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Quest Means Business

Trump, World Leaders Sign Gaza Peace Deal; Trump: Phase Two Of Gaza Ceasefire Deal Has Started; Trump On Gaza: Let Us Continue In Spirit Of Cooperation; Emotional Reunions As All 20 Remaining Living Hostages Freed; Three Researchers Receive Nobel Prize For Economics. Aired 4-5p ET

Aired October 13, 2025 - 16:00   ET

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

[16:00:17]

PAULA NEWTON, CNN INTERNATIONAL HOST: Well, that was fast. Look at that green arrow. Markets snap back on this Monday after the rout on Friday. We

will have more on that later. Those are the markets and these are the main events.

Israeli hostages and Palestinian prisoners return home as world leaders gather in Egypt to discuss plans for Gaza's future.

The Nobel Prize in economics is awarded to three researchers for their work on sustained growth. We will speak with one of the winners.

And investors, breathing a sigh of relief as President Trump says everything will be fine on trade with China.

Live from New York. It is Monday, October 13th. I am Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.

And good evening, we begin with breaking news: U.S. President Donald Trump calling the Middle East a region transformed. He is on his way right now

back to Washington after signing a ceasefire deal for Gaza on what has been a truly remarkable and historic day and we should all take that in. That is

overused phrase, but this really was something in the last few hours.

Mr. Trump co-chaired a Summit on Gaza's future in Sharm El-Sheikh, Egypt, after addressing Israel's Parliament. He was flanked by the leaders of

Egypt, Qatar and Turkey, who all helped broker the agreement between Israel and Hamas.

Mr. Trump said the time to start planning phase two of this deal is now.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: Now the rebuilding begins. The rebuilding is maybe going to be the easiest part. I

think we've done a lot of the hardest part because the rest comes together. We all know how to rebuild and we know how to build better than anybody in

the world.

I want to express my tremendous gratitude to the Arab and Muslim nations who helped make this incredible breakthrough possible.

(END VIDEO CLIP)

NEWTON: And then earlier Monday, cries of absolute joy in Israel.

(VIDEO CLIP PLAYS)

NEWTON: All 20 of the remaining living hostages are now back on Israeli soil freed by Hamas. They embraced, as you can see there, their families

after more than 730 days in captivity.

Emotional scenes also playing out in Gaza as hundreds of Palestinians released from Israeli prisons arrived on buses.

Becky Anderson has more now from Sharm El-Sheikh.

(BEGIN VIDEOTAPE)

BECKY ANDERSON, CNN INTERNATIONAL ANCHOR: It would be difficult to overstate the enormity of what we've seen today over the hours since Donald

Trump has been in the Middle East, first in Israel, and we witnessed those scenes, those heartwarming scenes as the living hostages were returned to

their families and the Palestinian prisoners were released.

In no small part, that success is down to Donald Trump and his team alongside the mediators and guarantors of this deal, that is Egypt, Qatar

and Turkey. But, you know, you would find it very difficult to find anybody in this region, in this room today where I am now, who don't put this

success in getting this ceasefire deal across the line down to one man and that is Donald Trump, and you hear that echoed around the rooms in this

Summit.

I am at the Sharm El-Sheikh Summit of Peace site and it was in this room, in this very room here that we saw Donald Trump flanked by the President of

Egypt. And those two mediators, guarantors -- Egypt and Turkey, where we saw Donald Trump sign the agreement to end the war in Gaza.

He talks today and has talked here and at the Summit and at the Knesset in Israel about this being the beginning for peace in the Middle East, as is

signed just up here.

Phase one is over. That is the ceasefire deal. And again, getting that across the line is an enormous feat and should be applauded. The next stage

is going to be really tough, and those in the room and there were representatives of more than 20 countries here.

[16:05:13]

Donald Trump described them as the wealthiest and most powerful group ever convened. Look, I had my producer do the math. Tally did the math for us,

and the GDP of those countries here in this room is around $30 trillion, give or take. Add the U.S. in and that's another $30 trillion, give or

take. So that is something like representatives of half of the world's GDP.

And Donald Trump's point about that is that this group of people gathered here today from the region, from Europe and from the wider world have

gathered to support the process of ending this war in Gaza and pursuing peace in the Middle East, and there is no doubt that Donald Trump is

convinced that that war is over. And there is no doubt that those gathered here today want to see an end to this conflict, a successful end to this

conflict.

