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Quest Means Business
AirAsia CEO's "Single Worst Feeling"; Poroshenko May Seek More Sanctions; Russia Vows Not to be Isolated; Europe on High Alert
Aired January 21, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: It's a day when the Dow Jones didn't move much in any direction. Steady as she goes as trading proceeded. With the
closing bell ringing, trading has come to an end on Wednesday the 21st of January.
Tonight, AirAsia's chief executive speaks for the first time about the moment he heard his plane was missing.
President Poroshenko of Ukraine on this program. He tells us there were 9,000 Russian troops in his country.
Matteo Renzi, the prime minister of Italy, he wants a different economic direction for Europe.
And we go in a different direction with an economic cycle of a very Davosian kind.
I'm Richard Quest, live in Davos, where I'm peddling business.
Good evening from Davos. By jingo, this is one of those evenings when you are glad to be here at the World Economic Forum just for the potpourri
and the grandeur of the guests that you're going to be hearing over the course of the next hour.
You're going to meet the biggest names participating. We have three major world leaders -- the president of Ukraine, the prime minister of
Italy, and the prime minister of the Netherlands.
Executives, too, by the bundle. The chairman of UBS and VTB of Russia banks. We have the chief executives of BP and Marriott. And keeping
order, making sure they don't get unruly and out of hand, Interpol's new secretary general, he'll also be with us.
We start, though, tonight. The chief executive of AirAsia has given his first interview since the loss of Flight 8501 between Indonesia and
Singapore. Tony Fernandes describes the moment he heard what happened as the single worst feeling he's ever had.
Investigators are examining the plane's flight data and voice recorders. They believe the plane climbed very steeply, then went into an
aerodynamic stall, according to the radar data. There were 162 souls onboard, and bodies are still being recovered.
Tony Fernandes has been at the front and center of the airline's response from the very beginning. He was tweeting constantly to keep
everyone informed. He tweeted on one occasion, "I'm the leader. I have the responsibility. It was my plane." I sat down with Tony Fernandes, and
I asked him, now, what's his understanding of what happened?
(BEGIN VIDEOTAPE)
TONY FERNANDES, CEO, AIRASIA: I think the NTSB is doing a very good job. They've got all the data there. It's now -- they're now going
through the process. AirAsia has been invited for the first time to look at that data on Friday. I think from there, we'll begin to ascertain what
happened.
But I think anything I'd say now is speculative and there are too many unknowns to really make a proper evaluation. I wouldn't be fair to anyone
by making any statements on it.
QUEST: But to be clear, do you know what's on the cockpit voice recorder --
FERNANDES: No, I don't.
QUEST: -- cockpit voice data -- the data recorder?
FERNANDES: No, I don't. We haven't had the -- we haven't been given the opportunity to listen to it yet.
QUEST: In terms of the moment when you learned about it, now I know that chief exec of airlines practice for this moment.
FERNANDES: There is no amount of rehearsal or practice or reading that can actually prep you for this moment. It is the single worst feeling
I think I've ever had in my life. And it continues to be that. That moment of that phone call will haunt me forever.
We've carried 250 million people, 13 years, very safely. And it is not something that you can really put into words when that call comes
through. But somehow, you have to find the resolve to be strong and get in there and focus on the families and our crew.
QUEST: How do you look at a member of the family? How do you go up to a member of the family in that situation?
FERNANDES: It is the hardest thing. There are no words. I mean, what can you say, apart from comfort, and say that we're doing our best and
we're there. And in some ways, we help each other.
I can't -- don't really want to repeat it on TV, but some of the messages I've got from the families are remarkable where they've given me
support and strength. They have said they're amazed at what we're doing, and they said AirAsia made dreams come true, you mustn't stop your resolve
and you must carry on.
They saw countries they never saw before, they flew when they never had a chance to fly. So, it's been an -- very emotional, both up and down.
QUEST: Tony, how does AirAsia move forward from this?
FERNANDES: Straightaway, I asked Airbus to come down to review all our procedures. Our pilots are trained according to Airbus. We have a
fantastic joint venture partner in CAE, the biggest training school in the world.
We have great aircraft. I asked to see whether our aircraft were equipped with everything, and Airbus confirmed it was. We've gone through
our training procedures over and over again. But safety is a marathon. It's never something that -- you have to keep evolving, keep learning.
QUEST: Except for this anomaly that the plane was flying on a day when it wasn't authorized to fly. Now, how does an airline put a plane in
the air on a day when it's not authorized to do so.
FERNANDES: Well, I think there was -- this was a purely administrative error between Indonesia, AirAsia, and the DGCA, which has
been accepted. I think they found 80 other flights from different airlines in that same procedure. Because there wasn't a link between the paperwork,
which is purely in some DGCAs, they don't even have that. They just authorize to fly.
But obviously, the airport authority, air traffic control, and Singapore, where it was all linked, was all approved. So, it's one of
those things which I think have been corrected now by having a linked system.
QUEST: More than one critic has said three major incidents -- albeit in different parts of the world, but with airlines from the same part of
the world -- 370, 17, and 8501. Do you see -- and the critics say there's a systemic link in that the organization of the companies, the running of
the airlines, the professionalism of the ability.
