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Quest Means Business
Raul Castro to Address United Nations; Dow Falls 300 Points; Shell to Halt Offshore Drilling in Alaska; China Fears Pinching Commodity Prices; Alcoa to Split Business; China's Xi Jinping Makes First UN Speech; China's Economy; Cheap Oil Hits Global Markets; German Prosecutors Investigating Former VW CEO; Emissions Scandal Crushing VW's Outlook
Aired September 28, 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)
(GAVEL POUNDS)
(APPLAUSE)
RICHARD QUEST, HOST: Good evening. Power is on full display at the United Nations as the presidents of China, Russia, and the United States
have been flexing their diplomatic and political muscles at the podium. We're waiting for the Cuban president, Raul Castro, to speak at the UN, and
when he does, we're going to bring that to you live as soon as it begins.
First, though, to our correspondent Richard Roth, who is at the United Nations. And Richard, although all those leaders speak pretty much every
year in some shape or form at the UN, we don't normally get this sort of bish, bash, bosh one after the other in quite the same way we've had today.
RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: I don't think I've heard any of those words uttered at the UN. But I thought you had
some heavyweights on display with big-time differences among the powers. Now, they're trying to work behind the scenes. President Obama called for
much more unity. He said, otherwise, in effect, you might as well give up.
Now, you mentioned Cuba's leader, Raul Castro. He was here earlier in the day inside the General Assembly, he came here. He did speak on
Saturday, when he addressed a development conference, and he got a lot of applause when he called for the end of the United States embargo. A vote
in the General Assembly is held every year, and Cuba gets overwhelming support.
And when President Obama spoke this morning, well, the president of the United States also drew applause when it came to Cuba -- how times
change -- and he said he'd like to one day end that embargo.
QUEST: Now, Richard, within this area of diplomacy, obviously, Castro talking on the embargo, but we also had President Putin making some very
strong comments against what he saw and what he describes as unilateral sanctions, which he says are outside the UN remit.
ROTH: Ah, President Putin or President Rouhani of Iran, nobody wants sanctions placed on them. Leaders of the Iranian nation, China, they all
were on display here with their own issues. Basically, here at the United Nations, I think it was the biggest attendance of world leaders ever, 150,
for the 70th anniversary of the UN.
Sanctions has worked in many places: South Africa, Namibia, I think. Iraq, for the most part. And then, at other times, we saw with Iran, it
did make enough pressure on the regime for them to come to the negotiating table to come up with a nuclear deal.
QUEST: So, it doesn't seem to be having the same effect as, arguably, in terms of Russia. Richard, we'll wait when we hear Raul Castro. I'm not
sure which leader they're up to at the moment, but we --
ROTH: Three left. Three to go --
QUEST: Oh, three to --
ROTH: -- before -- three, they're behind schedule by at least an hour. Three more from now will be Raul Castro.
QUEST: Three more from now. Well, keep us informed, which leads me to assume, knowing how the verbosity continues at the UN sometimes,
sometimes we may not get to it in this hour. Richard Roth, who's at the United Nations and will keep us informed. Three to go.
Let's look at the markets and how they've traded and the wild swings that we've seen. The big board down 312. Not the lowest point of the day,
Paul La Monica, but not far off. Just holding 16,000 on the Dow.
Now, all right, we had William Dudley of the New York Fed basically saying rates are going up this year, merely mirroring what Janet Yellen had
said on Friday before she had a funny turn. So, I'm wondering, why this fall today?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: I don't really think, as Fed-focused as we've been for the past few weeks, I don't think
the Fed had that much to do with this sell-off. You had a gigantic tumble in biotech stocks again, continued concerns about whether or not
politicians are going to call to really take the companies to task for the huge price increases we've seen from a lot of biotech companies.
At one point, the main biotech ETF was down 8 percent. That's an ETF. A couple of stocks were all down more than 10 percent, and that dragged
down the NASDAQ, the Dow obviously taking a tumble as well. But the Dow was -- held up relatively well compared to other parts --
[16:05:04] QUEST: But it was down all day.
LA MONICA: Yes.
QUEST: So there was absolutely no interest in buying.
