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Quest Means Business
White House Downplays Signal Group Chat Security Lapse; Stubb: U.S. And Europe Must Stay Committed To Each Other; U.S.: Russia, Ukraine Agree To Black Sea Safe Navigation; Interview With French Minister Philippe Baptiste; Finnish President On A More Flexible European Union; U.S. Consumer Confidence Hits Lowest Level Since 2021; Iconic Music Service Napster Acquired For $207 Million. Aired 4-5p ET
Aired March 25, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:06]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. Not much actually happening by way of the numbers.
It has been one of those sort of days looking for a direction, time to put us out of our misery and hit the gavel, assuming they get there in time,
which they rarely do. Oh, look at that. He is determined to try and break it unsuccessfully. It managed to hold its own, down oh, we've eked out just
a very small gain on the Dow. But it was all topsy turvy is the word I am looking for.
So those are the markets and these are the main events of the day. The White House on the defensive as Donald Trump backs his National Security
team following the discussion of war plans on a Signal chat.
Finland's President Alexander Stubb has a vision for Europe plus minus. We talk tariffs, Ukraine and European defense.
And the 1990s music program Napster. Remember that? May just be the original cat with nine lives.
Live from London, Tuesday. It is March the 25th. I am Richard Quest and I mean business.
Good evening.
It is just something that can happen. The words from the president as the White House downplayed the stunning lapse in National Security. The
President was describing the leak involving that group chat that his administration used to discuss war plans.
You know, you know the story. The editor-in-chief of "The Atlantic" added to a group, and look who else was there -- the V.P., the Defense Secretary,
the DefSec and others, all part of the messaging app, Signal. Major security concerns are now raised. And also, there is the content of the
group chat.
Senior Trump officials were shown insulting Europe in the leaked messages, "pathetic freeloaders" they were called. The Defense Secretary Pete Hegseth
said the continent had been freeloading and in the last hour, President Trump said he agreed with that sentiment.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: Yes, I think they've been freeloading. The European Union has been absolutely terrible
to us on trade. Terrible. And as you know, NATO, I got them to pay hundreds of billions of dollars. They were way behind. Why are they in for $100
billion and we are in for possibly $350 billion? It shouldn't be. It shouldn't be.
And you could say more important for them, because we have an ocean in between.
(END VIDEO CLIP)
QUEST: Now on the other side of that ocean, in other words, this side, the British Prime Minister reacted to the group chat, making clear that he had
very strict rules for secure comms. Other European leaders reacted to the insults.
Austria's President said its proof the continent must handle its own security. The former Belgian Prime Minister called it another wake up call.
This theme of being ready to stand alone and wake up calls and doing more, this was on the mind of Finland's President Alexander Stubb this morning,
when I asked him for his reaction to Europe being described as a pathetic freeloader.
(BEGIN VIDEOTAPE)
ALEXANDER STUBB, FINNISH PRESIDENT: Well, I don't think one should take those things personally. I think anyone who knows Finland knows that we
have one of the largest militaries in Europe. We are security providers, not security consumers.
And in this specific case, we are actually involved in three different operations to secure the Suez Canal; two of them E.U. operations and one,
the Coalition of the Willing.
I look at it from an operational perspective, and I think the U.S. operation was a raving success. We do this because we want to secure the
freedom of navigation and free trade, and that's a good thing.
QUEST: Were you surprised that they were using Signal? Were you surprised that -- I mean, I mean, do you use signal to communicate with your
colleagues other than I'll have a cup of tea at three?
STUBB: Well, I mean, we use different forms of communication and Signal, of course, out of the public ones is one of the safest. But for us, that's not
the issue. For us, the issue here is the operation and that was successful.
QUEST: We can go to the heart of the issue in a sense, which is the way in which this administration is viewing Europe. And I wonder at what point do
European leaders like yourself realize that the large -- certain members of the administration do not have respect for either the sovereignty or indeed
for Europe as a collective?
[16:05:02]
STUBB: Well, I think there are two observations on that. First thing is that the transatlantic relationship is obviously shifting and the second
one is a question, so what do you do about it? I think as President of Finland, there are at least two tracks that you deal with. One is a
bilateral track and you kind of ask the question, what can you do for America rather than what can America do for you? So a little bit of a
reverse Kennedy.
And there, you know, Finland has icebreakers. We have really good defense materiel and technology, among other things. And then the other track is,
well, how do you make sure that America stays engaged in European and transatlantic security and that you need to work on by making NATO as
appealing as possible and making the alternative cost of staying out of NATO too high and I think that's what the American administration is trying
to do and I think they're actually doing the right thing. Europeans do need to take more responsibility for their own defense and their own security.
