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Quest Means Business

U.S. Authorities Arrest Additional Suspects in Boston Marathon Bombing

Aired May 01, 2013 - 14:28   ET

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

(SIMULCAST WITH CNN USA TO THIS POINT)

RICHARD QUEST, HOST: And there we leave our coverage, continuing breaking news coverage from our colleagues at CNN USA.

We will, of course, be joining them as and when there are further developments of the two students and the American citizen who have now been arrested and -- a complaint has now been laid against these people, alleging obstruction of justice in connection with the Boston bombing and their relationship with the two alleged bombers.

We will have more details on that. QUEST MEANS BUSINESS, we'll have that, too, after the break.

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QUEST: Hello, I'm Richard Quest. There is QUEST MEANS BUSINESS in just a moment. This is CNN and before we go any further, on this network, the news comes first.

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QUEST (voice-over): As you've been hearing, U.S. authorities have made three additional arrests in the Boston Marathon bombing investigation. Two of the suspects are students from Kazakhstan. A photo taken in New York's Times Square shows them standing with the younger Tsarnaev brother, Dzhokhar. A third suspect is a U.S. citizen and he's been named as Robel Phillipos.

Both are aged 18 and began attending the University of Massachusetts at the Dartmouth at the same time as the younger brother. All three are due to appear in court within the hour. And when they do, you can rely on CNN; we'll have the details.

Protesters in Bangladesh have taken part in a May Day rally, calling for better working conditions. They do so as workmen are still pulling bodies from the wreckage of a garment factory building a week after it collapsed. The death toll has now risen above 400 and there are still 150 people missing.

Syria's president made a rare public appearance today. Bashar al- Assad visited a power plant in Damascus and congratulated the staff for their service on what he called "Workers' Day."

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QUEST: Some call it May Day, others International Workers' Day, a celebration of labor. It's a holiday in many parts of the world and a chance to celebrate spring. For others, of course, this year, more than any, a day of protest.

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QUEST (voice-over): Greek workers took part in a one-day general strike. Public transport in Athens came to a virtual standstill as demonstrators took to the streets. There's no buses or subways; ships and ferries stayed in port. Even hospital workers joined the industrial action.

In Istanbul, police fired water cannons, tear gas as well, to disperse protesters who attempted to storm the barricades in the main square. Officers had to shut down the routes to the traditional (inaudible) protest ground for the first time the May Day rally in the Turkish capital has been cleared and marred by clashes.

By contrast, the peaceful gathering in London's Trafalgar Square by trade unionists, pensioners and students came together in a show of working class solidarity and, of course, it was a sunny afternoon.

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QUEST: All this takes place as we're talking over the last 24 hours. The average unemployment rate in the E.U. remains at an all-time high of 12.1 percent. It's a tough time to be entering the workforce, none more so than for the youth of the continent.

Jonas Prising is president of ManpowerGroup and oversees the company's $12 billion business in the Americas and Southern Europe. He joins us now from Milwaukee.

Thank you; I apologize, as you would have realized, breaking news. And (inaudible) I apologize that we kept you waiting. But we do now get to grips with this situation. May Day should be a day of celebration for the working man and woman.

But this year it's protests that these numbers, isn't it, these unemployment?

JONAS PRISING, PRESIDENT, MANPOWERGROUP: Well, with the sobering news of the unemployment rate hitting a new high in the Eurozone and also very high in the E.U., one can understand why a lot of people are upset and frustrated at limited progress that has been made.

And as you correctly mentioned, you know, there are some things now that are cyclical normally in unemployment that are becoming structural. And you can see that in youth unemployment and the long-term unemployed. And those are very concerning areas of the unemployment as a whole, because they are much, much more difficult to resolve.

QUEST: I was looking at some statistics from the U.K. as well. And you know, the trend is clear, Jonas, isn't it; yes, the U.K., for example, may have created half a million new jobs, but many are part-time; many are temporary and most are at lower wages.

Now economists would say that is necessary perhaps to get economic growth moving. That is what happens when you have a structurally led recession.

Would you buy that?

PRISING: Well, I think that it -- to be -- for -- to see any meaningful reduction in unemployment, we need growth. So that this whole discussion around balancing austerity with stimulus and strategic investments and infrastructure is very much needed, because unemployment will not come down in any material way unless we see growth.

