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Quest Means Business
Poll - U.S. Economists Favor More Immigration; French Republican Party Backs Fillon; PSA Buys GM's Opel for $2.3 Billion. Aired 4-5p ET
Aired March 06, 2017 - 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: Ringing the bell on the stock exchange. Ringing the bell for gender equality, but the market is down
some 50 points for the Dow Jones Industrial, down over 21,000 at the moment. Time for the gavel. Yes, a firm gavel. The trading comes to a
close. It's Monday, it's March the 6th.
It's the travel ban, take two. The Trump administration tries a new order and new tactics. We'll discuss whether they are likely to work on this
program.
A real European champion. Peugeot picks up GM's money losing operations in Europe.
And tonight, the former Treasury Secretary, Robert Rubin explains how Donald Trump should pay for his promises. You'll hear him on this program.
I'm Richard Quest. We start a new week together and I mean business.
Good evening. As the president hopes for a second time lucky on the travel ban, the American Civil Liberties Union has already condemned the revised
executive order as Trump's new Muslin ban. Now, a single still photograph of the signing was released by the White House. The media was not allowed
to attend the signing. And compare it to the scene in January when the first version of the ban was seemingly rushed out without consultation.
This time the president put up the Secretary of State, the Attorney General, and the Homeland Security -- the Homeland Security Secretary, all
to talk to or at least brief the media, although none of those men took questions afterwards.
Following a month-long review, Iraq is not on the list of countries where people are banned from traveling to the United States. There will now be a
ten-day implementation period, unlike the original ban, which came in immediately. Valid visas already issued are exempted from the ban and
there's no religious minority priority, as there were in the original executive order, for those applying to refugee status. As Secretary of
State Rex Tillerson promised, an orderly rollout.
(BEGIN VIDEO CLIP)
REX TILLERSON, U.S. SECRETARY OF STATE: While no system can be made completely infallible, the American people can have high confidence that we
are identifying ways to improve the vetting process and thus keep terrorists from entering our country. To our allies and partners around
the world, please understand this order is part of our ongoing efforts to eliminate vulnerabilities that radical Islamist terrorists can and will
exploit for destructive ends. The State Department will coordinate with other federal agencies and implement these temporary restrictions in an
orderly manner.
(END VIDEO CLIP)
QUEST: Laura Coates is a CNN legal analyst. She's also a former federal prosecutor, joins me now. Laura, so, I mean, I've read the new order as
much as one can. It is clearly more detailed. It's more rounded. It has waivers, it has deals with all the logistical problems. Does it pass legal
muster?
LAURA COATES, CNN LEGAL ANALYST: Well, you know, it's as if the circuit courts or the lower courts in the United States gave a blueprint to the
president. And in fact, they did. The reason it looks to be more like a palatable, actual travel ban is because they pointed out the areas prior
this new ban being rolled out. They were a problem. It was due process. It was about whether or not you could prefer a religion. You can't in the
United States. And it was about giving a justification for why the present vetting measures were not enough.
This travel ban does those three things, but there's still some problems with it, Richard. And one of the biggest problems is, the President of the
United States absolutely deserves deference in terms of national security. But you can't make a bald assertion about national security being the
interests, and the reason. And you also can't make statements that don't support your claim that, in fact, it's not a bald assertion.
QUEST: But if you -- this last point that you've raised is really the crux of any future legal litigation or issues concerning it. Because the courts
have given the president very wide discretion in determining when he believes there's a matter of national security. Now, as I read the ban,
you know, what it's it like or what potentially could it fail on, the new one?
COATES: It could fail on the issue of intent. Remember, the reason the first one failed, was because justifications that were given -- first,
there wasn't a sufficient one.
[16:05:00] And also, you have the campaign rhetoric that reiterated time and again that there was an intention to have a Muslin ban. You also have
the commentary of former Mayor Rudy Giuliani saying that Trump came to him, asking how to make a Muslin ban legal. So, the courts looked behind the
rhetoric and find out whether or not, is this new ban a pretext? Can we look behind and does the emperor have on any clothes? So, that's where
you're looking for the ACLU to harp.
QUEST: OK, but, it's got rid of all the issues of those people who are stuck outside and can't get back. It's got rid of all of those who already
have existing visas. It's got rid of the issue of permanent residence. It's lost the minority priority for religious minority priority section.
So, really, you are just left with the six countries, not seven, that there were originally. And the -- I beg your pardon, and the refugee issue as it
relates to Syria.
