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Quest Means Business

Russian Gas Flowing To Europe Despite Ruble Threat; Russia Accuses Ukraine Of Attacking Fuel Depot; E.U. Warns China Not To Interfere With Sanctions; World Cup Draw Revealed: Qatar Faces Ecuador In 1st Match; Italy Ends COVID-19 State Of Emergency After Two Years; New York City Amazon Workers Make History With Union Vote. 3-4p ET

Aired April 01, 2022 - 15:00   ET

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

[15:00:23]

RICHARD QUEST, CNN BUSINESS ANCHOR: It may officially be spring, but it was a snowy day in Brussels. Snow on the ground and a choppy day for stocks

overall.

Look at the market. The Dow is now claiming having been up and down all day. You get the idea. That's a sort of a lack of direction over the course

of the day, but they are finding a footing in the final hour of trade.

The markets and the events that we need to bring to your attention today.

Tonight, the Belgian Prime Minister tells me we are at economic war with Russia, but dragging Europe into a military conflict will not help Ukraine.

NATO's Secretary General tells me Russia is regrouping, not withdrawing.

And a key recession signal flashes in the United States, you're going to hear about the inverted yield curve on a Friday.

We are live in Brussels. No April Fools, it is April the first, I'm Richard Quest. I mean business.

Good evening tonight from Brussels.

The weather turned nasty and the snow started falling, so the better part of valor and we rushed inside. But we still got for you the European

Commission behind me and Ukraine is remaining a major test on a variety of fronts for the E.U., not least oil and gas as we discussed last night.

There are leading voices who will be joining me on tonight's program from the E.U. and from NATO. You will also hear tonight, a moving interview from

the Chief Executive of airBaltic that's Martin Gauss.

Let's begin though tonight.

Last night we told you that Russia was threatening to turn off the gas. Tonight, the gas is still flowing. This is despite the Kremlin saying that

if money wasn't paid in rubles, they would stop the gas today. However, now the government spokesman Dmitry Peskov says there are no cuts because the

payment isn't due until the end of the month.

You'll recall what the Economy Commissioner said last night, he had a very strong word to describe what was happening.

(BEGIN VIDEO CLIP)

PAOLO GENTILONI, E.U. COMMISSIONER FOR ECONOMY: First, contracts must be respected, and in the existing contract, there is no obligation to pay in

rubles. Second, we will not be blackmailed by Moscow.

(END VIDEO CLIP)

QUEST: That word "blackmail" resonated around and echoed round European institutions today, it is the common word that they've all agreed to use to

describe what Putin seems to be doing. At least that's the way it appears, the term that Europe is using to describe Russia's demands. Belgium's Prime

Minister in an interview with me today, repeated the word "blackmail" again and again.

I sat down with Alexander De Croo, to discuss the threats from Russia and the E.U.'s response.

(BEGIN VIDEOTAPE)

ALEXANDER DE CROO, BELGIAN PRIME MINISTER: I think first of all, this shows that the economic sanctions do work, because it shows that that

Russia really is in trouble, and especially on the ruble currency. They are really in difficulties. Our position is that you cannot just change the

terms of contract.

So we'll just stick to the position we had and the contracts we have. In any case, on the Belgian side, we're not very much exposed to that, less

than five percent of our consumption is coming from Russia. But let's see if Russia really pushes through, but European position is a correct one, we

won't be blackmailed.

QUEST: If he does switch off the gas, even for your five percent, you could find a fracturing of the unity that we've seen as those countries

like Germany, and others who do require greater amounts start to get a bit iffy.

DE CROO: Well, we've been working hard over the last weeks to make sure we're prepared for events like this one, a lot of reserves has been

constituted, a lot of solidarity has been built on how do we cope with an interruption like that one, so we are prepared.

I honestly think if Mr. Putin does that, yes, we will be impacted, but the impact will be multitudes greater on his side.

QUEST: The question of President Zelenskyy's speeches, beautifully tailored as yesterday's was, so he has excellent advisers and speech

writers. He keeps saying what he wants, which is the no-fly zone and greater supply of arms. And of course, there's a huge amount of arms being

supplied

But the reality is, he is not getting it. Yet, he's not getting his aircraft that he asks for, he's not getting as no-fly zones. They are the

consistent things that he has requested, and he's not received.

DE CROO: Well, but he has received a lot, and he has received a lot of support and you really see two models, competing one with the other. The

Russian model, which is the classical authoritarian hierarchic model and the way President Zelenskyy and the Ukrainians work, it is by trying to

rally the rest of the world around them and getting support.

