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Quest Means Business

Fed Raises Interest Rates Amid Uncertainty Over Ukraine; Russia Hits Deadline For Dollar Bond Payments; War In Ukraine Could Lead To Food Shortage; U.S. Responds To Ukrainian President's Plea For Aid; Zelenskyy: Talks With Russia Starting To Sound "More Realistic"; Ukrainian Deputy Prime Minister: It's Not About Politics, It's About Survival; Boris Johnson Visits UAE, Saudi Arabia, To Find Alternatives To Russian Energy; Fed Raises Interest Rates Amid Uncertainty Over Ukraine; Chinese Stocks Soar As Government Announces New Stimulus. Aired 4-5p ET

Aired March 16, 2022 - 16:00   ET



RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Simply weird, quite perhaps inexplicable, pick the gavels up. No, I'm sorry. That's a rather tepid

gavel for a strong day on Wall Street at 519 points and you can see, we started good, then it went away, then it came back, and the reason the

markets have been hanging on every word from the Federal Reserve.

The markets: There's a main economic event of the day. One down and six to go. The U.S. Fed signals it is planning to raise rates at every meeting

this year to tackle inflation.

Moscow tries to pay its foreign creditors from frozen dollar accounts.

And Beijing makes a rare move to soothe investors' nerves, as COVID lockdowns are impacting the economy.

It is an extremely busy day. We have a busy hour, live from New York on Wednesday, March 16th. I'm Richard Quest and I mean business.

Good evening, the cycle of rising U.S. interest rates has begun and the Federal Reserve is girding for a drawn out fight against inflation. And the

war of Ukraine is emerging as a serious threat to the U.S. economy.

The Dow initially shed all its gains after the Fed announcement, which postulated six more quarter percent rate hikes this year, but the market

had a second thought, you can see, and it came back and closed near, if not above session highs. We'll analyze that in a moment.

The chair Jay Powell warned, the impact of the current conflict in Ukraine was serious.


JEROME POWELL, CHAIRMAN, U.S. FEDERAL RESERVE: The implications of Russia's invasion of Ukraine for the U.S. economy are highly uncertain. In addition

to the direct effects from higher global oil and commodity prices, the invasion and related events may restrain economic activity abroad, and

further disrupt supply chains, which would create spillovers to the U.S. economy through trade and other channels.

The volatility in the financial markets, particularly if sustained, could also act to tighten credit conditions and affect the real economy.


QUEST: Now, this is the Fed's statement that was released today. This is an analysis of the difference between the last Fed meeting and this one and

the changes in the statement, and when you look at what they've said in this meeting, well, we're pretty good at reading between the lines.

This is what they said. They talked about still elevated inflation amid broader price pressures. What does that mean? It means inflation is no

longer considered to be transitory, inflation is here for the time being and needs to be attacked.

They said the implications of the invasion of Ukraine were highly uncertain. This is a new reference, of course; when they last met, Ukraine

war hadn't begun, but it means that the war is now the biggest worry, not the pandemic. Public health issues only gets one reference towards the end.

And it said the Fed anticipates, quote, "Ongoing increases in the target range will be appropriate." In plain language, rates are going to continue

going up. The Fed is in it for the long haul. This committee will take no risks with entrenched inflation.

Matt Egan is with us now. It seems counter intuitive, Matt, to raise rates at a time of war when there are so many uncertainties. But Powell was

basically saying, forget it, we've got a job to do.

MATT EGAN, CNN REPORTER: Right. Richard, the Fed didn't really have any choices here. You're right, it doesn't really make sense in a vacuum to be

raising interest rates at a time when the economy is slowing down and there are so many uncertainties, given the war in Ukraine.

But inflation is really, really hot right now. It's on fire.

And so the good news is that the Fed is stepping in acting as the firefighter and they are going to try to put this inflation fire out. I

think the bad news is there's this sense that at a minimum, they are late to this inflation fight.

And sure, Jerome Powell, he said as much. I mean, he said with the benefit of hindsight, it would have been appropriate to move earlier. I mean, he

said that much is obvious.

Now, I wouldn't bet against the Fed's ability to catch up to inflation. They can raise interest rates more aggressively. I think the question that

is on everyone's mind is whether or not they can move interest rates aggressively enough to catch up to inflation without also sinking the

economy during a time of significant uncertainty -- Richard.


QUEST: Look at the day's market movements, though. If we factor in that the quarter point rise was well-telegraphed, and we knew it was coming. So we

get this two o'clock announcement. The market tumbles out of bed. I'm guessing that the prospect of six rate rises this year, but then it

recovers. So what happens?

