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Quest Means Business
Time Warner Shares Fall Amid DOJ Reports; German Markets Shrug Off Political Crisis; Military: Mugabe Enters Talks. Aired 4-5p ET
Aired November 20, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:06] RICHARD QUEST, ANCHOR, QUEST MEANS BUSINESS ANCHOR: Closing bell ringing on Wall Street, market is out for the Dow Jones. No actual
records on any of the major market. Hit the gavel and strong gavel. Trading is over on Monday.
Today is Monday, November the 20th.
Tonight, the lawyers are coming. Shares in Time Warner are down and handful stuff price the block in AT&T merger.
German markets are shrugging off the country's biggest political crisis in market history.
And I have (INAUDIBLE) to the big smoke. Three major employers have -- they are leaving post-Brexit in London.
I'm Richard Quest.
Tonight live from Abu Dhabi (INAUDIBLE) I mean business.
Good evening, breaking business news to bring you this evening. Just in to us at CNN. The report that the U.S Justice Department is going to sue to
prevent AT&T from buying Time Warner. Time Warner of course is not any Warner Brothers, it's HBO, it's Turner Broadcasting which of course own
CNN. So, Time Warning -- Time Warner is the parent company of the (INAUDIBLE).
Both stocks took it on the report. You see Time Warner shares are still down. They're down 100 point or so percent. And down in 1%. The AT&T
which had been lower has now come back at it's actually closing slightly higher.
Brian Stelter is our senior media correspondent. He joins me now. Brian, we knew that this -- there was a real risk of this deal being sued. So,
what happens here? That the -- the Justice Department actually sues or just doesn't give permission and then AT& T has to sue? What happened?
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: That's right. The government is going to go to court in the next two minutes and file a
lawsuit that prevents AT&T and Time Warner from actually closing their acquisition. Remember, this was announced more than a year ago. The two
companies were about to finish the deal, make it official.
So, by going to court, the DOJ stops that from happening and begin a court room process. This could take a number of months. At the very least
several longer and it could take years for a trial to go on.
But AT&T CEO Randall Stephenson had said, that the companies will seek an expedited hearing in this case. Richard, I'm told their going to hold some
sort of press event later in the day to react to the government filing the suit.
But first we have to see it. You know, there's been a lot of speculation about why the government would sue. What its case will be. And we're
going to find out through the paper work later today.
QUEST: All right, Brian, we believe that there is a press conference at 5:00 p.m. which is just an hour from now. So, know that you'll be well
across that.
Brian, is that merit to the government's argument? Or maybe that's prejudicial way of asking the question. Let me rephrase it slightly more
to since we do work for CNN. What is substantially the government's argument to prevent these two companies from coming together what that's
absolutely no overlap of production or distribution?
STELTER: I'll give you my best guess since we have not yet seen the case. AT&T is going to own HBO, CNN, Warner Brothers if this deal goes through.
So, theoretically, AT&T can say to its rival like Verizon, no, we're not going to provide HBO to your customers. We're going to keep HBO only for
our customers.
The government could look at that possibility and say that is anti- competitive and violate to Anti-Trust Law. Now, this has been gone with in lots of mergers, for example, the Comcast-NBC deal.
In that case, the Obama Justice Department put the behavioral conditions in place. Essentially, rules of the road, it said, Comcast, you can't go give
NBC only to your customers. You have to give to everybody else like AT&T and Verizon.
But we know that Trump's Justice Department doesn't prefer that around. They don't want to play put in behavioral conditions on this deal. They
want systemic remedies. So, in this case, they want AT&T to sell off big part of itself in order to get approval of this deal. AT&T says, we'll not
do that.
And the big question mark here, Richard, you and I talked about this before, is whether politics is involved here. Whether there's personal
feelings involved here.
President Trump vow to block this deal before he was elected. And ever since --
QUEST: Right.
STELTER: -- he has been tweeting nasty things about CNN. So, there's speculation not prove, but speculation then perhaps his fingerprints are on
this law suit and that's exactly what AT&T is going to try to prove in court.
[16:05:00] QUEST: Right. Brian, there is as I recall a very hefty breakups scene, if I recall, and you'll correct me if I'm wrong, something
like 3 billion that Time Warner has to pay if this deal isn't completed. Now, and is it your understanding that both Jeff Bewkes, our boss, and
Randall Stevenson, AT&T's boss, have the stomach to see through this fight?
STELTER: I asked Randall Stevenson that question last week. He said, yes, AT&T is committed, the same from the Time Warner side, they said yes, they
are planning to go to court and challenge the government action here.
You're right, you know, the breakup fee is depending on exactly why the breakup happens. So, in the case government lawsuit like this, it's
actually a smaller breakup fee of about $500 million. If the companies were to walk away for other reasons, you're right, it will be a lot more
than that.
