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Quest Means Business
Stocks Jumps After First Republic Rescue Plan; Protests Erupt Over France Pension Legislation; UK Bans TikTok App From Government Device; The Dark Side Of The Cobalt Supply Chain; Global Banking Concerns; Sustainable Sea Walls. Aired 4-5p ET
Aired March 16, 2023 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELENI GIOKOS, CNN INTERNATIONAL HOST: That is the closing bell ringing on Wall Street and take a look at how the markets have closed.
As you can see the Dow is up just over one percent. That's a gain of 373 points. It has been a rocky few days. We are in the green. As you can see
we started down in the negative. It has all got to do with those regional banks.
Well, those are the markets and these are the main events: A rescue to shore up confidence. Some of the world's largest banks provide a lifeline
to a smaller rival.
The European Central Bank plows ahead with a half-point rate rise.
And Macron forges ahead with pension reform, but without Parliament.
Live from Dubai. It is Thursday, March 16th. I'm Eleni Giokos. I'm in for Richard Quest and this is QUEST MEANS BUSINESS.
A very Good evening. Great to have you with us.
Tonight, Wall Street soared on news that the largest US banks offered to help a struggling mid-sized lender. My First Republic shares popped on that
reports that the bank would get a $30 billion lifeline. They closed, as you can see, almost 10 percent higher.
The US Treasury Department said 11 banks are depositing the money into First Republic. It was facing a crisis of confidence after the collapse of
Signature and Silicon Valley banks.
The news seem toed ease broader market worries. The S&P 500 rose more than one-and-a-half percent on the day. We've got green across the board and
earlier Thursday, the US Treasury Secretary said the American banking system is sound.
Janet Yellen spoke to the Senate Finance Committee about the collapse of Silicon Valley Bank and she said the government response shows that the
system will not be allowed to fail.
(BEGIN VIDEO CLIP)
JANET YELLEN, US TREASURY SECRETARY: I can reassure the members of the Committee that our banking system is sound, and that Americans can feel
confident that their deposits will be there when they need them.
This week's actions demonstrate our resolute commitment to ensure that our financial system remains strong and that depositors savings remain safe.
(END VIDEO CLIP)
GIOKOS: All right, we've got Matt Egan in New York for us. You're going to break it all down.
It was first rumored that First Republic Bank would get a cash injection and now, we are hearing $30 billion lifeline from major banks to shore up
First Republic. Take us through what we know.
MATT EGAN, CNN REPORTER: Well, Eleni, this is an extraordinary rescue from the industry itself. They are coming to the rescue of First Republic
Bank, which is a San Francisco based regional lender that has come under enormous pressure over the last week or so because it fits some of the same
characteristics as Silicon Valley Bank, the California bank that collapsed just about a week ago.
And so First Republic Bank's shares had been down this morning. At one point, it was down 36 percent, but everything turned around on these rumors
of a rescue, and now we have the confirmation, 11 of America's biggest banks, they are providing $30 billion in deposits.
Now, this is designed to give First Republic some additional financial firepower to meet demands from customers for withdrawals. And also, it is
designed to really bolster confidence in the system.
Now the 11 banks providing this cash, these deposits -- Bank of America, Citigroup, JPMorgan Chase, Wells Fargo -- they're all providing $5 billion
On top of that, Goldman Sachs and Morgan Stanley, they're providing two- and-a-half billion dollars in uninsured deposits each. And then below that, we have been BNY Mellon, PNC, State street, Truist, and US Bank, they're
all providing another $1 billion each of uninsured deposits. If you add it up, you get $30 billion, and the banks put out the statement and they say
that they are deploying their financial strength and liquidity into the larger system where it is needed the most.
They also say that the banking system has strong credit, plenty of liquidity, strong capital, and strong profitability. They said: "Recent
events did nothing to change this."
So Eleni, this is just a very interesting, very significant development. We had the Federal government coming in and rescuing depositors over the
weekend, and now, the banks themselves are coming to the aid of one of their rivals.
GIOKOS: Wow. have to say, I mean, this is coordinated action within the financial sector. Banks coming together, getting $30 billion to save
And I guess the messaging is pretty clear, whether you're seeing it from the private sector or from the Federal government is that, there is no room
for failure here. We heard that from Janet Yellen, that there will be no failure. There is no room to fail here.