EGAN: Yes, Richard, I mean, it looks like a pretty nice endorsement for Jerome Powell's approach here to fighting inflation. The fact that the

Federal Reserve is able to end this zero interest rate policy for almost exactly two years, and to do so and have the market rise sharply, I think

is pretty impressive.

I mean, we do know, though, that Fed announcements can trigger some significant volatility. So I don't know that we want to read too much into

this, and let's not forget, markets are up big today.

But they're also down pretty significantly this year and that's largely because of inflation, concerns about Fed policy, concerns about this war in

Ukraine. So certainly a nice day, I think if you're Jerome Powell, you should pat yourself on the on the back for being able to do this without

spooking the market.

Again, we need to see what happens going forward, because if inflation doesn't start to come down, then you're going to see investors become more

concerned about what the Fed has to do to knock it down.

QUEST: I was looking at the dot-plot, which I have here. And I was comparing the dot-plot -- that's the last one -- to the last one that

they've got. There's quite a dramatic revision from participants about how quickly they think rates are going to get to. What seems to be sort of the

medium range of 1.75 to two percent, but by the end of the year, they are really very hawkish on this.

EGAN: They are and they also upgraded their inflation outlook in the sense that they expect hotter inflation this year than they thought back in

December. They expect slower economic growth than they thought in December. And yes, they're now factoring in, they are penciling in six more interest

rate hikes this year; previously, they were expecting about three. Again, I think that is just acknowledging the reality here, which is that inflation

is hot, and it's getting hotter.

QUEST: So Bullard wanted half a percent. He was on his own. But can you see -- can you, Matt Egan, see a scenario where others, maybe two or three rate

hikes down the road of inflation isn't responding, decide that you might have to go quicker faster?

EGAN: Yes, absolutely. I mean, I think that, arguably, they were starting to seriously consider that just a few weeks ago before the war in Ukraine.

So yes, I do think that this idea that Bullard has of the first half a percentage point move in something like 20 years, I think that that could

become a reality.

Again, if inflation continues to get hotter, if it cools off, then perhaps the Fed doesn't have to resort to such an aggressive move.

QUEST: Matt Egan, thank you, sir.

Now, let's revisit the broken cogs of the global economic engine that we showed you earlier this week. You'll remember, these are the various bits

that have now got sand poured into them, and if the problem was featured in Jay Powell's news conference, all of these were referenced, you heard his

concern about the impact of Ukraine and the Russian invasion, and oil prices have fallen from recent highs, they are down about 30 percent from

there. They are still a problem for Jay Powell.


POWELL: Additionally, higher energy prices are driving up overall inflation. The surge in prices of crude oil and other commodities that

resulted from Russia's invasion of Ukraine will put additional upward pressure on near term inflation here at home.


QUEST: And all of this feeds into the global supply chain. And any idea that that will be made easier or unclogged by China's zero COVID policy,

there are now 37 million people in lockdowns of one sort or another across key industrial cities in China.


POWELL: Buyer constraints are limiting how quickly production can respond. These supply disruptions have been larger and longer lasting than

anticipated, exacerbated by waves of the virus here and abroad, and price pressures have spread to a broader range of goods and services.


QUEST: Now, all of this isn't esoteric. It is designed to stamp out inflation for the time being and the Fed has a mandate to keep it at around

two percent, and now it's nearly eight percent.


POWELL: No matter what happens, this is a committee that is determined to use its tools to make sure that higher inflation does not become



QUEST: No matter what happens, Alan Blinder, this committee will make sure that inflation does not becoming entrenched.

Alan Blinder is a former Vice Chair of the Fed. He knows exactly what it's all about. He is now a Professor of economics at Princeton.

Alan, good to see you.



QUEST: Let's not debate, are they behind the curve or how quickly they should have moved previously? You know, there is never the wrong time to do

the right thing. Are they moving fast enough now?

BLINDER: I think so. You know, what's got lost in today's commentary is the word that Powell used the week, two weeks ago, "nimble." There's a lot of

uncertainty around here. There was a lot when he used the word, there is even more now, because of the war in Ukraine.

Nobody knows where that's going, how long it will last, and how large the stagflationary shock that it is causing will be with us. So the Fed needs

to be nimble.

So what you see today is a kind of a guess, a first guess, of what that will mean in terms of raising rates for the balance of this year. But

another thing that nobody seems to focus on you, we were just looking at the dot plot, look how spread out it is.