There are, of course, the early stages of a recovery. And today's U.K. numbers on manufacturing were positive. So it isn't surprising that these are the kinds of jobs that you would see earlier in a recovery phase.

QUEST: Southern Europe and -- I mean, I know you also cover the Americas, but I think that we could put that to one side just because the state of play or the parlor state of play in Southern Europe is so bad. Can you see in your work there any signs for hope at the moment?

PRISING: Well, if you look at Southern Europe, you can actually see some positive signs as positive as they can be, with an elevated unemployment in Portugal that did not rise. Unfortunately, Greece and Spain saw a continued rise; France, of course, also saw a rise. But Italy stayed stable as well.

There are some countries where at least we can hope for some stabilization. But Greece and Spain are, of course, very, very hard-hit overall, but also signify hit on the youth unemployment side. I think it would be also important to remember that these are countries that started to implement structural labor market reforms after the recession hit.

QUEST: Good point.

PRISING: And as we think about the -- you know, as we think about the European unemployment picture, you're really talking about two or three different regions in themselves Northern Europe getting slightly worse, but still much, much better.

And what we have to remember is all of those countries implemented structural labor market reforms before the recession.

QUEST: Jonas Prising, good to talk to you. Thank you for putting this in context for us on this May Day holiday. Thank you very much. Jonas Prising from Manpower joining me.

The Fed has been talking and these are the statements from the May the 1st meeting.

Now it's sticking with its aggressive efforts to strengthen the country's fragile economy. The meeting is -- a two-day meeting has pledged to continue its bond buying program. Nathan Sheets is the global head of international economics at Citi.

Good to have you with us, Nathan.

Now, look, they didn't -- we -- you would have fallen off your chair if they'd done anything actually either on rates or on terms of the bond buying. We'd have all fallen off our chairs. But they do say the committee's prepared to increase or reduce the pace of its purchases. Now this is a reflection, isn't it, now of the view that it might be time to start tinkering with the numbers.

NATHAN SHEETS, GLOBAL HEAD OF INTERNATIONAL ECONOMICS, CITI: I think that's absolutely right, that since their last meeting in March, they've seen the economic data soften significantly.

And I think the leading explanation for what we're seeing in terms of the performance of the economy is that the drag associated with tax increases and the sequester and fiscal policy more generally is having a negative effect on the economy. And the Fed is reminding the markets that it is there and if these fiscal effects prove to be stronger than what the Fed currently believes.

QUEST: Right. Now --

SHEETS: It is imaginable that the Fed could do more stimulus than what we've seen so far.

QUEST: The market's off the best part of 100 points, give or take.

I'm guessing -- and I know you don't -- we don't sort of take the knee-jerk reaction from that. But I'm guessing that what they're basically saying is it's the uncertainty now in the picture. Fiscal policy restraining economic growth, continuing the policies. It's the uncertainty level.

SHEETS: Yes, I think that many equity investors kind of see the situation going forward as a no-lose proposition. If we get the weaker data, then the Fed is going to continue to QE for a longer period, as they've suggested in this statement.

On the other hand, if the economy starts showing renewed signs of vibrance and recovery, then rising economic activity is likely to raise profits and also make stocks very attractive.

So I think that we're in a period here where stocks are likely to perform very well.

QUEST: It's fascinating, this, because sitting in this chair in London, I can sort of see, on the one hand, I'm talking to you about the improving economic scenario. All right, it's not brilliant. It's not a rosy picture.

But, frankly, as seen from the other side of our studio, it's looking a jolly sight better than say, for example, Southern Europe where the third year of recession and 30-40 -- 30 percent unemployment is on the cards.

SHEETS: The U.S. is very much benefiting from being the least troubled region. It certainly doesn't mean that we don't have our share of challenges as we look to the future -- dysfunctional government, challenges with an aging population, debt levels and so on and so forth.

But these challenges look like they are manageable and it looks like that over the next year or so, we're likely to have growth. And I think that's more than we can say about Europe. And in Japan, Governor Kuroda has aggressively tackling those problems. But whether he'll be able to deliver faster growth than Governor Shirakawa is very much an open issue.

QUEST: Good to see you. Thank you, sir, for staying around and talking to us.

SHEETS: My pleasure.

QUEST: Lovely to have you on the program and putting these issues into broad context for us. We appreciate that.