But, you know, these companies did not expect to get this point. A year ago when this deal was done everybody was a 100% confident, there wouldn't
be this kind of government intervention, that change of course, is it President Trump was elected instead of Hillary Clinton. Let's be honest.
Our bosses were expecting Hillary Clinton to be elected when this was announced.
Normally, Republican administrations are pro-business, pro-merger and against regulation, against lawsuits, things like this.
QUEST: Right.
STELTER: But the Trump administration definitely unusual in this case that's why there's a lot of curiosity about why they decided to go to
court.
QUEST: Brian, thank you. As (INAUDIBLE) move on and you'll be following this closely. And back in report with Brian Stelter with that (INAUDIBLE).
A positive start to the week to the U.S markets, but it'll has just closed. Look at the closing numbers. Up to 72 points on day.
All right, the fact that Janet Yellen submitted her resignation that will become effective once Jerome Powell is installed as Fed Chairman.
Paul La Monica is in New York. By resigning and living Paul, she not to be any sees to be of chair. She could have stayed on as governor until 2020
something. But she has chosen like previous has have not to do that.
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Yes. There has been historical president for Fed Chairs when they're no longer going to be Fed Chair to
live the Fed entirely. And I think it does make sense, it will be a little awkward to say the least to have Yellen stay on board is the Fed having
served in the chair position but no longer being the chair. So, I don't think it's any surprise at all that she's living.
And she has, as in right now, a pretty good legacy that she will be living with. Helping to get the economy back on track. Following the financial
crisis, she did that as vice chair under Ben Bernanke and then during her one term as Fed chair as well. She is so far smoothly orchestrated the
unwinding from Q.E. (ph) and starting to raise interest rates in the market are still now records highs.
QUEST: I'm trying to remember the machinations, we look here last week. The Fed chair has to be a governor and therefore if there isn't a governor
should (ph) be available, they have to make one to the vacancy. So, if she goes Jerome Powell who is the governor is already there. So, effectively
they're going to have to replace her position as governor as well.
LA MONICA: Yes. There would be another vacancy of which there are still several. Randal Quarles was recently approved to be a Fed governor and
that gets rid of one of the vacancies. But we still have Stanley Fisher, the vice chairman who has stepped down. There are a lot questions about
just what President Trump will want to do to remake the Fed if he is so chosen to do so.
So far, most presidents don't upset the apple (ph) card all that much and go out -- they tend to go out of their way just to keep Feds stability,
policy stabilities. So, they're interesting to see whether or not that is something we see under Trump or not.
QUEST: All right. It is a Monday, Paul. And you heard myself and Brian Stelter talking about AT&T-Time Warner. (INAUDIBLE), let's have your
thoughts on there. Joining the married bond of analysis on this one.
It's a wrong business because, let's face it, if they can't get AT&T-Time Warner through on the legitimate grounds. Then what chance would you ever
have getting contrast which turns NBC Universal Studios with Fox which owns 21st Century Fox?
LA MONICA: Yes. That is a great point. Then I would like to think that if the merger of AT&T and our parent company Time Warner does not go
through and it's for legitimate and I trust reasons it's very difficult to argue that a merger between AT&T and Time Warner, which has Brian Stelter
pointed out numerous times, is a vertical deal. There's not a lot of overlap on the content side.
How can you, with a straight face, let Comcast which owns NBC Universal buy Fox's entertainment asset? It juts doesn't make sense.
[16:10:09] QUEST: Or it did Sony or indeed ay with the others. All right. And Paul La Monica -- helping us to understand. Thank you, sir.
LA MONICA: Thank you.
QUEST: As we continue to tonight Quest Means Business from Abu Dhabi. Germans could be heading to the polls yet again as pressure mounts on
Angela Merkel. We'll be in Berlin after the break.
(COMMERCIAL BREAK)
QUEST: As we move on, let me just correct, of course, the breakup scene that we're talking about is the other away around, it's AT&T paying across
$500 million or indeed the larger $3 billion from AT&T across to Time Warner. I think I just (INAUDIBLE) to this as a large amount of money if
the deal doesn't go ahead. So, let put that correct.
Angela Merkel says new elections are better than ruling with a minority government. The German Chancellor is limited options to form a new
government after coalition talks broke down which entries and failed (INAUDIBLE) with three other parties which political crisis as Germany's
most serious in decades.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, GERMAN CHANCELLOR (through-translator): The past where the minority government was stable country for a country that has the same many
challenges to deal is one that would have to be talk about very, very carefully.
One should never say never. But I would be very skeptical and think that new elections would be the best of all. I want to say, also, though, that
the virtue has gave us a task and we have never had such a situation. And that is why I took a special note to the president's word today.
