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Quest Means Business
Johnson Vows to Carry On after Wave of Resignations; Russia Begins New Offensive in Ukraine's East; Federal Reserve Officials Committed to More Interest Rate Hikes; Ben & Jerry's Sues Unilever over Sale of Israeli Business; Airline Execs Say Airports Responsible for Chaos. Aired 3-4p ET
Aired July 06, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:37]
PAULA NEWTON, CNN INTERNATIONAL HOST: US markets getting a late session boosts from those Minutes from the Fed, let's take a look.
As you can see there, the Dow up almost half a percent, nothing to write home about, but all the indices now in gains. Those are the markets and
these are the main events.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, BRITISH PRIME MINISTER: But frankly, Mr. Speaker, the job of a Prime Minister in difficult circumstances, when he's been handed a
colossal mandate is to keep going and that's what I'm going to do.
(END VIDEO CLIP)
NEWTON: Boris Johnson hanging in despite pressure from some top members of his party.
A top economic adviser, meantime to Ukraine's President joins me to discuss how they plan to fund reconstruction.
And Ben & Jerry's sues its parent company over sales in the West Bank.
Live from New York, it is Wednesday, July 6th, I'm Paula Newton and this is QUEST MEANS BUSINESS.
And good evening.
Tonight, British Prime Minister Boris Johnson says he will not step down. That's even as pressure grows from within his own party.
Right now, at this hour, he is meeting at Downing Street with key Cabinet Ministers. The UK government has been hit with a wave of resignations.
Thirty-seven officials and lawmakers have recently quit and I mean, you know, give it the hour, we could get more.
The floodgates opened after Chancellor Rishi Sunak and Health Secretary, Sajid Javid resigned yesterday within minutes of each other. Mr. Johnson
appeared defiant as always while facing questions from Parliament this morning. He said, in fact, he has no intention of resigning.
(BEGIN VIDEO CLIP)
JOHNSON: Frankly, Mr. Speaker, the job of a Prime Minister in difficult circumstances, when he has been handed a colossal mandate is to keep going
and that's what I'm going to do.
(END VIDEO CLIP)
NEWTON: Bianca Nobilo is outside the Houses of Parliament on Abington Green, and that's exactly where we want you, that front row seat to what
happened today, Bianca.
We seem to have had a year's worth of political headlines in 24 hours. What is happening at this hour, though, now that those Cabinet Ministers are
apparently meeting at 10 Downing Street with the Prime Minister?
BIANCA NOBILO, CNN ANCHOR, "THE BRIEF": Well, Paula, of course, I wouldn't want to be anywhere else or talking to anybody else and it has been too
much to keep up with. The tally just keeps growing.
We're now obviously well into the double digits, around 40 resignations. In terms of what's happening now. I'm hearing from MPs who are not in Number
10 Downing Street, but are hearing from those who are saying that the Prime Minister is acting defiant, that he is digging his heels in, and that he
keeps repeating that line that we've heard as a refrain throughout the day and throughout the last 24 hours, that he feels he has a mandate, a big
mandate, really referring to the last election, which was in 2019.
So much has changed since then, not least the fact that he has had crushing election defeats which indicate that when the public have an opportunity to
deliver a verdict on the Prime Minister, their answer is, "We don't want you in power."
He's had the resignations of his own MPs, cascades of Ministers. And every poll that we've seen lately has shown that the majority of voters and
conservative voters want the Prime Minister to resign.
So this line that he keeps repeating about the fact that he is content to stay in place, because he has a mandate to deliver on his policies is very
hollow and just simply doesn't stand up to scrutiny, Paula. So that's what we're hearing tonight.
The next option, if he doesn't decide to resign based on what the Ministers around him are conveying to him and saying now is really the moment so you
don't have the confidence of the government to continue, then the next moment for a decisive shift in this saga would be on Monday when the
powerful 1922 Committee is re-elected and that they potentially change the rules allowing for a confidence vote to occur imminently.
Then if that vote takes place, the received wisdom here in Westminster is that the Prime Minister couldn't possibly survive it, Paula.
That's where we are at the moment.
NEWTON: You know, I know that you spoke earlier with a conservative lawmaker who said basically, as defiant as he may be this hour and you're
getting texts from people saying he remains defiant, he really has no choice right now though. Can you see any way that he remains in office
beyond let's say, the next few days, especially when this Committee ultimately, you know, has a reckoning with him?
[15:05:00]
NOBILO: In terms of his agency in this and the choice, so if the 1922 Committee changed those rules and they have an election, sorry, a
confidence vote and he loses that confidence vote, he must go. So, he has no choice in that matter.
Up until that point, there is choice and I suppose the decision is whether or not he wants to leave earlier, some people say with a shred of dignity,
I think realistically and in terms of the history books, that's looking in short supply at the moment, but that he is responding to those closest to
him saying, you really need to resign.
