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Quest Means Business
Saudis Prepare to Admit to Khashoggi's Murder; Ten Dead After Floods Hit Southern France; Prince Harry and Meghan Markle Announce Pregnancy; Angela Merkel's Bavarian Allies Lose Majority; EU's Donald Tusk: No-Deal Brexit is More Likely Than Ever. Aired 3-4p ET
Aired October 15, 2018 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: As we enter the last hour of trade on Wall Street, all sorts of undercurrents moving the market. You
can see the way the Dow Jones Industrials -- this has really been the story of the day. Down, up, down, up, down up -- right the way through towards
this rush in the last hour. We will watch the market very closely as we seem to be up to the best of the day because this is what's driving the
markets. Oil prices, edging upwards as top investors are turning their back on Saudi Arabia with huge implications.
Stocks are settling now as earnings season gets underway, the shift of focus is beginning and the fall an American icon, Sears Roebuck given its
full name -- Sears is going bankrupt. Live tonight from the CNN Center, it's Monday, it's the 16th of October. I am Richard Quest, yes, I mean,
business.
Good evening. Tonight, the world's top bankers turn on Saudi Arabia. So Jamie Dimon from JP Morgan, Stephen Schwarzman Blackstone, and Larry Fink
of BlackRock including Jim Yong Kim of the World Bank -- they all have backed out of a high profile Saudi investment conference scheduled for next
week following the disappearance of Jamal Khashoggi. Still on the listing and this is what's interesting, still on the list for the "Davos in the
Desert" is Steven Mnuchin. He is the US Treasury Secretary, Christine Lagarde is going and is going as well and Tidjane Thiam of Credit Suisse.
So the IMF is going.
Interestingly, the IMF is going, but -- or at least for the moment, but the World Bank has pulled out claiming scheduling difficulties. About five
other bank Chief Execs have not yet declared whether they plan to attend. The Republican senator, Marco Rubio told CNN that the Treasury Secretary
shouldn't go, however, the national security -- the national economic advisor, Larry Kudlow said the conference was too important for Mnuchin to
miss.
(BEGIN VIDEO CLIP)
JAKE TAPPER, HOST, STATE OF THE UNION: When you say it's not time for business as usual, I assume, you're suggesting that Mnuchin should not go
to the economic conference in Riyadh, is that what that means?
MARCO RUBIO, US SENATOR, FLORIDA, REPUBLICAN: I don't think he should go. I don't think any of our government officials should be going and
pretending that it's business as usual until we know exactly what's happened here.
UNIDENTIFIED MALE: Is it appropriate for him to be going to that investor conference?
LARRY KUDLOW, NATIONAL ECONOMIC ADVISOR: Well, by the way, it's absolutely a confidence about terrorist financing and how to stop it, so it's a very
important subject. Regarding Secretary Mnuchin, I spoke to him last evening; at the moment, he is intending to go because of the importance of
the issue of ending terrorist financing, but again, along with the President and the general investigation, Mr. Mnuchin will make up his mind
as the week progresses.
(END VIDEO CLIP)
QUEST: Companies are facing the moral questions of how to deal with one of their most lucrative customers. Think about it. Just on fees alone --
fees alone, Wall Street rakes in around $250 million -- $247 million according to Reuters. If you look at Blackstone, there Saudi has pledged
$20 billion for US infrastructure projects -- Blackstone being the leader in that; and Softbank has got $45 billion from Saudi to fund startups.
That money, $40-odd billion some billion will be spent on companies like WeWork and DoorDash, also working on solar projects and solar power worth
$200 billion. You see the numbers and you see how significant this could be.
John Defterios is in Abu Dhabi, Samuel Burke is in Dubai. Starting first with yourself, Samuel Burke, just on these numbers that you see, the
Softbank investment. You see the other tech companies finding themselves again with the question, do they or don't they? Uber's CEO has said he is
not going.
SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: What's interesting here, Richard is that Softbank stocks down 7%, mainly on fears
of investors about some type of sanction going against Saudi Arabia, even though all of the analysts we spoke to have said, they don't see any
sanctions. That's not in the cards they believe, but what they do think could happen is the same pressure that you were just talking about on the
business and tech community not to attend Davos in the Desert could spread to investment.
Softbank stocks down 7%, mainly on fears of investors about some type of sanction going against Saudi Arabia, even though all of the analysts we
spoke to have said, they don't see any sanctions. That's not in the cards they believe, but what they do think could happen is the same pressure that
you were just talking about on the business and tech community not to attend Davos in the Desert could spread to investment.
[15:05:03]
BURKE: You mentioned some of the companies, I made a list. If you look at it -- Uber, WeWork, Didi Chuxing -- the Chinese version of Uber -- and
Slack have all taken investment so what the analysts say could happen is all of that pressure could add up, but that hasn't happened yet. I have
tried to contact all of these companies, Richard, and either I've gotten a no comment or I have gotten no response whatsoever when it comes to their
investments that they've received from Saudi Arabia, much easier to pull out of a conference than it is to pull an investment.
