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Quest Means Business

BP to Pay Record Fine; European Markets Down; Eurozone Back in Recession; Leadership Changes in BP After Deepwater Horizon Spill; Dow Falls; US Attorney General on BP Fine; BP Spill by the Numbers; Pound, Euro Strengthen; China's New Leader; China in Transition

Aired November 15, 2012 - 14:00   ET

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

NINA DOS SANTOS, HOST: BP's $4 billion settlement, the biggest criminal penalty in US history.

Back in recession. The eurozone's weakest economies drag down the strongest.

And Warren Buffet tells CNN that Europe will solve its problems one way or another.

(BEGIN VIDEO CLIP)

WARREN BUFFET, CEO, BERKSHIRE HATHAWAY: They either get closer together or they get further apart. The present system is unstable.

(END VIDEO CLIP)

DOS SANTOS: Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.

Good evening. It's an unprecedented penalty for an unprecedented environmental catastrophe. The oil giant BP has agreed to pay the biggest criminal fine in US history, $4 billion is the total here, to settle criminal claims arising from the Deepwater Horizon disaster.

Now, let's remind you that that rig exploded back in April 2010, killing 11 people, and leaking millions of liters of oil into the Gulf of Mexico.

Now, BP has also going to be paying another half a billion dollars to the US financial watchdog the SEC. Here's Matthew Chance with this report.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It was the biggest accidental oil spill the world's ever seen. More than 4 million barrels of crude spewing into the Gulf of Mexico after a devastating explosion on the Deepwater Horizon drilling rig, which killed 11 workers.

Now, BP has admitted liability and agreed to pay the highest criminal penalty in American corporate history.

CHANCE (on camera): Well, this is the deal BP has done with the US federal authorities. As well as admitting criminal responsibility, the company has agreed to pay $4 billion to settle all criminal claims, a fine more than three times higher than the previous record payment made by the drug company Pfizer in 2009. It's also agreed to pay another $525 million to resolve the civil charges brought by the SEC, the Securities and Exchange Commission.

But in return, look what it gets. BP says it will face no further criminal prosecution in US courts, a huge relief to the oil giant, and one which removes a key uncertainty over how much this oil spill will cost.

CHANCE (voice-over): But BP's liabilities are likely to go much further. Back in 2010, video cameras were set up on the seabed to broadcast live images of the oil gusher as the company struggled for 87 days to bring it under control. Analysts say tens of billions of dollars may still have to be paid out by BP in civil and private lawsuits not covered by this deal, but perhaps affected by it.

DANIEL O'SULLIVAN, ENERGY INTELLIGENCE: If admitting criminal liability in the US and paying what seems to be quite a large settlement for this both helps with eventual settlement of the civil liabilities against them, which could dwarf this -- it won't dwarf, relatively exceed the sum by quite a long way -- and also guarantees their continued tenure in the Gulf of Mexico. Probably good business, people are going to say at the end of the day.

CHANCE: And at the end of the day, analysts say the Gulf of Mexico remains a key region for the oil giant, forced into a humiliating acceptance of responsibility, but at least a step closer to putting this tragedy behind it.

Matthew Chance, CNN, London.

(END VIDEOTAPE)

DOS SANTOS: The US Attorney General Eric Holder will be speaking shortly. We'll of course bring you an update on what he has to say later on in the program, plus we'll be live from the Florida Gulf Coast with Ed Lavandera for the latest on what people make there of the settlement that BP has reached.

While shares in BP slipped after the news of that Deepwater Horizon settlement, the broader London market also ended the day on a pretty downbeat note, as you can see there. The FTSE 100 closing the day down three quarters of one percent. Remember that BP is one of the heaviest stocks on that indices -- on that particular market.

Now, for the rest of Europe, it was a similar picture. The DAX also ended the day down by the best part of around about one percent for its part, and the CAC 40 also ending the day in the red.

Now, unfazed and unfussed. The state of Omaha takes a long view of the crisis in Europe. Our exclusive interviewer with the founder of Berkshire Hathaway is just after this. Stay with us on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

DOS SANTOS: The recession has officially returned to this area, the eurozone. As European leaders plow on with their austerity, the GDP numbers coming from the last quarter show an entire continent here basically struggling to grow.

