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Quest Means Business
Taliban Gunmen Attack Pakistan School; International Condemnation of School Attack; At Least 145 Killed in School Attack; Rate Hike Fails to Stop Ruble Free-Fall; Piecing Together Russia's Economic Crisis; Putin Faces Serious Economic Challenges; Dow Closes 110 Points Lower; Oil Prices Continue Slide
Aired December 16, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, CNNI HOST: The losses picked up steam as the closing bell rings on Wall Street. The Dow is off more than 100 points, roughly
the worst point of the session. Campbell's bell (sic) ringing the closing bell. Trading is over for Tuesday, December the 16th.
Tonight, Pakistan in mourning, the world in horror as the Pakistani Taliban murder more than 100 children.
It's a ruble roller coaster. Chaos is gripping the Russian currency market.
And targeting moviegoers. A new terror threat from the group believed to be behind the Sony e-mail attack.
I'm Richard Quest. I mean business.
Good evening. The number tells its own story: 145 people have been killed in a terrorist attack in Pakistan, in Peshawar in Pakistan. And
worse than that, if that is possible, of that 145, 132 of them were children, many of those believed to be between 12 and 16 years old.
They were attending a school run by the Pakistan army, and a large number of students are sons and daughters of military personnel. The prime
minister of Pakistan has declared three days of mourning, and across the world, there has been comments, revulsion, and horror at the event that's
taken place. Rarely has anyone seen something on this magnitude. CNN's Atika Shubert has our report.
(BEGIN VIDEOTAPE)
(EMERGENCY VEHICLE SIRENS)
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT (voice-over): Gunmen stormed the military-run school at around 10:00 AM local time just as some
of the children were taking their exams.
MUDDASSAR ABBASS, LAB ASSISTANT, ARMY PUBLIC SCHOOL AND DEGREE COLLEGE (through translator): The men entered into the rooms one by one and
started indiscriminately firing at the staff members and students.
SHUBERT: The militants, wearing suicide vests, scaled the wall of the school. Pakistan's education minister told CNN it was a targeted attack.
MUHAMMAD BALIGH UR REHMAN, PAKISTAN STATE MINISTER OF EDUCATION (via telephone): They headed for -- from behind the -- from the back yard of
the school. They blew up a car and diverted attention, and then crossed the wall and the security guards, their attention diverted. Somehow, they
managed to get inside.
SHUBERT: The gunmen rounded up children and staff, killing many instantly.
AIZAZ KHAN, STUDENT, ARMY PUBLIC SCHOOL AND DEGREE COLLEGE (through translator): We were doing our schoolwork, and suddenly we heard firing
and the teacher told us, do not be afraid. Maybe the college drill has started. Then we saw army officers come in the school. Suddenly, an army
officer came and told us, you all go out the school's back door.
SHUBERT: The military moved in and, after an eight-hour standoff, secured the site. All the gunmen were killed, but the ordeal was not over.
At the local hospital, chaotic scenes. As the scale of the bloodshed became clearer, the death toll climbed. Sorrow for some boiled over into
anguish.
(MAN SHOUTING IN ANGUISH)
SHUBERT: The Pakistani Taliban had claimed responsibility for the attack. Traveling to Peshawar, the country's prime minister vowed not to
give into the group.
NAWAZ SHARIF, PRIME MINISTER OF PAKISTAN (through translator): I think this war and struggle will continue until terrorism is completely
rooted out of this country.
SHUBERT: Nobel Peace Prize winner Malala Yousafzai, who herself survived being shot in the head by the Taliban, sent a video message.
MALALA YOUSAFZAI, NOBEL LAUREATE: And we stand with all those families and all those children who are injured right now and who are
suffering through this big trauma. And now it is time that we unite, and I call upon the international community, leaders in Pakistan, all political
parties and everyone that we should stand up together and fight against terrorism.
SHUBERT: A message to a nation in shock and to a community now asking itself why so many innocent young lives had to be cut short.
Atika Shubert, CNN, London.
(END VIDEOTAPE)
QUEST: Journalist Jon Boone writes for "The Guardian" newspaper, and Jon joins me now on the line from Peshawar. Jon, there's no excuse,
there's no justification, there's only a perverted, warped view on why they did it. So, what's their reason?
JON BOONE, JOURNALIST, "THE GUARDIAN" (via telephone): They said it was revenge for the military operation launched by Pakistan back in June
against the militant and terrorist safe havens in this part of the world you've probably heard about, North Waziristan, which borders Afghanistan.
After years of foot-dragging, Pakistan finally got around to trying to dislodge those militant safe havens, and today, the Pakistani Taliban
spokesman said that the killing of children, particularly army children, the sons of army officers, was revenge for the children and women of PTP
militants, of Pakistani Taliban militants who they claim were killed during the operation in North Waziristan this summer.
QUEST: In Pakistan tonight, a country that is no stranger to terrorist activities of one sort or the other, is -- can you feel a gut
feeling of visceral horror of what's taken place, Jon?
