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Quest Means Business
Saudi Arabia's Economy Minister: Time to Diversify From Oil; Wild Weather; 'Star Wars' Breaks Box Office Records. Aired 4-5p ET
Aired December 28, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
(BELL RINGING)
RICHARD QUEST, HOST: Only make believe. She's already doing the gavel! Wait, Madame, wait. The bell has to ring. Only make believe, but she's
there, come on let's do a gavel.
So much excitement on a - be still my beating heart or a day when the Dow fell just 23.8 points. That might be the highest point of the day as
trading comes to an end on Monday, the 28th of December.
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QUEST: We've got radical reform. Saudi Arabia's economy minister says it's time to diversify away from oil, and Saudis need to realize the good times
may have gone.
Think of it as flash floods, tornado and now snow wreaking havoc on parts of the United States. And it's literally a billion at the box office. "Star
Wars" has a very, merry Christmas.
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QUEST: I'm Richard Quest, we start a new week together that week between Christmas and New Year, and I mean business.
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QUEST: Good evening. The falling price of oil has struck at the heart of one of the world's top oil produce producers. Saudi Arabia, just over a
year after saying it would not cut production, is now preparing for a dramatic austerity. The country announcing the biggest deficit in its
history, and all is seemingly as a result of Saudi and OPEC deciding to pump forever.
All in all Saudi has revealed a 2016 budget that's 14% less than it was in 2015.
(BEGIN VIDEO CLIP)
QUEST: Budget cuts, 14%, its finances are getting hit by low oil prices. Oil which makes up 75% of the total Saudi revenue -- government revenue,
oil is down by a quarter. It's lead to a record $98 billion deficit. That's around 23% of GDP.
To get the fiscal house in order, the government is considering austerity measures, including privatizing certain sectors of the economy, and most
controversially, reducing or cutting the subsidies it gives citizens on fuel. All of this was entirely foreseeable when Saudi Arabia decided just
18 months ago it was not going to cut production as part of an oil price support mechanism within OPEC.
When Saudi didn't cut, and OPEC continued to produce, this was the effect. Oil prices down from the highs over there, $110 back in July of '14 and
continuing to fall all the way down to, as you can see, November 4th, they were down at 50, and now they're in the mid-30s touching just $37 a barrel.
Saudi needs $106 to balance the books. The last time the price was that high was July 2014. So even from down here at $37, even if it gets back to
$50, as in November, the IMF projects that Saudi will run out of money in about five years' time. This was inevitable once they decided to cut
production and now the effects are clear for all to see. And where Saudis are having problems, others will undoubtedly follow.
So we were joined by the Saudi economy minister, Adel Fakeih about the cuts. He told me the government's making structural reforms to allow
private industry to continue growing.
ADEL FAKEIH, SAUDI ECONOMY MINISTER: It is always important that when you do make cuts, that you don't do them in a way that can shock the economy by
not providing enough opportunities for the private sector to continue growing. We are trying to make sure that the changes that are going to take
place over this year and next year are going to be just be fiscal responses to the deficit, but rather some structural changes in our economy. And this
should not be viewed as one year or two-year short-term solution. It is more a part of an economic and structural reform that takes into
consideration the health of the overall economy growth, and with deeper cuts than that, we may be hurting several of our private institutions that
have been growing and developing over the last decade.
(END VIDEO CLIP)
[16:05:03]
QUEST: Is it not just a simple statement of fact that you are going to have to live with oil prices way below what you need for a balanced budget,
which some say is $106 a barrel? You're going to have to live with that for many years to come? Even the OECD and OPEC believes it will be some years
before prices will creep back up.
FAKEIH: I would not speculate about commodity prices. This is cyclical. We've seen cycles before going back and forth, up and down. What matters is
that in our planning, we are determined to move into an economy that is less dependent on oil; we have a variety of interventions, short-term,
medium term, long-term that looks of increasing our non-oil revenues. Last year for the first time our non-oil revenue has grown almost 30% in one
year. It is now - it was reported last year as 30% of the total revenues of the country. We believe that there are tremendous additional opportunities
that we have not exploited yet. It will not be something that will happen in a few months. It will take a few years to do that. We are determined to
do the right mix of interventions to ensure that we move into our sustainable set of economic interventions that will create a prosperous
future for our future generations.
QUEST: Do you think the Saudi people have awoken to the reality that the good days are over?
