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Quest Means Business

Tanks For Ukraine; Russia: Tanks Decision Escalates Conflict To New Level; Markets Flat After Microsoft Posts Weak Earnings; Protests Erupt In Israel; Former Israel Central Bankers Warn Against Judicial Reform; Dash To The Bell. Aired 3-4p ET

Aired January 25, 2023 - 15:00   ET

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

[15:00:21]

RICHARD QUEST, CNN INTERNATIONAL HOST: Back in New York. The markets, and they've got another hour to trade. Also have a look at the Dow Jones and

the Big Board. We are -- you see, we rallied quite nicely, down just 15 points. It might even turn positive over the course of the next hour. I

wouldn't necessarily discount that possibility the way the market has moved.

That is the market. Those are the indices and the main events that we're watching for you: A united front against Russia. Western allies are

announcing plans to send more than a hundred tanks to Ukraine.

Microsoft has a gloomy outlook and that has deepened recession fears.

And former Governors of Israel's Central Bank openly oppose Netanyahu's plans to weaken the power of the country's Supreme Court. We'll talk about

that with one of them.

We all live in New York. It is Wednesday, midweek, it is January the 25th. I'm Richard Quest and back in New York, I mean business.

Good evening.

The West will arm Ukraine and go from defense to offense, at least that's the result of decisions taken as Germany's ruling party says Allies will

send around 80 Leopard 2 tanks to the frontlines, machinery specifically designed for an offensive campaign.

These are the weapons that Kyiv wants to reclaim territory it has already lost. For months, Berlin had blocked the Leopard 2's fearing escalation

with Russia.

Today, Chancellor Olaf Scholz finally agreed it was time to free the Leopards.

(BEGIN VIDEO CLIP)

OLAF SCHOLZ, GERMAN CHANCELLOR (through translator): Our goal is to quickly provide two armored battalions. There are many countries that are willing

to supply and we will coordinate this, involve them so that this will be possible step by step.

Germany, as I said, will provide Leopard 2 A6 tanks which will come from the stocks of the Bundeswehr.

(END VIDEO CLIP)

QUEST: What took Germany to this point? Basically, a US commitment to do the same with the Abrams tanks. Berlin's announcement followed President

Biden who said he was sending 31 Abrams 1 tanks to Ukraine.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: The Abrams tanks are the most capable tanks in the world. They're also extremely complex to operate and

maintain. So, we're also giving Ukraine the parts and equipment necessary to effectively sustain these tanks on the battlefield.

REPORTER: The Germany force you to change your mind on sending tanks?

BIDEN: Germany didn't force me to my mind. We want to make sure we're all together, that's what we are going to do all along. That's what we are

doing right now.

(END VIDEO CLIP)

QUEST: Now, President Biden has alluded to the fact, the Abrams really aren't suited for this type of warfare, but in the name of unity, Kyiv will

have them as well.

So, 31 American Abrams will be added to the roughly 80 Leopard 2's that Germany says Western allies have promised so far. These are the countries

that we believe are in it -- have agreed. The UK separately will supply 14 of its Challenger 2 battle tanks.

Nick Paton Walsh is in London, Phil Mattingly is at the White House. I'm going to start with you, Nick Paton Walsh.

I understand the political reality of this. But now, Ukraine has three different types of tanks with differing levels of interoperability that it

is going to have to contend with.

Now, I'm not trying to be negative in terms of the ability of allies to assist, but it's a bit of a dog's breakfast.

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: I think fundamentally, the one that will matter initially is the Leopard, that's

the largest number we're going to see up front. The Germans think they can get 14 there in the next three months or so.

The Abrams is a much longer, but potentially much more transformatory proposition. It requires in-depth repair, resupply complex, fuel supply

lines as well. So that's going to take a lot of Ukrainians being trained to get it off the ground.

The British Challenger, I think we can more safely say that was about the symbolism of Britain saying, "We'll send tanks. What about the rest of

you?" And of course, yes, it will be an added complication for them to be separately repaired and refitted.

That logistical line is going to be the big mess here, Richard, because the Leopard will probably be something make them better adjust, repair,

resupply, refuel on the battlefield on the frontlines themselves, but that transformatory M-1 Abrams capability, but it's months maybe a year away.

