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Quest Means Business
Egyptian Tourism, Trade Take a Hit; Interview With Richard Branson
Aired February 03, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Tourism and trade take a hit, it is a billion dollar loss to the Egyptian economy.
Richard Branson, on this program, says business leaders must speak out against dictatorships.
And a chief exec of Unilever, tonight, Egypt is a reminder, those left behind mustn't be left out.
I'm Richard Quest. I mean business.
Good evening.
Tonight, on QUEST MEANS BUSINESS our reporters from CNN are in Egypt and will bring you the very latest. Arwa Damon is in Cairo and will update us on the day of protests. Nic Robertson is in Alexandria, Egypt's second city, where there has been huge demonstrations, and planned to take place on Friday, in the next 24 hours.
We have more than that. We will listen to business leaders tonight. Richard Branson, who says business must give President Mubarak a clear statement of intent, it is time to go.
(BEGIN VIDEO CLIP)
RICHARD BRANSON, CEO, VIRGIN ATLANTIC: Business needs to stand up and be counted and, you know, start, actually start and you know trading with countries that are democracies and put our forces for good.
(END VIDEO CLIP)
QUEST: Sir Richard Branson. Unilever's executive will also say how it is affecting his business on the program. We need to update you there, with the actual events of the day.
Egypt's government has asked protestors to go home and invited the Muslim Brotherhood to be part of the dialogue on the country's future. The uprising shows little signs of slowing and the Brotherhood wasted no time in rejecting the call to talks. In a plea to the nation the newly appointed Vice President Omar Suleiman spoke on state television a few hours ago. He said the government would meet with the Muslim Brotherhood, which is an illegal organization, currently, under Egyptian law. They were one of the groups calling for major protests to begin last week.
Suleiman pleaded with demonstrators to let the state do what it needs to do. It came after another day of violence between rival protestors in Tahrir Square, in the heart of the capitol. At least five people were killed on the streets of Cairo. Hundreds more were hurt. At one point, this morning, 200 people were injured in the space of just one hour.
Now, the crowds in the square were smaller than in previous days. Journalists from various organizations say they have either been arrested, beaten, or intimidated. Amnesty International and Human Rights Watch also says its aid workers have been taken into custody.
On the ground now, CNN's Arwa Damon, who joins me on the line from Cairo.
Arwa, we need to take this point by point. The demonstrations were more aggressive and more violent, but they were smaller. So, if you factor in those two factors, where does that leave us tonight?
ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, where it leaves us right now is pretty much the anti-Mubarak demonstrators have managed to push the pro-Mubarak demonstrators out of Tahrir Square. They have largely taken over the roads leading in and out of the square, as well. And that has resulted in a calm-for now-that we have not heard here for the last two nights; ever since those demonstrations really turned incredibly violent. This has really been a (AUDIO GAP) period that has not just shocked the international community, but shocked Egyptians as well.
Many of them hardly recognizing their country, their capitol, what it has become; what we saw a lot of today, were pitched rock-throwing battles between the two sides, with eventually, as I was saying the anti-Mubarak demonstrators managing to take hold of the square and the areas around it, right now. The military, as usual, staying well on the sidelines.
QUEST: OK?
DAMON: Today, also, was a day of extreme violence against various media organizations. You were mentioned there were a number of our colleagues rounded up and beaten up, Richard.
QUEST: There is that video, doing the rounds at the moment, since you will be well aware of, of the van barreling through the square and out the other side, and taking with it various pedestrians in a most brutal fashion, Arwa. Do we know the provenance of that? Do we know what happened and how that came about?
DAMON: We do not know the exact details of exactly what happened. But we have, of course, seen the video and been just as horrified as everyone else has. Before we saw the video I, in fact, received a message from a woman whom I had interviewed yesterday. She is a human rights activist and she has a 19-year-old son. Yesterday she was making the point that she felt that her generations was responsible for what was happening here. Because, she said, that they let the youth down. They let the sons down by being willing to compromise the good governance for stability.
QUEST: Right.
DAMON: But she, in her message to me, said that this is just an example of another bloody event after the prime minister speaking, promising that no violence would take place. This type of a video emerges. So, she is saying that this is a true indication of what the regime's intent is and in clear contradiction to their words. By that token, the prime minister did say that the events, the violence, taking place yesterday would be investigated.
QUEST: OK?
DAMON: But, Richard, at the very same time that he was speaking we were seeing the street fights taking place and we were seeing the military doing very little to push these two sides apart.
QUEST: Finally, Arwa, do you think, from your vantage point, is it likely-and I realize the difficulty in answering this-but is it likely that this intensity of violence so shocks the moderate protestors on both side, that effectively the protests do dwindle out, giving Mubarak the breathing space that he is seeking?
DAMON: Well, Richard, it is interesting that you ask about that, because I was posing to people that very same question. And in fact, based on those individuals that I was speaking to, it has had quite the opposite effect. There were those who were supporting the demonstrators, the anti- Mubarak demonstrators, who had gone down to the demonstration site themselves. When the president finally spoke, making those concessions that he would not be seeking re-election in September, they said OK, that would be acceptable. They, at that point, felt that the demonstrators should Tahrir Square.