QUEST: I suppose it always comes down to this very unpleasant question as to whether Europe still views the United States as a reliable ally. And in
that context, I often hear one thing said privately, one thing said publicly.
STUBB: Well, I think, you know, we have to keep on working at it. You have to understand that international relations and diplomacy are never static.
So a lot of times you have to sort of earn the alliance, if you will. And of course, Finland has always had a very close relationship with the United
States, as have the other Nordic countries, and now especially that Finland and Sweden are in NATO and all the Nordic countries are in NATO. You know,
we continue to nurture and work on that relationship.
I think alliances are twofold. One is values based. And I would still argue that if you look at the U.S. Constitution, if you look at the United
States, by and large, there is a strong value bond. There might be ideological differences right now, but that's part of democracy.
And the other one is then interest based alliances, and I think it is in the interest of both Europe and the United States to stay committed to each
other, because together, of course, we are not only a security and military power, but we provide for roughly half of the worlds GDP and trade.
So, you know, we have to stick this together, and sometimes we have disagreements and in good relationships you can deal with those, I think,
in a sophisticated way.
QUEST: How far do you think your fellow leaders in the European Council, how far has reality sunk in that the alliance is not what it was, that it
is going to cost you a great deal more, and that you do need to consider European defense with arguably minimal U.S. involvement. Has that reality
sunk in?
STUBB: Well, there was a former Finnish President after World War II who was called Juho Kusti Paasikivi, and he had this famous saying that the
beginning of wisdom is to accept realities, and I think a lot of my colleagues in the alliance and in Europe, by and large, have accepted the
realities that the transatlantic relationship is changing.
And I actually think that it is a good thing that Donald Trump has been pushing Europe to take more responsibility for its own security and
defense. And if I may push it a little bit, kind of, you know, in the first three months of the presidency of Donald Trump, he has done more to push
European security and defense than previous 30 years during the post-Cold War period put together and this is something that a lot of European
leaders are coming to terms with. That's why we are talking about the increasing defense expenditure nationally. We are making the European Union
into a defense union. There is even mutualization of debt when it comes to investing in the defense industry and many other things.
So I do think that Europeans have woken up and smelled the coffee. So reality bites sometimes and now we are working on it.
(END VIDEOTAPE)
QUEST: You'll hear more from President Stubb later in the program.
And so to the actual incident that prompted all of this. The President, President Trump, that is, is standing by his National Security adviser, the
NSA, who set up the Signal group chat. Mr. Trump told NBC News that Mike Waltz has learned a lesson from the security breach, and Mr. Trump
downplayed its seriousness, calling it a glitch.
Intelligence officials testified in the Senate. The hearing on global threats was previously scheduled. The Director of National Intelligence,
Tulsi Gabbard claims no classified material was leaked. The CIA Director, John Ratcliffe, downplayed the incident during an exchange with the
Democrat, Jon Ossoff.
(BEGIN VIDEO CLIP)
SEN. JON OSSOFF (D-GA): Director Ratcliffe, this was a huge mistake, correct?
JOHN RATCLIFFE, CIA DIRECTOR NOMINEE: No.
[16:10:01]
OSSOFF: Terrorist organization --
RATCLIFFE: Inadvertent mistake of adding a reporter --
OSSOFF: And that wasn't a huge mistake? That wasn't a huge mistake? They characterized it as an embarrassment.
RATCLIFF: Well, I think this was a mistake.
OSSOFF: We will get the full transcript of this chain, and your testimony will be measured carefully against its content.
(END VIDEO CLIP)
QUEST: Kevin is with me. Kevin Liptak at the White House. Several things to go through. Let's just start. Deny till you die -- this is the obvious
policy that they are following and until we actually know, I mean, you know, Goldberg has told us that he had timing, sequencing, blah, blah,
blah. The administration still says that was not war plans. That was not classified. Deny till you die. We won't know till we see it.
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes. And it was interesting on the Hill, you know, Gabbard and Ratcliffe were asked again and again
whether this was classified material. Their first response was no. Eventually they began pointing towards Pete Hegseth, the Defense Secretary,
and said, you know, you better ask him whether this was classified material. Of course, he wasn't at the table. He is in Hawaii, nowhere near
that hearing, and so they were essentially passing the buck to him.
Later today when we heard from Trump in the Cabinet room, he also said that this material wasn't classified, but of course, this all sort of raises the
stakes for either Goldberg to release this information that he has or for Congress to put out what information it gets from the National Security
apparatus here in the United States, and then, of course, it will be able to be judged against exactly what they were saying.
