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Quest Means Business
Maybe QE in Europe; Concerns About "Lowflation"; European Markets Mixed; Dow Finishes Flat After Hitting Record High; Divide and Rule; Fort Hood News Conference; Devastating Milestone; Syrian Refugee's Desperate Act; Ukraine Gas Hike; Gazprom Under Pressure
Aired April 03, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: It's going to be a close-run thing tonight, whether the New York Stock Exchange, the Dow Jones Industrials, closes at an all-time high. We're going to be watching the number when it finally ticks over after she hits the gavel, which brings the close to the end of the trading day. Ooh, that's a -- ooh, gavel and a half! It is Thursday, it is April the 3rd.
Think of it as a maybe for QE. The ECB gives its strongest hint yet that the printing presses may be about to begin.
Call it unacceptable. Ukraine's president slams the latest gas price hike from Russia.
And Miley in the middle. Oh, boy. Why US sanctions on Russia will impact or could impact the world of pop.
I'm Richard Quest. I mean business.
Good evening. Call it money printing and negative interest rates. They are now firmly on the agenda if European inflation doesn't pick up soon. The president of the European Central Bank --
QUEST: -- says he will resort to "unconventional" tools to combat consistently --
QUEST: -- excuse me -- low inflation. It's Mario's Draghi's strongest sign yet he'll embrace quantitative easing if needed. Even so, policymakers left rates on hold at a quarter of one percent for the fifth month in a row. CNN's Jim Boulden is at the ECB's headquarters in Frankfurt tonight.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, it was no surprise that the European Central Bank here in Frankfurt made no policy changes during its monthly meeting on Thursday. But while there was no policy changes, there was acknowledgment that there is some worry that inflation is too low in the eurozone.
And Mario Draghi, the head of the European Central Bank, has said that the bank stands ready to use and could use and would use some unconventional measures if need be during the summer if it does look like inflation is too low.
MARIO DRAGH, PRESIDENT, EUROPEAN CENTRAL BANK: Frankly, we don't see the risk to deflation as having increased with respect to our assessment, which basically says that these risks are limited on both sides.
The discussion was actually very -- as I said, was very rich, and the main difference of viewpoints was in the following point. To what extent the latest data on inflation does change the medium-term outlook?
BOULDEN: So now, the questions is, will the stars align and allow Mario Draghi to continue to just use tough words to assure the markets the bank could intervene if inflation goes any lower? Or will the bank have to use some of its weapons this summer to try to prop up inflation?
The big worry in the markets is that the bank will use too many weapons too early and not be able to use them later if it gets even worse.
Jim Boulden, CNN, Frankfurt.
QUEST: At the ECB. Now, "lowflation," that's the phrase, lowflation has been named as the threat which may drive the ECB closer towards action. And we've only really started hearing about it. On Wednesday, the IMF chief, Christine Lagarde, called it a "horrible word" which describes an emerging risk to recovery.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: It's not so much deflation that we're concerned about, it's a regular, sustainable, longterm low inflation. Hence, "lowflation." Call it low inflation if you prefer.
(END VIDEO CLIP)
QUEST: Low inflation, lowflation, it's the same thing. Put it into context, Mario Draghi and Christine Lagarde both say we don't have persistent Japan-style deflation, a steady decline in prices. Now that, of course, as everyone knows, is disastrous.
But lowflation is painfully slow rise in prices, in the eurozone at the moment, just half of one percentage point, the lowest since 2009. And Christine Lagarde says chronic lowflation comes with the same sort of problems that you'd expect with out and right deflation.
(BEGIN VIDEO CLIP)
LAGARDE: Why is it a problem? Well, because it could suppress demand. It could suppress growth. And it could suppress output and jobs altogether. Different ways to call pretty much the same thing. Essentially, why should I buy something today if I know that tomorrow it will be cheaper? And it goes from there.
(END VIDEO CLIP)
QUEST: So, lowflation is seen as worse than disinflation, which is the slowing temporarily of the rate of inflation, which is normally the part of the economic cycle.
You get the idea. You have inflation, disinflation, deflation, and lowflation. Citi economist Benjamin Mandel joins me now. Good to see you, sir.
BENJAMIN MANDEL, ECONOMIST, GLOBAL ECONOMICS TEAM, CITI: Pleasure.
QUEST: Thank you for coming and helping us through this. We all know -- we all know that deflation is, to quote Christine Lagarde, "the ogre."
QUEST: But what's wrong with lowflation if you can keep it within a target?
