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Quest Means Business
Varoufakis Says Greeks "Blackmailed to Vote 'Yes'"; Former Greek Finance Minister Says Current Government "Hijacking" Referendum; European Stock Markets Close Mixed; Euro Makes Back Some Losses; Capital Controls Squeeze Greek Business; Instability Weighs on Greek Tourism; Crisis Creates Daily Struggle For Greeks; US Unemployment at Seven-Year Low; Second Day of Losses in Chinese Markets; Concerns About Global Growth Slowdown
Aired July 02, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Crawl up is on the Dow, the markets moving in very minor movements as trading comes to an end. It's the second day of
the second half of the year, the third quarter, whichever way you want to say it. There goes the gavel, trading is over, it's Thursday, it's the 2nd
of July.
Tonight, don't be blackmailed. Yanis Varoufakis on this program tells me the Greek people must vote "no."
Losing time, patience, and cash. Greek business groans under the weight of capital controls.
And an historic settlement for an historic catastrophe. BP settles over the Gulf of Mexico oil spill.
I'm Richard Quest, live in Athens, where of course, I mean business.
Good evening from the Greek capital, where tonight, the finance minister tells me the Greek people are being blackmailed into voting "yes"
in Sunday's referendum. And Yanis Varoufakis will resign if the public does not reject the deal being offered.
The IMF is now warning that Greece will need more than $55 billion -- 55 billion -- just to stabilize the country over the next three years. The
Greek government says this proves the country's debt is unsustainable and that any deal must include debt relief at the front end, not later on.
Yanis Varoufakis told me a "no" vote is the only way to secure a long horizon for Greece's economic future. I asked the finance minister what
appears to be flip-flopping of policy, first saying yes, then going ahead with the referendum, and then after that, calling for a "no" vote. All-in-
all, if he now believes the creditors are looking at Greece and putting the country into an impossible, untenable position.
(BEGIN VIDEOTAPE)
YANIS VAROUFAKIS, GREEK FINANCE MINISTER: Well, think of what our positions are. What we're saying is, we will accept the reform package,
more or less as you are proposing it. But we want an answer to the very simple question: is there going to be a prospect for investors, both Greek
investors and foreign investors, to look at this proposal and say, I want to invest in this country?
And the genuine answer, the only answer that can come out of reading this proposal that was put to us is no. Why? Because this proposal
clearly says we're going to have another review next month, and another review in August, and another review in September, and then in October,
we'll have another negotiation in order to come up with another bailout program by November.
No sensible investor would invest. What we need in this country is stability. What we need is a reform package that we can start implementing
next week and a long horizon so that investors have the confidence to say, OK, our prices in this country are very low, there's a reason for us to
invest.
But these people have -- the Greeks and the IMF and the Europeans have sorted out an agreement which gives us this long horizon. We need this
long horizon, Richard.
QUEST: How much money is in the system at the moment? In the Greek banking system -- in the system. How much of the emergency liquidity -- ?
VAROUFAKIS: That is a highly impertinent question to put to a minister of finance.
QUEST: Because there isn't enough, is there?
VAROUFAKIS: Well, there isn't enough. Clearly, there isn't enough --
(CROSSTALK)
QUEST: Only a couple of --
VAROUFAKIS: -- this is why we have capital controls.
QUEST: -- there's only a couple of billion left.
VAROUFAKIS: I'm not going to give you numbers at this point. All we need to say --
QUEST: Why not? Why not?
VAROUFAKIS: Well, because -- because it's not helpful. It is clear that we are in a kind of lockdown situation in the banking system, the
purpose of which is to allow the Greek people sufficient time until Sunday and Monday to deliver a verdict so that they will have an agreement with
institutions, we have an agreement with our partners in order to be able to build a proper escape plan so that this economy can put behind the crisis
and move ahead.
QUEST: Let's take this step by step. If there is a "yes" vote --
VAROUFAKIS: Yes.
QUEST: Well, you've already said this morning you'll be out the door and you won't be around to -- you'll brief your successor and you'll be
gone.
VAROUFAKIS: Well, Richard, let's be clear on this. We're democrats. The reason why the banks are closed, what is the reason? The reason is
that the eurogroup denied the Greek people the right, which we wanted to give -- to be faithful to, to have a verdict on the proposal that was put
to us by the institutions. This is the only reason why the banks are closed.
[16:05:01] QUEST: You knew -- you knew, sir, that on the moment that referendum was called and the moment the bailout expired and the moment
there was a default on the horizon, you knew what the ECB's decision would be. Because if you didn't know, everybody else --
VAROUFAKIS: It wasn't the ECB's decision, Richard.
(CROSSTALK)
QUEST: Everybody else --
VAROUFAKIS: It was the eurogroup's decision. The ECB did what it could within its rules. What I knew was that the eurogroup on the 27th of
June put a cruel dilemma onto us. They said sign an agreement based on a non-viable proposal or we'll close your banks.
Now, any decent democratic government facing this dilemma, especially when this dilemma is put to you so that the people are denied a verdict on
this proposal, can make only one choice. Do your worst.
