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Quest Means Business
Solid U.S. Jobs Report Fuels Fire for Rate Rise; U.S. Blames China for Massive Cyber Hack; Protesters and Police Scuffle at G7 Summit; China Behind Largest Cyber Attack Ever on Government Computers?; OPEC to Keep Production Up; The FIFA Investigation; Landon Donovan Talks Football; Fracking in North Dakota. Aired 4-5p ET
Aired June 05, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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RICHARD QUEST, CNN HOST (voice-over): That's a very popular ringing of the closing bell, the market may be down 60-odd points; something tells me
we're going to get the good gavel on this Friday, end of the week, if they can find where the gavel is. But they're lost the gavel.
We've got the date. It's Friday. It's the 5th of June. Tonight: a marvelous May. The U.S. jobs number puts the Fed back to work.
Absurd and unrealistic: Alexis Tsipras lashes out at Europe's debt solutions.
And the biggest data breach in U.S. government history. Now Washington points the finger at China.
I'm Richard Quest. It may be Friday, but of course I still mean business.
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QUEST: Good evening. Tonight, the case for an interest rate rise in the United States became that little bit stronger. There's the 24 hours after
the Fed was warned off raising rates until next year, along comes a storming jobs report that puts the idea of a rate rise firmly back on the
table.
U.S. economy had added 280,000 jobs in May. It was much stronger than expected and there were revisions upwards for previous months. The U.S.
has now added a million jobs in 2015. Look at the numbers; they're all up with the exception of March, which was a bit of a wobble. The rest of them
are all over 200,000.
It complicates one of the most pivotal questions in global economics at the moment, when should the Fed raise rates?
Janet Yellen and the Fed are torn between two options, sooner in 2015 or later in 2016. Now pushing the barometer towards sooner, you've got wage
growth. Wages still not keeping up with the target but analysts think wages will go up as now -- as employees find it more difficult to find
work. And you've got the jobs report that jobs report obviously puts pressure into the economy. Now pushing the barometer towards later, the
IMF is warning the Fed should wait until next year and must consider implications beyond U.S. borders.
The managing director said a rate rise before '16 could batter the markets.
Ah, but university college professor Ken Rogoff is here.
We'll come to Christine Lagarde's moments in a moment. Just so we know where you stand, Ken, are you a sooner or a later man?
KEN ROGOFF, ECONOMIST, HARVARD UNIVERSITY: I'm a September or December man, I guess. That's more on the sooner side.
QUEST: Right, based on which, what that you're seeing?
ROGOFF: Well, I think the U.S. economy's growing again and we're reaching a point wages are going up. There's starting to be inflation pressures and
it makes sense to start moving.
QUEST: Because I think people forget we are not moving to anything like -- I was going to say tightening bias. But you would sort of fall of your
chair with ridicule; we're literally just taking something off the table.
ROGOFF: Yes, we're at zero and we're talking about going to a quarter percent. I doubt they'd go any further than that. It's not exactly like a
really high interest rate.
So it's a tough decision because it's been a really bad recession. You don't want to slip back. I understand Christine Lagarde's comment. But on
the other hand ,the data are really showing things are healing -- in the U.S.
QUEST: Let's have a listen to what Christine Lagarde said when she made her comments yesterday.
She was talking about when rates should rise in the U.S. Have a listen.
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CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: Regardless of the timing, higher U.S. policy rates could still result in significant market
volatility with financial stability consequences that go well beyond the U.S. borders. In weighing these risks, we think that there is a case for
waiting to raise rates until there are more tangible signs of wage or price inflation than are currently evident.
So in other words we believe that a rate hike would be better off in early 2016.
(END VIDEO CLIP)
QUEST: Square that circle with the numbers that you saw today.
ROGOFF: Well, she said it a day ago and she did put an "if," you know, what the numbers were. And this was a big jobs report. It was very
positive, more than people expected. And Christine Lagarde mentioned wages; they went up. That was one of the most positive elements of the
report.
QUEST: What's the fear for the rest of the world in terms of the emerging markets? We something about this during the tightening tantrum, we all
did, the tapering tantrum, when markets were very oddly disrupted when the Fed started to taper.
ROGOFF: Well, let's get one things straight. There was a huge sigh of relief here that the U.S. is growing when nobody else is. So Europe,
Japan, they're pretty happy about this.
But the emerging markets, a lot of money rushed into there when things weren't going well in the advanced countries. And they're worried it'll
rush out as interest rates start rising. There are a lot of corporate borrowing, particularly in dollars.
On the other hand, they have flexible exchange rates which means they can just let their exchange rate go down instead of having a crisis like in
Greece.
QUEST: Glad you mentioned Greece. Stay exactly where you are.
Ken has elegantly taken us on to Greece, where the Greek prime minister has told his parliament that Europe's plan to resolve the country's debt crisis
is absurd and should be withdrawn. This is hardly a promising sign after weeks of meetings.
And now Alexis Tsipras says the two sides are closer together than ever but still unimaginably apart.