But when the pro-Mubarak demonstrators showed up and that violence broke out. They then said that the anti-Mubarak demonstrators should stick it out and that they would be standing right with them. They now, do believe, those people who I spoke to, given the violence that took place, believe that was deliberately orchestrated by Mubarak, as a last-ditch effort for him to be able to justify staying in power.
What has happened is the creation of a very serious trust deficits between the population, and between the government right now, Richard
QUEST: Arwa Damon, who is in Cairo for us tonight. Many thanks, Arwa.
Now, a tense but much calmer situation in Egypt's second largest city, where anti-government protestors in Alexandria have staged peaceful demonstrations on Thursday. CNN's Senior International Correspondent Nic Robertson is there. HE sent us this dispatch a short time ago.
(BEGIN VIDEOTAPE)
NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: The pro-Mubarak groups were out today, they were in far smaller numbers than they were yesterday. Yesterday they were 50 to a couple of hundred in the several different demonstrations they had. Today they weren't holding placards, they didn't have banners. They were standing on street corners waiting for the anti-Mubarak demonstrators, of which there were several large demonstrations today, to go by. But what happened was the anti-Mubarak demonstrators kept themselves away from the area where the pro-Mubarak supporters were. So they kept themselves apart. And it was that sort of self-censoring, if you will, that stopped a large confrontation breaking out here.
The anti-Mubarak group, though, however, say they are planning huge demonstrations here for Friday. The city is very, very tense at the moment. Even people are not part of the demonstrations, you can see, arguing on street corners about what is right and what is wrong. The debate here is that, you know, the government has made some concessions, that should be enough. These demonstrations are damaging the country. The demonstrations should stop. And the middle ground is evaporating. And it really is becoming a very divided and incredibly tense city.
(END VIDEOTAPE)
QUEST: That was Nic Robertson in Alexandria.
The impact of the uprising on the Egyptian economy will be huge according to the Egyptian government. The newly appointed Vice President Omar Suleiman says the country has already lost $1 billion from tourism alone. Holiday makers have abandoned the country by-in droves. A million, he says, have gone home. In his address to the nation he asked the protestors to take the economic fall out into account.
(BEGIN VIDEO CLIP)
OMAR SULEIMAN, VICE PRESIDENT OF EGYPT: I hope that the young people will get his message, that the state is very serious, and there is no contradiction in its institutions. And that it is careful to fulfill the demands that they have requested. And that the continuation of these protests is a continuation of paralysis of the state and will result in more losses. And that private agendas will exploit this protest to terrorize the society. And unfortunately the economic losses on a daily basis, I can't count them, but they will be-they will have a very strong impact on the future.
UNIDENTIFIED MALE: Can you give me an assessment?
SULEIMAN: It is said the losses in all the government sectors, whether tourism, whether trade, customs, all government income, have all gone down more than a third. I would like to tell you that there is more than 1 million tourists who have left Egypt in nine days. Imagine that everyday 110 tourists left Egypt. So, a million tourists in nine days have left Egypt. So, calculate the level of damage. At least in the last nine days we have lost $1 billion, just from tourism. So continuing this is a destruction of the country and not a demand for reform.
(END VIDEO CLIP)
QUEST: That, of course, is the Egyptian vice president talking there, about the effect. Now, the spirit of civil disobedience has awakened in North Africa, across the Middle East. Yemen is one of the areas. Thousands of people there staged a day of rage, this morning. Even after the president said that neither he, nor his son, would stand for re- election.
They could be on the eve of new protests in Jordan, despite the fact King Abdullah sacked and appointed a new government. Demonstrators have been on the capitol streets in Amman. These are Wednesday's pictures. We are anticipating large-scale protests on Friday. King Abdullah sacked the government, appointed a new prime minister.
Algeria's president is only just preparing to lift a state of emergency. Some might well point out that that state of emergency has been in place for the best part of 20 odd years, so it is not exactly (INAUDIBLE) in that respect.
OK, let's talk more about the economic and business impacts. With me is "MARKETPLACE MIDDLE EAST" John Defterios.
John, let's begin with Egypt and then we'll widen it out to talk elsewhere.
JOHN DEFTERIOS, CNN ANCHOR, MARKETPLACE MIDDLE EAST: OK.
QUEST: So, Egypt first. We heard the vice president say that it costs-it's a billion in tourism, at least.
DEFTERIOS: Indeed. I think it is fair to say at this juncture, not just tourism is going to be hurt. But also FDI, and also the long-term plans for the economic growth for 2011. We are projecting growth to 5 to 5.5 percent. I just got off the phone with an investment banker down in Cairo, who is part of the protests. Who said he was going through a roller coaster of emotions. But when I asked him what happens to the economy in 2011? He thought it would be cut in half, probably about 2.5 percent growth for the year, not 5 percent growth.
QUEST: Look at these numbers. Tourism, $13 billion, remittances, OK, well remittances will carry on, FDI will be hit.
DEFTERIOS: Yes.
