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Quest Means Business

Russia to Begin Annexation of Ukrainian Territories; Poland, Norway and Denmark Leaders Open Baltic Pipe; Russia Says It Will Annex Four Occupied Territories; Poland Expects Refugee Population to Reach 2.6 Million This Year. Aired 3-4p ET

Aired September 29, 2022 - 15:00   ET



RICHARD QUEST, CNN INTERNATIONAL HOST: It is nine o'clock in Warsaw in Poland and the markets are looking dreadful back in New York, where there

is one hour left to trade.

The Dow is down some 660-odd points. We are now looking at 29,000. It is highly dubious. It is recession fears prompting a selloff. The market is

off 2.2. The wider market, the triple stack, which we will show you several times over the course of the program that is also sharply lower as well.

You can see that the NASDAQ, the worst of the day.

The markets and the reasons why in tonight's program: Russia is to annex four occupied regions of Ukraine. This is sending a signal of dangerous


Poland striving for energy independence from Russia. New pipeline is key to the strategy.

And Liz Truss, the UK Prime Minister tries to sell her economic plan, so far seems to be unsuccessful.

We are tonight live from Poland. We are in Warsaw. It is Thursday. It is September the 29th. I'm Richard Quest and yes, in Warsaw, I mean business.

And a very good evening to you.

We are live tonight in Poland. We are in the Polish capital and we are delighted to be here. We are the guests tonight of our sister network

TVN24, who have been so helpful and kind to us throughout the preparation.

And we are here of course, because this is the place to be in a sense, if we're going to gauge and test what is happening in the global economy at

the moment.

Poland, you are aware, you don't need me, but it is at the crossroads of Russia and Europe. It is also of course, immediately next door to Ukraine

and it is bearing the brunt of the region's many crises. Just think of these crises affecting this place. The energy crunch happening at the

moment; inflation, which is more than 16 percent slowing growth, which is everywhere, maybe not a full years recession, but our guest will tell us,

there will certainly be a technical recession in Poland of two quarters, negative GDP.

And look at the map -- Belarus, Ukraine, Russia -- it becomes ever more clear, with 1.4 million refugees now being hospitably looked after in

Poland. However, the places where we must talk about, 1,500 kilometers from here in those regions that are currently occupied, a part of Ukraine's


Russia now says it will annex those four occupied areas following the sham bogus referenda that they held recently. The US Secretary of State, Antony

Blinken says the US will never recognize it.

However, that won't stop President Putin hosting his Kremlin ceremony on Friday. That will be the start of the process of annexation, it then has to

be ratified, I would say arguably rubber stamped by the Parliament and as a result, the West fears, war escalation.

Nick Paton Walsh is with us tonight. Nick is in Kramatorsk in Ukraine.

So, Nick, once this annexation has taken place tomorrow. Now, the significance I get, but how will that alter the way Russia prosecutes the

war against Ukraine, even if it claims that Ukraine is now attacking part of domestic Russia?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, essentially it does come down to whether or not Putin was, as he says, he

was not doing, was he bluffing about the possibility of using nuclear force. It does appear that their conventional military is severely

struggling to change the Ukrainian momentum on the frontlines here. We've seen that ourselves in their pretty significant advance down to pretty much

near where I'm standing from the Kharkiv region up in the north, and how they continue to press down amongst major logistical hubs for what's left

of Russia's presence here, in the very areas that the Kremlin are tomorrow going to say, become part of Russia, in their perception.


WALSH: Now, they'll do this using the pageantry we saw around the 2014 annexation of Crimea, that didn't require military violence. There was

military presence and force for it, certainly, but it's a very different world that they're dealing with here, because day by day, the areas that

they claim, they will now house part of Russia here, are slowly being retaken by Ukraine.

So, it's two very parallel realities with this sort of very predictable Kremlin pageantry and theater that we'll see play out over the next hours

and days or so. And then the stark cold reality of the Ukrainian battlefield where Russia's conventional force is just not holding Ukrainian

troops back.

The ultimate question is, does the Kremlin have some kind of card to square those two parallel realities -- Richard.

QUEST: At the moment, and judging by what you say, the answer would appear to be no, but it won't stop Vladimir Putin from going through the motions

ala Crimea in 2014, which raises the specter, does he hope that everybody is just going to go away?

