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QUEST MEANS BUSINESS

Kurdish Forces Say They've Made a Deal with Assad Government; Police Clash with Protesters at Barcelona Airport; South African President Ramaphosa Criticizes His Predecessor Jacob Zuma Over Corruption. Aired 3-4p ET

Aired October 14, 2019 - 15:00   ET

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


[15:00:14]

RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: And we are 60 minutes from the close of play on Wall Street, down just seven points on

the Dow. But you could see, it's been a choppy sort of day. Bearing in mind, the bond market is closed. I'll go into that later. It gives you an

idea why it might have been quieter than otherwise.

But the market is slightly down. Those are the markets and these are the reasons why.

The Queen's Speech kicks off a crucial week for Brexit. Leaders in Brussels are still saying a deal is possible.

Steve Mnuchin says the hard part is still to come with the U.S.-China trade agreement. I guess the hard part is actually what is the agreement?

And payment declined. Libra is losing corporate backers by the hour.

Tonight. I'm live London on Monday, it is October the 14th. I'm Richard Quest, and of course, I mean business.

Good evening to you. Yes, the bell was a little bit wonky this evening. They you are. Let's put it back into some good voice.

Tonight a new session of Parliament begins in Britain and the challenge for the Prime Minister Boris Johnson remains the same. Now time is almost out.

A decisive week began with Queen Elizabeth ceremonially opening Parliament. Her speech, which of course is written by the government outlined the

government's agenda and made it clear that top priority is leaving the European Union and the deadline remains October the 31st.

(BEGIN VIDEO CLIP)

ELIZABETH II, QUEEN OF UNITED KINGDOM: My government's priority has always been to secure the United Kingdom's limbs departure from the European Union

on the 31st of October.

My government intends to work towards a new partnership with the European Union based on free trade and friendly cooperation.

(END VIDEO CLIP)

QUEST: Now it is Ministers continuing to say they can agree a deal with the E.U., the Prime Minister has reiterated his pledge to get Brexit done.

(BEGIN VIDEO CLIP)

BORIS JOHNSON, BRITISH PRIME MINISTER: Mr. Speaker, I concur entirely with my, Honorable friend. If there could be one thing more divisive, more

toxic than the first referendum, it will be a second referendum. Let's get Brexit done.

(END VIDEO CLIP)

QUEST: How and when the U.K. leaves could well be decided by the weekend. And this is why I look at the map, I look at the diary, I should say of the

week ahead.

On Tuesday, we could get their first official response from the E.U. officials to Britain's latest Brexit proposals as the General Affairs

Council meets. Negotiations in Brussels will continue. On Thursday, that two-day Summit begins where European leaders get the chance to approve or

reject Britain's plans and if they reject it, what happens next?

Following that the spotlight is back at Westminster for a Saturday session of Parliament. That's the first as the Falkland Islands War Invasion of

1982. If there's no Brexit deal or no deal gets parliamentary approval, a law, the Benn Act requires Boris Johnson to ask for a delay, for an

extension, for it to be put off until next January.

Leaders in Brussels are showing some optimism at a meeting of Foreign Ministers, Ireland's Simon Coveney said the Irish border issue could be

solved although he admitted, an agreement is certainly not in the bag.

(BEGIN VIDEO CLIP)

SIMON COVENEY, IRISH FOREIGN MINISTER: The message I would give is that we need to be cautious. This is not an easy job. We spent three years trying

to get an agreement between the two sides that have made progress the different times, but certainly the last number of months have been

difficult.

So I think, you know, as my Taoiseach has said, a deal is possible, and it's possible this month, maybe even possible this week. But we're not

there yet.

(END VIDEO CLIP)

QUEST: Now, David Herszenhorn, Chief Brussels Correspondent for POLITICO, he joins me now in Brussels. So what's your feeling? Deal? No deal? How

close are they?

DAVID HERSZENHORN, CHIEF BRUSSELS CORRESPONDENT, POLITICO: Oh, well, Richard, I think you'll like this. These negotiators, they mean business,

they really mean business.

They're working very hard to cut a deal before this European Council Leaders' Summit. It's unclear they'll get there, as you heard Simon

Coveney, the Foreign Minister of Ireland say, but they're leaving open the possibility that they just might be able to pull a last trick.

QUEST: I mean, it all works on the basis of how likely is there that there's something that the rest of us haven't thought of or come up with.

All you really end up with is some very complicated machinations from the British.

[15:05:00]

HERSZENHORN: Well, there's no question, E.U. negotiators have long told us that they looked at every border on Earth trying to figure out is there a

way to more effectively manage the Ireland Northern Ireland border after Brexit.

Now we know they're zeroing in on two issues, keep these C's in mind: Consent - how to give people in Northern Ireland some say over what will

happen. And the last piece being Customs. And this is crucial for the E.U., where they're insisting that the E.U. single market has to be

protected. And that probably means Northern Ireland staying in a similar customs regime with the E.U. in the event that no free trade deal is

reached. This is the crux of it.