There has been a question around whether this whole issue has been based on true fundamentals. We know SVB had liquidity issues versus a lot of it
being sentiment driven. What is the street saying at the moment with all this action that we've seen?
EGAN: Well, I mean, Wall Street has greeted this news with you know, the financial equivalent of a standing ovation. US markets were down on the
day. There were a lot of concerns about the regional banking sector, and markets turned around as soon as reports of this deal came out.
You can see First Republic closing up 10 percent. US regulators, they are welcoming this news. They put out a statement announcing this $30 billion
rescue, and they said: "This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system."
And the Federal Reserve itself put out an additional statement reiterating that they stand willing to provide liquidity to the banking system, and
that the discount window remains open.
So, it is really interesting that we are seeing officials on both sides of the Atlantic trying to bolster the banking system, whether it's the Swiss
National Bank coming to the rescue of Credit Suisse, or now we have the banking industry and US regulators welcoming this rescue.
Clearly, a lot has changed in the last 10 days or so. We've learned just how fragile confidence can be in the banking system. The question now is
whether all of this is enough? Whether the efforts from regulators and from the banks themselves is enough to sort of put out this fire and restore the
trust that really had been eroded by these bank failures.
GIOKOS: Absolutely. I would have loved to have been a fly on the wall with those conversations, all of these banks coming together. I'm sure
we'll find out more details on how this came about.
Thank you so much, Matt. Great to see you.
All right, the European Central Bank says the banking sector is strong and solvent. It raised its benchmark interest rates half a percentage point
bringing them to the highest level since 2008. The decision follows last week's collapse of Silicon Valley Bank in the US and a $50 billion loan to
Credit Suisse from the Swiss National Bank.
This morning, ECB President Christine Lagarde said the banking system is stronger now than ever before the Great Recession. Take a listen.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: Given the reforms that have taken place, and I was around in 2008, so I have a clear
recollection of what happened and what we had to do.
We did reform the framework. We did agree on Basel III. We did increase the capital ratio. We did increase the financial coverage ratio as well, and I
think that the banking sector is currently in a much, much stronger position than where it was back in 2008.
(END VIDEO CLIP)
GIOKOS: Clare Sebastian is in London for us.
Clare, I think this -- it was a tough call, I'm sure for the ECB to raise rates given just the erosion of sentiment over the last few days, but
Christine Lagarde remains steadfast that the banking sector is safe and it is steady.
Was there anything in what she said that perhaps gives us a little bit of insight about what their mandate is going to be going forward?
CLARE SEBASTIAN, CNN CORRESPONDENT: You know, Eleni, I think the critical thing was not what she said, but what she didn't say in this press
conference after the decision. And if you parse the statement that they put out with the decision, it did not contain the kind of very specific, very
unequivocal forward guidance that we've been getting from the bank, it simply left that out, which tells us that they just don't know how this
financial market turmoil is going to play out at the moment.
She was very clear about that in the press conference. They just have to wait and see, wait and keep an eye on things like how banks are lending to
households and businesses. She said, they look at things like terms and conditions, any restrictions put on lending, anything that could
potentially in the future do the work of the ECB's tightening for it, and therefore reduce the need for further interest rates.
So that is really the key here, but she was also very clear that with inflation at eight-and-a-half percent, they really did have to keep acting.
Underlying inflation, she said is still going up in terms of any kind of improvement.
She said frankly, not a lot is being seen, so she doesn't see enough progress on that and that is why they went ahead with that half-point rate
I think the risk of cutting back on that, of doing a quarter point or even doing nothing at all was potentially higher in the end because the
financial markets might have looked to that and thought, well, what does the ECB know that we don't? Are things worse in the financial market than
we realized and panicked as a result of that?
So I think that's what was going on here, and certainly, this is something that the Fed and the Bank of England will be looking at when they meet next
GIOKOS: Yes. I mean, it was really interesting, I think in the lead up to this decision, you know, many people were saying, well, there's a call to
hold the rate hiking cycle. But clearly, weighing up those risks, it seems that inflation is still a bigger risk and there is confidence that the
banking sector is safe, liquid, secure, and they're ready to step in if needed.
SEBASTIAN: I mean, I think there is more confidence today than there was yesterday, certainly that the banking system is secure. There is, I mean --
the Pandora's Box has been opened really on that regard.