BOONE: I can. I've been here a few years, and I've seen -- I've reported on some very large -- terrible bombings that have killed almost as
many people as have been killed today, but this has really touched a raw nerve, I think.
The politicians are united. They'd been squabbling for months over political issues and Imran Khan, the opposition leader, has been running
street protests all summer. But tonight, there's a real sense of national unity. The media is outraged, the army is absolutely furious.
And I think it's both the scale and this is arguably the largest mass casualty terrorist attack in living memory, and also the fact that it
involved gunmen walking around a school executing children. Who could not be absolutely horrified by that?
QUEST: Jon Boone in Peshawar. Thank you, sir. Well, with that thought ringing in our ears, it's not surprising there's widespread
international condemnation of the attack, and that comes from, amongst others, the United States, perhaps Pakistan's traditional foe, India, and
the UK.
(BEGIN VIDEO CLIP)
JOHN KERRY, US SECRETARY OF STATE: And mothers and fathers send their kids to school to learn and to be safe and to dream and to find
opportunity. And particularly at this military school in Pakistan, they sent their kids there with the hope and dreams of serving their country.
Instead, today they are gone, wiped away by Taliban assassins who serve a dark and almost medieval vision, and the opposite of everything
that those mothers and fathers wanted for their children.
SYED AKBARUDDIN, SPOKESMAN, INDIAN FOREIGN MINISTRY: The government of India strongly condemns this barbaric crime against humanity. Our
prayers are with the families and loved ones of all those who have lost their lives or were injured in this barbaric incident.
DAVID CAMERON, PRIME MINISTER OF BRITAIN: The scale of what has happened in Pakistan I think just simply defies belief. It is a dark, dark
day for humanity when something on this scale happens with no justification. There's not a belief system in the world that can justify
this sort of appalling act. I think what this shows is the worldwide threat that is posed by this poisonous ideology of extremist Islamist
terrorism.
(END VIDEO CLIP)
QUEST: "This poisonous ideology of Islamist extremism." Fawaz Gerges is the professor of international relations at the London School of
Economics and Political Science. Fawaz joins me now. The -- it may be those comments, but the reality is that there are a group of people who
think it's OK to go in and slaughter children en masse. Who are they?
FAWAZ GERGES, PROFESSOR OF INTERNATIONAL RELATIONS, LONDON SCHOOL OF ECONOMICS: Well, the Pakistani Taliban is a loose coalition, chaotic
coalition of about 30 militant or extremist factions. The Pakistani Taliban was established in 2007, is a direct product of the American
invasion of Afghanistan and the migration of the Taliban in Afghanistan to Pakistan.
The Afghan Taliban really radicalized and militarized the Pakistani situation. What you have now is that the Pakistani Taliban -- and Richard,
at the risk of simplification, ISIS and the Pakistani Taliban are two sides of the same coin. The two most extremists Islamist factions that exist --
QUEST: Right.
GERGES: -- in the world today.
QUEST: But here -- I'm going to jump in here because there's lots to cover and time is short. But look, we're not strangers to terrorism, bombs
being put in public places. But ISIS is beheading in cold blood, and the Pakistani Taliban is slaughtering children in their schools. This is
different, Fawaz.
GERGES: Absolutely. It is qualitatively different. It is the celebration of savagery and viciousness. There are no red lines, no
limits. It's all-out war. Look what the spokesperson of the Taliban -- Pakistani Taliban said. It's an attack, as you said, Richard, an attack on
the sons of the military officers who have been waging an offensive in the tribal areas --
QUEST: Right.
GERGES: -- on the Afghan-Pakistani border.
QUEST: Does this attack in all its horror -- I mean, let's face it, who knows? By next week we might have forgotten about it because memories
are short. But does this attack bring together the Pakistani government, which sometimes has seemed to be fence-sitting when it comes to dealing
with terrorists within Pakistan?
GERGES: Well let me go further, Richard, and say that some elements of the Pakistani government flirted with the Pakistani Taliban in 2007, in
2008. Remember, this is a serious question. I hope that this vicious massacre will serve as a catalyst -- as a catalyst for what, Richard?
To mobilize the Pakistani nation. To mobilize the Pakistani nation, because you cannot defeat the Pakistani Taliban militarily. You need a
national unity government in order to deny it its social base in Pakistan or even --
QUEST: Right.
GERGES: -- elsewhere. And here -- and another final question on this particular point. The challenge, as you suggested, insinuated, facing
Pakistan is internal security, broadly defined, development, human security, and extremism, not external security. Its main enemy is not
India. Its main enemy is security broadly defined, including extremism, this type of savagery and viciousness.
QUEST: Fawaz, thank you very much. I can honestly say if 132 children's murdered doesn't galvanize a nation, Lord knows what will.
Thank you, sir, for joining us.
Now, when we return, we'll turn to our business agenda, and it has been an extraordinary day in another part of the world. A vast monster
interest rate hike in Russia, and it's not enough to protect the ruble. Ian Bremmer will be here after the break to tell us that Vladimir Putin
will soon be looking for scapegoats. But what happens, Ian, I want to know, to the ruble?
