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Quest Means Business

Israel Finance Minister Says Relationship with US in Crisis; Apple CEO Tim Cook First Openly Gay Fortune 500 CEO; Dow Up 200-Plus; US Economic Growth Tops Forecasts; European Markets Boosted by Strong Earnings; Tomorrow Transformed: World Without Wires

Aired October 30, 2014 - 17:00   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: Look at that, the market was up one and a third percent an hour ago when it closed, a strong gain of 220 points. Just

shows you what happens: when the Fed speaks, the market listens, it thinks about it, and then trading comes to an end.

(GAVEL POUNDS)

QUEST: One -- oh, dear. We've been shortchanged tonight, on Thursday, October the 30th.

On this program, Israel's finance minister tells me there's a crisis in Israel's relations with the United States as tensions in Jerusalem

threaten to boil over.

Tim Cook tells the world, "I'm proud to be gay."

And picking up the pace. Markets are rallying, the US economy posts healthy summer growth, the GDP numbers.

I'm Richard Quest. We will have it all and more, because I mean business.

Good evening. Tonight, Israel's finance minister tells me his country's relationship with the United States is in crisis. Minister Yair

Lapid said the region is suffering what he now calls "a painful spasm." A diplomatic dispute is building up over the development of new settlements

in Jerusalem.

Meanwhile, the Palestinian president, Mahmoud Abbas, has accused Israel of declaring war after the closing of the Temple Mount. The Temple

Mount is significant, a significant site in both Jewish and Muslim religions. It was closed by police after a rabbi was the victim of a

drive-by shooting.

The rabbi, Yehuda Glick, controversial figure, is an outspoken advocate of Jewish access to the Muslim holy sites. The rabbi's describes

as serious condition in Israel. The alleged assailant of the rabbi has also been murdered, attacked in Israel. Israeli police say they will

reopen the Temple Mount on Friday.

You can see the situation. All this at the same time as the Israeli finance minister has announced -- is in sharp disagreement with his prime

minister over the funding of new settlements around East Jerusalem. Benjamin Netanyahu plans to accelerate the building of 1,000 homes there.

The US has called that illegitimate.

Finance Minister Yair Lapid has decided it's time to speak publicly both against the building of these homes and about the deteriorating

relationship with Israel's closest ally.

(BEGIN VIDEOTAPE)

YAIR LAPID, ISRAELI FINANCE MINISTER: These are, of course, difficult times for us all. We are all mourning for a three-month-old infant that

was killed just a week ago and now there's another tension and somebody else was shot.

So as you were saying, tension is accumulating. But we think it is still under control, and we think we are capable of lowering these flames,

and hopefully this is one of those painful spasms that every now and then bursts here in Israel. And I think it's going to calm down, or we hope

it's going to calm down.

QUEST: It will calm down if both sides want it to calm down. Now you will obviously tell me that the Israeli side wants it to calm down, I would

imagine you would say that. Is it your belief that the Palestinian side or the Hamas side, the other side, wants it to calm?

LAPID: Well, it's -- you can always ask yourself whether or not this is a policy question. I mean, when somebody is taking his car, driving

into a station and aiming the car on a three-month-old baby, this is not a policy. This is plain terror. And this is plain violence, a dreadful,

horrifying violence. So you cannot talk about policies.

I think everybody in his right mind understands, both on the Israeli and the Palestinian sides, that this -- the best thing to do is go back to

the negotiation table and talk about the possibility of a two-state solution that will calm things down.

QUEST: The relationship between Israel and the US, although its fundamental bedrock probably remains strong, clearly you've had -- you've

had US officials saying rude things about the PM. You, sir, are even warning that part of Israel's policy could be damaging to the US

relationship. So are you worried that there is a growing fissure in that relationship?

LAPID: Yes, I am. And I've been very loud about this. The same way I thought that the kind of vocabulary used by some Israeli officials,

Power, Secretary Kerry, and other officials of the American administration, I don't think it's tolerable to use such vocabulary about the Israel's

prime minister. I think as a minister in his government and also as an Israeli citizen, I was offended by this.

The thing is, we have to recognize this is -- in Israel or American terms -- it's a crisis, even if it's a crisis within the family. Even if

it's a short-term crisis within a longer and much better relationship, it is always a bad idea to ignore a crisis when you are confronting by it, and

we'd better discuss this and sit and talk about this and make sure this is behind our backs as fast as we can.

QUEST: For a man, a minister of the seniority of the finance minister, to be saying that the relationship with your closest ally is a

crisis, that's very significant tonight.

LAPID: I -- you know what? I hope so. I'm not saying this to spite. I'm saying this because it needs to be taken care of. We need to sit and

discuss this. We need to lower these flames.

