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Quest Means Business
Israel Bombs Compound Of Group That Chooses New Supreme Leader; U.S. Consulate Grounds In Dubai Hit by Iranian Drone; Trump: U.S. will Offer Risk Insurance To Ships In Gulf; Middle East Fighting Disrupts Air Traffic Worldwide; U.S. Closes Three Embassies Over Tensions In Middle East; Trump Slams European Allies. Aired 4-5p ET
Aired March 03, 2026 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:16]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. The market has been sharply lower at the open.
There was a marginal recovery, as you can see, as the day went on. But we will get to all the details once the gavel has been hit and trading comes
to an end. There we go ma'am, please. Oh did anyone hit the gavel? Did I miss it? No. Here we go. Okay, one, two, Oh, yes! Thank you very much.
Those are the markets. And these are the main events of the day.
All of the stocks, oil, all falling and rising as the Iran conflict ripples through global markets. I will have the details, the analysis and we will
understand where we go next.
President Trump says the U.S. will ensure and, if necessary escort oil tankers traveling through the Straits of Hormuz.
And travelers, thousands stranded as the conflict brings the worlds gulf hubs to a standstill.
We are live in New York. It is Tuesday. It is March the 3rd. I am Richard Quest and I mean business.
Good evening.
We begin tonight in Dubai, where the authorities say a fire and the grounds of the U.S. Consulate has now been put out. The fire was started by a
strike from an Iranian drone. There are the pictures. The black plume at night of the smoke rising over the building.
According to the U.S. Secretary of State, Marco Rubio, the drone hit a parking lot and all U.S. personnel at the consulate have been accounted
for. It follows Israel striking a compound in the Iranian city of Qom that targeted a group of senior clerics, the very clerics responsible for
choosing the country's next Supreme Leader.
The Iranian state media is reporting the building had been evacuated before the strike took place, and Israel is also ramping up its attacks against
the Iranian-backed Hezbollah proxy in Lebanon. The U.S. says it has hit more than 1,700 targets so far in Iran. This is President Trump.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: They have no Air Force, it has been knocked out. They have no air detection, that's been
knocked out. Their radar has been knocked out.
And just about everything has been knocked out.
(END VIDEO CLIP)
QUEST: Nic is with me. Nic Robertson in Riyadh with the latest.
Good evening, Nic. Good morning. You've just slipped into the next day into Wednesday and let's start quickly this business in Dubai with the drone.
I mean, it is inevitable if this number of drones are being lobbed, drones and missiles, some are going to get through.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Look, I think part of the calculation here in assessing what Iran is able and not able to do is
recognizing, as they do here in Saudi Arabia at the moment, that Iran still has what is called command and control in military terms, it can decide
pretty much when and where it wants to hit, and it is going up an escalation ladder and it chose to hit the Consulate in Dubai as it chose to
hit with four drones the U.S. Embassy here in Riyadh the night before, the embassy in Kuwait the night before and the night before that.
So, the assessment here is that Iran is intentionally attacking these particular sites rather than it is a case of some getting through, because
if you take the Saudi example yesterday, just ever so briefly, they took down five drones that were fired at a major Saudi military airbase just
outside Riyadh, took down two drones that were fired at a Saudi oil complex in the east of the country.
So yes, some are getting through, but they are also being specifically sent to those specific places by Iran.
QUEST: In that case, Nic, the escalation that Iran would follow through with, because at the end of the day, what President Trump sort of said has
a certain truth to it. Overall, there is, you know, the U.S. can overwhelm simply by keeping this going longer than anybody else and with more
ferocity.
But the targeted nature of those attacks that you're talking about from the Iranians?
ROBERTSON: Look, Iran is fighting a different fight. Iran is fighting a fight where they need to drive up the price of oil. We are driving up the
price of oil. We do intend to close and are effectively, at the moment closing the Strait of Hormuz. They have essentially brought air travel in
the Gulf region to a standstill. That's created a huge amount of international attention.
[16:05:10]
Attention on that, attention on the fact that oil prices are going up. Now, the United States looks like it is very weak, it is looking -- it is like
its being called into question over whether or not it planned enough to evacuate people before all of this began.
You know people are standing by -- people in Dubai. No one expects this in Dubai to be standing there and watching a plume of black smoke rising up
one evening from the U.S. Consulate there. That doubles down on the message that the U.S. cant actually do what it wants to do, that it is helpless and
hapless in this situation.
This is what Iran is trying to do because it is trying to -- it is trying to scare The White House, scare Americans, scare other people, and drive
the price of oil up to make the war short because they calculate, and this was something we were hearing about before all this began, they calculate
that is where President Trump gets cold feet.