COATES: That's true. And that's why this particular ban is far more airtight than the other one was, which was very, very porous, had many,
many problems. It even had very obvious constitutional, you know, malfunctions, if you will. This one has a neater bow on it. But you still
have the problem that existed with the first -- the first travel ban, which was whether or not it was, indeed, intended to be a Muslin ban. That's
where the courts will still take issue. Ultimately, however, I think this ban will be able to pass a lot more legal hurdles than the other one did,
because it does not have those same issues of the other one.
The only issue, of course, is one of the provisions talks about, as justification, that there are 300 people that came to this country as
refugees, who are being investigated as potential counterterrorism. So, the problem here is though, where are they from? Was it these six
countries? Were they radicalized in the United States? Were they brought here as children? Is the justification you've given enough, at this point
in time, to fatally undermine your campaign rhetoric that really shows that it was really a Muslin ban?
QUEST: We'll talk more about it. No doubt the legalese are sharpening their pencils, even as we speak. Thank you, Laura.
COATES: Thank you.
QUEST: all Now another are extraordinary tale and story of the day. The FBI director, James Comey, was said to be incredulous at President Trump's
unsubstantiated claims that former President Obama wiretapped Trump Tower. It was in a week where Trump's message was derailed by allegations about
ties to Russia. Donald Trump has a history of making claims that distract from the other pressing issues.
So, let's remind ourselves, there's the Obama birther conspiracy issue. There was the electoral process rigged by some 3 million alleged fake
voters. And now, there's the Trump Tower wiretapping. Which is being said as a diversion from the Russia issues or the Russia problems being faced by
the administration.
We need to turn to David Gergen on these issues. He served as adviser to presidents Nixon, Ford, Reagan, and Clinton. We'll get to whether you
think it's a divisionary tactic in just a moment. But give me -- when you woke up in the beautiful state of Massachusetts on Saturday morning and you
read those tweets, what did you think? What was your gut?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: My gut was, Richard, that in his previous claims, there have been big surprises. This one was a
stunner. We've never had a sitting president of the United States accuse a former president of committing a crime. And doing so, without providing a
shred of evidence, which, of course, is required in order to determine guilt or innocence. And beyond that, when it was, you know, when he had a
lot of pushback and there were a lot of questions coming from the press, OK, let's see the evidence, what about this, what about that? He snuck off
the stage and hid behind the majesty of the office, saying, I refuse to answer any more questions.
And the Congress now ought to investigate it. I must tell you that -- and just anecdotally, talking to a number of people, I think this was a bridge
much, much further along, much farther away than the bridges he has erected in the past. This took us into a place where people are asking, is there
way we can get a new president. And under our system, that's very difficult. I don't think we're looking at that.
QUEST: So, as I recall, the difficulty now, it's exactly the same difficulty with the three million alleged voters, you know, false voters.
If you recall then, basically, the administration's point was, well, prove that there weren't 3 million. And now, we're in the same situation, where
the administration is saying, well, prove that it wasn't wiretap. Tell us that it didn't happen.
[16:10:05] GERGEN: That's what they're trying to do. And I'm not sure they'll succeed with that. They may succeed with their supporters. But in
the other case, with the people who voted illegally, the 3 million and so forth, and the president demanded an investigation by Congress, and that's
not going anywhere. This charge, on the other hand, is quite serious, because the president, President Trump, is impugning the integrity of the
FBI itself. And the whole Justice Department, but especially the FBI. And the FBI is the not going to let that stand. That's why you have a leak out
already that Comey is incredulous. He's stepping up the defense of what they've done. But I think they will also now be -- the FBI will be very
forthcoming to the Senate Intelligence Committee, for example, to give them the evidence that they didn't go to a -- that there was no wiretapping of
the kind that President Trump alleged. They're not going to let this go.
QUEST: But just to sort of take the other side, in a sense, it succeeded, David, if the goal was to get the media off the Russian problems of Jeff
Sessions and which member of the administration or pre -- or during the campaign, may have been in touch with the Russians. If that was the goal,
to do the old conjurer's trick of distraction -- don't look at what I'm doing, but look at this over here, and meanwhile, over there, and before
you know, it's all flimflammery. It's worked.
GERGEN: Well, I don't think so. Look, I think it did distract, initially, the Sessions story went off the front page. It's no longer there today.
But it was a temporary -- it will be a territory distraction, because the Senate committee, more than the House committee, is now under enormous
pressure to get to the bottom of things, to clear the air, and I think that the press is going to be paying enormous attention to what happens in these
investigative committees now. And there'll be lots of leaks. This is going to keep the Russian story front and center. There is a very
reasonable chance, Richard, what we would wind up with is, there is no evidence of collusion between the Trump people as a campaign and the
Russians, but that the president totally misspoke. You know, he slandered President Obama. And for that, he should pay a political price.
QUEST: Is there any evidence that middle America cares about this?