That would be the moment where he could choose to do it. Otherwise, he'd need to be pushed. And all throughout the scandals over the last 12 months,
those that have worked with Johnson, know Johnson, have written about Johnson, all underscore the Prime Minister is not someone who's going to go
quietly, he will fight to the last and he doesn't feel like he needs to give up, and this is a role that reportedly he's wanted for his entire
life, and clearly, demonstrably, he is not going easily.
NEWTON: Yes, and you have warned us about that many times. And in fact, it is given his character that he will continue to try and hang in there.
Bianca, we will leave it there for now, but come back to me, especially as developments warrant throughout the hour. Appreciate it.
Now, meantime, lawmakers grilled Boris Johnson during his appearance in Parliament. Sajid Javid, the former Health Secretary called on other
Ministers to resign. Johnson's fellow Tory said the time had come where his integrity was at stake. Listen.
(BEGIN VIDEO CLIP)
SAJID JAVID, FORMER BRITISH HEALTH SECRETARY: We have the Sue Gray report, a new Downing Street Team. I continued to give the benefit of the doubt.
And now this week again, we have reason to question the truth and integrity of what we've all been told.
And at some point, we have to conclude that enough is enough.
GROUP: Hear, hear.
JAVID: I believe that point is now.
(END VIDEO CLIP)
NEWTON: Now, the opposition as you can imagine, wasted no time in calling for Johnson to step down. Labour Party leader Keir Starmer, said Cabinet
resignations were long overdue.
(BEGIN VIDEO CLIP)
KEIR STARMER, MEMBER OF PARLIAMENT, LABOUR PARTY: Anyone quitting now, after defending all of that hasn't got a shred of integrity.
GROUP: Hear, hear.
STARMER: Mr. Speaker, isn't this the first recorded case of the sinking ships fleeing the rats?
GROUP: Hear, hear.
(END VIDEO CLIP)
NEWTON: Now some members of Johnson's Cabinet, we have to say, are staying loyal so far. This is key here: Foreign Secretary Liz Truss and Deputy
Prime Minister Dominic Raab have not stepped down. And Nadhim Zahawi, who has just been appointed right, new Chancellor of the Exchequer, in fact,
the Finance Minister there, he is still pledging his support and he is pledging to rebuild the economy.
And he said he will look at all options, and that includes crucial tax cuts. And it won't be an easy job at a time of sharply rising inflation.
The Bank of England has been steadily raising rates to try and rein in those high prices and that inflation.
Martin McTague is the National Chair of the Federation of Small Businesses, and he joins me now. And again, you too, I'm sure observing all of this,
wondering where it will end. But I appeal to you, as a battered British voter, right? There is real war on your doorstep, a figurative one with
your leading trading partner, the EU over trade in Northern Ireland. And then inflation, which continues to creep upwards.
You know, as one opposition reported today, Brits are having to pick this winter between eating or heating? How does this drama going on at this hour
affect British livelihoods at this point? And what are you worried about?
MARTIN MCTAGUE, NATIONAL CHAIR, FEDERATION OF SMALL BUSINESSES: Well, I think most small business owners don't really follow the twists and turns
of this drama. I know it's exciting. Oh, there's a circus going on here. But the average small business owner is really focused on where they're
going to find their customers, how they're going to pay the bills, and also who's going to pay them?
I mean, in many situations, I think over the last 12 months, the government has lost its way and we're looking for a complete reset with the new
Chancellor.
NEWTON: And do you think you will get that you considering all the Conservative government and they're still at odds with their own Prime
Minister as to whether or not he will leave?
MCTAGUE: Well, I think we will get that because he has made it very clear that he is not going to have to follow any of the solutions of his
predecessor. So what we're looking for him to do is show the same sense of urgency that he had over vaccines. Now, he clearly knows how to deliver. So
what we're asking him to do is now focused on these big issues.
He knows tax is at an all-time high. He should be cutting taxes on property, on people, and also on fuel. If he starts there, he will make a
big difference.
NEWTON: And when you say a departure from his predecessor who just quit to make a fine point of it 24 hours ago, you are expecting policy changes and
what are those that you would like when it comes to things like taxes or trying to rein in inflation?
[15:10:13]
MCTAGUE: Well, the biggest thing he needs to focus on is the rising costs of all the products that the average small business has to buy. So, they're
finding labor is very short and difficult to buy. They can't compete with the bigger companies when they have to source materials.
Many of these businesses are running out of cash rapidly. The last estimate we had was 40 percent of them are down to their last three months' worth of
cash. So this isn't something you can wait around for. The Chancellor's predecessor said that he was going to wait until October. I don't think he
has that time.
