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QUEST MEANS BUSINESS
Sri Lanka on Edge After Almost 300 Killed in Attacks; Trump Sues to Block Subpoena for Financial Records; Tesla Investigates Apparent Car Explosion in China. Aired 3-4p ET
Aired April 22, 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 HOST, QUEST MEANS BUSINESS: It is a new week, and we are on hour away from the closing bell. Europe didn't trade
today. The U.S. is on a frolic of its own. The market is down, not by a huge amount as you can see. Nothing to get too excited about, but the
losses have accelerated towards the afternoon.
And not surprisingly, two oil stocks are higher. We'll talk about that during the show. Boeing is down, Nike is down. Let's put it all together
and understand what has been moving the markets today.
Terror in Sri Lanka, hundreds are dead. On this program, the head of the UN's World Tourism Organization will join me. No more waivers. The E.U.
has clamped down on Iranian oil, puts pressure on countries around the world. And beyond the MAX. Boeing is facing questions about the safety of
its Dreamliner. Live from the world's financial capital, New York City on a very misty and unpleasant day. It is Monday. It is April 22nd. I'm
Richard Quest. I mean business.
Good evening. We begin tonight in Sri Lanka, which is under curfew and in a state of emergency. Social media has been shut down. And the
investigation into Sunday's terror attacks is ramping up.
So this is what you need to know. This is what we know at this hour. The government has apologized for failing to act on terror warnings. Sri
Lankan authorities say six suicide bombers carried out the attacks hitting three churches and four hotels. They say the perpetrators must have worked
with an international terror organization.
The Interpol and the FBI have now joined the investigation, at least 290 people have lost their lives. Hundreds are injured, including three
children of the Danish retail billionaire, Anders Holch Povlsen who also perished.
CNN's Will Ripley is in Sri Lanka's capital, Colombo, joins me now live. It is by my reckoning, middle of the night there at least. You're starting
to come around to the morning. A nighttime of curfew, bring me the latest please.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: So you can see the only activity in terms of vehicles out here really are these military vehicles
that you see here, Richard. There are a lot of armed soldiers patrolling the streets. This is Galle Face Drive, a beach-side promenade that earlier
in the evening should have been bustling with tourists, thousands of them on a normal night. But on this night, it was completely empty.
Now there's a nationwide state of emergency in effect and the curfew is in effect as well. And so the only vehicles that are allowed out here and you
can see police officers there on patrol, stopping everybody, making sure that every van, every car that passes has permission to be out on the
roads. And if you don't have permission, there could be a problem here.
Of course, the government's goal is to try to prevent people, members of this terrorist organization from acting again. And they do believe that
there is an international terrorist organization that could be at work here in Sri Lanka.
U.S. Intelligence officials are telling CNN that the Easter attacks, eight explosions that rocked multiple locations around this country bear all the
hallmarks of ISIS. Although at this stage, they don't know what level of involvement or whether this terror group here was simply inspired by ISIS.
But what they do know is that there were six suicide bombers that have now been identified and 24 suspects arrested, Richard.
QUEST: But Sri Lanka is no stranger to or in the past to terrorism Tamil Tigers, and the like. Now, that was all thought to be put to rest. Do we
know anything about what would have been behind all of this?
RIPLEY: Well, you're absolutely right. This is the country that was gripped by Civil War for almost 30 years. But that war ended 10 years ago
next month. And they did think that they had put the types of suicide bombings that used to be a regular part of life here behind them.
In terms of what has caused this if you look at the targets -- Christians at church, foreigners at high-end hotels all within a couple of hundred
meters of where I'm standing here, this hotel was not targeted, but 100 meters down the street is one of the three that was hit, the Shangri La
Hotel, also just down the street completely shut down at this hour.
If you're targeting churches, and you're targeting foreigners, you're going after a country's economy and you could be potentially trying to target
riffs in terms of different religious groups, the Christians and the Muslims are both minorities here, the Buddhist majority. There's been
communal violence between all of the groups that has flared up occasionally.
[15:05:03] RIPLEY: And this attack and some of the social media posts that followed and the anger online, you know, perhaps this was an attempt by
this group to unsettle the situation here in a country that thought it was pretty settled.
QUEST: Well, it's the middle of the night for you. We'll talk more as the hours move on when there's more to report. The big concern now is that
terrorists could try to stage more attacks.
So far, the police say they've found and detonated an unexploded bomb earlier on Monday in a van close to that of the churches that was
previously attacked. And Sam Kiley was telling me earlier that loads of detonators, dozens of detonators, had been found in another search.
CNN's national security analyst, Juliette Kayyem is with me. She previously was with the U.S. Department of Homeland Security.
When Sam Kylie said that they had found more detonators. He said more than 80 detonators, this does suggest a very serious elevation and we might -- I
mean, is it your understanding that this is it for now?