GERGEN: Well, I -- no. We have no evidence one way or the other. What I do think that if you're in the White House and you begin to see a drip,
drip, drip, you're going to fear that we can't hold on to our 35 to 40 percent base. Whatever that number is, that it will gradually begin to ebb
away from us. And very importantly, if this is ties up Washington, he's not going to get the kind of results in Congress on economic plans, that
you know so well, tax cuts, as well as infrastructure investments are essentially what had been helping to prop up the stock market and causing
this rally. They've been contributing enormously to that.
If you put those economic policies off for another year or so because you're so tied up with other things, as well as health care, you may not --
you may not get the growth numbers you're looking for, either. So there are some long-term costs to be paid here, when you start engaging in
flimflammery, as you call it, like this.
QUEST: Thank you, David. Appreciate it.
GERGEN: Thank you, Richard. Take care.
QUEST: From Massachusetts to almost a hundred years in Europe, nine decades, General Motors is saying good-bye. The chief executive, Mary
Barra, says it's the right decision, in a moment.
[16:15:00] (COMMERCIAL BREAK)
QUEST: Welcome back. QUEST MEANS BUSINESS, at the start of a new week. General Motors is ditching Europe. GM announced on Monday that it's
selling its European business, its Opel and Vauxhall to France's PSA group and the price tag is some $2.3 billion.
Take a look at what PSA already has in the garage. It has Vauxhall, it has Opel, it has Peugeot, obviously, and it has Citroen and it has DS
automobiles. It makes PSA Europe's number two carmaker, adding, of course, these two Vauxhall and Opel. Once you add them in, it will make it number
two behind the Volkswagen Group. So it will be a sizable force in European car making.
Now, as for GM in the garage in Europe, it still has -- I mean, arguably, more luxury brands. It still has Corvette and Camaro in Europe. It's not
exactly high-volume business. And certainly, it hands over Europe to other carmakers. In doing so, of course, from GM's point of view, it leaves
behind 18 years of losses. The chief executive, Mary Barra, explains why they decided, enough with Europe.
(BEGIN VIDEO CLIP)
MARY BARRA, CEO, GENERAL MOTORS: This was a difficult decision for General Motors, but we are united in our belief that it is the right one for our
employees, our customers, and our shareholders of all the entities.
As I said at the outset, Opel and Vauxhall are making strong progress . Tey've significantly strengthen their brands, brought outstanding cars to
the market, and made important advancements in technology. Their financial results have improved dramatically. It's clear that the team would have
hit the goal to break even in 2016 had it not been for Brexit. That though, along with key fundamental shifts in the European market during the
past 12 months, from changes in customer preferences to geopolitical and regulatory environments, to the impact of technology, it required
thoughtful, and disciplined decision making about our future.
(END VIDEO CLIP)
QUEST: So, that is what's in the GM Europe stable. This is what's in the new Peugeot, Citroen, PSA European stable. And Peugeot and Opel will now
take on European carmaker, the leader in Europe, by far the largest, which is Volkswagen. CNN's Eleni Giokos. If you look at what Volkswagen has, I
mean, you've got, obviously, you've got Volkswagen, Audi, Sert, Skoda, Porsche, Scania, Bentley -- a nice bit of expensive stuff there -- Bugatti.
I suppose the majority of this is high -- is the expensive stuff. The big volume stuff is Volkswagen, Sert, Skoda and probably, Audi.
Eleni Giokos has been speaking to Volkswagen's chief executive. Eleni is with me now from the Geneva Motor Show. I'm pretty certain that a -- we
knew this deal was coming, but even if it happens at the time of the auto show, it must have ginnied things up a little bit.
ELENI GIOKOS, CNNMONEY, CORRESPONDENT: Yes, absolutely. I mean, it's exactly what we've been seeing today. So many people talking about it, and
of course, we'll also be catching up with global CEOs. It's one of the biggest topics, because we know there is overcapacity in the European
market. We're worried about Brexit. There's so many concerns. But what's interesting about Volkswagen, you mentioned, it is the largest player, now
with PSA teaming up with Opel and Vauxhall it's going to give them around 17 percent market share. When you speak to the Volkswagen CEO, we spoke to
him a little bit earlier today. He would say he's not really concerned. And the reason why is because he knows there's a lot of consolidation
that's going to happen in the industry, but also, PSA has a lot of hard work, Richard, to try to turn that loss-making European business around.
So, I caught up with Matias Mueller a little bit earlier, let's take a listen on his thoughts on this new rival that he's going to have to contend
with going forward.
