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Quest Means Business
Coalition Continues Air Offensive in Libya; Britain's Chancellor to Release Budget Numbers Tomorrow
Aired March 22, 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: Good evening.
Tonight coalition planes are once more in the air above Libya. Two French fighter jets took off from this aircraft carrier, the Charles De Gaulle. They are on a reconnaissance mission as fighting rages on the ground. Now, in the city of Misrata, at least nine people have died during a day of fierce bombardment by forces loyal to Moammar Gadhafi. The hospital says it has stopped counting the injured. One eyewitness has described the battle, saying the city hangs in the balance.
(BEGIN VIDEO CLIP)
"MOHAMMED", EYEWITNESS: We haven't seen international strikes since the first day of strikes. And we are in urgent need of help, otherwise Misrata will be overrun tonight.
(END VIDEO CLIP)
QUEST: This is what is left of a U.S. fighter jet, which crashed near Benghazi, the two-man crew is safe. They had ejected before, obviously, it hit the ground. The U.S. Air Force says the jet was brought down by mechanical failure.
These British planes took off from an Italian airbase earlier. They are part of the mission to extend the no-fly zone to cover both Misrata, and Tripoli. Coalition leaders are still wrestling with the problem of who commands the mission when the Americans step back. U.S. Defense Secretary Robert Gates says the military operation in Libya will be scaled down from the U.S. point of view. Mr. Gates is in Russia, where the government has criticized the mission, saying most of the casualties are innocent civilians.
(BEGIN VIDEO CLIP)
ROBERT GATES, U.S. DEFENSE SECRETARY: It is perfectly evident that the vast majority, if not nearly all, civilian casualties have been inflicted by Gadhafi. Most of our targets, virtually all of our targets are isolated, non-populated areas, air defense sites, SA5s, 2s, 3s, and so on. And we have been very careful about this.
(END VIDEO CLIP)
QUEST: The Libyan capitol Tripoli came under coalition fire last night. CNN's Nic Robertson has been to see the damage. Nic joins me now on the line.
When you see the damage, what is the extent?
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: It was a couple of warehouses in the naval part of the port facility here in Tripoli, that we were taken to. Inside those warehouses we saw some mobile rocket launcher systems made by either Russia or the Soviet Union at a time they had Cyrillic writing on them. These are launchers that are about 30 foot long. Have adjustable platforms on the back which allow the two rockets that would be inside them to be fired at any elevation and in any direction. The rocket launchers themselves that we saw were empty, but there were other rockets in the warehouse there.
The reason government officials told us that they had taken us there was to show us that this was not really a proper military site. They said that this was a training facility and a repair facility and they showed us in some of the other warehouses there, large craters in the ground, in machine shops where they do mechanical training. They said not just for the navy, but also for civilians. But what we saw was very clearly military equipment that had been very precisely destroyed by missiles dropping right behind these four mobile rocket launchers.
What is interesting here also, Richard, is that this is what the government has taken us to see. It hasn't taken us to see any of the other claimed attacks that it says has happened on schools, on hospitals. The government only seems to be able to take us to these sort of military type facilities today, Richard.
QUEST: Let's just develop that thought, Nic. The Libyan authorities say there is a large number of civilian casualties being inflicted. The Russian have followed through with that. The Chinese have also mentioned that. From being in the country, are you able to give us any guidance on where the truth of this lies?
ROBERTSON: Well, I think the best truth is an interpretation of what we're shown and if we take it from the night of the first missile strikes here, on state TV within an hour and a quarter after it was on television. The only casualties shown in hospital were fighting age males, some of them wearing uniforms and being visited by army officers. And it was described they had shrapnel wounds, and they were saying we will be victorious. Still supporting Moammar Gadhafi.
The government took a group of journalists to what was going to be a mass funeral for 26 casualties. And only three people were buried, apparently, three plots filled in. And the family members who there gave conflicting accounts about the age, occupation, and how the people died, which didn't convince the journalists there. And the funerals for the supposed other graves, for people who were supposedly killed didn't actually take place, which rang rather hollow. The government, as I say, took us to see the site in Tripoli today. So it hasn't presented, the government has presented us here with any firm evidence of civilian casualties, or civilian injuries, or the targeting, as they say, of hospitals and schools.
No doubt the strike today will be a psychological message for the government. Not only is this military hardware in the warehouse targeted, but there were naval vessels that were lined up alongside, could also been targeted, but they weren't, Richard.
QUEST: Nic Robertson, who is in Tripoli for us tonight. Nic, many thanks, and you obviously will be back and Nic will continue reporting throughout the dark hours as and when there is more happening. Now, the images we have been seeing of military hardware, on both sides, particularly on the coalition forces, as they launch ships and missiles raises the issue of the price that all this will be paid. Most of the nations sending planes and ships are also carrying out, at some point, strict austerity measures.
