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Quest Means Business

Biden Says Russia Could Invade Ukraine Within The Next Few Days; Ukrainian Forces And Separatists Report Shellfire In Donbas Region; Dow Drops Sharply On Russia-Ukraine Fears; Trump And Family Must Sit For Depositions In New York Probe; Russia Says Ukraine Not Adhering To Minsk Agreement; Oil Prices Down But Still Above $90; Impact Of IMF Subsidy Cuts; Argentina's Economic Lessons. Aired 3-4p ET

Aired February 17, 2022 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:00:27]

RICHARD QUEST, CNN BUSINESS ANCHOR: Live from Buenos Aires, it's a special hour of program from Argentina tonight, and we will of course, have all the

very latest details and keep you fully up to date with what is happening in Ukraine.

The markets are down some one percent as investors are worried about the potential European conflict and what that would mean. We will give you all

the details on that. They are now down one and a half percent as you can see, markets are now the lowest point of the day, we'll watch closely as

the hour progressed.

The events that have been driving all of this: The U.S. is issuing new warnings at the United Nations, Russia, it says it's laying a groundwork to

justify starting a war in Ukraine, a false flag affair.

There is renewed shelling in Eastern Ukraine. The Ukrainian Army is saying separatists hit a kindergarten.

We're in Argentina today where we are looking at the economy from -- and we're getting a lesson from the street market to the boardroom. It's a

lesson on inflation. It's all in this Special Edition of QUEST MEANS BUSINESS, which is live from Buenos Aires on Thursday, February the 17th.

I'm RICHARD QUEST and in Buenos Aires, I mean business.

Good evening to you from the Argentinian capital. It's good to be here, a chance for us to check the economic temperature in another part of the

world that we don't often get to and on the program tonight, you'll hear what's going on, the CEO of Banco Galicia, who says Argentina's politicians

are finally having to commit to change.

You'll hear an exclusive interview with two heads of major oil companies who sit down together, two CEOs sitting together for the first time in a

joint interview, and they will debate the best way to handle energy transition.

We start of course, with the events of the day, as it relates to Russia and Ukraine.

The U.S. President Biden and the Secretary General of NATO Stoltenberg have both been giving speeches and talking, warning that Russia could invade

Ukraine at any moment. The U.S. says Moscow is lying. It doesn't get more blunt than that.

At the Security Council at the United Nations, the U.S. Secretary of State Antony Blinken warned Russia may fabricate a pretext to invade what some

people are calling a false flag affair by claiming what is happening to Russian citizens or those of Russian descent in the eastern part of the

country, and the Secretary of State is urging Moscow to choose diplomacy.

(BEGIN VIDEO CLIP)

ANTONY BLINKEN, U.S. SECRETARY OF STATE: I'm mindful that some have called into question our information, recalling previous instances where

Intelligence ultimately did not bear out.

But let me be clear, I am here today not to start a war, but to prevent one.

(END VIDEO CLIP)

QUEST: For its part, today, Russia expelled the number two diplomat at its embassy in Washington. Not many details have been given about that. The

U.S. is describing the expulsion as escalatory and unprovoked.

And so to the region itself, where Ukrainian forces and separatists are blaming each other for a series of military skirmishes that took place in

the contested Donbas eastern part of the country. Ukraine says it was a kindergarten that was hit by the shelling. President Zelensky called it a

big provocation.

Our Clarissa Ward is embedded with the Ukrainian military and just sent this dispatch. She spoke earlier about it with John King.

(BEGIN VIDEOTAPE)

CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: So we are here at a kindergarten less than three miles away from the frontline where Ukrainian

authorities are telling us that pro-Russian separatists fired two shells on this kindergarten, there were 20 kids roughly here at the time. It happened

this morning between 8:00 AM and 9:00 AM. Fortunately, they were in a different part of the building.

You can see just behind me, I'm trying not to move too because our signal isn't great here, but you can see behind me the aftermath from where that

shell hit and three people who worked at the school, according to local authorities were treated for concussion. They have subsequently been

released from the hospital, the children were all safe, as I said.

[15:05:17]

But really, what this goes to show is an escalation of incidents here on this frontline. There had been regular ceasefire violations along these

frontlines, but you might see two or three a day. Ukrainian authorities say today, they have seen more than 30, and hitting a kindergarten is, of

course, a significant escalation. No sense that this was specifically targeted.

But I think what this gives you a sense of, John, is just how dangerous things can become very quickly, with you know, a lot of people believing

that the Russian side is looking for a pretext to launch some kind of an incursion.

