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Quest Means Business
Fleeing ISIS Onslaught; Maliki Vows to Fight Appointment of New Prime Minister; Oil Companies Suspend Operations in Iraq; "New Era" for Turkey; Terror Victims Versus Arab Bank; Amazon Versus the World
Aired August 11, 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)
POPPY HARLOW, HOST: Markets may be rising, tensions in the Middle East are also surging. It is Monday, August the 11th.
Tonight, fear, panic and desperation among religious minorities in Iraq. The United States president, Barack Obama, speaking this hour.
Also, the case that could change global finance as we know it. Jordan's largest bank accused of helping to fund Hamas.
And Amazon versus the World. Why Jeff Bezos is taking on the Disney empire.
I'm Poppy Harlow in today for Richard Quest, and this is QUEST MEANS BUSINESS.
Good evening. Tonight, the fight for survival on Mount Sinjar. This CNN video filmed just hours ago shows the chaotic delivery of food and
water to thousands of Yazidis trapped on the mountainside. Below them, a brutal militia that has threatened to kill those who do not convert to
Islam.
On the mountain, extreme heat, hunger, and thirst. For some unable to reach supplies, time is running out. Kurdish forces have rescued about
20,000 Yazidis so far, and US officials say their airstrikes have halted ISIS expeditions on the mountain. CNN's Ivan Watson was onboard that
helicopter throughout this dramatic rescue, and he has this report.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: We accompanies a helicopter from the Iraqi Air Force with several Peshmerga fighters onboard
on a dangerous, chaotic, and dare I say, heroic mission to deliver aid to some of those people, those Yazidis who've been trapped on Mount Sinjar for
the better part of a week now, and to evacuate some of them from that mountain.
So, we took off from here on this aging helicopter that was loaded down with babies' diapers, with condensed milk, with food and water, and in
some cases, even boxes of shoes to give people. And as we flew over the plain in the direction of Mount Sinjar and we went over the ISIS positions,
the two machine gunners on the side of the aircraft began opening fire on suspected targets below.
They told me that every time they fly in and out on these missions, they take fire from down below. And I saw them go through cartridges and
cartridges, entire machine gun belts of ammunition, and then they got over Mount Sinjar, and it's this incredible geological formation that comes out
over the plain.
And there, we saw, hiding under some of the trees, some of these desperate people who've been trapped up there for a week, hiding in the
shadow of trees. In some cases, there were a couple of half-built structures that people were hiding around, and they all started waving to
us and waving white flags as we came over.
And that's when this chaotic process of trying to throw out assistance, aid, to these people began. The gunners were quite literally
hurling diapers and food off the helicopter, at some points at heights of up to 50 feet, to the extent that I was worried that people would get hurt
below.
And then we landed on several short occasions, and that's where, amid this explosion of dust and chaos, these desperate civilians came racing
toward the helicopter, throwing their children onboard the aircraft.
The crew was just trying to pull up as may people as possible. A little baby, a red-headed baby that ended up in my hands. It was chaotic,
it was crazy, but we were able to then lift off with about 20 civilians, some elderly. Some of these people had scratches, had wounds that were
clearly getting infected.
The crowd onboard the helicopter burst into tears, as did some of the Peshmerga fighters who were onboard there, trying to help them. Just the
relief was palpable.
(END VIDEOTAPE)
HARLOW: Our thanks to Ivan Watson for that report. We'll have a live report from him at the half hour here on QUEST MEANS BUSINESS.
Also this: US president Barack Obama is due to make a statement on the situation in Iraq this hour. Meanwhile, in Baghdad, Prime Minister
Nouri al-Maliki says he will not go without a fight. Iraq's president has nominated Shia politician Haider al-Abadi to replace Maliki as prime
minister.
The US is openly backing al-Abadi. The White House says Vice President Joe Biden phoned in to congratulate him on that nomination.
As the fighting intensifies, oil companies in Iraqi Kurdistan are shutting down operations and evacuating staff. On Monday, Hess, and also
Irish oil exploration Petro Celtic became the latest firms to suspend their operations there. We're hearing this is really becoming an hour-by-hour
look at the situation on the ground there.
The Kurdistan region produces about 15 percent of Iraq's oil. Traders are worried, though, that eventually if we see ISIS progress further south,
that could be detrimental to oil production in the country, which really the heart of the industry there is in the south of Iraq. And as you know,
they are getting closer and closer to that.
Joining me now is Will Geddes. He is the managing director at International Corporate Protection. Thank you for joining us. You know
this region, sir, better than so many. The way you see this now and from what you're hearing on the ground there, this is an hour-by-hour assessment
by the big oil companies, right?
WILL GEDDES, MANAGING DIRECTOR, INTERNATIONAL CORPORATE PROTECTION: Yes, absolutely. The oil majors who are primarily located around Erbil,
are having to review their plans on a daily basis, certainly in terms of ISIS and the amount of ground that they're beginning to take.
Now, ISIS have already managed to capture seven oil fields and two refineries, so there is a big concern. And although the majority of the
output of, obviously, production of oil within Iraq, primarily comes into the south of the country, about 75 percent.
HARLOW: Right.
GEDDES: There are, obviously, concerns about the impact into the Kurdish region and what impact that may have. Especially as there are some
very large fields up there.
HARLOW: Yes, and it's also important to put this -- this is all relative, right? When you look at what is happening to the Yazidis and the
minorities on the mountain, all of the efforts, really, in Iraq from the US government perspective and also Iraqi government is focused on the people,
the people suffering and dying there.
