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Quest Means Business

America Heads to the Polls; Market Impact of Midterm Elections; US Stocks End Mixed; European Markets Down; EU Slashes Eurozone Growth Forecast; Role of Tech Firms in Terror Fight; Alibaba's Blockbuster Growth; Swift's Tiff With Spotify

Aired November 04, 2014 - 16:00   ET



MAX FOSTER, HOST: The Dow finishes close to a record high on Wall Street as the nation goes to the polls. It is Tuesday, November the 4th.

Tonight, a referendum on the recovery. US voters cast their ballots in crucial midterm elections.

Stagnant and weak. We'll hear from Europe's economics commissioner on the grim new growth forecasts.

And a top British spy tells tech companies are helping ISIS. I'll be speaking to the former CEO of Apple on that.

I'm Max Foster, and this is QUEST MEANS BUSINESS.

Tonight in just a few hours, the first polls will begin to close in US midterm elections. The vote could see the balance of power dramatically

altered in Washington for the next two years. The outcome is likely to have major implications for the future of the country's economy and the

global recovery as well. At stake is control of the US Senate.

Right now, the momentum seems to be with the Republicans running for the Senate. They'll need to pick up six seats to take control from the

Democrats. CNN's latest pivot poll shows Republicans have a 95 percent chance of doing just that.

Markets are watching for a possible Republican victory and what that could mean, as well, for government policy. Three sectors that stand to

gain are first, the energy sector, which has been battered by falling oil prices recently. A Republican Senate would likely push for looser

environmental policies and support energy exploration.

Wall Street investors are hoping for more pro-business policies to celebrate a Republican win. It could also bring about more favorable

regulations for banks as well.

And the Defense sector could benefit from increased government spending as well. This could create lucrative contracts for industrial


Athena Jones now joins us from the White House. Athena, is the White House going to be able to work with Congress if the Republicans, indeed, do

gain control of the Senate?

ATHENA JONES, CNN CORRESPONDENT: Hi, Max. Well, that is certainly the big question. But for the record, I should mention that despite that

poll you cited a little while ago, the White House is not conceding that Democrats are going to lose the Senate.

Now, a lot of folks would say that is wishful thinking, but White House press secretary Josh Earnest did address this issue of cooperation in

today's press briefing. He said that he believes the environment for cooperation will improve after the election.

Now, there are some people who would say that even that statement is wishful thinking, given the recent past, given the last six years, where

there hasn't been a huge appetite for cooperation amongst the parties on Capitol Hill. So, it's a bit question, Max.

FOSTER: So, how likely are we likely to see a shift in economic policy from a Republican-controlled Congress, if that is the case and the

suggestions being that it might be, despite the changes in those polling numbers.

JONES: Well, certainly, on some issues where there could be an area for the two parties to work together -- again, that's a big "if" -- are

issues that are part of economic policy: infrastructure spending, tax reform, trade deals. These are areas where there has been some commonality

in the past.

But when it comes to major changes, major changes in economic policy, that seems bit a less likely because even if Republicans do gain control of

the Senate, they're not going to have -- or they're very unlikely to have a veto-proof majority.

So, if they were trying -- if they were to try make a big move that the president, that the White House disagrees with, they would face a

potential veto by the president. So, maybe some small moves in small-bore issues, but nothing major and game-changing is likely on the economic

policy front, Max.

FOSTER: In terms of the White House, would it change its policies, its economic policies, if voters reject the Democrat party at the polls

today, if there's a message through the polls?

JONES: I don't think that's the message that the White House is likely to get. Certainly that's not what they're indicating so far. They

believe, while insisting that they think there's still a chance that the Senate could stay in Democratic hands, they believe that voters are

responding to the White House's policies, which is policy that they say benefit the middle class.

So, they're going to keep on doing things and promoting ideas and policies, like raising the minimum wage, for instance, like equal pay for

equal work, that they believe will help the middle class. They believe those are the right policies.

So, I think it's unlikely, regardless of what happens today, I think it's unlikely that the White House is going to think that their policies

that are directed at the middle class are to blame. Max?

FOSTER: Athena, thank you very much, indeed.

Well, obviously, the dominant conversation throughout America today, also on Wall Street, a mixed day for US stock markets. The Dow eked out a

small gain. Paul La Monica joins us from CNN New York. Paul, the markets seem to be in a wait-and-see mode, I think we can call it that.

PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes, definitely. I'm not so sure I'd go so far to say we've got Wall Street apathy per se,

but right now, investors are just waiting to see what the results of the midterm elections are going to be.

And I think for the most part, if the Republicans do take control of the Senate, that's expected, so I'm not sure we're going to get a huge

rally on Wednesday as a result. You never know for certain, but I think the market is pretty much prepared for the GOP taking control of both

houses of Congress.

