Return to Transcripts main page
Quest Means Business
Greek Debt Crisis Special; What's Next For Greece; Fallout Following Greece's No Vote In Referendum; Pope Celebrates Mass In Ecuador; Golf's No. 1 Injures Ankle - Puts Open Championship In Doubt; At Least 44 People Killed In Two Bombings In Nigeria; Talks In Vienna Over Iran's Nuclear Program Deadline; Obama To Speak On ISIS Fight. Aired 3-4p ET
Aired July 06, 2015 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNNI: Tonight Greece in turmoil.
(BEGIN VIDEO TAPE)
One day after the historic referendum which has had no results, a new Finance Minister is sworn in. Will he be the man? We got a handle on the
crisis. Also European leaders debate their next move after being rebuffed by Greece, as the state is set to hold critical meetings, and the screws
tighten on the economy as the ECB refuses to boost funding to Athens. I'm Richard Quest. It's a special two-hour edition of Quest Means Business.
(END VIDEO TAPE)
A very good evening to you. It's been an eventful 24 hours since we learned of Greece's resounding rejection of Europe's bailout terms. Allow
me to tell you what we know at this hour.
(BEGIN VIDEO TAPE)
Here in Greece, a challenging first day and a difficult new job for Euclid Tsakalotos. He was sworn in as Greece's Finance Minister only hours after
Yanis Varoufakis resigned the post. Greek banks are to keep their doors closed until at least Wednesday, and the European Central Bank has
announced it's holding steady on its emergency liquidity. It will not raise the ceiling. No extra money for Greece and, actually, they're going
to increase or at least adjust, as they put it, the haircut on Greek debt.
Also tonight, the Germany Chancellor Angela Merkel and the French President Francois Hollande are in Paris, discussing the next steps today ahead of
the wider Eurozone summit that was called by President Tusk. That takes place tomorrow.
(END VIDEO TAPE)
After the Greek people refused the austerity attached to a bailout offer, the German Chancellor remained firm. She said basically it was all about
responsibility.
(BEGIN VIDEO TAPE)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): The principle which guides us, as Francois Hollande has said, it is a principle that we
need solidarity. We have solidarity. We've shown solidarity towards Greece. The last offer was a very generous one during the negotiations,
but Europe can only stick together in this time where we have these problems of migrants and terrorism and so on. Countries have to shoulder
their own responsibilities.
(END VIDEO TAPE)
QUEST: The Chancellor said Germany has exposed the Greek debt to the tune of $13 billion. France has around $1.6 billion invested. President
Hollande, also at that same press conference, perhaps sounded slightly more sympathetic.
(BEGIN VIDEO TAPE)
FRANCOIS HOLLANDE, PRESIDENT OF FRANCE: The door is open to discussion and now it's up to Alexis Tsipras' government to make some proposals, serious,
credible proposals. So that this desire to wish -- this wish to stay within the Eurozone and be realized with a program over time.
(END VIDEO TAPE)
QUEST: Jim Bittermann has been following the events in Paris of that Merkel and Hollande meeting. He joins me now from Paris. Jim, if we look
at the tone of the two leaders, am I right in thinking that President Hollande sounded somehow more sympathetic? He talked about having respect
for the dignity of the decision, whereas Merkel talked about responsibility.
JIM BITTERMANN, SENIOR EUROPEAN CORRESPONDENT, CNN, PARIS: I think you're absolutely right, Richard.
(BEGIN VIDEO TAPE)
In fact, Hollande going into this I think was on the phone with Tsipras and saying, you know, that -- for instance he said last night, after the vote,
to Tsipras, if you want me to help you, you've got to help me help you. Which is to say, you know, come up with something here and I'll help sell
it to the Germans essentially. And I think -- don't think that happened. I mean I think what we saw in today's meeting was basically people leaving
this mini summit here in Paris with exactly the same positions they arrived with, and that is basically that Merkel is saying that the Greeks have to
be responsible. And she said, importantly, that the conditions for a bailout haven't been met. And we'll see what they are -- you know, we're
open to seeing what they say when they arrive tomorrow in Brussels. But at the moment they haven't been met. So it is really putting the ball back in
the Greeks' court to say, hey, you've got to come up with something here. And Hollande, if anybody thought Hollande was going to try and talk Madam
Merkel out of this or come up with a compromise position, I think their hopes have faded after the meeting today. Richard.
QUEST: But, Jim, related to this, is there any feeling from the people you speak to at the Elysee Palace, or and in Europe -- is there any feeling
that they really don't know what to do? That they have been handed a very tricky position, not only by the referendum victory per se, but by the
magnitude of the majority?
BITTERMAN: Well, I think that is one of the things that we're hearing. And I think, you know, just in the last few hours here we've heard some
talk, for example, by the Dutch Prime Minister -- indications that there may be a growing movement to get behind something that would look like a
Grexit. Basically to get behind asking the white (INAUDIBLE) Greeks to leave the Eurozone. One of the things that some of the commentators here
have been pointing out is that leaving the Eurozone does not mean leaving Europe. The fact is there are plenty -- there are a number of countries in
Europe that are not in Eurozone and have their own currencies. So the Greeks could go back and revert to that and still maintain their ties with
Europe, still get all those subsidies and other sort of things that Europe provides, but not be in the Eurozone. And there's kind of like a softening
of the ground, one might think, ahead of some kind of a move that could be coming as early as tomorrow, if the Greeks don't come up with something
that the rest of the partners can agree on. Richard.
