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Quest Means Business
Netanyahu vs. Herzog; Apple's New TV Service; Airlines Accuse Each Other of Unfair Practices; Greece and EU Issue
Aired March 17, 2015 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NYSE CLOSING BELL)
[17:00:14] RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Guinness rang the closing bell appropriately
on St. Patrick's Day - or at least St. Patrick's week.
It is the market's topsy turvy - maybe they've had a bit of the old tittle themselves. As the bell was ringing, the market was once again highly
volatile. The numbers you see on the screen on Tuesday - it's the 17th of March.
Tonight, the big story - Netanyahu versus Herzog. Media exit polls in Israel are showing the race is too close to call in the Israeli election.
Also, David versus Goliath - a view of one CEO as Gulf Airlines takes their subsidies fight to Washington.
And Tim Cook versus the cable companies - Apple prepares a brand new TV service. I'm Richard Quest live from Miami where of course I mean
business.
Good evening from Miami. Tonight our coverage begins of course in Israel where the polls have now closed, the counting has begun and Israel's
general election is over. It's a pivotal moment for the country and the region. And the results from the first exit polls from Israel's Channel 2
show an absolute dead heat. Benjamin Netanyahu's Likud Party has voting support for 28 seats in Parliament. Herzog's Zionist Union is close with
27 seats. The other networks in Israel all have pretty similar results - 27, 27, 27, 27. On Twitter Mr. Netanyahu is calling it a big win for
Likud. There are a total of 120 seats in the Israeli Parliament - the Knesset.
The contestants and contenders were neck and neck leading up to the election. The incumbent Benjamin Netanyahu has pledged to stand firm
against threats from Iran. He also says he opposes the creation of a Palestinian State. His reigning challenger is the Zionist Union's Isaac
Herzog who's also currently in coalition. He's focused on domestic and economic issues and has promised to change the nature of the division of
wealth in the country, focusing his election on a question of the economy. If no party tonight has won an outright majority or an outright win, then
the party that wins the most votes will likely need to form a coalition. So it's not just a question about seats or mandates as they call them in
Israel, it's a question of how many votes you've got that get you those mandates.
CNN's reporters are standing by. Let's go first to our Israel correspondent Oren Liebermann who is at the Herzog headquarters in Tel
Aviv. Oren, for viewers explain if it is a dead heat on the seats, who gets first cherry at picking or trying to form a coalition? Or do both try
at the same time?
OREN LIEBERMANN, CNN ISRAEL CORRESPONDENT: Richard, if only I knew the answer to that. That of course is a very complex question and will come
down to recommendations. Now that we know or we at least have a good idea -- because remember these are just exit polls - now that we have a good
idea how this is all beginning to shake out, what happens next is that each of these parties will go to President Reuven Rivlin, president of Israel,
and recommend somebody for prime minister.
The president will take that into consideration and then pick somebody to create the next government. The question of course is who will that be?
We simply don't have a clear answer to that yet. We're here at Herzog headquarters and there is a muted but celebratory atmosphere here. They
have a lot of reasons to be happy. They did very well in the exit polls with 27/28 seats - right around there - a bigger number than they were
polling in the last two weeks.
At the same time, they lost the lead they had in the final exit polls, they had a four or five-seat lead. That has vanished. Netanyahu making a very
strong push this final weekend, these final days to close that gap and this looks to be neck and neck.
But there are other reasons to be happy here in the Herzog camp, in the Zionist Union camp, and that's because the other left-wing parties had very
strong showings while some other right-wing parties seemed to lose votes in these last few days. They seemed to lose seats and that's what Herzog
celebrators - or Herzog supporters rather -- are celebrating here tonight. They saw the numbers, they saw that Yesh Atid, a left-wing party, did well.
They saw that Meretz got about five seats. That's not a big number, but it is an important number that they made it into the Knesset.
[17:05:13] Then of course it's all (inaudible) United Arab List did well. The Arab List may not be part of a coalition government, it's seen as
likely supporting the left. On the other hand, they know that Likud is right there. They know that Netanyahu is right there with them, so there's
no - there's no -- conclusions here tonight after the dust has settled as to who will be picked to form a government. But when I said that they know
some of the right-wing parties didn't do as well, what I'm referring to there is Jewish Home seen as ideologically Netanyahu's closest ally -
QUEST: All right.
LIEBERMANN: -- and he didn't do as well. In the most recent polls, there were 10 to 12 seats. It looks like there are only eight seats. So it'll
be very close, Richard, and it'll all come down to President Reuven Rivlin - who does he pick to create a government. Very interesting. I wish we
could draw more conclusions tonight, but not yet.
QUEST: Oren Liebermann who is in Tel Aviv tonight and obviously will continue as we look towards the machinations of this. The vote comes at a
crucial time for Israel and its role in the global community. In Israel itself, the economy is under serious pressure. There's growth is slower
than in 2014 and that's partly due to last summer's Gaza Conflict.