[15:05:10]

Plus, it's unlikely to change the battlefield for this spring and the counteroffensives we may end up seeing, just really how fast and how many

Leopards can be in service for Ukraine by summer.

QUEST: Phil Mattingly at the White House. Did Germany force the President's hand?

PHIL MATTINGLY, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think what the President responded to when he was asked exactly that tells you everything

you need to know, even if it was a little bit more subtle. And that was he wanted to make sure that everybody stayed together. That has been the

overarching theory of the case, really the driving principle behind what the US, what the Biden administration has pursued over the course of the

last 11 months.

And while US officials were very clear, for all the reasons you laid out, for all the reasons Nick laid out, they didn't believe the M-1 Abrams tank

was a viable option here in terms of the battlefield conditions that they were facing.

They understood that was how to reach the outcome. If you want to put it bluntly, one US official made clear to me earlier today, this is about the

Leopards. Period. End of story.

This was not about the year, maybe potentially a little bit shorter in terms of getting the M-1 Abrams tank there, and the only way they felt like

they could get that done and it was made pretty explicit behind the scenes was to give a US commitment on those 31 Abrams tanks. That's where they

landed. And the reality is right now, despite the long time horizon, what they care most about is how quickly they can get those Leopard tanks in.

QUEST: Nick, between the Challenger, and the Leopards, and the Abrams, forgive the sort of naive elements of this question, but do they all use

the same shells and armaments?

WALSH: Roughly similar, I believe, between the Leopards and the Abrams, but I'll also have to confess you really caught me at a loss there, Richard. I

think it will be easy for NATO members to supply precisely the ammunition and keep those rolling.

But it is, as Phil said, the Leopard that's the key issue. There is another point behind all of this. Essentially, what the West is saying is that

these tanks will begin to be in place three months from now, and that really reduces the window Russia has to use its limited resources to change

events on the battlefield and that is going to have an impact inside the Kremlin's military thinking -- Richard.

QUEST: All right, okay, I'll come back to Phil in a minute. I just want to stay with you, Nick for one moment. Do these tanks -- are they game

changers? I don't mean, whether it's the Leopard or the Challenge or the Abrams, you know, the sending of these tanks, is it an offensive game

changer in this war?

WALSH: If it's there in adequate number with adequate equipment and adequate resupply, if it's able to stay functional, and to be there

adequately resourced to continually put pressure on the Russian frontlines. The Russians have nothing like this. It's a generational change.

These tanks are faster, better equipped, and just generally outmatch the at times rickety devices that Russia has forced to put on the frontline

because it's lost so much armor already in this war so far. So yes, it could change things significantly.

Joe Biden clear to say this is all a defensive capability. That's true if you perceive everything that Ukraine does on its own territory, possibly

valid argument here as being a defensive operation.

But make no mistake, these tanks are aimed to take the offensive against Russian defensive lines in occupied territory and change the outcome of the

months ahead.

QUEST: Nick Paton Walsh, I'll let you go. Phil Mattingly, I have a last one for you, the politics of all of this. We had Republicans praising

President Biden's decision, but we also know that the new House and the new right-wing are against much of Ukraine. Is there unity within the US

political system on this one?

MATTINGLY: Yes, I think for the most part, yes. And I think it's both bicameral, and it is bipartisan, and most importantly, there's unity on the

Members of Congress both in the Senate and the House, and here at the White House that matter the most. And I'm not trying to denigrate any of the

backbenchers in the House, any of the new freshmen Republicans who might be part of this new majority, but they don't drive decision making, they

certainly do not drive policy.

That said, I think everyone here especially at the White House, but certainly on Capitol Hill as well are very cognizant of the fact that there

is definitely a thread and to some degree, it's not just exclusive to Republicans, there are some Democrats as well, who have been wary about how

far this has gone, how much spending has been put on the table, from the Democratic side in terms of -- in spite of maybe domestic problems that

they would rather focus on and that they need to continue to focus on unity, they need to continue to highlight the stakes here, not just in a

Ukraine-Russia context, not just in a NATO context, but in a global context and a geopolitical context are extraordinarily important.