And you know what? In any -- like in any other relationship or in any other family, and we think of ourselves as an extended family, I think if

you have a problem on your hands, you have to deal with it, not to ignore it or to claim it doesn't exist. There is a problem. It has to do with

policies. It has to do with personalities. Each and every way, it has to be addressed.

QUEST: At a meeting in the last 24 hours, you're reported -- the way it's reported to have basically had strong words with the prime minister

and colleagues and then left the meeting over the question of further settlements around Jerusalem.

Now first of all, do you recognize that description of your contribution? In other words, did you challenge the prime minister and the

government's policy on settlements?

LAPID: Well, I don't know if "challenging" is the word I would use. I said, and my thinking is, this is not a good time to announce new

settlements outside of Jerusalem and outside of the big blocks that everybody understands will be part of Israel in the -- in any future

agreement.

(END VIDEOTAPE)

QUEST: And on tomorrow night's program, we'll hear the minister's view on the health of the Israeli economy as we near the end of a turbulent

year for Israel the region, and of course, one of the longest-running military campaigns in Israel's history.

We will talk about Tim Cook and his revelation this morning. The man admitted he was gay. It might have been an open secret in Silicon Valley,

but it's taken the business world by storm.

(COMMERCIAL BREAK)

QUEST: Tonight, the man at the top of the world's most valuable listed company takes a bold and unprecedented step. The Apple chief

executive, Tim Cook, has for the first time publicly acknowledged that he is gay.

He went further in an article in "Bloomberg Business Weekly." He said, "I'm proud to be gay, and I consider being gay amongst the greatest

gifts God has given me." Mr. Cook was writing in an article for "Bloomberg."

"If hearing that the chief exec of Apple is gay could help someone struggling to come to terms with who she or he is, or bring comfort to

anyone who feels alone or inspire people to insist on their equality, then it's worth the trade-off with my own privacy."

For Mr. Cook, the teachings of Martin Luther King have been a "major influence," both on his career and on his decision to come out now.

Speaking on Monday in his home state of Alabama, Mr. Cook said he had learned the importance of never compromising on the issue of equality.

(BEGIN VIDEO CLIP)

TIM COOK, CEO, APPLE: Dr. King once said, "Our lives begin to end the day we become silent about the things that matter." There is little, if

anything, that matters more in our country than our basic tenants of equality and human rights. I have long promised myself to never be silent

in my beliefs in regard to these tenants.

(END VIDEO CLIP)

QUEST: Now, Tim Cook has decided not to stay silent on this issue, though as it currently stands, apparently he is quite alone. Here's our

chart that we normally show you frequently. Look at all the companies. These are all the companies in the Dow Jones. They will spin and they will

go and the chief execs will move.

You will not find any openly-gay chief executive in any of the Dow 30. In fact, according to the Human Rights Campaign, in the whole of the

Fortune 500 -- we didn't have much room to put the whole 500 on -- the number of openly-gay CEOs has just risen from -- two -- and that's the one.

Let's talk about this more. Sarah Kate Ellis is the chief exec of GLAAD and joins me here in the studio, the organization --

SARAH KATE ELLIS, CEO, GLAAD: Thanks.

QUEST: Good to see you.

ELLIS: Good to see you, too.

QUEST: Thank you for coming in and talking to us.

ELLIS: Thanks for having me.

QUEST: Well, come on. So, he announces he's gay, and there are two distinct groups, aren't there? The first says no big deal, why is

everybody getting excited, people knew he was, surely we're past that? And the other is saying --

(RINGS BELL)

QUEST: -- no, no, no, no, no. This is a big deal. Where -- tell me what --

ELLIS: It's definitely a big deal.

QUEST: Why?

ELLIS: It's a big deal because it's the first, and we don't have any gay out executives at the CEO level of Fortune 500 companies, we haven't

ever, and this is the first one. And he's an incredibly respected and revered CEO.

So, to come out like this, he sets a new tenant, new tone for the entire culture in American and beyond our borders. It's a global company.

QUEST: And you're talking globally at the moment, because it's CNN International --

ELLIS: Yes.

QUEST: There'll be many people watching this for whom, let's face it, boring CEOs in pinstripe suits hardly gets the juices flowing. But when

it's Tim Cook and Apple, we're in a different kettle of fish.

ELLIS: Yes. Well, Apple is a game-changer, right? They changed our entire culture globally. They took products and they made them heroes that

they've never been before. So, now I think that when we look at him and what he's doing, it's another hero move. It's another leadership move, and

it's a big leadership move.

QUEST: Right. And the other thing we need to point out, of course, is that corporations by and large, it's been my experience, corporations

are further ahead in terms of accepting gay employees then, say, for example, politics and wider sections of society. You'd agree with that?