Gaza is the through line to potential peace in the Middle East, and many of those gathered in this room today want to navigate a new Middle East, a new

Middle East of peace and prosperity. But how we get there is going to be really tricky, because the question of the hour today is what is in that

agreement that was signed today.

We don't have the detail. We have a 20-point plan, the Donald Trump 20- point plan, which was presented in New York a couple of weeks ago, but it was a roadmap of sorts.

It began with stopping the conflict. Certainly, getting the hostages released in Gaza, job done to a degree. Some of the bodies of those who are

deceased are yet to be returned and I was told today by the Egyptian Foreign Minister that it is going to take some time. And it seems that

Israel has accepted that, but it is the next stage, what is governance and security look like in Gaza? Will Hamas disarm? These are all in this

original pathway, as it were, roadmap to peace.

What will a reformed Palestinian Authority look like? Is this a credible pathway to a Palestinian statehood going forward? And what does that look

like? The detail is short at the moment. The implementation of this plan, difficult to envisage at this point.

So I think at the end of what has been an historic day, Donald Trump making a speech to the Knesset, Donald Trump here in Sharm El-Sheikh, no Israel,

no Hamas, no Iran, even though Iran was formally invited to come, but flanked, as I say, by a group of leaders and representatives from countries

around the world who have committed to supporting the process to peace in the Middle East. It is how we get there, which is unclear at this point.

(END VIDEOTAPE)

NEWTON: Our thanks to Becky Anderson there, who really had a front row seat to everything that transpired there in Egypt.

Now, the full withdrawal, as you heard Becky say of the Israeli military from Gaza, is contingent on Hamas disarming and that could leave some

wiggle room for Israel.

Hamas fighters were spotted in Gaza City, and there have been reports of clashes with clans that oppose them. All of this underscores the challenges

that remain, including whether Hamas will turn its guns on Palestinians and how Gaza can be rebuilt when so much of it has been destroyed in two years

of war.

H.A. Helyer is a Senior Associate Fellow at the Royal United Services Institute for Defense and Security Studies, and he joins me now.

Really good to see you, especially when, arguably one of the better days in the last few years of diplomacy anywhere in the world, really. I want to

ask you, though, as you see it, what is the hard part of sustaining the significant momentum right now in the Middle East?

H.A. HELYER, SENIOR ASSOCIATE FELLOW, ROYAL UNITED SERVICES INSTITUTE FOR DEFENSE AND SECURITY STUDIES: Thank you so much for having me. Always a

pleasure to be on your program.

I think it is a good day, but frankly, it is a good day because our bar has been set incredibly low. It is a good day because the bombs, for now, have

stopped; the genocide, as was unfolding, has been paused. The starvation and famine will now be addressed.

This is not a happy, joyous sort of assessment here. It just means that the most negative things that we could think of have now come to at least a

pause. I won't say an end, because this is where things, frankly, will get very tough.

Today was, frankly, quite simple in comparison. It took a decision of the United States President to say to the Israelis, you will actually pull back

this amount of troops, and you will stop the war.

[16:10:18]

And to tell Hamas and Hamas got the message loud and clear that, frankly, the hostages were a liability. They were not leverage, and they were not

stopping the onslaught on Gaza by the Israeli Defense Forces.

What happens next is about how is Gaza going to be governed? But also, how long will it be before Israeli troops actually withdraw from Gaza itself?

Let alone the end of the occupation? And these two things are separate because, of course, Israel has been in occupation of Gaza since 1967, as

well as the West Bank and East Jerusalem.

But Israeli troops on the ground in Gaza are going to remain in roughly half of what constitutes Gazan territory after today, after all the

hostages have actually been released.

NEWTON: Now, Israel --

HELYER: How long will that stay? And what is in the next step going to be?

NEWTON: And forgive me, I do want to get to some of those nuts and bolts, right? I mean, there are challenges of having a stabilization force, which

is what is envisioned for Gaza. And yet now, you and I both know there is a dangerous power vacuum in Gaza right now, which is a threat not just to

Israel, but to the people of Gaza as well.

How do you see that transpiring now when, as you say, the elements that remain of Gaza, they convince themselves that you know, the hostages

themselves were a liability.

HELYER: So there are a few things here. First of all, there is one place or there is one group that I think will remain able to access those parts of

Gaza that continue to be under, ground control of the Israeli Defense Forces, and those will be Palestinian elements who have decided to align

themselves with the state of Israel and receive support therein.