JULIETTE KAYYEM, CNN NATIONAL SECURITY ANALYST: Well, obviously, this is it for now, in terms of you know, they clearly have identified a group and
they are focused on that group. But one of the reasons why you're seeing the curfew still on and you're also seeing the sort of blackout of social
media is the Sri Lankan government wants to ensure that they have complete control over mobility and communications until they're sure that the threat
They can't sustain this for very long. The country has to get back up and running eventually. But I would assume for the next 24 hours, I think the
number of detonators that you described, you know says to me that while this might be a national group, I, like others that you've commented on, I
find it difficult to believe as the Prime Minister said that there wasn't some international nexus because this this was big and synchronized.
QUEST: Other programs on this network will look at the reasons and the terrorist organizations. As a business program, we do need to explore the
unsavory aspect that you choose to hit the economy. You don't just choose to kill people, you want to create fear, which eventually leads tourists to
stay away. How insignificant is this economic aspect?
KAYYEM: It is incredibly significant for two reasons. One is Sri Lanka was on the upside of a long term Civil War, in which, you just look at the
number of foreigners that were killed, it was clearly a sort of a magnet for international travel and international business.
The worst part, though, of course is the loss of life and what that loss of life means and its investigation is that the country is shut down -- social
media and commercial activity. That's bad enough, domestically, but obviously, for reasons of trade and other economic impact.
So you've seen this in the past, a European city will shut down for eight hours. Boston shut down for eight hours. You cannot sustain major
metropolitan areas being shut down from economic activity for too long without having a much greater impact?
QUEST: Is it your understanding that when terrorists commit these atrocities, they obviously want to kill the largest number of people and
they were distressingly successful in this case, but they are doing it to hit an economy as well. They do have a very firm economic purpose in their
KAYYEM: Absolutely. In most of these cases, you know, there's going to be the obviously the primary target, in this case, it you know, it is the
Muslim community there. But also the targeting of Western hotels and hotels that cater to Westerners. That is clearly not just a statement
about, "Well, we don't like them. We don't like the other," but a statement about the economy and the business development going on in Sri
Lanka right now, which is a relatively good success story.
Also, just you know, Richard, just talking about the locations, remember, it was countrywide. And so this isn't like, you know, what we experienced
here in Boston, where you sort of had a street that was attacked and you know, sort of focused on that street. I mean, when you bring a country
down like this, it's going to have tremendous ripple effects through the economy that may take weeks or months to regroup.
QUEST: We'll talk about that, Juliette. Thank you. The terrorists chose to strike as you were saying, places of religious and economic importance,
more than 30 of the dead have been identified as tourists. And naturally the government is concerned about what this means to an economy that relies
heavily on tourism.
Zurab Pololikashvili is Secretary General of the World Tourism Organization who joins me now from Doha. Secretary General, thank you. Obviously the
condolences are there tonight. This is a shocking development in an economy that was only just recovering and tourism was a crucial part of it.
[15:10:00] ZURAB POLOLIKASHVILI, SECRETARY GENERAL, WORLD TOURISM ORGANIZATION (via Skype): Good Evening, Richard. First of all, of course,
it's very hard for me to make this interview; on behalf of 158 countries which are members, I want to express our deepest condolences to the
families, to the Sri Lankan nation.
It's very hard for me to have this interview again, and our organization has been in contact with the authorities in Sri Lanka, the fact that there
are political element is the contact with the Minister. So we're working, but the most important thing now is to band together and to support Sri
Lanka to recover because Sri Lanka always wasn't -- this is -- Sri Lanka is one of the best ever nice showcase after it recovered -- from war to peace
And again, Sri Lanka is one of the best example and it was said many, many times during today that this is I mean, a real shock, as we mentioned, and
we are ready and we are working very hard with the government and I proposed the talk and to support Sri Lanka in communication with the
government of Sri Lanka.
QUEST: Right, you know as well, as the entire industry does, that eventually things recover, and people start visiting again. Are the
practical things that people can do that you can do that the community can do to help Sri Lanka at this moment?
POLOLIKASHVILI: I think that we need to help in the recovery process to show in the past when the other countries were hit by the crisis, it was
natural in mid-May. We have technical support and we're offering support and capacity building in crisis communication and response which has proven
to be a critical input to rebuilding confidence in the tourism sector and the tourism administration.
Communication is so very important. Now, we need to be together and I want to propose to all our members to support, to help Sri Lanka in the
QUEST: It is -- the problem, isn't it, Zurab that it's an easy -- I use this word carefully. It's an easy target. To hit tourists is an easy
target that is very difficult for an industry to manage because you do have to have an open society and an open economy and a fairly open environment.
So tonight, what would your message be to tourists?