And I should say, while we're here on the Ukrainian side, looking at this aftermath of a pro-Russian separatists shelling, on the other side of the

border, they're claiming that Ukrainian forces have been shelling them as well. And I don't know if you could hear that, there is some shelling in

the distance there that we can hear, as I mentioned, less than three miles from the frontline, but clearly a lot of fears that the situation is

certainly escalating.

(END VIDEOTAPE)

QUEST: So Clarissa Ward reporting there where there has already been some form of shelling and military activity. Now, according to Western

officials, most Russian troops near Ukraine are within 50 kilometers of the border.

The Russians, however, say that a Ukraine in NATO could start a war in Crimea. It gives you the picture and the complexity. Our Sam Kiley -- CNN's

Sam Kiley is in Kharkiv, on the eastern part of Ukraine, he joins me now.

Sam, the situation -- we've just heard from Clarissa about what might be happening in terms of shelling, but this idea that there could be some

false flag where the Russians say that their ethnic descended people are being persecuted gives them the excuse. You're in the region where this

would perhaps happen.

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, that was the excuse if you recall back in 2014, when the Russians seized the Crimean

Peninsula and backed rebels in the east of the country who have now got those two breakaway republics unrecognized by anybody, including in the

short term, even by Russia, who haven't recognized them as independent, at any rate, not yet.

Now, they have been talking up in the last -- this is the Russians -- particularly since the meeting between Vladimir Putin and the German

chancellor, Olaf Scholz a few days ago when rather in an offhand way, in response to Scholz mentioning the NATO intervention in the former

Yugoslavia to prevent the genocide of Bosnian Serbs there, Putin said: Well, we've got a genocide going on in Ukraine.

He made -- and the Russians have made allegation in the past, there isn't a shred of evidence for it, but they have been increasing references to the

persecution of Russian speakers in the east of the country, frequently describing the central government here as a Nazi government as Ukrainian

nationalists has done in the National Socialist in the Nazi mold, and so on.

For exactly that reason that is why these exchanges of fire that Clarissa has been reporting on are so dangerous because had there been a retaliation

by the Ukrainians and some significant loss of life in the Donbas, in the Russian-backed rebel area that could have been taken as a cause for the

Russians.

Now, this is a City in Kharkiv, for example, are 75 percent Russian speaking. My impression is wholehearted support for the Ukrainian state

even though people here speak as their mother tongue, the language of their rivals just across the border. We're only 25 miles from the border. There

is a massive armored army, a full scale army gathering just north of here, about 50 miles north, including surface missiles, helicopter gunships, and

some of the people here are fairly relaxed.

And that is because, and they all tell us this, they are used to being in a state of war because that's the state that the country has been in,

Richard, since 2014. They just see these latest issues as an uptick in tensions.

There isn't a flood for example, of the IT workers for which a Kharkiv is justifiably famous now out of the country. They are battening down. There

is no signs at all that they are packing up their laptops and hightailing it to other parts -- safer parts of the country or other parts of Europe.

They're all sticking around because they strongly believe that they need to kind of tough days out whilst these false allegations of genocide are being

put around -- Richard.

QUEST: Sam Kiley who is in Eastern Ukraine. Sam, thank you.

On to the business news agenda of the day.

The chief executive of Airbus is telling us that he doesn't see -- expect too much turbulence as a result of the geopolitical situation in that part

of the world that would affect the company per se.

[15:10:12]

It's the world's biggest plane maker and it reported record profits. The CEO was speaking to Anna Stewart and he said that as the world comes out of

the pandemic, so Airbus is well positioned to weather whatever storms come along.

(BEGIN VIDEO CLIP)

GUILLAUME FAURY, CEO, AIRBUS: On the short term, we are protected, we have organized ourselves to visibility buffers, and to be able to continue to

run the business, would we face a significant crisis, we would have to take steps for the future for the more long term. But we are not in that

situation. Obviously, we are monitoring the evolution of the tensions and the conflict like other businesses, but again, on the short term, we are

not depending on that situation to be able to deliver our output.

(END VIDEO CLIP)

QUEST: And so to the markets and how they are trading, which is obviously an important part of what is happening with the events in Ukraine and

Russia.

The markets are sliding and they are going down quite sharply today. I want to show you the Dow, I'm going to show you all three -- the Dow, the

NASDAQ, the triple stock. We're down one and three quarter percent. So we're at the lows of the day, and the impetus is down.

This is always the moment of the day when people start to position themselves to go overnight. And arguably whether you want to be long

overnight is a question which is why we're seeing the NASDAQ down two and a half percent, well under 13,000 or 14,000 now. Tech stocks are being the

worst hit.

So we will have data, and believe me, as the hour moves towards the close, any major movements on those markets, I'll bring them to you immediately.

