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Quest Means Business
Major Airstrikes Hit Iran's Capital Tehran; Food and Water Access in Gulf Region Under Threat; Bahrain's Oil Company Declares Force Majeure After Strike; Trump's Mixed Messages on Iran War Timeline. Iran Launches Most Intense Operation Since War Began; IEA Countries Agree to Historic Release of Reserves; Flight Disruptions, Traveler Confidence Strain Global Tourism. Aired 4:00p-5p ET
Aired March 11, 2026 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:14]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": The closing bell is about to be rung on Wall Street and there it is. Dong! Dong! Dong!
The markets as you can see have been down throughout the whole session. This is all despite, of course, supposedly things getting better according
to the president or at least it will all be over and yet, at the same time, we have the mining of the of the Strait of Hormuz, and we have worries
about further attacks and more and more of these people ringing and doing the gavel are trying to break the gavel. They are failing.
Those are the markets and these are the main events of the day. Iran's military is pledging to retaliate in kind for strikes on its tanks, ports
and docks.
A record release of oil reserves. It is failing to cull the rising price.
And under pressure, energy companies are turning to legal measures, force majeure, what it means in difficult times.
We are live today here in New York. It is Wednesday, March the 11th. I am Richard Quest and I mean business.
Good evening.
We begin tonight. Iran's Revolutionary Guard said it has launched its most intense day of attacks so far. Officials are warning in Tehran that they
still expand their list of targets.
And so you've got three ships being hit earlier in the Strait of Hormuz. Several sailors are reported missing. The Omani Navy has rescued 20 crew
members.
Iran's military says it will retaliate in kind for strikes on its tanks, ports and docks. Citibank and Citi and Standard Chartered are extending
work from home for employees in Dubai.
As for Israel, sources there are telling us the country is preparing for a potential significant expansion of attacks from Iran tonight.
Delighted tonight, Erin Burnett is with me. Good evening, Erin. Live in Tel Aviv. Thank you for taking the time. I know it has been busy days.
This is getting -- if there is an expansion of attacks into Israel and there are more attacks on ports and docks and ships, this is expanding and
getting worse.
ERIN BURNETT, CNN ANCHOR: You know, it is. And I will say, Richard, in terms of what I am seeing and hearing here, and you know, we arrived last
Sunday, it is -- it's palpable and I guess, just what I see, but also what people here are saying, they are describing it as almost like COVID, right?
Remote schooling, so many businesses shut down.
It is not an economy that appears or feels like it is functioning. Even when you do go out, you know when days when there are fewer strikes than
others, you might see slightly more people on the streets. Some cafes are open, but plenty are closed.
Shopkeepers might open up their stores, then, when there are sirens, they have to shut down. You know, if you go buy at a fruit stand, will they shut
the entire thing down and then they come out and reopen it?
So it is not an economy that is functioning. There is a clock ticking on how long it continues and when you look at Israel, for example, and a story
that came out last week about immigration that this country has been facing ever since October 7th, because of an ongoing state of constant war, that
is a reality and you can see it. It is palpable.
And I guess, I would say, Richard it does feel that there is a clock ticking on that.
QUEST: Now, is there a difference of perspective from the Israeli point of view. In the United States, often in Europe, Britain, people are saying
there was no need to do this. It was a war of choice.
The best you're going to do is degrade Iran's abilities to fight and live another day. But in Israel, the view is often, well, that's a price worth
paying because that takes the prospect of annihilation and extinction for Israel further away. They see it differently.
BURNETT: Yes, they do, and you put it better than I can, but I would describe it, Richard as a fervor. And by all means, there are people here
who have very strong opinions, many of whom have a deep frustration with the Prime Minister here, right, and his leadership.
But when it comes down to this, and I was here for several weeks after October 7th, I was here when there was a northern front and back here now,
right now what I just am feeling from people is support for this and fervor for this and there is no question about it.
I will say something else, Richard, and I know you talk to so many people in the Gulf where you have spent such extensive time talking to someone
there who I have dealt with for gosh, 20 years at this point, several people. One person was just describing it as, "In between alerts and
interceptions, it is maintaining as much normality as possible. Everything is open. We are trying to go on with our lives, but everyone is worried
about how long this will continue and how much further it will escalate."
[16:05:15]
Right? That there is a sense of fear and a holding pattern and you can see it in the oil prices. You can see it in Halliburton or KPR being struck by
Iranian attacks, but the real implications of what this means, obviously, are incredibly profound for the global economy and cities in a region that
has become, you know, a third leg on the stool if for lack of a better term, if you think about it, as the United States need for capital, the
Arab World's providing of that capital, along with China, that third leg of the stool right now is in question.