FAKEIH: Well, actually, it is always good that you have changes in the overall conditions of an economy, because it always gives you the
opportunity to zoom out and consider options and decisions that you may not be willing to take if you are flushed with wealth. So I believe that what
is happening in the country now is that we are determined to take the right decisions. We have taken them. People who were speculating about severe
level of deficits until even a few months ago, we -- various institutions forecasted substantial deficit levels higher than what we have reported
today. That is not because they got it wrong, that is because actually we have already started implementing various measures to ensure that we manage
our economy in a better way.
QUEST: That was Saudi Economy Minister talking to me earlier.
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QUEST: The day wasn't as bad -- well, it was bad in the sense that on the market, it was in the red, but the market movements weren't as large as
perhaps that graph seems to indicate. The market opened up about 30 or 40 low, it went a bit further down but then then rallied towards the end of
the close, down just some 24 points. Small losses, despite the fall in oil prices.
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QUEST: To Europe, light trading volume across the board. There was -- the FTSE was closed on Monday, for the bank holiday for Boxing Day. European
stocks ended larger lower as the price fell, no trading on the FTSE, and the other markets, the Zurich SMI eked out a small little gain at the end
of the session.
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QUEST: Dozens of people died in extreme weather in the United States.
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QUEST: Whether it's tornadoes, whether it's flash floods, and now there's the prospect of snow in various parts of the country. We're going to be
looking at rebuilding following destruction. Who pays the bill? And will the (inaudible) step in? "Quest Means Business," good evening.
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[16:11:35]
QUEST: Powerful tornadoes, flash floods and blizzard conditions, all part of a massive storm system that's claimed dozens of lives across the United
States.
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QUEST: Texas is one of the hardest hit areas. Tornadoes tore through the suburbs of Dallas and the threat of more severe weather continues. People
there are now bracing for near freezing temperatures, and snow.
Other states are under blizzard warnings, including parts of Oklahoma and New Mexico. In Texas, at least 11 people died when tornadoes struck over
the weekend.
(END VIDEO CLIP)
QUEST: Homes, businesses, and transport links have been destroyed. CNN's Nick Valencia has more. He reports from Garland in Texas.
(BEGIN VIDEO CLIP)
JOSH WHITE, HOME DESTROYED BY TORNADO: I thought I was dead, you know. I was waiting for the tornado to suck me out, but it didn't. Life gave me a
second chance.
NICK VALENCIA, CNN INTERNATIONAL CORRESPONDENT: For Josh White, the chance to walk away from a deadly E4 tornado here in Garland, Texas, almost didn't
come.
WHITE: I was running towards my closet, and the doors and everything started caving in and stuff started flying through the windows. Things were
just hitting us, I could feel it hitting us, bricks, everything.
VALENCIA: He hid with his wife and 5-year-old son with just a mattress to protect them with winds up to 200 miles per hour.
WHITE: This has made me realize how fragile life is. But try to do better.
VALENCIA: 11 people were killed in Texas alone this weekend when tornadoes ripped through the state, tearing apart buildings, leaving skeleton
structures and shattered wood behind. The destructive winds are a part of a massive storm system wreaking havoc across the nation with a deadly mix of
tornadoes, ice, blizzards, and flooding stretching from New Mexico to Maine.
At least two dozen have kid and 100 million more could affected by storms, flooding, and snow from the same system. White gathers his belongings in
just a sweatshirt, while others in the Lonestar State are digging out of frigid blizzard conditions, just part of the bizarre and brutal weather
here. Texas is among the hardest hit states, along with Illinois and Missouri. Each reporting multiple deaths. At least four international
soldiers stationed at Ft. Leonardwood perished in Missouri this weekend when their car was overtaken by rising water.
UNIDENTIFIED MALE: They did find two individuals in the car, we found two other men that were actually outside of the vehicle that were in the creek.
VALENCIA: Now as hundreds of Americans are beginning to see the destruction left in the storm's path, millions more are bracing for what's next. Josh
White says he'll be there to help anyone who needs it.
WHITE: Everybody never expects this. Once you go through it, it changes your life forever. You want to help people now, you know?
(END VIDEO CLIP)
QUEST: Awful, awful story. Todd Gotell is the Mayor of Rowlett, in Texas - Rowlett in Texas; he joins me now on the line.
Mr. Mayor thank you for taking time in what I know is a very difficult circumstance for you. The tornado that went through your town was a mile
wide and four miles long. The devastation is almost complete with at least 80 homes destroyed. What was it like when it went through last night?