So I think that that's entirely likely as we go forward. We've already seen elements of that already, and I think that that is going to cause civil

strife within Gaza itself -- Hamas itself, of course, is going to be looking to settle scores and Hamas is incredibly unpopular within the Strip

more generally, not simply with those who might want to align with the Israelis, but I think Gazan society much more generally for opening the

floodgates of this incredibly horrible two-year period.

So the security vacuum that you speak of, it is not going to be an organic one. There is going to be, engagement into that vacuum or pushing that

vacuum to take place from the outside, particularly from the state of Israel, but also as a result of, frankly, Hamas is incredibly, as I said,

incredibly unpopular among Palestinians, and I don't think that they're going to be able to hold on to power on the ground without using quite a

lot of brute force.

And there will be those who will be interested from the outside to come and disarm them without there being a political process that actually sees a

Palestinian state come into operation, which of course, the Israelis have vetoed.

NEWTON: Which of course is the end goal here for many people, not to mention the Palestinian authority itself. I do want to ask you, Becky

Anderson, earlier today interviewed the Egyptian Foreign Minister who indicated that, look, he wants to see U.S. boots on the ground.

I want to ask you, how likely do you think that is to happen? And if it does happen, is that really necessary at this point in time? I think many

had envisioned, certainly, if not an Arab force on the ground, but a Muslim force on the ground in Gaza.

HELYER: So I don't think this is about a Muslim force, to be honest with you. I think the Palestinians would want to see Arab states on the ground.

But as part of a process where at the end of it, a Palestinian state comes into existence, and that's not remotely part of the Trump plan, the 21-

point plan that has been put out there.

So I don't think that you will see American troops on the ground. You might see technical advisers and things like that, but I don't think it will

really be a big portion of the international stabilization force.

There might be Turks. The Turks have expressed the willingness to get engaged in that regard. But I think that what the Egyptian Foreign Minister

was alluding to was that you want to have troops on the ground that the Israelis are going to feel obliged to stay away from.

[16:15:01]

It would be a catastrophe for troops to be contributed to this international stabilization force and then for the Israelis to use military

action to go across this new border into the area where the stabilization force is supposed to be active, because it would mean that, they simply

didn't have any teeth and I think that probably what the Egyptian Prime Minister is alluding to, that they wouldn't do this if these were American

troops on the ground, but none of this is really going to get anywhere unless there is a political process in place that makes it clear that at

the end of this, there is a Palestinian state and this is where the international consensus is, right?

The state of Palestine has been recognized by the overwhelming majority of the international community. Gaza is a part of the territory that belongs

to it according to the International Court of Justice and far beyond that, Israel must end its illegal occupation now.

NEWTON: H.A. Helyer, we will leave it there for now. Appreciate your insights.

HELYER: Most kind. Thank you.

NEWTON: Now, some 2,000 Palestinian detainees and prisoners were released today from Israeli custody, emotional reunions as they return to their

loved ones after years of isolation and detention. Those details next.

(COMMERCIAL BREAK)

NEWTON: U.S. President Donald Trump is hailing what he calls the dawn of a new Middle East, but he acknowledges it will take cooperation and goodwill

to keep the Israel-Hamas War from reigniting.

The Israeli Parliament welcomed President Trump on Monday with a standing ovation, and Prime Minister Benjamin Netanyahu called him Israel's greatest

friend.

In the President's address to the Knesset, Mr. Trump heaped praise on his envoy, Steve Witkoff, and son-in-law, Jared Kushner for helping push

through the ceasefire.

Kristen Holmes joins me now from The White House. It was an incredible day, wasn't it, Kristen? I mean, I just sat there watching all the video and how

all of these players came together through not the first Trump administration, but now the second.

Without a doubt, a historic day. So how do you read The White House now? Because the President, when it comes to foreign policy in that region, has

an abundant amount of political capital that he can now spend if he chooses.

KRISTEN HOLMES, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes, and I think you're going to see him using that. I think this is the beginning of really

diving into the momentum that they believe they have coming out of this peace deal.

Of course, as we know, part of that is diving into the phase two of these negotiations on the peace deal. There are a lot of sticking points.

Everybody knows there is a lot of sticking points. If you talk to White House officials, they are clear that this is going to be a long road to get

down, particularly. When it comes to some of the points in that 20-point plan, leaving the door open for Palestinian statehood or Hamas disarmament.