QUEST MEANS BUSINESS tonight, we are in Buenos Aires in Argentina. I'm here filming for a "World of Wonder" and it's a perfect opportunity for us to

take not only the temperature of Argentina itself, actually, it's summer. But also, we can also talk about inflation. It's over 50 percent here and

the rest of us are just starting to learn what inflation looks like.

(COMMERCIAL BREAK)

QUEST: Welcome back. It's QUEST MEANS BUSINESS tonight in Buenos Aires in Argentina. I'm here because I've been filming "Quest's World of Wonder"

which you will be able to see next month, but it really does give us an excellent opportunity to visit a region in a country that's in the midst of

deep political and financial crises.

[15:15:13]

And more than that, it is having to make crucial decisions.

The country is famed for its beauty, called it the Paris of South America. It's also the epicenter of one of the worst financial crisis that's been

seen in two decades.

(BEGIN VIDEOTAPE)

QUEST (voice over) A century ago, Argentina was one of the richest countries in the world, wealthier than France or Germany, and almost twice

as prosperous as its former colonial ruler, Spain.

But decades of political unrest and policy missteps have transformed this country into a political and economic basket case, just about bankrupt.

At a time when many in the world are adjusting to a new reality of soaring inflation, here in Argentina, it's a way of life.

(on camera): Inflation rates of 50 percent or more are the norm here in Argentina, people have got used to it. In fact, discussing rising prices

here is pretty much like the way the rest of us talk about the morning traffic or the weather.

On the larger macroeconomic scale, there are great problems for the country. Argentina has defaulted on its sovereign debt nine times.

(voice over): Critics point to mismanagement by successive governments of all political stripes and policies, which have held back exports like oil,

auto parts, and most important of all, food.

(on camera): Argentinian farm exports are renowned the world over, beautiful wines and magnificent beef, reared on the Argentinian Pampas.

With the country's economy in such trouble and foreign exchange reserves dwindling, this extra revenue is increasingly important.

(voice over): Argentina's history is littered with revolutionary giants, from Che Guevara to Eva Peron, better known as Evita.

(VIDEO CLIP FROM "EVITA.")

QUEST (voice over): Today, politics here is dominated by what the locals call "La Grieta" or "The Rift." A familiar dance to many here, a push and a

pull between left and right. One reformist leader after another takes over only to reverse the policies of their predecessor. Politics remains in

disarray.

So Argentinians look to the football pitch for inspiration. National heroes here wear blue and white jerseys, Lionel Messi, and in Buenos Aires, its

famous son, Diego Maradona, who still holds a special place in Argentina hearts.

(on camera): Economic calamity is never very far away in Argentina, but the people have lived with this for decades, which is a great shame, since

the country has such natural riches and could be an economic powerhouse once again that would require deep political change to be made, and at the

moment, no one seems willing to take the sacrifice and may not have any choice.

(END VIDEOTAPE)

QUEST: Now, the year has begun with some optimism. Argentina has reached a Memorandum of Understanding to reschedule more than $40 billion worth of

debt. It is now going to a staff level agreement, and it's hoped that can be concluded in a matter of weeks. That will give the country breathing

time.

I put it to the CEO of Banco Galicia that in the end, real change is going to take hard decisions.

(BEGIN VIDEOTAPE)

QUEST (voice over): To get an idea of the full beauty and breadth of Buenos Aires, I went to visit the Office of Fabian Kon. As chief executive

of one of Argentina's largest private banks, I suspect he doesn't have a lot of time to look out of the window.

It's tough running a bank in an economy where inflation is at least 50 percent.

FABIAN KON, CEO, BANCO GALICIA: Approximately 50 million bank accounts in Argentina, which is more than the entire population.

QUEST: Cash is still king.

KON: Cash is still king. It's very normal that you receive a deposit for a social plan, and you go to the ATM, you take the money away and you spend

it cash.

So you're using the bank as a cashier.

The main cause -- the main root of all the problem is Argentinian State spending more money than it collects for the last 50 or 60 years. There is

great in Argentina, a lot of instabilities, creating the need of financing that money that you don't have and there are two ways to finance money in

Argentina.

[15:20:10]

One of them is getting loans, and you know, you know what happens with a loan, you go to the external market, you go to the I.M.F. and then you have

to refinance or you print money. If you go to the external loans, you have to be refinancing all the time. That is the situation and culture here at

the moment.

If you print money, you have high inflation, which is the other part of reality of Argentina today.

QUEST: The I.M.F. is looking at doing a staff level agreement at the moment, there's going to be no easy way out.

