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Quest Means Business
Ukraine Hoping To Secure Prisoner Swap With Russia; Sweden And Finland Launch Bids To Join NATO; Musk Feuds With Twitter CEO Over Scale Of Spam; U.K. Sets Out Law To Sidestep Brexit Trade Deal With E.U.; Dash To The Bell. Aired 3-4p ET
Aired May 17, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL HOST: All right, it is the final hour of trading on Wall Street. Strong U.S. sales data is pushing up stocks. The
Dow is up about 400 points. We are seeing healthy gains across all the major indices right now.
Ukraine ends its defense of the Azovstal steel plant, the last remaining Ukrainian holdout in Mariupol.
And Elon Musk continues to poke Twitter over its user numbers, this time asking the SEC to investigate.
And Ireland's leader says the British government can't just keep talking to itself after the U.K.'s lays out unilateral plans to change its post Brexit
It is Tuesday, May 17th. I'm Zain Asher, in for my colleague, Richard Quest, and this is QUEST MEANS BUSINESS.
Ukraine appears to have surrendered its last stronghold in Mariupol ordering commanders inside a steel plant to save the troops' lives. Russia
says it has evacuated more than 250 Ukrainian fighters and taking them to Russian controlled territory. As you can see in this video, some had to be
carried out on stretchers from the plant. They had so fiercely defended.
Ukraine hailed the fighters as heroes of our time. Now, they are in Russian hands. Kyiv says its hopes for prisoner swaps to free some of the most
With the surrender, Moscow gains control of Mariupol and also completes a land bridge from its border to Crimea.
Melissa Bell joins us live now. So Melissa, just walk us through what happens to these Ukrainian fighters that have been evacuated, they are now
technically prisoners of war.
MELISSA BELL, CNN CORRESPONDENT: Correct. The evacuations had begun yesterday, Zain, and that, of course, a source of huge hope for their
families. But it also marks a significant turn in this war and could mark the beginning of a new phase and as you just said, that important land
bridge between Crimea and Donbas now established for Russian forces, it gives them that swathe of territory that they can claim as a victory in
their fight that began just under three months ago here in Ukraine.
Of course, there is the question from a humanitarian point of view what that means and you're quite right to point out to those wounded, some of
them having to be carried out on images that are difficult to watch. These are the images have been released by the Russian Ministry of Defense with
blurred images, because we're talking about prisoners of war at this stage.
The surrender of Azovstal, important, of course, militarily, strategically in terms of the war's momentum, but it was because they were so heavily
wounded, it was because they were running out of food, that the decision was made to announce their surrender and to allow those evacuations to
A huge period of wait now opens for the families of those fighters because none of them has any way of knowing whether their loved one is amongst
those evacuated so far, or indeed, whether that prisoner exchange that you mentioned will in fact happen. It is still the subject of intense and
difficult negotiations that Zelenskyy had warned last night required delicacy and time.
We caught up with the wife of one of those fighters earlier on today in the suburbs of Kyiv. Now, she had heard the news, as had everyone else on
Ukrainian television last night that those evacuations had begun, as a result she and her daughter had been shopping this morning to go and buy
some food just in case her husband came home. Have a listen.
(BEGIN VIDEO CLIP)
TATYNA, MOTHER OF UKRAINIAN SOLDIER (through translator): We so hope that he will return, that this will happen. We have been waiting for it for so
long. We love him very much and are waiting for him
LERA, DAUGHTER OF UKRAINIANS SOLDIER (through translator): I really want my dad to come back. Our family has been through so much since 2014. Poor
(END VIDEO CLIP)
BELL: You now that family that mother and daughter that you just heard from, two-time refugees since they fled 2014 in the Donbas area after it
fell to Russian-backed separatists. They then had to flee the siege and ultimate razing of Mariupol in March and now, find themselves in the
suburbs of Kyiv waiting to find out if their father and husband is amongst those who will be released.