ELLIS: Yes. Because they know that diversity impacts the bottom line, and that the more diverse talent pool that you can pull from, the

better talent you're going to get.

QUEST: Interestingly and finally, of all the CEOs globally that you could have had admitting that they were -- or coming out openly, was Tim

Cook sort of -- ?

ELLIS: He's wonderful.

QUEST: Was it the best?

ELLIS: Absolutely.

QUEST: How many more are there out there that want to do it?

(LAUGHTER)

ELLIS: Time for a commercial.

QUEST: Time for --

(LAUGHTER)

QUEST: -- maybe a time for commercial. Well, it pays the wages.

(LAUGHTER)

QUEST: At around 15 minutes from now, we'll be speaking live to one of the most powerful voices on this subject in the business community, he's

been on this program before. He's written a book called "Out the Gay Closet" -- or "Breaking Through the Gay Closet." He's the former BP chief

executive, Lord John Brown. He'll be with us shortly, live.

Now, the markets. Back to our normal daily bread and butter. At the super screen, you'll see exactly -- look at this! Oh, you can just swim in

the green of the market. It was GDP numbers. The Dow ended the day up more than 200 points.

Visa, MasterCard, both reporting earnings that topped analysts' estimates. Shares in both companies rose around 10 percent. Starbucks

shares are down a little bit in after-hours trading as its -- the outlook for the quarter was lower than expected. But 222 points on the Dow, GDP,

earnings, that's the reason.

The world's biggest economy -- this is the number. In fact, let's keep both of these up because this -- go from one to the other and you see

exactly the full. The 3.5 percent increase in GDP in the third quarter follows two quarters of uneven growth. That 3.5 number raised the market

by the best part of 1.7 percent.

And if you look at this, we can see exactly how it was done. Output was boosted. The trade deficit was down, defense spending was up, consumer

spending was up, although maybe not as strong as some would have liked. But the stripes were in an upward inflection.

Now, to some extent, economists are concerned some of the factors could be temporary. That defense spending is volatile, exports could be

hurt by the dollar and the weakness, and of course the consumer spending, well, the consumer can be fickle when the winds of change arrive.

Randall Kroszner is the professor at the University of Chicago Booth School. Is the glass half full or is it the glass half empty for you,

Randall, tonight?

RANDALL KROSZNER, PROFESSOR, UNIVERSITY OF CHICAGO: I think it's right in the middle.

QUEST: Ah!

(LAUGHTER)

KROSZNER: So, I think you described the GDP report well. Overall, the glass is more than half full because we're growing at 3.5 percent,

that's a good number, that's getting towards stronger recovery.

But when you start to look into the specifics, especially that consumption number, that's a little worrisome, that we might not have the

momentum going forward in consumption to really give us full liftoff.

QUEST: Right. Now, that full liftoff, of course, is a phrase that we're also talking about, liftoff with the Fed.

KROSZNER: Yes.

QUEST: When you saw their statement yesterday, and clearly Chair Yellen is well and truly in charge there. She got those references in

again and again about growth, and we're going to keep low, and we're going to be sure. Does -- have you changed your forecasts as a former Fed

governor for when rates rise?

KROSZNER: No, I think they -- they clearly did not want people to change their expectations about when rates might rise, that's why they kept

that phrase in, that it'll be "a considerable time" before they start to raise rates, even though they ended the additional asset purchases.

So, they tried to make it clear in the statement that yes, we're turning the -- we're ending the asset purchases because we think the

economy is starting to come back. We're seeing substantial progress in the labor market. But it's not so good that we're ready to raise rates anytime

soon.

QUEST: The dollar -- I mean, when I -- I always sort of wince painfully when we have to discuss currencies on this program for the simple

reason that one man's meat is another man's poison. It's a -- some gain -- currencies is a thankless task. But this strong -- as you were well aware

from Fed meetings -- but this strong dollar is going to prove to be something of a mixed blessing.

KROSZNER: Well, I think since it's more likely that the Fed is going to be exiting in the -- sometime in the next year or two as opposed to

Europe probably going into more quantitative easing types of things, the dollar has been strengthening relative to the euro, and I think the economy

in the US is starting to come back a little bit more strongly.

Certainly the dollar is up a bit, but I wouldn't over emphasize how much of a headwind that will be for the US, because the US economy just

doesn't trade nearly as much relative to its GDP as the UK or Germany or Japan or China.

QUEST: No, but that dollar does have implications for the current account and for the trade imbalance, because if there's one thing Americans

love, it's to spend, and they tend to spend largely on -- quite a lot on exports. Again, the trade situation, with a rising economy, a strong

dollar, do you see any worries?