But when you talk about protecting these oil assets there, what can be done? If you've got these big companies pulling out -- we know Shell, for
example, has not yet pulled out. They told me that they are assessing and the security and safety of their people is most important.
But when you do have these companies pulling out, do they literally abandon the refineries in the fields, or do they hire local contractors to
oversee them as much as possible?
GEDDES: Well, the stakeholders, obviously, behind the major oil companies operating out there are very embedded with the local community.
And certainly in terms of those assets, the protection of those assets, will be also primarily protected by local security personnel.
Now, there's a judgment call that these companies have to make, A, in the protection of their own personal, and certainly, some of the majors
have, as you've mentioned, evacuated some of their non-essential personnel.
HARLOW: Right.
GEDDES: But the security personnel may also need to be deployed within the region away from the oil --
HARLOW: Right.
GEDDES: -- obviously to the protection of their own families and of their own region. So, there's a very fine balancing act, and they will be
supported by those oil companies.
HARLOW: It's interesting, we still have crude below $100 a barrel, and you compare this to the previous years of attention in Iraq and we saw
oil prices absolutely spike. It's a number of factors here, right? The fact that they haven't -- ISIS hasn't progressed south into the heart of
the production.
Also, US production being higher, for example, production higher elsewhere in the world. But what do you make of this longterm, from what
you're seeing thus far?
GEDDES: Well, certainly in terms of the longterm position, the intervention and the involvement by the US government in providing a
military response to ISIS is inevitably having a good impact in terms of preventing ISIS take ground as rapidly as they have been.
However, I think the international community will have to come together, and even those taking quite a passive stance are going to have to
become more proactive.
ISIS are a force to be -- not to be reckoned with. Certainly in their capturing of some of those oil fields, they're selling what is allegedly
about 10,000 barrels a day --
HARLOW: Right.
GEDDES: -- in terms of the oil that they've captured.
HARLOW: And we know, we have to let you go, but just very briefly here, we know how wealthy ISIS has become because of all of the money and
assets that they have stolen. What can they do if they seize control of these oil fields?
GEDDES: Well, certainly they can fill their purse in terms of the funds that they have, and that is critical, certainly, for their resupply
of armaments and weapons, certainly, that is going to support their fighters and also resupply to engaging and also encouraging foreign
insurgents to join their cause.
So, if you have an enemy combatant like ISIS that is as well financially resourced as they are, unfortunately, it makes for a very
formidable enemy.
HARLOW: Will Geddes, we appreciate the expertise. Thank you for coming in this evening.
All right. Well, in Turkey, Prime Minister Recep Tayyip Erdogan is promising a new era after winning the country's presidential election.
Until now, the president's role has been largely ceremonial, but Minister Erdogan has announced that he will seek more power -- much more power --
for his new office.
With the growing turmoil in Iraq and Syria, Turkey's position in the Middle East could be -- really is crucial. Our emerging markets editor,
John Defterios, explains what the new era means for Turkey, and frankly, what it means for the world.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Prime Minister Recep Tayyip
Erdogan secured his prize, making the transition from prime minister to president-elect. But it appears the honeymoon period in financial markets
will be a short one.
After an early rally, the main Istanbul Borsa 100 Index finished down nearly 2.5 percent. Ratings agency Fitch suggesting there remain political
risks in Turkey, and that the long-serving PM may overreach in his new role. Erdogan, during acceptance remarks, says it is time to open a new
chapter.
RECEP TAYYIP ERDOGAN, PRESIDENT-ELECT OF TURKEY (through translator): Brothers, I say this from the heart: let's start a new social
reconciliation period today, and let's leave the old discussions in the old Turkey. Let's leave tensions, culture of clashes and virtual problems in
old Turkey.
DEFTERIOS: That softer tone comes after what's been a difficult 18 months. He faced intense protests over development plans in central
Istanbul and corruption allegations that reached to the top of the ruling party.
Before those setbacks, Mr. Erdogan represented a different face of Islam, one that could be pro-business. The challenge now is getting growth
back up to 8 to 9 percent, like it was a few years ago. Or is this recovery to 4 percent after a dip down to 2 percent the new normal in
Turkey?
BULENT ALIRIZA, DIRECTOR, CSIS TURKEY PROJECT: I think more serious questions will continue to be asked about whether the Turkish economic
miracle is going to continue. That's been a very important component of the string of victories that Mr. Erdogan has had.
DEFTERIOS: He has a plan to make Turkey a top ten economy by taking total GDP from $820 billion to $2 trillion by 2023. He wants to more than
double per capita income from just below $11,000 to $25,000 in the same time frame.
His first order of business is trying to prevent problems in neighboring Syria, and now northern Iraq, from defining his first chapter
as president and undermining his growth plans.
John Defterios, CNN, Abu Dhabi.
(END VIDEOTAPE)
HARLOW: Thanks to John Defterios for that and what the new Erdogan era is going to mean in Turkey. We'll be following that very closely on
this program.
Coming up after the break, terror attack victims pointing the finger at a major Jordanian bank. We're going to explain what this is all about
and how it's unfolding right here in the United States. That's next.
(COMMERCIAL BREAK)
HARLOW: As indirect talks between Israelis and Palestinians resume in Cairo, Jordan's biggest bank, Arab Bank, today faces charges it helped
provide funding to Hamas. The plaintiffs are families of US citizens killed in attacks allegedly carried out by Hamas between 2001 and 2004,
like this blast in 2003, when a suicide bomber blew up a bus in Jerusalem, killing more than 20 people.