The Central Bank has been forced to cut interest rates to try to stimulate growth and rates are now record lows. The relationship with the United
States also in trouble. Somebody even suggests jeopardy. The U.S. gives around $3 billion in military aid to Israel each year. Now above all,
tensions with Iran and Prime Minister Netanyahu staunchly opposed any loosening of sanctions. And he of course looking to undermine President
Obama's attempt at diplomatic solutions, hence of course the recent speech before the U.S. Congress.
As it's being closely watched in the Middle East, it's also being closely watched of course around the world. Our chief international correspondent
is Christiane Amanpour as she joins me now from London. Christiane, this is absolutely fascinating. We need your expertise to guide us through the
machinations here because, I mean, if it's a tie, Netanyahu and Herzog, where does the coalitions come from? What's the way forward? Give us some
guidance.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, as Oren was saying, it depends on the size of the other party and it depends on who
goes with whom. Obviously each side will try very hard to be able to cobble together that magic 61 number - 61 Knesset seats out of 120. And
we've spoken to leaders of the Joint Arab List.
Now they won't go into coalition, but an unprecedented coalition of Israeli Arab parties. Let's not forget these are not Arabs from foreign countries
- these are citizens of Israel who are Arabs, and they turned out en masse and also they have joined in a coalition to not join a - sorry - they've
joined themselves in a united block not to join any coalition but to try to vote for a policy that they say would defeat Benjamin Netanyahu and his
Likud Party.
Now, that is - we don't know whether any of that is going to happen. But certainly the whole world looks at Israel for the whole idea of regional
stability and whether the peace process is going to ever get off the ground. And Prime Minister -
QUEST: Right.
AMANPOUR: -- Netanyahu dropped a major clanger, didn't he? on the eve of the election saying no to a two-state solution. And that opened a whole
nother can of worms which we can go into.
QUEST: Right, but you say he dropped a clanger but of course say it - could that - could that statement of no two state solution - could that
have been, if you like, his trump card to get the election performance that he got tonight? Even if it makes it much more difficult when he then has
to go negotiate afterwards.
AMANPOUR: There's no doubt that that was a trump card - also the trump card of what certain Israeli Arabs are calling and a lot of observers
scaremongering and fearmongering saying, you know a foreign countries and NGOs are bussing in Arabs to defeat Likud and Likud is the only strong
country. But here's the thing - the peace process is backed by the international community, backed by their most solid ally the United States
and he has just ditched it. And I've just been speaking to various people who are very concerned, certainly in the region, that he's going to have a
hard time making a Houdini turn to once again get back into the peace process if he does.
And let's be frank about this - a non-two-state solution, Richard, means a one-state solution. A one-state solution means Arabs and Israeli Jews in
one state. And what will the numbers be in - eventually - and who will be in the majority and who will be in the minority? All of these are really
important questions.
[17:10:11] I spoke to the former Saudi minister of intelligence who says that he doesn't believe that Benjamin Netanyahu will ever sign a peace
deal. Here's what he told me.
(BEGIN VIDEOCLIP)
PRINCE TURKI AL-FAISAL, FORMER SAUDI INTELLIGENCE CHIEF: I was never one of those who believed that Mr. Netanyahu was going to deliver on the two-
state solution because of his actions and his words. And he's living up to that expectation for me, so if there are those who are deluded, I hope they
will have awoken by now.
(END VIDEOCLIP)
AMANPOUR: So he's answering basically your question as to why so many people think, you know, Netanyahu could have been Nixon goes to China. In
other words, the very conservative, hard-lined president who nonetheless summons the compromise and the courage for peace.
QUEST: Right.
AMANPOUR: He doesn't buy it - the Saudi former intelligence minister.
QUEST: Now, Christiane, if - let's just - let's just - go into the realms of what if, maybe and perhaps - which of course is always what you can do
when you haven't got an election result that you could actually hang your hat on - but if it is Bibi and if he does - if Netanyahu does form the next
government, then yes he's got a difficulty because of his ones - of his - of the measures he's taken.
But what does this do with the Obama administration in the remaining months and years? They're going to have to just get on with each other even
though they don't like each other.
AMANPOUR: Well, look, there's absolutely no doubt about that. The relationship between the United States is not in jeopardy. It is the
strongest relationship in international relations, and the United States all parties stand squarely behind Israel. And that is not going to change.
Clearly the personalities and the personal relationships have been under immense strain with the prime minister as we've all been reporting so
extensively, actively trying to subvert one of the administration's key foreign policy and diplomatic goals which is that nuclear deal with Iran.
So, again, that opens a huge number of questions. If Prime Minister Netanyahu doesn't want that deal, what is the option?
Most people say the option will have to be the military option. Is the Israeli prime minister prepared to do that? You know, certainly the United
States is not prepared to do that.