Let's have a look at the EU as a whole. What we saw was nine countries, including the likes of France and also Germany experiencing growth. These are the countries here marked in green. It was very modest growth, though, for some of these countries.

Take for instance France. That grew only two tenths of one percent, but even that was a surprise on the upside. We also saw Germany coming in with growth equaling the same amount that I must point out that that reading, up two tenths of one percent, was down on the last quarter.

Now, overall, what we saw was nine countries experiencing negative growth. These are the ones here in the red. And that doesn't even include this country, here, Belgium, which had no growth at all. And countries like Greece also weren't included in this report. We know that Greece has been experiencing its sixth year of recession.

Things are looking especially worrying in places like the Netherlands. Take a look at this figure. Its economy shrunk by 1.1 percent. That was the steepest of any European country, and it was also much, much more than people were expecting.

What I wanted to show you is that this means that the eurozone as a whole -- these are these 17 countries among the 27 in the EU -- the eurozone as a whole is now experiencing what's called a double-dip recession. That means it's back into the negative figures.

Collectively, if you can see the other countries that are part of the whole EU, the EU did expand, but only by one tenth of one percent.

Now, let's just remind you that we're awaiting that press conference on BP officially announcing a record fine against that British company to settle criminal claims over the oil spill in the Gulf of Mexico. This is an unprecedented penalty, as we've been telling you before, for an unprecedented environmental catastrophe.

The oil giant has agreed to pay the biggest criminal fine in US history. Let's remind you that that's a total of $4 billion. And why is it paying that money? Well, to settle criminal claims arising from the Deepwater Horizon disaster.

That rig exploded, you may remember, back in 2010, and it killed a total of 11 people. It also leaked millions of liters of oil into the Gulf of Mexico. BP is paying another half a billion dollars to the US financial watchdog, the SEC.

As you can see, we're going to be showing you live pictures of the scene there. What we're going to be hearing for in a minute is Eric Holder. He is the US Attorney General. He's going to be speaking on this very contentious issue, an issue that has basically dogged BP's share price for the best part of the last two years.

Also, strange relations with the British -- what used to be British Petroleum and the United States government. You'll remember that it caused a change at the helm of BP all those years ago. Tony Haywood, who'd only been in the job for a couple of years, is the CEO of BP taking over from Lord Brown, while he was subsequently replaced by an American. Bob Dudley is at the helm of that company.

So, in a moment, we're going to be hearing from Eric Holder, the US Attorney General speaking, and we're also going to be bringing you throughout the course of QUEST MEANS BUSINESS later on in the hour Ed Lavandera, who's standing by at the coast in Florida on the Gulf Coast to bring us the reaction from local people there to find out what this means for them now that BP has settled but won't be facing criminal claims.

Let's have a look at how the big board is faring at the moment in the United States. As you can see there, the Dow Jones Industrial average experiencing a second day of negative growth, as you can see -- or negative performance, I should say.

Down about two tenths of one percent or about 30 -- 26 points, as you can see on the Dow, at a level of 12,400 -- 12,543. I can just about see it from the screen way over there at the other end of the studio. One of the reasons why the Dow is down is also because of the anemic growth we've seen in the US.

And let's take this from Eric Holden, the US Attorney General talking about the BP settlement.

ERIC HOLDER, US ATTORNEY GENERAL: -- the Assistant Attorney General for the Criminal Division of the Justice Department, Lanny Breuer; Director Robert Khuzami of the Securities and Exchange Commissions Division of Enforcement; John Buretta, head of the Deepwater Horizon Task Force.

And many of the task force's members in announcing, really the latest step forward in our ongoing efforts to achieve justice for those whose lives and whose livelihoods were impacted by the largest environmental disaster in the history of the United States, and to hold accountable -- to hold accountable -- those who bore responsibility for this tragedy.

Today in the United States District Court here in the Eastern District of Louisiana in New Orleans, the Department filed a 14-count information charging BP with 11 counts of felony manslaughter, one count of felony obstruction of justice, and violations of the Clean Water and Migratory Bird Treaty Acts in connection with the Deepwater Horizon oil spill that began in April of 2010.

BP has agreed to plead guilty to all 14 criminal charges, including responsibility for the deaths of 11 people and the events that led to an unprecedented environmental catastrophe. The company has also agreed to pay $4 billion in fines and in penalties.