The markets get cold feet. The numbers all sort of dive down into the red and that is what will bring President Trump to a screeching compromise,
Iran hopes, over and above the ability of the U.S. to keep at punching Iran.
QUEST: Nic Robertson, I am glad. Thank you. The business aspects on this for us tonight, putting it into the markets, much appreciated because as
Nic was talking about the price of oil and the price has been rising, so within the last couple of hours, President Trump has tried to limit an
economic fallout from that rising price of oil.
The President posted on Truth Social: "The U.S. will provide political risk insurance to all shipping lines, if necessary," he said, "The U.S. Navy
will escort tankers through the Straits of Hormuz." Why? Because Iran has threatened to attack any vessels traveling through the strait. It has
brought an effective halt to all traffic, and bearing in mind the amount of oil that goes through there on an average day.
Now, S&P Global says only two tankers passed through the waterway on Monday.
Jakob Larsen is the head of Maritime Security at PIMCO. Jakob is with me now.
Will it make a difference? Because two aspects here. Firstly, commercial insurance has been cancelled and negated because of the risk, and secondly,
there is the physical risk that shipping lines don't want to put their ships and personnel under.
How does the President's promise help?
JAKOB LARSEN, HEAD OF MARITIME SECURITY, PIMCO: I think it helps in the sense that the shipping industry will take whatever help it can get in the
current situation to reduce the risk to its assets. We still have to see the details of the President's proposal, including any insurance and
financial aspects of it, but I think it sounds promising.
But as I've said, we need to see a proposed operationalization of this before we can sort of really comment in detail. But as I said, we will take
all the help we can get.
QUEST: You see, the problem, of course is yes. So the commercial, Lloyds and the commercial insurers may have pulled out and the President may offer
the guarantees. We've seen that before, by the way, where governments have stepped in to offer backstop guarantees.
But if you're the CEO of Maersk or some other MSC or some other major shipping line. Yes, you don't want to lose your ship, but you certainly
want to protect your personnel and I don't really fully see that escorting through protects against a flying drone.
LARSEN: It will provide some protection, and it may not protect against all threats that could potentially materialize in the air and that's absolutely
right. But shipping is not sort of black and white. It is not that you stop sailing the minute that there is a security risk. What you do is you assess
the risks and if your assessment comes out and the risk is below the risk acceptance level, then the shipping operation can carry on.
And indeed, this is also what we have seen historically. You will perhaps remember in the 80s when we had the so-called Tanker War, I think it was
more than 50 tankers that were hit by missiles, and still trade kept on flowing.
This has to do with the supply and demand dynamics and the fact that when a shipping availability is a bit short, when there is a lack of ships willing
to go in and out, the freight rates increase and then it becomes more commercially attractive, it also becomes more attractive for the crew
members. And then in the end, trade will start flowing, although perhaps at reduced levels.
So supply and demand and continued updated risk assessments that will eventually get trade flowing, perhaps not normal numbers, but at reduced
levels.
QUEST: Do you see non-oil trade? I am now talking about general cargo shipping. Are they making the decision now to avoid these routes?
[16:10:04]
Obviously the Strait, the Suez Canal, all of those rates, all of those routes and going around the long way around. Instead, you're seeing more of
that now.
LARSEN: We are absolutely seeing more of it, yes, and traffic in and out of the Strait of Hormuz has come down significantly and whatever ships are
sailing through there, primarily going eastbound, so that means out of the Persian Gulf and in the Red Sea. I haven't got any firm numbers yet, but I
think it is fair to assume that we will also see a slight reduction there.
Although, again, we have to be mindful that even during the Red Sea Crisis, the peak of that crisis six or eight months ago, we also still saw ships
going through, so we are still waiting for some more accurate threats basically to emerge from the Houthis before we can accurately assess that
risk.
QUEST: And of course, more details on exactly how the President's guarantee is going to work.
Grateful for you, sir. Thank you for coming up so quickly and talking about the prescient things.
Now, the disruption to shipping is pushing energy prices higher and sparking fears of a broader economic hit. Analysts at Deutsche Bank point
out that recessions often follow. I want to show you this. If you look at the various things.
Now, first of all, you've got the 1970s oil shock, then you've got the Gulf War. As you can see there, energy prices also roared up over there. Now,
these are all -- it doesn't really matter the reason why, it doesn't matter necessarily. The fact is that -- let's see what -- let's choose a nice --
there we go. It is the fact that the prices did go up.
And as they went up, recessions followed because of the direct linkage that takes place. Now, if you look and see where we are at the moment, sharper
prices at the moment were up nearly five percent on WTI. That's the U.S. crude benchmark and three percent.
The prolonged conflict, that's the problem. The prolonged conflict. What does it do to that?