QUEST: Suez, will be-
DEFTERIOS: I call them the four big cash earners, tourism at $13 billion, you heard from the vice president, himself, that will be taken down. Remittances, fine. FDIs-
QUEST: Does it come back? Does it come back? You know, is there a bounce? Is there a very short bounce back? Or do you think it is gone for good?
DEFTERIOS: No, this is a very good point. It all depends on how it is managed over the next six months. And, again, a couple of those sources I spoke to today, said they are looking for the three Ws going forward. When the president goes? We don't know if that is going to be five or six months. What the military does to nudge him out? Do they let him finish his term? When will the parliament be dissolved after the elections that were considered fraudulent? And the final point, when do you repeal the emergency law? We heard what Algeria was saying. This has been in place, in Egypt, and this is not a big enthusiasm booster for foreign investors if they still see that in place.
So the concept is, if you handle this right, in the five or six months, to go back to your questions, you could have a bounce back because people feel like the other two legs of the three-legged stool of economic reforms, political reforms, and the rule of law, are in place for the future. Which is important.
QUEST: You stay where you are. While I come over here.
DEFTERIOS: I'm going to have to because I'm latched in.
QUEST: Well, Morocco, Algeria, Libya, Egypt, Jordan, Yemen; they have an entire range of countries, all of whom could be-well, they are being affected in some shape or form. Of these countries, we know Yemen, he is not standing again. Jordan has got certain difficulties. Egypt, we know about. Of these, which is the most disconcerting for you, in terms of what happens next?
DEFTERIOS: Well-
QUEST: From a business point of view?
DEFTERIOS: Well, from the standpoint here, with the exception of Libya, they are all growing around 4 to 4.5 percent, which is not bad. But it is not enough to deal with the very high unemployment rate, which is running in the range of 10 to 15 percent. Double amongst the youth. They all have another thing in common, very high inflation right now. That is not going to go away over night. Interesting enough, Richard, if for this region, they have all had a recent turnover. And I know it sounds silly to others around the world. They all changed office or power in 1999, 2000, with the exception of Mr. Gadhafi, who has been in power for 41 years.
QUEST: But do those countries that maintain semblances of market oriented, capitalistic economies, Egypt for example, Jordan, to a large extent.
DEFTERIOS: They are feeling the heat. They are feeling the heat.
QUEST: Morocco?
(CROSS TALK)
QUEST: They were all market economies, with high private enterprise contributions to the economy.
DEFTERIOS: Sure.
QUEST: Does that continue?
DEFTERIOS: Well, in fact, it does. But the challenge is they are not getting the growth fast enough to deal with the root causes. What happened in Egypt with the unemployment? And in Jordan, right now, they are facing the inflationary prices. They have all opened up their economies. Of course, Libya and Algeria haven't been forced to do so, because they have the oil and gas reserves. Let's not forget, 41 billion barrels, sitting under the ground in Libya, gives Mr. Qaddaffi a little bit more breathing room.
QUEST: John, many thanks, indeed.
DEFTERIOS: Yes.
QUEST: We'll talk more about that, many thanks.
John Defterios, there, from "MARKETPLACE MIDDLE EAST".
When we come back, in a moment, the chief of Unilever says Egypt is a wake up call for all of us. The CEO of one of the world's biggest companies talks about responsibility in an age of political instability. QUEST MEANS BUSINESS.
(DESK BELL CHIMES)
(COMMERCIAL BREAK)
QUEST: Now, taking care of business amid political instability. Consumer goods giant Unilever says its main priority is the safety of its 2,400 employees in Egypt. It is one of the companies to suspend some of its operations because of the uprising.
Unilever is keeping an eye on the unrest. It is the maker of Dove soap, Lipton Tea, and it had results in which it posted better-than- expected fourth quarter results. Now those results were up 15 percent from a year earlier. That is despite soaring commodity prices, rising food prices, all of which took their toll to some extent. But Unilever had higher volumes, and indeed to some extent managed to maintain its margins. Unilever's chief exec, as the rest of the world, is watching Egypt. And I began by asking Paul Polman if he is worried for the future of the region?
(BEGIN VIDEOTAPE)
PAUL POLMAN, CEO, UNILEVER: Yes, what is happening there is very unfortunate, obviously, and our hearts go out to the people there. We have 2,400 wonderful people in Egypt. And I'm on the phone everyday with our management there. Our main priority is the safety of the people, and the families. And that is where we are focused on. Our business, itself, is relatively small, being in 170 countries, globally. But that is indeed a wake up call for all of us, that geopolitical instability can rapidly spread, and probably even faster than we saw before. Call it the Wikileaks phenomenon.
QUEST: Let's talk about that. Your operations, and I take on board what you say about your operations in Egypt. But, obviously, one wishes your staff well, there. But it is not just Egypt is it? Someone like yourself is not just concerned about what is happening there. You are concerned about the contagion effect?
POLMAN: For us it is very important, and for myself, as a person. But also for us as a company, that we get equitable and sustainable growth across the world. A system where a few people get all the benefits of growth, and many people have to bear the risks when things go wrong, is not a system that is sustainable.