But clearly, that now the subject of intense negotiations between two countries whose overall negotiations have now been suspended, an adviser to
President Zelenskyy announcing earlier today that the search for some kind of diplomatic resolution or political negotiated settlement between Russia
and Ukraine, those talks now suspended, because Ukraine simply doesn't agree with the Russian idea of looking for some sort of partition of the
territory. That's certainly what the adviser had to announce earlier on.
So for the time being, the fate of those fighters hangs in the balance, and the fate no doubt of the war, also. We wait to hear what Russia intends to
do next. But clearly, it can claim an important victory tonight by claiming Mariupol and of course, that huge swathe of territory that I mentioned a
moment ago -- Zain.
ASHER: All right, Melissa Bell live for us there. Thank you so much.
A fresh indication that Moscow's war on Ukraine is not going according to plan. A retired Russian General went on state TV and said so. In a rare and
surprising public critique of the war, the former General described the military's situation on the ground and said that Russian forces face a
tough battle ahead.
(BEGIN VIDEO CLIP)
MIKHAIL KHODARENOK, FORMER COLONEL, RUSSIAN ARMED FORCES (through translator): I must say, let's not drink information tranquilizers because
sometimes information that is spread about hearing some moral or psychological breakdown of Ukraine's Armed Forces, as if they are nearing a
crisis of morale or fracture. None of this is close to reality.
(END VIDEO CLIP)
ASHER: Despite heavy fighting in Eastern Ukraine and missile strikes almost to the Polish border, Russia still is not close to capturing what
would be perhaps its biggest prize, the strategic and vital port city of Odessa.
Still, Russia has been shelling the region and has ships in the Black Sea of Odessa shores and as the city faces off against the Russians today, it
is also struggling with the Russians of its past.
CNN's Sara Sidner explains.
SARA SIDNER, CNN SENIOR NATIONAL CORRESPONDENT (voice over): The remains of freshly bombed buildings, a hotel, and homes reduced to dust. The result
of the latest Russian missile attack in the Odessa region that has experienced strike after strike on places people live, work, and visit.
This is Russia's attempt to terrorize a target it desperately wants to possess.
Tell me what the strategic importance is of Odessa.
(GENNADY TRUKHANOV, ODESSA MAYOR speaking in foreign language.)
SIDNER (voice over): "This is the sea gate of our country," he says. "This is the city of legend." It is home to Ukraine's largest Black Sea Port used
both commercially and militarily. Russia has already attacked its oil refinery.
If Putin forces were to take the Odessa region, Ukraine's entire Black Sea coast would be controlled by Russia. The mayor of Odessa bristles at the
(GENNADY TRUKHANOV, ODESSA MAYOR speaking in foreign language.)
SIDNER (voice over): "Ukraine today as a maritime power. It will be a completely different state without access to the sea, without transport
logistics," he says. "We, and our Armed Forces will do everything to prevent the enemy from entering."
But the ties to the enemy run deep, historically and financially. Before the war, Russian tourist helped this Ukrainian seaside city thrive.
(OLEKSANDR BOBBITT speaking in foreign language.)
SIDNER (voice over): "Idyll. Russians really liked our cuisine, our shops here, the sea, architecture, and there were no problems." Oleksandr Bobbitt
(ph) is a historian who also owns a tour guide company.
He says citizens of Odessa speak Russian more than they speak Ukrainian, pro-Russian politicians were voted into office regularly. The mayor was
once friendly with Russia. He himself spoke to us in Russian.
SIDNER (on camera): Were you pro-Russian before and changed.
(GENNADY TRUKHANOV, ODESSA MAYOR speaking in foreign language.)
SIDNER (voice over): "I want to say that I have always had with pro-Odessa views," he says, "But I love and respect the history of my city where I was
Everywhere you look in the city is a reminder of its Russian history. There are statues of Alexander Pushkin considered Russia's greatest poet and
monuments to the conqueror of this land, Russian Empress, Catherine the Great.
Her sculpture used to be guarded and kept pristine. Now, it is soiled and a fresh Ukrainian flag flies on it. There has been a long fight over whether
to remove these symbols of imperialism in Odessa.