POLOLIKASHVILI: My message will be to first of all, again, to pray for families and to visit Sri Lanka again. It is a critical situation I know
and understand that many trips were cancelled. But I'm sure that Sri Lanka has the capacity to recover this very bad situation. And again, we need to
be reminded that we need in this very hard days for Sri Lanka.
QUEST: Thank you. Good to see you, sir. Thank you very much indeed for joining us. Secretary General of the UNWTO.
POLOLIKASHVILI: Thank you, Richard.
QUEST: As we continue, President Trump steps up the pressure on Tehran. The U.S. says anyone who buys oil from Iran will be guilty of sanctions
busting and I've told my wife that I never planned to fly on it. One of the workers at a Boeing plant who says the company profit over safety as it
churned out 787 Dreamliners. It is QUEST MEANS BUSINESS live from New York.
[15:16:09] QUEST: The Trump administration will no longer ground any exceptions to U.S. sanctions on Iran's oil sector. The administration's
aim is to stop Tehran to exporting oil all together and that could take a million barrels a day out of the global market.
The U.S. Secretary of State says he is confident that other producers will pick up the slack.
(BEGIN VIDEO CLIP)
MIKE POMPEO, U.S. SECRETARY OF STATE: Today, I'm announcing that we will no longer grant any exemptions. We're going to zero. Both the Kingdom of
Saudi Arabia and the United Arab Emirates have assured us they will ensure an appropriate supply for the markets. And of course, the United States is
now a significant producer as well.
(END VIDEO CLIP)
QUEST: So far and so good. However, look at what happened. Oil prices spiked to nearly six months highs. Three percent for Brent, which is the
main relevant one and WTI up two and a half percent. John Defterios is with us.
Two aspects on this story, faster supply and then of course also what happens to those countries that break or that don't get away or break the
sanctions. Firstly, on the supply. Can the UAE and Saudi make up the million or so from Iran?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Quite easily if they had to, Richard. The spare capacity in Saudi Arabia and the UAE and add
Kuwait of about two to two and a half million barrels a day. We have to question the preparedness at this stage, if you will. But I tell you those
importers for the last year have been on a roller coaster.
This time last year, Donald Trump was talking about taking the exports of Iran down to zero. He didn't deliver, offered eight waivers and prices
collapsed. Now as you saw there, Mike Pompeo say we're going to zero and then told those importers, the risk is not worth the reward at the end of
the day, suggesting he will put sanctions on you if you go forward.
Let's take a look at some of those that had the waiver. I call them the Big Four -- China, India, South Korea and Turkey -- they took 1.5 of the
two million barrels a day of exports before the policy change that came by the United States here. Where are we today? Iran's exports of crude alone
is below a million barrels a day. This is why we see prices spiking up to a six-month high. In fact, they're up about 30 percent in 2019.
Donald Trump used to complain that Brent crude for North Sea went above $70.00 a barrel. It's now hovering around $74.00. But he's the one to
blame here, Richard, because he's put the sanctions on Iran, sanctions on Venezuela. And we have the Civil War heating up again in Libya. Now the
plot twist here is ...
QUEST: Hang on, hang on.
DEFTERIOS: ... how does Saudi Arabia and the UAE coming to the front here and saying they're going to fill that void of Iran. It is going to raise
the tensions here in the Middle East.
QUEST: John, let me jump in, if I may, because there's a lot there. The issue of what he is going to do to China, Iran -- sorry, China, India, and
Turkey. I mean, what -- there has to be an action if he's going to make the threat?
DEFTERIOS: Yes and we had the threat last year and then the action didn't follow through. We had the U.S.-China trade tensions, you can imagine that
getting ratcheted up, you know that India and the United States, President Trump and Prime Minister Modi have had a very good relationship leading up
to this decision. You have to think that the White House is giving guidance to Delhi on this.
We saw that the Indian imports of Iranian crude were going down. Now, this is not going down well in Turkey and Iraq. Both put out statements today
saying this is going to cause regional instability and a couple of inside baseball issues we have to deal about with regards to OPEC, particularly
for Khalid Al-Falih of Saudi Arabia. This could be seen as a hostile act within OPEC -- against a co-founder of OPEC.
[15:20:03] DEFTERIOS: Saudi Arabia and Iran were co-founders back in 1960. Also, you have to think about the bromance between Saudi Arabia and Russia.
They have this OPEC plus agreement. Does it stay glued together if the Saudi Arabia and the UAE are seen backing Donald Trump right now? These
are big question marks going forward. But right now Saudi Arabia, Richard saying, "We need stability in the market, and we're ready to fill that void
left open here because of Iran."
QUEST: John Defterios. John, thank you. Now, Boeing is strongly denying claims of shoddy production at its Dreamliner plant in South Carolina.
