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Quest Means Business
Volcanic Ash Cloud Controversy: Ryanair's CEO Calls For Opening Scottish Air Space; Empowering Agriculture; Investing in Change; The E-G8 Forum
Aired May 24, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Tonight, helping the travelers: An update on the ash cloud crisis; we have Ryanair's chief executive calling for Scottish air space to be reopened. The director general of IATA says the situation is embarrassing.
Also, helping the poor on this program: Bill Gates calls for more help for small farmers in developing countries. And the World Bank President Robert Zoellick joins us tonight, too.
And also, helping to combat human trafficking: The secretary general of the World Tourism Organization, the U.N. WTO, gives us advice.
It's a busy hour. I'm Richard and I mean business.
Good evening.
Tonight more planes grounded across Northern Europe. And a dense cloud of volcanic ash from Iceland fills the skies above. Europe control says 500 flights were cancelled in the U.K. today. That is more than double the previous estimates by Europe's air traffic management organization. Ryanair, BMI, British Airways, were among those airlines shutting operations in Scotland and parts of Northern England.
Euro control says the air space over Denmark, southern Norway and southwest Sweden could be affected by tomorrow. Northern Germany and the area around Berlin, also in the path of this ash cloud. If that weren't bad enough, there is a disagreement between the airlines and the regulators over the true position of safety.
The budget airline Ryanair is defying the no-fly zone over parts of U.K. It sent a plane into the so-called red zone, an area the civil aviation authority of the U.K. says is thick with volcanic ash.
Well, what were they playing? Ryanair's Chief Executive Michael O'Leary is with me now.
Michael, you are (AUDIO GAP) the decision making and (AUDIO GAP) part of the air space and potentially tomorrow close more?
MICHAEL O'LEARY, CEO, RYANAIR AIRLINE: Yes, absolutely. Because they are based firstly on false information. You see here the MET (ph) office charts. Now we don't have the one for 6:00 o'clock this morning. Now, these are predictive models done in the basement in the MET (ph) office in London. They bear no-bear very little relationship to reality. This morning they show that-you see that intense red ash cloud, which is the area of heavy, dense concentration of volcanic ash, it was all over Scotland.
We sent an empty aircraft up this morning. Left Glasgow at 5:00 o'clock in the morning, flew north over all of the four Scottish airports. Aberdeen, Inverness, Edinburgh, landed back after an hour and a half of flying in Glasgow. We inspect it in detail. And guess what? No sign of any volcanic ash clouds. In fact, the sky was blue and no evidence of any volcanic ash material on the airplane, the engines, or the wing surfaces. There was no volcanic ash over Scotland. These charts are wrong.
QUEST: So why do you think the authorities, who have no beef against you, or any other airline-well, maybe in the narrow sense-but why do you think they would want to gratuitously close the airspace?
O'LEARY: To be fair I don't think they want to gratuitously close the air space. We had this debacle, though, for two months last year. After which we agreed we would move to the same procedures as presently operate in America and in Asia. If there is a volcanic eruption, which are frequent in Alaska, frequent in Indonesia, 100-mile no fly zone, fly around it and if you see something after that, fly around it. But if you are 2,000 kilometers away, as Scotland is from Iceland, assume there is no volcanic ash unless you see something.
QUEST: Right.
O'LEARY: And after you land do increase the rate of testing so that you can examine it. We have also gotten written confirmation from Boeing and from our engine manufacturer, GE, that it is safe to fly, even in these areas of dense ash con-these dense ash clouds.
QUEST: OK.
O'LEARY: But the key thing is they don't exist over Scotland this morning.
QUEST: The European Cockpit Association says, "We cannot accept, under any circumstances, any flights into the red zone, even if these are approved by airlines."
And then you have the CAA Chief Executive Andrew Haynes (ph), who said, "Our number one priority is to ensure safety of people both on board aircraft and on the ground. The sector is better prepared, but safety is number one."
Now, when you've got two-but hang on, when you have got one set of people saying it is not safe to fly, and you have you saying, well, I think it is safe to fly. The traveling public says, who is right?
O'LEARY: They don't. When you've got two people there who say it is not safe to fly, Euro Cockpit, at trade union representing pilots, we would never send a pilot up, or an aircraft, if we thought it was unsafe to do so. Our manufacturers say it is safe to do so. The only person so far today, or last night, who say it is not safe to do so, is the head of the CAA, who is acting on these speculative graphs, or these speculative charts, which have proven last year, and again, this morning to be materially inaccurate.
The CAA, if they were concerned about safety, should have sent up some test aircraft today. They have three of them. Guess how many they sent up? None, why? They're all broken.