WALSH: No, I think what he hopes is the rhetoric about nuclear force, the rhetoric about using that and the full protection available to Russia to

protect areas that are formally part of its territory will perhaps, as we may have seen, with a phone call between Russian President Vladimir Putin

and his Turkish counterpart suggest that maybe now is the time for peace negotiations, perhaps get Western partners to get Ukraine to slow its

ambitions on the battlefield here.

But I have to say western unity has been pretty clear that Russian dialogue is useless, really, because Russia does not respect agreements that it is

party to, didn't before this war, hasn't during this conflict during its earlier eight years and so, we are essentially into the crisis point here,

which is, as we see, Russia's conventional military not having an effect on the battlefield here to reverse its decreased position, what else can they

actually do? And that leads the chilling use of the word "nuclear," Richard, which everyone hopes won't happen, of course.

QUEST: Every time we talk about that, every time that word comes up, I cannot believe that we're actually using it in real-life situations, rather

than in some theoretical.

Nick Paton Walsh in Ukraine. Nick, thank you, sir.

Look at the markets again and you'll see why the Dow is down so sharply. It is off more than 600 points. And of course, one of the reasons that we've

seen is what is happening in Ukraine directly with the annexation, but you also have the energy question that is high on the agenda.

Intelligence sources now say Russian Navy ships were seen near the Nord Stream pipelines are in the vicinity at the time of the various explosions.

It's unclear if there's a connection. Russia has continued to deny any alleged involvement, but as you'll also see, Sweden now confirms a fourth


NATO is in no doubt. NATO's Chief says it is sabotage.

The gas leaks and the problems of the pipeline merely serve to underline Europe's energy vulnerability. We've known about it since the start of the

war, but it is becoming ever clearer now as we get closer towards winter.

Poland, for instance, trying as best it can to seek energy independence, which is why news of the latest pipeline up north was received so well.


QUEST (voice over): At the same time, the Baltic Sea bubbled and churned this week, a result of mysterious gas leaks in two Russian pipelines. In

Poland, a major step to circumvent Moscow's grip on Europe's energy supply as leaders gathered to open the Baltic pipe weeks ahead of schedule.

QUEST (on camera): The alleged sabotage of the Nord Stream pipelines has given a renewed importance and priority to the Baltic pipe. So, where does

this pipe go from and to? Well, it starts up in Norway, and it comes right the way down and goes into Poland. From there, the energy can be

distributed to other countries in the region.

The significance of course can be seen by the fact Poland has contracted for 15 percent of its energy requirements via the new Baltic pipe because

of what is exactly what's happened over the existing pipelines.


QUEST: The fear had always been that Russia would weaponize energy, exactly as it has. So, these other pipelines needed to have substitutes, and that's

the Baltic pipe.

The pipe is coming on stream earlier than planned and it can't be soon enough, because if the winter is as cold as predicted, it could be very

difficult. The latest opinion polls show that Europeans are prepared to weather the storm and take the pain. However, only once winter has arrived

will we truly know how bad it will be.

QUEST (voice over): Russia's invasion of Ukraine has brought water Poland's doorstep. In response, the Pols have open their arms. The country has 1.4

million Ukrainians receiving temporary protection. According to the UNHCR that's more than any other country.

Its geography and support for Kyiv has seen it become an increasingly important member of NATO.

MATEUSZ MORAWIECKI, PRIME MINISTER OF POLAND (through translator): Poland is part of the biggest and most important military alliance in world

history, the North Atlantic Treaty Organization, we consider this a substantial guarantee of our security.

QUEST (voice over) Poland's right-wing government has run afoul of the EU and Washington before mainly over democratic backsliding.

Those challenges haven't gone away. But for now, there is a common purpose that seems to be winning the day.


QUEST: And if this wasn't bad enough, of course, it comes at a time of great economic problems -- inflation energy -- it is all hitting Poland's

economy. Look at the numbers, and you'll see how bad the situation is. The S&P has downgraded growth forecasts from 4.5 to four percent this year, and

it would be less next year.

Our next guest has his own forecast though it is pretty grim, too.

Inflation is 16.1 percent, 16 percent this year, expected to peak as interest rates go beyond seven percent. Nearly four million Polish homes

are still using coal as a way of eating. The government has banned Russian coal, so that in itself creates a whole raft of new problems with a

shortage of coal and natural gas being more difficult to receive as we were hearing.

