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Quest Means Business
Ukraine's Interim Government Delayed; Ukraine Bailout; Crisis in Ukraine; Keeping Ukraine Solvent; Churning US Markets; Icahn Attacks eBay; Icahn's Battles; Nigeria's Economy; Boycotting Uganda Over Anti-Gay Law
Aired February 25, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: The closing bell has rung on Wall Street, the market is closed, it is down. It is Tuesday, it's the 25th of February.
Tonight, Europe's economic commissioner tells this program "We are ready to offer financial aid, substantial aid, to Ukraine." You'll hear it on this program.
Also, the world's most notorious activist investor, Carl Icahn, on his next target. You'll hear him on this program.
And tonight, Richard Branson tells me why companies and tourists must boycott Uganda over its anti-gay laws. You'll hear him on the program.
And the finance minister of Nigeria, a country with similar laws, tells me why they shouldn't. You'll hear her on this program.
I'm Richard Quest. I mean business.
Good evening. As you can tell, you're going to hear many people in the business world tonight on the stories that matter. But we begin in Ukraine, where they're still waiting for a new interim government, and time's running out to rescue the company's economy.
The acting president, Oleksandr Turchynov, has delayed naming the unity government until Thursday after pledging to do so today. The goal is to hold presidential elections in May. The opposition leader and the boxing champion Vitali Klitschko has already stepped forward as the first candidate.
Still, some analysts believe Ukraine could run out of money in a matter of days. Foreign aid is needed to avoid a collapses of the economy. So, where do we stand on this question of aid?
The United States and the IMF are both being consulted about a possible bailout, and the European Union says it stands ready to use what they describe as "substantial" aid. Any deal would likely require that Kiev commits to future economic reforms. Russia offered a $16 billion lifeline, which is now on hold.
Now, as for the currency, just look at what's happened the Ukrainian currency, and this will give you some idea of the market's perspective on the situation. The hryvnia against the US dollar has fallen extremely sharply. The number aren't that high, from 0.11 to 0.10, but you get an idea of that sort of very sharp fall since the volatile erupted on -- in February.
Now, Phil Black is live for us in Kiev tonight. So, Phil, give us a feeling of whether this is an -- whether the discussions taking place now have an orderly nature to them, or is this still very much making it up as they go along?
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Richard, there's no public sign of chaos or any sort of difficulties with these, but as yet -- with these talks. But as you mentioned, the talks to form an interim government have obviously hit some sort of snag, because they were supposed to do this by today. They didn't make their deadline.
It was never going to be an easy ask because this interim government has to be representative of the various opposition parties that opposed Viktor Yanukovych. These are parties that tend to not get along on very many things other than their opposition to the Yanukovych regime.
They're also trying to include technocrats in this as well as some of the people's heroes that emerged through the occupation and the struggle that took place in Independence Square here behind me. So, a big challenge. But the think they can do it by Thursday, now.
QUEST: And even if they move forward with this deal with the -- or some sort of pact with the European Union, they do still have to keep onboard the eastern part of the country, which is more pro-Russian, and of course, Russia still has a $3 billion existing -- or $2 billion or $3 billion existing loan outstanding. So, they can't just thumb their nose at Moscow.
BLACK: They can't, but there's no doubt that as this interim government forward, as it embraces the ways of the West, as it puts into place the economic reforms that the IMF and the international community are going to demand in return for the money on offer, the east of the country could very well suffer.
There is industry and manufacturing sectors there that will suddenly or in the near future being competing with the best of Europe. That's really going to hurt. And then there is the possibility that Russia can still retaliate. There has been talk of a trade war of some kind, of customs at the border being shut down, perhaps even more than they have been over the last year or so.
There are difficult times ahead, indeed. They cannot ignore Moscow, but at the same time, it is unlikely that they can appease them to such a degree that there will not be difficulty, hardship, economic consequences, because of the events that have taken place here in the capital.
QUEST: Phil Black, who is in Kiev this evening. So, the money and where is it going to come from? The European Economic Commissioner and vice president Olli Rehn told me today that the EU is ready to step in and help a Ukrainian bailout. I asked him whether the EU or the IMF would take the lead or drive the bus, so to speak.
(BEGIN VIDEOTAPE)
OLLI REHN, EUROPEAN ECONOMIC COMMISSIONER: I think we have some experience of parallel driving of the bus. I think it's important that we mobilize resources of the international community through the IMF and the European Union through the EU bond center, and we will combine our forces.
I believe that, without speaking on behalf of the IMF, which I don't want to do, but I believe that the starting point really has to be that there is a new and inclusive government based on democratic principles and that this government is really committed to serious economic reforms that support the country and its people to strengthen economic development and social benefit.