KROSZNER: So, as long as there's not a major shift or some sort of disorderly move in the dollar relative to other currencies, I think it's

perfectly reasonable to see the dollar gradually move up.

You're seeing greater strength in the US economy relative to most other countries in the world. Expectations that the interest rates will be

rising sometime in the next year or two in the US, whereas in Europe you're not going to see that, it's natural that the dollar would go up a bit.

QUEST: And you're sure that glass is still only half full and not half empty?

(LAUGHTER)

KROSZNER: I think it's right in the middle.

QUEST: Right.

KROSZNER: Just right.

QUEST: Just right. Not too hot, not too cold. Good to see you, Randall.

KROSZNER: Exactly.

QUEST: Absolutely.

KROSZNER: It was great to see you.

QUEST: And you, sir. We always believe that when you're talking economics, you've really got to talk common sense on this program, why we

enjoy having people like Randall join us to make sense of what's happening in the global economy.

Now, the GDP report helped push European stocks -- whoosh! -- they went up as well. Markets were boosted by stronger earnings. Automaker

Renault rose 3 percent after it reported strong sales. It upgraded Europeans' forecast for the year. Alcatel gained 16 percent after saying

it had cut its losses from a year earlier.

This is QUEST MEANS BUSINESS on what is a very busy day.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: (inaudible - talking into tin can). Yuck. Perhaps as a child, you pretended you were on the phone using one of these. The

vibrations -- (muffled into can) Hello, can you hear me?

UNIDENTIFIED MALE: I can hear you, Richard.

(LAUGHTER)

QUEST: The vibrations of your voice traveling through two tin cans and a piece of string as you chatted with a friend. Maybe you pretended

that they were on the other side of the world. It's the prototype of a method of communicating that's become a part -- an integral part -- of what

we are.

Right from the very beginning, it was an industry that generated huge amounts of employment, of prosperity, of ambition. The telephone gave us -

- (muffled into can) so much.

Well now, first with the wired networks, then with the wireless, this, as this edition of Tomorrow Transformed shows us, is all about how we

really are truly -- (muffled into can) connected to the rest of the world.

(BEGIN VIDEOTAPE)

QUEST (voice-over): It all started with one call as the way we communicate turned to technology.

UNIDENTIFIED MALE: (muffled from static) Hear my voice. Alexander Graham Bell.

QUEST: The spoken word went by telephone.

UNIDENTIFIED FEMALE: This is information, may I help you?

QUEST: The written word became e-mail.

COMPUTER VOICE: You've got mail.

QUEST: Then, we cut the cord, moving from wired to wireless.

ALEX SMITH, MOBILE PRODUCT LEADERSHIP, NIELSEN: Basically, all of your friends are in your pocket wherever you are, whenever you're doing

something, they're there. You can pull out your phone and you can text them, send them a video, send them a picture.

QUEST: Here in South Korea, one of the most connected countries in the world, messaging apps rule the roost, especially Kakao Talk.

UNIDENTIFIED FEMALE (through translator): When you use Kakao Talk, it's easy to send messages, group chatting, or gift icons.

QUEST: The basics of communication have always remained the same. These type of apps give it a little something extra.

QUEST (on camera): Today, we can tell the world our needs and emotions through our technology. There's no need to speak to anyone. But

is this communicating, or is it just noise?

TOREA YOUN, DAUM KAKAO (through translator): Personally, I think the best way of communicating is to meet in person and talk. There are some

things you can only convey in person. But Kakao Talk means being connected 24 hours a day, so I think it's a vital supplement to face-to-face

communication.

QUEST (voice-over): Today, we are more connected than ever. The challenge is handling the impact it will have on our world tomorrow. Will

we care more about the technology we use to communicate and less about the people on the other end of the line?

TOREA (through translator): So far, our users communicate person-to- person by sending gifts or playing games with each other. In the future, that connection will expand from not only person-to-person, but also

person-to-object, person-to-information, and online-to-offline. Communication as a whole will improve.

SMITH: I think it's had a massive impact for the positive in terms of how we communicate, especially when we look at how effectively we basically

remove that barrier, that historical barrier to communicating of distance. Wherever people are, family or friends around the globe, we can now just

pull out our phone. So, it really has opened up the world.

(END VIDEOTAPE)

QUEST: Ooh, I love that old video of the old -- the woman going, "Hello, hello, connecting you." When we come back, Lord John Brown spent

much of his career as the BP chief exec. He admits he lived a double life. He was outed and forced to resign. His thoughts on Tim Cook's decision to

acknowledge publicly he's gay.

(RINGS BELL)

QUEST: QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes

first.

Israel's finance minister says his country's relationship with the US is in crisis as a diplomatic dispute over new Israeli settlements

escalates. Yair Lapid made the comments on QUEST MEANS BUSINESS after a senior official in the Obama administration used an expletive to describe

the prime minister, Benjamin Netanyahu.