FOSTER: OK, Paul, thank you very much, indeed. Well, European markets turned negative late in the session here. The European Commission

cut its growth forecast for the euro area for 2014 and 2015. It now predicts the economy will grow 0.8 percent this year, down from 1.2


Energy companies also suffered after Saudi Arabia announced oil price cuts. BP, Total, Shell, they all ended the day around 3 percent lower.

Now, the European Commission admits that problems with the recovery are here to stay as it cuts growth forecasts for the year this year and

next year. Some of the economies that had been strongest are now actually getting weak marks.

Germany gets a C. Economic activity is expected to remain weak until next year. Geopolitical risks are causing businesses to hold off

investments there. France scored even lower, a D. The Commission forecasts weak growth and rising deficits. France only avoided an F

because the European Commission accepted the country's budget after some last-minute changes.

And things are sunnier here in the UK, with robust growth and a drop in unemployment. Economic indicators show that momentum should continue.

Now, the new European Commission faces an uphill battle in spurring growth. Nina Dos Santos spoke with EU economics commissioner Pierre

Moscovici and asked what he sees in today's report.


PIERRE MOSCOVICI, EU ECONOMICS COMMISSIONER: It's true that the next year, in 2015, will be a year of slower recovery all over Europe, and

especially in the eurozone, mainly because Europe is not a zone of enough investment. Investment being as well on the supply side and on the demand


So, well, now, the eurozone is out of the crisis, the integrity of the euro is ensured, stability is there, but we need to improve the dynamism of

the European economy, and that's what this Commission has to do.

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: You say that the eurozone is out of the crisis, but a lot of people are expecting that if

these inflation, jobless figures don't get any better soon, it'll be in the midst of another crisis pretty soon.

MOSCOVICI: Well, if you talk about a political crisis, Jean-Claude Juncker, the president of the Commission, said we are the Commission of the

last chance. I do fear this view, because I know that a lot of people in Europe feel dissatisfied with the European construction.

If we want to reconcile the Europeans with the European project, there is no other way than showing results. And those results have names. These

names are growth, jobs. And the main tool in order to obtain those results, which will be the task of the Europeans during those next years,

the next five years, is investment.

This is why the Commission is preparing a plan of 300 billion euros before the end of the year, for the next three years, in order to ensure

more investment for more potential growth, then also for jobs.

DOS SANTOS: The companies that could be planning to hire staff across the eurozone, Mr. Moscovici, listening to this interview, if you had to

convince them as to why they should be investing in the eurozone, when we're talking about a region, here, which has now got a little less than

half of the inflation target and has suffered with persistently low inflation for years, how can you convince them to plow money into the

eurozone if it could be on the brink of a deflationary spiral?

MOSCOVICI: We see that today the inflation is low, but that we expect it come up to 1 percent next year, and then 1.5 percent the year after.

But no, there is no worry to have about the eurozone. It's a solid place.

Now, the member states, all of them, or almost all of them, have made huge efforts of fiscal consolidation, the financial system is strong, the

stress tests show it in a very convincing way one week ago. Reforms are being made all around the continent. The wages are somehow under control

and the labor market is reforming. No, no, it's a good place to invest. A very good place to invest.

DOS SANTOS: In these figures here, it's not surprising that perhaps the EU has downgraded eurozone overall forecasts for growth, but it's the

supposedly biggest and most robust economies in the eurozone, like France and also Germany, are the ones that are causing people to get nervous.

MOSCOVICI: Well, I wouldn't say so. I think that what we need to do, all of us, with all the economic policy tools, as well as monetary policy,

which is led by the ECB, totally independent. Also national fiscal policies and also the investment plans and structural reforms. And I would

say as well the macro economic and micro economic level.

All of this must be coordinated, and some countries need to make more efforts still. Some others to help to more investment. And I'm sure that

if we can coordinate as well the tools, the countries, and the action of the EU, we are one of the strongest economies in the world, if not the

first economy in the world.


FOSTER: The EU economics commissioner speaking to Nina earlier on.

Now, next, the head of a top UK spy agency has a message for social networks: you've become the command and control centers for terrorists.


FOSTER: One of the top spies in the UK says major tech companies must take action to prevent terrorist groups from promoting their agendas on

social media. GCHQ is the UK agency responsible for monitoring communications, and the new director says strategies need to change now

that ISIS militants are using Twitter, Facebook, and WhatsApp.

GCHQ is concerned with the rise of new Snowden-proof security software, as they call it. The programs make it more difficult for

governments to monitor online communications.

Director Robert Hannigan says there is no doubt that ISIS is benefiting from social media platforms. He wrote, "However much tech

companies may dislike it, they've become the command and control networks of choice for terrorists."

I spoke to John Sculley, the former CEO of Apple, and I asked him how companies feel about policing the content on their sites.


JOHN SCULLEY, FORMER CEO, APPLE: I think the companies want to have as little to do with the government surveillance as possible. It's

obviously going to be unpopular with their users, it's highly complex and bureaucratic. The US is governed by rule of law. So, I think that the

companies are going to do everything they can to not be involved in this.