People I've been speaking to in the market have been saying that there is still nervousness out there. People aren't sure what other vulnerabilities
might come to light. Investors are certainly on a hair trigger, looking out for that.
And there are questions swirling still around Credit Suisse. You know, an JPMorgan analyst came up today and said that they think the most likely
scenario for the bank is that they will eventually get taken over. They don't really see that they're going to be able to complete this turnaround
on their own and what the Swiss National Bank has done in terms of funding this credit line is just not going to be enough.
So there is potentially more volatility and more turmoil ahead. But for now, certainly, the European stocks rallied towards the end of the day of
the back of what happened in the US, and it seems that for now, potentially, we might see a little bit of stability come back, but we just
don't know, Eleni. This has been a very fast moving situation.
GIOKOS: Yes. It has. It has been a very eventful week, and I just, you know, you don't know what news you're going to wake up to the next day.
Clare Sebastian, thank you so much. Good to see you.
Dramatic scenes right now in France, where the government has sparked anger by raising the retirement age without a full vote by lawmakers. Several
thousand People have been out on the streets of Paris, with police firing water cannon on some protesters after a fire was lit in a central square.
It comes after the government pushed a Pension Reform Bill through without the votes in the National Assembly. The bill raised the French retirement
age from 62 to 64. So, that's two years.
Jim Bittermann is in Paris for us.
Jim, without a vote, this sounds like a political gamble for those that made this decision and it is coming with consequences within Parliament and
also out in the streets.
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: And out on the streets, exactly, Eleni. In the Parliament, there was all this outrage this
afternoon, when Elisabeth Borne, the Prime Minister announced that she wasn't going to put this piece of legislation to a vote, that she was going
to enact it by decree, which is allowed by the French Constitution, but also which exposes her and her government to a no-confidence vote, and
several of the political parties here said they were going to file a motion for no confidence within the next few hours or maybe days, but in any case,
very soon, to test that notion of whether the government can get away with this.
And out on the streets, of course, like you said, there were protesters who had gathered in front of the National Assembly gets to kind of watch and
look on as this vote was supposed to take place. And when it didn't, they started protesting.
The protests continued for some hours. The protesters moved over to the Place de la Concorde in the heart of Paris, and the police as you mentioned
there, they used a water cannon and teargas to finally disperse the crowd.
So it's just some evidence of the kind of outrage that is still out there in the street, and we're going to perhaps see more of that later on and in
the next week, because the unions, a Joint Union Committee has gotten together and they've decided there's going to be a big day of strikes and
demonstrations next Thursday in France -- Eleni.
GIOKOS: Jim Bittermann, thank you so much. Appreciate it.
Next, another one bites dancers the dust. The UK joins the US in banning TikTok for government workers. That's coming up. Stay with CNN.
GIOKOS: Western governments are sending a clear message to TikTok over concerns the app could be used to spy on people's phones. The UK joined the
US on Thursday banning TikTok from devices used by government workers. The US is also threatening a further step, saying it may ban TikTok from the US
entirely if its Chinese parent company doesn't spin off the app.
China says there is no proof that TikTok presents a security threat to the US or any other country.
Sara Fischer is following the story from Washington for us.
Sara, fascinating. You know, this isn't the first time that we're talking about banning TikTok. I remember in mid-2020, it was a hot topic, and this
is really fascinating seeing the app being removed from government officials' phones.
Can they ban this app? I mean, what is the next step here for the US government?
SARA FISCHER, CNN MEDIA ANALYST: Yes, well, of course they can ban the app, they have the authority to. It is whether or not it makes sense to ban
the app. So where do we go from here?
The Committee for foreign investment in the US, which is a regulatory body here that monitors foreign investments in US companies has been trying to
broker a deal with TikTok over the past two years to essentially figure out whether or not there is something that we could do to allow TikTok to
remain here, but also allay any National Security concerns.
The news yesterday, a TikTok source confirmed to me was that CFIUS has sort of backchanneled to TikTok executives that they plan to ban the app unless
TikTok sells to a US company, and so it does appear that unless TikTok can broker that deal, they do risk being banned, at least here in the United
States. And by the way, that would mean off of all devices, not just government devices as you mentioned.
They are now banned from government devices in the UK and Canada, and that is something that we are discussing actively here in the US.