QUEST: The prime minister said in his address yesterday, he assured the Greek people that this wouldn't last long, that this would be over
quite quickly. But I suggest he's being disingenuous, because can't know that.
And the amount of damage, as, indeed, Minister Dijsselbloem said to me earlier in the week, the amount of damage that's come about because the
economy has effectively had a heart attack this week as a result of the banks being closed is going to make conditionality, the next agreement,
even worse.
VAROUFAKIS: Richard, you know that the essence of investment, it's forgoing present utility in order to achieve a better outcome in the
future. That's the essence of investment.
Think of what's going on in the last five months as an investment into achieving an agreement that is mutually beneficial for everyone. Why is
the Greek economy stagnating so badly in the last few months? Why are the banks closed? It is because the eurogroup has decided to blackmail our
government into extending and pretending further, like the previous governments were.
QUEST: And --
VAROUFAKIS: And we're not going to do this.
QUEST: And the eurogroup will say the banks are closed, the Greek economy's in the situation it's in because the government in Athens is
incompetent or inexperienced or maybe even both.
VAROUFAKIS: Richard, the reason why we were elected was because the eurogroup of five years has failed miserably. The institutions have
imposed a program of fiscal consolidation that will go down in economic history, global economic history, as the greatest failure ever. This is
why I'm sitting in this office now.
So, perhaps all sides should take a step back and reconsider their own contribution the last five years of this disaster and maybe they should
take very seriously the very simple proposition that it is time to stop extending this crisis into the future.
QUEST: Christine Lagarde said to me last night in an interview, she said -- I asked her, you know, the famous adults in the room line -- quote
that she said. She said we could still do with some more adulthood in the room. What did she mean?
VAROUFAKIS: What I can tell you is that adults do not hide problems under the carpet. They do not treat problems of insolvency as if it can be
dealt with with a few more loan tranches on conditions of more austerity, which reduces the incomes from which these loans will have to be repaid.
This is not what adults do. And judging by the last five years, the IMF, the European Central Bank, and the European Commission, have some
answering to do.
(END VIDEOTAPE)
QUEST: That's Yanis Varoufakis, the current finance minister. We'll hear more from him in the late -- later in the program.
Joining me now is Gikas Hardouvelis, the former Greek finance minister. You were Mr. Varoufakis's immediate predecessor. He took over
from you when they won the election.
GIKAS HARDOUVELIS, FORMER GREEK FINANCE MINISTER: Right. And I gave to him an economy that was growing, a country that had already arranged a
credit line with the Europeans, a country that was living -- abandoning the memorandum and was sailing for growth. We had access to the markets, and
we were planning to extend the --
(CROSSTALK)
QUEST: Right, but you also had a huge debt burden, which the IMF even today says was unsustainable. And to some extent, that debt sustain --
unsustainability, that debt burden was always going to have to be rescheduled. Would you agree?
HARDOUVELIS: No. Back then, the debt was sustainable. What makes the debt unsustainable now in the IMF's view is the fact that the economy
is not growing as fast, that the Greeks have screwed up. And what you have --
QUEST: The Greek --
HARDOUVELIS: What you have to remember is that the Greeks managed to reshuffle the debt, to rearrange the debt --
QUEST: Right.
HARDOUVELIS: -- from an average maturity of six years to an average maturity of 17 years and carries a very low interest rate. Its present
value, Richard, is very low.
QUEST: Let's talk about the state of the economy tonight. Tell me exactly what you're hearing about the ability of the Greek banking system
to survive, the ability of the money coming in. What are you hearing?
[16:09:59] HARDOUVELIS: Well, I hear and I see the economy has stopped working. Everybody's scared, people do not use their cars, they
have run on the supermarkets, they have run on medication, on pharmacies.
QUEST: So what -- but of course, you do represent a party that's looking for a "yes" vote in the -- or you were a member of a party that
wants a "yes" vote in the referendum.
HARDOUVELIS: This vote is a vote about being a member of the euro area.
QUEST: He says it's not.
HARDOUVELIS: Varoufakis is hi --
(CROSSTALK)
QUEST: He says --
HARDOUVELIS: -- is hijacking the vote of the Greek people.
QUEST: Well, he says not. He says that they're being blackmailed into voting "yes."
HARDOUVELIS: No.
QUEST: But actually, a "no" vote gives him a better chance to renegotiate.
HARDOUVELIS: Look at me. What is the question for yes or no? It's about the lenders' proposition. What is the lenders' proposition? Eight
and a half billion of restricted measures when Mr. Tsipras himself and Mr. Varoufakis actually signed a proposal of 8 billion. Are they kidding us?
Are they fooling the Greek people? They're actually hijacking their vote.
If they were sincere, they should have stood up and said this is our proposal, do you like it, or should we change it? Instead, they put
somebody else's proposal, which is not even on the table now. Come on. This is not exactly -- doesn't follow international democratic standards,
baby.
QUEST: Thank you very much. Thank you, sir.