In fact, gas bills here are about 1,100. The average gas bill is about $1,100.00 and that is likely to go up perhaps fivefold over the next 12

months. So, the government has frozen prices. It's put subsidies on coal, and it has done an enormous number of incentives for conservation.

Piotr Bujak is the Chief Economist at PKO Bank Polski. He is with me.

Good to have you, sir. Thank you.


QUEST: How bad will it be next year?

BUJAK: Well, Poland will definitely feel the blow of the financial crisis in Europe. Also, interest rate hikes will dampen economic activity, but

there are good reasons to expect that the Polish economy will once again outperform other European economies during the period of strong adverse

external shocks.

QUEST: But that's really just saying you're the cleanest, dirty shirt, in the sense of you're just doing better than everybody else and everybody is

doing badly.

BUJAK: Yes. So, this will be a difficult period, especially the next few quarters, last quarter of this year, first quarters of the next year, it

will be a technical recession in Poland.

QUEST: The decision to raise rates to get rid inflation down, realistically can -- I mean, how high the rates have to go here before you see meaningful

-- I mean, what was the target?

BUJAK: The inflation target is 2.5 percent.

QUEST: Right. So to get from 16 to 2.5 percent --

BUJAK: It will be --

QUEST: It's pretty much impossible.

BUJAK: It will be a very long and bumpy road to get inflation back to the target, but we don't expect much further rate hikes in Poland. We already

see some evidence --

QUEST: So that's suggesting that the Central Bank is prepared to tolerate a rate higher than 2.5 percent for a good long period.

BUJAK: I wouldn't say so. It is that the Polish Central Bank similar as other Central Banks in the C Region in Central Europe, start its rate hikes

before major Central Banks, before the Fed, the ECB and they have delivered five hundred -- the Polish Central Bank delivered nearly 500 basis points

of rate hikes and we are already seeing some signs of a weakening in demand in the economy and it should lead to weakening of inflationary pressures in

the next year.


QUEST: The premium that we're seeing in the Polish economy in terms of value on interest rates, and of course, the discount on equities. Where

does the political crisis that seems to be affecting the country now? I mean, the questions of the Prime Minister's ability to survive those

elections next year, the scenario of Poland is not looking so rosy.

BUJAK: Well, political instability would not help to deal with all the economic problems at the moment, but looking at the past few years, even

despite all the controversies around the Polish political scene, Polish politics, it hasn't affected the economy.

For instance, inflow of FDIs -- Foreign Direct Investments -- has been exceptionally strong to Poland, stronger than to any other country in the

region. And actually, Poland seems to be benefiting to some extent from geopolitical tensions.

For instance, following Brexit referendum in 2016, Poland has gained substantial share in all the FDIs coming into the EU.

QUEST: All right, so if we put it all together and accepting that it is going to be a very difficult 12 months ahead, has the government in your

view, and I'm looking at your forecasts here? You know, I mean, you're pretty much on target with everybody else for next year, 1.1 percent,

inflation down at 10.2 percent. Interest rates coming down next year to maybe six percent. But do -- has the government got the right economic

policies in the market's view?

BUJAK: Well, the market has some doubts about lack of coordination between monetary and fiscal policy.

QUEST: Not unique there.


QUEST: We will talk about that with the Bank of England later.

BUJAK: It is across the Europe at the moment, but Poland does not have such problems with this as the UK. So, it seems that the Polish zloty is now

much more credible to investors than British pounds.

QUEST: Ah, sir, thank you for joining us. I never thought we will hear the day where we will be talking about the Polish zloty being more credible

than the pound, but that's what we'll talk about later.

Thank you very much.

BUJAK: Thank you.

QUEST: As we continue tonight, Hurricane Ian is devastating Florida. We will be live in the Sunshine State after the break. Well, the sun may be

shining at the moment because the hurricane has gone past, but you can see the damage and the catastrophe that's in its wake.

QUEST MEANS BUSINESS live from Warsaw.



QUEST: Hurricane Ian continues its swathe across Florida, and the pictures are showing a dreadful catalogue of catastrophe and devastation. President

Biden has said that Hurricane Ian may be the worst in Florida's history.


JOE BIDEN, PRESIDENT OF THE UNITED STATES: It made landfall yesterday and it is still -- still moving across the State today. This could be the

deadliest hurricane in Florida's history.


QUEST: So, people trapped in homes, damage, fatalities not yet uncovered. The rescue is underway, but the storm surge is still to arrive in some

places and it has got widespread flooding with two-and-a-half million people without power.