Join me in the library and you'll see what I mean. There is never a good time to have a military conflict. But when you are making cutbacks in hospitals, and unemployment benefits, and you are cutting back on social spending, the argument goes this is a particularly bad time.
Now, Libya, the initial stages of Libya, they expect will be about $500 million to a $1 billion. That is estimated by one Washington think tank. And that all depends, really, on the length of any such campaign, according to that same report, the n-fly zone, costs on average per week, $100 million to $300 million. All of that is very dependent on the amount of munitions that actually have to be sent up. And the length and, of course, the depth of whether not, but this is just a no-fly zone. The number of sorties because, of course, remember a lot of the aircraft, particularly from the U.K., well, all of the aircraft practically, are having to come exceptionally long distances. Several thousand miles and that increases the costs.
If you take the six months of action and look at to this is when you start to get seriously large sums of money involved. If it goes on, if there are ground forces that become involved, then suddenly you are between, $3 and $4, and up to $8 billion. Now in the context, the world's 10 biggest defense budgets add up $1.1 trillion. The U.S. alone is nearly $700 billion, that is 60 percent of the total. So, a small beer (ph), perhaps, when you get these sort of numbers, but bearing in mind, Afghanistan is also costing a lot. The rundown in Iraq is costing a lot. Suddenly you do have to ask the question how long can this be contained?
Malcolm Chalmers is the security policy expert of the Royal United Service Institute. Professor Chalmers joins me now.
We never count dollars before we count bodies, in the sense of that. But there is a cost to be paid on this, isn't there?
MALCOLM CHALMERS, PROFESSORIAL FELLOW, ROYAL UNITED SERVICE INSTITUTE: Of course, there is a cost to be paid as long as we stay at this current level of intensity of operations. I think it is something that compared with Afghanistan and Iraq is by comparison is pretty small beer (ph). Once you get into ground operations, however, it is a different ballgame, as we have seen in Afghanistan.
QUEST: And who, who pays, whether it is the U.S., or the French, or the Brits. Does it come out of regular budgets, or do they have to get more money for this sort of operation?
CHALMERS: What normally happens in those three countries, at least, is that if the armed forces have to spend more money in order to have an operation, then they will get that extra money from a central reserve.
QUEST: But where is the extra cost? Because the salaries are already being paid, the hardware and armaments have already been bought. So where is the extra money coming from?
CHALMERS: Well, there are extra fuel costs, for example. Flying in ways you wouldn't otherwise have flown. If you expand munitions and in many cases you have to replace them and replenish your stocks. And there maybe other costs in terms of accommodation and so on.
QUEST: We hear talk, let's say 120, 130 missiles have been sent over. Is it normal that even before those missiles are sent somebody is already ordering the replacements.
CHALMERS: No, I don't think that would be the case.
QUEST: Really?
CHALMERS: If you have a long protracted conflict like Afghanistan, then you will be preparing to replenish your stocks. But in this particular case, I think the missiles, the cruise missiles have been used at this initial stage of the conflict. Probably won't continue to be used throughout it, because they were used to take out the air defenses.
QUEST: We talked about the cost, but we have to put this into the context that countries like the U.K. and France, and certainly the U.S., are going through serious budget cutbacks at the moment.
CHALMERS: Yes.
QUEST: Can you see an argument that says they shouldn't be expending money on this sort of military adventure, at this particular time.
CHALMERS: Of course there is that argument. But I think the main arguments are about this are about whether the objective is achievable.
QUEST: Well, let's talk about that. What is the objective? I heard the British prime minister in the Commons yesterday. And he keeps coming back to the idea of protecting the civilians and deflecting the question of what happens next.
CHALMERS: Right, but if we get into a situation in which as a result of protecting Benghazi and the areas the rebels control. That there are no long Libyan offensive actions, do we support a rebel offensive? Or do we think that would threaten civilians? And if not, do we end up with a stalemate on the ground which we have to police for months and years to come?
QUEST: Let me just ask you, if you have to come off the fence, is the coalition enmeshing itself in a quagmire?
CHALMERS: There is a risk of a quagmire.
QUEST: We know there is a risk, but-
CHALMERS: And it is-
(CROSS TALK)
QUEST: But at what point do we, can we say that, you know, there was a risk in Iraq.
CHALMERS: There was.
QUEST: They hadn't planned it. But at what point, here, because the thing is underway now.
CHALMERS: Well, the dilemma in all these operations and certainly in Libya is we are dependent on actors who are outside our control, the rebels and the other groups within Libya. Even if Gadhafi were to fall, there is no guarantee that Libya would move into a peaceful situation. You could have a vacuum of power and conflict between all sorts of groups who we don't understand. The question then would be, do we then say, well, though and get out. Or do we then have a responsibility to contribute policing on the ground?
QUEST: Professor, many thanks, indeed.