QUEST: John Defterios, what is the current level of thinking between companies about whether they should go or not? And if they are pulling
out, why are they pulling out if clearly -- if we do not have a definitive view on what have happened to Jamal Khashoggi?
JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: Richard, I think this is a tough decision for the Wall Street heavy weights that you singled out here
and they don't get bigger than Fink and Schwarzman and Jamie Dimon. Let's be blunt. They want to stay engaged in Saudi Arabia, but at a safe
distance.
I think they thought this week was loaded with risk and I think they perhaps waited too long to make the decision. You rightly point out that
the Treasury Secretary, Steven Mnuchin is staying engaged. I've been in touch for those with him on the delegation that were with the International
Monetary Fund. They are watching events closely, so the back door is ajar.
You can even say the same for Christine Lagarde as well, Richard. She says she will speak her mind. She wants to remain engaged in Saudi Arabia but
waiting for evidence over the next 48 hours. We have to break these two categories down though, the investment from Saudi Arabia. The outbound
investment into the investment funds of the United States and Europe is huge.
The Blackstone fund could double up to $40 billion, the Softbank fund up to $100 billion and JP Morgan has a mandate to handle a lot of privatizations
and potentially, eventually the big IPO for Aramco which has been shelved for the time being, and then there is the inbound investment which is
extraordinary. We are looking at $450 billion over the last 10 years and the Crown Prince, Mohammad Bin Salman has just notched it up a bit, so they
want us to remain in to the country. Big players like GE and Siemens have been there for years and they want to show that they still support the
Kingdom, but not when they see the sort of geopolitical risk that's right in front of us, of course, because of the events in Istanbul.
QUEST: I can hear all you're saying, how much of all of this is just downright hypocrisy? At the end of the day, they will be even -- even if
Saudi -- or even if there is culpability in the murder of Khashoggi, they will be back in to do business just as soon as they can because isn't
President Trump absolutely right when he says, "Hey, if we don't sell them the arms, someone else will."
DEFTERIOS: If that's a question to me, I think you're absolutely correct. $110 billion in defense contracts and orders, just over 10% has actually
been committed, but clearly, the Russians and the Chinese would like to fill that void. President Trump was struggling to try to get a trillion
dollar in infrastructure projects underway in a legislation through Congress. In Saudi Arabia, it's $1.4 trillion. US has 300 million
consumers, Saudi Arabia about 30 million. It is a bounty for inbound investors going into the country.
QUEST: Samuel, do you think there is a difference here between how traditional industries and bankers would view the potential hypocrisy of
going straight back in again versus new technologies and new tech, high tech -- how would they view it? I mean, are they in morally or will they
play the moral game or will they play, "Give us the cash."
BURKE: Well, what I was fascinated by, Richard, I am in Dubai right now for one of the biggest tech conferences in the world, and I was speaking to
tech executives in this region. I said, "Guys, are you nervous here?" Dubai is a huge trading partner with Saudi Arabia. I said, "Aren't you
nervous about what could happen? The President of the United States just said on "60 Minutes" there will be severe punishment if the Saudi is found
to be culpable?" And they brushed all of this off, Richard.
They said, "Clearly, you don't check your Twitter feed, Samuel. The President had just tweeted that he had spoken to the King of Saudi Arabia
and that he denied any knowledge whatsoever." They were saying that tweet sent a clear message to them that they don't think that there will be a
strong reaction from the United States. That's the perspective here, at least.
QUEST: Samuel Burke, John Defterios, thank you. But of course, we've got breaking news with CNN. Sources are now suggesting the Saudi government is
preparing a report acknowledging that missing journalist, Jamal Khashoggi was killed during an interrogation.
Now, it would be a stunning departure from previous statements in which the Saudis claimed no knowledge of Khashoggi's whereabouts. We'll be live in
Istanbul later in the hour with the latest in the investigation. That is if and when and the breaking is essentially ...
[15:10:16]
QUEST: ... that we are awaiting word which seems to suggest that that is the way the Saudis are going to paint this. Richard Clarke is in
Washington. Chairman of the Washington-based think tank, the Middle East Institute and has advised four US Presidents in the realms of National
Security Council and State of Department.
Richard, okay, so we are awaiting confirmation, but humor me and play with this if you will. For the purposes of these questions, if it does
transpire that they do admit that Khashoggi was killed during an interrogation, I mean, what -- simple, what happens next?
RICHARD CLARKE, CHAIRMAN, MIDDLE EAST INSTITUTE: Well, Richard, there has to be accountability. They can't just say that, "Oh, mistakes were made.
Somebody killed him inside of our consulate." They'll have to be much more specific than that and they will have to arrest people for having done it.
The question is how high up the chain are they willing to go? Because ultimately, the question will be, who ordered it? And is their
accountability serious or is it a cover up? That is what the world will want to know, and that is what the Saudis, I suspect are now working out
among themselves what they will say and how far up the chain they will go.