(BEGIN VIDEOTAPE)
MATTHIAS MULLER, CEO, VOLKSWAGEN (through translator): Well, it doesn't have a direct impact on our business. In the past, also, Opel and PSA have
been taken very seriously by us, and this is not going to change that new configuration. But first of all, we look at our own company, and we're
making up our own mind about what the future of the automotive industry will be. And the future of Volkswagen will be, we have a new strategy,
strategy 2025, that we are putting into practice. And we're going to do that with or without PSA and Opel.
GIOKOS: Do you think there's going to be more consolidation, more M&A activity in the automotive sector and Europe in specific given the talk of
overcapacity in the markets and of course, now, the risks that Brexit could pose as well?
MULLER: Well, we have to take a case-by-case decision, of course. And this is not going to be the last merger worldwide and it's not going to be
happening just in Europe, by the way. There will be a consolidation of the automotive market internationally, globally, and we're very attentively
following developments and then on that basis, we're going to make a decision going forward.
GIOKOS: Let's talk about political risk. In France, you've got concerns about what Marine Le Pen would mean on the Eurozone. On the other end,
concerned about Brexit, how that could play out for the automotive sector in the form of more trade barriers and increased tariffs.
MULLER: Well, we are worried, indeed, that protectionist attempts or trends, things that we're seeing, yes, it causes concern. But we are
proponents of a global free trade. We hope that all governments will share this spirit, if you will. We want to make sure that we produce our
products worldwide. And sell them under normal conditions, simple conditions for all of us.
GIOKOS: 60 percent of the cars sold to the United States last year were produced in Mexico. What are you going to do if there are going to be
changes to NAFTA, tariffs posed of around 35 percent. How will that impact you?
MULLER: First of all, we respect the decision of the U.S. administration. We do hope, of course, that these things will be discussed in a very
rational type of way. We have always based our activities on NAFTA, which is a free trade agreement and our decisions that we've taken in the past
were based on that condition and we hope that will be possible in the new administration, also.
GIOKOS: Are you going to be moving more plants to the United States? Is that the game plan?
MULLER: Well, just last year, from last year to now, we've invested in another 1 billion euros in Chattanooga, in our Chattanooga plant. So, the
U.S. is a strategic market for us. And in the past, we've been building cars, but we've also built cars in other parts of the world, including
Mexico of course.
GIOKOS: Are you talking to India's Tata Motors about teaming up and creating a new line for emerging markets?
MULLER: Indeed, this is not rumor. We are negotiating with Tata. And then we'll see what the result's going to be.
GIOKOS: When do you think that deal is going to materialize?
MULLER: I cannot tell you today. Now, these are talks, negotiations that tend to be not very easy. But we are in a very good, very good talks with
our colleagues from Tata, very cooperative. And I think in the future, there could be a joint project.
(END VIDEOTAPE)
QUEST: Good try, Eleni, good try. You pushed it as hard as you could. But he did say, in the future, there could be a deal. There could be a
deal. I mean, I guess what I need to know from you is, just how much has - - is the view of the people there, that GM exiting Europe starts a process of either consolidation or mergers, that others feel they've now got to
take part in?
GIOKOS: Yes, I think that's probably the trend we're going to see emerging. When you such a strong player like GM pulling out of the
European market, it shows concerns of political risk, which we heard earlier from the CEO. And of course, what Brexit is going to mean. I
mean, you got this big problem of overcapacity. And what in the world are those European carmakers going to do with a plant in the U.K. Now it's
going to be PSA's problem to kind of figure this out.
So, you know, on the eve of the big launch tomorrow, and here at the Geneva Motor Show, that is one of the biggest topics. And apart from that, it's
also about what kind of products are going to come out, as well.
[16:25:00] VW is going to be focusing on artificial intelligence. It's going to focus on automation, as well. So, you know, these are some of the
trends in the narrative that's going to be playing out over the next couple of days.
QUEST: Thank you, Eleni Giokos for joining us from the auto show. It's half past 10 at night.
Tomorrow, join us when we'll speaking to Peugeot's chief executive. We'll be talking to Carlos Devalles about how he's going to turn a money-losing
business that he's just bought into what he now calls a true European champion. Because it will be his problem, not hers.
German's biggest bank has made a habit of posting heavy losses over the last two years. Now, Deutsche Bank aims to raise $8.5 billion in new
capital, issuing new shares. It's a rights issue. It's a straight-forward rights issue. The stock has fallen some 8 percent or so, over the last
couple of days. In fact, I think it fell from 5 to 6 today. So, it's now down at 17 U.S. at one point, it was down at 5 euros two or three years
ago. So, it's come back quite a long way.
It's the fourth capital hike since 2010. And the strategy of the U-turn that was put in place is being amended. So, for example, the U-turn --
they're no longer going to get rid of Postbank. It's going to be integrated instead. There will be a new structure with a market trading
back with corporate investments. So, they're bringing two of their corporate trading desks back together. The original plan had been to get
rid of Postbank and pull things apart. Now, that seems to have been reversed. The issue for Paul La Monica, who joins me now, our guru on all
matters -- good to see you, sir.