QUEST: And we are now getting all this idea that Signal is okay to use and nothing wrong with that. Keep moving. Nothing to see here. Everybody else
uses it.
LIPTAK: Yes.
QUEST: It is one of those things people use. Keep moving.
LIPTAK: Yes, ad Trump kind of cast it as sort of a technical mess up today when he was in the Cabinet room. He essentially said, you know, sometimes
people get hooked in, as his words were, to these chats and sometimes you don't know that they are there.
At the same time, he confessed he had never heard of Signal before yesterday when he was briefed on this incident. He did say that in his
view, these things were better discussed in person. He thinks that the wall should be made of lead, the doors should be closed. People shouldn't be
talking about these things over technology.
He also said we probably won't be using Signal again going forward, but that will be an interesting sort of task for his officials. Signal is very
widely used in the administration for sensitive information, not necessarily for classified information, but it was interesting to hear him
frame this as sort of an everyday mess up that you can move on from quickly, and not this major breach of security that Democrats are casting
it as, and certainly, the way it has been described by "The Atlantic" Magazine as the President really trying to downplay it there.
QUEST: As I watched the day unfold, I found it quite depressing in a sense that, yes, let's rubbish the reporter, let's mischaracterize what happened,
do anything other than say we screwed up and we are sorry, and we will sort it out.
LIPTAK: Yes, because short of that, we wonder whether they've learned anything from it, from any of this, whether Michael Waltz, who Jeffrey
Goldberg says started this chat and inadvertently included him in it, will be doing anything different going forward.
And, you know, you have to remember these officials, the Pete Hegseths, the Tulsi Gabbards, these were unorthodox picks for these positions. They were
very -- it took a lot to get them confirmed to these jobs and a lot of people, when they were nominated, questioned their competence.
And this only, I think, aggravates those concerns going forward and you didn't necessarily hear anything from either Gabbard or Hegseth or Waltz or
President Trump to suggest that they recognize the severity of what could have happened, because this administration is only two months old, there
will be future times when military strikes are discussed, when military operations have to be debated within the President's team, and you wonder
whether they will take this incident and try and piece together what exactly happened. Based on their conversations and their remarks today, it
doesn't seem clear that they have recognized the severity of what they did.
QUEST: Kevin, always good to have you. Thank you, sir, at the White House tonight.
As for Signal itself, it is owned by a nonprofit group. The president of the group says the app uses end-to-end encryption, which she describes as
the gold standard in private communication. It is popular with governments and journalists because of its privacy features, and it is used by
governments of all sorts of stripes.
John Miller is our security expert and boss, John, before we get to the nitty-gritty, just spew the guts on what you felt when you heard this
story.
JOHN MILLER, CNN CHIEF LAW ENFORCEMENT AND INTELLIGENCE ANALYST: Well, first of all, it was amateur hour. It was sloppy, and it was dumb.
[16:15:10]
So my first thought was, well, this is what happens when you take people who have zero experience in National Security matters, put them in charge
of huge, complicated agencies, have them get rid of all of the deputies who could have guided them and taught them in the beginning. So the good news
is, it happened early and it is embarrassing, which means it probably won't happen again or at least not soon, so that was my first reaction.
QUEST: Right.
And now, if we talk about Signal because everybody uses it in some shape or form for some purpose, and what should they have used? You can't be rushing
off to a SCIF room every two minutes. Is there a mechanism that they should have used to have that level of conversation, inter parties so that they
could discuss matters of security?
MILLER: Richard, this is the exact reason that the National Security Council exists. It is the precise reason that the White House
Communications Corps exists. These are the military people who make sure that if you're the Secretary of Defense, the Director of National
Intelligence, the head of the FBI, whomever, that there is somebody there with you, a communications officer who can hook you up to a classified
system in almost any circumstance on foreign trips, at home or abroad, on the road in the U.S. and skipping over that to use a social media
application was just a matter of convenience.
And, you know, watching them say today there was nothing classified there from the intelligence community was this kind of deft, tortuous way of
saying, well, it wasn't intelligence information, it was defense information. So it may have been classified, but you'd have to ask Hegseth.
QUEST: Right, and then, of course, I confidently predict that we will end up with the President's version of classified, which is no, it is not
classified because we have the power to declassify it.
MILLER: Right.
QUEST: I see somewhere that's on the horizon.
MILLER: But here is the thing about Signal, which is this is a great app. I use it, dissidents in foreign countries use it because they believe their
governments can't penetrate it, and that the messages disappear. Reporters use it to talk to sources on the idea that, you know, the government won't
be able to get into it.
