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Quest Means Business
Tariff Man Make A Comeback; Trump Blasts Democrats For Holding Hearing While He Is At NATO; Cyber Monday Is On Pace To Be The Biggest Ever. Aired 3-4p ET
Aired December 02, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:11]
ZAIN ASHER, CNN INTERNATIONAL HOST: It's been a bit of a miserable day this Monday, December 2nd. We are in triple digit losses on the Dow after
we got weaker than expected manufacturing data, and also President Trump announcing on Twitter that he is going to be imposing steel and aluminum
tariffs on Brazil and Argentina, man. U.S. stocks are kicking off a new month deep in the red.
Those are the markets and these are the reasons why. Tariff Man make a comeback. Donald Trump threatens to punish Brazil and Argentina with steel
tariffs over alleged currency manipulation.
U.S. shoppers rack up the records on Cyber Monday, but stocks creep lower as soft manufacturing data spoils the economic picture.
And the Chinese government wants 850 million mobile users to upload their faces for their own protection.
Coming to you live from here in New York. It is Monday, December 2nd. I'm Zain Asher, in for my colleague Richard Quest and this is QUEST MEANS
BUSINESS.
Welcome, I'm Zain Asher. Tonight, the Tariff Man returns. President Trump says he will impose tariffs on steel from Brazil and Argentina. He
tweeted, "Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers."
"Therefore ..." the President says, " ... effective immediately, I will restore the tariffs on all steel and aluminum that is shipped into the U.S.
from those countries."
The reaction from Brazil, one of bewilderment. President Bolsonaro is saying he may call President Trump to discuss the matter. In the stock
market, news of the tariffs combined with disappointing manufacturing data and a setback in terms of the trade talks with China, the Dow fell more
than 200 points.
Boris Sanchez is joining us live from the White House. So Boris, just walk us through the President's decision on this. Why now?
BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes, it certainly is a brow raising decision by President Trump. He is arguing that Argentina and
Brazil are engaging in very unfair practices, suggesting that they are devaluing their currency. Therefore, he is lifting this exception that
kept Brazil and Argentina from facing some 25 percent tariffs on steel and a 10 percent tariff on aluminum.
The President is saying that steel manufacturers and farmers in the United States would be very happy with this decision that we should point out that
critics have suggested that the President is wrong on this that the devaluation of currency in Brazil and Argentina is linked to political
upheaval in those countries and not really a deliberate effort by these nations to carry out that kind of policy.
We should also note that neither of the Treasury Department or the Commerce Department have actually put out much documentation on these tariffs. They
have yet to officially announce them. So yet again, this is another example of the President carrying out diplomacy via tweet -- Zain.
ASHER: And Boris, what exactly is the President's political strategy with all of this? Obviously, he talked about trying to help U.S. farmers.
SANCHEZ: Yes, look, this goes back to his argument from the beginning of his campaign back in 2015, putting America first, putting American
manufacturers and American farmers first. He knows that in rural parts of the United States where he has a lot of support, farmers are hurting
because of his trade war with China. So a move like this to try to assist these farmers is key.
Let's not forget the billions in dollars that he has provided for these farmers in subsidies. Let's also not forget some of the bigger picture
strategy here.
Brazil and Argentina have trade deals in place with China to provide China with soybeans, one of the points of leverage that the United States has
used in this trade war.
And a further note on that it was roughly over a month ago that President Trump said that the deal with China, the Phase 1 of this deal was just
about done. All that was necessary was to sign off on it. Now, we're seeing reports that these negotiations may have further sticking points and
the Commerce Secretary, Wilbur Ross effectively announced that China could potentially face more tariffs if things don't move along in the coming
weeks -- Zain.
ASHER: So more setbacks in the U.S.-China trade war as well. Boris Sanchez live for us there. Thank you so much.
The Trump administration had exempted Brazil and Argentina from tariffs on steel and aluminum last year. Brazil is the second largest source of steel
imported to the U.S. behind Canada. It accounts for nearly 11 percent of imports. Argentina accounts for less than one percent.
President Trump accuses both Brazil and Argentina of unfairly devaluing their currency. While it's true that both currencies have actually fallen
against the dollar this year, Brazil has been trying to actually pop up the real.
[15:05:07]
ASHER: Argentina meanwhile, is grappling with an economic crisis which is largely responsible for its 37 percent drop against the dollar. Clare
Sebastian is following all. So Clare, I mean, Boris also touched upon this as well. This is not the result of Brazil and Argentina, you know, sort of
working behind the scenes to manipulate their currencies at all.
They've dealt with serious economic and political issues. That's why their currencies have fallen.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: This is absolutely true, Zain. I've yet to find an analyst and I've spoken to several today who
sees any evidence to the fact that this is anything other than a market force. They do not see government intervention in this, quite the
opposite.
These are the facts. Brazil's real, as you noted there, it fell to a record low last week against the dollar, but Brazil stepped in. They
started buying dollars to prop it up.
Argentina, the facts there. It's been a very bleak year. The peso fell some 37 percent, much of that in August when it look like a populist
government was going to get elected. That eventually did happen.