Opinions inside the committee, they are very spread out because people -- you know, frankly, people don't know what the future is going to bring.

QUEST: If you had been voting today, would you have been with James Bullard in going for half a percent?

BLINDER: No, no. I think the right thing to do was start slow and easy and if it looks like the deflationary part, rather than the static part is

going to be the dominant influence, then you can speed up, then you can go 50 basis points at a meeting, for example.

QUEST: And on this question on the Russia-Ukraine, everybody says it's the great unknown in that sense, the knowns and the unknowns and so forth.

Reading the statement, there is only one reference in the statement basically to public health towards the end, however, I get the impression

now that the committee is most concerned about Ukraine, spillover, uncertainty, and energy.

BLINDER: Yes, I mean, that seems to be the clear and present danger. Look, the coronavirus is not over. There is more of it now in Europe than there

is in the United States, which has not always been true and the history of this has been it tends to cross the Atlantic Ocean, in our direction. We'll

see about that.

But so far, coronavirus is going down rapidly in the U.S. to very low levels compared to where it was. And now this new and scary frankly,

problem has cropped up not just for the Fed, but for everyone.

QUEST: I start to hear people talking of recession and suddenly, the longer the war in Ukraine goes and the more spillover there, that increases. Is it


BLINDER: Hard to say. I mean, and you just put your finger on why. The longer and deeper this -- well, what we have to remember is the war in

Ukraine from the American perspective, we're a long way from there is a stagflationary shock, which means it pushes up inflation and it slows down

the economy.

And as I was saying a moment ago, you don't know which branch of that is going to be more severe. If it's the stag branch, we could have a

recession. We had recessions after OPEC 1 and OPEC 2. At least, so far, we don't think this is going to be anything like that magnitude, but we could

be dead wrong.

Look, it wasn't so long ago that a lot of people were saying, oh, Putin is not going to invade Ukraine, not everyone was saying that, but some people

were saying that.

QUEST: Very good point. How important is it? Just thinking back to the determination in Powell's voice as he says this committee is not going to

let entrenched inflation. How important is it now for the Fed to reestablish its credibility on inflation?

BLINDER: I think it is important and more important, I think Jay Powell thinks it's important. I read some of the pros as answering back some of

the criticisms he is getting from super hawks, one of whom is on his committee, and dissented today as you mentioned, but there have been


Larry Summers, Steve Rattner, the editorial page of "The Wall Street Journal," and others have been on the fence back basically, that you're

behind the curve. And, you know, you've probably seen this, I have. Some people calling for a Volcker moment and the analogy of Paul Volcker and

1979, I think that's a bad analogy, but Jay Powell doesn't want to let that go unanswered.

QUEST: Alan, it's good to see you, sir. We thank you. We needed your insight tonight and I appreciate it. Thank you, Professor.


QUEST: As you continue, Russia owed $117 million in interest payments today on its government bonds. Now the sanctions made paying that in dollars, a

lot more complicated. So could they pay it in rubles instead?

When is a default a default? Anna Stewart is with me after the break.


QUEST: Russia says it has ordered payment on $117 million in bond coupons that became due today on Wednesday. The Finance Minister said it's now up

to the U.S. to release the money from Russia's frozen accounts.

About half of the country's foreign reserves, $315 billion are inaccessible because of the Western sanctions. In total, $60 billion is owed in

sovereign debt so Russia could repay the whole lot of it needed to. Here is a little -- and it did hold payments to foreign investors, first time since

the Bolsheviks by the way, it will be the size of Argentina's default in 2020, a nonevent for global markets.

Various Russian entities owe European banks, $94 billion. France, Italy and Austria are the most exposed.

Anna Stewart is with us. Let's talk first about this attempted payment on the bond. They did have a grace period available to them anyway of 30 days,

which is normal in these contracts. But this was an interesting -- I mean, are they in default because of it?

ANNA STEWART, CNN REPORTER: Well, this was a huge surprise and it has happened just in the last couple of hours.

Just on Sunday, Russia's Finance Minister said they would be repaying this dollar denominated debt to unfriendly creditors or creditors in unfriendly

countries, I think he said in rubles, and that would have constituted a default.

But in the last couple of hours, Richard, according to the same Finance Minister, this is on "Russia Today." He says: "We have the money, we made

the payments. Now, the ball is in America's court." And now this is using dollars that have been frozen as part of the sanctions on the Central

Banks. The big question is, is there an exemption? Does this constitute a default or will it be allowed? And honestly, the answer is right now, we

don't know.