(OLEKSANDR BOBBITT speaking in foreign language.)
SIDNER (voice over): "There is social demand, let's say and we need to get rid of these symbols," he says. Not everyone agrees. Odessa writer and
poet, Paul Makarov (ph) says the monuments should stand.
(PAUL MAKAROV speaking in foreign language.)
SIDNER (voice over): "The attitude was positive. We appreciate and respect Catherine. Today's events should in no way affect our attitudes towards
(OLEKSANDR BOBBITT speaking in foreign language.)
SIDNER (voice over): "And there is this problem, if we remove the monument of Catherine, we need to rename the square," he says. "It was for a time
named after Karl Marx; for a while, named after Hitler. Then again Karl Marx. And here again after Catherine. What name should we choose?"
But the more Russian missiles wipe away lives here, the more fierce the argument to erase the physical reminders of its Russian past.
Sara Sidner, CNN, Odessa.
ASHER: Finland and Sweden are moving one step closer to NATO membership. Speaking alongside the Finnish President in Stockholm, Sweden's Prime
Minister said the two countries will submit applications to join the Alliance on Wednesday.
Earlier Finland's Parliament overwhelmingly voted in favor of joining NATO. Both governments say they believe differences with Turkey will be resolved.
Nina dos Santos joins us live now from Stockholm. So, Recep Tayyip Erdogan, the President of Turkey has said that he condemns what he believes is the
willingness of these two Nordic countries to host Kurdish militias. What makes the governments of both Sweden and Finland so competent, this issue
is going to be resolved -- Nina.
NINA DOS SANTOS, CNN CORRESPONDENT: I'm glad you asked that question, Zain, because it's a question I got the chance to put to Magdalena
Andersson, the Prime Minister of Sweden just after a press conference that she hosted with Sauli Niinisto who is the President of Finland who is here
for a State Visit that has been taking place, a very carefully choreographed one over the course of these accession plans being voted on,
debated on, and now as you said, signed off.
And essentially, it appears as though Turkey or at least, Turkey's President is raising two points here. One, as you mentioned, yes, it's the
large number of Kurdish people who have sought asylum here in Sweden. But on the other hand, it's also an arms embargo that Sweden pushed for and
implemented on Turkish weaponry after 2019 when Turkey -- apologies, I've got a problem with the light here -- when Turkey invaded parts of Northern
Syria for military operation there. So those are some sticking points.
But Magdalena Andersson appeared to be clear about the fact that there might be some negotiating room. She said she was looking forward to having
more bilateral conversations with Turkey about this very issue. Take a listen.
(BEGIN VIDEO CLIP)
MAGDALENA ANDERSSON, SWEDISH PRIME MINISTER: We've stated very clearly to Turkey that we are ready to talk, we are ready to go to Turkey to have
bilateral discussions on the way forward. So, we are ready to do our part.
(END VIDEO CLIP)
DOS SANTOS: Well, that's quite a big deal for a Prime Minister who, on the one hand, whose party was staunchly against NATO, up until just March of
this year, for 73 years, the Social Democrats here in Sweden have made it their main policy to be against NATO, and they've had a U-turn on that.
And now also to see this reproachment with Turkey from a woman who is going to potentially fight an election in four months' time, that's also a big
thing for a domestic policy point of view.
But looking beyond that, what does this mean for this part of the world? It is a huge geostrategic shift. And it's going to start happening very, very
quickly. As you pointed out, we've got the paperwork heading over to Brussels, to NATO headquarters. Tomorrow morning, we'll have the
ambassadors of these two countries having a meeting with the Secretary- General of NATO, Jens Stoltenberg tomorrow morning.
And then on Thursday, there is the big show of support from President Joe Biden himself because he's invited the leaders of both Sweden and Finland
to the White House to talk about their accession plans, that is being viewed very much as a big diplomatic push on behalf of the United States in
favor of getting these to rich countries with big defense sectors by the way into the block. It'll mean a much more secure NATO for the future, some
members say -- Zain.