MANDEL: Well, I think the problem isn't the fact that it's within the target, it's that it's well below the ECB's stated objective of keeping inflation below 2 percent but close to 2 percent. And so they're clearly missing on that objective.
QUEST: Right, but 2 percent was a number picked out of the air. All right, with economic theory behind it. But everybody went for 2 percent, the Bank of England started 2 percent, then the Fed joined in for 2 percent, then everybody else has joined in at 2 percent. There's no magic in 2 percent, is there?
MANDEL: I guess not, not per se, but I think what's really dangerous about having relatively low inflation -- and I kind of agree that the distinction between disinflation and low inflation is a little bit dubious.
Just being below that target is a reflection of the fact that there's a lot of slack in the economy for reasons that people are still figuring out, and there's a sense that because inflation is so persistently low that the sources of slack in the economy are very persistently low as well.
QUEST: So, how do -- how does the ECB get inflation that little bit higher --
QUEST: -- without off to the races?
MANDEL: Well, I think off to the races might be a high-class problem in some sense. I think really what they want to do is try to do a better job of meeting their mandated close to 2 percent goal.
QUEST: Right, but you don't want to turn the taps on too much, because turn the taps -- I mean, this has been the big problem throughout this whole massive stimulus. Yes, we're in unique circumstances --
QUEST: -- where you've got unparalleled accommodation.
QUEST: But if things turn around fast, it will move up quite quickly.
MANDEL: Right. Well, I think this debate has played out among most advanced economies, notably in the US and UK, where they're in a slightly different point in their business cycle, slightly ahead of the curve, already looking toward the exit in terms of monetary accommodation.
And so, there is a sense that they want to be ready when the time comes to remove accommodation as quickly as possible so as not to have inflation too high. One quick --
MANDEL: -- way of measuring whether there's a perception that they're not going to be able to do that when the time comes is inflation expectations. And at least in the US, we've seen those be very firmly anchored at 2 percent. So that's something that you would watch, I guess, to make -- to see whether they've turned on the taps too much.
QUEST: What do you think the ECB should do now?
MANDEL: Well, I think there's a growing consensus that they should actually take some action and do something at the June meeting. So, they held their key interest rates pat at today's meeting in spite of a very low inflation reading for March. And so, what that's done is kind of galvanized or condensed some consensus that they should do something in June.
Now, there's a few things that could occur in the next few months, which really makes the case for taking action. One, we could continue to see low inflation, which is due to undershoot --
MANDEL: -- ECB forecasts. Two, the euro could remain stubbornly high. And three, there could -- there seems to be a big -- an increasing chorus of voices, let's say, including Christine Lagarde at the IMF, who say they should be doing something in order to get out of their current situation.
And so, in June, in all likelihood, what they'll do is actually take the next step and reduce their refi rate and their deposit rate.
QUEST: In June?
MANDEL: In June.
QUEST: In June.
QUEST: Not in May. Well, not in a meeting, that just got --
MANDEL: Yes, that's right. So I guess -- well, in June, they'll have more information. They'll have the -- let's see, they'll have May inflation numbers by June, yes.
QUEST: Good to see you, sir. Thank you for coming in.
MANDEL: My pleasure.
QUEST: Many thanks, indeed. Now, European stocks ended the day mixed. Have a look at the numbers. As Draghi says, policymakers may consider QE, the FTSE ended the day lower, just a tad, nothing to get too excited about, so we won't worry too much about that.
Now, here's how the Dow ended in New York. Alison Kosik is at the New York Stock Exchange. Alison, I haven't seen the final number as it ticked over on the Dow. Did or didn't?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Didn't make it.
KOSIK: Didn't cross over to that fresh new high. No, no, no.
KOSIK: You know what's interesting? What a day it was, because we saw the Dow, we saw the S&P hit fresh record highs, but in the end, investors decided to kind of sit on their hands, and it was all about caution and killing time before the next catalyst.
That next catalyst is the March jobs report coming tomorrow. There's optimism that a good number will come out of it for the March job report. More than 200,000 jobs are expected to have been added during that month, so we shall see if that comes to fruition. Richard?
QUEST: Alison Kosik at the Exchange. The jobs number, this could be the moment. This could be the moment.
KOSIK: Yes, it could.
QUEST: It could be. Alison, thank you. Now, Google is splitting its shares in order to consolidate power into the hands of the company's founders. The company is creating different types of shares, shares that have no voting rights, and giving them out to existing shareholders. Come and have a look and you'll see what I mean.
So, investors can't complain. The important thing is, or the starting point is, they can't complain about Google's performance. Look at the way it's up. It's up more than 200 percent over the last five years. That's a graph that is certainly worth following.