QUEST: Christiane, good to have you. Thank you for helping us wind our way through this. We have a long night ahead and it's more like weeks
ahead as they try to do the deal. Christiane Amanpour, chief international correspondent.
It is a race that's far too close to call. TV exit polls show that Prime Minister Benjamin Netanyahu's Likud Party is neck and neck with Isaac
Herzog's Zionist Union. You've already heard from the Zionist Union. Now Elise Labott is at Likud campaign headquarters in Tel Aviv with a delay,
but at least does join me. Now, and so help me understand - does Bibi Netanyahu get the first attempt to form a government? And if so, who are
his likely coalition partners?
ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, Richard, it remains to be seen, OK? The real backroom deals are going to start taking place
over the next 24 to 48 hours and then those parties will go to the President Reuven Rivlin and recommend someone that they would support to be
the prime minister.
Now, Prime Minister Netanyahu has more support on the right from the Bennett Party which is a former economy minister - Economy Minister
Bennett. He also has support from the Israeli right fringe extremists, religious parties, the party of Foreign Minister Avigdor Lieberman. If he
can cobble all that right parties together, he can form a coalition.
Now Herzog on the left has Yair Lapid, the former finance minister who fell out with the Prime Minister and that's why these elections were held,
because the coalition fell apart. But even if Prime Minister is able to form a government, Richard, it's going to be a very narrow right-wing
government which as Christiane said could really hem him in and lock him in to some very extreme policies that he talked about over the last few days
to try to energize the base.
The right wing's going to be looking for him to make good on those campaign pledges and that could hurt him both in Israel and overseas around the
world if he tries to -
QUEST: Right.
LABOTT: Repair Israel's relations with the United States as he tries to stop Israel's growing isolation around the world.
QUEST: Elise, even so, from the mood there tonight must be jubilant and only because the prime minister having called this snap election was
believed that maybe wouldn't perform as well as he could or should, and now has pulled it back in the last few days and weeks before voting. They must
be please there in Likud.
[17:15:17] LABOTT: Very pleased. There's a lot of music, there's a lot of dancing going on, the mood in the last 24 to 48 hours was really grim,
Richard. But as the prime minister started this media blitz, they started to get a little bit more energized, a little bit more optimistic, and they
knew that the prime minister going out and saying these things to bring those voters in was going to bring them in.
And as the day grew on and as the polls started to close, they felt a lot more optimistic. Not giving - you know - they're claiming a big victory.
They know they have an uphill battle ahead of them in terms of getting together that coalition, but certainly no matter how you look at it, it is
a victory in the sense for Prime Minister Netanyahu who just a day ago thought -
QUEST: Right.
LABOTT: -- he was going to be out a job in a stunning defeat. And now he has fought his way back. They do not call him the Teflon prime minister
for nothing, Richard.
QUEST: Elise Labott who is at Likud's headquarters where Benjamin Netanyahu's supporters are celebrating. We're just hearing as a statement
has come from the Zionist Union -- that's Isaac Herzog's party -- saying that Likud has been misleading of course the electorate and saying that the
block on the right has actually shrunk and therefore as a result of tonight's election obviously with a tie between the Zionist Union and the
Likud.
There will be huge amounts of pressure for bragging rights and to basically get the PR - the perception - upper hand. One other thing to bring you on
this election in Israel before we move on -- the Israeli President Reuven Rivlin.
It's a ceremonial job but he will have the task of deciding which of the two leaders to invite to create a government who he believes is best suited
or best able to put together a coalition.
President Reuven Rivlin has said that "Israel needs a government as soon as possible. The president will work with all the election bodies to start
the consultations process as soon as possible. We hope to start as soon as Sunday."
Well that puts perspective into it all. The results - the voting -- was today, the results are tonight, the seeing where they'd be like the damages
overnight and the negotiations start at the weekend. We'll continue more coverage of course of what's happening in Israel as we continue.
Chief executives from the biggest airlines in the United States and in the Middle East - the Gulf 3 - they're all in Washington and each defends their
position in the open skies war. You're going to hear from Sir Tim Clark, the chief exec of Emirates after the break. It's "Quest Means Business."
Good evening to you.
(COMMERCIAL BREAK)
QUEST: Executives from the biggest airlines in the United States and the Gulf 3 are back at it again slinging accusations about unfair competition
and the taking of government subsidies. The issues haven't changed, the arguments remain the same.
American, Delta and United - so-called the Coalition for Open Skies along with various unions in the U.S. have been lobbying the U.S. government to
reevaluate the Open Skies agreements with the UAE and Qatar.
[17:20:10] They say Emirates, Etihad and Qatar Airways have taken upwards of $40 billion in state aid which they say allows them to chip away at the
market share and it puts American jobs and the U.S. economy at risk.
