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Quest Means Business
Survey: UK, EU Economy Defying Brexit Fear; Stiglitz Urges Europe to Fix Single Currency; International Tesla Unveils Its Fastest Car Yet; South African Finance Minister Summoned By Police, The Controversial Practice That Made Trump Millions; Slovakia to Host EU Meeting on Brexit; Asian and African Leaders Due to Gather in Nairobi; Rio Mayor: Olympics "Already Leaving a Legacy". Aired 4-5p ET
Aired August 23, 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, CNN ANCHOR: Those ringing on Wall Street, FedEx is ringing the closing bell. The Dow has actually given back most of the
gains. Still just about positive for the close. I'm feeling good today about the man in the patriotic tie. Oh, yes, re-rack the tape. That has
only happened two or three times that I can remember. It was obviously a very firm gavel. Well done, sir. Your firmness and patriotic tie, a
little bit of history has been made. It is Tuesday. It's the 23rd of August.
Tonight, bouncing back from Brexit. The U.K. and Europe defy the predictions of doom. The Nobel laureate, Professor Joseph Stiglitz is with
us tonight on the program.
Elon Musk is revving up his engines as Tesla announces two big upgrades. But what are they?
And the cutthroat corporate tactics that made Donald Trump his millions. A special CNN investigative report.
I'm Richard Quest. We have an hour together and I mean business.
Good evening. Just a couple of months, and it was the divorce that many predicted would create economic Armageddon in Europe. I'm talking about
Brexit. The vote was on June the 23rd, and just about everybody and their brother said all hell would break loose across the economies of Europe.
But now, if you look at the numbers, new figures show that both sides of the Brexit split are forging ahead.
I suppose there's an argument that says it's still too soon for the full ramifications. But even so, we've got of course the question of the pound.
Now we know that the pound has been down since June. That came straight hard on the heels, a full throttle devaluation that the market enforced.
But that had encouraging for foreign buyers. And as a result you can already see that even allowing for the traditional trade gap lag, the
export orders hit a two-year high. And those export orders will to some extent counteract the sluggish domestic demand that is being experienced in
the U.K. as a result of the Brexit vote.
On the other side of the channel, on the Eurozone and the EU side. The Eurozone economy is now expected to grow by 1.2 percent annually. That's
similar to the first six months of the year. So growth, if not exactly robust and ebullient, is certainly steady and firm. The PMI in services
and manufacturing they are at a seven month high. Although competence has fallen.
You can see the numbers. The point about these numbers, individually we can pass them to the nth degree. It is the totality of the numbers that
suggests that financial ruin or ruination has not arrived either on the Eurozone side, the EU side, or in the U.K., at least not yet.
Now over the course of this program we're going to be talking to Professor Joseph Stiglitz. He's a prize-winning -- Nobel Prize winning economist.
And he's warning that it's the euro itself that poses the biggest threat to Europe's economic future. That a one-size-fits-all policy does not work
for Europe's diverse states. And Professor Stiglitz, as you'll hear on this program, is calling on the Brussels to change its policies or risk
more exits.
The professor says the following. There should be a focus on growth instead of austerity. Some would arguably say that that is a shift that
has already happened. We'll ask him about that. He also tells us how he wants to encourage industrial policies that allow the laggards, mainly in
the south in some cases, to catch up. And there needs to be a requirement that deficits stay below 3 percent. And finally, to change the ECP mandate
to focus on growth and employment, rather than just inflation. We are very glad Professor Stiglitz is here to put this into perspective. Good to see
you, sir.
JOSEPH STIGLITZ, NOBEL PRIZE-WINNING ECONOMIST: Nice to see you.
QUEST: And you're going to be here for a while this evening as we talk not only of the U.S. but will be talking the EU but also the U.S. This is your
new book, "The Euro: How a Common Currency Threatens the Future of Europe."
[16:05:03] When we just talked about Brexit, for this first second. Yesterday the leaders were in Italy. They're going to have a summit to
talk about how to get rid of the U.K. or how the U.K. should leave. Are you optimistic or pessimistic about how the Brexit scenario plays out?
STIGLITZ: I think in the end I'm slightly optimistic. It's a balance. When the Brexit first occurred, Juncker responded, he's the head of the
European Commission, by saying very forcefully that they were going to punish the U.K. It was a really -- I thought -- an ugly moment. They say,
the only way we can keep the Eurozone together is not by providing them growth and shared benefits, but by threatening them if they leave, things
are going to be even worse.
QUEST: So do you now perceive the euro as being if not exactly a wonderful example of a single currency, at least a stable currency?
STIGLITZ: No, I don't view the euro as a stable currency, in the following sense. There is a real risk of an exit. We had a risk of a Grexit last
year.
QUEST: Who is going to go? Which countries do you perceive as being at risk, besides the U.K., obviously, which is out?