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ALEXIS TSIPRAS, GREEK PRIME MINISTER (through translator): The proposal given to me by Juncker and the institutions the other day in Brussels
really came as a nasty surprise to me. I couldn't ever have imagined that they would have handed over to us a proposal which didn't bear in mind the
common ground that we have found over the past three months in the Brussels group.
(END VIDEO CLIP)
QUEST: This does not bode well as the deadline looms for the end of the month for Greece to pay all of its June debts to the IMF.
Samuel Burke explains how we got to this point.
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SAMUEL BURKE, CNN CORRESPONDENT (voice-over): Greece waited until nearly the last minute to bundle. The government says it has the money, which
raises the question, why won't it pay?
RANA FOROOHAR, CNN CORRESPONDENT: I think that this is really the most worrisome point that we've seen in a couple of years in the European debt
crisis.
BURKE (voice-over): The Greeks are taking advantage of a rule not used for decades to save on the transaction cost of multiple payments. The savings
here: just $137, according to one asset manager, making it clear that above all these negotiations is the grand politics of the Eurozone, the
creditors with their demands for cuts and Greece with two red lines it's refusing to cross, cutting welfare for pensioners and a 10 percent VAT
increase on electricity.
Greece has said no. And now it bought until the end of the month, the new deadline has plenty of skeptics.
UNIDENTIFIED MALE: The considerable most likely scenario is that there's now a series of defaults through the summer and then eventually later on in
the summer, perhaps early in the autumn, the Greeks leave the euro.
BURKE (voice-over): Just this Thursday, Angela Merkel reaffirming to CNN that while negotiations are tough, they're still aimed at keeping Greece in
the Eurozone.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): At the same time, Greece has to be willing to undertake the necessary reforms because
in the end the country brings itself on a group course by its own efforts.
BURKE: Greece must now pay $1.7 billion by June 30th. The date may have changed but the bottom line still has not -- Samuel Burke, CNN, London.
(END VIDEOTAPE)
QUEST: Ken Rogoff's with me, who -- it was a tour de force in terms of Greece's decision to delay.
And it's obviously a political decision to do so.
But when you hear Tsipras' comments, they're still far apart.
ROGOFF: Yes. It's just not clear what the end game is here because Greece has been getting piles of money. It has not been making big repayments to
creditors; it just started to. And yes, they're not going to pay it. But at the same time, even if they don't, they're still going to have a massive
recession. They had a big credit card, the current credit card's been taken away completely now. And even if they don't repay it, it's going to
be really tough. There's a blame game going on.
QUEST: But that blame -- I mean, do you believe Greece exit from the Eurozone is -- I mean, Christine Lagarde said, yes, it's a possibility; it
could happen.
Do you believe it?
ROGOFF: I don't. I think it's more likely if they go in that direction to do what we have capital controls, make it hard to take money in and out of
Greece. It -- we've had that many times all over the world, even in Greece.
And it makes the euro in Greece worth less than a euro outside of Greece. But it's not as dramatic. But you could say it's temporary, some day
you'll be able to get your money, all the contracts are the same. That's my guess at where it's going to head. I don't know when it's going to get
there.
QUEST: When we look at this bifurcation between U.S. growth, new jobs, all these sorts of things and you look at what's happening in Europe, at the
moment, with Greece, still stuck, arguing the debates of five, six years ago, it's a very telling point.
ROGOFF: Well, Europe is emerging. So the U.S. is very far along now towards coming out of the debt crisis.
Europe's a long ways out. But there are parts of it that have a ways to go. And the rest of the world's not doing that well. China's entering
something worse. So we're in a situation with the U.S. is leading the way out; Europe's hoping to follow it. I don't know if Greece is going to tag
along. But it could still take a while.
QUEST: Good to see you, sir. Thank you very much.
Shares in Athens -- let's just wrap up the weekend, the euro market, they fell almost 5 percent. You don't need me to go into much reasons why. We
listen to what Tsipras said and you listen to -- you saw what happened today, nearly 5 percent. All the other markets were down. In case of
Germany and France, more than 1 percent. London sort of held onto its own just about.
On the U.S. markets, the Dow was slightly down. The S&P was flat. The Dow is under 18,000 by some change and the Nasdaq was slightly up for the day.
It was a solid report. That solid report's the potential rate because that report suggests rates will be going up sooner rather than later.
There was one point to note. Cyber security stocks after the U.S. accused China of a massive cyber attack, not surprising the cyber attack was good
for the stocks.
My tie today seems to match the mood of the markets.
The cyber attack is also being called the biggest ever on U.S. government computers. Almost every federal agency has been hacked. The information
of millions of employees compromised and we're going to show you how widespread after the break -- QUEST MEANS BUSINESS.
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QUEST: The United States is firmly blaming China for what could be the biggest hack of U.S. government computers ever. The information of some 4
million past and current federal employees was from every government agency may have been compromised.
Now China has denied the accusation. However, its embassy in Washington did call the speculation irresponsible and counterproductive.