This marks both the largest single criminal fine, more than $1.25 billion, and the largest total criminal resolution, $4 billion, in the history of the United States.

It stands as testament to the hard work of countless investigators, attorneys, support staff members, and other persons from the Deepwater Horizon Task Force, and a range of federal, state, and local agencies who have worked tirelessly to advance a complex and wide-ranging investigation that began even before the oil well was capped.

And it constitutes a major environmental -- toward achievement of fulfilling of a promise that I made here in New Orleans, along with my colleagues, nearly two years ago, to engage with our partners and with our counterparts to determine the cause of the disaster, to respond to its consequences, to seek justice on behalf of the victims, and to enable Gulf residents to continue to recover and to rebuild.

To this end, under the terms of of the agreement that we announce today, about $2.4 billion of the criminal recovery funds will be dedicated to environmental restoration, preservation, and conservation efforts throughout this region, including barrier island creation and river diversion projects right here in Louisiana.

An additional $350 million will aid in the development of state-of- the-art oil spill prevention and response technologies, education, research, and training.

And more than $1 billion will go to the United States Coast Guard's oil spill liability trust fund to be available for cleanup and compensation for those affected by oil spills in the Gulf and throughout the United States.

Now, as part of its guilty plea, BP will retain a monitor for four years who will oversee safety, risk management, and equipment maintenance in relation to deepwater drilling in the Gulf, as well as an independent auditor, who will conduct annual reviews to ensure compliance with the terms of this agreement.

The company will also hire an ethics monitor to improve its conduct and to foster robust cooperation with the government.

There can be no question that this historic announcement represents a critical step forward and really underscores the Justice Department's determination to stand with Gulf Coast communities.

In February, the same commitment led the Department to reach a partial settlement totaling $90 million with MOEX Offshore related to the company's Clean Water Act liability for the Deepwater Horizon disaster, and approximately $45 million of this total will go directly, again, to the Gulf in the form of penalties for expedited environmental projects.

But our work is far from over. The trips that my colleagues an that I have made to the Gulf Coast since the Deepwater Horizon spill, we have seen the damage to lives and businesses, as well as to coastal areas and wetlands that this tragedy has inflicted.

We understand the tremendous costs, both economic and environmental, that have been associated with this disaster, and we've been inspired by the resilience displayed by each and every Gulf Coast resident who has been affected.

And that's why I want to be really absolutely clear that today's resolution does not -- does not-- mark the end of hour efforts. And in fact, our criminal investigation remains ongoing, and we will continue to follow all credible leads and to assume any charges that are warranted.

In addition to the charges filed against BP, a federal Grand Jury also has returned an indictment charging the two highest-ranking BP supervisors, who were onboard the Deepwater Horizon on the da of the explosion with 23 criminal counts, including 11 counts of seaman's manslaughter, 11 counts of involuntary manslaughter, and alleged violations of the Clean Water Act.

The Grand Jury has also charged a former BP executive, who served as a deputy incident commander and BP's second-highest ranking representative at unified command during the spill response, has charged him with hiding information from Congress and allegedly lying to law enforcement officials.

These and other matters remain open, including a separate civil action that's pending in federal court here in New Orleans. We are looking forward to the trial, which is scheduled to begin in February of next year, in which we intend to prove that BP was grossly negligent in causing the oil spill.

In that lawsuit, we are seeking civil penalties and a judgment that BP and others are liable for removal costs and natural resource damages, exposure that could amount to billions of dollars.

Though we have been unable to resolve the civil case, we remain as determined as ever to hold those responsible accountable. In addition to my colleagues -- and I, we are firmly committed to combating oil spill fraud by investigating and by prosecuting those who attempt to reap criminal profits at a terrible tragedy.

Now, once again, I want to thank each of the task force members, the Justice Department leaders, local officials, and critical agency partners and Gulf Coast residents who have contributed to this work and who have made today's historic announcement possible.

Now, I'd like to turn things over to another key leader, the Assistant Attorney General for the Criminal Division, Lanny Breuer, who will provide additional details about today's action. Lanny?

DOS SANTOS: You've been listening to a news conference there held by Eric Holder, who's the US Attorney General, addressing this significant settlement worth about $4 billion made by BP to settle claims, criminal issues, relating to that Deepwater Horizon disaster in the Gulf of Mexico back in 2010.