But here is the other thing about Signal, a great product, by the way. It is just like Telegram or WhatsApp or competitors, is it is based on open
source code, which means when an encrypted app like that comes out, the first thing that Russia does, that China does, that the United States does
to conduct surveillance on foreigners using it outside of the United States is to look for vulnerabilities in that code.
And the second thing that happens is when they find a vulnerability that gives them access to intelligence targets within that system, they don't
announce it. They keep exploiting it as a collection platform.
Now, Signal has had vulnerabilities, has sent out patches to their vulnerabilities and kept up with that pretty well, but you have to believe
that when the U.S. government under the Biden administration issued the December 18th memo saying China is all over our phones and all over our
computers. So if you're going to talk government business that's confidential, use encrypted apps like Signal that there was a line there,
meaning for day-to-day conversations, why make it easy? It didn't mean talk about battle plans in progress of a classified nature over a social media
app that anybody can sign on to.
QUEST: John, always good to have you. Thank you. I am grateful. Maybe now, you'll actually accept my friend request on Signal. Maybe not. I wouldn't
bother if I were you. Thank you, sir. John Miller joining me.
Still to come QUEST MEANS BUSINESS, Ukraine and Russia agree to stop using force in the Black Sea. As you would expect, the Kremlin says the deal
comes with conditions. We will be in Moscow to discuss this in just a moment. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: The White House says Ukraine and Russia have agreed to stop using force in the Black Sea. It is a deal in principle, and the Kremlin says it
comes with certain conditions.
The U.S. hammered out the deal by holding separate talks with Russia and Ukraine in Saudi Arabia. Those talks went on for many hours.
Fred Pleitgen is in Moscow.
So they've sort of agreed, but the fighting or the agreement hasnt gone into force because once again, it would appear that the Russians are
saying, well, it is not that straightforward.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, that's exactly what they are saying and it was actually quite interesting to see
some of the messaging. They, first of all, couldn't agree on a common piece of paper, a common communique on all of this. There were four that were put
out in total, two by the United States, one by Ukraine, and then one by the Russians.
The Ukrainians saying they believe that this moratorium or ceasefire for the Black Sea goes into effect immediately after it was announced by the
United States, but the Russians indeed are saying not so fast. They want their agricultural bank to be taken off sanctions lists and to be
reconnected to the international SWIFT payment system before this deal will go into effect.
And I actually asked a couple of minutes ago, Richard, the Kremlin spokesman, about that, and he got back to me and said, look, the Russians
feel that the last time that a Black Sea Initiative was in place, which was from summer '22 to '23, they felt that they were getting the shorter end of
the stick because it was making it easier for the Ukrainians to export grain, while the Russians were under all sorts of sanctions and weren't as
effective to get on international markets.
So the Russians are saying now, they want to be taken off, or they want institutions to be taken off the sanctions list in order to be able to be
competitive on international markets and they are not going to put that deal into effect before that -- Richard.
QUEST: So where does it all go? I feel like sort of I am repeating last night's discussion with you in a sense that what moves this forward?
PLEITGEN: Yes, I think that progress is going to be extremely slow and it certainly is a lot slower than the Trump administration was hoping for.
They wanted a full on ceasefire by now, and said they wanted to deal with all of these issues that we are talking about right now, to be dealt with
after that. But of course, the Russians are saying that simply is not going to happen that way.
One of the things, however, that the Kremlin also says they believe is some progress is that both sides have now put forward a list of sites that they
both agreed on, of energy infrastructure that are not to be hit, including oil and gas installations. Of course, nuclear energy installations as well,
hydroelectric dams.
So there does seem to be incremental progress as far as that is concerned. However, the kremlin continues to say that as far as a full 30-day
ceasefire, the silencing of all weapons on all front lines, that is something that is a lot more complicated and the Russians certainly say
that they want what they believe are the underlying reasons for the conflict in Ukraine to be sorted out first, before something like that can
be put in place -- Richard.
QUEST: I am grateful. Fred is in Moscow. Thank you, sir.
The United States says it has revoked the visa of a Cornell University graduate student who protested against the war in Gaza. Momodou Taal has
taken the Trump administration to court proactively. He is arguing that he has a right to free speech and expression.
[16:25:10]
It comes amid broader concerns for foreign students and researchers at U.S. universities. Only last week, a broader concerns for foreign students and
researchers at U.S. universities.
Only last week, a French academic was denied entry to the United States, according to border agents. They later said they found confidential
information on one of his devices.
The French Ministry of Higher Education says they also found messages critical of Donald Trump's crackdown on academic research.
Philippe Baptiste is the French Minister of Higher Education and Research. The Minister joins me now from Paris.