It was initially believed that the breach was limited to just two government agencies. But investigators think every department was hit. So
let's just look and see.
This is, of course, famous Washington, D.C. The hacks on the Washington capital have grown bolder. Last year, the State Department had to shut
down its email system after a cyber attack. Russian hackers were suspected. Then it turned out those same hackers, whoever they were, also
targeted the White House on Pennsylvania Avenue. Officials only say unclassified information was compromised.
So from the State Department to the White House, now it's almost all agencies, including those of the Office of Personnel Management in this
latest hack, intelligence officials telling us it's part of a Chinese operation to compile a database of Americans.
Extraordinary business.
Evan Perez joins us now from Washington, where I'm sure you haven't yet been hacked, although maybe you have before teatime.
Evan, this is on a different scale this hack isn't it?
EVAN PEREZ, CNN CORRESPONDENT: Yes, Richard. This is on a different scale. We're calling this -- officials call this the mother of all hacks
simply because of the volume of data, the value of this data. You refer to this database of Americans that the Chinese are suspected to be building
according to intelligence on law enforcement officials here in the United States.
And why would be doing that, you would ask?
Well, possibly because it's of great intelligence value to them. This person, the Office of Personnel Management, for instance, the files there
would include very sensitive data on people who applied for security clearances. Now I'm told that the data that was pulled out does not
necessarily goes through the clandestine officers, some of the most sensitive of the jobs. However, some of those people begin at lower
levels. And so that data may also be included in this. And it is very useful if you're a Chinese intelligence analyst, to be able to figure out
who you want to target for future attacks.
QUEST: The question, of course, is in Washington, what are people saying at all levels? Because you have the State Department, the Pentagon in some
cases, at some of the extremities. You've had the White House. Now you've got this.
I mean, are they -- they're obviously concerned. But what all the lawmakers saying needs to be done?
PEREZ: Well, there's a huge amount that needs to be done. They've been trying for at least the last couple of years -- I've been talking about it
-- they've been talking about passing legislation that allows the government to better monitor its computer networks. And every year, as you
know, not much gets done on Capitol Hill here. They just argue and argue and nothing ever happens.
So that perhaps, this attack perhaps will change that atmosphere. We know that the Department of Homeland Security, which is in charge of essentially
guarding these computer systems really didn't see this. These hackers were in there for months before they detected this intrusion in April.
So we're talking about definitely asleep at the switch somewhat and now the question is how do you prevent the next one? Because now that the Chinese
have gotten it, you can bet that other agencies, other countries will want to do the same.
QUEST: Evan, thank you for that.
Joining us now from Mountain View in California is Rod Beckstrom, former director of National Cyber Security Center and the former CEO of ICANN, who
knows the Internet inside out and upside down.
Rod, so this is -- I mean, we are becoming almost inured and immune to another story of hacking.
When do you think -- how serious is this hacking?
ROD BECKSTROM, FORMER DIRECTOR, NATIONAL CYBER SECURITY CENTER: Well, in this case, it's very serious incident, as Evan said. This is quite a trove
of data. I would call it the mother lode of U.S. government data that they've gotten. There are some more sensitive things they might get at.
But this is becoming a part of our modern life. The simple reality, Richard, is that the Internet was never designed for security and we're
using it for almost everything today. And with that everyone and every organization is vulnerable.
(CROSSTALK)
QUEST: Let me jump in there because if that's right -- and there's two distinct groups of hackers here -- there are those people who are, if you
like, out to cause mischief and mayhem and there are those who are out to steal, national governments. And I suspect that the Western governments
are doing it as much the other way as the other way are doing it to the Western governments, not that you may be able to comment on that.
But what's the answer?
BECKSTROM: Yes, the answer is we've got to move towards international norms, treaties, agreements on cyberspace in the same way when we invented
nuclear technology, it change armaments and warfare.
We've got an escalating cyber arms race going on between countries and hackers. The security industry building the best defenses they possibly
can and these attacks may be more important that they do so. But we're going to have to get to international agreements on that. And these
discussions are underway. But they're slow. They're tedious. They're going to take I think quite a bit of time.
And in the meantime, government agencies, companies and others have to focus more on their security efforts.
QUEST: Right. But what's at risk in all of this?
I mean, in my case, if somebody hacks my bank account or whatever, I potentially could lose money but the bank will reimburse me. And we all
know how that works.
In the case of these governments, what -- is the fear they steal the secrets? Is the fear they get nuclear launch codes, that they shut down
the electricity?
I don't understand what the fear is.
BECKSTROM: Sure. Well, there's different fears. So let's take the nuclear one for a moment, which is a big focus for all countries in the
world. Thank goodness the -- all the major cyber powers are also nuclear powers. And the nuclear powers have reach peace of the world -- thank
goodness -- that has lasted since the end of World War II.
Well, since when no nuclear weapons have been used, thank goodness.
So there's agreement amongst those parties to continue to maintain the safety of those all-powerful instruments.