(BEGIN VIDEO CLIP)

LAPID: I don't think it's tolerable to hear such vocabulary about Israel's prime minister. I think as a minister in his government and also

as an Israeli citizen, I was offended by this.

(END VIDEO CLIP)

QUEST: Israeli authorities say they will reopen a sensitive holy site in Jerusalem on Friday only to certain women and men over 50. Police

closed the compound known to the Jews as Temple Mount and to the Muslims as a noble sanctuary following unrest over the shooting of a controversial

rabbi. The police shot and killed a Palestinian man suspected of carrying out that attack.

The president of Burkina Faso has announced a state of emergency and dissolved the government. The chief of the army has created a transitional

government and says a nationwide curfew will be enforced. It follows thousands of protesters who took part in violent demonstrations in the

country's capital.

A U.S. nurse has defied a quarantine order and left her home to go on a bike ride with her boyfriend. Kaci Hickox is advised to remain in

isolation after returning home to Maine. She'd earlier been treating Ebola patients in Sierra Leon. Negotiations between the nurse and local

officials have clearly broken down.

Tim Cook says being gay has given him the skin of a rhinoceros, and he says it's very useful when you're the chief exec of Apple. Nevertheless,

speaking last year in New York, he said even he, a member of the business elite, had felt discriminated against because of other people's ignorance.

(BEGIN VIDEOCLIP)

TIM COOK, CEO, APPLE: Since these early days, I have seen and I've experienced many other types of discrimination, and all of them were routed

in the fear of people that were different than the majority.

(END VIDEOCLIP)

QUEST: We now know perhaps what Mr. Cook was talking about since he said he's proud to be gay. Lord John Brown is the former chief exec of BP

and the author of the book, "The Glass Closet." Speaking to me on this program in June, he said that coming out as a gay man was good for

business. Lord Browne joins me now from Mountain View in California. Good evening, John Browne.

JOHN BROWNE, FORMER CEO OF BP: Good evening, Richard.

QUEST: So, I won't ask you whether you knew or you suspected about Tim Cook, but when you heard the news today, and read what he said, what

was your gut feeling - your initial thought?

BROWNE: Well, I was very pleasantly surprised. It's very important to have great role models, leaders who are ready to say that they're gay,

and people in very successful and powerful global positions. And Tim Cook qualifies on all those headings.

QUEST: In many ways - we were talking earlier on this program, CEOs of oil companies or widget companies are one thing, but a sexy,

inspirational company that people look up to globally - do you think it makes a difference?

BROWNE: I do. I think more people who are aware of Apple than they are of an oil company globally and they identify with his products which

are very good, and therefore they're identify - they'll know who Tim Cook is. And in particular, LGBT people around the world will be able to say

we've got a role model in the top of corporate life who's a successful man.

QUEST: The - when - Tim Cook now goes in and travels to countries where, for instance, being gay might be illegal or restricted. We only

need to think of Nigeria, Uganda, we need to think of Russia, possibly China, and will it - what would you imagine the reaction from government

leaders would be? Will he still be met and fated (ph) by Goodluck Jonathon and Putin and Medvedev?

BROWNE: I believe so and I very much hope so. I think when you're a CEO, of course you have to clear about being an authentic leader to give

people an example, but equally you're the carrier of a corporation's products and reputation services. And that's what they're looking at, and

I believe that won't change. Then if they want to do business, they'll do business.

QUEST: We talked earlier this year about how corporations are more advanced in the acceptance of diversity in the workplace. You believe that

to be firmly the case, than say, for example, politics or other societal groups?

BROWNE: Well I think generally corporations can have the means whereby to make it possible for people to be included. They have to do

something about it, and they are very advanced machines, if you will - human machines - to get things done. Politics has a very mixed record.

It's terrific in the U.S. and in my home country, the U.K., where a lot of politicians are out and they're very clear that they stand for inclusion.

So that's been a big advance over the last decade or so. But corporations are very important to make big change.

QUEST: What now needs to happen in your view, Lord Browne, to build on this sort of announcement? Because, we can arguably say each CEO or

chairman of board or minister that comes out, advances a little bit further. But what would you now like to see?

BROWNE: Well, I would like a corporation's leaders in particular to be very clear that they stand for inclusion of LBGT people and to send that

signal to measure the impact of their signal and to point to role models to make people feel comfortable and secure - safe to come out. People have

asked me, you know, what would it have taken for me to come out on the job. I would have said my fears would have kept in place. Although if there

were an example like Tim Cook, it probably would have sent electric shock through me, and I might've thought about it again. Role models are so

important -- so, more of the more, the better.