(COMMERCIAL BREAK)
QUEST: Now, when you and I were talking together last night, well, barely had our nightly conversation finished and late at night in Russia,
in Moscow, the central bank did a dramatic late-night rise in interest rates. And the ruble has spent Tuesday on a wild ride.
Remember, rates went up from 10.5 to 17 percent. And look at what happened. Well, this is the ruble versus the dollar. I mean, it just sort
of went into the most extraordinary -- in actual fact, of course, you'd actually be looking the other way around, US dollars, what they buy against
the ruble. But it's -- the principle still works the same way.
The ruble has devalued very sharply during the course of the session, then it comes back up again, and it tapers off. The ruble was down 19
percent against the dollar and hit a record low. It's a late rebound, currently down around about 11 percent on the day. But for the year so
far, it's still down 50 percent.
Now, if this is what happens when you jack up interest rates by 6 percent overnight, one can only wonder just how deep the crisis really is
in Moscow, which is why we need to turn to Matthew Chance, our senior international correspondent in Moscow, who will make some sense.
It was a surprise, Matthew. It was late at night. It doesn't seem to have done the trick. Is there a sense of crisis there?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think there has to be, doesn't there? A desperate sense of crisis. I mean, it
was 1:00 in the morning local time when this announcement was made. I missed it. I was asleep, along with most other people in Russia.
And to wake up in the morning with 17 percent interest rates must have been astonishingly bad news if you've got a mortgage in this country or if
you've got to make repayments on sort of flexible loan for a car or something like that. And so, this is going to mean an immense plunge in
living standards for many, many Russians who are in hock, in debt, possibly in dollars.
So, it was a desperate move to shore up the Russian currency to prevent panic. But these are desperate times, Richard.
QUEST: When we look at that desperation, Matthew, President Putin is holding to his principles. He's -- there doesn't seem to be a breach in
that.
CHANCE: No. And he's not somebody that appears willing to bend in the face of political pressure or, in this case, in the face of economic
pressure either.
(BEGIN VIDEOTAPE)
CHANCE (voice-over): On the streets of Moscow, there's no real panic, just a sense of impending doom. Particularly at this curbside currency
exchange, where Russians buy dollars despite the skyrocketing rates.
UNIDENTIFIED MALE (through translator): An hour ago, it was 60. Now it's like 85. I'm afraid because we got our wages in rubles and they don't
pay in dollars. It's scary.
CHANCE: It was to halt the ruble's slide that the Russian Central Bank hiked its key interest rates so dramatically, up 6.5 points to 17
percent. But the underline problems, a plunging oil price and international sanctions, weren't tackled, let alone solved.
ELVIRA NABIULLINA, GOVERNOR, RUSSIAN CENTRAL BANK (through translator): We must learn to live in a new zone and to focus more on our
own sources of financing and to give import substitution a chance.
CHANCE: At this supermarket in Moscow, shoppers are stocking up on imported goods, like tea and coffee ahead of expected price rises. It's
here in the country's shopping aisles that Russia's economic pain is starting to be felt.
"I can't afford to travel abroad, nor buy any of the imported products I'm used to," says this man. This woman blames Crimea for the crisis. It
was annexed by Russia earlier this year, "But can our government afford it?" she asks.
That's the criticism we heard at the weekend, too, at this rare social protest, bringing doctors and teachers onto the street.
CHANCE (on camera): You can see that despite the cold weather here, hundreds of people have turned out into the center of Moscow to protest
first and foremost against the health care reforms that are being implemented in this country.
Now, the government says that in order to make the health care services better, it will be closing hospitals. And many people, including
lots of doctors, will be losing their jobs. But in the bleak economic climate in Russia, many of these people believe that it's just about saving
money, and that their futures are being sacrificed.
UNIDENTIFIED FEMALE: All this reform, as they say, it's because of economic crisis because they don't have money for medicine. They have
money for war in Ukraine, but they don't have money for medicine, for education, and people here start to understand.
CHANCE: It may still be a fringe view in a country where President Putin remains hugely popular. But as this economic crisis starts to bite,
discontent could quickly spread.
(END VIDEOTAPE)
CHANCE: Well quickly, a couple more signs of the economic times, Richard: one of Russia's biggest car dealerships has suspended new car
sales until it revises its prices.
The Apple Store as well, the Russian version of it here in Russia, has gone offline, saying it is being upgraded. The last time that happened a
few weeks ago, prices of the iPhone 6, which were really cheap, were increased dramatically. So, more price rises for Russian consumers, I'm
afraid.
QUEST: Matthew, thank you for staying up late tonight. It's after midnight for you in Moscow. We appreciate it. Thank you. Matthew Chance
joining us from the Russian capital.
So, Russia is in trouble, but if you look at the pieces of the jigsaw, you'll see just how serious. Let's put the pieces together. First of all,
there's the price of oil and the fall in the price of oil, down 30 percent since June, a dramatic drop.