STIGLITZ: It was never in part of the Eurozone. It was in the EU but not the Eurozone. And you were mentioning a little bit earlier how the way it
adjusted, you emphasized the exchange rate fell, and that gave a boost to its experts. You put the hammer really on the head on the nail by pointing
out that it's the exchange rate adjustment that is a very forceful way of countries adjusting to shocks like the shock of the referendum. I think
the real issue here is politics more than economics. Right now there's lot of discussion, what will happen in Italy if the referendum fails, and --
QUEST: This is the constitutional referendum that Matteo Renzi is trying simplify procedures in the various parliaments.
STIGLITZ: That's right. Around that referendum everybody has gathered against Renzi. If it fails, Renzi government falls. There's talk of a
Five Star Movement getting power. They're committed to having a referendum. If there's another referendum, who knows the direction in
which it goes? Europe has lost most of the referendums they've had.
QUEST: Besides Brexit, and I like yourself have looked at this, not in as much detail, but Europe always managers pull it back on the final hurdle.
Alexander Steppe talks about a drama leading to a crisis leading to a sub- optimal solution.
STIGLITZ: Voters are not fine-tuned in the way that the European leaders are used to pushing things to the precipice and then pulling back. You
know, they've done it over and over. They've said they were going to fine Greece -- Portugal, and Spain for their deficits. Everybody thought, how
could you do this. Last minute they said, oh, no, we're not going to do it. You see that over and over again. But voters don't turn on a dime
like that. If there's the kind of referendum, whether it's in Italy or whether it's in Portugal or some other country, they're not going to turn
around like that.
QUEST: Staying with the euro for a second. We've got the ECB with its negative interest rates and it's pretty much quantitative -- it's not a
limited quantity but it is in the sense that they'll keep going until they get the results. We're seeing that QE doesn't really work in anything like
the measure. Even the Bank of England is discovering that as it does it post-Brexit.
STIGLITZ: And some of the countries have actually found that it has negative effects. Because the negative interest rates hurt the banks. The
banks contract lending, and that actually hurts the economy. This experiment with negative interest rates, it hasn't been done as carefully
in some countries as it should have been, but it is not going to get Europe back to anywhere near health. That's why what you need is the end to
austerity. You have to go back to a growth policy. The Eurozone is having very difficult -- it's sort of in the regulations of the Eurozone. It's in
the, you might say, the Constitution of the Eurozone. They don't have quite a Constitution but it's like that. The result of that is, it's the
structure of the Eurozone itself which is holding it back.
QUEST: That's going to change.
[16:10:00] STIGLITZ: That's what worries me. As that happens, and as that stagnation that's been going on for years continues, the likelihood that
the voters get fed up in one country or another is going to increase.
QUEST: You're going to stay with us. We're going to talk the U.S. in just a moment. Good to see you. Don't go any further. Now, the encouraging
economic data that I talked about, that may be Joe isn't quite so encouraged about, but it certainly pushed European stocks higher. All the
major indices in Europe were up between 0.5 and 1 percent. If you look at the market numbers, Union Credit shares are up 6.6. Reports that the
Italian lender is close to selling its Polish banking business.
To Wall Street, where the stocks just closed with a gavel that dropped. Small gains for U.S. stocks. Started out really rather ebulliently in the
morning, then drafted away as the day went on. Look, I'm going to say this repeatedly over the next few days. It is the last days of summer before we
come to a long weekend. And I think you're seeing an element, an element of that in the market.
Tesla's shares fell back in the last hour. They had been up more than 2 percent. The company has unveiled new versions of the Model S. The shares
up .7 percent. It claims P100D is the world's fastest production car. It can go from 0 to 60 in 20.5 seconds, which is as long as it's taken me to
read it. In fact, let's just see. You're at 60 miles an hour. The bigger battery increases the range. It's going to take me about two seconds to
introduce Alison Kosik at the New York Stock Exchange. Then I could be up to 60 miles an hour, Alison.
ALISON KOSIK, CNNMONEY CORRESPONDENT: You very well could be. What's interesting about this announcement from Tesla, Richard, is that it came
out in a tweet hours ago. You can see the anticipation that investors had about this. Because you saw Tesla shares up more than 2 percent throughout
the day. And then came the announcement. And the shares lost ground. As you said, closing just under about 1 percent. So obviously, still a
favorable announcement for Tesla but nothing that investors were really hoping for. But for Tesla, this announcement is all about the battery
pack, as you said, launching this 100 kilowatt hour battery pack for its Model S and Model X cars. A lot more energy, a lot of range, better
acceleration. This is for the new version of the Model S. The Model S, with Ludicrous mode. So with this new battery it makes this even more
ludicrous, Richard.