LA MONICA: Right, not at all. And we do have to keep in mind, this is the end of the quarter coming up, and it's been an ugly one. The Dow,
S&P 500, and NASDAQ all down nearly 10 percent. You've probably got a lot of hedge funds making moves before the end of the quarter.
I spoke to one non-hedge fund mutual fund manager this afternoon. He's loving it. He said he's buying GE, he's buying Apple, he's taking
advantage of these pullbacks and he's not panicking, and he says his clients aren't, either, which is kind of interesting.
QUEST: So, this -- are we in what -- I almost hesitate to use this phrase: buy on the dips?
LA MONICA: I mean, that is the joke, everyone talks about you always buy on the dips and the market eventually rebounds. We definitely didn't
see it today, I think, for the average --
QUEST: No, but it's just a dip?
LA MONICA: This is -- oh, this is clearly a dip. I don't think we're necessarily done yet. More volatility, the Fed is going to come back into
play. And then we've got earnings coming up. Hopefully, when you look at something like Apple --
(CROSSTALK)
QUEST: I've seen some of the prelims --
LA MONICA: -- lackluster -- lackluster sales --
QUEST: -- I've seen some of the preliminary forecasts on the earnings.
LA MONICA: Right. They're not going to be great --
QUEST: They're going to be awful.
LA MONICA: -- but they could be better than expected.
QUEST: I mean, the one I saw over the weekend suggests that up to third -- two thirds of the S&P 500 will either warn or miss this time
around.
LA MONICA: It's probably going to be bleak. I think the hope is that the fourth quarter outlooks are better than the actual third quarter
results.
QUEST: Three hundred off on the Dow. We'll talk to you again tomorrow.
LA MONICA: Better days tomorrow hopefully.
QUEST: Ah! Optimism! There is a cloud and it might even have a silver lining. When -- well, maybe not for Mr. Winterkorn. He's the
former chief executive of Volkswagen. Now, he's no longer at the top of the car company, but now, prosecutors say they're looking at criminal
possible action against him. It's QUEST MEANS BUSINESS, good evening.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Crude prices fell more than 2 percent on Monday, bearing in mind the market that was off more than 300 points for the Dow. Cheap oil
prices are squeezing profits.
Shell says as a result of this -- they didn't quite put it in these terms, but the expense of drilling offshore in Alaska is so high that Shell
is now saying it is going to stop offshore drilling in the northern state Alaska.
It's a key exploration, while it did not cover much oil or gas as had first thought, and therefore, as a result, the cost of exploration and
extraction is higher. At these lower prices, 60 to 70 percent down, it's simply not profitable.
Oil is down around 2.4 percent on Monday, and it's not the only commodity that's under pressure. China -- now, look, you've got aluminum,
you've got copper, you've got nickel, they were all down across the board.
China fears are wreaking havoc on these metals, which are absolutely crucial. China is a key consumer of these commodities. So, you've got
copper, aluminum, and nickel falling dramatically this year.
If you take, just for example, aluminum, which goes into so many industries, not least of which, the auto industry and the catalytic
converters and so many parts of manufacturing, depressed aluminum -- or aluminum, for those of you that prefer it -- aluminum prices have pummeled
Alcoa stock.
[16:10:08] The stock will now split into two publicly traded companies, separating the manufacturing basis from the traditional aluminum
business. And the mining firm Glecore's stock has also plummeted to record lows. There are persistent concerns about the low price of industrial
metals, selling its nickel project into Horizonte Minerals.
Many of those issues can be traced back to China. The country's president Xi Jinping spoke at the UN on Monday for the first time. Now,
President Xi is already making himself appear a power player, which clearly he is, committing troops for peacekeeping and saying he would work to
increase the voice of African countries, insisting China would not misuse its power.
(BEGIN VIDEO CLIP)
XI JINPING, PRESIDENT OF CHINA (through translator): We are committed to peaceful development. No matter how the international landscape may
evolve and how strong China may become, China will never pursue hegemony, expansion, or sphere of influence.
(END VIDEO CLIP)
QUEST: So, the issue, of course, is it all comes as China is grappling with serious economic slowdowns. Put it all in perspective: if
you just look at the second quarter growth, it was some 7 percent, the lowest since 2009. And economists dispute that figure as even being
accurate in its own right.