Helima Croft, global head of commodities at RBC. Now, the price that we are seeing at the moment, whether it is up five percent, 10 percent, whether we
are near $80.00. This really is knee jerk at the moment. What we need to see is what is sustained.
HELIMA CROFT, GLOBAL HEAD OF COMMODITY STRATEGY, RBC CAPITAL MARKETS: Well, Richard, I would say it has been a sharp run up and it has been quick, but
we have a physical supply disruption right now. I mean, we have a situation where the strait of Hormuz has been turned into an effective parking lot
with very few tankers going through.
We have Iraq now having to shut in vast quantities of its production. It is OPEC's second largest producer because they have no storage. So we are
actually seeing physical disruptions of flows. The question is what is the duration going to look like?
I actually think that given the risk involved in this war, price reaction has been pretty muted. The question will be, will President Trump's
assurances about, you know we will provide escorts through the Strait of Hormuz or political risk insurance, will that really be enough to make
people incentivized to go through the Strait in significant numbers?
QUEST: Give me an idea of the sort of prices that we get concerned about. Again, if we look at the -- if we look at the way we are at the moment,
$74.60 on the West Texas, $78.50 on the Brent at the moment.
What numbers do we need to guard against in terms of wider economic implications?
CROFT: I mean, I think for President Trump and for the American consumers, we always think about like, what is your pain point at the at the pump? And
certainly President Trump would want to do everything he could to avoid a situation where you had $4.00 a gallon for gasoline.
So, again that's why we are already getting these announcements and they did cause prices to fall back. I think there are many market participants
that believe this will be a short duration event, and that President Trump will be able to get the flow of traffic through the Strait of Hormuz.
I would just say we don't have a lot of details yet on this plan for the DFC to provide insurance. We do not know whether, you know this will be
enough to move cargoes in large numbers. Your previous guest was right, they will take any help they can get with the insurance industry. But how
many ships will really go through?
And we don't know yet how many naval resources the U.S. will be willing to deploy for the Straits when we are involved in active operations against
the Iranians.
QUEST: All right, so I just want to jump in quickly on that point. One of the things that we have -- I hadn't really thought about this until the
last 48 hours and that is because the shift to LNG as a result of the shift away from Russian oil, now of course, damned if you do, damned if you
don't.
[16:15:10]
LNG Qatar huge supplier, but the LNG is now a major problem and we've seen LNG rising four, five, six percent.
I mean, look at European gas prices. I think that's actually a more accurate reflection of the risk in the system. I mean, Richard, you're
exactly right. Europe is facing a significant energy shock because of this, because they have been weaning themselves off of Russian supplies.
If you look at the U.K., incredibly dependent on supplies of gas from Qatar, and so you have a twofold situation, you have the world's largest
LNG facility in the world offline, it could be temporarily offline, but it was struck by drones and precautionary measures it has shut down, and now
we cannot move any Qatari LNG through the Strait of Hormuz.
So you are absolutely right to focus on the economic threat to Europe. It is probably much more acute at the moment than what we are facing in the
United States, because again, they have already moved away from Russia and Qatar was one of the important backstops.
QUEST: Okay. All right, is it -- for the oil companies, particularly the U.S. companies who will benefit from the higher prices as a result? But if
we take, for example, oil and gas produced in the United States, there are no delivery problems for it. They are getting an elevated price for that
because the market price is higher.
The risk has not changed. Is that just a simple bonanza for U.S. producers in that sense?
CROFT: I mean certainly, U.S. producers had been concerned at the start of the year about the price outlook. Remember, we talked about U.S. production
plateauing, talking about the price that President Trump wanted for oil was not really sufficient to have robust U.S. growth.
And so yes, this is a temporary, you know, a little bit of a bonanza for these companies. More challenging are the companies that operate in the
Middle East. And when I mentioned Iraq. Iraq is now shutting in its major oil fields because they have no storage.
So, it depends on where your geography is in terms of your production for the companies.
QUEST: I am grateful. We will talk more. This isn't going to go away overnight. Thank you for joining me. Thank you.
CROFT: Thank you.
QUEST: QUEST MEANS BUSINESS, what a busy day.
Wall Street follow global stocks lower. It was horrible in Europe. I mean everything was down and now, we are seeing the way we've just closed,
NASDAQ off one percent, worst of the day. The potential impact for all of this. The former Chair of The White House Council of Economic Advisors.
There he is, Jared Bernstein. He is going to give us -- if he was looking at this now, Jared, when we come back after the break, how serious is the
wider economic impact?
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:20:27]
QUEST: So, to the markets and the selloff, as traders are bracing themselves for a prolonged conflict. In the U.S., excuse mel, I do beg your
pardon -- all of the major indices were down and yet they had recovered off the lows, well off the lows of the day.