The plaintiffs cite the US anti-terrorism act, a law that enables terror victims to sue supporters of attacks. Now, Arab Bank argues it
followed regulations and protocol and did not in any way support terrorism. Here's part of a lengthy statement issued by the bank.
It says, "Arab Bank has great sympathy for all victims of terrorism, but is not liable for the tragic acts described by the plaintiffs." It
goes on to read, "The bank did not cause or provide material support for the acts of terrorism involved in this case.
It's the first terror financing suit a bank to go to trial here in the United States. In fact, it's taking place right here in New York City.
And it could be landmark in terms of the precedent that it could set. At the heart of the matter: to what extent are banks responsible for their
clients actions?
Let's bring in two people to talk to us about this. Legal expert, CNN senior legal analyst Jeffrey Toobin. Also, Ayman Safadi, who is the former
deputy prime minister of Jordan, and now CEO of Path Arabia.
Let me start with you. Thank you both, gentlemen, for being here. Jeff Toobin, let me begin with you.
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: OK.
HARLOW: This seems very wide-reaching and has the potential to be historic in the precedent it could set by essentially saying that banks are
responsible for knowing what is being done with the money that goes through them in the future. Am I correct?
TOOBIN: Well, that's right. The Bush administration put a great deal of emphasis on stopping the financial aspects of terrorism, of going to the
source of trying to use the power of the United States Treasury, the power of the Justice Department, to stop the financing of terrorism involving
banks that do business in the United States.
These are civil plaintiffs, these are individual plaintiffs, but basically trying to do the same thing, trying to use the courts to say we
will punish banks financially if they give support, money, to terrorist organizations.
HARLOW: To you, Ayman Safadi, as we were speaking earlier, something you said -- you said that the liability is being pushed beyond what is
practical, beyond what is legal. This is a case that has been in the making for years and years, since, I believe, 2004. And now, it is just
finally going to trial. Your take on this is that there really is no cause here, no cause here. Why do you say that?
AYMAN SAFADI, CEO, PATH ARABIA: There is -- because it's incomprehensible that the Arab Bank is being the target of such
allegations. It's the leading bank in Jordan, it operates across the world. It's in a country, Jordan, whose commitment to combating terrorism
is second to none. The United States government itself has testified to the commitment of the Arab Bank in the fight against terrorism.
Actually, the Israeli government itself has looked into the transactions of the Arab Bank and gave it a clean bill of health. And
also, let me remind you that all financial transactions that go into the occupied Palestinian territories are monitored by the Israeli Central Bank,
and that the 1994 agreement between the Israeli government and the Palestine National Authority.
There's no evidence to support that the Arab Bank did any of that. The Arab Bank did comply with all legislation, and as far as channeling
those funds or those transfers to victims of violence, in the West Bank, these are victims that were being sent money by organizations --
HARLOW: But --
SAFADI: -- charity organizations in Saudi Arabia, elsewhere. And those charity organizations do have business with the US government, and
there's nothing against them in terms of terror, nor was ever any case against the people who received those transfers, an operation in which the
Arab Bank --
(CROSSTALK)
HARLOW: Ayman, let --
SAFADI: -- was simply a corresponding bank.
HARLOW: Let me jump in here and ask you this. However, Arab Bank did and throughout this process has refused to provide a number of customer
records, banking records, saying look, they'd be violating Jordanian law, et cetera, if they did that. That could actually hurt them in this case,
in terms of how the jury views that. Do you believe that more of these should be handed over?
SAFADI: Well, you don't counter unfounded allegations with committing a criminal act. Let me remind you that in Jordan and elsewhere in the
region, revealing financial documents is seen as a criminal act, which would render the bank liable to criminal charges.
Accordingly, the bank could not in any way submit those records. It did, however, comply with every other legislation and legal, being
Jordanian or international.
And as far as compliance with those legislations and ensuring that every financial transaction that it had carried out, whether to the
occupied territories, to the victims of Israeli aggression, or to elsewhere in the region, were consistent with transparent --
HARLOW: But let me get --
SAFADI: -- and consistent with international law.
HARLOW: Let me get Jeff Toobin in on this, because Jeff, this is a fascinating part of it, because a federal judge did rule that the jury can
infer what they would like from that, from the fact that all of these financial records were not turned over in this case, and that's obviously
key to the plaintiff's case.
What do you make of what that will mean? And also, can any legal means be taken to force them -- for the plaintiff's lawyers to force them
to turn over these records?
TOOBIN: Well, they can't force them to turn over the records, but the jury can infer bad things --
HARLOW: Right.
TOOBIN: -- about what the bank has done by their failure to turn over documents, and that could lead to an entry of judgment.
I don't know what happened here, but Mr. Safadi is asserting that Arab Bank was blameless in all of these -- in this situation. That what the
plaintiffs in this case say is, let's have a trial. That's why we have trials, is to determine whether that's the fact.
That appears to be what's going to be happening shortly, that there will be a trial, and these assertions that you're hearing will be tested in
front of a jury.
HARLOW: And we know the jury selection for that getting underway just today, kicking off just this morning here in New York. We do have to go,
Jeff. I very quickly have a question for you. The US government's role in all of this is quite confusing, but critically important. Explain it
briefly, if you can.