(END VIDEO TAPE)
QUEST: Jim Bittermann in Paris and, as Jim leaves us now, Jim makes a very good point about the possibility of (INAUDIBLE) leaving the Eurozone and
not leaving the E.U. Jim, thank you for that. Later in the program we'll talk about exactly whether that is possible because there is another very
strong view that says, since you can't leave the Eurozone, there is no mechanism for doing so, but there is a Treaty of Lisbon clause that allows
you to leave the E.U. You really can't have one without the other. A technical discussion for the future may be perhaps.
(BEGIN VIDEO TAPE)
Euclid Tsakalotos is the next Greek Finance Minister. Fifty-five years old, and he is the country's Minister of International Economic Affairs.
He has great experience in dealing with the Troika. He did de facto take over from Janis Varoufakis as the lead negotiator. He may be seen as more
approachable face than the radical incumbent, Mr. Varoufakis. Tsakalotos studied economics at Oxford. He's been a member of the Greek parliament
since 2012.
(END VIDEO TAPE)
In the last few hours he's been speaking to media as Finance Minister and, when he talked about the no referendum, he was clear about what it gave a
mandate for.
(BEGIN VIDEO TAPE)
EUCLID TSAKALOTOS, FINANCE MINISTER OF GREECE (through translator): It shows us that simple working men and those who have lost their business
have stated that we want to put place our trust in government which will give us a viable solution.
(END VIDEO TAPE)
QUEST: I'm joined here in Athens by Wolf Piccoli who is the Managing Director and Director or Research of Teneo Intelligence. Good to see you,
sir. Well, what a day. We need to dissect it quickly and with vigor. First of all, the new Finance Minister. Is he -- he's different in style,
but is he different in substance from Mr. Varoufakis?
WOLF PICCOLI, MANAGING DIRECTOR & DIRECTOR OF RESEARCH, TENEO INTELLIGENCE: It's a huge question. He's certainly a more affable figure, more soft-
spoken, not as toxic as Varoufakis, but Tsakalotos is a deep Syriza. He's somebody who's been a member of the party for a long time. Varoufakis
wasn't. So a huge question mark here whether ideologically can be more flexible than Varoufakis.
QUEST: And let's not forget, he was the person who put in the policy into the negotiation -- or the negotiation into play. He has been during the
negotiations. So when they walked away last Friday, or two weeks ago, whenever it was, he was there, walking.
PICCOLI: He was there. Apparently he was one of the two members who told Tsipras to take the deal, whereas Varoufakis and Pappa were the other two
members of the cabinet team who told Tsipras to walk, and they walked.
QUEST: So there is some belief or valid belief that he might be more moderate in terms of the next round of negotiation?
PICCOLI: It can be more moderate in terms of dealing with him, in terms of flexibility. In terms of whether he can actually deliver is a huge
question mark. He is regarded as a Narcoa (ph) Marxist. Just looking at this press conference today, there were various references to the vote
being a class issue. So early days here to say whether Tsakalotos can make a real change here. And the bottom line is very clear. It's not so much
about the Finance Minister at this point. It's about Tsipras. If Tsipras tomorrow goes to Brussels, he needs to convince that as a leader they can
trust him.
QUEST: Right, but what can Tsipras take to Brussels that is more than was on the table two weeks ago? Because what was on the table two weeks ago
really, not only is it no longer there, but it's not even really relevant now.
PICCOLI: It's not really relevant, absolutely. It's, that offer is actually dead. And the economy is taking a huge hit. What Tsipras needs
to take tomorrow to Brussels is a clear sign. He needs to convey a clear sign that he's -- he can be believed and he can deliver. Then the
technicalities will take some time. The deal (INAUDIBLE) the time to put together a new proposal really at this point.
QUEST: OK, we need to talk about the ECB tonight.
PICCOLI: Right.
QUEST: The ECB has said it will not raise the ceiling. No surprise in that.
PICCOLI: Right.
QUEST: But they're also going to adjust the haircut on collateral just for now (ph). Is that existing collateral or future collateral?
PICCOLI: This is existing collateral, as it is now it's discounted around 35, 40 percent, depending on the kind of collateral. If they, if they, if
they increase the haircut -- and we don't know about by amount that is (INAUDIBLE).
QUEST: But how can you haircut existing collateral when you've already lent money against it?
PICCOLI: Well, because there is a buffer here. There is a buffer still of liquidity that on paper the Greek banks have available, around 25 billion
Euros. Depending on the size of collateral, that of the haircut today or the increase of the haircut, that 25 billion Euros can be -- can be much
smaller.
QUEST: So that 25 billion Euros is where?