HARDOUVELIS: OK.
QUEST: Don't think I get called "baby" every night. Let's thank you, sir.
Now, European stock markets -- it gives you an idea, though, of the ferocity of views -- not in the European stock markets, but what you've
just heard there, both sides of the economic argument at the moment.
But there are the markets, two down, two up. No major changes. Well, I suppose the CAC 40 was up -- was down the best part of 1 percent. London
and Zurich both saw small gains, Paris and Frankfurt down less than 1 percent.
We've been tracking the euro all this week. It made back some of its Wednesday's losses against the dollar. It came after the US jobs report
missed expectations. So, what you're looking at today was the dollar effect on the euro.
You've seen the bailout request, the bailout default, the Greek concessions, and as you can see, the euro tumbling up and down towards the
referendum date at the end of the week.
The krona fell against the euro after the central bank unexpectedly cut interest rates. The Swedish central bank has warned a strong krona
could hurt demand.
As we continue on QUEST MEANS BUSINESS, immediately after the break, we'll be looking at Greek businesses and the consequences of the crisis.
They're easy to judge and difficult to bear. Leaders will explain how they're coping. It's QUEST MEANS BUSINESS, live in Athens.
(COMMERCIAL BREAK)
QUEST: With every day the banks remain closed in Greece, things get progressively worse, both for individuals and businesses. And that's what
we're focusing on with tonight's program, looking at the business side.
After all, imagine running a business where the banking system is closed, not for one day, as with a holiday, but for nearly a week.
Withdrawals capped at 60 euros a day. The Greek savers are waiting for hours in some cases to get their cash out. And pensioners are having to go
to specific branches if they don't have ATM cards.
[16:14:57] Fitch says the four largest Greek banks have already failed. The ratings agency says only the capital controls have saved them
from default.
Tourists are not bound by the withdrawal limits, but the tourism industry are urging visitors to bring extra cash. In fact, the British
chancellor said that in the House of Commons. Doesn't matter, though. Travelers are canceling their holidays, and Greece's tourism chief warns
the country is losing 50,000 hotel bookings every day.
Fewer goods are leaving the country. The Greek exporters' association says firms stand to lose more than $88 million a week, and businesses
aren't faring any better on home turf.
(BEGIN VIDEO CLIP)
ALEXANDROS VOUGLOULAKIS, OWNER OF VEHICLE RECYCLING COMPANY: The entire business world in Greece today is practically frozen, OK? There is
no exchange being done in commerce or in trade or whatever. We are unable to buy or to sell something that will make us ten euros, OK?
Now, companies like this one, or other type of companies, will work for about one week or two weeks, then we'll run out of cash.
(END VIDEO CLIP)
QUEST: Capital controls and financial instability are having a detrimental effect on Greece's tourism, and the dip is lightly to have
knock-on effect on local business. Our next guest is the chief executive of Greece's largest airline, Aegean. Dimitrios Gerogiannis joins me here
in Athens. Sir, good to see you.
DIMITRIOS GEROGIANNIS, CEO, AEGEAN AIRLINES: Good to see you.
QUEST: An airline has huge requirements to be able to move money in and move money out.
GEROGIANNIS: Correct.
QUEST: You're buying fuel, you're paying salaries, you're paying landing charges. How are you managing?
GEROGIANNIS: Well, Aegean over the years has developed very strong relationships with international banks and its major international
suppliers. So, after all, most of our income comes from incoming passengers, and therefore it is earned abroad.
As a result, despite the capital controls, we have been capable to procure all our services and supplies, which are necessary to ensure not
only the integrity of our operation, but also full service to our customers.
QUEST: But then you have the question, of course -- I mean --
GEROGIANNIS: In fact, just two days ago, and within capital controls, we took the delivery of the brand new aircraft from Airbus as part of our
fleet investment program.
QUEST: Yes, but you're having to do it, pardon the phrase, by moving the money around in the sense that you're paying for your Airbus with money
that's not in the country --
GEROGIANNIS: That is true, because --
QUEST: -- by being held in remote accounts.
GEROGIANNIS: Correct. Is it held, also, outside the country.
QUEST: Right. Which is not a very satisfactory way to run a business.
GEROGIANNIS: True. It is not. It's a very difficult one. But the most important impact so far has been on demand and on incoming bookings.
QUEST: Talk to me about this, because this is very serious, because this is your future income --
GEROGIANNIS: Precisely.
QUEST: -- and it's the future income of the country itself.
GEROGIANNIS: Precisely.
QUEST: What are you seeing in bookings?
GEROGIANNIS: Since the first day of the capital controls, we have seen a significant drop in the incoming bookings, both for domestic and
international travel. So, this data, we have, also, data from the Federation of Tourist Industry in Greece which shows that this trend is
also prevalent to hotels all across the country.
So, damage to the season and to the most resilient job-creating industry in Greece, which is tourism, is already significant. And
unfortunately, we don't expect next weeks banks to open after the referendum. We expect weakness to continue for the next couple of weeks.