[16:15:00]
TODD GOTELL, MAYOR ROWLETT, TEXAS: Well first, Richard, thank you for having us on the program today. I will tell you that you know we are
definitely working our way through this. This -- this particular tornado they actually upgraded today to an EF4 tornado through the city of Rowlett.
Additionally based on the numbers, we have about 1,000 homes that have been impacted by this tornado in some way. And of that, about 350 are completely
destroyed.
QUEST: So what is it that you need? Because obviously not only have you declared it a state of emergency and disaster, the state has declared it
and in the fullness of time obviously federal aid will arrive from Washington. What do you need at the moment, Todd?
GOTELL: We have had a tremendous amount of outpouring from the communities around us. We have had great support from the state of Texas, as well as
all of the local governments that surround us with their support. From a citizen perspective, we ask if you can make donations to the Red Cross.
They are here helping us, as well. As well as the Salvation Army. They're wonderful causes and that money goes back into our community to help the
citizens that have been impacted by the tornado.
QUEST: Mr. Mayor, you and your city manager, you sounded the sirens early. You sounded them four times, and that is largely credited with the fact
that there is no loss of life as a result. So that decision to sound sirens seems to have been -- seems to have been genius.
GOTELL: Well, we've got a very good emergency plan in place. In addition - in addition to that, we also had calls out to every home in the city,
notifying them of the tornado warning as it was coming in, and notifying them that we had a tornado on the ground in addition to sounding the siren.
We went out on social media and other areas as well to try to make sure we got ahold of every single person to give them as much advanced warning
possible.
QUEST: Todd Gotell, Mr. Mayor, thank you so much and we wish you and your people a god send that nobody was killed but you obviously have some very
serious and long painstaking work ahead of you sir.
(END VIDEO CLIP)
GOTELL: We appreciate the prayers. Thank you.
QUEST: Thank you. Brad Kieserman is Vice President of Disaster Operations and Logistics for the Red Cross. Before that he worked for the Federal
Emergency Management Agency, FEMA, which is the federal part of the U.S. Government that deals with these sort of emergencies.
He joins us now from Washington. Brad, you and your magnificent work as an organization, you've got your work cut out for you here, haven't you?
BRAD KIESERMAN, VICE PRESIDENT DISASTER OPERATIONS AND LOGISTICS, RED CROSS: Well good afternoon, Richard and I think all over the country, local
governments like Mayor Gotell's and folks all over the country have our work cut out for us.
(BEGIN VIDEO CLIP)
KIESERMAN: We have seen an unusual if not unprecedented level and type of disaster activity over the last five days, it's really incredible.
(END VIDEO CLIP)
QUEST: So you know, obviously the Red Cross has voluminous experience dealing with this, you know what you need, you've got the resources, you've
got the things in place. But I wonder are we destined to see more of these because of climate change, because of weather patterns? Are you preparing
for more of this sort of stuff?
KIESERMAN: We are preparing for more disaster activity. And I'm not a climatologist, so I'm not an expert in climate change or El Nino, but I
will say this.
(BEGIN VIDEO CLIP)
KIESERMAN: It is all about the resources, it's about the people and the volunteers, the Red Cross is a nearly all volunteer agency. The Red Cross
is funded solely by the generosity of our donors and we work with our partners. You heard the Mayor mention earlier the Salvation Army, the
Southern Baptists, the Disability Advocacy Community and so many others. It does take a whole community to respond to and recover from the types of
events that we're seeing across the country today.
(END VIDEO CLIP)
QUEST: And of course, obviously a global network that we are here at CNN international, while your people are doing such superb work in the U.S., in
the U.K. where there is also floods, Red Cross is very much involved. I don't think people really understand the full extent and range of the work
that the Red Cross actually does in these situations. So please, enlighten us.
KIESERMAN: So it's a - it's a great question Richard. You know the Red Cross for now over 130 years in the United States around all around the
world has focused on alleviating the suffering of people who are impacted and affected by emergencies and disasters. And we in the United States, we
do that with three basic lines of operation.
(BEGIN VIDEO CLIP)
KIESERMAN: Sheltering, feeding, and comfort. We provide shelters for folks. Today, there are over 1300 people in shelters in the United States, in nine
states in 30 separate shelters. Some of those are Red Cross run, some of those are Red Cross supported, some of those are independent. I think the
key here is though so many people over the last few days have needed shelter. And we provide food and we provide mental health and physical
health services, as well.