QUEST: And -

BROWNE: And we still only have two. We have Tim and we've - I think the next person on the S&P 500 is actually the S&P 700 plus. So just two

people in 700 is out and gay.

QUEST: Is it -

BROWNE: Statistically improbable.

QUEST: It's statistically improbable. I'm going to end with a - one of those questions that you can plead the Fifth Amendment as they say in

this country. Don't name names, John Browne, don't name names. But is it you understanding - not just statistically probable - from your knowledge

that there are quite a few that might be watching Tim Cook and saying, `Me next'?

BROWNE: I think in the - in the words of a British sitcom, I couldn't possibly comment. But actually there must be and one or two people I'm

sure are making up their minds right now.

QUEST: John Browne joining us from California. We thank you for joining us tonight. Much appreciate it, Lord Brown.

BROWNE: Thank you, Richard.

QUEST: Tonight, well tonight we say goodbye to the city of Boston's longest-serving mayor - who incidentally was also a very strong proponent

of gay rights and equality and diversity of all sorts in his states of Massachusetts. Tom Menino passed away early today at the age of 71. He'd

been diagnosed with an advanced form of cancer shortly after leaving office at the beginning of this year. In his two decades at City Hall, he took a

hands-on role in transforming Boston. We're bringing this to you tonight for one reason. Because earlier this month in what must've been one of his

last interviews obviously - he told me and he gave a message as we talked about ethics and morality, that he wasn't afraid to use the power of his

office.

(BEGIN VIDEOCLIP)

TOM MENINO, FORMER MAYOR OF BOSTON: Somebody has to be in charge of the city. If you want to turn it over to all the bureaucrats, nothing

would get done. Who should make the ultimate decision? The mayor of Boston had to do that. That's who I was for 20 years - making sure things got

done.

(END VIDEOCLIP)

(COMMERCIAL BREAK)

QUEST: Now, look at that. You're looking at the latest in the high- tech safety equipment. It's the obese crash test dummy. Yes, you heard me right - the obese crash test dummy. He and his family, even the wife and

kids, have helped save thousands of lives. Now the unsung hero until now. As we go to "Make, Create, Innovate," Nick Glass is going to sit down with

the brains behind the dummy.

(BEGIN VIDEOCLIP)

NICK GLASS, REPORTER AT LARGE, CNN: You'll see the hard-hitting slow motion crashes and the dummy in the driver's seat absorbing blow after

blow. This is the story of one of the great unsung heroes of our time.

CHRIS O'CONNOR, CEO, HUMANETICS: You can talk to a three-year old, you could talk to an 80-year-old, and everybody knows what a crash test

dummy is.

GLASS: He first started sitting in for us in 1952 when a colonel in the U.S. Air Force was worried about the safety of his pilots.

O'CONNOR: Back in that day, it was actually the testing was done by a Colonel Stapp from the Air Force, and he was actually very concerned,

ironically, because he said the Air Force pilots - I'm losing more in car crashes coming to work than I'm losing in our pilots being downed in their

aircraft.

GLASS: To begin with, the dummies used in cars were rather crude, made of wood, rope and sandbags. But over the years he's evolved into a

much more sophisticated piece of technology and a family man.

O'CONNOR: So the population of dummies expanded out from the basic male to a female, to a very large male, and then it included a child

population. Because the injury rate - children in cars - was dramatic.

GLASS: Their role has always been the same - thousands of crash tests, each one helping manufacturers design safer cars.

O'CONNOR: With the introduction of airbags, from the initial crumple zones to steering wheel design, every part that's in a vehicle has improved

in design over the years and all benchmarked against the crash system.

GLASS: This was shown rather dramatically in 2009. The Insurance Institute for Highway Safety in the U.S. tested a new Chevrolet against a

1950s model. Almost all the dummies in use today are made by the American company Humanetics. Here, at their European hub in Germany, the dummies

are put through their paces. With each bone-crunching hit, they're being prepared, or rather trained, for future customers. And there's a new

addition to the family 20 years in the making. So this is tall. What's different about him?

CONRAD LOGAN, HUMANETICS: It's our most advanced dummy. The neck has not just rubber, it has wires and damping material that simulates the

ligaments in the neck. You have a very complicated measurement system in that chest so you can see the complete movement of the ribs in three

dimensions. But what's special is that it's more trial fidelic (ph). It has - it's more humanlike than it's ever been before.

GLASS: And as they become more like us, the inevitable has happened. They're developing dummies that are roll (inaudible) and fatter.

O'CONNOR: A couple of the areas that we're seeing is like an obese people as well as an elderly. Both of them have a higher rate of injury or

death, and as a result of that, we have to look at how do we protect those type of people. Because they're still driving cars.

