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Quest Means Business
Greek Bailout Money Stalemate; Rise of the Greek Far Right; Spanish Eviction Moratorium; Merkel Visits Portugal; Dollar Holding Steady; BBC in Turmoil
Aired November 12, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: The protests and parliamentary battles are over. Now, Greece needs the EU to unlock its rescue fund.
Relief for Spain's most vulnerable homeowners after a woman commits suicide.
And move over Saudi Arabia, the US is on track to become the world's biggest producer of oil
Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. Sweeping austerity, a glowing report card, and nothing to show for it. Greece has done all it needed to satisfy its lenders, and yet, its next load of bailout money is for the moment nowhere to be seen.
Eurozone finance ministers are meeting in Brussels tonight. The euro group head Jean-Claude Junker says that they won't make a decision on the next Greek bailout installment today even though the country could actually default on a payment later on this week.
Well, Greece has already kept up its side of the bargain on Sunday, passing a new austerity budget. Junker says that a crucial report compiled by the EU, the ECB, and the IMF on Greece is now complete. It also looks positive, and as such, it's now time, quote, "to deliver in the most efficient way possible." But still, there's been no sign of any cash for Greece as yet.
What may come out of this meeting instead is extra time. Ministers are expected to give it an additional two years to hit its deficit targets going forward.
Greece still has quite a few more hoops to actually jump through later on this week. Let's have a look at them. The government's already had to weather protests in Athens over the weekend ahead of the parliament's vote on those new austerity measures.
As we mentioned earlier, an austerity budget was also approved by parliament late on Sunday night. That was something that the government would have hoped could have brought more bailout cash.
(BEGIN VIDEO CLIP)
ANTONIS SAMARAS, PRIME MINISTER OF GREECE (through translator): Greece did what it was asked to do, and this is recognized by everyone. And now it is time for lenders to do what they promised they would do, and they will do so. Then, we will turn to what is still to come. Each country needs to discuss it with their parliament.
(END VIDEO CLIP)
DOS SANTOS: As we know, though, the money isn't coming anytime soon, at least for the moment. Instead, Greece is likely to have to borrow more money to pay off its old debts. They'll have a treasury bill auction, which will take place this Tuesday, and that should raise around about 3.5 billion euros.
But that still leaves this country with at least 1.5 billion euros in terms of a shortfall. They're going to have to pay back the old treasury bills that actually mature and come due on Friday.
The only alternative for the moment, it seems, would be to roll over the debt, and that would effectively perhaps spell a default. Let's go over to Jim Boulden, who joins us now, live in our London studio, to break this down.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: OK, you did break that down pretty well.
DOS SANTOS: Well, thank you.
BOULDEN: It can be very confusing.
DOS SANTOS: Thank you, Jim. With the help of an able team of producers. But let's home in on why we find ourselves in this situation. Because it must be incredibly frustrating for viewers for -- also the politicians who are sitting around the table tonight. Tough to take one step forward -- and a painful step forward for Greece -- only to feel that they're taking two steps back.
BOULDEN: It's because of the way Europe is structured, isn't it? Everything takes a long time to go through, and you've got to go through A before you can get to B. So, Greece had to make these moves, as we've seen, both the austerity vote and the budget vote.
But the troika, as you mentioned, then has to present its program, what it thinks Greece has done to the finance ministers, who'll be looking at that tonight and tomorrow.
And then, the finance ministers have got to say they've done enough or haven't. And of course, we know that there are still steps they have to go through. It's not just a rubber stamp.
DOS SANTOS: So, what it seems as though we're going to hear is perhaps a lot of friendly talk, a lot of commitments to keeping Greece within the euro, but actually no hard cash.
And then, what people across the city of London and other financial centers in New York are asking themselves, is this another scenario where Greece will actually default, or is it just more saber-rattling?
BOULDEN: Well, I think -- look, let's be honest. They're not going to let Greece default when it's only a couple billion euros, so we'll work that out somehow to get through this week.
DOS SANTOS: Because that's a relatively small amount of money --
BOULDEN: Yes.
DOS SANTOS: -- if you look at what's been thrown at Greece so far.
BOULDEN: Right. So, Greece -- the next tranche for Greece is billions and billions of euros. That will come once all the Ts have been crossed and the Is have been dotted. So, I think we get through this week OK. It's not going to be that much of a problem.
It's just there are countries like Finland and others who want to make sure that what they're doing actually -- that Greece has actually implemented the austerity that they've promised to. Just because they vote on it in parliament doesn't mean it's actually implemented.
So, ever quarter, we gave to hear from the troika, is it being implemented? We know that the budget deficit is getting worse and not better. We know -- let's be honest -- they're not going to reach the target of the budget deficit by 2020.
So, something else has to happen. Will it be another loan to Greece? Will it be that the bonds they had, will they bring the interest rate down on the money that's already been loaned? There are lots of different mechanisms that can be put into place.