QUEST: Alison, we had a moment of minor New York Stock Exchange history. Let's show the tape again. I didn't think the gavel was going to fall off
on this. Oh, there it goes. I don't know whether you saw that at the closing bell. The gentleman who did the gavel managed to break it. Which
doesn't happen that often.
KOSIK: I missed it.
QUEST: You missed it.
KOSIK: I was busy writing.
QUEST: You are busily writing while a bit of history there. Alison Kosik at the New York Stock Exchange. Go see if you can find me the gavel on the
floor.
KOSIK: I will. If I do, I will bring it to you tomorrow.
QUEST: Love it. Thank you very much.
The South African rand tumbled after reports that the countries finance minister had been summoned by the police. Take a look at the rand and you
can see the way the share price has been moving. This is the rand intraday price. It's always interesting to show you an intraday. It fell 3 percent
on concerns of a rift between Pravin Gordhan, the finance minister and the president, Jacob Zuma. You have to remember that Pravin Gordhan, former
finance minister, came back into the job to rescue after three in a week and is enormously respected. But look, there you have that very sharp
fall.
David McKenzie is in Johannesburg to put this into perspective. David, I mean, we've known that Pravin Gordhan has been questioned and been part of
a completely unrelated investigation. Now what is this all about? Or is it all tied up with the same facts?
DAVID MCKENZIE, CNN CORRESPONDENT: Well, Richard, it is all tied up with the facts. And whether they are facts or whether they are politics, is
another matter indeed. But what we do know is according to local media reports, Pravin Gordhan, the finance minister and several others from the
South African Revenue Service have been asked to come in to speak to the elite police unit here, The Hawks, later this week. We did confirm that
they had received correspondence. Their finance ministry telling us that.
It is on an ongoing saga between that unit of the police and the finance minister and others where they have hinted at accusations of the finance
minister being involved in his time at the Revenue Service in a specialized unit specialized unit.
[16:15:05] An investigative unit which they say was a kind of rogue unit of South Africa's respected Revenue Service. Gordhan has repeatedly denied
there was any wrongdoing. The elite unit hasn't really said what the charges exactly are, and many people believe, Richard, that this is more
about a rift between President Jacob Zuma and the finance minister. We have a president on one hand accused of corruption. Accused of
contravening the constitution. On the other hand, the finance minister is trying to clean up shop, it seems, Richard.
QUEST: Just remind me, David, bearing in mind the ANC's very poor showing in the last local elections that took place just a couple of weeks ago,
just remind me, how long left does Jacob Zuma have in office? When is the next real test, if you like, of what we've seen from his administration?
MCKENZIE: Richard, there's the next election, and there's the next party conference. Those are two different things. The next election is in 2019.
That's when his terms run out. But even today the party was hinting, the ANC was hinting, Richard, they could call an earlier party conference
potentially to try and censure or even kick out Jacob Zuma. That's a long shot. But given the fact, as you describe, that the ANC was heavily
punished in that election recently and have lost key metros, there will be pressure to jettison the president. But this move today against the
finance minister could show that he's trying to continue to show his hand and take control of the treasury here in South Africa. It could have major
financial complications. Any perception of a rift between the two could lead to turmoil in the rand. And of course the long-term implications as
South Africa teeters on the edge of a major recession, Richard.
QUEST: David, watch these events carefully for us in South Africa and come back when there's a more to report. Thank you, sir.
As we continue our nightly conversation, the height of the 1980s economic boom, corporate raiders will the stars of Wall Street. We're going to
explain how Donald Trump's venture into this high risk, high reward world gives us a window into his 2016 campaign.
(COMMERCIAL BREAK)
QUEST: Welcome back to QUEST MEANS BUSINESS. Going against the advice of top advisors, using the media to advance his goals, and a tendency to bully
opponents. Now according to some, it's a part of the playbook that's been used by Donald Trump as part of his campaign for the presidency in 2016.
CNN's Phil Mattingly explains.
(BEGIN VIDEOTAPE)
[16:20:00] PHIL MATTINGLY, CNN CORRESPONDENT (voice-over): In the high- flying '80s, it was the corporate raiders who got the big headlines and even bigger paydays. Donald Trump wanted in on the action.
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: Money is a scorecard. Money is a scorecard as far as I'm concerned. Believe me,
money is not the most important thing, but it's a way of keeping score.
MATTINGLY: It's something Trump rarely discusses on the campaign trail, the four years where he played the stock market and mostly won, big, to the
tune of more than $200 million.
But a CNN investigation comprised of hundreds of pages of never- before- released depositions, testimony and financial documents, as well as more than a dozen interviews, opens a window into a playbook with striking
parallels to his campaign. One driven by a bare knuckle strategy, strong arm tactics, media leaks and public statements that often ran contrary to
the truth.