ASHER: Nina dos Santos, the consummate professional despite all the issues we were having there with your lights and your camera, you held it
together. Thank you so much. Appreciate that.
All right, Twitter's fate is more uncertain than ever. Elon Musk again says his takeover is on hold and his reasons are making some speculate that
perhaps he is getting cold feet. More on that, next.
ASHER: A regulatory filing by Twitter says Elon Musk quickly reached a deal to buy the company before raising concerns about fake accounts or
bots. Musk now says the deal is on hold until Twitter proves its user numbers are accurate. He even tweeted at the SEC to investigate.
Twitter shares are up today, but still well below Musk's offer of $54.20. Twitter says it is holding him to that price.
CNN's Brian Stelter is here with the very latest. So, Brian, what is going on here? Is Elon Musk trying to wriggle his way out of this? What are your
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Yes, yes, he is. Could a Musk maneuver be any more glaring, right? He is clearly trying to use this
spam bot issue, which could have come up in due diligence before signing any paperwork. He is trying to use this now to wriggle out of the deal.
As you said he is trying to do it in a very, very obvious way and he is being called out by Wall Street analysts, by observers. Whether that
matters or not, I think remains to be seen.
As you said the Twitter stock price is so far below Musk's offer a $54.20, and the Twitter Board wants to hold him to that offer. So there's a massive
gap right now in valuation and a big question mark about what happens, but anybody who thought when Musk announced that he was buying Twitter, when he
was taking over, anyone who was skeptical, anyone who was suspicious, anyone who doubted this would actually go through, they are being proven
correct right about now.
ASHER: So what are the consequences, though if he does try to back out? Does he pay a fine?
STELTER: Well, so it's an interesting question, right? Because you or I, normal people would face real consequences, right? There would be fines
that would actually hurt, actually pinch. There would be, you know, potentially, you know, legal consequences, years of lawsuits are possible
out of this.
But for someone like Elon Musk who has essentially infinite resources, I'm not sure any of those consequences really apply or really pinch him that
badly. And I think it's a fascinating question in the years to come, because this is probably going to unwind for a long time.
You can imagine the number of possible shareholder lawsuits and other sorts of legal maneuvers that will come if this deal just totally collapses, and
Twitter is left without a buyer.
But will those consequences actually hurt him? I think it's a different question. Yes, there could be a $1 billion breakup fee. But for Elon Musk,
is that just called Tuesday?
ASHER: Yes, because he's so rich. But just in terms of, you know, this whole bots issue that he has been raising the issue of what percentage of
Twitter's users are fake? What percentage of the accounts are not real?
This is an issue that Elon Musk has, of course, been aware of. Twitter has struggled with this issue for some time. So why is this coming up now all
of a sudden?
STELTER: Right. This has been an issue for years, but Twitter has been disclosing this as an issue for years. It's been regularly reporting that
it has been tracking this and trying to stamp out the spam bots, trying to remove fake accounts.
And as the current CEO explaining that Twitter thread on Monday, the company is working on this on a daily basis and removing accounts every
single day. He said more than a million accounts a day. So if Musk had wanted to know more about this before offering to buy Twitter, he certainly
could have. Instead he said he was going to take action on it. He said he was going to come in and solve the problem and then only weeks later, once
Tesla's stock declined, once the markets declined, once this deal didn't look so hot, then he claimed that this was an issue that is worth putting
the deal on hold over.
In fact, remember, he linked to a two-week old news story initially to justify putting the deal on hold. So this has all been such a charade from
the beginning, Musk coming up with an excuse to pull out of the Twitter deal. But the spam bot issue actually is interesting.
And Twitter executives and the Twitter staff was actually worked really hard at removing fake accounts because it is a problem for the company.
Advertisers don't want to be advertising to spam accounts, they want to advertise to real people. So it's a real problem for Twitter and other
companies. But I almost think Musk is making a mockery out of it by sharing poop emojis and by dismissing the real efforts of Twitter to take it
seriously and using it as an excuse to get out of this deal.