QUEST: And on this issue though, there is unlikely to be -- I think you would agree -- there is some likely to be a Mueller style investigation
into whether culpability goes up to the Crown Prince for example. And in that situation, to round up a few suspects and commit them to Saudi
traditional justice of a swift execution begs the question that you know, roundup the suspects, deal with it and hope everybody notices and we carry
on. Is that likely to happen?
CLARKE: Well, none of this is likely. The entire scenario is unlikely. It is unlikely that a US person, a permanent resident alien working for
"The Washington Post" would be killed inside a diplomatic facility and chopped to bits. This entire thing is unlikely, Richard. We are terra
incognita and we don't know what's happening inside the very opaque Saudi decision-making process.
QUEST: On the question that we saw yesterday, the article by leading columnist and editorial, what would happen if the US impose sanctions?
There were three -- essentially three threats. The first was oil could go to $200.00 a barrel, plus if Saudi decides to fiddle around with the oil
market. The second was that Russia could be invited into Saudi to lay claim to a base and provide arms, and the third was that it would
strengthen and embolden Iran as a partner to other Middle East countries. Are these bellicose threats that they are worthy of consideration?
CLARKE: Well, I think people are getting way ahead of their skis here. The United States has not imposed sanctions yet. It may never -- depending
upon what the Saudis do and the Saudis have to also make some decisions about what's in their best interest. Having a close relationship with
Russia is not in their best interest. Having a detente with Iran is not in their best interest.
The United States and Saudi Arabia need each other, but we can only have a relationship that is robust if both sides played by generally accepted
rules and somebody just stepped over the line and broke a very important rule.
QUEST: Do you go along with -- since we are a business program, we would need to put it into the commercial world. Do you go along with President
Trump's view that cancelling the arms deals, whether they were lucrative or not or whether there's new ones or not, but cancelling arms deals actually
-- there's no purpose to that because all that happens is the Saudi's are going to buy the arms from somebody else and the only people who ultimately
lose are yourselves and your jobs and your business.
CLARKE: Richard, I was Assistant Secretary of State in charge of selling - - deciding who gets US arms. Throughout American history, for the last 50 years, we have said no to some countries request for some weapons and they
have gone to other countries. That's nothing new. That happens all the time. The United States has certain rules and standards it has to live up
to and if that means that maybe we lose out an arms sale, that's nothing new.
[15:15:01]
QUEST: Do you detect a wish to move from those standards, those previous standards that you're talking about? Is it your understanding that the new
commercial reality of an administration run by a businessman is well, we need to look at the commercial side of this before and balance that with
what is the morally right thing to do?
CLARKE: As part of the process of selling weapons, the State Department sends notifications to the House and Senate and either house can block a
sale of a weapon and have done in the past, so it's not up to Donald Trump what weapons get sold to what countries. If the United States Senate on a
bipartisan basis says a particular weapon is not going to a particular country at a particular time, then it won't.
QUEST: When you look at the situation, I mean, I guess, fundamentally, every time I look at this story and we talk about it, I have the urge to
say, "What on earth were the Saudis thinking?" If they did commit this murder, "What were they thinking and how did they expect to get away with
it from the court of public opinion worldwide?"
CLARKE: Whoever the decision maker was, however how far up the tape it went and the Saudis are going to tell us an answer to that question,
whoever made that decision made that decision in a bubble. They thought that they could do on an international basis the kind of things that
perhaps they might be able to get away with in their country.
Richard, they don't even do this kind of thing inside Saudi Arabia. So it's very out of keeping with their behavior, that's why I don't understand
it. It makes absolutely no sense. It's an outrage and a huge mistake on somebody part and the Saudis are going to tell us a name, a decision maker,
a rouge and we'll see if their statement is credible.
QUEST: Richard, thank you, good to see you, sir. I appreciate it. Now, we are learning that sources are -- according to sources that the report
will say that the death was the result of an interrogation that went wrong. Arwa Damon is live from Istanbul.
This is a stunning development late in the day that it seems as if somebody is going to turn up and say, "It was him what done it, and an interrogation
that went wrong and by the way, we did cut up the body or not." I mean, Arwa, explain the inexplicable if you can.
ARWA DAMON, SENIOR INTERNATIONAL CORRESPONDENT, CNN: I think that had been the challenge throughout all of this, Richard. It's trying to explain and
figure out exactly what happened.
Now, according to these two sources, it was either an interrogation that went wrong and it was one that was meant to eventually lead to his
abduction from Turkey. Although one of the sources did caution that the report was still being prepared and could quite possibly change. The other
source was saying that it would likely conclude -- this report would likely conclude that the operation was carried out without clearance and
transparency and that those involved would be held responsible.
This in and of itself of course lends itself to so many questions. If the Saudi report is concluding this, why did it take so long? It's been 13
days since Jamal Khashoggi went missing. It's been 13 days that the Turks have been asking for access to the consulate that they just got earlier
today.
One would have assumed also, if the Saudis were in fact looking at this from that perspective of rogue elements and again, many of the questions
that are arising, why have they been so adamant up until this point to say that Jamal Khashoggi left the building the day that he arrived, because
that has been their claim from the very beginning and they weren't really trying to cast any doubt on that.