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Thank you.
QUEST: The issue is, this is not the first time that Deutsche has been to the market for money. And the question is, will it be the last?
LA MONICA: It may not be the last, as you pointed out. It's the fourth time already and the CEO had pledged that he would not have to go back to
the public markets for more cash. So clearly, you are deluding the existing shareholders, they never liked that, and that is why the stock is
tumbling today. This is a legal headache, despite the settlement over the toxic mortgages that still hasn't gone away, completely.
QUEST: So, what is the issue with Deutsche? Because they've settled with the Justice Department. They've settled with one or two other claims
against it. They're getting -- what is now the core issue that needs to be addressed at Deutsche Bank?
LA MONICA: I think part of the problem is the turmoil in Europe, as well, is not helping them. Many European banks are struggling right now. So,
you add that on top of these legal settlements, even though it seems that most of them are in the rearview mirror right now, I think this is a
company that's going to need more cash just to navigate the uncertainty that is Europe.
QUEST: It's Germany's largest. It's, you know, when I asked Wolfgang Schauble at the IMF last year, he wouldn't even talk about the question of
whether or not Deutsche was going to need a federal or German government bailout. I mean, by raising $8.5 billion, they are shoring up the balance
sheet quite nicely.
LA MONICA: Yes, they are. The hope is that even if this isn't the last time they have to raise capital, the next time won't be as much that they
need to ask for. And as you point out, the fears of a bailout by Germany have diminished. That stock has rallied sharply from the lows. So, while
the company is by no means healthy, I don't think it's on debt's door, the way many feared it might have been without a bailout, just a few months
ago.
QUEST: Good to see you.
LA MONICA: Thank you.
QUEST: Thank you, sir.
A look at the markets. Wall Street gave a very tepid response to the revised travel ban. Didn't seem to factor in at all. The NASDAQ and S&P
and the Dow, they were all lower. The Dow was 51 points off. It wasn't the worst of the session by any means.
Interestingly, Snap is now below -- let's take a look at Snap. Snap is now below the -- not the IPO. The IPO price was 17. The open price was 24.
And Snap is now trading just roughly below 24. Still early days. Very early days. After the break, a former lawyer and a banking executive
served on the boards of Ford and the New York Stock Exchange and President Clinton's era as Treasury Secretary. Robert Rubin's take on President
Trump's and his plans for the U.S. economy.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. The former U.S. Treasury Secretary, Robert Rubin, grades
President Trump's economic policy.
And from sewing machines to cars, Opel's past, present and future in Europe. We'll talk about that.
Before we get to it all, this is CNN, and on this network, the news always comes first.
Donald Trump signed a revised version of his controversial travel ban. The new order takes effect next week and affects citizens from six Muslim
majority nations. It won't affect travelers from Iraq or current visa holders and permanent residents.
The U.S., Japan, and South Korea are strongly condemning North Korea's latest missile test. Pyongyang fired four ballistic missiles into the sea
early on Monday. Three landed within 200 nautical miles of its coastline. China also spoke out the against the launch and called for restraint from
all sides.
Absurd. That's what the German government said after Turkey's president compared its ban on Turkish rallies to the Nazi era.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, GERMAN CHANCELLOR: I tell you quite honestly, such misplaced statements deserve no serious comment. They cannot be justified,
not even with an election campaign with a referendum of the introduction of a presidential system in Turkey. It is especially serious and personally,
I feel it is simply sad that Nazi comparisons always just lead to one thing, namely to the fact that the incomprehensible suffering of the crimes
of humanity of national socialism is belittled. And for that reason alone, comments like this disqualify themselves.
(END VIDEO CLIP)
QUEST: The rallies were meant to garner support among Germany's larger Turkish population for plans to overhaul Turkey's constitution.
A majority of U.S. economists think president Trump is wrong on immigration, according to the latest poll by the National Association of
Business Economics. 49 percent support increasing, 27 percent say no change in terms of immigration, and a survey, 285 business economies,
including things like Wells Fargo, AT&T, and FedEx. Shortly after the Trump inauguration is when the survey was taken. CNNMoney's Cristina
Alesci has been speaking to the former treasury secretary, Robert Rubin. He was the head of the national economic council under president Clinton.
He was also treasury secretary in the same administration. He then went on to become the chairman and executive committee of Citi group.