TOOBIN: Well, the State Department really is not happy that this case is going forward because, as you've heard, Jordan is an important ally, and
they don't want to see Arab Bank, which is a critical bank, injured in this way. The Justice Department and the Treasury department --
HARLOW: Right.
TOOBIN: -- are much more interested in attacking attacking funding sources of terrorism, and the solicitor general of the United States is
going to have to be a referee between those two parts of the federal government that disagree about how this case should be handled.
HARLOW: That is fascinating to have the State Department on one side and Justice and Treasury on the other in this. We'll be watching it very
closely. Appreciate your expertise, Jeffrey Toobin, and also Ayman Safadi staying up very late for us, there. We appreciate it, sir, thank you.
Well, coming up next on QUEST MEANS BUSINESS, first Warner Brothers, then Hachette, now Disney. Jeff Bezos, the chief of Amazon, picking up
some high-profile companies to argue with these days. We're going to explore what that means next on QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
HARLOW: Amazon is flexing its retail muscles once again, this time the feud is with Disney. Amazon has stopped pre-orders of "Captain
America" and other soon-to-be-released Disney flicks.
The move follows, really, a similar and long, long dispute with Hachette, which is a major, major publisher. They publish authors like
Malcolm Gladwell and also J.K. Rowling and Nicholas Sparks, as you can see.
Authors are rallying, a lot of them, rallying against Amazon. Why are they doing that? They're very upset for a number of reasons, which we're
going to get to in just a moment, but they're going so far as to ask their readers to e-mail this man, Jeff Bezos, the founder and CEO of Amazon, to
voice their protests.
Over 900 authors -- take a look at this, if we can show this to you -- this is a full-page ad in "The New York Times" yesterday. These are all of
the authors signing it, 900 authors, including John Grisham and Stephen King, signed this letter printed in this full-page "New York Times" ad on
Sunday slamming Amazon's business tactics, also calling for them to resolve the dispute with that major publisher I just mentioned, Hachette.
So, let's go to Samuel Burke, he's our correspondent in London. Let's talk about this, now, Samuel, in terms of why we're seeing Amazon flex its
muscles right now when, frankly, their earnings were not exactly stellar this quarter.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Well, Poppy, so many people are talking about how mad movie makers and even the authors of books are,
but the real truth of the matter is that shareholders are mad and very upset with Amazon.
Let me just show you what's happened with their stock over the past year. Back in January, things were looking very good. You had their all-
time high price of $407. But then, look, it's been all downhill since, especially with their last quarterly report, earnings were a big
disappointment.
The secret is here that nobody's talked about for ages: revenue is great at Amazon, but they're never able to get profitability. That is
coming out in this dispute.
A lot of people think that given this pressure that they're seeing from the market -- you see it continues to go down -- they're finally
having to flex that muscle and use all of the pressures that they can give because they have so much market share.
Don't forget, brick and mortar stores usually didn't go public with these disputes, but now, so many brick and mortar stores have closed.
Amazon has this great market share, so they're flexing that muscle, trying to get the prices down so more customers will come and buy with Amazon, and
then they won't have to deal with that lack of profitability and the punishment they're seeing from the market.
HARLOW: But it's an interesting fine line to walk, isn't it, Samuel, between getting the percent that they want on these and not alienating
customers and really making people angry to turn to other sources. So, it is a fine line. Appreciate it, Samuel, good to see you. Thank you so
much.
We're going to talk to one of those authors right now. Rilla Askew is one of the authors who signed that open letter that we just showed you, the
big one in "The New York Times" on Sunday saying that Amazon is hurting the livelihood of writers. She joins me here in New York.
So, I thought it was very interesting. You are not someone who is published by Hachette, this big publishing house, but you are banding
together with your fellow authors. What is it that you take such issue with at Amazon?
RILLA ASKEW, AUTHOR, "KIND OF KIN" AND "FIRE IN BEULAH": It's that they put the authors in the middle, in between in their dispute, which is a
business dispute, between the publisher and the distributor, Amazon.
And what's happening with their choices that Amazon made, they began to hurt authors. And what hurts one of us hurts all of us.
HARLOW: So, some of the accusations that are made in this letter are that the "pre order" button is gone for some of these books, for example,
on Amazon, or that it might take up to weeks for them to get delivered.
At the same time, you just heard Samuel's report. Amazon is a big company and a lot of us think this company makes billions and billions and
dollars, and at the same time, their profitability has been very strained, it's been under pressure. Shareholders are angry. This is also a
business. What do you say to that?
ASKEW: Well, they are a business and they have a perfect right to use any kind of techniques that they think will earn that profitability, but
not on the backs of the authors. And that -- I think that that's the real key, and that's the key to Authors United. And it -- the letter does say,
we don't take a stance on the dispute.
HARLOW: Right.
ASKEW: Our -- what we are asking is that Amazon not put the authors in the middle.
HARLOW: What's interesting -- and Samuel and I were just talking about is this fine line, though, that Amazon is going to need to walk
between trying to get the percents, et cetera, that it wants. But at the same time, not alienating customers.
At the same time, as an author, don't you rely hugely on Amazon? And when you think of other places for people to buy books online, what do you
think of, even, these days?
ASKEW: Well, there are certainly other online distributors. There's Barnes & Noble --
HARLOW: Sure.
ASKEW: -- there's Google Books, there are other places where people can order books. But I do know that a number of my friends who are
readers, who are not authors as well, they go directly to Amazon. If it's not there on Amazon, they just presume that it's not available.