At a forum, at a summit held by the U.S. Department of Commerce in Washington, the chief exec of Etihad said he wanted to clear the air. The
government in Abu Dhabi did provide capital and loans to the airlines only as an investment. His quote is, "I don't apologize for anything," he said.
"Etihad is a David, a David that has been fighting Goliaths since we started."
One of the other big carriers - perhaps one of the Goliaths in its own right - it's certainly the largest airline in the world by capacity -
Emirates is considering legal action against the U.S. carriers and is asking for time to respond to their claims before any dramatic policy
changes are made. I spoke to Emirates' chief exec Sir Tim Clark and asked him how this issue is best once and for all put to rest.
(BEGIN VIDEOCLIP)
TIM CLARK, CEO, EMIRATES: Now we have the report, we will respond to that in a very robust manner. The primary allegation of subsidy is as far as
I'm concerned low-hanging fruit with regard to the response and we will push back exactly as to what the case is and demonstrate to the U.S.
government agencies that are interested in this that we have not received any subsidies, will not receive any subsidies in the future - we must make
our own way.
And if we're given the opportunity to do that reasonably and fairly, then as you asked, will this put it to bed? Well I hope it does put it to bed
as far as we're concerned.
QUEST: You're fighting on two fronts now because what we saw in Washington was you've not only got the Coalition for Open Skies but your other nemesis
Lufthansa is still gearing for battle and it now seems as if the European Commission is going to investigate.
So one's left with this feeling, Tim, all these other people can't be wrong and the Gulf 3 right.
CLARK: Let me say that as Emirates we have been under the microscope for 30 years. Everything we have done has been a cause of concern, of
interest, of curiosity where our business model clearly demonstrates that we have been successfully growing our business model, it's scalability is
known to everybody. Our financials have been published for the last 21 years, we are free and open and transparent in everything we do - one's
only got to talk to the financing community, the governments that allow us to come into their countries and the multiple stakeholders involved in
everything we do.
So, we're kind of used to the - these kind of challenges and we will deal with these challenges as we always have done fairly effectively and
reasonably and demonstrate to those people who are concerned about what we are doing that they have no reason to be concerned and that we offer a very
good product that the consumers that we serve really like.
QUEST: The issue of course - the other issue that the U.S. carriers continue to say is that the way - that it costs jobs in the United States,
that there frankly is no point in them running routes to these parts of the world if you are running them at a lower cost or at a subsidized rate.
Now you will obviously say you're not running them at a low - at a subsidized - rate but I wonder, having covered this for many years, Tim,
how does one stop this just going 'round with an ever-decreasing cycle of allegation and counter-allegation?
CLARK: If you talk about those particular routes that we serve and they don't, you must ask yourself why. American Airlines is not present in the
Middle East. American Airlines is not present in Africa. American Airlines is not present in West Asia. How can they claim that we are doing
them damage when they don't fly there? United and Delta flight to the Middle East once a day. They serve four points in Africa and that is all.
We serve 24 points in Africa.
QUEST: Right.
CLARK: This is a 16-points in the Middle Eastern region and so on and so forth. All these points that we serve, we bring business to the United
States. Last year 1.7 million people on the carriers that we have a 2 and a half million - 2.4 million - came from points in Africa, the Middle East
and West Asia. These were places that the United States carriers do not fly to and they didn't fly to before we entered the scene. So, how can
they say we're doing them damage? I have never been able to link those dots.
QUEST: If this goes the way some suggest, and although the U.S. is highly unlikely to renegotiate or open up the Open Skies but the Europeans are
likely or potentially likely to want to review the Open Skies situation - you could be in trouble.
[17:25:09] CLARK: No, I'm afraid I don't subscribe to that. Why? Because most of the Arab political instruments that govern the flights of Emirates
into the European countries are done on a government-to-government basis on a bilateral basis.
And the support that we have from the majority of countries within the European Union are very positive and very supportive. And I would not
believe that they would want to see what we have done and are doing in supporting their cities that have been underserved for many, many years.
(END VIDEOCLIP)
QUEST: That's Sir Tim Clark, the chief exec, the leader of Emirates. Negotiating with his hands, the Greek finance minister is accused of
'flipping the bird' at Germany. What did he do? We'll show you after the break.
(COMMERCIAL BREAK)
QUEST: Greece is in a position like that of Sisyphus, the man condemned to roll a boulder to the top of a hill, only to see it roll down again.
That's the Greek Finance Minister Yanis Varoufakis writing in the "Financial Times" where he describes the effect of austerity on his
country. And now as Jim Boulden tells us, Germany is more concerned with Varoufakis' hand gestures than his Greek mythology.
(BEGIN VIDEOCLIP)
YANIS VAROUFAKIS, GREEK FINANCE MINISTER: And stick the finger to Germany and say -
JIM BOULDEN, CNN CORRESPONDENT: Not a friendly gesture. Though he was not yet Greek finance minister, the emergence of this video of Yanis Varoufakis
at a conference in May 2013 has added to the tension between Greece and Germany.