But not all investors are equal. Oh, to be sure, maybe on dividends and -- but some people get more than others. For example, you have the Class A share. Now, this is your bulk standard shares. It has the sticker "Google," it trades as Google, and it has one vote per share. Straight forward. That's the share that everybody is familiar with.
Then you have the Class C shares. They trade as "Goog." They have no votes. No say on how the company is run. In theory, the Cs and the As should follow, because it's both based on the same principle of earnings by share and these dividends paid. But usually the price likes the Class A shares.
And then, you have the Class B shares, and the Class B shares are not listed publicly, but these shares, the Class B shares, are mostly owned by the company founders and executives, and the shareholders get ten votes per share, which founders are Sergey Brin and Larry Page, along with, of course, Eric Schmidt, who owns between them 61 percent of the voting power.
Now, officials at the Fort Hood are giving an update on the shooting there on Wednesday.
MARK MILLEY, LIEUTENANT GENERAL, US ARMY, FORT HOOD COMMANDING GENERAL: -- or last night, but an update on the shooting incident that happened yesterday. First, I want to announce that we have positively identified and we are able to release, as next-of-kin have been notified, the alleged shooter is Specialist Ivan A. Lopez. He is 34 years old, originally from Puerto Rico.
Specialist Lopez was assigned to the 49th Transportation Movement to Control Battalion, or the 13th Sustainment Brigade. And again, his next- of-kin notification has been complete.
We will be publishing later on this afternoon, this evening Specialist Lopez's releasable service record, and you can find that on Fort Hood press center dot com.
In regards to Specialist Lopez's medical status, out of respect, as you can understand, for his family and the integrity of the ongoing investigation, I will not say anything further than the comments that I made yesterday.
As for the investigation, the criminal investigation division of the United States Army continues as the lead investigating agency, and they are right now synchronizing all of the investigative work of the federal, state, local, and army agencies throughout Fort Hood and the surrounding area. They are interviewing witnesses, and that is an ongoing and active investigation.
I would ask that everyone avoid speculation about the incident and let the investigation and the investigators take their course. Many of those are also -- many of those soldiers are also witnesses, and I would ask the media for due respect of the integrity of the investigation to try to stay clear of soldiers who may have been witnesses.
And as I stated last night, at this point, we have not yet ruled out anything whatsoever, and we are committed to letting the investigation run its course, but we have again no indications at this time of any links to terrorist organizations of any type, either national or international.
I just returned from Scott and White and visited with our wounded soldiers down there, and I'd like to thank publicly the great professional support that we've gotten from the entire medical staff at Scott and White. A tremendous effort by all of them, the Medevac pilots, and then also the great professional medical effort that was done here on Fort Hood at Darnall.
There are casualties still at Darnall, and there are casualties still being treated at Scott and White, and they are getting world-class medical care, and we appreciate all of that. Currently, we have 16 --
QUEST: A short update on the events at Fort Hood. Nothing dramatically new in the facts that we've been given then, and the general not giving many more details other than to see who had been visited and refusing to give details on the shooter involved out of respect for the family. We'll have more details in just a moment.
QUEST: The United Nations calls it a "bleak milestone" in the Syrian crisis. Today, the number of Syrian registered as refugees in Lebanon passed one million.
The UN says that would be a massive influx for any country to have to deal with, and in tiny Lebanon, the impact on the country's economy and infrastructure is nothing short of devastating, to say nothing of the humanitarian effect of those involved.
Just purely on economics, the World Bank believes and estimates that the Syria crisis has cost Lebanon $2.5 billion in lost economic activity last year, and threatens to push 170,000 Lebanese into poverty by the end of this year simply through lack of resources that could be spent elsewhere.
The government, the UN, and various agencies have mounted an unprecedented response targeting both refugees and Lebanese host communities. Late last year, they appealed for nearly $2 billion for this year, $242 million, a paltry amount in comparison, has been received.
Our senior international correspondent is Arwa Damon, and she now reports on a Syrian refugee who was denied aid and set herself on fire for the sake of her children. It's a move which mirrors the plight of countless other refugees.
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Mariam wanted to die. "I choose death," she says. "I choose death rather than see my children die a million times in front of me."
Words fail Mariam's husband, Ahmad, as he listens to the woman whose smile he fell in love with 24 years ago. Their four children, ages 13 to 22, don't want to be filmed. Three of them have a blood disease that requires a specific diet.
Six months ago, the UN switched from providing aid to all refugees to a targeted aid campaign. The family was deemed not eligible for food assistance.