FOSTER: Although, they are doing some policing, aren't they? Because I know that there's been a bit of a reaction to the comments about child

porn, for example. That's already not allowed on some of these social media networks. They say they're very quick at spotting it and bringing it

down as well.

So, how much of that is true? How much policing are they doing effectively in the areas where they admit it?

SCULLEY: Well, I'm not an expert on this, but I suspect that the child porn is a relatively easy one. It's not -- there's no controversy

with child porn. Everyone agrees it's bad. So, I don't think that falls into the same complexities that surveillance of people would, trying to

find potential terrorists. I think that's -- the terrorist issue is far more complex.

I think that the -- that my speculation is that in a few years, there will be some changes, and governments will have more access. But I don't

think it's going to happen overnight.

FOSTER: The problem here is that ISIS, discussing ISIS, isn't an illegal act, is it? But I think the intelligence agencies are suggesting

that if there is a sort of discussion, they should be allowed to gain more access through this encrypted data without having to necessarily go to

court every time.

But what's the debate there internally for the companies? How can they get through that? Because they know as well, don't they, where they

can have an impact on terror by giving particular bits of information?

SCULLEY: Well, I would agree with everything you just said. I think that the companies instinctively as citizens know that there is a threat.

As citizens of the world, all of us would want to try to be constructive.

But then when you change their hats and say as executives of your company, what do you intend to do? And that gets really complex.

As you know, there'll be lawyers advising from every side, and in a country that's governed by rule of law, as the US is, which is not always

true with every other country, it will make it very complex. Even if someone believes it's a good thing to do, it'll make it very complex to

make changes quickly.


FOSTER: It's a debate that will keep being discussed.

Now, Taylor Swift says sayonara to Spotify. The singing sensation would rather you buy her new album on CD or iTunes, we do believe. We'll

have the details and the dollars next.



FOSTER: Shares of Alibaba closed 3.25 percent higher after releasing its first set of earnings as a public company. The stock gained on news

that active buyers on its website jumped 52 percent from the same period last year. Those 105 million new users add up to roughly a third of

America's population. Alibaba's revenue jumped 54 percent to a more-than- expected $2.7 billion.

Joining me live from New York is CNN business correspondent Samuel Burke with more on Alibaba's results. Samuel, Alibaba stock initially fell

after those earnings. Why was that? Because the figures are incredible, aren't they?

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Yes, we heard all of the stats that you just mentioned about revenue, total users, merchandise, all

up, up, up. And then I watched the stock go down about 1.8 percent.

And it seemed like investors were spooked on the Street because Alibaba was talking about how they were going to invest for the long term.

It's the same thing that has spooked investors about Amazon and Facebook during earnings season right now.

And we saw that the margin shrunk a little bit at Alibaba, but those numbers actually blew the market away in the end, and that's how we ended

the day up the way we did.

But Alibaba did say long term, they want to invest in some of the same things that Amazon is investing in -- digital entertainment, and of course,

lots of that money being invested in mobile, Max.

FOSTER: They also want to break out from China, don't they? But actually, most of the interest is because they're so strong in China, where

other companies can't break into in the same way.

BURKE: Yes, it's a really interesting tale of what's happening in China, because on the one hand, you have the Chinese economy slowing. On

the other hand, Alibaba is able to buck that trend, and they just continued growing. So, they're avoiding some of the problems that you're seeing in


But we didn't see that growth outside of China. Still, really nothing to speak of here in the United States. That's something that investors

have been looking for for a long time, but it doesn't look like we're going to see it anytime soon, Max.

FOSTER: So, where do you think they're going to be moving on from here and building the business, even though it's huge already?

BURKE: Well, they say mobile apps. I think they want to get into messaging more. But again, it's that digital entertainment. It looks like

they want to do shows, like I said, the way Amazon is doing. Amazon has really had its first hit with a show called "Transparent."

And it seems like they want to be more like another Netflix, diversify and create these hit streaming shows. So, I think that's where we could

see them in the future.

When that whole group of people with Alibaba and Jack Ma were here for their big IPO, they talked a lot about growth in emerging markets, places

like Brazil, where they feel that they're already doing very well and they could quickly squeeze more money out of there. So, those are the areas

that we think they're going to be investing a lot in.

FOSTER: Samuel in New York, thank you very much.

Taylor Swift, meanwhile, is shaking off Spotify.


FOSTER: "Shake It Off" is the hot single from her just-released album, "1989." Swift pulled her music off Spotify's streaming service on

Monday, though. Spotify responded with a blog post begging her to come back.

Swift is a big proponent of selling physical and digital albums rather than streaming. The 24-year-old musician made her position clear back in

July in a "Wall Street Journal" op-ed. Swift said, "Music is art, and art is important and rare. Important, rare things are valuable. Valuable

things should be paid for."