VAROUFAKIS: My proposal was that Greece should simply announce that it is defaulting - just like Argentina did within the euro in January 2010 - and
stick the finger to Germany and say, 'Well, you can now solve this problem by yourself.'
BOULDEN: Initially, he denied doing it, then later claimed the gesture was taken out of context. Varoufakis tweeted a link to the talk on Monday,
requesting people to see the version, quote, "undoctored by the unscrupulous media."
But what if Greece had rejected the bailout and simply defaulted. Some analysts say it would have added to the crisis.
JANE FOLEY, RABOBANK: It would certainly have been a disaster because of the knock-on effects - the contagion that would have eaten through to the
other peripheral countries. It really could have caused cracks big enough to knock the system apart.
BOULDEN: If you do sit through more of the talk, you'll also hear Varoufakis explain even after telling creditors Greece wasn't going to pay
up, why Greece would still need to stay in the Euro.
VAROUFAKIS: It's a recipe for having all wealth liquidated and leave the country unless then of course we have armed guards at the borders to stop
people from taking their money out. But that would mean that we would had to get out of the European Union.
BOULDEN: In 2013, he also called for Greece to make revisions to return to the drachma as a backup in case the euro imploded and he took a swipe at
the ECB.
VAROUFAKIS: The European Central Bank - my God - your now to have a destroyed economy which is borrowing from the Europeans' stability
mechanism (ph) to pay to the European Central Bank is not just idiotic but it's the epitome of misanthropy. Say no to that.
[17:30:02] BOULDEN: Of course it's one thing to say something in opposition or in academia. It's another thing when you're in power and
meeting with Germans every other week in Brussels.
German Chancellor Angela Merkel's office denies there's a private feud with Athens though many in Germany are losing patience with the Greek government
with some perhaps wanting to stick up one finger right back at Athens. Jim Boulden, CNN London.
(END VIDEOCLIP)
RICHARD QUEST, INTERNATIONAL BUSINESS CORRESPONDENT AND HOST OF "QUEST MEANS BUSINESS": As our coverage continues, Israel has decided but the
result is not known. It's a tie between Benjamin Netanyahu and Isaac Herzog.
So who will be Israel's next prime minister and how long will it take to form a government? We'll talk about that on "Quest Means Business."
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There of course is more "Quest Means Business" from Miami in just a moment. As we continue, the Microsoft chief
executive will tell us he's excited about the company's future in China but not half as excited as our David McKenzie who gets to try a fake Apple
watch on size in Beijing.
Before all of that, this is CNN and on this network the news will always come first.
Israeli election is far too close to call. The first Israeli television exit polls are now showing a dead heat between Benjamin Netanyahu's Likud
Party and Isaac Herzog's Zionist Union. With voting brisk, no party's expected to pick up an outright majority. That means the party with the
most votes will need to form a coalition.
Iran's nuclear chief has expressed optimism about a possible deal with the United States at talks in Lausanne. Ali Akbar Salehi says that 90 percent
of the technical issues had been worked out. The White House quickly responded, tempering that statement.
(BEGIN VIDEOCLIP)
JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: We continue to believe that our odds of reaching this agreement are at best 50/50. Is that - it is going
to require the Iranian leadership - including those who aren't at the table, to sign on to this agreement.
(END VIDEOCLIP)
QUEST: U.S. authorities are accusing a former Air Force member of trying to join ISIS. Court documents say a former U.S. airman tried to enter
Turkey in January with the intention of heading to Syria. Turkish authorities allegedly stopped the man.
A militant group in Pakistan has murdered a lawyer who was linked to the death of Osama bin Laden. He was the attorney for the doctor who helped
the CIA track bin Laden in Abbottabad in Pakistan. That's where the terror leader was killed by Navy Seals.
[17:35:08] The American group Gindala (ph) says the lawyer was on its hit list. (Clears Throat) - excuse me.
Aid agencies in Vanuatu say they concerned at the potential scale of the devastation caused by Cyclone Pam. Eleven people are currently firm to
have died although it could take weeks to find out just how bad the situation truly is. Many of the outlying islands are cut off from the
capital.
While Benjamin Netanyahu has focused on security issues, his challengers are focused on issues much closer to home, and specifically home prices.
Excuse me. The price of a house is up more than 70 percent since Mr. Netanyahu took office. Rents have risen sharply as well.
Wages though haven't kept up nearly as much and that's been squeezing Israelis like Boa's Gross, the 31-year-old archeologist from Tel Aviv.
(BEGIN VIDEOCLIP)
BOAZ GROSS, TEL AVIV RESIDENT: No matter how much we progress in our jobs, in our salaries, we never manage to keep up with the rates in which housing
costs grow.