GIOKOS: I want to take a look at the assurances that TikTok has given in the past saying that all of US user traffic is stored on Oracle's Cloud,
that there are safety mechanisms that are in place, but clearly, there is an erosion of trust here in terms of the access the Chinese government
FISCHER: Absolutely, and I think by the way, you have to take a look at the backdrop here.
We had Chinese spy balloons flying over the US just a few weeks ago. This comes amid rising tensions between the US and China over things like
Taiwan, et cetera, and so of course, there is a trust deficit.
TikTok, to your point has said that they're going to make a lot of concessions to help allay any National Security concerns. They've said that
they'll team with Oracle to store US user data on Oracle Data Service here in the US. Now that data migration is not complete yet, but it should be
done soon. They've also given Oracle access to all their algorithms and their content moderation policies so that Oracle can look underneath the
hood and see if they're doing anything like limiting hashtags or talk about you know, negative things about the CCP.
They were hoping, TikTok, that if they did all of these things that government regulators in the US would say that would be enough. And so
what's newsy here is that apparently, regulators do have trust deficit. They just don't see it being enough.
GIOKOS: Yes. I mean, what is interesting, let's look at it from the TikTok perspective. I know that there has been a lot of talk about the fact
that they say it's very difficult to spin off the US operation, that US division. What is the prognosis in terms of how this is actually going to
FISCHER: This is such a weird argument. So you're saying that it's hard to spin off the US app, but at the same time, you're saying, oh, but we
have separated it from the backend so that the data is secure and I don't think TikTok can really have it both ways.
But I think in terms of what actually can be done technically, and practically, if you think back to 2020, TikTok had started to broker a deal
to spin off the US app. If you'll remember, they were in talks with Oracle, with Microsoft, with Walmart, et cetera, so it is confusing to me as to why
they aren't able to technically do it now if they said that they weren't able to do it then.
The other thing that's a little bit of a missing piece in this whole equation, to me is that TikTok has a lot of private investment. You have
companies like Tiger Global and Softbank that have invested billions of dollars into this company, and they are desperate, sources tell me to get
their money back, they want to return.
So why aren't -- why isn't the ByteDance company trying to spin out the US division to liquidate their investors? To me, that's the big question. And
you know, the only reasonable answer one would think is because China does not want them to spin it out. They like having that access. And then it
goes back to of course, they like having that access because they potentially have access to US user data, trends about how we consume
content, et cetera and that's the National Security concern.
GIOKOS: Wow, a complex story it seems. Sara Fischer, I am sure we will be talking about this in the weeks and months to come. Thank you so much for
FISCHER: Thank you.
GIOKOS: All right, there is a new partnership in European energy. The Italian energy giant, Enel, announced this week that they are teaming up
with the UK startup Newcleo.
It marks a renewed interest in nuclear and gives Enel the option to be an investor in a first of its kind nuclear plant. The plant will be built
outside of Italy where nuclear energy is illegal at the moment in Italy. Enel's newest strategic plan sets its sights on decarbonization and
Francesco Starace is the CEO of Enel and he joins me now from Rome.
Sir, great to see you.
I am so fascinated by what you're doing with Newcleo. It is an interesting startup. They say they do things safely, more efficiently. It's smaller.
I want you to take me through this deal, through this partnership, and what you're hoping to achieve within the nuclear energy generation space.
FRANCESCO STARACE, CEO, ENEL: Why are we interested in nuclear, it is because it's new and it has to do with technology that is based on
different fissile material which is thorium, which has been known since the beginning of the nuclear age, but has not been really used because it has
not military applications.
So it is a technology that is based on a fossil fuel that will only have similar application if you want non-military ones and that's one thing and
the other one is that it has -- I'm not going to be long on this technical explanation, but it has a lot of features that will --
GIOKOS: I know. I love this conversation because thorium is actually a really interesting mineral and I know about it because in South Africa
there was talk about, you know, why uranium is being used and not thorium because it is less reactive.
STARACE: Well, it is the reason. There is a reason.
GIOKOS: So this is really new. Yes, this is really new technology.
STARACE: Yes. It is really new technology also because the critical reaction and it has been kept critical by a flow of neutrons, so there is
an accelerator that brings the reactor to critical state, and that means that if you want to shut it down, you just shut down this flow of neutrons
so that the reactor is intrinsically much more safe.