(END VIDEO CLIP)
QUEST: Atika Shubert is a live press in Berlin tonight. Atika, as I listen to Angela Merkel, she is hiving off options. Initially, it doesn't
-- not thinking about new elections. Now saying not minority government. And it's difficult to see any way out here that doesn't involved the German
people going back to the polls within the next 12 months.
ATIKA SHUBERT, CNN SENIOR INTERNATIONL CORRESPONDENT: Well, exactly. It's really up to President Walter Steinmeier now to sort of point the way out
of this political dilemma. And he have some pretty sharp words today for political parties, basically he said, get your act together. Take a listen
to what he said.
(BEGIN VIDEO CLIP)
FRANK-WALTER STEINMEIER, PRESIDENT OF GERMANY (through-translator): This is the moment where all parties involved need to stop for a moment and
rethink their position. All political parties that have been voted into the German parliamentary committed to the public interest. They serve our
country. I expect all of them to be ready to talk, to try to form a government in the near future.
(END VIDEO CLIP)
SHUBERT: So, he stop short of calling for new elections and dissolving parliament which is in his power to do. But what he did instead was that,
listen, I'm going to meet with all the party leaders. I'm going to get you back to the negotiating table. And hopefully we can hammer out a deal.
He did not put a time limit on this, so, it could take some time. But, clearly, they are hoping that if they play for time at some sort of a
governing coalition will come out of this that frankly it didn't look too optimistic at this point, Richard.
[16:15:15] QUEST: So if there's no governing coalition, and I mean, let's face it, try to take in several months to get this call for a coalition to
fall apart and the other few months while they're trying to cover something else together. What happens in Germany in this interim period?
SHUBERT: Well, the country continues as normal. And, you know, frankly, compared to some of this other neighbors in Europe such as Belgium or the
Netherlands for example, and if they much longer to come up with governing coalitions. The problem is of course is that Germany is the stable center
of Europe. And so when it comes to Brexit negotiations, when it comes to any hopes for the French President, Emmanuel Macron's plan for E.U. reform,
all those grand ideas are going to have to be put on hold or Germany tries to get its political house in order.
And that's why even though there's no time limit, people here can -- the political parties here really feel the pressure to try and come up with
this coalition government as quickly as possible.
QUEST: Atika Shubert, thank you. And as Atika was talking about the various ramifications of this, well the fall out will be felt far and wide.
Let's take individually in taking politics around Europe. In the United Kingdom, for example, this is Merkel see there's a potentially sympathetic
place, but Theresa May during the Brexit talks or at least she is not unsympathetic to the plight of the British.
Then you got the French President, Emmanuel Macron, you could see his plans the European reform which on hold is perhaps Mrs. Merkel's closest European
ally, an interestingly, in the gap between the two, while this takes place, but then you have Macron being much more of the leader of Europe.
But Chancellor (INAUDIBLE) Vladimir Putin openly backing Russian sanctions of the annexation of Crimea. And she's had awkward moments with Donald
Trump, that first in March. They did not shake hands or (INAUDIBLE) middle of the office. And then at the G20, she rebuked him for pulling the U.S
out of the Paris Agreement.
On the economic French (ph) things are perhaps like different. Hans-Olaf Henkel is a member of the European Parliament and former president of the
Federation of Job and Industry joins me now from Brussels.
All right, so let's have it simply, what is your preferred option. So we know when you stand here, is it to go back in trying global (ph) another
one together, minority government or back to the polls?
HANS-OLAF HENKEL, MEMBER OF THE EUROPEAN PARLIAMENT: Well, Richard, first of all, thank you for inviting me to this discussion again. My personal
first option would be new elections. And by the way, that's also the opinion of the majority of the German people. By the way, your
correspondent in Berlin I think did an excellence summary of the situation. However, I would like to say that Germany is not in crisis. Angela Merkel
is in crisis.
Germany is continuing to be very stable. And by the way, as a first reaction to this decision our share prices, so German stock exchange went
up. So I think that's a good encouragement for the business community.
QUEST: All right. That's a fascinating point because you're right. The DAX did go up, but the Euro lost ground. And that would suggest that yes,
Germany it might be fine from this lack of certainty in the short term, because the economy is on very strong (INAUDIBLE) palliative growth. But
the rest of Europe needs a strong Germany or at least a certain Germany.
HENKEL: Absolutely right. And therefore, I think it is very good that the President has appeared to the parties to remember that they are
responsible. And by the way, just imagine we had new elections and we have the same result. So, I would like to make sure that the viewers here of
this program understand that Germany is not in crisis.
However, you are quite right. Germany has an important role in Europe. And what has not been covered by the news today, but was also very
important, Richard, is that a group of German businessmen today ask the German government to lean on Brussels and ask for a new deal for Britain
making an attempt to keep Britain and the European Union and I think that would be a great contribution of the new German government.