QUEST: Okay, so the ability to cobble to the third C - cobble. The ability to cobble together something from this. I mean essentially, it's

just going to get you into the transitional period. So it's got to pass the E.U. It's got to pass the Northern Ireland DUP. It's got to pass the

Irish and it's got to pass the British. I'm making it sound very easily. But if they don't, then at the Summit in Brussels, where you are, what will

happen?

HERSZENHORN: Well, if they don't have a deal at that point, and it may be that they're close to a deal, but they still need a delay, because this is

technically a very difficult thing to do. But by law in the U.K., Boris Johnson is required, if he doesn't have a deal by the time of this Summit

to come forward and ask for an extension.

Now that can be complicated for many reasons, not the least of which he promised Brexit, October 31st, do or die. And inevitably, if it hasn't

happened on November 1st, some of his opponents will say, hey, man, you're still alive. What happened? You must have lied to us.

QUEST: All right. But going back to after the Summit. Let's say they don't get a deal. Is it likely that they just all go home on Friday,

having no deal and waiting to see what happens under the Benn Act on Saturday? Or is it likely they will come up with -- you know, actually at

the Summit offer the Prime Minister some form of technical extension, dressing it up, however nakedly with a fig leaf, that there is something

worth talking about.

HERSZENHORN: Well, Richard, at POLITICO, what we are hearing and we're of course talking to people about this not just in Brussels but also in Paris

and Berlin and other key European capitals is that there will be serious pressure, especially from the French President Emmanuel Macron to show that

there is a real reason for a delay if another extension is granted -- something substantive.

That to his mind means either a British National Election or a second referendum. You heard Boris Johnson already saying that that would be

disastrous. He doesn't like the idea of a second referendum. He may have no choice but to go into a National Election.

Certainly, there are some folks in the E.U. who see them as having nothing to lose from another election taking place. Perhaps a government that's

more friendly comes into power.

In any event, I don't think there's any way for us to know where they'll be at the end of that Summit. If there's no deal. They will be waiting to

see does Boris Johnson come forward with an extension? How long of an extension will he request? If it's under the Benn Act, it is put forward

January 30th as a date. The E.U. absolutely does not have to agree with that date. They could push it out further, even as far as the end of the

envisioned transition period. That's December 31st of 2020.

We really just don't know, and of course, there will be some back and forth. How long should an extension be? Back six months ago, it was

Macron pushing for a short extension saying there had to be pressure on. He was almost alone in that. He succeeded and we see how they're up

against this crunch again, almost at Halloween.

QUEST: My bet with you is though, whatever does happen, it is going to be a very late night and you and I will be drinking coffee in that dreadful

room until the small hours of the morning. If not, having -- I'll buy you breakfast. If we're still going by then, I'll buy you breakfast.

HERSZENHORN: Then, I need to see you.

QUEST: Good to see you. Thank you. To the markets, U.S. market is a flat day. The Dow has more or less unchanged. There's all sorts of reasons

why. I can give you 1,001 reason today, not the least of which is the bond market is closed. So it's a quiet-ish day.

But I think if you look at trade, investors as a doubting last week's announcement that a limited trade deal has been done. Reports that China

wants more talks before it will sign off.

The President says without offering any evidence that China has already begun buying more agriculture, as it has agreed to do so. China hasn't

confirmed that.

Meanwhile, the U.S. Treasury Secretary Steve Mnuchin said if China doesn't sign the deal, Washington could still increase tariffs as planned in

December.

The way he puts it, the two sides have reached an agreement. It's merely just a question of dotting I's crossing T's and putting it to bed.

(BEGIN VIDEO CLIP)

STEVE MNUCHIN, U.S. TREASURY SECRETARY: There is a phase one deal. We have an agreement in principle, this is like when you buy a building,

you've reached an agreement to buy a building and now you've got to negotiate the contract.

There's execution work to be done on the document, but this document is substantially done. We've made a lot of progress and our expectation is

this will be concluded and signed by Chile.

(END VIDEO CLIP)

QUEST: Now, in China the one word not being used is deal. The editor of the state-run newspaper says there is strong will, now what does that mean?

Is there any difference? Well, the trade discussions in the state media are confining themselves to progress and results. And there's like Carla

Hills who are used to looking at this sort of stuff say that that is significant that the word deal is not being used.

[15:10:22]

QUEST: William Smead is the CEO of Smead Capital. He joins me now. Good to see you, sir. And thank you for joining. The market -- the market

doesn't know whether it expects a deal or not. It really doesn't.

WILLIAM SMEAD, CEO, SMEAD CAPITAL MANAGEMENT: No, that's right. But, you know, a lot of people think that the market is there to tell you something,

or we're supposed to read tea leaves provided by the market.

In the United States stock market, the most important facts are that the last 10 years, economic growth was relatively anemic, especially coming off

a deep recession and the evidence is not there yet that the underlying economy led by the aging of the largest demographic group, millennials will

take over from the technology wizards who have provided all the excitement in the stock market the last 10 years.

QUEST: But you are of the view that this demographic shift slow as it will be because it happens just bit by bit by bit by bit, will eventually create

a fundamental difference in spending patterns that will change the landscape.

SMEAD: Well, there's millions of people turning 30 every year, it's not bit by bit. It's a huge group of people that congregated in the coastal

cities when they were single for high paying jobs.