So there are two features that make it very interesting. There is a third one that this is a reactor that potentially could also recycle, that means
burn fissile material that is the waste material from classic nuclear plants.
So it will also be used as a way of recycling spent fuels, as we call them. But that's three very interesting features for us.
GIOKOS: Yes. It is very, very interesting. I'm really fascinated by what you're telling me.
Look, we know that Europe is divided on the nuclear argument. France is the biggest producer. We know Italy, it's banned, in other countries in Europe
as well, nuclear power stations are banned at the moment.
But I think the war in Ukraine has definitely shifted a lot of the narratives about where the next big energy supply is going to come from. Do
you believe it is nuclear?
STARACE: It could be nuclear. if technologies like this one really become industrial. So if they get through this what is called the valley of death,
when new technologies are tested for their life, and this is what we're trying to do now, between now and 2030 to 2035, where we think this will
become, we hope this will become a viable technology to supplement and complement the renewable energy growth that is taking place across Europe.
So a combination of these technologies and renewables would probably be the final blow to our fossil fuel dependence in Europe.
GIOKOS: You say you're going to build this outside of Italy in your press release. You didn't qualify where? What location? Where are you thinking?
STARACE: We have many options and it is very early to now try and disclose one. So there are several potential opportunities there.
GIOKOS: You had to divest out of Russia. We know that there is, you know, huge constraints on all fronts when it comes to gas, when it comes to oil
What is your prognosis on energy security in Europe. We were dealt a very hard blow over the past year, and the fear is that this is going to
continue because you've got long-term plans. You're looking at renewable, you're doing other things. But you know, these projects take time.
STARACE: I think it is a function of how quickly we reduce the use of fossil fuel and particularly gas in all the parts of the economy that still
use gas, but could do without it. That is basically, get rid of gas in the electricity generation that is not today possible and it is also in the
money with renewables.
So get off the gas from that end. Get off gas from the heating part and you know, heat pumps are now in demand in most locations in Europe. So if we
reduce the use of gas and fossil fuels in these two very large, energy consuming sectors of our economy, our life, then we can spare gas for
industrial use, which is really critical for some industries, and therefore make use in a wiser way of the residual fossil substances that we still
need until we find a different opportunity.
So how can Europe get more secure on its fossil fuel imports? Reducing that volume, and that can be done acting on these two fronts -- electricity
production and heating. If we get that through quickly, as fast as we can, then we will increase with the same speed our energy security.
GIOKOS: Sir, it was really good catching up. Thank you so much for that insights. Fascinating on the thorium front. Interesting to see a new rare
earth coming to the fore.
We will speak soon, I am sure. Take care.
STARACE: Thank you. Bye-bye.
GIOKOS: All right, next, Central Banks reassure nervous investors after the issues at Credit Suisse. We'll be speaking with economist Adam Posen
about what it will take to restore confidence in the banking sector.
Stay with us.
GIOKOS (voice-over): Hello. I am Eleni Giokos. There is more QUEST MEANS BUSINESS in just a moment.
We will hear from the British finance minister and a former Bank of England policy maker about the risk of a banking crisis.
And on My Freedom Day, we will explore the shocking origin of materials found in your smartphone. Before that, the headlines this hour.
Poland's president says his country will be the first NATO member to send fighter jets to Ukraine. Andrzej Duda is offering Kyiv four MiG-29 jets in
the coming days. Other NATO members, including the U.S., have been very hesitant to offer their fighters.
The Pentagon has released a video of Russian fighter jet intercepting U.S. drones over the Black Sea. The video of Tuesday's encounter shows a Russian
aircraft dumping fuel on the drone. The U.S. says the drone's propeller was being damaged in a collision, causing it to crash.
The head of FIFA has been reelected to a second term after leading it to record income. Gianni Infantino took over in 2016 after the resignation of
Sepp Blatter and is expected to speech he promised to deliver $11 billion in revenue over the next four years.
GIOKOS: Returning to our top story, markets closed higher on reports that major banks will rescue First Republic. The Dow rose 370 points. A group of
11 banks, including JPMorgan, Bank of America and Goldman Sachs will deposit $30 billion in First Republic.
Investors have been worried about the safety of regional lenders since the collapse of Silicon Valley Bank.
The British finance minister says the crisis show the strength of post 2008 bank regulations. Jeremy Hunt spoke to CNN's Jim Sciutto earlier. He said
he wants British start-ups to have more choices of where they bank and that the country does not necessarily need more rules.