NEWTON: You say he doesn't have that time. I mean, Cabinet Ministers are holed up at 10 Downing Street, and now trying to convince the Prime
Minister to leave. Are you worried right now that the British economy can really weather this kind of turmoil? You said it yourself, right, they need
to act quickly?
MCTAGUE: I am really worried because, you know, although, as I said at the outset that a lot of small business owners don't follow their twists and
turns of this political drama, they know and feel all the impacts of it.
You know, when it comes to increasing interest rates, when it comes to the cost of trying to do business with our nearest neighbors across the
channel, they are real problems. And then you've got another big political problem brewing in Northern Ireland. So these are things that this
government needs to get a grip of.
NEWTON: When you say get a grip off, what do you think that they could do to try and put -- give the country really its business owners, its
taxpayers more confidence, let's say early next week, mid next week. What kind of announcements would you like to see specifically?
MCTAGUE: You know, what would be a great start, if they stopped thinking about their internal disputes and started focusing on the big issues in the
economy? You know, we have called for cuts in VAT. We've called for cuts in National Insurance Tax, which is a tax on people. I think these are great
places to start. And if only they can show the same sense of urgency they did over COVID, we'll all be a lot happier.
NEWTON: I don't have a lot of time left, but I want to ask you, when you speak to you know, your members, what are they telling you about what might
happen in two weeks, in three weeks, given the fact that they need to meet a payroll, right? They're dealing with the costs, increase of their imports
coming into Britain, but also obviously trade issues and supply chain issues?
MCTAGUE: Yes. They are all telling me that they're at the end of their tail of -- you know, this is this is a cash problem and everybody who runs
a business knows that cash is king and the cash is running out. This government needs to act quickly.
NEWTON: All right, we will leave it there. As I say at this hour, the political turmoil continues. I know you are hoping for some calm in the
hours and days to come. Thanks again for your insights there.
Now, the next stage of Russia's war meantime is underway in Eastern Ukraine. Officials say, there is not a single safe city left in the Donetsk
region. The economic adviser to Ukraine's President joins me next.
(COMMERCIAL BREAK)
[15:16:03]
NEWTON: Russian forces are bearing down on Ukraine's Donetsk region and it is part of a new offensive to take the greater Donbas area, you see them up
there where Russia is setting its sights on the cities of Sloviansk and Kramatorsk, both already under heavy fire.
The Governor of Donetsk meantime says there is no safe place that isn't being shelled right now. And this is the problem, there are still hundreds
of thousands of civilians in the region. Officials are now begging them to evacuate as Donetsk braces for the next big battles.
Oleg Ustenko is an economic adviser to the Ukrainian President Volodymyr Zelenskyy, and he joins me now live from Kyiv. And I thank you for joining
us, as we were just saying, right, civilians remain under threat. The Russian military is making gains. Are you at this point cutting your losses
in the east in order to try and protect and shore up other areas of your country?
And I'm thinking specifically even in places that are really are an economic lifeline, ports like Odessa.
OLEG USTENKO, ECONOMIC ADVISER TO THE UKRAINIAN PRESIDENT VOLODYMYR ZELENSKYY: Right. Hi, Paula.
Yes, you're absolutely right. No safe place in Ukraine anymore since February 24. And you're absolutely right, Odessa is under constant attacks
coming from the Russian military forces. Even last night, there were several missiles they are sending from the Black Sea to Odessa region, the
same has happened in several cities in the eastern part of the country.
All over the country was in red yesterday night, starting I would say probably from 1:00 AM of our time until probably 3:00 AM. So everything was
in red. People were trying to find a safe place, but you can imagine how difficult it is to do in the midnight.
NEWTON: We can't imagine. But of course, we've seen because we've covered this so closely how terrified civilians are right across the country,
really, but obviously right now in the eastern part of the country.
One thing we've also noted and your President has noted is the damage to your country, it's been absolutely catastrophic and depressingly, right,
it's not over yet. The price tag right now has been put at three quarters of a trillion dollars. You guys say that you want Russian assets to pay for
much of it.
But I have to ask you, how realistic is that? And I'm just going to give you, one example, right? Those Russian Central Bank assets, they are held
all over the world, but already Janet Yellen, the US Treasury secretary says, look, right now it's just not legal for the United States to take
those Central Bank assets and to give them to Ukraine for rebuilding.
So do worry that the price tag here will continue to grow, and yet, there will not be a lot of money offered up to actually try and get it done.
USTENKO: To tell you that I'm sharing your concern is to tell nothing. Yes, absolutely. When we heard first this statement coming from the US
Treasury Secretary. Yes, exactly, this was our first reaction, but then we had a clarification coming from their side.
And basically what has happened, when we are talking about Russian Central Bank assets, actually they are diversifying all over the world mainly in G7
countries.