KON: Yes. But Argentina needs to start to a way of correcting of the main problem, which is reducing the fiscal deficit. So the agreement with I.M.F.

is creating for Argentina a path to reduce deficit and reduce money printing and that's what we will see in the next three years.

It's not going to be easy for the Argentinian population? No. Is that going to be easy for the Argentinian economy? No. But it is going to be good for

the medium term future.

QUEST: So you know, the old adage, I owe the bank $500.00, that's my problem. I owe the bank $500 million, that's the bank's problem. That is in

essence what the problem here in Argentina. You already owe IMF $44 billion.

KON: You're right. The main debt that I.M.F. has around the world is Argentina, it is the main debtor. So that's why what you're saying is

right, Argentina is a problem not only for Argentinians, but for the I.M.F. as well.

QUEST: When an agreement is reached, are you confident that the politicians in this country will be able to keep to that agreement, bearing

in mind, there is an election next year and if we look at the midterm elections, or we look at the congressional elections here, they suggest

disruption.

KON: No one wants to live in a country with more than 50 percent inflation per year, so my logic is saying that if you're a politician, you will

understand this, and you will provide for a solution for Argentinian economy. So I'm optimistic that this time, we will start the path of

reordering our economical structure.

QUEST: I hear you have a nice big lobby. You're trying to say what?

KON: This lobby, let me tell you something, it's open to people. If you're an Argentinian citizen, you can walk in. This Julio Le Parc is called a

kinetic artist. He basically does art with movement. His art move and have light. So from any position you are, you will see a different thing.

QUEST: If I take a dollar out my pocket and give it to you, then it will be how much?

KON: A hundred and five today, as a bank.

QUEST: If I get on the corner and talk to the chap around there in the back alley, he'll give me more than 200. So I go for dinner and anywhere

else in the world, I would just get out the corporate card and just put the card down and pay for dinner.

But here I'm thinking, I could get that half price if I meet around the corner and I get some pesos at the unofficial rate, which of course is not

legal, of course I know, so one wouldn't do it, but it creates a weirdness.

KON: Yes, it creates a weirdness and it is a reason for not growing, when you have these kinds of things. Another factor that you have to take into

account in the country is, are we growing? And in the last four years, half of the years, the GDP in Argentina was reduced and not growth. That's a

very big problem for Argentina.

Their GDP per capita is not growing for the last 20 years.

QUEST: You mix in the circles, the elite circles of government ministers, central bankers, particularly politicians, don't you ever just want to say

to them, stop spending. That's it. Stop spending. We know how to get rid of inflation.

KON: Yes, I want to say it and I said it. The real situation is that you have the senior citizens, you have the poor people, you have the works that

have to be done all over Argentina. You have investments to do and you have a law -- a need to provide. So the short term need to provide, it's good

for the medium term.

So we are confident that this time, I think that the population understood that we need a solution and the politicians understood that they need to

provide a solution in order to be elected in the future.

(END VIDEOTAPE)

QUEST: You weren't mishearing the CEO when he said inflation at more than 50 percent, arguably it is 60 percent, while inflation of course Argentina

is no longer alone. The United States, Europe and many other countries are now also seeing increasing inflation and measures that are needing to be

taken, increasing Fed rates, likely next month.

The Feds James Bullard told Julia Chatterley this morning that the Fed will do whatever is necessary to curb inflation.

(BEGIN VIDEO CLIP)

JAMES BULLARD, PRESIDENT, FEDERAL RESERVE BANK OF ST. LOUIS: I've suggested that a good target would be to have the funds rate or the policy

rate up at about a hundred basis points by July 1st, and that does mean we would have to move faster and more nimbly than we have in recent decades,

but I think that's probably the appropriate policy.

Now, we need some risk management in case this inflation does not moderate in the second half of this year.

(END VIDEO CLIP)

QUEST: So appropriate policy, well, here, inflation is more than 50 percent as I say. What does that mean in real life?

Francisco Fernandez-Fuentes (ph) and his fiancee, Florencia Prato (ph), well, we went out shopping because if you really want to know about

inflation, don't talk to James Bullard and others at the Fed or the Bank of England or the E.C.B., go shopping.

(BEGIN VIDEOTAPE)

QUEST: Look at this. Magnificent. Tell me about the sort of things you would find in going up in price here.

FLORENCIA PRATO, BRIDE-TO-BE: So for example, a very traditional dish here in Argentina, milanesa, if you would buy, peceto.

QUEST: Which is?

PRATO: Which is the kind of meat that we use to have milanesa. And it's 1,400 pesos. And last week, maybe it was 1,200.

QUEST: Really?

PRATO: So it changes all the time, and you kind of have to start to go to another kind of meat in order to do those milanesa, a cheaper --

QUEST: So there we have at 9,000. No, 960.