And now they're getting married and having children and what everyone doesn't realize is whether it was the E.U. or whether it was the Fed in the

United States, we just created a huge amount of liquidity, massive trillions of dollars of liquidity, but the velocity of money declined on a

steep slope.

So in other words, the money wasn't being used. It's like a game of Monopoly. It's the bank that has got loads of money in it, but if you

never use it, it doesn't do anything.

So therefore, when these 90 million millennials, the largest adult population group buy houses and vans and live their life, the demand for

money will cause the multiplier effect as we learned in macroeconomics to explode. And we are very possibly in that transition right now.

You're starting to see it in home sales, you're starting to see it -- it's almost like these -- this last leg of lower interest rates kind of kicked

things into gear.

QUEST: So this -- the next moves that will be -- that will take place. Most people seem to think we might get one more notch down on interest

rates, but there are those who sort of believe of course, that there's no need to because, you know, banks aren't lending the money they've already

got even though bank reserves are down.

SMEAD: Yes, well, the banks are way over capitalized. So that's from the CCAR, right? The restrictions the Fed put on them. So what's going to

happen is whatever profit they make in a year is not needed by the bank. So it's going to go to two places, buying back stock and raising dividends.

And historically, the large money center banks paid 50 percent of their profits out in dividends. And for example, Bank of America is way below

that, so that just means dividend growth at high levels for as far as the eyes can see.

And I can tell you, I went to a play last night in London and greedy bankers are still being vilified in entertainment and in pulpits around the

world.

QUEST: You feel at home here, don't you? It's raining. You're from Seattle.

SMEAD: I do feel at home.

QUEST: We've got plenty of rain for you.

SMEAD: Yes, plenty of it.

QUEST: They'll be plenty more when you get home. Now, good to see you, sir.

SMEAD: Thank you for having us.

QUEST: Thank you very much.

SMEAD: Yes.

QUEST: As we continue tonight, Donald Trump tries to confront the growing crisis on the Turkey-Syria border. The U.S. Congress is forging ahead with

a sanctions bill.

Reactions to Turkey's offensive from Washington to the Middle East in just a moment.

(COMMERCIAL BREAK)

[15:16:51]

QUEST: A leading Republican senator says he is in agreement with the U.S. House Speaker Nancy Pelosi on potential sanctions for Turkey. Lindsey

Graham just tweeted, "I spoke to Speaker Pelosi regarding congressional action on Turkey's incursion into Syria. The Speaker support bipartisan

sanctions against Turkey's outrages in Syria."

And the Speaker tweeted, "We must have a stronger sanctions package than what the White House is suggesting."

President Trump and Congress are sparring about how to sanction Turkey in its advance into Northern Syria, which leads to ISIS fighters escaping from

Kurdish-run prisons.

Sarah Westwood is standing by on Capitol Hill. Is there any? Let me start with the tough one, Sarah, is there any realization that the administration

has made the most awful mistake in what it did? And it's now up to Congress to put it right?

SARAH WESTWOOD, CNN WHITE HOUSE REPORTER: Well, certainly, Richard, the White House is starting to recalibrate the way that they're talking about

this, the way that they're responding to what Turkey has been doing. By all accounts, sanctions was not part of the initial conversation that

President Trump had with Turkish President Erdogan.

But now that Congress is moving this bill forward, and it's picking up so much momentum that White House aides fear it could pass with a veto proof

majority. We are seeing the White House start to consider a more robust response to Turkey and that includes potential sanctions.

President Trump met today with top administration officials, including Secretary of State Mike Pompeo, his National Security adviser, his Treasury

Secretary, but that is all happening as lawmakers are advancing their own package of sanctions that could potentially go much further than what the

White House is prepared to do, initially.

So the White House and President Trump potentially being set up, being put in a position right now to be embarrassed by a rebuke that could be coming

from Senate Republicans, even some that are very close with President Trump.

QUEST: But at the moment, let's get -- the reality is if Congress passes something, what would it be? I mean, what sort of legislation would it be

that binds the President's hands, and as you say, would have to be veto proof because it almost certainly wield his pen.

WESTWOOD: Well, the most likely vehicle for sanctions, Richard is the Graham-Van Hollen Bill that Senator Lindsey Graham and Senator Chris Van

Hollen, a Democrat, a bipartisan proposal put forward last week that would impose sanctions on top Turkish officials, including President Erdogan of

Turkey, including many officials under him. It would bar transactions with the Turkish defense sector, the Turkish energy sector.

So that is a very, very harsh sanctions package that might go further than what President Trump and his aides are considering right now. We don't

know exactly what is on the table the President was presented with options today.

But what could happen is the President could impose some sanctions that simply don't go far enough in the eyes of many of his critics here on

Capitol Hill, and Congress could push him even further, that could undermine his strategy in Syria -- Richard.

[15:20:00]

QUEST: Sarah, we're about to have from Nick Paton Walsh who is there. Before I do, I just want to get a feeling from you. I mean, obviously

Members of Congress are steeped in this.

But in terms of the American agenda, do Americans care, do you think?