And just to think about what an incredible and remarkable moment that you and I are having such a conversation.
QUEST: I am grateful. That's why we wanted to talk to you tonight before you leave Israel. Thank you very much, Erin Burnett joining us from Tel
Aviv.
The story of the day, the record release of oil reserves and it failed to lower oil prices. U.S. crude actually rose five percent. Earlier, IEA
countries agreed to release 400 million barrels of oil into the global market, double the previous record that was released after Russia's
invasion of Ukraine.
According to the IEA head, Fatih Birol, it was clear, the move would not solve the problem in the long run.
(BEGIN VIDEO CLIP)
DR. FATIH BIROL, EXECUTIVE DIRECTOR OF THE INTERNATIONAL ENERGY AGENCY: This a major action aiming to alleviate the immediate impacts of the
disruption in markets.
But to be clear, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.
(END VIDEO CLIP)
QUEST: Anna Cooban is with me.
They took some time -- they took a few days longer to actually announce this than had originally been thought, but will -- the fact the market did
not react, was it expected to react bigger than or greater than it did?
ANNA COOBAN, CNN BUSINESS AND ECONOMICS REPORTER: Well, I think that was the hope, Richard. I mean, the fact that they are tapping into these
strategic reserves only the sixth time in its history that it has done this, would suggest that they had hoped that the market would respond in
some sort of positive way and this was the largest release in its history, larger than the first Gulf War, then the aftermath of Hurricane Katrina,
then the Libyan Civil War. And, of course, Russia's invasion of Ukraine four years ago.
It is almost double the amount they released at that point. But I want to emphasize, Richard that this is as much about the practicalities of getting
oil to the market as much as it is sort of soothing traders who have been incredibly nervous.
But the IAE cannot overplay its hand. It can't keep tapping into these reserves. It is something, which if you get to the bottom you have to stay
there, because to state the obvious, you can't replenish these stocks during a time of crisis.
QUEST: Okay, it is one shot wonder, we know that. Is there any timescale for how they are going to release this? I mean, the Strait of Hormuz, the
number I've seen -- don't hold me to it is about 20 million barrels or so.
So, if you start releasing just a certain amount to compensate, you haven't got that many days' worth of the Strategic Reserve. And they wouldn't do it
all in one go anyway. They dribble it out over several months, one imagines.
COOBAN: Yes. So what the IEA has said is that each country will tap into its reserves and release it at a time that suits their own domestic needs.
And we actually saw Japan come out earlier today ahead of the IEA announcement, to say that it would be tapping into its reserves, saying
that it was sort of exceptionally dependent on oil coming from the Middle East.
But about the sort of timescales that we have to play with this Richard, I was speaking to an analyst earlier that said that this oil, the 400 million
barrels that will only tie the global market over for another 20 days. So, if we are still in this situation with the Strait of Hormuz basically being
blocked off in 20 days, then the IEA is going to have to have yet another consideration about potentially tapping into its reserves, which, as we've
mentioned, is something that it really does not want to do because once you go there, you can't really go back.
QUEST: Finally, when we look at -- you and I were talking last night in London about inflation and the way this is likely to develop. The latest
numbers show that U.S. inflation, and we are going to talk about it in a second, pretty much steadily under control. The hardening of the oil price
calls all this into question.
COOBAN: Yes. So if the oil price stays high as it currently is, yes, it has come down in the past couple of days, but it is still much higher than it
was at the start of the year. If this stays high, this will feed into the economy, into the products that are made with oil, into the transportation
costs. The idea is then it will then be passed on to consumers.
And then the fear is, is that that will raise inflation more broadly, which is something that we've seen Central Banks grapple with over the past few
years, and then what Central Banks don't want to see, Richard, is this dreaded price wage spiral where prices rise and people demand higher wages.
[16:10:15]
This is something that Central Bankers are watching closely, but I think the real clincher here is the time that this takes, so if we keep having
high oil prices for a sustained period of time, we can then imagine it feeding through to the economy.
QUEST: Anna Cooban in London, thank you.
U.S. inflation, as I just alluded to, was steady before the conflict began. CPI rose 2.4 percent for the 12 months ending in February. That's coming
nicely down towards target. Even PCE, which is the Fed's preferred measure was 2.5. So target is not far off at two percent. And now, of course the
economy facing pressure from rising energy prices from the supply chain disruption.