FERNANDES: No --
QUEST: Do you accept it?
FERNANDES: No, I don't. Quite strongly I don't. Because if you look at it, MH370, we don't know. Malaysia Airlines up to this point -- and
I've heard some of your reports -- has been a fantastically safe airline.
MH17 could have happened to any airline. There's nothing wrong systemically with the airline, I think. Malaysian Airlines was just
unlucky. And in our incident, we don't know the whole facts.
QUEST: How's the business doing? Have people said, I don't think I'm going to fly AirAsia? Is there any evidence yet, or are you -- is it the
opposite? Are people saying I am going to fly them?
FERNANDES: People have said -- and I have said I've been overwhelmed by the support -- but I think the biggest form of support is actually
putting your money where your mouth is.
And our bookings have been, actually, ahead of where we were this time last year. Except for Indonesia, for obvious reasons. And that is
something, I have to say, I'm very proud of my staff and the resilience of the brand.
(END VIDEOTAPE)
QUEST: Tony Fernandes talking to me earlier, the chief exec of AirAsia in his first interview.
Petro Poroshenko has called on Davos to show solidarity with Ukraine. The Ukrainian president says the country will stay strong. And next, he
tells me there's only one man responsible.
(BEGIN VIDEO CLIP)
PETRO POROSHENKO, PRESIDENT OF UKRAINE: This is because of Putin we are so strong. This is because of Putin we are so united. It is because
of Putin we have built up our army. And this is because of Putin we move to European Union, and nobody can stop us.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
QUEST: No snow fell during the day, but it's a crisp and beautiful evening here in Davos, where Ukraine's president has stated in no uncertain
terms he'll call for more sanctions if violence continues and Russia does not abide by the terms of the Minsk Cease-Fire.
During a keynote address in Davos, Petro Poroshenko said there were 9,000 Russian troops in his country. Peace talks are getting underway
tonight in Berlin. Residents near Donetsk say the shelling continues and many homes -- well, those that haven't already been damaged, those that are
left, are being damaged further.
Here in Davos, President Poroshenko has asked the IMF for a larger and longer-lasting bailout agreement. I asked Mr. Poroshenko about Russia's
claims that none of its soldiers are in Ukraine.
(BEGIN VIDEOTAPE)
POROSHENKO: Today, we have more than 9,000 Russian troops who so- called "lost their way" crossing our Russian-Ukrainian border bring with them hundreds and hundreds of tanks and armed personnel carriers and
killing Ukrainian civilians and attacking Ukrainian troops.
QUEST: But Mr. Lavrov says he believes you're ready to talk, you're ready to negotiate.
POROSHENKO: We are --
QUEST: Are you? Are you ready to talk?
POROSHENKO: We are ready 24 hours a day, 7 days a week, to have a discussion about how to implement the Minsk Agreement.
Because we already have a final document, which is based on my peace plan, which is very simple: stop fire, withdraw artillery, withdraw
troops, close the border, and have a political election on the Ukrainian legislation when we elect the person with whom we will speak about the
future of the region.
QUEST: What do you think President Putin wants out of this? Because you've talked to him. You spoke to him on the phone not too long ago. If
you're right, what's his game?
POROSHENKO: I think nobody in the world knows what Mr. Putin wants. We have a version that he wants a weaker Ukraine, and weaker Ukraine would
be more controlled by him. I am absolutely sure we don't allow anybody to control Ukraine.
Ukraine would be taking the governmental position on their people, and the Ukrainian people make the position, we have our movement to the
European Union.
QUEST: You're going towards the European Union, and if you have your way, it'll be sooner rather than later, which is exactly what he wants to
prevent.
POROSHENKO: Do you know, now we have completely different Ukraine. Ukraine is now never as -- now united as before. Ukraine is never so
strong as before. Ukraine never so pro-European as before. And do you know who is -- who make this possible? Putin.
This is because of Putin we are so strong. This is because of Putin we are so united. It is because of Putin we have built up our army. And
this is because of Putin we move to European Union, and nobody can stop us.
QUEST: What more would you now -- practical would you now like to see from the EU and the US. Do you say -- do you call now for more sanctions?
POROSHENKO: Point number one: the purpose of sanctions is not to hurt Russia. The purpose of sanctions is just keep Russia to be
responsible, to keep Russia at the negotiation table and to implement what we agreed.
If Russia, starting -- for four months after the Minsk Agreement don't undertake every single step, we should understand that we should make
additional steps.
QUEST: So, let's be clear: there's a meeting this afternoon, or there's a meeting in the next few hours that you hope will ratify Minsk or
reaffirm Minsk with a --
(CROSSTALK)
POROSHENKO: This should be a road map for the implementation of all the points we have in the Minsk memorandum. Withdraw all troops. Close
the border. Withdraw the artillery. Cease fire. And time for the election.
QUEST: And if that doesn't happen?
POROSHENKO: And if it doesn't happen, and if the escalation on the Ukrainian cities of the battle for the airport, Marinka, and others will
escalate, if they continue to kill my civilians, including the tragedy which we have in Volnovakha.