Or look, he might not be getting out of it. He might be trying to renegotiate. Right? He might be trying to get a much lower price, but I
guess that's why he's doing that emoji roll over the stock right now.
ASHER: Yes, but as he points out, if he does end up paying that $1 billion fine, maybe it is just another Tuesday for Elon Musk, given how much money
All right, Brian Stelter, we have to leave it there. Always good to see you, my friend.
STELTER: You, too. Thanks.
ASHER: Walmart says it expects the rising cost of food, fuel, and wages to cut into its profits this year. The retail giant shares are taking a dive
on the company's revised profit outlook.
The company's first quarter earnings also missed expectations. Executives are blaming inflation. They say Walmart shoppers are shifting away from
discretionary items and buying fewer things.
Paul La Monica has more for us to just explain to us how much inflation is affecting the average Walmart customer.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, Zain, clearly it is having a significant impact so much that Walmart really had a poor quarterly
earnings report and also gave guidance that Wall Street did not like at all, and the stock is plunging on this news, and it is bringing down some
of its fellow retail competitors, Target, which reports earnings tomorrow, its stock is down not nearly as dramatically as Walmart, which is at last
check, plunged more than 10 percent. Target was down about two or three percent, so still notable and significant but not as drastic as Walmart.
I think there is definitely a sense on Wall Street of people being concerned that maybe the U.S. consumer is starting to show some cracks
because of higher prices for just about everything. Inflation is clearly a significant problem for this economy.
ASHER: So besides Target, which obviously investors are fearing right now, what other retailers are likely to be affected by this exact same issue --
LA MONICA: Yes, I mean, I would imagine that just about any retailer that has a big presence with commodity based goods, food, first and foremost, it
is going to be an issue you're seeing with the price of clothing, with other goods as well.
What's notable though, Zain, is that the housing market, that's an area of the economy that a lot of people still wonder, is that the next shoe to
drop so to speak? Will people start to be concerned about higher mortgage rates as the Fed raises interest rates? It doesn't seem like that might be
the case just yet when you look at Home Depot's results.
Home Depot had a better than expected earnings report this morning and good guidance. So Home Depot stock is actually up at last check today, despite
what's going on with Walmart so that could be a good sign for Lowe's, which reports tomorrow morning as well in addition to Target.
ASHER: Interesting with Home Depot there. All right, Paul La Monica live for us. Thank you so much.
Steep rate rises are coming for the E.U. and the U.S. if inflation doesn't use. A European Central Bank official says there could be a half point
interest rate rise in July and Jerome Powell says the Fed will not hesitate, will not hesitate to continue raising rates in half point steps.
Speaking to "The Wall Street Journal," Powell said the economy is strong enough to take tighter monetary policy.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIRMAN, U.S. FEDERAL RESERVE: We know that this is a time for us to be tightly focused on the path ahead and on getting inflation
back down to two percent. We know how people are suffering from high inflation and we have both the tools and the resolve to get inflation back
And no one should doubt our resolve in doing that. And I think if you look at how quickly we've moved in the last few months, really, then you'll see
that financial conditions have tightened quite a bit.
What we need to see is inflation coming down in a clear and convincing way, and we're going to keep pushing until we see that.
(END VIDEO CLIP)
ASHER: Erik Nielsen is the Chief Economic Adviser at UniCredit he joins us live now from Berlin.
Erik, thank you so much for being with us. So you heard Fed Chair Jerome Powell basically saying that no he will not hesitate to continue raising
interest rates in this country, in the U.S., until inflation comes down. How is the market -- how would the marketplace respond to that?
ERIK NIELSEN IS THE CHIEF ECONOMIC ADVISER, UNICREDIT: Well, I think in America, Zain, it is priced into a large extent, right? We were -- there
was some fear of that they might go a bigger step than 50. But, I think my assessment, at least, is that it has been pretty well communicated in
America. And it is a quite -- there's a great consensus that inflation in America compared to Europe is, it's a demand driven thing.