"The New York Times" has reviewed hundreds of pages of documents and spoken to dozens of employees finding what it's calling a culture that often
valued production speed over quality.
Here is our good old fashioned, brand new 787 and some of the issues -- safety issues detailed in the report. You have for example, you have
debris that's been left near the wiring below the cockpit. Well, these are shavings from fasteners that have been put on and they dropped down onto
the wiring, you can imagine the sort of problems.
There have been test flights with debris in or around the engines, that's potentially lethal for the engine fans. A ladder was left inside the tail
or the empennage. Now, the worrying part there, of course, it was near the gears of the horizontal stabilizer.
If those gears had been gummed up or in some ways obstructed, then that could cause a similar problem where the plane could have been stuck out on
a dive or in a climb. And then you get rags that could have been left in the landing gear.
Significance there, of course, is that when the wheels retract, they're very hot. In fact, the whole gear area is extremely hot from spinning
wheels. And then of course, that could have been as serious issue.
Natalie Kitroeff wrote the story. Very glad that you're with us today. I read it over you. Good to see you.
NATALIE KITROEFF, ECONOMY REPORTER, "NEW YORK TIMES": Nice to see you.
QUEST: Thank you very much, indeed. "New York Times" economy reporter, is this a problem of 787s? Or is it a problem of 787s out of this factory?
KITROEFF: So we -- our reporting was based in this factory in North Charleston, South Carolina. So what we know is that, as you said more than
a dozen current and former employees described, as you said, a problem of culture, a problem where speed often trumped the concerns of these
employees, many of them quality managers whose very job it is to ensure that these planes are safe to fly.
QUEST: Right, but these managers -- it's not as if they were just continuing negligently and recklessly. Some of them did point out these
problems, didn't they?
KITROEFF: That's right, exactly. They were flagging in many cases, the very problems that we talked about. I mean, this debris that's all over
the airplane, this is something that one of these whistleblowers flagged repeatedly insisted needed to be cleaned up and he was told to let it go,
it would cost too much he said to lift those floorboards up.
QUEST: Mary Schiavo is in Charleston, South Carolina. She was Inspector General at the U.S. Department of Transportation. She joins me now. She
also represents families of air crash victims and has litigation pending against Boeing.
When you hear what Natalie is talking about. The risk is great or are we making too much?
MARY SCHIAVO, CNN AVIATION ANALYST: No, the risk is very great. And you can look back through history and you see that even damages to wire from
FOD -- free object damage -- can cause credit catastrophic loss of a plane comparable for example to TWA 800 where wiring brought down the plane off
Unfortunately, it's not isolated and that Natalie is right. I mean this has been a problem that has been reported, tried to be reported at and
other places as well. But anytime you have anything that can impede the operation of the plane, be it FOD, be it a ladder in the tail or rags, you
literally are in like a situation in an operating room where the surgeon leaves tools behind in the body. Same thing in the Air Force, it's
spotless in their in their repair rooms.
QUEST: Listen to what Donald Trump said when he spoke of this very plant back in 2017 standing in front of the Dreamliner as it rolled off the
assembly. He called it a work of art and said it was an example of why more products should now be made in America. Have a look.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We're here today to celebrate American engineering and American manufacturing. We're also here
today to celebrate jobs -- jobs.
This plane as you know was built right here in the great state of South Carolina. Our goal is a nation must be to rely less on imports and more
products made here in the USA.
(END VIDEO CLIP)
[15:25:11] QUEST: So let's be clear, Boeing, denies, denies, denies Natalie the thrust of your accusations, but is this a case of -- they're
just not used to making planes like they are in Everett. It's a new factory. I mean, Qatar Airways has refused to take delivery of planes from
KITROEFF: What we heard from these employees is that there was tremendous pressure from the top down to produce these planes as fast as possible.
Remember, the Dreamliner program was beset with delays from the very beginning. So this is a program that's already starting years behind. So
you have a tremendous rush, and that in that harried process, they said their concerns were not just at times being overlooked, but we're being
QUEST: But Boeing doesn't want to have a plane falling out of the sky, because metal shavings are on the wiring.
KITROEFF: That's absolutely right. And to be clear, the Dreamliner has never crashed, it has a pristine safety record, and airlines are standing
by the plane. Nevertheless, what we're talking about is this situation on the factory floor.
So at the C suite, you're right, there are these commitments to safety that are well documented, and that are real. But what we're asking about is
when the pressure weighs down on these workers, what happens?
QUEST: Mary, I need you to bring together the reporting, of course, on Lion Air and Ethiopian 737 MAX, because there we're hearing similar
accusations of pressure to perform, pressure to build.
SCHIAVO: That's right, and I think these do all tie together because there's one common thread and that is pressure to overlook problems to rush
the planes to market.