And I want to give you the symbol, this is the "Je suis Volnovakha," this is the symbol of the bus where killed 13 innocent people, including
one 14-year-old girl. This is absolutely not accepted. The same not accepted as Charlie Hebdo or the same not accepted like the MH17 terror
attack on Ukrainian sky.
QUEST: We must talk about the economy now, sir. You need more money, don't you? Or you need more support from the IMF.
POROSHENKO: We need solidarity with Ukraine. We need unity of our supporters, unity of the whole world. And we need that you believe in
Ukraine.
We need not the money just to spend it, because last year, year 2014, we paid our sovereign debt more than we attract from the global market.
And in that particular case, we need to have a financial pillow of reform to stimulate and to --
QUEST: How --
POROSHENKO: -- to promote the growth.
QUEST: How much? How much would you like that -- how cushioned would you like that pillow?
POROSHENKO: As far as I understand, CNN is the TV channel who knows news first, so I promise you that mission of IMF together with our
financial minister and governor of central bank will publish the new figures, and you will be among the first who knows that.
(END VIDEOTAPE)
QUEST: And I shall be holding the president accountable to tell me and make sure we are the first.
Russia's foreign minister says Moscow is pushing for a cease-fire with Ukraine. Speaking before the peace talks in Berlin, he said Russia would
not be isolated.
(BEGIN VIDEO CLIP)
SERGEI LAVROV, RUSSIAN FOREIGN MINISTER (through translator): All these attempts will not get any result. And despite this line by our
Western partners in his address to the Federal Council, President Putin underlined and made it quite clear that Russia will never follow a path of
self-isolation, suspiciousness (sic), and search for enemies.
(END VIDEO CLIP)
QUEST: Andrey Kostin is the chief exec of VTB Group, Russia's second- largest bank. Now, back in November, he told this program that the bank and himself in some instances politically was the hostage of a political
situation. He joins me now, sir.
ANDREY KOSTIN, CEO, VTB GROUP: Hi, Richard.
QUEST: You're still that hostage, aren't you?
(LAUGHTER)
QUEST: The situation continues. And it doesn't seem to be getting better for you.
KOSTIN: No. No. The situation is getting worse to some extent, because the economic situation in Russia is worsening. And this year, we
expect, actually, a difficult year in 2015 with the oil price fell down and inflation growing in Russia and economic growth is slowing down. But we
continue to work, and the Russian government is taking certain decisions, and --
QUEST: Do you think the Russian government -- I listened to what the president said in his State of the Union, and I've heard others -- is the
government moving fast enough to secure what is a deteriorating situation?
KOSTIN: Well, of course, the government is using a number of measures we should have used in 2008, 2009. But of course, the situation is quite
different. And we didn't have sanctions at the time, we probably need some other instruments that we use in 2009.
But the situation is quite different. We're cut off from the international markets for political reasons, not for economic reasons, for
example. But I think the situation is manageable. Russia's still --
QUEST: Manageable?
KOSTIN: Manageable. Russia still has a large reserves, currency reserves. The federal bank has substantial reserves. So, Russia has low
external debt. So, there's no problem for us repaying both sovereign and corporate debts. And so foreign investors can be quite safe from this
point of view.
QUEST: We can put the oil price to one side just for the second. If we just look at the other difficulties, the deficits, the sanctions, this
isn't an economic issue, is it? This is a political issue.
KOSTIN: Both, I would say. Both. We have political issues, we have economic issues as well.
QUEST: Right. But the -- but you're not going to solve most of the problems just on economics alone --
KOSTIN: No.
QUEST: -- until the president --
KOSTIN: No.
QUEST: -- or until the Kremlin decides either to shift policy or agreement is reached with Europe.
KOSTIN: That's been -- both sides should decide. The Kremlin itself can't resolve the issue. No, it's --
QUEST: Right. So, what do you want from both sides? Let's talk business here.
KOSTIN: I think here in Davos, where all businessmen talk, and we continue business. We conduct business with American banks, we conduct
business with European banks. We discuss many things with our clients, with our investors, actually.
But unfortunately, politicians, they can't agree, and they can't find solutions for the most urgent issues. Nobody's interested in having the
conflict in Europe. I think the positions should meet more often. They should find solution for the problem.
QUEST: Which always brings me -- whenever I hear people like yourself talking about this. Because does the president listen to business people
like yourself? You're a powerful man in Russia. You're head of VTB Bank.
KOSTIN: I think the Russian president realizes very well the necessity to find a solution in Ukraine, that's for sure.
QUEST: Right.
KOSTIN: Absolutely.
QUEST: Here we go. There for you, sir -- here's the pen.
KOSTIN: Yes?
QUEST: Mark on our Risk Map the biggest risk to growth, economies in 2015. Where would you put it, sir?
KOSTIN: I think Europe.
QUEST: Go on, then.
KOSTIN: Europe. Where is Europe, here?
QUEST: Europe's over here.
(LAUGHTER)
KOSTIN: Europe is a big risk, big risk. Geopolitical.
QUEST: Right.
KOSTIN: And economic as well.
QUEST: Europe is a big risk, so we'll note you on that particular, there. Thank you very much, sir, for joining us.
KOSTIN: Thank you. Thanks, Richard. Thanks.
QUEST: Good to see you, Andrey. Always --
KOSTIN: Bye-bye.