One thing to note before I let you go, the bill passed last year -- at the end of last year that had $46 billion in defense assistance, that was, as

somebody told me, we filled that above the brim for a reason. They don't want to have to go back and start these fights, start these negotiations

all over again in the near term. They want to stretch that out as far as they can, but at some point, it is very clear they will have to go back and

that will be a very interesting fight to watch play out.

[15:10:09]

QUEST: Phil Mattingly at the White House. Thank you, sir.

Russia has reacted as you would expect, with fury. Its Ambassador to Germany has evoked World War Two in his response. He says, ". battle tanks

with German crosses will be dispatched again to the Eastern Front, which will inevitably lead to the deaths of not only Russian soldiers, but also

civilians."

Earlier Eurasia Group released its top risks, and of course, Russia was at the top of it. The political consultancy believes a humiliating defeat

could turn it into the world's most dangerous rogue state.

Ian Bremmer is behind the report. He joins me now from New York.

Ian, so Russia has made the necessary sounds that one would expect, do they have much that they can do as a result?

IAN BREMMER, PRESIDENT, EURASIA GROUP: They have very little that they can do on the ground in Ukraine to take more territory. Keep in mind that the

territories that they've annexed illegally, four of them, they don't occupy a lot of that territory right now, and it is likely they're going to occupy

less of it over the course of the coming months given an expected Ukrainian counteroffensive.

But that doesn't mean that there's nothing the Russians can do and we've already seen some reports of Russian financing as far-right Spanish group

to try to assassinate some Spanish leaders. We've seen some cyberattacks against Polish logistics companies in the Defense and Military space.

We did just recently see an explosion of a pipeline on the Latvia-Lithuania border. We don't have any explanation for that. I'm pointing to these as

data points in terms of the war expanding potentially beyond Ukraine as the Russians have so little they can do on the ground in Ukraine.

And keep in mind, Richard, that the Russians see this very much as a proxy war against NATO. The reason they are losing against Ukraine, the reason

they're being humiliated is not just because the Ukrainians are courageous, though they are, but because NATO is providing such staggering amounts of

training, intelligence, and military equipment, which continues to escalate pretty much every week.

QUEST: Related to this, I was -- in my morning and weekend reading, I was seeing about the military exercises that South Africa is going to be

doing with Russia and with China.

Is there a legitimate argument for essentially the West to say to South Africa, even though the South Africans have said, we are friends with

Russia, oi, whose side are you on?

BREMMER: Oh, sure. There is a legitimate reason to say that and their response is going to be you guys are a bunch of hypocrites. I mean, I was

with the South African Foreign Minister last week, and this is before her photo op yesterday with the Russian Foreign Minister and was deeply unhappy

with the idea that the West is saying this is about democracies versus autocracies.

From her perspective, massive amounts of support for White European Ukrainians from the United States and from the West, and how much support

would the US provide in all sorts of other conflicts that have deep humanitarian implications for innocents on the ground, but don't seem to be

as strategically important for the for NATO, for example?

And so what we're seeing is not just from South Africa. We saw President Lula recently elected in Brazil blaming the United States and NATO in part

for the war in Ukraine. We've seen some of that even from Mexican President AMLO.

We've certainly seen a very neutral position from the Indian Prime Minister, who is now buying 33 times more oil from Russia than they were

before the war started. Why? Because they're getting a significant discount.

It's not just the Chinese, Xi Jinping, that's the big friend with the Russians on the global stage, pretty much every developing country is

taking that position.

QUEST: The tanks that are going to be sent. Whether their game changes, we could debate until they actually get there and we find out, but they are

certainly going to involve an escalation, or at least a more muscular response by the Ukrainians. That's the very purpose of them there.

So, do you fear that this escalates the battles?

BREMMER: It clearly escalates the battle, though it escalates it in a way that is perfectly understandable and justified, given the Russian invasion

and the war crimes they've committed.

I think what it really does change is it should show to the Russians beyond any question of a doubt that NATO is together in terms of their military

commitment to the Ukrainians for the foreseeable future.

Russia's strategy for the last months has been they expect that they're going to be able to get weakness and divisions inside NATO that the West

wouldn't continue to provide this level of support to Ukraine as you go through difficult winters as it has more economic costs, you know, and

that's -- the Russians are just wrong on that. And so the question is, when the Russians know that strategy doesn't work, what do they do next?