Joining me with an artist's perspective on the Taylor Swift tiff with Spotify is Zoe Keating. She's a Canadian-born cellist and composer and

comes to us from Redwood Forest, Northern California. Thank you very much, indeed, for joining us.


FOSTER: There are issues, aren't there, between musicians and these streaming services? Are you able to explain what they are? Are they just

down to money? What is it?

KEATING: Yes, it's about control and it's about money. I've been a very vocal proponent of artists having control over where they distribute

their music, and also to point out that streaming doesn't necessarily work for the middle class, where we have to rely on fans to pay our way instead

of streaming.

And I think with Taylor Swift, it's become clear that it's not working for the artistic royalty, either. So, who is it working for?

FOSTER: So, if you're streaming a new piece of music, whether it be an album or a single on Spotify, give us a sense of what sort of money

you'd make from that, considering the amount of streams that you get for each piece of music.

KEATING: Well, for a mid-range artist like myself, I had about half a million streams on Spotify, and I don't have my entire catalog up there.

And that netted me $1,900. Which obviously is not enough to live on.

And Spotify has been putting forward the message that artists should put all of their effort into these streaming services, and I don't really

see what the benefit is there for me. I'm better off putting all my energy towards my fans, so they can buy things directly or even on iTunes, which

is much better than Spotify.

Spotify is just -- and all streaming, in fact -- it's just a tiny fraction of an artist's income. And they've been putting forward the

message that, well, once you get big, then it really works for you. However, Taylor Swift is about as big as they go, and she decided to remove

her catalog. So, where are we now?

FOSTER: But do you think that's because of the money that she was getting back, or this idea that she feels that they're denigrating the art

of her form through the streaming service?

KEATING: Well, we have two things. One is that without question, artists get the best return when -- on their money when they give their

albums directly to their fans in the beginning. And so, that's the idea of windowing, that when your album is first released, the people who buy it

are the people who love you.

And then there is the idea that yes, I really commend her for standing up for artists and saying that hey, maybe this worth paying for. I think a

lot of artists are kind of scared to say that. And so, her management team might have been the ones who decided to not put it on Spotify. However,

her artist statement is definitely true to her, and I agree with her.

FOSTER: Do you think we're about to go through a new phase where the power is shifting back towards the artist, and Spotify is going to have to

actually respond to that, and some of the other streaming services? You're complementary about iTunes, but they take a large chunk as well, don't

they? How much do they take of each sale?

KEATING: They take 30 percent. However, one thing about iTunes --


FOSTER: Do you think that's reasonable?

KEATING: I think it is. One thing about iTunes, it's the same for everyone. Whereas with Spotify, I don't get the same deal as someone like

Taylor Swift. And, in fact, the deals are confidential. So, iTunes at least is a level playing field.

And also, I'm not just sure that streaming is ever going to be a way to replace an artist's income. And that is something that needs to be

addressed. If, for example, in my case, I haven't been able to tour for the entire year, because my husband has cancer.

So, there's been this message that artists should put their music on the streaming service and then tour to support themselves. And that's

obviously not possible, either. I'm really grateful that I can actually -- my fans buy my music directly.

So, I'm glad that we're having these conversations, and I really do hope that Spotify responds in a slightly more adult manner. I found their

response to Taylor quite condescending. It seemed like she was trying to control access to her music, and they replied in the style of a

manipulative boyfriend. I thought that was really unprofessional of them.

FOSTER: OK, Zoe Keating, thank you very much, indeed, for joining us.

Now, US President Barack Obama isn't on the ballot today, but his policies and economic achievements are. We'll look at the issues and what

the election results will mean for the president's plans next.


FOSTER: Welcome back, I'm Max Foster, these are the top news headlines we're following for you this hour.

US voters are going to the polls today in midterm elections. All 435 House seats are in play, along with 36 Senate seats. Republicans are

projected to make significant gains. They need a net win of 6 seats to take a majority in the Senate.

Police in Mexico have arrested the mayor of a town where 43 college students disappeared in September. The mayor's wife has also been taken

into custody. Mexico's attorney general says the couple were the probable masterminds of the mass kidnapping.

Kiev said it is reevaluating its cease-fire agreement with pro-Russia rebels after the separatists held controversial elections in eastern

Ukraine. Rebels in one self-declared region swore in their new leader earlier today. Russia is the only country to recognize the votes, which

were condemned by other Western governments.

The family of one of two murder victims in Hong Kong wants the suspect, Rurik Jutting to get the death penalty. The British investment

banker is charged with the murder of two Indonesian women found in his apartment. An autopsy will determine exactly how both women died.

Voting is underway in the U.S. The coming hours could see a shift in Washington's balance of power. Whilst President Obama isn't on the ballot,

the election is a referendum on his policies. The economy is growing strongly, especially compared to Europe. Actually after an uneven start to

the year, GDP grew at a 3.5 percent rate in the third quarter. Job growth is rebounding as well, but nearly 12 percent of Americans are still unable

to find full-time work.

