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Quest Means Business
ECB Holds the Line on Interest Rates; Oil Price Examined; Putin Implicated in Russian Ex-Spy Death; Too Late to Save Schengen? . Aired 4-5p ET
Aired January 21, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
RICHARD QUEST, HOST: The closing bell is ringing on Wall street. It's an up day for the Dow Jones Industrials. But once again volatility is the story
of the session. Hit the gavel, trading is over and it is Thursday. It's January the 21st.
(BEGIN VIDEO CLIP)
(BEGIN VIDEO CLIP)
QUEST: Tonight, there's no limit. Super Mario rides once again to the rescue of the markets. Vladimir Putin is accused in the murder of an exiled
Russian spy. And saving Schengen, the Dutch Prime Minister tells me it's almost too late.
(END VIDEO CLIP)
QUEST: I'm Richard Quest live at the World Economic Forum with the monkeys, gifts from China to the participants where together we all mean business.
(MUSIC PLAYING)
QUEST: Good evening. Tonight with markets in danger, the European Central Bank has ridden to the rescue once again. The ECB President, Mario Draghi,
says there's no limit to what he's willing to do.
(BEGIN VIDEO CLIP)
QUEST: And that pushed stocks higher in Europe and the United States. On Wall Street you can see the day started down, by 10 o'clock it started up,
then it was down, and then you get those comments from the ECB and the market roars ahead with the Dow closing up around 113 points.
For now, the ECB has kept interest rates unchanged. That much is certainly not a surprise, but the President said the ECB could consider its policies
as early as March.
MARIO DRAGHI, ECB PRESIDENT: We have the power, the willingness and the determination to act. There are no limits to how far we are willing to
deploy our instruments within our mandate to achieve our objective of a rate of inflation which is below but close to 2%.
(END VIDEO CLIP)
QUEST: The ECB is less than a year into its stimulus program. The - Mario Draghi began climbing the stimulus mountain last March.
(BEGIN VIDEO CLIP)
QUEST: We will obviously continue the analogy of here in Davos. He announcement the ECB would buy 60 billion euros worth of bills every month,
around $65 billion dollars. It's all in a bid to boost inflation and spur growth.
Then in December Mr. Draghi extended the program and he also cut rates going negative. Markets were disappointed that he didn't do even more.
Since then Europe's economic landscape has worsened. The threats of weak global growth market volatility, geopolitical risks are all closing in. And
now Mario Draghi says there are no limits to how far he'll go in deploying policy instruments.
The extra measures could come as early as March and may include buying more bonds every month, cutting interest rates even further.
(END VIDEO CLIP)
Axel Weber is Chairman of UBS in 2004 to 2011. He started on the ECB's governing council. Good to see you, sir.
AXEL WEBER, CHAIRMAN UBS 2004-2011: Good to see you, Richard.
QUEST: Now, I know you always are very circumspect before you comment on matters concerning the ECB, but we do need to find out what more -- you
heard the announcements. What's going on here?
WEBER: Well The Central Bank clearly have signaled that there's no limit to what they want to do, but there is a limit to what they can achieve.
Monetary policy has run its course in my view. We've seen massive stimulus over the last few years, and the additional effects of additional easing by
the Central Banks first and foremost the ECB are relatively small. That was starting to push (inaudible).
QUEST: So when he says -- when the President says today you know do whatever it takes, there is no limit, to what is he referring? Because,
yes, he can increase the amount to $95 billion a month. He can add another year or two on, he even lower rates further to go negative, but you're
saying that will only be of limited effect.
WEBER: Well, the additional effects of additional policies are not going to be very large. And really, Central Bank balance sheet when they augment,
what Central Bank is trying to achieve is basically bring inflation back up. At the moment this is very hard for Central Banks. They try to
reinvigorate (inaudible). It didn't happen. So Central Banks are finding their limits of what they're able to achieve without additional policies
stepping in and supporting them.
QUEST: So what needs to happen in Europe?
WEBER: What needs to happen is we've seen fiscal stimulus -- fiscal policy is largely neutral by now. Monetary policy is still very expansionary, but
we need reforms around Europe. The bigger questions around Europe are around migration, they are around refugees, they are around the structure
of Europe. The British Prime Minister spoke here today. These are long-term structure questions that are really important for Europe.
[16:05:17]
QUEST: They say, Axel, they say that they're dealing with these issues, and you have a wry - you have the beginnings of a wry smile.
WEBER: I've been hearing that for six or seven years and yes, they have started to do reforms but we've not seen enough of it. The same story in
Japan. We've heard about apenomics, we heard about the (inaudible) but it's only the third arrow. What they need to do is a lot more on the reform
side because Europe faces structural problems. And cyclical policies, even if you do them forever, do not substitute for structural policies.
QUEST: And with this then, you see the effect. Draghi spoke, the market rallied. But at best that will be short term and at worst it's a sugar
rush.
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WEBER: Look, I compare markets to the immediate response to news and that's what they do.