Minister, good evening. Thank you, sir, for taking time and joining us.
PHILIPPE BAPTISTE, FRENCH MINISTER OF HIGHER EDUCATION AND RESEARCH: Thank you.
QUEST: If we look at this particular case, I guess we can't know for certain what was the reason, but your view is that it has more to do with
this academics dislike of the Trump administration than anything to do with documents.
BAPTISTE: Well, yes, I can tell you that the discussion between the researcher and the Border officer was really related to the personal
discussions that he had on his phones, personal message related to political views and the situation of science in the U.S. and things like
that. So that's really what is really the core or at the heart of the discussion between the researcher and the border officer.
QUEST: So what can -- what can you do? What can Europe do? What can E.U. officials do? Because we are hearing now, again, whether it is German
students, British students; now French academics, you know, more and more people are having difficulty getting into the U.S., arguably because they
have been critical or don't like the administration. What can you do about that?
BAPTISTE: Well, I am not sure that we can do much. I mean, of course, it is the decision of the United States to decide who is going to be accepted in
the U.S. territory, and it is perfectly fine. It is the decision of the U.S., but it is worrying because, I mean, we really push forward for
freedom.
Freedom, of course, of opinion, freedom of course, academic freedom, freedom of research and this is really part of the core value of course of
French universities, but of European universities. And we are really ready to -- we really think it is absolutely essential and we are a bit worried
by what is going on today.
I mean, not only on this question of admission of people, but mostly on what is going on today on research and on scientific programs in the U.S.
QUEST: Wherever we look, the ramifications, whether its USAID or academics or universities are feeling the effect. So let's turn to the advantage for
Europe. Is there an opportunity for Europe to pick up the slack? To fill the space? To invest more?
BAPTISTE: Well yes, I mean, for sure. I mean, it is a kind of wake-up call for Europe and for our autonomy in research and for the fact that we have
values and we want to defend these values for sure. But, I mean, it comes in second, I would say.
The first thing I want to say is that before an opportunity, it is a problem for research and for science worldwide, because, I mean, the U.S.
have been really leading the way in terms of science and research. And I mean, all of our organizations worldwide, I mean, all scientific
researchers, we have been working jointly together on joint programs with our American friends, we have joint researches in American universities.
And the fact that, I mean, suddenly, I mean, many programs just fall down or are being cut abruptly. I mean, that's a real problem for research
worldwide.
I was a researcher having worked in the U.S. I've been working for American universities and American companies as a researcher. But like many other
friends, I mean researchers worldwide, we are really worried by what is going on.
QUEST: So let me ask you, we had earlier in the program, Alex Stubb, the President of Finland, we had him on this program and I asked him, and I am
asking you the same question, at what point do you think reality arrives in Europe when you realize that today's America, U.S. is not the U.S. you
knew, you're going to have to revise your thinking and that there is a certain harshness to now how Europe has to look to the future.
BAPTISTE: No, I mean for sure. I mean, that's a huge change for us. I mean, because, I mean, to be honest, I would have not expected to have to say
these things one day because, I mean, when I look back, I mean at how strong -- how strong are the ties between French universities, European
universities and American universities and NIH and NOAA and NASA, we have been working jointly together for decades, so of course it is worrying.
[16:30:11]
But at the same, I mean, yes, I mean, we have to reconfigure ourselves. We have to build -- we have to be more autonomous. And that's perhaps an
opportunity for us. I mean, to -- and also we have to invest more on research because it's something which is absolutely essential. It's
essential for the future of France. It's essential for the future of Europe.
QUEST: In other words, Europeans and others have to come out of denial about what the future may look like.
BAPTISTE: Well, I'm not sure it's really denial. It's really -- it's a new way of working.
QUEST: Right.
BAPTISTE: And it's true that we have to rely more on ourselves and perhaps a little bit less on our partners. And when you are a researcher, it's not
a good news, because, I mean, the way you do research is really to cooperate and you want to cooperate with the best institution worldwide.
And if suddenly in the U.S., you have less huge and bright institutions, then that's a problem for, I mean, for all researchers worldwide.
QUEST: Right.
BAPTISTE: When you see -- when suddenly, I mean, you have space programs that are being closed to be terminated or that are jeopardized, and you
don't really know why and when, and when you hear Mr. Musk, who is saying that in 2027 he wants to get rid of the International Space Station, while
at the same time, for this space station, we do have an international cooperation agreement.
QUEST: All right.
BAPTISTE: What does it mean? I mean, what's going on? Of course, it's very worrying for all of us, but it also means that we have to be more
autonomous.