(BEGIN VIDEO CLIP)
JEREMY HUNT, U.K. CHANCELLOR OF THE EXECHEQUER: I think from the financial and regulatory point of view, the robustness of the new rules was
demonstrated in Silicon Valley Bank U.K. was solvent. And that was because of the requirements that have been put in place since the banking crisis of
(END VIDEO CLIP)
GIOKOS: Adam Posen is the president of the Peterson Institute for International Economics. He served as an external member of the Bank of
England's monetary policy committee. He joins me now from Washington.
So great to have you with us. So many news items I want to tackle with you. I want to talk about the $30 billion that's come through from all these
banks, the coordinated action coming through from the banking sector to help First Republic.
What are your thoughts?
ADAM POSEN, PRESIDENT, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: I think it's a smart move, for political as well as administrative reasons.
The Federal Reserve isn't going to be able to find a buyer for First Republic or approve a merger very quickly.
This is also consistent with the message of the actions taken so, far that the cost of alleviating in the major regionals is going to be borne by the
banks, who are part of the Federal Deposit Insurance funds.
So the idea that these banks in their self interest are putting in money as the form of deposits that they will get back makes sense to me.
GIOKOS: Yes, I love that self interest. There is something in it for them.
POSEN: Oh, yes.
GIOKOS: Janet Yellen -- totally. Janet Yellen also says the system will not be allowed to fail. In saying the system will not be allowed to fail,
she's basically talking about banks will not be allowed to fail, to ensure there is no spread of contagion.
POSEN: I think -- I hope what she means is that the system not being allowed to fail means that depositors need to run from bank to bank and
need to be afraid of a sudden breakdown in payments.
Employees around the country don't need to be afraid of a sudden loss of liquidity for their paychecks. That is different from no bank is allowed to
fail. Banks do fail. The point is to have an orderly workout of the banking problems. I hope she is not saying no banks will ever fail.
In fact, I am hoping and assuming that First Republic will not be an independent bank very long from now.
GIOKOS: I think a lot of this has been tied into liquidity issues at SVB. We have been looking at the high interest rates, regulatory loopholes,
where the smaller banks haven't been subject to stress tests since Dodd- Frank was watered down in 2018.
Do you believe there is a confluence of issues that resulted in what we are seeing at the moment?
POSEN: I. Do we all should be humbled, myself very much included, after 2008, about not seeing what made the underlying connections in the
Nevertheless, this is a pretty clean case when we see that it was specifically the banks that had the loophole and then the tailored, as it
was called, supervision from the Federal Reserve were the ones who got in trouble, meaning it's not all the small banks. It's a specific group of
large but not considered systemic banks.
The $100 billion to $700 billion size, that that's where the problem was. Similarly, we saw that there was no problem in the money centered banks,
they survived a bunch of real world stress tests these last few years. So I do think it was a specific regulatory and supervisory mistake.
GIOKOS: What about interest rates?
What do you think the Fed should do?
I don't think I've ever seen so many calls to tell the Fed, listen, you should halt. There were similar calls in Europe. Christine Lagarde went
ahead and hiked rates despite what we saw with Credit Suisse, saying it was a coincidence it happened in the same week as SVB.
What do you think central banks should be doing?
POSEN: I think the Federal Reserve, right now, should be going ahead with a 25 basis point hike. I think they should have been going ahead with that
anyway. There was some overshooting; markets thinking we would do 50.
Now there is an under shooting in the other direction and they should pause. We have genuine inflation issues in the U.S. They are important to
every working person. They have to be dealt with. They will get worse if you don't deal with them.
Meanwhile, we are providing -- I shouldn't say we; the U.S. government, the federal deposit system, the banks who will be paying for the federal
deposit system, are all providing the necessary liquidity. So you should be able to separate raising rates against inflation for providing liquidity in
GIOKOS: Thank you so much, Adam. Such a pleasure to have you on the show. Thank you, sir.
POSEN: Thank you for having me.
GIOKOS: Sea walls keep coastal communities from washing away. But they can also make it hard for marine ecosystems to survive. One biologist is
changing that reality on this week's Call to Earth.
GIOKOS: According to the U.N., around a third of the world's population lives by the ocean. Sea walls are put in place to protect those
communities. But as sea walls go up, marine ecosystems suffer. On this week's Call to Earth, we traveled to Sydney where one marine biologist is
trying to make seawalls work for everyone.