A world where there is inequitable growth is not a sustainable world. For the long-term it is important that everybody can improve their standards of living. And it is good that you see processes like this happening. Perhaps the speed of it is surprising many of us, but it has to be for the long-term benefit of the region. I still have very high hopes for the long-term benefits if, for example, you are now talking the Middle East region. And movements like this over time will create a better, more prosperous region that is good for all of us. These people have seen technology driven, in my opinion, more what is possible and what they aspire to, and the gap is what they had been experiencing versus what their desires were, has simply become too big. And galvanizing that change can only be positive, if it is constructive change. And obviously, that should not go at the cost of any human being.
QUEST: Turning to commodities, the rising commodity market. The industries you are in hits the commodity markets. I can't think of an industry, perhaps, except maybe extraction industries, that is more hit by rising commodities. Everywhere you look you are clobbered by it.
POLMAN: We are obviously, commodities are an important part of our business, you are talking, right. Let me just put the perspective, a little bit in perspective the volatility that we are seeing right now. The volatility that we are seeing right now is significant, but it is less than what we had to deal with in 2007, 2008. If you remember the oil prices when up $250, we are now dealing with a little bit over $100. The economy, this is when Lehman collapsed, it was very precarious. Now we have a steady economic situation. So the environment is better than what it was two years ago. And our company, actually, is better. Our brands are stronger, our innovations are stronger. So we think we can ride the wave. There is a combination of modest price increases, tremendous savings efforts, of which we have a lot of opportunity, still. And continued innovations behind our products.
QUEST: But those-staying with those commodities, it is not just oil, though, is it? It is not-it is the softs-the edible oils and the nuts.
(CROSS TALK)
QUEST: All the things that go into your variety of products. And they are all hitting, at least, multi-year highs at the moment.
POLMAN: Yes.
QUEST: So how much of that can you contain within yourself, and your margin, before you have to pass it on?
POLMAN: Well, we try to do the minimum as possible, in terms of passing on, so that the consumer doesn't have to suffer. But there is undoubtedly some inflation that is happening. And you already see that now, in many of the countries across the world, including here in the U.K.
(END VIDEOTAPE)
QUEST: Paul Polman, the chief executive of Unilever on commodities, food prices, and Egypt.
We need to see how the events in Egypt have been reacting around the world, particularly, on commodity prices. If you look over here, we need to start with Brent crude. Now it has hit $103.28. That is a 28-month high. It is an interesting one. It is $102.37. Bearing in mind Egypt is not major oil producer by any stretch of the imagination and the worry in this price is primarily about-it is worried about the Suez Canal. But then not a huge amount of oil goes through there, because of very large tankers.
This is classically worries over spill over effects. Bearing in mind a third of the world's oil comes from Middle East and North Africa, so any form of disturbance is likely to cause great concern. That is where Brent crude is at the moment.
Copper, rubber, oil, all at record prices. Copper has hit a record of $10,000 a ton. It is also hitting all time highs for cotton and rubber. The U.N. says world food prices surged to a record in January. And that is what we are seeing reflected. That is more-the part of that speculation, part of it is, obviously, underlying fundamentals. And there is an element of currency transactions in there.
The markets, you might be surprised to see, the euro bourses trended basically in a mixed fashion with the Xetra DAX, in Germany, even managing to eke out a small gain. Shell dragged down the FTSE in London, after missing estimates. Total weighs on the CAC in Paris, and despite saying its Yemen venture remains at full capacity.
So, as you can see, as this story moves forward. It is very possible that for in Egypt's case we will see the maximum effect in the commodity markets, at least when we talk about the financial effects.
Now, on the currency markets, too, the euro has taken a bit of a tumble. It fell back after the president of the ECB suggested there were no immediate plans to raise interest rates. Jean-Claude Trichet's comments came when the ECB left rates on hold at the record low of 1 percent.
The investors on the more hawkish side have been expecting perhaps a more aggressive statement in the light of recent inflation data. The ECB inflation or Euro Zone inflation is over 2 percent.
(DESK BELL CHIMES)
(BEGIN VIDEO CLIP)
JEAN-CLAUDE TRICHET, PRESIDENT, EUROPEAN CENTRAL BANK: The evidence of short-term upward pressures, on overall inflation, mainly owing to energy and commodity prices. This has not so far affected our assessment that price developments will remain in line with price stability over the policy relevant horizon (ph). At the same time, very close monitoring is warranted. Recent economic data confirm the positive and underlying (ph) momentum of economic activity in the euro area, while uncertainty remains elevated. Our monetary analysis indicates that inflationary pressures over the medium to long term should remain contained.
(END VIDEO CLIP)
QUEST: Jean-Claude Trichet, president of the ECB.
It may not seem like it right now, Egypt's economy should bounce back from the uprising. That is the message from the president of the Eurasia Group. Ian Bremmer thinks it is a matter of when not if. And also, can the actual options of result are actually quite limited in this particular case. In a moment.
(COMMERCIAL BREAK)
QUEST: I need to remind you of the top stories tonight, from Egypt, where the country's new vice president publicly asked protestors to go home. Omar Suleiman made the plea on state television, following a day of violence in Cairo's Tahrir Square. Five people have been killed, hundreds more were injured.