[16:20:18]

But what you saw today was a show of force, essentially both with Netanyahu and then also the leaders of these Middle Eastern nations, essentially

saying they want to keep the pressure up. They're going to keep the pressure on Israel up,. They are going to keep the pressure on Hamas up.

You saw how President Trump really embraced the President or Turkey, Erdogan, saying that anything he needed, he always followed through on and

a lot of that is going to be pressure on Hamas.

Now, looking at the future as a whole, taking just the Middle Eastern portion out of it, they do believe that this is momentum towards a number

of potential deals in the region and outside of the region. That includes potentially and Iran Nuclear Deal. We know that Iran has never been weaker

than it is right now. So that's something they are going to look to capitalize on, particularly with their partners in the region.

The other part of this is what happens with the Russia-Ukraine War. I mean, President Trump, that was one of the things he said he wanted to accomplish

in the first 48 hours of his presidency, but he has been clear that it has been much harder than he thought it was going to be. Negotiating with Putin

has been much harder than he ever thought it was going to be.

Watching now to see how exactly they take this win and try to turn it into pressure against Putin for that conflict is something that we should all be

looking at very closely, because it is something that they want to do and they want to end. And of course, as we know now, Ukrainian President

Zelenskyy is visiting The White House on Friday. He says they want to talk about Air Defense missiles, those long range missiles coming at a time

where President Trump said that he might consider sending Ukraine tomahawk missiles from the U.S. that could dive deep into Russia if Putin didn't put

an end to the war.

So part of this is they are feeling bullish. They are feeling bullish about what happened, what they were able to achieve and how this plays out down

the road.

NEWTON: Yes, and I am glad you mentioned the fact that President Zelenskyy will be at The White House on Friday. Again, two very important fronts for

the president that, you know, he said he said, he would be able to solve very quickly from taking office.

So one win, partial win at least and we will wait to see what happens on Friday.

Kristen Holmes, grateful to you.

Now, about 2,000 Palestinian detainees and prisoners were released from Israeli custody. Nearly 40 buses carried the detainees through large crowds

in Southern Gaza. Israeli forces had been holding many of them for two years or more and this is key here, without any formal charges.

Emotional reunions as well in the West Bank, where some of the long term prisoners were reunited with their families.

Samer Halabiya was serving a 32-year sentence.

(BEGIN VIDEO CLIP)

SAMER HALABIYA, RELEASED PALESTINIAN PRISONER (through translator): It is an indescribable feeling. I still cannot believe it. Thank God. We used to

wait for this joy to happen, but I am not feeling it because it was a big surprise.

We faced an extreme psychological pressure and one could not believe until last second.

(END VIDEO CLIP)

NEWTON: Nada Bashir is in the West Bank for us where you've have been all day in fact.

Can you just do us a favor and take the measure of this day for us? I mean, we've seen pictures and video of prisoners being embraced by their

families. There did seem to be a sense of joy and optimism.

NADA BASHIR, CNN REPORTER: Yes, Paula, this certainly has been an emotional day for many here in the occupied West Bank following the release of those

Palestinian prisoners, some 250 released today either into the occupied West Bank, East Jerusalem and at least 150 deported to Egypt and we saw

that release today, hundreds gathering around the Ramallah Cultural Palace following the release of those prisoners from the Ofer Prison in the West

Bank, waiting to see those buses arrive. And when they did, there certainly was a lot of joy around that moment.

For many, of course, they have seen this as a moment of hope for Palestinians, but of course, on the flip side, in Israel, this has been

seen as a very heavy but acceptable price to pay for the release of Israeli hostages held captive in Gaza. Important to note that many of those who

were released had been serving long term sentences or life sentences, many of them convicted with serious offenses including murder. So this certainly

has been received quite differently in Israel.

But here in the occupied West Bank, many view these prisoners as political prisoners. So there is certainly a very different feeling here and we saw

some of those emotional reunions, of course, some of those prisoners that we spoke to told us that they had no idea that they would be released until

just a few hours before they were moved to the Ofer Prison in the occupied West Bank to prepare for their eventual release.

And of course, for many family members of those prisoners who had been serving life sentences, some of them multiple life sentences, this is not

something that they would have been anticipating in normal circumstances, but of course, as you mentioned, there are also some 1,700 Palestinians

from Gaza who had been detained and held without charge over the course of the war. They were also returned to the Gaza Strip today and we did see

those huge celebrations taking place there.