The tremendous economic pressures that we hear these reports out of the plant in South Carolina, out of Washington, out of Renton for the 737 and
787, and the theme is the same that if they didn't hurry these planes up, rush them out the door that they would lose the time war and the economic
war to Airbus.
And it was some of the same language we heard 20 years ago with the certification of the Boeing 777, the rush, that they were relying too much
on computer evaluation that safety concerns were being ignored. And you can't continue to ignore safety concerns. The Dreamliner was grounded, the
737 MAX was grounded -- the rushing of the safety is never a good thing.
QUEST: Mary, thank you. And thank you. Excellent reporting, if I may say having read the article.
KITROEFF: Thank you.
QUEST: As we continue. We will be back in Sri Lanka. Sri Lanka makes a drastic move to try to restore security after the deadly Easter bombings.
Facebook is speaking about the social media blackout. We'll talk about. It is QUEST MEANS BUSINESS. We are alive tonight from New York.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's a lot more QUEST MEANS BUSINESS in just a moment. And the
president's plan -- President Trump's plan, that is, to reshape the board room of the Federal Reserve has hit a major snag as Herman Cain says he
won't take the job.
Critical week for Tesla and it starts off with a little bang. One of its cars appears to catch fire in China, the shares are down around 3 percent.
As you and I continue tonight, this is CNN and on this network, the facts always come first. Tensions are running high in Sri Lanka after a series
of Easter Sunday bombings claimed almost 300 lives.
Officials have imposed a state of emergency and discovered other explosive devices. No one has claimed responsibility for the coordinated attacks.
The Kremlin says it's too early to congratulate Ukraine's apparent new president. With most of the ballots in, Ukraine's election commission says
Volodymyr Zelensky has won nearly three quarters of the votes, they are still counting. Zelensky says he plans to restart peace talks with Russia,
but his specific policies are so far very unclear.
Donald Trump says he's going to court to try to stop Congress from getting his financial records. The House Oversight Committee controlled by
Democrats wants ten years of financial information. The president and his organization filed the lawsuit today to block the committee's subpoena.
The British "Sunday Times" says the Duke and Duchess of Sussex are considering a move to Africa after their first child arrives any day now.
They are expecting and they are reportedly planning an international role for Britain's royal family. Buckingham Palace says any future plans are
We return to the terror attacks in Sri Lanka. The country's social media ban is now in its second day. The government blocked a number of platforms
over what it calls false news reporting circulating online. I'm joined by our chief media correspondent Brian Stelter. Good to see you, Brian --
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Yes, me too --
QUEST: If we start from an idea that it is never really acceptable to block or censor the media, is it ever justifiable in these cases?
STELTER: Certainly, many countries have made similar choices. I don't want to claim this is widespread, but there had been cases before this,
including in neighboring India where social media services have been blamed for causing violence, for causing hysteria and government to take an
It's obviously an aftermath here in the United States, it would be shocking in some other countries, but Sri Lanka is not the first, I don't think it
will be the last.
QUEST: Can you blame --
STELTER: This is --
QUEST: Can you blame if in these emerging markets --
STELTER: Yes --
QUEST: There is a perception that the internet or the social media sites are being used to inflame an already deadly situation?
STELTER: There's legitimate concern about that. Here in the United States, concerns about online radicalization, the same thing we saw in New
Zealand last month, that is a legitimate issue that these tech companies have to be part of the solution about.
Fundamentally, how do we make peace go as viral as hate? That's what I think about in the wake of this most recent tragedy. Something that is
sickening and divisive, that's going to go more viral than something that tries to lower the temperature and lower the tensions.
QUEST: They talked about circulating false news reports.
QUEST: Now that -- that's no weak point here. Because they're not saying what it is. If they had said terrorists are using this, we need to
understand the role that terror played or these sites played --
STELTER: Right --
QUEST: Maybe that's more -- I don't know.
STELTER: When they say false news, what you think about is President Trump saying fake news. And we all know the president's definition of fake news
is real news. He is screaming about news he doesn't like. We have seen that insidious term spread around the world and other countries have used
"fake news" in order to smear real news.
[15:35:00] Now, in this case in Sri Lanka, I don't know exactly what stories they're talking about, maybe there was a real concern about
terrorists posting video of their killings like the way we saw in New Zealand last month.
QUEST: Where does the responsibility lie here? Let's start from accepting that we're in a new environment with platforms that didn't exist when you
and I started our careers and are moving at a far faster pace than we ever with greater numbers than we could ever imagine. Now, accepting that --
QUEST: What role do you think the platforms have?
STELTER: They have to be -- they have to acknowledge that they are running these towns, running these cities, running these virtual states and
countries. And they have to provide, police and fire and all of the things that towns and cities need.