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WEBER: The real thing is does it move the economy. If it moves markets it doesn't mean it moves the economy. And I think Central Banks have become
too focused on moving markets because these policies have really tried to push investors into risky assets, but it doesn't achieve traction with the
economy. They've not achieved traction with inflation, which is not permanent.
QUEST: But they can't -- that's the problem, they can't. They've tried everything at them and they can't.
WEBER: Well look, but the problem is if you continue to repeat the same policies and they don't work, maybe more of it is not the answer but a
different policy choice.
QUEST: Join me at the worry wall over here if you please can. Choose your color ink. Black, red, blue or green.
WEBER: I'll take black.
QUEST: All right. This is you're very worried about what's going -- gut feeling for 2016. This is you're not worried at all, the year started
badly. Where are you on the worry wall?
WEBER: Well, I'm about here.
QUEST: You're optimistic?
WEBER: I'm optimistic, yes.
QUEST: What's driving that optimism?
WEBER: The optimism is driven by a very simple fact. We've been to a bad start. There are some things that worry investors but the real economies
are going to pull through. China, authorities will ultimately step in and put things right. Oil at some point it's going to bottom out and start
increasing. So (inaudible) market doesn't worry me. What worries me is politics and no structural reforms. And I hope that the deep crises we've
been in will now start, in Europe in particular, that we see these reforms.
QUEST: Wonderful to see you, sir. Thank you very much.
WEBER: Thank you.
QUEST: Thank you very much, Axel Weber, of UBS joining me here.
Now, the ECB's hints of new stimulus pushed all the major European indices higher.
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QUEST: Stocks in Germany and Paris surge at 2%. London stocks are of a gain of 1.8%. Zurich failed to rise above the 1%. Poor Zurich didn't manage to
do it.
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QUEST: On Wall Street, it was a leap at the open.
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QUEST: And the three major indices besides that dip, they rallied at the close. The positive ending was yet another reversal the Dow has seen. Just
look at the triple digit swings in all but one of the last five sessions. And it doesn't matter whether we compare them to whether they are ups or
downs. It's triple digits left and right.
(END VIDEO CLIP)
QUEST: Conventional wisdom says the plummeting price of oil below 30 for the first time in a dozen years is driving the markets. Morgan Stanley's
Chief Executive James Gorman told me he's not so sure about that.
JAMES GORMAN, MORGAN STANLEY CHIEF EXECUTIVE: It's awkward isn't it? I mean normally when you have this kind of market balance you have very tangible
things to point to, the tech bubble burst, the crash in '08, even the euro crises in 2012. Is it oil that's driving it? Is that sufficient to have
taken the market into this kind of spin? Hard to see against the back drop of a growing U.S. economy, 5% unemployment and China is still growing in
the 6% range.
QUEST: So that's the reason why fundamentally we're left scratching our heads saying is there something smelly and nasty waiting out there.
GORMAN: Possibly or is the market just wrong and the short term markets can be irrational. Animal spirits take over. So the question is not are we due
for some form of correction. We probably were. Were we due for this violence in this short of period. This has been the worst market opening in
January in history. Does the environment suggest a case that would bring that about?
QUEST: What do you think? Answer your own question. Does the environment suggest the justification for that level of violence?
GORMAN: Not even close. The largest economy in the world 17 trillion is growing at 2 to 3%. The second largest economy in the world at 10 trillion.
China, is growing at 6.9%. The world is - the global growth is there. There are pockets of despair obviously, Brazil and others but global growth is
there. The fundamentals don't suggest this kind of violence.
QUEST: In which case then what smooths it out, or is this the new normal that we have to live with and that your bank has to live with?
[16:10:01]
GORMAN: One thing I can promise you, it's not the new normal. Markets go in cycles. And if we lived in this state you and I would be doing very
different things with our lives. No it's not the new normal. I think we can expect over time for reasonable minds to address the issues that have and
people to step in and they'll start taking opportunities in this market. This is how you make money as a long-term investor.
QUEST: As a long-term investor. It's just trying to have the nerves and the stomach in the short term that causes the dyspepsia.
GORMAN: If it was so easy then everybody would be a winner in the market, it's not so easy.
QUEST: Let's talk about how you're moving at Morgan Stanley and what you're moving. You've started a fundamental and radical rethinking, haven't you?
GORMAN: Well, I think we're pretty much completed it, but yes.
QUEST: Yes. Projects streamlining, the whole idea of moving. When you - when you embark on something like this, what's the thinking behind it in
terms of the long-term strategy?
GORMAN: Well you start with what does the world environment look like for the sorts of products and services we offer? And the answer to that is in a
global economic growth we do well. Secondly, what parts of that do we do really well in? We do really well, equities we're number one in the world.
M &A we're number one or two every year. IPOs we're number one in the world. Wealth management we're number one or two. So we have really strong
businesses.
QUEST: So this is you're not worried at all. This is your very worried. And that means you're --
GORMAN: About --
QUEST: So where are you?
GORMAN: Life?
QUEST: No, about 2016, 'cause you just said sir, you just said the worst January in history for the opening of the market in the first few weeks. So
where are you?
GORMAN: I'm a little under 5, 4 and a half wherever that is.