[16:25:07]

Of course, important to remember that many of those returning to the Gaza Strip have been detained for many months and so have returned to near total

destruction, many of them uncertain about the fate of their loved ones and family members also perhaps returning to very sad news of the fate of their

loved ones.

And of course, we've also seen, over the course of the day, warnings from the Israeli authorities for celebrations not to take place and the

celebrations today has certainly been somewhat more muted than we have seen in previous exchanges.

NEWTON: And turning to Gaza, as you were saying, some of the detainees and prisoners returning there, and yet, obviously, as you said, what are they

returning to? Complete destruction, and in many cases, their loved ones either can't be found, have passed away or missing.

We still have hanging in the balance here, a new U.N. report saying that nearly one in six children in Gaza are acutely wasted in the words of that

U.N. report. Where does there -- is there a sense of where things go from here in Gaza?

BASHIR: I mean, look, Paula, we've been speaking to Palestinians here. There is optimism, but certainly a lot of trepidation around what is next,

whether the ceasefire holds, whether we do get to phase two and what this means for the Gaza Strip in terms of the rebuild effort, in terms of seeing

more aid getting into the Gaza Strip and seeing the health care system being rebuilt from the ground up and that is certainly a huge feat ahead if

indeed the ceasefire holds.

And of course, the figures, the data is staggering. It is troubling the level of malnutrition, the starvation that we've seen over the last two

years. We are having the U.N. now distinguishing this and clarifying this as a genocide in the Gaza Strip.

So there is a lot of concern around what the future holds for Gaza. Of course, we've also been hearing from U.N. agencies saying that they have

already seen real progress in the amount of aid getting into the Gaza Strip that they have stepped up, the amount of humanitarian supplies that

includes tents, food, medication as well, getting into the Gaza Strip.

So we are seeing that effort already underway, but there is so much to be done and then, of course, there is the matter of recovering bodies as well.

Since the ceasefire took effect, we have been receiving updates from Gaza's Civil Defense over the number of bodies, hundreds of bodies that have now

been recovered. They've been able to recover them in this moment of peace now in the Gaza Strip.

So there is certainly still a lot of grief ahead for many in the Gaza Strip. Certainly, a lot of challenges ahead and we have been seeing those

videos of thousands trying to return to their homes now. And of course, only fighting destruction and rubble.

So this is a very difficult moment for the Gaza Strip. We've been hearing words of commitment from world leaders, of course, today, U.S. President

Donald Trump, touting the support of the Arab and Muslim nations in providing funding towards that rebuild effort and to support the

redevelopment of the Gaza Strip.

But this is all very much dependent on the success of this ceasefire agreement, on this holding and of course, this is all very dependent on the

cooperation and commitment of international partners in supporting that effort in the Gaza Strip. And there is the question of internal clashes as

well, which we've already seen claiming lives in Gaza -- Paula.

NEWTON: Yes, that has been an issue in Gaza for some years and I will say all of this also depends on the fortitude of the people of Gaza themselves

that have been through so, so much in the last two years.

Nada Bashir for us. Thanks so much.

We will have more on our breaking news coverage of the Gaza ceasefire ahead as all of the 20 remaining living hostages are freed from Hamas captivity,

we are live in Tel Aviv. That's next on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[16:32:01]

NEWTON: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment.

When the Nobel Prize in economics was awarded to a -- to three researchers for their work on sustainable growth, we'll speak to one of the winners.

And Wall Street recovered much of Friday's losses after President Trump says U.S. trade with China, it'll be fine. Before that, though, the

headlines this hour.

The 20 remaining living hostages in Gaza were returned to Israel after two years of war. Just a short while ago, Hamas handed over four coffins with

remains of deceased hostages, 250 Palestinian prisoners and nearly 2,000 detainees from Gaza who were held in Israel without charge have also been

released.

High winds and heavy rain have been battering the U.S. East Coast. Coastal flooding was reported along the Jersey Shore, where gusts reached 80

kilometers per hour. The storm brought more than 25 centimeters of rain to parts of South Carolina over the weekend, the rain is forecast to move

offshore on Tuesday.

And three economists were awarded a Nobel Prize in their research for innovation and growth. Joel Mokyr was recognized for identifying the

prerequisites for sustained growth. Philippe Aghion and Peter Howitt shared the other half of the award. Their work advances the theory of creative

destruction.

Screams of joy and tears of relief in Israel as the last 20 living hostages held by Hamas are reunited with their families after more than two years,

their freedom made possible through cease fire -- through cease fire agreement between Israel and Hamas.