HARLOW: Right.
ASKEW: And I think that that's really the key, that Amazon is so powerful. And yes, authors need Amazon. We need all of the online
booksellers, as well as the independent bookstores and the brick and mortar bookstores.
But because they have such power and because there are so many people who go to Amazon first, not only for books, of course, but for all kinds of
other products, when you disappear from Amazon, you're disappeared.
HARLOW: Yes.
ASKEW: And that's really a problem, certainly for the authors affected by this dispute. But in the long run, it's so for all of us.
HARLOW: Yes, it gives Amazon certainly a lot of power, but at the same time, they have to maintain that customer base. Appreciate the
insight coming from your unique perspective, Rilla. Thank you for joining us.
All right, still to come here on QUEST MEANS BUSINESS, with ISIS militants down below, refugees on Mount Sinjar are waiting desperately for
any help they can get from the air. Our Ivan Watson has a firsthand look at this dramatic rescue, next.
(COMMERCIAL BREAK)
HARLOW: Welcome back, I'm Poppy Harlow. This is CNN. Let's update you on the news headlines this hour. Dramatic video filmed by a CNN crew
shows a desperate rescue mission carried out by the Iraqi Air Force on a mountain with thousands of Yazidi refugees have been trapped by militants.
CNN's Ivan Watson was there when the crews pulled some of those refugees onboard their helicopter. We'll be with Ivan in just a moment for his
reaction to what that was like.
Meanwhile in Baghdad, the political crisis deepens. The Iraqi president has appointed a new prime minister, Shia politician Haider al-
Abadi. The choice is a public rejection of embattled Prime Minister Nouri al-Maliki who says he will fight the appointment. U.S. President Barack
Obama's due to make a statement on Iraq around 15 minutes from now.
And a three-day ceasefire between Hamas and Israel, appears to be holding as indirect talks get underway in Cairo. The International Red
Cross said the ceasefire had enabled them to send hundreds of aid trucks into Gaza on Monday with desperately-needed supplies.
And investigators say the current Ebola epidemic began with a two- year-old child fell ill in Guinea. The "New England Journal of Medicine" reports that the toddler started showing symptoms of the disease eight
months ago and died four days later. The virus has killed 961 people in four countries.
Mexico's president has signed a really historic reform to the country's energy sector into law. The goal is to boost economic growth in
Mexico by attracting, they hope, what will be billions of dollars in investment in the oil, gas and electricity industries there. For decades,
the oil sector has been dominated by state-owned Pemex. Nick Parker is with us live in Mexico City. So, you know, it's interesting, Nick, when
you look at this in terms of a president there - President Pena Nieto who has been trying for years to get this done. And he really based his reform
agenda on Mexico's increasing competitiveness, and economic growth made that a cornerstone. Looking at this now that he has signed this into law,
I wonder how much of a game-changer you think it is actually going to be for their economy.
NICK PARKER, CONTRIBUTOR, CNN.COM INTERNATIONAL: Well that's a very interesting point, Poppy. And, yes, certainly a landmark reform I think,
whichever way you do look at it and one that many people thought just a few years ago may never happen because it's such a politically sensitive issue,
this idea of the state oil monopoly as a way to preserve the nation's oil wealth, and as a way to remain self-reliant. How did he do it? He made a
number of compelling arguments which I think will have to wait a few years to see if they really are borne out, but the government may change.
This energy reform will add 1 percentage point to GDP every single year. And what's more, by 2025 will create two and a half million jobs.
So certainly a big economic benefit, and at the same time, President Enrique Pena Nieto also made the point that it is a way to tackle the
country's dwindling reserves that have been beset by a lack of capital and the lack of no-how and expertise. He made the point today again when he
signed it into law.
(BEGIN VIDEOCLIP)
ENRIQUE PENA NIETO, MEXICAN PRESIDENT, VIA TRANSLATOR: The energy reform opens the doors to private investment and state-of-the-art
technology. What it will do is increase our energy production in a way that is transparent, efficient, competitive and sustainable. With this
reform, we can extract oil from deep waters and better exploit our vast reserves of shale to obtain gas.
(END VIDEOCLIP)
PARKER: Now, Poppy, what was signed into law today was actually the secondary implementing legislation which will really provide a blueprint
for how this is all going to work. One concern with it is that it may be watered down in the interim period from when the initial reform was passed
last December. I spoke to an analyst at Credit Suisse, and they're really maintaining this is about as liberal and business-friendly as they could
have imagined. There is a strong hybrid - Hydrocarbons Commission - which will inject some transparency into the system and also many foreign oil
companies will now be able to be granted licenses and don't have to go into business with the state oil company Pemex. Poppy.
HARLOW: Yes, and you know, Nick, it's interesting because when you look at inviting in what you were viewing before as competitors now as
partners. You -
PARKER: Right.
HARLOW: -- obviously get a boost in terms of the technology being at the forefront of it rather than just relying on the state-run company. At
the same time, I wonder do we have any indication from the oil giants of what their interests in the region is.
PARKER: Well, Poppy, as - you know as well as I do - the oil - the oil giants - are not the most talkative of companies -
HARLOW: (LAUGHTER).
PARKER: -- they're not especially chatty, and they have remained quite tight-lipped about this. But I did get a statement from Exxon Mobil,
the largest of the publically-traded energy companies. They are welcoming what they call an historic move today and say we will pursue investment
opportunities in Mexico that are competitive with other opportunities around the world. And just to give a quick idea of what they're all
getting so excited about, we're returning back to this idea of these resources that've always been out of reach from Mexico.