QUEST: Well, we'll be talking-
O'LEARY: The CAA, if safety is their number one priority, they didn't even send a pigeon up over the skies of Scotland this morning. We, British Airways, the other airlines could provide them with an aircraft. We did the work for them. We sent the aircraft up into this red zone. It landed, it has no volcanic ash material on it, whatsoever.
QUEST: OK.
O'LEARY: So, please, on the one hand, we are the airline that has actually flown in the airspace and found nothing, compared to somebody who hasn't even sent a pigeon up there.
QUEST: All right. And you'd be surprised you are in good company this evening. IATA's chief executive and director general, Giovanni-
O'LEARY: A reliable gentleman.
QUEST: Giovanni, who I know you know, is on our program next and makes that exactly that same point about the aircraft being sent up.
But, I need to ask you, the-you're recent numbers, your results that came out, had quite a thumping great bit allowance for EU 261, within it.
O'LEARY: Yeah.
QUEST: You are now charging a levy for EU 261. And you are completely unapologetic, for that.
O'LEARY: Yes.
QUEST: Do you expect this crisis, or this one is going to cost too much.
O'LEARY: No, I think this crisis, hopefully will end very quickly, because I think, you know the bureaucratic bungling, which is what the CAA, and the MET office here, demonstrate over the last 24 hours, will readily be identified. I think they will find-they will produce charts tomorrow, that says, that this mythical cloud has suddenly disappeared somewhere else and we'll all be back flying. But it doesn't address the fundamental issue. There will be more volcanic ash eruptions in Iceland. We need the same procedures that apply in other sectors of the world.
QUEST: OK.
O'LEARY: Have a no-fly zone. Nobody wants to fly over the volcano in Iceland. But 2,000 miles away, in Scotland, the skies are blue and they are clear of volcanic ash.
QUEST: So, are you disappointed that a year after the really big crisis, that frankly, European governments and countries were still ham-fisted in the way they have handled this?
O'LEARY: To be fair, a year after the bureaucratic bungling of last year.
QUEST: Right.
O'LEARY: And it is unfair to target European government. The U.K. MET office and the CAA have failed to implement the agreed procedures, which are followed in every other are of volcanic ash eruptions. And that is why Scottish airport has been closed today. It is not volcanic ash, it is bureaucratic incompetence.
QUEST: I think I claim a first tonight. We have got through about four to five minutes and you haven't done a commercial. So, I consider that-
O'LEARY: Ryanair-
(LAUGHTER)
QUEST: No, no, no.
(LAUGHTER)
QUEST: Many thanks.
O'LEARY: Thank you, Richard.
QUEST: Michael O'Leary joining me.
Now the head of the International Air Transport Association, Giovanni Bisignani, says that governments have not yet learned to speak with one voice and that is the same voice. He joined me on the line from Paris, a short while ago.
(BEGIN VIDEOTAPE)
GIOVANNI BISIGNANI, IATA: Absolutely, no. We still have a difference between southern countries, U.K., Ireland, France, the Netherlands, give the airlines to make their own assessment and to fly, if they fly in safety and there is no problem in this. Germany is using a different kind of model. But what is really surprising is the situation in U.K.
U.K., why? Because it is an important part to be able to evaluate the ash concentration. And the only plane available, a Cessna, whose value is probably $25 million, is not flying because it is out of service.
QUEST: So you are roundly criticizing the U.K. transport secretary?
BISIGNANI: Probably it is not his fault. It is the civil aviation, but in any case it is a bit embarrassing for a country that cashes over 3.5 billion pounds from airlines, and our passengers, not able to put in service a $25 or $30 million plane in order to solve this problem and have a clear indication of what is the ash concentration in the area limited to, around U.K.
QUEST: We look at the different countries and what they have decided to do, and the lack of coordination. Are you surprised? The European aviation industry has been a mess for a long time. Why do you think it should be any better now?
BISIGNANI: You know, I must say that Vice President Carlos (ph) is trying to do his best, but you know, it is 25 years that we are waiting for a single European sky. Every time that we have a volcano activity we say it is time to speed it up. But it is just words because they forget very quickly of what has to be done.
QUEST: So what would you like them to do the moment this volcano crisis is over?
BISIGNANI: I am waiting on this since 25 years. The minister of transport realizes that they need political leadership. They do not have this kind of political leadership. And they ask the head of states, of Europe, at the next meeting, at the next summit in Brussels, to put this on the agenda and solve once, and forever, this single European sky that will facilitate the travel and well, facilitate the impact that we have on the environment. And it will be a win-win solution for everybody
(END VIDEOTAPE)
QUEST: Giovanni Bisignani of IATA, talking to me earlier.
The skies are deceptively blue over large parts of The European Continent. Are they hiding something that is clear very nasty? Guillermo is at the World Weather Center.
Where is this thing going, Guillermo?