PICCOLI: Is basically the collateral provided by the, the, the banks (INAUDIBLE). Is bonds, is different kind of bonds provided by the state,
and other assets. That they are basically being used.
QUEST: So the net effect of this haircut adjustment would be what, in real life terms?
PICCOLI: It is now nothing. It only becomes effective the moment in which the ECB is willing to increase ELA. They will only be able to do it by a
smaller margin, depending how much this haircut is. We don't know how much the haircut is. So, as it is now, it doesn't seem to anything. It is a
cosmetic turning the screw, if I can put it in that way. But the moment in which ELA will need to be increased, and that hopefully is going to come
later this week. Because otherwise the banks will still remain closed.
QUEST: Well, how -- how much do you believe in terms of free cash float in the banking system at the moment available to pay out?
PICCOLI: Is pretty much frozen the system at this point.
QUEST: No, but in terms of -- in terms of the 20 -- in terms of the 60 Euros a day.
PICCOLI: Yes.
QUEST: .there is still some money in the system, a billion or two.
PICCOLI: There's still some money. No, no, is certainly less than a billion at this point. Let's be very clear about that. It was a billion
at the end of last week. If we need (INAUDIBLE) we just assume that 120, 130 million went out since then, we are a bit -- potentially I think, best
case scenario, they might be able to get to Thursday, something like that. But they might also be forced to reduce basically the amount of daily
withdrawals from 60.60, which in reality is 50 now because we don't have any longer 20 Euros notes, to something lower than that. It's a huge
question mark. And now we need to see what can be achieved tomorrow at the Eurozone summit.
QUEST: It's all about the Eurozone summit. Sir, very good to have your interpretation, your analysis, joining us this evening. As we continue
Quest Means Business in Athens, a special two-hour edition of the program. The ripples Greece is making across the pond.
(BEGIN VIDEO TAPE)
We'll update you on the DOW and the S&P, they are still trading, and we will close the European markets. How they took the news on what by any
stretch an extraordinary day.
Good evening.
(END VIDEO TAPE)
(COMMERCIAL BREAK)
(BEGIN VIDEO TAPE)
(END VIDEO TAPE)
QUEST: Welcome back to Quest Means Business. Let's take a look at how Greece's resounding anti-austerity sentiment is going over on the global
markets. Maggie Lake is in New York and has the specifics. How did Europe, how did New York, how are they reacting?
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT, CNN INTERNATIONAL, NEW YORK: Well, you know, Richard, I think you're going to see a lot of
headlines that the markets are resilient in the face of the Greece crisis. And a lot of the losses were moderate but, if we take a look at the big
board, I think that shows what's going on in terms of sentiment underneath the headlines. And we're down about 90 points right now. We opened down
triple digits, we came all the way back, halved those losses, but we're sliding again toward the close. And for all of this discussion and over
the last few days, as much as you and I have heard people say this is not 2008, this is not 2012, the one similarity is that the road ahead, the
solution, if there is one, lies in the hands of politicians. And that is not a situation that investors are very comfortable with. They feel that
there has to be a political solution to this crisis. They are very concerned about that. They know that European is not known for acting
swiftly and decisively in the face of crisis. One analyst even said it's unclear that Europeans know what they can do, let alone what they should
do. And that makes people very nervous here.
If you look at how European markets faired, again there were losses. They were a little bit steeper in the areas you would expect, in Portugal and
Italy and Spain, which have more exposure. But they're not that steep at all. We're in a holding pattern now until we get through Tuesday's summit.
But there is a concern and worry that the situation could run ahead of or out of the control of politicians on the ground where you're -- you are in
Greece, where we are at the precipice of a banking crisis. So the ECB action is important, but nothing seems to settle investors' nerves today.
On the contrary, every time someone spoke, it seems like we lost a little bit more confidence in this being resolved.
QUEST: And there -- the prob -- the real issue here is on both sides of the Atlantic, Maggie, the ability to withstand whatever pressure. Now
obviously the U.S. will be much more responsive to what happens in the European markets. So what's likely to happen as the ECB turns the screws
on the Greek banks and the ripple effects fall out?
LAKE: You know, I, I don't think a lot of people know, and that's the problem, Richard. We're in unchartered territory again. We don't know how
this is going to play out. No one thinks you're going to have a cascading, panic moment. That much everyone agrees on. Most people think there is
going to be a grudge (ph). That we look at the brokerage notes, up to 85 percent chance some are assigning now. Does that spill over to the rest of
the global world? No. They're more worried about China. But does that hurt the Eurozone economy? Is that a drag? Is it going to be costly on
Europe? And does that damper the global economy? Everyone thinks, yes. I mean, if you talk to investors, there is no winner here. This is terrible
for everyone, which is why they're holding out hope that the politicians will come together on Tuesday and find a solution. They're hopeful, but I
think those hopes are diminishing the closer we get to Tuesday and the more you hear officials speak. And for as long as you and I are covering this,
they seem as far apart as they have ever been. Richard.