There is too much heat on the economy and the Fed has to do something right. So that differs quite a bit from where the consensus is a little bit
ASHER: Let's see what the Dow is doing right now, if you could just pull that up. Last time I checked, it was up about 400 points or so. Right? It
still is. But we've seen the markets sort of seesawing over the past few weeks in this country.
Are investors slowly getting used to this idea that, you know, this is the new normal, that high interest rates are here to stay in this country?
NIELSEN: I don't know. You know, I'm in the School of Bill Dudley who, who famously wrote, right, that we sometime in the market forget that that when
the Central Bank tightened policies, it is to tighten financial conditions, it is to slow the economy and that comes almost always with some lower
asset prices in the equity market.
That's part of a way of taking some of the stimulus away or even tighten policy. So I'm in the camp that think -- who thinks that we would have a
lake further down. I mean, maybe not a big one, but a lake further down in markets.
ASHER: And just in terms of a recession here in the United States, what are your thoughts on how soon you might see a recession? And whether or not
we can actually avoid one?
NIELSEN: That's a very good question. I don't think the U.S. will get a recession, Europe is in greater danger of that, be closer to the war, and
we are much more being hit -- we are hit much harder by the commodity prices. But the point here, I think, for the U.S. is that the world is
really not in a good place now. Right?
The U.S. has been pushing along pretty nicely, because of all the fiscal stimulus and what have you. But if you look around the world that you have
emerging markets, certainly looking increasingly difficult, China, particularly slowing probably more than they print their numbers, and
Europe doesn't look so good, either.
So at a time when we are coming in here with some withdrawal, or maybe substantial withdrawal of stimulus in America, maybe on both fronts of
fiscal monetary policy, you're certainly seeing a -- you will certainly see a slowdown, but I don't think the U.S. will hit a recession, but it could
be close, but I doubt it.
ASHER: And just in terms of China, since you touched on China, we're seeing China's Zero COVID policy having a massive effect when it comes to
demand. In fact, not a single car, not a single car was sold in Shanghai in the month of April. That's incredible. How is all of that impacting the
global economy, do you think?
NIELSEN: It's big, right? And I think that there's a big possibility that it's even bigger than the numbers they print. Remember, China has first big
structural issues in terms of growth, the demographics that has been long running issues. Now we don't even talk anymore about the big outbreak they
have which is the real estate crisis, the financing of the real estate, which is where they are doing the best to hold it, but their leverage in
the system in China is huge.
I mean, if you think back to the crisis event here in Europe, and you remember Ireland and Southern Europe, these were peanuts compared to the
numbers that China has now and then comes on top of that, their very peculiar handling or tough handling of the COVID crisis, and you said it
exactly, the right -- the pictures we see from Shanghai and others. It's absolutely devastating.
So the numbers are -- we, economists have always thought that the Chinese are smoothing their GDP numbers a little. You don't get such quarterly
numbers quarter after quarter, and that's okay, whatever but now, I rather suspect that this moves them a little bit more than they should do, maybe
for political reasons up to the Congress at the end of the year or something but that's a guess on my part, but it doesn't look good.
ASHER: Right. You're low on trust there. All right, Erik Nielsen --
NIELSEN: I have low trust.
ASHER: Live for us there, thank you so much.
All right, still to come here on QUEST MEANS BUSINESS, a brewing Brexit fight. The U.K. wants to sidestep its deal with the E.U., the Irish Prime
Minister says U.K. needs to take the negotiation seriously. He spoke about it with Richard Quest. We will have that next.
ASHER: The U.K. government says it's putting forward a new law that is sure to increase tensions with the European Union over Brexit. The law
would nullify certain elements of their 2019 Brexit agreement.
The E.U. says a unilateral change would breach international trade rules and warn it would retaliate if the law is passed. The U.K. says it still
hopes to negotiate a solution to its trade dispute with Brussels.
Ireland's leader says the U.K. is not sincerely engaging in talks with the European Union. He spoke to Richard Quest.