You can see the steep fall there. They are grappling with rising government debt, poverty, inflation of 50 percent. They have actually also
been propping up their currency, not least by raising interest rates, which is now over 60 percent with the Central Bank.
So those are the facts there. There doesn't seem to be any competitive devaluation. So I think it's difficult to see why this is happening now,
why the President picked this moment to come in and make this move because as the Argentine Production Minister said today, they weren't even
expecting it at all.
The tweet came as much of a surprise to them, as it did to the rest of us.
ASHER: So just in terms of what the President's motives are, some people say this could be payback because Brazil and Argentina have actually
provided a soybean market to China. Is there any truth in that?
SEBASTIAN: Well, okay, so this is the picture of the market with soybeans. The top three producing countries are the U.S., Argentina and Brazil and
the top importing country is China.
Now, last year, amid all of the trade disputes between the U.S. and China, the U.S. exports to China all but dried up and of course, China then has to
look somewhere else and Brazil was a big beneficiary of that. Argentina has also seen breakthroughs there as well. They had a breakthrough earlier
this year, where they managed to get China to open up their market to soy meal, which is a sort of processed form of soybeans used for pig feet. Of
course China has a huge pork market.
So both of those have benefited, so that could be part of it. Obviously, this is a very sensitive topic for the President. Anything that goes to
the problems that the U.S. farm belt has suffered at the hands of this trade war is something that is very unknowing to him.
ASHER: Clare Sebastian, live for us. Thank you so much. President Trump says imposing tariffs will make steel companies and farmers happy, but look
at what happened to steel prices since the President first imposed metals tariffs in March of last year.
Prices rose, hitting a high of $920.00 per ton. Companies reopened, it shut mills and started hiring workers, but the price spike was actually
just a blip. Increased production, along with a drop in demand caused prices to fall back.
That hurt companies like U.S. Steel which closed off its furnaces and laid off staff. In October, Moody's downgraded its outlook for the entire steel
sector to negative saying, the situation was unlikely to improve anytime soon. Even still, Trump says raising steel tariffs could help turn the
tide.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Well, Brazil has really discounted -- if you take a look at what's happened with their currency,
they have devalued their currency very substantially by 10 percent. Argentina also.
And I gave them a big break on tariffs. But now I'm taking that break off. Because it is very unfair to our manufacturers. And it is very unfair to
our farmers.
Our steel companies will be very happy and our farmers will be very happy.
(END VIDEO CLIP)
ASHER: Joining me now is Mohamed El-Erian. He is the Chief Economic Adviser at Allianz. So you heard the President just talking there. I am
I'm actually not sure if you heard him, but he was saying that steel companies in this country would be very happy and that farmers would be
very happy.
But just -- when you look at the President's trade strategy overall, how much has it actually benefited U.S. manufacturing.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: So the weaponization of tariffs has had the three impact, if you go from low to higher.
The lowest impact is in changing other people's currency behavior because, as we just said, this had been market forces. The one exception to that is
China. But that is very specific. It has had more impact in starting to get some concessions for the U.S., and the most impact is what you don't
see, which are companies reconsidering their supply chain.
Some of it is going to other countries, some of it is coming back to the U.S. But the big test is going to be what happens when we look back in two
years' time? Will this phase of trade tensions be viewed as part of a journey to a free but fairer trade regime? Or will it end up being a
destination? And that's going to be the big, big question mark.
ASHER: But you bring up a very important point and that is, you know, when the President raises tariffs, yes, it might change behavior. Yes, people
might reconsider, China, but that doesn't automatically mean they're going to be moving to the United States. There are other countries in Southeast
Asia that are benefiting enormously from the U.S.-China trade war. What are some of those countries?
[15:10:17]
EL-ERIAN: So we saw that in round one, Vietnam being a perfect example. But it turns out that Vietnam doesn't have the infrastructure to absorb all
their demand for outsourcing that's going that way. So we've seen Indonesia benefit as well. We've seen the Philippines benefit as well.
But ultimately, these countries are going to hit capacity constraints. And that's why you see businesses also bringing back some of the operations
back to the U.S., but I think that we are going to see a significant diversification of outsourcing away from China. What you're going to hear
more and more is in China for China. So those who establish big presence in China is going to be in order to supply the Chinese market.
ASHER: I see. And when you look at the manufacturing data, we got it today, for example, 48.1 percent. What does that tell you about the
effectiveness of Donald Trump's trade policies?
EL-ERIAN: Yes, you see it all over the world, same story for Europe. And what it tells you is that the globally oriented companies, and
manufacturing has a good component of globally oriented companies are at risk.
So you are seeing two different economies, whether it's here or in Europe. It is even more acute in Europe. The domestic economy is doing fine. The
manufacturing economy and business investment is doing less well. And the big question is, who will contaminate who? Will the weak manufacturing
contaminate the domestic side or will the domestic side lift up the manufacturing side? And that's going to play out over the next few months.
ASHER: It's so interesting, because, you know, when the President talks about or tries to promise that steel jobs are going to come back and in
this country, there is going to be revival in manufacturing. I mean, is there -- is there a better strategy that the President should be employing
to bring back those jobs? Is there a better way at all? Or are those jobs just gone. Forget it.
