is going to be granted, European elections will be

held in the U.K. What do you worry about as this process continues now?

HENKEL: Well, I worry about that it will continue. In fact, I think it's time that someone in Europe puts their fists on the table and say enough is

enough. And I think it is time for the European Union and some leaders in the European Union to give strong signals to Britain that they want them to

stay in the European Union.

I think this would support the remainers in Britain, and if they also give some signal that they would give Britain some more autonomy, for instance,

over its own immigration, then it would give the Brexiteers --

QUEST: But --

HENKEL: A face-saving way out of the mess.

QUEST: Isn't it a bit late for that? Wasn't the time for that back in 2015 when David Cameron came here in '14 and '15 seeking a better deal? You

know, arguably, and correct me, obviously, if you think I'm wrong. The Brexit train has left that station.

HENKEL: Well, you're absolutely right. It was absolutely the case that Madam Merkel and Jean-Claude Juncker refused to give this kind of autonomy

to David Cameron at that time. And it is hard to imagine today, but at that time, the issue was EU immigration, it wasn't immigration from outside

the EU.

Meanwhile, of course, the problem is more or less solved or has gone away. But you're absolutely right, that was in my view one of the key factors.

Cameron went home from Brussels empty-handed, and my colleagues from my political group, the conservatives here, many of those said is that all

what he got?

And as you will remember, the referendum was a very close --

QUEST: Right --

HENKEL: Race. So this would have -- or could have changed the situation. Now, it is not too late because right now, they are coming again into a

situation where there is no decision in London and a signal from Europe that would allow Britain to be more independent when it gets to

immigration, might indeed help solve the problem in Britain.

QUEST: Good to see you, sir, thank you. Always nice to have you on the program --

HENKEL: Thank you, Richard --

QUEST: Always grateful that you give us time, I appreciate it. To the markets now, the European markets, it was a mixed picture, that warning on

growth from the ECB's Mario Draghi, now, the sentiment. Two up, one going nowhere, and the FTSE was lower.

France neatly reported better-than-expected industrial numbers, and the pound and the currency markets. The pound is rising, it's approaching

$1.31, speculation that it will agree a new Brexit delay and the government dare to say the British economy grew three-tenths of a percent in February.

That was higher than expected, largely probably because of stockpiling.

Anna Stewart is with me. Even you know, as we look tonight at a longer extension, Anna Stewart, I asked you this earlier on the "EXPRESS", and I'm

going to go back again and ask again, the question is a longer extension, is it a good or bad thing in terms of British industry and the question of

certainty?

[15:55:00] ANNA STEWART, CNN REPORTER: Yes, because you have to separate, you know, the pound and the reaction we'll see tonight from

business. And there is a big difference here. In terms of the pound, it is priced in, an extension likely to be a long one, and no deal has been

really taken off the table for investors sometime ago.

For business, however, an extension isn't necessarily a good thing at all. Sure, a no-deal Brexit being taken off the table is good for business, but

it doesn't help in terms of business investment going forward. It's more lingering uncertainty, and as you see, we're seeing so many reports about

stockpiling and stuff like lots of people mitigating risks. That will continue with any extension. Richard?

QUEST: All right, so the mitigation of risk continues, but there is -- you know, the pound holds on 131, we've been in this range now for many months,

and I wonder what it will take rather before of previous occasions, what it will take to dislodge it or to boost it?

STEWART: Because on previous nights like this, where you've been in Brussels, I've been talking about, you know, where the pound could go.

You're right, it's stuck in a bit of a rut, it's been trading between a $1.29, a $1.33 for weeks now, and from Forex, Amazon spoken today because

an extension is already priced in, because no deal has pretty much been taken off the table for investors, at least.

It would take something really dramatic to happen in Brussels tonight for that to change, to see a dramatic move. We're talking about, you know, the

EU saying no to an extension or only granting a very short one.

QUEST: Anna, thank you, we will -- don't go too far because we'll need obviously more analysis as the evening wears on. Before we leave you in

this hour though, we do need to show you what the markets are doing in New York and how the Dow Jones is trading.

Because by my recording, it's going up to 4:00 in New York. And after quite a bit of a --a bit of a tumble yesterday, the market is down just by

21 points. So it hasn't really gone much. The Nasdaq was higher over the course of the session, and the Nasdaq actually put on a bit more weight --

(CLEARS THROAT)

Excuse me, than the Dow as indeed did to the S&P at 500. So what had been the downward trend of the Dow, Boeing shares of course was not an influence

as much today. As for here in Brussels, they are having dinner. The Prime Minister, the British Prime Minister, we're not quite sure where Theresa

May is, whether she's still in the building or has gone to the U.K. ambassador's residence for her dinner as she awaits to be told and it is

being told, invited to accept the terms upon which the EU will grant Britain the extension it seeks.

We'll carry on talking about this many more hours of discussions to go.

(COMMERCIAL BREAK)

END

END