The Fed and other Central Banks will take those into account in the weeks ahead. Gita is with me, Gita Gopinath, the former First Deputy Managing
Director of the IMF, now a Professor at Harvard.
This, Gita could -- first of all, wonderful to see you. Thank you for taking the time, but this is -- what we are now in is a scenario that is
nightmarish for monetary policy.
GITA GOPINATH, FORMER FIRST DEPUTY MANAGING DIRECTOR Of The INTERNATIONAL MONETARY FUND: Hi Richard. Indeed, this is a stagflationary shock for the
world economy and therefore it is a nightmarish scenario for monetary policy makers around the world.
So, if you look at where the price of oil has drifted in terms of what we might expect on average for this year, it was about $65.00 a barrel before
the war started, and now it has moved up to $75.00 a barrel on average for the year, right?
That's about 15 percent increase. That in and of itself adds about 50 basis points to global inflation, and it takes off up to 0.2 percentage points of
global growth just coming from the oil channel.
I mean, setting aside what comes, what happens -- what is happening with tourism, what is happening with financial market sentiment, setting all
that aside. So we certainly didn't need any more uncertainty in the world. This is just another huge dose of it.
QUEST: What would you do if you had to decide on this? You're going to end up with slowing down. You're going to end up with higher inflation. The Fed
has done a really good job of clarifying at any given point which side of the mandate is more important. If you were the Fed, where would your
priority be now?
GOPINATH: Well, I am of the view that even before the shock, it was a hard argument to make to cut rates any time soon especially not in the first
half of this year and I think that only strengthens that argument now. It would make a lot of sense to wait and to see, because inflation has come
down, but if you look at their favorite measure of PCE inflation, that's still elevated above their targets around 2.8 and 2.9 percent.
So at this moment, a wait and see is the right approach.
QUEST: Do you think you -- all Central Banks, do you think they can afford the luxury of looking through the oil shock price? And I am thinking about
tariffs. They did a really good job of saying look, we think it is a one- off. We don't think it is going to feed in and become systemic.
Do they enjoy that luxury with oil when we know it goes into so many aspects of production?
GOPINATH: That's a great point because you're right. The tariffs give us some comfort that the second round effects may not be big and we can see
through some of these price increases.
But when it comes to oil, yes, it does affect the economy and many other sectors. But I think more important, it is much more salient because people
see it at the pump immediately. They see in the U.S. their gas prices have gone up by around $0.50. That makes you start worrying about inflation and
therefore in terms of what you expect in terms of wage increases and so on.
I still don't think we are at that place where we are in a -- you know, in a spiral when it comes to inflation, but unlike other kinds of the tariffs,
which went along with gas prices coming down, we now have the additional problem that we have both tariffs and gas prices going up and that is a
reason why Central Banks should pause to see how these things develop.
QUEST: The world is not fair that much I think any of us who have looked at economics know, and the developing world is going to be really hit by this.
They are going to find obviously, rates are rising and particularly if you've got dollar denominated, the rates you may be paying on debt will be
higher.
[16:15:10]
You've got higher dollars, so you're paying back more. I mean, it is not -- there is going to -- do you foresee a developing country current classic
currency crisis?
GOPINATH: I don't foresee a currency crisis for the major economies because -- emerging market economies because I think that they have built up
policies and institutions to deal with it. But it is not -- but at this point what they are suffering from is a stronger dollar. They are seeing
capital inflows shrink. We are not seeing huge reversals, but we are seeing lesser capital flow going into these countries.
And, you know, they were having some good luck with capital flows last year. So, this is not great news for them. And lastly, the fiscal space is
increasingly diminished for countries around the world so while in the past you would want to rush toward price caps and send checks to your households
and so on, there isn't any space left for countries to deal with, and I am saying that about the developed enemies of the world, too, because what we
saw in the last round was that it is very hard for governments to do this on a temporary basis. Once you provide support measures, it lasts a very
long time, and they hit on the fiscal situation is quite large.
And lastly, we are in a world with very little aid in grant money, which is what low income countries will need at this point. They really can't take
any more loans.
QUEST: To end on a slightly more positive note, at least -- do policy makers at least seem to have a handle on it?
GOPINATH: I would say that firstly, I think nobody really knows how this is going to end in terms of policymakers as the Central Bankers and Finance
Ministers around the world. We saw this big announcement in terms of release of Strategic Reserves. But as we said, that's about 20 days' worth
of supply.
Ships have to start going through the Strait of Hormuz. If that doesn't happen in a week or in two weeks, I think we are now talking about much
more than $75.00 average for the year and with each $10.00 that you're going to add on that, the effect on growth around the world, of course, it
has -- different countries vary differently.