QUEST: And is it -- how long do you think before we get this report, if such it be, and when it arrives?
DAMON: It's unclear at this stage. This is just the initial information that we are able to get, and again, keeping in mind that it could very well
change. You know, you do have a team from Saudi Arabia delegation that came that's part of this Saudi Arabia-Turkey joint working group and there
was a group of Saudis who did go into the consulate earlier in the day. They were followed a few hours later by the Turkish lead prosecutor, by
these Turkish forensics team that went inside, and they are still inside right now, the Turkish forensic team are there. Vans are parked right
behind us.
So, again, are we going to see some of joint statement that's going to come out? We don't really know.
QUEST: Arwa Damon who is in Istanbul. Arwa, thank you. Now, I want to go back to Richard, Richard Clarke who is with me. Richard, if this
announcement comes out in the way that Arwa has been suggesting, an interrogation gone wrong or a potential rendition from a lower level and
this rogue element.
[15:20:16]
QUEST: Would this admission per se be sufficient to quell the international clamor if they put up somebody as supposedly some poor person
high enough as being, you know, well, it was him that done it.
CLARKE: Well, it won't be good enough for some people. How many people will accept that, and I think, Richard, it depends on how credible it is,
and we really can't know that until we see it. It is conceivable, I suppose that a rogue element that is. We don't know much about the
decision making process inside the Saudi intelligence service, so it's possible. Let's see what they say.
QUEST: All right, but you're a realist, you're a former diplomat who now lives, pardon the phrase, in the real world in that sense, and the wish for
business, for commerce to get back to normal, particularly when we're talking about Saudi Arabia which has such vast potential with outbound
investment and demand for inbound projects, that is going to be overwhelming. Can you see that?
CLARKE: Well, American corporations, international -- large international corporations in the west have to worry about their consumers, they have to
worry about their stockholders, and I don't think we can just hold our nose, turn a blind eye and say, "Oh, yes, we accept your story," unless
it's credible. It's going to have to be credible.
QUEST: Good to see you, sir. Thank you. Thank you for sticking around to give us more analysis on the back of the breaking news, it's much
appreciated. This is "Quest Means Business" tonight coming to you live from the CNN Center. We will look at Sears. We will look at the market,
topsy-turvy. The movements haven't been huge, but the volatility has been there all day, after the break.
It hasn't been easy going as investors tried to put an awful week behind them. Remember last week, down 1,300 and then rallied at the end of the
week, but still down heavily for the week. Tech shares remaining lower and the week ahead, there are so many worries, but particularly earnings, it is
a major week for earnings. Mohamed El-Erian is the chief economic adviser at Allianz.
[15:25:12]
QUEST: And Mohamed, of course, I sent you a moment ago -- my apologies, sir. We are destined at some point to be in the same studio at the same
time for the same show, but today is not that day. So I apologize in advance.
But look, when you look at the market today, what do you see bearing in mind what we saw last week? What's now the undercurrent?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: What I see is a personal consolidation within a regime change. Let me paint you the image.
The market has been a high flying plane flying on the basis of a very powerful engine called liquidity injection -- Central Bank is putting money
in. That plane is transitioning to a better engine, not an artificial engine, a long term engine which is called fundamentals.
Now that transition in midair is of course, turbulent and then add the fact that our policy makers are around the world meeting in Bali, identified
seven whisks to that transition, so for me, this is a volatile process, but ultimately, ultimately, it's better to be driven by fundamentals than by
short term liquidity.
QUEST: Except that short term liquidity has been going for eight years, hasn't it? I mean, this is not like it came and went, so I am very shrewd
to use an airline analogy, an airplane analogy for me. I can understand that because if the engines are now running on better fundamentals, that
would suggest the plane after turbulence will continue but in smooth air.
EL-ERIAN: It would with two qualifications. One is that these fundamentals are divergent. The US is doing well and will continue to do
well for a couple of years, at least. Europe and Japan are not there yet, so you get divergence which is putting stress on certain pricing that we
look at in the market very carefully. Second, there's a whole question mark about trade, what's going to happen to trade policy, so yes, it is
better in theory, but in practice, it's not a perfect engine. That's why people out there should expect the volatility to continue.
QUEST: And this Saudi business, if it transpires as you've heard just with the "Breaking News," that Saudi does admit that Khashoggi was
killed/murdered in the consulate, what does any self-respecting banker or bank do on the back of that news?
EL-ERIAN: So first it raises a lot of questions and it raises huge dilemmas for governments, for business leaders. What I find really
interesting today if I may, Richard, is the market reaction. Oil went up very little. This is the main oil producer and oil reacted very little.
The measurement of sovereign risk in Saudi Arabia moved but very little, so what the market is saying is that, while there's all of these questions, at
the end of the day, this will pass.
Now, the real question mark as to the political and geopolitical aspect of it, but when the market looks at the most sensitive areas -- oil and
sovereign risk -- it's not that worried right now.