A causeway was destroyed and in doing so, that cut off two communities.

CNN's Ryan Young is in Orlando, of course, home of the theme parks, which have all been closed.

The current situation in Orlando is what?

RYAN YOUNG, CNN CORRESPONDENT: Richard, that's a great question and I want to say something, talking about those theme parks, if you think about this,

there are so many people from around the world who are here for holiday or vacation who have been trapped here during the storm.

So many people thought by leaving Tampa and coming to Orlando, they were escaping the storm, only to end up in one of these situations where now

they've been drenched hour after hour and power is out to a lot of parts of this Central Florida area.

I want you to take a look down this way, Richard, because you can see that car that's been stuck in the water for quite some time, that has happened

over and over again. We've seen rescues happen over and over again.

I wanted you to see this video, there was a reporter doing a live shot early this morning outside of the hospital when he noticed a car gets stuck

in the water. He tried to wave the woman down, as you watch this video, watch what this reporter decided to do. They make their way out to that car

and he actually carries the woman back toward the location where they were dry.

And the reason why the woman was driving, she was a nurse and she was trying to get to the hospital. When we arrived there a little later on and

getting ready to do a live shot, Richard, a man and a woman showed up. They were frantic, the reason why? The woman was going into labor and they were

blocked to the hospital because of the water. We helped guide them around and get them to the hospital.

So, we've seen rescues of senior citizens in this area. We've seen people trapped in their homes because this is a 200-year flood event so far in

this area. More than 20 inches of water have come down on the Orlando area ad there are people who have never expected to have water in their front

yards are dealing with this and they are having to be rescued by airboats and get out that direction.

So, when you put all this together, Richard, you can understand how just slog and waterlogged, look at this direction, this is a lake that people

come to in the Florida area. The banks of the lake have now pushed their way into the street. They've been blocking this road for quite some time.

You see some receding, but at the same time this is repeating itself over and over.

The devastation pictures from further south, you talked about that causeway that fell. Sanibel Island is completely cut off. It's going to take some

time to be able to restore some of these major infrastructure problems that they have throughout the State of Florida at this point -- Richard.

QUEST: Right. But to be clear, the hurricane and the worst of the winds -- I mean, I know that devastation is remaining -- has now passed through and

to a large -- and again, I'm not minimizing when I say this, to a large extent it is now determining the extent of loss of life and property.

YOUNG: Yes. That is exactly what's happening now. So this storm was so large at one point it almost straddled the entire state. It has now moved

over to the Atlantic and it is moving north and they actually believe it may reorganize itself as a hurricane.

But right now, the water and the wind have moved way outside of Orlando. So hopefully, the State of Florida is done with this storm as we speak --


QUEST: Ryan Young who is in Orlando. Ryan, thank you.

The British Prime Minister, Liz Truss has broken her silence on the ever increasing financial crisis in Britain. A crisis prompted by the UK

government's decision to introduce tax cuts, which the market says is unfunded. The Prime Minister vowed to stick to the policy.

When she was on local radio, different stations across the country, presenters grilled her about the fallout. Here are some of the questions.


RADIO HOST: Time is short. So, I'm going to just blaze on into the questions, lots from my listeners this morning, Kerri Ann Birchington says,

"What on earth were you thinking? The country was already in a state of recession?" Another says, "How can we ever trust the Conservatives with our

economy again?"


RADIO HOST: And Lydia says, "Are you ashamed of what you've done? Are you?"

LIZ TRUSS, BRITISH PRIME MINISTER: I think we have to remember what situation this country was facing.

RADIO HOST: A couple of people have said to me here in Nottingham, this is like a reverse Robin Hood.

TRUSS: That simply isn't true.

RADIO HOST: This isn't just about Putin. I mean, your Chancellor on Friday opened up the stable door and spooked the horses so much, you could almost

see the economy being dragged behind them.

TRUSS: This is about Putin.


QUEST: Anna Stewart is with me. The questions were obvious, as indeed were the answers, but we also had the Chief Secretary to the Treasury, basically

starting to suggest that the real problem was that the market just simply wasn't informed about all of this, and Anna Stewart, disagreeing with the

IMF's assessment.

ANNA STEWART, CNN REPORTER: Yes, and this government is disagreeing with quite a few people at this stage -- economists, IMF, Moody's, the credit

rating agency; economists, analysts -- you name it. Either the government is right and everyone else is wrong or they may want to rethink this plan

and that is certainly the suggestion that we had from the IMF earlier in the week.