The amount of weapon support that he has been getting, has been much more than anyone could have expected and we, over the last weeks have also

decided to buy weapons, and to send new weapons directly to Ukraine.

Now, about the no-fly zone, I've been very clear on this in Parliament, because I think at some point, you just have to put the things at the

table. If, we, as NATO would install a no-fly zone, this would drag all European NATO Allies into a full out war on the European continent. That's

to the advantage of no one. It is certainly isn't to the advantage of Ukrainian people.

One of the good things is that Europe is stabilized and is not a party, but is supporting Ukraine.

QUEST: When you made that decision, some weeks ago, you couldn't have known then that Ukraine was going to be so resilient, and the fortitude

would be so great. So you couldn't have known then that they were going to be on the other hand at the moment, in which case, as I listened to

Zelenskyy, I kept thinking, he is going to eventually turn around and say to you all, when I lose, and you're all hand wringing about oh poor

Zelenskyy, poor Ukraine, he's going to say I told you, I told you what I needed and you didn't give me.

DE CROO: Well, but let's look at how we are coping with this. First of all, we're supporting him with weapons. Secondly, the economic sanctions

are really, really targeting the Russian economy right in the heart, and you see the impact of these economic sanctions are making it extremely hard

for Russia to wage that war. That's the way how we deal with it.

Being part of the conflict and having a full out conflict on the European continent that would actually hamper our capacity to help Ukraine, it would

not be to the advantage of Ukrainian people to expand this war over the whole continent.

QUEST: Do you accept that whether we use the technical term, you are at war, but de facto Europe, and the United States is in a war with Russia?

DE CROO: There is a war going on in Ukraine and we are involved with economic sanctions and these economic sanctions, you could say is an

economic war. That is correct. There is -- but we are not a party in the military side of the war and we want to maintain it that way.

QUEST: And when it is over, as it will be, and if we assume for the moment that it is a really messy ending, with something to do with the eastern

part of Ukraine, and who knows what the final --

DE CROO: No one knows.

QUEST: No one knows. But ultimately, would you be in favor of reparations from the Russians for the enormous damage done to Ukraine?

DE CROO: First of all, let's see how we can end that war as fast as possible, and it is good that there are peace talks. Not sure what they

will lead to, but a war is never ended on the battleground, the war is ended around a table. After that, the rebuild up of Ukraine will be a major

task and as a European Union, we've said we want to be part of this.

If you look at the atrocities that have taken place, we are making sure that everything is being recorded, that war crimes will be monitored,

evaluated, and prosecuted. And after that, I think it's quite clear that the position will be that Russia needs to play its role in repairing all

the damages that have that have happened.

But let's first of all, try to get a ceasefire, and if you want to have real peace talks, you need to have a ceasefire as a first priority.

QUEST: And once that's done, Margaret Thatcher famously said about Mikhail Gorbachev, he is a man I can do business with. Post Ukraine, is Vladimir

Putin in a post Ukraine environment somebody you can do business with?

DE CROO: I'd be -- that would hardly -- that would really surprise me. I'd be very surprised if that would be possible. If you see everything that has

happened and the sanctions that we have today, those sanctions are here to stay for a long time and this is not just a page that you can turn.

QUEST: So even post ceasefire and whatever comes, essentially, as long as Vladimir Putin is there, Europe is going to find it just about impossible

to do business with them.

[15:10:44]

DE CROO: Well, except if the man completely changes his mind.

QUEST: You don't believe that.

DE CROO: But honestly, I don't see that on the horizon. I see a President that was ill-advised, that took poor decisions based on wrong information,

a war that was poorly organized, and that is even more poorly executed. This is what I see.

And a President that is not changing his mind and despite of the fact that this is obviously not going the way he wanted and the sheer devastation of

that country. I mean, it's completely pointless, illegal. Humanitarian atrocities taking place is something that no one would have believed that

would still happen. We haven't seen that over the last 50 to 60 years.

And repairing that is not an easy thing, and I would be very, very, very surprised if Mr. Putin is the person who would repair everything that he

has caused.

(END VIDEOTAPE)

QUEST: The Belgian Prime Minister talking to me here in Brussels earlier today.

Now Russia says Ukraine has hit one of its oil depots. It says a helicopter struck Belgorod just inside Russia.

Russian state media is describing about 16 million liters of fuel it says is now on fire. The Kremlin says Putin is aware. Ukraine has not commented

or says "No comment."

Fred Pleitgen is in Kyiv.