GUILLERMO ARDUINO, CNN METEOROLOGIST: We stay with the 24-hour forecast. That is important to say. Also, we have to emphasize that the operation through the ash area is at the discretion of each country.
We are going to be talking about low, medium, or high concentration. Low, it is OK to fly through. Medium, with some questions. High, definitely not. So look for those words. Also, I want to show you this picture I was paying attention to the interview with the CEO of Ryanair.
When we look at this map, we see how the volcanic ash actually goes into Scotland. Look at this picture. Richard, I'm going to let it loop a couple of times. The pinkish is the volcanic ash. And it is getting close to that cloud area, a low pressure center, and then, boom. You see it north, in Scotland, also we have both low altitude and high altitude. That is something else that we are going to be talking about.
Again, I'm going to look at it once more. You see volcanic ash here, in pinkish. This is a frontal system, a low pressure center, and then is sweeps in and it is over northern Scotland. So we see the presence of volcanic ash on the satellite picture, both high altitude and low altitude. So, I wanted to make that point very clear.
Now, let's show the area where it is important for our viewers. Again, 24 hour forecast, that is the only thing we can do.
Within the next 24 hours, of course, Iceland is having problems, and a huge area of Northern Europe as well, even getting very close to Berlin.
Now, let's break it up into the high, low, and high-moderate, and low levels. So, I'm going to show you, once this loop ends. Even parts of Greenland, there we have the problems.
Here we go. So, low, moderate, and high. So, you see, focus on the red that is the no fly zone definitely. And you see how the authorities are saying that parts Great Britain and also parts of Sweden, are a no fly zone, because of that potential high concentration. This forecast is valid until Wednesday. We will see the new update and we'll let you know.
QUEST: Guillermo, we thank you for that. And we know you are going to have a busy 24 hours ahead.
When we come back, in just a moment, QUEST MEANS BUSINESS continues. The ethical part of tourism and the "Freedom Project". Whether you and I are traveling on business, or on pleasure, frankly, how do we keep it responsible, in a moment.
(COMMERCIAL BREAK)
QUEST: As you and I talked about last night, as part of the CNN Freedom Project we are looking at how travelers, like us, can do are bit to find the human trafficking and the forced labor that is often so prevalent in the places where we visit.
Joining us tonight is the secretary-general of the World Tourism Organization, the U.N. WTO, which serves as a global forum for tourism policy issues and a practical source of knowledge on how to deal with these issues.
The organizations very global code of ethics states that, "the exploitation of human beings, in any form, particularly sexually, especially when applied to children conflicts with the fundamental aims or tourism and is the negation of tourism."
As is made very clear by their latest video.
(BEGIN VIDEOTAPE)
(CROWD NOISES, CITYSCAPE)
UNIDENTIFIED MALE: Travel and tourism, it is about having new experiences and a good time. But responsible tourism is more than this. It is about having respect for the local culture and local people. Especially respect for the most vulnerable, in particular, respect for children. Care and cherish them as if they were your own.
If you want to be a tourist in a world that is safer for children, open your eyes. Children need you. Don't let child abuse travel. For more information go to, www. UNWTO.org/protect children. Contact, Protect Children @ unWTO.Org.
(END VIDEOTAPE)
QUEST: The UNWTO says everyone has a role to play in responsible tourism and is urging travelers to respect human rights at their destinations. It's guidelines state that exploitation in any form conflicts with the fundamental aims of tourism.
The sexual exploitation of children is a crime, both punishable at home and abroad. The organization wants you to understand the idea of a fair wage. Bear in mind that, when we are bargaining for goods.
Taleb Rifai is the UNWTO's director general. And always good to have Taleb on our program here, with us this evening.
Good evening Taleb, from Madrid. The size and scale of this problem. We're going to have to break it down into different areas.
Let's start with the most serious. There is this code of practice against the sexual exploitation of children in tourism. It is a code that the UNWTO has worked closely to create. But the fact is, is it working?
TALEB RIFAI, SECRETARY GENERAL, UNWTO: I think it is. I think it is, Richard. I think it is creating a momentum of awareness around the world. Of course, we have to recognize that this phenomenon does exist at wide scale in many parts of the world. And the battle is that of awareness versus submitting to the matter of fact on the ground. It is working because are able not to influence the legislations in many countries, the enforcement of this in many countries and the awareness. So, on all three levels we feel that the situation has gained much more momentum.
QUEST: The sexual exploitation we talked a lot on our program last night, so I don't want to dwell too much on that side, because for many tourists, leisure and business travelers, the main way we come into contact with human trafficking and with forced labor or child labor, or indentured service is in our everyday interactions with the people, isn't it?