That costs roughly $100 billion to the Russian economy, because for every dollar it falls, well, $2 to $3 is lost from export earnings. The
export earnings, which then of course, are used, then, of course, to pay taxes and revenues to the government.
Then you've got sanctions. The sanctions costing roughly $40 billion a year to the economy from the EU and the US. And to make matters worse,
well, of course, today, President Obama has said he will sign the latest increase in sanctions against Russia that have been proposed by the US
Congress. So, sanctions will become an increasingly important part.
Put these together, along with an economy that's suffering stagflation, now in recession, and you start to get capital flight: $130
billion, according to the authorities, likely to leave the country this year. And if this continues, well, capital controls can't be far away.
That's something the central bank is looking at.
It's not surprising in this scenario you end up with this market uncertainty. The RTS is down nearly 54 percent since July.
So, you've got the pieces of the jigsaw, and you start to put them together and you see one word: Russian crisis. Makes for a very nasty
economic picture. Ian Bremmer is with me to talk more about this. Good to see you, sir.
IAN BREMMER, PRESIDENT, EURASIA GROUP: Good to see you, Richard.
QUEST: As always, thank you. Look, this Russian crisis, it's serious. It's deepening. And what's the way out?
BREMMER: Well, the way out economically is completely not in front of them. There's nothing they can do to bring oil prices up. And
politically, their ability to get sanctions off requires a level of capitulation on Ukraine and with the West that Putin would absolutely show
no signs that he wants to do, and he has no reason domestically, politically, to do it.
QUEST: But a 54 percent drop in the currency, or 50 percent drop in the currency can't just be explained simply by the price of oil if the
fundamental economy was being well-run and it had other strands to it. Because they have got those very large reserves.
BREMMER: Look, Putin's popularity before the Ukraine crisis started - - had been dipping. It was going down over the course of the last years because he rose to power with oil prices going up, the economy was doing
better, but at no point was he able to diversify the economy. At no point was he actually bringing in foreign direct investment other sectors. It
was not a well-performing economy.
His popularity started to shoot through the roof on the back of the Ukraine crisis. So you've got two very interesting problems here. Oil
prices at $50 and Russia's in serious trouble, Putin's in trouble. Oil prices at $50 and Western sanctions, Putin now has a political narrative.
That's actually not a problem for him in the near term.
What Putin needs to do right now is scapegoat. He can't scapegoat oil prices, but he can scapegoat everything else, and that's what you're going
to see happen over the next couple of weeks.
QUEST: Meaning?
BREMMER: Well, some of that's to the West.
QUEST: Blame? Blame?
BREMMER: Blame. The United States, speculators, westernizers within Russia, the Ukrainian government that he considers illegal. These are your
challenges.
QUEST: But the history of jacking up interest rates to try and save an economy is poor at best. The UK tried it, Sweden's tried it, it's been
tried in Thailand in the past. There's been many countries -- you'll be more familiar than I will -- it doesn't work.
BREMMER: In the history of revengist nationalism and militarism to otherwise distract a population that is suffering economically, that has a
more mixed bag to it, and that's precisely where Putin is going right now.
The economy is going to continue to go down. They were saying it was going to be flat, then they were saying 1 percent down. Just yesterday
they said 6 percent down. That's clearly already out of date.
But the politics -- my goodness! We're talking 85 percent approval ratings on the basis of this aggressive foreign policy.
QUEST: This is very -- it sounds so simplistic to say this, but you'll know what I mean. This is very dangerous.
BREMMER: It's very dangerous. You can't -- the fact is, if you look at the way Russia has portrayed this, this policy by the West, they're
saying this is an effort at regime change. Putin said it, his foreign minister has said it and his cabinet said it, that American sanctions are
aimed not just to punish the Russians, but to force the Kremlin out, to force Putin out.
If they really believe that, if the people believe that, the response has to be to defend your sovereignty --
QUEST: Right.
BREMMER: -- aggressive response. We're going to see that.
QUEST: And we'll say thank you, sir --
BREMMER: Thank you, Richard.
QUEST: -- for coming and helping us understand what's been happening. We appreciate it.
BREMMER: Sure.
QUEST: An event that hasn't happened since 1975. Now, back then, the US government banned crude oil exports in the face of an oil price shock.
When we come back, my next guest says it's time for Washington to change back to that policy.
(COMMERCIAL BREAK)
QUEST: It was going all right until late afternoon, and then the market turned turtle and the Dow fell more than 111 points, 17,000 is now
starting to look a little bit dicey for the Dow. To think, we were thinking of 18,000 just a week or three ago.
Look at what's happening to oil and the price of oil. Well, down $1.54. For Brent, it's at $60.12 a barrel. That's the current price at
the moment, down more than 1 percent on the day.
Now, despite the falling oil prices, US producers still producing huge amounts of shale oil. Breitling Energy is a Texas-based company that goes
into the fracking business in a big way. We have the man who is called the fracking master because you do so much of it. Sir -- it's Chris Faulkner.