So I expect every policymaker is basically hoping that this is going to be short lived, and it will end in weeks not in months.
QUEST: I am grateful. Thank you, Gita, always good to see you. Let's talk more as this crisis continues. Thank you.
The Iran War is putting a massive strain on global tourism. The WTTC, the World Travel and Tourism Council says the sector is losing up to $600
million a day. The Chief Executive, there she is, Gloria Guevara, is in Madrid and she will be with me after the break. Good evening, Gloria, stay
exactly where you are. We will be with you in a minute or two.
(COMMERCIAL BREAK)
[16:20:35]
QUEST: The World Travel and Tourism Council says the Iran War is costing its industry at least $600 million a day in international visitor spending.
So the reasons, of course, low traveler confidence and the strains in demands and flight disruptions, the WTTC believes 14 percent of global
traffic transit through the Middle East, and the major regional airports are only partially open, if at all.
So with the hubs -- Dubai, Abu Dhabi, Doha, Bahrain normally processing more than 500,000 passengers a day and no sign of it getting back to normal
anytime soon, the WTTC's Chief Exec, of course is Gloria Guevara.
Gloria is with me now from Madrid. Good evening, Gloria, it is good to see you as always. Thank you.
These are the first real numbers that we have seen from organizations and they are extremely sobering because this is business and money that is not
coming back.
GLORIA GUEVARA, CHIEF EXECUTIVE, WORLD TRAVEL AND TOURISM COUNCIL: Unfortunately, yes, Richard, and thank you for having me.
As you know, and as we know, the Middle East has done a great job. Last year, they broke a new record. They have a little bit over $193 billion in
international spending. And this year, we were anticipating that they were going to pass $200 billion. If you compare their growth year-over-year, it
is significant. They have been doing a great job.
And as you say, the hubs in the Middle East are very important, although they represent five percent of the global international arrivals, they
manage or they handle one of every seven international travelers. So that's significant because they connect the global south, the South to the North,
the East to the West and this is just the impact that we are counting in the Middle East.
We are not counting the impact in the connectivity that we are seeing to connect the global south and as I say, the south to the north that's also
significant.
QUEST: So what can be done in this environment? Because you know, clearly people aren't going to travel unless they feel safe and no amount of good
advertising or promotion by the Gulf countries. And they have done a fair whack of it at the moment is going to change that. If the reality of
missiles is still there, what can be done?
GUEVARA: Well, a couple of things. First of all, they are doing a great job protecting the travelers, and that's very important, providing, for
instance, free hotel rooms, free meals, great communication because based on our research, 90 percent or 95 percent of the tourists, they come back
to these destinations depending on the experience.
So right now, there is nothing that we can do. We just have to wait. But it is very important how they manage the crisis. Second, we need to monitor
closely when this ends so that we can recover faster. Let's remember the travel and tourism is the most resilient sector. We have survived to every
single crisis and people will continue traveling. The question is how soon and how fast they will come back to the region, and how soon and how fast
they will be spending their holidays there.
QUEST: The chief executive of Hilton, Chris Nassetta, who you know well, of course, I am just going to read what he is saying. He has made some very
disturbing comments about the situation for the United States. He talks about long term decline of the U.S., losing half its market share over 30
years, diplomatic tensions, Canada, frequent -- all sorts of reasons.
For somebody like the CEO of Hilton to warn that the U.S. and now, of course with the Trump administration policies seemingly unfriendly to
tourism, or at least in some cases, this is really very, very grim news for the U.S. tourism.
Well, and Chris is absolutely right. According to our data, last year was the best year ever in travel and tourism. We are going to close with $11.7
trillion, 471 million jobs. Unfortunately, every single region has seen growth except North America and in the case of North America, there was
growth in Mexico, but there was no growth in Canada and the U.S., and the U.S. is the one that is declining.
[16:20:01]
If we continue with that forecast, and I am talking about international travelers, because domestic was about the same, but if we continue with
that travel, with that trend, travel and tourism in the case of the U.S., currently they are the biggest in the world.
In four or five years, the biggest is going to be China as an example and why is that? Because of their growth. So he is absolutely right. The U.S.
has been declining. And in the last couple of years in international arrivals, international spend, and it seems that it is going to continue
declining if they don't change their policies.
QUEST: Finally, the World Cup, you've got the multiple countries involved in it. Arguably the U.S., this is an opportunity for the U.S. to put a
friendly face to the world to invite people, but from what you've just said, it doesn't sound hopeful.