DOS SANTOS: And they're going to be talking about those mechanisms, apparently, this evening, all the mechanisms coming through, perhaps even giving Greece cash to buy its own bonds back off the markets. Would that help?
(CROSSTALK)
BOULDEN: Loan Greece money --
DOS SANTOS: Who knows?
BOULDEN: -- to buy its own bonds to then pay the money back from those bonds back to Greece and give the money back from those bonds back to Greece, and give the money back to Greece another way.
DOS SANTOS: What does this mean for the average person on the street, because for somebody who's witnessed those kind of anti-austerity process, outside the parliament this weekend, Greece finally manages to pass through that vote. But still, it comes across as though their good will is being stretched. And patience.
BOULDEN: Yes. And what the Greek people keep saying is we don't -- every time we go through this process, then we're told three months later we have to do more austerity. So, that's why they're looking at possibly giving Greece two more years of deferment from the inevitable, to give Greece more time.
It doesn't mean that pain will be less. It just means that a default isn't going to come right away, if in fact they have to have, what? Maybe give them more break on their bonds in the long term. Or does Greece start growing in 2014, as is being projected?
DOS SANTOS: That's the trillion-dollar question, isn't it?
BOUDLEN: Yes, I know.
(LAUGHTER)
BOULDEN: I'm not saying it's going to happen.
DOS SANTOS: For the moment. Thanks so much. Jim Boulden there in our London studio, breaking down what exactly could happen this evening at that eurozone finance ministers meeting.
Well, there's more at stake here than just money. In extreme economic times, some Greeks are actually turning to extremists politics, as well. Openly fascist parties are now enjoying more support across this country than ever before. And the most vulnerable communities being turned into scapegoats. Diana Magnay has this report, which some viewers might find upsetting.
(BEGIN VIDEOTAPE)
(CROWD CHANTING)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): Despite its frightening and sometimes violent presence on the streets, Golden Dawn is now Greece's third-largest party. It has 18 seats in the parliament.
NIKOLAOS MICHALOLIAKOS, LEADER, GOLDEN DAWN (through translator): We may do the Hitler salute, but at least our hands are clean.
MAGNAY: The party campaigns with the slogan "Clear the Filth." The filth, its code for African and Asian migrants.
"MANOS," GOLDEN DAWN SUPPORTER (through translator): I don't like foreigners because they cause a lot of trouble. They scare people. They rape women. They kill for no reason. Many people blame Golden Dawn for being racist, but we're not racist. We're nationalists.
MAGNAY: At a free emergency clinic in central Athens, a string of patients seek help for racial attacks.
"SIMON," VICTIM OF RACIAL VIOLENCE: "What are you doing here, Black Mambo? Why are you in our country? Go from here. Go to hell." They come from behind and I fall down.
MAGNAY (on camera): Is it because they hate foreigners, is that why?
"SIMON": Exactly. It's obvious.
MAGNAY (voice-over): We meet the head of the Tanzanian Community Center, Francis Williams. In September, a mob attacked his center and several shops on the same street. A terrified neighbor shot this video.
(PEOPLE SHOUTING)
MAGNAY (on camera): She was saying, "Well done," the police, for protecting you?
FRANCIS WILLIAMS, PRESIDENT, TANZANIAN COMMUNITY, ATHENS: No, no, no. For protecting him.
MAGNAY: For protecting them? Protecting Golden Dawn?
WILLIAMS: Yes.
MAGNAY: And then offering them drinks?
WILLIAMS: Yes, yes.
MAGNAY (voice-over): Williams points out how police stood by whilst black-clad youth smashed windows. The community center was ripped apart.
WILLIAMS: And we expect maybe the police could have given us a hand, or at least confront these people, at least arrest some people.
MAGNAY (on camera): But nothing.
WILLIAMS: But nothing, of course. Just looking at them and -- that's why we think the police are part of them.
MAGNAY (voice-over): Police spokesman Christos Manouras said he would investigate any video which suggested officers had turned a blind eye that night. In a written exchange, I asked him whether the police had failed to remove pockets of fascism within the police force.
He wrote, "Unlawful behaviors, wherever they come from within the Greek police force, are not and will not be tolerated."
A new police unit is being set up, tasked with confronting racist violence. Undaunted, Golden Dawn is now policing whole neighborhoods itself.
MAGNAY (on camera): This is one of two squares in the center of Athens that we're told is pretty much controlled by Golden Dawn. Since 2009, they've made it very difficult for immigrants to sit here, to stay here, to sleep here.
And that's maybe why you now see so many children playing in this square, why so many Greek people say they're better protected by Golden Dawn than they are by the police.
MAGNAY (voice-over): Elderly supporters are not ashamed to show their political colors.
UNIDENTIFIED FEMALE (through translator): Golden Dawn saved us. Without them, we wouldn't be able to go out of our houses. They came in groups and chased the foreign people who were criminals, of course. And right now, we are able to sit on these benches in peace.