CHALMERS: Thank you.
QUEST: Thank you.
Now we talked there about the economic cost, if you like, of this military activity. Britain's balancing budget was going to be difficult even before the mission. The eve of the budget is neigh, well, eve is now, the budget is neigh. And we'll crunch the numbers when it comes to austerity, no end in sight.
(COMMERCIAL BREAK)
QUEST: Now there are concerns at home and abroad in many countries that have put an end to the brief winning streak for European stock markets. Take a look at the way things were. Only the Zurich SMI poked its head above the parapet. Otherwise, relatively small losses, 0.5 a percent, here, 0.25 of a percent, there. The mining stocks were amongst the worst or the poorest in the London market. Brent crude, incidentally, is just up slightly at $115 a barrel.
European finance ministers have now agree on their permanent bailout fund. It is the European Stability Mechanism. You are aware they put nearly $750 billion into the mechanism. It will come into force in two years' time. And it replaces the European Financial Stability Facility.
These are all high acronyms, extremely complicated lending facilities. But the gist still remains the same, whichever way you cut this cake. It is the bailout fund that would be used to help sovereign debt relief, as necessary. And the new facility is at a lower rate of interest than the previous one. Double whammy, though, took place in the U.K. Inflation is now at its highest level for more than two years. CPI expected, then 4.4 percent. That is consumer price inflation. And if you go to the retail price index, that is even over 5 percent at the moment. Its rising energy, it is clothes, it is a whole variety of reasons. Although the Bank of England says it expects U.K. inflation to remain high for the foreseeable future, as CNN's Jim Boulden now explains the fact is, inflation is very much back on the agenda at budget time.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: The violent response to raising university fees has become an unwelcome symbol for Britain's austerity plan.
(CROWD CHANTING)
BOULDEN: The conservative government came to power last may pledging to cut the budget deficit dramatically and quickly.
UNIDENTIFIED MALE: This budget is needed to give confidence to our economy.
BOULDEN: But little will change on Wednesday when the annual budget, starting April 1, will be unveiled by Finance Minister George Osborne. Most of the pain is already in place for the next four years. Though, Osborne is likely to be forced to increase the amount of short-term borrowing. Why? Britain is facing inflation like everyone else, prices are rising, but people's paychecks aren't.
CHRIS GILES, ECONOMIC EDITOR, "FINANCIAL TIMES": Though spending goes up, but actually incomes haven't gone up, so tax revenues haven't. So ultimately this means that this sort of inflation shock we are having in Britain, right at the moment, doesn't help the public finances. Their borrowing will be higher.
BOULDEN: As for scraping in more revenue the government has already lifted the top income tax bracket to 50 percent. And raised the national sales tax to 20 percent in January. A big hike in the tax to pay the state pension kicks in on April 1. On Wednesday the only new revenue raiser will be the time-honored pledge to cut tax loopholes for the rich and for multinational companies.
And a possible tax on tickets for passengers using private jets; this will help pay for sweeteners to motorists by not raising the fuel tax as much as once thought.
STEPHEN HERRING, BDO: The balance is between a notion of fairness, when all people, across all income spectrums are being asked to pay more in taxes or receive less in benefits. Merging that with the need to attract entrepreneurs and key executives to the U.K.
BOULDEN: The opposition Labour Party wants the whole austerity plan to be, well, less austere. Many unions agree public sector jobs are being slashed. There are also big cuts in local services like libraries and social care that are already starting to bite.
GILES: The economy hasn't done brilliantly at the end of last year, but it hasn't completely been blown off course yet. This sort of argument between labor and conservatives will come to head throughout this year, later this year, we'll get the first real evidence of whether the deficit reduction program is hurting the economy or helping the economy.
QUEST: Other struggling economies are watching the U.K. shock therapy. Britain plans to cut its budget deficit to just 1 percent of GDP by 2015, a target that will be nearly impossible if austerity leads the U.K. back into recession. Jim Boulden, CNN, London.
(END VIDEOTAPE)
QUEST: So as the budget is just 24 hours away, I asked HSBC's head of global research, Bronwyn Curtis for her take on Wednesday's budget. And when you put it into the wider picture, of course, what is happening in Japan as it comes to grips with the nuclear crisis and tsunami. I began by asking Bronwyn, in the U.K., what George Osborne needs to do to make his budget a success.
(BEGIN VIDEO CLIP)
BRONWYN CURTIS, HEAD OF GLOBAL RESEARCH, HSBC: The chancellor really has to make sure that he keeps the confidence of both the international investors and his domestic audience, that he will continue along the road to austerity. It is really important that those fiscal plans aren't watered down.
QUEST: But in that regard, he now has a much more difficult task, doesn't he? Not least of which increased defense spending as a result of the conflict in Libya.