QUEST: Yes, it could also be a question of when is the payment made? When it is sent or when it is received? That'll also be a legal issue that

they'll need to look at. Is it enough to make the payment or do you have to wait for it to be received by the clearinghouse to be distributed out?

These are the sorts of issues that will keep lawyers in foreign homes and foreign holidays for some time to come.


QUEST: The other issue: What happens next for all the Russian debt? Because they're not going to be able to refinance it, even if they roll, they can't

roll it over.

STEWART: Yes, there is that question. But also, I think the bigger one or the bigger concern from analysts I was speaking to you, which isn't just

what happens in terms of the sovereign debt, which is relatively small in terms of what sort of international banks are exposed to is if Russia

defaulted on its sovereign debt, does that then mean or trigger a default on corporate debts which are much, much bigger in terms of the exposure for

Western banks? It's $121 billion worth according to the Bank of International Settlements.

So if this meets the sort of rules and regulations, if this means Russia hasn't defaulted on that sovereign debt, a lot of investors around the

world will be breathing a big sigh of relief based on that.

QUEST: There is one other thought: Why does it matter? At the end of the day -- well, at the end of the day, it has limited systemic risk in global

bond markets.

The war, even, please, God were to end tomorrow, the ramifications would -- Russia is locked out of capital markets for years.

STEWART: Yes. And this is the problem with sovereign default is the fear that a country can't borrow on international markets or those borrowing

costs would sort of ratchet up, but of course, as you say, Russia is already locked out of capital markets. So why does it matter?

There is the significance, the fact that they haven't defaulted on international health sovereign debt since the Bolshevik Revolution over a

hundred years ago. There is also the fact that this would bleed right past any conflict in Ukraine.

What investor will want to lend money to Russia, if they default on their sovereign debt? And I think their investor confidence, frankly, it has

already shattered and will already probably take many years to restore, but sovereign debt defaults, that probably equals decades.

QUEST: Anna Stewart in London. Anna, thank you.

The war in Ukraine is disrupting its grain exports and through that, it is raising the fears of global food crisis, not least from higher prices.

China imports the most cereal products from Ukraine, then you've got Egypt, Indonesia, Bangladesh, Tunisia, Libya -- all major concern customers. And

energy prices going up makes the situation even worse.

The fertilizer company, Yara International says it's hard to slash production because of rising natural gas prices and that could lead to even

higher food prices.

Svein Tore Holsether is the Chief Executive of Yara. He joins me now from Brussels.

Talk me through your logic here. The way in which you get -- you have to live with the rising prices. There's not -- you're going to hedge maybe on

fuel, but what happens next?

SVEIN TORE HOLSETHER, CEO, YARA INTERNATIONAL: Well, thanks, Richard, for inviting me and first, I have to say that we're deeply concerned about what

is happening in Ukraine right now. The events that are happening on the ground, it's just heartbreaking to see and to see the conditions that our

colleagues are in in Ukraine right now, our office building was hit by a missile on February 26th, so it is really devastating and that's our first

and foremost concern.

But in addition to that, we also have fuel prices and energy prices going up and energy prices and food prices are linked. Because what is really

food, well, it is energy for us humans, right, and it takes energy to produce food.

And with natural gas prices going up to levels that we've never seen before, it has an impact directly on the ability to produce fertilizer, and

it comes on top of lower productivity in Ukraine and Russia as a direct result of the conflict, and also on export restrictions.

QUEST: So obviously, our concern is with the people and your staff, and I'm guessing at the moment, it's hard to tell exactly how many have been

directly affected or please God, they've not been hurt or worse.

From your point of view, what do you do? How do you manage a company in those circumstances?

HOLSETHER: Well, it's incredibly complicated at this point. And it goes straight to the purpose of our company to responsibly feed the world to

provide more food for a growing population. And today, half of the world's population gets food because of mineral fertilizer. So it's the most

lifesaving innovation of all times.

And when we get disruptions like this to the flow of material, we have a global food system that has done a fairly good job of feeding a growing

population over decades now except the last two years during the pandemic, and then we get significant disruptions both on the flow and the cost of

fertilizer and we're doing whatever we can, we are working around the clock in order to secure new sources, making a system that is less dependent on

Russia than it is to today, and really trying to help the farmers in this very challenging situation.


QUEST: But realistically, you do not see being able to do any business with Russia for years.