QUEST: Fascinating maneuver at this interesting stage. Let me ask you though, do you think -- I mean, two aspects of this next question.
[16:20:06] Firstly, Angela Merkel, is her position in doubt in the sense either the party or if there are new elections any chance that she would be
removed before new elections? And secondly, why should there be any different result if and when new elections are held?
HENKEL: Well, it sounds the first question is concern that is indeed a rising unrest among southern (ph) party. And it is not at all very sure
that she will be automatically again the candidate. Although -- and I think she fears the pressure, that's why she announced today that she would
be there new candidate.
I think that surprising initiative is a recite of her -- it's her feeling that she's under pressure from her own party. And to your next question of
course. However, let me remind you that the parties may come up this time with different programs.
For instance, Merkel has now a completely different immigration policy. Partly also as a recite (ph) of the negotiations which now feared (ph).
And the social Democrats will probably come up with a much more lefties program. So you could see indeed a different party program running against
each other in new elections.
QUEST: All right. Hans-Olaf stay with us, we're going to talk more to you in just a moment to tell with this aspect of Europe, because the action
(ph) jobs from the U.K. in the wake up Brexit is beginning to take shape.
Goldman Sachs says it will open to new European headquarters in Frankfurt and Paris. Head of Goldman, Lloyd Blankfein, says, that Brexit pushes us
to so decentralize. And the E.U. ministers have voted to move more than a thousand job (INAUDIBLE) as indeed they must. European banking authority
is now going to be located in Paris, 170 jobs there. The vote was deadlock. In the end, Dublin loss in the AGL (ph) way with a tie breaker.
And they have to do it in the European Union. And the European Medical Authority, that's going to Amsterdam, 900 jobs there. The vote was also
deadlock. And Milan was the loser.
CNN's Diana Magnay has more from London.
(BEGIN VIDEOTAPE)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): And so it begins Britain's Brexit immigrants, the European medicines agency off to
Amsterdam, the M.A. staffs favorite, though it was Brussels who did the choosing.
UNIDENTIFIED FEMALE: You will also have a very stylish clean and enjoy efficient tips, besides, our (INAUDIBLE) to start funding.
UNIDENTIFIED FEMALE: Hello.
MAGNAY: And Europe's banking much though, the EBA off to Paris. New jobs and investments just at little bit of extra prestige for these two cities.
After a hard fought, Eurovision (ph) were already campaigned.
European cities putting out all the staffs to where these two key agencies and there's thousand plus staff who come with them.
UNIDENTIFIED MALE: I am here to tell you a story from the city of the north.
MAGNAY: As the European Council President, Donald Tusk prior to the vote, whatever the outcome the real winner of today's vote is the E.U. 27.
Organized and getting ready for Brexit. In London, the loser thousand jobs down organized for Brexit not exactly the government transferees right now.
(on camera): These are the first to go, but they weren't necessarily be the last, not unless the prime minister can offer businesses some certainty
about a transitional deal. And that of course all depends on how much she is prepared to pay for this fractious (ph) and horribly complicated divorce
to go through.
(voice-over) The Brexit here is in that cabinet maybe softening on the cash issue. Reports on Monday that Theresa May was readying a 40 billion euro
offer, double has starting point that still someway of what Europe want.
The E.U. Chief Negotiator, Michel Barnier making it clear, there could be no exceptions to the rule, if Britain once out of the single market.
MICHEL BARNIER, E.U. CHIEF BREXIT NEGOTIATOR: On financial services, U.K voices suggest that Brexit does not bid Brexit. Brexit means Brexit. The
legal consequence is at the U.K. financial service providers lose their E.U. passport.
MAGNAY: So critical for the U.K. economy. The big question, how many of the big banks will keep the lights on of the Brexit. Diana Magnay, CNN,
London.
(END VIDEOTAPE)
QUEST: Hans-Olaf Henkel is back with me, member of the European Parliament and (INAUDIBLE) his back. I was fascinated by what you said earlier that
there are chairman business leaders hoping to get the U.K. to read or at least find some which U.K. in the E.U.
But if you listen to Michel Barnier there, I mean, this train is out of the station.
[16:25:17] HENKEL: Yes, you are quite right. The train is out of the station, but I -- Richard, I must remind you there is another train heading
that train on the same track. Because I do agree with the outlook unwritten, but I think the situation in Europe is at least as bleak (ph),
because Europe needs Britain.
As a matter of fact, I think even more that Britain is Europe. And with Britain living, the last country was common sense is leaving this place.
Britain has always be in an advocate for subsidarity for autonomy, for free market, for competition. And if Britain is gone, I think the entire
European Union is suffering long-term in competitiveness, that's why I think these business leaders are right.