MAGNAY: But there are also the law-abiding residents of migrant origin who've long considered Greece their home and who now live in a state of permanent fear.
MAGNAY (on camera): How long have you been in Greece?
WILLIAMS: I've been here for the better of 12 years.
MAGNAY: And will you stay?
WILLIAMS: No way. I've -- it's -- my dream of being here, I think, has been benched. I feel I have to go back home.
MAGNAY (voice-over): Hours after we leave, his center is attacked again, the door blown away with a stick of dynamite. Such is the ugly mood in what was the birthplace of democracy.
Diana Magnay, CNN, Athens.
(END VIDEOTAPE)
DOS SANTOS: Those austerity measures are also taking their toll on Spain. We'll be live in Madrid, where banks have been forced to respond to the fury that has surrounded a woman's suicide.
(COMMERCIAL BREAK)
DOS SANTOS: Some of Spain's most vulnerable homeowners are getting a bit of a break from the banks. An industry group says that people who are unable to pay their mortgages at the moment won't be evicted if they face, quote, "circumstances of extreme necessity."
The moratorium on evictions will last for two years. The move follows the recent suicides of two homeowners, and that sparked emotional demonstrations across the country. CNN's Isa Soares now reports.
(BEGIN VIDEOTAPE)
(PEOPLE CHANTING IN SPANISH, BANGING ON PANS)
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT (voice-over): With pans and spoons in hand, they plead for a right to keep their home. Their placards need no translation. They blame the banks. "Murders!" they shout.
Their indignation comes after a 53-year-old woman committed suicide just as authorities prepared to repossess her home.
UNIDENTIFIED FEMALE (through translator): We the citizens elect a government so that they help us, and until now, the government has given their support to the banks. They've been rescued while they are ruining us.
SOARES: According to Spain's El Pais, some 400,000 people have been thrown out of their homes since 2008, all because they could not meet payments on their mortgage.
VICENTE PEREZ, PLATFORM FOR PEOPEL AFFECTED BY MORTGAGES (through translator): We have cases of older people, some in their 80s, who lose their homes because they act as guarantors for their children. They weren't the ones buying, they were getting second mortgages to help their children out.
SOARES: Sixty-two-year-old Noemi was one such person. I met her and her family back in July of this year.
NOEMI SARANGO, EVICTED RESIDENT (through translator): What I wanted was to rent. I did not want to buy because I thought, how am I going to pay so much money? But they put all those things in your head. They tell you you're going to have a flat. Pay little by little, like renting. And then you keep the flat, it will be yours.
SOARES: Noemi's fight for her home came to an end on the 29th of September.
SARANGO (through translator): I stopped paying the mortgage because I could no longer afford it. I didn't even have money to eat.
SOARES: That's the day she was evicted.
SARANGO (through translator): I don't wish this on anyone.
SOARES: She lost her property and her sense of achievement with it. And at the end, Noemi was left with 80,000 euros of debt in her name.
(WHISTLE BLOWS0
SOARES: Back on the streets in Madrid, these protesters continue to battle for cases like Noemi's. It may be a while until the rattling of pans and spoons are silenced.
Isa Soares, CNN, London.
(END VIDEOTAPE)
DOS SANTOS: And those protests are being difficult for Spain's banks to ignore. CNN's Madrid Bureau Chief Al Goodman joins us now, live from the Spanish capital. Al, a lot of this has to do with this ongoing spiral of -- a dept spiral, let's say.
Many people feel hopeless and helpless, largely because of legacy mortgages in Spain as well. Even if they give the property back and the keys back, they still have to pay down the debt.
AL GOODMAN, CNN MADRID BUREAU CHIEF: Indeed. And so, they're trying to attack us on various fronts, and that's what these two suicides recently in the last few weeks, the woman in northern Spain, a man in southern Spain, both age 53, bot committing suicide just as the eviction notice was about to be served.
That has really pushed the two sides, the conservative government and the socialist opposition, which haven't been able to agree on anything, together, and they're trying to find a solution. They're pushed, for instance, by leading judges, who are saying you have to come up with solutions.
Even a major police union is offering to pay legal fees and salary -- salaries for its officers who don't want to take part in these evictions. So, there is a major movement now to try to solve the problem.
On the one hand, it's what to do about the long-term problem where they get not just your home, but they also can go after your future earnings. On the short-term, it's how to prevent these evictions for the people who are the most vulnerable. Nina?
DOS SANTOS: It must be very difficult for the government to legislate on this at a time when, of course, they're having to recapitalize the banking system, take money from other countries, and that could come with conditions that will require them to shut down some of those very banks that have lent to these homeowners.
GOODMAN: Right. If we take it back, it's the property bubble that went -- that bust four years ago, and so there was an endless -- everybody thought they could be a homeowner. The banks, according to many accounts, actually pushed people unknowingly into getting these mortgages, like that was referred to in the story we just saw.