Listen, those interviews from the Prime Minister, I think were not very good for public opinion and looking at some polls ever done since that

interview, it certainly isn't looking good. The opposition party taking quite a lead in polls.

Liz Truss, the Prime Minister just repeated again and again that the market reaction we've seen since Friday links to do with the global economy, it

has links to do with Putin, but really refused to acknowledge or accept that it had anything to do with her policy at all and I think voters, I

think the general public will feel quite frustrated by what you heard there.

QUEST: So the government has now painted itself into an impossible situation. The Bank of England is buying gilt to do whatever it can, which

is exactly the opposite thing that pushed down rates, and it is exactly the opposite of what they want to do at the moment.

How does this play out? Does it play out financially in the market? Economically in the numbers? Or politically, where she has a huge majority?

STEWART: It plays out on all three and I think we've got to think about the timeline as to how much damage can be done on all three. In terms of the

Bank of England and the government, they are working at complete cross purposes. You have monetary and fiscal policy pulling in different


The Bank of England was going to sell gilts next week. It was due to start quantitative tightening. Instead, it is buying them up. This is not the

position it wanted to be in. It feels forced clearly by the government's position. The government doesn't buy that.

Now, we've seen markets stabilize over the last 24 hours. You can see the pound bear, it is certainly higher than it has been although I think it's

the worst week's performance for the currency since 2016. But you know, the gilt process for the Bank of England is just sticking plaster. That's only

for the next two weeks. What happens then?

QUEST: Anna Stewart, what happens tomorrow night is I'll be in London and hopefully you will be with me, too.

STEWART: I am amazed you've got that beautiful studio.

QUEST: And together we can put all our -- tell me about it. But I'll be in your beautiful studio in London tomorrow night because with the week that

we've had, we've decided QUEST MEANS BUSINESS tomorrow night comes from London.

Anna Stewart, thank you.

It is a glorious studio where I am at the moment. I am the guest of TVN24, our sister news station here in Poland.

And coming up after the break, a senior journalist, my counterpart at TVN24 will be with us to put it into the political context of what's happening in

this country. It's after the break.





QUEST: Our top story tonight, Russia plans to annex four regions of Ukraine on Friday, following the sham referenda, where the Russians say more than

96 percent of the population had voted in favor -- at the barrel of a gun, of course.

The referendum is being called a sham by the West. In total, it's 18 percent of Ukrainian territory and the nature of course is a military (ph)


So here in Poland, which is where we are tonight, they are, of course, feeling the effects. The existing effects of the war and are worried about

what comes next.

There are roughly 2 million refugees one way or another that have entered Poland. Many of them are being hosted in people's homes. The economic

impact is simply everywhere, because of higher energy prices. And inflation is running at 16 percent.

Michal Sznajder is the senior anchor here at TVN24. He joins me now.

First of all, sir, thank you for letting us borrow your studio.



SZNAJDER: -- our pleasure, thank you.

QUEST: Thank you. The seriousness of the situation from Poland's point of view. The government was already in some economic difficulty. This has

tipped it over.

SZNAJDER: Absolutely. And this is something that many questions must be asked. For example, how much people are willing to sacrifice.

I think the big question right now, how much pain can be inflicted upon the Polish people regarding the question of the energy prices. For example,

that is the result. But when -- you've been here for sometime, Richard, I'm sure you've seen the Ukrainian flags many places. You have seen people.

QUEST: But the fear is, which has been from day one, that in a deep, dark winter, that is very cold, which it could be, the people will turn around

and say, well, hang on. We're happy to have the refugees here. But we can't continue like this.

What would happen?

SZNAJDER: A dark winter, as in many places in the region probably and there is a number of problems right now. For example, the question of coal.

Will there be enough coal?

And depending on which statistic you quote, between 20 percent or even 33 percent of Polish households use coal. There is not enough coal to go

around. When it is available, it is quite expensive.

Arguably, the most important Polish politician, Mr. (INAUDIBLE), the leader of the (INAUDIBLE) party, recently said to the public, "Burn everything but

tires for heating." So that is the level of discourse right now. Recently, the Polish minister responsible for the environment, she said that they all

but guarantee coal at reasonable prices.


SZNAJDER: And now, just yesterday, the Polish prime minister said that self rationing perhaps should be some sort of a solution.