Now, if this is a case of Ukraine, either by accident or design, attacking an oil depot on the other side of the border. How do you gauge the

significance of that, Fred Pleitgen?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: First of all, I don't think that this is something that they could pull off by accident, I

think this would certainly be by design, if they managed to pull it off. If they did, however, it certainly would be a brazen counterattack and also

one that almost borders on the virtually impossible.

As you know, Richard, I was in Belgorod for 10 days at the start of this war. It's a town that is very close to the border with Ukraine, very close

to Kharkiv, of course, one of the main places from where the Russians have launched their invasion of Ukraine. But it is actually not that close. It

is about 70 kilometers away from Kharkiv.

And so for any sort of helicopter to be able to take off from Kharkiv, which is under heavy attack by the Russians, fly all the way to Belgorod,

attack that oil or fuel depot and then fly back towards Ukrainian territory, that certainly would be a massive feat. Now, having said that,

the Ukrainians so far have not denied that it was them. They said they can neither confirm nor deny that it would have been one of their aircraft or

several of their aircraft that did this.

The Russians for their part are placing the blame on the shoulders of the Ukrainians. They are saying that it was at 5:00 AM this morning, that it

was an MI-24 helicopter coming from Ukrainian territory flying very low. There is also video of that.

If they managed -- if they did it and managed to pull it off, it would certainly be a brazen attack, and certainly one that is very improbable.

QUEST: Right, but if they did do it, brazen as it is, what does Russia do? Because the country is already at war at full strength, prosecuting it with

everything they've got in terms of conventional weapons.

If they were able to do this, then what's Russia's response?

PLEITGEN: Well, first of all, if they were able to do it, then the Russians should be very concerned because having been down there, I saw the

Russians have air bases down there. They have air defense facilities down there. They have a lot of troops down there. And if several helicopters

managed to get through all of that, and bomb that place, the Russians would certainly have to think about improving their air defenses down in the

Belgorod area.

But we have already seen a reaction from the Russians, Richard. In fact, the spokesman for the Kremlin, Dmitry Peskov he came out and said that

Vladimir Putin has been informed about this incident and also that it could have negative repercussions for the peace talks or for the talks about

trying to end the conflict that are already ongoing between the Russian side and the Ukrainian side. They said that the atmosphere would not be a

good one after such an attack from the Ukrainians.

[15:15:08]

But essentially of course, the Russians don't really have a leg to stand on considering the amount of fuel and oil facilities that they've attacked

here on Ukrainian territory over the past couple of weeks, one right south year of Kyiv, one near Lviv, several and other locations as well.

It is clear that the Russians are in a big military campaign, a war against Ukraine, and if the Ukrainians strike back, then of course, that is

something that a war will bring.

But the Russians should be very concerned if the Ukrainians managed to pull this off.

QUEST: Fred Pleitgen joining us live tonight. I'm grateful, sir. Thank you.

As we continue on QUEST MEANS BUSINESS. I'll speak to the NATO Secretary General here in Brussels about the state of the conflict in Ukraine.

(BEGIN VIDEO CLIP)

JENS STOLTENBERG, NATO GENERAL SECRETARY: We live in a very dangerous and unpredictable situation and a more dangerous security environment.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

QUEST: Welcome back, the E.U. and China have held a Virtual Summit and the warning from the E.U. to China: Don't interfere with the sanctions on

Russia. Also, they urge China to help end the war with the E.U. Commission President Ursula von der Leyen saying it is Beijing's duty to do what it

can to end the war.

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: We expect China as a member of the Security Council of the United Nation to take its

responsibilities. There are few members only and they have a vast responsibility, and China has an influence on Russia and therefore, we

expect China to take its responsibility to end this war and to come back -- that Russia comes back to a peaceful negotiations solution.

We expect China if not supporting the sanctions, at least to do everything not to interfere in any kind. Also, on that point we were very clear.

(END VIDEO CLIP)

QUEST: The Russian Foreign Minister Sergey Lavrov is in India, excuse me - - hailing India as a friend and praising its neutrality and said Russian trade will use more non-western currencies. India is buying discounted

Russian oil.

With me is Emily Rauhala, the Brussels Bureau Chief of "The Washington Post," former Beijing correspondent for "The Washington Post." Good to have

you. Thank you for coming along on this cold evening.

[15:20:14]

What is the relationship? What does realistically the E.U. expects to get out of Beijing on this?