[16:35:00] Cristina joins me now. Interesting about Robert Rubin, the quiet man of international exhibition, but enormously respected.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Absolutely. And he has a tremendous amount of ideas on how to promote economic growth. He wants to
retrain out-of-work Americans, he wants to see increased infrastructure spending. He doesn't want to cut social safety nets. These are all ideas
of his, he says, could promote growth here in the U.S. of course, he has no ability to make those decisions, now. He's long gone as former treasury
secretary. But my big question to him was, how do you pay for all of this? Listen.
(BEGIN VIDEOTAPE)
ROBERT RUBIN, FORMER TREASURY SECRETARY: I would not pay for it by reducing social safety net. And I would not pay for it by block granting
or capping Medicaid or food stamps. But I think you'll see a lot of pressure in that direction. I would not lower the top rate for
individuals. I think that serves no useful economic purpose. And then I would -- I would address the whole set of what I call reforms. You can
call them what you like. I think we need to have sound immigration policy and a pathway to citizenship, and the immigrant population that is now
being so criticized plays a real important role in our economy. H1Bs, I would have enough so companies don't have to move their business abroad to
have the people they want. They can hire them here. I certainly would have life-long learning, which I mentioned a moment ago.
ALESCI: How do you pay for that? How do you preserve the social safety nets? How do you pay for lifetime learning? How do you pay for
infrastructure? Where's the money going to come from?
RUBIN: I think the reality, whether we like it or don't like it, and I think this is going to be the reality no matter who's in office, we're
going to have higher taxes, in my opinion. And I think they should be progressively designed.
ALESCI: Not under this administration.
RUBIN: They don't seem oriented that way at the moment. So, I think that's probably right. But I think the realities of life are, we are going
to need additional federal revenues. Now, also, there are probably -- not probably, there are areas where perhaps we could spend our money more
wisely and more effectively. And one area that never gets that kind of review and needs it, and that's defense. It's an enormous part of our
budget. And when I was there, I used to argue, why don't we take a look at this and just -- we don't want to sacrifice one iota of national security,
just make sure we're functioning as effectively as we can, but it's very hard to get that done, politically.
(END VIDEOTAPE)
QUEST: Cristina, he's a great thinker in economics, but he's diametrically opposed on a philosophical basis, he's talking about higher taxes to talk
about the provision of the safety net. The administration, eventually, is talking about slashing them. You couldn't get much more polar opposites.
ALESCI: Yes. It's a complete opposite of Trump's economic policy. In fact, Robert Rubin believes the economy will grow at about 2.5 percent, but
there's a big "if" attached to it. He said, if there are no detrimental policies implemented. And what he means by that, is that he believes in
this economy, where we have near-full employment in the U.S., if you increase fiscal stimulus in the form of tax cuts and in the form of
infrastructure spending, without paying for it, then input costs get higher, and we could end up with a situation where there's inflation. And
that actually could hurt economic growth, not help it, Richard.
QUEST: Thank you very much. Cristina Alesci in Washington for us.
Now to Paris, where top official of the French Republican Party says it unanimously supports its beleaguered candidate, Francois Fillon. It
follows an emergency meeting of the party's grandees amid speculation it would press Fillon to step down from the presidential race. Melissa in
Paris for us tonight. Now, hang on, hang on a second! Hang on. Members of his party have been leaving his campaign like rats from the sinking ship.
And yet now, one of them expects us to believe that they are unanimous in Fillon staying! Which is it?
MELISSA BELL, CNN PARIS CORRESPONDENT: It's been the most extraordinary day and inside that headquarters tonight, the most extraordinary sort of
fight for the soul of the party and its immediate future went on behind closed doors. Now, they came out unanimously behind Francois Fillon,
essentially, Richard, because Francois Fillon refused to go. For the last few days, he's been hemorrhaging support. His very campaign has been
collapsing under the weight of defections, parliamentarian after parliamentarian have been saying, we can no longer support him, he simply
has to go.
[16:40:00] Tonight, he found himself facing some of those who left his campaign, some of those who had ceased to support it, many of them who had
openly been calling for someone else to stand, and he told them, I'm not going to go. They had a choice, split the vote by finding another
candidate, but in the end, they decided they would go with him. So, this embattled candidate is going to represent the Republican party through to
the bitter end. But this is, in a sense, is the end of it. They had to rally behind him or change course.
QUEST: Thank you, Melissa. You anticipated my next question, which is, so this is the end of that, you know, dispute, in terms of, is he or isn't he.
He's going to stand. He will be the Republican, the center-right candidate in the election.
BELL: That's right. And there will be no other Republican candidate in the election, and that's one of the questions we have until they all came
out of that meeting tonight. So, he will represent the party, although, many, within the party, have really backed him, holding their noses. This
is absolutely not what they wanted, but Francois Fillon didn't leave them a choice. The danger is now, he's going to lose it for them. You're really
talking about one of -- there are two parties here in France, who held power, shared power since the fifth Republic began in 1958. This is one of
them. Neither of those two parties is looking like they'll get into the second round. Absolutely extraordinary times here in France.