QUEST: I'm grateful to you, sir. Thank you for taking time tonight in Paris. Thank you very much. Good night from London.
BAPTISTE: Thank you very much.
QUEST: Now, when we come back, we'll hear more from Alex Stubb, the president of Finland, who says that changing world order is an opportunity
again.
(BEGIN VIDEO CLIP)
STUBB: We're getting to the point where world events are dictating the relationship between the United Kingdom and the European Union, and we
should actually seize the moment.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:35:18]
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS. In a moment, the president of Finland tells me Europe needs to be more flexible
to help resolve issues, what he calls problematic members. Europe plus- minus is how he describes it. The music pioneer sharing app Napster is sold to a 3D technology company for $200 million.
All of that we will get to, but only after the news headlines, because this is CNN and on this network, the news always comes first.
President Trump is once again slamming the journalist who was inadvertently added to the group chat on the U.S. war plans in Yemen. Without offering
any proof. Mr. Trump says JEFFREY Goldberg of "The Atlantic" has, in his words, made up a lot of stories. The president says classified information
wasn't shared on the unsecured Signal app.
A Turkish court has ordered the detention of seven journalists covering nationwide protests. They include a photographer for the AFP. The French
news agency has demanded his release and is calling on Turkey to respect the freedom of the press. It says he has no role in the protests triggered
by the arrest of Istanbul's mayor.
An Oscar-winning Palestinian director has been released from Israeli custody after being attacked and detained overnight. According to his wife,
Hamdan Ballal was beaten by a group of settlers outside his home on the West Bank on Monday and then taken into police custody. Ballal's brother
says the director was treated for his injuries at a hospital. He's since returned home.
President Stubb of Finland says flexibility is the core to the future of Europe. The president is calling it, as he says, E.U. plus or minus. It's
something of a mismatch approach. In other words, some will have a bit closer connection, others a bit less on certain decision-making. And it
might include those outside of the E.U., like the United Kingdom or some new forms of association. E.U. plus or minus is the second part of a
discussion with President Stubb when I asked him if he's ready for Trump's threatened tariffs.
(BEGIN VIDEOTAPE)
STUBB: No one should be ready for tariffs because we understand, I think, from historic experience, that they never come with anything good. But we
are prepared. And of course, you have to remember that the European Union has exclusive competence on three key areas. One of them is trade, one of
them is customs, and one of them is competition. So basically antitrust. So I would assume that Brussels and President Ursula von der Leyen is
prepared.
But it's very important that we try to avoid this tit-for-tat on tariffs and different types of customs issues because I think it will harm both the
European and the American economy. And I think it would be quite useful if we, the Europeans and the Americans, could forge more of a deal on free
trade rather than on tariffs. But we have to take what comes and react to it.
QUEST: If we take the situation now with the change and the reality, what do you think needs to change at the European center? Clearly, the
structures, commission, council, parliament, this directive, that committee, mutuality, subsidiarity, it all has to change somehow to make
the thing work better. What changes do you want to see?
STUBB: Well, the starting point is to understand that we always live with an imperfect union. So the European Union is not a utopia. It's more than
an international organization and less than a state. That actually means that it does have some constraints. So the classic question is European
foreign policy. That's all good and well, but who should I call?
I think always, you know, it's not about just giving more power to Brussels, if you will. I think what we'll see probably is a little bit more
of a flexible union. And I'm a sad case because I did end up writing my PhD at the LSE in 1999 about flexible integration. Basically, the idea that not
everyone has to do everything at the same time. So we'll see a lot of jostling of power and bilateral relationships coming from Europe.
So France reaching directly out to the U.S., the U.K. doing the same thing. Finland the same thing. But I think it's very important that we keep the
crux of it.
QUEST: Right.
STUBB: And make sure that the president of the European Commission and the president of the European Council remain strong.
QUEST: Brexit was about dogma on both sides.
[16:40:00]
The British wanted out. The Europeans were absolutely determined then not to have cherry picking, as it was described. That new reality that you've
described. Do you see an opportunity for a U.K. to be more involved, sub single market, but more than just on the outside?
STUBB: Definitely. I think now after about almost 10 years after Brexit, we're getting to the point where world events are dictating the
relationship between the United Kingdom and the European Union, and we should actually seize the moment. So, first of all, I think it's good to
see British leadership in the coalition of the willing with Ukraine.
I'll be in Paris for a meeting together with President Macron and Prime Minister Keir Starmer on Thursday. But this will give us an opportunity to
work on key issues of mutual interest. So that would be security, intelligence, and yes, there should be some free trade agreement between
the European Union and the United Kingdom. So what I'm starting to see now is a more flexible Europe, or perhaps something we could call E.U. plus
minus.