QUEST: 4 and a half. That's the Chief Executive of Morgan Stanley. As we continue tonight, the role of President Putin in the murder of Litvinenko
in London.
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QUEST: You're going to hear from the Ukrainian President Poreshenko who believes that sanctions against Russia in the matter may be the only tool
that the Russians understand.
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(COMMERCIAL BREAK)
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QUEST: Let us go immediately to Flint, Michigan where we're going to hear from the freed marine coming back from Iran.
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AMIR HEKMATI, FREED U.S. MARINE: A very long journey. Unfortunately, many people have traveled this road with me, but despite all the difficulties,
thank god, thanks to everyone's support, everybody from the President, Congressman Kildee, every day Americans, I'm standing here healthy, tall,
and with my head held high. So I'm glad to be here and I appreciate everyone's support once again.
(CROSS-TALK)
UNIDENTIFIED MALE: Amir, what now? What will you do now that you're home?
HEKMATI: I plan to do some interviews in the near future and I will definitely answer everybody's questions.
UNIDENTIFIED FEMALE: What can you say to Michigan for their support?
[16:15:00]
QUEST: There you have the returning marine who had been imprisoned in Iran, Amir Hekmati, who had been imprisoned in Iran charged with various
espionage offenses. But there had been five of them of course that were released. They then went to Ramstein Air Force base for medical checks and
now they're starting to be repatriated back to the United States. We will of course be watching of course the U.N. - when the Washington Post
reported Jason Rezian also returns to the U.S. but so far no word on that.
(END VIDEO CLIP)
QUEST: We continue with our evening digest this evening. Russian's foreign ministry says relations with the United Kingdom have been darkened after
Britain accused Vladimir Putin of probably approving the murder of an exile spy.
(BEGIN VIDEO CLIP)
QUEST: Alexander Litvinenko came to the U.K. in 2000 after blowing the whistle on his Russian's Federal Security Services. CNN's International
diplomatic editor, Nic Robertson reports.
SIR ROBERT OWEN, INQUIRY CHAIRMAN: There can be no doubt that Alexander Litvinenko was poisoned by Mr. Lugovoy and Mr. Kovtun.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Even more explosive, (Owen's) 327-page report concludes Litvinenko's murder ten years ago on the
streets of London was probably sanctioned by Vladimir Putin.
OWEN: I have concluded that the FSB operation to kill Mr. Litvinenko was probably approved by Mr. Pepetruchef , then head of the FSB. And also by
President Putin.
ROBERTSON: Russia's Foreign Ministry reacted calling the report politically motivated. But on his death bed in a London hospital, Litvinenko, a vocal
critic of Putin, warned the Russian leader his murder would come back to haunt him.
This is the hotel where the report says that Litvinenko was given the poison polonium in a cup of tea. Traces of it were found on the tables and
chairs and in the tea pot. The report also says that the two alleged murderers had no animosity towards Litvinenko and that the poison could
only have been manufactured in a nuclear facility. And therefore, for it to end up in the hands of the intelligence services must have been sanctioned
at the highest levels of the state, probably Putin. His widow is demanding the British government take action.
MARINA LITVINENKO: I'm calling immediately for expulsion from the U.K. of all Russian intelligence operatives, whether from the FSB (inaudible) or
from other Russian agencies.
ROBERTSON: But the British Home Secretary stopped short, calling in the Russian ambassador to demand cooperation targeting sanctions only against
the two alleged murders.
THERESA MAY, BRITISH HOME SECRETARY: I can tell the house today, that Interpol notices and European arrest warrants are in place so that the main
suspects, Andre Lugovoy and Dmitry Kovtun can be arrested if they travel abroad.
ROBERTSON: Ten years since the hotel security cameras recorded Lugovoy in the moments before Litvinenko's murder. Both men have denied they were
involved. Lugovoy calling the enquirer's finding quite absurd. The inquiry helped shrink their world, but with Putin in power, Litvinenko's widow
doubts they'll ever face justice.
LITVIENKO: Putin himself personally protected Lugovoy. He himself, Mr. Putin stated it's not Lugovoy and provided him immunity. He said Russian
citizens not extradite for any justice to another country. He protected him.
ROBERTSON: Until then, Alexander Litvinenko's murder remains an open case. Killed, it appears, for speaking truth to power.
Nic Robertson, CNN, London.
(END VIDEO CLIP)
QUEST: The British Prime Minister, David Cameron, says he has not ruled out punitive action against Russia and will continue to do business with Moscow
with what he says is clear eyes and a very cold heart. Additional sanctions could add more misery to the Russian economy already struggling with a
currency crises. The ruble hit a record low.
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QUEST: The currency's fall mirrors the falling oil prices. The Kremlin insists it's not a collapse. We were hoping to interview the Russian
Central Bank Governor here at Davos today. We were scheduled to do so. The governor cancelled that interview earlier in the day.
(END VIDEO CLIP)
QUEST: The President of Ukraine told me he's not optimistic that Russia will cooperate with the U.K. because Russia still denies it was responsible
for the downing of Flight MH17 over Ukraine. President Petro Poroshenko urged Europe's democracies to seriously consider the findings of the U.K.