And so, you've got right now the banks under pressure, they're about to receive a huge bailout from Europe with a lot of conditions, and they're trying to get any sort of euros they can out of anybody. And so, they don't want to back off.
But they've sort of been forced to right now. That's why you have the banking association coming out this day saying, we'll take the moratorium for two years on the most extreme cases. But how many people will that actually affect? The figures range from 150,000 to 400,000, depending on who you talk to on how many people have been evicted in the last four years.
And this measure will not be retroactive and it may affect some thousands of families. So, it's not going to stop all the evictions. Nina?
DOS SANTOS: Is this being viewed in Spain as a quick fix, let say? Because a two-year moratorium is very different to a promise of, let's say, debt relief, to people in a country where some might argue debt relief, just like for Greece, is what's necessary here.
GOODMAN: Well, nothing quick about this, Nina. This -- these protests, like we just saw, have been going on for months. Our colleague Isa's been out, we've been out, our crew's been out, we've had another CNN correspondent been out in the last year. We've seen these kinds of evictions and stopping evictions, there are all sorts of creative ways to try to stop them.
What some of these people are saying is, OK, take the house back, but let me rent here so you the bank will get some money. You won't get as much as paying off the mortgage, but at least I won't be out on the street.
So, there's a variety of options that are out on the table, and they're trying to say to the banks, look, the economic crisis is bad enough, but you can't throw all these people, who were normal working people until recently, but now with the unemployment rate over 25 percent, they're not normal anymore. Nina?
DOS SANTOS: Yes, it just goes to illustrate the human impact of what's going on financially in Spain's banking sector as well. Thanks so much. Al Goodman, there, at CNN Madrid at this late hour over there.
Well, speaking of Iberia, the German chancellor Angela Merkel is visiting Portugal today and has praised the government there for its resolve to try and solve its own debt crisis. She's publicly showing her support these days for the government and Lisbon, whose popularity has slipped because of austerity measures.
Well, it's undergoing quite a bit of pressure at home to renegotiate the terms of its $99 billion bailout and, in fact, unions have called for demonstrations to take place to try and greet Mrs. Merkel as she arrives in Lisbon.
Time for a Currency Conundrum for you out there. Now, South Africa has released a rebound set of bank notes that will feature a portrait of Nelson Mandela on them. My question to you this evening is, if the South African currency is the rand, what is the krugerrand?
Is it A, the former South African currency? Is it B, a gold coin? Or C, could it be a nickname for the 100 rand note? We'll have the answer to you for that Currency Conundrum later on in the show.
Well, the US dollar is holding steady against the world's major currencies this Monday. Right now, one euro buys you just over $1.27. That means it's almost unchanged from the rate we saw on Sunday. It's up around a tenth of one percent against sterling, but flat against the Japanese yen.
(COMMERCIAL BREAK)
DOS SANTOS: The British Broadcasting Corporation is looking for new leadership as the corporation is plunged ever deeper into a crisis over two separate child abuse sex cases.
Two executives, the director-general and also the deputy director of news -- or sorry, director, I should say, and deputy director of news, now stepping aside for now, at the moment, because of what the BBC calls, quote, "a lack of clarity surrounding the senior chain of command."
The scandal toppled the BBC's director-general over the course of the weekend. And in fact, the director-general serves as the corporation's chief executive and editor-in-chief. George Entwistle had only been in that job for about 54 days.
And now, there's open outcry over his $700,000 payoff. That's equivalent to a full year's salary. CNN's Dan Rivers has more on the circumstances behind George Entwistle's downfall.
(BEGIN VIDEOTAPE)
DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It's a scandal that has claimed the top man at the BBC.
GEORGE ENTWISTLE, FORMER DIRECTOR-GENERAL, BBC: I have decided that the honorable thing to do is to step down from the post of director- general.
RIVERS: But the BBC remains under the spotlight, the world's media camped out on its doorstep, including BBC news crews reporting on their own employer, as more casualties of the child abuse scandal are announced among the broadcaster's senior management.
The head of news, Helen Boaden and her deputy Stephen Mitchell are both stepping aside. A man who used to be a marketing guru for Pepsi is now temporarily taking over at the top.
TIM DAVIE, ACTING DIRECTOR-GENERAL, BBC: Today, I've announced that we are establishing one very simple line of command in news. That's the first task for me as a new acting director-general coming in, so that I can deliver the journalism that is trusted.
UNIDENTIFIED MALE: Tonight, this program apologizes. A key allegation in a report about child abuse was wrong.
RIVERS: The scandal that caused such consternation here boiled down to this: a failure to broadcast allegations of child abuse about a BBC personality, Jimmy Savile, followed by the rushing on air of an inaccurate report claiming a conservative politician was a pedophile. Now, the politicians are demanding answers about who actually made those decisions.
JOHN WHITTINGDALE, BRITISH MEMBER OF PARLIAMENT: We need to find out who was consulted, who had the final authority to take that decision, and on what grounds they possibly thought that this program should be broadcast.