As we were talking, Brent briefly approached $85.00, but the markets -- they are all falling back. Gold gave back some of its gains. It was the
only safe haven of the day and the U.S. dollar, which, of course did put on a bit of ground.
So, that gives you an overarching view of where we are and, Jared Bernstein is with me, the former chair of The White House Council of Economic
Advisors under Joe Biden, now policy fellow at the Stanford Institute of Economic Research.
Jared, when I look at those numbers, away from the knee jerk, I guess what I am seeing is the uncertainty. You can't really price in a longer war, but
you've got to be cognizant of the fact that's where we could be headed.
JARED BERNSTEIN, FORMER CHAIR OF THE UNITED STATES COUNCIL OF ECONOMIC ADVISORS: I actually think that's the key issue right there. I mean, the
one variable that in some ways is the most important and the most mysterious is duration.
If this war is a four-week affair, I think supply chains, commerce, flow through the Straits, oil production, shipping, refining, all of that snaps
back pretty quickly. If instead of four weeks we are talking about four months or longer, very different discussion. So duration is key to economic
impact.
QUEST: When you've been in government and part of various policymaking, what sort of discussions are taking place at the moment? Where does the
economics fit into, if you will, the strategic decision making?
BERNSTEIN: Well, to put it simply, at the gas pump, if I were in The White House right now, I would be getting calls from everyone, from the senior
staff to the President saying, hey, remind me, what's that rule of thumb you're always talking about when the price of oil goes up by $10.00 a
barrel? And that rule of thumb is $0.25 at the pump.
Now, if you look at the average across the nation here, you'd see that gas prices a little bit south of $3.00 a gallon. You know, you break that $3.00
measure, you go up to $3.25. Because in fact, WTI is up about $10.00.
People will notice that, and that's one of the most acute quick kind of acting prices that we see. And by the way, it links very closely into the
affordability debate, which is an area where President Trump has been doing very badly.
QUEST: The Fed watches all of this, and I mean, this is the classic dilemma in the true meaning of the word. You can't cut rates to buy a bit more
insurance because you're already elevated and you dare not raise rates because you're elevated and you've got higher inflation that might come
feeding through from oil.
What do you do?
BERNSTEIN: Well, at least as far as Chair Powell is concerned, he will tell you all day long that the direction of travel is for is toward lower rates.
While he very wisely, I think, wants to sit back and look around for a while and see what their rate cuts have done thus far in the macro economy.
He is consistently weighted the labor market as a greater concern because he believes that were it not for tariffs, the price indices would be
heading back to target.
Okay, so now, we have this new wrench in the equation and you're right, I think it makes life harder for him and the Fed, typically they try to look
through supply disruptions. That gets pretty tough if were talking about the longer duration scenario I outlined before.
QUEST: Jared, again, give me insight. Youve sat in the room, you've heard the debates. What happens when it -- what happens when it gets to the stage
on the one hand, on the other hand, but on the other hand, but on the third hand. But then we could do this. What happens when it becomes so
complicated that you really can't game it out.
[16:25:02]
BERNSTEIN: Right, now that's a great question. One of our earlier presidents said, in such a situation, bring me a one handed economist for
precisely the reason you mentioned.
Look, by the time you get to the President and the folks who are making the decisions, you've hashed that out with your team. So, we don't do a lot of
that in front of the president, but what we would instead do is say sir, here are three scenarios, sort of good, bad and in middle and in this case,
what they would be probably at least in my lane would be here is what happens if oil stays up for a while, here is what happens if it just comes
right back down to where it was, and here is the middle path.
QUEST: Finally, is it your view that fundamentally the U.S. economy is in good order? And this is quite a risk that the President -- I mean, we won't
get into his reasons one way or the other, but this -- he is taking quite a risk with an economy that's not doing badly.
BERNSTEIN: Richard, that is precisely my view and it is a strongly held view of mine that this economy has been good, has been solid whether you're
talking about GDP, productivity growth, an unemployment rate at 4.3 percent is relatively low, stock market that has -- before this -- yes, it had been
doing pretty well. Certainly, some very nice investment numbers.
But you can only throw so much at that resilience before it breaks. There are real fragilities in our economy. In our labor market, we have a very
low hire situation. So there is not a lot of margin there. If layoffs were to pick up on the investment front, I think A.I. looks kind of bubbly and
then on the uncertainty front, you know, a lot of businesses were already nervous about that outlook.
So I am worried that this is perhaps a nudge too far against the underlying resiliency of the U.S. economy.
QUEST: I am glad you're with us tonight, Jared. Thank you so much. We will talk more as this goes on. Thank you for joining us.