TRUMP: The difference between me and other people is I'll attack back. If I have to attack whatever method is necessary, I will. I will.
MATTINGLY: The review also discovered repeated allegations of Trump's use of one particularly volatile, yet completely legal tactic -- greenmailing,
the practice of buying a large stake in a vulnerable company for the sole purpose of forcing its management to buy the stock back to avoid a takeover
at a premium. With companies like Bally and Holiday Corp, Trump used his unique position as holder of a casino license, which allowed him to target
his competitors in New Jersey and make millions as their management scrambled to stave off a takeover attempt.
Walter Reed, the New Jersey casino commissioner at the time, equated Trump's action to using, quote, "A casino license as a weapon to weaken or
undercut the financial integrity of his rivals." Trump and his lawyers vigorously disputed the greenmail charge. But Trump in an unsolicited
moment during testimony in front of the commission took pains to remind the commissioners greenmail is, quote, "A totally legal practice. However,
it's something the name, greenmailer, is not a very pretty word", according to transcripts obtained by CNN.
But a tell-all account from former Trump executive, John O'Donnell, paints a different picture. In his 1991 book on the billionaire, O'Donnell
recounts Trump behind closed doors is making it very clear what he was doing. Bashing Bally executives as idiots who caved in.
In addition to making money, Trump had another motivation. "I really enjoyed doing it, because it put a real scare into them," Trump said,
according to O'Donnell. With Bally and Holiday, Trump never went so far to make a tender offer for the companies, leaving critics to believe he
attacked to juice the stock and sell for profit.
CARL ZEITZ, FORMER MEMBER, NJ CASINO CONTROL COMMISSION: I don't think he intended to acquire another casino hotel.
MATTINGLY: Carl Zeitz, a Democrat who supports Hillary Clinton, served alongside Reed on the New Jersey Casino Commission and raise major concern
about whether Trump's greenmailing practice made him unfit to keep his state gaming license.
ZEITZ: In those days, the term was "greenmail" where you went into a public corporation that was vulnerable and bought stock and kind of held it
up. I think that was his purpose. We did not regard it as conduct sufficient or the level to say, you're no longer qualified. But if we did
-- we took it seriously. We didn't like it. And we hoped that by doing that, we put a stop to that kind of business.
MATTINGLY: Trump kept his casino license. But the companies themselves never recovered. Holiday Corp's management, bogged down by the debt it
took on to ward off Trump, soon had to sell off valued business lines. Thousands lost their jobs. Bally was also left wounded and similarly mired
in debt.
As for Trump, despite the millions in profits and the weakened competitors, it wasn't all positive. His efforts sparked a Justice Department
investigation in the 1980s, alleging that Trump concocted a scheme to dodge federal stock purchase notifications. Something done specifically to hide
his intentions from Bally and Holiday.
Trump settled the resulting federal lawsuit of $750,000. He did not admit any wrongdoing.
In a separate civil lawsuit brought by Bally shareholders, Trump agreed to pay them $2.25 million for his role for artificially inflating the
company's stock.
Yet for Trump, one thing remains clear, then as now, there are no apologies for his tactics.
TRUMP: I love battles. And, unfortunately, battles -- I'm not controversial to be controversial. I mean, I get into a lot of battles and
that's part of winning.
(END VIDEOTAPE)
QUEST: Phil Mattingly reporting there.
[16:25:00] Now, for all the many years he's been in business, economists have ranked Donald Trump as their third choice when asked, which candidate
would be best at managing the economy? If you asked the general public, they have him as number one behind Hillary Clinton. But a survey of 400
experts from the National Association for Business Economics -- a fine body of men and women I'm sure -- a majority chose 55 percent, chose Hillary
Clinton, even the Libertarian candidate, Gary Johnson, comes in second with 15 percent. Donald Trump comes in third with 14 percent. Very different
than viewing results from the economists than you get from the general public.
Most economists also support boosting growth through relaxed immigration policy and more free trade. Of course free trade is how long is a piece of
string? One man's protectionism is another man's free trade, and both people will see the same facts in exactly the opposite direction. Which is
a very good moment to return to our guest of honor tonight, Professor Stiglitz.
STIGLITZ: Nice to be here.
QUEST: You're an adviser to the Clinton campaign on economic and trade issues. And when it comes to -- let's do the trade first. When it comes
to trade policy, Secretary Clinton is against TPP. You're against TPP. But it's possible, or it's likely, the president is going to try to get TPP
through in a lame duck Congress before the end of the year.
STIGLITZ: Yes, I find that outrageous. Both parties in their platform and the leaders have said this shouldn't be the way things in our democracy
works. When you have an election, the leaders of both parties, the platforms, have raised deep doubts about TPP. To rush it through in a lame
duck session I think is absolutely wrong. And I hope there is the will on the part of both parties --
QUEST: What's wrong with that though? In the same way that the Democrats have said no, the president should be able to bring his Supreme Court
nominee and not wait for a new president, what's wrong with TPP? He is still the president.