EL-ERIAN: So the best way is on two things. One is visibly the rest of the world is to try and promote economic growth there. The problem is not
the U.S., the problem is that the rest of the world has slowed down significantly. And we are importing to some extent that slowness.
But domestically, we also have to focus much more on retraining workers, retooling workers and infrastructure. Unless we increase our own
productivity, this weaponization of tariffs is simply going to be a lose- lose game for everybody. And that's why ultimately, it's about what countries do domestically and whether you get to a fairer, but still free
trade system.
ASHER: And actually, the President quoted you today in a tweet. Let's pull it up for our audience. Let's see, I don't know if I can meet this
without my glasses. "The United States has ..." if you could help me, Mohamed. I just can't read this without my glasses.
EL-ERIAN: Okay, so I was talking about the extent to which the U.S. markets have outperformed other markets. So I noted -- he notes in that
week, quote, "The U.S. has outperformed the rest of the world in an eye popping in fashion. I don't think we've seen numbers like that. Mohame
El-Erian, Allianz, Chief Economic Adviser."
And then he goes on to say, " ... but despite this, there's tremendous potential for growth for greater, far greater than most have understood."
ASHER: Okay. So when you see that, I mean, what would you say was still the major headwinds in the U.S. economy though?
EL-ERIAN: So he also got the markets. It is eye popping to see how much the U.S. has outperformed other countries. Imagine, had you invested a
dollar in the U.S. and the dollar in emerging markets five years ago, the difference is 150 percent. We have never seen that sort of difference
before.
It speaks to the fact that emerging markets are going through a difficult period and are more vulnerable to trade tensions.
The reason why I said that this morning is that a lot of people are telling investors, fade the U.S. and take your money out and put it elsewhere, and
I'm saying it's too early for that.
ASHER: When is the right timing to do that then?
EL-ERIAN: When you see the following three things. One, is pro-growth policies in the rest of the world. We haven't seen that. Two, a reduction
in trade tension. We haven't seen that. And three is something very technical, which is where you see starting to see flows go to the
developing world. The time is going to come because you can't have these massive divergence. It's just not now.
ASHER: It's all about timing. Can I just say, thank you so much for helping me. I literally am this blind as a bat without my glasses. So
that was very embarrassing, but thank you so much.
EL-ERIAN: I have to squint as well. I could hardly see it, too, so --
ASHER: Oh, thank you. We will both stumble through it together. Thank you.
President Trump is criticizing House Democrats for holding a public impeachment hearing while he's away for the NATO Summit this week.
The White House said Sunday that the President's lawyers also will not participate Wednesday. Before he left for London, Donald Trump told
reporters Ukrainian President Zelensky cleared him of any wrongdoing in an interview published earlier today. Take a listen.
[15:15:03]
TRUMP: The do-nothing Democrats decided when I'm going to NATO, this set up a year ago -- that when I'm going to NATO -- that was the exact time --
this is one of the most important journeys that we make this President.
If you notice, there was breaking news today. The Ukrainian President came out and said very strongly that President Trump did absolutely nothing
wrong. That should be case over. But he just came out a little while ago and he said President Trump said absolutely nothing wrong and that should
end everything.
(END VIDEO CLIP)
ASHER: And Phil Mattingly joins us live now from Capitol Hill. So, Phil, we know that the President and his legal team have said that they are not
participating in Wednesday's hearing. Not exactly surprising, though. Just walk us through that.
PHIL MATTINGLY, CNN U.S. CONGRESSIONAL CORRESPONDENT: Yes, look, I think it tracks basically with what White House position and the President's
position have been throughout this entire process. I think the difference now is unlike in the investigation process which was run by the House
Intelligence Committee, the White House has a very real opportunity to participate.
They can ask questions of witnesses. They can submit proposals for their own witnesses. Perhaps most importantly, they can give a concluding
presentation at the end of the House Judiciary Committee process, which launches on Wednesday.
Now, they haven't ruled out participating at all. They've just ruled out participating on Wednesday. But I think in the letter that the White House
counsel sent last night to the House Democrats, they made it pretty clear when they call it an a partisan and baseless investigation, that they're
probably not going to play ball anytime soon.
I think the rationale here when I talk to Republicans here up here on Capitol Hill is they've been calling this a quote "sham process"
throughout, why legitimize it now by participating? Particularly, Zain, when if the House votes to impeach, as seems likely at this point in time,
there's going to be a Senate trial and the Senate is currently controlled by Republicans and likely the President could get kind of a better shake or
at least a better structure over in that chamber than he would in the House.
ASHER: Some people might argue, though, that the President participating could actually allow him to sort of shape the hearing and make a case for
his innocence though. What do you think?
MATTINGLY: I think it's a fair argument and I think it's one Democrats have been making of, look, if you say that this was a quote-unquote,
"perfect call," if you believe that you haven't done anything wrong, as the White House has been firm on their position of throughout this entire
process, then why not come in and make your case? Why not have your lawyers come in and question witnesses? Why not propose your own
witnesses?
I think one of the interesting dynamics we've seen play out over the course of now several weeks, almost a couple of months is that the White House's
best witnesses from a defense perspective, the people who were actually in the room with the President who would be able to testify that the President
didn't do anything wrong are the same exact people they haven't let come in and testify.