BERNSTEIN: Thank you.
QUEST: Let's turn now to the travel and the flights. Some have resumed. They are doing it through safe corridors, whatever that means. After the
break, we are going to discuss the ripple effects of the world's largest travel hubs.
Paul Charles will be with us to talk about that.
(COMMERCIAL BREAK)
[16:30:42]
QUEST: Hello, I'm Richard Quest. A lot more Quest Means Business together. Thousands of travelers are stranded in the Iran conflict, halts commercial
air flights around the Gulf's three airports. And President Trump lashed out at European allies. Some of them. He's hosting the German chancellor at
the White House.
We'll get to that after the headlines, because, of course, this is CNN. And here the news it always comes first.
Israel says it hit a covert nuclear weapons development site in Iran today, also targeting a compound where a group was reportedly gathered to choose
Iran's new supreme leader. Iran is responding to U.S. and Israeli attacks with attacks of its own across the region. The U.S. now confirms a drone
hit near the American consulate in Dubai. There have been no reported injuries.
Israel is warning people to leave parts of southern Lebanon. The defense forces says it struck several Hezbollah targets in Beirut (INAUDIBLE).
Israeli Prime Minister Benjamin Netanyahu says he's ordered the military to seize strategic high ground from the Iranian backed militant groups.
A father of a school shooter in the U.S. state of Georgia has been found guilty of murder and manslaughter charges. The prosecutors say Colin Gray
buying his son a weapon allowing him to access the gun and ignored repeated warnings that his son was a danger to others. His then 14-year-old son used
a rifle to carry out a mass school shooting in 2024, killing two teachers and two students.
U.S. markets spent the day in the red. Investors are weighing the economic fallout from the conflict. Look at the indices and you'll see they were all
lower. And on travel disruption, rising oil prices hitting airline stocks again sharply lower. 6 percent for JAL, 7 percent for Air France-KLM, Wizz
Air, of course, which flies across the region down 7 percent as well.
The overall -- some airlines are resumed limited services on Tuesday. That include Emirates, Etihad and Virgin Atlantic. Thousands more flights have
been canceled in Dubai. A small number of flights took off on Tuesday.
It's a major disruption. DXB, as it's known, handles more than a thousand flights a day, most of them from Emirates. The disruption is having ripple
effects around the world.
CNN's Lynda Kinkade reports.
(BEGIN VIDEOTAPE)
LYNDA KINKADE, CNN CORRESPONDENT (voice-over): Canceled. Delayed. Diverted. Words few travelers want to hear but it's a reality for many airline
passengers around the globe after several major travel hubs closed or heavily restricted their airspace because of missile and drone strikes
across the Middle East. That conflict resulting in travel chaos, long lines and long waits, upending many trips.
UNIDENTIFIED MALE: Unfortunately, our whole trip from our school canceled it, so we're no longer going to Dubai.
KINKADE: Most commercial flights in and out of Dubai have been suspended. Airports in Abu Dhabi, Doha and other regional hubs were also either shut
down or subject to severe restrictions. All are popular transit points for long haul travel. And without these key connections, the flow of aircraft
and flight crews has been disrupted. Many passengers left stranded.
UNIDENTIFIED FEMALE: We don't have any information. No one is telling us anything. We cannot get into contact with anyone. We're trying to go home.
That's the only thing that we want.
KINKADE: In one popular tourist destination, authorities in Bali, Indonesia, say more than 1600 tourists were stranded at the airport Sunday
after flights to the Middle East were canceled or postponed.
It's a headache all around. The new routes will likely be longer for passengers and the fuel costs higher for airlines.
At the Frankfurt Airport in Germany one passenger bound for Australia says she's trying to rebook after her flight was canceled. But it hasn't been
easy.
UNIDENTIFIED FEMALE (through translator): The phone hotline is completely overloaded. We can't reach anyone. Actually, it's not going so well at the
moment.
[16:35:00]
KINKADE: The disruptions are also a serious concern for people who work in the Middle East but live in different countries, like these migrant workers
in Bangladesh who say they're afraid they'll lose their jobs if they don't return soon.
Airlines are scrambling to reroute flights with some headed over Saudi Arabia. The timeline for a full return to normal service isn't known. Some
limited repatriation flights and select departures are underway now to help stranded travelers.
UNIDENTIFIED FEMALE: I've never been so scared in all my life.
UNIDENTIFIED FEMALE: We stayed in a hotel in Dubai and we saw -- we heard explosions while we were having breakfast on Sunday morning. There was
black ash falling on the breakfast table.
KINKADE: Right now officials are urging people to check their flights and pack a lot of patience.
Lynda Kinkade, CNN.