So basically, in terms of the assets of the Central Bank, we don't see any problem. Actually, we already started the process, and for example, Canada
already made an adjustment to their national legislation which allows us not only to have these assets arrested, but have these assets transferred
to the purposes of Ukraine. We can use them actually for the current financial needs and we can also use these assets in the future when we are
going to rebuild our economy.
[15:20:14]
The same actually already done by Ireland, and we are expecting that all the countries, which are holding Russian Central Bank assets are going to
do the same.
So in terms of the Russian Central Bank assets, it's a little bit easier. In terms of -- but of course, one more time, of course, you have to have a
consensus between all the players who are actually holding these assets now, but making these adjustments to the national legislation should be
okay.
In terms of the private assets, which are from the Russian nomenclature and which are arrested now. And actually, now we are talking about $150 billion
of assets, either which are already under arrest, or some of these assets are just still under investigation and we are very much sure that these
assets are going to be arrested as well. Here is a little bit different story, but it doesn't mean that it's not resolved story.
We do see how it can be resolved. And actually, our allies are saying that, yes, we can expect the results much faster than someone could expect.
NEWTON: I know that G7 countries politically are trying that. And yet legally, some of them remain a little bit more skeptical, because they do
fear that this will end up in Courts for years. But I want to get to another point there about how any kind of peace talks play into the
economic angle here, right?
You know, Western allies, is it realistic to expect that Russia is not going to say, look, if we want any kind of peace here, you have to lift
some sanctions, and that the only way you guys are going to get on a path - - your own President says he wants this war over by the end of the year, but how do you even begin to discuss reconstruction and rebuilding if there
is no peace and Russia is saying there will be no peace if sanctions aren't lifted?
USTENKO: Look, we are very mature and our position is very much clear, we would like all the sanctions, which are already imposed on Russia, they
should continue as they are now. And actually, we are calling for more sanctions that actually, a lot of expectations in terms of the Package
Number Seven.
In terms of the reconstruction and development, you are absolutely right. We are in a state of war. You know, Russians are destroying our assets. The
Russians are killing our assets. The Russian are, you know, sending missiles and rockets and all these terrible things, which they are doing on
our land, in our country, but it doesn't mean that we should not think about the rebuilding plan, even already, even when we are in the state of
war.
But also keep in mind that, you know, the autumn is coming very soon and the winter is going to be cold. And we are not, you know, in a warm
climate. Our winters are extremely cold, you know, and it's snowing and it's windy and we have to think in terms of our people who lost their
houses.
Look, hundreds of thousands, big apartment complexes already destroyed by Russians, so basically people do not have even a roof. So, what we are
doing and what we are calling for, we are calling at least for these kinds of social programs, at least, you know, to build houses for the people who
lost their homes.
NEWTON: Yes, it will be a tall order in the months to come as you said, winter coming very, very quickly and those cold temperatures. We're going
to leave it there for now. Oleg Ustenko, but we'll continue to follow the story, especially as we follow the money trail from those Russian assets.
Appreciate it.
Now, the US Federal Reserve worries inflation could become entrenched. Fed officials also say they have committed to more interest rate hikes. Those
comments revealed in the minutes from their June meeting.
Now, meantime, US stocks were up slightly as the market digested these notes. The Dow up as you can see it there, better than half a percent. Now
oil prices meantime continuing to fall as fears of a global recession grow.
On Tuesday, Brent had its biggest drop since March after falling again early morning, Brent is now flat.
Rahel Solomon is with me now. You know, I left the reading of the Fed Minutes to you, thankfully. We've had a good look at them. But again, were
there any surprises because the market seems to be somewhat comforted by what they saw?
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Yes. It does seem so, right. No surprises, though. Certainly, a lot of the things we've been hearing from
the Fed leaders and Powell when he was in Portugal last weekend, the last few weeks. Markets were actually flat just before the Minutes were released
and as you already pointed out, Paula, as we've seen, some significant, some sizable gains at least in the Dow there.
[15:25:10]
So, 50 to basis points, it's what's still likely appropriate for this month's meeting and a few weeks the July meeting, so half a percent to
three quarters of a percent. It's interesting now that that is likely appropriate again, because remember, last meeting, it was really
significant.
I mean, it was the largest rate hike we have seen since 1994, but it really sort of gives you a sense of how serious this problem of inflation is for
the Central Bank. Yes. They talked about sort of some of the same headwinds that we talk about a lot in terms of the war in Ukraine, in terms of supply
chain issues.
The group also saying that they are concerned about inflation expectations becoming entrenched. This idea that if we expect inflation to stick around
for several years, we might start to change our behaviors because we might start to ask for more pay to sort of account for inflation. That would be a
disaster for the Fed, Paula, as you know. It makes our job a lot harder to manage inflation, if we start changing our consumer behavior, because of
it.