The federal budget deficit has fallen for five years in a row. That's due to the economic recovery by tax receipts and spending cuts. The

deficit had been a major point of contention between the President and Congress. Now, Jonathan Mann joins us from CNN Center in Atlanta, and,

Jonathan, what would you say the results will mean for Obama's economic policy?

JONATHAN MANN, ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Well, Max, let me answer your question with another question - or with a quiz, if

you like. We're going to show you someone and you guess who he is - we're telling you already. He's the U.S. treasury secretary. But can you name

him? Could most people watching us right now name him? He's Jack Lew, of course. Let's move on to another man - chairman of the Council for

Economic Advisors. Does anyone out there know his name if you're watching from home? I don't think many Americans could name him - that's Jason


And the reason most people can't name them is because they don't really need to know who their names are. But then there's this woman.

Even if viewers don't all recognize her, she is the chairman of the Federal Reserve. She's Janet Yellen. And investors and markets around the world

sure know who she is because it really is the Fed, not the White House or the Treasury that's really been driving the U.S. economy out of recession.

There was some early, early and important decisions by the Obama administration, but it's the Fed's money. More than $3 trillion in

stimulus that had helped so much - they've helped the stock markets reach record highs, they've brought down unemployment. The U.S. economy as you

mentioned grew 3.5 percent in the third quarter. That's probably the Fed's work. Yellen isn't elected and she will still be in office long after

Obama and Lew and Furman are gone.

So, this is almost, almost like any other day for the Fed. It's really the Fed that's making the policy that matters. What's interesting

about this election in fact is not what it's about to change in the Obama economic plan, but what's not going to change. Obamacare - the reform of

one-sixth of the U.S. economy - the entire health insurance overhaul was going to be a major election issues with Republicans who are all still bent

on its repeal. But that didn't happen. Obamacare is still on the books, and the wind has gone out of the sails of those who want to erase it.

There is the prospect of tax reform, and if Republicans hold both houses of Congress, that is a project they've been talking about for a long time, but

Republican's fight as hard among themselves about tax policy as they do with the President, so anything could happen. My money though isn't on


So, what we're expecting is Republicans in control of both houses of Congress and some people are saying that maybe they will want to

demonstrate that with Congress in their hands, they are effective leaders and they will deliver at least the basics. So maybe a real budget instead

of emergency stopgap spending measures which is what we've been seeing for years now, and may be the regularly-needed hike in the debt ceiling without

threatening to close down the government or actually closing it down, which is what we've seen in the past.

Optimists are hoping the Republicans will want real achievements after so many years of frustrating, nearly paralyzed government. Pessimists

worry that the election is only going to make the paralysis worse and maybe the whole system just stays slow and dysfunctional until the next election

and a new president two years from now. Max.

FOSTER: OK, Jon, thank you very much indeed. And as you can see, in about an hour and a half we'll have those first polls (ph) - we'll bring

that to you. Now, six months after India's new prime minister was swept to power, one of the country's top executives says the honeymoon period there

is well and truly over. India's World Economic Forum began on Tuesday in New Delhi, and Arnand Mahindra, the head of Mahindra Group spoke to our

Andrew Stevens there. He says time is running out for Prime Minister Narendra Modi to deliver on his grand economic promises.


ARNAND MAHINDRA, CHAIRMAN, MAHINDRA GROUP: At the end of the day, it's about leadership. You want one person to come in and join the dots

because all the separate ministries that control the elements that would make business easier here seem to be veering off in the wrong directions

with their own -- marching to their own drummers -- so to speak. We needed somebody to come in and say, `This has to work - we've got to join all the

dots and make all the district (ph) elements such as resources, infrastructure, power, red tape, taxes work together to make India a more

competitive place.


history - you've been a senior industrialist in India for all - for many, many years - how do you describe at the moment your level of optimism that

this time it will be different?

MAHINDRA: This is make-or-break time. And I'll be honest, I'm optimistic. I think the right steps are being taken. I'm often asked why

aren't there bigger reforms? I've never been in favor of a part (ph) that says we want a big-bang reform. Big-bangs usually get you a big hole in

the ground. You want to move gradually, you want to show a good reform every day. And Prime Minister Modi recently in Washington declared at the

USIDC that his goal is one reform every day - one new archaic law to be deleted every day. That's the kind of goal we want. But now he's going to

have to deliver.

STEVENS: Said yes, he's going to have to walk the walk -- exactly. That word "archaic" -- I've actually been hearing a lot of that word. Just

very quickly, how long will Indians give him? What's his timeframe to actually get - to use a cricket analogy - runs-on-the-board.