RIFAI: Correct. Correct. The issue here is that the tourism infrastructure the transportation, the accommodation, and all other facilities that are at the service of tourists can become a conduit for such violations, the most gross violations of human rights. What we are trying to do here is turn this infrastructure into channels of awareness and use this very infrastructure, where every airline seat and every hotel room can become a message transmitter of how serious these violations are.
QUEST: The problem, of course, is that many of the companies involved, they're not directly involved in it. But they turn a blind eye, or they are selling a dream and the last thing they want is some nasty nightmare to sully it. You know as well as I do, Taleb, too often the traveling and tourism industry has closed its eyes to the obvious.
RIFAI: Well, Richard, I'm sorry those operators are now not only shunned, they are persecuted and they are hunted, all over the world. The legislation and the implementation, the level of implementation now is by far much stricter than it was before. And as our code of ethics says, this is not to resume and this is the absolute negation of it. And I must tell you that any business that is keen about the sustainability and the credibility of its operation does not, and never does, get involved in activities like that.
QUEST: Do you worry that on the other side of the equation, the tourists themselves, people-blithely go through marketplaces and don't notice child labor, blithely buy goods and don't think of how they were made, or they don't notice all sorts of issues of young kids working, old people working, poor working conditions.
RIFAI: That is precisely why the awareness campaigns are very important. Sometimes we run by things by life, we look at them but we don't see what is behind what we look at. And that is why we embarked on this campaign, "Don't let child abuse travel." It is a campaign that precisely aimed to deal with the situation that you are describing. In making people see not only look at what is going on around them.
QUEST: You see that is the call. It is keeping our eyes open. I've said this last night, and I'll ask you to say it again. It is keeping our eyes open for what is obvious, but you might choose to ignore.
RIFAI: And that is correct, and we may sometimes choose to ignore simply because we don't know. Not because we are very apathetic about it. It is simply because many people don't really know and we want the world to know that this phenomena does exist and we cannot accept it anymore.
QUEST: Taleb, as always, a treat and a pleasure to have you joining us from Madrid tonight. Good to see you, sir. Many thanks, indeed, for joining us.
You can find additional resources at our Web site. It is an important part of CNN. Go to CNN.com/freedom, for the modern-day slavery issues, the stories, the videos, the facts. And you can take a stand by participating in our iReport Freedom Project Challenge. It is at CNN.com/freedom. And join the conversation and ending modern-day slavery. Connect with us at Facebook.com/CNNFREEDOM. You can also find it on Twitter. Well, you'll find it all on the Web site.
Coming up, after the break, friends first, business partners later. Or is it the other way around? And it is always a happy marriage. "The Boss" Steve Hindy explains how he deals with his old drinking buddy.
(DESK BELL CHIMES)
(COMMERCIAL BREAK)
QUEST: Shares in Glencore finished below their offer price on the first full day of trading for London's biggest ever IPO. The commodity group's shares ended around 2 percent, that was still a little below the issue price of 530 pence, around $8.50. CNN's Emily Rubin looks at what lies in store for the newest player, which is not only on the market, but on the FTSE 100.
(BEGIN VIDEOTAPE)
EMILY RUBIN, CNN FINANCIAL CORRESPONDENT (voice over): They don't come much bigger than this, in terms of company size, its hold on markets and the shear interest in an initial public offering.
Glencore has been the talk of investors for months. The offering of shares at $8.60 values the 37-year-old commodity producer and trader at $59.3 billion. At the close of trade today Glencore will become only the third company to joins the FT 100 Index on the first day of trading.
Though the price has fluctuated since gray trading began last week, demand has been extraordinary for the biggest IPO since General Motors reentered the stock market last November.
ELIZABETH COLLINS, MORNINGSTAR: It certainly is very exciting that Glencore is coming to market. That they have to become less secretive. There is only a few global trading houses like this on the planet.
RUBIN: Before having to open the books ahead of this IPO Glencore was known for what wasn't known. It was never very clear how much precious metal is owned, how much coal, and oil it traded. How much agriculture commodities it controlled. Now it is known Glencore, in its own words, is one of the world's largest suppliers of the majority of the metals and minerals it trades.
It also controls a huge amount of agricultural commodities. In a time of rising food prices, and with its willingness to work in places like Zambia and the Democratic Republic of Congo, it is not without its critics.
COLLINS: If you are looking to invest in commodities, there are certain risks that you have to be willing to take. And there are certain strong personalities in the mining world. And equity investors either need to be OK with that or willing to look elsewhere.
RUBIN: The IPO will make Glencore CEO Ivan Glasenberg a multi-billionaire, though he vows not to sell all of his shares while he is working there. And hundreds of millionaires will be created out of Glencore employees.
The booming commodity prices over the past year has helped the buzz around Glencore, despite the recent softening in some prices. Retail investors will now have to decide it Glencore will ride a commodity bull or be the ultimate sign the commodity bubble is about to burst?