Also interesting is there sort of forecast of where they see PCE, of course, Personal Consumption Expenditures, ending for the year. All told,
total PCE price inflation, they expect that to come in at about five percent by the end of the year, top line, and then 4.1 percent for core.
To give you some perspective, right now, we're at 6.3 percent top line, 4.7 percent core. So that's a pretty -- a sizable difference from where the Fed
sees that going at the end of this year.
For next year, it sees that number coming down to 2.4 and then down to two percent in the following year.
So, the Fed apparently thinking that maybe inflation has peaked, at least based on these forecasts, citing slowing aggregate demand and an easing of
supply constraints in that forecast. The idea there being that the Fed hoping that the medicine of monetary policy will have worked for the demand
side and hoping for a bit of luck on the supply side.
NEWTON: Yes. It's going to take a lot of luck, because that's close to their inflation target, and so to think that they will get there in a
matter of just, you know, one or two years is incredible.
SOLOMON: Exactly.
NEWTON: We have been talking about recession, a lot of experts wondering if we're not talking ourselves into one. Now, we noticed that oil kind of -
- it slipped yesterday, and it really held on to that. It is flat today. But is this a leading indicator that, indeed, those economic headwinds,
maybe even a recession may be in the offing?
SOLOMON: Well, it seems to be I mean, everyone that I'm talking to seems to say that the clients we're seeing in commodities are largely driven by
recession fears, right? We're seeing it in copper prices. We're seeing it in wheat prices, we're seeing it in crude prices, for sure.
So if we're already seeing declines in commodities, the market seems to be pricing in the idea that we already have a recession. But it's interesting,
Paula, you mentioned the sort of, are we talking ourselves into a recession? And it's a real concern that some have, this idea that if we
feel like we're already in a recession, we start to make moves based on that, right?
We already start to curb our demand because it feels like we have a lot less wealth to begin with. You look at your retirement account, you feel a
lot less wealthy. And so you start to already behave as if we're in a recession.
The Fed perhaps would like to see some slowing demand. We don't want to see a screeching halt of course, suspending now, and that's the big concern
here in terms of can they pull off a soft landing, which by the way, the Fed again, reiterating that it is looking increasingly difficult.
NEWTON: Interesting there as you've already had a lot of other people predicting that a soft landing is close to impossible at this point in
time.
Rahel, thanks so much. Really appreciate that update there.
Meantime, Ben & Jerry's is suing to stop its parent company, Unilever, from selling its business in Israel. The sale would make Ben & Jerry's ice cream
available once more in the West Bank.
Ben & Jerry's said last July that selling its products in the West Bank was inconsistent with its values. You see the statement there, and it referred
to the area as occupied Palestinian territory.
The brand's distributor in Israel oppose the move, is now set to buy the business outright from Unilever.
Anna Stewart has been following the story from London, and I don't want to get caught up in the legalities here. This is a very complicated story
politically as well. What's at stake as far as Ben & Jerry's is concerned, especially when it comes to its irreverent founders who are likely
motivating a lot of this.
ANNA STEWART, CNN REPORTER: Yes, I mean, I think at this stage, the relationship between Ben & Jerry's and Unilever has hit an all-time low.
You don't sue your parent lightly, and I guess we would think further afield. The future of ice cream freezes and supermarkets in Israel hang in
the balance as well.
Now, Ben & Jerry's has an independent Board, and that has the right to make decisions about what it calls its social mission. That much, both sides
actually agree on here. But Unilever says it has the right to sell Ben & Jerry's Israeli business to a distributor and clearly the ice cream maker
disagrees.
Now, I won't bore you with a very long history lesson, but this saga does take some explaining.
This distributor, AQP, I can bring you a timeline here. They refuse to comply with Ben & Jerry's decision to stop selling products in the West
Bank.
As a result that is why Ben & Jerry's decided to just pull out of Israel altogether, causing a lot of controversy.
[15:30:13]
In March, AGP sued both Unilever and Ben & Jerry's and as a result of, that just last week, Unilever announced the sale.
They thought this would draw a line under the whole saga. Ben & Jerry's ice cream could still be sold in Israel but if it were then to be sold in the
West Bank, it would be a breach of international law because someone else would be selling it.
But Ben & Jerry's disagrees, they say they have a right to protect their brand and their social integrity. They do want to see their ice cream being
sold in the West Bank. That's why they're seeking this injunction.
So now the sorry saga continues again, now hangs in the balance of a court in New York.
NEWTON: And you said the story is far from over and political implications beyond Ben & Jerry's. Thank you for taking us through that.