"I went to them over and over. I said, 'You must have made a mistake,'" Mariam says. They lied to me. They mocked me. They shouted, "Get out of here!"
Mariam torched herself.
DAMON (on camera): This is the exact spot where the incident took place in front of UNHCR's registration center for northern Lebanon. The vendors here all witnessed it happening. They said it took place very quickly, that she briefly exchanged a few words with somebody, and then poured the gasoline on her head. The next thing they knew, she was a ball of flames.
DAMON (voice-over): The helplessness, the humiliation, it was just too much. Sometimes, all the family had to eat were scraps of dried bed.
DAMON (on camera): Mariam is saying that she feels as if her heart was burnt by the way that they were being treated even before she decided to set herself on fire, that she felt like they were all being treated like animals. She says, "I'm not an animal, I'm a mother, I'm a human."
DAMON (voice-over): She says she would plead, "'I'm going to set myself on fire. Feel my pain, feel what's in my heart. Feel that I have four children.' They would laugh at me and send me away."
UN personnel at the center and guards told us she wasn't mistreated, but the UN takes these allegations very seriously and is looking into them, along with also following up on the family's eligibility for reinclusion in the food aid program.
The UN is also covering all of Mariam's medical costs. She says all she's ever done was for her children's survival. "I worked very hard for their education." They don't come to the hospital. She doesn't want them to see her like this.
QUEST: We'll have more after the break.
QUEST: Gazprom is cranking up the heat again on Ukraine, announcing a 70 percent rise in the price of gas and ordering repayment of a multibillion-dollar national energy debt. Gazprom is now charging Ukraine $485.50 per thousand cubic meters for gas. It's also issued a final demand to Ukraine, claiming it owes $2.2 billion.
The Gazprom chief exec puts it like this: "Hopefully in the near future, Ukraine will start repaying its debts and will finance its ongoing supplies. However, we see that the situation is not improving and it is only getting worse."
The Ukrainian prime minister said there's only one reason behind the rise, as he sees it.
(BEGIN VIDEO CLIP)
ARSENIY YATSENYUK, PRIME MINISTER OF UKRAINE (through translator): Firstly, the price of $468 is absolutely unacceptable. Secondly, the Russian Federation completely understands this. Thirdly, there are no reasons for Russia to increase the gas price to Ukraine from $260 to $460 except one reason, which is politics.
(END VIDEO CLIP)
QUEST: It's not just that Ukraine can ill afford a gas crisis. To really understand Russia's position, well, we need to go one stage further and we need to look at Gazprom itself. And if you join me at the super screen, you'll see exactly what I mean.
Gazprom is one of the largest companies in the world. It employs some 400,000 people. So far, so good with Gazprom. But it owns 168,000 kilometers of gas supply lines, and the pressure's building.
Look at the way the stock has been valued over the last six months and you start to see its extraordinary volatility. If you were to overlay this with, say, BP or Shell, you would see much more consistency, it's the ups and downs. But you wouldn't see these vast changes that you get as a result of the Crimea crisis or, indeed, the political situation.
Now, its third quarter profit was down around 10 percent. It was down to some $8 billion. That still beat analysts' expectations. The numbers are down because of a weaker ruble and lower domestic demand.
But it's more than just that. It's the future and, if you like, the fortunes of Gazprom itself, bearing in mind its share price, its sales, and the way of the company.
In 2011, it topped the list of Fortune's Global 500 companies. However, just fast forward two years, and it goes from number one, not quite hero to zero, but not far off. It goes -- falls to number 21 because of pressure from domestic competitors and America's shale gas boom.
Put this into perspective: what is actually happening with Gazprom? Is it an oil company? Is it an energy company? Or is it more a tool of the state, which happens to do a bit of energy on the side?
We're joined now by Anders Aslund, who's a senior fellow at the Peterson Institute for International Economics in Washington. Good to see you, Anders, thank you. I've ready your very interesting article last year about Gazprom. Fundamentally, you believe that it hasn't done anything right.
ANDERS ASLUND, SENIOR FELLOW, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: Indeed. What you say is all correct. And my assessment is that the leadership of the Kremlin, together with certain Gazprom managers, tapped the company on about $30 billion a year.
And this is done in two ways. One is that they are selling pipelines to Gazprom through discretionary deals --
ASLUND: -- at three times higher price than they should. And obviously they are buying assets like Gazprom bank and its insurance company and other assets very cheaply and in that way make a lot of money. This is mainly a source of corruption.