HOLSETHER: It has become much more complicated and it is a dilemma and we've been very transparent and open about that because the level of

minerals that are in Russia with first, natural gas, 40 percent of natural gas to Europe comes from Russia. They're big on phosphate, they're big on

potash, and they're embedded into the food system, so that's the dilemma: Do we continue to source or not?

And that has huge humanitarian impacts as well, and that is a decision bigger than me as an individual or bigger than us as a company, we need to

discuss that with governments, nationally and internationally to understand the full humanitarian impact of that.

But surely, there are already sanctions in place, and we, of course, comply by those and that creates a lot of disruption to the supply chains at the


QUEST: Right. But I think you raise a very solid, strong moral point, which we cover, and we talk about quite a lot on QUEST MEANS BUSINESS, which is

the role of the company and the CEO as the moral arbiter or moral barometer, in a sense to do that, which is right and address that dilemma

that you talk about, because there will come a day sooner please God than later, where you do have to ask: Do I go back in there?

Let's just say, Ukraine does fall to Russia. Russia does have a semblance of normality, it now turns to the West and says, right, well, this is that.

That bit is over. Now, which companies are coming back into Russia again? That will be a moment where -- and I don't -- I'm not asking for your

answer now, believe me, because it's going to take you many hours of soul searching, but that is the sort of thing you're going to -- you could well


HOLSETHER: Sure, and these are huge dilemmas and we are facing them every day. And I'm in constant dialogue with David Beasley who is heading up the

World Food Programme as well and listening to what he is seeing now on the frontlines or the 800 million people that don't get enough food today and

that was before the war, and now, this is coming on top of it and we have a role to play here to help to support growing more food, but at the same

time, we are faced with a dilemma.

And you're absolutely right. There is no clear answer to that and how we deal with it. But one thing that is clear, is that we have to create a food

system that is less dependent on Russia, and that has less dependency on single countries so that we are more robust to face situations like this

where global food supply is as impacted by the acts of Russia as we are today.

QUEST: Sir, very grateful that you came on the program tonight to talk about it. We'll talk more as this crisis continues and I look forward to

hearing an update from you on how the company is managing these dilemmas. Thank you, sir.


Volodymyr Zelenskyy asked the U.S. Congress for more help. We'll have more on his emotional speech, and President Biden's reaction.




QUEST: I'm Richard Quest and you're most welcome to more QUEST MEANS BUSINESS.

The Bank of Ireland's chief executive on the economic impact of the Russia- Ukraine conflict and rising interest rates.

Chinese stocks soaring after Beijing's intervention. We'll explain what did they do that sent DiDi up more than 40 percent and same for Alibaba. Still

it's CNN and here, the news will always come first.


QUEST: That news means a 7.3 magnitude earthquake hit in eastern Japan on Wednesday and that led to a tsunami advisory. Millions are without power as

a result of the quake. An official says at least one person killed, 88 people injured.

Jailed six years in Iran, she's on her way home to United Kingdom. Nazanin Zaghari-Ratcliffe was one of two British Iranian women released by Tehran.

She had been accused of trying to overthrow the government and vehemently denied the charges.

The Russian journalists detained for protesting on live TV in Russia has spoken to CNN. Marina Ovsyannikova says she's been spared prison for now

and instead was fined 30,000 rubles, around $300. She talked to Christiane Amanpour about her experience.


MARINA OVSYANNIKOVA, RUSSIAN JOURNALIST AND PROTESTER (through translator): I don't feel scared. But at the moment, of course, I feel a huge burden of

responsibility. And I realize that my life has changed irrevocably.



QUEST: President Zelenskyy of Ukraine made a direct appeal to U.S. lawmakers for more aid. In a video address, Volodomyr Zelenskyy invoked

9/11 and Pearl Harbor while asking for new sanctions.


VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): I'm asking to make sure that the Russians do not receive a single penny that they use

to destroy people in Ukraine.

The destruction of our country, the destruction of Europe, all American ports should be closed for Russian goods. We -- peace is more important

than income. And we have to defend this principle in the whole world.


QUEST: President Biden called the speech convincing, as he announced new military aid. He stopped short of supporting a no-fly zone.


JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: It includes 800 antiaircraft systems to make sure the Ukrainian military can continue to stop the planes

and helicopters that have been attacking their people and to defend their Ukrainian airspace.

And at the request of President Zelenskyy, we have identified and are helping Ukraine acquire additional, longer-range antiaircraft systems and

the munitions for those systems.