And we are very concerned about the weeks following. How many passengers are we going to have on our flights next month and this month,
this coming month?
QUEST: I know from previous experience that by and large, tourism is resilient in the face of crises such as terrorism. But I wonder whether
it's as resilient in the face of -- experts say it will bounce back when banks -- because people would have already decided, well, my summer
holiday, I'm not going to Greece, I'll go to France or Spain or somewhere else.
GEROGIANNIS: Well, we have faced crises in the past, and we have managed to go through them. However, right now, we need to have a quick
return to normality. This is a key factor. We need to have it as soon as possible before the damage -- in order to minimize damage to economy and
employment.
QUEST: Finally, I just need to give our viewers -- and I would like you to give our viewers -- because you're running a large airline. You own
both airlines. You've got Olympic and Aegean. You're the core of the economy. So, tell me how the bad the situation is. Is it a crisis level
yet, do you believe?
GEROGIANNIS: Well, it is a crisis situation, and we have to cope with it. As I said, as Aegean, we have faced crises in the past of different
sorts, and we have dealt with it. However, we really need to have a quick return to normalcy in order to minimize damage to the economy.
QUEST: Thank you, sir, for joining us.
GEROGIANNIS: Thank you very much.
QUEST: Thank you, sir.
Now, for small businesses -- because Aegean, obviously, is at the larger end. For small businesses, the latest crisis exacerbates an
economic situation that was already perilous.
[16:20:04] The little money small business owners can get has to go a long way. CNN's Isa Soares, also here with me in Greece, meets one man
struggling to provide for his family.
(BEGIN VIDEOTAPE)
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT (voice-over): Sakis has given his heart to these broken pieces, lovingly fixing and restoring them.
But now, after 40 years of labor, he's struggling to put himself together. His emotions are running raw.
SAKIS GRASSOS, PENSIONER (through translator): I'm 65 years old and I'm a beggar. How can I live? I've had triple bypass, and if something
happened to me now, would my wife have to decide to let me die because we don't have money?
SOARES: Sakis retired just two years ago and passed on his family carpentry business to his children, already in its fourth generation. But
even with the business, he worries about the life they'll lead.
GRASSOS (through translator): I feel very sorry for my children. My first son is looking for a job. My daughter is in law school, and I have
no money to send her abroad for something better. My third son works here, so at least he can have something to feed his family. There is no future
for young people.
SOARES: From time to time, he returns to this workshop to help out, but mainly to forget about the world outside, where millions of Greek
pensioners struggle to make it day by day.
GRASSOS (through translator): Every day, I go and wait outside of the bank for two or three hours to get 60 euros. I sold my wedding ring
because I had to. I sold everything just to get by.
SOARES: And in case I didn't quite understand his frustration, he takes out his wallet.
GRASSOS (in English): All my money.
SOARES (on camera): Twenty --
GRASSOS: Yes.
SOARES: Thirty-five.
GRASSOS (through translator): That's all I have, and I have to provide for my family. Ten euros for electricity, five for petrol. Some
for shelter and supermarket, and then that's gone.
SOARES (voice-over): Showing me around his workshop, he tells me he's seen many crises, having ten employees before to absolutely none now. From
it all, he came out stronger. But now at his age, he tells me, he's defeated.
SOARES (on camera): You're clearly very emotional. Are you angry, are you frustrated, are you sad?
GRASSOS (through translator): I am frustrated that this is the end of my life. I am angry at the people who brought us to this. I'm sad because
I cannot provide for my family. I'm sad I cannot enjoy the last years of my life after all the years I've worked for.
SOARES (voice-over): Heartbreaking words from a man who has spent his years giving life to broken pieces.
Isa Soares, CNN, Athens, Greece.
(END VIDEOTAPE)
QUEST: So there you see both sides of the business situation. We're going to talk more about how business is coping later in the program.
Now, in stark contrast to the situation in Greece, America's adding jobs by the hundreds of thousands. It's not all good news, after the
break.,
(COMMERCIAL BREAK)
QUEST: The US jobs report for June, it was strong enough to make investors think a rate rise is coming and probably sooner rather than
later. It wasn't quite an all-around success story. Take a look at the headline numbers, and they look quite good.
[16:25:03] The unemployment rate has fallen to 5.3 percent. That's stonkingly good. The lowest rate since April 2008, before the crisis. The
economy added a healthy 223,000 jobs, nearly a quarter of a million. But wage growth was stagnant, and our old friend -- or enemy, depending -- the
participation rate hit a 37-year low.
Now, that's always significant because it suggests people are simply giving up search for work. The job numbers for April and May were revised
downwards, which gives an idea of what the longer-term trend is.
All of this -- look at the number on the Dow Jones. It was closed slightly lower ahead of the Independence Day holiday, and that Dow Jones
number reflecting, of course, perhaps, the fear that rates will go up.
Now, there's no such tranquillity in China's market. Would that they only finished down 27.8 on the day. It was a second straight day of very
heavy losses in the Shanghai Composite. Markets in Shenzhen fell more than 5.5 percent. All the while, Beijing keeps repeating efforts to encourage
buying.