GUEVARA: Well, it is a great opportunity to make the case that people are welcome to the U.S., to have a great experience. I was in the U.S. for
instance, a couple of months ago and I went through Global Entry. I truly believe that's the best in the world in terms of biometrics and I am sure
that you experience that every time that you come back to the U.S. You are in and out of the airport in two minutes, three minutes in Immigration.
So the U.S. has a very unique opportunity, similar with Canada and Mexico, to welcome all of these travelers from around the world, the travelers that
they already purchased their tickets to go to these different matches that they don't want to miss and they should feel welcome.
We have an opportunity to make these people later, ambassadors so that they can come back and talk to other prospects and travelers to, so that they
invite them back to the U.S., so it is a very unique opportunity. They should maximize that and have a plan. And of course, take advantage of all
these fans that they will go regardless. And they have already acquired their tickets.
I think that, plus the 250 celebration, plus a couple of other things, they are going to help the U.S. to recover, but let's hope that they maximize
the opportunity.
QUEST: Gloria, always good to see you. Thank you for taking time. Joining us tonight from Madrid.
GUEVARA: Yes.
QUEST: Your new headquarters in Madrid.
GUEVARA: Thank you.
QUEST: The war is threatening the Gulf's regions supply of both food and water. The closure of the Strait of Hormuz is one of the reasons. We will
discuss it in a moment.
(COMMERCIAL BREAK)
[16:30:26]
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Hello, I'm Richard Quest. We have a lot more QUEST MEANS BUSINESS.
In the Middle East a commodity even more vital than oil or gas, now a target, fresh water. And Bahrain's National Oil Company has used the words
force majeure. What implications are there when those words are used. After the headlines and only after the headlines, because this is CNN and on this
network, the news comes first.
Iran says it has attacked two ships in the Strait of Hormuz. Tehran claims it fired on this Thai flagged carrier after the vessel disregarded warnings
and tried to pass through. Iranian state media says a Liberian flagged ship was also struck. The U.S. Central Command is warning civilians to stay away
from the ports near the strait.
More than 30 countries have agreed to tap their oil reserves in an effort to bring down prices. The International Energy Agency, the IEA, says
members will release 400 million barrels. It's the largest such release. Nearly a fifth of the world's supply has been impacted by the war. The last
coordinated release took place in 2022 after Russia invaded Ukraine.
Jeffrey Epstein's former accountant has been testifying on Capitol Hill, where lawmakers have been asking to know how the late sex offender made his
fortune, how he spent it, and whether it was used for illegal purposes. A congressional aide said Epstein was associated with at least 64 trusts and
entities and moved large sums of money to his various associates.
Iran says it launched its most intense and heaviest operation since the start of the war today. Iran's Revolutionary Guard claims it used advanced
long range missiles to target Israel and U.S. military assets in the region. The speaker of Iran's parliament said the attack proves the U.S.
and Israel have failed to take out the country's missile capabilities.
Inside Iran our team on the ground had a close call as Tehran came under aerial bombardment on Tuesday.
(BEGIN VIDEO CLIP)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: OK. We're hearing jets overhead. There's anti-aircraft fire going on. We're told we
got to get out of here as fast as possible.
(END VIDEO CLIP)
QUEST: Now, overnight, Tehran was hammered with fresh waves of strikes.
Fred Pleitgen, he reports from northern Iran, and we should warn you that or should note that CNN, we operate in Iran with the permission of the
Iranian government, as required under local regulations. However, we maintain full editorial control over what we report.
(BEGIN VIDEOTAPE)
PLEITGEN: The U.S. and Israel's massive aerial campaign seems to be continuing in full swing. Overnight in the position that we were, we heard
jets streaking overhead and then massive explosions in the distance. It's unclear what exactly the target was of that aerial raid that we witnessed,
but certainly it wasn't the only one in the past 24 hours.
In Tehran, the Iranian capital, there were major airstrikes also overnight and into the morning hours. Some of the targets appeared to have been in
the east of the city, in east Tehran. That's the area that's gotten hit quite a lot over the past couple of days. But then also once again the area
around Mehrabad Airport, that's sort of the second airport of the Iranian capital, that is very much within the city limits.
Also outside of Tehran, there's a satellite town called Karaj which has been hit in the past couple of days quite frequently, and apparently was
now hit once again. All this comes as the Iranian government is trying to project that it is in a strong position in its standoff with the U.S. and
Israel.