(END VIDEOTAPE)
QUEST: Emily Rubin reporting there.
Now on the markets, Ryanair, who you heard from the CEO earlier, was one of the few airline stocks to make gains. The shares were up 1.2 percent in London, other airlines fell, by and large. Well, the share prices did, you see what I mean.
(LAUGHTER)
Europe's major indices all closed higher. Mining, energies were pushing companies like Rio Tinto up 2 percent, Acela Metal (ph), 1 percent to the good in Paris. Even BP was a gainer at 1 percent in the London market.
The U.S. markets are open and doing business.
(DESK BELL CHIMES)
And that is how the Dow Jones is trading. Don't get excited. It is only up 7.5 points. Barely worth us, you and I, spending more than a second or two talking about. But it is higher, which I suppose that is to the good.
Now, when we come back in a moment, he is one of the most famous businessman of all times. What happens when Bill Gates gets involved in farming, and then discusses the future of the developing world. It is after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. This is CNN. And on this network, it's always the news always comes first.
Egypt's former president is facing a trial that could bring the death penalty if convicted. Hosni Mubarak is charged with allowing security forces to shoot protesters in Cairo's Tahrir Square. His two sons and Mubarak himself face charges of corruption and wasting public money.
President Barack Obama spent some time at the prime minister of the UK's residence, Number Ten today, talking with David Cameron. Their unofficial agenda included Libya, the Arab uprisings and the Israeli-Palestinian conflict. Mr. Obama plans to speak to parliament on Wednesday.
The ash cloud from the latest volcanic eruption in Iceland is spreading toward Central Europe and forecasters say it will reach Berlin at around midnight on Tuesday. It covers all of Britain air space early by Wednesday. Airlines have already grounded some flights. The experts are somewhat divided. Mostly, they say the eruption has already passed its peak.
More bad weather could hamper the search and rescue efforts in the American Midwest, as crews continue to look for survivors from last Sunday's tornado in Joplin, Missouri. At least 118 people were killed by the tornado, which makes it the deadliest ever recorded in America.
Bill Gates says everyday farmers hold the key to pulling the Third World or the developed world out of poverty. Now, the Microsoft chairman was speaking on behalf of the Bill and Melinda Gates Foundation. And as he was talking, he was quite clear he believes farming is a key part of any form of development.
Join me in the library and you'll see why Mr. Gates thinks that.
First of all, he's not talking African farmers or major agribusiness. He's talking about small plot farmers, which he describes as the world's most powerful lever to actually get people out of the poverty trap. They need to be self-sufficient, seed capital, and he believes, eventually, they are the future of moving people up the food chain, literally.
Now, the foundation is already providing some of that money. It's not only providing money for things like seeds, but it's also crucially providing money for engineering and discovery of better seeds for most suitable environments and for, of course, the entire scientific research to make them resistant to infection.
The Gates Fund needs protection during these austere times. Mr. Gates recognizes quite clearly that the austerity in Europe and the budget deficit problems in the United States means providing money, public money, for these causes might not be regarded as very popular in difficult times.
Even so, as you'll now hear, Bill Gates told me, this is one crucial way that we can make a difference.
(BEGIN VIDEO CLIP)
BILL GATES, CHAIRMAN, MICROSOFT: You want to empower them so that they have crops that they consume and sell. But what happens is no one is willing to put the research in to develop the new seeds, to help them learn how they should do the farming. And so by putting a little bit of government or philanthropic money in, you put them in a whole new level of -- of ability. And then, it's self-sustaining as a business after that.
QUEST: Self-sustaining up to a point. But -- and there is always, unfortunately, an economic but in these environments. Let's just take the -- the rising commodity prices, which is, of course, hitting people in their pockets. But, also a collapse in commodity prices can hit farmers. So they are very much at the whim of the market.
GATES: Well, over time, food prices have gone up because the population is going up and all we'd have to do is raise African productivity to be anywhere near European or American productivity and these farmers would do quite well and -- and the prices would -- would not be nearly as high.
QUEST: Particularly in your own country, where the budget deficit debate is very real, and there will be cutbacks, how can you advance that argument that helping somebody 3,000 miles away, let's face it, Mr. Gates, that's the easy bit to cut.
GATES: Well, over the last decade, the United States has become more generous, particularly in health areas. The AIDS support through PEPFAR Global Fund has been quite amazing.
Now, as you say, budgets are tight. So far, these foreign aid things have not been cut substantially and that -- there'll be, you know, in next year's budget and the next year's budget. If we can really explain what the impact is, I think we won't see substantial cuts there. Certainly, the U.K., Australia, many other countries, kept the -- the support for the very poorest, the aid that's very measurable, they kept that and decided that they would not balance their budget on the reduction of -- of helping the very poorest.