Ken Rogoff, we need you, Ken. Professor of economics at Harvard University, former chief economist at the IMF. He's at Watertown,
Massachusetts to help us make sense of it all. Let's start with Greece. You have been the canary in the mine for a very long time, saying this was
all going to go horribly wrong. So, Ken, does it get worse?
KEN ROGOFF, FORMER CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: Well, I think it's hard to see a pretty picture for the Greek economy. I
hope they vote yes in the referendum on Sunday. They've been offered a very good package.
But you know, the fact is, the Troika, the European Commission, the IMF, and the European Central Bank, they're asking Greece to do reforms
which they're not sure they want to do. And if the country doesn't want to do them, it's not going to work.
But then, Greece has to find another way forward. Their austerity is mostly because they were spending way beyond their means, and now they're
not able to.
QUEST: If it's a "no" vote and negotiations continue longer, how long can a banking system remain frozen, Ken?
ROGOFF: You can keep capital controls on for a very long time. Let's not forget, a lot of Europe had them into the 50s and 60s, and Greece had
them a lot longer. Of course, they have to open the banking system. They're going to have to support the banking system. They're madly
figuring out how to do that.
But I expect that's the most likely thing, they'll keep the capital controls, but they'll open the banking system and the economy will trudge
along.
QUEST: China -- you heard me talk about what's happening with the Shenzhen and the Shanghai market. But China, of course -- we hear mixed
reports about just what the growth rate is.
If that growth rate is artificially or -- artificially really high, and actually, China's only growing at 4 or 5 percent, not even the 7 and 8,
now worried are you that this bubble in property actually expands into the wider market and economy?
ROGOFF: Well, I don't think there's any question China's slowing and they're trying to deal with it. And I don't think the Chinese government
knows exactly what the numbers are. Let's not forget, it's well over a billion people there, and it's all spread out.
But I think the stock market's something else, that it's very new, it has a lot of retail investors. Only Chinese can invest in it. And so,
this sort of hyperactive stock market, the sort of growing pains, I wouldn't read too much into it. Let's not forget, it went way up, and now
it's come down.
QUEST: Ken, finally and briefly, of all the issues in the world at the moment economically, which one are you most concerned about when you
have a morning cup of coffee?
(LAUGHTER)
ROGOFF: Well, I think you've hit on the two. I think if China has a more severe slowdown, that's going to be a big problem for everybody, and
it's certainly been accounting for a lot of world growth, it's very fragile.
And Greece, it's certainly a very difficult situation. Is it going to spread? How much is it going to spread? I suspect it will be less than
people thought.
QUEST: Right.
ROGOFF: But of course it's risky.
QUEST: Ken Rogoff, grateful for you, sir, putting it into perspective for us tonight. Thank you for joining us.
QUEST MEANS BUSINESS from Athens, as we are all week. Yanis Varoufakis says powerful forces in Europe have been insisting on a non-
viable path for Greece. Those powerful forces we discuss with the Greek finance minister after the break.
[16:30:02] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment when Yanis Varoufakis tells me what happens if the Greek people
vote yes or no in this Sunday's referendum.
And BP shares soar because it's settled on the Deepwater Horizon oil spill.
We'll have all of those stories but before any of it, this is CNN and on this network the news always comes first.
Greece's finance minister says he will resign if the Greek people vote in favor of the latest bailout plan from the European creditors. Speaking
to me on "Quest Means Business," Yanis Varoufakis says the capital controls have been forced onto Greece by Europe, a situation tantamount to
blackmail. And a no vote is the only way to fix Greece's economic future.
(BEGIN VIDEOCLIP)
YANIS VAROUFAKIS, GREEK FINANCE MINISTER: We want an answer to the very simple question - is there going to be a prospect for investors - for
Greek investors and foreign investors to look at this proposal and say `I want to invest in this country' -- and the genuine answer, the only answer
that come out of reading this proposal to the masses, no. Why?
Because this proposal clearly says we're going to have another review next month and another review in August and another review in September and
then in October we'll have another negotiation, you know, to come up with another bailout program by November. No sensible investor would invest.
What we need in this country is stability.
(END VIDEOCLIP)
QUEST: At least 38 people have died after a ferry capsized in Central Philippines. A hundred and eighty-nine people were onboard, 17 are still
unaccounted for. Divers from the Red Cross are helping the Philippine coast guards with the search for survivors.
Navy divers are also using underwater flashlights to allow rescuers to continue searching at night. That of course is allowing that weather
conditions permit.
Tunisia has named a third man as being suspected of being involved in last week's beach massacre in Sousse. Officials say eight people including
a woman are under arrest. (COUGHS) - Excuse me.
Thirty of the 38 people killed were British. More victims' bodies were flown home to the U.K. today. Investigators in Taiwan have released
their findings into February's crash of TransAsia Flight 235.