Now, Democrats made clear they believe that is an admission of kind of de facto guilt to some degree, and perhaps more importantly, they say that
will form the basis of a likely Article of Impeachment related to obstruction. But this is the White House position here, and I just -- I
don't see it changing anytime soon. I could be surprised.
But based on what the President has said and what the White House counsel has said up to this point, they very clearly are far more focused on what
they do and how they act when the Senate gets the hold of it than they are right now while House Democrats are on the lead.
ASHER: All right, Phil Mattingly live for us there. Thank you so much. Severe winter weather across the country is forcing many Americans to stay
home and shop online. Cyber Monday is on pace to be the biggest ever. Consumer spending might just be the saving grace of the U.S. economy.
And after an internet outage was lifted, reports are emerging, hundreds have been killed in protests in Iran. That story, next.
(COMMERCIAL BREAK)
ASHER: Welcome back, everybody. The five-day shopping spree that kicked off on Thanksgiving in the United States comes to a close today with a
Cyber Monday blowout.
This year, it is more crucial than ever for the suffering retail industry. Consumers have so far spent more than $11 billion. It's estimated they'll
spend another $9 billion by Monday's end making it the biggest Cyber Monday ever.
Now, despite signs of weakness in the U.S. economy, Americans have actually been opening their wallets in record numbers. While consumer spending has
helped pull growth out of the downward slide. It hasn't been enough to keep markets in the green.
There was a touch of green when markets opened in the morning, then we got the manufacturing data that sent markets down about 200 points or so. That
is the reason why the markets are down right now. Let's talk through this. To talk to us about it, Ben Phillips. He's Chief Investment Officer at
EventShares. He is in Los Angeles for us.
So Ben, just walk us through because we've got two issues that the markets are sort of spooked by right now. Number one is obviously the
manufacturing data. But number two, also these new tariff announcements that the President made concerning Brazil and Argentina.
BEN PHILLIPS, CHIEF INVESTMENT OFFICER, EVENTSHARES: Yes, that's right. You know, I think it's still a pretty decent looking market. I mean, near
term, we're looking a little overbought. So we're expecting a little bit of pullback in December.
But if we look out six to twelve months, everything is looking pretty rosy still. So you know, we have GDP growth, I think the Atlanta Fed just upped
their estimates pretty dramatically. So it looks like the GDP slowdown has bottomed. We had a great consumer spending week as you just pointed out,
so things are actually looking pretty up for 2020 at this point, outside of the trade talks, that's the big wild card.
ASHER: Should we be focusing more on those consumer spending numbers? I mean, do you anticipate any headwinds when it comes to retail or consumer
spending as we head into the Christmas holiday?
PHILLIPS: Well, I think if this past weekend, if you look at Black Friday and Cyber Monday are any indication that consumers are still feeling pretty
good. So we have good employment. We're seeing wage growth. We're seeing some modest inflation pick up. So everything's looking okay, where the
consumer is earning more, but inflation is not eating into their spending power, and net-net. I mean, that's what we're watching.
We've been watching consumer confidence to see if the trade talks and anything going on in policy bleeds into confidence, but it doesn't appear
to be so.
ASHER: We've also got the impeachment hearings. Obviously, when it comes to the political process in United States, everybody is heavily focused on
the hearings on Capitol Hill. The Democrats are moving very, very quickly. The House is likely to impeach the President. Obviously, he is going to be
- likely going to be acquitted in the Senate.
But just in terms of how the markets are going to react to that. Do you anticipate any kind of market reaction whatsoever?
PHILLIPS: I think less so from impeachment. I mean, if we talked to other institutional investors, they're largely looking through it as noise. It's
more politicking, less policy. And again, policy is what moves markets, you know, politics is really what's the emotion and debate and rarely
results in policy.
So I think this is one of those instances where it's politics over policy. And so we're focusing a lot of our efforts and I think other investors are,
where is there a policy change underway that's going to be supportive, so it's largely trade. It's the Fed, and then it's U.S. consumer.
ASHER: Okay. So speaking of policy changes, you know, just a few weeks ago, investors were very sort of upbeat and hopeful about a trade deal
between the U.S. and China. And now we're sort of seeing some hesitancy both on the part of the President and also China coming out and saying,
listen, we want tariffs completely cancelled if we're going to sign Phase 1 of a trade deal.
So how concerned are markets about that?
PHILLIPS: That's right. I think China is -- you know, both sides are flexing still, right? There's been a lot of fits and starts since this
started. I think we've had 13-14 rounds of different high level talks with, you know, top officials in the administration.
So, you know, it looks like we're still moving forward. I think Trump is eager to get a deal. I think China senses that. And so they're trying to
ask for a little bit more here in the 11th hour, kind of like we saw back in May.
So the big risk is things break down, we see everyone walk away again and I think markets do react negatively to that, but I think Trump is very
incented and very much so wants a trade deal even if it's light and skinny Phase 1, whatever you want to call it.
[15:25:14]
ASHER: Even if it's piecemeal. All right. Ben Phillips live for us there. Thank you so much.