(END VIDEO CLIP)
[16:20:00]
QUEST: But when it comes to rebuilding, which of course is at a crucial part in the long-term structure of these events, where does the onus lie
here? Because obviously some will have insurance and that will be difficult in some cases. Then you've got the federal government with FEMA,
and you're an expert in that. Then you've got state government and the poor person sometimes thinks where do I begin?
KIESERMAN: It's a mosaic, and you're absolutely right. It - there are so many players who can bring resources to the table, and resources means
money, and resources means expertise and planning. But there's no one level of government and no single volunteer organization that is going to really
be able to drive a retire recovery. Recovery begins in the community, it ends in the community and it's the role of all of us in this business to
support the community with every resource we can bring to bear.
QUEST: Brad, I shall let you get back to your duties and thank you for taking the time to talk to us. It is much appreciated at this --
KIESERMAN: Thank you, Richard, thank you so much.
QUEST: Thank you so much. So what price is the internet? Mark Zuckerberg is answering his critics personally.
(BEGIN VIDEO CLIP)
QUEST: Tech activists or some of them in India, say that his free basics plan is commercialism dressed up as altruism. Now Zuckerberg says that's
not the case. It's all raising a very, very tricky issue. After the break.
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QUEST: The Chief Executive of Facebook, Mark Zuckerberg, has hit out at Indian critics who say he's trying to force his app, Facebook, on new
internet users in the country. Now, the initiative that Zuckerberg and others created is called free basics. And the idea is to roll out a
stripped down version of the internet to impoverished or poor Indian users who don't, can't afford, or haven't got access to fast internet access. The
stripped down version has a certain number of apps, it's about 100 apps, give or take. It has some weather, some jobs, some basic information.
Others say -- the critics say it's nothing more than colonialism, (inaudible) commercialism colonialism. But writing in the Times of India,
Zuckerberg says --
(BEGIN VIDEO CLIP)
QUEST: He says if we accept that everyone deserves access to the internet, then we must surely support free basic internet services. Who could
possibly argue against this?
(END VIDEO CLIP)
QUEST: Well, there are many people who say that what he's doing is creating a commercialism with a second class internet that doesn't have universal
access of net neutrality.
[16:25:10]
QUEST: The Indian entrepreneur, spoke to me a short time ago from Mumbai. He told me he's critical of Mark Zuckerberg's basic plan and Zuckerberg
hasn't answered the allegations in his article.
(BEGIN VIDEO CLIP)
MAHESH MURTHY, CO-FOUNDER, SEEDFUND: The issue that we have is that he wants the government's bandwidth and spectrum to be used and made available
for Facebook free basics, which is a program that only allows people to use Facebook and a few other hand-picked sites, but nothing particularly useful
for you know the lower economic class in India. No Google, no YouTube, no Khan Academy, no education, no jobs, nothing, no agricultural or market
information, nothing of that sort. So I absolutely do not buy his argument. This argument is only about increasing Facebook's bottom line, it's got
nothing to do with India.
QUEST: Which model would you prefer? If you accept that there's no such thing as a free lunch, would you prefer to have an advertising model where
you get data if you watch an advert.
(END VIDEO CLIP)
QUEST: Would you prefer to have limited band width where you get throttled after so much. Or in the Africa Orange situation you get data if you buy a
handset? Accepting that there's always a quid pro quo, which would it be for you?
MURTHY: So I'm going to have to guess what your question is because I only hear snatches of it at a minute, but I do understand your question, which
models do I like? The truth is that I'm okay and we're all okay with any model that allows the average newbie, the new internet user in India the
full, and unfettered access to the entire internet.
(BEGIN VIDEO CLIP)
MURTHY: But there are multiple ways, it could either come with you know watch ads, which is perfectly fine. It could come with the government
offering a certain amount of band width, which is fine, it could come with you know a certain amount of band width free and beyond that you pay its
fine. We're okay with anything as long as it has complete unfettered internet that we get to watch. We've got nothing particularly against
Facebook, except Facebook's desire very clearly to control the narrative here, control the user and make sure the user does not go anywhere you know
to anywhere interesting or important at all.
(END VIDEO CLIP)
QUEST: Manchester United manager Louis van Gaal, is so far not the savior the Red Devils were hoping for.
(BEGIN VIDEO CLIP)
QUEST: His job security is now called into question and it's not just his record on the field that matters and consider the club's performance on
Wall Street.
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[16:31:17] RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Richard Quest. There's more
"Quest Means Business" in just a moment when the "Star Wars" and Adele rule the galaxy together at least as far as Christmas is concerned.