QUEST: -- glad to have you on the program.
Now, as we continue with QUEST MEANS BUSINESS tonight, it's a case of plots foiled, soldiers deployed. European countries are on high alert as
authorities try to prevent another attack. The head of Interpol, Jurgen Stock, joins us after the break. He has an insight on cross-border
cooperation.
(COMMERCIAL BREAK)
QUEST: Welcome back to Davos. France is stepping up its anti-terror response in the wake of the Paris attacks. It's hiring more than 2,500
people, mostly in intelligence gathering. The bill will be well over $500 million for more resources and equipment. According to the prime minister,
3,000 people with jihadist ties need to be under surveillance. Yes, 3,000.
Police operations are continuing in several countries as investigators examine the links between radical Islamists in Europe and terror networks
elsewhere. Italy's prime minister Matteo Renzi told me Europe needs to work together on this.
(BEGIN VIDEO CLIP)
MATTEO RENZI, PRIME MINISTER OF ITALY: Now is the time to create a unity in intelligence, in the police reaction, in the sharing of
information. And so, I believe terrorism is a new global -- the new global attack of terrorism is a problem for Europe.
But I believe if finally Europe is not only economic union, but an ideal union, I believe with the sharing of information and reaction, we can
fight against them.
(END VIDEO CLIP)
QUEST: That's the Italian view. Well, the Dutch prime minister, Mark Rutte, says he's doing everything in his power to prevent another terrorist
attack in Europe, and I asked the prime minister where the Paris attacks -- whether it was a wake-up call to Europe's leaders enough hadn't been done.
(BEGIN VIDEOTAPE)
MARK RUTTE, PRIME MINISTER OF THE NETHERLANDS: Unfortunately not, because we know since March 2013 that we are at this high threat level.
And it means that our services, our army, our police, everybody is at the highest alert level.
QUEST: But what more, then, can Europe do to integrate cooperation to prevent these sort of attacks?
RUTTE: A lot has been done over the last six months.
QUEST: But not enough.
RUTTE: Well, an attack can happen. Even I cannot tell you that an attack will never happen in the Netherlands. What I can tell you is that
we will do everything to prevent it.
QUEST: If we look at the growth of extremism, it's now on both sides, isn't it? It's on the Islamic extremism side with the attacks, and the
right-wing side, the Islamophobia and the anti-immigration lobby.
RUTTE: Well, let's be very clear: what happened in Paris, what happened near Liege in Belgium, in Verviers, brought an attack not by Islam
people. This was an attack by terrorists who used Islam as an excuse for their attacks.
QUEST: How concerned are you at the right-wing -- the rise of the right-wing in countries like your own right now?
RUTTE: In my own country, I am not concerned about it. Because I do sense that a large majority of the Dutch population understands that we
have people in the Netherlands with the Muslim background, an Islamic background, who are trying to raise their families, be an integral part of
society. They have nothing to do with these terrorist attacks.
What we need to do in the Netherlands is both fight these attacks, at the same time, prevent them. So it is repression and prevention.
QUEST: And when Viktor Orban in Hungary says he wants to stop immigration -- that's the answer, stop immigration -- what do you say to
him?
RUTTE: I disagree with him. I believe on the issue of immigration, you have to deal with it sensibly. So, you have to question yourself, what
is the amount of absorption level of society in terms of immigration? These are the type of issues you have to look at. So, I disagree with
Viktor on this.
QUEST: Have go. Over here.
RUTTE: Oh, yes, you want me to --
QUEST: Now, where would you like to -- what for you is the biggest risk in -- as you would wish to define it?
RUTTE: I do believe that ISIL and the fight against ISIL in the Middle East, in Iraq and Syria, is the biggest risk at the moment. So, I
would, like others, mark that part of the world.
(END VIDEOTAPE)
QUEST: That's the prime minister of the Netherlands joining me. Now, Interpol is the largest police force in the world, mainly because it's
everybody else's police force as well. Its secretary general, Jurgen Stock, is with me. Sir, good to see you. Thank you for joining us.
Let's talk on this issue, this knotty issue of cross-border terrorist activity. You're right up to date with this. So, how bad is it?
JURGEN STOCK, SECRETARY-GENERAL, INTERPOL: I think Paris -- the Paris attacks, again, show two things. One, the threat is real. And number two,
the threat is complex. See, we have a growing number of conflict zones around the globe interwoven with each other.
We have al Qaeda, we have the Islamic State terrorist groups. We have independent cells within our countries, maybe not in any command and
control structure. And of course, we have the lone wolves. And we have those returning from the conflict zones and posing threats to the countries
where they come from.
QUEST: Right. But if that's the case, and if it is so many people going up and down, backwards and forwards across borders, what can Interpol
do about it?
STOCK: First point is, it's very difficult for the security agencies to dismantle criminal activity, terrorist activity. It's very difficult to
detect plans, to identify plans before terrorists can take action against innocent people, mainly. So, what the prime minister of Belgium, for
instance, said yesterday on CNN is the need to better share information.
QUEST: But we'd have hoped by now that you were sharing information.
STOCK: Yes, we are --
QUEST: It's ten -- it's more than ten years since 9/11, 7/7 in the UK. The Madrid -- if you're not sharing now, what more do you need to
share?