HARLOW: Right.
PARKER: In the deep waters of the Gulf of Mexico, Pemex estimates there's something like 29 billion barrels of oil untapped and ready to be
developed. Mexico also has the world's sixth largest shale gas reserves. Again, very, very little fracking and something that, you know, certainly
could be developed as supermajors come in. JPMorgan estimates that this could bring in $30 billion a year of foreign direct investment, and later
this week, we'll get a clear idea of which of the gas and oil fields the foreign companies will be able to -
HARLOW: Yes.
PARKER: -- bid on. Poppy.
HARLOW: It's interesting, and of course what we're also going to closely watch is how many jobs does this create locally. Are these foreign
companies hiring locally or are they bringing in their own workers on those rigs, especially in the deep water where they stay for weeks. We'll be
following it. Nick Parker live for us in Mexico City. Thank you .
Here in the United States, markets have finished the day slightly higher despite all the geopolitical unrest in the Middle East. It's the
situation in Ukraine which is the focus for investors. There are reports that Russia is ending some military exercises that we've seen in recent
weeks on the border with Ukraine. That has been enough to encourage some buying on Wall Street after quite a volatile week last week.
Meantime, European stocks hit their strongest session in days. The markets in London, Paris and Frankfurt all finished up by 1 percent or
more. Again, the improving situation between Russia and Ukraine are the apparently-improving situation that is encouraging investors in Europe.
The DAX which took a beating last week has erased the losses we saw in the last two sessions.
We return now to our top story this hour - the crisis in Iraq. CNN's Ivan Watson got a firsthand look at incredible, incredible video of a
rescue of those Yazidis on Mount Sinjar. He joins me now live from Iraq. Ivan, it was hard for everyone to watch that, and I can't imagine what it
was like for you to experience that.
IVAN WATSON, SENIOR INTERNATIONAL CORRESPONDENT: This was a very, very intense afternoon to say the least. We have been hearing second and
third-hand about these civilians, these members of the Yazidi religious minority who'd been trapped, besieged on this mountain. But I wasn't able
until today to really see how dire the conditions really were and how trapped they truly are. And that one of the only ways to reach them is
aboard a rickety Russian-made helicopter flown by the Iraqi Air Force.
The flights that they make takes about 45 minutes from Iraqi Kurdistan, but the gunners on the crew are worried -- they're nervous --
and they (inaudible) a lot of ammunition from their machine guns as they fly to the mountain over the ISIS front lines, shooting down at suspected
ISIS targets. And when they get there, you just see mostly women and children running around on this mountaintop with no cover really to speak
of. A few shacks and some of them are hiding under trees and this is how the Iraqi Air Force is delivering basic civilian necessities like baby
diapers and bottles of water and food. Poppy.
HARLOW: It is - it is incredible, and Ivan, as you said, you have never seen a situation as desperate as this one. Our thoughts are with
everyone there. And, Ivan, thank you for the reporting for bringing us this video. It really brings the most important human element home to all
of us. Ivan, thank you. And please - your crew, everyone - stay safe. We're going to be back after a short break.
(COMMERCIAL BREAK)
HARLOW: "BuzzFeed" - you know that name, you've probably been to the website. The news and entertainment site is sometimes derided as a home
for cat pictures. But it's actually quite a lot more. And it is celebrating today a $50 million cash injection. It's going to use the
money from the venture capital firm Andreessen Horowitz to fund a major expansion. According to "The New York Times," investment (SOUND OF CAT
MEOWING) values the company - look at those videos - at $850 million. Compare that for a moment to the $250 million that Amazon paid for "The
Washington Post," - that legendary newspaper. Chris Dixon who is a partner at Andreessen Horowitz clearly has high hopes for this investment. He
predicts that "BuzzFeed" will become "A preeminent media company." There is a growing demand for news and entertainment distributed on social media
and on your mobile phone, and if you want the evidence, well, the latest stats from "BuzzFeed" at least report 150 million unique visitors every
month. Let's talk about this with our expert Brian Stelter, senior media correspondent for CNN. Eight hundred fifty million dollars, "Washington
Post" $250 million. How do you get this valuation for "BuzzFeed"? Does it make sense?
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: It makes sense if you believe that "BuzzFeed" is going to be - as you said - one of the
preeminent media companies of the future. It makes sense if it's going to be what Time Inc. was generations ago - a portfolio of magazines - or what
CBS was at the dawn of radio and television. That's what its investors believe "BuzzFeed" can be, and they believe they're building the platform
for that now.
HARLOW: So I wonder what they're biggest hurdle is, because you and I were talking earlier about the fact that they're doubling down in their
foreign desks. They've broken some big stories. They're trying to say we are not just those cat videos that we show you -
STELTER: Right.
HARLOW: but how did they - how did they - win long-term trust?
STELTER: Well for example they're doubling their foreign desk with this infusion of cash.
HARLOW: Right.
STELTER: They're going to do a lot more with it. They're going consider making movies - at least make a lot more videos than they
currently make. But most of their business is an advertising business. They work with big advertisers -
HARLOW: Right.
STELTER: -- and create native advertising - you know, kind of the - the kind of - advertising that looks like news or entertainment but is
actually sponsored content.
HARLOW: Yes.