WESTWOOD: Well, certainly there is a lot for Americans to care about with regards to the Trump administration right now, but the impression that the

Americans have abandoned an ally that has fought alongside the U.S. against terrorism, that is something that is certainly resonating, even with

Republicans who have not criticized the President on a number of fronts, even some of his staunchest allies have come out to hit him about the way

he has handled the situation with Turkey.

QUEST: Good to have you with us, Sarah, as always. Thank you for putting in the perspective for us. Nick Paton Walsh, he is just back from Syria.

He's at Erbil now in Northern Iraq, where he joins me. How bad was the situation where you were?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, when we left things were extraordinarily fast in how they're changing.

It's almost hard to imagine how the vacuum created by the U.S. withdrawal could be anything other than deliberately designed except that it appears

to have happened completely by mistake because of Donald Trump's phone call on Sunday with President Erdogan sparking the Turkish moves, sparking the

overstepping by the Turkish, the use of these quite brutal Syrian rebels.

And then the regime now this morning, it seems stepping in incredibly fast into areas where the Syrian Kurds feel abandoned by the United States. And

that's a lot of the south and increasingly close to the border, too. And the town we were in called Tal Tamr just yesterday, the regime came in this

morning, startling to see the confidence they have and quite how they stepped into the vacuum so quickly -- Richard.

QUEST: Now, just to be clear, we're talking here -- when you say the regime, you mean?

PATON WALSH: Damascus. The Damascus government. So there are three factors at play here, the Syrian Kurds who America essentially walked out

on, the Turkish military who are walking with these quite extreme Syrian rebels trying to take areas back in the north, and then a Damascus

government to the south who thought they were out of this fight, but actually realized the Syrian Kurds need their help, and are racing to the

rescue with Russian airplanes in the sky protecting them.

QUEST: I'm a bit lost in all of this, but wasn't a lot of this territory where the regime was pushed out from some years ago as part of the early

parts of the Syrian Civil War?

PATON WALSH: Yes, so if you wind the clock back, yes. It was all homogenously controlled by the regime. The rebellion started, the regime

were pushed out, the regime were weak. The regime were kind of getting to a precarious stage by 2013.

But the problem was the north and the Sunni rebellion there didn't manage to get its hands on good governance. And that began to allow extremists in

the midst. The extremists were occasionally better at fighting some said because they're quite more happy to die. And that led to chaos,

corruption. Frankly, many says something worse than the regime offered.

And that then spawned eventually ISIS, partly because of the brutality of the regime bombing against some of the civilian areas that essentially led

to ISIS setting up their Caliphate and getting support -- a lot of it -- from across the border in Iraq.

QUEST: Nick, finally you have covered -- thank you for the primer. You have covered this in detail since the early days of all of the

machinations. What do you make of it? Give me an assessment.

PATON WALSH: We just had this extraordinarily unnecessary prolonging of the end of the Syrian Civil War. We began to look in the last 18 months

like we were seeing things slowing down, solutions that were not comfortable or pleasant, beginning to take shape. And the American

presence in the Syrian Kurdish areas was just stopping some of these inevitable things that have happened in the last week from occurring.

These didn't have to happen because the Americans were basically saying as long as we're here, calm down. There were a thousand troops doing an awful

lot of good in terms of U.S. foreign policy goals, slowing Iran's issues here, keeping the Russians on the back further, keeping the regime away

from here protecting allies in the fight against ISIS.

And most importantly, in all of this, stopping ISIS from regrouping. So we have a situation now where yes, Turkey is getting what it always wanted.

The regime are getting back the turf they wanted. Russia gets to look big on the world stage as a reliable ally.

The United States looks very bad indeed, very impulsive. We've known that about this current White House occupant for quite some time.

But the big outstanding problem here as it has been four years of hard earned fight against ISIS -- 11,000 dead Syrian Kurds as a result, but ISIS

now are looking at a new lease of life, essentially one U.S. official said to me, there's a hundred thousand potential jihadists who would go back to

their ranks anytime soon -- Richard.

QUEST: Nick Paton Walsh, thank you and before we move on, it is just worth reminding people of course, that whilst you and I talk business every

night, people like Nick Paton Walsh are covering this story meat and veggies day in day out.

[15:25:06]

QUEST: So when he talks in those sort of terms, it is worth remembering, he has been covering this since the beginning of the crisis and take his

words and assessments seriously.

Now while all this plays out, Saudi Arabians and Russia getting closer. Diplomatically in oil, of course is in there.

Vladimir Putin visited Saudi today, for the first time in more than a decade. The Saudi Energy Minister told CNN's Matthew Chance cooperation is

deepening and it wasn't just Russia and the Kingdom was hoping to develop closer ties.

(BEGIN VIDEO CLIP)

ABDULAZIZ BIN SALMAN AL SAUD, SAUDI ENERGY MINISTER: We will try to see how can we image our vision of 2030 with the vision that the Russian

government has on this strategic perspective, with a view of course to expand and enlarge and enhance this diversity.

This diversity of cooperation and in deepening it, but with regard to some of these, they are not just happening with Russia, it's happening with

China, with Iran, with Korea, with many of European -- prominent European countries and of course, U.S.