TESSA JOWELL, SHADOW UK CULTURE MINISTER: Will she agree that the next victim of this crisis must not be the independence of the BBC?
MARIA MILLER, UK CULTUER MINISTER: The only organization that can restore the public's trust in the BBC is the BBC itself.
RIVERS (on camera): But amid all the hand-wringing and resignations here at BBC, there are plenty who feel the victims of the child abuse should not be forgotten.
CHERIE BLAIR, HUMAN RIGHTS LAWYER: We need to do more to ensure that if a child is in difficulty that that child's voice is heard, and that attention is paid to them. Because sometimes we have tended to think that the victim -- we haven't listened to what the victim is telling us.
RIVERS (voice-over): Reform for the way child abuse victims are cared for and reform at the BBC for the way those stories are reported.
Dan Rivers, CNN, London.
(END VIDEOTAPE)
DOS SANTOS: The global energy landscape is changing. Next, the director of the International Energy Agency tells us how the US is catching up with the world's biggest oil producers.
(COMMERCIAL BREAK)
DOS SANTOS: Welcome back. I'm Nina dos Santos. These are the headlines this half-hour.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): The Gulf Corporation Council says that Syria's new opposition coalition is the legitimate representative of the Syrian people. That's according to news agencies. The head of the bloc, the cleric Ahmed al-Hatib, is also seeking diplomatic recognition from the Arab League.
Eurozone foreign ministers are meeting in Brussels tonight. The Eurogroup head Jean Claude Juncker says that they won't make a decision, though, on the next Greek bailout installment today. That's even though the country could actually default on a payment that comes due this week.
Spanish banks have pledged to stop eviction of some homeowners who fall behind on their mortgages. The banks will relent only in cases of, quote, "extreme necessity." The moratorium (inaudible) will last two years. It comes after a woman committed suicide after she was being evicted, the second such incident to take place in recent months.
The European Union has proposed stopping its continental airlines emission tax for one year. Climate Commissioner Connie Hedegaard says that stopping the clock to allow time to work on an alternative international agreement for them. The E.U.'s plan had been heavily criticized by the airlines.
(MUSIC PLAYING)
DOS SANTOS: The United States is on track to become the world's largest oil producer within the next eight years. This is the International Energy Agency's forecast for 2015. The U.S. is set to pump about 10 million barrels of oil a day.
That close on the heels of Saudi Arabia, as you can see there, with just shy of 11 million barrels per day. And this is how the IEA sees the sector for the year 2020. As you can see here, the United States has overtaken Saudi by around about half a million barrels per day.
The IEA also says that the United States will be self-sufficient in energy by 2035. That's (inaudible) to technological advances that make it commercially more viable to extract oil from shale rock.
Maria van der Hoven is the International Energy Agency's executive director. And earlier today she told me that the U.S. oil boom is (inaudible) the global energy map.
(BEGIN VIDEO CLIP)
MARIA VAN DER HOVEN, E.D., IEA: All these imports that now come from Saudi Arabia and from the Gulf states, from OPEC countries, going into the -- into North America will have to look for different markets.
While and these different markets are there, they are in China; they are in Asia. And country like China and India because that's where the economy is emerging. And that's where the largest growth in energy demands will be.
DOS SANTOS: So what will be impact the OPEC?
VAN DER HOVEN: Well, what we can see now, as I mentioned, that the United States will be the world's largest producer of oil by 2017 for a number of years. And after that, Saudi Arabia and other countries will take over again.
But for OPEC, there's another gamechanger and this other gamechanger is Iraq. And Iraq has huge reserves of oil and gas, and they will come to market in a couple of years. And it will triple their output from now around 3 point and a little bit million barrels a day to more than 8 million barrels a day.
DOS SANTOS: Yes, in fact you're expecting the route to become one of the world's largest producers with about 45 percent market share.
VAN DER HOVEN: Yes, that true.
DOS SANTOS: That is huge.
VAN DER HOVEN: That's huge. But you know, the availability is so (inaudible) oil that's there is easily accessible that it's really is very -- at it -- at a low cost, you can produce it at low cost. But their problem's always water with transport routes, with human resources, with electricity. So it's a different kind of problem they face.
But for instance, in the United States, we have seen that this shale gas revolution and also the light fight (ph) oil production brings jobs, brings prosperity. And I think this is something that has to happen in Iraq as well, because it will help them to create a new environment, to create a new country.
DOS SANTOS: But that's making a lot of assumptions about infrastructure, about the political stability of places like Iraq and other countries around the world that are listed on this report of yours.
VAN DER HOVEN: But that's always the same thing. You have a number of assumptions. You can see what's happening now and then you extrapolate it into the future.
DOS SANTOS: Well, one thing I wanted to attack here is the fact that even if the United States were to become the number one oil producer, according to your targets here, by 2017, (inaudible) Saudi Arabia, it could peak very early, though. That's what the research shows.