PRATO: Nine hundred and sixty. Yes.

QUEST: That's 960. So, that's a better cut.

PRATO: Yes.

QUEST: For the thousand, then you're working your way across.

PRATO: Yes, exactly. So you have to find alternatives to have sort of the same dish, but with cheaper meat.

FRANCISCO FERNANDEZ FUENTES, GROOM TO BE: This inflation rate about 50 percent, makes you spend all the peso you have because it's going to be

worth less tomorrow than it is today. And it is going to be worth even less the day after.

PRATO: So saving money is not practical. You have to spend it all because next month, it is going to be worth less than and you can't buy as much as

you bought last month with those pesos that are staying in your bank account, so you spend it off.

FERNANDEZ: For decades, Argentines have known that inflation will erode their savings, their salary. So what do they do? They turn to the dollar.

There is a sort of obsession with the dollar in Argentina.

QUEST: Let's go to fruit and veggies. There is a line there.

We will have a kilo of the finest peaches.

UNIDENTIFIED MALE: Peach?

QUEST: Yes. We're getting a good one. Two hundred and eighty, is it? Two mangoes.

FERNANDEZ-FUENTES: Okay.

QUEST: Those mangoes.

PRATO: (Speaking in foreign language.)

QUEST: There we go. Thank you very much. What aren't you buying now that has gotten so --

PRATO: Apricots, definitely like peaches.

QUEST: Yes?

PRATO: Not buying as much. They're really expensive, like 300 pesos a kilo, which is like four or five peaches. That definitely has changed.

QUEST: Muchos gracias.

FERNANDEZ-FUENTES: (Speaking in foreign language.)

QUEST: Right.

PRATO: So delicious.

FERNANDEZ-FUENTES: It is good peach.

QUEST: We are just about getting a taste of inflation in the north. For the first time in decades, we're seeing price rise. What would you say to

us? Because people in the North are saying, I go to the shops and suddenly, it is more expensive.

FERNANDEZ-FUENTES: They need to be smart about their purchasing decisions. They need to find a way to save money and to preserve the value of their

hard work. They have to get creative.

QUEST: You've lived with it all your life.

FERNANDEZ-FUENTES: Well, yes. Ever since I've been a teenager, I can think about inflation, and how things have gone up and they're going up and they

continue to go up, and maybe the saddest thing, we just get used to it. We got used to it.

QUEST: It eats away at your savings. It eats away at everything. It's like a rotting cancer, isn't it?

FERNANDEZ-FUENTES: It's a chronic disease that we have here in Argentina.

(END VIDEOTAPE)

QUEST: The reality of living with inflation. When we come back, we'll update you on Ukraine, of course. We'll keep you informed with the markets

and we'll have more from Buenos Aires.

QUEST MEANS BUSINESS. The Rio de Plata is over there, the river between here and Uruguay. A beautiful day, clear blue skies. Wonderful to be here.

(COMMERCIAL BREAK)

[15:30:00]

(MUSIC PLAYING)

QUEST: Breaking news in to CNN, let me update you.

A New York judge has ruled that former president Donald Trump must sit for deposition in the New York probe into the Trump Organization.

But president Trump's adult children, Ivanka and Don Jr., will also be forced to cooperate in the civil investigation brought by the New York

attorney general, Letitia James, who's probing potentially fraudulent asset valuations at the Trump Organization.

You'll recall this week that Trump's accountants have just said that they can no longer stand behind the last decade of work that they had done. And

the valuations could no longer be relied upon. We'll bring you more details on that as we move forward.

A reminder at the top of the news tonight, President Biden says that Russia's and the threat over Ukraine is very high and that Russia could

invade in the next several days.

The U.S. secretary of state, Antony Blinken, at the United Nations, has outlined Russia's potential plan of attack, a false flag if you will. And

he warns Kyiv could be a target and he's calling for diplomacy.

At the same time, in what the U.S. is calling an escalatory step, Moscow expelled the number two diplomat at the U.S. embassy. If an attack takes

place, one of the places from which it will become is Belarus.

Belarus and Russia are pretty much at one at the moment. In fact, the president of Belarus, Lukashenko, told our Fred Pleitgen today that they

were a united front, both Belarus and Russia, which perhaps raised eyebrows as well as this was a way of them moving forward. Fred Pleitgen is with me

now in Minsk in Belarus.

[15:35:00]

When he said that, the tone of the president's answers to you left you in no doubt about what?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: No doubt about the fact that he 100 percent stands behind Vladimir Putin, because that was

actually the question I put to him, is that, with the United States saying that it would actually has severe consequences, Richard, for Belarus, if

there was an attack launched from Belarusian territory, even if it was by Russian forces, whether or not he'd still support it, fully the course

Vladimir Putin had taken toward Ukraine.