QUEST: Now as Russia is advancing deeper into Ukraine, there are tentative signs of a breakthrough in peace talks.


QUEST: Zelenskyy said Russian negotiators were beginning to sound more realistic. So let me show you where the war effort stands at the moment.

There was a theater, where hundreds of people had taken shelter, in the besieged city of Mariupol. And that was bombed on Wednesday and a

humanitarian convoy was hit by Russian artillery in the middle of the country. Five people there injured.

A defense official saying launched Russia has launched more than 980 missiles against Ukraine since the start of the invasion. Sam Kiley is in


Sam, before we start with the military, I've got to ask you this. I listened to President Zelenskyy, as you would have done, too. And I was

left thinking he was remarkably measured when I might have been tempted to say, for all the help you're giving us, it will be a fine argument when

they finally win, Russia.

And then what will you do?

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think there may be two reasons for not doing that. The first is the obvious diplomatic

niceties, which means when you're going with your hand out, asking for help, don't bite the hand that might feed you.

But the other is that the Ukrainians are starting to feel not quite that they've got the upper hand but they've certainly held the Russians at bay.

There's no question at all that the Ukrainians have seriously upset the Russian plans.

And if he gets more military help, then he may be able to -- and this is the Ukrainian argument -- to push the Russians back so that they don't make

the sorts of concessions that prove that might is right, such as abandoning their quest to join NATO. a

And that would, in the end, actually, potentially call Putin's bluff, is this whole invasion about NATO and Russian security?

Or is it really, which is what they really believe in this country, about Russians' fear of democracy?

Having a successful democracy on his doorstep sets a bad example to an oppressed people in your own country. But the failure to read the situation

is something preoccupying some of the finest intellectuals in the government here. And earlier today, Richard, I spoke to the deputy prime

minister in charge of the NATO file. This is her analysis.


OLHA STEFANISHYNA, UKRAINIAN DEPUTY PRIME MINISTER: Even in the biggest cities of Ukraine, which has now been circled by Russian army or even with

the Russian army in there, these are the people who are standing in front of the tanks with Ukrainian flags, having no fear with that.

And this is what surprises Putin. So this is where he fails. So I'm absolutely sure that he's uncomfortable in every moment that he's sitting

in his bomb shelter, he fails in each of his assessments.

And the chain of command, which disinforms him, and the senior management around shows that they know nothing about our nation. so-- and this is the

strength that we have against this terror.


QUEST: Again, I hear them, the U.S. military and the British military and others, saying that the Russian, you know, the Ukrainians, plucky

Ukrainians, are doing an extraordinary job and then it goes dot, dot, dot.

But eventually Russia's sheer might will prevail. They will be overwhelmed. That is the sort of unspoken message that comes across from these military


Has that changed?

KILEY: I think it has. I don't think there's any question now -- and I've been speaking to my own sources on this, particularly in the United

Kingdom, around other parts of Western Europe.

And the political/military analysis is that -- and it goes back to overestimates of the strength of the Russian army during the Cold War, that

was an overestimate made by NATO, this is an overestimate of the strengths given to Putin by his own generals.

In Russia, you don't get thanks for telling Putin that invading Ukraine would be a bad idea because it's not full of neofascists and anti-Semites,

that it is full of people who will fight for democracy, that it does have a much improved armed force and it is getting antitank equipment that would

undermine their very old fashioned Soviet type tank attacks, that have gone disastrously wrong in the field.

You get advancement, you get a promotion by telling buses in a dictatorship what it is they want to hear. And I think that has been shown to be very

graphically illustrated here. Some military analysts may be catching up with that, some may not; some are not that bright, Richard.

QUEST: But Sam, the sheer numbers that Russia has at its disposal, literally, unfortunately, the way they treat the worth of human life -- but

the sheer numbers, doesn't that ultimately swamp?

KILEY: It does on paper.


KILEY: What's very interesting about what we're hearing out of Russia, what we're hearing from the Western intelligence sources, is that, for example,

the Russians are looking to recruit several thousand Syrian mercenaries to augment their troops here.

There have been reports, particularly in the east of the country, of the Russian army having to bring in civilian vehicles, because they've lost so

many military vehicles. There are reports that conscripts, contractually not obliged to fight on the front lines, were effectively tricked into

participating in this invasion.

The Russians have lost at least three, possibly four people of full general rank, that's people above major general and above. And they are being held

up when they thought they'd be able to capture the city in a matter of days.

The issue will be, do they really have those huge numbers of reinforcements?