Then, you've got the Purchasing Managers' Index. At 47 points, it's the lowest since 2009. You've got a stock market down 40 percent since
mid-June.
Robert Kuhn is the international corporate strategist who's been personal advising the Chinese president.
ROBERT KUHN, ADVISOR TO CHINESE PRESIDENT: Good to see you, Richard.
QUEST: Good to see you, sir. He's also the author of the book "How China's Leaders Think." So, let's start with, if you like -- I mean,
President Xi is being feted, he's being celebrated, people think he's doing a good job at one level. But they've made a ham-fisted attempt at trying
to rescue the market. Does he appreciate how badly they've handled the market?
KUHN: I think we've seen China reverse their original approach, which was to try to manage whatever they can. That's the traditional way of a
planned economy and one-party system.
But China's leaders are very sophisticated. If you look at the top leaders, you look at President Xi himself, each one has run two or more
major provinces. And if you look at it from the standpoint of population - -
(CROSSTALK)
QUEST: Well, you say that. You say that. I mean --
KUHN: They're like European countries. And so, they have that experience in dealing with all of this --
QUEST: Bureaucracy.
KUHN: -- of running a -- effectively, a country. Now, there's a complexity in the market economy. They're not used to dealing with a
market economy.
QUEST: But they told people not to -- they told people to buy shares, then they told them not to sell shares, then they said, we're going to give
you money to buy shares. This is an anathema to a market economy.
KUHN: That's not very smart. You're absolutely right. And they --
QUEST: Do they accept that now?
KUHN: Yes, they do. And -- people think the Chinese government, the Chinese party, you think it's a monolith. It's not. It's not. It's like
a normal bureaucracy, just like the American government, like other governments.
So, there are different people doing different things at different times, some of them trying to win favor of the leaders and say things that
agree -- they think agree to their benefit, and it works in the opposite way. Senior leaders are very smart in China, and they -- when they
recognize and they see a mistake, they change it.
QUEST: And if we now take the economic policies, and let's face it, even if they manage to soothe and balm the nerves of the markets or the
economy now, they've still got this fundamental debt overhang: bad loans, dark pools, whatever we want to call it. The Chinese economy from several
years of miscreant behavior, has to be cleaned up.
KUHN: Well, miscreant behavior is a strong term. They may be ill- advised in certain cases. It may be trying to stimulate growth through investment rather than through consumption, but it's not miscreant.
If you analyze what's happening today, you have the stock market, you have the real economy, and you have debt. Those are three independent
things. You can't lump them all together. And so, from --
(CROSSTALK)
QUEST: Well, except --
KUHN: -- from the -- the stock market, you said, went down 40 percent, yes, but what you didn't say, it's still 25 percent higher than
where it was. It was wildly overvalued. People promoted. They shouldn't have done that. You have to look at the real economy, what's happening.
It's a very complex subject.
(CROSSTALK)
QUEST: Do we know what's happening?
KUHN: I could --
QUEST: Do we know what's happening in the real economy?
KUHN: -- I can argue both sides of it.
QUEST: Right.
KUHN: I can argue both sides of it. But what -- normally, what you do, is you only take one side of it. You've got to see both sides. I
don't know what the total sum of it is, the calculus of it, but you have to understand both sides.
You're complaining that China's growing only 7 percent. When China was growing 12 percent, the base was 2 trillion. That's a 250 billion
increase. Now, it's growing at 700, 750 billion increase with a similar population.
(CROSSTALK)
[16:15:00] QUEST: Oh, I realize -- no, I -- so, heads you win, tails I lose.
KUHN: So you live with it.
QUEST: I'm aware, yes. If it's growing at 10 percent, I'm going to sit here and accuse it of being out of control --
KUHN: Right.
QUEST: -- if it's 7 percent, it's not fast enough.
KUHN: And the 7 percent actually on a quantitative basis per capita is more than it used to be. The problem is, where is that growth coming
from? And if it's in industries that are over capacity, if it's more infrastructure they don't need, it's inefficient, so it'll build the GDP
now and keep it in the short term, it'll build debt, and that'll be a problem in the long term. You have to analyze it all together.