QUEST: Right, but is the market fooling itself? Is this one of those cases where the market chooses to believe that Saudi would not harm itself
by cutting production or failing to provide more and to the recent OPEC deal? And when the worst happens, then the market goes into turmoil?
EL-ERIAN: Yes, that's a possibility, but I think the baseline is that the market is focusing on what you talked about earlier in your show which is a
co-dependency between the west and between Saudi Arabia. So, yes, this is an issues that raises lots of question, but what the market is saying is
that these are so co-dependent that somehow, they are going to have to work it out and I think that's what you see in the market place.
QUEST: Sir, finally, as one of the great thinkers on these issues, Mohamed, the concept of having to make a moral decision when you have very
limited facts, and you are a banker or a CEO of a company whose got stakeholders and shareholders, employees, customers. You heard Richard
Clarke talking about that decision. How do you navigate that decision?
EL-ERIAN: I think ultimately, it's an issue of values and culture. You have many stakeholders and perhaps the most important ones are your own
employees and you have to make a decision. In the old days, it used be just go for what a business is. I think now, it's become a much more
complex issue and companies have to listen very carefully to the employees and also to the other stakeholders.
So this is a very difficult situation for many people, and you've seen -- and what's interesting is, in the US where these issues are much more
important, many more have dropped out than in the rest of the world.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Good point, thank you sir, good to see you --
EL-ERIAN: Thank you --
QUEST: Excellent to see you, I promise you, next time I'll be sitting next to you, thank you. As we continue, QUEST MEANS BUSINESS from the Cnn
Center. Turkish investigators enter the Saudi Consulate, they're looking for clues about the disappearance of Jamal Khashoggi, we'll be live from
Istanbul.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. We'll bring you the business news as we always do. But before
we get a moment further, you are watching Cnn, and on this network, the facts always come first.
Two sources are telling Cnn that Saudi Arabian officials are preparing a report that says the journalist Jamal Khashoggi died during an
interrogation that went wrong. It's been the first time the Saudis have admitted responsibility for Khashoggi's disappearance two weeks after he
was seen entering the Saudi Consulate in Istanbul in Turkey.
The sources tell Cnn, the report is not final and could be changed. At least, 10 people have died after flash flooding hit the Aude region of
southern France. Roads were cut off and cars overturned after three months without rain fell in six hours, it all took place Sunday into Monday.
Officials say one person is missing and five are seriously injured. News of a royal baby -- Meghan Markle and Prince Harry, the duke and duchess of
Sussex are expecting their first child in the Spring. Kensington Palace released a statement in answering the news which said that the queen is
said to be delighted for the couple.
[15:35:00] The German Chancellor Angela Merkel's fragile ground coalition government is getting rattled by regional state elections. On Sunday, her
allies, the Christian Social Union, the CSU lost their majority in the Bavarian state parliament.
The pro-immigration environmentalist greens and the right-wing anti- immigration AFD, their party came in second and third. The European Council President Donald Tusk says a no deal Brexit is now more likely than
ever.
But he's urging EU members not to give up. Erin McLaughlin is live from Brussels. Erin, very simply, everybody is now saying a no deal Brexit is a
possibility --
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT: Yes --
QUEST: More likely --
MCLAUGHLIN: No --
QUEST: According to --
MCLAUGHLIN: That's enough --
QUEST: What the next person, to what Donald Tusk was saying. Are they seriously now suggesting that it's on the cards, but beyond being a
theoretical possibility?
MCLAUGHLIN: Well, at this point, Richard, diplomats I've been talking to are telling me in light of the fact that these Brexit negotiations are now
frozen. There are no more rounds of negotiations expected for this week ahead of the European Council on Wednesday.
That we can expect preparations on the EU side for a no-deal, that possibility to ramp up. And diplomats also talking about the possibility
that in November, they had expected to have this summit to sign off on any potential Brexit deal that had been reached.
They're now talking about the potential of turning that into a quote, "no deal" Summit. So this seems to be very much a possibility, given that this
impasse which frankly has existed for months persists.
It will be very interesting and critical to see what happens here in Brussels on Wednesday. That's when Theresa May arrived and --
QUEST: Right --
MCLAUGHLIN: Addresses the EU 27th, on a state of a negotiation.
QUEST: Erin, clearly, nothing is going to be agreed by Wednesday and this council. You talk about the November council --
MCLAUGHLIN: Yes --
QUEST: Is that looking like it's turning into a make or break because if you don't get it done in November, you're pretty much impossible to get it
done -- no, I mean, it is just about to get it done by the end of March through all the various verifications and ratification processes.
MCLAUGHLIN: Oh, you know, I was speaking to one senior EU official a while ago, and he was telling me, you know, the toughest nuts to crack when it
comes to these negotiations are always cracked last. The EU is no stranger to 11th hour deals.
And diplomats I've been talking to say that there's a distinct possibility, a thin area, so to speak for a deal to squeak through in time for that
November summit that again, diplomats I'm talking to also saying that they're ramping up preparations for a no-deal scenario because they remain
at this impasse about what to do with Northern Ireland.