Let me run you through exactly what the Attorney General Eric Holder had to say. He said that BP had pleaded guilty to 14 criminal charges, and these include a dozen felony charges stemming from, of course, that Deepwater Horizon spill in the Gulf of Mexico.

As a result of that settlement which, as I was saying before, is the biggest criminal settlement so far in US history, BP will be subject to a number of conditions. BP will be getting a monitor for four years, he said, as part of the settlement, and it will be subject to auditors, reviews into its deepwater drilling activities.

Two BP employees will be charged with involuntary manslaughter, and another BP executive will be charged with lying to Congress.

Let's take a look back at exactly -- exactly what happened back in 2010 and this spill by the numbers. The government estimates that almost 5 million barrels of oil leaked into the Gulf. That adds up to about 636 million liters of oil.

It took a total of 85 days before this well was finally capped, 25 countries and international organizations contributed to the cleanup efforts there. The latest fine comes on top of that $20 billion that the company's already agreed to pay into a trust fund to meet damages and claims from that spill.

And earlier, throughout his news conference, Eric Holder was exactly laying out how some of that trust money will be spent. About $2.4 billion, he said, will be going to criminal recovery -- these criminal recovery funds will be going to environmental projects around the Gulf.

$350 million will also be used for environmental aspects of drilling and deepwater drilling to make sure that it's safer in the region. $1 billion will be going to the US Coast Guard's trust fund to be made available to people who make their livelihoods from fishing and also the Gulf Coast.

Let's take a look at currencies, now, because the pound and the euro are strengthening against the US dollar today. On the other hand, what we're seeing is the yen slumping heavily.

(COMMERCIAL BREAK)

DOS SANTOS: Let's head now to China, its once-in-a-decade leadership transition, and what a political theater it was.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: -- to welcome the Standing Committee members.

(APPLAUSE)

(END VIDEO CLIP)

DOS SANTOS: In the Great Hall of the People, an elite group of seven men, all named to the Politburo Standing Committee, strode onto the stage there. They were led, as expected, by Xi Jinping, the new head of the Communist Party and the military. He's expected to add president to his titles early next year.

Well, Xi warned of the, quote, "many severe challenges that the party faces," including corruption and also bureaucracy. He also spoke about his dream for China. Christopher Johnson, who worked at the CIA as its senior China analyst joins us now live from Washington today. Good to have you on the show.

First of all, this wasn't as pro-reform as many people in the West would have expected. I presume that's your take on it as well?

CHRISTOPHER JOHNSON, FORMER SENIOR CHINA ANALYST, CIA: Yes, I think that's right. There were several much more serious reform-oriented candidates who were in competition for the top leadership slots and they did not make the list. So, the orientation of the group that we've wound up with is definitely not as pro-reform as it might have been.

DOS SANTOS: What's that going to mean for relationships with the United States, then? Because obviously we've got a US president now just taking the first baby steps into his second term in office, and his point of view is very much skewed towards relations with China.

JOHNSON: Yes, I think that's right. I don't think that -- while these folks are less reform than some of the other people who were in contention, we're not dealing with a group of hardliners here. These folks are very pragmatic people. They've worked, many of them, with the United States in the past in the provincial experiences that they had working with US business and so on.

So, there's no sense that any of them are necessarily hardliners on the United States. And in fact, while those more reform-oriented candidates might have been more in favor of bolder reforms, there might also have been a more contentious grouping in the Standing Committee than what we see.

The grouping that we wound up with, it looks like it's going to get along fairly well. And that might actually allow Xi Jinping more room to develop a good, solid working relationship with the United States.

DOS SANTOS: Obviously, it'll take us some time to get to know these key characters here, but what kind of tenor do you think we'll see from Xi Jinping and the other people in the Politburo? Will it also cause the renmenbi to eventually weaken, like the United States would like?

JOHNSON: Well, this is going to be a key task. I think it's fair to say that the renmenbi actually has been appreciating against the dollar for some time now. This will continue to be a perennial issue, especially in the bilateral trade relationship.

So far, I think Xi Jinping has not shown any clear signals about what he might do there. I do think we're seeing some signs that, just like with President Obama, Xi Jinping is an economic nationalist.