When we come back in just a moment, the victims of last week's factory collapse are being laid to rest whilst they are still removing bodies from the rubble. And Bangladesh's trading partner now is telling the country to improve standards or there will be action. Jim Boulden's with us after the break.

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QUEST: Angry protesters marched in Bangladesh to demand safer working conditions as the official death toll from last week's building collapse now has risen above 400.

Thousands of workers turned out in Dhaka for a May Day protest, some renewing their calls to sentence the owner of the building that collapsed to death. Today, the remains of some of those factory workers who were killed were buried. Some were too badly battered or decomposed to be identified.

The building's owner and his father are among eight people arrested so far and the police are seeking a fifth (sic) person.

The European Union is turning up the pressure on Bangladesh itself, threatening to strip Dhaka of its trade privileges if it doesn't make its factories safer. The country currently receives duty-free and quota-free access to the E.U.'s single market. Now the E.U.'s warned it's "presently considering appropriate action."

Firstly, in order to incentivize responsible management of the supply chain -- and but, at the same time, here's the other bit: ". we continue to encourage European and international companies to promote better health and safety standards in garment factories.."

That's from Baroness Ashton, the vice president, and of course high commissioner for foreign affairs, and then Karel de Gucht.

The trade restrictions would have a massive impact. Jim Boulden is here to take us through the numbers.

Jim, what purpose, what earthly purpose does it serve to threaten a developing, poor country like Bangladesh with trade sanctions?

JIM BOULDEN, CNN CORRESPONDENT: The reason for that is the European Union is getting fed up, because they have asked before for Bangladesh to tighten up its restrictions, tighten up and try to help what is basically sweatshops. And they haven't done it.

And this is why Bangladesh needs to listen to the European Union. The E.U. is the largest trading partner for Bangladesh, a very poor country. Sixty percent of the garments exported from Bangladesh come here to the European Union.

Why? Well, of course, low wages in Bangladesh and duty-free access to us -- to the E.U. makes these products very cheap.

Why is that? Because as Richard said, the E.U. has these trade privileges, so-called generalized system of practices, GSP. This is to help poor countries to get the access to market in the rich West. It's a very, very positive program that the European Union has supported. It's only stripped one country of that access and that's Myanmar. And that's over human rights records.

So to say that they might put Bangladesh in the same bucket is something very serious indeed.

Now interestingly, the U.S. does not have this kind of preferential trade with Bangladesh when it comes to garments. So costs tend to be higher in American stores than in European stores. So that's why Bangladesh needs to listen to what the European Union is saying.

How important is the garment industry? Well, we can't say enough: it is $19 billion per year to the Bangladesh economy. We're talking, of course, about ready-to-wear garments, some of them very, very cheaply made and very cheaply sold. Eighty percent of all exports from Bangladesh are these ready-to-wear garments (inaudible) --

(CROSSTALK)

QUEST: And we showed some of them last night on this program that we bought here in London.

But I come back to this idea. All right. Does it work? I mean, is there any indication that this sort of bully boy tactic by the E.U. will have any.

BOULDEN: Well, there's a very delicate balance here, because not even the NGOs are calling for a boycott. They don't want to see these jobs lost in Bangladesh. So what do you do to make sure that the Western companies continue to sell -- continue to buy what is made in Bangladesh?

The only way to do that is to increase the conditions in which these people work in Bangladesh. The only way to do that is to say it's going to cost you a lot more to sell these products in the E.U. than it does now if you don't clean up your act.

Will it work? Well, there was that huge fire last year as well and people thought things would clean up after that, and of course they didn't.

QUEST: (Inaudible). It's an important story for us and we're going to stay with it, and so are you. Many thanks.

Becky Anderson asked the Bangladeshi home minister for his response to this possible E.U. action.

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MUHLUDDIN KHAN ALAMGIR, BANGLADESH HOME MINISTER: (Inaudible) we also then (inaudible) we try to (inaudible). You see, you want the cheapest, but ever since then, you want to delay their standards (inaudible). These don't go (inaudible).

QUEST (voice-over): The full interview you can hear on "CONNECT THE WORLD" at 9:00 pm London time. That just in over an hour and 10 minutes from now. I'll be back after the break, QUEST MEANS BUSINESS, good evening.

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QUEST: Now once upon a time, all you needed to get an upgrade on a plane was, wear a shirt and tie, travel alone and smile at the right people. Well, now airlines are looking to squeeze revenue out of every passenger. And rather than giving you and me those free upgrades, they're auctioning the seats off instead.