QUEST: And we are delighted, sir, that you came long to do that for us.
(LAUGHTER)
QUEST: Come back again.
KUHN: Look forward to it.
QUEST: Very much so. Now, when we come back, we're going to talk more about the VW scandal and what happens to Martin Winterkorn, who's now
firmly in the eyes of the criminal prosecutors. He said he didn't do anything wrong that he knows about. Let's see if the prosecutor agrees.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Cheap oil is one of the key factors that's been rocking the markets. CNN's Max Foster now looks at how and why in Market Movers and
Shakers.
(BEGIN VIDEOTAPE)
MAX FOSTER, CNN INTERNATIONAL CORRESPONDENT (voice-over): When it comes to oil, it used to be all about the Middle East. Today, the Persian
Gulf still has plenty of crude, but the boom is global. We produce a surplus of 2 to 3 million barrels a day.
Oil buried deep beneath the Earth's surface in shale rock can now be accessed with new technologies, like fracking and horizontal drilling. In
2014, US oil production saw its biggest jump in more than 100 years. And it's not the only country to unleash a flood of crude. Production in
Canada and Brazil has also hit record levels.
At he same time, there are more alternatives to oil, like natural gas and renewables. When oil supply outstrips demand, prices fall, and cheap
oil has consequences. It's great for consumers, costing less to fuel up cars and heat homes.
But it can be tough for companies in the oil patch. It hurts profits and leads to job cuts. And a really sharp dip can unsettle global markets.
That's why oil prices are worth watching. They can move and shake the world economy.
(END VIDEOTAPE)
QUEST: Now, it was the need to account for high oil, indeed diesel energy prices, that led to such demand for more fuel efficiency, which of
course is largely behind the Volkswagen scandal if you go down to its core.
The probe into the scandal gripping Volkswagen is now widening. The former chief executive is in the firing line as German prosecutors are
investigating Martin Winterkorn for possible fraud. He resigned from his post last week. He said he is not aware of any wrongdoing on his part. A
chief prosecutor explained the investigation.
(BEGIN VIDEO CLIP)
BRIGIT SEEL, BRAUNSCHWEIG CHIEF PROSECUTOR (through translator): Based on public complaints which have been filed, we have started an
investigation into fraud allegations in relation to the VW emissions scandal. The complaints were against Dr. Martin Winterkorn, so the
investigation will seek to determine whether reasonable suspicion exists against him or other employees with positions of responsibility at VW.
(END VIDEO CLIP)
[16:20:10] QUEST: Now, let's look at this scandal as it looks by the numbers. Volkswagen has already set aside $7 billion -- $7.3 billion -- to
cover the cost of likely recalls. Now, most people believe that's simply not going to be enough. The costs will rise. The US alone could impose up
to $18 billion in penalties.
(RINGS BELL)
QUEST: Thirty-three percent of the market value on VW has been wiped out. That has completely destroyed this year's financial forecasts.
(RINGS BELL)
QUEST: And employees could be prosecuted for fraud, facing massive fines if convicted, and possibly up to ten years in prison. Joining me
from Frankfurt is Hans-Christoph Hirt, the executive director at investment management firm Hermes EOS. Sir, can you hear me?
HANS-CHRISTOPH HIRT, EXECUTIVE DIRECTOR, HERMES EOS (via telephone): Yes, good afternoon, I can hear you. It's late evening here in Frankfurt.
QUEST: Ah, late evening for you, afternoon for us. Sir, you have been highly critical not just of what happened in the moment, but also of
the way Volkswagen has put a -- the last chap as chairman, after the Porsche guy went, and also with Muller becoming his chief executive. Why
do you -- why are you critical of the two people now running Volkswagen?
HIRT: It's very good -- good question. We work at Hermes EOS, we work for a group of 40 pension funds from all around the world, and we
represent the interest of around 200 billion in equities.
And really, what our clients want us to do is to be responsible and act with honor. So, in a situation like with Volkswagen, we think it's
important to contribute to the corporate governance and the discussions that are ongoing.