GLASS: We have a lot to thank the crash test dummy for - he's helped saved countless lives. This is what makes life as creators of the dummy so

personally rewarding.

O'CONNOR: There's not a presentation I do that doesn't show the number of deaths have been reduced year over year as a result of our test

equipment. And if we can continue to save lives, reduce the amount of deaths, that's more important to me than anything else.

(END VIDEOCLIP)

QUEST: Shares of Alcatel-Lucent - end of the day 16 percent higher. The company which makes equipment for the telecoms companies of the big

networks reduced its losses for the last quarter. Costs have been cut even if sales fell again. In the past, the companies' chief execs told me,

quote, "is around the corner." Speaking to me a short time ago, the new chief exec insisted it's true.

(BEGIN VIDEOCLIP)

MICHEL COMBES, CEO, ALCATEL-LUCENT: We are not out of growth in our core business which is core networking. Then we first see the growth on IP

routing, after a disappointing 22. And I've always said that 22 was very specific. So, I believe that is growing where we've decided to refocus

ourselves. I can't even in an adverse environment - meaning less growth this quarter on a whole, and less growth in our more - most - profitable

region which is America. Despite this adverse environment, we have proceeded at our highest ever operating profit for Alcatel Lucent since

March. So which means that we can be profitable even in adverse conditions, which has never been the case for Alcatel-Lucent before. And

third, --

QUEST: Yes?

COMBES: -- is innovation. Innovation is back within Alcatel-Lucent.

QUEST: How do you do big cost reduction in an industry - this is an industry overall is growing fast and which requires - as we've heard many

times from your company - massive investments?

COMBES: No problem. I delivered 2/3rd of the $1 billion cost reduction that I was due to deliver. But, --

QUEST: How?

COMBES: -- but I have decided not to touch to my R&D spent. So when you look at the R&D spent within the company which is the shoe (ph) for the

future, it was 2.2 in 2012, it's still 2.2 in 2014. Despite that, I have been able to reduce costs. How? Reorganization of the company, reduction

of LG&A (ph), double-digit reduction of SG&A. We were still a little bebearing (ph) as an empire (ph). Reallocation of the resources what

matters. Stopping a few business lines where we have lost so much money in the past few years. So, basics in order to reestablish productivity to the

company.

QUEST: We are hearing chief execs again and again and again say `France needs to restructure, and it needs to do it sooner rather than

later.' Do you join those calls?

COMBES: Of course. France has to conduct a few reforms in order to conduct (ph) growth. And we know all those reforms - in terms of

employment, in terms of tax, in terms of cost of administration, no doubt. From time to time people say you cannot restructure a company in France. I

say it is not true. I joined Alcatel-Lucent 18 months ago. We were operating on seven locations. I have closed five out of the seven. I have

reduced the number of people in France, and I have done that with the support of my unions. If you are clear in what you have to achieve, if you

share the direction, if you handle people with care, you can restructure in France as in any other country. And what we have done is a proof point

that you can do it.

(END VIDEOCLIP)

QUEST: Some strong views on the reconstruction of France from the CEO of Alcatel. It's a beautiful day, an awesome day, and a perfect time to

catch up on some online shopping. A park bench and a laptop's all you need, and that's all the hackers need to steal your credit card information

and to do some shopping of his own. (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: Russia's government has spoken out against allegations that Russian hackers have been involved in a hack on the White House computers

this week. A spokesman for Russia's president called the accusation groundless and said there was no proof. The White House said the attack

was less serious than it might have been. CNN's international correspondent Matthew Chance reports from Moscow.

(BEGIN VIDEOCLIP)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Is Washington the latest battlefield in Russia's cyberwar with the West? The Kremlin

denies allegations it was behind the recent White House computer security breach. But analysts say Russia has emerged as a highly-sophisticated

cyber threat.

MIKKO HYPPONEN, CHIEF RESEARCH OFFICER, F-SECURE: By far, the biggest problem relating to cyber security in Russia is the criminal element

operating inside Russia which are then targeting the rest of the world. This includes backing Trojans, Ransom Trojans, Keyloggers, Botnets. There

are a fairly large number of governmental-related cases coming out of Russia as well. But they target a much, much narrower field of targets.

CHANCE: But there are growing suspicions that range is broadening. His relations between Russia and the West deteriorate, particularly over

the conflict in Ukraine. Analysts say they're seeing coordinated digital attacks against Western institutions and infrastructure. At the Moscow

headquarters of Kaspersky Labs which tracks global cyber threats. Analysts say an upsurge in military and political targets points to state involved.

And the suspicion is the same highly-skilled programmers behind criminal cyberattacks are now also being paid as mercenaries in a global cyber war.