CHRIS FAULKNER, CEO, BREITLING ENERGY: Thank you. How are you? Good to see you.
QUEST: Good to see you, sir. Right. I saw some great numbers that said -- rig count down. People are not drilling as much now in shale oil
in the US. Are we going to see the Saudi plot work?
FAULKNER: You know, I hope not. I think that you would be foolish not to think that capital expenditures next year are going to be down if
the price of oil remains where it's at. Now, if we get to $50 and even continue beyond that, I think the number could be half that of the drilling
rigs either would lay down or re-shift to other more economical ends.
QUEST: Right, but does that mean that production is down, or does production remain at the same level, you're just not increasing it with new
rigs?
FAULKNER: It could be one or the other. If folks have to drill in certain areas to hold production, we'll see production continue to rise.
If drilling was to slow, these wells decline very rapidly, so production would come offline.
QUEST: But I -- look. Why is the US -- why is the shale industry on this suicide march --
(LAUGHTER)
QUEST: -- when prices are falling?
FAULKNER: I think it's because there is no version of an OPEC here. We all can't get together at a table every few months and say, hey,
Richard, do you want to cut production? I'll cut production now around 10 percent. The reality is there are so many small moving players here.
But the markets will drive it. If they can't make money -- OK? -- I don't think anyone's going to go kamikaze on us and just keep drilling and
just go bankrupt.
QUEST: Are you still fracking?
FAULKNER: We are fracking.
QUEST: You are?
FAULKNER: We are in the Permian Basin.
QUEST: But it's at $50, $60 a barrel!
FAULKNER: I think you've got take under perspective to say, look, certain areas can make money at this level. Certain areas can make money
under.
QUEST: Few and far between.
FAULKNER: Fewer. I won't say far between. Fewer.
QUEST: Fewer
FAULKNER: Fewer.
QUEST: All right. How does this play out in the end? Where is oil? Does it continue to drop for the next month or three?
FAULKNER: I think we've got a couple things happening here. Number one, I think we can -- we've seen less supply, slowing down, because some
of these wells are declining and a lot of operators can't continue to drill at the pace they've done in the past that moves the needle down.
I think the money may get near $50. I think second quarter, though, we're going to see some rebound as the internal decline begins to take
place.
Who's really hurting here is your opening package. It's Russia, right? But the United States is definitely a target of OPEC, and I think
Vladimir Putin might be the bigger target.
QUEST: All right sir. Forgive me keeping it brief. It's been a very busy day --
FAULKNER: No worries, thank you, Richard.
QUEST: -- as I'm sure you know. Thank you.
FAULKNER: Always great to see you.
QUEST: Now, as we continue, we will have to return. So many innocent young lives have been lost, and it was all in one horrific attack, that
sort that absolutely defies any form of description. The Nobel Peace Prize winner Malala speaks out about what happened in Pakistan today, and you'll
hear it in a moment.
(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 will always
come first. There's outrage around the world after the Taliban militants attacked a military-run school in Pakistan. Officials now tell us the
death number has risen to 145. If that wasn't bad enough, the vast majority of the victims were children, many between the ages of 12 and 16.
An Australian official says the authorities are investigating why a known criminal was out on bail considering his background. The gunman, Man
Haron Monis, was killed in the siege of a Sydney cafe after holding 17 people hostage for many hours. Two of the hostages lost their lives during
the attack.
The Russian ruble has stabilized adjust. It started a dramatic late- night rate hike from Russia's Central Bank. But the currency spent Tuesday on a wild ride. At one point it was down 19 percent against the U.S.
dollar.
Bill Cosby's family is rallying to the defense of the comedian against allegations of sexual assault. Cosby's daughter Evin released a brief
statement claiming he is the father you thought you knew. She echoed the sentiments of Cosby's wife Camille who's also rejected the accusations.
The former Florida governor Jeb Bush said he is in his words "going to actively explore a presidential bid." Mr. Bush made the announcement in a
post on Facebook. There's been a lot of speculation about a potential run by the Republican. He is of course the brother of George W. Bush and the
son of the father who was of course also the president. Today's announcement was unexpected.
The Nobel Peace Prize winner Malala Yousafzai has called the attack in Pakistan a senseless and cold-blooded act of terror. The Pakistani
teenager who herself was shot by the Taliban two years ago for speaking up for the right of girls to be educated.
(BEGIN VIDEOCLIP)
MALALA YOUSAFZAI, NOBEL PRIZE WINNER: We stand with all those families and all those children who are injured right now and who are
suffering through this big trauma. And now it is time that we unite, and I call upon the international community, leaders in Pakistan, all political
parties and everyone that we should stand up together and fight against terrorism and we should make sure that every child gets safe and quality
education.
(END VIDEOCLIP)
QUEST: The Pakistan Taliban are against Western-style education for children and the employment of women. My next guest has done a lot of work
on education reform in Pakistan. He's Sir Michael Barber, the U.K. special representative on education on Pakistan. He joins me now from London. Sir
Michael, the atrocity speaks for itself in its heinous nature. But the fact that this can't take place in that country tells us what in your
opinion?