So, some of these issues about the economic frictions, I expect those to continue. Probably we'll see competing WTO cases and things of that nature. So, these trade issues are going to be perennial in the relationship going forward.

DOS SANTOS: OK, Christopher Johnson, thanks so much for joining us from Washington this evening. Up next, we'll be live in Florida after the break.

(COMMERCIAL BREAK)

DOS SANTOS: Hello and welcome back, I'm Nina dos Santos. These are the main news headlines here on CNN.

The skies over Gaza's border have been filled with explosions as Palestinian militants exchange rocket fire with the Israeli army.

(BEGIN VIDEO CLIP)

DOS SANTOS (voice-over): Air raid sirens were heard south of Tel Aviv. Israel's military says that three people were killed in attacks on its civilians. Meanwhile, Israel continues to attack what it calls terror strikes from Gaza. (Inaudible) people there have been killed.

The new political era has begun in China as the country's Communist Party unveiled its new leaders. Xi Jinping has been appointed the new chief of the party, replacing outgoing Hu Jintao. Xi will also run China's central military commission, which oversees the country's army and national security.

Oil giant BP will pay $4 billion in a settlement with the U.S. Justice Department over the Gulf of Mexico oil spill. It's the biggest criminal penalty in U.S. corporate history, some three times over. BP has also agreed to admit guilt over the death of 11 workers in the accident.

The Eurozone slipped into recession for the second time in four years. Collectively, the 17 economies which use the euro shrank just slightly in the last three months of the year.

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(END VIDEO CLIP)

DOS SANTOS: Let's take a closer look at that historic settlement agreed by BP in the U.S. government today. If it's approved by the court, well BP will never face again a criminal prosecution over the Deepwater Horizon disaster. CNN's Ed Lavandera's at St. Petersburg on the coast, the Gulf Coast in Florida with the latest.

(Inaudible), Ed, first of all, what are locals going to be making of this settlement? Presumably some might say it's not enough; our livelihoods have been damaged. People lost their lives.

ED LAVANDERA, CNN CORRESPONDENT: I think it's going to be a mix of reactions to this news, Nina, because there are still a great number of people who have still not settled claims, still have lawsuits pending with the company.

But nonetheless, this is still a major announcement and a major milestone in the aftermath of the BP oil disaster that happened back in 2010, which obviously claimed the lives of 11 people working on the Deepwater Horizon rig.

But this is a massive settlement, $4.5 billion. And it also includes a $1.2 billion criminal fine, which is the largest fine ever levied here in the United States; also a $525 million settlement with the Securities and Exchange Commission here in the United States to settle claims with that department; as well as some -- more than almost $2.5 billion that will be given to organizations like the National Fish and Wildlife Foundation as well as the National Academy of Sciences.

That money will be used to study the effects and for environmental purposes here in the cleanup, in the aftermath of the oil spill.

So, significant, but also the -- maybe the biggest news that we're now able to confirm is that three employees with BP also now personally face criminal charges.

The two highest-ranking BP officials on the Deepwater Horizon rig face some 23 criminal counts, including counts for manslaughter and involuntary manslaughter, as well as another former BP executive, who faces criminal counts of withholding information from investigators.

So that continues.

Throughout all of this, also BP has pled guilty to some 14 criminal violations, 11 or 12 of which, I believe, are felony counts as well, so a wide-ranging settlement with big ramifications here. But by no means is this all over for BP.

There are still billions and billions of dollars left in other settlements that need to be handled, as well as more fines that are expected to come from the U.S. federal government as well.

DOS SANTOS: Yes, excellent point, that's true. And also there will be trials later on in February as well.

Thanks so much.

Ed Lavandera there at St. Petersburg, Florida, on the Gulf Coast this evening.

Up next, an interview with Warren Buffett. Won't want to miss that (ph).

(MUSIC PLAYING)

(COMMERCIAL BREAK)

DOS SANTOS: Let's get some investment insight for you out there now.