And I'll show you what Wall Street makes of Louis van Gaal's performance at Manchester United as the manager.
Before all of that, this is CNN and on this network the news always comes first.
Iraq's prime minister has congratulated the country's troops for their reported liberation of the city of Ramadi.
Soldiers raised the Iraqi flag over the government building in the city center. It follows almost a week of heavy clashes between government
forces and ISIS which captured Ramadi.
An Iraq military spokesman said all government buildings have now been reclaimed.
(BEGIN VIDEOCLIP)
BRIGADIER GENERAL YAHYA RASOOL, IRAQI MILITARY SPOKESMAN, VIA INTERPRETER: Yes, Ramadi has been freed and the armed forces and the anti-terrorist
group and also we've realized (ph) our flag on all the government's building in Anbar.
(END VIDEOCLIP)
QUEST: Four national soldiers were among the dead as a huge storm system continues to engulf large parts of the United States.
The soldiers who were stationed in Missouri were found dead after their car was swept away on a flooded street. Their names and nationalities have not
yet been released.
More than 40 people have been killed in weather-related incidents in the past week and more bad weather is expected until at least Tuesday.
The British Prime Minister David Cameron has visited parts of Northern England that have been hit by severe flooding.
Record amounts of rainfall have caused defenses to fail, leaving thousands of homes flooded. Mr. Cameron said the government would spend more money
to improve flood prevention.
(BEGIN VIDEOCLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: Yorkshire, for instance, we spent a hundred million pounds on flood defenses since I became prime minister.
We're planning to spend another $280 million, so almost three times as much. But, you know, that's of no comfort obviously to the people who've
been flooded here in York, and, you know, all our hearts out to them.
To be flooded is a terrible experience anyway and it's even more terrible when it happens at Christmas or New Year, a time when people are meant to
be at home with their families and celebrating.
(END VIDEOCLIP)
QUEST: Relatives of the three-year-old Syrian refugee whose death sparked international outcry have arrived in Canada.
Photographs of Aylan Kurdi's lifeless body washed up on a beach in Turkey helped galvanize the world's response to the Syrian refugee crisis.
Now, members of the Kurdi family have been greeted by Aylan's aunt at Vancouver Airport. They intend to live in Canada as refugees.
It's been a buzzling season in the English Premier League as some of the perennial favorites have put up disappointing scores and failed to respond.
A short while ago all eyes were on Manchester United as it took on rival Chelsea, a team with its own difficulties that also lost a manager.
The game ended in a nil-nil draw which makes Manchester United winless in its last six matches and it means that the Red Devils' leader Louis van
Gaal could soon be the latest high-profile manager out of a job.
Van Gaal when he was appointed manager in May of 2014 was expected to restore the fortunes of one of the world's biggest football cups and
certainly one of the best known franchises in the globe.
Despite the club's dismal on-field performance, on Wall Street where it's traded, it's fared quite well this year.
[16:35:05]This is where we start - started down at around $15 or so. You get to some high points where $19 or $20, but as it drifts back over
towards where we are at the moment - just shy of $18 - the stock is up 14 percent.
Since it's listed in New York back in 2012, Manchester United has had three managers spend time at the helm. So these are the managers so far.
The first of course was Alex Ferguson. Now, Alex Ferguson had been there for many years before the listing, but if you just take that period from
listing to when he retired, he saw the share price rise 27.5 percent over the course of his tenure.
Then you have perhaps the less veiled (ph) fated David Moyes. When he took over, modest gains around 16 percent in less than a year.
When you talk about van Gaal, he is the first manager to preside over a loss. The shares are down some 4 percent since he took over in July of
this - of last - year.
You getting the idea?
CNN's Don Riddell is - Don, you'll help - and you know my knowledge of football let alone football managers could be written on the proverbial
postage stamp.
But I can say (LAUGHTER) I do know my balance sheets and I can see that a 4 percent loss on a stock that's otherwise done well, he hasn't got long for
this team, does he?
DON RIDDELL, CNN "WORLD SPORT": Well, it doesn't look like that, does it Richard? I mean, I suppose it was a result of sometime today they got a
point against Chelsea, but really he needs to show that this team can win games and win games in an exciting fashion.
This is football team, but as you say, it is a brand, it has an image, it has tradition. And when they hired van Gaal they thought they were going
to get exciting, attacking football.
And it has been anything but this year.
QUEST: Right.