QUEST: OK, now, for those of us who are finding it all a bit difficult to follow the twists and turns worthy of a French drama, indeed, who is likely
-- and I promise you, Melissa, I will not hold this against you after the first round, but who is likely to go into the final round?
BELL: At this stage, it looks almost inevitably like it will be the woman who embodies profound rapture or a real change with everything that's gone
before, the far-right's Marine Le Pen, who would really change the course that France has been on since the end of World War II. The other, Emmanuel
Macron, also a newcomer to French politics, also a change, but he would really represent continuity and keep France on course. The most pro-
European of the candidates, that is the choice that's going to be facing the French, I predict, when they get to the second round of this election.
And neither of two main parties, Republicans or socialists, are likely to be anywhere near it. And that is something very new, and no doubt the way
this story I've been following over the course of the last few months, Brexit, Trump, this is how it's likely to play out here in France. And as
you say, here in France, we're watching it change hour by hour. And the country is gripped to this election in a way that no other election has
divided the country or preoccupied it so much at this particular stage in the campaign. I think in living memory.
QUEST: Good to see you, Melissa. Thank you, staying up late once again, doing duty for us tonight in the French capital, a typical road ahead. One
that's likely to be strewn with potholes. After turning around Peugeot, Carlos Tavares has an even more challenging task. He has to return Opel to
profit. And bearing in mind GM has been trying to make money with Opel for many decades.
[15:45:00] (COMMERCIAL BREAK)
QUEST: After much anticipation, and we talked about it long enough, the deal has been done. The French automaker, PSA, has announced it is buying
Opel from general motors, and it plans to turn around the unprofitable business. Now, if you take Opel itself, it has been somewhat of a very
difficult time. So, the company is formed in 1862 by Adam Opel, who's a former metalworker. Now, originally, actually, they first made sewing
machines and then it made bicycles and finally, it moves into automobiles. In 1902, you have this extraordinary contraption, the first automobile
built entirely by Adam Opel's company. It looks rather splendid for a day out motoring in the countryside. 1929 and general motors buys 80 percent
of Opel shares at $26 million.
That would be about $350 million or so in today's money. It then buys the remaining 20 percent two years later and Opel becomes General Motors.
Incidentally, if you bear in mind what they bought it for in the amount of losses, it's some $18 odd billion in losses, if that puts it into
perspective. 2009, GM files for bankruptcy in the wake of the global financial crisis. And 2009, they did consider selling Opel and Vauxhall,
but decided against it. Now 2017, GM's Mary Barra, Taveras, they shake hands, a $2.3 billion deal. John Davis is the creator and host of "Motor
Week" he joins me from Owings Mills in Maryland. Well, now, look, they bought it for $26 million or so in 1929 or whatever. I guess a good
investment in hindsight, or an absolute albatross?
JOHN DAVIS, HOST, MOTOR WEEK: I think an albatross is closer. The last few years, they've gotten closer to profitability, but Mary Barra made it
very clear when she took over GM, she didn't necessarily want to sell more cars, but she wanted to make more money. She's done pretty well on both,
but they didn't see where even if Opel got profitable, which it's pretty close to it now, that it would be a really good deal for them. So, they're
getting out.
QUEST: So, explain in simple language why has Opel -- why has GM not been able to make a success of -- a financial success, of Opel?
DAVIS: Well, it's Opel and Vauxhall. And I think it comes down to, in the past, probably management in the fact that they were more focused on
providing some of the engineering aspects that U.S. GM needed in actually making cars that were hugely popular. They also have a situation that is
sort of in the middle of the market in Germany and Great Britain. And Mercedes and Audis and a lot of others -- and BMW have all been encroaching
on that market and taking a lot of the profit out of the cars that do so well. And looking ahead, they say, we can make it profitable, but we're
not going to be able to sell the cars that we build for Europe elsewhere and it's going to take too much investment.
QUEST: So, in that scenario, tonight, are you optimistic that an Opel- Vauxhall within PSA stands more chance of success than it did with gm?
DAVIS: I think so. Because both carmakers, primarily, are now going to be focused on Europe, not basically looking all over the world for everything.
Also, Peugeot has made it clear, they want to expand and become, frankly, they're going to be almost as big as the market leader, Volkswagen, by the
time this is all over. And they're on a growth spurt. And they've got a lot of energy and determination. And right now, I think that's what Opel
needs. But, Opel has a very serious labor situation. They have very strong unions, and that's going to be the strongest challenge for Peugeot.