The militant group also handed over four coffins with the remains of deceased hostages. Those were escorted into Israel where they will be

formally identified before being returned to their grieving families.

Our Clarissa Ward was in Tel Aviv -- is in Tel Aviv, pardon me, in Hostages Square when the 20 were released, she is there now. Clarissa, really good

to have you on the program.

You've really seen this from the start of this absolutely horrible, horrible war. You know, I commented to people in the office today that in

seeing these reunions, the hostages seemed to be comforting their families, their parents, most of all, the relief was absolutely palpable.

CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: It really was, Paula. And you watch those videos of those incredibly emotional reunions, some of

them literally wails of pain, of joy, but also just the sense of release. This is a country, these are people, and particularly these hostage

families, have been living essentially with their breath held in their bodies, tense, constantly thinking.

[16:35:07]

I spoke to one woman in the crowd today at Hostages Square who said, honestly, all we can think about we go out to a restaurant, what are the

hostages doing? We wake up in the morning, we go swimming. All we can think about is, what are the hostages doing? What are they living through? How

can we go about living a normal life while they are still languishing in captivity.

And so, today was really the first time that, I think, we saw Israelis let go, breathe in and celebrate. There was this tremendous atmosphere at times

of jubilation in Hostages Square, people cheering when they saw those helicopters transporting the hostages from the Re'im military base to the

Ichilov Hospital, which is just a few minutes away from Hostages Square, and welcoming them home with joy as they prepare to effectively close this

very dark two year chapter.

Obviously, for the people of Gaza, this is not so much about closing or ending a chapter, but rather about opening a new and daunting and unknown

chapter, the scale and enormity as you were just describing and talking about with Nada Bashir of the damage, of the grief, of the sorrow of the

humanitarian crisis. This is now where all efforts are going to be focused and all eyes are going to be concentrated.

But for today and for the families, particularly of these hostages and Israel, this was a moment for them to come together as a nation, to grieve

the dead who came back in coffins. And by the way, I should add just four coffins coming out of Gaza today, with the bodies of Israeli hostages, 28

deceased believed to be in total.

But Israel's leadership has said that it may take quite some time to locate the remains of all the other hostages who were killed and to transport them

safely out of Gaza and back into Israel.

But only then, honestly, Paula, when you've seen all of the remains of the deceased, will you see that clock in Hostages Square. And I'm sure you've

seen it in many of the live shots that we have done over the course of the last two years, that is literally keeping track of every minute, every

hour, every day that these hostages were held. And that clock will not stop ticking until all of the remains of every last hostage who was killed are

also brought out so that their families can begin the process of grieving, of having that all important closure, and so that Israelis can start to get

on with their lives, so to speak, Paula.

NEWTON: Yes, and so much sorrow there, as you said, because for so many families, obviously they want the remains of their loved ones.

And I'm also struck as well, Clarissa, by the fortitude of these families, not just the ones that got to welcome the hostages home, but those who

didn't, that they died in the attack or they died in captivity and yet fought so hard for this day, they also have to be given credit.

Clarissa, as I said, grateful to you for all your reporting over the last couple of years, and I'm sure that will continue, appreciate it.

Now, in an extraordinary moment, during his speech to the Knesset, President Trump called on Israeli Prime Minister Isaac Herzog to offer a

legal reprieve to Benjamin Netanyahu. The Israeli prime minister is fighting charges of bribery, fraud and breach of trust in three separate

but related cases.

(BEGIN VIDEO CLIP)

DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: I have an idea, Mr. President, why don't you give him a pardon? Give him a pardon. Come on.

By the way, there was not in the speeches, you probably know, but I happen to like this gentleman right over here, and it just seems to make so much

sense.

You know, whether we like it or not, this has been one of the greatest wartime presidents. This is one -- been one of the greatest wartime

presidents and cigars and champagne, who the hell cares about that?

(END VIDEO CLIP)

NEWTON: OK, joining me now to talk about it is Gideon Levy is a columnist for Haaretz Newspaper who served as an advisor to former Israeli Prime

Minister Shimon Peres. Grateful to see you again, especially on a day like today, when Israel does have a lot -- a lot of cause for optimism.

I do want to start though where the president finished off. How much do you believe the possibility of a pardon for Netanyahu was really what got the

prime minister over the line in this deal?