STOCK: It's Interpol's task to support member countries in sharing information.
QUEST: Right.
STOCK: We have the databases, we have the mechanism, we have a system connecting 190 member countries, police officers, to get in touch with each
other, to share information --
QUEST: That's right.
STOCK: -- to do analysis. And this is exactly what has to be done now.
QUEST: What do you need more of? Money? Manpower? What do you want more of?
STOCK: The most important resource for police is information. We need information, we need analysis, we have to provide that information
back to our member countries, and they have to take action before terrorists take action.
QUEST: And talking about this -- because one of the big areas that I know you're -- and you're new to the job and you're very concerned about is
cyber terrorism, cyber warfare, cyber hacking. The Sony example showed us just how awful and deep and difficult it is. But you weren't surprised.
STOCK: No, I wasn't surprised because we know that's one way that is getting a criminal industry. We know the business of cyber crime as a
service. We know it's getting more sophisticated.
You don't need to be an expert to attack any company. You just can rent a partner in the internet, in the dark net, in the underground
economy. You can buy stolen identities, millions of stolen identities.
So, it's increasing. The threat is increasing. This is my message, because we are all getting more and more connected to the internet.
QUEST: Well, unless we just throw up our hands and say, well, you know, I'm very sorry, but it's -- what would you like us to do about it?
STOCK: We need awareness. We need awareness amongst all of us who are using smartphones. More and more are using smartphones, using
internet, using in the future devices that are immediately connected to the internet.
So, we need awareness, we need to just make use of the tools the industry is providing, so maybe 80 percent of all the attacks can be
prevented by simply doing the patches and the work for prevention.
QUEST: Right. We need to do some prevention ourselves here. Which is the area of the world you're most concerned about? The risk --
economic, geopolitical, cyber crime. Go on. Where would you like to put your circle on our --
STOCK: You see, unfortunately, the threat is complex, the threat is real, and unfortunately, the threat is global. We have had the terrorist
attack sin Australia, in Pakistan, in Yemen.
QUEST: You get two.
STOCK: So, I'm already familiar with these circles that have been numbered. The threat is global and Interpol has to see the whole
landscape. It would be a mistake just -- it's the world. That's our responsibility.
QUEST: You get the world. Thank you very much, sir.
STOCK: Thank you.
QUEST: Thank you very much, indeed, for joining us.
As QUEST MEANS BUSINESS continues -- I think that was a bit of a cheat, that one, to go for the world. But since he's the secretary-general
of Interpol, I'm not about to take him on. Or I might never get out of here and get home.
Competing priorities with one goal: growth in Europe. We're going to hear from Italy's prime minister. He's looking for a new economic
direction driven by QE. And the chairman of UBS, who says it'll take more than stimulus to get back to growth. We are in Davos and so are you.
(COMMERCIAL BREAK)
QUEST: I'm Richard Quest. There's more "Quest Means Business" in just a moment when we'll hear from the Italian prime minister on his
economic dream for Europe and the chief executive of BP who tells me the winners and losers will be in the world of cheaper oil. After all, this is
CNN and on this network the news always comes first. The chief executive of AirAsia told me he's been invited by investigators to look at flight
8501's data and voice recorders on Friday. Tony Fernandes says he doesn't know what's on them yet in his first interview since the terrible events.
He described the moment he realized the plane was lost.
(BEGIN VIDEOCLIP)
TONY FERNANDES, CEO, AIRASIA: There is no amount of rehearsal or practice or reading that can actually prep you for this moment. It is the
single worst feeling I think I've ever had in my life. And it continues to be that - that moment of that phone call will haunt me forever.
(END VIDEOCLIP)
QUEST: At the World Economic Forum in Davos, Ukraine's president stated he would seek more sanctions if violence escalates. Petro
Poroshenko said there were 9,000 Russian troops in his country. Russia denies its soldiers are in Ukraine. Peace talks between the countries are
underway in Berlin.
The leader of a prominent anti-Islamization movement in Germany's resigned after a backlash against several controversial photos. German
newspapers published this picture today that shows Lutz Bachmann posing as Adolph Hitler. Bachmann's been a key organizer of anti-Islam rallies in
Germanys like this one tonight in Leipzig.
The French Prime Minister Manuel Valls has pledged nearly $500 million to fight terrorism. He says thousands of suspected Jihadists have been
identified and will be watched. The government will also create thousands of new jobs to confront this escalating threat.
This time tomorrow all will be revealed. The ECB's expected to rollout a massive stimulus plan in a few hours from now. And reports
suggest it will be more aggressive than expected. Mario Draghi's reportedly considering pumping 50 billion euros - that's around $58 billion
dollars - into the Eurozone economy each and every month for the next year at least. It would total $1.2 trillion by the end of next year. The
German Chancellor Angela Merkel's warning QE must not distract from the need for structural reforms. Mrs. Merkel's emphasis on strict fiscal
reform puts her at odds with the Italian Prime Minister Matteo Renzi. Here in Davos he told me he's looking for the ECB to use QE to change Europe's
direction.