And the difference to the previous approach by Barnier and Juncker and all these people is they addressed not London, they do address Brussels. They
say, hey Brussels, I found the British in another deal, a new deal which gives them more autonomy especially in the immigration. And then, of
course, the British government has an opportunity to go back to the voters to say, hey, we got what we wanted without the disadvantages of Brexit.
QUEST: Good to see you Hans-Olaf. Thank you for staying up late tonight. (INAUDIBLE) we appreciate it. Thank you.
HENKEL: Nice talking to you again.
QUEST: As we continue tonight, from Quest Means Business, a potentially forward in Zimbabwe, where the military training Robert Mugabe will come
face-to-face that the vice president that he sacked. We are live in Harare after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, there's more on Quest Means Business in just a moment. Donald Trump makes a move that he says will take sanctions
on North Korea to the next level. And in the day is up, the Keystone pipelines spilled oil across South Dakota. Another U.S. state vote so let
that pipeline go even longer. And as we continue tonight, this is CNN. And on this network, the facts come first.
The German Chancellor Angela Merkel is in favor of holding snap elections. After negotiations to pull a three-way ruling coalition failed on Sunday.
Mrs. Merkel insist she won't step down, but some fair new elections would let the far-right anti-immigration AfD Tea Party gain more governing.
After ignoring a deadline to resign or face impeachment, the Zimbabwean President Robert Mugabe is apparently agreed to held talks, with the vice
president he sacked earlier this month, that's according to the military.
Emmerson Mnangagwa has been in hiding since then. He's expected to return to Zimbabwe soon.
And with the Argentine Navy, it's probably the worst case scenario, it says its missing submarine could lose oxygen in two days. On Monday, the Navy
picked up noises. It says it could be a distress signal on the crew. Sub's captain also reported a battery system failure could pull the vessel
vanish. There are 44 crew members onboard.
The notorious cult leader Charles Manson has died. The California Department of Corrections said he died on Sunday of natural causes. He was
83. Manson drew world wide attention 1969 after orchestrating a wave of murders that terrorized Los Angeles.
And the Georgia Dome in Atlanta is imploded, a delivered fate at least. Look at that. The stadium was home to the Atlanta Falcons of the NFL. It
has hosted some of the events for the 1996 Summer Olympics and was a Super Bowl site in 1994 and 2000. It's also next to CNN. It's time to replace
Georgia Dome with a new stadium this year.
Major developments tonight out of Zimbabwe where the military sets a road map that the country's new leadership has been agreed. Farai Sevenzo is in
Harare. A road map or a coldy sack (ph), which is it?
FARAI SEVENZO, CNN CORRESPONDENT: Well, they called it a road map, Richard. They say that Operation Restore Legacy, which is what they're
calling is apparent, too (ph), now whether that is Mr. Mugabe's legacy or the ZANU-PF legacy, we are here to find out. But yes, Mr. Emmerson
Mnangagwa is going to meet Mr. Mugabe. That is what the army wants.
But in the mean time, the young voices' role for now are being ruled by a man who's maybe 100 years old, had something to say, and this is what they
told us at the University of Zimbabwe.
(BEGIN VIDEOTAPE)
SAVENZO (voice-over): In just one week, Harare has gone from a city of whispers to a city of loud protests. These University of Zimbabwe students
can hardly believe they are allowed to protest. Their messages are simple one. Robert Mugabe's time is up.
UNIDENTIFIED FEMALE: (Inaudible) you value when all you can say was good life. I got offended.
UNIDENTIFIED MALE: Were you all offended?
UNIDENTIFIED FEMALE: Yes.
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED FEMALE: Yes.
UNIDENTIFIED MALE: Yes, we're all offended, very offended.
UNIDENTIFIED FEMALE: Very offended.
UNIDENTIFIED MALE: We might be replacing his nook with an other nook (inaudible) seven years of operation. So what we are saying is we need a
new black as our leader.
UNIDENTIFIED MALE: It's total revolution. He personalizes the revolution and (inaudible) eliminate those who would have (inaudible), those who could
accelerate this authority.
UNIDENTIFIED MALE: (Inaudible) change will come.
SAVENZO: Whichever way you look at it, the army they say is the lesser evil. For nearly four decades they say, they've dealt with oppression and
a failing economy that they are only too happy to escape.
(on camera): These students and so many other Zimbabweans are saying the kind of freedom they are having now is better than before the army took
over. And we're hearing it from everybody despite the fact that the men in camouflage are still on Harare streets.
(voice-over): They've turned to the military men and now guard for help. Dozens of people gathered in a park outside the parliament to reflect and
pray.