RIDDELL: They're not just struggling with - in -- the Premier League, they're out of the champions League too. They actually haven't won a game
in eight.
And although he says he won't quit, it may not be his decision.
QUEST: Right. But he did also say he doesn't need to be fired, didn't he? Over the weekend he came out with his extraordinary quote that's basically
interpreted as being 'I'll know when it's time to go' so to speak.
You don't have to wait to fire me.
Is it -- I'm going to ask you the same question that I asked when we were talking about Mourinho a couple of weeks ago.
Is it his fault? I mean, I know he's the manager but is it his fault? He's put together a team or has he just been the victim of circumstance?
What's the word?
RIDDELL: Well I will say this - succeeding and following the first steps of Alex Ferguson which is what he and David Moyes tried to do is very, very
difficult. Those are very, very difficult shoes to fill.
But if you look at the support that van Gaal has had from the United board. I mean, they spent something like $380 million on new players this season.
You know, some managers could argue that they don't have the support of the boardroom, they aren't given money to buy players.
He cannot make that argument. He has had the support. They are struggling to score goals, they don't seem to be able to play any kind of attacking
football, and that's going to be a problem.
And he does seem to be such an abrasive personality, doesn't he? I mean, he's really rubbed the media up the wrong way.
You know, he says the players are playing for him, but we're not really sure.
QUEST: So, I ask you then as an expert in this field what is wrong? Is it his style? Is it the team that he has created? Is it his leadership
style?
RIDDELL: Well, I think it's a little bit of everything. I mean, when he was brought in, he was, you know, hailed as one of the great managers of
the modern game.
But I'm not sure he is to be honest. I mean, he did win the Champions League 20-odd years ago with Ajax (ph).
In his time with Barcelona and Bayern Munich, he wasn't as successful as some of the other managers like Pep Guardiola and Jose Mourinho.
So perhaps he was a little bit overrated. I think there is a lot of circumstance. I think the Premier League is changing. You look at some of
the men - some of the teams that have beaten Manchester United recently.
You know, there's so much money in the League -
QUEST: Right.
RIDDELL: -- now, it's actually quite hard to stand out. It's become much more competitive.
QUEST: So you can refuse to answer this question if such you wish. Will he be gone before the snowdrops of spring?
RIDDELL: (LAUGHTER). I'm not sure he's even got that long. I think -
QUEST: (LAUGHTER).
RIDDELL: -- his results today gave him a couple of games - maybe - but you do get the sense that he's a dead man walking.
And it's not just because of the way he's been performing. It's because of the fact that there are some very, very attractive managers already on the
market.
Jose Mourinho doesn't have a job, Guardiola has announced he's leaving Bayern Munich at the end of the year, and the top clubs desperately want
these guys.
They don't want to miss out on the opportunity to get them, and so that also could well count against van Gaal here.
QUEST: You're a hard man, Riddell, you're a hard man when it comes to the boardroom. Don Riddell at the CNN Center.
[16:40:06] As we continue our look tonight, and it's been a long wait. It's 75 years after being forced to work in the brothels for soldiers.
They called them "Comfort Women." Now they get an apology and some compensation from Japan.
The women involved say it's little, it's late and it's (inaudible).
(COMMERCIAL BREAK)
QUEST: Japan says it will now pay more than $8 million into a fund for the so-called "Comfort Women." It's the awful phrase that was used to describe
women who served as sex slaves for the Japanese military during the Second World War.
Most of the victims were Korean. This agreement between Tokyo and Seoul is considered a diplomatic breakthrough, although one group representing some
of the women says the deal, in their words "is almost humiliating."
Modern-day Japan still struggles with a controversial culture where human trafficking in illegal sex work still lurk just beneath the surface of
everyday society.
CNN's Tokyo correspondent Will Ripley reports.
(BEGIN VIDEOCLIP)
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: On a cold, rainy night in Tokyo, Japanese schoolgirls line the streets, shivering in short skirts,
passing out flyers for JK Cafes. JK, short for joshi-kasei - high school girl.
One JK Cafe allows our cameras inside. We find it full of adult men paying for the company of school girls as young as 16.
What kind of customers usually come in here? "Most are in their 30s, 40s and 50s," says 18-year-old Honoka. She says they talk about school, work
and life.
The karaoke machine full of J-pop, a teenage favorite. These girls, all dressed in their actual high school uniforms, earn about $8 an hour to
socialize and serve food and drink to men often more than twice their age.
Sometimes customers bring expensive gifts, sometimes they want more than small talk.