The idea of having a single strategic partner has gone forever. I think we do ourselves service, the country a service and the new generation,

forthcoming generation a service if we can extend and expand and diversify our strategic partnership.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: You can't always depend on those strategic partners if you've just got one of them. It's

best to have a backup.

AL SAUD: We have good strategic partners and they'll still remain as strategic partners and continue, hopefully to be strategic partners. But

again, a good old British lesson, hedging is not a bad idea.

(END VIDEO CLIP)

QUEST: Even if that politics are in turmoil, the business case for London and New York remains strong.

That's what executives are saying about their favorite places to invest. Why should it be London and New York? NY-LON. What's the attraction of

these two great cities at the time of great turmoil? We'll talk about it after the break.

(COMMERCIAL BREAK)

[15:30:00]

RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, a lot more QUEST MEANS BUSINESS in a moment. And South Africa's president takes

aim at his predecessor over the cost of corruption. We'll be live in Johannesburg. And the youngest winner in the history of the Nobel Economic

Prize says it's time for more women and more minorities in the profession. Well, how realistic is that? We'll talk about it. This is CNN, and on this

network, the facts always come first.

Syrian state media is reporting that Syrian troops have entered more towns in the north of the country. That's after the Kurdish administration

reached a deal with Damascus for military assistance. The Kurds also say they've reached a memorandum of understanding with Russia. All this

alliance shake-up is in response to Turkey's military offensive that's under way.

Police clashed with protesters at Barcelona airport after several Catalan independence leaders were jailed on Monday. Thousands of demonstrators

were met with a heavy police presence. Roads and trains to the airport have been blocked. The protests continue and this is the scene in

Barcelona tonight.

It all comes after nine people were sentenced for their part in a failed attempt by Catalonia to split from Spain in 2017. K-pop star has been

found dead at her home. She was found by her manager on Monday afternoon. Police says it seems she took her own life, though investigations continue.

She was a child actor before starting her music career 10 years ago. She was 25 years old.

OK, in the United States, you have an impeachment scandal in Washington and the administration seems to be at war with the Fed. In Britain, you have

Brexit turmoil. There are so many problems, economic, political. Britain and the United States yet are still the world's most popular places to

invest, according to the new study and the consultancy EY.

In the U.S. media entertainment are attracting great levels of investment, in the U.K., it's life-sciences, businesses and it's all in demand. It

also tells us most business leaders say they're not expecting a significant down-turn in the near future. We need to get to grips with this with Steve

Krouskos is the global Vice Chair of EY.

Hang on, they're not expecting a great -- Davos at the beginning of the year, everyone was expecting Armageddon.

STEVE KROUSKOS, GLOBAL VICE CHAIR, EY: Armageddon, how? I don't know. I don't think so. Look, if -- the U.K. and the U.S. have always been an

attractive investment destinations. So, it really did not surprise me to see the U.K. and the U.S. one and two. The reality is -- and you know, you

travel many places around the world, so do I.

There aren't many places or many countries where you don't have some unrest or some confusion or some uncertainty, right, in that government, in that

place? The U.S. and the U.K. have great businesses, great IP, English is a common language, rule of law. All those things, really, you know --

QUEST: Right, except --

KROUSKOS: Form a great --

QUEST: We've been told, of course that, let's take in the U.K., of course, there's the Brexit phenomenon that companies' headquarters are moving away,

whether it's Honda's production, whether it's JPMorgan moving jobs to Paris, wherever it might be. And in the U.S., we've told that people are

shunning it because they don't like the administration's policies.

KROUSKOS: Well, you know, look, Brexit certainly is a factor. And could you see a bit of M&A activity that slows down a few weeks before, a few

weeks after, you know, a hard -- if there were to be a hard Brexit. But I don't think that's a long-term determining factor in terms of, you know,

there are a lot of value in U.K. companies. And while there are some moving out, you're seeing growth as well.

QUEST: So, this idea that the U.S., for example, turn off the lights and all go home, you know, all the money is going to China. You're saying

that's not true.

KROUSKOS: All the money going to China? No, I don't think so. The U.S. --

QUEST: Or was.

KROUSKOS: Well, for a period of time, sure, there was a lot of investment in China. But the U.S. invests mainly -- U.S. companies are investing in

the U.S., right? Yes, there's a fair amount of outbound activity as well. Same is true with the U.K. What you're not seeing as much is investment,

you know, into -- from China into the U.S. per se, right? Because of some of the regulations that have prohibited that.

QUEST: And how is the U.K. doing pari passu with other European centers which have taken Brexit as being as an opportunity? And sure, you know,

certain euro-dollar stuff and bonds and all the euro-dollar trading and swaps, the ECB wants out of London and wants within its jurisdiction

overseas. So, there will be a shift, but is it as pronounced as we think?

KROUSKOS: I don't think it's pronounced as we think. I mean, we see some examples in the headlines, but at the same time, I mean, I don't think you

see the masses moving.

[15:35:00]

You still see much activity here. London is still a preferred destination --

QUEST: Really?

KROUSKOS: For a lot of reasons. It's a great city.