(END VIDEOCLIP)
QUEST: A report from the Israeli state controller has accused Mr. Netanyahu of being slow to react to the housing crisis. It also criticized
the bureaucracy that delayed construction of new homes. Now in response, the prime minister insisted the cost of living needed to be seen in the
broader context.
(BEGIN VIDEOCLIP)
BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER, VIA INTERPRETER: When we talk about the housing prices, cost of living, I do not forget for even one
moment the issue of life itself of the living. The greatest challenge we are facing for our own lives as Israeli citizens, as a state, is the threat
posed by Iranian nuclear disarmament.
(END VIDEOCLIP)
QUEST: Joining us now from London Daniel Levy is the director of the Middle East and North African program at the European Council on Foreign
Relations.
Mr. Levy, good evening to you and thank you for joining us. So we've got - we had an election - the result is deeply, deeply uncertain tonight which
begs the question who gets first dibs at forming a government and which way - who gets into bed with whom?
DANIEL LEVY, EUROPEAN COUNCIL ON FOREIGN RELATIONS: Well, Richard, the sense in Israel tonight is that Prime Minister Netanyahu may well and
probably has pulled this out of a hat and that his natural coalition partners are in a much stronger position to gather with him to form a
government and to be asked to do so by the president first.
If one counts the Arab list that's supported by the Palestinian citizens of Israel, then it becomes a much closer race. But they unfortunately tend to
be marginalized and excluded in what is the Achilles heel of Israeli democracy. So right now the strong sense is that Prime Minister Netanyahu
can form a government and is likely to do so and he has a number of options for doing so.
QUEST: And now that's interesting because I'm looking at the list and let's permeate the list. I mean obviously -
LEVY: Sure.
QUEST: -- he's got the right that he can go for and he would find it almost impossible I suspect. The other people would rather walk home than
go back into coalition. You've got Beytenu with Lieberman that he could (go to). So how does he form that coalition whilst at the same time not
giving too much away?
LEVY: Well, let's part for a moment the second part. He gives a lot away - that's the nature of Israeli governing coalitions, that's the nature of
political system where you have 11 parties in Parliament, probably half of them at any given time inside the government the largest single party
barely scratches a quarter - doesn't even scratch a quarter of the seat (ph). So he does give a lot away.
If you look at the numbers and I'm also looking at the numbers, Richard, Netanyahu's party - that's the sense tonight.
QUEST: Yes, please.
LEVY: -- the allies from the right, the allies from the ultra-orthodox gets him to about 54. He needs one more party to join him. There is a
party that broke away from the Likud. It's kind of soft Likud. The head of that party - Mr. Kahlon has said he wants the finance ministry. That is
the most obvious coalition. There are other options - Lapid - it's not as much of an impossibility, as you said, him rejoining. He could try and
form a grand coalition also bringing in the Zionist Union of Herzog and Livni. So he has a few options to -
[17:40:01] QUEST: Right, but they -
LEVY: -- (inaudible) 61 plus.
QUEST: Do you see any - do you see any option where you'd in your grand coalition as we've seen once or twice before where Herzog and Netanyahu
would come together in a coalition on a rotating prime minister-ship basis. It's happened before, it happens in extreme cases. Are we at that
situation where we could be looking at it here?
LEVY: Here's the dynamic, Richard. Prime Minister Netanyahu, if he can form a narrow right government, if this chap I mentioned Kahlon is willing
to get him above the 61 line, then Netanyahu is firmly in the driving seat. If not - if Kahlon and Lapid demand a rotation, then it's possible, but
Herzog would have a hard job selling that to his own party and will probably be ill-advised to join such a government.
It's not inconceivable, but I would say judging by the commentary and the numbers coming out of Israel tonight and these are still exit polls, but
they need to hold up. Netanyahu narrow government first option, grand coalition second option, narrow Herzog government a distant third option.
That's the sense tonight.
QUEST: David Levy, thank you. The permutations are many. You'll be doing the calculations - I mean Daniel Levy - do forgive me, I've got so many
permutations and possible options for government in Israel. And of course let's not also forget that the actual decision on who's going to start
probably won't begin until Sunday when the president invites one or other to begin.
We are expecting to hear from Prime Minister Benjamin Netanyahu. Bibi is expected to make a statement or a speech in the next hour or so. We -- you
can guarantee that we'll bring it to you live and /or as soon as we can thereafter after Benjamin Netanyahu does give us his reaction to the
results.
He's said tonight already - he's described it as against all odds. It's a big win for Likud, a big win for the national camp and a big win for the
country of Israel.
Meanwhile, the president of Israel, Reuven Rivlin, has also said that what Israel needs more than anything else - it needs a government and it needs
it sooner rather than later.