Trade fears hit European stocks as well and the major indices all closed lower with every single sector in the red. French and German stocks both
sensitive to trade fell two percent each.
People took to the streets after the price of oil jumped, now, hundreds maybe dead after a crackdown up in Iran. That story, next.
(COMMERCIAL BREAK)
ASHER: Hello, everyone, I'm Zain Asher. There's more QUEST MEANS BUSINESS in a moment when we will look at the worsening political crisis in Iran
where hundreds are reported killed as the government cracks down on protests over fuel hikes.
And how to cover for a presidential race when your boss is in the running. Bloomberg News grapples with its 2020 coverage.
Before that, though, these are the headlines we are following for you at this hour.
The U.S. President is expected to arrive in London soon for a NATO meeting marking the 70th Anniversary of the Alliance. Donald Trump is facing new
pressures this year, 2020 election campaign on the Impeachment Inquiry and it is unclear if he will take further swipes at NATO in what analysts say
could be an attempt to fire up his base back home.
A vigil has been held in London for the victims of Friday's terror attack. Prime Minister Boris Johnson attended alongside Labour Party leader Jeremy
Corbyn and the Mayor of London, Sadiq Khan. Jack Merritt and Saskia Jones had been attending an event linked to a prison rehabilitation program they
were involved in when they was stabbed to death by a man convicted on terrorism offenses. He was out on early release.
[15:30:10]
And the Prime Minister of Malta is resigning effective mid-January amid an investigation into murder of a prominent journalist and anti-corruption
crusader. Prime Minister Joseph Muscat has faced accusations of trying to protect his inner circle from investigators. He said Sunday, that he only
made decisions in the best interest of the case, but he acknowledged that some of those decisions were better than others.
And the U.N. Climate Change Conference opened in Madrid, Spain, Monday. Leaders are discussing whether to set up a funding mechanism for poor
countries experiencing loss and damage from climate change. So far, richer countries have resisted the idea, but U.S. Secretary-General says
vulnerable people are hurt first and worst.
And Typhoon Kammuri strengthened and made landfall in the Philippines main island, Monday night. The category 4 storm packing winds of nearly 215
kilometers per hour will bring rain and possible mudslides. Thousands of people have been evacuated and schools across the region are closed.
Up to 450 protesters have been killed in Iran according to "The New York Times". Demonstrations began in response to a 50 percent hike in the price
of oil. The government has not confirmed death toll numbers. Sam Kiley is in Abu Dhabi for us. So, Sam, this is really the deadliest unrest and most
violent protest we've seen in that country since the revolution 40 years ago.
Just walk us through just how brutal, how violent, how vicious authorities have been in terms of cracking down.
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the authorities have been brutal. Amnesty International saying that at least 208 people
that they have been able to verify have been killed. They say that the number could be a lot higher. I have to say, also, there has been a lot of
violence against the authorities with -- we've seen social media posts of film of in at least two cases demonstrators being shot by police after
being chased by those demonstrators with axes or machetes.
So, this is an increasingly tense, increasingly violent series of demonstrations that have spread right across Iran and the center of the
country in Tehran right out to the east, west, and particularly in the south where there have been reports of a very large number of casualties
following a demonstration on or around November the 25th.
And the reason people are a little vague about some of these statistics and dates even is that Iran has been subjected to an almost total internet
blackout both on mobile and on broadband connections. There is some limited connectivity has come back in the last 24 hours, but 3G mobile,
which is the means by which Iranians like they do around everywhere else in the world now communicate and get their messages out, particularly when it
involves these political movements, have been completely offline.
So, a lot of this information is only coming out in the last few days. But nonetheless, there has been very clear signs of and large numbers of people
in really very violent clashes right across the country. The government saying that, for example, 34 ambulances have been destroyed by people they
call vandals and thugs.
But the demonstrators also saying that they've been coming under live fire from security forces right across the country, Zain. But this is also
coming at a time, as you know, when there is demonstrations against Iranian influence in the Lebanon and particularly in Iraq recently. And of course,
a reaction -- a lot of this to economic hardship in Iran itself where in the middle of November, the government suddenly announced a 50 percent
increase in fuel prices.
And that is on top of a number of other very serious financial issues for the government following, of course, the U.S.-led sanctions against that
country in an effort to try to get it to return to the table and renegotiate the deal that was signed in 2015 to limit its capacity to
develop a nuclear industry, and allegedly also develop a nuclear weapon.
That is the American angle. From the Iranian perspective, this is also very much an organic response to hardship and 40 years of theocratic rule,
Zain.
ASHER: All right, Sam Kiley live for us there, thank you so much. Demonstrators are protesting the oil price hike announced two weeks ago.
Iranians are also feeling the effects of an economy squeezed by U.S. sanctions. Growth has fallen even as European countries try to help
support trade with Iran.
[15:35:00]
Protests are -- protesters rather are directing their anger at their own leaders. Karim Sadjadpour is a senior fellow at the Carnegie Endowment for
International Peace, he joins us live now from Washington. Karim, thank you so much for being with us. So just walk us through where all of this
started. We know that gasoline price hikes were imposed up to 50 percent and protesters are angry about that.
But just talk to us about how much the Iranian economy has really suffered after western sanctions.