QUEST: This seems to me to be the perfect example of your theory and philosophy of how market economies and the business and the development and developing world comes together, because farming is a business and it is a small business.
Does it seem particularly attractive to you?
GATES: Well, it's very exciting, because the science of helping these farmers out is improving a lot, helping them avoid disease, getting this productivity up, using less water, being sustainable with new techniques. And all it takes is a little bit of help before they can go out and be making food that allows everyone to eat better.
So, yes, it's -- it's exciting to learn and it's great to see that governments who have lost a focus on the -- these farming issues, they're now coming back.
Now, as you say, budgets are tight. But people are realizing that they underfunded these agricultural efforts and they're -- they're encouraging each other now to get back and really make these investments.
(END VIDEO TAPE)
QUEST: Bill Gates, who joined me earlier.
Now, we'll stay with these development issues. And the this time, we'll turn our attention to the Middle East and North Africa. The World Bank is backing a change in the Arab world by offering $6 billion to Egypt and Tunisia over the next two years. The bank says funds are critical if the Arab spring is to mature in an Arab renaissance and not lapse into what they call an Arab winter.
Up to $4.5 billion is available to Egypt over the next 24 months. Payments depend on it seeing evidence of political reform. Tunisia could get up to a billion dollars, supporting freedoms and access to information, open government and retraining of the unemployed.
I spoke to the head of the World Bank, the president, Robert Zoellick.
And I needed to know, economically, what has to change now that political transformation has begun.
(BEGIN VIDEOTAPE)
ROBERT ZOELLICK, PRESIDENT, WORLD BANK: On the economic side, you know, we're announcing our commitment to try to move forward with about $6 billion for both Tunisia and Egypt over the next two years. But connected to a more open governmental process, to draw people into it, job creation, both short-term, but also the basis for long-term, social and economic inclusion, and this includes sort of lagging regions and groups that have been left behind, including women, but ultimately all connected to building stronger private sector investment and growth.
QUEST: I was talking to an investor in Egypt over the last 24 hours who was basically saying, when was I going to visit there again?
And I said, well, how are things?
And he said they're a total mess, things are far from getting back to normal.
So in that environment, are you worried that there will be slippage back?
ZOELLICK: There's always that risk. And we're also putting out some economic forecasts that show the slippage in Tunisia and Egypt, in part because of tourism, lack of investment. But that's one reason why some of our approaches are to try to disperse money more quickly, some of that toward programs that would help deal with some of the expectations of people in the Square, job creation, but also some of the fundamentals that will deal with the long-term side, for example, creating the type of industry where you can draw in private investment, whether local or foreign, to create the jobs you're going to need over time.
QUEST: There's no guarantees of success, but you could end up throwing away a bit of money that gets wasted.
ZOELLICK: You're right that we've got a transition government in both Egypt and Tunisia. And that adds to the challenge. The governments have been able to own the process. And we're working with them, along with some of the other development banks and the IMF, to make sure the right steps are taken. But we have to build in flexibility for some of the questions for the future.
I think the best way to deal with that, Richard, is to try to include the things we've had about, for example, Freedom of Information Acts, having the -- the governments communicate what they're doing.
QUEST: The reality and the prospect and promise are so far apart at the moment.
ZOELLICK: Well, you know, I'm not so sure I'd agree with that. I think the people who came out into the street, the people that forced these historic revolutions what they have a say. I was just in Tunisia and Morocco in the past couple of weeks. I met with civil social groups. A lot of them are fresh. They're starting. Some of them use social media and communications.
But with the new finance minister of Tunisia, I just spoke to again this past week, they're trying to communicate more broadly, even as they set up the political and electoral...
QUEST: Right.
ZOELLICK: -- processes.
QUEST: How finely balanced do you think it is at the moment?
Where is the balance of risk?
ZOELLICK: I think this is a very sensitive moment, Richard. And, of course, it varies by country. I think Tunisia is a little further along on the economic side. But it had a leaderless revolution and that's part of the thing that creates the challenge as they move toward the next step is having the interim government carry it along.
I think in Egypt, a lot of the government officials that we're trying to work with are a little uncertain about what steps they should take.
So I think this G8 summit in Deauville, I hope, will help push the process along, get them the right support, but recognize that will have to build in flexibility, because this is an uncertain, promising prospect, but also some risks.
QUEST: On the program tonight, Bill Gates tells us that governments in the G20 must not withdraw their assistance and support, but he's fearful in budgetary times, that they will do just that, in difficult times.
It's starting to look as if it's an uphill struggle for you.
ZOELLICK: It is. I -- I was pleased to see President Obama talk about some support for Egypt in his recent speech. Some of the steps we've taken to support Tunisia quite quickly had support from some of the E.C. But that's one of the reasons our institutions exist, is that we can try to provide some of the financial and policy support quickly. And were trying to do it in a coordinated fashion across our institutions.