STIGLITZ: He is, but the question is at that point, at the lame duck session, you have Congressmen voting who know that they're not accountable
anymore. They've been kicked out. And --
QUEST: They're the ones who can give the best votes.
STIGLITZ: The idea is that a lot of people who are not politically accountable because they're not leaving may, in response to promises of
jobs or, you know, just subtle understandings, do things that are not in the national interest. Let me try to explain why I and a lot of other
people are against TPP.
It's not that we're against trade. Adam Smith, going back to Adam Smith, economists have talked about expanding markets, it opens up advantages of
economies of scale. And taking advantage of comparative advantage. This is not a trade agreement. Even the administration's economists have come
to calculations that the effect on GDP is minuscule and a more realistic estimate say that the effect on the economy is actually negative. What
people care about is the provisions on intellectual property that will drive up drug prices. The provisions, what they call the investment
provision, which will make it more difficult to regulate, and actually harm trade.
QUEST: But under the fast track authority, there's not the ability to tinker with it. So this thing either goes down or there has to be a full
scale renegotiation with the other 11 partners.
STIGLITZ: Not necessarily a full scale negotiation. I've talked to some of the people in the partners. It wasn't that we bargained badly. It was
that our interests were reflected in corporate interests. They were at the table. Ordinary citizens weren't. Even Congressmen couldn't find out what
the U.S. bargaining position was. They wanted to renegotiate. We wanted to renegotiate.
QUEST: So would have to be a renegotiation though. Everybody back at the table?
STIGLITZ: Back at the table. But there is an understanding about where the problems are. The problems are in the investment agreement. The
problems are especially with the intellectual property provision, that can be done.
QUEST: Would you leave NAFTA alone?
STIGLITZ: No, I would change NAFTA to. Because Chapter 11 in NAFTA has the same provision of trying to discourage regulations with disastrous
effects in Canada. Interestingly, when I was in the Clinton administration, no one ever discussed Chapter 11. Even as Clinton was
pushing the agreement through, there was no discussion. And the reason was it was inherited from the Bush administration and nobody wanted to tinker
with it. That was a big mistake.
[16:30:02] QUEST: Finally, Professor, and bearing in mind that you are coming from party pre-standpoint in the sense of supporting one candidate.
Are we at a moment in history where all the globalization rhetoric and policies that have driven trade for the last two decades are going to be
rethought?
STIGLITZ: Oh, very much so. The reason is very simple. The advocates of trade said it was going to benefit everybody. The evidence is it's
benefitted a few and left a lot behind. It could have been different. We could have managed trade in a way that would have had shared benefits. But
that's not the trade agreements that we've had. And now people are realizing that that rhetoric that everybody was going to be better off was
a lie.
QUEST: We are grateful, sir, that you came to talk to us tonight.
STIGLITZ: Nice to be here.
QUEST: Much appreciated, thank you very much indeed.
As we continue on QUEST MEANS BUSINESS, you have the names you want to hear. We have from a Nobel laureate. We're going to be talking to a
foreign minister next. The Slovakian foreign minister will join me to talk about the EU and the Bratislava informal summit. Where they're going to
try and decide what they're going to do in the future. Is it going to give us any idea? In a moment, QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. When the mayor of Rio tells us that the city will start to
feel the benefits of this year's Olympics.
And British vineyards say they can take on the French at their own game. Now that Britain is leaving the European Union.
And in talking about that were going to have the foreign minister of Slovakia in the program in just a moment to talk about how they will be
holding an informal summit of the other 27. All of that in the second or three, but before, this is CNN, and on this network, the news always comes
first.
President Obama has visited parts of Louisiana, hard-hit by deadly flooding. More than 106,000 residents and households have registered for
assistance from the U.S. federal government. The floodwater damage is more than 60,000 homes and 13 people lost their lives. The president has called
on Americans to help and to keep on helping.
(BEGIN VIDEO CLIP)
BARACK OBAMA, U.S. PRESIDENT: Let me just remind folks, sometimes once the floodwaters pass, people's attention spans pass. This is not a one-off.
This is not a photo-op issue. This is how do you make sure that a month from now, three months from now, six months from now, people are still
getting the help that they need.
(END VIDEO CLIP)
[16:35:00] QUEST: Iraqi forces say they will liberate the city of Mosul from ISIS by the end of the year. ISIS extremists set fire to these oil
reserves in northern Iraq as a part to hamper visibility. Mosul is Iraq's second largest city. It's been held by the terror group for two years.