QUEST: But the commitment to continuing to support Ukraine in a positive way seems to -- people in this country still seem to be with that at the


How deep is that?

SZNAJDER: To answer your question, at a certain point, it was impossible to know anyone who hasn't, for example, hosted a Ukrainian refugee in their

own home. This is something that is quite a big --


QUEST: The significance of that, of course, is that Poland has done so much work on this. But at the same time, it's still at odds with the E.U. over

things like receiving its development funds or its economic recovery funds because of what happens with the judiciary, with the press.

SZNAJDER: And some in Poland did raise this argument, that since Poland did help so much with -- and arguably, the majority of the help, especially in

the beginning, was from the Polish people, from regular folks. Later, the government joined in.

And there are some in the government, for example, who are raising the point that, since Poland helped the Ukrainian people so much, that the

money should be given. We need it, we helped them. Give us the money.

That is the narrative that is trying to be pushed in some parts of the ruling party right now.

And an interesting thing recently, the (INAUDIBLE) press website published a survey, in which it was said that 67 percent of Poles, of Poles, say that

the Polish government should in fact do what Brussels is expecting. But a majority of voters (INAUDIBLE) just to say, no, you should not give in.

QUEST: All right but -- we were supposed to talk to the prime minister but perhaps for understandable reasons, he had to postpone because he is facing

a crisis. And if I talk to people, some people say, well, the question is whether he will be prime minister by the end of next week.


SZNAJDER: It has been announced that he will stay in office -- it's fresh news, just in the last few minutes.


SZNAJDER: Perhaps about the thing is that it will be a difficult argument - - this my assessment -- for the Law and Justice Party because, arguably, one of their biggest, strongest tools, their propaganda and the (INAUDIBLE)

media might be the reason they will get (INAUDIBLE).

Because people see a difference from the propaganda that says they are doing so well and the prices or the shortages. So of course the election is

in the, air; it's too early to predict anything.


QUEST: But it's looking likely he will take them into the election.

SZNAJDER: Too early to say (ph).

Thank you sir.

QUEST: Thank you sir, we're very grateful. Thank you to you and all your colleagues for being so --


QUEST: -- to us tonight.

SZNAJDER: Thank you.

Now he's safe, maybe the prime minister will talk to me before the end of next week. We'll certainly be trying to find out.

Coming up, the red flags that exist on Europe's economy, they are fluttering ever further. Germany has record high inflation. Europe is

wondering how much pain it will take. And the markets are deeply unhappy. It is not a good scenario. QUEST MEANS BUSINESS.





QUEST: Welcome back to QUEST MEANS BUSINESS from Warsaw.

Tropical storm Ian, we are now getting some numbers on that. It seems like it could be at least 15 people have died as a result of the storm. The

devastation and the loss of property as well is quite enormous across the state. The president says it is the worst or could be the worst storm in

the state's history.

The landfall came on Thursday afternoon, near Ft. Myers. It was a category 4 at the time. The homes there, as you can see, submerged. And hospital

patients have had to be evacuated from the various hospitals. Brian Todd is in Naples in Florida.

Brian, Naples was right at ground zero, if you will, for where this thing was headed.

So daylight has brought what?

What can we see?

BRIAN TODD, CNN CORRESPONDENT: Well, Richard, we got to Naples not long ago. And just going street to street to assess the damage here, not many

communications. It's a hard town to get into because of roadblocks and other closures and other obstacles.

But let me show you what we've got going here. This is what the water did to this apartment building right here. It just blew through the facade of

it, damaged just about all of the inside of it.

Photojournalist Mike Love is going to walk with me as we sweep through this area. Look at this apartment, same thing. Just tore through the facade of

this apartment.

I spoke to the lady right above there when I called out to see if anybody was home. She came to the window. She said that the water -- that there was

no one -- she doesn't believe there was anyone was home in the apartments, so that's fortunate because if anyone was home, look what the water would

have done.

It would have rushed right in. And to give you perspective, Richard, on just how high that water was and where it came from, come on over here.

This is, if you take a look at this yellow street sign, the lady in that one apartment said the water was right to the lower part of that street

sign that says "ahead," the rectangular part.

That's where the water was. And look at where it must have come from. That's the beach over there. And it must have pushed in through that area

there. And you can see that beach area is elevated.