Coming up for us, for us Boris Johnson said he will stay on as prime minister, even as the pressure to resign keeps growing.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
BORIS JOHNSON, U.K. PRIME MINISTER: I look at the issues this country faces. I look at the pressures that people are under and the need for the
government to focus on their priorities. I cannot, for the life of me, see how it is responsible just to walk away from that.
(END VIDEO CLIP)
NEWTON: OK, that's been the line from Boris Johnson all day. He says he will not step down. Even as his own ministers are urging him to resign.
Concerned lawmaker Alec Shelbrooke spoke to Bianca Nobilo earlier. He told her Johnson's tenure is coming to an end.
(BEGIN VIDEO CLIP)
ALEC SHELBROOKE, BRITISH CONSERVATIVE MP: I will not put a timeframe on it. But it is all over. It seems to be that members of the cabinet are in
Number 10 as we speak.
[15:30:00]
It's assumed that they are saying to the prime minister that he can no longer command the confidence of the party and that he should take the
resignation route out.
If he doesn't do that, it is highly likely that a new executive of the 1922 committee, that is being elected on Monday, will seek to change the rules
and force him from office.
(END VIDEO CLIP)
NEWTON: Nic Robertson is outside 10 Downing Street right now, trying to keep an eye on what is happening behind that door there.
You just heard Alec Shelbrooke say, this is all over, whether it's tonight or next week.
What are you hearing?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: The prime minister seems to be making a different calculation, doesn't he?
He has said all day he has a mandate from the electorate and he's going to follow through on what they expect him to deliver, despite that we hear
senior cabinet members like Michael Gove or a one-time ally, a frenemy over the years with the prime minister has told him to go, that this is the time
to resign.
The press association here in the U.K. reported that Priti Patel, the home secretary, another long serving, influential cabinet member, again, we
understand has told the prime minister it's time to go.
Yet we have seen some other cabinet ministers come and go. At least one of them indicated she still has support for the prime minister. She says
others in the cabinet have the support of the prime minister.
So he's hearing a range of views. He's got a dogged determination that he's demonstrated all day. Whether it was in the cut and thrust of Prime
Minister's Questions time or in the intense, probing questioning of the committee he faced this afternoon, the dogged determination to stay on and
continue.
And the possibility that this bank bench committee, this 1922 committee, could essentially change its own rules early next week and have a vote of
confidence that would challenge his leadership.
He remains content at the moment to see if they exchange their executive and then would change its own rules and then call for a vote of confidence.
That's where he seems to stand. That's what he's said all day, a dogged determination in the face of what seems to be an increasingly determined
and entrenched element within his own party to tell him to step down, that is too long and it's time to go.
NEWTON: Despite what those cabinet minister said, it does seem, when he had those two key cabinet ministers resign and resign with speeches of how
they could no longer keep this up, you have to think, at this point, he maybe resigned to going out with this non confidence vote but that there is
no choice for him.
Nic, I want to lean on your expertise on two areas.
So the first is allies of Britain, who are out there, wondering what is going on and what will come next, even if Britain can be relied upon to
support Ukraine and Northern Ireland as well.
Right now the key dispute going on with the E.U. and trade that comes out of the Brexit negotiations, in your estimation, how difficult would it be
at this point in time for someone to just take over the government and really try to calm those allies and calm the situation with the E.U. in
Northern Ireland?
ROBERTSON: There is certainly a sense that Boris Johnson's leadership, the U.K. in general at the moment is losing the trust and confidence of its
former European Union partners.
I've spoken to two prime ministers from within Europe and they both sense that Boris Johnson's word is not as good as it was. There is a sense, from
outside of the country, that he is not a strong a partner as he was, he is not a strong ally.
This credibility issue is something that has been undermined domestically and undermined on the international stage. When you are looking in from the
outside, there is a question that remains for British politics and the Conservative Party, over who they would replace the prime minister with.
And they are seeing that fight drifting toward the values of the right wing of the party. That could still signal a tough time ahead on the Northern
Ireland protocols, the passing of that bill that would allow the British government to break this international agreement that it made with the
European Union.
[15:40:00]
And therefore, in the eyes of its former European partners, make its word just less credible. There is a view that that could, even under a new prime
minister, could be the trajectory of the next British prime minister and government.
There's also the realization that potentially it could change. There is a big question mark in the international community.
What happens over the U.K. next?
Does the party keep staggering toward the Right?
The hard Right of the party that has been forcing the no confidence votes to the prime minister until now, essentially led the Brexit charge, all of
that?
Or does the party redefine itself?
At the moment, international eyes, former partners, that's a really big question.
NEWTON: You are so right to underscore those issues for us, especially given the Brexiteers, more right of the party, the more populist wing of
the party, that brought Boris Johnson to that office right now.
OK, Nic, the night is young in London. We will come back to you if there are any developments.
British Airways is adding to the long list of summer flight cancellations.