EMILY RAUHALA, BRUSSELS BUREAU CHIEF, "THE WASHINGTON POST": Well, that's a good question. What they said today is please use your influence on

Russia to stop this war. What they didn't specify exactly is what that looks like, what would Beijing do? So far, Beijing has been sort of trying

to play both sides, expressing support for Russia, but also saying, you know, isn't it a pity about this war? The E.U. is asking them to change

that position.

QUEST: But the traditional view on Beijing is that when push comes to shove, the economic relationship between the E.U. and the U.S. dwarfs that

between the Russia and Beijing.

RAUHALA: That's true, and that is certainly the message that the E.U. delivered to China today. I think what makes the E.U. really nervous right

now is that that was the assumption about Russia for so many years, the E.U. thought, we'll do business with Russia, what could go wrong? And now

they're wondering, can we continue to do business with China while they're supporting this role? Are they really our partner? Is this a safe person?

QUEST: And then we've got this weirdness with India and the relationship with India and exactly what is expected here.

India is playing it down the middle, but at some point, Europe and the United States are going to say to India, make your mind up or not?

RAUHALA: That's right. I mean, India wants to buy this cheap Russian energy. That's something that they said they're going to do. But I don't

think that's going to be a position that the E.U. and the U.S. are going to support, especially not going forward.

QUEST: So where does this leave the people in the building behind me? Because they've got the biggest sanctions, they've managed to get everybody

together. There is unity at the moment. Even those like Viktor Orban are considered to be back within the fold again. For how long?

RAUHALA: That's the question. I mean, the E.U. is quite pleased with itself right now. From the E.U.'s perspective, they've done a lot. They've

moved quickly with unity, but the question is, is that unity going to last as this war drags on?

QUEST: Well, why would it fracture? What would be the fracture points?

RAUHALA: I think the question of energy is really central. Some members of the E.U. are calling for a full embargo on Russian oil and gas. Other

members -- Italy, Germany -- oppose that. They say it's going to cost too much, it is going to costs too much for our people to heat their homes, to

drive to work and they're not willing to go all the way.

QUEST: But they accept that there has to be this removal of dependence on Russian oil. So are we really just talking about a question of fact and

degree?

RAUHALA: That's right. They've said we are going to cut by two-thirds this year, but we're not going to go all the way and we'll see if they get to

two-thirds and we'll see if ultimately they decide to cut it off completely.

QUEST: Give me a feel for the -- give me a feel for the mood.

RAUHALA: The mood at the Summit today with China, I would say it was quite dark, quite pessimistic. Everyone said going in expectations are low and I

think it's safe to say they are low coming out of the Summit. I don't think that E.U.-China relationship is heading in a good direction. And I think

both sides agree. The question is, can they find a way forward to try and stop this war?

QUEST: Thank you for joining us tonight. I appreciate you. Thank you very much, indeed.

As we continue, the I.E.A., the International Energy Agency is to release more oil from its own reserves and from national reserves as well. It has

released 60 million barrels last month and similar announcement of course, on Thursday. Speaking earlier, President Biden praised the move.

(BEGIN VIDEO CLIP)

JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: Nations are coming together to deny Putin the ability to weaponize his energy resources against

American families, not only American families, but families in Europe and around the world.

(END VIDEO CLIP)

QUEST: Now, all of this factors into the market and the question of higher energy prices and the possibility to sow a growth, higher interest rates

leading to a recession. The major indices are flat at the moment. Strong U.S. jobs report show 431,000 jobs, but it is the issue of the yield curve.

Now, this is -- we're going to talk about this over the next few months a great deal. So you and I might as well get to grips with it here and now.

You're looking at the 10-year and the two-year U.S. bond yields.

Remember the yield is the amount that you get for lending money. Normally, the longer you lend, the higher the yield. It should be -- this is the

normal way. However, when it inverts, you end up paying more at the shorter end.

And earlier on Friday, the two-year went higher.

The issue Paul La Monica -- Paul La Monica is with me. Now traditionally and it has been a barometer that has worked well. Traditionally, an

inverted yield curve signifies a recession, six months to a year from now. Let's not argue or discuss the reliability of the predictor. Let's instead

ask you, do you believe it is predicting a recession this time?

[15:25:32]

PAUL LA MONICA, CNN BUSINESS REPORTER: I'm not so sure, Richard, because there are a couple of things at play. For one, a lot of people I talk to

say that it is also important to look at the yield curve for the three- month treasury, and there still is a pretty wide disparity between what the 10-year is yielding and the three-month Treasury, it is not close to

inversion. When we get a flatter curve there, it might be a more worrisome sign, because obviously, a three-month Treasury is something with an even

shorter duration than a two-year.