And secondly, as you said, geopolitics. And only thirdly, it's a company. And then, of course, you can't do much about it.
QUEST: It's also managed to successfully miss the shale gas or the shale extraction boom that has been such a revolution in the United States. You quote President Putin as saying shale gas wasn't really real, and you quote the CEO of Gazprom believing that shale gas was a boom. Now, everybody else realizes there's gold in them there shale.
ASLUND: Yes, and it's not the only revolution they missed. They missed the Chinese market. Gazprom hardly sells anything to China. They have missed the LNG. So essentially what Gazprom does is exporting --
ASLUND: -- gas from West Siberia, through pipelines to Europe, which makes it enormously vulnerable. And it has lost one third of its sales since 2009 because it is misbehaving so badly, cutting supplies both in 2006 and 2009 to Europe.
QUEST: Let me jump in and just finally say, when we look at the share price of Gazprom and we see how it's performed and we see the volatility, say, vis-a-vis more traditional energy producing companies, is that because there is such uncertainty about Gazprom, which there shouldn't be, really, because it's a tool of the state? Or is it because investors just don't trust what the state's going to do with Gazprom?
ASLUND: Well, the main thing is that the shareholders know that the money that Gazprom makes is not for them, but for certain insiders in the Kremlin and Gazprom. Therefore, Gazprom has now a P value of 2.4. The share price has fallen by slightly more than 80 percent in the last six years. This is really a useless company and should not be treated as a company.
QUEST: Well, that's put it bluntly. We thank you for that, sir. You don't often hear that on any business program, "a really useless company that should not be treated like a company."
When we come back after the break, we're going to turn our attention to Malaysia 370. You're going to hear the views of one of the world's leading airline CEOs about the sort of changes that the industry needs to consider such that this event should never happen again. Akbar Al Baker of Qatar Airways after the 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. U.S. Army has confirmed the identity of the gunman at the Fort Hood military base as Ivan Lopez. Three people were killed in the shooting before the gunman killed himself. Speaking at a news conference a few moments ago, Lieutenant General Mark Milley said the investigation will focus on every possible motive.
LIEUTENANT GENERAL MARK MILLEY, COMMANDER, FORT HOOD: At this point we have not yet ruled out anything whatsoever. And we are committed to letting the investigation run its course. But we have again no indications at this time of any links to terrorist organizations of any type, either national or international.
QUEST: A Ukrainian government report blames the ousted president Viktor Yanukovych for the deaths of anti-government protesters at the hands of special security forces. Twelve members of the Berkut Force have been detained. Yanukovych has denied he had anything to do with the killings. The U.N. Refugee Agency says the number of Syrian refugees living in Lebanon has now passed the one million mark. The small nation now hoses -- houses -- the largest number of refugees per capita in the world. U.N. staff in Lebanon register 2,500 new Syrian refugees each day.
Turkey has lifted its ban on Twitter. The decision follows Wednesday's constitutional court ruling that the government's move was a breach of free speech. Several Twitter users in Turkey tell CNN they can use the website again. A celebrity TV cook Nigella Lawson has been barred from boarding a flight to the United States. She was stopped from getting onto a British Airways flight from London to Los Angeles last Sunday. No official reason has been given. Britain's "Daily Mail" newspaper has linked the incident to Ms. Lawson's recent admission in court that she had used cocaine in the past.
CNN has learned that a British naval warship will conduct what's known as a specific search in the hunt for missing flight Malaysia 370. A spokesman said that the person in charge of that search will make a big operations announcement on Friday. The prime ministers of Malaysia and Australia have vowed to keep hunting for the jet. Australia's Tony Abbott says the search is extremely challenging.
TONY ABBOTT, AUSTRALIAN PRIME MINISTER: This is probably the most difficult search ever undertaken. The most difficult search ever undertaken. Even though we are constantly refining the search area, even though the search area is moving north, it is still an extraordinarily remote and inaccessible spot, at times subject to very difficult sea conditions.
QUEST: The whole of the airline industry is now following this search closely. Qatar Airways is taking part in a project to check all passenger passports against Interpol's database. The chief executive of Qatar Airways, Akbar Al Baker, joined me a short while ago to talk about the very real issues facing the industry.
AKBAR AL BAKER, CEO OF QATAR AIRWAYS: Quite frankly, I don't think we have many options. What can you do to change when an individual that is in control of a machine and is running something in his brain? I don't think there is anything the industry could do to change this.
QUEST: So you lean towards the pilot being involved in this in some way?
AL BAKER: I don't know. I don't want to preempt there is an investigation going on in Malaysia and I as a CO of an airline would not like to preempt what I think could have happened. I think I will leave it for the authorities to find out.