QUEST: The Ukrainians have suggested they'll need up to $35 billion in aid. Are we -- are you and the Ukrainians on the same page in terms of the amounts of money you're talking about, assuming those preconditions of a government that's inclusive and all those other things are on the table, are you at least talking about tens of billions?
REHN: I prefer not to go into concrete numbers at this stage. In fact, my colleague Commission Vice President High Representative Catherine Ashton is today in Kiev has she has been there since yesterday, again, and she is talking with the Ukrainians as regards their political and economic situation, also concerning financing needs.
And we are working within the European Commission and, with our members states of the European Union, we are working in order to assess the real financing needs of Ukraine. And I believe that we can come back to this matter in a few days, once we have done our homework and analyzed more thoroughly what are the real needs in terms of financing in Ukraine.
QUEST: There's definitely this moment, isn't there? A moment in time where Ukraine is concerned? A moment that perhaps the Europeans lost out the last time with the first round of negotiations, for whatever reason. That's in history. But there is this next moment for Europe to solidify Ukraine's position on the European side of the bargain.
REHN: I believe this is a historic moment, and we are standing ready to support Ukraine, first of all to have a peaceful political solution based on democratic principles. And then, secondly, to provide substantial financial assistance once certain conditions, especially economic reforms, are going to be fulfilled.
I believe also that it is very important that the European Union provides Ukraine a convincing European perspective, starting with an association agreement. I believe that for Ukraine, it is fully possible, it's perfectly possible, and certainly advisable that the country moves on a course itself into a European orientation and at the same time practices good and mutually beneficial neighboring relations with Russia.
(END VIDEOTAPE)
QUEST: Olli Rehn talking to me earlier, and you'll hear Commissioner Rehn later on the forecast for the European economy later in the program.
Look at this. This is the way the New York market traded during the course of Tuesday, classic up a bit, down a bit, up a bit, down a bit, and finally closing the day with very little movement down, just down some 27 points at 16,179.66.
Alison's at the New York Stock Exchange and joins me now. This is one of those days where, frankly, when people ask why did the market down? Because it didn't go up.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. You know, it was one of those days we just saw things churn, really churn.
QUEST: Yes.
KOSIK: And those who were in the market -- which were few, because volume was so low -- they decided to sell a little bit. Investors overall just couldn't look past the weak economic news that we got. We found out consumer confidence in February was weaker than expected.
Housing prices, they were up, yes, 11 percent last year. Here's the problem: they trailed off noticeably in the fourth quarter, so investors said, you know what? We're going to take a breather after the rally yesterday, Richard.
QUEST: Alison, after the break, we're going to be talking to the billionaire investor Carl Icahn. He has been very much in the news, not only with Apple, but also with eBay, having a run against eBay and eBay's management at the moment, isn't he?
Alison can't hear me at the moment. Alison Kosik at the New York Stock Exchange. Now, when we come back after the break, we'll be talking to Carl Icahn. After he launched a scathing attack on the management of eBay, we're going to ask him what's behind this attack? Why? And what does he hope to gain, or is it just a money-making venture?
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: The billionaire investor Carl Icahn is doing battle with eBay, and it's all getting very --
(RINGS BELL)
QUEST: -- nasty. In a letter to shareholders, Mr. Icahn's attacking what he calls a lack of accountability of the global e-commerce company and blames management for alleged conflicts of interest and lapses in corporate governance. The company's fought back.
He personally criticizes the chief exec, John Donahoe, claiming he's not aware of what's going on. He says the firm should spin off its PayPal unit, warning it's at risk of being added to the dust bin of history.
Mr. Icahn's no stranger to public and passionate stands. Two weeks ago, he backed off from his campaign to get Apple to boost its stock buyback program and said the company's existing program was like bailing with a leaky bucket, though it was enough to satisfy him.
And last summer, the target was Michael Dell. He said his company was being run like a banana republic in a desperate Dell debacle and used comparisons with Vladimir Putin and North Korea.
Let's elaborate on those remarks. We're honored and pleased to have with us on the line Carl Icahn, who joins us now on the phone.
CARL ICAHN, CHAIRMAN, ICAHN ASSOCIATES (via telephone): Just give it to me.
QUEST: I'm going to give it to you, sir. I'm going to give it to you. Let's --
ICAHN: OK. I'm just -- OK, good. I didn't say give it to you. I said through my secretary here.
QUEST: Well, I'll give it to you anyway.
ICAHN: OK. OK. Good. Good to talk to you.
QUEST: Let's start. Now, what is wrong with eBay that you decided you had to get involved?
ICAHN: Well, we look for undervalued companies, and it's certainly -- we think undervalued in a binary sense, because if you took away -- if you separated PayPal and eBay, we think the company's very undervalued, all right? And as far as we're concerned, that is what they should do. And we've done that with many other companies --
QUEST: Right.
ICAHN: -- over the years. This is just a very badly -- first of all, we don't think it's well-run by Donahoe to begin with.