Ian Bremmer is president of the Eurasia Group, a global risk research, and consulting firm. He was in London. I joined to ask him if he thinks Egypt is entering the end game?
(BEGIN VIDEOTAPE)
IAN BREMMER, PRESIDENT EURASIA GROUP: The breadth of potential outcomes in Egypt is actually pretty limited. It is not going to be a fundamentalist Islamic state. The military is not going anywhere. And they are going to be, you know, a free market trading economy. Those outcomes we know. But how much violence it takes to get there, how messy, now long? Still very much an open question at this point.
QUEST: You say that with an air of certainty. You say that those narrow range of options will be the way this plays out. Why are you so certain about that?
BREMMER: Well, Mubarak has made it clear that one way or the other, he's going. I don't think there is anyway he is staying past September. I don't think any way he is putting his son in, that is done.
QUEST: Right.
BREMMER: The Egyptians are like the Lebanese. Fundamentally, a trading nation, have been for a very long time. You feel it in the bazaars, you feel it in the cafes. Any one that goes there, you are not going to change the essence of the Egyptian people. And so that the nature of the economy is not going to change, and frankly, there isn't a strong indigenous radicalized, Islamic movement in Egypt. There is no Hezbollah. So when the problems were starting and there was anarchy the blamed Hamas coming across the border. There was no one else to blame within Egypt.
QUEST: Egypt as a trading, capitalist, market economy doesn't suddenly go to the left?
BREMMER: Well, I-certainly any new Egyptian government is going to have to show that they are more socially responsible in terms of things like food subsidies, with food inflation, basic social services. Someone call that going to the left. But you are not going to see suddenly Egypt becoming a state capitalist economy. I don't believe that at all.
QUEST: Jordan? Let's look at Jordan, then. Because we have already had the king changing the government.
BREMMER: Smart to do, yes.
QUEST: Smart to do, but is that the act of desperation?
BREMMER: It is an act of very deep concern. I mean, when you have Queen Rania, saying-you know, Tweeting some support for the Egyptians and immediately getting thousands of Jordanians saying, "You're next! You've got to go!" I mean, they recognize that they have got a problem.
QUEST: We've slightly forgotten Tunisia as Egypt became the gorilla in the room causing the problems. But the truth is, Tunisia is far from settled.
BREMMER: That's right. You know, you can put in...
QUEST: The riots continue.
BREMMER: And -- yes. And it's -- it's not clear that the new government is, you know, yes -- I mean we -- I'm sure you and I both met members of the new government in Davos walking around. Great. They're going to be there, you know, sort of for a six month period and all the rest.
But, you know, cohering a government that is going to have a dramatically different tint -- it's not like Egypt, where you're -- this is going to be a much more, I would say, iterated process. In Tunisia, we don't know what the future holds for us.
QUEST: Is the market economy business world more at risk tonight as a result of the events we're seeing, whether it's in Tunisia and now Egypt and the instability thereof?
BREMMER: Yes. And not oil. Oil prices went up $100 because people panic. I mean, you know, I remember when Abdullah came in as king in Saudi Arabia, it went up $3 or $4 immediately, because people just didn't understand the nature of the transition. This is the same stuff. This is people who haven't paid attention to geopolitics and they're freaking out.
The Suez Canal is not going to close down. You're not going to see Saudi fall apart or the major oil exporters. Iraq is perfectly fine, from that perspective. But in terms of broad instability in the Middle East, I mean these places are emerging markets. You know, we've seen all of these reports from banks, the HSBCs, the Dana Charters (ph), that have said that we're going to enter an economic super cycle over the next 20 years because 70 percent of the world's growth is going to come from emerging markets.
You know what, emerging markets are more politically unstable, fundamentally, than the developed world. We are seeing that right now.
(END VIDEO TAPE)
QUEST: Ian Bremmer of Eurasia Group.
It's time to end all dictatorships -- Sir Richard Branson tells us why it's not just politicians -- business leaders need to speak out.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, we update you with the news always first.
And Egypt's new government has announced steps that will diffuse, they hope, the situation. But as time -- a tense stand-off continues between pro- and anti-government factions in Tahrir Square in the heart of Cairo, Egypt's Health Ministry says at least five people have been killed, more than 800 injured in clashes since Wednesday.
Journalists from various news organizations say they've been arrested, beaten or otherwise intimidated.
Egypt's newly appointed vice president spoke on state television just a few hours ago. He asked protesters to go home. Omar Suleiman says he has started a dialogue with opposition forces and even invited The Muslim Brotherhood to be part of the talks on the country's future. He denied the government has any connection with the violent pro-Mubarak actions in Cairo.
Thousands of anti-government demonstrators protested in the streets of Yemen's capital on Thursday. The rally in Sana'a came a day after President Saleh's announcement that he would not seek reelection. He's been in office for 32 years. The protesters held signs that blamed the government for their policy. Some also demanded that Saleh step down now.
The town of Tully along Australia's northeast coast is now strewn with debris after it was hit by Cyclone Yasi. The mammoth category five storm came ashore on Wednesday as one of the strongest storms ever to hit Australia. Despite the damage, Australia is relieved there was no deaths. No major injuries have been reported. Residents took warnings seriously and they evacuated their homes before the cyclone actually hit.