In the case of cyber, it's very different, though, because what gets developed as a hacking tool by a nation state or by a hacking group can
quickly get adopted by others because once it's discovered and often they're discovered within hours or days, they're out there for everyone
else to use. So it's a very different cycle and dynamic we're going through in this era than in the nuclear arms race era.
QUEST: A CEO once said to me -- and an expert; I'm sure you might have been used later to me -- that any chief executive that does not take cyber
security as the number one threat and have their cyber chief reporting directly to them is being negligent and should be fired.
Would you agree with that?
BECKSTROM: Pretty much so, yes. Definitely the top security expert in the firm should be reporting to the CEO, should be reporting to the board risk
committee or audit committee. Boards of directors and surveys have admitted they don't understand this problem. That means you've got to
spend more time on this.
And the reality is Richard, is, well, we've got to advance our own risk management methodologies in this whole field, integrating traditional
economic analyses with the very complex technical analysis that's going on.
QUEST: Thank you for joining us, sir. Have a lovely weekend. Thank you.
World leaders and protesters are heading to Bavaria this weekend. Now both groups are hoping to set the agenda of the G7 meeting in Germany.
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QUEST: The G7 summit hasn't even started and protesters are already clashing with the police in Germany. It was mainly argy-bargy, pushing and
shoving as demonstrators for the 17,000 police brought in for the summit.
Karl Penhaul is in Garmisch in Germany, where the summit is going to take place.
I suspect both sides are sort of digging in for what could be a long weekend. But, Karl, how serious are these demonstrations or is it just a
bit of noise and fury?
KARL PENHAUL, CNN CORRESPONDENT: Well, the demonstrations, Richard, are serious. Why? Because behind these demonstrations there are serious
ideas.
Our attempt getting here early was not only to look at the argy-bargy -- and we did see some of that today -- but also to hear workshops, forums and
discussion groups that have been going on, talking about why they feel the need to protest. These are groups. There are myriad groups. They're
united in a common dream, that of building a better, fairer world for everybody.
They're united, too, in a common hatred of the G7 leaders because they believe that they're dividing world politics and world finances for their
own benefits, not for their citizens and that of the global community.
Then beneath that, there are all myriad concerns, like fighting world poverty, solving the world refugee crisis, cutting down on military
spending, combating climate change, you name it. There are concerns there and they've been talking about how to do that. But it was a demonstration
in Munich -- let's look at some of the ideas on display there.
(BEGIN VIDEOTAPE)
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PENHAUL (voice-over): The drumming of support to fight the system.
The first of many protests and events planned for before and during the G7 summit. Have a look around, there's a mixture of Greens, leftists of
different stripes, anarchists and simply concerned citizens.
Leaders of the seven most industrialized nations, the G7, will meet at a castle south of Munich at the weekend. Protesters decried that it's a club
of elitist fat cats.
JOHANNES GERGEN, G7 PROTESTER: We think that the G7 is not democratic.
UNIDENTIFIED MALE: (INAUDIBLE) for one crime, the G7 state are committing (INAUDIBLE). They're Communists that (INAUDIBLE).
PENHAUL (voice-over): Vastly different groups, vaguely united behind a dream of a better future.
Why on Earth are you rolling the world down Munich High Street?
UNIDENTIFIED FEMALE: (INAUDIBLE). And we have to protect it.
PENHAUL (voice-over): Everyone marching seems to have their own beef.
UNIDENTIFIED FEMALE: Today we're here and put any liberation thought of during this big demonstration against capitalism.
UNIDENTIFIED MALE: (INAUDIBLE).
UNIDENTIFIED MALE: In Germany, the majority of the people is against genetically organically modified organisms. That's a fact.
PENHAUL (voice-over): Anti-globalization and anti-G7 protests have a reputation for turning violent. We're making our way down to the place
where the demonstration is due to start and already we see that there's massive buildup of police presence.
How's the demonstration going to be today? Big demonstration?
UNIDENTIFIED MALE: (INAUDIBLE). I don't know.
PENHAUL (voice-over): Is it going to be cool? Is it going to come?
UNIDENTIFIED MALE: I hope so.
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PENHAUL (voice-over): Back at the demo, riot police march to a reggae beat.
While these protesters were clear their revolution was going to be a fiesta. But a party move may yet sour, demonstrators are vowing in the
coming days to try and shut down this summit.
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PENHAUL: Now police say there were 34,000 demonstrators on the streets of Munich; thousands more are now flocking here to the town of Garmisch-
Partenkirchen, close to where the G summit will be held starting on Sunday. More demonstrations, of course, are planned. Another of the immediate
concerns of the protesters of course is the cost of staging this summit, together with security and the whole organization, a budget of around $150
million we're told, Richard, just to put that in perspective. That is a little bit more than the European Union is spending this year on plucking
refugees out of the Mediterranean as they try to cross from North Africa into Europe -- Richard.