The Islamic Revolutionary Guard Corps, which is, of course, the elite wing of Iran's military, sent out a text message to people here inside Iran
detailing the costs to the United States of the ongoing war with Iran. The Iranians trying to say that they are the ones who are now in the driver's
seat.
Meanwhile, politicians here in Iran continue to say that right now the Iranians are not interested in negotiations with the United States and
instead are gearing up for what could be a very long war.
Fred Pleitgen, CNN, in northern Iran.
(END VIDEOTAPE)
QUEST: Now, the war is threatening the supply of fresh water in the region. At least one desalination plant has been targeted by Iranian strikes. The
Arab region is dependent on these plants for clean water, excuse me.
[16:35:03]
Kuwait and Oman use desalination for virtually all the drinking water. Bahrain and Saudi use plants for at least two-thirds. Food supply in the
region is also threatened. The strait is closed. Gulf states import around 90 percent of their food supply, and most of those imports go through
Hormuz.
Kaveh Madani is director of the United Nations University Institute for Water, Environment and Health, with me from Toronto.
Sir, I'm grateful. On this question of water, it sort of sounds so obvious that if you have a war in this region, one protagonist is going to attack
your weakest point, which could be the desalination plants.
KAVEH MADANI, DIRECTOR, U.N. UNIVERSITY INSTITUTE OF WATER, ENVIRONMENT AND HEALTH: It is true. So that's one of the biggest vulnerabilities in the
region. All the affected countries are using desalination substantially with the exception of Iran, which uses only desalination in its coastal
areas, and so it was the first country that reported an attack to a desalination plant. And then, you know, we saw the incident in Bahrain at
the reported incident. But I'm not convinced that the countries are -- have yet decided to take that level of madness.
QUEST: When they attack the desalination plants, there's, you know, once they are out of operation, those plants, the repercussions are felt pretty
quickly. I mean, it's not realistic to -- you can't even if you wanted to ship the water in and therefore the pain point of hitting the water supply
is disproportionately hard.
MADANI: It is, although you got -- we got to be careful about what we claim because countries don't have only one desalination plant. So if one is
attacked, one is out of business, there are others plus not all of them are being used for drinking water, which is the most essential demand. So it
totally depends on which one gets attacked, how it gets attacked, what the level of damage is, and how long they would be out of business.
So I think it is important. But also note that the desalination plants require a lot of energy so you don't have to attack the desalination plant.
You can attack the adjacent power plant and take them out. So I think there is some signaling game going on. The countries are showing teeth to each
other that they can target these infrastructure. Yet fortunately, knock on wood, that has not happened.
QUEST: On the food question, at one point there's a -- at one point of course you can get food in by driving it long way rounds and if you really
needed to, there are ways to get food supplies, certainly to the Gulf countries, less so maybe to Iran. That's more difficult as their own food
supply becomes under threat. But it's going to push up prices globally. The whole, the whole supply chain of food becomes much more difficult.
MADANI: Yes. I mean, so the impact globally would be through fertilizers and other sources. This region is not a big exporter of food to the rest of
the world. But we know transportation has been impacted. The energy sector is being impacted. The transport of fertilizers is being impacted. But
these countries also import food. Iran had the policy of self-sufficiency and was concerned about food security to an extent.
I don't know how much food reserves they have or what sort of food supplies they have and how long they last but we have seen in the region that
countries have suffered when their food imports got impacted. This was -- there was a case of Qatar a few years ago when they went on their embargoed
by the other Arab nations. We had seen what happened to Saddam Hussein and the wheat for oil trades and all of those things.
Of course the bigger countries have more lands and more agriculture and better portfolios when it comes to water and food. The smaller countries
are more vulnerable in that -- when it comes to these threats.
QUEST: I'm grateful, sir. Thank you for joining us tonight. Thank you.
We've been discussing the pressure that the war is putting on global oil and gas markets. So now this new word, well, not new, but being around for
donkeys' years. Force majeure, when it's used in a contract and when one party or the other declares force majeure, what does that mean and what are
the implications after the break.
(COMMERCIAL BREAK)
[16:42:28]
QUEST: The word is force majeure, superior or irresistible force. An event or effect that cannot be reasonably anticipated or controlled. Of course
it's a legal clause reserved for the most extreme events.
Bahrain's National Oil Company told clients this week it will be unable to honor its contracts, and Bapco took the extraordinary step of declaring
force majeure after an attack on its refinery complex. Its notice cited the ongoing Middle East conflict and gave no timeline on resumption of
operations. Other companies, energy and others, shipping and the like, may need to follow suit. The conflict has disrupted so much of supply.