Transcripts from the cockpit voice recorder show complete confusion after one of the plane's engine's lost power. The pilot appeared to shut
off the only working engine by mistake. As seen from the video, the plane clipped a taxi as it came down over the highway before plunging in the
river. (COUGHS) - I beg your pardon.
[16:35:01] Rafael Nadal is out of Wimbledon. The two-time champion was beaten in four sets by the unseeded German Dustin Brown. In today's
other second-round games, Andy Murray and Roger Federer both advanced in straight sets.
I do beg your pardon for my coughing during the news headlines. It's been a very hectic day that you can imagine. It's warm and humid here in
Athens. But it was another dramatic day in the Greek debt saga. Allow me to bring you up to speed.
The IMF warned that Greece will need an additional $65 billion to stabilize its finances. The Fund's new report calls on European creditors
to grant Athens comprehensive debt relief. The president of the European Parliament says faith in the Greek government has hit rock bottom.
Martin Schulz has urged the prime minister in Greece, Alexis Tsipras, to resign if the yes vote prevails in Sunday's referendum.
The Eurogroup President Jeroen Dijsselbloem is warning a "no" vote could cast out over Greece's future in the Euro.
(BEGIN VIDEOCLIP)
JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT VIA INTERPRETER: If people say we don't want that, then there is no basis. I think that there would
not only be no basis for a new program, but it would be very much the question whether there would be a basis for Greece in the Eurozone.
(END VIDEOCLIP)
QUEST: So, to the second part of our interview with Yanis Varoufakis who told me if the Greek people vote yes, he would consider it an
acquiescence to blackmail from Jeroen Dijsselbloem and the Eurogroup, but he would implement - or at least the government would implement - that
decision.
In the second part of the interview with the finance minister, I asked him if there's a "yes" vote on Sunday, will the government have difficulty
implementing it.
(BEGIN VIDEOCLIP)
VAROUFAKIS: The only thing you need to know and our audience needs to know is that as committed Democrats, we shall respect the right of the
Greek people to determine with a yes vote that the institutions' proposals should be signed into law. That's all you need to know, that's all these
institutions need to know, that's all the Greek people need to know.
QUEST: Will the Greek government fall?
VAROUFAKIS: This, you see, we fought very hard for the Greek people to have the right to say or to say no. If they say yes, we will respect
it. How they are going to do it and who will the minister that signs into law -
QUEST: It won't be you.
VAROUFAKIS: -- is neither here nor there -
QUEST: It won't be you.
VAROUFAKIS: -- I've already declared that it won't be me because I am not in the business of extending and pretending. I was elected - we were
elected - on a platform of ending the extend and pretend. But, if the Greek people under duress imposed upon them by closed banks from the
Eurogroup, decide that they want to say yes to the institutions, we consider this a kind of acquiescence to blackmail.
But if they want to do it that way, we shall respect it and we will do whatever it takes politically to make sure that their decision is abided
by.
QUEST: If it's a "no" vote, then the very agreement that you said you would accept, you're going to go and say we want to renegotiate.
VAROUFAKIS: Richard, it will be a day during which an agreement will be reached after "no" vote. And I'll tell you that the difference will be
that the "no" is going to lead to a viable agreement because the SLA -
QUEST: Why, why are you so sure about that?
VAROUFAKIS: Because we've had very good proposals during this week from official Europe that were not forthcoming until we'd declared that
we're going to have a referendum.
Europe needed this jolt, they needed this infusion of democracy. They needed to see that (AUDIO GAP) government we had politicians who were not
willing to go along the extend and pretend route, and who were prepared to say we will make very difficult reforms, we will cross (ph) many of our red
lines as we have done. But we are only going to do it in the context of debt sustainability.
QUEST: And you believed the only way, effectively, to force the European's hands was this referendum.
VAROUFAKIS: I didn't believe that. I was hoping that there would be no need to force their hand into logic. It makes sense, doesn't it? We
need to reform this country, we need a difficult reform package which will be painful - bitter medicine let's say, right? - but you have to go out
there to the people and offer them a prospect of recovery. And there can be no prospect of recovery when you live in a dark cloud of unsustainable
debt.
QUEST: What if the Europeans after a "no" vote say - because I listened to what President Juncker said, I listened to what Minister
Dijsselbloem said. They say, and they continue to say, there can be no talks as long as the position of the Greek government hasn't changed.
If there's a "no" vote, the position of the Greek government hasn't changed.
[16:40:08] VAROUFAKIS: Well for six months now I've learned -- this is my short political career - there is a major disconnect between press
conferences and what's said behind closed doors. And what matters is what's said behind - what is said behind - closed doors.
And I can assure you Richard that we have very good proposals being put to us during this week of turmoil. Maybe it's disagreeable, but Europe
had to be brought to this stage of a heightened crisis before we snatch a sensible solution out of the jaws of unsustainable agreements.
QUEST: Why do you think the Eurogroup are being like they are to Greece? Do you -- you don't think they want you out the Euro, so is it
that you're hoping that by being tough with Greece it sends another message to any other uppity countries that want to get difficult?