And the problems, really, with appointments that were announced on Friday, I think, are twofold. One, it seems like Volkswagen or the
supervisory board just thinks it's enough to let the CEO go and do a reshuffle of the management board. And they also don't think at all about
the role of the supervisory board, the non-executive directors --
(CROSSTALK)
QUEST: Right, but --
HIRT: -- which is very important in the German two-tier system. So, we think it's just -- it doesn't send the signal we had expected from the
company.
QUEST: All right --
HIRT: They need to do more to regain the trust.
QUEST: All right, but the company says they're going to do whatever they can to regain the trust. Surely you would accept that the company is
now in the middle of the firestorm, and stabilizing the ship, to mix my metaphors, is the priority, and all these other things will fall into
place. But if you don't stabilize the company, you won't have a company to run.
HIRT: Correct. I mean, we said today in our statement, it was twofold. One, you clearly need some strong leadership now, and you need
people who know the company well and who are possibly insiders.
But there is, of course, a question, should you put two insiders, two long-serving executives on the key positions of CEO and chairman of the
supervisory board, and should you give them a permanent appointment at this stage, where the investigations --
QUEST: Right.
HIRT: -- are still ongoing and they really don't know who knew what at what point? And you would probably appreciate in the German management
board system the sectors are jointly responsible, it's not just the CEO.
At other companies, like Siemens, for example, the management board members found out to their great surprise how tough the German law is in
this regard.
QUEST: One final question: when they have the extraordinary meeting and when they do have the meetings to discuss this, are you going to vote
your -- are your members going to vote against the current administration and the current bosses?
HIRT: We are currently in contact with Volkswagen. They're a little bit in crisis mode and have limited communications. We will form an
opinion --
(CROSSTALK)
QUEST: Sir, I need to --
HIRT: -- ahead of the EGM --
QUEST: -- I need to interrupt you, forgive me --
HIRT: -- once we have the --
QUEST: -- I need to interrupt you, I do apologize. Raul Castro is now speaking at the United Nations.
[16:24:20] (RAUL CASTRO SPEAKING AT THE UNITED NATIONS)
QUEST: So there we have Raul Castro giving his first address to the United Nations, and not surprisingly, nothing majorly different than one
might have expected.
On the question he recognized of course Venezuela, Ecuador. He blamed the European Union for the migrant crisis and said that the E.U. needed to
take responsibility and has been heard - as has been heard -- many times from Cuba in the halls of the United Nations, called an end to the U.S.
blockade, a return of property including Guantanamo and the cessation of the radio and television broadcasts directed towards Cuba.
Again and again saying that there need to be reparations and compensation for the economic blockade - what he called the economic
blockade.
Richard Roth is at the United Nations and joins me now. What stood out for you from the speech?
RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT: Well it was interesting. Look, a different brother - a different Castro as president but we are
marking the 70th anniversary of the U.N. and Fidel Castro was here in 1960 - very tumultuous times right before or right after the Bay of Pigs, before
the Cuban missile crisis, one of the big highlights in U.N. history.
You remember Adlai Stevenson, the U.S. Ambassador showing photos of reconnaissance flights with missiles in Cuba - nuclear-tipped missiles
supposedly aimed at the United States.
Look, different - similar tone - but there's progress this time long in waiting. And President Obama in his remarks for the General Assembly
earlier had said that these issues about diplomatic relations and people- to-people talks are moving forward.
He said quote, " I'm confident our Congress will inevitably lift an embargo that should not be in place anymore." Then you heard Raul Castro
again call for the end of it.
And he also praised governments that agree with him in Venezuela and Ecuador to applause from those tables. Richard.
QUEST: Yes, talking about - I could hear the applause in the background but we never got any pictures of those other delegations. So
would be -- besides Ecuador and Venezuela - who would have been applauding what Raul Castro was saying?
ROTH: Also Argentina because Raul Castro said they are in the right versus the United Kingdom when comes to the Falkland Malvinas Islands -- a
long time running dispute also.
But for Raul Castro it's his first appearance during the high-level debate. He spoke on Saturday. I guess I was struck because there were no
military fatigues like his brother might have wore.
I mean, it kind of, it didn't seem that shocking, maybe after we've had all this big lineup of major diplomats and presidents. I don't know
what you thought, but it was a timely address, there's progress at least in this area - in this hemisphere regarding the problems, but human rights
remains an issue as President Obama pointed out.