QUEST: Right, but now, that's an interesting point, because there's the issue of eBay and PayPal and whether or not you can extract more value by splitting them off. But then there's this issue you've raised of corporate governance. You've said it's one of the worst-run companies, and the acts of conflict of interest are some of the most egregious. Why?
ICAHN: All right, well, to begin with, Andreessen bought Skype from eBay for $2.7 billion. For $2.7 billion, he's on the board. Andreessen's on the board.
QUEST: Right.
ICAHN: And only 18 months later, the company was flipped for $8.5 billion. Now, you don't think that's pretty egregious that they couldn't go out and find Microsoft themselves or at least -- and by the way, at the time, he said --
QUEST: Right.
ICAHN: -- at the time, and recently --
QUEST: Let me just jump in here, though, Mr. Icahn. What -- when we look at the sort of deals that you have been against, whether it be Apple, whether it be Dell, or indeed eBay, there seems to be two views.
One is that you're a meddling, interfering activist investor, and the other is actually you're the spokesman for investors that actually sparks great value. There is an interesting contradiction there, isn't there?
ICAHN: Well, I don't think there's much of a contradiction if you look at our record. From 2000, if you bought my flagship company, IEP, that does that activism, for the most part, you bought it, you're up 2400 percent. All right? Or 28 percent a year including 08, which was bad.
You look at the closest competitors, like Berkshire Hathaway, they're only up 200 percent compared to our 2500 percent. So a shareholder, I don't think, would argue too heavily with you concerning whether or not our activism works.
In the last five years, our hedge fund returned 37 percent annually doing these activist trades. Now, you happen to pick one or two of them that worked, actually, because we did make money on all of them, but not as well.
For instance, Forest Labs, it took us three, four years to be activists there, to say there it should be sold, and it was just sold -- it was just sold for $93. Only six months ago, the stocks sold at $37.
QUEST: So what --
ICAHN: In this country --
QUEST: Yes?
ICAHN: In this country, you have a dysfunctional corporate governance system, and I'm saying that eBay, it's tremendously dysfunctional. So, if you want to give marks for corporate governance, some companies are A, some are B, some are C, eBay's an F.
(CROSSTALK)
QUEST: All right.
ICAHN: And -- I mean, so --
QUEST: Sorry, let me jump --
ICAHN: -- that's my point.
QUEST: Let me jump in here if I may, sir. The -- when you look at the market, which I know you think is particularly fruity at the moment, when you look at the market, can you see many examples of those companies that you would wish to get involved in and that you would wish to take to the cleaners, if you like?
ICAHN: Well, you use these words "take to the cleaners." When we get involved with a company, we believe we help them immeasurably, we help the shareholders. The shareholders have made billions and billions and billions of dollars, we believe, by our intervention.
We believe that companies -- many companies in the country are well- run. Many are terribly run, and there is no accountability, and you can't get rid of the guys that run them. But once you do, or once you get those guys to play on the straight and narrow instead of some playing golf all day.
Or the examples of eBay where they give away $4.5 billion to one of the board members, but if you can change that, you can make great -- great strides in this country. And by the way, in this country, the people that are really suffering from this are the pensioners that own the stock. And that's -- and by the way, in our country, these pensions are underfunded.
QUEST: All right.
ICAHN: Many of them are underfunded, and it's the job, by the way, not just of me, but of the large mutual funds to stand up to these guys.
QUEST: Let me jump in here quickly, Carl Icahn, because we're out of time, I just want to ask you, after all the years you've been doing this, you still enjoy it?
ICAHN: Well, I do like what I do. I enjoy the strategy of it, but I also think -- and it may sound corny to you -- that I'm doing a good thing for all the shareholders and it's something that should be done. And so, I feel that way. I feel I owe my country something, and I'm doing it.
Now, I know people say that's corny. Hey, but I'm certainly not doing it for the money anymore. So, I mean --
(LAUGHTER)
ICAHN: I think that's true. I'm in the giving pledge anyway, so --
QUEST: Carl, come and join me on the set one day, and we'll have a good discussion on the question of corporate governance. I'd love to have you on the program live here with us in the studio one day.
ICAHN: All right, I may take you up on that.
QUEST: Thank you very much, Carl Icahn joining us, putting the point of view for corporate governance and the eBay situation.
When we come back, we continue with the big names in business. We'll talk to Sir Richard Branson. Uganda's new anti-gay laws sparking an international outrage, and now, Sir Richard Branson, the Virgin Group founder, says business should take a stand. Sir Richard's with me after the break.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Tonight, Nigeria's finance minister is calling for an independent forensic audit of the state-owned oil companies amid claims that $20 billion, perhaps, has gone missing. Ngozi Okonjo-Iweala has told me the allegations made by the country's bank governor must be investigated, despite the fact he's now been suspended by the country and the country's president.