So it had to have rushed -- the storm surge had to have rushed that way, all the way past here at that level, Richard, and into these apartment


There's more damage over here. You can see this one where the water went in through those shades right there.

Again, we've been going street to street, people telling us that they basically lost everything inside their homes because this was not just a

wind event but really, especially in this town, a heavy flooding event. So people have lost everything.

And yet still, almost 24 hours or maybe more than 24 hours after landfall, still, rescues are going on, both in Naples, Ft. Myers and elsewhere.

And people are saying that, as much as people may want to come back to their houses and sift through areas like this, it's still not quite safe

because you could have downed power lines, other objects that can really injure you.

And they are saying to people here, don't rush back to your homes. If you come back and you get hurt going through your home, we don't necessarily

have the resources to rescue you because we're still doing water rescues. People are trapped in places like this. So that's what they're up against

this afternoon, Richard.

QUEST: Brian Todd, thank you sir. It's understandable that people want to go home. Thank you, Brian Todd, who is in Naples in Florida.

So to return to the situation in Europe. The parlor states (ph) of European economies, German inflation, the latest numbers are at pretty much the

highest number in 26 years, 10.9 percent on an annual basis. It's up sharply from August.

And, of course, it has spiked dramatically since the start of the year. The euro markets, just look at the numbers. There are so many issues with

Europe at the moment that it's not surprising the markets have fallen deeply, sharply and continued unease as the U.S. fades and shorts (ph) and

falls, as well.


QUEST: So the best barometer of all this, as you and I discussed many times, is people like deliver and courier companies, logistics companies.


Because they are into everybody's business, literally, figuratively. And they know what consumers are buying. InPost is one such company. It is

huge. It's a Polish logistics company.

It's known for its parcels lockers, where it delivers direct to people on a giant scale. It's in many other European countries, as well. Rafal Brzoska

is the chief executive.

Sir, it is good to have you on. We were talking earlier today. You could see the slowdown before we were seeing it in the numbers.

So what are you seeing now?

RAFAL BRZOSKA, CEO, INPOST: What we see today, we see that consumers are shifting from the goods like the preferred one, may be more expensive, now

into substitutes. They are surging on the website to find cheaper goods. So the basketball (ph) is decreasing. The frequency is still kept on the same


QUEST: Do you expect it will get worse?

In other words, from your experience with this sort of activity, do things slow down to such an extent?

BRZOSKA: I think for e-commerce, this is, yes, it is a kind of tailwind. This is a shift in the consumer preferences. But we also strongly believe -

- and we observe -- at least in our InPost numbers -- new users coming to online shopping, Polish penetration online is around 10 percent.

Western European countries is more than 20, 25, 30. So we are catching up. That's why when you look at the fringe volume in last two quarters, it has

dropped by almost 24 percent. Our volumes have gone up by 7 percent. So we see that people are shifting into other foe (ph) and our lockers, this is

our home delivery, much more convenient and cheaper.

QUEST: So for you, cheaper absolutely (ph) --


QUEST: -- go on.

BRZOSKA: -- cheaper for end users than door to door. Like 30 percent cheaper. So they shift from door to door deliveries into local deliveries.

QUEST: Local delivery is still somewhat new in the United States. It has really only come to the U.K., although it is growing.

It that the future?

BRZOSKA: This is definitely the future because the energy associated with the delivery to door and delivery to lockers, in our cases, it is one-

eighth of the manpower and one eighth of the energy. So it is sustainable. We save 75 percent fuel emission for parcel deliver, for instance, versus

traditional to door.

QUEST: If we talk about Ukraine and, obviously, as a logistics company, I'm guessing that the expertise that you have has been put to good use. And you

must be highly involved.

BRZOSKA: Literally we are involved (ph) and also collectively, we have hundreds of entrepreneurs (ph) before organized within first five days out

of a common helping hand, giving what everyone from our enterprises may give to the help, what we would contributed (sic).

So we contributed the transportation, we transported more than 6,000 tons of humanitarian aid, just for free. But the other entrepreneurs (ph)

contributed in kind, whatever they had to help.

QUEST: And do you anticipate having to keep -- maybe not at that same level but we are talking about an escalation as a result of the annexation.

Do you anticipate having to continue on that sort of level?

BRZOSKA: We are definitely dedicated to help our Ukrainian brothers. I mean, they are our neighbors. They fight against Russia and, instead of us

fighting there, we should help them to defend their country. That is natural.