QUEST: Maggie Lake, who is in New York. Thank you. Keep watching, please. Are we up to date from Greece at the moment. I'll have much more
on the rapidly developing story from Athens. So many tentacles, so many different issues that we have to get to grip with. Michael Holmes, though,
is following the other big news at the CNN Center. Michael, good evening.
MICHAEL HOLMES, ANCHOR AND CORRESPONDENT, CNN INTERNATIONAL, ATLANTA: Good evening to you, Richard. Thanks very much for that. Coming up here on the
program, the clock ticking on the latest deadline for an agreement for Iran's nuclear program.
(BEGIN VIDEO TAPE)
We'll have that and see how close the negotiators may be to ending a 13- year standoff. Also, we will have much more from Richard Quest in Athens as Greece and Europe decide what to do following Sunday's referendum.
We'll be right back.
(END VIDEO TAPE)
(COMMERCIAL BREAK)
(BEGIN VIDEO TAPE)
BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL: Today we face the possibility that a deal will be signed with Iran, which is the foremost
state sponsor of terrorism in the world. This deal, as far as we can see, comes on almost daily concessions from the P5+1 to growing Iranian demands.
Everyday more concessions are made and every day the deal becomes worse and worse.
(END VIDEO TAPE)
HOLMES: And those words there from the Israeli Prime Minister, Benjamin Netanyahu, as negotiations on Iran's nuclear program come down to the wire
yet again.
(BEGIN VIDEO TAPE)
Representatives from Iran, the U.S., and five other powers all meeting in Vienna, trying to finalize details of a framework agreement. Their latest
self-imposed deadline is tomorrow, although negotiators do acknowledge it could slip again. It's not hard and fast. The deal would curb Iran's
nuclear program in exchange for sanctions relief. Israel has tried for months to stop the deal, even before final details are even known, saying
the agreement would allow Iran to build nuclear weapons, something the U.S. says is not the case.
(END VIDEO TAPE)
Teheran denies trying to acquire nuclear arms, regardless, and says it does have the right to peaceful nuclear energy. Iran's Deputy Foreign Minister
for Middle Eastern Affairs spoke with CNN's Fred Pleitgen. He says a nuclear agreement would go a long way towards repairing relations with the
West.
(BEGIN VIDEO TAPE)
FREDERIK PLEITGEN, SENIOR INTERNATIONAL CORRESPONDENT, CNN, LONDON: What do you think a nuclear agreement would mean for cooperation or interaction
with the United States, here in this region?
HOSSEIN AMIR-ABDULLAHIAN, DEPUTY FOREIGN MINISTER FOR MIDDLE EASSTERN AFFAIRS, IRAN (through translator): Our nation has bitter memories of the
United States in the past 36 years following our revolution. But the nuclear negotiations are a historic opportunity with the U.S. If the
United States acts wisely and logically in these negotiations, then we can say that America has left a positive impression with the Iranian nation.
So if the moves and actions of the United States are constructive, it can leave a positive impact of the U.S., which can lead to further engagement
and interaction.
PLEITGEN: Including the fight against terrorism, the fight against ISIS? Do you see further cooperation there?
AMIR-ABDULLAHIAN (through translator): If is the policy of the United States is of a double standard, there is a need for serious confidence
building in that respect. We are helping the Iraqi government fight against terrorism, upon the request of that government. However, there are
no links and no cooperation with the United States in the fight against ISIS.
PLEITGEN: There are some countries in this region, and there are politicians in the United States as well, who fear that Iran will expand
its influence here in the region if a nuclear deal comes through, if a lot of the sanctions are lifted. What do you say to that?
AMIR-ABDULLAHIAN (through translator): If a nuclear deal is finalized between Iran and the P5+1, that will help developments in the region. And
our agreement will not be aimed at any country in that region.
PLEITGEN: Is there any scenario in Syria where Iran would drop support for Bashar Al-Assad?
AMIR-ABDULLAHIAN (through translator): We do not insist that Bashar Al- Assad remains the life-long president in Syria, but we are against the idea that terrorists and external forces should make that decision for Syria.
Upon the request of the Syrian government, we have offered assistance on the level of military consultants to Syria in the face of terrorists. And
we have no troops on the ground in Syria.
(END VIDEO TAPE)
PLEITGEN: Suspected Boko Haram militants are stepping up deadly attacks in Northeast of Nigeria, a series of bombings killing at least 28 people in
two cities on Sunday. And in the past week alone, renewed violence has left more than 150 people dead. (Aldimarar Vaga) (ph) with more.
(BEGIN VIDEO TAPE)
(ALDIMAR VAGA) (ph): They tried to say whom they could, but too often they failed. This is the aftermath of the latest deadly string of attacks in
Nigeria's north, much of it too graphic to show in full. The attack in the central city of Jos on Sunday evening was the culmination of a series of
brutal strikes over the weekend. They're still counting the dead and injured, but already it's believed to be the bloodiest attack since the
Nigerian army stepped up its campaign in the country's north against Boko Haram militants earlier this year. And the first since Boko Haram pledged
allegiance to ISIS, rebranding itself ISIS West Africa.