[16:40:00]

GIDEON LEVY, COLUMNIST, HAARETZ: So, first of all, let's stick to the facts. And the fact is that at this stage, the president cannot pardon the

Prime Minister, he can only pardon him once his trial will be over. And therefore, this intervention in a very domestic issue was really

unnecessary and spoiled the little bit party.

NEWTON: I understand what you're saying, and many people have pointed this out, and yet, do you believe that that promise that the president, who's

going to be in office for well over three years now, will continue to pressure the Israeli government for some type of as he called it, legal

reprieve?

LEVY: He can push the government as much as he can and as much as he wish. But finally, it's about the legal system to decide so, Israel is still a

state of law, and as long as it is a state of law, everyone, including the prime minister, should follow the law and follow the legal system, and no

one else can interfere, with all the respect to the president of the United States, even he cannot interfere and shouldn't.

NEWTON: Shouldn't is a different -- is a different issue. I hear you though that he really can't interfere.

I do want to turn to Israeli politics and how Israelis again a divided populace for sure on this evening and yet, how do you -- how do you think

they feel about things going forward? Because now, there can be elections, right?

LEVY: First of all, there must be elections in the year 2026 which is around the corner. And I'm sure there will be elections in 2026. I'm sure

that if you will check the polls tonight, you'll see an increase in the popularity of Benjamin Netanyahu. No doubts about this, but polls are only

true for the day that they are being made, and until 2026 everything can happen towards direction.

I don't exclude the possibility that Netanyahu will be re-elected, even though, right now it looks against all odds, because all the polls, but

really all the polls until now, do not give him a majority, but he might also lose the elections, sure.

NEWTON: You know, at the end of this very long day, and when you look at the state of Israeli politics and how it's going to work out going in the

future, in terms of what happens in Gaza, what happens in the West Bank, how much do you believe this deal from President Trump has changed things,

if at all?

LEVY: No doubt that this was a day of joy for all Israelis, and in a way, a day of national pride, because such an attitude of an American president to

this small state makes people proud. I can easily understand in this party, and it was a party today, in the -- in the -- in the Knesset, in the

parliament, there was something missing, very, very missing, and I'm really sorry for this, because the suffer, the starvation, the genocide, were not

mentioned at all, as if they never happened.

And I would expect, especially in a day like this, that someone of the Israelis and also the American president, will say a word to the victims,

will say a word to the people who are still suffering and suffered so much in the last two years, they deserved some kind of warmth, of empathy, of

solidarity, or something. This was totally missing in this party. But for Israelis, it was really a great day of joy, which most of them will never

forget.

NEWTON: And we will leave it there. Gideon Levy as we continue to check in with you. Appreciate it.

Now, three men received the Nobel Memorial Prize in Economics today. Philippe Aghion is one of them. We'll discuss his prize-winning research.

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[16:47:18]

NEWTON: The Bank of Sweden Prize in Economic Sciences, in Memory of Alfred Nobel, was awarded to three economists for their research on growth. Now

the winners are Joel Mokyr, Philippe Aghion and Peter Howitt. Aghion and Howitt built on a previous economist's theory of, "Creative destruction."

Now, the theory of creative destruction, explored by the Nobel laureates shows how new products build off of older ones and stimulate growth when

they enter the market. These are products -- these new products eventually outcompete the old ones.

For example, of course, railways phase out the steam engine when more efficient diesel and electric engines came along. Nobel Prize for Economics

laureate Philippe Aghion joins us now.

And firstly, we just want to congratulate you. I know from hearing some of the recordings that you were completely surprised, but perhaps a lot of

your colleagues were not, so congratulations.

PHILIPPE AGHION, LAUREATE NOBEL MEMORIAL PRIZE FOR ECONOMICS: (INAUDIBLE) I was completely surprised, yes.

NEWTON: Good. Congratulations to you then.

AGHION: I'm very surprised.

NEWTON: I can imagine. To be clear, though you and your colleagues point out that creative destruction is the driving force of capitalism, and it

does lead, of course, to disruption.

Now, I'm going to ask you, for our audience here, do you believe, at the end of the day that it is possible to mitigate its more negative impacts on

society, things like inequality, economic displacement? Because for people who are insecure about the economy around us these days, they might say to

you, professor, no, it is not possible.

AGHION: So, my view is that we can have institutions and policies that can make creative destruction socially acceptable.

For example, in Denmark, they have the flex security system on the labor market. When you lose your job for two years, you get 90 percent of your

salary, and the state helps you retrain and find a new job.