How many have been axed?
And crucially, what it means for travelers. That's next.
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NEWTON: Airlines are having a summer of travel chaos. British Airways says it will cut more than 10,000 flights from the schedule. That's just to ease
disruptions. This is the latest airline and the latest rounds of cancellations that have been announced.
British Airways now cut its summer schedule by 13 percent, as carriers all over the world struggle to get back to normal. Some executives are blaming
the airports.
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BEN SMITH, CEO, AIR FRANCE-KLM: We have seen in some airports that the shortages, that security shortages, the customs and immigration. So the
impact that it has on us is it's quite large.
CARSTEN SPOHR, CEO, LUFTHANSA AIRLINES: It's basically a lack of staff in our infrastructure parts, which is ground handling, baggage handling,
security checks.
JOZSEF VARADI, CEO, WIZZ AIR: We are suffering from the lack of proper services, from air traffic management, from airport security and ground
handling. And that causes the issues.
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NEWTON: Felipe de Oliveira is director of Airports Council International.
[15:45:00]
He joins me now live from Montreal.
I guess we've now put you in the hot seat after those quotes. You say the problem is much more complicated and no doubt it is. But the airlines are
pointing to airline authorities and, by extension, the governments that regulate them.
So which is it?
Is it the airport authorities, the airlines, the governments?
What's the problem?
FELIPE DE OLIVEIRA, DIRECTOR, AIRPORTS COUNCIL INTERNATIONAL: Well, thank you for having us today. You know, the comments that come from our
colleagues from the airlines are quite true, you know.
However, we have to understand how an airport works. We have more than 20 stakeholders that work inside of the airport buildings, that represent more
than 60 percent of the jobs in the industry.
When the passengers see airlines in the airport, the stakeholders come from air traffic controllers, immigration process and others. And basically, one
of these stakeholders have an issue on the process. It's an domino effort that affects all parts of the travel experience for the customers.
That's why, basically, I don't like this pointing figures in the air because basically we are community, we need to work together to solve
issues together, considering all the stakeholders we have.
NEWTON: Let's talk about solving the issues. Many of the problems seem to hinge on scarce labor. I mean, travel has been picking up for months.
What are some of the labor issues and what do you think could help solve it in the near term, especially, you know, there are shortages everywhere.
DE OLIVEIRA: Yes, I don't agree with you that there are shortage everywhere. We have specific airports that are suffering. You mentioned
some of them. However, we need to understand that, during these two years of COVID, we lost a lot of professionals.
In different in the airlines, we didn't receive any support from the governments, including, of course, the ground handlers and other
stakeholders from the industry. Now to recruit these people back, train them and bring back the speed they need to deliver the service that we need
to the customers, it takes a little bit of time.
That's why we're seeing different countries, they need to import labor, especially in ground handling sites. We need to improve the systems by
basically using the automated systems in the countries to accept the immigration process and others that we need to work in training and support
our members on that delivery.
NEWTON: OK, but when I'm trying to get at here, when I'm sitting in an airport, many of us have sat in airports and things are nowhere near
normal. Sometimes you can understand certain delays, other times you can't. It's been absolute chaos.
We understand if it's pilots, air traffic control operators, obviously they can't be trained overnight. But in terms of the other labor issues, you
keep talking about the ground handlers, perhaps it's immigration and customs.
What do you think can be done in the weeks to come?
Right now, I'm thinking 2019 is like a dream right now. We can't travel like that for years to come.
DE OLIVEIRA: And that's the case. We need to work as an ecosystem to solve the problem. That's why governments need to help us to have the important
of ground handling employees from different countries to support the airports that are facing these issues in the ground handling side.
The airports are doing their best to train people and improve the service quality. That you see will improve in the future weeks. However, we're
still facing issues in the air traffic controllers. We're still facing issues on the pilots as well.
So basically, as an ecosystem, if we solve one side, we won't save the other. That's why basically, the domino effect that caused any kind of
issues in the parts of the travel, it will affect us.
That is why you see that kind of misunderstanding what's happening when you're at the airport and you don't understand what's going on in different
parts of the process.
NEWTON: OK, I don't have any time left here but I am going to ask you, next summer, yes or no, we will be closer to normal?
Yes or no?
DE OLIVEIRA: Yes, we are crazy to travel. We have an industry to bring back the connection between families, business, holidays and we will do our
best to work hard to have these people back in our airports on our airplanes.
NEWTON: Fingers crossed, we'll be back to you next summer to see if hopefully some of the chaos has died down. I'll leave it there for now,
thanks so, much appreciate it.
Now nearly 40 members of the U.K. government, as we've been telling, you have recently stepped down. Calls are growing for the prime minister to do
the same. Boris Johnson says, yes, he's not going anywhere. More on this next.