CURTIS: Well, of course, it is going to be very difficult, but a lot of the big cuts are already in there. And we know about them. So what he's going to be doing is really tinkering rather than tampering. In other words, he can change things at the end, but you're right, extra spending in the way of defense, other extra spending I'm sure will come through. He'll just have to cut a little bit more. I think the biggest problem really though is growth. And looking at revenues going forward, it does look as though the Office of Budget Responsibility will have to cut their growth forecasts and that, of course, means that revenues will be less.
QUEST: You see, we've always known that the government, until now, the coalition government has pretty much been living on its predecessors' numbers and actions. This is the first time, isn't it, that their policies will be the ones to the fore?
CURTIS: Yes, it is the first time their policies will start to come through. And just remember, most of those policies really haven't hit us. And we talked them last year, but they really start coming through after April. I think people will feel it much more strongly then. We talked about, you know, cutting local government budgets. They have talked about cutting spending on education and here and there, but really the impact hasn't come through yet. I think that is going to be the big problem. And they will have to hold their nerve because the international environment also doesn't look that great at the moment. And so it will be quite difficult to keep confidence up in the corporate sector and among consumers.
QUEST: Let's talk on the international front. We are starting to get a suggestion that however horrific the events in Japan, for the people there, we may actually see a classic V shape, a very strong down of economic activity, but a rebound as reconstruction gets underway. Is that your understanding?
CURTIS: The idea of a V-shape recovery in Japan is quite amusing in some ways, because they've had such low growth for so long. But what we will say, of course, this area only accounts for about 4 percent of GDP. So we are taking about Tokyo and say, Yokohama, we are talking about 18 percent of GDP. So, that is not really the issue. And of course, money will come through for reconstruction. I think the issue is really supply chains. We have seen around the world, particularly auto companies and some electronics companies, having to cut back production because they may not get parts from Japan.
(END VIDEOTAPE)
QUEST: And these are some of the areas that are badly affected by those supply chain issues. For instance, Sony, which has suspended some of its facilities until the end of the month. That affects things like camcorders, camera lenses, microphones, getting the products out has been one of the big issues. And some factories have been closed. Toyota, particularly has halted on Japanese vehicle production until Saturday. In some places it has resumed. Now at the North American factories, they are working normal at the moment, but that could change, of course, if the supply chain becomes tighter and indeed, in some cases, there are warnings in the U.S. to buy cars sooner rather than later. That panic buying wouldn't help anything. Nissan production is likely to resume full production on Wednesday. Three out of four Japanese plants are running again. But that gives you-three quarters of that gives you and idea of the supply chain issues.
When we come back in just a moment, back in business tomorrow, a break of almost 7 weeks, the Egyptian stock market should be reopening. We are live in Cairo to see whether that is likely.
(COMMERCIAL BREAK)
QUEST: A fire has ripped through the Egyptian Interior Ministry. Flames could be seen on the roof of a multistory building. There was a dark plume of smoke over downtown Cairo. Electrical circuit, said a government spokesman, is suspected. The ministry had been the site of peaceful protests. Thousands of ministry employees had been making demands for higher wages. They denied they set fire to the building. CNN's Ivan Watson joins me from Cairo.
Did they set fire to the building, or was it an electrical fault?
IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: We don't really know, Richard, but the fact is this is the second suspicious fire to hit the Interior Ministry Headquarters and its surrounding compound in 30 days here in Cairo. So, it does make you scratch your head a little bit and wonder how a blaze like this could have erupted on the roof, within hours of what had been a peaceful but angry protest of thousands of police, some in uniform, demanding higher wages. The spokesman for the Interior Ministry said the reason that the fire spread so quickly was because uniforms and old furniture were stored on the top floors of that building.
We saw at least one person getting detained. We saw soldiers seizing cameras from journalists, on the ground near the Interior Ministry building in the hour after the fire had been extinguished. Authorities insist nobody was injured in the blaze, though we did see one man rushed away in an ambulance, Richard.
QUEST: And Ivan, supposedly the Cairo's stock exchange will reopen after many weeks. Is it going to?
WATSON: That is another very good question. Because I've been press releases nearly every week saying that, yes, the stock market is going to reopen again. And it has been closed since January 27th, Richard. That is in the midst of the uprising here, that eventually shoved Hosni Mubarak out of power, on February 11. It has been closed for a month and a half now. During that week it was closed, Richard, because the main index here in Egypt plunged some 16 percent. So we are just going to have to wait and see. I spoke with the chairman of the stock exchange. He says that it will operate a shorter period, from 10:30 to 1:30 tomorrow, rather than normal hours which are 2:30. We're just going to have to wait and see.
As perhaps the fire indicates, the situation here is still far from stable in the aftermath of Egypt's revolution.
QUEST: Interesting, that's Ivan Watson joining us from Cairo and Ivan is quite right, further speculation is pointless.