(BEGIN VIDEOCLIP)
MATTEO RENZI, ITALIAN PRIME MINISTER: I think European Union will be very solid only if in the future European Central Bank become a bank -- a
central bank -- as the Federal Reserve and other institutions. So, I'm not diplomatic - I say it very clearly. But now really their respective
independence of European Central Bank, it's very important. Because if every prime minister decide to give a suggestion/advices to the European
Central Bank, this is against our common treaties and our common laws. So, I respect the law everywhere, I respect the law. I don't speak about the
decision of European Central Bank. Clearly Europe is the only one part of world without an idea of growth because United States show very, very
strongly a different idea of growth and as of today the results are in the side of administration very great results. China, India, every part -- in
Brisbane in G20 - every leader have said, `OK, we invest in the growth.' Only Europe invested in austerity. It's impossible investing austerity.
So could it could be the first step to change economic direction in Europe? This is my dream. My project, not dream.
QUEST: I was about to say your dream is growth. So you are looking for - whether it comes from the ECB or from your government - you're
looking for a change in economic direction.
RENZI: Absolutely yes. I think we must change in very concrete decisions. First, invest in the growth means come back to politics in
direction of investments - public and private investments. Second, if we decided to create common ideals and common value, it's impossible don't
invest in education. You research in the universities system and in the last five years, Europe invests only in the very austerity (inaudible)
slogan. And for me, this is a mistake.
QUEST: Have you told Chancellor Merkel this? And what does she say?
RENZI: Tomorrow I will meet Angela Merkel in my city -
QUEST: Oh.
RENZI: -- because I want to show her mayor in Florence.
QUEST: Home territory.
RENZI: I invite her in Florence in the Uffizi Gallery in front of David (ph) and so I will speak about our idea of a career (ph) but she's
preparing to do that. Because of that I am very respect for Angela but they have a different idea about economic development.
QUEST: The map, sir, the map.
RENZI: The map. For me the risk for 2015 -- with Libya the first because Libya in this moment is the place in which international community
don't believe the future. The intervention against Libya was correct but now it's time to build a future in Libya.
(END VIDEOCLIP)
QUEST: That's the prime minister of Italy, Matteo Renzi. Now the chairman of UBS says quick quantitative easing alone won't bring back
growth. Axel Weber believes the program would simply give European governments breathing room to make structural reforms. Axel Weber's also a
former president of Germany's Central Bank. He joins me now. Good to see you, sir.
AXEL WEBER, CHAIRMAN, UBS: Good to see you again, Richard.
QUEST: Would you be supporting the QE vote that's going to take place tomorrow on the - at the ECB?
WEBER: It's not a decision for me to take.
QUEST: What?
WEBER: Well, it's a rhetorical question, so, yes. I know how to stay away from those things.
QUEST: (LAUGHTER).
WEBER: Look, the point is you heard governments again talk - Mr. Renzi and others about the ECB action. I prefer governments to talk their
own action. The ECB's and independent institutions, they do what is needed from a monetary policy perspective, but governance need to stand up to the
plate and do their own work.
QUEST: On this - on this issue of growth versus more austerity - when the balance is right - is Europe - has Europe - got to readdress that
balance yet or do you believe the balance is right?
WEBER: The problem Europe faces - like the Japanese problem - need an approach that has three elements. First and foremost, it needs fiscal
policy, monetary policy and structural reforms to play a role together. But the balance in Europe is too much on fiscal policy stimulus and too
much on monetary stimulus and too little on long-term growth. And that won't work in a long run.
QUEST: Right. So the basic fear is - it is the classic fear - that if you don't - if you don't hold the feet to the fire, the structural
reforms won't get done.
WEBER: That's the problem. And the real problem is that this is not the first year where we've seen this. We've seen this for seven years play
out. Every year you have this Groundhog Day where the community comes to Davos, and what we discuss is European problems. And every year they don't
look better. So, again, this is another year where we're discussing European problems.
QUEST: We've got enough problems to discuss, so I've got one or two other things that we do need to discuss this evening. So, let's go to our
risk map. The risk map. Where would you like to put your circle? What's giving you - what's the biggest risk in 2015?
WEBER: Europe is a risk, but I think the biggest risk is here.
QUEST: Maintaining -
WEBER: Geopolitical risks, conflict in the Middle East - the whole new discussion we've seen with terrorist attacks with the whole
geopolitical environment becoming more aggressive. That's the biggest risk for the economy.
QUEST: Now if you just step back one moment because I need to - everybody in Davos wearing these - you're wearing one, aren't you?
WEBER: I'm wearing one as well.
QUEST: And what's the goal here? I mean, this your challenge.
WEBER: The goal is over Davos - over the time here - you walk 6 kilometers and then UBS with World Bicycle Relief will donate a bicycle to
children in Africa to get to school in a better way.
QUEST: Here's the bicycle.
WEBER: It's the heavy bicycle.
QUEST: It is actually. It's not exactly sort of a light little contraption, is it?
WEBER: No, it's a robust bicycle for country roads that aren't tarmacked where you need a robust bicycle.
QUEST: How many of these have you bought?
WEBER: We are actually willing to donate 2,500 of those if people walk the extra mile.
QUEST: So you've got to have walked 6 kilometers -
WEBER: Over your Davos time.