And they're very aware of the politically --
QUEST: Right --
MCLAUGHLIN: Fragile state Theresa May finds herself back in London.
QUEST: Erin McLaughlin in Brussels, thank you. We return to Turkey, Elise Labott is in Washington and Cristina Alesci is with me as well in New York.
Elise, first of all, if this is true and it's from two sources, that they are preparing to admit some culpability to the level and range of which we
cannot know.
How does this alter how the U.S. would move forward.
ELISE LABOTT, JOURNALIST: Richard, it sounds like it's true. I've heard similar from my sources and we've been waiting actually for two or three
days for, you know, the Saudi bureaucracy if you will to try and agree on how to roll this forward.
Look, they knew that they would have to say something, the idea that the Saudi government did not know anything about what happened to Jamal when he
walked into the consulate and never walked out is not plausible.
And so the government knew that they were going to have to come up with some type of explanation --
QUEST: Right --
LABOTT: They know they're not going to look good, but they had to give, you know, everybody something to say about what happened. I think the
United States -- and you heard President Trump earlier today say that it could be some rogue killers.
I think that everyone, you can see over the last few days settling on the narrative that this was a rogue operation, an abduction, an interrogation
gone horribly wrong, that there was no -- and had to kill him. There was no authorization from the highest levels of government.
[15:40:00] And the person that undertook the operation failed miserably at it, in addition to not, you know, seeking authorization. And so it seems -
-
QUEST: Right --
LABOTT: That that's what the Saudis are saying, it sounds like the Turks are going to go along with it, and it sounds like the U.S. will accept it.
QUEST: And let's go immediately to Clarissa Ward; our chief international correspondent. Clarissa, you just heard Elise spread out for us the
potential way -- I mean, the realist amongst us know that's how it will go. They will blame a rogue element and everybody moves forward. Is that how
it will play it do you think?
CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: I think that's what the Saudis are very much hoping, and that's why presumably they've decided
to go with this tact.
There also seem to be strong indications that Turkey is ready to go along with that. We've seen a complete cessation of the leaks that we saw coming
out of Turkish media here last week. Also indications that the U.S. is keen to sort of get on board with this narrative if you will.
We heard from President Trump today essentially breaking the story in a sense, saying that it sounds like it might be the work of rogue killers.
Well, at this stage or at that stage, I should say, rather, it wasn't necessarily even confirmed yet that Jamal Khashoggi was indeed killed.
So I think what you're seeing broadly is an effort from many different powers to try to go about the business --
QUEST: Right --
WARD: Of damage control. Clearly though, that is a big ask, that is a tall order. Even if Saudi Arabia does come out as we expect eminently or
in the coming days, it's impossible to know what timeline they're working on exactly.
But if indeed, they do come out and say, listen, this was the result of a rogue operation, it was a botched interrogation, it was never intended to
kill him, we're taking disciplinary action against those who perpetrated this, they didn't have the right clearance, they didn't behave with
transparency.
Even if they come out and say all of this, is it too little, too late? Does that explain things in full? Will people buy into this narrative that those
at the highest towers of power in the kingdom did not know about this.
These are questions that are still far from answered, Richard.
QUEST: Stay with me, Clarissa, and indeed you and Elise, I just want to get from Cristina Alesci in New York, the element of if this is all true as
you've heard your colleagues describe, does this give business the fig leaf, those banks, the fig leaf necessary to say, well, if government,
Turkey, Saudi and the U.S. are all going along with this, well, we will too -- back to normal.
CRISTINA ALESCI, CNN CORRESPONDENT: I think it's going to be really hard because a number of bank CEOs and large investors across Wall Street have
already said they are not going to the investor conference that so many of them pulled out of over the weekend and almost every hour today, there was
someone else pulling out of this conference.
So I think it makes it very difficult for them to walk back and say they're going to attend the conference after all. You know, one of them, most
interesting big of the story lines here is the fact that even though the U.S. is perhaps a little bit less reliant, Saudi oil, it has become a
little bit more reliant on Saudi money from the sovereign wealth fund going into Wall Street, going into tech companies, going into tech investment
funds.
So that interdependence is going to continue in the long term, at least, that's what my sources are telling me.
QUEST: Cristina, I'm going to let you go and get back to your sources because we do need to know what Wall Street, what the banks think, whether
they will go back. So you come back for us in a moment, please, when there's more to -- when you've got more from that.
I want to go to Elise back in Washington, following on from what you just heard Cristina say about how they're going to be looking for the direction.
You know, it still begs the unsavory question, I mean, let's assume the worst is true.
That the -- Jamal Khashoggi was killed, dismembered. They have -- they have denied it. They've even denied for days. How hard can it be if
you're the Crown Prince, Elise Labott, to call up the consulate and say what happened, we need to get the story true?