The United States State Department says Turkey has requested extradition of Muslin Cleric, Fethullah Gulen, from Pennsylvania. The request is not
related to last month's attempted coup. The State Department's spokesman will not comment on what the request was related to. The U.S. is now
considering the extradition request.
Slovakia is the host of a meeting of all the EU countries, all except the U.K., next month. They'll be discussing -- well, it's an informal meeting
to discuss the details of Brexit. When the European Council President, Donald Tusk, called the meeting, he said it would come after political
reflection on Europe's future.
Now, already we've had some reflections from Chancellor Merkel, Prime Minister, President Hollande, President Renzi. They began preparing for
the summit on Monday in Italy.
Joining me now is Slovakia's minister of foreign and European affairs, who joins me in the C-suite. Minister, good to see you, sir.
MIROSLAV LAJCAK, SLOVAKIAN MINISTER OF FOREIGN & EUROPEAN AFFAIRS: Thank you for the invitation.
QUEST: We heard yesterday a wide agenda in a post-Brexit world for what Europe will do, the rest of the EU, the remaining members. But your first
task is actually to discuss how to get rid of Britain. How should the U.K. leave?
LAJCAK: I wouldn't say how to get rid. Are sorry that Britain has decided to leave. But it's a reality and we have to go with this. So we have two
tasks to deal with at the same time. First, to negotiate the terms of the future relationship between the EU of 27 and the U.K. And second, to speak
about the future of the post-U.K. future of the European Union.
QUEST: Ok, will come to that second part in a minute, because I do want to talk about that, but firstly, do you favor a more liberal, relaxed regime
for the U.K. to have access to the single market or are you a hard liner?
LAJCAK: I'm certainly not a hard liner, that's clear. The U.K. is an extremely important country and will continue to be an important country.
Now it's about the arrangement, because you have the benefits of the partnership and you have the responsibilities, and there has to be a
balance. We have to agree on the model of how ambitious we want to be. Because you cannot really leave the European Union, you have to agree on
certain model of relationship between your country and the European Union.
QUEST: But you accept there's going to have to be an agreement on future relationship before the U.K. leaves. You can't have a situation where
they've left and then have to negotiate. Or maybe you can.
LAJCAK: Well, there are different views on that.
QUEST: What's your view?
LAJCAK: I believe that we shall agree on the future relationship. So from where we are now to where we want to go, that sounds logical to me.
QUEST: In terms of the invoking of Article-50, are you in favor of an early or later invocation of Article-50?
LAJCAK: Not too late. Because this is a situation when we are in an uncertainty. We have the outcome of the vote. But we have the legal the
status quo. So I really believe the U.K. needs to take time to get ready. But it should not drag on for too long because our people need to know.
QUEST: Let's talk now about the future of Europe. I want to read you what Donald Tusk said when he announced it. He said, "We also discussed the
fact that too many people in Europe who are unhappy with the current state of affairs and who expect us to do better." What can you do? What is it
that needs to happen within the remaining EU as part of this process?
LAJCAK: EU is a great project.
QUEST: No, with respect, sir. We know those. What policies and changes need to take place within the EU?
LAJCAK: We need to address issues our people think about and talk about. Because there is a feeling that Europe elites are addressing different
issues. Not the ones that people care about. People care about security. People care about the economy. And of course we take things for granted,
the positive things.
QUEST: Right, but when you say that you've got to address those to make it. You've been taught -- not you personally -- but the leaders have been
talking about that for as long as I remember. And all that happens is greater encroachment from the Commissioner from Brussels. It's the
Commission that doesn't get it. Are you now prepared to tell them?
LAJCAK: No, I would never say so. The Commission is extremely important. The EU without the Commission would not be the European Union.
[16:40:00] It has to be a balance between the member states, the Council, and the Commission, and European Parliament. We have no time for inter-
institutional battles. We really have to address issues are people care about.
QUEST: But in this battle towards pushing power from the EU center, which I understand is what this is all about, never mind common defense policies,
common immigration policies. But fundamentally, philosophically this is about pushing power back down again, isn't it?
LAJCAK: For some. Not for all. That's what we have to discuss. That's exactly what we have to discuss. What has to be delegated to the level of
Brussels and what has to rest with the national states, with the national governments, that's really important. That's important for the best
functioning model of the European Union.
QUEST: Are you confident you can get agreement on all these things?
LAJCAK: I am, yes. It won't be easy. We have all we need for that today.
QUEST: Good of you to come in, sir.
LAJCAK: Thank you.
QUEST: We very much appreciate it. And we'll talk more about this in the future.
LAJCAK: OK. Thank you for inviting me.
QUEST: Thank you very much indeed.
Now, let's go to an area of industry that you don't often think about. Britain's wine industry. Is the glass half full? A view of Brexit. The
industry is making gains. The lower pound that we talked about, is helping exports. Nina dos Santos went to find out more.