VAN DER HOVEN: Exactly. It could peak very early. And that, of course, depends on the speed in which all these resources are going to be developed. And but nevertheless, there will be this development and it's only because technology helps to bring this light fight (ph) oil to the market and to bring the shale gas to the market.
DOS SANTOS: Briefly, what does that mean for the ultimate consumer, then?
VAN DER HOVEN: Well, we do hope, of course, as it will have some impact for the ultimate consumer as well. And it's not only about job creation, but it's also about money. But I have to tell you that it's not only -- you know, there is this supply and demand cycles. And the more supply there is, the demands, well, it will be met.
But it's not only about extra supply, it's also about energy efficiency. And, again, there, this is also one of the drivers in the United States, not only about domestic production going up, but also about fuel efficiency going up and that means less dependence on oil. So there are two things to go together and example we can see now with our own eyes in the United States.
(END VIDEO CLIP)
DOS SANTOS: The U.S. -- sorry -- U.K. tax office hasn't had a beam (ph) from Starbucks over the last three years. And some British lawmakers want to know why. Executives from Starbucks, alongside Google and Amazon were summoned to Parliament today. Find out what happened, next.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Well, it's time for today's "Currency Conundrum" (inaudible). Earlier on the show, I asked you what is a Krugerrand. Well, the answer to this is B. It's a gold coin. The gold Krugerrand coins were first produced back in 1957.
That was to encourage investments in South African gold. It's now the most widely held and actively traded bullion coin anywhere in the world. It's also legal tender although, must point out, it has no face value. The value (inaudible) by the prevailing price of gold at the time.
(END VIDEO CLIP)
DOS SANTOS: Global trade will soon be singing to Asia's tune. That's according to HSBC, which says that the world will soon depend on countries like China for their growth. Zimbabwe is one country doing some pretty lucrative deals with the Chinese these days. But as Robyn Curnow now reports there are questions of corruption which need answering first.
(BEGIN VIDEO CLIP)
ROBYN CURNOW, CNN HOST: Well, here's a little bit of China in eastern Zimbabwe.
CURNOW (voice-over): This is Anjin, which is a joint venture between the Chinese and the Zimbabweans, mining diamonds in the controversial Marange Fields, from where critics claim some of the diamond revenue is illicitly funneled to President Robert Mugabe's ZANU-PF party, claims the Zimbabwean government and Chinese mining officials deny.
When CNN got exclusive access earlier this year to Marange, the Chinese welcomed us with lunch and speeches as well as a tour of their mining operations, seemingly eager to show off what they say is cooperation and development with their African partners.
Many, like the U.S. government, are highly critical of this Chinese venture and others across Africa. Critics argue the Chinese have exploited Africa's commodities to fuel their growth. But the relationship is uneven, unfair, neocolonial. Even South African President Jacob Zuma has warned trade ties are unbalanced and unsustainable in the long term.
But still, many African leaders, like President Bongo of Gabon, say they prefer doing business with the Chinese.
CURNOW: What's the difference between a Chinese investor and a European investor or an American investor, from your point of view?
ALI BONGO, PRESIDENT, GABON: The aim is still to make money.
CURNOW: But what's the difference? Why would you say the Chinese have been so successful in -- on the continent?
BONGO: Well, I think that it has to do probably with the policy of the Chinese government, you know, coming into a country, investing and not really wanting to get involved.
CURNOW: Not asking questions?
BONGO: Not asking questions, not wanting to be involved, you know --
CURNOW: Not putting all those human rights issues --
BONGO: (Inaudible) politically, (inaudible), yes.
CURNOW (voice-over): Beijing just doesn't like lecturing other leaders, says a top Chinese diplomat in Africa.
ZHONG JIANHUA, CHINESE AMBASSADOR TO SOUTH AFRICA: We do ask questions. But sometimes the style (ph) is different. Do you respect the people who sit in the position, who is the president? You don't talk to a president like you talk to a student.
We don't treat all these African leaders, African people like our student, no. We see them as equal. We do have questions, but we probably ask these questions privately. We ask these questions quietly.
CURNOW (voice-over): For many, the Chinese emergence in Africa has hardly been quiet. Last year, China-Africa trade reached more than $166 billion, much more than U.S.-Africa trade, which s around $80 billion.
The Chinese are not only building roads here, like this one in Zambia, where copper mining is one of the main industries, they've even constructed cities in places like Angola, the second largest oil producer in sub- Saharan Africa, mostly investing in commodities and energy. China gets roughly a third of its oil from Africa.
Many African countries have become dependent on the economic might of China and analysts say will feel the pain of any slowing in Chinese growth. But, still, China's influence continues deep into the African bushveldt -- Robyn Curnow, CNN, South Africa.
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DOS SANTOS: The city of Venice is covered in high water for the time which is known as the aqua alta phenomenon. So let's get a little bit more on this. This is when, of course, the tides get quite a bit higher. Let's go over to meteorologist Jennifer Delgado, standing by at the CNN International Weather Center.