[15:15:22]

QUEST: All right, but Ian, back to the earlier question. What happens with the bifurcation or the division of the developing world supporting or

at least not opposing Russia? And how do you put Humpy Dumpty back together globally, after this is over when not unreasonably NATO, or individual

countries will say to India, will say to South Africa, you talk tough on democracy, but you weren't with us when it counted?

BREMMER: Yes, that's right. Well, I mean, when it counts, it depends on who you're talking to. A lot of people think when it counted, is the

Palestinian issue. A lot of people think when it counted, is the Armenians being cut off with the Nagorno Karabakh right now and nobody is talking

about that. A lot of people talk and say it's about Yemen.

I mean, it really -- you know, there are so many of these developing countries that are saying that what really matters is not what is blaring

in the headlines in the West, whether it's Democrats or Republicans or Europeans consistently for the last 11 months, and I think what they say is

that this is not about democracies. This is about the West, and we're deeply unhappy and dissatisfied with the way that's been framed.

So NATO is together, NATO is stronger, meaningfully stronger than it was 11 months ago, much more military spending, expansion coming on the books,

certainly with Sweden, probably -- certainly with Finland, probably with Sweden, and also forward deployments.

The G7 is stronger, the United States with its European allies, and its Asian allies, the Japanese are doubling Defense spending. They have a major

border with Russia, too. We don't talk about that very often.

But the developing world is not with the United States, NATO, and G7 on Ukraine, not in the slightest. And that's not about to change, Richard.

QUEST: Ian, I'm very glad you mentioned -- we discussed that aspect of it. It is in and off itself getting lost in the discussion. I'm grateful to

you, sir. As always, thank you.

It is QUEST MEANS BUSINESS live from New York.

Tesla report earnings immediately after the bell. The Chief Executive, Elon Musk is facing legal scrutiny, of course, this tweeting claims that he

could take the company private. We'll talk about it after the break.

(COMMERCIAL BREAK)

[15:20:12]

QUEST: Really interesting on the markets, they've clawed their way back. I showed you at the opening up the program. But now we're virtually

unchanged.

I think we could go positive. But then what do I know?

The NASDAQ is off just a fifth of a percent. So as you get the Even Stevens and it follows Microsoft announcing its slowest revenue growth since 2016,

but the market is not that badly off with Microsoft anyway, perhaps because of its announcement on AI, ChatGPT.

The shares were open sharply lower, there is a warning of economic uncertainty, and like many other companies, it has announced layoffs,

thousands of them.

Matt Egan is with me. But you know, we're looking down just over half a percent, and you've got to hand it to Satya Nadella. He is playing the long

game. He is basically saying, yes, well don't worry about today. I'm focused on AI in the future.

MATT EGAN, CNN REPORTER: That's right, Richard.

You know, that big investment from Microsoft, you know, they're investing billions of dollars in OpenAI. That's the company behind that scarily good

chatbot, ChatGPT, and that is, I think being well-received in the market in the medium to long term, but I don't really think investors love what they

heard from Microsoft last night.

I mean, this is the slowest sales growth for this company since 2016 when Barack Obama was still in the White House and they did strike a pretty

tepid tone when it comes to demand.

They said that they're seeing other companies be cautious in terms of spending, because they're worried about what happens to the economy.

They're concerned about, you know, a slowdown a potential recession.

QUEST: Right, but I was going to say, but you know, where Microsoft makes its money these days, it is not where it used to make its money. I

mean, the Cloud is a much more important part of its revenues than say, although Office and Windows is still very significant.

EGAN: Oh, absolutely. I mean, that's the problem here, though, is because they're not only dealing with this slowdown on the PC side, which is

hurting their Windows and Office business, but yes, their moneymaker is on the enterprise side and the Cloud spending boom that we've seen in recent

quarters, that has slowed down, and it has slowed down, in part because some CEOs are worried about spending lots of money right now, because they

don't know what's going to happen in the economy.

But, Richard, it is pretty interesting to see, as you mentioned, the market turnaround. I mean, at one point, the Dow was down 450 points, the NASDAQ

was off 2.6 percent. If we see anything close to a flat close today, that's pretty impressive, especially because as you mentioned, we also have more

earnings after the bell coming up -- Tesla, IBM, GDP numbers tomorrow, and then the big Fed meeting next week.