Also, the finance minister tells me there's no economic impact yet on African countries who have passed anti-gay legislation. Norway and Denmark are amongst those countries that have suspended aid to Uganda following the passage of the recent law.
In a moment, we'll hear from the Virgin boss, Richard Branson, who has called for a boycott of the country. Nigeria also banned same-sex marriage last month.
First, though, let's talk about the suspension of the central bank governor. Nigeria's finance minister told me the exact amount of money that supposedly had gone missing and must be found.
(BEGIN VIDEOTAPE)
NGOZI OKONJO-IWEALA, NIGERIAN FINANCE MINISTER (via telephone): My case is that we've had too many fingers bandied around, and it is really urgent and important that we have an independent audit in order to ascertain what the true number is and where the money has -- what is the use for and where it is in order for us to have a basis to go forward.
Any money new to the federation accounts of the country, a finance minister would like to make sure that that money comes in.
Now, yesterday, the president called for an investigation and said he also wants to see all the money back. So, all we're saying is, this -- under the auspices of the auditor general, because he said that's the proper process we must follow.
We think this is urgent. We think it should be done quickly, and it should be done to establish an objective basis for everyone to go through.
QUEST: One other issue to raise with you. Uganda has passed an anti- gay law that is similar in scope and size to that which was passed by Nigeria. Richard Branson has called for a boycott of businesses to Uganda. Are you seeing, Minister, an economic effect yet on the law that was passed in Nigeria?
OKONJO-IWEALA: Well, we are not seeing an economic effect yet. And Richard, we -- I think that what I would ask and plead is an understanding that this issue needs to have an evolutionary process.
Justice in the US, it's taken 40, 50 years to get where they are. You're dealing with different cultures and different countries, and I'm speaking for my country, Nigeria, that there also has to be a process of evolution, of conversation, of discussion.
It's very difficult in a different culture to be able to be where others are overnight. It took them a long time to get where they are. I think we should be given that opportunity to evolve to have the conversation.
And I think that the boycott may actually -- any proposed boycott may actually undermine that conversation because this goes deep. In Nigeria, 96 percent of the population backed the legislation.
Although my take is that as we move along and have that conversation and you look at the different aspect of the law, I'm sure Nigerians will also come to evolve and maybe look at it a bit differently.
(END VIDEOTAPE)
QUEST: Now, that was the Nigerian finance minister, Ngozi Iweala. Sir Richard Branson joins me live via Skype from the British Virgin Islands. Sir Richard, you've called -- you've said, basically, you will boycott Uganda and you've called on other business leaders to do so over the anti-gay law.
When Minister Iweala says the boycotts may actually undermine the very cause you are putting forward, what would you say?
RICHARD BRANSON, FOUNDER, VIRGIN GROUP: Well, I have enormous respect for her and would certainly listen to what she has to say. When Uganda said that they would put people in prison for life for not reporting gay people, put people in prison for life for being gay, my initial reaction was I just didn't want to do business with Uganda.
And I felt that countries giving money to Uganda should withdraw those monies and I'd rather spend that money in countries that treat their people decently.
I think that people are born gay, about 10 percent of the world's population are born gay. They don't actually have a choice in the matter. It's a scientific fact. And the president actually said if it could be proved that it was scientifically a fact --
QUEST: Right.
BRANSON: -- he wouldn't pass it into law. But he continued to do so.
QUEST: Are you finding any support for your position from other business leaders? Because you know and I know, Sir Richard, these are one of these things where people will tut tut behind the back and say yes, something must be done. But you are one of the very few who's actually come out and done something about it. So, are you getting support from others?
BRANSON: Well, a lot of Ugandan business people feel equally strongly as I do, and they took a different approach and they went to see the president, and they thought they had an absolute assurance from the president that he wouldn't pass this law.
And sadly, the president has passed this law, and there is now a witch hunt in Uganda. And today, on the front page of the newspapers in Uganda, it had pictures of the 200 most prominent gay people in Uganda.
Nothing like this ever happened in America to that extent where people would be sent to prison for life for being gay. It's like sending someone to prison for life for being born --
QUEST: Right, but --
BRANSON: -- born crippled. It's just -- it's patently wrong that you can do that to somebody that has no choice in the matter.
QUEST: OK. So, pulling the strands together, there are many countries in Africa where homosexuality is illegal, and whatever one may say about that, I suppose your view here is that it is the laws that are being passed in Nigeria and Uganda that take them out of the realm of those other countries where it is illegal?
BRANSON: Well, I picked Uganda because they'd said life in prison. I just felt that life in prison for not reporting somebody who is gay would result in -- would result in similar thing that happened in Malaysia, where the deputy president of Malaysia was imprisoned by -- sorry, the opposition leader of Malaysia was imprisoned by the president, and they used the fact that he was gay as an excuse to get him locked up and out of the political scene.