Essam Al Tamimi is the chair of Al Tamimi and Company, one of the Middle East's top corporate law firms, with me now.
Sir, it is good to see you. I'm grateful. The phrase force majeure in contracts it also comes up with war. It's always there. It's always sort of
buried somewhere near paragraph 496 or whatever. But no one ever expects it to be used. What's the effect when it is?
ESSAM AL TAMIMI, CHAIRMAN, AL TAMIMI AND COMPANY: Force majeure. It's started as a civil law. Came from the French principle. It's basically when
the contracts become impossible to perform. And it's also, again, it's a risk that unforeseen. And then they're at risk become beyond the control of
one of the party, they can rely on the force majeure and force majeure clauses are available on most of the civil law countries. So it's embodied
in the codified law.
In the common law countries and the countries that follow up the common law system, it's probably more of a contractual relationship, whereas in
Bahrain, UAE, the rest of the Middle East, is one class that's embodied in the law. And you cannot contract outside of it so you cannot even waive it.
QUEST: No, but -- OK. But when it happens, once force majeure is declared, and I hear what you say that in the Gulf countries, it is -- it's one of,
it's integral to the system, jurisprudential system. Once it's declared, does that essentially let one party off the hook from having to perform
contractual rights, i.e. deliver oil or supply or whatever?
[16:45:07]
AL TAMIMI: Yes. The rights under the force majeure, which makes the contract impossible, and then one of the contractor party, if they rely on
the force majeure, they don't have to perform that contract. And the law says the party comes back to their original position prior to contracting.
There is the condition as you outlined in your introduction that this has to be something not foreseen at the time of contract. So there's a two
difference of Bahrain, for example, made a contract today, they cannot rely on the force majeure today because the risk is foreseen. It has to be
something that's foreseen and makes the performing of the contracts impossible to perform and once a party rely on that clause, they can get
out of their contracts and they don't have to deliver.
QUEST: OK. So if we take the situation now, I think nobody would dispute the fact that there is a war and war does tend to have its own contractual
terms and force majeure, would you expect much litigation as a result of this war?
AL TAMIMI: Yes. Because one of the things that force majeure and breach of contracts or non-delivery, it has a knocking effect on other suppliers and
other contractors. And as a result of cancellation of one contracts, relying on a force majeure, which makes the contract impossible and the
goods or the services are not provided, that's basically will affect the chain under them and the supply chain.
And as a result of it, there are, to answer your question, yes, I expect a lot of reliance on force majeure clause because of the conditions. And it's
probably going to bring in a lot of litigation because their losses is going to be not just in one party, but also the supply chain under those
parties.
QUEST: All in all, particularly I'm thinking now of the UAE where -- which has become a freeport, there is the Jabal Ali and Abu Dhabi has got
similar. You've got in some cases multiple jurisdictions, often contracts being under the English common law, some will be under European. There
could be all sorts of jurisdictional issues. And it's going to be very difficult to untangle this web of legal problems.
AL TAMIMI: It is a tangle, but as you rightly said, there are some contracts may be governed under the English law, which is a common law. And
the threshold under the English law of a force majeure is a higher requirement. It's construed more stricter, and as you also rightly says, we
have a two common law jurisdiction in the UAE, the DIFC and the AGGM, where a lot of the litigation basically is not covered by the -- governed by the
civil law.
It's governed by the common law, and again, we're probably going to see some of these cases being litigated under the common law on those two
jurisdictions in the future.
QUEST: I can see the legal bills going through the roof. Thank you, sir. I'm grateful that you've joined us tonight. And as I always say, send the
bill to the usual place. Thank you, sir.
Now, as QUEST MEANS BUSINESS continues, President Trump is again suggesting the war with Iran is almost over. He's sent what seems to be mixed
messages. How mixed? In a moment.
(COMMERCIAL BREAK)
[16:51:20]
QUEST: Right. These are live pictures there coming to us from Kentucky. Hebron in Kentucky, actually. Donald Trump is speaking at an event there.
We're going to -- we're monitoring what he's saying. Of course, a lot of these speeches that he gives, frankly, we hear the same things again and
again and again, but we are monitoring very closely in case there's some new news that he is saying and then we'll bring that immediately to you.
The president told Axios the war in Iran will be soon over because, as his words, there's practically nothing left to target. Arguably, that's just
spinning for domestic consumption because the president initially suggested the operation would take several weeks and markets rejoiced on Monday when
he seemed to suggest a shorter timeline. These mixed messages, ever since.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We took a little excursion because we felt we had to do that to get rid of some evil, and I think
you'll see it's going to be a short term excursion.