MAHINDRA: I'm not a political pundit, but I can tell you that from a business perspective, we are very impatient now. I say he has a year. The

honeymoon period as you know is over. He's done a great job, he's got good grades on the honeymoon period. Sustaining this and getting implementation

now is -- I would say, if in a year we don't see some real change in the economy, some change in the animal spirits (ph) and some real economic data

to show what he's doing is working, time will be running out.


FOSTER: Well Richard spoke to the newly-appointed Indian Tourism Minister, Shripad Yasso Naik, of the World Tourism Market here in London.

He asked the minister to explain his new agenda.


SHRIPAD YASSO NAIK, INDIAN TOURISM MINISTER: Our goal is only to boost the tourism. We should project India with its real image that to the

whole world, and bring the tourists, bring the (inaudible) ministry from all the world to India. And know the India spiritually in every aspect of

their life.


NAIK: Yes.

QUEST: -- are you going to make? Are you going to change the visas so you -

NAIK: Yes.

QUEST: -- so you get your visa on arrival?

NAIK: Definitely (inaudible) -


QUEST: I hear reports -

NAIK: Yes, yes.

QUEST: -- and you confirm now -

NAIK: Definitely, definitely (inaudible) begin the month with the visa on arrival is already there. So we have all that - we all done a good

job - that is the ultimate visa. And you really get the good message (inaudible) get started. We did one month --

Male: Big news.

NAIK: -- yes, is a big news. Yes, I think that (inaudible) visa from major countries.

QUEST: So you're going to - Incredible India -

NAIK: Yes.

QUEST: -- has been very successful.

NAIK: Yes.

QUEST: But India does not get the level of tourism the country really should.

NAIK: Yes, we are focusing on that. I can tell you that last - last - within these three or four months, foreign tourist arrivals was increased

by 6 percent, 6 percent, 6 percent. And foreign nation, yes, the foreign nation just gone up - 12 percent increase. That is a good sign. That is a

good sign, yes.

QUEST: And the difficulties of handling that tourism - airlines, hotels, infrastructure -

NAIK: Yes, yes, yes, yes.

QUEST: -- is the new government -


NAIK: Yes, definitely -

QUEST: -- (inaudible) spending the money?

NAIK: Definitely. Whatever (inaudible) economic duty and we are focusing that.


FOSTER: You can see there Richard at the Travel Market here in London. And beautiful beaches, lakes, waterfalls, mountains - perfect spot

for a relaxing vacation. You have to look - or rather overlook - the de- Nurashi Zone (ph) of course there. Richard also spoke with a businessman. He wants North Korea to be your next holiday hotspot.


Female Announcer: All of you tourists will directly witness here and experience real looks of (inaudible) Korea to cherish impressive memories.

QUEST: Traveling to North Korea is not only possible, but easy and safe. So, the mere fact that you have to remind people that it's easy and

safe suggests that it's probably anything but.

JORDI CAMPS, FOUNDER AND CEO, EXPERIENCE NORTH KOREA: Absolutely not. First question that people ask is, well I might consider to go but it's not

possible, is it? So, there you go - it is possible. It must be really difficult because you need a visa - we take care of the visa, we take care

of absolutely everything. And they ask me how safe it is. The last time I checked, the United States and England had nuclear bombs and here we are.

QUEST: What sort of people are going to North Korea?

CAMPS: People who are curious mostly - I would say curiosity is number one reason to go to North Korea. And people who want to do things

that are - they're mind-blowing. It is something - it is once-in-a- lifetime experience. We are not used to the way they live, we are not exposed to that kind of thinking, so just to go and see it, you cannot

actually go and live there. Just to go and see, it is absolutely amazing.

QUEST: The repression - the repressive side of North Korea - whether it be the people locked up for lack of justice as we would understand it,

the lack of the rule of law as we would understand it, it begs the question is it a suitable place for tourism? Is it a suitable place to go and visit

these sort of things when so many people are locked up, detained or executed without (force) of law?

CAMPS: We're not making a political stand on North Korea. What we're - all we're saying is if you want to go and see, we can take you there.

That's all we're saying. We're not in any way advocating for people to, you know, adhere to their regime or to think the way they do. All we're

saying, we're travel professionals, we can take you there.

QUEST: How many people are going?

CAMPS: Five thousand people a year which is the same amount of people that land in London-Heathrow every half an hour. That's how exclusive it

is to go.

QUEST: And how many people get turned down for the visa?

CAMPS: We have never had anybody turned down for the visa. There's only two restrictions - you cannot be a South Korean passport holder - they

do not recognize South Korea as a country - and you cannot be a journalist. So, unfortunately we cannot take you there.


FOSTER: Well, the prime minister of Georgia is one of the youngest state leaders in the world, and he says he's leading Georgia on a return to

the big European family. Tourism (inaudible) there as well. We'll speak to him after the break.


FOSTER: The prime minister of Georgia says he wants to make his country a "real" European state - not a territorial dispute with Russia.