He said that he fully did, that those two countries were operating as one, with that united force that you were talking about and that they would

support one another.

One of the things we have to keep in mind is the Belarusian president, Alexander Lukashenko, is very much a supporter of Vladimir Putin and also

got a lot of help from Vladimir Putin in 2020, with the big protests going on here in Belarus.

But also we saw today, Richard, some huge military maneuvers between the Belarusian and the Russian militaries and it certainly was a formidable

force we saw there. That's one of the things that really has the U.S. concerned.

You've got tens of thousands of Russian troops on the ground here in Belarus. The U.S. believes it easily could also march on into Ukraine if

there was a full-on invasion.

Now when I put that to Alexander Lukashenko, those concerns, he became a little unnerved. Here's what he said.

(BEGIN VIDEO CLIP)

ALEXANDER LUKASHENKO, BELARUSIAN PRESIDENT (through translator): You have to admit, if you have any shame at all, that you missed this period under

the eyes of the entire global community. You accused Belarus and Russia that we will invade Ukraine yesterday.

We didn't. So your intelligence and billions of dollars that you are spending on it are useless. At least admit this.

(END VIDEO CLIP)

PLEITGEN: Strong words there from Alexander Lukashenko. The Russians and the Belarusians are saying that these military maneuvers will go on until

Sunday. They will then end. And the Russian troops will then leave.

However, no timeline for them leaving has been given yet -- Richard.

QUEST: Fred Pleitgen, in Minsk, Fred, thank you, sir.

The Russia crisis is proving and showing the importance of energy and the fragility of the energy supply. Here in Argentina, after the break, we

bring together two CEOs, the state-owned oil company and the private oil company for their first joint interview. The future of energy, in a moment.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

[15:40:00]

(MUSIC PLAYING)

QUEST: The roller coaster that is oil prices continues with Russia and Ukraine. And today, it was up yesterday, down today. Brent and WTI both

fell some 2 percent. We're still above $90 and the fragility in the price at the first whiff of fighting would send that through the roof, we

believe.

Now to a rare event, so rare it has not happened before, an exclusive interview with two of Argentina' two leading oil CEOs, who've never sat

down for a joint interview together. It is the YPF, the state-owned oil company chairman and the Pan American Energy Group CEO.

We have much to discuss, of course, Argentina being an energy-producing country, very dependent on the price and also concerns about the future for

sustainability and a shift toward what's next.

(BEGIN VIDEOTAPE)

MARCOS BULGHERONI, GROUP CEO, PAN AMERICAN ENERGY: One thing I learned about the business is we always is have to look to the long term. We cannot

make decisions based on short term volatility.

So if I look at long term, clearly I see that, aside from the political effects, as you mention, Ukraine being the latest one, the biggest issue is

what are we, as an industry, and how are we going to react to the energy transition.

And, you know, we aim at being protagonist of this transition. And that will also help bring supply and security of supply in the long term.

QUEST: This idea of energy transition, I always think it's a bit like turkeys voting for Christmas. You know, you're disagreeing. You have a

reason --

(CROSSTALK)

PABLO GONZALEZ, CHAIRMAN AND PRESIDENT, YPF: No, not --

(through translator) -- I disagree with that figurative way of posing the problem. Oil and gas is what's going to finance energy transition.

If we don't invest in oil and gas, we can't make windmills, we can't make solar. I think the turkey should be happy because we're trying to give it a

life, let it live a little longer, in a happier way.

QUEST: The point it raises, though, is whether or not we can get to sustainable options in time. This is an economy that does make a lot of

money out of oil and gas.

BULGHERONI: I believe that we all have the same goal, which is to bring down emissions. Globally, that is what everybody wants to do.

But the energy transition, from my point of view -- and I think from the point of view of many in the industry -- is incorrectly seen as a one

solution fits all model. It is a heterogeneous solution that we need to look for, one where the energy makes of different regions, evolves over

time throughout the regions.

QUEST: If we look at the future, nonconventional methods -- I know you don't like the word "fracking" but you know --

BULGHERONI: Why not?

QUEST: Well, people get very touchy at that word.

But nonconventional methods, is that the future?

GONZALES (through translator): It is the present, it is part of reality. Argentina, has, in Vaca Muerta, the second largest nonconventional gas

reserve in the world. In the case of YPF, we've grown in nonconventional production almost 65 percent year over year.

Since the Industrial Revolution, all industrial activity has always polluted and generated some controversy. I think you have to be aware of

the rational and reasonable exploitation of resources or else there is no development.