The other thing I'd have to point out is that people say that you need to invert and stay there for a while before the clock really begins. Yes,

we've inverted and it's kind of flip flopped a couple of times this week, but until we get an inversion that lasts for several days, several weeks,

where we can clearly say yes, shorter term bond yields are higher than longer term bond yields and that pattern is stuck, I don't think the

recession clock down should necessarily start just now because we had a brief inversion earlier this week.

QUEST: No, but even if it doesn't start now, the fact we are getting what -- five, six interest rate rises this year -- at a time when there is a

worsening situation of inflation because of higher oil prices, at least as it looks tonight this Friday night, there are not encouraging signs for

strong growth.

LA MONICA: No, not at all. The worrisome sign right now, Richard, I think is, as you point out, we have had a super spike in oil and other commodity

prices. Inflation was a concern even before Russia invaded Ukraine, it's more of a worry now, and when you look at those jobs numbers, we had really

solid wage growth, 5.6 percent year-over-year.

The problem though, is that if you look at the latest CPI numbers, consumer prices are up 7.9 percent. So even a 5.6 percent increase in wages doesn't

keep you up to speed with the prices of consumer goods that are skyrocketing.

QUEST: Paul, do you believe the market is sort of trading around its bottom at the moment, in the absence of another exogenous event. We've sort

of -- we've seen losses yesterday, we see better gains today, but we're trading -- essentially, we're trading sideways.

LA MONICA: Yes, we're trading sideways, which I think is encouraging, Richard, it's nice to see that the market is not this bottomless pit. You

don't also get this sense of fear just yet, like we had in March 2020, at the beginning of the COVID pandemic in the United States, at other times of

crisis like 2008, like 2000.

I think that we've had several good years of market performance, even in the midst of the pandemic. So having a quarter where stocks pull back a

little bit, not the worst thing in the world. We now have to all pay attention to earnings coming up in the next couple of weeks, see what

Corporate America has to say about profits not just for the first quarter, but the rest of the year.

QUEST: Good Lord, I had forgotten about earnings season. There's plenty there on our agenda and plenty there to keep you and me busy over the weeks

ahead.

Paul La Monica, have a good weekend, sir. I appreciate it.

As we continue, next on QUEST MEANS BUSINESS, don't underestimate Russia's continuing power. That's the message from NATO Secretary General as we

continue the conversation with him.

(COMMERCIAL BREAK)

[15:32:16]

QUEST: Hello. A good Friday to you. I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS coming in just a moment. We're talking to the NATO

Secretary General Jens Stoltenberg. He'll be telling us about the Russian troops are not withdrawing but he is prepared -- they believe they're

preparing for the next phase of the war in Ukraine.

And airBaltic CEO pledges to be the first airline to return flying to Ukraine. We'll get to all of that in just a moment. But only after the news

headlines because this is CNN and here the news comes first always.

The FIFA World Cup draw is now being revealed. Qualifying teams have been placed into eight groups. The first match is host Qatar versus Ecuador. The

tournament begins in November.

After two long years, Italy's COVID-19 state of emergency is over. The health minister says a new phase is beginning. But he warned that doesn't

mean that pandemics finished. Indoor march will remain mandatory until the end of this month. Italy was the first western country to be hit hard by

the pandemic.

Amazon workers in New York City have voted to form a union. It's the first year U.S. union in Amazon's 27-year history. The campaign was led by a fine

employee.

President Zelenskyy of Ukraine describes the situation in the southern part of his country as extremely difficult. He says that Russia is trying to

consolidate its presence in separatists Donbas region. Meanwhile, Russia says the forces are regrouping to intensify operations in priority areas.

NATO's head, the secretary general told me, don't underestimate Russia's power, despite what we're seeing at the moment.

He spoke to me about the volatility of the conflict in Ukraine. And I wanted to know where he thought it was going bearing in mind, Russia said

it was refocusing. Did that mean withdrawing?

(BEGIN VIDEOTAPE)

JENS STOLTENBERG, SECERTARY GENERAL, NATO: I mean, that what we have seen is that they're moving forces from around Kiev and the intention is to move

them down to Donbas and then most likely engaged in offensive in the Donbas region. For me, this is not at withdrawal. This is repositioning of your

troops to engage them in battle somewhere else.

[15:35:02]

QUEST: But do you fundamentally believe that the fact -- the very fact that they're doing that means that they are abandoning the hope of taking places

like Kiev, Kharkiv in the West?