The market will open when it opens and we'll find out tomorrow and tomorrow is the day. When it comes to doing business, he says he'll deal with everybody even Colonel Gadhafi.
Coming up, Donald Trump tells us about his ties to the Libyan leader and what happens to the money he receives.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN and on this network, well, the news always comes first. So let me tell you immediately that new coalition maneuvers have taken place in Libya's civil war.
France is now saying it may extend operations beyond the Benghazi area and according to a U.S. admiral, Qatari forces will join the no-fly zone by this weekend. The admiral also said Gadhafi's air forces be weakened to the point where it will, in their words, not have any negative impact on coalition air strikes.
To Japan, power is back on to the control room of reactor number three at the Fukushima nuclear plant. Once air-conditioning is turned on, workers will be able to return to work in that control room. The plant owners say damaged to the reactors one and two will take more time to repair than previously thought.
The Egyptian Interior Ministry suspects a faulty electrical circuit caused the fire that engulfed its building in Central Cairo. The ministry says the finding of its investigation could be announced on Wednesday. The fire followed a peaceful protest earlier in the day. The ministry says the protesters are not suspected in causing the fire.
Opposition groups in Yemen are saying no to a deal suggested by President Ali Abdullah Saleh. The ruling party official says the president offered to step down by the beginning of next year. The opposition says he must go now. In a televised speech, President Saleh warned any coup attempt that lead to a civil war.
A growing unrest in the Middle East pushed oil prices higher again. The prices of Brent crude back above $115 a barrel. Now investors have continued to focus on the conflict in Libya and escalating tensions in Yemen. Traders say that raise supply concerns on the region and you'll see exactly what I'm talking about when you look at this graph.
The (inaudible) shows how it's been responding to both the North Africa and the Middle East, but the strong rise in the center just about here, that's relates to the government crackdown in Libyan capital.
But before you really concentrate on this, what you really have to look at about is this because that shows that no matter what international instance were taking place, there has been this gradual inexorable rise in the price of oil from $94 and change all the way up to $119, and now at $115 today.
The rise seems to have been - seems to now be entrenched. So I spoke with John Hofmeister, the former president of the Shell Oil Company and I asked him that whether or not this raising rates and rise has been driven by fear.
(BEGIN VIDEOTAPE)
JOHN HOFMEISTER, FORMER PRESIDENT OF SHELL OIL COMPANY: It is fear. It's irrational. The best-equipped companies can manage this kind of turmoil, but people who have a future need for oil get very nervous very quickly and they will buy futures contracts at whatever prices out there, and that's what drives the price so quickly, so volatile.
QUEST: Is there a discrepancy though between the fundamental uses of oil and energy and those who are speculatively pushing the market?
HOFMEISTER: If you look on a short term basis, you're absolutely right. The speculation that's out there is taking advantage of the situation, but they have willing buyers at the prices that are being charge. So that's not - the actual act of buying is ultimately irrational decision and there are buyers out there at these prices.
But over the longer term, what really is driving the fundamentals of concern is that over the next two to three years in particular, the demand is going to far exceed the supply.
QUEST: There's very little that can be done if you just look at the supply and demand aspects of this. Where do you think we need to address the needs?
HOFMEISTER: China is actually doing what it should do. It's out there working with state-owned oil companies, offering them loans to have the capital to invest to meet future growing global demand. And so there will be a demand supply equilibrium that's achieved, we don't know yet at what price.
QUEST: We do know that the price equilibrium is not really going to be less than we're seeing at the moment?
HOFMEISTER: Not for years to come, Richard, because the effort by the international community of oil producers including state-owned companies, although they've been spending capital as much as they reasonably can over the last three or four years.
There is a lag time in some of the big finds, the big fields out there in places like Brazil, Angola and Kazakhstan and Ghana and so forth. It's going to take four or five years I believe to catch up to the growing global demand at best.
QUEST: Do - in the United States, should Americans get used to the idea of the four and five gallon of gas and even if it's not just for pricing purposes, but for environmental purposes to help promote the cutback in the use of fuel?
HOFMEISTER: Unfortunately, Richard, those prices will drive the U.S. back into recession, which will lead to demand description. Keep in mind the U.S. would spend a hundred years building out an energy infrastructure supply and demand where affordable energy is the lubricant on the economic engine. And when energy becomes --
QUEST: Let me challenge you on this. Are you saying though that you're already at about $4 give or take in some places, $3.80, $4, are you really saying that another 50 cents or so, which could have such great benefit in terms of the reduction in consumption would drive the U.S. back into recession?
HOFMEISTER: I fear it would. The reason is everybody forgets. While the U.S. is viewed as a rich country, half of the American families in this country live on less than $38,000 a year and $4 to $5 gasoline takes them right out of the market. They stop buying many other things.