MICHAEL BARBER, U.K. SPECIAL REPRESENTATIVE ON EDUCATION PAKISTAN: Well let me start first of all by my expressing my deepest sympathy to the
families, to the communities that is affected by this absolutely terrible atrocity. And as Malala said, it is senseless and coldblooded and needs to
be condemned by everybody. But it tells us that there are - the Pakistan is a troubled country. And what I want to put on the record though is that
right across that country, there are parents - wonderful parents - who want their children - girls and boys - to be educated. There are teachers doing
a great job in many cases trying to educate those children. There are officials and there are political leaders really trying to work hard on
education. I've been 41 times in the last four years - five years - to Pakistan and I've met many of these people. They are a fantastic people in
that country. So why it's a very troubled country which has more than its share of crises and more than its share of atrocities, I want to put on the
record how many hard-working people there are trying to improve education. And the best thing we can do for - to recognize the families affected by
this is to work hard on the ground day-after-day to improve education because that's the opposite of terror.
QUEST: Well, you say that but of course - bearing in mind Malala herself was the victim of a terrorist attack because she and her friend
went to school. If you then have this sort of attack, do you not fear it drives people - maybe not the educated, maybe not in some parts of the
country - the metropolitan areas - but in the rural areas - we better not go to school?
BARBER: Well, Pakistan is a very big country. Most of my work has been in Peshawar, not the province affected by this. And in that country
over the last three years, an extra 1.5 million children have been enrolled in school. The teachers are now attending school and working in more than
90 percent of cases, that was a much lower figure. The schools all -- nearly all - have running water. The place has been improved. So,
including the rural areas of Peshawar, we've seen big improvements in enrollment, attendance, the quality of the schooling and now we're focusing
on improving what those children actually learn all day in school. So thanks to the Chief Minister in Peshawar and his officials, there's been
really good progress there.
But there are areas of the country where this threat is existential and is a problem, and that's why the international community needs to get
behind those people in Pakistan that are working to get children day-to-day educated in the school and learning the things we want them to learn so
they can be successful in the 21st century.
QUEST: Sir Michael, thank you, and when you please have been on one of your future trips - your 42snd or 43rd trip - please come back and tell
us more about it.
BARBER: I will. I'll be there in January and I'd be happy to do that.
QUEST: We're looking forward to it already. Thank you, sir. Now the school attack in Peshawar was carried out but the Pakistani Taliban, and
it's a terrorist organization that's responsible for a series of attacks over the last few years, and worse, is vowing to continue its mission of
implementing strict Islamic law. CNN's chief U.S. security correspondent is Jim Scuitto and he's been taking a look at the group for us.
(BEGIN VIDEOCLIP)
JIM SCIUTTO, CHIEF NATIONAL SECURITY CORRESPONDENT: They were killed in their school uniforms taking exams in classrooms. A first-aid course in
the school auditorium. Half a dozen terrorists carrying out systematic massacre of children. Brutal even by the standards of the Pakistani
Taliban.
Boy, VIA INTERPRETER: We were doing our schoolwork. Suddenly we heard firing.
SCIUTTO: The Taliban called revenge for Pakistani military operations against them. "We want them to feel our pain," said a Taliban spokesman.
The attackers who had ammunition and supplies, says the Pakistani military, to last for days. A U.S. counterterrorism official called the assault
unprecedented, saying it may signal an escalation in an already-bloody war with the Pakistani government.
JOHN KERRY, U.S. SECRETARY OF STATE: Mothers and fathers sent their kids to school to learn and to be safe. Well this morning wherever you
live, wherever you are, those are our children.
SCIUTTO: The Pakistani Taliban's chief aim is bringing down the Pakistani government and establishing Sharia law, but it has an alarming
history of targeting the U.S. as well. In 2009 a Taliban suicide bomber killed seven CIA officers in Eastern Afghanistan. In 2010 the group
claimed responsibility for the attempted car bombing of Times Square in New York City. And following the killing of Osama bin Laden, the group vowed
more attacks on American soil.
DANIEL MARKEY, COUNCIL ON FOREIGN RELATIONS: There have been instances where they've supported international terrorists. They've been
aligned with groups like al Qaeda. That makes them a concern to us but indirectly.
SCIUTTO: Washington had pressed Pakistan to take on the group more aggressively on the ground and Pakistani has followed through with an
ongoing military offensive against the Pakistani Taliban in its northeastern stronghold as well as some 3,000 counterterror operations.
(END VIDEOCLIP)
QUEST: Jim Sciutto reporting there from Washington. "Quest Means Business" in a moment.
(COMMERCIAL BREAK)
QUEST: Now the routing (ph) of the ruble has sent aftershocks to global markets, especially in the more sensitive emerging economies. These
are the currencies we are keeping an eye on for obvious reason. The Hungarian forint has fallen by about half of one percent. Hungary has
considerable exposure to Russia and of course the government of Viktor Orban has tied itself in many ways playing a double-edged sword between the
E.U. and Russia. So that's going to be feeling the effect.