Inquiry.
(BEGIN VIDEO CLIP)
[16:20:01]
PETRO POROSHENKO, PRESIDENT OF UKRAINE: I think that the British legal system has a very high level of trust. Nobody in the world have any doubts
about the Russian connection with these crimes. I would not comment about the personal involvement of the Russian President, but I'm absolutely sure
that this is in the Russian interest to participate and cooperate with the investigation which is presented by the British court. But I think this is
the very disturbing signal, not only for Russia but for the whole world.
QUEST: There are two people for whom there are existing extradition warrants that have refused to be extradited. Do you think that the other
countries need to impose more sanctions or to take stronger measures, would that be your movement?
POROSHENKO: Look, we have the same cases run through the mh17 which happened on Ukrainian territory. And we delivered as much evidence as
possible that that was a Russian soldier, Russian weapon, Russian missile, and Russian responsibility. From the very first moment Russia denied that
but now we have the results of the Dutch investigation team which mentioning the particular name of the person who doing this.
QUEST: They still deny it, the Russians?
POROSHENKO: Exactly. And that's why I'm not very optimistic about the today case. Because even if the topic was the problem for the national -- United
Nations Security Council and even in that situation Russia uses a veto right which has characterized Russia not in very good things.
QUEST: Now we'll talk about your country.
POROSHENKO: Please.
QUEST: And your economic problems. You had a meeting with Christine Lagarde. You're looking for maybe $10 billion in 2016. Are you going to get
the money this year do you think?
POROSHENKO: It seems to me it should be $7 billion. I'm absolutely confident that we are in a brilliant form of cooperation with the
International Monetary Fund, with the World Bank and I was proud that here in my last press conference with Christine Lagarde, it was the words,
Ukraine surprised the world.
We today have a positive estimation of the reform from the European parliament, from the highly representative European Union, from Christine
Lagarde, confirm that the implementation of the reform especially difficult during the time of war but we do it. (inaudible) debt, we are improving the
banking system, financial system, tax system. We seriously created the structure for the anti-corruption and many other things.
QUEST: How is the anti-corruption going? Because --
POROSHENKO: It's already launched - it's already launched. We need nine months for delivering the baby. It's already launched and a transparent
procedure. The appointment of the old detective of the special anti- corruption bureau who can investigate everything including the President by the way.
(END VIDEO CLIP)
QUEST: And that's President Poroshenko talking to me earlier. Brand new CNN poll numbers on the U.S. Presidential race. Donald trump still leads the
Republicans in Iowa.
(BEGIN VIDEO CLIP)
QUEST: Bernie Sanders on the democratic side has a commanding lead over Hillary Clinton. You're going to hear the numbers and we'll talk about what
it means and the whole question of trust after the break.
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(END VIDEO CLIP)
(COMMERCIAL BREAK)
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QUEST: New CNN polls released just a short time ago on the U.S. Presidential race, Bernie Sanders has taken the lead over Hillary Clinton
in Iowa. That's where the caucus, the first of the campaign season will be held just over a week from now.
Donald Trump still leads for the g.o.p. for the republicans. CNN's senior political reporter Stephen Collinson joins me from Washington.
The big news here of course is Sanders over Clinton. The question is does this become a much greater self-fulfilling prophecy elsewhere.
[16:25:05]
STEPHEN COLLINSON, CNN SENIOR POLITICAL REPORTER: Yes, that's right, Richard. If you look at these numbers both on the Democratic side and the
Republican side they set the stage for what would be two huge political earthquakes in just over a week when this presidential election finally
gets to see the verdict of voters.
Trump is up 11 points now in Iowa. Bernie Sanders is up 8 points on Hillary Clinton in Iowa. Bear in mind that Sanders also has a big lead in New
Hampshire.
(BEGIN VIDEO CLIP)
COLLINSON: So that really opens the prospect of Bernie Sanders overcoming the front-runner, Hillary Clinton, who remember everyone thought would have
a cake walk to the nomination. In the first two contests, a democrat socialist senator beating the establishment front-runner and supposedly
(inaudible) nominee Hillary Clinton in the first two contests could really reshape this race as we go national, Richard.
(END VIDEO CLIP)
QUEST: Stephen, thank you. We'll talk more about that as we get closer.
The popularity of Donald Trump and other nontraditional candidates signals a shift away from the establishment. Income inequality a major issue among
some candidates are playing into that role.
(BEGIN VIDEO CLIP)
QUEST: According to Edelman's Trust Barometer survey, 71% of high income Americans say they trust institutions. Just 40% of low income people feel
the same. It's the biggest gap of any country in the survey.
(END VIDEO CLIP)
QUEST: Talking about this, Richard Edelman, the chief executive of the public relations company that bears your name. Good to see you. I was going
to ask you about the trust barometer but what we're seeing with this election, this poll, is exactly that question, the lack of trust in
establishment turning to new ways.