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[15:50:00]
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NEWTON: Now we have an update for today's top story. The British home secretary has informed the prime minister that his party believes he has to
go. That's from a source telling CNN. Priti Patel, a loyal supporter of Johnson, was one of the cabinet ministers, in fact, to see him right there
at Downing Street this evening.
I will note, she did not resign, at least not yet. Boris Johnson's government, as we've been telling, you has been in chaos; 37 Conservative
MPs have resigned. Johnson has pledged that he will continue to stay in power and isn't going anywhere.
Ian Murray is a British Labour MP serving Edinburgh South. He joins me now from Abingdon Green outside of the U.K. houses of Parliament.
It's good to have you here on what is still a very eventful evening. We listened to your leader today, I listened to him in Parliament. He was
loyally setting up the case against the prime minister.
Quite succinctly, he made the point that the prime minister never seems to learn from his mistakes, despite repeated professions of contrition.
I ask you, how is your party any more than a bystander at this point?
You seem to be, in effect, of really getting the results that even his own party wants, everyone or many people seem to want the prime minister to
step aside. But he continues to hold on to power.
IAN MURRAY, BRITISH LABOUR MP: Well, it's very difficult to get rid of a British prime minister. But we've been calling for his resignation now
since the start of this crisis back in December of last year.
And it's been repeated lies, it's been repeated scandals. The last straw, of course, with this weekend, when he lied about appointing the deputy
chief whip to a senior government position, who'd been embroiled in sexual harassment claims.
This is a prime minister that doesn't start a sentence and finish the same sentence without some kind of lie, bluff or bluster in the middle. It's
really, his own party should have taken him out a long time ago.
The fact it is taking them this long, they are still unable to remove him from office, it says more about the Conservative Party than anything else.
NEWTON: Off the top, there's not much you can do. It lends to a certain of impotence in British politics, which is unfortunate given the crises that
Brits are facing. I mean, your own party mentions it all the time, my Brits are wondering in the winter if they need to heat or eat.
What can you do to effect any kind of change here?
Especially, because even if Boris Johnson leaves, right, this is still the Conservative Party. That is a hefty majority you wield in Parliament.
MURRAY: That's why we're calling for a general election, because of the prime minister doesn't think he should resign and leave office. We think
the British people should have a choice to make that decision and have a general election.
But if that is not the case, one of the things we've been seeing since the very start is that, you're, right there's huge issues in the country at the
moment. There is our international relations which are at their worst they've ever with Boris Johnson who's prime minister, embarrassing us on
the international stage. We have a cost of living crisis.
[15:55:00]
We have an inflation crisis, we have low growth, we have high taxes and we're in stagnation at the moment in terms of our economy.
You're right to suggest that most people in the country will be worried about how to pay their bills, many will be making the choice about whether
or not they can afford to heat or eat. That is really unacceptable.
The key point being, we have a prime minister who spends all his time and his cabinet ministers spent all their time trying to see if there's jobs in
Parliament (INAUDIBLE) n paralysis.
A good example of that will be tomorrow, when many of the public bill committees that sit behind us to criticize legislation have been canceled
because the government has no more ministers to take that business through the House of Commons.
That shows you the paralysis. We can only break that paralysis by replacing the government fully through an election or replacing the prime minister
with someone else.
NEWTON: Yet your leader has not shown to have great popularity with the British public so far. In the committee meeting, you said that Boris
Johnson, not you but the MPs of Labour, said that Boris Johnson was held up by enablers.
Those are the enablers will inevitably stay in government right now.
What does your party hope to offer, really, in the days and weeks to come?
We could be very far from a general election still.
MURRAY: Well, it's up to us to do three things. One is to hold this government to account and continue to make the case for a general election.
The second thing is to put forward our policy ideas to resolve this crisis. Indeed, the prime minister and the chancellor took on the idea of a
windfall tax on the early gas profits in order to help people with their energy bills.
That's no government policy. We've been promoting that now for over a year. It's now up to us to persuade the British people that they've tugged away
from this Conservative Party, that they should be backing the Labour Party.
Keir Starmer's done an incredible job since the blue wave of the 2019 general election when the Labour Party got its worst result in 100 years.
Pulling back to well ahead in the polls, if there was a general election today on the average of polling numbers of the last six months, we'd be
entering government with a very sizeable buffer.
So it's really important for us to continue to make the case, to continue to make the case that conservative MPs, to move this prime minister and try
to bring some dignity and respect back to our Parliament of democracy and the great office of prime minister.
NEWTON: Yes, as some of our people have noticed on the air, many allies looking on with dismay in terms of the state of British politics at this
point in time.
We'll leave it there for now, thank you so much.
Ahead for us, just moments left, the trade on Wall Street, will have the final numbers and the closing bell when we come back.
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