This can happen in Uganda now. Anybody can accused of not reporting somebody who's gay. And that's just patently dangerous and wrong and unfair and unconstitutional against all human rights.
QUEST: Sir Richard Branson joining us from the Virgin Islands. Richard, thank you very much, indeed, for joining us. Good to see you.
BRANSON: Thank you.
QUEST: In warmer climes. Many thanks, indeed. Now, after the break, we turn our attention to Istanbul, where protests have broken out all about a recording purports to be the prime minister. It's fueling the anger. We'll explain about that report and that recording after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network, the news always comes first. Europe's economic commissioner says the E.U. is ready to step in and help with a bailout for Ukraine. Speaking to me on "Quest Means Business" Olli Rehn says the country's at an historic moment. Meanwhile, Ukraine's acting president delayed the appointment of an ancient government until Thursday.
Riot police in Istanbul fired tear gas and used water cannons to push back anti-government protesters that were demonstrating after allegations of corruption were made against Prime Minister Erdogan. We'll have more on this story in just a moment after this news summary.
President Obama has warned that he's planning - (inaudible) planning a full withdrawal of U.S. troops from Afghanistan this year if no security deal is signed. In a phone call to the president, Hamid Karzai, Mr. Obama's warned the longer there is no deal, the fewer troops who remain if it is signed.
A South African court has ruled that parts of the Pistorius murder trial may be televised. The double amputee track star goes on trial on Monday for the fatal shooting of his girlfriend. The court says live audio broadcasts will be allowed during the entire trial.
More now on the deteriorating situation in Turkey where police have fired water cannons at crowds of demonstrators in Istanbul tonight. Anti- government protests erupted today after leaked telephone recordings appear to capture the Prime Minister Tayyip Erdogan and his son discussing how to hide huge sums of money. CNN cannot confirm the recordings are authentic. Our correspondent Ivan Watson reports.
(BEGIN VIDEOCLIP)
IVAN WATSON, SENIOR INTERNATIONAL CORRESPONDENT: A political bombshell has erupted in Turkey as a result of the leak of an audio recording. Now, we can't confirm the recording, but it sounds like it's the Turkish Prime Minister Recep Tayyip Erdogan instructing his own son on how to hide millions of dollars and euros in cash from police. Now, the Turkish prime minister - he has taken the release of this audio very, very seriously - denouncing it in public in an assembly before members of his political party, calling it "immorally edited material."
RECEP TAYYIP ERDOGAN, TURKISH PRIME MINISTER, TRANSLATED BY WATSON: There aren't any allegations that I cannot answer, but neither members of AK party nor I will be lured by their traps to change the agenda, and we will not surrender to this game. If we surrender to them and deal with their shameless montage and shameless traps, we cannot find time to serve our people.
WATSON: The audio recordings have exploded across social media in Turkey and they have also created ripples within the Turkish political elite. The leader of the opposition political party known by the acronym CHP - Kemal Kilicdaroglu - he came out in Parliament and actually played the audio recordings in their entirety. The Turkish television networks that were covering this - mainstream networks - they actually broke away from live broadcasts to basically censor out the audio recordings, these controversial audio recordings. Afterward, Kemal Kilicdaroglu made some very strong statements against his political rival, the Turkish prime minister.
KEMAL KILICDAROGLU, REPUBLICAN PEOPLE'S PARTY LEADER, TRANSLATED BY WATSON: Either you take a helicopter and flee abroad or you resign.
WATSON: The release of embarrassing and compromising phone conversations has become an almost weekly event in Turkey in recent months, ever since police launched a series of raids targeting members very close to the Turkish government in an alleged corruption scandal. A scandal that the Turkish prime ministers worked very hard to try to stop by purging thousands of police officers and prosecutors from the police by pushing through a number of controversial pieces of legislation that would give the prime minister direct control over the judiciary as well as a controversial law that would allow the prime minister to basically ban internet sites without getting a court order first.
In his speech to parliamentarians on Tuesday, the Turkish prime minister basically justified that quote unquote "internet censorship law" saying he was doing that to prevent attempts at blackmail. All of this political pressure is building in Turkey ahead of nationwide municipal elections that are expected to be hotly contested at the end of March. Ivan Watson, CNN Moscow.
(END VIDEOCLIP)
QUEST: Now, the European Commission has upgraded the E.U.'s economic growth forecast and outlook for the next two years, but only just frankly a smidgeon. It's the winter forecast, and Brussels says the Eurozone's recovery is gaining ground in their words. It remains modest here, however it looks country by country if you join me at the super screen, you'll see. Pretty much as growth has returned, here in green are all the countries that E.U. predicts will have economic growth. As you can see, it is the majority - well it's the vast, vast majority of the Union. Let's take the growth countries out and just add those going into contraction, and - well, where the contraction bits - there's the contraction bit which is there - there are two of them. They are Slovenia and Cyprus. I guess we didn't pay the bill properly.