LABOTT: That's very true, Richard. I mean, listen, again, like I said, they know they're not looking good here. I think they want to just do some
triage in terms of, you know, stopping this from being snowballing and questions about, you know, the whole house of Saud and what happens from
there.
[15:45:00] I think the U.S. will have to undertake some kind of punishment, and I might just say that this is part of a larger concern that
the U.S. has had about Crown Prince Mohammad Bin Salman. You know, his recklessness, his overreach, whether it's in Yemen, whether it was in Saudi
Arabia with the rest of, you know, many members of the royal family and officials there, whether it was the -- you know, house arrest of Prime
Minister Hariri in Lebanon, there's been a very growing concern about his overreach.
And I think when you see Secretary of State Pompeo go out to Saudi Arabia, obviously, part of it was trying to find out what happened. But the U.S.
had already known what's happened. I think they're hoping that this will be a sober conversation, not just with the Crown Prince, but with the king
to say, this young man is the future of Saudi Arabia and get your house in order.
QUEST: Clarissa, assuming this plays out, and I keep putting that prefix before because this could take many different terms before we're finished.
But assuming it plays out as you have speculated and you and Elise have put forward.
Does this dramatically weaken the Crown Prince's position? I mean, is he finished if this is true? And if he's not finished, what role will he play
because obviously King Salman must be spitting furthers at the way his own reputation is being soiled and that of the country by this.
WARD: Well, firstly, Richard, I will just say that, you know, in terms of you having an abundance of caution, you're right to do that. And our
sources who have been giving us this information --
QUEST: Right --
WARD: Do say that it is still possible that Saudi Arabia could change tact, that they could change their approach, that the narrative may evolve.
We don't know whether the results of this internal investigation are going to come out tonight or tomorrow or in the next few days. There are still a
lot of questions surrounding this.
In terms however of the future of the Crown Prince, I think what you're seeing by the very choice of this narrative if indeed it does bear
fruition, you're seeing the king and essentially Saudi Arabia as a government saying quite strongly that no, we'll confess to this having
happened and it was a bosh operation.
But there's no discussion here about the Crown Prince being personally liable or personally involved or to blame in any way for this. And there's
no discussion about whether or not he is still a legitimate leader. He is seen within the context of Saudi Arabia by many as being the sort of great
white hope for the future.
And he is obviously ruled as an authoritarian, he has not created the space in Saudi Arabia whereby people would even --
QUEST: Right --
WARD: Begin to feel comfortable questioning his authority at this stage. So, I wouldn't anticipate anything drastic or dramatic in terms of a change
in his relationship or role with the king and with the international community going forward.
I think what they're hoping is that with this, they can hopefully begin to put it to bed.
QUEST: So, let me put it to you, Elise, here we are, following on from what Clarissa has just said, we could have a situation worldwide where we
are asking the question, did President Putin know about or authorized the murder of the -- well, the attack on the Skripals and the murder of course
there after of one person who did touch the perfume bottle?
Does have liability for the Novichok agency? And then the second one, does the Crown Prince of Saudi Arabia have personal knowledge or liability for
the murder of Jamal Khashoggi in their consulate? I mean, in this situation, two leaders being asked, were they responsible or did they know
that their agents were going to go out and murder someone?
LABOTT: Well, I mean, I think everyone -- no matter what the explanation is, Richard, I think everyone knows the answer to the question, and I might
add a third person. Kim Jong-un assassinating his brother in Malaysia. And so it's -- you know, it's -- there's been this rush of extra-
territorial killing and believed to be ordered by the leaders.
The difference as we've been saying is, Putin, Kim Jong-un, these are ultimate rulers of their country. In the case of Saudi Arabia, I agree
with Clarissa, I don't think Crown Prince Mohammad is going anywhere, I do think that it's the whole -- not just by the United States.
And as they said, there's been a lot of concern about this young prince and his kind of adventurism. There's concern within Saudi Arabia, there's a
real tag of war going on right now. You remember that when he was named to be Crown Prince, it was above, you know, others that thought they were
giving up the job.
[15:50:00] Mohaya Bin(ph) -- Naya Bin(ph) and you know, the whole other family that was left kind of in the dusk when King Salman rose to power.
And so, I think that the hope is that this is going to clip his wings a little. He's certainly not going to go anywhere, but the hope is that
chasing MBIs(ph) might, you know, actually fully realize the better parts of the vision and there are a lot of the good parts of his vision.
But the idea that he is going to do it with an iron fist, I think the hope is that he knows that people will be watching him closely, and that, you
know, he might be able to calm down. I can't say that that's going to happen, I'm saying that's the hope.
QUEST: Elise, thank you and Clarissa also, thank you. Quite extraordinary times, we appreciate you both this evening. Now, as we continue, we will
update you on what we know. We need of course to get check the markets because the markets, although they've been subdued, that would be -- we
would be foolish to believe that the markets have taken this in their stride.
That chart shows the day and shows exactly why if this situation were to deteriorate, the volatility would eventually push markets sharply to the
down side. We'll have more in a moment.