QUEST: Karl, of course, those of us who've covered G7s over the years, the mere fact that it's G7 and not G8 since Russia has been excluded, expelled,
kicked out, booted, whatever you want to say, that in itself is going to be one of the talking points there, the poor, the dwindling relationship
between the West and Russia.
PENHAUL: Absolutely. I mean, people here though, however, talking among the protesters that we've talked to, they say, yes, fine. Boot out Russia.
Nobody really is defending their decision to go and invade Crimea, for example. Nevertheless, there are still a core of protesters here who
adhere very strictly to Communist ideals, to socialist ideals. They were telling me only yesterday they feel a kind of socialism that was put into
practice in the Soviet Union was not the right kind. Socialism, some of these protesters say, could be the solution going forward. Others say
we're well beyond now the debate between capitalism and socialism. We have to look for much broader, much more intelligent solutions.
And so, yes, these demonstrations are a little bit of a talking shop. There also could be some action. As I say, it is very clear that there's
no love lost between the protesters or the police; battle lines seem to be being drawn and we're keeping an eye on that -- Richard.
QUEST: And you'll be there all weekend. Thank you, Karl Penhaul in Germany, watching the G7.
OPEC says it will keep the oil flowing and the competition and the markets have given their response. We'll continue our look, a showdown over oil --
QUEST MEANS BUSINESS. Good evening.
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[16:31:38] QUEST: Hello, I'm Richard Quest. There is of course more QUEST MEANS BUSINESS in just a moment when we're going to visit the town in
North Dakota that's seeking divine inspiration for its future in fracking.
And there's more. I'll be speaking to the U.S. soccer legend Landon Donovan after a week of turmoil in FIFA.
But before all of that, this is CNN and on this network the news always comes first.
The United States says China is behind what could be the largest-ever cyberattack on U.S. government computers. The information of millions of
employees from almost every U.S. agency may have been compromised. China says the U.S. accusation is counterproductive.
(BEGIN VIDEO CLIP)
HONG LEI, CHINESE FOREIGN MINISTRY SPOKESMAN, VIA INTERPRETER: (AUDIO GAP) China resolutely tackles cyberattack activities in all forms. China itself
is also a victim of cyberattacks. We are willing to have global cooperation in this field to build a peaceful and safe, open and
collaborative cyberspace.
We ask the United States not to be so skeptical and stop chasing the wind and clutching the shadow. But instead, add more trust in cooperating in
this field.
(END VIDEO CLIP)
QUEST: Police in Pakistan say eight of the ten people believed to have been convicted over the attack on Malala Yousafzai have in fact been
acquitted. Malala was shot in the head by the Taliban gunmen in 2012. It now appears only two of the defendants were sentenced to life because there
was not, in their words, "not enough evidence to convict the other eight."
Iraq's foreign minister under Saddam Hussein has died. Fariq Aziz suffered a heart attack in prison. He was 79 years old. And Iraqi court sentenced
Aziz to death in 2010. His health had been in decline for some time.
The Greek prime minister has told his parliament that Europe's plan to resolve the country's debt crisis in his words, "is absurd and should be
withdrawn." After a week of meetings, Alexis Tsipras says the two sides are closer together than ever, yet still unimaginably far apart.
(BEGIN VIDEO CLIP)
ALEXIS TSIPRAS, GREEK PRIME MINISTER, VIA INTERPRETER: The proposal given to me by Juncker and the institutions the other day in Brussels really came
as a nasty surprise to me. I couldn't ever have imagined that they would have handed over to us a proposal which didn't bear in mind the common
ground that we have found over the past three months in the Brussels group.
(END VIDEO CLIP)
QUEST: There are signs of stronger growth in the U.S. economy. The monthly jobs report came in better than expected. Two hundred and eighty
thousand jobs were added in May. The unemployment rate ticked slightly higher as more people started to look for work.
It's official. OPEC is not cutting oil production despite prices which have fallen 40 percent over the past year. OPEC nations made the
announcement after the meeting in Vienna on Friday. It's the latest move in the battle between OPEC and Western oil producers.
[16:35:08] That battle leaves many producers struggling to break even, even as oil supply outstrips demand. And the price a barrel -- just take a look
if you can see. That's how the price moved -- quite a long range. It went from $62 down to $60, then up, then down, then up. It shows you exactly
what was happening on Brent crude.
But what's fascinating is despite this extreme volatility, the Brent prices spiked higher after the decision was announced and falls back in volatile
trading.
What is fascinating to note -- despite these spikes and troughs, the price ends pretty much not too far away where it started from.
OPEC's secretary general says all OPEC countries agree to keep production going with a smile. CNN's John Defterios asked him if this decision was
more about the fight for market share than a fair price for oil.
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ABDALLA EL-BADRI, OPEC SECRETARY GENERAL: The market share was not in this time in -- the circumstances did not dictate that we look at the market
share. OK, $30 million is fair for us and we're going to keep it.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: There's an argument -- and I've heard it from Iraq, Venezuela, and Nigerians that this is not a fair
price around $60 to $65 a barrel. Are you serving the needs of all your members today would you say?