Warren Buffett, the chairman of Berkshire Hathaway, gave an exclusive interview to CNN's Poppy Harlow. She began by asking him just how risky the situation in Europe was right now.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: Well, Europe's got big, big problems and they will solve them in time. But they've created a monetary union without getting fiscal policies synchronized in a way that didn't -- would avoid huge strains over time. And they're now facing up to the fact that the original concept of the union needs some significant modification.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: So much attention is being paid here to the fiscal cliff. Do you think that the risk that Europe poses right now is a bigger risk to the global economy?

BUFFETT: Well, it's a risk for the European economy. But there --

(CROSSTALK)

HARLOW: (Inaudible) the biggest buyers are good (ph).

BUFFETT: Yes, but they'll be the biggest buyers 10 years from now and five years from now and 20 years from now. I mean, there's always things in the economic picture that, you know, you could write down on a piece of paper, that are problems. And that's been true for hundreds of years, here. And yet America moves forward.

So we will always have problems. Sometimes we're just unaware of them. On September 10th, 2001, we didn't know that we were going to have a huge problem the next day. There's always risks in the economy. Overall, the American economy overcomes them all, over time.

HARLOW: Do you think that the Eurozone is going to survive this, Warren?

BUFFETT: I don't know. They have to -- they have to work out something where they coordinate -- they either get closer together or they get further apart. The present system is unstable, and they've seen -- they've seen that instability manifested. But Europe isn't going to go away. I mean, they will be a huge market; they'll be producing lots of things.

HARLOW: But the Eurozone may not make it through this?

BUFFETT: It's hard to tell exactly where -- how it comes out.

HARLOW: When it comes to China, Governor Romney vowed to label China a currency manipulator in his first day in office if he became president.

What would that have done to the U.S.-China relationship?

BUFFETT: I don't think that would have been a good idea.

(LAUGHTER)

BUFFETT: Every country fools around with its currency to some degree. I mean, we've had a currency policy over the years, and we've done a lot of things in terms of affecting our own currency.

(END VIDEO CLIP)

DOS SANTOS: Let's get a picture of the weather forecast in Europe, Jenny Harrison standing by at the CNN International Weather Center to tell us all.

So, Jenny, I gather we're talking Europe this time?

JENNY HARRISON, CNN METEOROLOGIST: Yes, talking Europe indeed. And more heavy rain across the southern regions of the Mediterranean.

Now luckily there are systems that's been coming across. It is indeed (inaudible) further south, which is what we thought it would do but that does at least mean that the heavy rain that came down has stayed well south of Rome and Florence all those areas that have seen the floodwaters. But look at this.

In 24 hours in Tunisia, 107 millimeters of rain and the wind gusts nearly 70 kph. So maybe a small little system (inaudible) fairly ferocious system. And just going back to Rome, just as well, the rain did stay further to the south because still it looks like this in some of the streets. So it's going to take a while for the floodwaters to really die down.

So that low across the central Med, that'll slowly work its way eastwards. Still we'll have some obviously some heavier spells of rain embedded within that, maybe some strong, gusty winds. Much of mainland Europe fairly quiet.

We've got high pressure in control. And then to the northwest, a new system coming through bringing rain, but also ushering in some much cooler air. And then this system just pushing in towards Portugal. That could bring some heavy rain, some strong winds, maybe some tornadoes. So you can see some warnings in place there for that.

Meanwhile, across in central Europe, this is a picture taken earlier this day in Germany. Now this obviously is very dense fog, very typical this time of year.

But it fine if you're somewhat on your own on a bicycle and there's nothing around you, different story, May 38, just north of Leipzig about 40 vehicles all crashed into one another, huge pileup, 31 people were injured. And for all those people with seriously injured. And so as I say, this is what we've got. High pressure this time of year, and it does bring fog like this.

More of the same over the next few days, Nina.

DOS SANTOS: Thanks so much, Jenny Harrison there at the CNN Weather Center.

And that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining us. I'm Nina dos Santos. MARKETPLACE EUROPE is next.

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(COMMERCIAL BREAK)

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DOS SANTOS: Hello and welcome to MARKETPLACE EUROPE. I'm Nina dos Santos in London.

The E.U. Commission expect that output across the region is likely to shrink by not quite 3 percent this year, acknowledging that the difficult process of rebalancing the region's economy will probably take some time.

With unemployment across the Eurozone now standing at 11.6 percent, this week we take a look at how businesses are forging a future for themselves during these uncertain times.