And we'll not relent until the enemy is totally and decisively defeated.
UNIDENTIFIED REPORTER: On Iran you called it an excursion. You said it would be over soon. Are you thinking this week it will be over? Are you
taking about days?
TRUMP: No, I think soon. I think soon.
UNIDENTIFIED REPORTER: OK, and with respect --
TRUMP: Very soon. We could call it a tremendous success right now. As we leave here, I could call it, or we could go further.
We have hit them harder than virtually any country in history has been hit, and we're not finished yet.
(END VIDEO CLIP)
QUEST: The White House emphasizes the war will be over when the president says so.
David Chalian is in Washington.
David, there's two things going on here. The first is this phrase, TACO, Trump always chickens out, as they say, where some are saying he's easing
off. He doesn't want to face the difficulty now. But the other thing is, he is trying to write history before history is finished. He's trying to set
an agenda. If I say this is a success, it will be a success.
DAVID CHALIAN, CNN POLITICAL DIRECTOR: You may recall George W. Bush standing on an aircraft carrier with a banner behind him that said, mission
accomplished, there's a warning there about trying to write history, as you note, Richard, before it is written.
And President Trump is keenly aware of that. I think that's why you see so much of this mixed messaging, because I think it's deliberately trying to
provide options for him or provide optionality to him at any given moment. If you say soon, you could sort of define soon any which way you want. And
certainly, according to what you just played there, doesn't mean this week.
I think there are two critical things to watch here for Trump's thinking. You mentioned the taco thing. This is different than just, you know,
unilaterally sort of putting tariffs on or not but I do think we have now seen sort of a proven track record of how markets inform Donald Trump's
thinking and actions. And just listening to him before this event in Kentucky, he was in Ohio across the river today speaking, he clearly is
laser focused on the markets, on the oil issue we were discussing and prices.
And of course, he's portraying them in the best possible light from his perspective. But you can tell that that is going to determine an outcome
here for him.
QUEST: David, this was entirely foreseeable. I mean, I've been covering -- you don't need to have had 30 years of business experience to know that if
you start a war with Iran around the Strait of Hormuz, oil prices will go through the roof.
CHALIAN: Right.
QUEST: And it seems like it's the administration is, as if it's a surprise.
[16:55:00]
CHALIAN: I don't know if it's a surprise. In fact the president said today, Richard, they anticipated an increase, of course, again doing Trump what he
does, he said of course it didn't even go up as much as we anticipated, because he's always trying to shape the narrative there. I think they
anticipated it. Some have called it a blip. It will be momentary.
What I don't think they anticipated or have a sense of is the gyrations in the market, just how long that is going to last. Even if he somehow decides
to, you know, turn a switch and say, we're done with this, let's call it a success, we know this is still going to have ramifications for quite some
time.
QUEST: And this idea, I mean, even if he decides to back off, does Israel? Does Iran? I mean, that's the problem here. You know, he can say it's all
over bar the shouting. But Iran just keeps lobbing more, God forbid, at more ships. And I just wonder who's the hostage here?
CHALIAN: It's a good question. I mean, I think, though, what we'll learn in the answer to your question is, as you said, the enemy has a vote in this.
Other actors like Israel has a vote in this, our allies. But if Donald Trump chooses to sort of end America's involvement and try and declare this
a success and pivot back towards the American economy and domestic political affairs, we'll learn about how much he sees that he has a
responsibility to try and deal with whatever knock-on effects are happening in the region, or if he truly, really turns his back on that. You know, we
don't have the answer to that yet.
QUEST: David, good to see you, sir. Grateful. Thank you.
CHALIAN: You too.
QUEST: We'll talk more. "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." We should not be surprised when the WTC tells us that the war is costing around $600 million a day in lost
tourism. After all those places involved, the UAE, Saudi, Israel, Qatar, Bahrain, these are major destinations in their own right. And there are of
course the vast transit hubs for Emirates, Etihad and Qatar Airways amongst others.
But how to get over this and move forward? Because at the same time, even when this is over, there's a certain truth that now has become clear, which
is the threat and the reality which we've always known about. And the UAE has done a very good job of convincing others that it didn't really exist
and has now come into sharp focus.
How do you respond and react? That's going to be the big test. You can only tell people things are safe for so long when the evidence has to prove it
to them. And that's true of tourism absolutely. But, but, on the good news, tourism is the most resilient industry in the world. And yes, it will
bounce back. I put money on it.
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's profitable. Good
night.
END