So, Sir Richard Branson is speaking out about Egypt. Now, the billionaire owner of Virgin Atlantic and the Virgin franchise says on his blog that politicians and business leaders -- politicians and business leaders should give President Mubarak a clear statement of intent. And this is the key bit -- he must step down immediately.
All of the entrepreneurs I've spoken to, he says, want the same thing -- a properly elected democracy in Egypt as soon as possible. These were the words of Sir Richard Branson of The Virgin Group.
Well, a short while ago, he joined me on the line via Skype from Ulusaba in South Africa.
And I asked Richard why he'd waited until now to put this message across when, frankly, Mr. Mubarak has been in power nearly 30 years.
(BEGIN VIDEOTAPE)
RICHARD BRANSON, FOUNDER, VIRGIN GROUP: As -- as a business, we have no dealings in Egypt, so, you know, so it was just a -- just to make that absolutely clear.
I think that through the organization of the elders that we're involved in, they have spoken out against dictatorships and repressive leaderships oh -- over the last 10 -- you know, 10 years.
But I -- but I actually believe that business leaders should also play a part and -- and we shouldn't leave it to politicians to speak out. You know, there are -- there are a lot of repressive leaderships in -- in the world. I think now is an opportunity to rid the world of them. I think democracy is obviously right for the pe -- for the people of these countries and -- and -- and it -- it is much better, I think, for business to trade in a democracy than it is under a dictatorship.
QUEST: Would you be prepared to withdraw your company's -- the many various companies that you have -- from countries if and when you discover that they have started to move to regressive policies and away from the democratic way?
BRANSON: Yes, I mean South Africa is a good example. I mean we -- we had many opportunities offered us in South Africa under apartheid. We turned those down. The moment apartheid was abolished, you know, we moved in with our airline. We -- we moved in, you know, with financial service companies. We moved in with mobile phone companies. And I'm sitting in a beautiful game reserve and -- and other ventures.
And -- and I think, you know, what -- if -- if business can, you know, show -- support democracies, especially fledgling democracies like Egypt, you know, when it opens up and becomes a true democracy, you know, that -- that will show other countries that democracy works.
QUEST: Right. And, finally, to -- to a chief exec who's watching this tonight and says, well, Richard would say that. You know, a privately held company, he doesn't have the same shareholder necessary beating down on his throat, doesn't have the same issues with -- with the banks that we have.
What would you say to the chief exec to -- to rope them into your cause?
BRANSON: Well, it's simply that, you know, now -- now -- now is the time to act. I think that there are many regimes that -- that are -- that, you know, they -- that with a bit of push from the business world, with a push from the political world, with a push from their people, they -- they can be changed for the better. I mean they -- you know, the -- we -- we know that in -- under dictatorships, horrendous things happen in prisons. Innocent people get tortured. Innocent people get locked up. And, you know, it is -- it is wrong for us to deal in countries like that.
QUEST: Which countries are you thinking of?
Are you prepared to tell me which countries you would like to see the leaders get that extra nudge and push out of the way?
BRANSON: Well, I think there are -- there are a lot of countries around the world, sadly, that are still run by dictators. And there are a lot of -- a lot of countries in the Middle East. And, you know, I think -- I think that, you know, it would be very -- very good if -- if some of those current dictators made a -- made a bid for the -- for a Nobel Peace Prize by doing what de Klerk did in -- in South Africa in stepping down.
(END VIDEO TAPE)
QUEST: Sir Richard Branson talking to me earlier.
The uprising in Egypt has investors holding their collective breath. We'll be in Jerusalem to get the view from Israel after the break.
(COMMERCIAL BREAK)
QUEST: The events in Egypt, the uprising, has sent investors off to the sidelines in many cases. And the question, of course, is how and when will they be tempted back. No one more so than in Israel, where, of course, they are watching with great alarm and concern the events from their neighbors.
Jerus -- joining me now from Jerusalem is Saul Singer, the author -- the co-author of "Start Up Nation," the story of Israel's economic miracle.
Saul joins me now live.
Saul, what happens in Egypt, obviously a country that has peace with Israel, where there are certain trade links that have now become established over some years, Israel is very good at adapting to changed circumstances, as your book makes clear.
How will they adapt to this?
SAUL SINGER, CO-AUTHOR, "START UP NATION": Well, that's exactly the point, is that Israel, if you look at the last, say, 15 years, when the whole start up nation emerged in Israel, Israel has gone through so many crises. You had the -- the Internet bubble burst. You had the collapse of the affluent process. You had the three years of suicide bombings and you had the Gaza war and the Lebanon war. And then the -- the most recent financial crisis.
And throughout all of these, Israel has only moved up and up.
And so basically, Israel has specialized in dealing with adversity. That's sort of the story that we tell in the book about how Israel overcame all this adversity. And what's going on now is, you know, it's really not news that we live in a -- in a kind of unstable region here. And that's probably...
QUEST: Right.
SINGER: -- that's what Israel has lived with all this time. And it's become, you know, better or worse at different times. But it's -- it's not clear that that is going to change much...