(BEGIN VIDEO CLIP)

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DOS SANTOS (voice-over): Coming up, turning their backs on city life, the Spaniards migrating to the countryside in search of a more secure future.

And we hear from the man whose company is delivering the U.K.'s first 4G mobile network.

UNIDENTIFIED MALE: When we focused on written, we can be very successful and we can have a secure future.

(END VIDEO CLIP)

DOS SANTOS: The economic crisis in Spain isn't just having an impact on the way people live; it's also influencing where they live as well. The scarcity of jobs across the cities in the country has led many Spaniards to move out of those urban areas and into small towns and villages in search of work.

For some, it's even a question of starting their own new business. Al Goodman now reports from a town 21/2 hours away from Madrid.

(BEGIN VIDEO CLIP)

(MUSIC PLAYING)

AL GOODMAN, CNN CORRESPONDENT (voice-over): As an entrepreneur, Alonso Alonso likes a challenge, but he didn't think it would be on a farm. Yet here he is, producing organic fertilizer on an industrial scale, with 50 million worms in his field doing the composting.

GOODMAN: These worms are working right now?

ALONSO ALONSO, FERTILIZER FARMER: Yes, exactly.

GOODMAN: They're not on their coffee break?

(LAUGHTER)

ALONSO: (Inaudible).

GOODMAN: OK.

ALONSO (through translator): We designed this project about a year ago. Before that, I had no idea I would be involved with worms.

GOODMAN (voice-over): His business in Madrid used to sell solar panels to construction projects. But four years ago, the real estate boom went bust, the beginning of the country's devastating economic crisis.

ALONSO (through translator): We did not find a future in the city. We have to move and we found a new market niche in ecological agriculture products.

GOODMAN (voice-over): It means relocating far from this busy street near his office to a place with a very different view.

With one in four Spaniards unemployed, a growing number are looking for work in villages.

GOODMAN: Experts say it's hard to know how many people have moved from cities to rural areas, but the trend is clear: the long-term population decline in villages has stopped.

GOODMAN (voice-over): This village, Villa Nueva de la Vera (ph), was an easy choice. Alonso's parents left it long ago to work in Madrid, while keeping a house here. The fertilizer business is just outside of town on his uncle's land.

ALONSO (through translator): We've got about two hectares here to buy around a farm like this in Madrid would be incredibly expensive.

GOODMAN (voice-over): Still, he needed a loan, hard to get now in Spain.

Finally, this nationwide bank's branch in the village complied. He'll pay nearly 7 percent interest, but says he feels fortunate.

Jose Luis Amaya also found work in Villa Nueva (ph), his native village. He lost his job operating heavy construction machinery in Madrid and now runs a grocery shop with his family just off the village's main square.

JOSE LUIS AMAYA, SHOP OWNER (through translator): I've been back to my old Madrid neighborhood a few times, and once saw some neighbors with their son, searching for food in a trash bin. The father had work just like me. He was someone just like me.

GOODMAN (voice-over): Yet the village provides only enough to get by, he says.

AMAYA (through translator): (Inaudible) hasn't arrived here yet like in the capital.

Look here, this couple with a new baby.

UNIDENTIFIED FEMALE (through translator): I have another one, who's 18 months old and my husband and I are both out of work.

GOODMAN (voice-over): But there is work near town at this center, which offers yoga and personal growth seminars.

Silvia Barcenilla was a sales representative in Madrid until the company demanded cuts in her salary. She quit, went jobless for a year, then move to this area and got hired as the center's marketing director.

SILVIA BARCENILLA, MARKETING DIRECTOR (through translator): The economic crisis clearly was an influence. If I had a job I liked in Madrid, I would never have come here. But it isn't great (ph). The crisis offers opportunities.

GOODMAN (voice-over): Alonso sees it that way, too. He's hired a full-time and part-time worker so far and hopes to expand to four full-time staffers soon, and that's not counting the worms, which natural reproduce quickly and never need a break.

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DOS SANTOS: Al Goodman there in Spain.

Well, coming up after the break, Jim Boulden catches up with the company delivering the U.K.'s first 4G mobile network.

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DOS SANTOS: Welcome back to MARKETPLACE EUROPE here in the heart of London, where (inaudible) communication just got a whole lot faster, thanks to the rollout of the 4th generation mobile network.