(END VIDEO TAPE)
QUEST: That's the president of the World Bank, Robert Zoellick, on Egypt and Tunisia.
Let's start with international politics and economics and add a dose of technology. A pre G8 summit for Internet's leading business brains. The G8 is in Paris and the technology boffins have taken front stage.
(COMMERCIAL BREAK)
QUEST: Nicolas Sarkozy has called for governments to play a part in regulating the Internet. At the e-G8 summit he said he wants ground rules to limit online excesses. Key players were targeted in the dot-com industry. And that included Facebook's Mark Zuckerberg and Google's Eric Schmidt.
The attendees will continue this two day tech fest on Wednesday. And this is what we've heard so far.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: It's beautiful. It's (INAUDIBLE).
MAURICE LEVY, CEO, PUBLICIS GROUP: And it is the conclusion of that -- of those discussions that I will bring to not only President Sarkozy, but the head of states.
JIMMY WALES, FOUNDER, WIKIPEDIA: I think one of the best things that's coming out of this is that whatever regulations are needed on the Internet, what we have had a long track record of is really clumsy regulation, regulations that don't actually solve the problem that they're meant to solve and cause a lot more problems.
So I think one of the things that a lot of the people here are saying is, as we heard in the session earlier today, first do no harm. It's really important for governments to realize that simply saying we don't like piracy, therefore, we're going to outlaw it, doesn't actually solve the problem.
BEN VERWAAYEN, CEO, ALCATEL-LUCENT: The Internet is global and regulation is local.
How do you get that really aligned?
And we see many examples. We have examples that you have privacy laws in the U.K., but there you go on Twitter and it's outside the law. You get things that are physically located in one jurisdiction but are used in another jurisdiction.
Those elements we cannot ignore, because they're truly important. And you can't solve them one jurisdiction at a time.
So I think that what President Sarkozy has done by saying this needs to be done on the level of the G8, is the right thing to do.
JOHN DONAHOE, CEO, EBAY: Hopefully it's a common dialogue. Itkws -- I think what doesn't do any good is a -- a polarized notion that either it's total regulation or none, that it's -- it's -- and I think President Sarkozy hit it in his opening, when he's talked about establishing a dialogue, a dialogue between the -- the policymakers and the -- the -- the Internet platform providers. And this is a good -- a good first step in that.
CHRISTINE LAGARDE, FRENCH FINANCE MINISTER (through translator): A reasonable regulation, because the responsibility of government is to assure flexibility for businesses so that companies which are growing find their place, gain value and create employment. And our responsibility is also to create safety. And safety happens through reasonable regulation.
WALES: The next billion people are going to come online in the next 10 years, maybe faster than that, even. And they're not coming online from the U.S. and Europe and Japan. We're all online, mostly. They're coming online in China, in India, in Africa, South America.
So huge volumes of people are going to be joining the -- the global conversation. They're going to be blogging. They're going to be innovating. They're going to be writing Wikipedia in their own languages. And I think it's going to have a remarkable impact on the world.
VERWAAYEN: The billion people you're talking about, the non-haves who will have the opportunity to go and improve their lives, will simply not stop where they are today. They won't. So they will create new ecosystems, new -- new trading systems, new abilities to work together. And I think it's only beneficial to all of us that we are aware that the status quo is not to stay.
LEVY: If you look at the new world, it's much more about collaboration and cooperation than -- and stimulation, obviously, than the confrontation. I don't believe that confrontation is helpful. I -- I think that we can get much more by collaborating.
(END VIDEO TAPE)
QUEST: Now, you heard from Christine Lagarde in that report. Interesting, though, her views are on the digital technology. We did, of course, try to ask her about a possible IMF candidacy. Madame Lagarde wouldn't discuss it.
When we come back, The Boss.
(COMMERCIAL BREAK)
QUEST: Moving your business into the world's most booming economy, it sounds like a no-brainer.
As Michael Wu finds out tonight, buying into the Chinese success story involves problems of its own.
An ocean away in New York, Steve Hindy is going back to business with an old friend. As he knows well, that's not always easy. The experiences of The Boss.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: (voice-over): Previously on The Boss, recognition and reward -- Steve Hindy never forgets the importance of engaging his staff.
STEVE HINDY, FOUNDER & PRESIDENT, BROOKLYN BREWERY: You've got to be able to get other people excited about what you're doing.
UNIDENTIFIED MALE: And in Shenzhen, China, Michael Wu learns the trick of raising prices.
MICHAEL WU, CHAIRMAN, HK MAXIM'S GROUP: We're going to raise prices. But we're going to do this very gradually, so it won't be as noticeable that we are raising prices.