And the plus being the United Kingdom and Norway and Iceland, and perhaps the minus being the types of member states like Hungary and Slovakia, which
are a little bit problematic inside the European Union right now. But, you know, to put it into one frame is to say that we will see a more flexible
Europe and hopefully we'll see more U.K. leadership in this flexible Europe. I think it's only a good thing.
(END VIDEOTAPE)
QUEST: President Stubb of Finland.
U.S. Consumer Confidence is quickly wilting, disappearing in a sense. A former adviser to President Trump says tariffs have a lot to do with it.
We'll discuss that next.
(COMMERCIAL BREAK)
QUEST: U.S. Consumer Confidence slid in March as the fourth month in a row. The Confidence Board Index is now at its lowest level since 2021.
[16:45:05]
A former economic adviser to Donald Trump indicated that tariff threats are partly to blame. Stephen Moore warned perception can become reality. My
policy advice for Republicans stop talking about tariffs and get the tax cuts done quickly.
Elisabeth Buchwald is in New York, joins me now.
Elisabeth, thank you. Look, this is, you know, the confidence numbers are important because they are, in a sense, a barometer of what's going to come
next. And as best as I can tell, the tariffs have still to come, April 2nd, et cetera. So how does this circle get squared?
ELISABETH BUCHWALD, CNN BUSINESS ECONOMICS CORRESPONDENT: Well, the Consumer Confidence data did not paint a very pretty picture of the
economy. And tariffs do seem to be having an effect on what consumers believe the economic outlook is. Now their beliefs don't always line up
with reality.
QUEST: If that's the case, where do -- the reality is what? I suppose we have to sort of pass to what the reality is, what it might be knowing, for
example, that we're going to get tax cuts from the administration, but we're also going to get tariffs.
BUCHWALD: Well, so I would say for the time being, the economy looks like it's in pretty good shape. The unemployment rate is well below historic
averages, both looking at 20 years going back to 1948, still below that. And so when the unemployment rate starts to rise, that's when economists
might worry. But when you have a really solid unemployment rate, that means that people have money to go out and spend.
And yes, we're seeing a little bit of spending decline, which is raising a lot of fears. But for the most part, the economy is in solid ground.
QUEST: I listened to the president today and he was talking about rising prices and prices are falling, and eggs are not as expensive as they were.
And it's all nirvana. Groceries. That's what he likes. He likes to talk about groceries, doesn't he? I'm not sure what the reality is when we talk
about groceries now.
BUCHWALD: It's one of those things we saw on the campaign trail. Both Harris and President Trump were going out there and talking to people in
grocery stores, because it's one of those things that we just feel. We interact with grocery prices all the time. And I don't know about you, but
for me, I've been going to the grocery store and seeing plenty of empty shelves of where eggs used to be. And that's something that will seep into
how we're feeling about the economy.
QUEST: Are prices -- from what you can tell, are prices, I mean, they're not falling. Are they stabilizing? And I guess, again, we're not talking
about what the rate of inflation that the Fed will tell us about or the (INAUDIBLE) tell us. We're talking about what people are feeling and this
confidence number suggests people simply -- we're looking now at this graphic. You can see headline versus core. It's all come down nicely over
the last few months and years. But prices haven't fallen like the administration promised to do.
BUCHWALD: Yes. But I would also point out that we don't necessarily want prices to fall. And that sounds like a very weird thing. Why wouldn't you
want lower prices? And that's a phenomenon known as deflation. And when you start to see prices go down, it's a very ugly spiral to get out of.
QUEST: Right.
BUCHWALD: So in some ways, it's actually a good thing that that promise isn't coming true.
QUEST: Pull it all together for me tonight. How close or far away are we from, quote, "a recession." The recession that people says the tariffs are
going to cause now. All right. I'm going to give you a bit of wiggle room here. You can take a wide definition of recession. We're not -- we won't
stick strictly to two quarters of negative GDP. But you know what I mean. How close are we to a serious slowdown?
BUCHWALD: It depends on who you ask. It depends on the weather. It depends on a lot of things. Look, we'll never really know for certain when we're in
a recession. Oftentimes, the official committee that calls a recession, it happens afterwards. So we'll be in a recession without even knowing it. So
we could very well be in one right now. I don't think we are based on the economic data. Federal Reserve chair Jerome Powell doesn't seem to believe
we are, but we could be.
Now, I'll also point you to the fact that consumers have had feelings a lot of times about there being a recession, and they've been wrong. We saw that
so many times in 2022. I mean, how many economists did you interview and how many people did you speak to that said, yes, we're in a recession.