MICHEAL MARTIN, IRISH TAOISEACH: It's time you started negotiating seriously in a substantial way, with the European Union. This is the treaty
that you signed up. The British government signed up to this, ratified it in Parliament and now have misgivings in terms of the potential operation
of this protocol because, let's not forget, some aspects of this haven't been adhered, grace periods, exemptions and so forth.
But nothing can replace substantive, professional negotiations between the European Union and the United Kingdom to deal with issues that have
legitimately arisen in respect to the operation and of the protocol, particularly with by the Unionists within Northern Ireland, which we
believe can be resolved through (INAUDIBLE) --
RICHARD QUEST, CNN HOST: Right, but they would say that there has been negotiation for the last six months to a year, there has been negotiation.
The E.U. proposals are not acceptable to the British and vice versa. And therefore, this is the way forward. They are not, of course, at the moment,
activating Article 16.
MARTIN: There hasn't been negotiations for the last six months.
MARTIN: But they all haven't (ph) There hasn't, de facto, because there are (INAUDIBLE) happening in Northern Ireland. There were engagements prior
to Christmas. And we refer to (INAUDIBLE) which the vice president of the European Commission, he got far (ph) with very significant advances.
And I think listening, you know, he met Unionist politicians and also industry and business in Northern Ireland. By the way, the protocol is
advantageous now. It's working in favor of industry, business, jobs, agriculture in Northern Ireland. And most people in Northern Ireland want
to retain access (INAUDIBLE) market.
QUEST: Would you support a change in the protocol?
MARTIN: We are prepared, as members of the European Union, through negotiations between the European Union, the commission vice president and
his team and the U.K. government, to minimize the impact in terms of checks and so on of the operations of the protocol, which can be done, with
sensible engagement it can be done.
But this kind of going off, start, you know, -- the British commons (ph) just can't keep talking to itself about this. It needs to really get into
proper negotiations with the European Union.
ASHER: At the heart of this latest Brexit fight is the Northern Ireland protocol. It's a deal that was signed in 2019 to ensure that even with the
U.K. leaving the European Union, the border between the Republic of Ireland and Northern Ireland would stay open. Bianca Nobilo explains.
BIANCA NOBILO, CNN ANCHOR AND CORRESPONDENT (voice-over): All of the disruption of Brexit, arguably the thorniest challenge and least bated
beforehand was its effect on the island of Ireland. The Northern Ireland protocol came into effect in 2020 to try and address some of these
It had two key objectives: number one, protecting the E.U.'s single market, which allows the free movement of people, goods, services and
capital. The cause, Northern Ireland is part of the U.K., separated by the Irish Sea. The Republic of Ireland is part of the E.U. So this is now the
only land border between the U.K. and the E.U.
The second thing was avoiding a hard border on the island of Ireland. The removal of border checks was an important part of the peace process in
recent decades. There were fears that the restoration of the hard border here would have an incendiary effect on tensions between the Unionists, who
want Northern Ireland to remain part of the U.K., and Republicans, who want unity with the Republic of Ireland.
Plus they had to find a way to mitigate the economic and social impact on people and businesses which move across this border frequently. So the way
to square the circle ended up being customs and regulatory checks on the movement of goods between Great Britain and Northern Ireland, effectively
creating a border in the Irish Sea, which has infuriated Unionists.
So why does this matter?
A Northern Ireland executive is in deadlock because of. It Unionist parties are refusing to reenter government until major changes are made to this
protocol. Because this assembly is based on power sharing, there must be both the nationalist representative and the Unionists. And one cannot be in
power without the other.
So U.K. prime minister Boris Johnson, there he is, says that he wants to get the government there back up and running. He's also arguing that
circumstances have changed dramatically since the protocol was agreed; namely the pandemic and a European war worsening the cost of living crisis.
So he's threatening to override the protocol to make changes that are palatable to his government and Unionist parties in Northern Ireland and he
says he will do that unilaterally, saying that the U.K. would have a necessity to act, if a compromise can't be found with the E.U.
But the E.U. has made it clear that unilateral action would be a breach of international law, which is not a good look for a head of state. And the
E.U. has warned that taking that step could spell a trade war and/or legal challenges.