Now, Jen, I lived in Venice for a year, and I distinctly remember those times.
JENNIFER DELGADO, AMS METEOROLOGIST: I remember you --
DOS SANTOS: -- pretty crowded. It's pretty crowded and a lot of people get out of the central station, will get out of vaporetto, really they feel quite bad they didn't bring their Wellington boots, put it that way.
DELGADO: Absolutely, the Wellies are definitely necessary. You know, we were talking to somebody in the weather department. I said, you know, I'd be really mad that, if I went there and there wasn't aqua alta. I just think that would be something nice to experience. I'm sure you probably did, Nina. But again, of course, it's a serious situation. We're talking about flooding there.
And of course, in the northeastern part of Italy, there has been, as you can still see, a lot of moisture there, right on top of the Adriatic Sea. And when this happens, of course, we see all these shops and they're all just flooded and people trying to get by with their day-to-day activities. But it's kind of hard when you're talking about water so high.
As we go over and I show you some of the totals here, from Sunday and Monday, and you're looking what people are dealing with, here are the Wellies out there.
Nina, they're not very fashion forward. But I tell you what, they get the job done. You see residents and shop owners, trying to sweep out the water, kind of a -- I don't know if that really is going to be very effective for now. We really just have to wait till it comes down.
As we go back over to our graphic here, we talk about some of the totals, some of these locations, we have rain totals up to 257 millimeters. But that's only one part of this story. We're also talking about the high tide. And when this happens, of course, that makes the situation even worse.
Now on a normal time, we're talking normal high tide, we're seeing water right around 80 centimeters or less. Now when it gets high like what we just saw, we saw, what, up 149 centimeters. And 90 percent of the city flooded. As we go to tomorrow, we're expecting to drop down to about 90. That means less than 12 percent of the city will be flooded.
So that means a vast improvement as we go through the next 24 hours. We talk more about the agua alta. And of course Nina mentioned this, the high waters, well, again, this happens when you have heavy inland rain, of course the strong winds blowing the water back over.
And then the strong area of low pressure and chilling of the low pressure, right now, it's still just kind of spinning right on top of Italy. As we go through tomorrow, we're going to start to see this low diving down towards the south of France, scoots over towards these.
This is going to allow a ridge of high pressure to build in and this is going to be quiet weather for a good part of Europe, starting on Wednesday. And that's good news because that means conditions will dry out. Across the U.S., we are looking at rain out there.
You can start to see a little bit of snow trying to work in. This is all due to a frontal system that's approaching the east. Another winter storm heading into the West Coast. So we talk about the east, because look at these travel delays out there, Nina. For Baltimore, we have a ground stop and -- I should say ground delay.
Earlier we had a ground stop for Atlanta. It's just changed over the last couple of minutes. And then for LaGuardia and Boston, delays up to nearly two hours. And I think that's going to increase as we get later into the afternoon as well as into the evening hours. So there you have it. We talked about aqua alta and everything else. Back over to you.
DOS SANTOS: Aqua alta followed by plane delays. Well, (inaudible). But thanks so much, Jennifer Delgado there at the CNN International Weather Center.
Do stay with us. We'll be back with more QUEST MEANS BUSINESS straight up this way.
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DOS SANTOS: Well, GDP numbers coming out of Japan have been released, and they're quite a bit worse than economists had been expecting. They (inaudible) that Japan is currently undergoing its most dramatic slowdown since the earthquake and tsunami that hit the country back in March of 2011.
From Tokyo, Alex Zolbert explains what's behind this sharp decline.
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ALEX ZOLBERT, CNN CORRESPONDENT: The latest economic news here in Japan is not good, but at the same time, it is not a huge surprise. Japan started its business week learning that third quarter GDP had taken a hit of about 0.9 percent, falling about 3.5 percent at an annualized rate. Economists point to several factors.
First, something that many countries are grappling with, slowing global demand. The Japanese car makers and electronics giants are also battling a very strong yen. Keep in mind the stronger the yen, the more expensive Japanese products are overseas.
Another factor, go back to March of 2011, the earthquake and tsunami, there have been the ongoing rebuilding efforts of one of the biggest reconstruction projects in Japanese history, certainly since World War II. Well, that's pumped a lot of money into the system, but according to most analysts, most of that money has funneled through at this point.
Going for the full impact of the territorial dispute with China, which flared up in the middle of September, has not fully been realized at this point. So when you speak with analysts here, they say it could be another quarter, perhaps two or three quarters of contraction here in Japan. That would give Japan its third technical recession since 2008 -- Alex Zolbert, CNN, Tokyo.
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DOS SANTOS: Executives from Starbucks, Google and Amazon spent an uncomfortable afternoon being grilled by British lawmakers today. The main question: how did these corporate giants actually manage to pay such small amounts of tax -- in some cases, no tax at all -- in Britain while still racking up billions of dollars in sales?