QUEST: Tell me --

KROUSKOS: You enjoy being in London.

QUEST: I do, I do. But you know, I've got a home here, yes, I don't sort of -- got roots here. But what are the reasons why people want to be here?

KROUSKOS: The quality of talent, right? And the quality of people that you can recruit here. The level of innovation, it often gets under played.

There's a lot of innovation, a lot of technology development happening in the U.K. Again, I think the English language and the commonality of

English language is a big factor.

Time zones, London is a convenient place to do business around the world, right? Whether you're in China or whether it's in the U.S., like all those

factors contribute to make London very attractive and continue to be attractive.

QUEST: If we take M&A generally now, where -- what are the parts of the world that are causing worry, where either through lack of regulation or

through corruption, lack of transparency, they're not seeing the level that they should?

KROUSKOS: You know, I get asked that question all the time. Where are you seeing shortfalls? If I'm honest, we're seeing strength across all of the

markets. I mean, the U.K., for example, we're actually trading at a high level as we've ever traded. Our growth in the U.K. quarter-to-quarter,

first quarter, first quarter was as strong as it's ever been.

As I look in the markets around the world, I struggle to find weakness. China, for example, plenty of domestic activity happening. You may not

think as much about the inbound and outbound right now. Australia, plenty of activity being spurred by government and plenty of domestic activity and

some again outbound activity.

You go around Europe, been a slight decline in Germany, but we're starting to see that come back up as well. I really -- even South America, where

some people don't believe there's as much happening, a lot of activity.

QUEST: South Africa.

KROUSKOS: South Africa --

QUEST: We'll be talking about next. It's an entire range of different issues.

KROUSKOS: OK, so South Africa is probably not experiencing growth of some of the others, but from a -- it's coming from a pretty small base as well.

QUEST: Good to see you, sir, really happy --

KROUSKOS: Good to see you, Richard, thank you very much --

QUEST: Thank you so much indeed. And we're talking about South Africa, and if you want to understand some of the reasons and the problems --

well,$34 billion, that's what the South African president estimates how much his country lost to corruption under his predecessor Jacob Zuma.

Cyril Ramaphosa who took over last year is promising reforms.

He says we'll revive the economy, and he says he'll bring to justice those responsible for the enormous graft issues. David McKenzie is our

correspondent in Johannesburg. The Ramaphosa comments came at an FT conference, but what was interesting about it is, he was the one raising

the level which now looks as been the cost of state capture.

DAVID MCKENZIE, CNN CORRESPONDENT: Well, that's right. I mean, Richard, this number is certainly eye opening, $33 billion. In fact, some analysts

say it's even double that, around $60 billion that was lost due to both the financial crisis and South Africa's response to that.

But more importantly in the case of this, the graft and alleged graft that happened during Cyril Ramaphosa's predecessor Jacob Zuma's tenure almost 10

years here in South Africa.

What's important here politically is clearly, Ramaphosa is trying to distance himself further from his predecessor at this Africa Summit in

London, and trying to assuage the fears of investors who think that he hasn't necessarily moved quickly enough, Richard, to try and bring in the

crucial reforms to help counteract some of that lost time and lost progress that people saw here in South Africa during that period, Richard.

QUEST: Does anybody sort of find it a little bit weird to be talking about how much money has been lost when many of the people doing the talking were

part of those administrations? And in some ways, for many years, those like Ramaphosa obstructed those trying to get rid of Zuma.

MCKENZIE: Well, certainly, Ramaphosa was deputy president during Zuma's second term. So, you're absolutely right. There's been sustained

criticism that because of his position, he didn't do enough to get rid of Jacob Zuma during that period, even if he is now trumpeting the cost that

Zuma's presidency had. In the coming days, they say that they're going to release some concrete steps to try and fix or kick-start this marabou

economy that South Africa is dealing with.

In particular, the state power utility ESCOM has saddled this country with an extraordinary amount of debt. Moody's is the only rated agency that

hasn't reduced South Africa to junk status. Now, Ramaphosa is talking a big game on the international stage, Richard, to try and bring investors

in, but I think they need to see these concrete steps on how they're going to fix this economy given, A, that they had this period of --

QUEST: Got it --

[15:40:00]

MCKENZIE: Sluggish growth due to in part this graft, and also Ramaphosa is seen as someone tainted by that previous graft.

QUEST: David, thank you for staying up late tonight. Much appreciated, thank you. As we continue tonight, Facebook's Libra has got some major

stumbling blocks. The key packers are now backing out, the regulators say they're going to take a much closer interest than at first thought. But we

need to discuss whether or not Facebook is going to -- can, we'll continue in a moment.

(COMMERCIAL BREAK)

QUEST: Some breaking news to CNN. England's international football match in Bulgaria has been halted twice during the first half after the England

players and manager reported racist abuse being shouted by the home fans. Don Riddell is at the CNN center. Who's been shouting what?

DON RIDDELL, CNN ANCHOR, WORLD SPORTS: Richard, I can't tell you exactly what is being said, but it has been enough for the referee to take steps

one and two of the three-step protocol within European football. And this game is now hanging by a thread. We can tell you that on the face of it,

England are 4-0 up at halftime, the game is at halftime.