Has a customer ever asked you out on a date?
ELI, RUSSIAN GIRL IN JAPAN:, TRANSLATED BY RIPLEY: "Yes, all the time. But we have a no dating rule here," says 16-year-old girl Eli, a Russian born
and raised in Japan.
[16:45:00] RIPLEY: The cafe's owner, Hedike Imanaka (ph) says if girls are caught dating customers, he calls their parents.
He says everything happening here is legal.
All 80 schoolgirls on staff must have a signed permission slip.
HEDIKE IMANAKA (PH), TRANSLATED BY RIPLEY: "People often tell me I'm running a strange business," he says.
RIPLEY: So are these all visits to this? To this bar here?
(Segetugoo Colagnay) is 45, a married father and university professor. He says he comes here for the conversation.
(SEGETUGOO COLAGNAY, MARRIED FATHER AND UNIVERSITY PROFESSOR): I like drinking and I can learn from the young generation. I really enjoy it.
RIPLEY: Thirty-five-year-old Johnny Mechio (ph) says chatting with young girls gives him energy but says he's never asked one out.
JOHNNY MECHIO (PH), JK CAFE CUSTOMER, TRANSLATED BY RIPLEY: "I come here once a week," he says. There may be criticism, but I come because it's
fun.
RIPLEY: We found other JK businesses selling a different kind of fun. This hallway, lined with massage parlors, even a shop selling schoolgirl
uniforms and supposedly used underwear.
So this is the menu for services and you can pay for a 30-minute massage or you can pay for an hour walk where you leave with a girl.
They're called "walking dates." A U.N. human rights envoy in October called the practice worrying. Last year, a U.S. State Department report on
human trafficking called walking dates a common front for prostitution.
UNIDENTIFIED FEMALE, TRANSLATED BY RIPLEY: "Once you're out of the shop, even by a step, you can do whatever you want," says this victims' advocate
who asked us not to show her face.
The Lighthouse Center for human trafficking victims is one of the few resources available for JK girls in trouble. Executive director Shihoko
Fujiwara says Japan's shame-based culture - blaming the victim - prevents many from seeking help.
"Always society accusing the children who enter that kind of business."
RIPLEY: Our final stop - an adult video store. Sitting right next to the pornography we find videos of schoolgirls in uniform, smiling, posing for
the camera.
The boxes - some of them say the girls are elementary school age. This store operates openly in one of Tokyo's busiest neighborhoods.
Because the children on the covers are fully clothed, it's not clear if any of the videos violate Japan's newly-revised child pornography laws which
make it illegal to possess sexualized images of children.
Beneath the bright lights, a dark reality - a culture some say exploits the innocence of young girls.
Will Ripley, CNN Tokyo.
(END VIDEOCLIP)
QUEST: Disturbing. We'll be back with more "Quest Means Business" in a moment after you have a chance to ponder "Make, Create, Innovate."
(COMMERCIAL BREAK)
[16:50:22] QUEST: "Star Wars" is breaking more records across the galaxy. It's bringing moviegoers out in force.
Well the Force has been awakened more than once. It's taking more than $1 billion at the box office in a record 12 days.
That's the fastest in cinema history, and it hasn't even opened in China. The Chinese premiere was held on Sunday night.
Some other familiar names were dominant over the Christmas period. The bestsellers according to Amazon in music on CD was Adele's new album "25."
In videogames, the bestseller was "Call of Duty - Black Ops III". The new "Star Wars" game "Battlefront" was also one of the top sellers.
Pop culture journalist Sowmya Krishnamurthy, joins me to talk about some of the bestselling items this (inaudible.)
SOWMYA KRISHNAMURTHY, POP CULTURE JOURNALIST: Hi, happy holidays.
QUEST: Indeed to you. Now, "Star Wars" obviously - I mean, it's hard not to after all the hype. But even you must have been amazed at just the
sheer ferocity and speed of it.
KRISHNAMURTHY: That's the Force. The Force was with us with "Star Wars" premiering and we knew this was going to be a big movie.
Everyone knew it was going to break box office records, but I don't think we realized how it was going to be everywhere.
QUEST: The thing I like about this story is that it seems to be justified by the product.
KRISHNAMURTHY: Right.
QUEST: People say it's a great movie and you sort of feel like they haven't been conned as a result.
And the same with - you could say about Adele with the album. People say it's worth it.