KARIM SADJADPOUR, SENIOR FELLOW, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Well, as you mentioned, the protests were triggered by a rise in
gasoline prices, but they've been sustained by much deeper grievances, a long history of repression and corruption in Iran, which predates the U.S.
economic sanctions.
The sanctions of the Trump administration have certainly worsened Iran's economic situation according to the IMF. Iran's economic growth rate in
the upcoming year is expected to be negative 10 percent. And I think what's notable when you listen to the slogans of the protesters, their ire
is directed at their own leadership, at corruption and repression.
I haven't heard any slogans of people blaming the United States, U.S. imperialism or economic sanctions. So, when you're actually living in
Iran, what's much more palpable for you is the corruption mismanagement around you.
ASHER: So, what are the other options that the Iranian leadership has in order to get the Iranian economy back on track beyond say, for example,
raising gas prices by 50 percent. Can they boost exports of non-oil goods like food and textiles for example, what are their other options?
SADJADPOUR: The hard reality for Iran's leadership is there's really no way for them to reverse their economic decline absent an eventual deal with
the United States. And the reason why that is, is that the way U.S. sanctions are set up, it essentially forces companies and countries around
the world to make a simple choice, and that is, you want to do business with America or do you want to do business with Iran?
And for the vast majority of companies and countries around the world, that's a -- that's a very easy decision. They may import oil and gas from
Iran, but they can get that oil and gas from other countries like Saudi Arabia whereas the United States is an indispensable economic partner.
So, I think that the regime in Iran may calculate that they can sustain this level of economic duress until November of 2020, and hope that another
president is elected in the United States. But where they're going to continue to face these protests and deep-seated economic, political and
social grievances.
ASHER: You mentioned that the IMF has projected that Iranian economy will contract by about 10 percent in the coming year. Also inflation in that
country is in double-digits, I think it's 37 percent or so. What does that mean for the average Iranian living in Iran just in terms of their own
economic difficulties from a day-to-day perspective?
SADJADPOUR: You know, it depends for every person, it's different in Iran, but certainly, you hear stories of people saying, you know, they went to
the market and the prices of basic food stuffs had doubled compared to the previous week. And often times, Iran's response to protests exacerbates
the economic challenges the country is facing.
So, to take an example, they shut down the internet this time so they could kill people and detain people in the dark, so the world wouldn't see. So,
over -- as many as 400 people have been killed, as many as 7,000 have been imprisoned. They shut off the internet, and that onto itself has had a
huge economic impact because millions of Iranians said, we couldn't conduct any business.
WhatsApp was shut down, the internet was shut down, and they couldn't communicate with one another, they couldn't communicate with the outside
world. So, the measures that Iran takes to suppress popular economic discontent often times exacerbates economic discontent.
ASHER: All right, Karim, thank you so much for being with us, appreciate it.
SADJADPOUR: Thank you.
ASHER: All right, still to come here on QUEST MEANS BUSINESS, "Bloomberg" reporters are being banned -- the Trump campaign is accusing the network of
bias because it is refusing to investigate its billionaire boss and the president's 2020 political rivals as well. That story, next.
(COMMERCIAL BREAK)
[15:40:00]
ASHER: President Trump's 2020 campaign says it's revoking the press credentials of "Bloomberg News" reporters at its events. It comes after
the news outlet said it would not investigate its billionaire owner Mike Bloomberg or the other Democratic candidates, but will still investigate
the president.
Bloomberg joined the race for the Democratic presidential nomination last month. Oliver Darcy joins us live now. So, I mean, here's the thing. I
mean, this is sort of unprecedented because we haven't really seen a situation where a media mogul is running for president. There is a massive
conflict of interest here. What do you make of what the Trump administration is saying with "Bloomberg News"?
OLIVER DARCY, CNN BUSINESS SENIOR MEDIA REPORTER: Well, it's really awkward for one, right? So, "Bloomberg News" has had this longstanding
policy where they don't investigate the personal activities of Michael Bloomberg. And now that he is in the race, they're still saying we're
going to continue this tradition of not investigating Michael Bloomberg, and we're going to extend that courtesy to his rivals in the Democratic
nomination race.
That said, they said earlier that they're going to still continue to investigate the Trump administration because they're running the
government. And so, this is what really has prompted the fury today from the Trump campaign. They're saying it's unfair, you're not going to
investigate the Democrats but you're going to continue to investigate us.
ASHER: And the anger is somewhat justified?
DARCY: Totally. I mean, it makes a lot of sense in this case because they are going to continue investigating the Trump administration while not
investigating the Democrats, and it's really awkward for everyone. There's no real good solution here, I don't think from "Bloomberg" other than to
say that we're going to cover "Bloomberg" like any other candidate and look into him, look into the other candidates.
But that's not what they're doing. They're trying to avoid at all costs investigating Michael Bloomberg.
ASHER: And you actually pointed out something very interesting and smart to me during the commercial break. And Jeff Bezos owns "The Washington
Post" and they investigate him. They treat him like anybody else, especially, you know, with that whole situation with the divorce from his
wife --
DARCY: Yes --
ASHER: And those lewd text messages. So --
DARCY: It's really the tale of two billionaires, right? So, Jeff Bezos bought "The Washington Post" a few years ago, and he has totally fire-
walled himself off from the editorial procedures of the newspaper. He allows them to investigate Amazon, they publish investigative reports into
Amazon, they've covered the personal life of Jeff Bezos.