Technically, the second largest armed force on the planet; got 200,000 troops or so here in country. They are not, it would appear -- and no

satellite evidence to the contrary -- able to reinforce in any significant numbers. This may be as far as and as powerful as they get.

Now the problem with all of that, Richard, is that the Western assessment is also that both the Ukrainians and the Russians here on the ground in

Ukraine are at about 90 percent capacity of where they were at the beginning of this war.

And the Ukrainians are outnumbered by the Russians and they are outgunned and, above all, they are outgunned in the air and with missiles. So they

are still very much the underdogs.

And of course, at the end of the tunnel, you've got the dismal prospect of either a chemical, biological or ultimately nuclear attack remaining,

something that Russia may well use as a last option -- Richard.

QUEST: And we will leave that exactly where it is, Sam Kiley, because, the day that you and I have to start talking about that in more detail is

neither one, a day that, well, need I say more. But Sam, grateful for you tonight. Thank you. Thank you, sir.

It's QUEST MEANS BUSINESS. Desperate times call for desperate measures and the British prime minister may be controversial, looking to Saudi Arabia

for alternatives to Russian energy.





QUEST: The British prime minister is seeking alternatives to Russian gas and oil and has gone to UAE to speak with the prince. Then to Saudi Arabia

to meet with Mohammed bin Salman. Makes one of the few Western leaders to visit the kingdom since the 2018 murder of the journalist Jamal Khashoggi.

The prime minister wants both Saudi Arabia and the UAE to pump more oil as the West tries to wean itself off the Russian-supplied energy.


BORIS JOHNSON, U.K. PRIME MINISTER: It is vital, if we're going to stand up to Putin's bullying, avoid being blackmailed by Putin in the way so many

Western countries sadly have been, we've got to get ourselves off of Russian hydrocarbons.

They're a massive part of the global market. They help to drive the price. We need to talk to other producers around the world about how we can move

away from that dependency.


QUEST: Now oil prices have returned to levels before the Russian invasion. And that boosted European markets, which have been rattled. So we have

strong performances, particularly in Germany and Paris, up more than 3.5 percent.

But London was in there, too, and all big markets rose. Hope of some progress in Russia also lifting the indices, as you see across the board.

Francesca McDonagh is the CEO of the Bank of Ireland Group, with me in New York.

Nice, you're at least in New York, even if we're not in the same room together.



QUEST: So from a bank's point of view, besides obviously the appallingness of the nature of what's going on, what's your major concern here?

MCDONAGH: So major concern, other than the awful humanitarian crisis, is the impact that two countries, whose GDP collectively is just over 3

percent of global output, is having such far-reaching impacts on inflation, interest rates -- obviously, we'll talk about that -- and also GDP growth.

And what that means to the real economy of businesses and households in our home market of Ireland is obviously creating a level of uncertainty,

particularly when we started the year really focused on the positives of recovering from a post-pandemic environment. And the narrative in Ukraine

has fundamentally changed that.

QUEST: What I think you're beautifully describing, of course, is our growing realization of the interconnectedness in the global economy. This 3

percent is actually leveraged because of integration.

MCDONAGH: Absolutely. And you've seen supply chains be really stressed as a result of COVID-19. And as they recover, you're now seeing them frayed

further by what's happening to energy prices and commodity prices, particularly food.

And the economic burden of war is very uneven. So that will really impact lower income families or businesses, that are still getting back on their

feet after the pandemic.

QUEST: So let's take Ireland. First of all, two years ago, you had Brexit, then the end of the transition period and the full thing. Then you have the

pandemic, which hits you hard as well. Now you have this. All in all, a miracle the Irish economy is still standing.

MCDONAGH: I wouldn't call it a miracle; I think it's a result of actions taken by the state but also by businesses. So Bank of Ireland, just

announced our full year results. We had a rebound in performance. And that is a result of the economy recovering but also difficult decisions we've


And we still remain optimistic and positive about the future, despite geopolitical uncertainties. And the Irish economy, the fundamentals are

actually very strong. So you've got a young, well-educated population, very attractive place for foreign direct investment.

And I've been speaking to American businesses here in New York, who want to invest or increase their presence in Ireland. Every native English speaker

in Europe, given Brexit, and there's some real positivity across a range of industries for investment.

And also the local domestic, the indigenous economy has managed to grow in 2021. So there's still positivity, despite the uncertainties, as you

mention, of Brexit and the reality of two years of pandemic.