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DOS SANTOS (voice-over): Launched as Everything Everywhere in 2010, EE, as it's now known, owns the Orange in T-Mobile brands in the U.K. Jointly owned by France Telecom and Deutsche Telecom, EE is the first company in the U.K. to provide 4G mobile services.

EE has 27 million customers. It plans to cover 16 cities this year and is aiming to offer 4G to 98 percent of the U.K. population by 2014.

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OLAF SWANTEE, CEO, EE: We applied for -- to use our existing airwaves to develop 4G. (Inaudible) could have done the same thing. We did that 12 months ago. We started building early in the year, so we got our shareholders to approve a 11/2-billion pound investment program. We're investing 1.4 million a day. And that's why we can have 4G in the U.K. before the end of this year.

JIM BOULDEN, CNN CORRESPONDENT: Does it surprise you that it's taken this long to get the 4G in one way; another way that the other companies haven't done it yet?

SWANTEE: Well, in some ways, I'm not surprised, because about 14 months ago, this company, EE, did not have a plan for 4G, because in the U.K., the profitability in the mobile industry is lower compared to other markets. So the strategy of most companies, including EE, was to sit on your existing network and try to maximize profitability from that, as opposed to investing for the future.

BOULDEN: Now from a corporate branding point of view, your company has caused some confusion, you must admit. You've been Everything Everywhere, Everywhere Everything to others, T-Mobile Orange, explain why this change of the name and what you, as a CEO, have to do to try to get that to -- explain that just to your employees and to your customers.

SWANTEE: Our employees and the market liked the fact that we introduced EE, a new name, a fresh name for a company, a network and for a brand, which is the first brand in the U.K. that will bring 4G services and fibre broadband at the same time.

So the reception has been very good. It's a brand that will stay alongside Orange and T-Mobile, because Orange and T-Mobile are brands that are very strong, that carry a lot of customers. So customers will continue to be able to buy Orange and T-Mobile plans.

BOULDEN: So in the U.K., we will see T-Mobile and Orange shops, combined into one?

SWANTEE: Yes. Basically today, we have 720 stores in the U.K. and we will make sure that all stores will be able to sell all brands.

BOULDEN: So you think we'll see a lot of consolidation in Europe?

SWANTEE: I don't think so. I think that it is difficult for two reasons. One is that the regulators in the various European countries want to maintain three to four players by country; and secondly, it's hard to prove all the synergies and, you know, operational advantages to integrate companies across multiple markets.

And that's why, as a company here in Britain with two shareholders, but only focused on Britain, we can be very successful and we can have a secure future.

BOULDEN: And being focused on Britain keeps you outside the Eurozone. People are getting worried about the Eurozone again.

How does any of that affect you? Or does it not affect you because you're able to focus on the U.K.?

SWANTEE: Well, it affects me indirectly, because of course, the U.K. society is very dependent in -- from an economic perspective in dealing with European Union and with European countries. And U.K. economy has (inaudible) very much pressure.

So we have seen that in B-to-B but also consumers. I mean, people continue to phone and continue to use our technologies. But there is a lot more deal-seekers out there, a lot of people who search value in telecommunications. So it has been a big impact.

BOULDEN: And to circle around, and 4G gives you a chance to get your existing customers to upgrade to something more expensive.

SWANTEE: Cycles in the U.K. is typically 24 months or when someone has a phone or a device, typically after 24 months, these customers move to a next device and then typically to a different network technology.

The real important thing around our pricing has to be that it's easy to understand, that it's simple and that people can trust to use the device in a 4G environment. And we will price it accordingly.

BOULDEN: Because if they don't -- some people feel they can't use the phone, then why upgrade.

SWANTEE: No, absolutely. And the exciting thing about 4G is exactly the using these new applications that you would otherwise not do, real-time gaming or in B-to-B, you know, the cloud (ph) service. I mean, you have so many applications that you see in countries like the U.S. or Korea, where they have a 4G network, applications that will come to the U.K. very quickly.

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DOS SANTOS: The CEO of EE, Olaf Swantee there, speaking to CNN's Jim Boulden.

Well, that's it for this edition of MARKETPLACE EUROPE. Join us next week if you can. But in the meantime, thanks for watching. And goodbye.

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