They stop traveling. They stop vacations. They stop buying clothes. They stop buying whatever it is that they have to stop buying in order to afford gasoline, which is the only way they can get to work. And so what you have is a general economic reduction of activity because people are paying that premium price for gasoline.
(END VIDEOTAPE)
QUEST: Some (inaudible) from the former president of Shell certainly on the particular point that the price of oil ain't falling anytime soon.
Money made from oil is a major part of Colonel Gadhafi's fortune and that money has now spread far and wide with his dealings with the west. Some unusual and particularly of names perhaps have turned up along the way who's received money from Colonel Gadhafi.
CNN Money's Poppy Harlow has the - I mean, when I think of Colonel Gadhafi and I think I don't necessarily put Donald Trump in the next sentence.
POPPY HARLOW, CNN MONEY: This is true, but so much we have learned about those that have performed for Colonel Gadhafi over the years, those who have done business deals with him and as we found out, Richard, when we sat down with Donald Trump for a pretty extensive interview is that he did a major land deal with Colonel Gadhafi.
It was to rent land in upstate New York, just around the U.N. General Assembly, but I want you to take a listen to what Donald Trump says the deal entailed and pay particular attention to what he says he did with that money from Gadhafi. Take a listen.
(BEGIN VIDEOTAPE)
DONALD TRUMP: I deal with everybody and I like that. What did I do with Gadhafi? I leased him a piece of land for his tent. He paid me more than I get in a whole year and then, he wasn't able to use that piece of land.
So people would say, did I take advantage, did I (inaudible) so I got in one night more money than I would have gotten all year for this piece of land up in Westchester and then didn't let him use it? That's called being intelligent?
HARLOW: Do you still have the money that Gadhafi paid you?
TRUMP: You're not talking that kind of money. Do I still have it? What does that mean?
HARLOW: I mean, what happened to the money? Some celebrities who performed for Gadhafi have given that money -
TRUMP: I give -
HARLOW: -- or you've given it away. I think that's the question on people's mind.
TRUMP: Sure. I give tremendous. In fact, the other night Comedy Central roasted me. They gave me a tremendous amount of money. It's already gone to charity. So I give money to charity. I gave that money to charity and in fact, I said, when I did it. I'm going to take Gadhafi's money. I'm not going to make it easy on him and I'm going to give the money to charity, and that's exactly what I did.
(END VIDEOTAPE)
HARLOW: So, Richard, Donald Trump making it very clear that's what he did with the money from Gadhafi where Gadhafi never actually got the land that Trump rented to him. He gave it to charity.
This coming from a man, keep in mind, Richard, who's been making headlines here in the U.S. and around the world about a potential bid for president in 2012, Richard.
QUEST: And of course, he has strong views on any subject that you'd like to throw at him. We've just been talking to John Hofmeister about the price of oil.
HARLOW: Right.
QUEST: Donald Trump is going to have to address that as well with oil - with gasoline in the U.S. having to $4 a gallon.
HARLOW: Undoubtedly and he has had strong opinions on crude prices and particularly on OPEC for a long time. He called OPEC a cartel. He said speculators are not driving up the price of oil, Richard, but that it is all OPEC and that is the sole reason for the spike we're seeing in crude.
But what's very interesting is what he thinks the U.S. should do as part of the solution to higher crude prices. It involves how we should handle the oil in Iraq. I want you to listen to his take on this.
(BEGIN VIDEOTAPE)
TRUMP: I'm saying very simple. It's common sense. If Iran is going to take it up, which they are, I know for a fact, if Iran is going to -
HARLOW: Why do you know that?
TRUMP: I just know. I just know. I do with everybody. You know, people say, do you have experience? I have more experience than anybody because I deal with these people all the time. I deal with them on a business basis and the political basis.
Now, if we're leaving Iraq and Iran is going to take it over, what do we just take over the oil? We should take it over.
HARLOW: We should come in?
TRUMP: Well, I don't want to give it to Iran.
HARLOW: Should we be running Iraq right now?
TRUMP: We should be running the oil.
HARLOW: What about the Iraqi people? What would they say?
TRUMP: They'll do very nicely. You give them plenty of oil. Right now those oil wells are a mess. You give them plenty of oil. They'll do very nicely.
(END VIDEOTAPE)
HARLOW: So obviously, Richard, that question would have to post to the Iraqi people. How would they feel about the United States taking control of all of their oil? I think I know the answer to that one, Richard, but I'd certainly never heard anything like that from Donald Trump before, Richard.
QUEST: Quick question, but short answer.
HARLOW: Sure.
QUEST: Does anyone taken seriously in terms of this presidential idea or is he regarded as a maverick with a few loony ideas?
HARLOW: If this were a year ago, I think the latter might have been true. Right now, he is topping some serious polls in this country. People do take him seriously.
Bottom line, the responses I'm getting on Facebook, on Twitter, on the blogs from this is that yes, some people do take him very seriously. We'll see if he's serious about this bid, Richard.