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UNIDENTIFIED FEMALE: Smart upgrade gives you access to all the advantages of Austrian business class. You decide how much you wish to pay for this privilege. Place your bid online in a few clicks.

You can change or cancel it up to 72 hours before you fly. Enter your credit card details and confirm your particulars. Then keep your fingers crossed. Of course, you only have to pay if you are awarded a smart upgrade.

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QUEST: Yes, you heard it right. They're auctioning off upgrades. The auction software within Austrian booking system is provided by a U.S. company that's called Plusgrade, which also does auctions for all these other airlines, Brussels, Air Mauritius, Virgin Atlantic and New Zealand.

Every airline runs a different policy and not all air -- not all passengers -- backpackers, perhaps -- are invited to join in the auction process, maybe just the top tier.

This is how it works. This is Etihad. Now we've created a dummy booking, London to Abu Dhabi on the May the 17th. Now I bought it in -- I booked it in economy. But I want to upgrade to their Pearl Business Class. And now I make my offer.

But look here. This shows the strength (ph). So I'm only going to offer 5 and a quid, bearing in mind it's a several thousand pound ticket. And that's not going to get me -- it is unlikely the strength (ph). But if I go all the way up here, ring, ring, ring, I'm now offering nearly the price, 840 pounds. And then you push that; of course you would push continue and the process would continue.

The conundrum for the airlines is how to persuade full-fare passengers not to switch and bid. Go to economy, stay in business class. How can this be the exception, not the rule? I put that point to the chief exec of Plusgrade, Keith -- Ken Harris, who joined me from New York.

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KEN HARRIS, CEO, PLUSGRADE: Yes, so this is something that we launched about two years ago with Air New Zealand and TAP Portugal initially.

And over the course of the past two years, we've just seen the momentum build with carriers around the world, really getting on board with the concept of upgrade auctions, both based on the significant revenue streams that they're seeing and the really powerful passenger experiences that they're able to bring to their customer base.

QUEST: So how do you convince them that they can have an upgrade auction but the frequent flyers like me won't come to expect to win it or take part in it and therefore will still buy the expensive seat?

HARRIS: Well, it depends on each of the airlines that are participating in the program. But many of them -- in fact, all of them always had their top tier frequent flyers top of mind.

You look at some of our partners, even like Copa Airlines out of Panama, and they're very clear that they're only going to process these revenue-based upgrades after all of their top tier members have already received the benefits that they have rightfully earned.

So whether it's in terms of timeline or when these upgrades are processed, or even there's features within the program that allow your top tier members to be weighted higher and have preferential treatment within the program, the airlines are very conscious and cognizant of making sure that their top tier and most loyal members still receive their benefits, but then they're able to still find significant revenue and provide really good, strong passenger experiences with all the extra spare capacity out there.

QUEST: OK. So let me throw at you the -- what I will describe as the Singapore Airlines issue, an airline that notably almost never upgrades and for one reason, because they say the person who's paid $4,000, $10,000, whatever, should not find somebody sitting in the seat next to them who's paid $1,000 or $500 in an auction at the last minute.

HARRIS: Sure. You know, and every airlines have their own strategies and positions.

And you look at a lot of airlines who have incredible premium cabins, whether they're carriers that we work with, like Virgin Atlantic or Etihad or Air New Zealand or otherwise, and many of them do find that they're making sure that their full fare business class passengers are well looked after and always will have the initial priority and the certainty that they're in that cabin.

But when you have all that excess spare capacity and are, you know, looking for ways to generate incremental revenue streams, you know, would you rather be bestowing great experiences to your passengers and bring something that's value add? Or looking at other areas, like (inaudible)?

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QUEST (voice-over): The headlines: U.S. authorities have made three additional arrests in the Boston Marathon bombing investigation. Two of the suspects are students from Kazakhstan. A photo taken in New York's Times Square shows them standing with the younger Tsarnaev brother who has been charged with the bombing.

Protesters in Bangladesh have taken part in a May Day rally, calling for better working conditions. Crews are still pulling bodies from the wreckage a week after the collapse.

Syria's president made a rare public appearance. Bashar al-Assad visited a power plant and congratulated staff on their service on Workers' Day.

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QUEST: Those are the headlines. Now to New York, "AMANPOUR" is live.

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