STOLTENBERG: No, that I think it's far too early to reach -- to make that conclusion, but I think it reflects that they have experienced much more

resistance and the fight has been much more difficult for Russian forces. They need to concentrate and to regroup or to focus now on the Donbas

region.

QUEST: If the strategy both on the diplomatic front is a peace ceasefire, peace treaty, that seeds Donbas, then it makes sense to an extent, doesn't

it? To increase the military battlefield against Donbas, take that -- I mean, a much powerful, more powerful position to go into negotiations.

STOLTENBERG: But I think we all have to realize that at the beginning there -- the aim was to take both Kiev and Donbas, then they have not been

successful in either taking Donbas nor Kiev. And then because they have a much stronger Ukrainian resistance than they expected, and then they are

now changing or regrouping. But this is not the withdrawal, it is actually just another way to wage war.

And we see that the shelling continues. And we see that the human suffering continuous. So, the war continuous. It's not the real withdrawal from the

war.

QUEST: But if the war focuses on Donbas, is there a danger that the rest of the world says, all right, well, we protected or he is protected in most of

Ukraine, we can let Donbas go to Russia?

STOLTENBERG: NATO's position is clear. We support Ukraine's territorial integrity and sovereignty within its international recognized borders. And

that's also a reason why NATO allies for many years, actually, since 2014, have supported Ukraine, allies of tens of thousands Ukrainian forces which

are now on the frontlines fighting the invading Russian forces. We have equipment for many years.

So, the Ukraine Armed Forces are bigger, stronger, better equipped, better lead now than they ever have been. And then combined with the courage and

the commitment of Ukrainian forces, they have been able to actually fight back and resist the invading Russian forces. And that's exactly what we are

going to continue to do proud and with support.

QUEST: But you were surprised at the -- at the -- at the lack of professionalism or the lack of process, that the Russian forces they

haven't performed as NATO had predicted or believe they would. We all thought -- we all thought it was going to be over in a week and a half.

STOLTENBERG: But every plan, in a way, doesn't survive the first day of battle. So that was exactly what happened with the Russian plan of taking

Ukraine in a few days. Because they partly underestimated the strength of the Ukrainian forces and overestimated the strength of their own forces.

You should not underestimate Russia because Russia is still the biggest land power in Europe.

And we have also seen that President Putin is willing to use force to achieve his objectives. And that is one of the important lessons to be

learned from the invasion of Ukraine.

QUEST: You do have many moments of -- in which I thought your diplomatic skills were -- what par excellence when you were with the former president

of the United States Donald Trump. As you had to go through this, what role is NATO got paying the bills for NATO? This event, this Russia event far

from being desirable. But are countries paying that us faster as a result?

STOLTENBERG: Yes. What we have seen is that first of all, since we made the decision in 2014, all allies started to invest more and more and more

allies are meeting the (INAUDIBLE) spending two percent of GDP on defense. Since the Russian invasion of Ukraine, many allies have made announcements,

not least Germany to meet the two percent guideline. And I welcome that, because in a more dangerous role, we need to invest more in our security

what's exactly what NATO allies are doing.

QUEST: Do you ever feel not that you would because you're way too diplomatic but then you wish sometimes you could say to the members, I told

you so. If you'd only started paying the dues properly in the first place, we might not be in this mess.

STOLTENBERG: Well, I think all allies realized that it was the right thing to start. And I think allies perhaps also realized that issue started even

earlier. But the good news is that over the last -- since 2014, we've seen a significant increase in defense spending across Europe and Canada. $270

billion extra U.S. for defense all these years. And now they're stepping up even further. So, so we are investing because we need to do that.

When we see more global competition, we see a more dangerous role and then we see the aggressive actions of Russia.

QUEST: Do you lie awake thinking about Putin using the unthinkable weapons? I mean, for the first time in our lives -- let's be blunt here.

[15:40:04]

For the first time in our lives with similar age, we are facing the -- somebody actually saying, I might use a tactical nuclear or I might not,

that keeps people awake at night, does it keep you awake?

STOLTENBERG: It makes me concerned because we have two tasks in this conflict. One is to provide as much support to Ukraine as possible, but at

the same time, prevent this conflict from escalating to become a full- fledged war between NATO and Russia. Because that may actually lead to the risk of use of nuclear weapons. And we have a responsibility to prevent

that from happening.

And we do that, not least by increasing our presence on the eastern flank, to send a very clear message to Russia that an attack on one ally will

trigger the response from the whole alliance. And this increased presence is not to provoke a conflict, but to prevent the conflict and also prevent

escalation of the conflict in Ukraine.