STELTER: That's the secret to their success, even though they're a front facing website is mostly -
HARLOW: You think that? -
STELTER: -- fun videos and less than news.
HARLOW: Do you think that could hurt them, though if they try to head-to-head with CBS or with a company like CNN, etc., that that line
seems a bit blurred?
STELTER: I don't know if their audience cares.
HARLOW: Yes.
STELTER: Certainly people like you and me care. We see many, many journalistic institutions experimenting with this kind of sponsor content.
HARLOW: Yes.
STELTER: But "BuzzFeed" in some ways is far ahead of the rest of the pack. So, they are the ones doing the experimenting -- figuring out what
the audience is - it's willing to accept --
HARLOW: Right.
STELTER: -- what they're not willing to accept.
HARLOW: Interesting, though, we heard that one of the partners at Andreessen Horowitz say they look at it as more of a technology company.
STELTER: Yes, and they say that partly because then they can get a higher valuation.
HARLOW: (LAUGHTER).
STELTER: You look at a Facebook or enough (ph) -- These companies are so much more highly valued than a news company, a journalism company.
HARLOW: Sure.
STELTER: The reality of "BuzzFeed" is that it's news but mostly entertainment.
HARLOW: Yes.
STELTER: It's got that mix in the same way that "The New York Times" has a style section but also a foreign section.
HARLOW: That's true. Interesting, though, is something that "The Times" did point out in their article this morning about the future of
"BuzzFeed". They said may not even be "BuzzFeed".com - talking about producing content solely for Instagram, Snapchat - 15-second videos?
STELTER: Yes.
HARLOW: I mean, is that where they're going to make a lot of this money?
STELTER: Whenever a platform ends up existing in the future, I think that is an experiment for them. They know they need to be I those areas -
those platforms - whether those are material businesses for them in the future, --
HARLOW: Right.
STELTER: -- we will see. For now they're not, but I think they're being wise for example to think that way and to open up what is essentially
going to be a - the coin at their motion pictures division out on a studio lot in Hollywood.
HARLOW: Whew!
STELTER: We're placing a number of different bets right now, and that's why they're so interesting to watch. They have not only so much
money behind them, but they're placing a lot of different bets to see which ones work in the future.
HARLOW: Are you bullish?
STELTER: I am. I am. I understand why it was about six months ago Disney approached them, offered a lot of money to buy them and they decided
no - we believe we can build -
HARLOW: They wanted a billion, right?
STELTER: -- this to be -- yes, the rumor was a billion-dollar valuation.
HARLOW: Wow.
STELTER: People laughed that, but now this is an $850 million-dollar valuation.
HARLOW: Sure - you're almost there.
STELTER: They're almost there.
HARLOW: Almost there.
STELTER: So, they clearly think they've got something that can be as big as a media company was 20 years ago, but online instead of in print or
on TV.
HARLOW: We will be watching and you'll be reporting closely on it. Brian Stelter, thank you, we appreciate it. All right, time for your
international weather forecast. Tom Sater is at the CNN Weather Center. Hello, Tom.
TOM SATER, METEOROLOGIST FOR CNN INTERNATIONAL: Hi, Poppy. We've been quite busy in the World Weather Center with tropics that are just -
not really working as one. We've got so many systems the last 30 to 60 days. Here's a system off the coast of Africa we're watching it develop,
another one off the coast of Mexico, the Pacific - something's not right. There's a hurricane, hurricane, we have a super typhoon and then we had
Halong moved up into areas of Japan.
So let's talk about first the Atlantic which we had Bertha - at one point was a hurricane making its way all the way across the North Atlantic
and slamming into parts of the U.K. Now, this is quite interesting because heavy amounts of rain, they've had all sorts of rainfall and strong winds,
even tornados up to the north.
But notice the spin up in the North Sea to the north. Organizers of a sailing event I guess thought it was still OK, but at 2 p.m., the coast
guard out of Belfast was called because just off the coast, 87 sailing dinghies capsized in the strong seas and the high wind. Two hundred people
had to make it to shore on their own. The winds were still strong, and sure we have some squally showers as they like to call it, but it's still
really not calm. It will not be calm for another 48 hours. We still have good rain up in parts of Scotland, we've had some heavier rainfall - you
could see it even bands of thunderstorms moving in and out -- Central Germany. For the next 48 hours the system does not move much, though it's
hard to believe at one point was all the way over into the Caribbean - a tropical system still making its way and making its presence known.
But the winds are going to be a little gusty. Because the rain has dampened the ground, we could have a tree fall here or there. But we had a
few tornados - just two - of six. A couple of - one in France, we had a couple in Belgium, and again, it was quite active. This cold front will
continue to move east and that'll push the heat a little bit further eastward into parts of Russia as we continue to watch what was Bertha.
Now, let's talk about what was Super Typhoon Halong - made its way again into the Kochi prefecture. It was just a month ago. They had
Neoguri, then they had Nadkri I mean, the amounts of rainfall with this has just been unbelievable. In the next - in the last 24 hours, even some
pretty strong winds as the system was leaving. But when it comes to Kochi, the amount of rain is just unbelievable - 1,200 millimeters of rain. It's
now the wettest August ever, just 200 more millimeters by the end of the month and this will be the wettest month in their history since they've
been keeping records.
We've had the landslides, we see pictures like this - let me show you the flooding too. It's really amazing. We had one fatality, and that was
- we are still looking. There was a surfer that is missing and went missing early on. But just one fatality with all of the rain and the
saturated ground that they have had.