Anyway, as you can see, those two - Slovenia and Cyprus are the two that are expected to shrink. Italy's growth forecast has been cut quite sharply. It's down - Italy has been cut ten bases points at 0.6 percent this year. The Commission still expects that growth rate to double in 2016. So, Italy with its new government who incidentally has now won a vote of confidence in both houses of Parliament, just 39 years old.
As for Spain there's was an upgraded forecast to 1 percent. The country is grappling with stubbornly high unemployment at the moment. So, taking that as the picture overall, with all the green and just a little bit of red, and those countries that are still getting faster (ph). The European Commission's Vice President Olli Rehn told me the worst of the Eurozone prices is behind, but of course now it's the risk of complacency which he now says must be foremost in everyone's mind.
(BEGIN VIDEOCLIP)
OLLI REHN, VICE PRESIDENT, EUROPEAN COMMISSION: I think it's actually a political summary. You could become my spokesman perhaps with that (inaudible) for summarizing things. More seriously, we are seeing the economic recovery getting ground in Europe. And what is positive is that it is based on strengthening domestic demands and it is also spreading to so-called vulnerable countries such as Spain and Portugal, Ireland already before, and to a certain extent, also in Italy. So we are seeing certain positive developments, but at the same time I'm fully aware that we cannot afford any kind of complacency because we have high unemployment in many countries of Europe. And that's why we need to stay the - stay the course of (inaudible) economic reform and strengthen the recovery, strengthen the foundation so sustainable growth and job creation in Europe.
QUEST: On that last point, finally, Vice President, this unemployment issue which continues to bedevil, in the statement it's accepted that it's another half year or year before unemployment as a leading - as a (lagging/lacking) indicator - when do you expect to see meaningful reductions in unemployment in the Eurozone?
REHN: We are currently seeing - or we have experienced a stabilization of employment situation so that unemployment is not increasing anymore and, you know, certain vulnerable countries (subcreation) are positive for the moment. And we expect that this year will see a gradual improvement in employment and next year we see a stronger pickup in the employment situation in Europe.
(END VIDEOCLIP)
QUEST: Vice president of the European Commission, and that is Olli Rehn on European growth. In a moment, coming up, there's a big problem with Bitcoin which has severely rattled the market for the virtual currency.
(COMMERCIAL BREAK)
QUEST: It's supposed to be the world's largest trading platform for Bitcoins. Instead, Mt. Gox looks like a blank plage (ph). If you logon on to Mtgox.com, this is what you're going to find. Have a look (RINGS BELL). I tried to log on, it wouldn't even do it for me on my computer here on the desk. This is what it - you can see - you can see what it used to look like. It's claimed that Mt. Gox has lost more than 744,000 users' Bitcoins. Now, that would be worth $367 million. In a statement attributed to the Mt. Gox team, it says, "In light of recent news reports and the potential repercussions on Mt. Gox operations and the market, a decision was taken to close all transactions for the time being to protect the site and our users." That's one way of looking at it. Of course, if you've got money in Mt. Gox in Bitcoins, you might see things slightly differently. You might of course have heeded all the warnings from those who said it was all a scam to start with. Tom Robinson is the co-founder of Elliptic which aims to improve the security of digital currencies. He thinks this is a blip for Bitcoin, so I asked him that with no real safety net or regulation, frankly what this shows is the risks are high.
(BEGIN VIDEOCLIP)
TOM ROBINSON, CO-FOUNDER, ELLIPTIC: Bitcoin is still in the very early stages. This is a very immature ecosystem. There are always going to be bad apples. We're seeing a shakeout at the moment, and this is going to make the Bitcoin industry stronger and make it more ready for mainstream consumption.
QUEST: You see, isn't that the point? Bitcoin has to - to a certain extent, the Bitcoin foundation has to accept a certain degree of normality of regulation and cannot blithely say `we are renegades, we are mavericks, we rebel against central currency rules.'
ROBINSON: Absolutely. And the majority of Bitcoin companies are - are for regulation. They want the legitimacy of regulation, they want the extra level of protection for consumers that regulation will bring. So essentially at Elliptic we're pushing regulators to regulate us.
QUEST: Why did it go wrong at Mt. Gox? What did go wrong there?
ROBINSON: It's still unclear exactly what happened, but it seems that they had an internal security problem which meant they simply don't have the Bitcoins that they were looking after on behalf of their customers.
QUEST: If it could happen at Mt. Gox, it can happen anywhere.
ROBINSON: So, Mt. Gox is one of the - the very earliest Bitcoin companies. They were founded a few years ago when Bitcoin was just a project - a pet project. What you're seeing now is a lot of investment go into Bitcoin companies - these companies are now fully compliant with financial services regulations. They're well-funded, they're well run. And so the risk of this happening again is much reduced.