Against the backdrop of growing public anger over clever but still legal tax avoidance, Britain's public accounts committee questioned the companies' decision to base their European businesses outside of the United Kingdom.
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MATT BRITTIN, CHIEF EXEC, GOOGLE U.K.: Like any company, we're required to do two things: one, to play by the rules -- and when you set up internationally, you need to make decisions about how to protect your intellectual property and how to organize -- and secondly to manage our cost efficiently in order to satisfy our shareholders. And our goal is to --
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UNIDENTIFIED FEMALE: So you're minimizing your tax, even though it's unfair to British taxpayers?
BRITTIN: It's not unfair to British taxpayers. We pay all the tax you require us to pay in the U.K. We paid $6 million --
UNIDENTIFIED FEMALE: There may be --
BRITTIN: -- tax (inaudible) --
UNIDENTIFIED FEMALE: We're not accusing you of being illegal. We're accusing you of being immoral.
BRITTIN: OK. It's not a matter of personal choice.
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DOS SANTOS: Well, no one's accusing these companies of illegal activities, as you heard there. But it's worth taking closer look at exactly how they minimize those kind of tax bills and why that's caused all the controversy.
Take, for instance, Starbucks. Its coffee beans are bought actually not for Europe -- they're bought for Europe, but not in Europe. They're actually bought in places like Jamaica, Panama, Colombia, largely in Central American countries and South American country as well as elsewhere around the world.
Now the beans, as we were saying before, are not actually bought in the U.K., but they're actually bought through a subsidiary in a firm based in Switzerland. After this, the beans are shipped here to Amsterdam to be roasted and then finally, as you can see here, they eventually reach the U.K.
Now all of this is a complicated maneuver. But this supply chain is actually a way of pushing profits right around the world. And it has the effect of reducing a tax bill in a particular country.
Last month, CNN's Mallika Kapur spoke to Starbucks CEO Howard Schultz in India and he explained that it's all down to how much profit the company makes.
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HOWARD SCHULTZ, CEO, STARBUCKS: Europe is going through a very difficult time and, as a result of that, there's a lot of scrutiny in the marketplace of companies who should and pay their fair share of taxes.
So the first issue is we have paid about 160 million pounds of taxes, the back tax, over the last three years. The unfortunate issue within the U.K. is we're not a profitable business in that market. We have about 800 stores in that market, but we're not profitable.
We do pay a royalty back to the core business. And that royalty is consistent with all the other markets that exist within Starbucks. And whether you're profitable or not, the business must pay a royalty back to the company that are providing the services.
So within the U.K. press, there is a misunderstanding. How could you be paying a royalty if you're not profitable? And so we do pay a royalty, as does other markets that are in its formative stage or are not making a profit.
But we do pay taxes in U.K., a substantial amount. But we have not paid corporate income tax because we have not made a profit.
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DOS SANTOS: Howard Schultz, the CEO of Starbucks, speaking to Mallika Kapur a month ago.
Do stay with us, because we'll get you up to date with what's happening on the world's top markets when we come back (inaudible).
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DOS SANTOS: Most of Europe's major stock indices are start of the week on the wrong side of the zero line, all except Frankfurt's Xetra DAX ended the session in the red. When it comes to the German markets, they were listed mainly by banking shares which performed well right across the board, (inaudible) utility shares went sharply in the other direction, though.
And an American backdrop by more than 2 percent for its part in the London session. Utility companies like (inaudible) each lost by more than 2 percent in Paris, dragging down the CAC 40.
Also watching Wall Street, the main U.S. indices are holding quite a bit higher at the moment. But I must point out the volume is rather light as Veteran's Day is being observed today and also the bond market is closed.
A rebound in Chinese exports for the month of October is giving the street some support despite concerns, ongoing concerns about the impending fiscal cliff and also that disappointing GDP figures coming out of Japan.
Well, that's it for this edition of QUEST MEANS BUSINESS. I'm Nina dos Santos. Thanks for watching.
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DOS SANTOS (voice-over): These are the headlines from CNN this hour.
The Gulf Corporation Council says that Syria's new opposition coalition is the legitimate representative of the Syrian people. That's according to news agencies. The head of the bloc, the cleric Ahmed al- Khatib, is also seeking diplomatic recognition from the Arab League.
Meanwhile, Syrian activists say that government war planes are bombing Ras al-Ain. The (inaudible) regime and rebel forces have been fighting over the strategic town near the Turkish border. An opposition group says that at least 48 people have been killed across Syria this Monday.
Eurozone foreign ministers are meeting in Brussels tonight. The Eurogroup head Jean Claude Juncker says that they won't make a decision on the next tranche of money for Greece. So even though the country could actually default on a payment this week.
Spanish banks have pledged to stop evicting some homeowners who fall behind on their mortgages. The banks will relent only in cases of extreme necessity.
The European Union has proposed stopping its continental airlines emissions tax for one year. It says that stopping the clock will allow time to work on alternative agreements on that controversial issue.
"AMANPOUR" is next.
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