(COMMERCIAL BREAK)
QUEST: Cnn breaking news. Two sources telling us that the Saudi Arabian officials are preparing a report that will say the journalist Jamal
Khashoggi died during an interrogation that went wrong. That will be the first time that the Saudis have taken responsibility for Jamal's
disappearance two weeks after he was last seen entering the Saudi consulate in Istanbul.
The sources are telling us, the report is not final and could be changed. Arwa Damon is at the consulate, John Defterios is in Abu Dhabi. First, to
you, Arwa, quite a remarkable development that you just -- you reported to us. Any idea if and when or how the logistics of how we will be told about
this?
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Oh, no, we don't know that at this stage. What we really have are sort of these broad strokes as
to what according to these two sources, we can expect out of this report. One is your cautioning there, saying, that look, things could still change
as we're still being worked on according to the other source that Cnn spoke to the report which states that this was carried out without clearance and
without transparency and that those involved would be held responsible.
[15:55:00] Now exactly how high up into the Saudi government this may or not go, we do not know. But you'll remember in the early days of our
reporting on this, there were the 15 Saudi nationals that arrived in Istanbul the very same day that Jamal Khashoggi --
QUEST: Right --
DAMON: Went missing. A number of them did go to the consulate, the Turks have been holding them as persons of interest, and then how deep does this
go into the Saudi Consulate staff in another -- still that, we still don't know.
Sam Kiley is in Riyadh, the first time we're getting some reaction from Saudi Arabia on what we're hearing out of Istanbul. Sam, what can you add
to the reporting if this is -- well, let's say, when we do get this word, how will the reaction be in Riyadh?
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, there are two things there, I think, Richard. That this is something that has been
alluded to, I would say since assassinating night. We have been hearing from sources here that there may be some kind of confessional or semi-
confessional statement.
Notwithstanding the continued public position of absolute denial. I think one of the critical things here that occurred was that King Salman himself
took control of the narrative after a very -- rather aggressive and diplomatic language have been used with this absolute denial.
Up until that point and when he reached out to the Turkish president. But as I say, what Clarissa's sources are saying is consistent with quite a lot
of the hinting, broad, heavier than hinting stuff that I've been hearing since Saturday.
I think essentially, what's going on here is that the American president blurted out a confidence that had been shared with him by King Salman over
the telephone, and that has set the horses running.
Now, I reached out --
QUEST: Right --
KILEY: To very high levels here, it's late at night here, there's not a denial nor is there a confirmation so far, but there's a promise to
respond. Now, that response may well be just wait for our official statement.
This is not a country that does embarrassment. This is a country that likes to be able to control the narrative and make sure that all --
QUEST: Right, Sam --
KILEY: Of the ducks are in a row. So this last ten days has been a nightmare for it, Richard.
QUEST: OK, Sam, stay with me, I need to go to John Defterios who is in Abu Dhabi. John, if all this is -- happens, then the GCC and those other
countries that have stood by, Saudi Arabia will also have to give their response. How are they likely to respond?
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, Richard, they've been trying to give this full force of support here for Mohammad Bin Salman and
for Saudi Arabia. This is the site of the two holy Mosques, so it does carry a great deal of weight in the region.
But they reiterated that support on two different occasions over the last four days. So it will be interesting to see how they try the new ones,
their message going forward here. Just on the response of my phone in the last 15 minutes, so it's lit up with different messages where people
(INAUDIBLE).
At the top of your program, we were talking about this attendance too in the Davos of the Desert, it looks like now the CEOs of BlackStone and
BlackRock and JPMorgan Chase made the right decision. This is the geopolitical risk that people wanted to avoid.
Because from the outside, looking in, this looks like perhaps a brutal murder. And we have to also talk about the consolidation of power of
Mohammad Bin Salman, the Crown Prince.
He took out Mohammad Bin Daif(ph). At the same time, the king has to be thinking to Sam's point here, he has to broaden out the cabinet and not let
this consolidation of power continue. It's high risk, this is a young Crown Prince, he's impulsive at times, there's a long list of things that
he's done that have really shocked people around the world including the arrests internally, the embargo on Qatar --
QUEST: Right --
DEFTERIOS: But this is the icing on the cake and people are surprised.
QUEST: John Defterios, thank you, we do need to leave it there. Jake Tapper and "THE LEAD" is coming up, thank you two, Arwa to Sam and to you,
John. The -- we will continue to be watching the developments obviously as we move forward.
All of our correspondents are now working sharply and hard on bringing the -- getting this announcement official and then the ramifications whether
it'd be in the markets in the other countries around the world. So with the market looking extremely volatile at the moment, the Dow has been all
over the sharp over the course of -- now, it's on the down side, but it had been up over a 100 points at one stage.
It gives you an idea of exactly how nervous people are. And certain is the word better than nervous. Well, that is QUEST MEANS BUSINESS for tonight,
I am Richard Quest in at the Cnn Center. Whatever you're up to in the hours ahead, I hope it's profitable.
(BELL RINGING)
The bell is ringing, the day is done, the Dow is down.
END