EL-BADRI: Well all our ministers they agree. They know the price, they know their production and so everybody -- all of them they agree.
DEFTERIOS: But why are they suggesting they would like to see a higher price and how do you get a higher price?
EL-BADRI: Well if you have a commodity you would like to see a higher price but you have to abide by the market mechanism.
DEFTERIOS: And are you surprised by the resilience of the U.S. shale producers or the non-traditional production today. They're not going away
and they can still survive at $60 a barrel.
EL-BADRI: Let me tell you something, (AUDIO GAP) a lot of American they don't understand what they say. I said American tight oil -- we call it
tight oil -- we welcome it. It is another addition to the supply. But it is very expensive and I approve (ph) of that, I am correct. Because their
rigs from 1,609 riggers today drop to 646, is a lot of projects being deferred or cancelled.
So, and there is a trend of decline in tight oil.
DEFTERIOS: But there's a decline in tight oil rigs but not tight oil production today.
EL-BADRI: No, no, tight oil production will come. This is very short time. You know, six months this is not that time. You will see.
DEFTERIOS: And how do you counter the argument that OPEC's become an organization designed for the primary Gulf-producers of the Arabian
Peninsula led by Saudi Arabia, sir?
EL-BADRI: If you -- if you were with me today, you see that OPEC is from all the countries -- from Nigeria, from Iran, from, you know, Ecuador, from
Venezuela. You see that this from three/four continent all agree on this decision -- with a smile too.
DEFTERIOS: Final point here. Iran is a big question mark. If they get an agreement at the end of the month, the oil minister Mr. Zangeneh was saying
they'll have another million barrels a day by December. That creates even more oil for this market. How do you handle that?
EL-BADRI: One-time comers worth soloth (ph).
(END VIDEO CLIP)
QUEST: That's one way of looking at it. I spoke to the chief executive of Norway's Statoil. Now, whichever way you look at it, everybody in the
industry is absolutely perplexed about how to handle the strategy when oil prices are showing such volatility.
In the case of Statoil, he told me the plans of the reality of low oil prices but maintaining production.
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ELDAR SAETRE, CEO, STATOIL: Well, at least for now the rules have changed. It still remains that there is a 5 percent annual decline in oil production
out there and sooner or later that will have to be replaced by new barrels and they will have to come from somewhere and reflect the fundamental cost
structure of the industry.
So I think at one point we will -- we will have to face the cost curve and then it also becomes very important how the industry's addressing the
increasing costs that we have seen in the industry over the last few years.
QUEST: Is there a contradiction between the measures designed to reduce carbon emissions -- and let's face it -- become more environmentally
conscious and the current scenario where the Saudis are pumping hell for leather to maintain market share. The U.S. is reforming to try and
maintain market share. Everybody wants to maintain market share but where does conservation come into that equation?
SAETRE: Well I think that's my point. You have to introduce a cost on carbon. That's a real cost that industry, all players will have to relate
to and that will gradually also change behavior and consumption patterns.
[16:40:11] So I think the response to that is really that, you know, we need to introduce something which is sufficient and works towards the
industry and has an impact.
QUEST: It 'em in the pocket! is what you're saying.
SAETRE: That's worked for decades, you know. That what shapes the wealth of nations today and I think the monetary system is still very efficient
and is the language that that industry understands -- and consumers understands as well.
(END VIDEO CLIP)
QUEST: That's the view of Statoil on the question of OPEC.
When we come back, a day at the movies where frankly real life is more exciting than that which you see on the screen and the movie itself is
being panned. In a moment.
(COMMERCIAL BREAK)
QUEST: Was the end of a very busy week -- perhaps one of the most turbulent weeks of FIFA history. What better way than to celebrate than
some popcorn, a cold drink and the release of a Hollywood movie. Hitting theaters on Friday is "United Passions," the dramatic recounting of FIFA
history.
Now the critics have panned the film. They call it a sanitized corporate propaganda. And the waves of scandal and misconduct, the real life of the
last week have largely been scrubbed from the plotline. You don't even get a tinge or scintilla of scandal.
And FIFA even contributed up to $22 million of the $26 million-dollar cost (AUDIO GAP) got it all. Apart from its loose relationship with facts, it's
also apparently not very entertaining. So, Claire Sebastian went to find out and have a look.
(BEGIN VIDEO CLIP)
(BEGIN TRAILER OF "UNITED PASSIONS")
MALE ACTOR: I don't know where the money's gone. I mean I have my suspicions.
(END TRAILER)
CLAIRE SEBASTIAN, CNN PRODUCER: The words are almost prophetic. This is the movie version of Sepp Blatter played by Tim Roth and largely bankrolled
by the football organization itself. It presents FIFA as it wants you to see it. Unfortunately, the past two weeks have rewritten the script.
LORETTA LYNCH, U.S. ATTORNEY GENERAL: They corrupted the business of worldwide soccer to serve their interests and to enrich themselves.