(BEGIN VIDEOTAPE)
NINA DOS SANTOS, CNNMONEY EUROPE EDITOR (voice-over): Across the sun- kissed slopes, wine makers are getting ready for the harvest. This isn't Burgundy or Bordeaux. It's Britain. And they're not just making any wine.
They're about to bottle England's version of champagne.
FRAZER THOMPSON, CEO, CHAPEL DOWN: We are 120 miles from the northern reaches Champagne, the most famous wine-producing area in the world. And
here we have exactly the same soil type. The white cliffs of dover, the first thing you see in England is chalk. And that's the thing that makes
English sparkling wine so fantastic.
DOS SANTOS: Long beset by low temperatures and high costs, English wine had languished at the bottom of the barrel. But by growing different
grapes, and going up market, ventures like Chapel Down in Kent, has re- found the industry fizz. Now supplying Buckingham palace and number 10 Downing St.
THOMPSON: I remember in the early days that we would have great varieties and people would taste and go, it tastes quite nice. And then you tell
them it was English and, "Ooh, horrible." Now we're that change occurred, I think was largely around winning gold medals.
DOS SANTOS: English sparkling wine out-performed some of the best champagnes last year. Securing its place in the world of wine. And
Britain leaving the European Union could make 2016 a vintage year, economically speaking.
DOS SANTOS (on camera): How do you think Brexit will impact the wine business here in the U.K.?
THOMPSON: In truth actually, because of the devaluation of the pound that's happened, that's got to be great news for exports. So in an
industry -- in order to create brands in an industry sense, we have to get international reach. And that will help our export aspirations, which are
considerable.
DOS SANTOS: The English wine business is still relatively young. These vines for instance are only 15 years old. But as the quality of their
grapes has improved, demand has increased, and production has responded. Soaring some 40 percent since 2009 to 5 million bottles last year.
DOS SANTOS (voice-over): At Chapel Down, that's meant a 30 percent increase of sales year-on-year and an opportunity to double their acreage.
With those kind of financials, English wine is a field set to mature nicely over the years. Even if it's outside the EU. Nina dos Santos, CNNMoney,
Kent, England.
(END VIDEOTAPE)
QUEST: And raise a glass, in my case a cup of tea. We'll have more in a moment.
(COMMERCIAL BREAK)
[16:45:56] QUEST: Japan's Prime Minister, Shinzo Abe, will soon be ditching the Super Mario costume he wore at the Olympic games' closing
ceremonies. That's when he attends the Tokyo International Conference on African Development this week. This year's meeting of African and Asian
leaders is in Nairobi. Zain Asher explains in our new series, "Africa looks east," Japan's trade deals with Africa date back nearly a hundred
years.
(BEGIN VIDEOTAPE)
ZAIN ASHER, CNN ANCHOR (voice-over): If you're looking for evidence of longstanding ties between Japan and Africa, look no further than the car
industry.
KATSUMI HIRANO, VP JETRO: The special trade relationship with Africa is sustained by the automobile industry. Over 90,000 is supplies in South
Africa alone.
ASHER: From showrooms in Johannesburg to the streets of Nairobi to plants in Egypt, in Africa the Japanese car in king.
MIKE WHITFIELD, MANAGING DIR, NISSAN SOUTH AFRICA: The Japanese brands have established themselves over many, many years. This is one of our
major markets for future growth.
ASHER: Mike Whitfield is the managing director of Nissan South Africa. Nissan has operated on the continent since 1959. Today it does business in
a number of countries, including running manufacturing plants in South Africa and Egypt.
WHITFIELD: Certainly a continent of great opportunity. It is a lot of individual countries, each of them unique, that have their own needs. But
primary the fact that Africa does have the people resources. It has a great need to provide mobility.
ASHER: And it's not just cars. Flowers, hair care technology, all connected the continent to Japan. Japanese companies operate on the
continent include Japan Tobacco, Nikon, the world's largest zipper maker YKK, construction giant, Komatsu and food company, Ajinomoto. According to
Multinational firm Linklaters from 2005 to 2014, Japan invested more than $33 billion in Africa. Outpacing China, India, Malaysia, among others.
And the countries seen the bulk if investment from all over Asia is Nigeria. In Tokyo, Japan's external trade organization, Jetro, provides
research and risk management analysis for companies looking at to penetrate the African markets.
HIRANO: In our survey the number of Japanese companies doing business in Africa is 678. We also believe we do have much potential to increase.
ASHER: Katsumi Hirano has worked in African affairs for 30 years. He says demand is the driving factor.
HIRANO: After the disaster we started to import from natural gas and also the crude oil.
ASHER: The African development bank points out that 40 percent of the Japanese business is concentrated in South Africa, mostly South Africa.