QUEST: So, did you see any contradiction between the stated anarchists of Bitcoin and what you're now saying which is no, let's have regulation, let's basically have the FSA or whatever that is looking over things. Let's get back to good old-fashioned regulation. Isn't there a contradiction?
ROBINSON: No, I disagree that the founding principles of Bitcoin were around anarchy. What they're about is people having control of their own wealth, of being able to do away with financial intermediaries. That's not anarchy, that's just S&P(ph) -- a better way of doing financial transactions.
(END VIDEOCLIP)
QUEST: The head of Global Connectivity of Facebook has told CNN just how his company is working to connect everyone in the world to the internet. Jim Boulden spoke to Christopher Weasler about internet.org at the Global World Congress in Barcelona. Weasler says it's a project that Mark Zuckerberg wanted to highlight at the congress.
(BEGIN VIDEOCLIP)
CHRISTOPHER WEASLER, GLOBAL CONNECTIVITY DIRECTOR, FACEBOOK: Mark came here to deliver the vision on internet.org. Internet.org is focused on bringing connectivity - internet connectivity to the two-thirds of the world that don't have that connectivity today. And so there's no better place to come to in February than Barcelona when the whole industry is here to deliver a message of partnership with operators.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: That's easy for him to say, but you're the man given the task to do it. What is it you need to do now, this year, to get that rolling?
WEASLER: Right. Well, the whole company is gearing up for this, and when we launched internet.org, we deliberately launched it as an alliance of partners working together. So, it's not just Facebook. There are a bunch of us working on this - companies like Qualcomm and Ericsson, Nokia, Samsung and others. So we are actively rolling up our sleeves, engaging with partners. We're defining projects that we can launch off in in test or trial mode that are focused on removing some of the key barriers to getting people on the internet affordably.
BOULDEN: So Rwanda is one of the examples you all have been using. What is the specifics about that trial?
WEASLER: Yes, so that's - the Rwanda trial which is called SocialEDU - it's focused on bringing education content to students, university students, in Rwanda. It's a great example of the convening power of internet.org where we're bringing together a carrier - in this case it's Airtel, device company, Nokia, the content provider which is edX and then the government of Rwanda is also participating to provide free education content to students on lower-cost phones to the students in Rwanda.
BOULDEN: Beyond Rwanda, can you give some of the specific examples of where you're working with operators in certain countries?
WEASLER: Yes, so I mean, a couple of countries that Mark highlighted yesterday - we're working with a carrier called Globe in the Philippines. We're working with another carrier called (Tego) in Paraguay and we've got projects that are sort of in the percolating stage in all of the sort of key growth markets around the world.
BOULDEN: There are a few people on the - on social media - who said `Well, this is just a way to get Facebook to people who don't have it already, so it's good for the company as well. It is good for Facebook as well, even though Mark said it won't make any money for a long time.
WEASLER: It's very, very tied to our vision and the vision of Facebook from the beginning, which is to make the world more open and connected.
BOULDEN: So, how does the takeover WhatsApp -- How does that help what you need to do as far as the idea of connecting more people around the world?
WEASLER: Well, I think first of all we're really excited about that deal. They're a great company, they've got close to a half a billion users. They're very engaged users. Seventy percent of them use the service every day and they're adding more than a million users per month, so they're really one of these rare services that's on track to get to a billion users. I think what brought us together was the vision that Mark has for connecting the world which was totally consistent with Jan's vision for connecting the world from the WhatsApp site. You know, how that all comes together will be determined today, the deal hasn't closed, we're operating as independent companies. But we really look forward to working more closely with them.
(END VIDEOCLIP)
QUEST: The future of Facebook. And now to the weather forecast and the future over the next 24 hours. We'll keep it nice and modest. We have modest goals when it comes to knowing if it's going to rain or snow.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Modest goals - you speak for yourself, I think we'd prefer to think of ourselves as a little bit above the modesty line, actually, Richard -
(CROSSTALK)
QUEST: Well I didn't mean - now, now, now, now. What I did was - all we want to know is what's the weather going to be? We don't want to try and change it.
HARRISON: OK. I tell you what, you're first day back and you're already having to go.
QUEST: (LAUGHTER)
HARRISON: Listen, yes, there's been a lot going on in the last few hours actually across the United States. In Washington, there was a - quite a bit of snow that came through in the last few hours. Doesn't say exactly how much because it came down at a bit of a wide (inaudible), and then if you were to look at Washington right now, there is really no snow at all to be seen. So, quite an amazing day there.