SEPP BLATTER, FIFA PRESIDENT, VIA INTERPRETER: That's why I'm going to put my presidency forward to a special elective congress.
SEBASTIAN: FIFA officials arrested and accused of corruption, the resignation of Sepp Blatter -- all this makes for moments in the film where
the irony is hard to ignore.
(BEGIN TRAILER OF "UNITED PASSIONS")
MALE ACTOR: The whole machine's going to blow up.
MALE ACTOR 2: (Inaudible).
(END TRAILER)
SEBASTIAN: It also stars Gerard Depardieu who plays Jules Rimet, the founder of the World Cup. Depardieu was there to celebrate as the movie
premiered at the Cannes Film Festival last year.
As it opened Friday in the U.S., the scenes were a little more modest. This movie theater is the only one in New York showing "United Passions"
although there are a few others around the country. We're just a few minutes from the very first showing and, well, they're not exactly fighting
off the crowds.
[16:45:11] STEPHEN O'REGAN, MOVIEGOER: I'm the only person going to see this film?
MALE: So far.
O'REGAN: (LAUGHTER).
SEBASTIAN: Football fan Stephen O'Regan was the only person who turned up in time for the lunchtime showing.
O'REGAN: The planning of when this film was released is completely and utterly bizarre, you know? So, yes, I just thought yes, I have to go see
it.
SEBASTIAN: Critics have universally panned the production. "The Hollywood Reporter" described it as a "cringeworthy self-aggrandizing affair" and the
noskel (ph) in "The Guardian" went one step further. Jordan Hoffman is the author of that article.
JORDAN HOFFMAN, FILM CRITIC: It's less of a movie than more of like a propaganda film that would be shown at a corporate retreat -- like look how
great we are. The fact that it got out into the wild, that in itself is sort of fascinating.
SEBASTIAN: In a letter posted to FIFA's website last year, FIFA's secretary general Jerome Valcke said, "We are very confident that this
movie will effectively impact upon FIFA's image and show positive results."
Critics say if that was the intention, this may have been the ultimate own goal. Claire Sebastian, CNN New York.
(END VIDEO CLIP)
QUEST: All of this unwanted publicity comes on the eve of one of the biggest weekends in the football calendar. On Saturday, the Champions
League final is going to be held in Berlin between Barcelona and Juventus. It's the most important football match of the year in Europe.
And the 2015 Women's World Cup also kicks off a month of play in Canada. Let's put this all in perspective. Landon Donovan who's widely considered
the best football player ever to come out of the United States joins me now from Los Angeles via Skype.
Sir, thank you for joining us. I mean, -- the -- we will -- I don't know whether you're intending to see this movie about FIFA. But it sounds like
if there was a prize for bad timing, this would get it. And if there was a prize for bad movies, this would achieve it as well. Would you agree?
LANDON DONOVAN, FORMER CAPTAIN, U.S. MEN'S NATIONAL TEAM: (LAUGHTER). Yes, completely. I think I might have to see it now. It's been a crazy
week obviously and it really -- there's no good time for this to come out.
But with the Women's World Cup, the Champions League final, it's pretty messy right now.
QUEST: So, what has been fascinating here in the United States is the discrepancy between this and the rest of the world. The FBI and the DOJ
lead the way in all of this. But football or soccer is not as great as elsewhere and it hasn't been big news here in the U.S. Help me understand
and square this circle.
DONOVAN: Well it's, I mean, it's the same thing with anything in the soccer world. Obviously it gets more attention around the world, but I
think what's made this a headline story in America is that the Department of Justice and the FBI are looking into this seriously.
So if you're a casual sports fan, a soccer fan or just a business fan or a fan in general of politics and sports, this is fascinating for you. And
for us that are intricately involved, it's been the biggest eye-opening week I think in my career as someone who -- my career as somebody who's
associated with this game.
QUEST: Right. Did you always think there was something smelly and rotten in FIFA?
DONOVAN: Sure. I mean, we, you know, from the time I was 18 I heard -- you hear rumors and you hear rumblings about this guy (AUDIO GAP) -- be
careful with this guy, this guy is shady. And these are people that are high-ups in our confederation in CONCACAF, and when you go to tournaments,
you always sort of had this uneasy feeling sometimes when meeting certain people but you never wanted to believe it.
As a player, you want it to be pure. You know, you grow up playing when you're five years old because you love the game and it's pure. And when
you find out just how deeply connected all of these people were and how much money they were taking, the extent they were going to better
themselves personally at the expense of everybody else.
It's really disheartening and more than anything I'm just saddened by it. It's very sad.
QUEST: And what's fascinating here is because although in cricket, there has been match fixing -- many cases of match-fixing, many prosecutions of
match-fixing.
Here we are not talking about match-fixing in that sense. We are talking - -
DONOVAN: Yet.
QUEST: -- well, oh, oh, yet? You think there may be an allegation smirking somewhere? Or do we just don't know?