QUEST: The energy crisis that is going to hit this country, the higher (INAUDIBLE) -- it hits you both as a business -- how many trucks do you


Thousands of trucks, thousands of trucks. Even if they are electric, you still pay lots of (INAUDIBLE) as well. So it's hitting you, it'll hit the

bottom line in some shape or form, as it will hit every person at home.

Not forget being a CEO, do you think the stomach is here in Poland for a hard winter to continue that support?

BRZOSKA: It's difficult and it will be difficult. So everyone has to be ready for the worst scenario. And we as a business, yes, we have to be

ready for that as well. In our case, it is much easier.

As I said, we need one eighth of the energy needed, one van, not eight vans, to deliver the same 1,000 parcels. So our pain is not so like

remarkable than in other businesses.


QUEST: Hopefully, as things progress, we can talk more to you so that we have an idea of exactly what is happening in this part of the world. Very

grateful to you, thank you very much indeed.

The markets, we want to quickly show you how things are looking in there because we are just 10, 11 minutes or so from the close of play; 3 odd

percent on the Nasdaq, pretty horrible, pretty grim. There doesn't seem to be much (INAUDIBLE). The whole scenario, it's an ugly day on the markets.

We'll have more after the break.




QUEST: Delightful to be here in Warsaw tonight, even in such difficult economic times but it is important that we get to grips with what is

happening. And we are talking about the markets today.

And they are absolutely reflective of the turmoil we are currently seeing. The triple stack shows inflation fears; the Dow is off, the S&P is up more,

even more -- in fact, the S&P is lower than its June lows and we are testing June lows.

The Nasdaq is the worst of it. Look at the Dow 30. And you will see a real misery. Three at the top, Travelers, Visa and (INAUDIBLE), they are all on

frolics of their own.

But when you see Boeing down 6 percent, Apple off 5 percent, Nike, you realize the rout that is -- Apple, by the way, is down at the bottom

because it's been downgraded by Bank of America. Paul La Monica is there.

We are testing June lows and, in some cases, exceeding it on certain stocks and indices.

What are we looking for, to try and prop it up?

PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Yes, it's going to be tough. I think investors are hoping maybe earnings will be decent. We'll

get a clue tonight. Nike, one of those Dow components, that is really struggling, they will report results, I think a lot of people will be

paying attention to that.

But Richard, the big problem right now is that Fed members are continuing to stress that there is nothing that they are seeing that is really going

to change their mind with regards to the inflation outlook. They are going to keep aggressively raising interest rates. And we saw this morning,

jobless claims numbers, they sank again.


LA MONICA: The job market is still in pretty decent shape, all things considered. So when you look at that, the Fed's dual mandate of price

stability and maximum employment, they are not worrying about the maximum employment side at all.

It is all about price stability. Everything is inflation focused, more rate hikes are coming, the market realizes that. And they don't like it.

QUEST: But the question, of course, is where is the roof?

And how quickly do we get there?

The last dot plot showed a higher roof but some are suggesting a 5 percent interest rates now looking far more likely.

LA MONICA: Yes, I think anything is possible, Richard, with regard to how many more rate hikes and how big they will be. We won't get the next

meeting until November and then one after that in December, just before the holidays.

Inflation pressures, that's really what we need to see. Tomorrow we're going to get the personal consumption expenditures figures that come out.

Hopes are that that rate slows from last month. Last month, it was about 6.3 percent year over year.

And that would be nice if we got to see a deceleration in that. But if those numbers come in hot, you are going to probably see more investor

angst about inflation and 75 basis points, three point quarter rate hike in November seems like a given. Probably a half point in December.

But who knows?

Maybe they have to do another three quarters point hike in December if these inflation figures do not start cooling off.

QUEST: Paul La Monica, thank you sir. Serious stuff to be talking about. We will follow closely, thank you.

We will take a break and, on the other side, a "Profitable Moment."




QUEST: The national soccer stadium, lit up like a Christmas tree here in Warsaw. It's an interesting question, how long that can continue. The

supersized nature of Poland's problems, high inflation, higher interest rates, worsening unemployment, they are larger but endemic and

representative of what the continent is facing.

And the issues, of course, of how it will be dealt, well, they all depend on an exogenous event. And that, of course, depends on Ukraine and Russia.

It's been useful to be here. I thank our colleagues at TVN24. That is QUEST MEANS BUSINESS for this Thursday night. I'm Richard Quest in Warsaw.