The players are currently in the dressing room. It's been reported locally, that the Bulgarian captain during this halftime interval has

actually gone into sections of the crowd to try and remonstrate with the supporters, telling them that this game is now hanging by a thread. As you

mentioned, Richard, the game was stopped twice during the first half.

The first after England players and their manager had reported that racist abuse was being hurled at some of their team, and that led to a stadium

announcement indicating to the supporters that if it continued, then the game would be abandoned. Shortly after that, the game was halted for

around five minutes towards the end of the first half.

And again, this game seemed to be in peril. You can see the England players standing there, talking amongst themselves during the break. And

you can also see a group of supporters leaving the stand, a group of Bulgarian supporters. We don't know exactly why they were leaving, were

they asked to leave? Were they being led out? But clearly, a large number of Bulgarian supporters leaving the stadium.

QUEST: Don --

RIDDELL: It must be said, Richard, that this stadium is only half full tonight for a couple of reasons, but one of which is that this team has a

history of racist abuse --

QUEST: Right --

RIDDELL: From their supporters, and that's why the stadium is only half open.

QUEST: Don, we'll be talking to Darren in just a moment.

[15:45:00]

But before we do, what do the rules say about this? I mean, does there come a point where they abandon it or does the game just get awarded to the non-

offending party, whatever the score was?

RIDDELL: Well, I'll be interested to hear what Darren Lewis has to say about this. Because it's never really been tested. The problem with

racism in European football is that whenever teams are sanctioned for it, it tends to --

QUEST: Right --

RIDDELL: Be a slap on the wrist. It tends to be a fine, a paltry fine of $15,000, $20,000, $25,000, and that's it. Sure, there are stadium

closures, teams have to play perhaps in neutral venues afterwards. But in terms of what UEFA would decide if this game had to be abandoned, I'm not

sure it's entirely clear. It should be a win for England and maybe it will be the case.

But we'll have to see. But --

QUEST: Right --

RIDDELL: It is very unusual to see this protocol actually being applied and the game in such jeopardy as this one is right now.

QUEST: Don, thank you. As I said, Darren Lewis is a football writer for "The Mirror", good to see you.

DARREN LEWIS, FOOTBALL WRITER, THE MIRROR: Good to see you too.

QUEST: And you have covered this extensively --

LEWIS: Indeed --

QUEST: Indeed on "WORLD SPORTS". So, what do you make of tonight? I mean, obviously they were reprehensible behavior of the Bulgarian fans. We

don't know quite what they're shouting, but I'm guessing it's not very pleasant.

LEWIS: Well, they were making monkey chants. And at around about 28 minutes into the game, Tyrone Mings; he's a defender who plays for the

Premier League side Aston Villa, he turned to the England coach Gareth Southgate, he says, did you hear that? He's asking the England coach, look,

can you do something about this?

Now, there had been some talk before tonight from the England players that if there had been racist abuse, they would be prepared to leave the field

of play. You know, Bulgarians --

(CLEARS THROAT)

The Bulgarians reacted quite -- they were very angry about this, Richard, and they said, well, how dare you criticize us? How dare you --

QUEST: The Bulgarian players?

LEWIS: The Bulgarian head coach basically said, we have a good record. You have more problems in England than we do here.

QUEST: So, let's just be clear. From what you know, and you've obviously been speaking to people who are well across what happened, was there the

offensive racist noises made?

LEWIS: Yes.

QUEST: So, that's not in doubt.

LEWIS: That is not in doubt tonight.

QUEST: And it's not in doubt where the -- from which side of the stadium that came from?

LEWIS: No, not in doubt at all.

QUEST: So, England is 4-0 up at halftime. This carries on, what do you do here? Do you continue to play or do you make the example and you abandon

the match?

LEWIS: Well, I would ask all of your viewers around the world, what would they do if they were in this situation? What would you do if you were in a

situation, you heard men being abused on the basis of the color of their skin in a high-profile match being watched by fans around the world. What

should you do?

QUEST: But is it --

LEWIS: Does the sport, Richard, take precedent over basic humanity? Because we should not be at this --

QUEST: Right --

LEWIS: Stage --

QUEST: But abandoning --

LEWIS: Where it's happening --

QUEST: But abandoning the game only works if there is a corollary, i.e. a very heavy punishment and or you forfeit the game.

LEWIS: That is not for the players to decide. The players' duty is to protect themselves as individuals, because we cannot have sport being

prioritized over the wellbeing and over the kind of thing that we thought we had driven out of --

QUEST: Yes --

LEWIS: Society. We cannot prioritize that, Richard, it makes me angry as a black man that there is even a debate about this because we wouldn't

tolerate sexist abuse, we would not tolerate homophobic abuse. Why do racists around the world in the sport of football time and again get the

opportunity to abuse young black men?

QUEST: Answer your own question.

LEWIS: Well, because the authorities in football are weak. They try to impose -- they either try to impose minuscule fines or what they do is they

kick it into the long grass so that when everyone's forgotten about it, they can impose a punishment that doesn't really have an impact on the

country at fault. It was well, peer pressure.