RICHARD EDELMAN, CEO EDELMAN: What you see, Rich, is that you've got an unbelievable disenfranchisement of a group of people in the United States.
(BEGIN VIDEO CLIP)
EDELMAN: They feel as if they're not ever going to quite get up the mountain. They actually also feel they have as much information as the
elite. And, they also believe that the elites are not looking out for them.
(END VIDEO CLIP)
EDELMAN: So all of a sudden this pyramid of influence that we've believed in for years is turned upside down. And the mass believe that they have to
talk to each other.
QUEST: OK, but this is - this is emblematic in many ways of what we're seeing here in Davos, what we're seeing in society generally at the moment.
People don't have trust.
EDELMAN: I think that what you see around the world, it's in Britain, it's in Mexico, it's in Brazil, people are really disgusted with government.
(BEGIN VIDEO CLIP)
EDELMAN: And in a certain way the U.S. is emblematic of that. They pick a businessman and they pick a very sort of far left democrat to be the
emblems of the campaign.
(END VIDEO CLIP)
QUEST: You have looked at many elections over a year or two, I think I can safely say.
EDELMAN: It's true.
QUEST: Is it your feeling that what we are seeing is a hiccup in the early stages and it settles down to something more traditional further on?
EDELMAN: I'm not so sure. I think what you see is a flight from the middle. And in fact, the middle arguably also could be open to a third party. You
know it could be a Bloomberg or someone like this.
(BEGIN VIDEO CLIP)
EDELMAN: It could be kind of interesting.
QUEST: So it's still all very much to play for. When we talk about the questions of the U.S. Presidential election, this anger, this deep seated
anger and resentment, it's a middle class phenomenon now and that's what seems to be different.
(END VIDEO CLIP)
EDELMAN: But you also see, in fact that it's people who are high school educated, white, and arguably a bit more male for Trump. On the left, it's
also people though who are deeply educated and don't necessarily feel that the central part of the democratic party speaks for them.
QUEST: So factor all this in at the worry wall. What color - what color are you going to go for?
EDELMAN: Oh, I'll go for blue, sort of my favorite.
QUEST: Why is it your favorite? Is this your favorite?
EDELMAN: It's the color of Edelman, come on. Here we go. I'm going to put - no you want me to go --
QUEST: No, you go where you like and be prepared to justify it.
EDELMAN: So I'm going to go sort of here with an upside down triangle because I think that the elites actually have lost the confidence of the
mass.
QUEST: But you remain relatively unworried about the way things are going at the moment?
EDELMAN: Well, here's the thing, I think the U.S. is going to be okay. I think the lower oil prices are going to mean that countries like Spain for
example are going to do pretty well. And I also think that there's a real opportunity for business here. I think that CEO trust is up, interestingly
with Howard Schultz, Paul Polman at Unilever, you start to see a whole new group of people leading and I think actually business has a remarkable
opening.
QUEST: And we thank you, sir, for braving the cold. It's got very chilly out tonight, minus 15 Celsius. I can never remember what that is in
Fahrenheit but we're in Europe.
EDELMAN: See you soon.
QUEST: Good to see you.
As we continue tonight, the very serious issue of Europe's migrant crises.
(BEGIN VIDEO CLIP)
QUEST: The Prime Minister of the Netherlands and the current President of the council, Mark Rutte, is next on the program warning that time is
running out to deal with this issue.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment when Christine Lagarde tells me her plans for a possible second term
leading the IMF. And he's a musician, an entrepreneur, an award-winning activist, and in a
few minutes will.i.am will be my guest on "Quest Means Business.
Before all of that, this is CNN and on this network the news always comes first.
At least six people including a civilian have been killed in an explosion in Giza. It comes after a booby trap exploded as Egyptian security forces
tried to rig a suspected militant hideout. Thirteen other people were injured.
More than five people have been - are dead - after a coordinated attack in the capital of Somalia. A suicide car bomber attacked a beachside hotel
complex in Mogadishu. Along with several gunmen, the terror group Al- Shabaab has claimed responsibility. A British inquiry says the Russian President Vladimir Putin probably
approved an operation to kill a former Russian spy. Alexander Litvinenko died in 2006 of polonium radiation poisoning after meeting two former Russian operatives at a London Hotel.
He became an outspoken critic of Mr. Putin, leaving -- after leaving Russia. Russia's foreign ministry dismissed the inquiry calling it
politically motivated. Bernie Sanders is now the Democratic presidential frontrunner in the U.S. state of Iowa. The latest CNN poll shows him with a 51 to 43 percent lead
over Hillary Clinton. Donald Trump still leads the Republican race.
Stocks in the U.S. and Europe rebounded on Thursday after Mario Draghi of the ECB hinted the central bank could increase its stimulus as early as
March. Stocks also got a boost from a sharp rise in oil prices. The president of the World Bank told me countries need to act while markets are volatile.
(BEGIN VIDEOCLIP)
JIM YONG KIM, WORLD BANK PRESIDENT: Now is the time to make structural reforms. Change and diversify your growth model.
Make sure that you're an inviting environment for business investment. This kind of thing has to happen right now.