To the newly-elected government of Muhammadu Buhari this is its first major security setback and the new administration's response will be closely
watched, both home and abroad. As Nigerians ask themselves if the worst is yet to come. (INAUDIBLE), CNN, London.
(END VIDEO TAPE)
PLEITGEN: And now to a setback for Kurdish forces trying fight off ISIS in Syria.
(BEGIN VIDEO TAPE)
An opposition group says that ISIS has now retaken the town of Ain Issa. It is a strategically important place, as it lies along a supply route to
the militants' self-proclaimed capital of Raqqa. YPG forces and allied fighters seized the town from ISIS just last month, with the help of
coalition air power.
(END VIDEO TAPE)
Well later this hour we do expect to hear from the U.S. President, Barack Obama, on the progress or otherwise in the fight against ISIS. He's set to
speak in about 30 minutes, and we will bring that to you live as soon as it gets underway.
The latest world news headlines is just ahead.
(BEGIN VIDEO TAPE)
Also banks in Greece set to remain closed for at least another two days. We'll be back in Athens with Richard Quest for all the latest on that
story. Also, a massive crowd comes out in Ecuador to watch Pope Francis celebrate mass. And we will have the latest in a live report for you when
we come back.
(END VIDEO TAPE)
(COMMERCIAL BREAK)
[15:30:00] HOLMES: Welcome back, everyone. Let's take a look at the hour's top headlines for you now. Greece has a new Finance Minister.
Euclid Tsakalotos was sworn in to this challenging post just a few hours ago, taking over, of course, from Yanis Varoufakis, who resigned to give
Greece a better chance at a bailout deal.
Nigerian authorities now say at least 44 people were killed in two bombings in the city of Jos. One blast hit a restaurant - the other a popular
mosque. No one officially claiming responsibility, but the police say the attacks have the hallmarks of Boko Haram.
Negotiators have just hours left to meet the latest self-imposed deadline over Iran's nuclear program. Foreign ministers from Iran, the U.S. and
five other powers tried to finalize a framework agreement in Vienna. Iran says a few "tough issues" do remain on the table.
In front of a massive and adoring crown Pope Francis just wrapped up celebrating mass in Ecuador. Organizers say they expected at least a
million people at the event. His week-long visit to Latin America is meant to continue his focus on the world's poor.
And the flag's a clue (ph). We're gonna take you back to Athens now and get the latest on the debt crisis. Richard Quest in Greece. How are you,
Richard?
(BEGIN VIDEOTAPE)
QUEST: I'm very well actually, all things considered.
HOLMES: Considering.
QUEST: The sheer energy - well, the energy of this story - the democracy of the vote, Michael, and now, of course, the implications for Europe are
so huge. Thank you, Michael. We'll see you shortly for more other (ph) news.
There has been a big change in the Greek government, despite (INAUDIBLE) pushing for a no vote. And the casualty was Yanis Varoufakis, who resigned
as the finance minister. In a moment of resignation, he took one last swipe at the creditors. He said I shall wear the creditors' loathing (ph)
with pride.
Now to the man who's taken over, Euclid Tsakalotos, the chief bailout negotiator and someone who's familiar in the corridors of Brussels. He has
a job on his hands, as you can imagine. The Greek banks are set to stay closed on Tuesday and Wednesday at least.
After he took the oath of office, and while many people in Greece are still celebrating the referendum conclusion (ph), it's unclear how the victory
takes shape as, indeed, if it does at all.
Nina dos Santos shows us now why the Greek people voted no and how that affects the government's decision with such a large majority.
(BEGIN VIDEO CLIP)
NINA DOS SANTOS, CNN CORRESPONDENT: Greeks began gathering before the polls closed waiting for an outcome that could make or break their
country's future. The result - a resounding no - rejecting the crippling demands of Greece's creditors, something its government had always wanted.
UNIDENTIFIED FEMALE (through translator): This is our first step to our next battle. Now it truly starts. I do not think that everything will
suddenly be perfect. But it is a first step in making fear go away.
UNIDENTIFIED FEMALE (through translator): In any case, things will get hard for Greece. Neither yes nor no will save this (INAUDIBLE). I believe
it is a moral issue. Those who voted no did it because they can't take it anymore.
UNIDENTIFIED MALE: All the world - Europe - just watched these people (ph) - just watched this country - just watch them - and just watch them.
(END VIDEO CLIP)
SANTOS: Lifted (ph) just months ago in a promise to unite his people against austerity, Prime Minister, Alexis Tsipras, performed the same feat
once more. And now on a strength and position, has promised to take the fight to Brussels to campaign the better conditions and more money.
(BEGIN VIDEO CLIP)
ALEXIS TSIPRAS, PRIME MINISTER OF GREECE (through translator): Today, considering last week's very difficult circumstances, you made a very brave
choice. However, I'm fully aware that the mandate here is not a mandate to break with Europe, but a mandate to strengthen our negotiation position to
seek a viable solution.