(END VIDEOTAPE)
QUEST: Paul Charles is with me, the founder and CEO of the PC Agency. Paul, one of the leading practitioners in the business, joins me from Miami.
Paul, the reality is, as we just look here, you'll see you've got the three big hubs. You've got Abu Dhabi, Dubai, and you've got Doha. They are now
the global hubs for so much air travel. And if you just take Abu Dhabi and we look at where Etihad is, and the way the ins and outs of them, the sixth
freedom right, everything comes in, everything goes out.
So this disruption really does drive home how significant the Gulf Three now are.
PAUL CHARLES, FOUNDER AND CEO, THE PC AGENCY: Absolutely. These are pretty well, Richard. The three most significant hubs in the world. I mean you
only have to look at Dubai Airport, which last week announced it carried 97 million passengers last year to give you the scale of how they're
operating.
So when they're not able to operate as they haven't been properly over the last three days then you can imagine the knock on effects around the world,
not just for passengers, as you've been hearing, but also for cargo and the whole economic supply chain destinations all over the world rely on these
hubs to supply them with essential food and other cargo, for example.
QUEST: Right. So tonight we know the first few flights are leaving from, say, Flydubai and Emirates. Qatar is going to look at it tomorrow. They say
they're doing it through safe corridors.
How do you do that? How do you actually -- I mean the risk is still there from Iran so how are they doing it?
CHARLES: Well, the airlines wouldn't be flying if they believed there was risk. And they have very sophisticated security teams within the airlines
who cooperate very closely with governments all over the world. The security teams within the Middle Eastern carriers especially, and other
carriers like Virgin who are flying into Dubai again, as you say, will be working very closely with governments to look at these corridors.
How can they fly south out of the region away from the conflict zone safely? And that will no doubt involve military support. There will be
military guidance and aircraft in the air who are helping to protect these commercial airlines as they take off.
QUEST: What do you think the airlines' responsibility is here to passengers stranded? I've got friends and colleagues all over the world. I mean, we
see, for example, in Dubai, the local government there has basically picked up the bill for all the hotels, which is a great PR gesture that they are
doing. But if you are further down route, then what do you do? Do you wait to see if the airspace is open? Do you book Singapore, Thai or BA or
whatever to avoid it? What's the best guess?
CHARLES: Yes, locations like Dubai and Abu Dhabi have been very generous towards those who obviously are stuck in the region. Airlines, of course,
are going to be picking up a hefty multi-billion dollar bill over this. They're going to have passengers stuck in the wrong place. They've got
their own pilots and cabin crew in the wrong locations, as well, of course, as their own aircraft in the wrong place.
I've just come back from Sao Paulo and there were two Qatar Airways aircraft on the ground there, obviously unable to fly towards Doha. So the
multi-billion dollar bill is only going to increase each day that this conflict goes on. And that's going to affect airline profitability of
course.
QUEST: I know this is not necessarily the most significant thing, but for European carriers and U.K. carriers, this would be considered extraordinary
circumstances for the purposes of Rule 261, I'm guessing. There's going to be no able to claim. I mean, you're still going to have to have care and
comfort. You've still got to have care and comfort under that. But there's no question of compensation under 261.
CHARLES: No, I mean, as always, it depends on your tier status with an airline on how they treat you and where you're going from and how much
you've paid for your ticket. But in essence, the airline has to get you from A to B or offer a refund. So passengers will be very much talking to
their tour operators and travel agents, as well as the airlines directly.
[16:40:02]
And it's thrown the industry into some level of turmoil this week for that reason. Everything has been upended because when the hugely popular Dubai-
Doha-Abu Dhabi axis falls into this situation, then it affects many millions of people. Especially when you've got 4,000 flights a day being
canceled.
QUEST: Paul Charles, who is on his way to London tonight, safe flying, sir, as your plane leaves. I'm grateful for you joining us tonight. Thank you.
CHARLES: Thank you very much.
QUEST: This growing conflict has pushed the U.S. to close three embassies in the region. We'll be in Iraq in just a moment. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: The U.S. has closed its embassy in Saudi Arabia after it was struck by two suspected Iranian drones. The embassies in Kuwait and Lebanon have
also been closed on Tuesday. The State Department told non-emergency government workers to leave five countries in the region and in the last
hour, the Secretary of State Marco Rubio has said the United States is working to evacuate Americans stranded in the Middle East.
(BEGIN VIDEO CLIP)
MARCO RUBIO, U.S. SECRETARY OF STATE: Rest assured, we are confident that we are going to be able to assist every American. As I told you right now,
we have about a little over 1500, maybe closer to 1600 Americans requesting assistance. And we know that we're going to be able to help them. It's
going to take a little time because we don't control the airspace closures.