At the same time in the Southeast in Atlanta, have a look at this iReport. Now, this is not something -- a cloud formation -- you will see every day. It's got the most fabulous name - it is called undulatus asperatus which I think sounds like something out of the Harry Potter movies. And in fact it was only recently named, back in 2009. And this formation of cloud arises from a couple of reasons, but we think this has really come about because of some higher ground to the northwest of Atlanta, the direction it was coming in, and at the same time differing wind speeds to the sort of lower levels of cloud and the upper levels, and this is why you end up with this quite amazing - if you can see the bottom right hand - left hand - corner here. Quite amazing pictures. So there's lots to look at. You ought to Google undulatus asperatus and you will see what I mean. But again, that has since cleared through.
What we have got is finally some good news for California. The drought as we know - look at this - nearly 91 percent is in severe drought in California. We've been talking about it for the last few weeks because of course the winter period - we just sort of should have seen some mountain snow - we've seen none of that. But things are finally about to change. This area of low pressure coming in off the Pacific. And we're going to see rain, we're going to see snow to those higher levels. The only concern is it could come at a fairly short burst. We might actually see some flooding in some areas simply because the ground is so drought- stricken, so dry and so solid. The rain could of course run off. You can see the time line here, so it's really Thursday into Friday. So finally some much-needed rain although of course it will do really very little towards the drought. But anything is better than nothing. Eighteen Celsius in Los Angeles on Wednesday, 9 in Atlanta and in fact a little bit cooler possibly on Thursday.
Meanwhile, across in Europe, the northwest we've got some more showers coming in, and guess what, Richard? I have no more time, so that's -- but I can talk more about that tomorrow - about the dredging that is going to take place as soon as that levels and what that could or couldn't do for flooding in the future.
QUEST: Undulatus asperatus or -
HARRISON: It's really got a fabulous ring to it.
QUEST: It really has.
HARRISON: (Inaudible).
QUEST: A cloud formation - as a separate one - yes, you are quite right. You are quite. It sounded like something that you should go to your GP for and they'll give you something to take two and call him in the morning.
HARRISON: (LAUGHTER).
QUEST: I've got a nasty case of undulatus asperatus (inaudible).
HARRISON: Yes. So Harry Potter is the (inaudible).
QUEST: I preferred mine. Thank you very much. Jenny Harrison at the World Weather Center. When we come back, if it connects to the internet and you can wear it, it's probably on show in Barcelona. We'll see the big trends I wearable technology. It's the World Mobile Congress after the break. This is "Quest Means Business." Good morning - evening (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Now, would you wear something like that every day? I mean, a wrist watch is one thing, but all this modern technology. Well, technology fans at the Mobile World Congress in Barcelona are slapping on some of the latest devices that are wearable technology. Attendees are getting around in the latest smart watches, glasses and bracelets. Jim Boulden takes a look at what's trending.
(BEGIN VIDEOCLIP)
BOULDEN: Well, one of the hottest categories here at Mobile World Congress is wearables, and I've asked Meaghan Fitzgerald from 23snaps, a social networking site, to help us go through some of the wearables that are here. And you've been taking a lot of photos, haven't you?
MEAGHAN FITZGERALD, HEAD OF MARKETING, 23SNAPS: That's right, I've seen a number of people with some very interesting technology on and about their persons.
BOULDEN: Yes.
FITZGERALD: Here's a couple of examples.
BOULDEN: Now, what about some tweets?
FITZGERALD: There are a number of people talking about how important this trend is. As you can see, there's people who are comparing it to perhaps a minority report, but also people who are pointing out that nodding your head will be the equivalent of turning on your devices.
BOULDEN: Is this a gimmick?
FITZGERALD: It's hard to say. Some of the feelings on the floor is that this is not going to catch on for mainstream consumers. But, particularly where it ties in with fitness, there's a lot more opportunities to -
BOULDEN: Yes.
FITZGERALD: -- break into the mainstream market.
BOULDEN: And you've also done some video?
FITZGERALD: That's right. I've got a video here of someone who's engaging with their entertainment device with gestures.
BOULDEN: Yes. So he's doing this, yes. I noticed you were wearing one as well, what does this do?
FITZGERALD: That's right. This is a Fitbit which is there to track your fitness - your steps throughout the day, your sleep patterns at night and hopefully help you improve your fitness.
BOULDEN: I think I'll just stick to my good old-fashioned watch for now. Jim Boulden, CNN Barcelona.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." You really can't argue with success. Tonight you heard Carl Icahn on the program talking about why he is a corporate activist investor. Why he takes companies - I use the phrase `to the cleaners' - he took issue with that. In other words, he said he's not doing that, he's basically looking for undervalued companies, all those where management is failing to extract the most from the corporate assets. Again, from the days of RJR, the days of TWA, Gulf and Western, more recently with Dell, with Apple and now seemingly with Ebay. Carl Icahn has either been a mischievous, busy-body, interfering in other companies or he's been the savior of the shareholder and made them rich in the process. It really is a classic case, Mr. Icahn, you pays your money, you takes your choice. And that is "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.
END