DR. ARIA LEE, LIVING SEAWALLS (voice-over): I started getting into marine science when I was in my 20s and was doing a lot of scuba diving. I was
really interested in the tiny critters living in the marine environment.
There is a lot of attention with biodiversity and conservation around the large fish, like the sharks and the whales. But you have to remember that
these organisms rely on smaller organisms in order to survive.
We really need to start at the bottom and build up a really strong base on which to build up this food web.
My name is Dr. Aria Lee and I'm the project manager for Living Seawalls.
The problem in urbanized areas such as Sydney Harbor is that so much of the shoreline has been built over without official structures, over 50 percent
of the shoreline in Sydney Harbor has some sort of structure built upon, it whether it be a seawall, wharf or pontoon.
And these artificial structures have taken away the micro habitats, like rock pools, crevices, tiny holes that you would see on a natural rocky
shoreline. What Living Seawalls is doing is bringing back these natural habitat features to an artificial structure, such as a seawall.
We, as marine economists, went out and identified features of a natural shoreline that are missing from a flat, featureless seawall. We have
translated that onto a Living Seawalls panel.
The panels are designed digitally and then a prototype is 3D printed. There are currently 14 Living Seawalls sites around Sydney and around the entire
world. We've installed over 1,000 Living Seawalls habitats.
We can certainly see the difference that the Living Seawalls panels make. The textures can provide seaweed a really strong hold onto the surface.
That's extremely valuable for all the marine organisms that rely on the kelp, not just for protection of their homes but as a food source.
When there is a new construction, we want the designers to think about how they can design the structure to benefit both humans and the natural
environment. Right now, sea walls are really only used for humans. They stop erosion, they protect property that is behind it.
(voice-over): What we want to do in the future is think about what the marine environment needs as well as what humans need. And that way, we can
build more sustainably in the future.
GIOKOS: Let us know what you are doing to answer the call with the #CallToEarth.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Freedom is extremely important to me because I've come to a country and a school that has given me the freedom, the
accessibility to an education where I can look at my culture and different cultures and see it through a different perspective.
And then I am fueled as a thinker and as a changemaker to continue making changes for such people who can't.
(END VIDEO CLIP)
GIOKOS: That's a beam. She is a student from the American School of Dubai, telling me earlier today what freedom means to her. We are marking the
seventh annual My Freedom Day by speaking to young people across the globe who are celebrating freedom and working to combat modern day slavery.
There is a very good chance that you've used something with cobalt in it today, be it your cell phone, own laptop or electric car. Demand for cobalt
is expected to double by 2040, according to the IAEA.
While it is associated with new technology and innovation, cobalt mining is tainted by a practice that should've died out centuries ago. That is child
labor. Much of the world's supply comes from the Democratic Republic of Congo.
There, adults and children toil in dire conditions. Let's revisit a 2018 investigation by CNN's Nima Elbagir. Please be warned some of this is hard
(BEGIN VIDEO CLIP)
NIMA ELBAGIR, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This is the start of the supply chain leading all the way from this makeshift mine
to your luxury battery powered car.
The sacks are full of cobalt ore, a crucial component in lithium ion batteries, set to power the coming green energy revolution.
But at what cost?
There is growing evidence that the cobalt supply chain uses child labor.
Companies say they are working hard to verify the source of all their hand- mined artisanal cobalt but that it's a difficult task.
We're here to follow the supply chain and see if we can do it for them. Before we set out, even the local governor warns us to expect to see
children at work.
(voice-over): We arrive at the Musonoi river mine where the cobalt ore is washed to grind it down. Although we've been given permission to film here,
as soon as they see us, officials begin to scare the children away.
Not all of them, though, are fast enough. Some work on.
One young boy staggers under his load. His friend sees the camera and he drops his sack. They've clearly been warned.
A mining ministry official spots, this boy carrying cobalt has been captured by our cameras. His response is brutal. Later we ask him why he
struck the child. He refused to answer.
(END VIDEO CLIP)
GIOKOS: Investigations into the cobalt industry continue. Richard Quest spoke to one of the people pushing the story forward.
Siddharth Kara just released the book "Cobalt Red: How the Blood of the Congo Powers Our Lives." Here is what he had to say.