To the markets, and the stock market in the United States fell. The Dow Jones gave up a128 points when trading closed on Wall Street. A two-day
Federal Reserve meeting is underway and investors are eying an announcement from Janet Yellen. And that announcement of course could pave the way for
an interest rate rise or at least give a better indication. The announcement indeed will come after the close or will come on Wednesday.
In Europe, the stocks closed lower. Investors looked ahead. They were very concerned about the Wednesday's Fed meeting and the Fed's statement.
Germany's DAX shed more than 1 and 1/2 percent. It's back under 12,000. It got there - it just couldn't hold the line.
The CAC 40 and the Zurich SMI fell. In London, the FTSE ticked up a half of a percent on the back of mining utilities.
Lufthansa, the German carrier, has announced it is canceling half its short to medium-haul flights on Wednesday. The pilots are going on strike over
labor agreements that the airline is trying to renegotiate. Lufthansa says 80,000 passengers are - will be - affected.
Quest Means Business continues. Apple has liked the look of TV for years. The question is whether it's ready to launch its own streaming service.
We're in search of answers next.
(COMMERCIAL BREAK)
[17:46:05]
QUEST: Apple has been pledging to reinvent television for a while. Now it could be on the verge of rolling out a TV streaming service. "The Wall
Street Journal" says any service could launch in the United States in this autumn. Samuel Burke joins me from New York.
What sort of service would this be, appealing to whom?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Well, Richard, it looks like Apple's trying to do what a lot of companies are trying to do right now -
offer cable television online - less channels for less - for much smaller cost. So you have to stop and ask yourself what would be the advantage
that Apple would have here? They're saying 25 channels for between $30 and $40 bucks according to reports..
It comes down to ecosystem and user interface, Richard. At the end of the day, we know millions of people have the iPhone in their hand. So if this
service launches in September as is reported, millions of people right away could access the service.
Of course on the iPad as well which I'm sure you're saying is obvious, but one thing that people have overlooked often but not on this show, Richard -
you and I have talked about Apple TV time and again - this little streaming device, a lot of people overlooked it during this latest announcement about
the Apple Watch. They lowered the price from $99 to $69, Richard, and now we know why - so that millennials - people like me - can get TV - cable TV
- in a new and different way - streaming.
QUEST: Ah, but they may get their cable TV and you may do that, but that puts Apple firmly into the issue of negotiating - negotiating for content,
negotiating, frankly, -- I mean, let's be blunt about it - negotiating with our bosses, Turner Broadcasting and negotiating with Time Warner and
negotiating with NBC, ABC, CBS - anybody who's got content. Because there's no point in having a streaming service if you haven't got something
to put on it!
BURKE: Exactly right and a lot of people say this is what's prevented Apple from creating their own television set. That doesn't look like it's
coming down the pipe any time soon. And in fact, Richard, it looks like they may have already hit a little bit of a snafu.
It looks like some of the big channels here in the United States will be on it, but NBC which is owned by Comcast, it looks like they've already come
into problems with it.
So that is the big wild card here, but it looks like they've already got the big players onboard. One big player is missing but that could be very
difficult for them. But who knows? A couple of years down the line, they could get them, so we'll see.
But I think it's really all about this device for right now. If people have these on their television, Richard, $69 bucks, connect TV to internet
and then you can have Apple TV in their streaming package. Hopefully you and I will be on there.
QUEST: Yes, but by that stage you won't be a millennial anymore.
BURKE: (LAUGHTER).
QUEST: Your good life will be different.
BURKE: Neither will you.
QUEST: Believe me, my millennial days are a long since gone. Samuel Burke - don't touch the bell. Now, as Apple gears up for the release of its much
anticipated watch on April the 24th, it has a problem to deal with in China. It's not a new problem, it's been dealt with it before, but China
is a key market for the company and (inaudible) new product. And China is already being flooded with fake Apple watches that cost a lot less than the
original.
How on earth are you going to have a fake of something that we haven't even seen and got the original. In China it's possible. And CNN's David
McKenzie went to test them out.
(BEGIN VIDEOCLIP)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: It's the tech launch of the year.
Male: Apple Watch is the most personal device we have ever created.
MCKENZIE: Apple fan boys can't wait for the April release of the Apple Watch. Know what? We've already found one in China, kind of. So is this
an Apple Watch? And we took it to a tech geek.
DAN CHUNG, TECH ENTHUSIAST: (LAUGHTER). OK, it's pretty neat.
[23:01:05] MCKENZIE: If someone was just walking down the street, you probably wouldn't know.
CHUNG: Yes, walking down the street you would never know that isn't an i- Watch. I mean, it just looks like the real thing.
MCKENZIE: Of course fakes in China are nothing new. They've been selling Apple knock offs in malls like this for years in China. The iPod, the
iPad, the iPhone - they've all been copied for Apple-crazy China.