QUEST: But if there was and I'm -- if there was use of a tactical weapon in Ukraine, God forbid, where, for example, fallout went into NATO countries,

would you regard that as an attack on NATO?

STOLTENBERG: We live in a very dangerous and unpredictable situation and a more dangerous security environment. And therefore, I think it's very

dangerous to speculate too much. What I can say -- because that will add to the uncertainty. But what I can say is that an attack on the nature of our

country will trigger a response to the whole alliance. That is the very clear message we are sending, not only words, but also in deeds by

deploying tens of thousands of more troops in eastern part of the alliance and increasing readiness of our forces.

So, there should be no room for miscalculation in Moscow, about our willingness and commitment to defend all allies. And by doing that we are

preventing them from attacking any NATO country.

QUEST: Finally, you have said you're staying on for a year. You have forgiven or forgotten the delights of monetary policy in Norway. And the

jobs are gone to the deputy. Why did you decide to stay?

STOLTENBERG: Because we are in the midst of a very serious security crisis for Europe. Because I -- for me, it's a privilege to continue to secretary

general of NATO. And I'm honored to be asked by third allies to continue and then I felt that was the most important thing I can do. And therefore,

I accepted the offer to continue.

(END VIDEOTAPE)

QUEST: The Secretary General of NATO talking to me earlier. After the break, airBaltic was the airline, the last one to stop flying to Ukraine.

After the break, the chief executive tells me he'll be the first to return.

(COMMERCIAL BREAK)

[15:45:38]

QUEST: The chief executive of airBaltic told me he wants his airline to be the first to return flying to Ukraine. It was one of the last to stop

before the war. In fact, on the night, the war began earlier that evening, Martin Gauss was on QUEST MEANS BUSINESS. And we discussed the preparations

he was making for what might or might not happen. We didn't know what happened quite so quickly.

(BEGIN VIDEOTAPE)

MARTIN GAUSS, CHIEF EXECUTIVE OFFICER, AIRBALTIC: We have the demand currently in both directions. But we're monitoring it and we are fueling

the aircraft so that it could even in the air return and we stay in touch with our aircraft all the time. So, we are prepared for anything at any

minute. But we are still offering the flights and we still receive also significant bookings for both directions.

(END VIDEO CLIP)

QUEST: Well, that was just a few hours before Russian tanks moved in. And Martin Gauss told what happened thereafter.

(BEGIN VIDEO CLIP)

GAUSS: At 4:00 in the morning, I got the call that the war has started. And we did not fly. And we turned contacted the Ministry of Foreign Affairs to

evacuate the passengers which were in Kiev. So, without the plane, so that was pretty dramatic. I remember that.

QUEST: And what's the current situation? Obviously, you're not flying there at the moment.

GAUSS: We took care of our stuff. So, they are all out. And we have three aircraft every evening in Riga now and we really do that to go back to the

three destinations, Lviv, Odessa and Kiev. We really want to do that coming from the Baltic states to be in there and help rebuild the moment it

works. So today, it's not possible. But if we have a chance to go back in, we will be going back in.

What we do now, we have three aircraft which could go on night flights somewhere. And they are not going because we want to have three aircraft to

immediately open again our operation into Ukraine the moment we can. This is really something -- we're from the Baltic states. We have a very --

we're very close. We know historically, the people in the Baltic states. Know what it means to be occupied.

And we as an airline, being so close. We stopped there as the last one, we will be the first one going in.

QUEST: You have a race with Michael.

(CROSSTALK)

QUEST: Michael says he will be the first back into Ukraine.

GAUSS: Very simple, very easy. We have one hour, 30 flight time I think from Ireland, it's much longer. So, we'll be first.

QUEST: You can meet on the ground.

GAUSS: Yes, yes.

QUEST: You can meet on the ground there. The bigger issue is what you've just alluded to. This is more than -- that has hit people much harder

because of why in your view?

GAUSS: The Baltic states were occupied by the Soviet Union 30 years ago. They were fighting for their independence, not with weapons, but peacefully

and they got independence after being occupied. If you -- and many of my employees are -- have been -- had the Soviet passport, today they are free

Latvians, they are NATO, they are Europeans. They can judge what it means. I think the Baltic states and that's why they are so vocal on the -- on the

NATO on defending the border.

But they also feel it differently. They feel how the Ukraine people feel. And I think that is what we feel in the country.

QUEST: And when you're running the airline, obviously commercial and safety and all these other issues coming. But you want to be part of this?