UNIDENTIFIED FEMALE: We do not want him. We do not want the slightest bit of Robert Mugabe in our country. Even his wife and his children, we don't
want anything to do with him ever again. He's made our lives miserable.
SAVENZO: Side by side, arm in arm, they sing "God Bless, Zimbabwe" and have a prayer for a nation in need blessings and closer from the Mugabe
area.
(END VIDEOTAPE)
QUEST: Farai Sevenzo reporting there from Zimbabwe. And we return to our top stories. So the German political mess party (ph) seems to have rattled
investors at the moment.
[16:35:00] If you take a look at the way the markets have been trading, you'll see that all the European markets were higher and even Frankfurt
manage to eke out a smaller gain of the day despite the fact that of course there were such seemingly disagreement within the ruling coalition.
The Department of Justice is to sue to block AT&T acquisition of Time Warner, the parent company of CNN. AT&T have justice shoot of statement
saying, "Today's DOJ lawsuit is a radical and inexplicable departure of decades of antitrust precedent. Vertical mergers like this one are
routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to
be treated differently." And there will be a press conference of the various parties to take place in just about 45 minutes from now.
The German political mess as I was outlining, it seems to argue with rattled (ph) investors in front of the DAX. And in the day (inaudible)
percent after German Charles Rangel (inaudible) failed to form a coalition government. At the same time Europe failed and gains the dollar by roughly
the same amount. Last month, the DAX set the record high and this year 14% to the good.
Oliver Rakau is the Chief German Economist and Consultant from Oxford Economics. He joins me from Frankfurt via Skype. And Oliver, the issue,
look, everybody have heard and I've read you (inaudible) on what you wrote on the (inaudible) day. It seems that everybody says, look, Germany's
economy is strong and growing and this will not affect it, but surely eventually the uncertainty does take a tow.
OLIVER RAKAU, CHIEF GERMAN ECONOMIST, OXFORD ECONOMICS (via Skype): Well, you're right. And basically everybody, including us, thinks that the
short-term impact should be rather liable. We have a global economy that's picking up, we have sentiment at record highs, we have labor market at
record highs, and we think that Germany economy is growing by 2.5 percent this year as well as next year.
So the short-term impact is muted, the more medium-term impact could be more adverse, you're right via the uncertainty channel. But if you would
think a little bit about it, then the question is what's the outcome of the different possible futures. And one of the main outcomes is that basically
in respect of the -- having minority government, majority government or new elections, we will have a mix of some form of the mainstream parties in the
end and the government and all of them want to blow taxes, raise spending, raise investment, and erode (ph) basically the fiscal surplus from the
demand perspective. The eventual outcome of the election formation is not that important.
QUEST: Right. But what about of Angela Merkel herself? She becomes much weaker as a result of this. And where is the concern either in the market
or in the investment community that's Angela Merkel has sales will not have the authority to push forward her policies or her manifesting?
RAKAU: I think from a domestic perspective, so the German investment Forex (ph), there should be relative little impact. Given what I just said about
the economic growth outlook, I think what financial markets internationally, especially will need to get used to is basically more
political noise out of Germany in the future, less leadership out of Germany in the future because we have a political environment.
QUEST: But you just -- sorry to interrupt that, you talked about less political leadership out of Germany. Surely, without German leadership and
with the UK heading out on Brexit and nobody really listening too much of what the UK says, and Emmanuel Macron hasn't like formulated yet the
gravitas of leadership within the EU structures, the EU itself, the commission, the EU, the council suffers by this.
RAKAU: Well, you know what, certainly Merkel has been this at the center of all the political attention in recent year. But it's not like Germany
was suddenly be unable to have some form of opinion on European matters. And even without Merkel in the future, which could happen, although I still
doubt it personally, Germany will be still be able to work alongside Macron and the EU commission to work potentially towards for the European
integration, just it will be in more noisy process than we were used to from Germany in the past 3 years.
[16:40:04] QUEST: Good to see you Oliver. Oliver Rakau joining us via Skype from Frankfurt.
As we continue, Donald Trump places North Korea back on the US list of state-sponsored terror and he continues the so-called campaign of maximum
pressure against North Korea.
(COMMERCIAL BREAK)
QUEST: Donald Trump is carrying the way for a record of U.S. sanctions against North Korea and to putting Pyongyang back on the U.S. list of
state-sponsored terrorism. Before cabinet meeting, the president said the move should have happened years ago.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Tomorrow, the Treasury Department will be announcing an additional sanction in a very large one on
North Korea. And this will be going on over the next two weeks. It'll be the highest level of sanctions by the time it's finished over a two-week
period.
(END VIDEO CLIP)
QUEST: Ryan Nobles is in Washington. Ryan the purpose now of doing this is what?