But with the revolution of e-commerce here, the speed is just breathtaking. We counted at least a dozen suppliers on Tow Bow (ph) - China's virtual
marketplace. Most call them the i-Watch and they're often blatant copies. But how much does the pretender stack up with Chinese?
Male, TRANSLATED BY MCKENZIE: "It's real, it's real" says this tech salesman. "I haven't seen the real one so I can't be sure," he says.
MCKENZIE: But the watch's performance is more 80s throwback than trend- setter. Now if this watch is anything like the Apple Watch, then Apple's in trouble. But it runs at just under $50, so I guess that's not really
the point. Got a call. Hello? David McKenzie, CNN Beijing.
(END VIDEOCLIP)
QUEST: We'll be looking closely at his expenses when he gets back. CNN has been talking exclusively to the head of Microsoft. You're going to
hear what Satya Nadella thinks of wearables perhaps the Apple Watch and if they're really the next step in technology innovation. (Inaudible).
(COMMERCIAL BREAK)
QUEST: Welcome back. "Quest Means Business" - we're in Miami tonight. The head of Microsoft says he's keen to add more intelligence to wearables.
The chief executive Satya Nadella spoke exclusively to CNN's Maggie Lake who asked him if wearables really are the next big thing.
(BEGIN VIDEOCLIP)
SATYA NADELLA, CEO, MICROSOFT: I think that it's going to be many different types. When I think about wearables, I look at it in a very
broad sense. Like the one I'm wearing here is a band. In fact I think of it as a sense of framework - it collects all kinds of interesting data. In
fact it rendezvous all that data into a Cloud service that which we can even integrate with our emergency medical record.
So there's a lot of interesting things you do - not just on the wearable but with the Cloud service that in fact gathers through the wearable. And
the most salient, interesting aspect of those devices is data. In other words, how can we add intelligence on top of the data that's been collected
from all of these devices so that you as an individual can get more out of all of this computing power.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: You've just been talking to business executives. You're going to be
continuing to do that. Do they feel confident enough about the economy to bend to get where they need to be in terms of making the most of that data
out there?
NADELLA: But the most interesting aspect to me I think is the base of innovation - the need for change in terms of business transformation is
such that you have to use technology. But then of course the question is can you empower the individuals within the organization?
One of those services I talked about is this tool that I use every day at work called Delve. It's kind of like the Facebook Newsfeed for one where
in fact I can see all the work that's happening inside of Microsoft. It's on an orchard/on chart (ph) view. It's a view of who's doing what. And it
lights up based on what my, you know, topics of interest are because it knows even my schedule and other information.
[17:50:00] LAKE: Where in the globe do you see the most opportunity? Do you find this pace is most apparent in developed economies or are we seeing
great opportunity in Asia?
NADELLA: It's fascinating to see in fact technology spreading all over the world. And, you know, in the past it was very straightforward - whatever
happened in the U.S. would spread with some amount of delay all over. But now it's not the case. In fact, you have these trends or micro trends
start anywhere, depending on where on the technology curve they are. And also the world is getting pretty complex in terms of regulatory
environment. Because every country care about virtual sovereignty.
LAKE: Has that been an issue in China - some - it's been challenging environment for a lot of people. What's your goal there? What are your
expectation for growing the business in China?
NADELLA: You know, -- we've in China for quite a few years and we're very committed to that market. We are in fact doing very well because we're the
only international Cloud company with an operation in China and we're also in the process of getting our Xbox business launched in China.
So we're really excited about what the opportunity holds and we're very committed to the market.
LAKE: So much is in the Cloud and so much is happening mobily (ph) and so much is changing so quickly for technology and in many cases even in our
country. Regulation seems to be behind that. What are your hopes for that? Do we need to get - the authorities need to get on the front foot in
terms of catching up?
NADELLA: Yes, I think that's clearly the topic of our times. Governments, for example, have a real role to play when it comes to protecting their
citizens. And yet you want to have laws that govern how even governments operate so the things that are enduring values like privacy can be
maintained. You really need the balance between companies and governments and across
governments.
(END VIDEOCLIP)
QUEST: The CEO of Microsoft, Satya Nadella. We'll have a "Profitable Moment" after the break. "Quest Means Business in Miami.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." The dispute between the U.S. carriers and the Gulf Three rumbled on in Washington. And now we're
starting to see exactly where everything lies. The Gulf Three are rejecting all the accusations made against them in the so-called white
paper.
This is going to run. The Europeans an d the Americans are angry, they feel that they've been had and that the Gulf Three are taking advantage.
The Gulf Three think exactly the opposite. Is there going to be any major development, a new twist and turn? Probably not.
The arguments have been around for years, they haven't really changed. What it really needs is some way, once and for all, to establish who's
right.
And that's "Quest Means Business" for tonight. I'm Richard Quest in Miami. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's
profitable. I'll see you in Miami and in Havana on Monday.
[01:06:03]
(END QUEST SHOW)
END