QUEST: On the bigger, wider question of the constant streaming of data. Now, Tony Tyler has already spoken about that no -- you know -- that no plane must ever be allowed to go missing again. What's your thoughts on that?
AL BAKER: Well, I think the industry will have to find a solution where no matter what you do, the data that's coming out an airplane should never be able to be switched off by anybody.
QUEST: You will be hosting the IARTA annual general meeting in Doha later this year. Do you think that this is something IARTA needs to get to grips with, if only to sort of -- to prove to the world that the airlines are leading the way on this and are not putting costs before anything else?
AL BAKER: I don't there is anything that is more expensive than losing an airplane and whatever the cost may be. I don't think IARTA really has too much to say. I think this will have to happen on the level of IKO (ph), and of course big governments around the world so that such a thing should never be allowed to happen again -- no matter what will be the cost to implement systems in an airplane that will make it safer to fly.
QUEST: And finally on this area, sir, the traveling public. The one thing that I have heard again and again and again is incredulity that at plane -- that they can't find it. They just don't know where it is. They're searching but nothing's there. Through your understanding, how do you give confidence to the public?
AL BAKER: Well, let me tell you something. Like I said earlier, that there is nothing that will guarantee something that should never happen again. You know we will always be learning and people will always find ways to do things. What we have to do is to make things very difficult to happen, and I hope that the industry will come up with a solution with such a thing when an airplane can disappear because of an act of one person or a group of people should never be allowed to happen again.
QUEST: And on tomorrow's program, Akbar Al Baker will talk about his own airline obviously Qatar Airlines which started flying from Doha to Philadelphia today to give us a review of what his airline is up to in the skies. Now, in the last hour we learned that Brendan Eich has resigned from Mozilla just ten days after taking the helm of the company. Now this has to be one of the shortest helm ships. It follows a storm of criticism from Firefox developers and members of the gay community who took to blogs and Twitter to express their outrage over Eich's appointment. Now, you may ask why. I'll tell you. In 2008 Eich donated a $1,000 to support a ballot initiative in California that sought to outlaw same sex marriage in California. He since made various comments about and sort of explained it and in some ways apologized for it. But he's still -- he's gone.
Going up with those weakest first quarter for trade in 20 years, the country's foreign trade minister joins us to talk about how Brazil is turning the corner.
QUEST: Greece saw a 15 percent rise in travel revenue and tourist arrivals last year -- no mean feat. The tourism minister says she wants to make Greece a year-round holiday spot. She joined me in the C Suite.
OLGA KEFALOGIANNI, GREEK TOURISM MINISTER: 2013 was a record year for tourism for Greek tourism, both in terms of arrivals with almost 18 million visitors and also in terms of revenue which is very important with almost 12 billion euro in direct revenue for the Greek state. And we see that 2014 is looking an even better year --
QUEST: Even at the same time as the country's been having such problems and the economy has been in recession -- some would say depression?
KEFALOGIANNI: Well, we have been in recession for six consecutive years, we believe that 2014 will be the first year that we will have a marginal growth. But still, it has been a very, very challenging period. Tourism has been the most resilient sector of the economy, and it's true that it's the first good message about the Greek economy.
QUEST: So, as you look to the summer of '14 and beyond, what's your strategy going to be to not just rebuild the confidence or rebuild the perception, but to grow that market?
KEFALOGIANNI: Well, that was the challenge at first -- really tackling misperceptions and recreating the image of Greece as a very safe and very friendly destination. And I think that we succeeded in doing this, and definitely things are much better now than the first time that we met two years ago. But our strategy right now focuses on promoting Greece more as a country -- an all-year destination not just for sea and sun and the Greek Islands vacation, but also for thematic tourism, for all sorts of different types of niche, I would say, taxifer (ph) tourism.
QUEST: You are to some extent against the sanctions while Greece is worried about the sanctions against Russia because obviously you have many Russian tourists. In fact, it was one of the largest growth sectors for Greece in terms of tourism, wasn't it?
KEFALOGIANNI: Yes, in 2013 we had a 45 percent increase in the number of visitors from Russia. This was mainly added defuted (ph) to the fact that the Greece was one of the countries facilitating the visa for Russian visitors, and we're really looking forward to welcoming more Russian visitors in Greece.
QUEST: Are you worried that as a result of sanctions because of Crimea that could be in jeopardy?