RYAN NOBLES, WASHINGTON CORRESPONDENT: Well, it's to show that this White House continues to put up their pressure on North Korea. But there's also
a secondary assessment that you can make from this that the current plan as it relates to North Korea isn't really working all that well that the Kim
Jong-Un administration in that regime continues to be a bad actor in that part of the world. And the Trump administration feels that more needs to
be done.
In fact Rex Tillerson, the Secretary of State made a surprise appearance here in the White House briefing room earlier this afternoon. And he
basically said that these sanctions aren't doing the job. Take a listen.
(BEGIN VIDEO CLIP)
REX TILLERSON, U.S. SECRETARY OF STATE: It is having a significant effect on North Korea. We know that there are current shortages of fuel based
upon what we can gather from anecdotally, but also from certain Intel sources. We know enough that their revenues are down because the number of
the revenue streams are being curtailed now.
So I think it is having an effect. Is this the reason we haven't had a provocative act in 60 days? I don't want to suggest to you that I could
say. But we're hopeful this period will continue.
(END VIDEO CLIP)
NOBLES: So you heard the Secretary of State there say that initial actions by the White House have taken them up to a certain point, but they still
believe more needs to be done. You know, the Secretary of State was specifically asked though with this idea of putting them back on the list
of state sponsors of terror was more symbolic or it if would have a direct impact. And he can see that there was a symbolic effort here and that
certainly the symbolism was important but over the long run they believe that it's this type of kind of aggressive action against the Kim Jong-Un
regime that will ultimately yield some sort of a result. Richard.
QUEST: The Chinese don't agree and suddenly Vladimir Putin doesn't agree. He has actually said of course that heaviest sanctions are
counterproductive. And again, so is it helpful to have the three leaders, I suppose, going in opposite directions?
[16:44:57] NOBLES: I mean that's a great question, Richard. And in fact, one of the arguments that Rex Tillerson made today is that he believes that
this is something that's going to put on notice, some of this other leaders in that region and show them that the United States is being serious about
this, but you raised a great point. In the past months of leaders of China and Russia have suggested that some sort of an open dialogue with North
Korea would be far more productive.
And it's also important to point out that the United Nations did not choose to weigh in on this new development by the United States. So it certainly
seems that this administration is going at this alone and whether or not Trump's talking kind of being the leader of the opposition to Kim Jung-un
yields the kind of results he is looking for and we'll have to wait and see.
But you raised a great point. It is very difficult for them to get the progress that they're looking for when you're not necessarily working with
those most important partners in the region in China and Russia.
QUEST: Ryan Nobles, thank you.
Officials in Nebraska have approved to extend the Keystone Pipeline across U.S. state base here all the way down to the south. The U.S. state comes
after days after the Keystone itself leaked more than 200,000 galloons of oil in neighboring South Dakota. Debate over the pipeline based the earth.
Barack Obama vetoed Donald Trump gave the green light. Supporters say it would be an economic boom. Environmentalists are weary, Native American
groups cut cost their sovereign lands. There's very few issues as controversial as what you're looking out there the pipeline and the way it
goes across the country.
And Michael Zehr is the vice president of the Consumer Energy Alliance and previously served such senior advisor. The Senate Majority Leader Mitch
McConnell, he is in Washington and obviously, you, Zehr, support the pipeline. But when you take, for example, the events of the last week,
where there was a leak of some 200,000 galloons of the pipeline. I mean, I don't think you would disagree that there is some risk involved with this
pipeline?
MICHAEL ZEHR, VICE PRESIDENT, CONSUMER ENERGY ALLIANCE: No, not at all. I think that, you know, with any large scale infrastructure project. There's
always going to be some risk but I think it's to be said that there's a lot of innovation that's been going on and a lot of efforts to make this
pipeline the ones that in question right one, one of the safest ever with five different reviews that have been conducted. You know, pipeline still
are the safest way of moving crude oil from one place to another.
And, you know, the State Department itself did an evaluation a number of years ago, spending so much. And so, I think, you know, as we look at what
happened last week and we look forward, I think improvements are always necessary but pipelines by far are the safest means for transport available
to us right now.
QUEST: I mean, Michael, at the end of the day, the success if you like called, the ability to build this pipeline and get it operational is a
political question, which is evidence by the fact that the president of one party said no, the president have another party said yes. So really it
doesn't matter too much the evidence because it really comes down to the man or woman in the White House.
ZEHR: And that's a shame that it comes down to some political decisions. But, I mean I took eight years to get to no under Obama and it's taking
last than a year under Trump to get to a yes for all three states and the president have basically said they re going to approve it. So, yes,
there's definitely an element of politics in this. But at the end of the day, this is an $8 billion infrastructure project that will employ, I guess
42,000 indirect jobs, 3,900 construction jobs. I mean, and what we're talking about is a stable source to North American crude, to U.S. refinery.