QUEST: It's expected that part of the IMF agreement will be reduction in oil subsidies.

BULGHERONI: I think it's important to discriminate in this sense, because the subsidies are for the consumption of gas and the consumption of

electricity.

QUEST: It will raise the prices.

BULGHERONI: Irrespective of the subsidies, the real issue is that, as producers -- and we're mainly here sitting as oil and gas producers -- what

one would hope to see is a market-based pricing that will incentivize the production of oil and gas.

In turn, that will increase production, will create jobs and, in turn, magically, you will, hopefully, see us fighting for prices to get the same

clients. And the price will go down.

QUEST: That's a magnificent economic treatise on the price of oil.

[15:45:00]

QUEST: Which basically takes us from here to there but over a long period of time. What I'm saying is, you're about to get clobbered at this end.

BULGHERONI: But Richard, Rome wasn't built in one day, right?

(CROSSTALK)

(LAUGHTER)

QUEST: Right. So a final question to you.

How difficult is it to run very large companies, in an economy like Argentina, that's seemingly just on the brink of bankruptcy and where

politics is so febrile (ph) and so difficult?

GONZALES (through translator): What is not good is the intervention of bad politics. Politics can give us tools to boost the industry. Good politics

helps.

We have politics that must accompany growth and it requires us to do it. We have been able to show results with YPF and Pan American Energy. I think it

has done well. Last year, we had very good results.

BULGHERONI: There is nowhere in the world where business is easy to do. One seems to fall into the preface that the grass is always greener on the

other side of the fence.

I'm a third generation oils man and, throughout the life of our business, we've seen many different governments. And the real solution has always

been to look at the long term and to have a deep commitment for investment, because, at the end of the day, that is the most important tool within your

toolkit as a business man.

(END VIDEOTAPE)

QUEST: The CEOs in the energy business.

(MUSIC PLAYING)

QUEST (voice-over): After the break, I try my hand at sapo, which is a game involving throwing things at frogs -- well, not real frogs but you'll

see what I mean in just a moment. Also (INAUDIBLE) talking economics. It's QUEST MEANS BUSINESS, in Buenos Aires.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: Today you have the water, the Casa Rosada, which is the presidential palace, of which much ado and, well, Patrick Gillespie is with

me, who's the Argentinian reporter at Bloomberg News.

[15:50:00]

We're looking at the Casa Rosada. It's going to be presidential elections next year.

PATRICK GILLESPIE, BLOOMBERG NEWS CORRESPONDENT: Yes.

QUEST: And the country is in as much political turmoil, if you will, as economic.

GILLESPIE: Richard, let's take a step back. Argentina is coming out of three years of recession, it was one of the worst economic crises in the

history's long history of crises. It came out of recession last year.

But you still have, as you mentioned earlier, 50 percent inflation and 40 percent of Argentinians living in poverty. So you have a very delicate

situation. And looking at the political and economic agenda ahead, the government, in the next month or so, is defining an IMF agreement, a record

bailout with the International Monetary Fund, that will define the political and economic agenda.

QUEST: All right, but that economic bailout, at 44 billion is what they already owe, 50-55 odd billion will be the restructuring, unless there's

fundamental change all you're doing is exchanging old debt for new.

GILLESPIE: There's certainly a concern that this IMF agreement doesn't have enough teeth in it to fix the structural problems in Argentina and it

will only push out the debt payments 4-10 years, not enough to really address the problems of constant fiscal deficits, money printing and high

inflation.

QUEST: We know how to cure those, cut back on fiscal deficit, stop the money printing and inflation will eventually come down (ph) -- but it will

cause pain.

GILLESPIE: It would cause pain certainly in the short term and this is a society of short-termism. It's called corta placismo. It's a country that's

honestly always thinking about -- with 50 percent in inflation, it's very difficult to project in the medium term, long-term.

So it's a country that politically is very polarized and a society that's always thinking about tomorrow, spending its money before it's worth less

and less.

QUEST: So what's the answer?

I realize if you had the answer, you wouldn't be here talking to me but doing something more useful.

What's the answer?

GILLESPIE: The country needs to find basic concepts that both sides of the political aisle, despite their differences, what's called the political

divide, despite their differences, they're willing to get behind and say, these five, six things, we're not going to get rid of them.

Central bank independence, that's an issue that the central bank here is not independent like in many countries. That's an issue the two sides are

trying to debate.

QUEST: But let's take that, so you have the Kirchners and (INAUDIBLE) as vice president, Cristina Kirchner. You have Matt Quinn (ph), came in with

great -- and one thought this might the one.