But Richard, this is ultimately about all of us as individuals. The real world and the virtual world are increasingly merging. What's happening on
the internet is increasing what's happening in real life. Terrorism starts online and then happens in real life.
That's ultimately on all of us as citizens, not just the tech platforms. I would love to entirely blame the tech companies, but this is something
we've all created, we all are living in this environment.
QUEST: Right, but let's -- this is all linked, for instance --
STELTER: Yes --
QUEST: To let's say the New Zealand example. Now, Australia has already brought in legislation, the U.K. as you will be aware is planning
legislation, everybody is going to plan some form of legislation in all of this. But it begs the question, what do you expect these companies, these
tech companies, whose platforms have grown faster than anybody could imagine?
STELTER: Right, in the same way that I expect the police to take -- fire or 10 minutes to get to me in an emergency. It takes Facebook five or ten
QUEST: Right --
STELTER: Longer to react in an emergency. Now, its critics say you need to react quickly, you know, you shouldn't take a day to take down an
abusive account. But these rules are being made of these roads as we're all driving on them. And I just think we all recognize in Sri Lanka, there
are people trying to use social media to connect with loved ones, to communicate, to unite, to ban together, and that's harder today because
this ban is in effect for a second day in a row now.
I'm sitting in New York, I'm not the best judge of what's going on there. But this is a very delicate situation. These platforms, these websites,
they become like oxygen for many people all around the world. There's most people who have an internet connected device, they rely on Facebooks and
the WhatsApps as a form of connectivity, and to take it off all of a sudden in the middle of an emergency is a very risky move.
QUEST: Particularly in countries that have leapfrogged landlines.
STELTER: Right --
QUEST: Traditional media --
STELTER: Straight to the mobile phones.
QUEST: Straight to the mobile phone --
STELTER: And in countries that --
QUEST: And Sri Lanka by the way is one of those countries --
STELTER: State -- you know where the media is tightly controlled, social media is an independent opportunity. So many costs, so many benefits from
QUEST: Good to see you, sir.
STELTER: Yes, me too.
QUEST: I'm not sure -- a bell on the way, thank you very much.
STELTER: As we continue tonight, he's saying he was committed to securing a seat on the Federal Reserve. Herman Cain changes tune, he now says to
the president, no, thank you. The issue of course is not only what happened to Herman Cain, but Stephen Moore's seat. Can that now be rushed
through as a result. It is QUEST MEANS BUSINESS after the break.
[15:40:00] (COMMERCIAL BREAK)
QUEST: President Trump's plan to reshape the Federal Reserve board has hit something of a snag. One of the people he'd hoped to install has pulled
out. The president tweeted "my friend Herman Cain; a truly wonderful man has asked me not to nominate him for a seat on the Federal Reserve board.
I will respect his wishes. Herman is a great American who loves our country."
Jeremy Diamond is with me from Washington. Jeremy, he pulled out because he couldn't get confirmed.
JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: Yes, that's exactly what happened, Richard. Republican senators were telling the White House in the
past couple of weeks that they would not be able to confirm Herman Cain over questions about not only his qualifications, but also those long-
standing allegations of sexual harassment that were -- that ended his 2012 presidential campaign.
And it's interesting because just last week, Herman Cain appeared to be digging in, telling the "Wall Street Journal" that he did not intend to
withdraw, and yet today, we see this tweet from the president indicating that Herman Cain did just that, Richard.
QUEST: OK, so Herman Cain is gone, but I see Chuck Schumer saying that the loss -- that the Democrat head of the Senate, that the loss of Herman Cain
should not be a reason to ram home Stephen Moore, who is the other nominee or who used to be of course a great friend of QUEST MEANS BUSINESS on the
show all the time.
DIAMOND: Yes, that's right. You know, there had been numerous questions about Stephen Moore's qualifications, you know, despite being an economic
commentator and serving, you know, as a CNN economic commentator on the board of the "Wall Street Journal", "Wall Street Journal's" editorial
Moore only has a Masters degree in economics, he's not an economist by training and that has raised questions not only that, but he's also a
partisan who has advocated for some questionable ideas such as, you know, bringing back the gold standard, for example, and, of course, he is viewed
as kind of this Trump accolade which could diminish perhaps the Federal Reserve board's stated independence.
QUEST: Wow --
DIAMOND: So still questions there, but again his nomination hasn't officially been submitted yet, but the president has said that he does
intend to do that. We'll see if he actually follows through.
QUEST: So the president has already had one member. He then -- I'm going to lose track of them somewhere. He got the chair, Chair Powell, he got
the vice chair, now he's got these other two. I mean, having -- his displeasure with Chair Powell suggests he's determined, the president that
is, to ram -- to ram in partisans, rather than sort of more general economics.