QUEST: I want to talk to you before the end of the week on whether you think the market has fundamentally turned? Now we may not be seeing the

gains now, but has the sentiment -- to use that awful word -- has it and people now believe that the trajectory will be different? We'll talk about

it either tomorrow or Friday. Thank you, sir.

EGAN: Thanks, Richard.

QUEST: I want to hear Matt's analysis on this. As he just mentioned, Tesla's earnings are after the bell and analysts are expecting profits to

recover after two disappointing quarters.

Elon Musk was on the witness stand in California earlier this week, questioned as part of a class action lawsuit over his claim, his tweet, in

fact, in 2018, that he'd secured funding to take Tesla private.

Clare Duffy is with me. The lovely -- the juicy part about any litigation, is that once you're on the witness stand, all bets are off. You know, it's

the Judge who is in charge, as we discovered, of course, during their very purchase agreement of Twitter.

So Musk, the case, the results, how is it looking?

CLARE DUFFY, CNN BUSINESS WRITER: Right, you know, it's interesting, Richard, to that point, Musk has been very subdued in Court this week. It's

a real significant change from hearing him talk about the situation on Twitter or in video calls with his fans.

He has been very critical of the SEC and the action it took against him over this tweet. And in Court, it has been frankly, a little boring. He's

been very subdued. And so that's been sort of interesting to watch. As you say, once you're under oath, things might change a little bit.

Musk has made a number of arguments this week, mainly that his tweets don't necessarily affect Tesla's share price. He is saying he can't draw a causal

relationship between his tweet saying funding was secured and these investor losses, but it'll be really up to the jury to decide whether that

is true or not.

QUEST: Okay, now, I look at Tesla's share price, and it has bounced back from those bad old days where there were concerns about that. I wouldn't

say it's out of the woods, but there is a stability in the price -- you're nodding your nodding your head. You don't agree. Go on.

[15:25:11]

DUFFY: Well, no -- you know, it is interesting, Musk has made that argument in Court this week. He is saying these shareholders are really

just upset that they sold out early and they are not getting to take advantage of Tesla's more recent share growth.

But then, over the last year, you see Tesla's share price is down more than 50 percent. And tonight, Tesla will be reporting earnings. It's something

that shareholders are going to be watching really closely.

The company is expected to report a recovery in revenue after two sort of disappointing quarters, but I think the big question is, what is the

company going to say about this current quarter, the first three months of this year?

In the earlier part of the month, they reported sort of disappointing sales numbers for their cars in December, and I think there is a question of

whether there is sort of softening demand for Tesla's that could hurt the company in the coming months.

And then then there's this whole question about Musk's distraction with Twitter. That's the other thing I think we'll be watching for tonight, it

is whether he can reassure Tesla investors that he is not too distracted with Twitter.

QUEST: Well, I think you've given yourself your own marching orders for tomorrow night's program, as we will then chew over exactly what was said.

Thank you, Clare Duffy with me.

DUFFY: Thanks, Richard.

QUEST: Stay with some business news -- may business news. Rupert Murdoch has abandoned the plan to combine two arms of the empire. Now, of course,

he split them off originally. Now he wanted to put them back together and now he's not.

FOX and News Corp both jumped on the news quite considerably. Look at those. Those are good gains. He had proposed the deal last fall, almost 10

years after they separated from each other.

Now, in a letter, he and his son, Lachlan, both told the Boards of both companies a merger was not optimal for shareholders.

Oliver Darcy is with me.

So look, Oliver, make sense of this for me. Was this a bad idea that should never have been promulgated in the first place? Or have conditions changed

and they've made a wise decision to reverse?

OLIVER DARCY, CNN SENIOR MEDIA REPORTER: Well, I think it depends on who you might talk to, Richard.

Investors never liked this deal. I think they've been pretty vocal since Murdoch opposed it last fall. You've seen investors come out and say that

they are worried about reuniting FOX Corp, the broadcast arm of Rupert Murdoch's media empire with News Corp, which is the print publishing arm,

and so they were not really excited about this deal.