VAROUFAKIS: Richard, perhaps we can have this conversation after Sunday -
QUEST: No, no, you know what it -
(CROSS TALK)
VAROUFAKIS: -- and I know exactly what you mean.
QUEST: (Inaudible).
VAROUFAKIS: And I know exactly what you mean. But at this very moment, we're struggling for an opportunity to reach an agreement that is
beneficial to the whole of Europe. For me now to sit down here and speculate with you as to why it is that the Eurogroup has been insisting on
a non-viable agreement for us would not be helpful at this critical juncture - in the middle of this battle.
After the battle is over successfully in a way that is, as I said, beneficial to every European country, not just to Greece, then we can do
this historical analysis of exactly why it is that some forces - very powerful forces - in Europe have been insisting on a non-viable path for
Greece and for the Eurozone.
QUEST: It'd be more interesting to do it now.
VAROUFAKIS: Well maybe to you but these people out there including other European peoples, have expectations of us and they want us to do
whatever it takes to reach an agreement that will minimize the human cost of this crisis which we didn't have to have.
(END VIDEOCLIP)
QUEST: Yanis Varoufakis, the finance minister of Greece, talking to me from his - oh in his office which is just a stone's throw across from
Syntagma Square here in Athens.
BP reaches a settlement over the largest environmental disaster in U.S. history - the terrible day in 2010 and the month that follows has cost
the company tens of billions.
(COMMERCIAL BREAK)
QUEST: BP has agreed to a record-breaking payout to settle claims arising from the 2010 oil spill in the Gulf of Mexico.
Here's how the Louisiana attorney general broke the news.
(BEGIN VIDEOCLIP)
BUDDY CALDWELL, LOUISIANA ATTORNEY GENERAL: Today is not the end of a lawsuit, but it's the beginning of real restoration of the state of
Louisiana.
[16:45:14] And I am here today to announce the largest environmental settlement in history.
(END VIDEOCLIP)
QUEST: The oil giant will pay more than $18 billion to five Gulf Coast states affected by the spill. About three billion barrels of oil
spilled from the oil well, you'll remember, off Louisiana following the explosion aboard the Deepwater Horizon oil rig. BP's already been fined $4
billion after admitting criminal offenses related to the disaster.
Investors liked the deal. BP's shares - well not so much the deal, the settlement - they're up 4 percent after the announcement. CNN's
justice correspondent Evan Perez joins me now from Washington.
Evan, before we go any further, just answer once and for all - is this the end of legal liability for BP? Because every time we turn `round, it
seems as if there's another somebody else saying, you know, another billion here, another billion there. Is this it?
EVAN PEREZ, CNN JUSTICE CORRESPONDENT: I think investors are reacting because they do believe this is the end of at least any major, major costs
for the company arising from this oil spill.
However, the litigation is not over because BP is still trying to claw back from some from some of the settlement money that it has paid out in
the United States. There's hundreds and hundreds of claims that were made against BP and that BP believes were fraudulent.
And BP has actually been going on the offensive to try to get some of that money back. And so we expect that you'll see a lot more headlines of
BP fighting off some of these claims.
But for the time being, it appears the main headlines on how much money the company has to pay, that is over.
QUEST: And the Justice Department - the Louisiana Department - they obviously regard it as a triumphant success. But at the same time, they
have to balance the fact that BP is a large investor, it is a large shareholding company and it does employ many - many thousands - of people.
You don't kill the goose that may lay the golden egg.
PEREZ: That's right and I think Louisiana and a couple of other states where you have a lot more facilities from BP, they are very careful
about this. But there was a tremendous environmental impact that is clear that also affected the economy of those states. There's a lot of tourism
that comes through states, a lot of fishing that depends on the health of the Gulf of Mexico. All of that was deeply affected by this oil spill.
And here's the other thing - the Justice Department has also been having trouble in bringing some of the criminal cases against individuals.
There were some individuals, if you recall, Richard, who were charged with wrongdoing resulting from this spill and what - away from all of the
headlines -- what's been happening is some of those cases have been crumbling, partly because the Justice Department is not able to produce
what evidence, you know, it said it had and so that's been the problem.
QUEST: Even Perez at the Justice Department in Washington. Thank you.
PEREZ: Thank you.
QUEST: As "Quest Means Business" continues, anger and confusion as Greeks prepare for an historic referendum. We're going to gauge the mood
in Athens.
(COMMERCIAL BREAK)
[16:50:21] QUEST: Just a few days to go before Greece's historic referendum and the latest polls show a slight lead for the "yes" vote.
Forty-seven percent of those polled are in favor of accepting the creditors' demand. Forty-three say they would vote against it.
It's within the margin of error. The critics are arguing that many Greek people aren't even clear what's at stake. Even the ballot paper
seems cryptic. The wording is mired in complex jargon like "preliminary debt sustainability analysis."
The ballot also controversially puts the "no" option above the "yes" although arguably you could say it was done alphabetically - well at least
in the English alphabet.