(END VIDEOCLIP)
[16:35:09] QUEST: It is crucial that the European leaders stem the flow of migrants, moving into the E.U. over the next six to eight weeks. That's
what the Dutch prime minister told me earlier today. Mark Rutte warns the migrant crisis must be tackled before warmer weather
arrives or Europe could see its free border system fall apart. I asked the prime minister why we should believe that European leaders will
actually fix this problem now.
(BEGIN VIDEOCLIP)
MARK RUTTE, DUTCH PRIME MINISTER: What I'm asking you to believe is that the sense of urgency with spring coming up. At the moment this month we
already have 35,000 people coming from Turkey through Greece into Europe. Last year it was 1,600 for the whole month, now 35,000 for the first three
weeks. And so the sense of urgency is there. And what I need to do with my colleagues is build on a sense of urgency. I have no guarantee we will succeed. I can guarantee you we will do
everything we can.
QUEST: But you have a problem, not only with finding the right policy, but keeping everybody on board because as you are aware, some of the countries
in Central Europe are not with you on this.
RUTTE: No, but we took a decision as the European Council, as a council on this issue of distribution, of relocation.
So the asylum-seeker is not deciding him or herself -- I go to Hamburg, -- no. It is the European Union telling you, you go to Lithuania, Estonia or
to Germany.
QUEST: Is that workable?
RUTTE: It is workable - absolutely.
QUEST: On large-scale - on large scale?
RUTTE: Yes, but then you need to have the reception capacity, the hot spots - and it's awful European lingo - the hot spots in Italy, in Greece
we need them to be established. We are working on that but now for the next six to eight weeks, the most important thing is that they stem the flock from migrants moving from
Turkey into Greece.
QUEST: How concerned are you at the shift in policies from countries like Poland? You obviously are aware of the decision to investigate by the
Commission the new laws - the new Polish government. But they seem to be taking a leaf out of Hungary's book - turn to the right
and become Draconian.
RUTTE: Well they can take leaves out of anybody's book - I don't mind. But they have to stick with the European force and the European laws.
QUEST: Are you prepared for a fight to protect that?
RUTTE: Oh, I am always prepared for it - every fight if it makes sense. But first I really want to know whether they've done anything which runs
against European thinking.
QUEST: Where are you on the Worry Wall?
RUTTE: Well, you know I am a politician and I think I will be relatively optimistic. I will group myself on 4 which means I'm a bit worried but I'm
particularly issue (ph) oriented.
QUEST: Is that a politician's 4?
RUTTE: No, this is a 4 of the holder of the Council presidency of the European Union and prime minister of the Netherlands being always
positively optimistic and particularly now that they see the economy picking up.
Yes, we do know we have certain issues to deal with like the refugee crisis. But I think we can do that.
(END VIDEOCLIP)
QUEST: So Mark Rutte as a 4 on the portable Worry Wall. I shall put him here. That's the prime minister of the Netherlands.
A Thursday at Davos and the future of Britain's role in Europe was the focus of one major panel. The U.K. prime minister tried to get the
business community on his side. David Cameron asked the company leaders at Davos to campaign against a
Brexit from the E.U. The U.S. treasury secretary stated he's not shocked by the recent volatility in China.
Jack Lew said he doesn't think the situation is much different than it was last year.
(BEGIN VIDEOCLIP)
JACK LEW, UNITED STATES SECRETARY OF THE TREASURY I think that it shouldn't be a surprise that China's growth rate is slowing down. That's been
something that's been underway, and the question really is can they reach a sustainable, healthy, stable grow rate with a mix of consumer and
industrial activities that is sustainable.
QUEST: The IMF managing director also said she's not worried about China's market swings. Christine Lagarde has won support for a second term at the
helm of the Fund. Christine Lagarde's current term ends in July. Now, Christine Lagarde's already drawing up plans for that second term.
When I spoke to her I suggested this race is done and dusted. But the managing director is not counting her chickens.
(BEGIN VIDEOCLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Oh, go on - no, it's not over. It's never over. There are 188 members in the
institution, so I'm very honored, very flattered that all of those have come out and nominated me.
But there will be more to say what they want and whether they want me to carry on.
[16:40:04] QUEST: Yes, OK, you're being suitably diplomatic. I'm saying it's over, you're sort of being shy about it, but the reality is that the -
with such support, you now have to describe how you're going to change for a second term or what you're going to do in the second term.
What would that second term look like?
LAGARDE: AIM -- meaning agile, integrated and member-focused. And this is something that I really believe in. Agile means that the institution has
to adjust, to adapt to move fast. There's always talk about the fourth revolution, about us being digital and
no longer anything else and probably more than that in the next five years. The Institution has to adjust to that and we'll do it.
Integrated means that we need to work together with other institutions - the World Bank, the ILO and others. And within the institutions we cannot
have boundaries. We have to face problems and members head-on, all forces onboard. And that's what I mean by being member-focused. If you have a problem, I
want to be your solution and it's not going to be one size fits all. It's going to be adjusted to use specific situations.