GILLESPIE: The Wall Street darling for a long time and --

(CROSSTALK)

GILLESPIE: -- and Argentina is now going back to a financial pariah. It will be interesting in the next election, is if Macri's coalition, now led

by the mayor of Buenos Aires, among others, can return to power but with a more center-focused voter base and not so much campaigning for his base

that's just 20-30 percent of voters.

QUEST: What about the extreme right?

There's a talk of populism and that taking root here.

Do you see that?

GILLESPIE: There has been emergence of some far right figures here, who want completely economically liberal policies. They have risen in

prominence by winning midterm elections, some seats in the house but they still are not part of the big coalitions that are really governing the

country.

QUEST: Finally, you and I note, from the world with your days at CNN, now you're here with Bloomberg News, what's it like to live here in Buenos

Aires?

GILLESPIE: It's a beautiful place, great; the people are extremely kind and friendly, mucho calidez, as we would say in Spanish. The country has a

highly educated society, amazing weather, amazing natural resources. We just wish the economy could get itself together as well.

QUEST: Good to see you sir, good to see you looking well, thank you.

Patrick Gillespie from Bloomberg.

Now you know, when I travel, I like to have a go at the local game, whatever it might be, have a try at throwing this or doing that, whatever

the locals are doing, I want to try it. And so it was, I was on the ranch outside Buenos Aires with the gauchos and I tried my hand at sapo. It's a

game where you throw something at a tin frog. You try to hit something and you may succeed or not -- or you cheat.

(BEGIN VIDEO CLIP)

(MUSIC PLAYING)

JUAN PABLO VIAGGIO, EL OMBU ESTANCIA: You have (INAUDIBLE) that we call sapo.

QUEST: It's a game.

VIAGGIO: It's a game, yes. Sapo means frog in English. Yes. Frog. Here you have a frog. So you have some coins, yes. And you have to put the same

distance and shoot the coin and try to put it the sapo -- the old lady, yes.

Good luck.

No, nothing.

Ah!

QUEST: You have played this before.

UNIDENTIFIED MALE: It needs to be lower rather than lobbed high.

QUEST: Everybody's an expert.

Right.

(CROSSTALK)

QUEST: Ah!

VIAGGIO: No. No. No.

(LAUGHTER)

[15:55:00]

QUEST: I'm feeling it.

VIAGGIO: Yes.

QUEST: I'm feeling it.

And I felt it.

Last one. Last game.

(CROSSTALK)

VIAGGIO: I'm near.

QUEST: Yes, but not near enough.

UNIDENTIFIED MALE: No and ...

(LAUGHTER)

QUEST: I still can't even win when I cheat.

(END VIDEO CLIP)

QUEST: Story of my life, can't win even when I cheat.

Look at the markets, in a rather bad way today, look at how the Dow is trading at the moment and, after the break, we'll take a "Profitable

Moment," with the lows of the day, off 1.75 percent. QUEST MEANS BUSINESS.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: Tonight's "Profitable Moment" from Argentina: I have a confession to make, a sort of resentment; not an anger, perhaps a frustration, as I'm

going around Buenos Aires in this country.

It's magnificent. The place is beautiful. The food is excellent. The people are delightful. I won't try to practice any Spanish like Patrick Gillespie.

It's just a phenomenal place to be. And then you also realize the phenomenon is also an economic basket case.

The country is essentially bankrupt. It's getting money from the IMF and it's having to reschedule loans. And the poverty rate is obscene in this

country. And yet they can't agree. They can't agree on policies, they can't agree on politics, they can't agree on economics and it's been going on for

decades.

It begs the question, so what happens?

Well, no one really knows, because everybody's muddled through. But as we face inflation of say 6 percent or 7 percent and the Fed is immediately,

you heard James Bullard, will do immediately whatever it takes, here, inflation is 50-60 percent, imagine that.

You heard on this program tonight. People can't go out shopping and buy the same thing this week they did last because of the changes. And seemingly no

one wants to do anything about it except argue and bicker about what's the best policy.

I don't have a solution. Believe me, if I did, I wouldn't be standing here, either. But I can certainly feel that element of resentment and frustration

that the economics are so dreadful and the politics are so poisoned in a country that's so beautiful.

Now I do need to show you what's happening with the markets before I love you and leave you tonight from Buenos Aires. It's a pretty awful day.

You'll see on the triple stack and on the Dow, the markets are sharply lower. We're at the worst of the day on all of them, down nearly 2 percent.

And the Nasdaq is down nearly 3 percent so that's all on the back of Ukraine and what's happening over there.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Buenos Aires, Argentina. Whatever you're up in the hours ahead. I hope it's

profitable. I'll be back in New York next week.

END