DONOVAN: Well listen, where there's smoke there's fire, right. And to think -- if people are willing to go to the length that they've gone, you
know. I read the indictment -- I don't know if everybody's read the indictment. But if you're going -- if you're willing to go to that length,
it's not a stretch to say, 'Here, you know, I'm going to bet on this game or I'm going to -- I'm going to -- do something to affect this game to make
money. These guys were willing do anything to -- for personal gain. So, of course it's possible.
QUEST: Final two -- final two questions for quick answers. Champions League final, Barcelona and Juventus -- who wins it?
[16:50:05] DONOVAN: Well the obvious answer and the one I will go with is Barca, but you just get some feeling in your gut that Juve is going to find
a way to win, so I'll stick with Barca, but I certainly wouldn't be surprised.
QUEST: I was going to ask about the Women's World Cup as well but we're out of time on that one. So, sir --
DONOVAN: Go USA.
QUEST: I'm sorry? Go USA, yes. Stupid question for me to have asked. I could've known that answer even before he said.
Well, all this week -- thank you, sir for joining us. All this week we've been looking at a world washed with oil. We end where we began -- in a
small town in North Dakota where an oil boom went bust.
(COMMERCIAL BREAK)
QUEST: It's the oil battle and it's a crude showdown. All this week we've been reporting on the global impact of OPEC's decision to keep on pumping.
We've seen the frackers of Williston, North Dakota. In Vienna, we spoke to the chief exec of the French oil giant Total. We've taken you to the Gulf
producers in the UAE and we've shown you the giant oil tankers floating off the coast of Malaysia.
Now let us go full circle. Let's end where we begin, this time with the church, the town of Williston and the locals praying for prosperity.
(BEGIN VIDEO CLIP)
(SONG) Our God is greater, our God is stronger, God you are higher than any other.
QUEST: At the New Hope Church, Sunday services are always full.
(SONG) God is bigger, God is stronger.
QUEST: Whether your services are traditional or modern, the economy is testing the faith of many. Growth in North Dakota has slowed after oil's
big fall.
After the praying comes the politics and here they are sure the Saudis have me their match.
MALE: I will tell you this, look here, they're hurting pretty bad. I think their deficit's gone through the roof. (LAUGHTER).
QUEST: Williston's economy runs almost entirely on oil and gas too. During the peak of the boom, oil was a beacon of hope.
SHAUN BREILAND, PASTOR, NEW HOPE CHURCH: Oil was going crazy and then tons of people were coming here --
QUEST: Shaun Breiland, pastor of the New Hope Church grew up here. He's seen it all.
BREILAND: People were leaving desperate situations in different parts of the country and they were coming here and starting something new for their
families. And so the cool thing about that was people were getting kind of a new optimism in life.
QUEST: They don't call it New Hope for nothing. The word 'new' is everywhere -- new oil finds, new jobs, new homes, new beginnings.
MALE: We didn't have any work back in Washington State, we came here and found a job and life is great. It's awesome.
QUEST: Even with a slowdown?
MALE: Yes, even with the slowdown, yes.
QUEST: Today after church, there's only one place to go -- Gramma Sharon's for brunch. It's standing-room only here and there's a lot on the menu. I
don't know what to have -- tell me, guide me.
WAITRESS: Omelet, garbage omelet.
QUEST: What's in a garbage omelet?
WAITRESS: It has ham, sausage, bacon, green peppers, onions, tomatoes and cheese.
QUEST: The garbage omelet is just as it sounds. Luckily at Gramma's there's plenty of brunch favorites. Sir, nice to meet you.
MALE: Nice to meet you too.
[16:55:03] QUEST: Gramma Sharon's is a place for all the family.
FEMALE: And that's Connor, he's like my grandson, --
QUEST: Yes.
FEMALE: -- my son-in-law Corey, my daughter Christie, --
QUEST: Yes.
FEMALE: -- and my grandson Kayden.
QUEST: Wow. Family is important in Williston. Some fear the local sense of community was lost when the oil workers flooded in.
MALE: You used to walk into a place like this and you knew everybody. Now you're a stranger.
QUEST: Brunch and baptisms.
MALE: Therefore we baptize you in the name of the father, the son and the Holy Spirit.
(CHEERS)
QUEST: Williston's got the lot, but oil is still it's bread and jam.
(END VIDEO CLIP)
QUEST: The oil showdown. We'll have a "Profitable Moment" for you after the break. It's "Quest Means Business" (inaudible).
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." OPEC has decided today to keep pumping and the American frackers -- well they can now produce oil at lower
prices even though it is expensive nonetheless. A sort of quiet equilibrium may have been reached.
To be sure, they are not pumping or drilling as many rigs here in the United States, but that will soon change. What has happened over the last
year is that the balance of power in oil has shifted.
The U.S. is now the swing producer, but unlike the Saudis, when the U.S. needs to make a change, it does so on economic grounds, not because it's
ordered to at a government level. And that's the big difference that exists now in oil.
Economics, not politics is playing a much greater role. And that is "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever
you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you next week.
END