So, it has a true benefit to our economy and to our security.
QUEST: And, yes, I want to turn away if we may just based site in, we look at the ability of the U.S. to produce oil effectively, on gas effectively
as a result of non-traditional methods frocking if you like -- a fracturing, becoming the world's largest producer and in doing so, shifting
the balance of energy par in the world. Would you agree that this is perhaps the most significant event in energy in a generation?
ZEHR: Oh, the Shell revolution, I think you could argue that that is by far one of the most significant shifts that occurred in the last
generation. I mean, look at the level of production that we've had. I mean -- and for the Untied States to shift from sort of a smaller player to
now kind of the swing producer in the world is a tremendous movement. And quite frankly, it's going to be good for U.S. consumers, it's going to be
good for you as families and small business. And ultimately, it will be good for our allies as well as they can rely on United States as a stable
supplier and a good ally.
[16:50:06] QUEST: Michael, good to see you. Thank you for taking time.
ZEHR: Thanks so much.
QUEST: "Quest Means Business" continues from Abu Dhabi in a moment.
(COMMERCIAL BREAK)
QUEST: (INAUDIBLE) to happen. Once upon a time, as they say, a young princess married a handsome young prince. And 70 years later, they
celebrates their platinum wedding anniversary. CNN's Royal Correspondent Max Foster looks back at the Queen and Prince Philips romance in this
historic today.
(BEGIN VIDEOTAPE)
MAX FOSTER, CNN CORRESPONDENT (voice-over): It was the start of a royal romance which charmed the nation and the world. The Queen and Prince
Philip married in Westminster Abbey 70 years ago, in a dazzling ceremony broadcast to 200 million radio listeners. One of the bridesmaids was the
Queen's cousin and friend, Margaret Rhodes, who passed away last year. She was in no doubt the couple's bond was based in love.
MARGARET RHODES, QUEEN'S COUSIN: I think she fell in love when she was 13. And he was good-looking. You know, he was a -- he was sort of Viking god.
She never looked at anybody else ever. And I think he really truly has been a rock.
FOSTER (voice-over): The couple met before the Second World War when Prince Philip was a young naval cadet. Until he retired this year, he was
an almost constant presence at the Queen's side. A dedication that came at a personal cost for his own ambition.
RHODES: Just have been there all the time behind her and really to sacrifice his life, he did it too, sacrificed his life because I think he
would have loved to go on in the navy and really made a career of that. So he sacrificed too. And so I think it's made for a wonderful solid
marriage.
FOSTER (voice-over): Their partnership grew. And the Queen would rely on Prince Philip's advice before delivering important speeches.
QUEEN ELIZABETH II, ENGLAND: My lords and members of the House of Commons.
FOSTER (voice-over): Valuing his honesty in a world filled with deference.
ROBERT HARDMAN, AUTHOR, OUR QUEEN: And his number one job from the word go has been to, quote, Support the Queen. Everything he does is in support of
the Queen. And it's just been one of the great royal romances I think of history.
People talk about Victoria and Albert as a phrase that trips off the tongue, and I have no doubt that in years to come, people will talk about
Elizabeth and Philip in exactly the same way.
FOSTER (voice-over): For seven decades the royal couple faced some of monarchy's biggest and most challenging moments together. And behind the
scenes, the Prince remains in the Queen's own words her strength and stay.
(END VIDEOTAPE)
[16:55:03] QUEST: What can one say other than in a world of millennials and hedge funds (ph) and seconds, 70 years married, a majesty and a prince.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, it is a somewhat fascinating situation in Germany at the moment. Angela Merkel, the rock, the solid one, the one
who seemingly was going to be there forever. Well she's still in charge of Germany but her position greatly weakening and tonight, a lot of
uncertainty over the future of Germany in the sense of a coalition government.
And now they have to decide what comes next. Well, for the next two months at least, it will also be trying to come together a coalition again or
going for fresh elections or a minority government. Now, pretty much two of those have already been rolled out. So, you're looking at new elections
and not could be sooner rather than later.
All of the time, when the European agenda is heavy, not least with Brexit, and there is nobody else that is seen is not strong person. Emmanuel
Macron hopes to become that leader in the future but far from France but he is not there yet. Britain's on the way out, Angela Merkel is now seriously
weakened.
Whichever way you look at it, there is an irony here that the very strong woman of Europe is now in a week of petition but nobody says it's a crisis
because Germany's economy is so strong. It's pretty much on auto pilots approach.
And that's Quest Means Business for tonight. I'm Richard Quest in Abu Dhabi. Wherever you're up in the hours ahead, hope it's profitable. I'll
see you tomorrow.
END