QUEST: So the U.K. has had two, maybe three interest rate hikes and there's more to come. Today we saw what the first of the Fed -- and there could be

six ahead. The ECB is some way off that.

But having seen what the other economies have basically had to do, I'm guessing you think it'll be the same for Europe.

MCDONAGH: Yes. So the Fed is not alone in having an increasing interest rate outlook. We've got the Bank of England meeting tomorrow; we have part

of our business in the U.K. We would expect a 25 basis point hike in the market, that is already pricing that in. But for Europe, for the ECB,

there's a lot of debate around this.


MCDONAGH: And we talked about interest rate increases before the invasion with inflation increasing. But we now expect one, possibly two rate hikes

by the ECB during 2022 to get to 0 percent.

QUEST: It's going to be a very different world, in the sense -- I mean, you know what I mean. We are seeing nothing like we have ever really

experienced, because Brexit, global financial crisis -- then we had Brexit, then the pandemic, all of these are much greater shocks than the systems

were designed for.

MCDONAGH: They are. But they've also shown us resilience and the importance of adapting. And I tell you one thing, if there's any positive coming out

of it -- and I'm just watching your previous stories about sources of energy, it is the whole ESG agenda.

So under the cover of COVID-19, ESG went mainstream with much more awareness around environmental impacts of how we consume and run our

businesses. But I think now, as well as environmental awareness, we're seeing the political impact of being dependent on energy from Russia, in a

country that is now heavily sanctioned.

And that could, if there's one positive, there could be a catalyst over time for change and a shift away from Russia and fossil fuel dependence to

more carbon neutral, you know, renewable energy efficient solutions.

Now the irony is we probably take a step backwards before we make progress because we've all seen reports of Germany firing up its coal factories and

stockpiling coal sources in case it gets cut off from Russian energy sources.

So maybe that's a step backwards but, over time, this could be a catalyst for more awareness from businesses, policymakers, consumers about the

source of energy and reducing that dependence on countries like Russia.

QUEST: Francesca, we will be in Dublin in April, for QUEST MEANS BUSINESS. I'm looking forward to meeting you on your own home turf.

MCDONAGH: Likewise, thank you.

QUEST: Thank you very much indeed.

QUEST MEANS BUSINESS tonight. Coming up, Hong Kong stocks had their best day in more than a decade, which is a relief after the last few days.

And COVID cases are soaring in China but it is China that has shifted the needle -- in a moment.




QUEST: After a few rough days, Chinese stocks have posted huge gains on Wednesday. The Hang Seng jumped 9 percent, its best performance since 2008.


QUEST: And the reason is simple, the Chinese government announced new stimulus measures to help the economy amid rising COVID cases and also sort

of suggested its battle against corporations might be at least easing off.


DAVID CULVER, CNN INTERNATIONAL CORRESPONDENT: Even as Chinese health officials battle to contain a rapidly spreading COVID outbreak across

China, with tens of millions in lockdowns in major cities, including in Shanghai, they're now easing policies on isolation and testing.

Health experts say changes come in an effort to ease pressure on the healthcare system, at risk of being overwhelmed. Under the new guidelines,

asymptomatic patients and those with mild symptoms will no longer be sent to the hospital.

Instead, they'll be sent to government-run isolation centers. The new playbook policies include shorter quarantine and hospitalization period.

Amidst this, the worst outbreak since Wuhan in 2020, Chinese business sectors taking a hit, halting work in industrial and tech sectors in


But positive signs came Wednesday as Apple supplier Foxconn partially resumed operations in the their southern campuses. Meanwhile, big gains in

Chinese markets on Wednesday. They come off reports from state media that China's state council met and stated it would work to stabilize markets and

boost the economy.

They reportedly will rely on monetary policy and new loans to make this happen. President Xi Jinping's big business crackdowns over the past year

or so have previously caused companies' values to plummet. But Chinese markets closing up Wednesday, even as officials here prepare for strict

COVID measures to linger well into April -- David Culver, CNN, Shanghai.


QUEST: We'll put it all together in a "Profitable Moment," after the break.




QUEST: And so it begins, the Fed rate rising cycle now underway. How far, how fast, how high, how long, all of these sort of questions will be asked.

We are looking at maybe five, six rate rises, 2.5 percent, 2.7 percent when it tops out in a year or two.

But that's the nature of the beast. Here we go again, hold on to your hats.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. At least the market was up on the back of it, took it in its stride, I think we can

say, whatever you're up to in the hours ahead, I hope it's profitable today.