And Sinn Fein, now the largest party in the Northern Ireland assembly, has warned that the prime minister tearing up the protocol will destabilize
ASHER: Bianca Nobilo, joins us live now.
Thank you so much for breaking that down there.
With this standoff happening now between the U.K. and the E.U., neither side willing to budge, what is the solution?
NOBILO: What we've seen today is the foreign secretary, Liz Truss, putting forward a plan to Parliament, to enable the United Kingdom to move
unilaterally on this, essentially moving out of the way of a solution and toward unilateral decision-making by the U.K.
But the E.U. has said they will not tolerate any form of unilateral action from the United Kingdom, that they are willing to explore different
But the E.U. have underscored they have significant concerns if the U.K. do want to go ahead and essentially change the rules to suit them. And they
have said that they would use any measures at their disposal to retaliate.
Some have thought that that will indicate a potential trade war. But in terms of what the U.K. actually wants to achieve here, some of their main
grievances are around checks on British sausages and uncured meats, veterinary checks.
They want the ability to change VAT to address the cost of living crisis in Great Britain, especially providing energy relief and, crucially, they want
to get rid of the remnants of the European Court of Justice arbitration in Northern Ireland.
That really offends the eurosceptic sense of sovereignty. So one of the proposed solutions that has the most likely success because the E.U. have
indicate they would countenance something like this is the idea of a green lane for goods going from Great Britain to Northern Ireland that are only
destined for Northern Ireland and then a red lane, with extra checks for goods leaving Great Britain, which are intended for Ireland.
But the fundamental principle of this is the fact that you cannot have an inviolate Good Friday agreement, an impeccable union and Brexit all at
once. It's just not possible unless you are Houdini or Einstein. And we don't have that. We have Boris Johnson and the E.U.
ASHER: They are in an impossible situation.
What is the significance of the U.K. basically breaking international law?
NOBILO: It is something politicians, even within the prime minister's party, and diplomats are deeply concerned about how that would look and
what it would telegraph to the global community. They think it would undermine Britain in the eyes of the world in this rules based order and in
the eyes of its allies and empower adversaries who want to play around with a rules based order, as things stand.
It also would problematize (sic) things when dealing with the Northern Ireland executives. As you mentioned, as I said, one of the key issues here
is the Northern Ireland executive is not functioning at the moment because the DUP won't come to the table as they do not like the protocol as it
The other part of that executive has said that if the prime minister goes ahead and unilaterally breaks international law, then they won't partake.
So he is now between a rock and a hard place.
ASHER: Bianca Nobilo, live for us there. Thank you so much.
That is QUEST MEANS BUSINESS. I'll be back at the top of the hour as we make a dash for the closing bell -- up next, "LIVING GOLF."
ASHER: Hello, I am Zain Asher. It is a dash to the closing bell and we are just two minutes away from that. U.S. stocks are set to close higher,
erasing yesterday's losses. The Dow headed to a strong finish, up nearly 400 points, as you can see on your screen.
The S&P 500 is up almost 2 percent and the Nasdaq us fighting to get out of bear market territory. Investors may have to get used to rising interest
rates. The Fed chair Jay Powell says the federal bank is ready to do whatever it takes to bring down inflation.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: We know that this is a time for us to be tightly focused upon the path ahead and on getting inflation back
down to 2 percent. We know how people are suffering from high inflation.
We have both the tools and the resolve to get inflation back down. And no one should doubt our resolve in doing that. And I think, if you look at how
quickly we have moved in the last few months, really, then you will see that financial conditions have tightened quite a bit.
What we need to see is inflation coming down in a clear and convincing way. And we are going to keep pushing until we see that.
(END VIDEO CLIP)
ASHER: And tech stocks gained some momentum today. Intel, Apple and Microsoft are all higher. And Disney's erased yesterday's losses, up more
than 3 percent. All right. That is your dash to the bell. I am Zain Asher. "THE LEAD WITH JAKE TAPPER" starts right now.