QUEST: Right. I was absolutely certain that the Fed was going to push it into a recession. I was convinced that that -- the speed of interest rate
rises was going to.
Great to see you. We'll have you -- we'll have you many more times on QUEST MEANS BUSINESS. Welcome on board.
BUCHWALD: Looking forward.
[16:50:01]
QUEST: Make yourself comfortable. Thank you.
BUCHWALD: Thank you.
QUEST: The early internet darling apps that just sold itself for more than $200 million. Napster. Napster or Napster have been and gone.
(COMMERCIAL BREAK)
QUEST: Beep, beep, beep. You've got mail. Now do you remember that sound?
ANNA STEWART, CNN CORRESPONDENT: I remember. You take forever to go into the internet.
QUEST: It was the dial up modem of course, the soundtrack of the internet's early days. It was an iconic sound. And Napster, which is one of those
names, is just sold over $207 million. So Napster was launched in '99, two years after Josh Gursky, our producer, was born. I've got T-shirts older
than him. It quickly got into legal copyright battles. It's evolved into a music streaming service, and now it's been sold to a 3D tech company.
What do they want to do with it?
STEWART: I mean, this, first of all, is a platform that many people won't probably remember, I think. I'm not sure if you ever used it. I use
something similar, and it was in this sort of piracy era when people didn't think they'd ever have to pay for music ever again. It was passed CDs. You
could just share your files with your friends, and no one thought anything was wrong with that.
For our viewers who might not know it, I do have a clip that may spark some memories. This is Sean Parker, the founder, played by Justin Timberlake.
QUEST: I'm not sure we got that. Do we have that? Tell me, what about happened? Why has it sold? What's it been doing since the noughties to now?
STEWART: OK, so people that do know it will remember it went bankrupt in 2001. Most people thought it died a death then, but the story kept on
going. This has been a brand that's been bought multiple times. It is now a fully licensed music streaming company, and the reason that it's now being
bought by an immersive technology company is they see a future where we're not just looking at streaming music, we are looking at potentially
immersive music, going to a virtual concert in the metaverse, using it for e-sports, using it for gaming.
So potentially Napster, which really disrupted the industry, might disrupt it all over again.
QUEST: But what's it got that others haven't got better funded and bigger and stronger, et cetera, et cetera? What's it got?
STEWART: It's not dissimilar to the big arrivals. It's cheaper. It still has 100 plus million tracks, which is a similar size actually to Spotify
and Apple.
[16:55:03]
It doesn't have as many exclusive launches of music, for instance, as something like Spotify. So it's a minnow in the industry. It's an easy one
to pick up for a company that wants to get into this area.
QUEST: Did you ever have an AOL e-mail or were you too cool for that?
STEWART: I had AOL, I had Hotmail, I think I was, oh, I can't even -- Stewpotterama at Hotmail.com. Don't use it. I don't think it still exists.
What about you?
QUEST: I'm not going to tell you mine. I've had the same e-mail address since I first went online.
STEWART: You never use Napster?
QUEST: No, I wasn't cool enough for that. No.
STEWART: Air of the gramophone over here, I think.
QUEST: I wasn't cool enough, but you never know.
STEWART: But are you law-abiding, Richard? Let's face it.
QUEST: Let's not go that far. I did have an AOL e-mail address, and I had that for years. And then finally --
STEWART: But some of these brands come back. What I think is interesting. Kodak, Nokia, Napster.
QUEST: Are you trying to say I might come back?
STEWART: Back in fashion, Richard.
QUEST: Good to see you, Anna Stewart.
We will take a "Profitable Moment" after the break. QUEST MEANS BUSINESS. Good to have you.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." I can be really blunt about all of this. It's just a case of deny until you die. When I listened to everybody
talking about the Signal fiasco and the chatroom, first of all, the journalist was a load of, secondly, it wasn't classified information.
Thirdly, nobody did anything wrong. Fourthly, I mean, it just went on and on and on, and it will continue to do so for days to come.
Not one person could actually say, yes, we screwed up and we're sorry, and we'll look out and see what needs to change. But that's the toxic
environment of politics today. And it's been like that pretty much for the last 20 or 30 years. Neither side can give ground on the basis that to give
ground is a sign of weakness. And so you've got Republicans who are absolute hawks on military, who know that this is wrong, still having to
defend the indefensible.
And meanwhile, who knows what happens next? We just have to wait, watch and see. But I find it a little bit depressing that nobody can simply say,
sorry.
And that's QUEST MEANS BUSINESS for this Tuesday night. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it is
profitable. We'll be in Brussels on Thursday for "Airlines for Europe."
END