QUEST: Poppy Harlow who is in New York for us tonight. Also, in New York at the moment, this is the way the big board is trading. We are down 18 points just at 12,000.
When we come back, we will not only get some analysis on what's moving the market, but also force to reveal all. We're live in New York getting reaction to the news that the fed will have to unveil its secretive practices.
QUEST MEANS BUSINESS, good afternoon.
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QUEST: You want a number with a lot of zeros. How about this? They are $3.5 trillion. That's a three and a five and a one, two, three, four, five, six, seven, eight and on we go. That's how much the U.S. fed doled out during the financial crisis and now the U.S. Supreme Court has said the fed has to tell the public where the money went, who got it, how much were spent and how did they pay it back?
They have to reveal the names of the banks particularly those who went to the hallowed discount window. It's all part of the right to know. Maggie Lake, dressed in black, in mourning perhaps for this transparency that the bastion of the fed now has to reveal to the world.
MAGGIE LAKE, CNN CORRESPONDENT: That's right. For the first time and I think it's the 98-year history of the discount window. This is a big deal for the fed, Richard, and really as the end of a legal drama that's been going on behind the scenes.
What are we going to find out? We're not really sure, but we think at the very least who went to the discount window, which individuals, remember, they maybe foreign banks as well, which will raise a lot of eyebrows on this side.
And how much did they need? What were the details of the loan? Who was in trouble? How much trouble were they in? So that's what analysts are hoping to find. Does it matter for the banks? Analysts tell me not so much.
It will be interesting, but it won't have the kind of impact it would have when Bloomberg who's the institute that sued the fed first ask for the information. Two years have gone by now. That's a real buffer in terms of impact, but it does matter for the fed.
They've always argue to Central Bank that the confidentiality surrounding the discount window was what enabled them to make these emergency loans and institutions are not going to come there if they feel like there's going to be a run on their bank.
So they argue that this has hurt them, hurts their ability to act in crisis. I think it's going to depend on - on the time lag here. You remember, there's already with the financial reformat already put in place the rule that they do have to disclose.
But with the two-year lag, if that's the standard that's now used, it may not have the sort of chilling effect. But clearly, this, Richard, underscores just how controversial even two years out, the fed's actions were and the fact that people are extremely uncomfortable with what some especially the critics see as a real power grab by the fed.
QUEST: The critics say that, you know, the U.S. taxpayer has a right to know how much money was at risk. But, Maggie, when you ask the critics, the (inaudible) who promoted this, well, is this not going to make the fed less effective? Who's going to go to the discount window?
You know, let's face it, if you need to borrow money, you don't want any people to know about it.
LAKE: Right, it is and you know, Richard, I think underneath all of these is still this idea that officials not just the fed, but finance officials acted in the heat of the moment. They protected the banking industry at the expense of the taxpayer.
I think that is the current that is underwriting this is that they don't really trust, yes, they acted in emergency, but who were they really - who's interest were they acting on? But officials certainly see things differently.
Bernanke and those in his inner circle really felt like they saved the world financials - but there - the people who have been going after them, there is this sort of under current that they protected the banks.
And that's the follow up, the anchor would still sink in the financial crisis.
QUEST: Come on, Maggie, admit it. You and I are absolutely are gagged to know who went at (inaudible) we want to know who was broken up to go to the discount window.
LAKE: That's right and you know, Richard, I asked, you know, do we think that it was the ones we thought in trouble? The analyst I talked to today said what will be interesting is if it was the people we thought were helping. That will be the real surprise.
QUEST: Maggie Lake who is in New York for us tonight. Wall Street, come and have a look and see how the Dow Jones is trading at the moment. The Dow is, well, we're just down 22 points at the moment at 12,000 looks to be safe at the second.
There were these two little areas where we did pop on those above the line, but for most of the session, we are heavily in the red. Alison Kosik is at the New York Stock Exchange, and I mean, the day is once again dominated by geopolitical events.
ALISON KOSIK, CNN CORRESPONDENT: It really is and today, Richard, the political event of the day is Libya. I mean, you can see it reflected not in equities, but in oil prices. I'm watching oil traded here in New York close in - you know, it's pretty close to $105 a barrel.
You know, there's sort of this torn on the side of investors at this point as oil continues to stay at its high level. There really is a lot of concern as to how much it's going to eat into U.S. economic growth as a whole.
I mean, we're watching stocks kind of - kind of just sit there today. You know, kind of take a breather today. I think what you're seeing is investors waiting for the GDP report coming out at the end of the month and the big concern is that oil is going to wind up weighing on that number coming out on Friday, Richard.
QUEST: When we look at - we've got an earning season coming up. There'll be clearly issues of economic growth and the cost of the war. Is there still an effect from the AT&T deal that's hanging over or is that really a case of, what have you done for me lately?