The India rupee is - has - as well as has indeed the Brazilian real. Now, you'll be well aware course - we've discussed it many times - the
issue is in the Brazilian economy. The weakness the new government that Dilma Rousseff is putting together. So that's it. The Indian desian (ph)
rupee, having struggled very badly, did manage to bounce back to - dance back to -- by 1 percent. But it did still fall to its lowest level since
1997. So it really is a case of one day does not make a recovery.
Robert Shiller is the Nobel Prize-winning economist and the sterling professor of economics at Yale University. Sir, we need your help to
understand just how grim this oil, ruble, emerging market economy situation is.
ROBERT SHILLER, ECONOMICS PROFESSOR, YALE UNIVERSITY: Well it's grim for some and not so for others, right? I mean, it affects - it's really bad
for Russia. I don't know what - and there's two things going on. The oil price and Vladimir Putin.
QUEST: Right.
SHILLER: The Russians are bringing the second thing onto themselves. They seem to want this. They seem to want the turmoil and sanctions. But
--
QUEST: But let me jump in here. Let me jump in here. When we look at the spillover effect of this falling oil price, what we see of course is
a rise in the value of the dollar, and emerging markets - whether it's Brazil, whether it's India, whether it's Indonesia - everybody else is now
being clobbered.
SHILLER: Yes, it seems to - it has kind of a funny effect this time because normally lower oil prices should be good. It's like a gift, right
- we have more of something over the world. In, you know, last time, major trend, after the 1980 oil crisis, oil prices just fell for 20 years. And
you know what? That was the biggest bull market we've ever had. A 20-year bull market from 1982 to 2000. We went kind of crazy over low oil prices.
They got really low.
QUEST: Right.
SHILLER: Much lower than they are now, and the stock market was at an all-time high.
QUEST: So do you think it's somewhat unusual that we have got this oil price falling which should be good for the U.S. consumer with prices,
you've got a strong dollar which, again, is good for keeping inflation down, and the market is having such volatility?
SHILLER: Yes. Well, I've never said that the market makes sense. It has - people are thinking something, and maybe they're thinking that it's
disrupt - you know, hey, this country has this beautiful fracking industry. You know, we're proud of it actually. Those Russians, they don't have
that. They don't come up with things like this. So we're very happy to see that. I'm just guessing what's on people's mind. It seems to be a little
bit deflating to see that the prices are getting too low to support this new industry.
QUEST: Sir, thank you for joining us, putting it into perspective - the very topsy-turvy world that is existing and that is exactly the issue
at hand that quite often not a lot of it does make sense at the moment. A very serious development in a story you and I have talked about
frequently. The Sony hacking scandal - well never mind just a bit of tittle-tattle over which star is being put out by which member of
management. When we come back, we'll show you a much more serious aspect of this.
(COMMERCIAL BREAK)
QUEST: A fuel in threats today from the group claiming responsibility for the Sony hack attack. They're calling themselves the Guardians of
Peace, and they said people who see the movie "The Interview" in theaters - in movie theaters - will face terrorist attacks. Samuel Burke joins me
with the details. There's been a lot of hoo-hoo-ha-ha deet-deet you know about the e-mails and the tittle-tattle and the gossip - Angelina Jolie and
Amy Pascal. But this is different. Tell me -
SAMUEL BURKE, BUSINESS CORRESPONDENT: This story has now turned the corner and they're saying that people who go to see this movie - a comedy,
"The Interview" - will have a bitter fate. I want to show you the message that these hackers posted on a file-sharing website earlier today, Richard.
In this message, they say, quote, "We will clearly show it to you at the very time and places "The Interview" be shown, including the premier. How
bitter fate those who seek fun in terror should be doomed to. Soon all the world will see what an awful movie Sony Pictures Entertainment has made.
The world will be full of fear," they say. "Remember the 11th of September 2001." Of course CNN has been in touch with Sony who say they're not
commenting because the FBI is looking into this. Law enforcement tell us they're looking into it. But they say it's unlikely, Richard, that these
hackers are inside the United States.
QUEST: OK, so the core - I mean the threat is real?
BURKE: The threat is real though it looks like this hacking from outside the United States so likely the hackers are outside the United
States. The film has its premier in just a couple of days - its New York City premier - not too far from where we are right now, Richard.
QUEST: Right. A lot of developments in this extraordinary story which just seems to have - it's like an octopus with tentacles.
BURKE: It moves every which way. In my hand right now is the actual complaint from two formers employees.
QUEST: Right.
BURKE: Of Sony who are suing Sony. And basically what they say in this complaint is that Sony knew about the weaknesses in their system, that
they didn't protect their information. I spoke to a couple of lawyers who said it all comes down to really one line. They say that Sony needed to
maintain reasonable and adequate security measures and that they did not.
QUEST: Right, so this is basically claiming - they're suing because they say Sony left the door open. And they knew the door was open.