(END VIDEO CLIP)
SANTOS: The critics rule (ph) it won't be easy, as Greece is worse off than it was this time last year. And, while they weren't exactly asked
about their membership in the Eurozone, many say that the outcome ushers Athens ever closer towards the exit door.
(BEGIN VIDEO CLIP)
VICKY PRYCE, ECONOMIST: The government thinks that they can use the no votes to increase their negotiating mandate. But I don't think the
Europeans are gonna have very much interest in doing so. What they will worry (ph) them, though, is the fact that Greece is now in a serious
decline in terms of its economy. And you can't have a failing state - a completely bankrupt state - as part of the European Union.
(END VIDEO CLIP)
SANTOS: Results may have been simple. After all, Greeks only really had a binary choice. But, in reality, this referendum blows (ph) up far more
issues than it settles. It was hastily organized. The question itself was convoluted and contingent on an offer that is no longer valid, leaving
those who wish to challenge its outcome with plenty of room for maneuver.
This referendum plunges Greece and Europe into a world of unknowns. Its people may have spoken loud and clear, but it's far from clear that no is a
word the country's creditors will want to hear.
Nina dos Santos, CNN, London.
(END VIDEOTAPE)
QUEST: Let's head to Germany now. Klaus-Peter Willsch is a Germany M.P. who has said Greece's no vote should mean an exit from the Eurozone. He
joins me via Skype from Frankfurt. Minister, thank you for joining me. When we look at this now what - how far do you think the rest of the
Eurozone can go - can go to meet Greek demands?
(BEGIN VIDEO CLIP)
KLAUS-PETER WILLSCH, BUNDESTAG MEMBER: Well, I think the message of the referendum is rather clear. They want to have the advantages of the common
currency and don't take - well, the circumstance (ph) - the evidence you have to bear.
If you look at what we already did with all this bailout policy, I just want to remember you that the Eurozone was never meant to be a bailout
zone. And it was strictly forbidden in our league framework. Nevertheless, when the Greek sovereign (ph) debt was so high and nobody
else would lend them any money, it was the IMF and the euro countries that helped, and then they (INAUDIBLE) of 50 billions and another 50 billions by
lowering interest rates and pushing back the payback dates.
So, and now they are - they gave the signal that they are not ready to take any structural reforms. So it's better to try it outside the Eurozone for
the Greeks.
QUEST: Right. But - but the leaving of the Eurozone which, if I understand you correctly, you are now calling for Greece to - to do with
friendliness and amicability or whatever - but you are calling them to leave. That will be very disruptive for all, particularly for the Greek
people.
WILLSCH: Yes, but you cannot continuously make a living out of living your life on other - on other country's taxpayer costs. And that's the
situation we face - we have been facing for years now. We had some - well slides (ph) hope that it would be - it would become better. They would
really go to reforms. But with a new government they went against any prior (INAUDIBLE) - any going on in restructuring the country. So, if they
are not ready to take their share, it makes no sense to keep them - to force them into this union where they, from the competitiveness of the
economy, are not able to -
QUEST: All right. Now, accepting what you say, but how far would you go in saying that they E.U., not just the Eurozone now, but the E.U. must
offer some form of humanitarian aid? I know it sounds absolutely bizarre, but in the wealthiest club in the world, we're talking about humanitarian
aid for one of its memberships - for one of its members. But the hardship in Greece with medications not being available and rising poverty - that
has to be dealt with.
WILLSCH: Yes, of course, and who has funds and possibilities for that? You know, there are even (INAUDIBLE) in the time when they still paid with
the drachmas. So, this is not Armageddon or something like that. It's - it's a chance for Greece to make a new start with their own currency -
policy (ph) - with their own currency and, well, gets down - tax (ph) down in parts - raise (INAUDIBLE) - would do something good for the tourism
sector in the country. And, of course, it is a stony (ph) way in the first time. But it's - it has to be the effort of being a good ground for a new
start.
QUEST: Minister, thank you for joining us. I appreciate your view. That's a strong view from northern Europe, but I appreciate your coming on
this evening and talking to us.
(END VIDEO CLIP)
As QUEST MEANS BUSINESS continues, what's next for Alexis Tsipras and his country following the overwhelming vote - the possible scenarios?
(COOMMERICAL BREAK)
[15:42:00] QUEST: A very good evening, everyone. Welcome to an extended QUEST MEANS BUSINESS tonight - two hours - as we're getting to (INAUDIBLE),
talking about all the aspects of the Greek referendum vote and the various events following on from that.
Following the victory, the Greek prime minister will tomorrow - on Tuesday he goes to Brussels. Negotiations resume. The creditors are hoping that
he brings proposals with a strengthened position.
There are three possible scenarios how this plays out. There are probably many, but this is really what it boils down to. Firstly, the country
secures a new deal with its creditors, which means a bailout. And the government's pushing for significant debt relief.
And now, of course, this is hugely unpopular in Europe - not least amongst the other countries which were bailed out, just as Ireland and Portugal and
Spain - to some extent which have paid the price of austerity as well.