QUEST: And if you put it all together, who's next? Give me some insight. Who are you watching closely that's the next to either consolidate, to do a
deal, to do a common platform, recognizing that the infrastructure and the investment costs are so high now in that industry?
[16:50:00] DAVIS: Well, I think there's two. Ford, which has about the same market share that Opel has. They're now going to be way down the
list. They've got to look for some synergies. And they are making some money in Europe. But I think the big candidate to look for some kind of a
tie-up is, obviously, going to be Fiat Chrysler.
QUEST: With who? With?
DAVIS: Well, it's increasingly looking like it's going to be a Chinese situation, although I wouldn't rule out the Japanese.
QUEST: Good to see you, sir. Thank you very much.
Thank you for putting it into perspective that we can all follow on the road.
People around the world are joining the fight against modern day slavery. In Hong Kong, schoolchildren are getting a lesson in empathy and you'll
hear about it after the break. It's Quest Means Business, live from New York.
(COMMERCIAL BREAK)
QUEST: Childhood's a special time. One that's supposed to be filled with love and enjoyment. Now, many children today don't have that basic right
because they've been forced into sweat shops and slavery. It's a distinction that one school in Hong Kong is keen to impress upon its
students and it's going about it in a unique way. Alexandra Field reports from Hong Kong.
(BEGIN VIDEOTAPE)
MATT FRIEDMAN, THE MEKONG CLUB: I need you to take a bolt. Slower. Another row here. Five in a row.
ALEXANDRA FIELD, CNN INTERNATIONAL CORRESPONDENT: It's 8:30 in the morning at this Hong Kong high school, but this is not a regular day.
FRIEDMAN: My name is Mr. Friedman. I run a company and our company makes nuts and bolts. And you have one of them in your hands.
FIELD: Classes are canceled, Mr. Friedman says. Their labor is his for the next five hours.
FRIEDMAN: And you're going to take the nut, you're going to put it on the bolt, you're going to take the nut and put it on the bolt, continuously. I
do not want you to talk to anyone else. I don't want you to even make eye contact with me.
FIELD: The minutes crawl by. The students look bewildered, confused, even angry.
FRIEDMAN: You. Come over here. You're not doing it faster. Stand over here and do it faster. Time is money. Come on! Faster! OK, give her a
detention. Right here. Just because. Don't drop the bolt. Give her detention.
FIELD: The teenagers' struggle the process is painfully slow.
FRIEDMAN: You're done!
FIELD: Then Mr. Friedman reveals his true intentions.
FRIEDMAN: This was a simulation. It was to give you an opportunity to experience what it's like for a short period of time to lose control of
your life.
FIELD: To help them understand what it's like for the millions trapped in forced labor.
UNIDENTIFIED STUDENT: When I was doing it, my hands started sweating, I was sweating. So, I can't basically imagine how people would do it for
like 14, 15 hours every day.
FRIEDMAN: Do you think it was fair?
UNIDENTIFIED STUDENT: No.
FRIEDMAN: No. Did you like me?
UNIDENTIFIED STUDENT: No.
FRIEDMAN: OK. Very good. Thank you very much.
UNIDENTIFIED STUDENT: I was pretty close to walking out of the room. Like, I felt pretty disheartened when I thought, you know --
FIELD: Just an hour from their school day, designed to drive home the realities of modern day slavery. An experience intended to motivate young
people to try and make a difference.
UNIDENTIFIED STUDENT: I would definitely feel more sympathy for those who are like in slave labor.
UNIDENTIFIED STUDENT: I feel like, as students, we can actually raise awareness about this issue.
STUDENTS IN UNISON: Join us on March 14th to stand up to slavery.
FIELD: Alexandra Field, CNN, Hong Kong.
CNN is teaming up with young people around the globe. It's a unique student-led day of action against modern slavery. It's my Freedom Day on
March the 14th. Joining my Freedom Day is a simple question, what does freedom mean to you? Send us your answers via social media and please, use
the hashtag, my Freedom Day. What does freedom mean to you? A Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. What difference does it make where your automobile is made? Well, that's not a political comment,
necessarily, for example about whether it's made south of the border in Mexico and you've got involved in sort of the question of cars being moved
backwards and forwards with the Trump administration. Or, indeed, if you take Europe where Opel is now being made, sill in Germany, Vauxhall still
in Britain, but the company no longer owned by General Motors, but will be owned by PSA of France.
And then the question of whether or not, as the Peugeot CEO has said, people have a problem with cars made in France. Well, now, Peugeot Citroen
has widened its stable of vehicles. But it still doesn't answer the question, why do we care so much about where the car is made? Have we not
changed much since the day of Japanese and German cars? That's 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. I'll see you tomorrow
END