BURKE: And that they knew the door was open. And even it says in one point in this complaint that Sony chose to do things on the cheap more or
less and they chose what was more expedient for their wallet rather than taking - rather than keeping their employees safe. Of course, many of
these lawsuits are settled out of court. Sony PlayStation - different from Pictures - settled something similar data breach before as well.
QUEST: Right. Tell me briefly be - as we - finish, Amy Pascal, the head of Sony Pictures Entertainment, is she safe? I mean in her job - you
know, please God she's safe otherwise.
BURKE: One of the most important media analysts, Laura Martin, who's a financial analyst who covers the medias says typically in these type of
situations heads roll, and these e-mails point to whose heads might roll. Now on the other hand, she's now one of these employees - not filing the
lawsuit of course - but she's an employee who's had her information breached.
QUEST: And now Sony reminded us in their e-mail that it's stolen material . Thank you, Samuel.
BURKE: Thank you, Richard.
QUEST: Good to see you tonight. North Korea has branded this movie, "The Interview", that we're talking about and calling it an act of war.
It's put the company squarely in the middle of an already tense relationship between Japan and North Korea. CNN's Will Ripley is in
Tokyo.
(BEGIN VIDEOCLIP)
WILL RIPLEY, TOKYO-BASED CNN CORRESPONDENT: Right now we're driving up to Sony headquarters here in Tokyo. This is where the company's top
executives work. And inside that building right now they're dealing with a major crisis - a humiliating cyberattack on their American subsidiary,
Sony Pictures Entertainment. Hackers calling themselves 'Guardians of Peace' leaked embarrassing, sensitive insider information. They're
promising more punishment on Christmas Day when Sony is set to release "The Interview."
(BEGIN CLIP)
Male Actor: You want us to kill the leader of North Korea?
(END VIDEOCLIP)
RIPLEY: The comedy is about two journalists killing Kim Jung-Un, North Korea's supreme leader, reportedly infuriated. His top officials
call the movie "An act of war."
PROFESSOR JEFF KINGSTON, TEMPLE UNIVERSITY: Obviously Pyongyang is very upset with this movie depicting the assassination of their leader and
the fact that the CEO of Sony was directly involved with it.
RIPLEY: Temple University Asian studies professor Jeff Kingston says what may be a joke to some is deadly serious to North Korea. I was in
their capital Pyongyang a few months ago. Pictures of their leaders are everywhere, almost like Gods, they're worshipped and honored. And here in
Asia, defending honor is everything. So there's rampant speculation that North Korea orchestrated the cyberattack on Sony to take revenge.
KINGSTON: They're denying that they were directly involved. We all suspect they were.
RIPLEY: If Sony suspects anything, they're not saying it publicly. A spokesman acknowledged growing speculation but would only say the
investigation is ongoing.
PROFESSOR TOSHIMITSU SHIGEMURA, WASEDA UNIVERSITY: (Inaudible) of pressure.
RIPLEY: Waseda University professor Toshimitsu Shigemura says to understand why Sony may be hesitant to point the finger at North Korea, you
need to know the geopolitics at play. Do you think any Japanese lawmakers would ask Sony not to criticize North Korea?
SHIGEMURA: Maybe.
RIPLEY: North Korea still maintains this unofficial embassy in Tokyo. While the nations have no formal diplomatic ties, Pyongyang does have some
influence through political and business back channels.
SHIGEMURA: They want to stop the movie.
RIPLEY: And while North Korea may seem distant to most of the world, its military routinely launches projectiles into the Sea of Japan.
Pyongyang also admitted to kidnapping Japanese citizens in the '70s and '80s, forcing the abductees to train North Korean spies.
KINGSTON: The abductee issue is extremely politically sensitive in Japan.
RIPLEY: Tokyo and Pyongyang are in the middle of sensitive talks that Japan hopes will lead to more reunions like these from 2002 when North
Korea let five Japanese abductees come home. Some fear it could all fall apart if the Sony hacking controversy escalates. You won't find posters
for "The Interview" at movie theaters like this one here in Tokyo because the film is not being released in Japan. But the hackers warn if Sony
doesn't stop the release all together, the worst may be yet to come. Will Ripley, CNN Tokyo.
(END VIDEOCLIP)
QUEST: We'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment," - well profitable in a manner of speaking. The Russian ruble versus the dollar - it's telling a very
sorry tale at the moment. When the Russian Central Bank hiked interest rates by 6 percent, well maybe they'd forgotten history. Such a move
didn't work for the U.K. in times of the Eurozone crisis, it didn't work for Sweden, it hasn't worked in the Asian financial crisis, and frankly,
it's unlikely to work for the Russians either. No, Russia needs to do something different. It needs to accept that the long, slow decline of the
ruble will only be arrested and reversed when economic policies change or indeed the market starts believing that the Russian economy is profitable
in the future. That is a long time away. And so for the time being, expect more volatility. And for those involved in investments in Russia,
good luck, you'll need it.
And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope
it's profitable. I'll see you tomorrow.
END