DIAMOND: Right, and that is the backdrop kind of, to this whole discussion about these two candidates who appear to be partisans who would perhaps do
the president's bidding on the Federal Reserve board. You know, remember, this president has talked about the Federal Reserve and talked about its
policies in a way that no previous president has.
He's really broken with conventions and protocol in terms of commenting on every decision that the Federal Reserve board makes, making clear that he's
disappointed in the Federal Reserve chairman that he himself --
QUEST: Right --
DIAMOND: Appointed. These have all been very unconventional moves, and so that's why even more attention is being drawn to these two controversial
picks, now just one left, but whether or not he will be nominated will certainly be a sign of the president's, you know, medal going forward and
whether he can actually garner Republican votes for such a controversial --
QUEST: Jeremy, thank you. Now, from the American Central Bank, the Fed, to Kenya's Central Bank. Governor Patrick Njoroge says he's looking to
shore up the Kenyan economy in the event of another financial crisis. Negotiating with the IMF for a new standby loan facility. I asked the
governor why he thinks Kenya needs bailout money at the ready.
(BEGIN VIDEO CLIP)
PATRICK NJOROGE, GOVERNOR, CENTRAL BANK OF KENYA: We are looking at the sort of melt-down in global financial markets. That has happened before
and it can happen to us again. We are reasonably OK with Brexit because we've been assured that the transition will be neutral in terms of trade
impact to us.
But we still don't know how that will impact us indirectly. As you know, for instance, now the global growth has been scaled down quite
dramatically, so the point is that we are one of the most open economies in Kenya -- in Africa, and therefore, we do need some insurance against those
QUEST: Because a lot of people are suggesting you're managing the currency, that you are interfering in the currency, and that it is no
longer freely floating in quite the way it used to.
[15:45:00] NJOROGE: That is not correct.
QUEST: But the perception is there.
NJOROGE: You know, I cannot -- I cannot control people's perceptions. The perceptions are there, but the question is not so much what are the
perceptions? The issue is what is really happening?
Our exchange -- policy is very simple. It is actually freely floating -- we have a flexible exchange rate. Flexible exchange rate. So we let it
move, we don't have a direction, we don't have a level. What we do is we intervene to minimize volatility and that is -- you know, that is
understood and well accepted because volatility as you know can actually have significant destabilizing effects on the economy.
What has happened and this is what most people do not acknowledge, is that there has been a significant contraction in the current account deficit.
Four years ago, it was at 10.5 percent of GDP, and now it is at 4.7 percent of GDP. Significant contraction. This has led to a significant stability
QUEST: Right --
NJOROGE: In terms of inflows and outflows in the exchange market.
QUEST: Christine Lagarde is very fond of reminding us all to put -- to fix the roof when the house -- when the sun shines. The sun has been shining,
have you fixed your roof?
NJOROGE: We have -- actually the sun has not been fully shining, so we've been --
QUEST: But it's not now.
NJOROGE: Well, even then, frankly, we have had a lot of work that we have been doing in the background. For instance, what are the things that we
needed to do? This is probably how we've been fixing the roof. First and foremost, creating an environment of macro stability, meaning bringing the
macro balance in order.
Secondly, the inflation, inflation is well anchored, the expectations on that are well anchored, it's below 5 percent, the range is 2.5 to 7.5
percent. That is what -- that's what we've been prescribed, but actually, it's at 4.4 percent today. The important elements are also the reforms
that are going on, and we have had some issues in the banking sector which we have been working on.
As you know, we put three institutions in receivership back in 2015 and 2016, and now there has been significant consolidation and strengthening of
the banking sector.
QUEST: Did you have a good Washington? Was it a good fund regime for you?
NJOROGE: Actually, I think it was kind of disappointing. Disappointing because the news was bad, right? Global growth is going down. And
secondly, there wasn't a solution for the fundamental problems that ailed everybody. One of which is if there's a problem, how will we deal with it
going forward? Because the issue of collaboration has since gone out the window, and in that sort of international environment, collaboration is
QUEST: But isn't this -- aren't we at a situation where the reason collaboration has gone out the window, one of the major reasons, maybe not
the only one, but the major is that the U.S. is no longer collaborating.
NJOROGE: That is true. At least, the sense is that the U.S. is more focused on its own domestic politics and its own domestic objectives --
QUEST: Yes --
NJOROGE: But the problem here is that no one is an island to themselves. And so everyone of us will hurt, everyone of us will suffer when we do not
(END VIDEO CLIP)
QUEST: As we continue, Tesla shares are down some 3 percent, and we'll show you one particular reason why in a moment.
[15:50:00] (COMMERCIAL BREAK)
QUEST: An important week for Tesla began with a bang. Look at this security camera footage. Watch the car on the left, smoking, boom, fire.