SIDDHARTH KARA, AUTHOR: The first step to addressing any horror like this is to bring the truth out into the, world to spread awareness of what is
happening. What's particularly appalling about this is this degrading exploitation at the bottom of these supply chains. It touches our lives,
all of us, each and every day.
RICHARD QUEST, CNN HOST: How did it get this bad?
Yes, how do they pronounce it, artisanal mining?
It's usually describing something rather exotic and boutique-y.
KARA: Artisanal mining is just a term that belies the reality. You think people are baking bread or something. It's actually utterly degrading
working conditions, people caked in toxic filth, using pickaxes and rebar with bare hands to scrounge cobalt out of the ground.
QUEST: Why has this industry as grown has not the pressure been put to bear?
The companies who are buying the cobalt are the very largest in the world.
So why is the same pressure not being put here that we saw in mining, in textiles, in early advanced industrial production?
KARA: Honestly, the candid answer is because, for whatever reason, the perception is these people don't count the same as you and I do. It's
"those people over there, not our people over here."
We wouldn't send the children of Cupertino to scrounge in toxic pits but we can send the children of the Congo. Or we look the other way when it is the
children of the Congo.
The fact of the matter is, for centuries, the people in the heart of Africa have not counted the same as you and I. That's why we are at this place,
this long-standing, unholy story of exploitation of African people.
QUEST: So you have people, the well heeled, the chattering classes, who will make sure it's only fair trade chocolates and properly sourced wools
for their sweaters. But they will go out and buy a device that has the lithium ion or the necessary cobalt in it with no regard for that which it
has come from.
KARA: Well, I think actually, people like you and I, all the consumers, buying these gadgets, we've all been made unwitting participants in this
When you plug in your phone, when I plug in my phone, when your viewers plug in their phones or cars, laptops, they don't think they are plugging
in the suffering of African children. If they did know, they would clamor for accountability. And that is the outrage I hope everyone feels.
QUEST: Related to that is what we can do about it because in the case of chocolate, you buy it or you buy another. In the case of cotton, well,
there will be a label somewhere. In the case of your phone or your car, you can't buy another one because the other one has the same problem.
KARA: People like you and I cannot function for 24 hours without cobalt from the Congo. There is no alternative. There is no statement we can make
as consumers to avoid so and such products.
So we have to clamor for accountability, that these companies, they all claim the conditions at the mining level of their supply chains adhere to
international human rights standards.
Zero tolerance policies on child labor, sustainable practices. And the truth is, in the Congo, none of that is true.
QUEST: So when you talk to these companies and you say, look, you say this but here is the evidence that what you are talking about is crap, what do
KARA: They will all say, OK, maybe the conditions on the ground are crap, to use your appropriate word, but it's not in my supply chain.
It must be in someone else's. And so the fiction here is, if it's in everybody else's supply chain but not mine -- and that's true of everyone -
- then where is all this child mined cobalt going?
It's to the tune of hundreds of thousands of tons of artisanally mined cobalt every year. So it's not it's just in Company A and it's only in
Company B. It is in all of their supply chains. They have to acknowledge that, accept that truth, get on the ground and address the problem.
QUEST: A final thought occurs to me. Having been to many of these countries that have enjoyed great wealth from oil and really brought their
people up into a much higher standard of living, this cobalt in Congo, where 75 percent of it comes from, should be, should be the passport to a
better life for that country, bearing in mind what you say about the growth of cobalt.
KARA: It should, be you are right. Three-fourths of the world supply is mined in the Congo. But the Congo has been cursed. It's resource rich.
That has been its great curse, as ransackers and pirates and pillagers have descended in the heart of Africa for centuries, running off with all those
resources and using the people there as a slave labor force at best.
So they've never benefited from their resources -- war, civil strife, disease, corruption all play a role in that. But at the end of the day, it
is the power brokers outside in the global north, who have ransacked the Congo for centuries.
GIOKOS: CNN reached out to the Democratic Republic of Congo for comment. We did not receive a reply. We also reached out to three tech industry
groups, the CCIA and the CTIA did not respond to us. The consumer tech industry sass they are unable to comment at this time.
That's it for QUEST MEANS BUSINESS. I am Eleni Giokos in Dubai. Thanks so much for joining me. "THE LEAD WITH JAKE TAPPER" is up next. Take care.