GAUSS: No, we are in this region, right? We have a border in Latvia with Belarus and Russia. We are in the three Baltic states. We feel that that is

part of our business. It was in the -- in the last 26 years since we exist. We were serving these countries. And we want to do that also in the future.

We are connecting people. And I have employees from Ukraine, from Russia and from Latvia and that we all working together peacefully and it works.

And we -- I think we can be also a symbol in the region for that connectivity which has to come back.

QUEST: If we take that out of the equation just for a second, the Ukraine. The rest of the airline and the rest recovery from COVID, it was actually

doing quite well.

GAUSS: And it is now doing well because we're getting out of COVID like everybody else. We see good bookings coming for the summer, especially

outbound. A little drop now for the inbound to the Baltics, I think because of the reporting of what's happening. But the outbound is upsetting it.

QUEST: I just want to quickly talk on this NFTs business. You keep doing NFTs of your planes and various.

[15:50:09]

I think you're on the ninth all the 10th at the moment. But there's a bigger point here, isn't there?

GAUSS: Yes. That's the Baltic city collection that was a year ago started. That's a marketing thing for promoting (INAUDIBLE) cities. But we are

coming out actually with something new, real NFT collection. And why we're doing this? We're learning. We learned a lot last year on this blockchain

technology. And what we are doing long term is tokenization of a frequent flyer program. Nobody has done that yet.

And we need to learn by doing certain things. Because with that, we will reduce complexity costs and make a better frequent flyer program for our

customers. But that is a journey, we've started that a year ago, it was issuing that first NFT, will be in May issuing Planies they are called. So,

that is something new. And airBaltic is very innovative. And we have always been at the forefront when it was about these things.

QUEST: How do you -- how do you manage this so that it is -- there's real purpose, not just gimmick behind it? Because one can -- I can see an

argument that say, oh, there he goes again. But actually, nobody else is doing this. And the reason nobody else is doing it is because it's not

commercially viable.

GAUSS: I think I have a history in the company was my team in the last 10 years because we ordered an Airbus A220-300 at that time called Bombardier

CS-300 in 2012 when the aircraft wasn't even designed. And I had to listen for four or five years how bad that decision was. Today everybody would

love to have one. So, we have over the years always done things which were very innovative.

That is also something which in three years time, people might see completely different. We have that ability, we have a spirit in the

company. We've gone for all electric cars on the ground, but not everybody does that at the moment because it looks to be more expensive. Business

case shows that in three years times with all the complexity behind it. It makes more sense to do it now. So, we're doing it now.

I think airBaltic has that in their DNA not only since I'm there I think it was there before and we just continue doing this.

(END VIDEOTAPE)

QUEST: The CEO of airBaltic. And he'll have his Planies which we'll be looking at and seeing if they're a half good investment in the future.

After the break, I'm going to show you the market. The markets been all over the place. Start with a new quarter, plenty of opportunity is ahead.

In a moment.

(COMMERCIAL BREAK)

[15:25:12]

QUEST: The Berlaymont building here in Brussels. The home of the Commission. It is still -- well, it's sort of snow flurries tonight. But

it's still jolly cold which is a good enough reason why we decided to come inside in the relative warmth of this maybe we're not that warm with the

window open but better than being stuck outside of the plaza. You get my point. The last few moments of trade on Wall Street all over the shop.

There were rumors of this. Rumors of that. A late rally, a sharp, late rally. You can see that bit of green on the right of the chart. We've had a

yield curve inversion, don't worry, we're going to talk about it. That's a great deal in the next few days and weeks ahead. And you're looking at the

Dow 30, Visa, Verizon and Merck are the gainers. That tells you all you need to know if you want to know about the state of the market.

They are the ones that are doing the best. We'll have a profitable moment or I'll have a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment from Brussels. We are at economic war with Russia. So, I told the Belgian Prime Minister to meet today. Now on

this program we've discussed on many times that this is an economic war against Russia. And it cannot be denied. Whether or not and how to avoid it

turning into a military conflict for NATO is a different issue. But I can't say telling you tonight, I had to pinch myself that I actually sat there

and discuss the possibilities and the prospects of a nuclear war if you like or nuclear weapons being used in Europe with the Secretary General of

NATO.

I would never have one second in my life thought that this would have ever got to this point. But that's the world we are in. In the same way I would

never have thought that President Putin would unite NATO and unite the European Union like nothing has before. All the conflicts within the union

have been put to one side as the countries have come together. Whether it can last post-Ukraine war, I don't know. But for the moment, at least, it's

holding and that has to be good for all.

[16:00:00]

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest live in Brussels.

END