Now, yesterday, it was reported that part of perhaps, the calculation by Murdoch to delay this deal or to scrap it entirely, which seems to be

what's happened here is that the Costar Group offered about $3 billion for a piece of News Corp, the part that operates the real estate section of the

print arm, and so that has essentially put this deal on hold.

But you could also see why that might be an easy out for the Murdoch camp, you know to point to as the reason this isn't going to move forward. It

would have been particularly embarrassing, I think, for Murdoch, particularly as he tries to solidify his legacy if he were unable to

reunite these companies as he is trying to define you know, what people are going to remember him for.

QUEST: Sifting the truth or sifting from the rumors of what's happening, who is really in charge? How much Lachlan controls? How much Rupert still

is driving the bus? We don't really know.

DARCY: Yes, we don't really know. I mean, everyone I have talked to inside both companies would say that Rupert is fairly involved, you know, it's not

uncommon for him to be strolling around the offices in New York or in LA or other places. And so I think that, you know, they would say he is pretty

hands-on still, but they would concede probably that he has slowed down a little bit.

You know, he is not maybe the youngest guy in the world anymore, and so it is expected that you would slow down. But look, this is someone who has

battled health issues and come back and someone who is known to be involved in key decisions in both companies.

QUEST: He was 91. He will be 92 on March the 11th.

All right, thank you. Oliver Darcy, I appreciate it. Thank you. I should be so lively at 91. I should still be lively 71.

As the Israeli Prime Minister lobbies to take power away from the country's Supreme Court, the chorus of dissent is growing. Now, two former Central

Bankers are speaking out, Jacob Frenkel, one of them is with me after the break.

QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[15:30:00]

(MUSIC PLAYING)

QUEST: Israel's prime minister Benjamin Netanyahu has been defending his plan to take power away from the supreme court. He wants to give parliament

the option to overrule the Supreme Court on crucial decisions.

Critics say the various things would potentially jeopardize LGBTQ rights, enforce gender segregation in the public and one of the most sticky ones,

exempt ultra orthodox Jews from military service.

Israelis are deeply divided and have taken to the streets. They say the changes will lead to corruption and Israel becoming a religious state. This

is what one student said.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I am protesting because the democracy in Israel is at stake. I am a student, a law student. And once I heard about the reform in

the legal system, I was shocked.

I can't believe that the changes they want to make will make such a difference in the (INAUDIBLE). It's basically a change in the regime. And

we, as a student protest, are against it and want to save our democracy.

(END VIDEO CLIP)

QUEST: Now the, prime minister says there may be 80,000 people on the streets but 2 million people voted for the coalition. Two former central

bankers from Israel say the new laws could hurt investment and Israel's credit rating.

Jacob Frenkel is the former governor of the Bank of Israel and one of the economists speaking out. He joins me. Jacob joins me from Tel Aviv.

It's always good to see you, sir. I am grateful for you tonight. Look, you obviously don't speak out very often on major controversial issues like

this. You must feel pretty strongly that there is something wrong.

What is the core of your worry?

JACOB FRENKEL, FORMER GOVERNOR, BANK OF ISRAEL: The main core is, if is not broken, do not fix it. There's tremendous challenges today. We are

talking about a very sweeping overload of the judicial system, at the end of which the concept is that the balance.

[15:35:00]

The checks and balances is going to be altered in a very fundamental way. The judicial side will be weakening and its ability to control the

government will also be weakened.

Now Israel has succeeded extremely well over the past decades. It has excelled, it has developed the high tech. It has been integrated into the

world economy, much of it under the leadership of prime minister Netanyahu.

What we feel now is that the justice minister, with the new government, are aiming to change fundamentally the balance and we see significant risks in

it. It is not purely ideological or polemical.

We are coming to it as a completely nonpartisan, purely professional -- and I look at the experience of other countries that have gone through this. I

look at Poland. I look at Hungary. I look at Turkiye.

Everywhere where the judicial system has weakened, economic performance has weakened, foreign investment has declined.

QUEST: All right.

FRANKEL: Rating agencies have worsened and the economy suffer. So what I am saying is, I am sure there are areas for improvement. But it has to be

done in a very thoughtful way, in a more conceptual way and --

QUEST: Jacob, let me jump in. The fundamental fear that you are expressing is that investors would shy away from putting either fund money or direct

investments into Israeli companies.