And Michael Bloomberg is totally different, totally different approach. He is intertwined with "Bloomberg News", he has used Bloomberg to kind of get
his views out there through the editorial board. And he has prohibited them from investigating his activities. And so, it's a completely
different approach, and it really shows, you know, how one billionaire is operating --
[15:45:00]
ASHER: I mean, this -- you know, Mike Bloomberg, who knows how well --
DARCY: Yes --
ASHER: He's going to do. I mean, some people obviously doubt his prospects. But if he really sort of climbs up in the polls, and things
start to look optimistic for him, not in terms of necessarily getting the nomination, but if he starts to do reasonably well, this could present a
huge dilemma for the media company.
DARCY: Yes, and this is just starting. This policy is just underway and it's already presenting some problems for them. If he does somehow end up
becoming the nominee -- I mean, they're -- they said -- we asked about the position here and the policy, they're going to have to. There is no way
they can get --
ASHER: Of course --
DARCY: Away with not investigating Michael Bloomberg. I think the weeks to come, it's just going to -- the pressure is just going to continue to
build. "Bloomberg News" right now, the editor-in-chief put out a statement saying, they're going to continue to treat Trump fairly. But already some
problems, right?
Like a "Bloomberg News" reporter frequently travels on Air Force One with the president. So, now, we're unclear what's going to happen when there is
a "Bloomberg News" reporter flying to a rally. And are they going to physically prevent the "Bloomberg News" reporter from entering the rally?
Like how is this going to work? It just -- you know, already presenting problems and it's only really just underway, this policy.
ASHER: Oliver Darcy live for us, thank you so much.
DARCY: Thank you.
ASHER: Meantime, another of President Donald Trump's rivals, House Speaker Nancy Pelosi was speaking in Madrid on the first day of the two-week Global
Climate Summit known as COP 25, it comes after the president gave formal notice of the U.S. withdrawal from the Paris Climate Treaty last month.
Pelosi says the United States is still committed to the target set by the 2015 agreement.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D-CA): For future generations. This is a mission. This is a passion. This is a scientifically-based approach to all of that
--
(CLEARS THROAT)
Excuse me. And we are here to say to all of you, on behalf of the House of Representatives and the Congress of the United States, we're still in it.
We're still in it.
(END VIDEO CLIP)
ASHER: Reducing carbon emissions is key to the targets in the Paris Climate Agreement. One carbon capture company has developed a refreshing
way to put all that CO2 to good use. John Defterios has more in this edition of "THE GLOBAL ENERGY CHALLENGE".
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): It works like a giant sponge, built by Climeworks, the world's first commercial carbon-
catcher machine. It pours vacuums, siphoning carbon-dioxide from this Swiss valley's ambient air.
LOUISE CHARLES, COMMUNICATIONS MANAGER, CLIMEWORKS: Inside the collector, we have a built-in material which is highly selective, so it captures just
CO2 on its surface. Once it's fully saturated, then we close each of the collectors. It's heated and the CO2 thereby can be collected and
delivered.
JAN WURZBACHER, FOUNDER & CHIEF EXECUTIVE OFFICER, CLIMEWORKS: Our dream is removing substantial amounts of CO2 from the atmosphere. Capturing 1
percent of global emissions. That's a vision. Even more needs to be done, but there will not be one single solution, and not one single company.
That is clear.
DEFTERIOS: The question remains what exactly do you do with the CO2 once it's been captured? In Iceland, Climeworks is working on a long-term
solution in the form of an industrial process called CarbFix.
WURZBACHER: They inject CO2 in the underground result of rock formations where the CO2 is turned into stone within two years. So, it reacts with
this underground rock, and is then mineralized and is safely stored with no risk of leakage.
DEFTERIOS: The transition to this permanent storage will not be immediate though. So, in the meantime, Climeworks has found a use for their captured
CO2 in an existing market, soda. Coca-Cola Switzerland is using the gas to carbonate their sparkling alpine mineral water.
PATRICK WITTWEILER, HEAD OF SUSTAINABILITY, COCA-COLA SWITZERLAND: There is actually no difference to a common standard CO2. So the bubbles, they
are delivered from the Climeworks installation in a liquid form. The CO2 goes then into the mixer unit and there, the CO2 is dissolved in the
product, even in a bottle(ph).
And it's a technology which fights against the climate change and, therefore, yes, we strongly believe it makes sense.
DEFTERIOS: The carbonation from the soft drinks will, of course, re-enter the atmosphere once the bottle is opened. But buying from big industry are
a crucial stepping stone if companies like Climeworks are to succeed in the reign of making carbon capture a profitable business. John Defterios, CNN.
(END VIDEOTAPE)
ASHER: Chinese cities are already among the most veiled in the world. Now, the government is mandating facial scans from anyone registering a new
phone number. Privacy experts are sounding the alarm. That story, next.