QUEST: Thank you very much, indeed. I appreciate it, thank you. Now, we'll turn to our -- attention to our normal digest of economics. And

perhaps another controversial area concerning it, of course. Esther Duflo has won a prize -- a Nobel Prize in Economics. Now, that's not

particularly controversial, except she's only the second female economist to have been honored by the Nobel jury. And she's calling out the problem

in her profession in just a moment.

(COMMERCIAL BREAK)

[15:50:00]

QUEST: Esther Duflo is the youngest person ever to win the Nobel Prize in Economics, part of three honored today for their work on alleviating

poverty. And there you see the other two who were honored today. However, there's one other thing about Duflo. Besides being the youngest, she's

only the second woman to ever win the prize.

And now she wants to inspire a generation of women to follow in her footsteps. She's a professor at MIT. Joining me is Rana to discuss this.

Look, Rana, first of all, you know, it's congratulations obviously. She's the youngest. But this business of the second woman --

RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: Yes --

QUEST: Now, why do women find it harder in the field of economics, do you think?

FOROOHAR: Well, there's not a very big supply chain, a pipeline of women talent. And you know, the thing about the Nobel that's very interesting is

it's voted on by a jury of your peers. When your peers are all men, I mean, there's sort of --

QUEST: Yes --

FOROOHAR: A selection --

QUEST: Right --

FOROOHAR: Bias right there. But you know, why in a bigger sense are there not more people in the field? I think that economics has some of the same

problems that engineering does, that computer science does, where there simply aren't a lot of role models. I have also heard just informally from

folks that I talk to, high-level sources, a lot of problems in the field, a lot of sexism, a lot of discrimination.

I mean, this is something that high-profile women like Janet Yellen who used to be the Federal Reserve Chair have called out. Christine Lagarde --

QUEST: Right --

FOROOHAR: I mean, a lot of people talk about this.

QUEST: And let's listen to what Esther Duflo said because she says it's not only women who are left out.

(BEGIN VIDEO CLIP)

ESTHER DUFLO, NOBEL PRIZE WINNER IN ECONOMICS: The reasons why there are so few women who get the Nobel Prize or other prizes is not because the

people who give prizes are not -- are discriminating against women. It's because the entire funnel is just not big enough. And that's not just for

women, I should say, it's also for minorities.

There are not enough African-Americans in the economic profession by any stretch of the imagination. In fact, it makes women look positively

numerous. And that has to change.

(END VIDEO CLIP)

QUEST: It's extraordinary, isn't it, Rana, this -- but she's right. It's not about the last bit of the chain. It's going -- you've got -- we've got

to trace this back all the way to kindergarten and school.

FOROOHAR: Absolutely. And I think in part, it's the way economics has been taught. It's the way economics has been done. I mean, one of the

things actually that's fascinating about Esther, not only is she a woman, but she's studying poverty, which is not something that economists have

done enough of.

[15:55:00]

They studied financial markets. They haven't done enough studying poverty. She's also gathering her own data. She does her economics in a very

different way. She comes out of the Ivory Tower, all of those things need to become more part of the profession. And I think they are. I actually

think we're at a tipping point now where people are much more interested in the interaction between economics and psychology or economics and

development.

It's not so much about building these mathematical models that there's no real world data to support.

QUEST: What needs to happen in the sense of -- I mean, you know, you're not going to get mentors. You're not --

FOROOHAR: Yes --

QUEST: Going to get role models overnight. And there's frankly --

FOROOHAR: Yes --

QUEST: Only one Janet Yellen and one Christine Lagarde.

FOROOHAR: True enough. Sadly in this field, change takes a lot of time because economists who become high-level policymakers and influential

people who win Nobels tend to come out of academic institutions. Academic institutions change --

QUEST: Yes --

FOROOHAR: Very slowly, much more slowly than say, media. I am seeing more people just, you know, in the offices of the financial times where I'm a

columnist. There are more women here now than there used to be. But there's still a long way to go. And it's a process though that I think

that you're going to see more people driving towards because the questions are so relevant. You know, how do you --

QUEST: Right --

FOROOHAR: Empower women that need to be in the workforce to create growth? How do you empower people at the lower part of the economic food chain?

These are the big questions in the profession. You're going to need --

QUEST: Right --

FOROOHAR: A more diverse group to answer them.

QUEST: Rana, good to have you with us as always, thank you.

FOROOHAR: Thank you.

QUEST: And we will take our profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment. I'll be honest, I was quite surprised that the NY was so bullish about the U.S. and the U.K. when it comes to M&A

activity. I want to be sure it's where all the banks are, it's where the media companies are. But even so, there are so many issues, Brexit, the

European politics, the slowing of the U.K. economy.

In the U.S., you have problems over what's perceived to be the Trump administration, and now the gridlock in Washington. I guess it just goes

to prove that something that looks on the surface when business leaders have to make crucial decisions, they tend to look at completely different

things, and most important, they look at the long-term.

They look at where they hope to be, not next year or the year, but 15 or 20 years down the road. Which is what we should be doing, you and I. And

that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope it is profitable.

(BELL RINGING)

Clap, the day is done, the bell is ringing.

END

END