QUEST: Well...
SINGER: -- once this crisis is over.
QUEST: Well, yes, up to a point. I can take -- I can see where you're going with that. But Egypt we are the country that first made peace. And there was a peace dividend that was able to be enjoyed by the Israeli economy without having to worry about the south -- the southern part and what was happening there.
Now, you've got Jordan, of course, and other countries.
Now, if that dynamic changes, say with The Muslim Brotherhood, surely there must be concern in the business area of Tel Aviv.
SINGER: Well, there is concern. There is worry. And, you know, the Israeli stock market did take a little hit, but not fundamental change. And but -- but even if The Muslim Brotherhood takes over, which is -- does not actually seem likely at this point, but even if it did, it's, you know, despite all the rhetoric, the -- the forces in place to keep the basic, you know, strategic situation between Israel and Egypt are very strong and really don't depend on just a piece of paper.
They're -- you know, Egypt is not going to change the fundamental relationship with Israel. Even if you had a more radical government in charge there, it would be bad. They would...
QUEST: Right.
SINGER: -- they would cause trouble. It would not be as good as a transition to democracy. But I don't think that you would see fundamental change in the relationship, let alone war.
QUEST: So -- so does Israel have to shore up the balustrades of its economy, do you think, just in preparation for what might happen?
Would it be now, say, for example, Central Banker Fisher, who has run a -- a particular policy in relation to the shekel, where we've seen interest rates being used to protect, intervention being used to protect, is it time now for a shift in policy?
SINGER: Well, actually, Stanley Fischer just pointed out, among the other things, that they are sitting on a huge stock of dollars that they've amassed for -- for other reasons, not for strategic security reasons. But -- but basically, the Israeli economy is on a very sound footing going into this, coming out of the financial crisis.
And I think, you know, what you're going to see is kind of what -- what happened, say, with when Warren Buffet invested or bought Iskar in the north of Israel in the middle of the Lebanon war...
QUEST: Right.
SINGER: -- the second Lebanon war, when is -- that part of Israel was being bombarded and -- and Iscar basically told Buffett well, you know, as far as you're concerned, there is no war, because we're never going to miss a delivery.
And that's basically what people have come to expect from Israel, that, you know, whatever happens, the economy is not particularly affected and weathers the crisis.
QUEST: Saul Singer joining us tonight with that part of the story, as we have comprehensive coverage from all parts of the region. Saul, many thanks, indeed, joining me from Jerusalem.
Hints and signals -- Ben Bernanke, we're going to turn our attention to the U.S. economy. Yes, it's still there. He went before the media. We'll take you live to the U.S. and what the Fed chief thinks of the recovery.
(COMMERCIAL BREAK)
QUEST: Now we want to give you another quick update on the situation in Egypt, where the vice president, Omar Suleiman, has spoken on state television. He urged protesters to go home and said the unrest would have an impact -- a huge impact on the Egyptian economy. We've also had numerous reports of journalists being beaten and intimidated. A U.S. State Department official says the attacks seemed to be organized but it was unclear who was responsible.
The Fed chairman, Ben Bernanke, faced reporters for a rare press conference in Washington on Thursday. His appearance before the National Press Club comes on the eve of another important jobs report and a worrisome jump in energy prices.
Maggie Lake is in New York and joins us now -- oh, my word, Ben Bernanke, I mean it's -- it's not like -- it's not like Jean-Claude Trichet -- every month, he sits and answers questions -- is it?
MAGGIE LAKE, CNN CORRESPONDENT: Yes, no, it's not. We don't usually see this from the Fed chairman. But Ben Bernanke has said from the beginning they are trying to be more transparent. In fact, they're considering doing that sort of European style press conferences. It's a debate that's gone on in the Fed. And we should point out, this wasn't exactly free-wheeling. The questions were sort of submitted to a moderator at the top of the stage with Ben Bernanke and he read them. But they were real questions. And Bernanke, for the most part, both in a little prepared statement and then in the Q&A, sounding a little bit more bullish on the U.S. economy than we've been hearing him talk about lately, saying it really seems like the recovery is taking hold and that there's reason to be optimistic about jobs. We haven't really heard him say that before.
But he did almost immediately take pains to also say that unemployment is too high, it's going to be slow coming down, housing remains weak, and, therefore, it seems that, you know, QE2 in place, no changed plans. That part of it is really identical to what we've heard him saying in con -- Congressional testimony three months ago, Richard.
So no news there.
He did spend a lot of time, though, talking about inflation. I know Trichet brought it up earlier in the day, as well. He was asked very pointedly whether the Fed policy is stoking, fueling this rise in commodity, fuel -- food prices in particular, that we are seeing kind of reverberate and have these repercussions around the world.
Bernanke very clear in his answer, saying it is not because of the Fed policy, because of quantitative easing. Instead, he said, that it's growth in emerging markets that's causing it, which is a positive thing, and that they have the tools to deal with it. It's not their mandate.
So basically they're saying it's not our fault and it's not our mandate to deal with that issue, rather blunt there. So that was the sort of interesting part of the debate, Bernanke coming our very clearly, not mincing his words on that -- Richard.