(COMMERCIAL BREAK)
[15:50:00]
ASHER: Welcome back. China is already one of the most tightly-controlled online environments in the world. Now facial recognition checks are about
to become even more ubiquitous. New rules have gone into place requiring anyone registering a new mobile phone number to submit scans of their face.
Beijing says it's necessary to crack down on fraud, it's raising alarms about how it could be used by the country's vast surveillance state.
Shelly Palmer is here. Shelly, what do you make of this?
SHELLY PALMER, CHIEF EXECUTIVE OFFICER, THE PALMER GROUP: Wow, well, look, facial recognition is very emotional for people because everyone knows what
a face is and everybody has used it in a Facebook or what have you. But truly, when you go to get a SIM card in China, you give in your passport if
you are a foreign national, and if you live in China, you need to also identify yourself.
So, they already know exactly who you are and who owns the phone.
ASHER: Yes --
PALMER: And in practice, they know exactly where that phone is all of the time, and what it's doing. There is no privacy in China as we understand
it in the United States. So, yes, I understand this is -- sounds terrible --
ASHER: The facial recognition --
PALMER: Probably is terrible --
ASHER: Software goes one step beyond just --
PALMER: Sure --
ASHER: A passport or a driver's license, say for example.
PALMER: Absolutely. Well, in one way it does. In that, you could then use a camera to recognize you as opposed to having to take your
fingerprints or bring you into custody or ask for your papers, so, yes, you'd be able to track people's movements. But the phone is already
tracked.
ASHER: Right --
PALMER: So, you're already carrying your phone -- so, to think that, oh, they're going to see my face and know it's me, they already know your phone
is in your pocket, they know it's you, they know exactly where you are. So, the idea that the face thing matters that much, it's psychological.
But it's in practice from a data perspective, not very much different.
ASHER: So, from the government's perspective, why are they saying -- why are they saying they need facial recognition then?
PALMER: I'm not the Chinese government, so I can't tell you why they think, but I do know that the level of data science that goes on in China
across the board with machine intelligence from artificial intelligence and all the different training sets they have, it's so different than it is
here because the government has access to all of the data --
ASHER: That's what I'm saying --
PALMER: So all their behaviors get fed into a system in a way that they can't in the United States and certainly can't in Europe. So, it gives
China an opportunity to advance -- again, take another kind of quantum leap in machine intelligence and learning around that subject.
ASHER: But they have said that, you know, this is going to be helpful for security reasons. I mean --
PALMER: Sure.
ASHER: Are there actually legitimate reasons --
PALMER: Of course, there are --
ASHER: Why they might want it?
PALMER: Yes, of course, there are legitimate reasons. They just haven't - - have to do with a big brother state.
ASHER: OK --
(LAUGHTER)
[15:55:00]
PALMER: Because if you're in a crowd of people and there are cameras looking at you and know -- you know who everybody is, if you have a -- if
you're wanted by the authorities, they'll be easily able to find you. You're probably not holding your smartphone at that point, certainly not a
registered one.
You can't get rid of your face. There are of course big brother reasons to have it.
ASHER: It is sort of like "CCTV" footage in the U.K., for example?
PALMER: Yes.
ASHER: I mean, there are legitimate reasons, but doesn't stop it from necessarily being controversial.
PALMER: Look in San Francisco, the absolute epicenter of technological innovation in the United States, they went crazy when they -- they now, you
have to get a subpoena, you have to get a warrant to get a security camera -- to get a footage from a security camera.
And they passed ordinances that say you just can't willy-nilly just get that information because they are trying to respect the level of privacy.
And they're also very well aware of how dangerous this could be in the wrong hands.
ASHER: Right --
PALMER: But the Chinese government is either the right hands or wrong hands depending on who you think you are. So, they're just going to have
that data anyway.
ASHER: All right, Shelly Palmer live for us, thank you so much. And now, moments left to trade on Wall Street, the Dow is off by more than 200
points. There was an initial gain at the open, then investor confidence plunged after data showed that U.S. manufacturing shrunk again in November.
It's the fourth consecutive month of construction.
That is QUEST MEANS BUSINESS, I'm Zain Asher in New York.
(COMMERCIAL BREAK)
JAKE TAPPER, HOST, THE LEAD: Welcome to THE LEAD, White House in crisis, I'm Jake Tapper. We begin with breaking news in the politics lead.
Tonight, the House Intelligence Committee will allow its members to review the report that Democratic staffers have been writing, detailing the
president's role in the Ukraine scandal, meaning tonight, we're going to learn about the committee's findings from this phase of the inquiry.
But right now, we're learning that Republican staffers have prepared a report of their own. And CNN's Manu Raju has reviewed it. Manu, what can
you tell us?
MANU RAJU, CNN CONGRESSIONAL CORRESPONDENT: Well, it's 123-page report, essentially rebutting the Democratic allegations that the president abused
his office, engaged in bribery, in his handling with Ukraine, pushed and then withheld foreign aid to -- military aid to Ukraine at the same time as
pushing the -- for us this foreign power to investigate his political rival.
Instead, what the Republicans are saying that everything the president did was -- had a reason. They're saying to the president, it was within his
rights to push for Ukraine to do just that because of -- it's his concern about the history of corruption in the country.
END