FRANKEL: Absolutely. In a fundamental sense, Israel has benefited immensely from integrating into the world financial system. Foreign

investment has been huge, especially into the high tech sectors. We have been called the startup nation.

And we basically say, come on, don't risk it. Foreign investors have voted with their feet in favor of Israel. And they vote with their feet when they

are unhappy with the developments. And they express concern, deep concerns.

QUEST: Right.

So what about the prime minister, when he says, these proposals were on the table during the election and we got elected?

We are obliged by mandate to do it.

FRANKEL: Well, there is no question that the elections concluded conclusively and created a legitimate victory and a legitimate government.

But I would claim, I think everyone that has concern would claim, the details of the reform have not been spelled out.

Of course, the government has been elected in a legitimate way. They always said that they want to reform the judicial system. But the extent to which

it is now being discussed has never been on the table.

Let me just say, when people went to the voting, booth they voted for parties, they did not vote for specific items on the agenda. That's the way

it's always going to be. But as we discuss now specifically, the judicial reform, the issue is not to do it through false and through the fact that

one has a majority; rather it should be more inclusive.

It's going to effect the life of everyone in the country. And therefore, if you want to go through this, do a referendum on that issue. But I don't

think that's the need. You need to exchange views. It is a professional issue.

We are not talking about a political agenda. We need to talk about it in a professional way. And I do believe that some of the proposals, while

emanated from an economic analysis of their unintended consequences, that is all. We are saying we are in a world of risk management. Don't take this

risk.

Explore it to the end and create the consensus. This is all that we are saying.

QUEST: It's good to have you say it on QUEST MEANS BUSINESS. I'm very grateful to you. Good to see you, you are looking --

(CROSSTALK)

FRANKEL: -- great majority of the economic profession in Israel that is very, very concerned about it. Let me just say, prime minister Netanyahu

has led the economy of Israel to new heights. There is no reason to take a chance and to risk --

QUEST: Right, I'm grateful, sir, thank you, Jacob Frenkel joining us from Tel Aviv.

[15:40:00]

That's QUEST MEANS BUSINESS. By the way, we will be in Tel Aviv in March. QUEST MEANS BUSINESS will be coming from Tel Aviv as we take a view on the

Israeli economy and Israeli business. Of course, now there's going to be more for us to talk about.

Let me talk about the markets and how we're going to tell you at the top of the closing bell. At the top of the, hour there will be the closing bell.

We've got a bit of green but we're not going to eke out some green after the close, wherever things are. I don't know.

Coming up next, "MARKETPLACE EUROPE."

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QUEST: Hello, I'm Richard Quest. The dash to the closing, bell it is two minutes away. Wall Street is looking at past week earnings for Microsoft

and. Boeing the market, the Dow opened lower, up over 400 points at one point. It is just off 21. We even see a smidgen of green, as you saw there.

The S&P is up. It has barely changed now. It is up just 3.5 points. The Nasdaq is similar. So you have a market that wants to rise but isn't.

The U.S., Germany and other Western countries are sending tanks to Ukraine. The Eurasia Group's president Ian Bremmer told me their agreement sends a

message to Russia.

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IAN BREMMER, EURASIA GROUP: NATO is together in terms of their military commitment to the Ukrainians for the foreseeable future.

Russia's strategy for the last months has been that they expect that they are going to be able to get weakness and divisions inside NATO, that the

West wouldn't continue to provide this level of support to Ukraine as you go through difficult winters, as it has more economic costs.

And the Russians are just wrong on that.

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QUEST: Ian Bremmer, Eurasia.

The Dow components. Interesting, Disney continues its climb, having been beaten up. Now there is growth within it.

McDonald's is the number two. But if you look over, there is no real theme to the market today accept Boeing, of course, is up on earnings. Otherwise,

you have the banks in the middle and you have 3M, Travelers and Amgen all at the end. You get the idea.

The market is sort of bifurcated but it is difficult to see exactly, particularly when you look at the numbers, it's pretty much even Stevens

terms of the 30 overall.

And that is the way the market looks. We will have some more of that tomorrow, of course, on QUEST MEANS BUSINESS. Otherwise, the closing bell

on Wall Street is about to ring, whatever you're up to in the hours ahead, I hope it is profitable.

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