Second option - if Greece fails to get a deal, it will be one step closer to having to issue its own script - its own IOUs - its own parallel
currencies without further injections of cash from the ECB. That becomes almost essential within days. Salaries have to be paid next week. And
drachmas in the future can't be that far off.
A third scenario - and this is a tricky one - temporary Grexit. Is it even possible in practice? The idea is Greece could be given a temporary
holiday from the Eurozone and would allow it to devalue (ph) and carry out reforms and then return when all was well.
Let's put those scenarios of the vote and all the scenarios which will be coming forth and have a big impact on Greece or Europe further afield.
Economist Anthony Chan joins me live from New York. Sir, good to have you. Of all those scenarios - for Grexit, buckle on down, temporary Grexit -
which do you think is most appealing?
(BEGIN VIDEO CLIP)
ANTHONY CHAN, ECONOMIST: Well, obviously, Richard, the most appealing one is for them to reach some sort of an agreement and perhaps have some of the
austerity but not all the austerity that was asked for.
I think that the Eurogroup has to be cognizant of the fact that the Greek people voted in a resounding manner that they don't too much austerity.
Sixty-one percent is a number you can't ignore. But at the same time the Eurogroup has to be very careful because, if they give Greece a sort of a
sweetheart deal, then they're be a lot of other governments in other peripheral countries that will say, why do (INAUDIBLE) sacrifice?
More importantly, maybe we don't have to do more of these sacrifices, because all we have to do is have a referendum and then we don't have to do
any of the things that they've been asking us to.
So I think it's a real fine line. But right now I think the best-case scenario would be to get some sort of a deal and get it quickly.
QUEST: Right. Now, if they can't - and bearing in mind the ECB has refused to raise the ELA and it's increased their haircuts - I'm guessing
that you're thinking time is not on Greece's side.
CHAN: Absolutely, Richard. I think you're spot on. I think that right now the Greek banks are essentially bankrupt. They're running out of
money. It's a question of when the money will - will end. And, of course, now with the increase in the haircut, collateral for the Greek banks was
already pretty scarce. And now that collateral is worth even less.
The banks are going to have to continue to restrict those withdrawals and restrict them even further. So there is a lot of pressure on the Greek
government to make some sort of a deal. But, at the same time, there is a lot of pressure on the Eurogroup to - to sort of show at least some
compassion without going overboard and sort of stimulating the demand for too many concessions from the other countries.
So, it is something that we're gonna have to watch real closely. But remember that raising the haircut is just the first step by the ECB. The
next step would be to sort of reduce or, in fact, eliminate the Emergency Liquidity Assistance, and that will throw the banking system into complete
chaos - not that we're that we're very far away from that. But it would be a lot more severe. And that's something that could happen, especially as
we approach July 20th when that big payment to the European Central Bank is due.
QUEST: One other thought, Anthony, which we - we know that the effects so far have had a bad hit on the economy. Have you seen any numbers yet, or
is it too uncertain and too soon to say what you would imagine the recession or at least a downturn on GDP is likely to look like in Q2, Q3 or
even 2015? Is it too soon?
CHAN: No, it's not too soon. Already we have some estimates that if Greece were leave the Eurozone, it would probably reduce Eurozone economic
growth in the second half - anywhere from half a percent to as much as three-quarters of a percent. That's the bad news.
The good news is that there's good momentum. You saw the Germany orders - very, very strong. And it looks like, if Greece stays in the Eurozone,
growth in the Eurozone will probably be somewhere around two and a half percent in the second half of the year.
So, if I were to shave off a half of a percent or maybe even three-quarters of a percent, you still have pretty respectable growth. You're still
looking at one and three-quarters to two percent economic growth in the second half. And if you look at where we were a year ago, that's still
pretty good.
QUEST: And - and in a word - in a word, Anthony, what about Greece's growth? What does it do to that?
CHAN: Well, I think that all you have to do is look at what Greece is doing. Greece is now in a contraction. They have unemployment rates of
over 25 percent, and the economy doesn't look like it's gonna grow this year.
So, if you move in that direction, a lot of people are saying well it's not a big deal. They'll just basically move to their own currency. But their
own currency is probably gonna have to take a haircut of almost 50 percent. So if people are saying that pensioners are struggling with their pensions,
imagine how much and painful the struggle will be when the value of those pensions go down 40 to 50 percent from current values.
QUEST: Anthony, thank you for putting it into such stark terms. It's what we needed to hear tonight. We appreciate it. Michael Holmes is at the CNN
Center.
(END VIDEO CLIP)
(END VIDEOTAPE)
HOLMES: Our thanks to you, Richard, and the team there in Athens. We'll be back with you. Meanwhile, coming up, armed with a message - Pope
Francis has returned to his native Latin America. We're gonna take you live to Ecuador. That's where a huge crown came out to see him celebrate
mass.
(COMMERCIAL BREAK)
[15:48:00] HOLMES: Welcome back, everyone. Pope Francis' first, full day in Ecuador - far from over. In a few hours he will return to Quito where
he will meet with the nation's President, Rafael Correa. And then, after that, the pontiff will travel to the Cathedral of Quito, a city landmark
that dates back to fifteen hundreds.