Adding to the confusion, Greeks are being bombarded by campaign advertisements like this "yes" advert which is being aired on the national
station Skai TV.
(BEGIN VIDEOCLIP)
(IMAGES OF PERPLEXED PEOPLE)
(END VIDEOCLIP)
QUEST: Dramatic commercials from both sides are warning Greeks of a disaster should the opposition win the vote. This one talks about dignity.
Let's gauge the mood amongst the Greek people. Panos Polyzoidis is a current affairs journalist at Greece's Skai TV, joins me now. Sir, good to
see you.
PANOS POLYZOIDIS, JOURNALIST, SKAI TV: Good to see you.
QUEST: So, what's your feeling on how the polls - such polls as we have because we don't really have much to go on at the moment about the
trend on the vote.
POLYZOIDIS: Not really because it's all very fluid. The campaign has been - is - a very short one, just a week and it could still swing either
way really.
QUEST: What would be the factors? Because at the end of the day, the government is going hell for leather with this idea that a "no" vote will
give you a better deal and will not - and this crisis -- will not last that long.
POLYZOIDIS: Well obviously they don't have a real story, they don't have a clear game plan that could persuade many people. On the other hand,
they play on the fact that people are fed up with the problems they've had to face over all these - the last few years.
QUEST: What do you make of Yanis Varoufakis saying, yes, if we - if there's a "yes" vote - the government will respect the will of the people,
it will implement that "yes" vote with an agreement, but obviously he's not going to be around to do it.
POLYZOIDIS: Well, there's not - there's not an agreement on the table. I mean, the agreement that we Greeks are called on to vote on this
Sunday is no longer on the table. It has been withdrawn -- it has been improved and then withdrawn.
The question -
QUEST: They deny this. They say, yes, there is an agreement - it was the last agreement that was put out there and that will be the starting
point for the next agreement.
POLYZOIDIS: Well the other - the other side - say it's still, it's not on the table and the bailout program - the second bailout program - has
now expired. And technically it has.
Another factor of course will be the banks. They remain closed, people do not have access to their deposits, and frankly the 60 euro limit
has been going down. Why? Because the country has run - has been practically -- has been running out of 20s. So 20 euro - 20 euros sign
(ph).
So in fact you can only withdraw up to 50 because ATMs only serve 50s and 20s. You can't - there's no -- in many ATMs there's no way you can get
60s.
QUEST: So there isn't actually the money in the - the physical cash - in the supply system?
POLYZOIDIS: Exactly, that's the problem. And finally, I think the two campaigns are using their heavy weapons to the extent that they can.
Tsipras seems to be still very popular. The moment that Tsipras appears on national television, the "no" campaign picks up. And today our "yes"
campaign used a real heavyweight - the former Prime Minister Kostas Karamanlis hasn't spoken ever since he left the government prime minister -
the premiership in 20 - 2009.
QUEST: Right.
POLYZOIDIS: And he spoke out for the first time, calling for a "yes."
QUEST: What's your gut feeling? I mean, not on the result because that would be presumptuous of both yourself and myself and it will be the
Greek people. What's your gut feeling on how angry the Greek people are, resentful or and if they are, is it towards their government or is it
towards the Europeans?
POLYZOIDIS: Frankly, I think it's a matter of playing anger on the one side against fear on the other. There is anger at what has happened so
far and there is the wish to reply/response to that anger. On the other side there is fear about what might happen and people are beginning to
believe that there is still worse to come if things go wrong again.
[16:55:08] QUEST: When you say worse to come, we'll find out about it on Sunday - possibly.
POLYZOIDIS: Or Monday morning.
QUEST: Well, Sunday night/Monday morning. Polls close at the evening. We should have the result by when?
POLYZOIDIS: It's very difficult to say because it's a simple count, but procedurally there may be problems because -
QUEST: Oh, oh.
POLYZOIDIS: -- there has been only a week to organize this.
QUEST: A simple count with procedural problems. We can see how this one's going to go as the day - as the weekend - moves on. Sunday night we
will have a special program of course - "Greece Decides." You will be able to join for that.
I'll have a "Profitable Moment" - if my voice lasts - after the break. This is "Quest Means Business" in Athens.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." When you meet Yanis Varoufakis, it's hard to put the man's reputation with the man in front of
you. He's witty, interesting, lively and seemingly has a deep commitment to what he's doing. After all, this professor came into government with no
previous experience. He's also supposedly an expert on game theory and many people say then our (ph) strategy is all about putting that into play.
But the reality is very different as he makes clear once and time again. The damage being done to the Greek economy you heard about tonight.
Tourists are staying away, orders aren't arriving, money isn't flowing through the system.
Yanis Varoufakis knows all of this and still believes that the best way forward is to have a "no" vote on Sunday night. From his point of
view, he'd better be right because overall, looking from outside, the damage is deep.
And that's "Quest Means Business" for tonight. I'm Richard Quest in Athens. Whatever you're up to in the hours ahead, I hope it's profitable.
I'll see you here tomorrow.
END