KEFALOGIANNI: Well, I will be very honest with you. I will not comment on whether sanctions are moral or not, but in any case, they should be imposed on governments, not on people. So, we would never, let's say, prevent Russian visitors from coming --
QUEST: You may have no choice. You may have no choice. They may not be allowed to come.
KEFALOGIANNI: Well, this is not something that we would ever support, so we're really looking forward to welcoming more visitors from Russia in Greece and we actually saw an increase in the number of visas issued in March.
QUEST: That's the tourism minister from Greece, and you can hear what she's been reading by the way and reading for leading on the "Best of Quest" this weekend. Brazil's foreign trade minister says his country is undergoing extensive reforms in the face of changing trades demands. You'll hear from him in a second. Brazil posted a trade surplus of $112 million in March, which sounds good. For the first quarter as a whole, though, Brazil posted a deficit of over $6 billion. So, you've got that good number and then you've got that appalling quarterly number which is the worst, incidentally, for 20 years. Brazil's key export partners -- the United States, China and Argentina.
Of course China is the single largest and that's obviously because of the commodities that go from Brazil across -- probably that way actually -- to China. Growth's been slow in both the U.S. and China. Argentina's trade has been dwindling due to the decline of the peso. As for Venezuela -- now, Venezuela is not at the top of the trading partner list. It is, though, important. Recent unrest. These sort of pictures have been giving grave cause for concern. And the question of course has been whether Brazil with its influence in the region really needs to take a more muscular approach in dealing with Venezuela.
I spoke the Brazil's minister for foreign trade. He was attending a world economic forum in Panama and I asked how they were going to deal with this very unbalanced trade number.
DANIEL GODINHO, BRAZILIAN FOREIGN TRADE SECRETARY: It is important always to diversify trading partners. So, we've been negotiating a trade agreement with the E.U., and we're about to exchange offers in goods, government procurements, services, investments so we will be able to foster our bilateral trade with E.U. for instance. We're also discussing investment treaties -- new investment treaties -- with many partners abroad. So there are a number of situations we're trying to address even internally in Brazil. So, we're trying hard to implement the W2 trade agreement on trade facilitation, we're adopting a whole new model of single-window systems -- putting everybody together -- all the agencies -- the governmental agencies which deal with trade. There are 22 in Brazil, they are all coming with us in this internal effort in order to be more efficient in our trade with the whole world.
QUEST: Trade with Venezuela. Is Brazil somehow changing its relationship with Venezuela with the government there, do you think?
GODINHO: Well, Venezuela is an important partner for Brazil of course, is an important trading partner. Well, you know that Venezuela joined Mercosur two years ago, so we've been working really hard to put our close -- our countries even closer -- and I think Venezuela is doing well in our bilateral trade and our bilateral relations and of course we want to enhance this relationship.
QUEST: A busy program indeed. The Greek tourism minister, the Brazilian foreign trade minister, and now the minister of weather -- Jenny Harrison at the World -- the ministress -- you know, I think it's the ministress of weather.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: (LAUGHTER). I don't mind. You call me whatever you like, Richard. The minister -- I like it, I like it. I like a nice title. Yes, of course what you need for all these things, Richard, you need some good weather don't you for heading anywhere on your travels. Now, I need to warn you that we've had some very severe thunderstorms across parts of the U.S. in the last few hours, certainly on Wednesday there were three tornadoes reported, two in Missouri, one in Kansas, and there's a likelihood of a few more because we have this big, long line of thunderstorms working their way eastwards as we continue through the end of the week. Remember we've got that very, very moist warm air in the Southeast ahead of that front, bringing in the cooler air.
So, this is a situation continuing Thursday into Friday morning. This large area here, by the way, this sort of threat, this warning area about 50 million people actually reside under these warnings. Large hail, strong winds and of course it is that time of year, so there is a threat now of tornadoes coming from these very strong storms. Right now, current airport delays still at Chicago, it was their report is the same about an hour ago. So now in 20 minutes some ground delays because of the weather conditions. And as we continue through Thursday into Friday, you can see here that we've got some pretty long delays expected because of those thunderstorms, particularly in the overnight hours. Indianapolis you can see there it may be up to 90 minutes. And, again, it's all spreading eastward, so eventually it will see some rain and thunderstorms on the east coast as well. And, in fact, the warnings will also continue Friday into Saturday. But you can see it's a large area, but the warnings perhaps not as strong, not the red warnings. Because although they're the same thunderstorms, they're not quite as strong at this point. So just be aware of all that.