But what happened? There was supposed to be about the company's self- driving strategy. And so the CEO gave a presentation for investors just over an hour ago. The shares are down more than 3 percent, the company
reports earnings on Wednesday.
It's already warned those numbers will be bad. Peter is with me -- Peter Valdes, so, Peter, why? What happened to that white car?
PETER VALDES-DAPENA, CNN BUSINESS SENIOR AUTO WRITER: We don't know yet. Well, we -- it caught fire clearly, but that's really all we know. We
don't know was this car in any kind of accident? One thing we can tell from looking at it, it's obviously not driving anywhere, it wasn't charging.
So Tesla supposedly is investigating this, but there is a lot we don't know. It's a very unusual incident, as you can see this is very -- it
doesn't just catch fire, it sort of explodes --
QUEST: Yes --
VALDES-DAPENA: It's very violent which is unusual for this type of a battery fire I think.
QUEST: So, obviously, if this turns out to be systemic, I mean, we don't know. Whoever owned the car may have fiddled with the battery --
VALDES-DAPENA: Right --
QUEST: Maybe we just know. But if it turns out to be systemic, then that would be very serious.
VALDES-DAPENA: That would be very bad, indeed. Certainly, you know, gasoline powered cars carry around, well, gasoline in a big tank and that's
flammable, we all understand that. But anything with an electric car with these lithium ion batteries makes people very nervous.
So I think, you know, that's why one reason I think we're seeing Tesla shares going down is people are worried about this if it does turn out to
be something that Tesla needs to fix.
QUEST: And the presentation on it for investors, do we know what was said? So what do we know about what they're going to be talking about?
VALDES-DAPENA: Well, right now, one thing we have heard Elon Musk go very strongly on already is LIDAR. Tesla cars don't have LIDAR. Other
automakers and companies like Waymo say you need to have this laser system in order to make a self-driving car.
Tesla says no, it's utterly useless, in fact, it's a waste. We can do this with just cameras and radar. They're explaining about these highly evolved
chips that Tesla themselves has made that's going to allow Tesla -- that allows Tesla cars and are in these cars already to do the kind of high-
powered processing to drive --
QUEST: Yes --
VALDES-DAPENA: By themselves with just cameras and radar.
QUEST: But what about the story of the Tesla that was fooled into oncoming traffic. What did they ever said about that situation?
VALDES-DAPENA: Well, if you're talking about a test that was done in China, that was done with some people who put markings on the road to cause
it to look as if the lane markings were going in that direction, and they tricked a car into following those lane markings.
Tesla's response of course is, well, hey, if you're going to make fake lane markings, you could fool a human driver by painting fake lane markings on
the road. You know, what are we -- what's anyone going to do about that?
QUEST: Peter, come back when there's more after Tesla, thank you. We're in the last few moments of trade on Wall Street, and the three indices, the
Dow is doing -- let's go and have a look over here. This is the way the 30 look to have finished off with that.
But you've got the Dow which is down. We've got the S&P which is just up a fraction, the Nasdaq is doing slightly better. Why is this down? Well, if
you come over here you'll see. Boeing, which is the huge component in the Dow, that's what's pulling that down.
[15:55:00] Another big component several -- Goldman is down, that's a large component of the Dow, heavily-weighted is similarly on the opposite
side of course, you do have Chevron and Exxon both having an extremely strong day and not surprisingly, oil prices are up some 2 percent to 3
percent, and that has boosted them.
Otherwise, middling in terms of earnings if you wait, we have a busy week of earnings ahead of us. Investors will be watching, Boeing, but it
reports 737 Max, Caterpillar on China, Microsoft and Facebook and snap, all reporting in the coming days. These are the markets, love you and leave
you, we'll have our profitable moment after the break.
QUEST: Tonight's profitable moment. Tourists have very short-term memories when it comes to visiting places that have been hit by terrorist
attacks. Look up, Mumbai, Paris, London, even New York, Egypt, Tunisia. Eventually, the tourists do return to those destinations.
The problem, of course, is, how long can that keep going? And the issue now, of course, very firmly as it relates to Sri Lanka. Yes, I have no
doubt that Sri Lanka, the airline, and the hotels, will in some shape or form recover and return. They always do. But it is the damage that is
And make no bones about this, the terrorists intend to inflict economic damage, almost as much as they intend to kill and maim. That is the
purpose, otherwise, why hit hotels and the like? Which is why as I've said and sat here before, yet things will sort of get back to normal over a
period of time.
But for those of us who travel regularly, it is a clarion call that we must not stop. We must continue our travels. We must be wary and careful when
we are going, but the gist remains, this world revolves and as tourism, we must continue with it. And that is QUEST MEANS BUSINESS for tonight, I'm
Richard Quest in New York.
Whatever you're up to in the hours ahead, I hope it is profitable. The Dow is down, the bell is ringing, the day done.