KOSIK: It is really a case of what have you done for me lately. Isn't that what Wall Street is all about? Yes, yesterday we saw the market rally on that news of that merger. You know, Wall Street loved the great merger.
You know, it shows confidence in the economic recovery, but that was yesterday. Today, we got Libya dominating the headlines. It's got oil prices already over $104 a barrel. This is a really big concern and stocks, of course, they're in a holding pattern, really cautious today.
We also have a big housing report coming out tomorrow. You have to remember housing is still a huge drag on this economy. Between oil and housing, you know, investors really aren't feeling that (inaudible) today, Richard.
QUEST: Alison in New York - the New York Stock Exchange. We thank you for that. As you can tell, (inaudible) busy hour. We'll take a breadth, a moment to be (inaudible). Jenny Harrison at the World Weather Center. Good evening, Jen.
JENNY HARRISON: Hello, Richard. I'm going to start out with conditions in Japan first of all. Now, we know, of course, the wind is beginning to change direction coming from the north again. So once again feeling quite a bit colder for everybody on the ground.
North, 20 kilometers (inaudible) Fukushima so the wind chill is playing a part. So it feels like minus 4 even though the actual temperature is 1 degrees Celcius, minus 1 degree. And then in the Rockies, well, 4 degrees and again, that wind is taking the top off that temperature.
This is the low pressure, which will continue to also feed in some more of that (inaudible) snow. It's very, very cold air coming down in Japan. Picking up all that moisture and it will deposit it as snow mostly to the mountains. We could just see one or two showers really into Sendai and also Tokyo over the next couple of days.
But sunny throughout most (inaudible) it will continue to be largely on the dry side. You can see where the snow is coming in and it's same for the most part just sticking along those mountain tops. But the winds are turning offshore over the next 24 hours as that low pulls away.
Fairly nice, these are the surface winds of course, but still quite variable along these coastal areas. But the majority of the winds are now coming from the west to the east. Now, (inaudible) the spread of any dangerous radioactive matter.
We were talking yesterday about how the authorities have discovered some of that radioactive material actually in the sea water. Of course, this is so critical because it is such a vast area of fishing across this particular portion of the coast of Hunshu.
Now, we have two currents, which are in the region. This is the Kuroshio current, which is a very warm current and then coming in from the north what is actually called the parent current. This is a current that brings the really, really rich nutrients into the area, and it's where these two currents actually meet that we have this very, very active fishing area.
Because, of course, the warm waters that enable these nutrients to really just attracts all the fishes in the area and has a real variety of fishing that is also done just off the coast.
Now, what we've also been hearing is that once these radioactive particles or materials get into the sea water and particularly these ocean currents, they do disperse very, very quickly.
But, of course, it's something else to be considering at this particular time. For the forecast for Sendai, we can't just rule out one or two showers. The overnight temperatures just below freezing, a little bit of (inaudible) mixed in, but largely dry and getting a mild into Tokyo as we head towards the end of the week, Richard.
QUEST: You know, Jenny, it's sounds right in one sense, but I was - I was fascinated earlier in the week and this idea about spinach and why spinach apparently is one of those vegetables that they are concentrating on because apparently (inaudible) sides of the leaf and the way in which it absorbs things from the atmosphere.
HARRISON: Yes, as you said, it's a very, very popular and widely grown, which is probably why spinach is the - also one of the crops that is so concerning. But if you say, very, very largely, it relies heavily on being fed by water and of course, we know that the water is also into the soil (inaudible) has been affected.
But also it's coming down, Richard, from the atmosphere so the rain on the one hand, you know, pushes it into the soil and also into the plant.
QUEST: Jenny Harrison at the World Weather Center. Many thanks. Now, we've just an update from the U.S. State Department on what's taking place in Libya. The briefing finished a short time ago.
Mark Toner is the spokesman and he says, America is helping to achieve the goal set by the United Nations.
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MARK TONER, U.S. STATE DEPARTMENT SPOKESMAN: We, you know, we didn't ask for this current role. We indeed, you know, through our international partners within U.N. Security Council moved to enact the resolution frankly to address urgent humanitarian concerns that there was going to be a bloodbath in Benghazi and other places.
And - let me finish, please. We have taken action. That action just began. We're still establishing the no-fly zone. We've had success. We believe so far in at least quelling the violence. Moving forward, we've said that and the president has said this as well.
We're going to seek to apply. We've got other forms of pressure that we can apply on Gadhafi and we're going to continue to push for our overarching our long term goal that we believe - delegitimize as a leader and must step down, he and his regime, his associates.
How we get there is, of course, being evaluated and discussed, but again, there's other forms of pressure that we're going to keep applying on Gadhafi to get to that point.
(END VIDEO CLIP)
QUEST: And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I do hope it's profitable. "WORLD REPORT" is just ahead.
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