Georgia has anchored its economic fortune and future to Brussels, and in June signed a free trade agreement with the European Union. John Defterios

spoke to the Georgian prime minister and asked what the E.U. deal would mean to his country.


IRAKLI GARIBASHVILI, GEORGIAN PRIME MINISTER: We call this signature our return to the big European family. And why? Because we share the same

culture, and most of all, the same values. We want to live in a better Georgia, and I really want to transform this country to a real European


JOHN DEFTERIOS, "CNN'S EMERGING MARKETS" EDITOR AND ANCHOR OF "GLOBAL EXCHANGE": I was looking back at January 2008 in a referendum. Even then,

more than three-quarters of your population wanted NATO membership, and it still remains about 80 percent, but isn't that provoking Moscow? Doesn't

it strain relations even more?

GARIBASHVILI: Georgia's aspiration is not against anybody, including Russia. And I think Russia has also an interest to have a peaceful

situation - and peace and stable situation - in the neighborhood.

DEFTERIOS: Domestically, when I look from the outside in, it seems like there's a great deal of attention on political retribution for the

previous government. Former prime minister's in jail, charges against a former president. Isn't it better to close the chapter?

GARIBASHVILI: We are motivated to build a real European democracy here - a true democracy that works for everyone - for each and every

citizen. And nobody is above the law, and this is our principal position on this. And therefore, it's really hard to understand because hundreds

and thousands of grave crimes were committed during this nine or ten-year period. In these cases should be investigated, but this is the

prosecutor's job. This is the courts, the independent judiciary, so let them decide.

DEFTERIOS: You've led this government now yourself for a year. I see that foreign direct investment is slow to come back after the elections.

Why is that the case?

GARIBASHVILI: When the former president went, as he left, and when we elected the new president, and this year we completed the cycle by holding

the free and fair local elections - then this, you know - the new phase of investments began.

DEFTERIOS: You're a key transit point for the BTC pipeline for oil.


DEFTERIOS: Now the southern quarter gas pipeline is going to be built and perhaps opened as early as 2019. Isn't that a phenomenal (bank) for

you to rely on political backing from the United States and Europe because of the role that Georgia played -


DEFTERIOS: -- is this strategically important?

GARIBASHVILI: Because this is the only country that will connect the Caspian Sea and its resources to the European market - European countries.

So therefore Georgia remains a stable and reliable transit country.


FOSTER: Prime minister of Georgia. And now in the global economy, that spans from Georgia to India, Australia and beyond. Companies say

they're looking for employees who have an edge. Now a number of Western MBA programs are opening up on Asian campuses to give their students a

broader perspective of business thinking. In "Future Finance," Hong Kong University's Sachin Tipnis tells us that schools must collaborate to stay



SACHIN TIPNIS, EXECUTIVE DIRECTOR (MBA), UNIVERSITY OF HONG KONG: Every economy and financial system is unique. In China, the state-owned

banks have been empowered to support rapid infrastructure build up. But in India, raising capital may still have certain roadblocks. And in emerging

markets like Indonesia or Cambodia, the regulative framework may pose a big challenge for capital markets. This dynamic landscape means that a

traditional business school approach in a single location with courses designed only for one type of market is no longer enough to achieve a

broader perspective.

Students at Hong Kong University begin their MBA studies in Beijing. This on-the-ground experience exposes them to local culture, language and,

most importantly, to the Chinese way of doing business. Once in Hong Kong, students continue with a strong regional focus. Companies, brands,

concepts including emerging market finance are discussed in the context of Asia.

It doesn't stop there. After Hong Kong, our students attend one of the top schools either in London or in New York. These kinds of

partnerships are the perfect way to bring Western business education and Asian philosophies together. Other universities have similar programs, and

it's a trend that will only continue to grow. Will business school still be relevant in ten or 20 years? The answer is yes. But here's the

difference - the next generation of business schools will look and function much like incubators. They will partner closer with corporate world for

students to work on life projects on real business issues. These are exciting times for business and a decisive time for business schools to

evolve and remain relevant.


FOSTER: Now with children's gaming, what's all the rage one day can quickly be forgotten the next. I'll speak to the creator of the game Moshi

Monsters to find out what he says his games profitable - after the break.


FOSTER: The maker of the Smash It! children's game, Moshi Monsters, says it wasn't as big a success as he had hoped. Now for parents of young

children across the world, that's probably surprising to hear. Michael Acton Smith says - (AUDIO GAP) well he founded Mind Candy which makes Moshi

Monsters, and his company underwent a major overhaul recently when Smith stepped as the CEO to focus on a more creative role. He is now launching a

new game called World of Warriors, hoping to have a second hit in a tough industry. I spoke to Michael Acton Smith earlier and asked him what makes

a children's game successful.