Hawaii quickly for you. We had the one system move through - Elsie (ph) moved out of the area, Julio made its way to the north, but of course
the coastguard was called upon to help a stranded sailboat there, Poppy. All three sailors that were on there have been rescued by the coastguard.
So we had some good news.
HARLOW: That is good news. But wild weather all over --
SATER: Yes.
HARLOW: -- the place. Appreciate the update, Tom, thank you. Coming up next here on "Quest Means Business," an app - really - to help you send
a message to Israel or Hamas. You can use your credit card. We're going to explain next.
(COMMERCIAL BREAK)
HARLOW: The temporary ceasefire is holding in Gaza tonight, however pictures like all of the ones that we have been seeing will not be easily
forgotten, and people around the world are using their spending power to send a message to these warring parties. While boycotts are not new, the
technology being used to organizing - organize them - is becoming increasingly sophisticated. Our Sara Sidner explains how there is at least
one app out there to try to help you decide what to buy or not to buy.
(BEGIN VIDEOCLIP)
SARA SIDNER, SENIOR INTERNATIONAL CORRESPONDENT: The war on the ground between Israel and Gaza is sparking another kind of war - a battle
of the apps. Smartphone applications intended to create economic pain using barcodes to help users decide which products to boycott. This one
aimed at Israel and companies that support it, its numbers suddenly spiking from a few thousand to more than a quarter of a million in just a few weeks
- the numbers surging at the ferocity of the war in Gaza did the same.
LUKE BURGESS, CAMPAIGN CREATOR: You know, I'm 16, I'm not an Arab, I'm - why I'm from Jewish - Jewish heritage - and I, yes, I am pro-
Palestine.
SIDNER: Britain Luke Burgess came up with the long-live Palestine boycott Israel campaign.
BURGESS: If I find out that this company had been donating X-amount to the IDF or had illegal factories and illegal settlements in the West
Bank - regardless of what they've done - if it has helped the Zionist movement, I'd add them to the list.
SIDNER: But political analysts in Israel say it's not likely to do the kind of damage its users are hoping for.
GERALD STEINBERG, PRESIDENT, NGO MONITOR: It probably doesn't have any economic significance because most of the people who sign up boycotting
Israel are people who never buy Israeli products anyway. There is concern in Israel about the broader boycott movement - about demonizing Israel, the
political war that goes on in parallel to the shooting war.
SIDNER: If you don't think companies are worried about these kinds of campaigns, note this recent statement from Starbucks, saying rumors it
financially supports the State of Israel or its military or not true. Starbucks has long been a target of a larger boycott Israel movement called
Boycott, Divest and Sanction - or BDS - of which Burgess is a member. But Burgess' campaign is now being met with contrasting ones.
IVAN PRADO, BUYCOTT APP FOUNDER: There is a campaign to avoid Israeli products just as there is a campaign to support Israel products and also a
campaign to avoid products that are created in countries that are patrons of Hamas.
SIDNER: At the center of it all, the California man who created the Buycott app - a platform where anyone can sign in and create their own
boycott campaign, including Burgess.
PRADO: Buycott is a mobile app that makes it easy for consumers to vote with their wallet.
SIDNER: Ivan Prado's team of two works to try and ensure the information on the companies targeted is valid.
PRADO: The app was created with a focus on U.S.-based issues.
SIDNER: Initially, the most popular campaign was veered at U.S. users who wanted to ensure that products containing genetically-modified
ingredients were labeled as such. Pardo could never have imagined that the fastest-growing app now, with more than 260,000 users, would relate to a
decades-old political fight here in the Middle East.
(END VIDEOCLIP)
HARLOW: A fascinating report from our Sara Sidner there. We'll be back here on "Quest Means Business" after a short break.
(COMMERCIAL BREAK)
HARLOW: We finish tonight's show with this advice - next time you're heading to a job interview or meeting with your boss for a raise or asking
for a raise, you might want to consult the "Quest Means Business" playlist beforehand.
(BEGIN VIDEOCLIP)
50 CENT, RAPPER: Go shawty, it's your birthday, we gonna party like it's your birthday, we gon' sip Bacardi like it's your birthday, and you
know we don't give a ***, it's not your birthday. You can find me in the club, --
HARLOW: That is the number one apparently on the QMB playlist, but seriously, a new study from the Kellogg School of Management at
Northwestern University found the songs with a lot of base like that one, 50 Cent's "In Da Club" make you behave like you're more confident and
powerful and apparently means you're going to do better in that job interview. Some songs to avoid -
BAHA MEN, MUSIC ARTISTS: Who let the dogs out? Who, who, who, who, who? Who let the dogs out?
Who, who, who, who, who?
HARLOW: Apparently people who listen to a low-power playlist, one with a little less bass like that one - Baha Men's classic "Who Let the
Dogs Out." They're less likely to make first - make the first move in those negotiations.
BAHA MEN: Yippie yi yo. And everybody havin' a ball. Yippie yi yo.
HARLOW: Something to remember when you're going in and asking for a raise. That is a "Profitable Tune" for you in place of Richard Quest's
"Profitable Moment." And that is "Quest Means Business. I'm Poppy Harlow in New York. Richard Quest will be back tomorrow. Thank you for watching.
We are awaiting U.S. President Barack Obama to make a statement on the crisis in Iraq. We will bring that to you as soon as it begins here on
CNN. For now, though, "The Situation Room with Wolf Blitzer" is next.
END