As these opportunities begin to open up, we can act very quickly to reach them and get them out of harm's way.
(END VIDEO CLIP)
QUEST: Clarissa Ward is with me. She is in Erbil in Iraq.
Good evening or good morning to you. This is turning into a very -- it was never going to be easy, but it's now getting more difficult. You've got the
U.S. saying that they are going to be arranging flights, and they are going to be sorting out or at least chartering.
What's your understanding?
CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, I think everybody is a little bit in the dark, as you say, Richard. Oh, sorry, I'm
getting mixed up so I'm going to take this out of my ear. But for the moment what we know is this. There has been updated guidance that has been
issued by the State Department, specifically with regards to the U.S. embassy in Baghdad and the U.S. consulate here in Erbil.
They have now ordered the evacuation of all non-emergency personnel, although we've heard Secretary Rubio saying just hours ago or last hour
that in fact those embassies were already down to the bare bones.
[16:45:05]
Also the embassy in Beirut down to the bare bones. So not clear that they would actually have to evacuate a lot of people there. But there are so
many contractors as well here, Richard, who work for companies that assist on these bases, who are staying in various places around the city who have
real concerns about their security and where they should go. At the moment the airport, which is just over there, Erbil Airport, is firmly closed. It
has been coming under regular attack missiles, drones, rockets, you name it, since the U.S. and Israel began their bombing campaign in Iran on
Saturday.
And there's no sense at the moment that that's going to change. The airport in Baghdad is also not open. And so then you're looking at the possibility
of chartering busses and somehow getting them over to Turkey and arranging ongoing travel for them from there. But from what we understand, a lot of
people across the region very nervous as they see hostilities continuing to ratchet up.
We just saw a couple of hours ago a drone intercepted, apparently targeting the U.S. consulate in Erbil, another Iran-backed militia in Iraq, saying
that it had launched 23 attacks on this sort of northern Kurdish-Iraqi part of Kurdistan today.
QUEST: Right.
WARD: And so a very real concern for many Americans and others in the region that they are stuck for the meantime with no clear way out, Richard.
QUEST: The U.S. often seems to do a better job, I mean, maybe it's just because we're watching from afar, but looking at how the U.S. -- Marco
Rubio speaking today, charter flights being organized, the registration, you know, many other countries just sort of tell their nationals, well,
register and we'll let you know what's happening. But the Americans seem to manage to get ahead of it. I don't know whether that's just from as viewed
from afar. But on this particular one, they do seem to be ahead.
WARD: Well, I think in general, Richard, there's no question that the U.S. takes it very seriously in terms of the security of their citizens and
getting them out of harm's way. I'm old enough to have covered the war between Israel and Hezbollah in Lebanon in 2006 and the Americans were able
to evacuate people on ships. And I remember the scenes of other nationals, Australians literally throwing their passports on the ground with
frustration because their governments were just not able to facilitate evacuation in a timely manner.
What seems to be the case here, although this is speculation, is that perhaps the U.S. was a little bit on the back foot in terms of anticipating
the ripple effect or the domino effect, and how quickly this would go from being a joint U.S.-Israeli bombing campaign on Iran to a regional conflict
involving 12 different countries.
QUEST: Right.
WARD: And so perhaps that's why we're seeing a little bit of catch up in terms of trying to work out how best to get people out of harm's way as
soon as possible, Richard.
QUEST: I'm glad to talk to you in Erbil tonight because give me a feel for what it feels like there. Sitting over here in New York is very difficult
to gauge the mood on the street, what people are talking about, restaurants open, that sort of thing. Give me an idea, please.
WARD: I think with every passing day, Richard, people become more and more anxious because in this part of the world and particularly here in
Kurdistan, you know, there are alliances and allegiances and relationships that are tenuous, that are fragile. And there is a real fear that you are
going to start to see incredible strain put on those relationships to the point of potentially breaking.
So let's talk about what's happening in Baghdad. You have militias and young men who are supporters of Iran, going every night and trying to force
and fight their way into the Green Zone. And then you have Iraqi Security Forces beating them back and using flashbangs, and then you're creating a
real tension between these popular mobilization forces, the Hashd al- Shaabi, and between the Iraqi Security Forces.
Or let's talk about here in Kurdistan for the leadership of Iraqi Kurdistan, the relationship with Iran, the relationship with Turkey is
crucial. It's often challenged, but it's an important -- these are important relationships. Whereas for the Iranian Kurdish militia groups
that are here, they are very much now wanting to cross the border and get in on the action and try to take advantage of the fact that the Iranian
regime is at such a weak moment.