QUEST: And, finally, I mean do you think we make too much of the prognostications, the aside comments that people like Bernanke -- we watch it so closely, the testimony on con -- on Congress. We let -- Maggie, I can -- I can imagine your day. You've spent listening to this testimony, you know, reading the ruins and the to...
LAKE: You should have sympathy for me because of that. You're right. We do pay attention to it. And, yes, we need to, Richard, because traditionally, even though they hold press conferences and -- and they're trying to be more transparent...
QUEST: All right...
LAKE: -- the -- a change in language from them signals a shift in policy that is absolutely significant for the global economy. So we have to painstakingly listen to this.
And, in fact, we actually have some sound from the press conference related to that inflation issue, which is really sort of dominating the discussion of global markets right now.
Have a listen.
(BEGIN VIDEO CLIP)
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Some of the emerging markets have -- are -- are facing inflationary pressures because their own economies are growing perhaps even faster than their capacity. That is, they are -- their policies have not been such to keep growth and capacity balanced, which means that inflationary pressures are rising from those emerging markets.
But I think it's entirely unfair to attribute excess demand pressures in emerging markets to U.S. monetary policy because emerging markets have all the tools they need to address excess demand in those countries.
(END VIDEO CLIP)
LAKE: He's saying it's unfair people are still say -- going to say it and point the finger that way.
Richard, I -- I do want to say, though, he -- that he did say they're watching food and energy closely. They are worried about it. It's like a tax on consumers. They're worried it's going to hurt the economy, which is what they've been working so hard, you know, to lift out of this recession. And he said the Fed remains committed to price stability.
Still, everyone -- the takeaway from this today is interest rates staying low, QE2 on for the foreseeable future.
QUEST: good lord, Maggie, did you do any other work besides listening to Ben Bernanke today?
You've -- you've...
LAKE: You know I did.
QUEST: You've...
LAKE: You know I did.
QUEST: -- got detailed notes I'll bet you -- you've got a whole pad of them there, your shorthand.
All right, many thanks.
Stenographer Maggie Lake, who was taking careful notes today of Ben Bernanke.
Now, we need to turn our attention to Australia, where a monster of the tropical cyclone slammed into the Australian state of Queensland on Wednesday, this -- the winds and the scale of this were incredible and yet no fatalities or, indeed, serious injury.
Pedram is at the World Weather Center for us this evening.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes, Richard, it really is amazing that no fatalities came out of this storm system. And the scale of it just puts everything in perspective, because from end to end, this storm covers all of Queensland, about 2,000 kilometers of coverage. And the winds were reported to gust upwards of 300 kilometers per hour. A lot of areas getting damaged, but no reports of fatalities as of this hour.
And you take a look at the wind swath associated with this storm, the deep red area here, that shows you the strongest winds, 120 or so kilometers per hour sustained within this region.
A couple of factors go into play for why no fatalities come out of this region. And the higher populations, of course, Cairns, and also coming down toward Townville, those areas being avoided as those winds -- the strongest winds go right between those communities.
But, of course, there are towns, smaller towns within that region, about a 200 kilometer swath, that had very strong winds, say around Innisfil, where they saw very strong winds, and also farther south in that area, we have had significant damage.
But fortunately, everyone -- it looks like just about everyone had evacuated and heeded the precautions associated with the storm system.
And look at this -- the rooftop of this building ripped apart -- no one in there to be injured. That's the good news. And a lot of property damage, the downfall with this around Cardwell, but you can again see areas that have kept a lot of folks out of the path of the storm as they had already evacuated.
Now, we've got a storm system, one interesting feature popping up across Northwest Europe, a very strong storm system beginning to work its way in. And we're talking about gale force winds coming out of the Glasgow area within the northern region of the U.K. there, where we have wind gusts up to 112 kilometers per hour as of the last hour. We're going to see unsettled weather here across much of Scandinavia. Some snow showers possible but mild weather remaining to the south, Richard, over the next 24 or so hours. But very heavy rainfall headed toward portions of the U.K. here, as you can see as of the last couple of hours, as well, Richard.
QUEST: All right, Pedram. Many thanks.
JAVAHERI: Yes.
QUEST: We appreciate that.
I'll have a Profitable Moment in just a moment.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment.
Richard Branson says business leaders should show dictators the door. It's a controversial view in a world when companies all too often look the other way in the pursuit of profit.
Also tonight, you heard the chief executive of Unilever admit that an economy which has great inequity within it is not sustainable.
Putting these vies into practice is not so easy in the real world. Mubarak in Egypt only became undesirable when protesters took to the streets. Until then, his leadership didn't stop travel companies sending millions of tourists to Egypt.
Saddam Hussein -- he was kept in power for decades, in many cases by business and government.
And President Mugabe has been in Zimbabwe for decades and despite this, he's still on top and despite sanctions, he's still in control.
As global companies become more powerful, Virgin's Branson and Unilever's Polman should seek more CEOs brave enough. They should try and rope more into their cause, brave enough to ignore the P.R. execs. What's needed is more businesspeople who will speak their mind.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
Continuing coverage of the situation is next, "WORLD REPORT" with Michael Holmes.
END