SERGEY LOZHKIN, SENIOR SECURITY RESEARCHER, KASPERSKY LAB: What we see now is that governments, they come to cyber criminals. They

communicate, not directly of course - not in Russia, seeds in United States, a seed in China - everywhere. They're not communicating directly,

and the governments' base to cyber criminals to develop malware.

CHANCE: There is of course little by way of hard evidence - pinning any cyberattacks on Russia or any other country. Anonymity is one of the

key reasons cyber warfare is so widespread. But analysts say the types of targets being hit, the level of sophistication being used, points to a

coordinated, Kremlin-backed campaign against the West, into which even Russia's cybercriminals may now have been drawn. Matthew Chance, CNN

Moscow.

QUEST: Have some news to bring you - some breaking news. Look at the moment. Let's listen in.

(VIDEOCLIP WITH QUEST PROVIDING VOICE OVER)

QUEST: It is the signing Russia and Ukraine have reached an agreement in the European Union gas talks. You'll be well aware that there's been a

dispute over whether or not Russia will continue to guarantee gas supplies to Ukraine over the winter. In addition, of course Ukraine has got to not

only pay the back money of some 3 billion euros which is in an escrow account, but also make payments potentially --

(APPLAUSE)

QUEST: -- for future gas provisions.

Female: The second (inaudible) which will be signed concerns an addendum to contract between Gazprom and Metrogas.

QUEST: So what we have there of course is an agreement that the two sides will - Russia will provide gas. We'll get the details of that deal

in the next couple of hours. But it does seem as if an agreement has been reached tonight.

(END VIDEOCLIP)

QUEST: Let's stay with the hacking story we were talking about a moment ago. Not only is hacking getting easier, people are not taking

enough responsibility for their own security. Samuel Burke now tells us how to protect yourself online.

(BEGIN VIDEOCLIP)

SAMUEL BURKE, BUSINESS CORRESPONDENT: A breezy fall day in Central Park. Like many others, my colleague Jose Tallieri (ph) is taking a break.

He finds a convenient place to stop and browse the internet. But he's about to fall into a cyber trap.

Male: Setting up the tether right now, so I mean this is going to be my internet access.

BURKE: Caleb Huff (ph) is an expert in online intrusions with all the skills of your typical hacker. He has created an unsecured public Wi-Fi

network.

CALEB HUFF, ONLINE INTRUSIONS EXPERT: From here, I mean, these are the applications that I can run within the antenna. This is going to allow

me to see people's logins and passwords.

BURKE: So we're just waiting for our next victim to login into the Wi-Fi network.

HUFF: Right.

BURKE: He's using the tool that spies on secure web traffic by routing it through the hacker's computer.

HUFF: The logins and passwords from one of these websites are encrypted - just not very strictly. So, what this program here does is

decrypt them in real time and then displays them in plain text.

BURKE: Jose is our next victim. Right on queue -

JOSE TALLIERI, COLLEAGUE: Central Park Wi-Fi. It's one of the only one that's not locked down.

BURKE: That's his first mistake and it's a big one. Do not connect to open Wi-Fi networks. Jose checks his e-mail.

HUFF: So what we're seeing right here, someone is logging into Yahoo.com.

BURKE: Then he decides to go shopping.

TALLIERI: Winter's coming, got to get myself a new coat.

BURKE: Something just popped up.

HUFF: Right. So it looks like somebody is logging in to their Amazon accounts, their e-mail address is displayed right here, password is

displayed right here. These numbers and symbols here will represent the symbols on your keyboard. So what this literally spells out to is

passpass0202.

BURKE: Like so many of us, Jose is using the same password for e-mail and Amazon - another mistake. Now we have all this information, let's see

how far a hacker might take it using just my everyday cell phone. Cyber, Joey, CNN. I'm in. I've gone into our victim's Amazon account. I have

the American Express Card already in there. He saved it, there we go. I just made a purchase on his Amazon account.

Jose will have no idea he's been hacked until he sees his bill. Caleb now has access to his e-mail accounts, his Amazon account, and his credit

card. How easy was that?

HUFF: Extremely easy. I mean, everything that we're using here is readily available on the internet. Anybody can go buy it, download the

software, and there's tutorials out there as well.

BURKE: For everyone involved, a walk in the park. Samuel Burke, CNN New York.

(END VIDEOCLIP)

QUEST: Let's be clear - we're not showing you or teaching you how to hack, we're warning you how to avoid it. (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment" - I promised you a busy show. A finance minister, a CEO, a former top CEO, and an entire lesson on how to

avoid being hacked, and a market that went up more than 1 percent over 200 points. Well that is "Quest Means Business" for tonight. I'm Richard

Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. Join me in London tomorrow.

END