UNIDENTIFIED MALE: Nine months ago, Michael Wu was a man with a mission.
WU: This year is a big focus to enter China. We see huge potential for our brands all over China.
UNIDENTIFIED MALE: Today, he's older and wiser. He's found that China is challenging and the reality is proving expensive.
WU: Hiring people is very difficult now. We've having a huge turnover in our staff just because the economy is very active and it's very easy for them to get jobs elsewhere.
UNIDENTIFIED MALE: There are more than 90 bakeries in China's Guangdong Province alone being fed by China's turbo-charged economy. So Michael is finding it difficult to retain staff. And that is turning into a major problem.
WU: When we moved our factory to Shenzhen, which we did -- we just did so recently, it's also a very big problem hiring factory workers. These are some of the everyday problems that we are facing.
UNIDENTIFIED MALE: And his problems don't end here. The sheer size of China makes just delivering his products a nightmare, let alone selling them.
WU: In Hong Kong, we don't have to worry about logistics, because everything was so small. But in Guangdong now, where everything is spread out so far, logistics is a big cost and a big concern.
UNIDENTIFIED MALE: The going may be tough, but Michael is battling on with his plans to open at least 40 stores in Guangdong this year.
UNIDENTIFIED MALE (through translator): Is our margin dropping?
The margin has improved over the last two months.
UNIDENTIFIED MALE: Driving the expansion, profit. As the chairman, Michael is all too aware that China's massive spending power makes it all worthwhile.
WU: The average selling price of a product is actually now more expensive than in Hong Kong because it's priced in renminbi. A few years ago, we were about 25 percent lower than Hong Kong.
UNIDENTIFIED MALE: One country, two systems -- the political formulae of Hong Kong and the mainland is reflected in the business climate between the two entities, as our boss has discovered.
WU: I think the future is very good and it will be a long path ahead with a lot of challenges, but we're going to get there one day.
UNIDENTIFIED MALE: As expansion plans kick into high gear at the Brooklyn Brewery, Steve Hindy is visiting a new business venture that he has invested in.
HINDY: How are you doing?
UNIDENTIFIED MALE: Steve is at the New York Distilling Company looking for the man heading up this project.
HINDY: Is Tom around?
Tom?
UNIDENTIFIED MALE: He's here to meet Tom Potter, his former business partner at the brewery.
TOM POTTER, PRESIDENT, NEW YORK DISTILLING COMPANY: Welcome to the Distillery.
HINDY: Thanks. It looks good.
POTTER: That's Blue Nun (ph), right?
UNIDENTIFIED MALE: Before they became business partners, they were friends -- neighbors, in fact, who enjoyed home brewing at the weekend.
HINDY: We were watching the Mets on your little TV in the back yard and I was trying to convince you that we should quit our jobs and start a brewery.
POTTER: A few of our planes.
HINDY: Yes.
UNIDENTIFIED MALE: Tom was skeptical. He knew that starting a brewery was a tough business to succeed in and starting it with a friend even more so.
POTTER: I think the odds that it would work are pretty small, you know. Most of my friends, even most of my good friends, I could never be in business with.
UNIDENTIFIED MALE: Over time, Steve won him over with figures showing the explosive growth of micro brewing and the possibility of turning a pastime into a successful business venture.
HINDY: It was pretty impressive. It went from a stupid idea to something, well, maybe there's something here.
UNIDENTIFIED MALE: They made it work for 18 years, turning a partnership into a multi-million dollar business. On several occasions, their friendship took a hit and they had no choice but to redefine it through a partnership agreement.
POTTER: There were definitely times when it was hard.
HINDY: The relationship was...
POTTER: You know, the relationship was rocky and, you know, you had to step back and take a breath and say, you know, we -- we've got to work this out. But I think it did help that we -- we had a very similar vision of where we wanted the business to go. We were almost always in sync on that.
HINDY: And we both were very determined. I mean we were going to make this work even when it wasn't working.
POTTER: Yes.
HINDY: And that -- that was about half the time.
POTTER: It was, yes.
UNIDENTIFIED MALE: In 2004, they sold their distribution business and Tom left Brooklyn Brewery. Since then, Steve has built on their success and his own experience.
HINDY: For me, the biggest hurdle was going from being an entrepreneur where you're doing everything yourself and if it's got to be done, you -- you go do it and becoming a manager, where you're sitting in your office, talking to people and trying to get them to do what has to be done.
That -- that's tough.
UNIDENTIFIED MALE: Next week on The Boss, as Michael Wu's expansion plans take shape, Richard Quest goes for a visit with the boss.
(END VIDEO TAPE)
QUEST: That's The Boss next week on QUEST MEANS BUSINESS.
But that is our program for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope your travels go all right.
And, of course, I hope it's profitable.
The news is next.
END