(END VIDEOCLIP)
QUEST: Christine Lagarde has the support of the British, the French, the Germans, the Americans and the Chinese.
If she doesn't get the second term, I'll eat my hat. The governments that rely on oil revenue, the fall in prices has wreaked havoc. Nigeria's vice president says the low price comes with a silver
lining. He will reveal that silver lining, such as it be, after the break.
(COMMERCIAL BREAK)
QUEST: Like most stock markets around the world today, oil prices staged a rally. Brent was up 6 percent and U.S. crude also was higher, both back
near $30 a barrel. U.S. stockpiles grew but not as much as had been feared. Speaking at a
panel in Davos, the chairman of Saudi Aranco told John Defterios Saudi Arabia won't stop producing either.
(BEGIN VIDEOCLIP)
KHALID AL-FALIH, CHAIRMAN, SAUDI ARANCO: This is a position that we've earned over a long time, and we've earned it by investing, by being true to
our principles, by continuing to be committed to our consumers and we're not doing to leave that position for others.
(END VIDEOCLIP)
QUEST: The slide in oil prices has hit countries like Nigeria hard. The government relies on oil - around three quarters of the revenue and local
and media reports the fall has left the government unable to pay some employees.
Joining me now Yemi Osinbajo, Nigeria's vice president. Good to see you Mr. Vice President.
YEMI OSINBAJO, VICE PRESIDENT, NIGERIA: Good to see you too.
QUEST: So, we know it's hurting. Just how bad is it hurting and where is this silver lining that you're telling me about?
OSINBAJO: Well, we spent something in the order of $5 billion U.S. dollars on subsidies last year and we're not going to have to spend any of that
this year. So that's a substantial savings. So for the man on the street, for the man who is going to the pumps to buy
petrol, that's good news.
QUEST: That's because you're not having to pay the subsidies?
OSINBAJO: Why no, we don't have to pay subsidies, yes. So that's good. That's good.
QUEST: If you look out into the future, can the Nigerian government live? It's going to have to, but how difficult will it be to live with an oil
price of say $30 to $50?
[16:45:04] OSINBAJO: Well, the thing is that we have plenty of room in domestic resource mobilization, we have plenty of room in taxes, we're
collecting 20 percent of VAT at the moment and we can widen that coverage, do much more in terms of collection of revenues.
Plugging leakages, fiscal discipline , I think that there's just plenty of room and we will survive even with that oil price.
QUEST: As I've been talking to people here at Davos - literally now seeing you this evening, and thank you for coming.
OSINBAJO: Yes.
QUEST: First time you've been on the program and we hope you'll be back in the future. They all say your priorities - security, economy, anti-
corruption and dealing with basically putting the economy onto sound footing.
OSINBAJO: Absolutely. Yes, those are the priorities - security, the economy, corruption - those are the priorities.
The economy of course is at the center of all of this - it's important for everything, you know.
QUEST: Why should we have more faith in anti-corruption measures when we know in the past good intentions have failed?
OSINBAJO: Well I think the first thing is personalities. The president, President Buhari, is known for his stand against corruption for years.
Every Nigerian trusts him and every Nigerian knows that here is a man who will stand by his word.
And that I think is a very important part of all of this. And I think the country's also ready for a change. I think everyone is saying this is a
time to fight corruption, this is the time to get to some, you know, discipline in governance.
I just think there is a sense that the moment is here.
QUEST: The moment is indeed here. The moment is here -
OSINBAJO: Yes.
QUEST: -- for you to join me at the Worry Wall. What kind of pen would you like?
OSINBAJO: I'll take the red.
QUEST: Oh, this is going to be good.
OSINBAJO: (LAUGHTER).
QUEST: When ministers and vice presidents - all right, so you know where - so where are you in terms of - this is very worried, this is not so
worried. Where are you?
OSINBAJO: I'm somewhere here, just over here. Right here, yes.
QUEST: You're not so worried.
OSINBAJO: Not that worried. (LAUGHTER).
QUEST: That is, that is optimism.
OSINBAJO: Yes. Good.
QUEST: Mr. Vice President, please do come back again.
OSINBAJO: Thank you.
QUEST: And keep us informed on what's happening in Nigeria.
OSINBAJO: OK, thank you very -
QUEST: Thank you very much indeed.
OSINBAJO: -- thank you.
QUEST: Nigeria is now the largest economy in Africa. The economies that rely on oil and commodities have suffered from global factors, and then
there are those that are self-inflicted. Now the second largest economy in Africa is South Africa. It was thrown into turmoil once the president removed the country's finance minister,
then he sacked the replacement a few days later. The new finance minister is Pravin Gordhan who was the old finance minister
two finance ministers ago. You get the idea. I spoke to Mr. Gordhan and asked him how he plans to deal with the fall in commodities.
(BEGIN VIDEOCLIP)
PRAVIN GORDHAN, FINANCE MINISTER, SOUTH AFRICA: Mining in the percentage of GDP is very small. It's a big part of our exports and on - obviously on
- the revenue side. So the commodity events that we're having at the moment will have an impact
and of course in terms of jobs as well. But we have a fairly diversified economy, we have a reasonably-sized manufacturing sector which could do better - it's not in excellent shape.