MICHAEL ACTON SMITH, CREATOR, MOSHI MONSTERS: So, Moshi Monsters had an incredible history. The first game we created at Mind Candy didn't

work. It was creative but a bit of a commercial disaster, and Moshi Monsters was our last roll of the dice with just a little bit of money left

in the bank. We took a sketch and built it up into what became a phenomenon. It took off and everyone else by a lot of a surprise, and it

was very successful. It still is. It generates a lot of revenue from subscription on the web, and also from physical products, magazines and

toys and books and so forth. But over the last year or two it's come down from its peak, and now it's kind of stabilizing at a sort of more evergreen

level. And so the focus at Mind Candy is to make sure we're not a one- trick pony. We want to create new, incredible, magical entertainment for kids and have been working on a lot of new projects alongside Moshi.

FOSTER: Is that inevitable in children's gaming - that it will peak very quickly and can fall away just as quickly?

SMITH: Yes, it's a good point. So I think a the younger end of the market, sort of the preschool children who play things like Peppa Pig or

Thomas the Tank Engine or Dora - those products can last for decades because the audience is kind of less fickle. So the slightly older crowd -

the sort of six to 12-year-olds, they are - they do move from thing to thing. They do get into products and toys and then move on to others quite

quickly. So it's a really valuable lesson we've learned. And, as I say, we had an amazing journey with Moshi. We learned a huge amount. We

inspired and created amazing entertainment for millions of kids. And now, as I say, it's just come down to a lower level. And we still think it'll

be around for many, many years. I hope my grandchildren get to play Moshi Monsters one day, but it won't quite be the phenomenon that it was sort of

in 2011 and 2012.

FOSTER: There's been some criticism of the gaming industry - the way it deals - what has been called discrimination on a lot of levels. And as

you say, your new game is focusing on learning. Do you feel that the gaming industry is becoming more responsible and isn't just playing to

purchasers (ph) out there which it's easy to do and sometime under the wire because it's the gaming industry? But are things changing do you think?

SMITH: I think things are changing. I think what's wonderful over the last few years is how many new people have come into the gaming

industry, and people who wouldn't normally consider themselves gamers have discovered what a wonderful art form it is, how much fun you can have.

Gaming isn't just about being in your bedroom playing, you know, for hours and hours on your own. It's social, it connects families. The themes in

gaming can stretch from everything from a racing game to a puzzle game to a game to help you sharpen your memory and your brain skills. So, I think

it's a very, very wide, wonderful industry, and I think that's a great thing.


FOSTER: Well, Moshi Monsters aren't the only things roaming the Web Summit in Dublin as Jim Boulden explains this year. It's all about the

rise of robots.


JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: One of the big themes here at the Dublin Web Summit is artificial intelligence - robots. Meet


Female: Nao is a humanoid robot designed to interact with humans with the best of the interfaces - voice, body language, but not be so close to

human that it becomes creepy.

BOULDEN: But now I can get robots to cut my grass, I can get them to Hoover-vacuum my house. How is this different?

Female: Absolutely. Yes, you see there that makes him laugh. Yes, because that makes him laugh, because you see a lot of robots can do

exactly what you - what you're - mentioning. However, this is not - and there's a lot of great companies doing that out there. We want to do

companion robots.

BOULDEN: Companion, OK.

Female: And we want to do robots that actually - artificial intelligence is quite a big word that can mean a lot of things. What we

like it to mean is that the robot can understand some of the context. For example, it can detect emotions in your voice, can see that you have droopy

eyes if you're sad and then maybe, you know, and sometime offer you to play a peppy song -


Female: -- if it sees you're sad. We hope in the future he will be able to Wi-Fi into other connectivity to control things in your home. For

example, instead of, you know, getting up and putting your blinds down, Nao would say, `Oh, it's getting very sunny out there, do you want me to put

the blinds down?'


Female: And that is where artificial intelligence (inaudible) come in.

BOULDEN: I see. But it was a living, breathing celebrity who really caught the attention of day one here at the summit. Actress and

entrepreneur Eva Longoria took to the main stage, and in it she said something that was quoted several times on Twitter - she says, "I want to

challenge all the women here today to become mentors. Without mentors, the system won't work." For more on Eva and her interview on CNN and my photos

of her getting ready for that interview, you can always go to Jim Boulden, CNN Dublin.


FOSTER: Jim Boulden reporting there for us. You're watching "Quest Means Business." I will be back after this very short break.


FOSTER: Not only are this year's midterm elections set to be historic in the United States, they're also going to be the most expensive in the

country's history. The amount of money being spent is pretty staggering when you consider that they are almost up to $3.7 billion according to our

(inaudible). That's the total price tag for the election according to the Center for Responsive Politics. Now, the biggest chunk -- $2.7 billion -

is being spent by candidates and their parties. Tune in later tonight - the complete election coverage with Wolf Blitzer, Anderson Cooper and CNN's

entire political team. "CNN's Election Night America" begins at quarter to midnight London time. Now, that is "Quest Means Business." Thank you for

watching. I'm Max Foster in London.