Meanwhile in Europe, still most of the weather is coming up from the south pushing up across western Europe. Still pretty cold across areas in the east, and still looking like I'm afraid in London. It is getting better. In fact, the air quality a lot better later in the day on Thursday than it was actually earlier on. But these are the reports from Wednesday, and you can see in and around London itself actually some of the readings that they're getting up to 8 and 9, so that is where some of the worst pollution exists. And of course it's not just London -- across into the low countries, parts of Germany, France -- many of the major cities with the current airflow, and with the dust coming up from Sahara still seeing the same sort of thing. You can see now in London reporting about a 102 particles.
And the forecast as we go into Friday and Saturday, it's actually looking a lot better because of course the weather is coming from a different direction. We've got the showers coming in from the west, and that will also bring a change with the direction of the winds. And, oh I really quickly wanted to get some view, Richard. Warm conditions still in Budapest by Friday. Oh, I'm being told to wrap, but I've got to get this. You asked me about April showers. Now, of course in winter -- this is what we have -- the winter Jetstream is further to the south, the weather is cold. As we head into spring, we have April showers. It warms up from the south and we have the Jetstream further to the north. So, system after system, --
HARRISON: -- and you know what they say, don't you? April showers bring May flowers. Got to stop talking now, I'm being told off.
QUEST: The mistress of weather -- I think that works nicely.
HARRISON: (LAUGHTER). The mistress.
QUEST: The mistress. The headmistress. We'll be back after the break.
QUEST: I never thought I'd use the words Miley Cyrus and Russian sanctions in the same sentence, but there is a first time for everything. The singer could indirectly become a victim of the U.S. penalties against Russia. Now, let me explain. That's Miley Cyrus, and this is Helsinki's Hartwall Stadium where she is due to perform in June. Now, you're with me so far. The venue is owned by three close friends of the Russian President Vladimir Putin, including the billionaire Gennady Timchenko seen over here. He has a 50 percent stake in the stadium over here. The other two are the brothers Arkady and Boris Rotenberg. So, you have the owner, the singer, the stadium and now the possibility of sanctions imposed upon them following Russia's annexation of Crimea, which may mean that he can't profit from her when she performs over there. You get the idea? The Cyrus concert has been organized by the U.S. promoter Live Nation. In a statement they say they're reviewing portfolio, etc. etc. etc., sanctions identified with Russians are upheld. You get the general idea. Let's talk about all of this. Joining me now is Anthony Woolich, partner of the London law firm Holman, Fenwick and Willan. Anthony, bizarre, isn't it?
ANTHONY WOOLICH, PARTNER AT HOLMAN, FENWICK, WILLAN: Well, it just shows how far-reaching trade sanctions can be.
QUEST: Is this just because he has a 50 percent stake in a stadium that she might perform in and therefore money goes to the stadium and the stadium would then -- he might reap benefits from it? Is that the -- is that the sort of a causation line?
WOOLICH: Yes, absolutely. Basically, this is a matter of U.S. trade sanctions because the individuals you mentioned --
WOOLICH: -- are not actually subject to E.U. trade sanctions, and under the U.S. rules, if a sanctioned individual, an SDN -- specially- designated national -- has at least a 50 percent interest in a company, then the company itself is treated as an SDN.
QUEST: Right, now --
WOOLICH: -- and therefore --
QUEST: In -- as these sanctions start to bite, in your legal opinion, do they become more efficient or do they become more ridiculous?
WOOLICH: Well, there's a lot of interesting literature about how effective sanctions are. In recent times, they are credited as having assisted in for example shortening the war against Libya because the sanctioning of exports of Libyan oil meant that Colonel Gaddafi could not use the proceeds of that oil --
WOOLICH: -- in order to purchase weapons and arms. And of course so far as Iran is concerned, they are credited as having brought the Iranians to the negotiating table. So, I think that the evidence suggests that trade sanctions can be very effective.
QUEST: Good to see you, sir. Thank you. No doubt you'll get a ticket to the concert, assuming of course you're not breaking sanctions. Nice to have you with us.
QUEST: We'll have "Profitable Moment" after the break.
QUEST: The whole question of sanctions is fascinating as you've just heard. Miley Cyrus and the concert infinite (ph). What on earth is going on? Well, of course sanctions are one way in which policy can be enforced. But as you heard, the effects are mixed at best -- whether it's Iraq or whether it's Libya or whether it's Syria, or, going back even further -- whether it was South Africa -- there's never really been a consensus on sanctions except in one respect. If they are going to work, everybody has to not only sign on, but they also have to follow through. And that of course is the big problem with any sanctions against Russia. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Thank you for your company for our nightly conversation on business and economics. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.
(END QUEST SHOW)