QUEST: Did it just feel like going over the fences? He may - he said all the right words that Castro - that a Castro -- might be expected to
say. He said all the right words in all the right order, but where was the passion as he said it?
ROTH: Right. I think he knows that times are changing. He talked about the illegal Guantanamo Bay positioning, but it's, yes, he was giving
enough red meat to constituents who follow the long-time Cuban position regarding the big neighbor, the United States.
But he had it both ways. I think he walked it through the tightrope.
QUEST: Richard Roth at the United Nations, you have your work cut out for you for the days ahead as you listen to many more of these speeches.
And now the United Nations General Assembly's awash with rhetoric condemning the root cause of the migrant crisis.
[16:45:04 ] I'm going to be joined by William Lacy Swing of the International Organization for Migration next. It's "Quest Means
Business."
(COMMERCIAL BREAK)
QUEST: `We need help' - that's the plea - simple plea - from the king of Jordan to the U.N. The King Abdullah said international support for
refugees flooding into Jordan is just a small fraction of what's needed.
Syrians fleeing the war now make up 20 percent - 20 percent - of his country's population. "The burden of the humanitarian disaster is more
than Jordan can bear," His Majesty said.
(BEGIN VIDEOCLIP)
KING ABDULLAH, JORDAN: It is high time that the international community acts collectively in facing this unprecedented humanitarian
crisis as support countries like Jordan and Lebanon which have been carrying the brunt of this burden for over the past four years.
(END VIDEOCLIP)
QUEST: Pierre Moscovici is the European Commissioner for Economic Affairs. He told Maggie Lake Europe must find a way to welcome the
refugees. And he's optimistic the E.U. is on the verge of a solution.
(BEGIN VIDEOCLIP)
PIERRE MOSCOVICI, EUROPEAN COMMISSIONER FOR ECONOMIC AFFAIRS: The commissioner and myself, we are in favor of a Europe which is human. And
when people suffer from regimes that kill and threaten, when they need to find to refuge in Europe, it is our duty to welcome them.
Of course we do that also by securing our external borders. I think that it's difficult to find a compromise but it is on the way. Europe is
building with values and these values are based on the right of human beings, human persons. Europe is multicultural. Europe doesn't check
between Christians and Muslims. We only address human beings.
You also asked me about economics. Well, we are doing the studies with them quite convinced that in the medium term this is not a threat for
our economy. It could be an asset.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Many feel the numbers that are being discussed are already woefully out of
date. We have Donald Tusk warning that millions of migrants may be on the way to Europe.
What do European leaders need to do to get ahead of the problem?
MOSCOVICI: Until now we are aware of the numbers. The importance is it is probably the most important refugee crisis since World War II, that
it represents something like 0.1 percent of the aggregate population of the E.U.
There is no invasion, there is no threat of invasion. This is pure fantasy. It's clear too that we need absolutely to secure, to protect our
borders, to also cooperate with the countries of origin to resolve the geopolitic problems that lead these people to fly away to escape from their
own country.
[16:50:12] We don't want millions of people to come here. We want these problems to be solved but we also need to be capable of welcoming
those who need to be welcomed because, again, they are threatened in their own life or integrity.
(END VIDEOCLIP)
QUEST: Pierre Moscovici. Some tough talk from the Russian president at the United Nations. Vladimir Putin is slamming the Western sanctions
ahead of his first meeting with President Obama in more than two years.
First, let's enjoy a highlight from "Make, Create, Innovate."
(COMMERCIAL BREAK)
QUEST: A slam against the U.S. Russian President Vladimir Putin came out swinging during his speech at the United Nations.
(BEGIN VIDEOCLIP)
VLADIMIR PUTIN, RUSSIAN PRESIDENT, VIA INTERPRETER: Unilateral sanctions circumventing the U.N. Charter have become commonplace, in
addition to pursuing political objectives. The sanctions serve as a means of eliminating competitors
(END VIDEOCLIP)
QUEST: Western sanctions and the isolation that's followed has cost Russia dearly. The economy's due to shrink 3.4 percent this year alone.