And there's been studies in Denmark showing that there is no negative impact on health of losing your job in Denmark.

So, they found a way to accommodate creative destruction, the to accompany workers to help. Them, you know, move from one job to another. And so, it

boosted innovation, because it's much easier to lay off and hire, but at the same time, it did so in a protective way.

So, I think something like, you know, the flex security system in Denmark is the way to go. And I believe, also very much in education, we should,

everyone should be well educated so that you can face the change.

[16:50:01]

NEWTON: But so many -- so many governments have tried this. And while sometimes they succeed in measure, they do not succeed in terms of, if you

look at just, let's look at income inequality in developed countries.

And then we have this compressed business cycle. Do you believe that these forces could actually pose a threat to democracy itself? I mean, how to

adapt? And you've done so much work on this in terms of how to rethink the role of the state and civil society?

AGHION: Yes, exactly. So, I believe that you need firms innovate. The state is there, for example, with tax policy and with competition policy, for

example, there is always the worry that yesterday's innovators will turn into entrenched incumbents that will stall, that will deter future entry

and future innovators. And that's where competition policy is very important.

But you see sometimes governments as being -- are being captured by vested interests and they don't implement the competition policy. And that's where

civil society is so important to limit the scope for corruption and for capture of governments by private incumbent private interests.

So, I believe very much in the triangle between firms that innovate a government that implement competition policy and tax policy, and the civil

society that makes sure that the government is not being captured by incumbent interest.

I mean, a fast-growing economy is one where new talents, no matter the social origins can blossom and create and they challenge vested interest

and incumbent firms.

But that's the whole thing. That's what creative destruction is all about, is to allow new talents to constantly challenge a vested interest

established firms. And that's what makes growth dynamic, you see.

NEWTON: Yes, and yet, the very essence of this, I don't have to remind you, is challenging, even in places like your home country, in France. So, I do

want to turn to the artificial intelligence issue now, you've been steeped in economic history for decades. Now, should we fear it? It is very much

the essence right of creative destruction and what it means.

AGHION: Yes, that's right. So, A.I. has a big power -- has a growth potential. Artificial intelligence has a huge growth potential because it

automates tasks in the production of goods and services, in the production of ideas, it becomes easier to find new ideas with A.I.

So, but the thing is that, you know, Ill design, competition policy can stifle growth. You see from the A.I. revolution, can limit the growth

potential of A.I.

So, it's very important to have institutional change that competition policy should adapt to avoid that a few actors in A.I. monopolize the

market and stifle completely new entry and new innovators.

So, we need the A.I. revolution, together with good competition policy to harness the growth potential of A.I. similarly for the employment potential

you know, to make sure that you know, A.I. will not destroy too many jobs, or that people can move from one job to another. Education is important,

and flex security, the labor market policy that Denmark, for example, implements, the combination of those two will be crucial to maximize the

positive impact that A.I. new jobs.

Because A.I. will create lots of new job when you A.I. you become much more competitive and productive, and there is a big demand for your product.

That's your source of creation of jobs.

NEWTON: Well, I want to congratulate you again. I thank you for schooling us. I know it is late now in France, we are delighted to speak to you on

the day when you are celebrating. Appreciate it.

AGHION: Thank you so much. Thanks so much for having me. Bye, bye. Thank you.

Now, U.S. markets bounced back from Friday's sell off now that President Trump has softened his tone on new China tariffs, more on the global market

reaction next.

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[16:56:25]

NEWTON: So, U.S. stocks rebounded after Friday's sell off triggered by President Trump's criticism of China. Now, the Dow and the S&P 500 each

added more than one percent, the NASDAQ gained more than two percent in fact. President Trump softened his tariff threats after a weekend of trade

talks with China. Asian markets not as relieved. Hong Kong's Hang Seng Index saw the worst of the day off, 1.5 percent. Japan's Nikkei fell one

percent.

We do want to look at some of those Dow components now, Goldman Sachs, JP Morgan up more than two percent percent. Both report on Tuesday, Nvidia up

nearly three percent again as A.I. stocks helped by lower trade tensions with China that we were just talking about.

And also interesting, Broadcom, which was up almost 10 percent it in fact, has a new deal to make custom chips for OpenAI. We will see what happens

when President Trump returns to the White House, we continue to follow all of those trade talks with China.

That is QUEST MEANS BUSINESS. I'm Paula Newton. THE LEAD with Jake Tapper starts now.

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