Twenty-three percent in East Africa. And 21 percent to the north. West and Central Africa make up the rest. While China has become Africa's
largest trading partner, Japan's modern history with the continent dates back to 1918, when japan opened its first consulate in Cape Town, South
Africa. Even though it's hard to tell what the next frontier will be between Africa and Japan, Hirano is optimistic the relationship is here to
stay.
HIRANO: Japan is known as very proactive and accepted to join the Africa market. We have the strong requirement to expand beyond the border so that
Japan faces a second globalization.
(END VIDEOTAPE)
QUEST: The mayor of Rio says the 2016 Olympics already leaving a legacy behind in proving a developing country can successfully host the games.
You're going to hear from Mr. Mayor after the break. QUEST MEANS BUSINESS.
[16:50:00] (COMMERCIAL BREAK)
QUEST: The mayor of Rio de Janeiro says the 2016 Olympics have cemented an important legacy for his city and for Brazil. It proves, he says, that
developing countries are worthy hosts of the games. Shasta Darlington has been to Mayor Eduardo Paes. And Shasta joins me now. Shasta, I don't know
how you're managing to stay awake after all the hours of work that you have been doing. Rio still looks absolutely gorgeous and glorious this evening.
But the mayor, you talked to him many times in the process, of getting the games, post-games. How was he different after them?
SHASTA DARLINGTON, CNN CORRESPONDENT: Well, Richard, I think he had a couple of things on his side. First of all, he could say we pulled it off
without major disasters. In fact, he says the Rio Olympics were a success for the athletes and the visitors. They had 410,000 international
visitors, a little over the half a million they expected. But he also said, he talked about the legacy that was left. Now my question for him
was, OK, you did pull it off, but given the fact that there were empty seats, that ticket sales frankly were disappointing, and that even at the
end of it, even when Brazilian sort of caught that Olympic fever, a poll shows that 62 percent of Brazilians think the Olympics did more harm than
good. Can you really say this was a good idea? And this was his answer to me.
(BEGIN VIDEO CLIP)
EDUARDO PAES, RIO DE JANEIRO MAYOR: It's good that the Olympic came to South America. It's good that it came to a city like Rio. It was never
about solving all the problems of Rio nor solving the problems of Brazil. It was never about hiding our problems. It was about you gather the world
here, there are some rich countries, there are poor countries. But this is an amazing world, it can get better. It can get better.
(END VIDEO CLIP)
DARLINGTON: I think there are still a lot of critics out there, Richard, who would say that even know, again, there were no catastrophes, this isn't
the right time or the right place in a country with a deep recession. We've got the Paralympics coming up in two weeks and they've only sold 12
percent of those tickets. Again, the mayor says he's convinced they'll sell out before the games start, but I find that highly unlikely at this
point, Richard.
QUEST: If we look at the post-Olympics agenda, obviously we have the trial of Dilma Rousseff. When is that due to start? And what economic plans are
there to try and deal with the recession?
DARLINGTON: Richard, I think that's part of the hangover, when we talk about the Olympic party being over. Brazil is waking up and remembering,
oh, yeah, we were in the middle of an impeachment trial. Dilma Rousseff will face the trial in the Senate. The trial itself starts on Thursday.
She's going to go to Senate for the first time to defend herself on Monday. We expect this all to be over by the end of the month.
[16:55:00] There's no doubt this country can't commit to a long term economic plan until there is a president who is going to be permanently in
place until the end of his term. He has all sorts of plans. It's not clear he has the backing in congress for those plans. A lot of people
still view this whole impeachment trial as a coup d'etat as we've talked about many times. Will he have the political support for anything that
would be really tough measures? I think that's still a question there, Richard.
QUEST: Shasta, who is in Rio. We'll be talking more, Shasta. Good night to you.
We will enjoy a Profitable Moment immediately after the break. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. On this program you heard the Slovakian foreign minister talk about how he's hopeful they can get a deal
not only on a negotiating strategy for Britain over Brexit, but also the future look and feel and policies for the new European Union, the so-called
EU 2.0 or 3.0 or whatever you like. I don't know why he's quite so optimistic. The history of the EU managing to pull things out at the last
minute, it has to be a torturous process before they get anywhere close. Expect many more raucous meetings late into the night before we get any
idea what the future EU looks like.
But we must turn our attention to something that doesn't happen very often. It's only happened twice that I know of since we've been here in New York.
Today was the second day when the gavel finally gaveled off. There we go. I have no idea. It was FedEx, by the way, that lost the gavel.
[17:00:00] The last time it was a medal of honor winner that managed to lose the gavel. I have no idea if it's good for the market, bad for the
market, or tells us nothing about the market. But the gavel went for a burn. And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in
New York. Whatever you're up to in the hours ahead, I hope it's profitable. We'll do it again tomorrow.
END