So, let's take you to Quito now. That's where we find our Rosa Flores, joining us with the latest on the papal visit. And the warm welcome
continues. Update us on what's been happening today.
(BEGIN VIDEO CLIP)
ROSA FLORES, CNN CORRESPONDENT: You know the pope just broke bread with hundreds of thousands of faithful in Guayaquil (ph), which is a city such
southwest of here. Now the crowd was packed. Not only could you find people from Ecuador but also from neighboring countries. We could see in
the crowds some flags of some of the neighboring countries.
But I gotta share with you that part of the experience of these masses is the experience of the culture and the language of South America. The pope
wanted to make sure that there was an atmosphere of inclusion. That's why some of the readings are - are actually in the dialects of the locals in
these particular countries. So you can hear Guatanee (ph), for example throughout his visit and the masses he will be celebrating in South
America.
You can also hear chants during some of these masses because of that - because of the message of inclusion - trying to bring more people back to
the Catholic Church and respecting the language and the culture. The language, of course, Spanish, is widely spoken in South America, and it's
the native language of Pope Francis, the first Latin American pope.
And, so, his homilies are spoken from the heart. We're told that - that he will probably ad lib a lot during this trip because these are Spanish-
speaking countries. And it's a homecoming of sorts for him. His first stop, of course, here Ecuador. But then he moves on to Bolivia and
Paraguay.
HOLMES: And, Rosa, reports that protocol was - was broken a little bit somewhat yesterday. Tell us about that.
FLORES: You know, we were there before he broke protocol, and we were seeing a lot of crowds gather at the diplomatic mission of the Holy See,
which is the residence where the pope is staying here in Ecuador. And we could hear that the people were chanting and screaming, asking for the pope
to come back out of the residence.
So, of course, shortly after we left, here comes the pope we learned from the Vatican's radio. And according to the Vatican radio, he spoke to the
people outside for a bit, said a short prayer, gave them a blessing - a blessing good night, Michael, because he said, you know, all of the
neighborhood is awake because of - of him - because people were wanting to see him.
So he came out and greeted the crowd, blessed them good night, and then everyone was able to rest. Michael.
HOLMES: And he's known for popping out and jumping out of the car and going and having a bit a chat, isn't he? Well, plenty of time for another
one. He'll see you next time, Rosa. Good to see you. Rosa Flores there.
(END VIDEO CLIP)
HOLMES: Well, a disappointing development for golf's world number, Rory McIlroy. He's likely going to miss next week's British Open after
rupturing ankle ligaments while playing football. The tournament's defending champion revealing the injury on his Instagram account. The 26-
year-old says he's already doing rehab on the ankle and working hard to be ready for a comeback.
Now, so, one of golf's biggest names - more than likely out of one of the sport's biggest events. Christina Macfarlane joins us now live from
London. At the sound of that injury we shouldn't even be passing (ph) it and saying likely, ah he's not playing.
(BEGIN VIDEO CLIP)
CHRISTINA MACFARLANE, CNN "WORLD SPORT": Well, that's not what Rory McIlroy has to say, Michael. You can only imagine how he's feeling at the
moment. As you say, we're on the cusp of one of the biggest - arguably the biggest majors of the year - just nine days away.
He's the defending champion - is world's number one - trying to keep at bay a rising Jordan Spieth, and then he has a kick back with his mate from a
Saturday afternoon and ruptures ligaments in his left ankle. Not since Ben Hogan in 1954 has a defending champion not been able to turn up and play in
the major the following year to defend his title.
Now that puts him out of the Scottish Open, which is traditionally the warmup event for the open this week. But, when we spoke to his management
company a short while ago, they said there was a 10 percent chance - a 10 percent chance that Rory McIlroy could play in the open championship next
week.
Earlier today we spoke to some medical experts who said, ah, ah, that might not be true. They said that this type of injury - it takes up to 12 weeks
of rehab for a player to be fully fit again. And, you know, whether or not he's gonna be able to play next week will potentially depend on how much
pain he's able to put up with as he walks around that course, which, of course, is not ideal, Michael.
HOLMES: Yes. Yes, exactly. I wonder if they'd let him use a buggy or something like that. I don't know how those rules are. Yes or no -
quickly gotta about 10 seconds. Could he use a buggy?
MACFARLANE: I've never seen it done before in a major championship. I'm sure we won't see it again.
HOLMES: Yes, there you go. Well done. Inside 10 seconds too. Good to see you, Christina. Christina Macfarlane there.
(END VIDEO CLIP)
HOLMES: Ah, bad luck for Rory. That's no good - playing football with your mates.
Now, we are waiting for remarks from the U.S. President, Barack Obama. That's due any second now - was due about a minute and a half ago,
actually, but he's running a little late. The president spent the afternoon getting briefed on the fight against ISIS. Now Mr. Obama meeting
with the defense secretary - the joint chiefs as well. We'll bring the U.S. president's remarks live as soon as they come in.
That's all for this hour. Thank for watching. Richard Quest will back from Athens after the break.
END