The ruble's down 20 percent against the dollar since July and let's not forget the oil prices which are destroying the economy.
And consumer prices are up 16 percent year to date, obviously on the back of imported inflation. Two of CNN's senior international
correspondents are with us, both of whom have been based in Moscow and have covered these crises - Phil Black and Nick Paton Walsh are with me.
Good to see you, sir.
Male: Good to see you.
QUEST: Now let's talk first of all - the - Putin's decision to involve himself in Syria by giving military support to the Assad regime -
how does that affect the dynamic here?
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: We don't know what that's going to do on the ground yet, because he hasn't made that clear.
That's a key question.
But we know what he's done here and internationally -- he's reshaped the conversation.
He's brought himself back in from the wilderness. Suddenly he's a power broker again - he's back at the big table of international politics.
QUEST: And the way he put - he frames the argument -- is Obama has to speak to Assad.
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well it's the same old argument they've always made which is, you know, Assad is the
one fighting terrorism.
He was at the beginning even when people he was fighting were just moderate school teachers who were really angry at how they'd been repressed
for so many years.
So, yes, I mean, this is domestic woes causing Putin to do this. The problem as you outlined economically (ph) - he can't fix them, he doesn't
have the cash.
What he can do is grandstand on the world stage and this is some of that really in all honesty. Their military involvement - it's not massive,
they're not bringing in any thousands of troops -
QUEST: But it could be very destabilizing. And so, if that were possible.
WALSH: If you had mentioned Putin, the KGB man has a big chess set. This is a couple of pawns he's moving around. It's potentially also - we
don't know how Ukraine's going to play out. It's another part of the conversation that Obama will have to have with him now.
And, yes, it's his broader strategy of let's restore that old sense of Soviet grandeur that he loved so much in the KGB that disappeared in the
90s.
BLACK: Yes, implementing - having a voice in these affairs is very important to Russia, very important to Putin as well. It is something that
he talks about regularly - not letting the United States get its way on everything. But he believes the Russian voice should be heard as well.
QUEST: The situation in Syria at the moment - beyond description.
WALSH: Look, even if there was a peace deal, nobody really doing the fighting against Assad is going to listen to it. So you can pardon (ph)
that to one side, and then the problem Syria's always had is that each time in a war people normally get tired on both sides and they want a peace
deal.
[16:55:04] Here, new people keep coming in and refreshing the fight. ISIS with their opposition - not really the opposition - and the Russians
now. Just when you think maybe Iran and Hezbollah are getting tired and weak, in come the Russians to back them all up at a very convenient time
for (inaudible).
QUEST: So when I hear Moscovici on this program tonight, or I hear Cameron or I hear anybody speaking saying well, it's all about making sure
that we make arrangements for people to be safe in their country or safe back home or whatever - I can see the look on your face.
BLACK: Yes. They talk about that. There's always - I think John Kerry said recently we need to return Syria to a stable, secular democracy
where people can be safe.
There is no sense of that happening in the short term whatsoever. And it's very difficult to see how that can happen.
WALSH: Absolute opposite is happening. The regime-held areas people are pouring out of them, the people who already left in the north of ISIS -
and they want to be there because with ISIS or they have to get out fast is the opposite occurring right now.
QUEST: Gentlemen, if I had my hat on, I would take it off to you both because while I sit comfortably in the studio, you're out there doing the
hard work in the field.
Gentlemen, thank you for joining us.
We will have a "Profitable Moment" after the break. "Quest Means Business," good evening.
(COMMERCIAL BREAK)
QUEST: Before we leave you tonight, we're learning more information about the reach and the severity of the Volkswagen scandal.
A report from the German newspaper "Bild Am Sonntag" - now it's alleging that top Volkswagen managers knew about the diesel emissions
manipulation as early as 2007. The newspaper says it's obtained a letter from an electronics firm Bosch to Volkswagen. Bosch is the company that
manufactured the software in question.
The letter reportedly says the software's only meant for testing. Volkswagen says it's seeking to clarify and it will not comment on
speculation. The scandal gets ever deeper for Volkswagen.
And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I (RINGS BELL) hope
it's profitable.
I'll be at the CNN Center tomorrow.
END