QUEST: -- over the Davos time. The clock started last night at midnight.
WEBER: That's true.
QUEST: And if your Fitbit says you've done six, you'll donate a bicycle.
WEBER: That's right. So I'm walking for helping children in Africa get to school so that they're not tired by the time they get to school but
they can actually concentrate on education. That's the idea.
QUEST: So you want to know who's won today from between you and me, don't you?
WEBER: Oh, won't it be interesting to hear (inaudible).
QUEST: I think you cheated.
WEBER: Why's that?
QUEST: According to this, you've walked 9.82 kilometers today.
WEBER: I'm very -
QUEST: Since midnight.
WEBER: I'm very committed to our cause.
QUEST: And I've walked only 4.8 kilometers. You've walked twice as far as me today.
WEBER: Yes, but you're much more hyperactive going up and down and bouncing around on the stage here, so, you should count for more than that.
QUEST: OK, absolutely. Well there we are. Are you sure you didn't have one of your assistants run up and down the promenade?
WEBER: I'm very sure. My assistant went with me, but it was my (inaudible), you know.
QUEST: It's a wonderful idea.
WEBER: Thank you.
QUEST: Everybody's doing it. It's exactly the sort of thing people need to have at Davos to bring it home so thank you, sir.
WEBER: I think it's very good that people join in. Thank you.
QUEST: We'll get rid of this bicycle. Whoopsie daisy. There we go. Careful, you've got the microphone. Now, as we continue, U.S. stocks ended
the day slightly higher. The Dow was up just 39 points and some news just in to us tonight. eBay says it will cut two and a half thousand jobs this
quarter to around 7 percent of its total workforce. The company reported a 9 percent rise in revenue compared to last year.
Think of it as a matter of rooms with a view to create jobs. Another chief executive - this time the Marriott chief executive is got a million
rooms, but he's going to discuss his bold plans for 2015.
(COMMERCIAL BREAK)
QUEST: The "Business Traveller" update. Marriott International has an ambitious target for 2015. It's aiming to grow its portfolio to a
million rooms by the end of the year. Now crucially, Marriott says the expansion will create 150,000 jobs. The president and chief exec Arne
Sorenson's with me now. Good to see you, sir.
ARNE SORENSON, PRESIDENT AND CEO, MARRIOTT INTERNATIONAL: Nice to see you, Richard.
QUEST: Now, here in Davos - you've got a million rooms - you haven't got any rooms, not rooms in Davos but a million here - but you know what I
mean.
SORENSON: Yes.
QUEST: A million rooms. Why is that significant?
SORENSON: Well it's the first time any company will have hit a million rooms. So last year we signed 100,000 rooms - 100,400 to be
precise in the year 2014. Six hundred fifty hotels - so almost two hotels a day. Most ever by a lot. And that pace we suspect will continue into
2015. So by sometime in 2015, we'll have either open or signed and under development a million rooms.
QUEST: A million rooms. How significant is this? I mean your creation's very important and we know at the moment in many parts of the
world it's a disaffected youth - it's a disaffected population. So where do you see your role in putting into that?
SORENSON: Well, the world's obviously a big place -
QUEST: Right.
SORENSON: And these jobs are different in different places of the world. So sometimes they're luxury hotels in cities. Often in this
pipeline they are in the developing world, so we'll open in Haiti in about three weeks' time. In Haiti these jobs - about 200 of them in the Marriott
at Port-au-Prince will be absolutely transforming to the people there. And we won't be able to hire enough people in many respects, given the need for
jobs in that market. We'll open in Rwanda later this year, we'll open in Sri Lanka later this year.
QUEST: So, you're cognizant of the fact it's not just opening hotels so that lots of people can stay there?
SORENSON: Oh, absolutely. These are - one of the reasons we love our business so much is the way our people are transformed by their work. They
like their work, they grow in their jobs, we want them to succeed. We want them to take my job.
QUEST: Oh. Well, there we are. One of the big issues in the industry at the moment is Airbnb, and how Airbnb is creaming off quite a
lot of the hotel traffic. Do you see Airbnb as a threat, as competition or as another distribution channel?
SORENSON: I don't think it's a distribution channel. I think it's potentially a competitor. I think right now it has been a force to bring
more people into travel. So it's not creaming the people off to top. By and large it's offering rooms for less than hotel rooms typically cost in
the same market. And often in doing that, they're bringing people on the road who otherwise wouldn't be on the road. That's a good thing for us.
QUEST: But you don't - but you don't see it as something that has to be squashed?
SORENSON: We don't see it as something that has to be squashed. We do think it is a fascinating thing to watch. It's obviously grown very,
very quickly, it appeals to some folks, the rules need to be fair, right?
QUEST: Right.
SORENSON: So they ought to be paying lodging taxes just the way we pay lodging taxes -
QUEST: Oh -
SORENSON: -- just the way we pay lodging taxes. And those sorts of safety things. But by and large we don't see it as head-to-head
competition.
QUEST: Here's the map, here's the pen. There's the map - the biggest risk you think in 2015?
SORENSON: I think there's a reason why there's so many circles right here. It is a part of the world which is still turbulent, absolutely
turbulent.
QUEST: That's a good word. Thank you, sir. Thank you for coming back - good to see you as always.