KRISHNAMURTHY: Absolutely. Sometimes numbers lie, where $1 billion in sales , everyone says it was a terrible movie, all of these brands are in
bed with "Star Wars."
But people actually like it, and the ardent fans went out to see it and they love it. And I think quality says something.
And same with Adele. She took a four-year hiatus, we knew she was going to have a big album, but we didn't realize it was going to be a huge album --
$5 million sales and counting. In 2015 that's unheard of.
QUEST: Is it justified?
KRISHNAMURTHY: I think it's justified. I think Adele is one of the last few rock stars. She really kind of lives life on her own terms.
When she came out, she did the opposite of what her contemporaries were doing. She wasn't streaming her album, she didn't do a touch-up (ph)
social media press - she really stayed true to herself and I think fans realized that and they respect it.
QUEST: We've got to talk about the year overall. What for you was the pop culture moment of all?
KRISHNAMURTHY: I think when you talk about pop culture, the name Kardashian has to come into play. But this year was actually Bruce Jenner,
--
QUEST: Yes, and -
KRISHNAMURTHY: -- now Caitlyn Jenner. That was - that was the big pop culture moment to see Bruce Jenner, Olympic champion, transition to Caitlyn
and really use her platform to talk about LGBT issues.
I think what was great with the Kardashians people oftentimes talk about what are they about -- the family's so fluff. But here you see using a
platform for good.
QUEST: And with that of course every aspect of it, right the way down to the Annie Leibovitz pictures in "Vanity Fair" right the way down to -
KRISHNAMURTHY: And Pakobal (ph).
QUEST: -- right the way down to the serial - the reality series --
KRISHNAMURTHY: Yes.
QUEST: -- that he did - or she did - as a result. It created a completely new arena.
KRISHNAMURTHY: Absolutely. And it really shows that the Kardashian name, or in this case, the Jenner name, really touches all points of pop culture.
QUEST: Has Donald Trump (RINGS BELL) hit pop culture.
KRISHNAMURTHY: Donald Trump has definitely hit pop culture.
QUEST: In what way?
KRISHNAMURTHY: You know when a rapper like Mac Miller who had a song "Donald Trump" years ago is tweeting, "Please, Donald, I don't want you to
win" to his teenage fans, you know it's permeated all parts of pop culture.
Even people who can't vote, don't want Donald Trump to win.
QUEST: And finally, Justin Bieber - the bad boy -- came back to -
KRISHNAMURTHY: We saw his front, we saw his back.
QUEST: We also saw - yes, we saw a lot of it. But I give him a bell (RINGS BELL) because he actually asked people to buy the opposing single
for the U.K. number one - the NH Choir -
KRISHNAMURTHY: (LAUGHTER).
QUEST: -- and he deliberately lost being U.K. number one.
KRISHNAMURTHY: But great album for Justin and the pix weren't bad either.
QUEST: Smut, smut.
KRISHNAMURTHY: (LAUGHTER). One person's smut is another person's art.
QUEST: Who asked this woman in?
(LAUGHTER)
KRISHNAMURTHY: Speechless.
QUEST: Good to see you.
KRISHNAMURTHY: Great to have me. Thank you.
QUEST: Now, a quick recap on how Wall Street finished the session. Take a look - a lot small losses despite the fall in oil prices. Trading was very
light, the Dow is down 1.7 percent for the course of the year.
[16:55:05] European stocks ended (inaudible) as oil prices fell. There was no trading on the FTSE for a U.K. bank holiday as -and Zurich just eat out
- eked out - eated out - eked out the smallest gain.
All that - all that pop culture for a middle-aged man in a suit it's a little bit too much. I'll have a "Profitable Moment" after the break
(RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." When it comes to the controversy over Mark Zuckerberg's internet.org that's now free basics.
I freely confess I'm betwixt and between. Free basics is the internet service in India for poor people that has a limited number of apps,
including of course Facebook, jobs, weather, a certain amount of news and the like.
But not the full spectrum. It is not the total internet.
The critics say that's colonialism and the commercialism under a different guise and it really doesn't work.
Zuckerberg says actually giving people some access is better than none and it's a good start.
I read "The Times" of India's criticisms and I agree with them. I read Zuckerberg's defense and I agree with him. I go backwards and forwards
between these two.
And that I think is what tells you how complex this issue is. Of course everybody thinks internet and free internet is a good idea.
The problem is somebody has to pay for it. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York.
Whatever you're up to (RINGS BELL) in the hours ahead, I hope it's profitable.
We'll do it all again tomorrow.
END