We have an agricultural sector that despite the drought that we have currently, if we make some imports worth (inaudible) from the private
sector and government could do better as well. And above all, we've had a very resilient services sector which strained down slightly but still helping us to stay above the bottom line.
QUEST: So, why are so many analysts so gloomy about South Africa's economic future do you think?
GORDHAN: Well partly it's a global environment. It's linked to the emerging markets story, it's linked to the commodity-producing story as
well. And I think we've reached the point where we have got to tackle some of our
own structural issues. So, how do you get a better education system? How do we get more
proficient output in terms of the skills and higher levels of skill from our vocational training and university sector?
I think that the dream of 1994 of votes solving politics and society challenges is one that is partly incomplete, so as a nation we've got to
continue building social cohesion.
(END VIDEOCLIP)
QUEST: That's Pravin Gordhan, the finance minister of South Africa. It's not only chief execs and business leaders who are here.
The singer will.i.am was honored here for his educational work. And you're going to meet with will.i.am and hear his views on some very different
subjects as "Quest Means Business" continues live from Davos (inaudible).
(COMMERCIAL BREAK)
[16:51:22] QUEST: It's the worst cliche at Davos that they talk about the great and the good being here, but the World Economic Forum attracts people
from the creative fields as well as the economic. The singer will.i.am is one of them. He was recognized with a Crystal Award in Davos for his work in getting kids to stay in school and go to
college. He told me he wants to use his celebrity status now to help those in need.
(BEGIN VIDEOCLIP)
WILL.I.AM, SINGER: Being in a successful group, you're always called to do, you know, work when there's a natural disaster or when there's a
political rally and they want to bring awareness to certain things. And I noticed that every day in the ghetto that I'm from and other ghettos, you know, reflect the same living conditions are always in a tsunami,
they're always in a messed up situation. So I wanted to start with my ghetto and get these kids up to speed so they can create jobs and have careers in the future.
QUEST: What have you discovered works and, just as important, what have you discovered doesn't work?
WILL.I.AM: What doesn't work is like lip service where you, you know, just going at it the way that we've always gone about it, expecting results.
What does work is motivation, encouragement and, you know, breaking the mold.
I wish my mom threw me in the swimming pool because then I would know how to swim. So I use that metaphor with these kids.
Like, let's just jump in the deep end. The worst that's going to happen is you'll know a little bit more than what you didn't know around science,
technology, engineering and mathematics. That's the worst that's going to happen. You're going to know a little bit more of this subject if you'll
just dive in the deep end and learn robotics. The best that's going to happen is you're going to be able to create jobs in the future.
QUEST: The whole question of diversity is now on every agenda. We even have a reference of course as you know with the Oscars with the question of
diversity of the nominees. What do you think of that?
WILL.I.AM: Sometimes being awarded a trophy isn't as important as filling up theaters and people liking the film. The fact that these films weren't
nominated doesn't change the fact that I love those films. And everyone else that bought tickets feel the same way. There is also a
big opportunity to create your own Academy. So, why don't we just create our own Academy?
QUEST: Do you support those then who say boycott the Oscars because of this? Or do you simply say, no, far better, do our own thing and tell them
where they can stick it?
WILL.I.AM: No. I wouldn't even say tell them where they can stick it - that's just too much energy. And boycotting, that's too much energy too.
Unfortunately, that's the way it's configured. If you want to go and try to change that, that's cool. If you want to make a new thing, hey, let's
go. So, I don't like that word worry because I don't like - I don't really worry about things. I like - I'm concerned about things --
QUEST: Change the word -
WILL.I.AM: - OK -
QUEST: -- 'concern' - how concerned are you?
WILL.I.AM: (Inaudible) (LAUGHTER). Yes I'm concerned on, as it relates to education, like if you take the investment that big companies are doing
around artificial intelligence and machine learning and then you see governments and their investment on goop learning, it's like totally
lopsided. [16:55:02] And so, and that should be a human right thing that we fight for
is to be up to speed so that we aren't dumber than the things we make.
(END VIDEOCLIP)
QUEST: The - out of great respect, there is his 9. And to make it clear, it's "concern". My hand's so cold so that I can't even write it.
We'll have a "Profitable Moment" after the break. The Concern Wall or the Worry Wall.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Once again, Super Mario Draghi has to ride to the rescue, promising that he'll do whatever is necessary. And
now of course monetary policy seems to be in a bit of trouble. He says they may even revise this as soon as March and that of course could mean more monetary printing.
But Axel A. Weber of UBS on this program reminds us that frankly all this quantitative easing, printing of money, is now of only limited effect.
The world is awash with money, central banks are tapped out. The ECB came to this party late and now despite their very best efforts, they can't get inflation back up again and they can't get systemic growth
moving. It's going to take governments to do that, and, frankly, they seem to have their minds on other matters.
And that's "Quest Means Business" for tonight. I'm Richard in Davos. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's
profitable. It's -16 here, it's cold.
END