And so you have all these tensions playing out, all these unintended consequences that probably are almost certainly were not part of the
planning to the extent that, you know, a great deal of planning went into this, but which now present real potential friction points going forward,
Richard.
QUEST: Clarissa, I'm grateful. Thank you. It's very late at night for you, and I suspect there's many more hours of work ahead. Thanks for taking the
time in joining us tonight.
[16:50:03]
It's QUEST MEANS BUSINESS from New York. The president lashed out at some European allies while hosting the German chancellor. It was the Spanish and
the British who got the ire this time. Why? In a moment.
(COMMERCIAL BREAK)
QUEST: Germany's Chancellor Friedrich Merz says he's on the same page as Donald Trump when it comes to ousting the Iranian regime. The leader spoke
at the White House when the president took the opportunity to lash out at some European allies.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Spain has absolutely nothing that we need other than great people. They have great people, but they
don't have great leadership. And as you know, they were the only country that NATO would not agree to go up to 5 percent. I don't think they want it
agreed to go up to anything. They wanted to keep it at 2 percent, and they don't pay the 2 percent. So we're going to cut off all trade with Spain. We
don't want anything to do with Spain.
By the way, I'm not happy with the U.K. either. This is not Winston Churchill that we're dealing with.
(END VIDEO CLIP)
QUEST: Kevin Liptak is with me from the White House.
The president, look, if you're the Spanish prime minister you don't really care because you knew about this and you've been seeing this before. and
they've responded saying the president is wrong. Anyway, if you're Keir Starmer, you're a little more worried about this, aren't you?
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes. I think you would be alarmed if you were someone who has spent the better part of the last
year really trying to cultivate President Trump and trying to ensure that your relationship doesn't go completely off the rails. And it seems as if
just this one instance of Starmer initially saying that the U.S. wouldn't be able to use bases in England or on Diego Garcia, the island in the
Indian Ocean, to launch attacks on Iran, was the impetus here for the president really going after him quite forcefully.
Now, Starmer has since said that the U.S. could use those facilities to go after the ballistic missiles, but he is still very limited in his support
for what the president is doing here and clearly the president is irate about it. And it is kind of interesting. It's also really the first time
that Starmer has actually broken with the president. Clearly, he thought that this was the issue that he needed to stand his ground on.
I think I read in the "Financial Times," he was calling it the his "Love Actually" moment. You know harkening back to that scene in the movie with
Hugh Grant and Billy Bob Thornton. So I think both sides of this seem to have viewed this as a moment for a break. But clearly President Trump very,
very upset that more European allies aren't behind him on this.
[16:55:10]
QUEST: An interesting phrase, the special relationship. I think the special relationship has become a bad relationship. I'm quoting him there from the
movie just to show that.
Listen, on another point, on another point here, Kevin, how concerned are the White House that this whole issue of the legality and the War Powers
Act? I see John Thune basically saying, Senate majority leader, saying, listen, it's legal, go away. There's no problem here. But at the same time,
others are saying, no, it's not legal. Are the White House concerned or not?
LIPTAK: No, not in the least. And I think the reason for that is they know that no member of Congress actually wants to take a vote on a war powers
authorization. They haven't taken one in almost 20 years. This has been a fraught issue for the Congress ever since sort of the debacles in Iraq and
Afghanistan. And the White House is fully aware that most members of Congress, including most Republicans, would rather just have the
responsibilities for war back on the administration.
They don't want to take responsibility for this. So for all of the griping that you hear from members of Congress about how the administration went
about this, questioning whether it's legal to go to war, you know, the Constitution says that Congress has the authority to declare war.
QUEST: Right.
LIPTAK: But almost no member of Congress actually wants to assume that responsibility when it actually comes down to it. So I don't think the
White House is concerned whatsoever about these sort of remarks that you're hearing.
QUEST: I'm grateful to you, Kevin. The only thing missing from Starmer is that famous line where he says, I shall be much tougher with the president
and the president needs to be ready for it. Yes, you can tell that I have watched that movie more times than is honest or decent.
LIPTAK: Yes.
QUEST: Kevin Liptak at the White House.
We will take a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment."
My producer Ronan was just simply saying to me in my ear, anyone who tells you that we know how this is going to end in the markets is wrong. I told
him I thought he was wrong. The reality is, you have to make educated guesses based on what's likely to happen and at the moment what's likely to
happen is this short three, four, five-week, whatever, and it could not be -- it wouldn't be in the absence of an exogenous event.
But that's the problem. It's the exogenous event. It's the thing that you're not expecting. It's the thing that out of the blue. And can you
predict for that? Well, no, you can't. And because the risk of that is quite high, oh, maybe Ronan was right after all.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable. No,
Ronan cannot be right. I'll see you tomorrow.
END