SORENSON: Nice to see you.
QUEST: Thank you very much. The chief exec of BP tells me the company's response to the Gulf of Mexico oil spill's been extraordinary.
It's still waiting to find out what the total cost will be. Bob Dudley is after the break. This is "Quest Means Business" and we're in Davos.
(COMMERCIAL BREAK)
QUEST: The Bank of Canada is the latest central bank to shock the market by lowering its interest rate. The key lending rate is now cut from
- it's just a fraction - but from 1 percent to three quarters of a percent. The Canadian dollar though reacted - it sunk 2 percent against the
greenback. The move was unexpected and the Bank of Canada says it's a direct response to the falling oil price, which of course has certain
deflationary pressures within it.
The chief executive of BP says he's turned the company inside out in his effort to put the 2010 Gulf of Mexico oil spill behind it. The court
hearings have begun to determine how much BP could be fined over the spill. And prosecutors are asking for a penalty up to $13.7 billion. BP is using
the falling oil price to try and justify a smaller fine. I asked Bob Dudley to explain the big-picture effects on BP of this lower oil price.
(BEGIN VIDEOCLIP)
BOB DUDLEY, CEO, BP: It's going to lead to a massive change - a shift in the industry globally, geopolitical impacts. For us, we're a very, very
long-term business - we think long-term. But we're going to have to rebase the costs.
QUEST: How does the lower oil price translate in real, hard business terms?
DUDLEY: For us, we were already rebasing the company. We sold $40 billion of assets due to our problems in the Gulf of Mexico. So our
overheads were already high, so we're in the process of doing that. It does lead to a lower workforce. It will need scrutiny over exploration -
we'll see some reduction in exploration -- and we'll very carefully over every dollar of CAPEX that we spend.
QUEST: As between the Gulf producers, the traditional OPEC companies and the shale oil. Who do you think wins out in this battle?
DUDLEY: It does seem now that the OPEC nations - part of the OPEC nations - really want to find out what is the market of the shales in the
United States. And it's a question mark. What is the economic level to keep that engine that was running so fast in the U.S.? Some of it will
have been froth. There's a lot of overleveraged companies. So I think that you will see reductions - the rig counts are dropping off - and we'll
see what is the price level that creates the equilibrium.
QUEST: What do you think about the price down in the 40s? Is it dangerously low for stability sake - both for countries, for oil companies,
for exploration for the industry?
DUDLEY: Depends. There's a lot of wild cards this year. Three's countries that will be winners - China, India, Japan, broadly Europe, U.S.
There are some places that will see some real pain - they range from Norway to Scotland in the U.K., Russia, Iraq, Angola. These places it depends on
if countries have the stability funds that allow them to get through and weather a transition down or through the other side.
QUEST: Would you care to give me what you think the medium-term price is?
DUDLEY: It's impossible to say. We are going to evaluate projects around $60 before we make decisions. We're going to rebase the cost
structure so that we can operate with a reasonable return at $50 in time -- $16/17. But we'll see.
QUEST: The arguments that just started in the latest litigation in the United States - do you wonder whether this is ever going to come to an
end?
DUDLEY: We've turned the company inside out, we've changed the way we're structured, the emphasis on many things - the checks and balances on
decision-making and I think an extraordinary response to an accident and to meet our commitments in the Gulf.
QUEST: Are you angry at the amount of money you are having to spend?
DUDLEY: We have liabilities now that exceed the actual damages of Hurricane Katrina, I don't think it's been an environmental Armageddon.
It's been a terrible, terrible event and we have said that we want to make good on that, but it just seemed like it's - could go a long time.
QUEST: Right. The risk map - the mini risk map. We have the big one in the office. Put on the map where you think the biggest risk in 2015 is.
DUDLEY: OK, I'll do one geopolitical, I'll do one economic for energy. These are the two that I think, so the economic for energy - the
one that I can't quite figure out how it could - how the engine could get back going would be Venezuela --
QUEST: Venezuela.
DUDLEY: -- and I believe that the economics of - the geopolitical risks around ISIS, Iraq, Iran, Syria are significant.
(END VIDEOCLIP)
QUEST: All right. He was using the mini map, so I will now put his - Bob Dudley's - suggestion. There's Venezuela and of course he also wanted
Syria. So we're really starting to see a bit of a geographical spread. But most of it of course is `round Syria, Libya and that region. We'll
have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." UBS has done a pretty good job getting everybody to wear these. If you walk 6 kilometers over Davos,
they'll donate one of these bikes to a charity. It's an idea that seems to have caught on. It brings together two particularly important ideas - one,
fitness and health and secondly, doing something for everybody else. Well that's really not necessarily what Davos does very often. But this year
it's captured the imagination. As a result, people are walking more and taking cars less which means there is less traffic, less traffic jams and
less tempers being frayed. I'm still not convinced that I only walked 4.8 kilometers today. I seem to have never stopped since I got up. Oh hang
on, the bike's on the move. And that's "Quest Means Business." I can't even operate a bicycle. I'm Richard Quest in Davos. Whatever you're up to
in the hours ahead, (RINGS BICYCLE BELL) I hope it's profitable. I'll see you tomorrow.
END
